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 September 30, 2017

☐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, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,”  and “emerging growth 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 ☐
Emerging growth company ☐

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

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

Yes  ☐  No  ☒

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, 4,779,262 shares as of October 30, 2017

INDEX

EVANS BANCORP, INC. AND SUBSIDIARIES

PART 1.  FINANCIAL INFORMATION		PAGE
Item 1.	Financial Statements
	Unaudited Consolidated Balance Sheets – September 30, 2017 and December 31, 2016	1
	Unaudited Consolidated Statements of Income – Three months ended September 30, 2017 and 2016	2
	Unaudited Consolidated Statements of Income – Nine months ended September 30, 2017 and 2016	3
	Unaudited Consolidated Statements of Comprehensive Income – Three months ended September 30, 2017 and 2016	4
	Unaudited Consolidated Statements of Comprehensive Income – Nine months ended September 30, 2017 and 2016	5
	Unaudited Consolidated Statements of Changes in Stockholders’ Equity – Nine months ended September 30, 2017 and 2016	6
	Unaudited Consolidated Statements of Cash Flows - Nine months ended September 30, 2017 and 2016	7
	Notes to Unaudited Consolidated Financial Statements	9
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	38
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	51

PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
EVANS BANCORP, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 2017 AND DECEMBER 31, 2016
(in thousands, except share and per share amounts)
	September 30,		December 31,
	2017		2016
ASSETS
Cash and due from banks	$	16,790	$	12,503
Interest-bearing deposits at banks		1,265		581
Securities:
Available for sale, at fair value (amortized cost: $148,771 at September 30, 2017;		148,300		95,222
$95,810 at December 31, 2016)
Held to maturity, at amortized cost (fair value: $4,472 at September 30, 2017;		4,487		1,983
$1,959 at December 31, 2016)
Federal Home Loan Bank common stock, at cost		2,404		2,185
Federal Reserve Bank common stock, at cost		1,908		1,546
Loans, net of allowance for loan losses of $14,182 at September 30, 2017
and $13,916 at December 31, 2016		983,823		928,596
Properties and equipment, net of accumulated depreciation of $17,952 at September 30, 2017
and $17,012 at December 31, 2016		10,742		11,310
Goodwill and intangible assets		8,581		8,406
Bank-owned life insurance		23,233		21,534
Other assets		18,621		16,843
TOTAL ASSETS	$	1,220,154	$	1,100,709
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits:
Demand	$	216,250	$	201,741
NOW		96,741		88,632
Savings		552,559		508,652
Time		166,769		140,949
Total deposits		1,032,319		939,974
Securities sold under agreement to repurchase		9,380		10,159
Other borrowings		33,600		28,200
Other liabilities		16,033		14,298
Junior subordinated debentures		11,330		11,330
Total liabilities		1,102,662		1,003,961
CONTINGENT LIABILITIES AND COMMITMENTS
STOCKHOLDERS' EQUITY:
Common stock, $.50 par value, 10,000,000 shares authorized; 4,776,763
and 4,302,504 shares issued at September 30, 2017 and December 31, 2016,
respectively, and 4,776,360 and 4,300,634 outstanding at September 30, 2017
and December 31, 2016, respectively		2,391		2,153
Capital surplus		59,017		44,389
Treasury stock, at cost, 403 and 1,870 shares at September 30, 2017 and
December 31, 2016, respectively		-		-
Retained earnings		58,304		52,630
Accumulated other comprehensive loss, net of tax		(2,220)		(2,424)
Total stockholders' equity		117,492		96,748
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	1,220,154	$	1,100,709
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 SEPTEMBER 30, 2017 AND 2016
(in thousands, except share and per share amounts)
	Three Months Ended September 30,
	2017		2016
INTEREST INCOME
Loans	$	11,659	$	9,620
Interest-bearing deposits at banks		7		1
Securities:
Taxable		706		385
Non-taxable		202		235
Total interest income		12,574		10,241
INTEREST EXPENSE
Deposits		1,252		977
Other borrowings		116		100
Junior subordinated debentures		111		95
Total interest expense		1,479		1,172
NET INTEREST INCOME		11,095		9,069
PROVISION FOR LOAN LOSSES		161		1,006
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES		10,934		8,063
NON-INTEREST INCOME
Deposit service charges		448		475
Insurance service and fees		2,169		1,855
Gain on loans sold		61		35
Bank-owned life insurance		128		144
Loss on tax credit investment		(1,338)		-
Refundable state historic tax credit		972		-
Interchange fee income		379		319
Other		546		507
Total non-interest income		3,365		3,335
NON-INTEREST EXPENSE
Salaries and employee benefits		6,343		5,402
Occupancy		805		732
Advertising and public relations		311		232
Professional services		514		535
Technology and communications		730		504
Amortization of intangibles		28		-
FDIC insurance		195		201
Other		910		1,105
Total non-interest expense		9,836		8,711
INCOME BEFORE INCOME TAXES		4,463		2,687
INCOME TAX PROVISION		740		471
NET INCOME	$	3,723	$	2,216
Net income per common share-basic	$	0.78	$	0.52
Net income per common share-diluted	$	0.76	$	0.51
Cash dividends per common share	$	0.40	$	0.38
Weighted average number of common shares outstanding		4,774,602		4,287,124
Weighted average number of diluted shares outstanding		4,896,967		4,362,479
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
NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016
(in thousands, except share and per share amounts)
	Nine Months Ended September 30,
	2017		2016
INTEREST INCOME
Loans	$	32,551	$	27,228
Interest-bearing deposits at banks		62		45
Securities:
Taxable		1,705		1,323
Non-taxable		636		695
Total interest income		34,954		29,291
INTEREST EXPENSE
Deposits		3,558		2,972
Other borrowings		224		201
Junior subordinated debentures		315		273
Total interest expense		4,097		3,446
NET INTEREST INCOME		30,857		25,845
PROVISION FOR LOAN LOSSES		136		838
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES		30,721		25,007
NON-INTEREST INCOME
Deposit service charges		1,266		1,321
Insurance service and fees		6,249		5,175
Gain on loans sold		131		79
Bank-owned life insurance		400		421
Loss on tax credit investment		(2,257)		(2,139)
Refundable state historic tax credit		1,619		1,508
Interchange fee income		1,102		977
Other		1,466		1,267
Total non-interest income		9,976		8,609
NON-INTEREST EXPENSE
Salaries and employee benefits		18,089		16,383
Occupancy		2,355		2,171
Advertising and public relations		717		707
Professional services		1,666		1,771
Technology and communications		2,141		1,653
Amortization of intangibles		84		-
FDIC insurance		551		542
Other		2,605		2,731
Total non-interest expense		28,208		25,958
INCOME BEFORE INCOME TAXES		12,489		7,658
INCOME TAX PROVISION		3,002		1,725
NET INCOME	$	9,487	$	5,933
Net income per common share-basic	$	2.01	$	1.39
Net income per common share-diluted	$	1.96	$	1.37
Cash dividends per common share	$	0.80	$	0.76
Weighted average number of common shares outstanding		4,724,774		4,278,171
Weighted average number of diluted shares outstanding		4,845,664		4,345,307
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 SEPTEMBER 30, 2017 AND 2016
(in thousands)
	Three Months Ended September 30,
	2017			2016
NET INCOME		$	3,723		$	2,216
OTHER COMPREHENSIVE INCOME, NET OF TAX:
Unrealized loss on available-for-sale securities			(112)			(376)
Defined benefit pension plans:
Amortization of prior service cost	4			5
Amortization of actuarial loss	28			35
Total			32			40
OTHER COMPREHENSIVE LOSS, NET OF TAX			(80)			(336)
COMPREHENSIVE INCOME		$	3,643		$	1,880
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
NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016
(in thousands)
	Nine Months Ended September 30,
	2017			2016
NET INCOME		$	9,487		$	5,933
OTHER COMPREHENSIVE INCOME, NET OF TAX:
Unrealized gain on available-for-sale securities			78			533
Defined benefit pension plans:
Amortization of prior service cost	19			15
Amortization of actuarial loss	107			105
Total			126			120
OTHER COMPREHENSIVE INCOME, NET OF TAX			204			653
COMPREHENSIVE INCOME		$	9,691		$	6,586
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
NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016
(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, 2015	$	2,132	$	43,318	$	47,616	$	(1,810)	$	-	$	91,256
Net Income						5,933						5,933
Other comprehensive income								653				653
Cash dividends ($0.76 per common share)						(3,255)						(3,255)
Stock compensation expense				421								421
Excess tax benefit from stock-based compensation				22								22
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 exercise				8								8
Reissued 267 shares in stock option exercises				(6)						6		-
Reissued 3,215 restricted shares, net of forfeitures				(5)						5		-
Balance, September 30, 2016	$	2,147	$	43,983	$	50,294	$	(1,157)	$	(69)	$	95,198
Balance, December 31, 2016	$	2,153	$	44,389	$	52,630	$	(2,424)	$	-	$	96,748
Net Income						9,487						9,487
Other comprehensive income								204				204
Cash dividends ($0.80 per common share)						(3,813)						(3,813)
Stock compensation expense				462								462
Reissued 741 restricted shares												-
Issued 440,000 shares in stock offering		220		13,922								14,142
Issued 13,936 restricted shares, net of forfeitures		9		(9)								-
Issued 3,253 shares under Dividend Reinvestment Plan		2		124								126
Issued 3,713 shares in Employee Stock Purchase Plan		2		124								126
Issued 10,001 shares in stock option exercises		5		140								145
Repurchased 9,218 shares in treasury stock										(342)		(342)
Reissued 13,300 shares in stock option exercises				(135)						342		207
Balance, September 30, 2017	$	2,391	$	59,017	$	58,304	$	(2,220)	$	-	$	117,492
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
NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016
(in thousands)
	Nine Months Ended September 30,
		2017		2016
OPERATING ACTIVITIES:
Interest received	$	34,568	$	28,952
Fees received		10,095		8,648
Interest paid		(4,062)		(3,419)
Cash paid to employees and vendors		(27,256)		(24,467)
Cash contributed to pension plan		(1,000)		(140)
Income taxes paid		(1,733)		(974)
Proceeds from sale of loans held for resale		9,793		5,300
Originations of loans held for resale		(9,483)		(7,227)
Net cash provided by operating activities		10,922		6,673
INVESTING ACTIVITIES:
Available for sales securities:
Purchases		(65,889)		(25,953)
Proceeds from maturities, calls, and payments		12,041		18,425
Held to maturity securities:
Purchases		(3,355)		(194)
Proceeds from maturities, calls, and payments		851		337
Cash paid for bank owned life insurance		(1,300)		-
Additions to properties and equipment		(358)		(1,329)
Purchase of tax credit investment		(2,380)		(703)
Insurance agency acquisitions		(275)		-
Net increase in loans		(54,724)		(136,160)
Net cash used in investing activities		(115,389)		(145,577)
FINANCING ACTIVITIES:
Proceeds from short-term borrowings, net		4,621		41,985
Net increase in deposits		92,345		94,983
Dividends paid		(1,902)		(1,626)
Repurchase of treasury stock		(342)		(80)
Issuance of common stock		14,509		248
Reissuance of treasury stock		207		-
Net cash provided by financing activities		109,438		135,510
Net increase (decrease) in cash and cash equivalents		4,971		(3,394)
CASH AND CASH EQUIVALENTS:
Beginning of period		13,084		22,621
End of period	$	18,055	$	19,227
See Notes to Unaudited Consolidated Financial Statements

(continued)

7

PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
EVANS BANCORP, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016
(in thousands)
	Nine Months Ended September 30,
		2017		2016
RECONCILIATION OF NET INCOME TO NET CASH
PROVIDED BY OPERATING ACTIVITIES:
Net income	$	9,487	$	5,933
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization		1,333		1,079
Deferred tax expense (benefit)		830		(211)
Provision for loan losses		136		838
Loss on tax credit investment		2,257		2,139
Refundable state historic tax credit		(1,619)		(1,508)
Gain on loans sold		(131)		(79)
Stock compensation expense		462		421
Proceeds from sale of loans held for resale		9,793		5,300
Originations of loans held for resale		(9,483)		(7,227)
Cash contributed to pension plan		(1,000)		(140)
Changes in assets and liabilities affecting cash flow:
Other assets		(1,944)		(1,784)
Other liabilities		801		1,912
NET CASH PROVIDED BY OPERATING ACTIVITIES	$	10,922	$	6,673
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 NINE MONTH PERIODS ENDED SEPTEMBER 30, 2017 AND 2016

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 nine month periods ended September 30, 2017 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, 2016 (“10-K”).  The Company’s significant accounting policies are disclosed in Note 1 to the 10-K.

9

2. SECURITIES

The amortized cost of securities and their approximate fair value at September 30, 2017 and December 31, 2016 were as follows:

	September 30, 2017
	(in thousands)
	Amortized		Unrealized				Fair
	Cost		Gains		Losses		Value
Available for Sale:
Debt securities:
U.S. government agencies	$	28,461	$	64	$	(278)	$	28,247
States and political subdivisions		29,985		424		(21)		30,388
Total debt securities	$	58,446	$	488	$	(299)	$	58,635
Mortgage-backed securities:
FNMA	$	32,772	$	123	$	(230)	$	32,665
FHLMC		15,242		34		(116)		15,160
GNMA		2,176		25		(15)		2,186
SBA		10,310		24		(82)		10,252
CMO		29,825		50		(473)		29,402
Total mortgage-backed securities	$	90,325	$	256	$	(916)	$	89,665
Total securities designated as available for sale	$	148,771	$	744	$	(1,215)	$	148,300
Held to Maturity:
Debt securities
States and political subdivisions	$	4,487	$	6	$	(21)	$	4,472
Total securities designated as held to maturity	$	4,487	$	6	$	(21)	$	4,472

	December 31, 2016
	(in thousands)
	Amortized		Unrealized				Fair
	Cost		Gains		Losses		Value
Available for Sale:
Debt securities:
U.S. government agencies	$	12,958	$	67	$	(153)	$	12,872
States and political subdivisions		34,952		356		(166)		35,142
Total debt securities	$	47,910	$	423	$	(319)	$	48,014
Mortgage-backed securities:
FNMA	$	14,694	$	96	$	(230)	$	14,560
FHLMC		3,544		32		(51)		3,525
GNMA		2,535		19		(21)		2,533
CMO		27,127		67		(604)		26,590
Total mortgage-backed securities	$	47,900	$	214	$	(906)	$	47,208
Total securities designated as available for sale	$	95,810	$	637	$	(1,225)	$	95,222
Held to Maturity:
Debt securities
States and political subdivisions	$	1,983	$	5	$	(29)	$	1,959
Total securities designated as held to maturity	$	1,983	$	5	$	(29)	$	1,959

10

Available for sale securities with a total fair value of $129 million and $87 million at September 30, 2017 and December 31, 2016, respectively, were pledged as collateral to secure public deposits and for other purposes required or permitted by law.

The scheduled maturities of debt and mortgage-backed securities at September 30, 2017 and December 31, 2016 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.

	September 30, 2017				December 31, 2016
	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	$	4,557	$	4,579	$	2,869	$	2,876
Due after one year through five years		25,945		26,170		30,171		30,214
Due after five years through ten years		25,989		25,887		12,166		12,133
Due after ten years		1,955		1,999		2,704		2,791
		58,446		58,635		47,910		48,014
Mortgage-backed securities
available for sale		90,325		89,665		47,900		47,208
Total available for sale securities	$	148,771	$	148,300	$	95,810	$	95,222
Debt securities held to maturity:
Due in one year or less	$	3,392	$	3,388	$	780	$	778
Due after one year through five years		495		483		289		283
Due after five years through ten years		506		512		814		805
Due after ten years		94		89		100		93
		4,487		4,472		1,983		1,959
Total held to maturity securities	$	4,487	$	4,472	$	1,983	$	1,959

Contractual maturities of the Company’s mortgage-backed securities generally exceed ten years; however, the effective lives may be significantly shorter due to prepayments of the underlying loans and due to the nature of these securities.  The duration of the investment securities portfolio increased from 3.4 years at December 31, 2016 to 3.8 years at September 30, 2017.

Information regarding unrealized losses within the Company’s available for sale securities at September 30, 2017 and December 31, 2016 is summarized below.  The securities are primarily U.S. government-guaranteed agency securities or municipal securities. 

11

	September 30, 2017
		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	$	18,540	$	(278)	$	-	$	-	$	18,540	$	(278)
States and political subdivisions		2,470		(8)		1,645		(13)		4,115		(21)
Total debt securities	$	21,010	$	(286)	$	1,645	$	(13)	$	22,655	$	(299)
Mortgage-backed securities:
FNMA	$	18,130	$	(141)	$	4,079	$	(89)	$	22,209	$	(230)
FHLMC		10,281		(82)		1,039		(34)		11,320		(116)
GNMA		940		(14)		287		(1)		1,227		(15)
SBA		4,354		(82)		-		-		4,354		(82)
CMO		12,005		(116)		12,352		(357)		24,357		(473)
Total mortgage-backed securities	$	45,710	$	(435)	$	17,757	$	(481)	$	63,467	$	(916)
Held to Maturity:
Debt securities:
States and political subdivisions	$	3,471	$	(4)	$	561	$	(17)	$	4,032	$	(21)
Total temporarily impaired
securities	$	70,191	$	(725)	$	19,963	$	(511)	$	90,154	$	(1,236)

	December 31, 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	$	6,847	$	(153)	$	-	$	-	$	6,847	$	(153)
States and political subdivisions		16,895		(146)		731		(20)		17,626		(166)
Total debt securities	$	23,742	$	(299)	$	731	$	(20)	$	24,473	$	(319)
Mortgage-backed securities:
FNMA	$	9,577	$	(230)	$	-	$	-	$	9,577	$	(230)
FHLMC		1,728		(8)		988		(43)		2,716		(51)
GNMA		1,046		(17)		309		(4)		1,355		(21)
CMO		19,745		(569)		1,166		(35)		20,911		(604)
Total mortgage-backed securities	$	32,096	$	(824)	$	2,463	$	(82)	$	34,559	$	(906)
Held to Maturity:
Debt securities:
States and political subdivisions	$	863	$	(3)	$	706	$	(26)	$	1,569	$	(29)
Total temporarily impaired
securities	$	56,701	$	(1,126)	$	3,900	$	(128)	$	60,601	$	(1,254)

12

Management has assessed the securities available for sale in an unrealized loss position at September 30, 2017 and December 31, 2016 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 has not recorded any other-than-temporary impairment (“OTTI”) charges as of September 30, 2017 and did not record any OTTI charges during 2016.  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 stable past performance is not a guarantee for similar performance of the Company’s securities portfolio in future periods.

3.  FAIR VALUE MEASUREMENT

Fair value is defined in ASC Topic 820 “Fair Value Measurement” 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 measurement:

	Level 1 inputs are quoted prices for identical instruments in active markets;
	Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and
	Level 3 inputs are 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 September 30, 2017 and December 31, 2016, respectively:

(in thousands)		Level 1		Level 2		Level 3		Fair Value
September 30, 2017
Securities available-for-sale:
U.S. government agencies	$	-	$	28,247	$	-	$	28,247
States and political subdivisions		-		30,388		-		30,388
Mortgage-backed securities		-		89,665		-		89,665
Mortgage servicing rights		-		-		571		571
December 31, 2016
Securities available-for-sale:
U.S. government agencies	$	-	$	12,872	$	-	$	12,872
States and political subdivisions		-		35,142		-		35,142
Mortgage-backed securities		-		47,208		-		47,208
Mortgage servicing rights		-		-		527		527

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 nine month periods ended September 30, 2017 and 2016, respectively:

	Three months ended September 30,
(in thousands)	2017		2016
Mortgage servicing rights - July 1	$	555	$	466
Losses included in earnings		(25)		(22)
Additions from loan sales		41		15
Mortgage servicing rights - September 30	$	571	$	459

14

	Nine months ended September 30,
(in thousands)	2017		2016
Mortgage servicing rights - January 1	$	527	$	557
Losses included in earnings		(46)		(147)
Additions from loan sales		90		49
Mortgage servicing rights - September 30	$	571	$	459

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

	September 30, 2017		December 31, 2016
Servicing fees	0.25	%	0.25	%
Discount rate	9.52	%	9.52	%
Prepayment rate (CPR)	8.78	%	8.12	%

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 September 30, 2017 and December 31, 2016:

(in thousands)		Level 1		Level 2		Level 3		Fair Value
September 30, 2017
Collateral dependent impaired loans	$	-	$	-	$	18,639	$	18,639
December 31, 2016
Collateral dependent impaired loans	$	-	$	-	$	13,114	$	13,114

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.  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’s 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 $20.3 million, with an allowance for loan loss of $1.7 million, at September 30, 2017 compared with $15.1 million and $2.0 million, respectively, at December 31, 2016.

15

FAIR VALUE OF FINANCIAL INSTRUMENTS

At each of September 30, 2017 and December 31, 2016, 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:

	September 30, 2017				December 31, 2016
	Carrying		Fair		Carrying		Fair
	Amount		Value		Amount		Value
		(in thousands)				(in thousands)
Financial assets:
Level 1:
Cash and cash equivalents	$	18,055	$	18,055	$	13,084	$	13,084
Level 2:
Available for sale securities		148,300		148,300		95,222		95,222
FHLB and FRB stock		4,312		4,312		3,731		3,731
Level 3:
Held to maturity securities		4,487		4,472		1,983		1,959
Loans, net		983,823		977,975		928,596		945,998
Mortgage servicing rights		571		571		527		527
Financial liabilities:
Level 1:
Demand deposits	$	216,250	$	216,250	$	201,741	$	201,741
NOW deposits		96,741		96,741		88,632		88,632
Savings deposits		552,559		552,559		508,652		508,652
Level 2:
Securities sold under agreement to
repurchase		9,380		9,380		10,159		10,159
Other borrowed funds		33,600		33,558		28,200		28,152
Junior subordinated debentures		11,330		11,330		11,330		11,330
Level 3:
Time deposits		166,769		168,389		140,949		141,758

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 Federal Home Loan Bank (“FHLB”) and Federal Reserve Bank (“FRB”) stock, which are non-marketable equity investments, approximate fair value.

As a member of the FHLB System, the Bank is required to hold stock in FHLBNY.  The Company regularly evaluates investments in FHLBNY for impairment, considering liquidity, operating performance, capital position, stock repurchase and dividend history.  As of September 30, 2017, the Bank’s investment in FHLBNY stock was not impaired.

The Bank, as a member of the 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.  Based on the current capital adequacy and liquidity position of the FRB, management believes there is no impairment in the Company’s investment at September 30, 2017.

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.

16

Loans Receivable.  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, negotiable order of withdrawal (“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:

	September 30, 2017		December 31, 2016
Mortgage loans on real estate:	(in thousands)
Residential mortgages	$	125,946	$	118,542
Commercial and multi-family		492,692		462,385
Construction-Residential		1,850		2,540
Construction-Commercial		100,446		93,240
Home equities		67,343		66,234
Total real estate loans		788,277		742,941
Commercial and industrial loans		207,110		197,371
Consumer and other loans		1,521		1,417
Net deferred loan origination costs		1,097		783
Total gross loans		998,005		942,512
Allowance for loan losses		(14,182)		(13,916)
Loans, net	$	983,823	$	928,596

The Bank sells certain fixed rate residential mortgages to FNMA while maintaining the servicing rights for those mortgages.  In the three month period ended September 30, 2017, the Bank sold mortgages to FNMA totaling $4.4 million, compared with $1.7 million in the three month period ended September 30, 2016.  During the nine month periods ended September 30, 2017 and 2016, the Bank sold $9.7 million and $5.2 million, respectively, to FNMA.  At September 30, 2017, the Bank had a loan servicing portfolio principal balance of $80 million upon which it earned servicing fees, compared with $76 million at December 31, 2016.  The value of the mortgage servicing rights for that portfolio was $0.6 million at September 30, 2017 and $0.5 million at December 31, 2016.  At September 30, 2017 there were $0.1 million in residential mortgages held for sale compared with $0.3 million at December 31, 2016.  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, 2016.  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, 2016.  Unless otherwise noted in this Form 10-Q, the policies and methodology described in the Annual Report for the year ended December 31, 2016 are consistent with those utilized by the Company in the three and nine month periods ended September 30, 2017.

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-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.  Unlike commercial customers, consumer loan customers are not required to provide the Company with updated financial information.  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:

September 30, 2017
(in thousands)
Corporate Credit Exposure – By Credit Rating	Commercial Real Estate Construction		Commercial and Multi-Family Mortgages		Total Commercial Real Estate		Commercial and Industrial
1-3	$	74,627	$	374,371	$	448,998	$	133,588
4		25,819		94,204		120,023		59,199
5		-		10,417		10,417		8,122
6		-		13,700		13,700		4,572
7		-		-		-		1,629
Total	$	100,446	$	492,692	$	593,138	$	207,110

December 31, 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
1-3	$	82,520	$	372,235	$	454,755	$	121,414
4		6,541		73,655		80,196		59,117
5		-		12,506		12,506		12,623
6		4,179		3,989		8,168		3,404
7		-		-		-		813
Total	$	93,240	$	462,385	$	555,625	$	197,371

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:

September 30, 2017
(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	$	3,491	$	912	$	2,012	$	6,415	$	200,695	$	207,110	$	1	$	2,363
Residential real estate:
Residential		829		105		825		1,759		124,187		125,946		-		1,146
Construction		-		-		-		-		1,850		1,850		-		-
Commercial real estate:
Commercial		168		2,301		1,488		3,957		488,735		492,692		-		8,788
Construction		6,929		452		-		7,381		93,065		100,446		-		-
Home equities		538		381		570		1,489		65,854		67,343		-		1,081
Consumer and other		7		12		10		29		1,492		1,521		-		10
Total Loans	$	11,962	$	4,163	$	4,905	$	21,030	$	975,878	$	996,908	$	1	$	13,388

Note: Loan balances do not include $1.1 million in net deferred loan origination costs as of September 30, 2017.

20

December 31, 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	$	6,772	$	2,966	$	1,150	$	10,888	$	186,483	$	197,371	$	-	$	3,106
Residential real estate:
Residential		868		123		567		1,558		116,984		118,542		-		862
Construction		-		-		-		-		2,540		2,540		-		-
Commercial real estate:
Commercial		6,319		1,522		2,357		10,198		452,187		462,385		483		1,874
Construction		257		-		4,417		4,674		88,566		93,240		239		4,178
Home equities		481		119		679		1,279		64,955		66,234		-		1,261
Consumer and other		15		10		5		30		1,387		1,417		-		17
Total Loans	$	14,712	$	4,740	$	9,175	$	28,627	$	913,102	$	941,729	$	722	$	11,298

Note: Loan balances do not include $783 thousand in net deferred loan origination costs as of December 31, 2016.

21

Allowance for loan losses

The following tables present the activity in the allowance for loan losses according to portfolio segment for the nine month periods ended September 30, 2017 and 2016:

September 30, 2017
(in thousands)	Commercial and Industrial		Commercial Real Estate Mortgages*		Consumer and Other		Residential Mortgages*		Home Equities		Total
Allowance for loan
losses:
Beginning balance	$	4,813	$	7,890	$	96	$	769	$	348	$	13,916
Charge-offs		(51)		(127)		(50)		-		(1)		(229)
Recoveries		335		-		22		-		2		359
Provision (Credit)		(74)		21		41		143		5		136
Ending balance	$	5,023	$	7,784	$	109	$	912	$	354	$	14,182
Allowance for loan
losses:
Ending balance:
Individually evaluated
for impairment	$	808	$	877	$	35	$	17	$	-	$	1,737
Collectively evaluated
for impairment		4,215		6,907		74		895		354		12,445
Total	$	5,023	$	7,784	$	109	$	912	$	354	$	14,182
Loans:
Ending balance:
Individually evaluated
for impairment	$	2,898	$	13,693	$	35	$	2,545	$	1,577	$	20,748
Collectively evaluated
for impairment		204,212		579,445		1,486		125,251		65,766		976,160
Total	$	207,110	$	593,138	$	1,521	$	127,796	$	67,343	$	996,908

* Includes construction loans

Note: Loan balances do not include $1.1 million in net deferred loan origination costs as of September 30, 2017.

22

September 30, 2016
(in thousands)	Commercial and Industrial		Commercial Real Estate Mortgages*		Consumer and Other		Residential Mortgages*		Home Equities		Total
Allowance for loan
losses:
Beginning balance	$	4,383	$	7,135	$	85	$	909	$	371	$	12,883
Charge-offs		(122)		-		(36)		-		-		(158)
Recoveries		78		59		11		-		1		149
Provision (Credit)		571		538		47		(322)		4		838
Ending balance	$	4,910	$	7,732	$	107	$	587	$	376	$	13,712
Allowance for loan
losses:
Ending balance:
Individually evaluated
for impairment	$	720	$	1,109	$	46	$	3	$	11	$	1,889
Collectively evaluated
for impairment		4,190		6,623		61		584		365		11,823
Total	$	4,910	$	7,732	$	107	$	587	$	376	$	13,712
Loans:
Ending balance:
Individually evaluated
for impairment	$	6,408	$	7,663	$	46	$	2,602	$	1,583	$	18,302
Collectively evaluated
for impairment		181,032		538,466		1,485		110,297		62,555		893,835
Total	$	187,440	$	546,129	$	1,531	$	112,899	$	64,138	$	912,137

* Includes construction loans

Note: Loan balances do not include $715 thousand in net deferred loan origination costs as of September 30, 2016.

23

The following tables present the activity in the allowance for loan losses according to portfolio segment for the three month periods ended September 30, 2017 and 2016:

September 30, 2017
($ in thousands)	Commercial and Industrial		Commercial Real Estate Mortgages*		Consumer and Other		Residential Mortgages*		Home Equities		Total
Allowance for loan
losses:
Beginning balance	$	4,970	$	7,899	$	104	$	832	$	373	$	14,178
Charge-offs		(18)		(127)		(17)		-		(1)		(163)
Recoveries		4		-		1		-		1		6
Provision (Credit)		67		12		21		80		(19)		161
Ending balance	$	5,023	$	7,784	$	109	$	912	$	354	$	14,182

September 30, 2016
($ in thousands)	Commercial and Industrial		Commercial Real Estate Mortgages*		Consumer and Other		Residential Mortgages*		Home Equities		Total
Allowance for loan
losses:
Beginning balance	$	4,195	$	7,308	$	101	$	763	$	406	$	12,773
Charge-offs		(89)		-		(13)		-		-		(102)
Recoveries		23		8		4		-		-		35
Provision (Credit)		781		416		15		(176)		(30)		1,006
Ending balance	$	4,910	$	7,732	$	107	$	587	$	376	$	13,712

*Includes construction loans

24

Impaired Loans

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

		At September 30, 2017
		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	$	751	$	876	$	-	$	822	$	33	$	6
Residential real estate:
Residential		2,447		2,607		-		2,472		33		63
Construction		-		-		-		-		-		-
Commercial real estate:
Commercial		1,968		2,086		-		2,078		98		15
Construction		197		197		-		226		-		11
Home equities		1,577		1,677		-		1,613		48		16
Consumer and other		-		-		-		-		-		-
Total impaired loans	$	6,940	$	7,443	$	-	$	7,211	$	212	$	111

		At September 30, 2017
		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	$	2,147	$	2,374	$	808	$	2,192	$	101	$	16
Residential real estate:
Residential		98		98		17		98		3		1
Construction		-		-		-		-		-		-
Commercial real estate:
Commercial		11,528		11,586		877		11,612		85		366
Construction		-		-		-		-		-		-
Home equities		-		-		-		-		-		-
Consumer and other		35		60		35		38		2		1
Total impaired loans	$	13,808	$	14,118	$	1,737	$	13,940	$	191	$	384

25

		At September 30, 2017
		Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Foregone		Interest Income Recognized
Total:		(in thousands)
Commercial and industrial	$	2,898	$	3,250	$	808	$	3,014	$	134	$	22
Residential real estate:
Residential		2,545		2,705		17		2,570		36		64
Construction		-		-		-		-		-		-
Commercial real estate:
Commercial		13,496		13,672		877		13,690		183		381
Construction		197		197		-		226		-		11
Home equities		1,577		1,677		-		1,613		48		16
Consumer and other		35		60		35		38		2		1
Total impaired loans	$	20,748	$	21,561	$	1,737	$	21,151	$	403	$	495

		At December 31, 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	$	1,304	$	1,604	$	-	$	1,455	$	125	$	51
Residential real estate:
Residential		2,513		2,720		-		2,542		39		78
Construction		-		-		-		-		-		-
Commercial real estate:
Commercial		2,123		2,168		-		2,181		33		89
Construction		257		257		-		404		2		28
Home equities		1,559		1,621		-		1,606		51		30
Consumer and other		-		-		-		-		-		-
Total impaired loans	$	7,756	$	8,370	$	-	$	8,188	$	250	$	276

26

		At December 31, 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	$	1,844	$	1,913	$	492	$	1,898	$	62	$	53
Residential real estate:
Residential		71		72		1		72		2		1
Construction		-		-		-		-		-		-
Commercial real estate:
Commercial		1,054		1,083		296		1,062		50		-
Construction		4,179		4,201		1,175		4,180		194		-
Home equities		194		206		20		195		9		1
Consumer and other		43		68		43		45		3		3
Total impaired loans	$	7,385	$	7,543	$	2,027	$	7,452	$	320	$	58

		At December 31, 2016
		Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Foregone		Interest Income Recognized
Total:		(in thousands)
Commercial and industrial	$	3,148	$	3,517	$	492	$	3,353	$	187	$	104
Residential real estate:
Residential		2,584		2,792		1		2,614		41		79
Construction		-		-		-		-		-		-
Commercial real estate:
Commercial		3,177		3,251		296		3,243		83		89
Construction		4,436		4,458		1,175		4,584		196		28
Home equities		1,753		1,827		20		1,801		60		31
Consumer and other		43		68		43		45		3		3
Total impaired loans	$	15,141	$	15,913	$	2,027	$	15,640	$	570	$	334

27

Troubled debt restructurings

The Company had $12.7 million and $5.1 million in loans that were restructured in a troubled debt restructuring (“TDR”) at September 30, 2017 and December 31, 2016, respectively.  Of those balances, $5.3 million and $1.2 million were in non-accrual status at September 30, 2017 and December 31, 2016, 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 interest 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 September 30, 2017, 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:

		September 30, 2017
		(in thousands)
		Total		Nonaccruing		Accruing		Related Allowance
Commercial and industrial	$	1,525	$	990	$	535	$	433
Residential real estate:
Residential		1,664		265		1,399		-
Construction		-		-		-		-
Commercial real estate:
Commercial and multi-family		8,623		3,915		4,708		368
Construction		197		-		197		-
Home equities		625		129		496		-
Consumer and other		25		-		25		25
Total troubled restructured loans	$	12,659	$	5,299	$	7,360	$	826

		December 31, 2016
		(in thousands)
		Total		Nonaccruing		Accruing		Related Allowance
Commercial and industrial	$	574	$	532	$	42	$	147
Residential real estate:
Residential		1,949		227		1,722		-
Construction		-		-		-		-
Commercial real estate:
Commercial and multi-family		1,617		313		1,304		-
Construction		257		-		257		-
Home equities		667		175		492		1
Consumer and other		26		-		26		26
Total troubled restructured loans	$	5,090	$	1,247	$	3,843	$	174

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 borrower time to improve cash flow or sell the property.  Other common concessions leading to the designation of a TDR are lines of credit that are termed-out and/or extensions of maturities at rates that are less than the prevailing market rates given the risk profile of the borrower.

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The following tables show the data for TDR activity by the type of concession granted to the borrower for the three month and nine month periods ended September 30, 2017 and 2016:

	Three months ended September 30, 2017					Three months ended September 30, 2016
	(Recorded Investment in thousands)					(Recorded Investment 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	1	$	874	$	874	-	$	-	$	-
Residential Real Estate & Construction:
Extension of maturity	1		133		151	-		-		-
Extension of maturity and
interest rate reduction	-		-		-	1		109		109
Commercial Real Estate & Construction:
Combination of concessions	1		4,179		3,397	-		-		-
Home Equities	-		-		-	-		-		-
Consumer and other loans	-		-		-	-		-		-

	Nine months ended September 30, 2017					Nine months ended September 30, 2016
	(Recorded Investment in thousands)					(Recorded Investment 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	1	$	874	$	874	-	$	-	$	-
Extension of maturity	-		-		-	1		24		24
Term-out line of credit	1		180		180	1		20		20
Residential Real Estate & Construction:
Extension of maturity	1		133		151	1		95		95
Extension of maturity and
interest rate reduction	-		-		-	1		109		109
Commercial Real Estate & Construction:
Extension of maturity	3		5,073		5,073	-		-		-
Combination of concessions	1		4,179		3,397	-		-		-
Home Equities:
Extension of maturity and
interest rate reduction	1		20		20	-		-		-
Consumer and other loans	-		-		-	-		-		-

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The general practice of the Bank is to work with borrowers so that they are able to repay 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.  There were no loans which were classified as TDRs during the previous 12 months which defaulted during each of the three month and nine month periods ended September 30, 2017 and 2016, respectively.

5. COMMON EQUITY AND EARNINGS 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 nine month periods ended September 30, 2017, the Company had an average of 122,365 and 120,890 dilutive shares outstanding, respectively.  The Company had an average of 75,355 and 67,136 dilutive shares outstanding for the three and nine months periods ended September 30, 2016, respectively.

Potential common shares that would have the effect of increasing diluted earnings per share are considered to be anti-dilutive and not included in calculating diluted earnings per share. For the three month period ended September 30, 2017 there were no anti-dilutive shares outstanding. For the nine month period ended September 30, 2017, there was an average of 23,593 potentially anti-dilutive shares outstanding, that were not included in calculating diluted earnings per share because their effect was anti-dilutive.  For both the three and nine month periods ended September 30, 2016, there were no anti-dilutive shares outstanding.

The Company issued 440,000 shares of common stock at $35.00 per share (including shares issued upon partial exercise of the underwriters’ allotment option in connection with the offering) in a registered common stock offering in January 2017.  The offering netted $14 million in additional capital after expenses.

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6. OTHER COMPREHENSIVE INCOME

The following tables summarize the changes in the components of accumulated other comprehensive income (loss) during the three and nine month periods ended September 30, 2017 and 2016:

	Balance at June 30, 2017		Net Change		Balance at September 30, 2017
	(in thousands)
Net unrealized loss on investment securities	$	(175)	$	(112)	$	(287)
Net defined benefit pension plan adjustments		(1,965)		32		(1,933)
Total	$	(2,140)	$	(80)	$	(2,220)
	Balance at June 30, 2016		Net Change		Balance at September 30, 2016
	(in thousands)
Net unrealized gain (loss) on investment securities	$	1,384	$	(376)	$	1,008
Net defined benefit pension plan adjustments		(2,205)		40		(2,165)
Total	$	(821)	$	(336)	$	(1,157)

	Balance at December 31, 2016		Net Change		Balance at September 30, 2017
	(in thousands)
Net unrealized (loss) gain on investment securities	$	(365)	$	78	$	(287)
Net defined benefit pension plan adjustments		(2,059)		126		(1,933)
Total	$	(2,424)	$	204	$	(2,220)
	Balance at December 31, 2015		Net Change		Balance at September 30, 2016
	(in thousands)
Net unrealized gain on investment securities	$	475	$	533	$	1,008
Net defined benefit pension plan adjustments		(2,285)		120		(2,165)
Total	$	(1,810)	$	653	$	(1,157)

31

	Three months ended September 30, 2017						Three months ended September 30, 2016
	(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 loss on investment
securities:
Unrealized loss on investment
securities	$	(186)	$	74	$	(112)	$	(605)	$	229	$	(376)
Defined benefit pension plan
adjustments:
Reclassifications from accumulated other
comprehensive income for gains
Amortization of prior service cost (a)	$	7	$	(3)	$	4	$	8	$	(3)	$	5
Amortization of actuarial loss (a)		44		(16)		28		56		(21)		35
Net change		51		(19)		32		64		(24)		40
Other Comprehensive Income	$	(135)	$	55	$	(80)	$	(541)	$	205	$	(336)

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

	Nine months ended September 30, 2017						Nine months ended September 30, 2016
	(in thousands)						(in thousands)
	Before-Tax Amount		Income Tax (Provision) Benefit (b)		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	$	117	$	(39)	$	78	$	860	$	(327)	$	533
Defined benefit pension plan
adjustments:
Reclassifications from accumulated other
comprehensive income for gains
Amortization of prior service cost (a)	$	23	$	(4)	$	19	$	24	$	(9)	$	15
Amortization of actuarial loss (a)		130		(23)		107		168		(63)		105
Net change		153		(27)		126		192		(72)		120
Other Comprehensive Income	$	270	$	(66)	$	204	$	1,052	$	(399)	$	653

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

(b) Tax benefit includes impact of re-valuation of deferred tax asset due to increase in marginal federal income tax rate

from 34% to 35%.

32

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 nine month periods ended September 30, 2017 and 2016.

	Three months ended September 30, 2017
		Banking		Insurance Agency
		Activities		Activities		Total
		(in thousands)
Net interest income (expense)	$	11,120	$	(25)	$	11,095
Provision for loan losses		161		-		161
Net interest income (expense) after
provision for loan losses		10,959		(25)		10,934
Non-interest income		1,196		-		1,196
Insurance service and fees		108		2,061		2,169
Amortization expense		-		28		28
Non-interest expense		8,315		1,493		9,808
Income before income taxes		3,948		515		4,463
Income tax provision		542		198		740
Net income	$	3,406	$	317	$	3,723

	Three months ended September 30, 2016
		Banking		Insurance Agency
		Activities		Activities		Total
		(in thousands)
Net interest income (expense)	$	9,103	$	(34)	$	9,069
Provision for loan losses		1,006		-		1,006
Net interest income (expense) after
provision for loan losses		8,097		(34)		8,063
Non-interest income		1,480		-		1,480
Insurance service and fees		100		1,755		1,855
Non-interest expense		7,561		1,150		8,711
Income before income taxes		2,116		571		2,687
Income tax provision		251		220		471
Net income	$	1,865	$	351	$	2,216

33

	Nine months ended September 30, 2017
		Banking		Insurance Agency
		Activities		Activities		Total
		(in thousands)
Net interest income (expense)	$	30,934	$	(77)	$	30,857
Provision for loan losses		136		-		136
Net interest income (expense) after
provision for loan losses		30,798		(77)		30,721
Non-interest income		3,727		-		3,727
Insurance service and fees		313		5,936		6,249
Amortization expense		-		84		84
Non-interest expense		23,836		4,288		28,124
Income before income taxes		11,002		1,487		12,489
Income tax provision		2,430		572		3,002
Net income	$	8,572	$	915	$	9,487

	Nine months ended September 30, 2016
		Banking		Insurance Agency
		Activities		Activities		Total
		(in thousands)
Net interest income (expense)	$	25,943	$	(98)	$	25,845
Provision for loan losses		838		-		838
Net interest income (expense) after
provision for loan losses		25,105		(98)		25,007
Non-interest income		3,434		-		3,434
Insurance service and fees		332		4,843		5,175
Non-interest expense		22,439		3,519		25,958
Income before income taxes		6,432		1,226		7,658
Income tax provision		1,253		472		1,725
Net income	$	5,179	$	754	$	5,933

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:

	September 30,		December 31,
	2017		2016
	(in thousands)
Commitments to extend credit	$	230,790	$	217,581
Standby letters of credit		2,875		3,736
Total	$	233,665	$	221,317

34

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 nine months of 2017 or during 2016.

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 made a $1 million contribution to the defined benefit pension plan during the first nine months of 2017.

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 nine month periods ended September 30, 2017 and 2016:

		Three months ended September 30,
		(in thousands)
					Supplemental Executive
	Pension Benefits				Retirement Plan
	2017		2016		2017		2016
Service cost	$	-	$	-	$	42	$	47
Interest cost		55		55		35		36
Expected return on plan assets		(69)		(66)		-		-
Amortization of prior service cost		-		-		7		8
Amortization of the net loss		23		22		21		34
Net periodic cost (benefit)	$	9	$	11	$	105	$	125

35

		Nine months ended September 30,
		(in thousands)
					Supplemental Executive
	Pension Benefits				Retirement Plan
	2017		2016		2017		2016
Service cost	$	-	$	-	$	126	$	141
Interest cost		163		165		103		108
Expected return on plan assets		(206)		(197)		-		-
Amortization of prior service cost		-		-		23		24
Amortization of the net loss		69		66		61		102
Net periodic cost (benefit)	$	26	$	34	$	313	$	375

10.  INCOME TAXES

In 2017, the Company recognized the impact of its investments in partnerships that incurred expenses related to the rehabilitation of certified historic structures located in New York State after the historic structures were placed in service.  At the time a historic structure is placed in service, the Bank is eligible for a federal and New York State tax credit.  The Company’s accounting policies related to these investments and the resulting tax credits is detailed in Note 1 to the audited Consolidated Financial Statements on Form 10-K for the year ended December 31, 2016.

The following table presents the impact to the results of operations for the three and nine month periods ended September 30, 2017 and 2016:

		Three months ended September 30,			Nine months ended September 30,
		(in thousands)				(in thousands)
	2017		2016		2017		2016
Loss on tax credit investment	$	(1,338)	$	-	$	(2,257)	$	(2,139)
Refundable state historic tax credit		972		-		1,619		1,508
Income tax benefit		660		380		896		757
Total HTC income	$	294	$	380	$	258	$	126

11.  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 modifies the guidance used to recognize revenue from contracts with customers for transfers of goods or services and transfers of nonfinancial assets, unless those contracts are within the scope of other guidance. The ASU also requires new qualitative and quantitative disclosures, including disaggregation of revenues and descriptions of performance obligations.  The Company will adopt the guidance in the first quarter of 2018 using the modified retrospective method with a cumulative-effect adjustment to opening retained earnings. Because the guidance does not apply to revenue associated with financial instruments, including loans and securities that are accounted for under other U.S. GAAP, the new revenue recognition standard does not have a material impact on the Company’s consolidated financial statements. The Company’s implementation efforts include the identification of revenue within the scope of the

36

guidance, as well as the evaluation of revenue contracts. While we have not identified any material changes related to the timing or amount of revenue recognition, management will continue to evaluate disaggregation for significant categories of revenue in the scope of the guidance.

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 Consolidated Financial Statements included in Item 8 of the Annual Report on Form 10-K for the year ended December 31, 2016.  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.  The standard was adopted effective January 1, 2017.  One part of this ASU that impacted the Company was the elimination of the concept of a tax windfall pool.  Previously, an entity determined for each award whether the difference between the deduction for tax purposes and the compensation cost recognized for financial reporting purposes resulted in either an excess benefit or a tax deficiency.  Excess tax benefits were recognized in additional paid-in-capital; tax deficiencies were recognized either as an offset to accumulated excess tax benefits, if any, or in the income statement.  Excess tax benefits were not recognized until the deduction reduced taxes payable.  Under the new standard, all excess tax benefits and tax deficiencies are recognized as income tax expense or benefit in the income statement in the period in which they are incurred.  The impact was a tax benefit of $0.1 million and $0.3 million for the three and nine month periods ended September 30, 2017, respectively.

In addition, the Company made the accounting policy election effective January 1, 2017 to account for forfeitures of stock awards when they occur rather than estimating the number of awards that are expected to vest.  When stock awards are granted, the Company assumes that the service condition will be achieved when determining the initial amount of compensation cost recognized.  The Company does not expect this election to have a material impact on its financial statements.

ASU 2016-13, Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments.  Current GAAP requires 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 FASB expects that an entity will be able to leverage its current systems and methods for 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.  A challenge for the Company could be the operational impact.  Costly new systems and processes 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 date of January 1, 2020.

ASU 2017-04, Simplifying the Test for Goodwill Impairment.  The objective of this ASU is to simplify how an entity is required to test goodwill impairment by eliminating Step 2 from the goodwill impairment test.  Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill.  Under the amendments in

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this ASU, an entity will perform its annual goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount.  An entity would recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value.  The amendments in this ASU are effective for annual reporting periods beginning after December 15, 2019, including interim periods within those fiscal years.  The Company does not expect the standard to have a material impact on the Company’s financial reporting.

ASU 2017-08, Premium Amortization on Purchased Callable Debt Securities.  The objective of this ASU is to amend the amortization period for certain purchased callable debt securities held at a premium.  The FASB is shortening the amortization period for the premium to the earliest call date.  Under current GAAP, entities generally amortize the premium as an adjustment of yield over the contractual life of the investment.  Current GAAP excludes certain callable debt securities from consideration of early repayment of principal even if the holder is certain that the call will be exercised.  As a result, upon the exercise of a call on a callable debt security held at a premium, the unamortized premium is recorded as a loss in earnings.  The amendments do no not require an accounting change for securities held at a discount; the discount continues to be amortized to maturity.  The amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018.  The Company does hold callable debt securities that were purchased at a premium and is currently evaluating the impact of the standard on its financial reporting.

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; loan losses in excess of the Company’s allowance for loan losses; 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; the impact of such changes in accounting pronouncements and practices being greater than anticipated; the ability to realize the benefit of deferred tax assets; 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, 2016.  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, except to the extent required by law.

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. 

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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, 2016.  These policies, along with the disclosures presented in the other Notes to the Company's Audited Consolidated Financial Statements contained in its Annual Report on Form 10-K and in this financial review, provide information on how significant assets and liabilities are presented in the Company’s Unaudited Consolidated Financial Statements and how those values are determined.

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

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, 2016 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 carrying value.  There were no triggering events in the nine month period ended September 30, 2017 that resulted in an interim impairment test.

ANALYSIS OF FINANCIAL CONDITION

Loan Activity

Total loans grew to $998 million at September 30, 2017, a $22 million or 2% increase from total loans of $976 million at June 30, 2017 and a $55 million or 6% increase from $943 million at December 31, 2016.

Loans secured by real estate were $788 million at September 30, 2017, reflecting a $22 million or 3% increase from $766 million at June 30, 2017 and a $45 million or 6% increase from $743 million at December 31, 2016.  Commercial and multi-family real estate loans were $493 million at September 30, 2017, $16 million higher than the $477 million balance at the end of the second quarter of 2017 and $30 million higher than the balance of $462 million at the end of 2016.  Commercial real estate is the largest part of the Company’s loan portfolio and has historically been the highest growth segment of the portfolio.  The market for commercial real estate in the Company’s footprint in Western New York has been strong over the past two years.  The demand, along with the Company’s dedicated resources and proficiencyin commercial real estate lending, led to strong growth at an annualized rate of 13% in the third quarter of 2017.

In the third quarter of 2017, residential mortgage originations were $12 million compared with the previous quarter’s originations of $6 million and $10 million in last year’s third quarter.  Residential mortgages sold in the third quarter of 2017 equated to approximately 38% of the residential mortgages originated by the Company during this quarter, as compared with 39% of residential mortgages originated during the second quarter of 2017 and 17% in the third quarter of 2016.  The Company originated $29 million in residential mortgages in the first nine months of 2017 and sold 34% of those loans, compared with $25 million and 20%, respectively, in the first

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nine months of 2016.  Management decides to keep or sell residential mortgage loans at the time of origination based on interest rate risk management and the risk-adjusted return of alternative investment sources such as mortgage-backed securities.

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 was $207 million at September 30, 2017, representing a $1 million decrease from $208 million at June 30, 2017, but $10 million or 5% higher than the $197 million balance at December 31, 2016.  Commercial loan demand rebounded in the second and third quarter after weaker commercial loan demand in late fourth quarter of 2016 and early first quarter of 2017.  C&I loan growth has been impacted by the Company’s concerted effort to exit leveraged syndicated national credits (“SNC”).  A $9 million leveraged SNC loan was sold in the second quarter and the Company chose not to participate in the renewal of another $11 million leveraged SNC loan in the third quarter of 2017 resulting in an early payoff of the balance.  The Company has $12 million remaining in its leveraged SNC portfolio as of September 30, 2017.  While the Company is not actively marketing these remaining loans, it does not plan to originate any new loans in the leveraged SNC portfolio in the foreseeable future.

Credit Quality of Loan Portfolio

Total non-performing loans, defined as accruing loans greater than 90 days past due and nonaccrual loans, totaled $13 million, or 1.34% of total loans outstanding at September 30, 2017, compared with $14 million, or 1.42% of total loans outstanding, as of June 30, 2017 and $12 million, or 1.28% of total loans outstanding, as of December 31, 2016.  The $1 million decrease in non-performing loans since June 30, 2017 reflects the extension of a matured loan that was 90 days past due as of the end of the second quarter.  That particular loan has paid as agreed since the extension and is therefore considered a performing loan as of September 30, 2017.

Troubled debt restructurings (“TDRs”) increased from $5 million at December 31, 2016 and $9 million at June 30, 2017 to $13 million at September 30, 2017.  The increase in the first six months of the year is attributable to a single commercial real estate loan of $5 million that matured in the first quarter and was subsequently extended.  While the borrower was considered by management to be financially troubled due to a high loan to collateral value ratio, the Company expects the borrower to pay the principal and interest of the restructured terms as contracted, and, therefore, the loan remains in accruing status.  The increase in the third quarter is due to a $4 million non-accruing commercial construction loan that was restructured during the quarter with new terms including a new maturity date, amortization, payments, and rate.  At the time of restructuring, there was a $0.7 million paydown and a $0.1 million charge-off.

Commercial credits graded as “special mention” and “substandard,” or the criticized loan portfolio, were $38 million at September 30, 2017, a $1 million decrease from $39 million at June 30, 2017, but approximately unchanged from the $38 million in criticized loans at December 31, 2016.  The level of criticized loans can fluctuate as new information is constantly received on the Company’s borrowers and their financial circumstances change over time.  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 Company maintains an allowance for loan losses that in management’s judgment appropriately reflects losses inherent in the loan portfolio.  The allowance for loan losses totaled $14.2 million or 1.42% of total loans outstanding at September 30, 2017, compared with $14.2 million or 1.45% of total loans outstanding as of June 30, 2017 and $13.9 million or 1.48% of total loans outstanding at December 31, 2016.  The Company recorded $0.2 million in provision for loan losses in the third quarter of 2017, compared with $0.4 million during the 2017 second quarter and $1.0 million in last year’s third quarter.  The fluctuation in provision for loan losses reflects the loan growth and criticized loan trends of the current quarter compared to the two comparative quarters.  The net charge-off (recovery) ratio for the third quarter of 2017 was 0.06% of average net loans, compared with a ratio of (0.08) % and 0.03% in the second quarter of 2017 and third quarter of 2016, respectively.

Investing Activities

Total securities increased to $153 million at September 30, 2017 from $143 million at June 30, 2017 and $97 million at December 31, 2016.  Interest-bearing deposits at other banks, which consist of overnight funds kept at correspondent banks and the Federal Reserve, were $1 million at September 30, 2017, compared with $2 million at June 30, 2017 and $1 million at December 31, 2016.  The Company has purchased investment securities to leverage the capital generated in the common equity issuance in the first quarter of 2017.  While management plans to leverage the capital with loan growth over the long term, investment securities have been purchased to generate more immediate returns.  Average investment securities and interest-bearing cash were 14% of average interest-earning assets in the third quarter of 2017, compared with 13% in the second quarter of 2017 and 11% in last year’s third quarter. 

The Company’s highest concentration in its securities portfolio was in available for sale U.S. government sponsored mortgage-backed securities at 59% of total investment securities at September 30, 2017, compared with 57% at June 30, 2017 and 49% at December 31, 2016.  The concentration in tax-advantaged debt securities issued by state and political subdivisions and U.S. government-sponsored agency bonds was 23% and 18%, respectively, of the total securities portfolio at September 30, 2017, compared with 24% and 19% at June 30, 2017 and 38% and 13% at December 31, 2016.

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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.  The total net unrealized loss position of the available-for-sale investment portfolio was $0.5 million at September 30, 2017, compared with $0.3 million at June 30, 2017 and $0.6 million at December 31, 2016. 

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 September 30, 2017 were $1.03 billion, a $13 million or 1% increase from $1.02billion at June 30, 2017 and a $92 million or 10% increase from $940 million at December 31, 2016.  The growth in the first nine months of 2017 reflected growth in savings deposits of $44 million, time deposits of $26 million, demand deposits of $14 million, and NOW deposits of $8 million.  All of the savings deposit growth is attributable to municipal deposits.  The Company hired a new director of government banking and has more aggressively pursued municipal deposits in 2017.  The Company’s most successful effort in attracting new retail deposits through the first nine months of 2017 has been in time deposits as customers have returned to maturity deposits with increases in short-term interest rates.  Due to the transactional nature of demand deposits, average balances are a useful metric to meaningfully measure sustained growth rates.  Average demand deposits were $214 million in the third quarter of 2017, a 4% increase from $205 million in the second quarter of 2017 and 14% higher than the $187 million average balance in the third quarter of 2016.  Of the Company’s $27 million inaverage demand deposit growth over the past twelve months, $19 millionwas in commercial accounts, $5 million in municipal accounts, and $3 million in retail consumer accounts.

The Company had $34 million in other borrowings at September 30, 2017, which consisted of a $10 million long-term advance with the FHLBNY scheduled to mature in 2020 and $24 million in overnight borrowings with the FHLBNY.  Other borrowings were $15 million at June 30, 2017 and $28 million at December 31, 2016.  The Company’s use of its overnight line of credit with FHLBNY varies depending on its ability to fund investment and loan growth with core deposits along with the line usage’s impact on interest rate risk.

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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 book value.  Yields are presented on a non-tax-equivalent basis.

	Three months ended September 30, 2017						Three months ended September 30, 2016
	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	$	970,988	$	11,659	4.76	%	$	875,999	$	9,620	4.37	%
Taxable securities		117,888		706	2.38	%		74,172		385	2.06	%
Tax-exempt securities		35,103		202	2.28	%		37,853		235	2.47	%
Interest bearing deposits at banks		1,713		7	1.62	%		1,162		1	0.34	%
Total interest-earning assets		1,125,692	$	12,574	4.43	%		989,186	$	10,241	4.12	%
Non interest-earning assets:
Cash and due from banks		13,683						13,802
Premises and equipment, net		10,892						11,557
Other assets		48,312						44,130
Total Assets	$	1,198,579					$	1,058,675
LIABILITIES & STOCKHOLDERS' EQUITY
Interest-bearing liabilities:
NOW	$	91,962	$	50	0.22	%	$	86,428	$	50	0.23	%
Savings		545,900		667	0.48	%		487,168		574	0.47	%
Time deposits		163,087		535	1.30	%		115,644		353	1.21	%
Other borrowed funds		30,347		111	1.45	%		44,577		94	0.84	%
Junior subordinated debentures		11,330		111	3.89	%		11,330		95	3.34	%
Securities sold U/A to repurchase		9,547		5	0.21	%		13,400		6	0.18	%
Total interest-bearing liabilities		852,173	$	1,479	0.69	%		758,547	$	1,172	0.61	%
Noninterest-bearing liabilities:
Demand deposits		214,228						187,201
Other		15,035						16,860
Total liabilities	$	1,081,436					$	962,608
Stockholders' equity		117,143						96,067
Total Liabilities and Equity	$	1,198,579					$	1,058,675
Net interest earnings			$	11,095					$	9,069
Net interest margin					3.91	%					3.65	%
Interest rate spread					3.74	%					3.51	%

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	Nine months ended September 30, 2017						Nine months ended September 30, 2016
	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	$	945,828	$	32,551	4.60	%	$	816,712	$	27,228	4.45	%
Taxable securities		93,848		1,705	2.43	%		71,941		1,323	2.46	%
Tax-exempt securities		35,541		636	2.39	%		38,314		695	2.42	%
Interest bearing deposits at banks		8,152		62	1.02	%		11,949		45	0.50	%
Total interest-earning assets		1,083,369	$	34,954	4.31	%		938,916	$	29,291	4.17	%
Non interest-earning assets:
Cash and due from banks		13,326						12,852
Premises and equipment, net		11,048						11,321
Other assets		47,269						42,973
Total Assets	$	1,155,012					$	1,006,062
LIABILITIES & STOCKHOLDERS' EQUITY
Interest-bearing liabilities:
NOW	$	94,481	$	155	0.22	%	$	87,864	$	213	0.32	%
Regular savings		532,623		1,927	0.48	%		469,470		1,711	0.49	%
Time deposits		153,423		1,476	1.29	%		113,054		1,048	1.24	%
Other borrowed funds		18,764		208	1.48	%		21,988		182	1.11	%
Junior subordinated debentures		11,330		315	3.72	%		11,330		273	3.22	%
Securities sold U/A to repurchase		10,856		16	0.20	%		13,252		19	0.19	%
Total interest-bearing liabilities		821,477	$	4,097	0.67	%		716,958	$	3,446	0.64	%
Noninterest-bearing liabilities:
Demand deposits		205,380						180,472
Other		14,649						14,632
Total liabilities	$	1,041,506					$	912,062
Stockholders' equity		113,506						94,000
Total Liabilities and Equity	$	1,155,012					$	1,006,062
Net interest earnings			$	30,857					$	25,845
Net interest margin					3.81	%					3.68	%
Interest rate spread					3.64	%					3.53	%

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Net Income

Net income was $3.7 million, or $0.76 per diluted share, in the third quarter of 2017, compared with
$2.6 million, or $0.54 per diluted share, in the second quarter of 2017 and $2.2 million, or $0.51 per diluted share, in last year’s third quarter.  The increase over both prior periods primarily reflects higher net interest income and a lower provision for loan losses.  Return on average equity was 12.71% for the third quarter of 2017 compared with 9.13% in the second quarter and 9.23% in the third quarter of 2016.

The Company had net income of $9.5 million, or $1.96 per diluted share, in the first nine months of 2017, a 60% increase from $5.9 million, or $1.37 per diluted share, in the comparable period of 2016.  The increase reflected growth in net interest income and non-interest income and a reduction in the provision for loan losses.  Return on average equity improved from 8.42% in the first nine months of 2016 to 11.14% in the nine month period ended September 30, 2017.

Other Results of Operations – Quarterly Comparison

Net interest income increased $1.0 million, or 10%, from the second quarter of 2017 and $2.0 million, or 22%, from the prior-year third quarter to $11.1 million in the third quarter of 2017.  The increase was driven by average interest-earning asset growth, particularly loans, as well as a widening of the net interest margin.  Average commercial loans, including both commercial real estate and commercial and industrial loans, were $789 million in the 2017 third quarter, 3% higher than $763 million in the second quarter and 11% higher than $712 million in the 2016 third quarter.   

Net interest income benefited $0.4 million in the quarter from the payoff in full of two unrelated loans that were formerly in nonaccrual status.  At the time of the payoff, $0.4 million in interest payments previously received were recognized as income.  The benefit contributed 14 basis points toward the quarter’s net interest margin and 16 basis points toward the average loan yield during the quarter.

Third quarter net interest margin of 3.91% increased 17 basis points from the 2017 second quarter and 26 basis points from the third quarter of 2016.  Loan yields benefited from variable loan re-pricing due to an increase in the prime rate as the Federal Reserve increased its target rate by 75 basis points since late in 2016, including 25 basis points at its June 2017 meeting.  Funding costs increased during the quarter as the cost of interest-bearing liabilities was 0.69% in the third quarter of 2017 compared with 0.65% in the second quarter of 2017 and 0.61% in the third quarter of 2016.  Some of the increase in funding costs was due to an increase in time deposit rates given higher market rates and increased competition.With the Company and most competitors keeping savings rates flat due to the high cost of re-pricing large savings portfolios, the primary tool to gather consumer deposits is through time deposits.  Time deposit customers tend to be more rate sensitive so banks need to keep rates at competitive levels to attract new time deposits.  The average cost of time deposits was 1.30% in the third quarter of 2017, compared with 1.28% in the second quarter of 2017 and 1.21% in the third quarter of 2016.  When compared with the second quarter of 2017, the increase in the overall cost of interest-bearing liabilities was also a result of higher usage of wholesale borrowings, which increased from 4% of interest-bearing liabilities in the second quarter of 2017 to 6% in the third quarter of 2017.  When compared with last year’s third quarter, the increase in the rates paid on overnight borrowings contributed to the higher cost of interest-bearing liabilities in the third quarter of 2017.  The average rate paid on borrowings in the third quarter of 2017 was 1.76%, compared with 1.12% in last year’s third quarter, reflecting the increase in the federal funds rate.

The $0.2 million provision for loan losses for the third quarter of 2017 reflects the loan growth in the quarter, somewhat offset by a decrease in criticized loans and a decrease in specific reserves on impaired loans.  The 2017 third quarter provision for loan losses is lower than the $0.4 million recorded in the second quarter of 2017 and $1.0 million in the third quarter of 2016.  Both of the comparative periods experienced higher loan growth and an increase in criticized loans.

Non-interest income was $3.4 million in the third quarter of 2017, compared with $3.1 million in the second quarter of 2017 and $3.3 million in the prior year third quarter.  Each of the third quarter and second quarter of 2017 included the impact of a net reduction of noninterest income related to investments in historic rehabilitation tax credits.  There was no comparable transaction in the third quarter of 2016.

The Company’s community focus and support extends to financing historic rehabilitation projects in the City of Buffalo and the Company enhances its yield by investing in the related tax credits.  When a project is completed, the Company begins to recognize tax benefits with an associated reduction in the investment.  In the third quarter of 2017, the positive net impact to net income was $0.3 million as a $1.0 million refundable New York State tax credit was recorded in non-interest income and a corresponding $0.6 million tax benefit was realized in income tax expense, offset by a $1.3 million write-off on the investment.  The write-off was contemplated during the pricing of the initial investment in the tax credit project,which ensures that the Company earns its desired return on investment.  The Company will recognize an additional $0.2 million tax benefit from these projects in the fourth quarter of 2017 to complete the transaction.  The net impact to non-interest income in the third quarter of 2017 from investing in historic tax credits was a reduction of $0.4 million, compared with a reduction of $0.3 million in this year’s second quarter and no impact in the third quarter of 2016.

Insurance revenue increased $0.3 million from each of the second quarter of 2017 and last year’s third quarter to $2.2 million in the third quarter of 2017.  Part of the increase from the second quarter of 2017 is seasonal in nature as commercial lines revenue has a large number of policies that renew in July.  Employee benefits revenue, an important focus for the Company after hiring a couple industry

44

veterans, experienced significant growth in the quarter, particularly when compared with the prior year’s third quarter.  The year-over-year increase was also driven by continued growth in commercial lines insurance commissions and personal lines revenue bolstered by revenue from the two recent insurance agency acquisitions.

Non-interest expenses of $9.8 million in the third quarter of 2017 increased 13% from the prior-year period and 6% from the second quarter of 2017.  Salaries and benefits costs were $6.3 million in the third quarter of 2017, an increase of 5% from the second quarter of 2017 and 17% from last year’s third quarter.  The increase in salaries and benefits reflects strategic personnel hires to support the Company’s continued growth, as well as an increase in incentive compensation, benefits costs, and severance expenses.

Technology and communications expenses were $0.7 million in the third quarter of 2017, an increase of $0.2 million from last year’s third quarter, but down from $0.8 million in the second quarter of 2017.  Technology expenses increased from the prior year period due to a new online banking platform that was implemented in the second quarter of 2017 and a new core banking system that was converted in 2016.  Although the new core system was implemented in the beginning of the second quarter of 2016, there were credits and rebates associated with the new contract that were applied in the third quarter of 2016. 

The Company’s efficiency ratio in the third quarter of 2017 improved to 66.2%, lower than the 68.9% in the second quarter of 2017 and 70.2% in last year’s third quarter.  The reduction reflects the Company’s significant net interest income growth.

Income tax expense was $0.7 million, or an effective tax rate of 16.6%, for the third quarter of 2017 compared with $0.9 million, or 24.8%, in the second quarter of 2017 and $0.5 million, or 17.5%, in last year’s third quarter.  The effective tax rate for each of the quarters reflects the benefit of the previously noted tax credit investment transactions.  Excluding the impact of the historic tax credits, the effective tax rates were 29.0%, 29.3%, and 31.7% in the third quarter of 2017, the second quarter of 2017, and the third quarter of 2016, respectively.

Other Results of Operations – Year-to-Date Comparison

Net interest income was $30.9 million for the first nine months of 2017, a $5.0 million or 19% increase from the first nine months of 2016. The increase in net interest income is attributable to a $144 million or 15% increase in average interest-earning assets and a 13 basis point increase in net interest margin. The increase in average interest-earning assets reflects average loan growth of $129 million or 16% to $946 million during the first nine months of 2017. Most of the growth was in commercial loans, including $76 million in average commercial real estate loans and $34 million in averageC&I loans.

The Company’s net interest margin increased 13 basis points from 3.68% in the first nine months of 2016 to 3.81% in the first nine months of 2017.  The yield on average interest-earning assets increased 14 basis points from 4.17% to 4.31%. Average loan yields increased 15 basis points from 4.45% to 4.60%. Loan yields have benefited from variable loan re-pricing due to increases in the prime rate related after the Federal Reserve raised its target rate by 75 basis points between December 2016 and September 30, 2017.  The cost of interest-bearing liabilities was 0.67% for the nine month period ended September 30, 2017, an increase of 3 basis points from the prior year period. Time deposit rates increased from 1.24% in the nine month period ended September 30, 2016 to 1.29% in the current year period.  Over the same periods, respectively, average other borrowings rates increased from 1.11% to 1.49% and junior subordinated debentures increased from 3.22% to 3.72%.  With the rise in short-term interest rates in 2017, competitive time deposit rates increased in the market and promotional pricing of time deposits resulted in the increase in the Company’s overall time deposit portfolio rate.  The other borrowings rate reflects the increase in the federal funds rate and the junior subordinated debentures increased rate reflects the higher 3 month LIBOR rate in 2017.  These rate increases were somewhat offset by a decrease in average NOW rates of 10 basis points and average savings deposit rates of 1 basis point.  Consumer NOW rates were reduced by the Bank in late 2016 while most savings deposit product rates were unchanged, with the slight decrease in the portfolio’s overall rate resulting from a higher concentration of lower-cost municipal savings deposits.

The Company recorded $0.1 million in provision for loan losses in the nine month period ended September 30, 2017, compared with a provision of $0.8 million in the first nine months of 2016. The lower provision in the first nine months of 2017 is attributable to a sustained period of low charge-offs impacting historical loss rates in the reserve calculation, net recoveries in the first nine months of 2017 of $0.1 million, and lower loan growth in the nine month period ended September 30, 2017.

Non-interest income for the first nine months of 2017 of $10.0 millionincreased $1.4 million from the prior year period. The increase was predominantly a result of increased insurance service and fee revenue.  Insurance service and fee revenue, the largest component of non-interest income, was $6.2 million for the nine month period ended September 30, 2017,  a21% increase from $5.2 million in the comparable period of the prior year. Several business linescontributed to the increase, including profit sharing, commercial lines property and casualty commissions, personal lines property and casualty commissions, claims services revenue, and employee benefits revenue.

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Total non-interest expense increased to $28.2 million in the first nine months of 2017, $2.2 million or 9% higher than the nine month period ended September 30, 2016. The increase was mostly attributable to an increase in salaries and employee benefits costs. Salaries and employee benefits costs were $18.1 million for the first nine months of 2017, a $1.7 million or 10% increase from $16.4 million in the prior year period. The year-over-year increase in salary and benefits expense reflects annual merit increases, personnel hires to support the Company’s growth strategy, and higher incentive compensation. Technology and communications expenses increased $0.5 million to $2.1 million for the first nine months of 2017, reflecting additional expense related to the Company’s conversion to a new online banking platform in the second quarter of 2017 and a new core banking system in 2016.

The Company’s efficiency ratio for the first nine months of 2017 was 67.8%, compared with 74.0% during the prior-year period. The improvement in the ratio reflects the increase in net interest income and non-interest income,  partially offset by the increase in non-interest expenses.

An income tax expense of $3.0 million was recorded for the nine month period ended September 30, 2017, compared with $1.7 million in the first nine months of 2016. The difference reflected the increase in taxable income in 2017 as well as the impact of historic tax credits.  A benefit of $0.9 million was recorded in the first nine months of 2017, compared with $0.8 million in the comparative period in 2016.  The effective tax rate for the first nine months of 2017 was 24.0%, compared with 22.5% in the comparable 2016 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 29.7%, compared with 31.0% in the first nine months of 2016.  The lower rate reflects the benefit from discrete tax deductions related to stock compensation in the nine month period ended September 30, 2017.  The change in accounting for stock compensation as it relates to taxable income is described in more detail in Note 11 to the Unaudited Consolidated Financial Statements for the period ended September 30, 2017.

CAPITAL

The Company consistently maintains regulatory capital ratios significantly above the federal “well capitalized” standard, including a  Tier 1 leverage ratio of 10.38% at September 30, 2017, compared with 10.57% at June 30, 2017 and 9.49%  at December 31, 2016.  The increase from the end of 2016 reflects the impact of the Company’s registered common stock offering in January 2017 which netted $14 million in additional capital after expenses.  The Company issued 440,000 shares of common stock at $35.00 per share (including shares issued upon partial exercise of the underwriters’ allotment option in connection with the offering).  The offering was accretive to book value per share.  Book value per share increased to $24.60 at September 30, 2017, compared with $24.21 at June 30, 2017, and $22.50 at December 31, 2016.

On August 15, 2017, the Company declared a semi-annual cash dividend of $0.40 per share on the Company’s outstanding common stock. The dividend was paid on October 3, 2017 to shareholders of record as of September 12, 2017.  Earlier in the year, a $0.40 dividend was declared in February 2017 and paid in  April 2017.

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.  The Company uses the Federal Home Loan Bank of New York (“FHLBNY”) as its primary source of overnight funds and also has one long-term advance with FHLBNY.  The Company had $34 million in borrowed funds at FHLBNY at September 30, 2017, compared with  $15 million and $28 million at June 30, 2017 and December 31, 2016, 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 FHLB, the Bank is able to borrow funds at competitive rates.  Advances of up to $180 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 $18 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.

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 September 30, 2017, approximately 5% of the Bank’s securities had contractual maturity dates of one year or less and approximately 22% had maturity dates of five years or less.  Additionally, mortgage-backed securities, which comprise 59% of the investment portfolio at September 30, 2017, provide consistent cash flows for the Bank.

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The Company’s primary source of liquidity is dividends from the Bank.  Additionally, the Company has access to capital markets as a funding source.

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.  In the Company’s internal stress test at September 30, 2017, the Company had net short-term liquidity of $194 million as compared with $248 million at December 31, 2016.  Available assets of $154 million, divided by public and purchased funds of $239 million, resulted in a long-term liquidity ratio of 64% at September 30, 2017, compared with 58% at December 31, 2016.

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)
		September 30, 2017		December 31, 2016
Changes in interest rates
+200 basis points	$	1,953	$	1,838
+100 basis points		2,801		2,590
-100 basis points		(3,664)		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 may be limited to lesser amounts such that interest rates are not less than zero. The Company included the 100 basis point reduction scenario results in the preceding table as of September 30, 2017 as this scenario offers more meaningful results now that the Federal Reserve has increased the federal funds rate 75 basis points between December 31, 2016 and September 30, 2017.  The projected negative impact to net interest income in this scenario reflects the Company’s asset sensitive position on its balance sheet.  The assumptions in the Company’s projections 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 September 30, 2017 (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 September 30, 2017 the Company’s disclosure controls and procedures were effective.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

No changes in the Company’s internal control over financial reporting were identified in connection with the evaluation required by paragraph (d) of Rule 13a-15 or Rule 15d-15 under the Exchange Act that occurred during the fiscal quarter ended September 30, 2017 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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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 the third quarter of 2017, the Company purchased shares of its common stock as follows:

Issuer Purchases of Equity Securities

Period	Total Number of Shares Purchased (1)		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2)	Maximum Number of Shares that may yet be Purchased Under the Plans or Programs
July 2017:
July 1, 2017 - July 31, 2017		498	$	41.95	-	5,994
August 2017:
August 1, 2017 - August 31, 2017		341	$	40.95	-	5,994
September 2017:
September 1, 2017 - September 30, 2017		-	$	-	-	5,994
Total:		839	$	41.54	-	5,994

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

(2) On March 25, 2013, the Board of Directors authorized the Company to repurchase up to 100,000 shares of the Company’s common stock.  The repurchase program has no fixed expiration date but may be suspended or discontinued at any time.  The maximum number of shares that may be purchased under this program as of September 30, 2017 was 5,994.

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.

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	EXHIBIT INDEX
Exhibit No.	Name
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 September 30, 2017, formatted in XBRL (eXtensible Business Reporting Language): (i) Unaudited Consolidated Balance Sheets – September 30, 2017 and December 31, 2016; (ii) Unaudited Consolidated Statements of Income – Three months ended September 30, 2017 and 2016; (iii) Unaudited Consolidated Statements of Income – Nine months ended September 30, 2017 and 2016; (iv) Unaudited Statements of Consolidated Comprehensive Income – Three months ended September 30, 2017 and 2016; (v) Unaudited Statements of Consolidated Comprehensive Income – Nine months ended September 30, 2017 and 2016; (vi) Unaudited Consolidated Statements of Stockholders' Equity – Nine months ended September 30, 2017 and 2016; (vii) Unaudited Consolidated Statements of Cash Flows – Nine months ended September 30, 2017 and 2016; and (vii) Notes to Unaudited Consolidated Financial Statements.

50

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

November 2, 2017

/s/ David J. Nasca

David J. Nasca

President and CEO

(Principal Executive Officer)

DATE

November 2, 2017

/s/ John B. Connerton

John B.  Connerton

Treasurer

(Principal Financial Officer)

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: November 2, 2017

/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: November 2, 2017

/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 September 30, 2017 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: November 2, 2017

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 September 30, 2017 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: November 2, 2017

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

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Document And Entity Information - shares	9 Months Ended
	Sep. 30, 2017	Oct. 30, 2017
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	Q3
Document Period End Date	Sep. 30, 2017
Document Fiscal Year Focus	2017
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding		4,779,262

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Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
ASSETS
Cash and due from banks	$ 16,790	$ 12,503
Interest-bearing deposits at banks	1,265	581
Securities:
Available for sale, at fair value (amortized cost: $148,771 at September 30, 2017; $95,810 at December 31, 2016)	148,300	95,222
Held to maturity, at amortized cost (fair value: $4,472 at September 30, 2017; $1,959 at December 31, 2016)	4,487	1,983
Federal Home Loan Bank common stock, at cost	2,404	2,185
Federal Reserve Bank common stock, at cost	1,908	1,546
Loans, net of allowance for loan losses of $14,182 at September 30, 2017 and $13,916 at December 31, 2016	983,823	928,596
Properties and equipment, net of accumulated depreciation of $17,952 at September 30, 2017 and $17,012 at December 31, 2016	10,742	11,310
Goodwill and intangible assets	8,581	8,406
Bank-owned life insurance	23,233	21,534
Other assets	18,621	16,843
TOTAL ASSETS	1,220,154	1,100,709
Deposits:
Demand	216,250	201,741
NOW	96,741	88,632
Savings	552,559	508,652
Time	166,769	140,949
Total deposits	1,032,319	939,974
Securities sold under agreement to repurchase	9,380	10,159
Other borrowings	33,600	28,200
Other liabilities	16,033	14,298
Junior subordinated debentures	11,330	11,330
Total liabilities	1,102,662	1,003,961
CONTINGENT LIABILITIES AND COMMITMENTS
STOCKHOLDERS' EQUITY:
Common stock, $.50 par value, 10,000,000 shares authorized; 4,776,763 and 4,302,504 shares issued at September 30, 2017 and December 31, 2016, respectively, and 4,776,360 and 4,300,634 outstanding at September 30, 2017 and December 31, 2016, respectively	2,391	2,153
Capital surplus	59,017	44,389
Treasury stock, at cost, 403 and 1,870 shares at September 30, 2017 and December 31, 2016, respectively
Retained earnings	58,304	52,630
Accumulated other comprehensive loss, net of tax	(2,220)	(2,424)
Total stockholders' equity	117,492	96,748
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 1,220,154	$ 1,100,709

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Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Securities:
Available for sale, amortized cost	$ 148,771	$ 95,810
Held to maturity, fair value	4,472	1,959
Loans, allowance for loan losses	14,182	13,916
Properties and equipment, accumulated depreciation	$ 17,952	$ 17,012
STOCKHOLDERS' EQUITY:
Common stock, par value	$ 0.50	$ 0.50
Common stock, shares authorized	10,000,000	10,000,000
Common stock, shares issued	4,776,763	4,302,504
Common stock, shares outstanding	4,776,360	4,300,634
Treasury stock, shares	403	1,870

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Consolidated Statements Of Income - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
INTEREST INCOME
Loans	$ 11,659	$ 9,620	$ 32,551	$ 27,228
Interest-bearing deposits at banks	7	1	62	45
Securities:
Taxable	706	385	1,705	1,323
Non-taxable	202	235	636	695
Total interest income	12,574	10,241	34,954	29,291
INTEREST EXPENSE
Deposits	1,252	977	3,558	2,972
Other borrowings	116	100	224	201
Junior subordinated debentures	111	95	315	273
Total interest expense	1,479	1,172	4,097	3,446
NET INTEREST INCOME	11,095	9,069	30,857	25,845
PROVISION FOR LOAN LOSSES	161	1,006	136	838
NET INTEREST INCOME (EXPENSE) AFTER PROVISION FOR LOAN LOSSES	10,934	8,063	30,721	25,007
NON-INTEREST INCOME
Deposit service charges	448	475	1,266	1,321
Insurance service and fees	2,169	1,855	6,249	5,175
Gain on loans sold	61	35	131	79
Bank-owned life insurance	128	144	400	421
Loss on tax credit investments	(1,338)		(2,257)	(2,139)
Refundable state historic tax credit	972		1,619	1,508
Interchange fee income	379	319	1,102	977
Other	546	507	1,466	1,267
Total non-interest income	3,365	3,335	9,976	8,609
NON-INTEREST EXPENSE
Salaries and employee benefits	6,343	5,402	18,089	16,383
Occupancy	805	732	2,355	2,171
Advertising and public relations	311	232	717	707
Professional services	514	535	1,666	1,771
Technology and communications	730	504	2,141	1,653
Amortization of intangibles	28		84
FDIC insurance	195	201	551	542
Other	910	1,105	2,605	2,731
Total non-interest expense	9,836	8,711	28,208	25,958
INCOME BEFORE INCOME TAXES	4,463	2,687	12,489	7,658
INCOME TAX PROVISION	740	471	3,002	1,725
NET INCOME	$ 3,723	$ 2,216	$ 9,487	$ 5,933
Net income per common share-basic	$ 0.78	$ 0.52	$ 2.01	$ 1.39
Net income per common share-diluted	0.76	0.51	1.96	1.37
Cash dividends per common share	$ 0.40	$ 0.38	$ 0.80	$ 0.76
Weighted average number of common shares outstanding	4,774,602	4,287,124	4,724,774	4,278,171
Weighted average number of diluted shares outstanding	4,896,967	4,362,479	4,845,664	4,345,307

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Statements Of Consolidated Comprehensive Income - USD ($) $ in Thousands	3 Months Ended				9 Months Ended
	Sep. 30, 2017		Sep. 30, 2016		Sep. 30, 2017		Sep. 30, 2016
Statements Of Consolidated Comprehensive Income [Abstract]
NET INCOME	$ 3,723		$ 2,216		$ 9,487		$ 5,933
OTHER COMPREHENSIVE INCOME, NET OF TAX:
Unrealized gain (loss) on available-for-sale securities	(112)		(376)		78		533
Defined benefit pension plans:
Amortization of prior service cost	4	[1]	5	[1]	19	[2]	15	[2]
Amortization of actuarial loss	28	[1]	35	[1]	107	[2]	105	[2]
Net change, Net-of-Tax Amount	32		40		126		120
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX	(80)		(336)		204		653
COMPREHENSIVE INCOME	$ 3,643		$ 1,880		$ 9,691		$ 6,586

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

[2] 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, 2015	$ 2,132	$ 43,318	$ 47,616	$ (1,810)		$ 91,256
Net Income			5,933			5,933
Other comprehensive income				653		653
Cash dividends			(3,255)			(3,255)
Stock compensation expense		421				421
Excess tax benefit from stock-based compensation		22				22
Issued restricted shares	10	(10)
Issued shares under Dividend Reinvestment Plan	3	129				132
Issued shares in Employee Stock Purchase Plan	2	106				108
Issued shares in stock option exercises		8				8
Repurchased shares in treasury stock					$ (80)	(80)
Reissued restricted shares, net of forfeitures		(5)			5
Reissued shares in stock option exercises		(6)			6
Balance at Sep. 30, 2016	2,147	43,983	50,294	(1,157)	(69)	95,198
Balance at Dec. 31, 2016	2,153	44,389	52,630	(2,424)		96,748
Net Income			9,487			9,487
Other comprehensive income				204		204
Cash dividends			(3,813)			(3,813)
Stock compensation expense		462				462
Issued shares in stock offering	220	13,922				14,142
Issued restricted shares	9	(9)
Issued shares under Dividend Reinvestment Plan	2	124				126
Issued shares in Employee Stock Purchase Plan	2	124				126
Issued shares in stock option exercises	5	140				145
Repurchased shares in treasury stock					(342)	(342)
Reissued shares in stock option exercises		(135)			$ 342	207
Balance at Sep. 30, 2017	$ 2,391	$ 59,017	$ 58,304	$ (2,220)		$ 117,492

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Consolidated Statements Of Changes In Stockholders’ Equity (Parenthetical) - $ / shares	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Consolidated Statements Of Changes In Stockholders’ Equity [Abstract]
Cash dividends per common share	$ 0.80	$ 0.76
Issued shares in stock offering	440,000
Repurchased shares in treasury stock	9,218	3,280
Issued restricted shares	13,936	19,093
Reissued restricted shares	741
Issued shares under Dividend Reinvestment Plan	3,253	5,270
Issued shares in Employee Stock Purchase Plan	3,713	5,166
Issued shares in stock option exercises	10,001	490
Reissued shares in stock option exercises	13,300	267
Reissued restricted shares, net of forfeitures		3,215

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Consolidated Statements Of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
OPERATING ACTIVITIES:
Interest received	$ 34,568	$ 28,952
Fees received	10,095	8,648
Interest paid	(4,062)	(3,419)
Cash paid to employees and vendors	(27,256)	(24,467)
Cash contributed to pension plan	(1,000)	(140)
Income taxes paid	(1,733)	(974)
Proceeds from sale of loans held for resale	9,793	5,300
Originations of loans held for resale	(9,483)	(7,227)
Net cash provided by operating activities	10,922	6,673
INVESTING ACTIVITIES:
Purchases of available for sale securities	(65,889)	(25,953)
Proceeds from maturities, calls, and payments of available for sale securities	12,041	18,425
Purchases of held to maturity securities	(3,355)	(194)
Proceeds from maturities, calls, and payments of held to maturity securities	851	337
Cash paid for bank owned life insurance	(1,300)
Additions to properties and equipment	(358)	(1,329)
Purchase of tax credit investment	(2,380)	(703)
Insurance agency acquisitions	(275)
Net increase in loans	(54,724)	(136,160)
Net cash used in investing activities	(115,389)	(145,577)
FINANCING ACTIVITIES:
Proceeds from short-term borrowings, net	4,621	41,985
Net increase in deposits	92,345	94,983
Dividends paid	(1,902)	(1,626)
Repurchase of treasury stock	(342)	(80)
Issuance of common stock	14,509	248
Reissuance of treasury stock	207
Net cash provided by financing activities	109,438	135,510
Net increase (decrease) in cash and cash equivalents	4,971	(3,394)
CASH AND CASH EQUIVALENTS:
Beginning of period	13,084	22,621
End of period	18,055	19,227
RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES:
Net income	9,487	5,933
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	1,333	1,079
Deferred tax expense (benefit)	830	(211)
Provision for loan losses	136	838
Loss on tax credit investment	2,257	2,139
Refundable state historic tax credit	(1,619)	(1,508)
Gain on loans sold	(131)	(79)
Stock compensation expense	462	421
Proceeds from sale of loans held for resale	9,793	5,300
Originations of loans held for resale	(9,483)	(7,227)
Cash contributed to pension plan	(1,000)	(140)
Changes in assets and liabilities affecting cash flow:
Other assets	(1,944)	(1,784)
Other liabilities	801	1,912
NET CASH PROVIDED BY OPERATING ACTIVITIES	$ 10,922	$ 6,673

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Organization And Summary Of Significant Accounting Policies

9 Months Ended

Sep. 30, 2017

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 nine month periods ended September 30, 2017 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, 2016 (“10-K”).  The Company’s significant accounting policies are disclosed in Note 1 to the 10-K.

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Securities

9 Months Ended

Sep. 30, 2017

Securities [Abstract]

Securities

2. SECURITIES

The amortized cost of securities and their approximate fair value at September 30, 2017 and December 31, 2016 were as follows:

	September 30, 2017
	(in thousands)
	Amortized		Unrealized				Fair
	Cost		Gains		Losses		Value
Available for Sale:
Debt securities:
U.S. government agencies	$	28,461	$	64	$	(278)	$	28,247
States and political subdivisions		29,985		424		(21)		30,388
Total debt securities	$	58,446	$	488	$	(299)	$	58,635
Mortgage-backed securities:
FNMA	$	32,772	$	123	$	(230)	$	32,665
FHLMC		15,242		34		(116)		15,160
GNMA		2,176		25		(15)		2,186
SBA		10,310		24		(82)		10,252
CMO		29,825		50		(473)		29,402
Total mortgage-backed securities	$	90,325	$	256	$	(916)	$	89,665
Total securities designated as available for sale	$	148,771	$	744	$	(1,215)	$	148,300
Held to Maturity:
Debt securities
States and political subdivisions	$	4,487	$	6	$	(21)	$	4,472
Total securities designated as held to maturity	$	4,487	$	6	$	(21)	$	4,472

	December 31, 2016
	(in thousands)
	Amortized		Unrealized				Fair
	Cost		Gains		Losses		Value
Available for Sale:
Debt securities:
U.S. government agencies	$	12,958	$	67	$	(153)	$	12,872
States and political subdivisions		34,952		356		(166)		35,142
Total debt securities	$	47,910	$	423	$	(319)	$	48,014
Mortgage-backed securities:
FNMA	$	14,694	$	96	$	(230)	$	14,560
FHLMC		3,544		32		(51)		3,525
GNMA		2,535		19		(21)		2,533
CMO		27,127		67		(604)		26,590
Total mortgage-backed securities	$	47,900	$	214	$	(906)	$	47,208
Total securities designated as available for sale	$	95,810	$	637	$	(1,225)	$	95,222
Held to Maturity:
Debt securities
States and political subdivisions	$	1,983	$	5	$	(29)	$	1,959
Total securities designated as held to maturity	$	1,983	$	5	$	(29)	$	1,959

Available for sale securities with a total fair value of $129 million and $87 million at September 30, 2017 and December 31, 2016, respectively, were pledged as collateral to secure public deposits and for other purposes required or permitted by law.

The scheduled maturities of debt and mortgage-backed securities at September 30, 2017 and December 31, 2016 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.

	September 30, 2017				December 31, 2016
	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	$	4,557	$	4,579	$	2,869	$	2,876
Due after one year through five years		25,945		26,170		30,171		30,214
Due after five years through ten years		25,989		25,887		12,166		12,133
Due after ten years		1,955		1,999		2,704		2,791
		58,446		58,635		47,910		48,014
Mortgage-backed securities
available for sale		90,325		89,665		47,900		47,208
Total available for sale securities	$	148,771	$	148,300	$	95,810	$	95,222
Debt securities held to maturity:
Due in one year or less	$	3,392	$	3,388	$	780	$	778
Due after one year through five years		495		483		289		283
Due after five years through ten years		506		512		814		805
Due after ten years		94		89		100		93
		4,487		4,472		1,983		1,959
Total held to maturity securities	$	4,487	$	4,472	$	1,983	$	1,959

Contractual maturities of the Company’s mortgage-backed securities generally exceed ten years; however, the effective lives may be significantly shorter due to prepayments of the underlying loans and due to the nature of these securities.  The duration of the investment securities portfolio increased from 3.4 years at December 31, 2016 to 3.8 years at September 30, 2017.

Information regarding unrealized losses within the Company’s available for sale securities at September 30, 2017 and December 31, 2016 is summarized below.  The securities are primarily U.S. government-guaranteed agency securities or municipal securities. 

	September 30, 2017
		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	$	18,540	$	(278)	$	-	$	-	$	18,540	$	(278)
States and political subdivisions		2,470		(8)		1,645		(13)		4,115		(21)
Total debt securities	$	21,010	$	(286)	$	1,645	$	(13)	$	22,655	$	(299)
Mortgage-backed securities:
FNMA	$	18,130	$	(141)	$	4,079	$	(89)	$	22,209	$	(230)
FHLMC		10,281		(82)		1,039		(34)		11,320		(116)
GNMA		940		(14)		287		(1)		1,227		(15)
SBA		4,354		(82)		-		-		4,354		(82)
CMO		12,005		(116)		12,352		(357)		24,357		(473)
Total mortgage-backed securities	$	45,710	$	(435)	$	17,757	$	(481)	$	63,467	$	(916)
Held to Maturity:
Debt securities:
States and political subdivisions	$	3,471	$	(4)	$	561	$	(17)	$	4,032	$	(21)
Total temporarily impaired
securities	$	70,191	$	(725)	$	19,963	$	(511)	$	90,154	$	(1,236)

	December 31, 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	$	6,847	$	(153)	$	-	$	-	$	6,847	$	(153)
States and political subdivisions		16,895		(146)		731		(20)		17,626		(166)
Total debt securities	$	23,742	$	(299)	$	731	$	(20)	$	24,473	$	(319)
Mortgage-backed securities:
FNMA	$	9,577	$	(230)	$	-	$	-	$	9,577	$	(230)
FHLMC		1,728		(8)		988		(43)		2,716		(51)
GNMA		1,046		(17)		309		(4)		1,355		(21)
CMO		19,745		(569)		1,166		(35)		20,911		(604)
Total mortgage-backed securities	$	32,096	$	(824)	$	2,463	$	(82)	$	34,559	$	(906)
Held to Maturity:
Debt securities:
States and political subdivisions	$	863	$	(3)	$	706	$	(26)	$	1,569	$	(29)
Total temporarily impaired
securities	$	56,701	$	(1,126)	$	3,900	$	(128)	$	60,601	$	(1,254)

Management has assessed the securities available for sale in an unrealized loss position at September 30, 2017 and December 31, 2016 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 has not recorded any other-than-temporary impairment (“OTTI”) charges as of September 30, 2017 and did not record any OTTI charges during 2016.  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 stable past performance is not a guarantee for similar performance of the Company’s securities portfolio in future periods.

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Fair Value Measurement

9 Months Ended

Sep. 30, 2017

Fair Value Measurement [Abstract]

Fair Value Measurement

3.  FAIR VALUE MEASUREMENT

Fair value is defined in ASC Topic 820 “Fair Value Measurement” 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 measurement:

	Level 1 inputs are quoted prices for identical instruments in active markets;
	Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly; and
	Level 3 inputs are 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 September 30, 2017 and December 31, 2016, respectively:

(in thousands)		Level 1		Level 2		Level 3		Fair Value
September 30, 2017
Securities available-for-sale:
U.S. government agencies	$	-	$	28,247	$	-	$	28,247
States and political subdivisions		-		30,388		-		30,388
Mortgage-backed securities		-		89,665		-		89,665
Mortgage servicing rights		-		-		571		571
December 31, 2016
Securities available-for-sale:
U.S. government agencies	$	-	$	12,872	$	-	$	12,872
States and political subdivisions		-		35,142		-		35,142
Mortgage-backed securities		-		47,208		-		47,208
Mortgage servicing rights		-		-		527		527

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 nine month periods ended September 30, 2017 and 2016, respectively:

	Three months ended September 30,
(in thousands)	2017		2016
Mortgage servicing rights - July 1	$	555	$	466
Losses included in earnings		(25)		(22)
Additions from loan sales		41		15
Mortgage servicing rights - September 30	$	571	$	459

	Nine months ended September 30,
(in thousands)	2017		2016
Mortgage servicing rights - January 1	$	527	$	557
Losses included in earnings		(46)		(147)
Additions from loan sales		90		49
Mortgage servicing rights - September 30	$	571	$	459

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

	September 30, 2017		December 31, 2016
Servicing fees	0.25	%	0.25	%
Discount rate	9.52	%	9.52	%
Prepayment rate (CPR)	8.78	%	8.12	%

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 September 30, 2017 and December 31, 2016:

(in thousands)		Level 1		Level 2		Level 3		Fair Value
September 30, 2017
Collateral dependent impaired loans	$	-	$	-	$	18,639	$	18,639
December 31, 2016
Collateral dependent impaired loans	$	-	$	-	$	13,114	$	13,114

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.  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’s 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 $20.3 million, with an allowance for loan loss of $1.7 million, at September 30, 2017 compared with $15.1 million and $2.0 million, respectively, at December 31, 2016.

FAIR VALUE OF FINANCIAL INSTRUMENTS

At each of September 30, 2017 and December 31, 2016, 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:

	September 30, 2017				December 31, 2016
	Carrying		Fair		Carrying		Fair
	Amount		Value		Amount		Value
		(in thousands)				(in thousands)
Financial assets:
Level 1:
Cash and cash equivalents	$	18,055	$	18,055	$	13,084	$	13,084
Level 2:
Available for sale securities		148,300		148,300		95,222		95,222
FHLB and FRB stock		4,312		4,312		3,731		3,731
Level 3:
Held to maturity securities		4,487		4,472		1,983		1,959
Loans, net		983,823		977,975		928,596		945,998
Mortgage servicing rights		571		571		527		527
Financial liabilities:
Level 1:
Demand deposits	$	216,250	$	216,250	$	201,741	$	201,741
NOW deposits		96,741		96,741		88,632		88,632
Savings deposits		552,559		552,559		508,652		508,652
Level 2:
Securities sold under agreement to
repurchase		9,380		9,380		10,159		10,159
Other borrowed funds		33,600		33,558		28,200		28,152
Junior subordinated debentures		11,330		11,330		11,330		11,330
Level 3:
Time deposits		166,769		168,389		140,949		141,758

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 Federal Home Loan Bank (“FHLB”) and Federal Reserve Bank (“FRB”) stock, which are non-marketable equity investments, approximate fair value.

As a member of the FHLB System, the Bank is required to hold stock in FHLBNY.  The Company regularly evaluates investments in FHLBNY for impairment, considering liquidity, operating performance, capital position, stock repurchase and dividend history.  As of September 30, 2017, the Bank’s investment in FHLBNY stock was not impaired.

The Bank, as a member of the 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.  Based on the current capital adequacy and liquidity position of the FRB, management believes there is no impairment in the Company’s investment at September 30, 2017.

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 Receivable.  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, negotiable order of withdrawal (“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

9 Months Ended

Sep. 30, 2017

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:

	September 30, 2017		December 31, 2016
Mortgage loans on real estate:	(in thousands)
Residential mortgages	$	125,946	$	118,542
Commercial and multi-family		492,692		462,385
Construction-Residential		1,850		2,540
Construction-Commercial		100,446		93,240
Home equities		67,343		66,234
Total real estate loans		788,277		742,941
Commercial and industrial loans		207,110		197,371
Consumer and other loans		1,521		1,417
Net deferred loan origination costs		1,097		783
Total gross loans		998,005		942,512
Allowance for loan losses		(14,182)		(13,916)
Loans, net	$	983,823	$	928,596

The Bank sells certain fixed rate residential mortgages to FNMA while maintaining the servicing rights for those mortgages.  In the three month period ended September 30, 2017, the Bank sold mortgages to FNMA totaling $4.4 million, compared with $1.7 million in the three month period ended September 30, 2016.  During the nine month periods ended September 30, 2017 and 2016, the Bank sold $9.7 million and $5.2 million, respectively, to FNMA.  At September 30, 2017, the Bank had a loan servicing portfolio principal balance of $80 million upon which it earned servicing fees, compared with $76 million at December 31, 2016.  The value of the mortgage servicing rights for that portfolio was $0.6 million at September 30, 2017 and $0.5 million at December 31, 2016.  At September 30, 2017 there were $0.1 million in residential mortgages held for sale compared with $0.3 million at December 31, 2016.  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, 2016.  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, 2016.  Unless otherwise noted in this Form 10-Q, the policies and methodology described in the Annual Report for the year ended December 31, 2016 are consistent with those utilized by the Company in the three and nine month periods ended September 30, 2017.

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-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.  Unlike commercial customers, consumer loan customers are not required to provide the Company with updated financial information.  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:

September 30, 2017
(in thousands)
Corporate Credit Exposure – By Credit Rating	Commercial Real Estate Construction		Commercial and Multi-Family Mortgages		Total Commercial Real Estate		Commercial and Industrial
1-3	$	74,627	$	374,371	$	448,998	$	133,588
4		25,819		94,204		120,023		59,199
5		-		10,417		10,417		8,122
6		-		13,700		13,700		4,572
7		-		-		-		1,629
Total	$	100,446	$	492,692	$	593,138	$	207,110

December 31, 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
1-3	$	82,520	$	372,235	$	454,755	$	121,414
4		6,541		73,655		80,196		59,117
5		-		12,506		12,506		12,623
6		4,179		3,989		8,168		3,404
7		-		-		-		813
Total	$	93,240	$	462,385	$	555,625	$	197,371

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:

September 30, 2017
(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	$	3,491	$	912	$	2,012	$	6,415	$	200,695	$	207,110	$	1	$	2,363
Residential real estate:
Residential		829		105		825		1,759		124,187		125,946		-		1,146
Construction		-		-		-		-		1,850		1,850		-		-
Commercial real estate:
Commercial		168		2,301		1,488		3,957		488,735		492,692		-		8,788
Construction		6,929		452		-		7,381		93,065		100,446		-		-
Home equities		538		381		570		1,489		65,854		67,343		-		1,081
Consumer and other		7		12		10		29		1,492		1,521		-		10
Total Loans	$	11,962	$	4,163	$	4,905	$	21,030	$	975,878	$	996,908	$	1	$	13,388

Note: Loan balances do not include $1.1 million in net deferred loan origination costs as of September 30, 2017.

December 31, 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	$	6,772	$	2,966	$	1,150	$	10,888	$	186,483	$	197,371	$	-	$	3,106
Residential real estate:
Residential		868		123		567		1,558		116,984		118,542		-		862
Construction		-		-		-		-		2,540		2,540		-		-
Commercial real estate:
Commercial		6,319		1,522		2,357		10,198		452,187		462,385		483		1,874
Construction		257		-		4,417		4,674		88,566		93,240		239		4,178
Home equities		481		119		679		1,279		64,955		66,234		-		1,261
Consumer and other		15		10		5		30		1,387		1,417		-		17
Total Loans	$	14,712	$	4,740	$	9,175	$	28,627	$	913,102	$	941,729	$	722	$	11,298

Note: Loan balances do not include $783 thousand in net deferred loan origination costs as of December 31, 2016.

Allowance for loan losses

The following tables present the activity in the allowance for loan losses according to portfolio segment for the nine month periods ended September 30, 2017 and 2016:

September 30, 2017
(in thousands)	Commercial and Industrial		Commercial Real Estate Mortgages*		Consumer and Other		Residential Mortgages*		Home Equities		Total
Allowance for loan
losses:
Beginning balance	$	4,813	$	7,890	$	96	$	769	$	348	$	13,916
Charge-offs		(51)		(127)		(50)		-		(1)		(229)
Recoveries		335		-		22		-		2		359
Provision (Credit)		(74)		21		41		143		5		136
Ending balance	$	5,023	$	7,784	$	109	$	912	$	354	$	14,182
Allowance for loan
losses:
Ending balance:
Individually evaluated
for impairment	$	808	$	877	$	35	$	17	$	-	$	1,737
Collectively evaluated
for impairment		4,215		6,907		74		895		354		12,445
Total	$	5,023	$	7,784	$	109	$	912	$	354	$	14,182
Loans:
Ending balance:
Individually evaluated
for impairment	$	2,898	$	13,693	$	35	$	2,545	$	1,577	$	20,748
Collectively evaluated
for impairment		204,212		579,445		1,486		125,251		65,766		976,160
Total	$	207,110	$	593,138	$	1,521	$	127,796	$	67,343	$	996,908

* Includes construction loans

Note: Loan balances do not include $1.1 million in net deferred loan origination costs as of September 30, 2017.

September 30, 2016
(in thousands)	Commercial and Industrial		Commercial Real Estate Mortgages*		Consumer and Other		Residential Mortgages*		Home Equities		Total
Allowance for loan
losses:
Beginning balance	$	4,383	$	7,135	$	85	$	909	$	371	$	12,883
Charge-offs		(122)		-		(36)		-		-		(158)
Recoveries		78		59		11		-		1		149
Provision (Credit)		571		538		47		(322)		4		838
Ending balance	$	4,910	$	7,732	$	107	$	587	$	376	$	13,712
Allowance for loan
losses:
Ending balance:
Individually evaluated
for impairment	$	720	$	1,109	$	46	$	3	$	11	$	1,889
Collectively evaluated
for impairment		4,190		6,623		61		584		365		11,823
Total	$	4,910	$	7,732	$	107	$	587	$	376	$	13,712
Loans:
Ending balance:
Individually evaluated
for impairment	$	6,408	$	7,663	$	46	$	2,602	$	1,583	$	18,302
Collectively evaluated
for impairment		181,032		538,466		1,485		110,297		62,555		893,835
Total	$	187,440	$	546,129	$	1,531	$	112,899	$	64,138	$	912,137

* Includes construction loans

Note: Loan balances do not include $715 thousand in net deferred loan origination costs as of September 30, 2016.

The following tables present the activity in the allowance for loan losses according to portfolio segment for the three month periods ended September 30, 2017 and 2016:

September 30, 2017
($ in thousands)	Commercial and Industrial		Commercial Real Estate Mortgages*		Consumer and Other		Residential Mortgages*		Home Equities		Total
Allowance for loan
losses:
Beginning balance	$	4,970	$	7,899	$	104	$	832	$	373	$	14,178
Charge-offs		(18)		(127)		(17)		-		(1)		(163)
Recoveries		4		-		1		-		1		6
Provision (Credit)		67		12		21		80		(19)		161
Ending balance	$	5,023	$	7,784	$	109	$	912	$	354	$	14,182

September 30, 2016
($ in thousands)	Commercial and Industrial		Commercial Real Estate Mortgages*		Consumer and Other		Residential Mortgages*		Home Equities		Total
Allowance for loan
losses:
Beginning balance	$	4,195	$	7,308	$	101	$	763	$	406	$	12,773
Charge-offs		(89)		-		(13)		-		-		(102)
Recoveries		23		8		4		-		-		35
Provision (Credit)		781		416		15		(176)		(30)		1,006
Ending balance	$	4,910	$	7,732	$	107	$	587	$	376	$	13,712

*Includes construction loans

Impaired Loans

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

		At September 30, 2017
		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	$	751	$	876	$	-	$	822	$	33	$	6
Residential real estate:
Residential		2,447		2,607		-		2,472		33		63
Construction		-		-		-		-		-		-
Commercial real estate:
Commercial		1,968		2,086		-		2,078		98		15
Construction		197		197		-		226		-		11
Home equities		1,577		1,677		-		1,613		48		16
Consumer and other		-		-		-		-		-		-
Total impaired loans	$	6,940	$	7,443	$	-	$	7,211	$	212	$	111

		At September 30, 2017
		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	$	2,147	$	2,374	$	808	$	2,192	$	101	$	16
Residential real estate:
Residential		98		98		17		98		3		1
Construction		-		-		-		-		-		-
Commercial real estate:
Commercial		11,528		11,586		877		11,612		85		366
Construction		-		-		-		-		-		-
Home equities		-		-		-		-		-		-
Consumer and other		35		60		35		38		2		1
Total impaired loans	$	13,808	$	14,118	$	1,737	$	13,940	$	191	$	384

		At September 30, 2017
		Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Foregone		Interest Income Recognized
Total:		(in thousands)
Commercial and industrial	$	2,898	$	3,250	$	808	$	3,014	$	134	$	22
Residential real estate:
Residential		2,545		2,705		17		2,570		36		64
Construction		-		-		-		-		-		-
Commercial real estate:
Commercial		13,496		13,672		877		13,690		183		381
Construction		197		197		-		226		-		11
Home equities		1,577		1,677		-		1,613		48		16
Consumer and other		35		60		35		38		2		1
Total impaired loans	$	20,748	$	21,561	$	1,737	$	21,151	$	403	$	495

		At December 31, 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	$	1,304	$	1,604	$	-	$	1,455	$	125	$	51
Residential real estate:
Residential		2,513		2,720		-		2,542		39		78
Construction		-		-		-		-		-		-
Commercial real estate:
Commercial		2,123		2,168		-		2,181		33		89
Construction		257		257		-		404		2		28
Home equities		1,559		1,621		-		1,606		51		30
Consumer and other		-		-		-		-		-		-
Total impaired loans	$	7,756	$	8,370	$	-	$	8,188	$	250	$	276

		At December 31, 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	$	1,844	$	1,913	$	492	$	1,898	$	62	$	53
Residential real estate:
Residential		71		72		1		72		2		1
Construction		-		-		-		-		-		-
Commercial real estate:
Commercial		1,054		1,083		296		1,062		50		-
Construction		4,179		4,201		1,175		4,180		194		-
Home equities		194		206		20		195		9		1
Consumer and other		43		68		43		45		3		3
Total impaired loans	$	7,385	$	7,543	$	2,027	$	7,452	$	320	$	58

		At December 31, 2016
		Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Foregone		Interest Income Recognized
Total:		(in thousands)
Commercial and industrial	$	3,148	$	3,517	$	492	$	3,353	$	187	$	104
Residential real estate:
Residential		2,584		2,792		1		2,614		41		79
Construction		-		-		-		-		-		-
Commercial real estate:
Commercial		3,177		3,251		296		3,243		83		89
Construction		4,436		4,458		1,175		4,584		196		28
Home equities		1,753		1,827		20		1,801		60		31
Consumer and other		43		68		43		45		3		3
Total impaired loans	$	15,141	$	15,913	$	2,027	$	15,640	$	570	$	334

Troubled debt restructurings

The Company had $12.7 million and $5.1 million in loans that were restructured in a troubled debt restructuring (“TDR”) at September 30, 2017 and December 31, 2016, respectively.  Of those balances, $5.3 million and $1.2 million were in non-accrual status at September 30, 2017 and December 31, 2016, 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 interest 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 September 30, 2017, 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:

		September 30, 2017
		(in thousands)
		Total		Nonaccruing		Accruing		Related Allowance
Commercial and industrial	$	1,525	$	990	$	535	$	433
Residential real estate:
Residential		1,664		265		1,399		-
Construction		-		-		-		-
Commercial real estate:
Commercial and multi-family		8,623		3,915		4,708		368
Construction		197		-		197		-
Home equities		625		129		496		-
Consumer and other		25		-		25		25
Total troubled restructured loans	$	12,659	$	5,299	$	7,360	$	826

		December 31, 2016
		(in thousands)
		Total		Nonaccruing		Accruing		Related Allowance
Commercial and industrial	$	574	$	532	$	42	$	147
Residential real estate:
Residential		1,949		227		1,722		-
Construction		-		-		-		-
Commercial real estate:
Commercial and multi-family		1,617		313		1,304		-
Construction		257		-		257		-
Home equities		667		175		492		1
Consumer and other		26		-		26		26
Total troubled restructured loans	$	5,090	$	1,247	$	3,843	$	174

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 borrower time to improve cash flow or sell the property.  Other common concessions leading to the designation of a TDR are lines of credit that are termed-out and/or extensions of maturities at rates that are less than the prevailing market rates given the risk profile of the borrower.

The following tables show the data for TDR activity by the type of concession granted to the borrower for the three month and nine month periods ended September 30, 2017 and 2016:

	Three months ended September 30, 2017					Three months ended September 30, 2016
	(Recorded Investment in thousands)					(Recorded Investment 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	1	$	874	$	874	-	$	-	$	-
Residential Real Estate & Construction:
Extension of maturity	1		133		151	-		-		-
Extension of maturity and
interest rate reduction	-		-		-	1		109		109
Commercial Real Estate & Construction:
Combination of concessions	1		4,179		3,397	-		-		-
Home Equities	-		-		-	-		-		-
Consumer and other loans	-		-		-	-		-		-

	Nine months ended September 30, 2017					Nine months ended September 30, 2016
	(Recorded Investment in thousands)					(Recorded Investment 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	1	$	874	$	874	-	$	-	$	-
Extension of maturity	-		-		-	1		24		24
Term-out line of credit	1		180		180	1		20		20
Residential Real Estate & Construction:
Extension of maturity	1		133		151	1		95		95
Extension of maturity and
interest rate reduction	-		-		-	1		109		109
Commercial Real Estate & Construction:
Extension of maturity	3		5,073		5,073	-		-		-
Combination of concessions	1		4,179		3,397	-		-		-
Home Equities:
Extension of maturity and
interest rate reduction	1		20		20	-		-		-
Consumer and other loans	-		-		-	-		-		-

The general practice of the Bank is to work with borrowers so that they are able to repay 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.  There were no loans which were classified as TDRs during the previous 12 months which defaulted during each of the three month and nine month periods ended September 30, 2017 and 2016, respectively.

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Common Equity And Earnings Per Share Data

9 Months Ended

Sep. 30, 2017

Common Equity And Earnings Per Share Data [Abstract]

Common Equity And Earnings Per Share Data

5. COMMON EQUITY AND EARNINGS 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 nine month periods ended September 30, 2017, the Company had an average of 122,365 and 120,890 dilutive shares outstanding, respectively.  The Company had an average of 75,355 and 67,136 dilutive shares outstanding for the three and nine months periods ended September 30, 2016, respectively.

Potential common shares that would have the effect of increasing diluted earnings per share are considered to be anti-dilutive and not included in calculating diluted earnings per share. For the three month period ended September 30, 2017 there were no anti-dilutive shares outstanding. For the nine month period ended September 30, 2017, there was an average of 23,593 potentially anti-dilutive shares outstanding, that were not included in calculating diluted earnings per share because their effect was anti-dilutive.  For both the three and nine month periods ended September 30, 2016, there were no anti-dilutive shares outstanding.

The Company issued 440,000 shares of common stock at $35.00 per share (including shares issued upon partial exercise of the underwriters’ allotment option in connection with the offering) in a registered common stock offering in January 2017.  The offering netted $14 million in additional capital after expenses.

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Other Comprehensive Income

9 Months Ended

Sep. 30, 2017

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 nine month periods ended September 30, 2017 and 2016:

	Balance at June 30, 2017		Net Change		Balance at September 30, 2017
	(in thousands)
Net unrealized loss on investment securities	$	(175)	$	(112)	$	(287)
Net defined benefit pension plan adjustments		(1,965)		32		(1,933)
Total	$	(2,140)	$	(80)	$	(2,220)
	Balance at June 30, 2016		Net Change		Balance at September 30, 2016
	(in thousands)
Net unrealized gain (loss) on investment securities	$	1,384	$	(376)	$	1,008
Net defined benefit pension plan adjustments		(2,205)		40		(2,165)
Total	$	(821)	$	(336)	$	(1,157)

	Balance at December 31, 2016		Net Change		Balance at September 30, 2017
	(in thousands)
Net unrealized (loss) gain on investment securities	$	(365)	$	78	$	(287)
Net defined benefit pension plan adjustments		(2,059)		126		(1,933)
Total	$	(2,424)	$	204	$	(2,220)
	Balance at December 31, 2015		Net Change		Balance at September 30, 2016
	(in thousands)
Net unrealized gain on investment securities	$	475	$	533	$	1,008
Net defined benefit pension plan adjustments		(2,285)		120		(2,165)
Total	$	(1,810)	$	653	$	(1,157)

	Three months ended September 30, 2017						Three months ended September 30, 2016
	(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 loss on investment
securities:
Unrealized loss on investment
securities	$	(186)	$	74	$	(112)	$	(605)	$	229	$	(376)
Defined benefit pension plan
adjustments:
Reclassifications from accumulated other
comprehensive income for gains
Amortization of prior service cost (a)	$	7	$	(3)	$	4	$	8	$	(3)	$	5
Amortization of actuarial loss (a)		44		(16)		28		56		(21)		35
Net change		51		(19)		32		64		(24)		40
Other Comprehensive Income	$	(135)	$	55	$	(80)	$	(541)	$	205	$	(336)

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

	Nine months ended September 30, 2017						Nine months ended September 30, 2016
	(in thousands)						(in thousands)
	Before-Tax Amount		Income Tax (Provision) Benefit (b)		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	$	117	$	(39)	$	78	$	860	$	(327)	$	533
Defined benefit pension plan
adjustments:
Reclassifications from accumulated other
comprehensive income for gains
Amortization of prior service cost (a)	$	23	$	(4)	$	19	$	24	$	(9)	$	15
Amortization of actuarial loss (a)		130		(23)		107		168		(63)		105
Net change		153		(27)		126		192		(72)		120
Other Comprehensive Income	$	270	$	(66)	$	204	$	1,052	$	(399)	$	653

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

(b) Tax benefit includes impact of re-valuation of deferred tax asset due to increase in marginal federal income tax rate

from 34% to 35%.

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Segment Information

9 Months Ended

Sep. 30, 2017

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 nine month periods ended September 30, 2017 and 2016.

	Three months ended September 30, 2017
		Banking		Insurance Agency
		Activities		Activities		Total
		(in thousands)
Net interest income (expense)	$	11,120	$	(25)	$	11,095
Provision for loan losses		161		-		161
Net interest income (expense) after
provision for loan losses		10,959		(25)		10,934
Non-interest income		1,196		-		1,196
Insurance service and fees		108		2,061		2,169
Amortization expense		-		28		28
Non-interest expense		8,315		1,493		9,808
Income before income taxes		3,948		515		4,463
Income tax provision		542		198		740
Net income	$	3,406	$	317	$	3,723

	Three months ended September 30, 2016
		Banking		Insurance Agency
		Activities		Activities		Total
		(in thousands)
Net interest income (expense)	$	9,103	$	(34)	$	9,069
Provision for loan losses		1,006		-		1,006
Net interest income (expense) after
provision for loan losses		8,097		(34)		8,063
Non-interest income		1,480		-		1,480
Insurance service and fees		100		1,755		1,855
Non-interest expense		7,561		1,150		8,711
Income before income taxes		2,116		571		2,687
Income tax provision		251		220		471
Net income	$	1,865	$	351	$	2,216

	Nine months ended September 30, 2017
		Banking		Insurance Agency
		Activities		Activities		Total
		(in thousands)
Net interest income (expense)	$	30,934	$	(77)	$	30,857
Provision for loan losses		136		-		136
Net interest income (expense) after
provision for loan losses		30,798		(77)		30,721
Non-interest income		3,727		-		3,727
Insurance service and fees		313		5,936		6,249
Amortization expense		-		84		84
Non-interest expense		23,836		4,288		28,124
Income before income taxes		11,002		1,487		12,489
Income tax provision		2,430		572		3,002
Net income	$	8,572	$	915	$	9,487

	Nine months ended September 30, 2016
		Banking		Insurance Agency
		Activities		Activities		Total
		(in thousands)
Net interest income (expense)	$	25,943	$	(98)	$	25,845
Provision for loan losses		838		-		838
Net interest income (expense) after
provision for loan losses		25,105		(98)		25,007
Non-interest income		3,434		-		3,434
Insurance service and fees		332		4,843		5,175
Non-interest expense		22,439		3,519		25,958
Income before income taxes		6,432		1,226		7,658
Income tax provision		1,253		472		1,725
Net income	$	5,179	$	754	$	5,933

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Contingent Liabilities And Commitments

9 Months Ended

Sep. 30, 2017

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:

	September 30,		December 31,
	2017		2016
	(in thousands)
Commitments to extend credit	$	230,790	$	217,581
Standby letters of credit		2,875		3,736
Total	$	233,665	$	221,317

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 nine months of 2017 or during 2016.

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

9 Months Ended

Sep. 30, 2017

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 made a $1 million contribution to the defined benefit pension plan during the first nine months of 2017.

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 nine month periods ended September 30, 2017 and 2016:

		Three months ended September 30,
		(in thousands)
					Supplemental Executive
	Pension Benefits				Retirement Plan
	2017		2016		2017		2016
Service cost	$	-	$	-	$	42	$	47
Interest cost		55		55		35		36
Expected return on plan assets		(69)		(66)		-		-
Amortization of prior service cost		-		-		7		8
Amortization of the net loss		23		22		21		34
Net periodic cost (benefit)	$	9	$	11	$	105	$	125

		Nine months ended September 30,
		(in thousands)
					Supplemental Executive
	Pension Benefits				Retirement Plan
	2017		2016		2017		2016
Service cost	$	-	$	-	$	126	$	141
Interest cost		163		165		103		108
Expected return on plan assets		(206)		(197)		-		-
Amortization of prior service cost		-		-		23		24
Amortization of the net loss		69		66		61		102
Net periodic cost (benefit)	$	26	$	34	$	313	$	375

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Income Taxes

9 Months Ended

Sep. 30, 2017

Income Taxes [Abstract]

Income Taxes

10.  INCOME TAXES

In 2017, the Company recognized the impact of its investments in partnerships that incurred expenses related to the rehabilitation of certified historic structures located in New York State after the historic structures were placed in service.  At the time a historic structure is placed in service, the Bank is eligible for a federal and New York State tax credit.  The Company’s accounting policies related to these investments and the resulting tax credits is detailed in Note 1 to the audited Consolidated Financial Statements on Form 10-K for the year ended December 31, 2016.

The following table presents the impact to the results of operations for the three and nine month periods ended September 30, 2017 and 2016:

		Three months ended September 30,			Nine months ended September 30,
		(in thousands)				(in thousands)
	2017		2016		2017		2016
Loss on tax credit investment	$	(1,338)	$	-	$	(2,257)	$	(2,139)
Refundable state historic tax credit		972		-		1,619		1,508
Income tax benefit		660		380		896		757
Total HTC income	$	294	$	380	$	258	$	126

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Recent Accounting Pronouncements

9 Months Ended

Sep. 30, 2017

Recent Accounting Pronouncements [Abstract]

Recent Accounting Pronouncements

11.  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 modifies the guidance used to recognize revenue from contracts with customers for transfers of goods or services and transfers of nonfinancial assets, unless those contracts are within the scope of other guidance. The ASU also requires new qualitative and quantitative disclosures, including disaggregation of revenues and descriptions of performance obligations.  The Company will adopt the guidance in the first quarter of 2018 using the modified retrospective method with a cumulative-effect adjustment to opening retained earnings. Because the guidance does not apply to revenue associated with financial instruments, including loans and securities that are accounted for under other U.S. GAAP, the new revenue recognition standard does not have a material impact on the Company’s consolidated financial statements. The Company’s implementation efforts include the identification of revenue within the scope of the guidance, as well as the evaluation of revenue contracts. While we have not identified any material changes related to the timing or amount of revenue recognition, management will continue to evaluate disaggregation for significant categories of revenue in the scope of the guidance.

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 Consolidated Financial Statements included in Item 8 of the Annual Report on Form 10-K for the year ended December 31, 2016.  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.  The standard was adopted effective January 1, 2017.  One part of this ASU that impacted the Company was the elimination of the concept of a tax windfall pool.  Previously, an entity determined for each award whether the difference between the deduction for tax purposes and the compensation cost recognized for financial reporting purposes resulted in either an excess benefit or a tax deficiency.  Excess tax benefits were recognized in additional paid-in-capital; tax deficiencies were recognized either as an offset to accumulated excess tax benefits, if any, or in the income statement.  Excess tax benefits were not recognized until the deduction reduced taxes payable.  Under the new standard, all excess tax benefits and tax deficiencies are recognized as income tax expense or benefit in the income statement in the period in which they are incurred.  The impact was a tax benefit of $0.1 million and $0.3 million for the three and nine month periods ended September 30, 2017, respectively.

In addition, the Company made the accounting policy election effective January 1, 2017 to account for forfeitures of stock awards when they occur rather than estimating the number of awards that are expected to vest.  When stock awards are granted, the Company assumes that the service condition will be achieved when determining the initial amount of compensation cost recognized.  The Company does not expect this election to have a material impact on its financial statements.

ASU 2016-13, Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments.  Current GAAP requires 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 FASB expects that an entity will be able to leverage its current systems and methods for 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.  A challenge for the Company could be the operational impact.  Costly new systems and processes 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 date of January 1, 2020.

ASU 2017-04, Simplifying the Test for Goodwill Impairment.  The objective of this ASU is to simplify how an entity is required to test goodwill impairment by eliminating Step 2 from the goodwill impairment test.  Step 2 measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill.  Under the amendments in this ASU, an entity will perform its annual goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount.  An entity would recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value.  The amendments in this ASU are effective for annual reporting periods beginning after December 15, 2019, including interim periods within those fiscal years.  The Company does not expect the standard to have a material impact on the Company’s financial reporting.

ASU 2017-08, Premium Amortization on Purchased Callable Debt Securities.  The objective of this ASU is to amend the amortization period for certain purchased callable debt securities held at a premium.  The FASB is shortening the amortization period for the premium to the earliest call date.  Under current GAAP, entities generally amortize the premium as an adjustment of yield over the contractual life of the investment.  Current GAAP excludes certain callable debt securities from consideration of early repayment of principal even if the holder is certain that the call will be exercised.  As a result, upon the exercise of a call on a callable debt security held at a premium, the unamortized premium is recorded as a loss in earnings.  The amendments do no not require an accounting change for securities held at a discount; the discount continues to be amortized to maturity.  The amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018.  The Company does hold callable debt securities that were purchased at a premium and is currently evaluating the impact of the standard on its financial reporting.

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Organization And Summary Of Significant Accounting Policies (Policy)

9 Months Ended

Sep. 30, 2017

Organization And Summary Of Significant Accounting Policies [Abstract]

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 nine month periods ended September 30, 2017 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, 2016 (“10-K”).  The Company’s significant accounting policies are disclosed in Note 1 to the 10-K.

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Securities (Tables)

9 Months Ended

Sep. 30, 2017

Securities [Abstract]

Schedule Of Amortized Cost And Approximate Fair Value Of Securities

	September 30, 2017
	(in thousands)
	Amortized		Unrealized				Fair
	Cost		Gains		Losses		Value
Available for Sale:
Debt securities:
U.S. government agencies	$	28,461	$	64	$	(278)	$	28,247
States and political subdivisions		29,985		424		(21)		30,388
Total debt securities	$	58,446	$	488	$	(299)	$	58,635
Mortgage-backed securities:
FNMA	$	32,772	$	123	$	(230)	$	32,665
FHLMC		15,242		34		(116)		15,160
GNMA		2,176		25		(15)		2,186
SBA		10,310		24		(82)		10,252
CMO		29,825		50		(473)		29,402
Total mortgage-backed securities	$	90,325	$	256	$	(916)	$	89,665
Total securities designated as available for sale	$	148,771	$	744	$	(1,215)	$	148,300
Held to Maturity:
Debt securities
States and political subdivisions	$	4,487	$	6	$	(21)	$	4,472
Total securities designated as held to maturity	$	4,487	$	6	$	(21)	$	4,472

	December 31, 2016
	(in thousands)
	Amortized		Unrealized				Fair
	Cost		Gains		Losses		Value
Available for Sale:
Debt securities:
U.S. government agencies	$	12,958	$	67	$	(153)	$	12,872
States and political subdivisions		34,952		356		(166)		35,142
Total debt securities	$	47,910	$	423	$	(319)	$	48,014
Mortgage-backed securities:
FNMA	$	14,694	$	96	$	(230)	$	14,560
FHLMC		3,544		32		(51)		3,525
GNMA		2,535		19		(21)		2,533
CMO		27,127		67		(604)		26,590
Total mortgage-backed securities	$	47,900	$	214	$	(906)	$	47,208
Total securities designated as available for sale	$	95,810	$	637	$	(1,225)	$	95,222
Held to Maturity:
Debt securities
States and political subdivisions	$	1,983	$	5	$	(29)	$	1,959
Total securities designated as held to maturity	$	1,983	$	5	$	(29)	$	1,959

Scheduled Maturities Of Debt And Mortgage-Backed Securities

	September 30, 2017				December 31, 2016
	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	$	4,557	$	4,579	$	2,869	$	2,876
Due after one year through five years		25,945		26,170		30,171		30,214
Due after five years through ten years		25,989		25,887		12,166		12,133
Due after ten years		1,955		1,999		2,704		2,791
		58,446		58,635		47,910		48,014
Mortgage-backed securities
available for sale		90,325		89,665		47,900		47,208
Total available for sale securities	$	148,771	$	148,300	$	95,810	$	95,222
Debt securities held to maturity:
Due in one year or less	$	3,392	$	3,388	$	780	$	778
Due after one year through five years		495		483		289		283
Due after five years through ten years		506		512		814		805
Due after ten years		94		89		100		93
		4,487		4,472		1,983		1,959
Total held to maturity securities	$	4,487	$	4,472	$	1,983	$	1,959

Unrealized Losses On Securities

	September 30, 2017
		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	$	18,540	$	(278)	$	-	$	-	$	18,540	$	(278)
States and political subdivisions		2,470		(8)		1,645		(13)		4,115		(21)
Total debt securities	$	21,010	$	(286)	$	1,645	$	(13)	$	22,655	$	(299)
Mortgage-backed securities:
FNMA	$	18,130	$	(141)	$	4,079	$	(89)	$	22,209	$	(230)
FHLMC		10,281		(82)		1,039		(34)		11,320		(116)
GNMA		940		(14)		287		(1)		1,227		(15)
SBA		4,354		(82)		-		-		4,354		(82)
CMO		12,005		(116)		12,352		(357)		24,357		(473)
Total mortgage-backed securities	$	45,710	$	(435)	$	17,757	$	(481)	$	63,467	$	(916)
Held to Maturity:
Debt securities:
States and political subdivisions	$	3,471	$	(4)	$	561	$	(17)	$	4,032	$	(21)
Total temporarily impaired
securities	$	70,191	$	(725)	$	19,963	$	(511)	$	90,154	$	(1,236)

	December 31, 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	$	6,847	$	(153)	$	-	$	-	$	6,847	$	(153)
States and political subdivisions		16,895		(146)		731		(20)		17,626		(166)
Total debt securities	$	23,742	$	(299)	$	731	$	(20)	$	24,473	$	(319)
Mortgage-backed securities:
FNMA	$	9,577	$	(230)	$	-	$	-	$	9,577	$	(230)
FHLMC		1,728		(8)		988		(43)		2,716		(51)
GNMA		1,046		(17)		309		(4)		1,355		(21)
CMO		19,745		(569)		1,166		(35)		20,911		(604)
Total mortgage-backed securities	$	32,096	$	(824)	$	2,463	$	(82)	$	34,559	$	(906)
Held to Maturity:
Debt securities:
States and political subdivisions	$	863	$	(3)	$	706	$	(26)	$	1,569	$	(29)
Total temporarily impaired
securities	$	56,701	$	(1,126)	$	3,900	$	(128)	$	60,601	$	(1,254)

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Fair Value Measurement (Tables)

9 Months Ended

Sep. 30, 2017

Fair Value Measurement [Abstract]

Financial Instruments Measured At Fair Value On Recurring Basis

(in thousands)		Level 1		Level 2		Level 3		Fair Value
September 30, 2017
Securities available-for-sale:
U.S. government agencies	$	-	$	28,247	$	-	$	28,247
States and political subdivisions		-		30,388		-		30,388
Mortgage-backed securities		-		89,665		-		89,665
Mortgage servicing rights		-		-		571		571
December 31, 2016
Securities available-for-sale:
U.S. government agencies	$	-	$	12,872	$	-	$	12,872
States and political subdivisions		-		35,142		-		35,142
Mortgage-backed securities		-		47,208		-		47,208
Mortgage servicing rights		-		-		527		527

Changes In Fair Value For Mortgage Servicing Rights

	Three months ended September 30,
(in thousands)	2017		2016
Mortgage servicing rights - July 1	$	555	$	466
Losses included in earnings		(25)		(22)
Additions from loan sales		41		15
Mortgage servicing rights - September 30	$	571	$	459

	Nine months ended September 30,
(in thousands)	2017		2016
Mortgage servicing rights - January 1	$	527	$	557
Losses included in earnings		(46)		(147)
Additions from loan sales		90		49
Mortgage servicing rights - September 30	$	571	$	459

Quantitative Information About Significant Unobservable Inputs For MSRs

	September 30, 2017		December 31, 2016
Servicing fees	0.25	%	0.25	%
Discount rate	9.52	%	9.52	%
Prepayment rate (CPR)	8.78	%	8.12	%

Financial Instruments Measured At Fair Value On Nonrecurring Basis

(in thousands)		Level 1		Level 2		Level 3		Fair Value
September 30, 2017
Collateral dependent impaired loans	$	-	$	-	$	18,639	$	18,639
December 31, 2016
Collateral dependent impaired loans	$	-	$	-	$	13,114	$	13,114

Estimated Fair Values Of Financial Instruments

	September 30, 2017				December 31, 2016
	Carrying		Fair		Carrying		Fair
	Amount		Value		Amount		Value
		(in thousands)				(in thousands)
Financial assets:
Level 1:
Cash and cash equivalents	$	18,055	$	18,055	$	13,084	$	13,084
Level 2:
Available for sale securities		148,300		148,300		95,222		95,222
FHLB and FRB stock		4,312		4,312		3,731		3,731
Level 3:
Held to maturity securities		4,487		4,472		1,983		1,959
Loans, net		983,823		977,975		928,596		945,998
Mortgage servicing rights		571		571		527		527
Financial liabilities:
Level 1:
Demand deposits	$	216,250	$	216,250	$	201,741	$	201,741
NOW deposits		96,741		96,741		88,632		88,632
Savings deposits		552,559		552,559		508,652		508,652
Level 2:
Securities sold under agreement to
repurchase		9,380		9,380		10,159		10,159
Other borrowed funds		33,600		33,558		28,200		28,152
Junior subordinated debentures		11,330		11,330		11,330		11,330
Level 3:
Time deposits		166,769		168,389		140,949		141,758

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Loans And The Allowance For Loan Losses (Tables)

9 Months Ended

Sep. 30, 2017

Loans And The Allowance For Loan Losses [Abstract]

Schedule Of Loan Portfolio Composition

	September 30, 2017		December 31, 2016
Mortgage loans on real estate:	(in thousands)
Residential mortgages	$	125,946	$	118,542
Commercial and multi-family		492,692		462,385
Construction-Residential		1,850		2,540
Construction-Commercial		100,446		93,240
Home equities		67,343		66,234
Total real estate loans		788,277		742,941
Commercial and industrial loans		207,110		197,371
Consumer and other loans		1,521		1,417
Net deferred loan origination costs		1,097		783
Total gross loans		998,005		942,512
Allowance for loan losses		(14,182)		(13,916)
Loans, net	$	983,823	$	928,596

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

September 30, 2017
(in thousands)
Corporate Credit Exposure – By Credit Rating	Commercial Real Estate Construction		Commercial and Multi-Family Mortgages		Total Commercial Real Estate		Commercial and Industrial
1-3	$	74,627	$	374,371	$	448,998	$	133,588
4		25,819		94,204		120,023		59,199
5		-		10,417		10,417		8,122
6		-		13,700		13,700		4,572
7		-		-		-		1,629
Total	$	100,446	$	492,692	$	593,138	$	207,110

December 31, 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
1-3	$	82,520	$	372,235	$	454,755	$	121,414
4		6,541		73,655		80,196		59,117
5		-		12,506		12,506		12,623
6		4,179		3,989		8,168		3,404
7		-		-		-		813
Total	$	93,240	$	462,385	$	555,625	$	197,371

Recorded Investment In Loans Past Due

September 30, 2017
(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	$	3,491	$	912	$	2,012	$	6,415	$	200,695	$	207,110	$	1	$	2,363
Residential real estate:
Residential		829		105		825		1,759		124,187		125,946		-		1,146
Construction		-		-		-		-		1,850		1,850		-		-
Commercial real estate:
Commercial		168		2,301		1,488		3,957		488,735		492,692		-		8,788
Construction		6,929		452		-		7,381		93,065		100,446		-		-
Home equities		538		381		570		1,489		65,854		67,343		-		1,081
Consumer and other		7		12		10		29		1,492		1,521		-		10
Total Loans	$	11,962	$	4,163	$	4,905	$	21,030	$	975,878	$	996,908	$	1	$	13,388

Note: Loan balances do not include $1.1 million in net deferred loan origination costs as of September 30, 2017.

December 31, 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	$	6,772	$	2,966	$	1,150	$	10,888	$	186,483	$	197,371	$	-	$	3,106
Residential real estate:
Residential		868		123		567		1,558		116,984		118,542		-		862
Construction		-		-		-		-		2,540		2,540		-		-
Commercial real estate:
Commercial		6,319		1,522		2,357		10,198		452,187		462,385		483		1,874
Construction		257		-		4,417		4,674		88,566		93,240		239		4,178
Home equities		481		119		679		1,279		64,955		66,234		-		1,261
Consumer and other		15		10		5		30		1,387		1,417		-		17
Total Loans	$	14,712	$	4,740	$	9,175	$	28,627	$	913,102	$	941,729	$	722	$	11,298

Note: Loan balances do not include $783 thousand in net deferred loan origination costs as of December 31, 2016.

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 nine month periods ended September 30, 2017 and 2016:

September 30, 2017
(in thousands)	Commercial and Industrial		Commercial Real Estate Mortgages*		Consumer and Other		Residential Mortgages*		Home Equities		Total
Allowance for loan
losses:
Beginning balance	$	4,813	$	7,890	$	96	$	769	$	348	$	13,916
Charge-offs		(51)		(127)		(50)		-		(1)		(229)
Recoveries		335		-		22		-		2		359
Provision (Credit)		(74)		21		41		143		5		136
Ending balance	$	5,023	$	7,784	$	109	$	912	$	354	$	14,182
Allowance for loan
losses:
Ending balance:
Individually evaluated
for impairment	$	808	$	877	$	35	$	17	$	-	$	1,737
Collectively evaluated
for impairment		4,215		6,907		74		895		354		12,445
Total	$	5,023	$	7,784	$	109	$	912	$	354	$	14,182
Loans:
Ending balance:
Individually evaluated
for impairment	$	2,898	$	13,693	$	35	$	2,545	$	1,577	$	20,748
Collectively evaluated
for impairment		204,212		579,445		1,486		125,251		65,766		976,160
Total	$	207,110	$	593,138	$	1,521	$	127,796	$	67,343	$	996,908

* Includes construction loans

Note: Loan balances do not include $1.1 million in net deferred loan origination costs as of September 30, 2017.

September 30, 2016
(in thousands)	Commercial and Industrial		Commercial Real Estate Mortgages*		Consumer and Other		Residential Mortgages*		Home Equities		Total
Allowance for loan
losses:
Beginning balance	$	4,383	$	7,135	$	85	$	909	$	371	$	12,883
Charge-offs		(122)		-		(36)		-		-		(158)
Recoveries		78		59		11		-		1		149
Provision (Credit)		571		538		47		(322)		4		838
Ending balance	$	4,910	$	7,732	$	107	$	587	$	376	$	13,712
Allowance for loan
losses:
Ending balance:
Individually evaluated
for impairment	$	720	$	1,109	$	46	$	3	$	11	$	1,889
Collectively evaluated
for impairment		4,190		6,623		61		584		365		11,823
Total	$	4,910	$	7,732	$	107	$	587	$	376	$	13,712
Loans:
Ending balance:
Individually evaluated
for impairment	$	6,408	$	7,663	$	46	$	2,602	$	1,583	$	18,302
Collectively evaluated
for impairment		181,032		538,466		1,485		110,297		62,555		893,835
Total	$	187,440	$	546,129	$	1,531	$	112,899	$	64,138	$	912,137

* Includes construction loans

Note: Loan balances do not include $715 thousand in net deferred loan origination costs as of September 30, 2016.

The following tables present the activity in the allowance for loan losses according to portfolio segment for the three month periods ended September 30, 2017 and 2016:

September 30, 2017
($ in thousands)	Commercial and Industrial		Commercial Real Estate Mortgages*		Consumer and Other		Residential Mortgages*		Home Equities		Total
Allowance for loan
losses:
Beginning balance	$	4,970	$	7,899	$	104	$	832	$	373	$	14,178
Charge-offs		(18)		(127)		(17)		-		(1)		(163)
Recoveries		4		-		1		-		1		6
Provision (Credit)		67		12		21		80		(19)		161
Ending balance	$	5,023	$	7,784	$	109	$	912	$	354	$	14,182

September 30, 2016
($ in thousands)	Commercial and Industrial		Commercial Real Estate Mortgages*		Consumer and Other		Residential Mortgages*		Home Equities		Total
Allowance for loan
losses:
Beginning balance	$	4,195	$	7,308	$	101	$	763	$	406	$	12,773
Charge-offs		(89)		-		(13)		-		-		(102)
Recoveries		23		8		4		-		-		35
Provision (Credit)		781		416		15		(176)		(30)		1,006
Ending balance	$	4,910	$	7,732	$	107	$	587	$	376	$	13,712

*Includes construction loans

Data, At Class Level, Of Impaired Loans

		At September 30, 2017
		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	$	751	$	876	$	-	$	822	$	33	$	6
Residential real estate:
Residential		2,447		2,607		-		2,472		33		63
Construction		-		-		-		-		-		-
Commercial real estate:
Commercial		1,968		2,086		-		2,078		98		15
Construction		197		197		-		226		-		11
Home equities		1,577		1,677		-		1,613		48		16
Consumer and other		-		-		-		-		-		-
Total impaired loans	$	6,940	$	7,443	$	-	$	7,211	$	212	$	111

		At September 30, 2017
		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	$	2,147	$	2,374	$	808	$	2,192	$	101	$	16
Residential real estate:
Residential		98		98		17		98		3		1
Construction		-		-		-		-		-		-
Commercial real estate:
Commercial		11,528		11,586		877		11,612		85		366
Construction		-		-		-		-		-		-
Home equities		-		-		-		-		-		-
Consumer and other		35		60		35		38		2		1
Total impaired loans	$	13,808	$	14,118	$	1,737	$	13,940	$	191	$	384

		At September 30, 2017
		Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Foregone		Interest Income Recognized
Total:		(in thousands)
Commercial and industrial	$	2,898	$	3,250	$	808	$	3,014	$	134	$	22
Residential real estate:
Residential		2,545		2,705		17		2,570		36		64
Construction		-		-		-		-		-		-
Commercial real estate:
Commercial		13,496		13,672		877		13,690		183		381
Construction		197		197		-		226		-		11
Home equities		1,577		1,677		-		1,613		48		16
Consumer and other		35		60		35		38		2		1
Total impaired loans	$	20,748	$	21,561	$	1,737	$	21,151	$	403	$	495

		At December 31, 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	$	1,304	$	1,604	$	-	$	1,455	$	125	$	51
Residential real estate:
Residential		2,513		2,720		-		2,542		39		78
Construction		-		-		-		-		-		-
Commercial real estate:
Commercial		2,123		2,168		-		2,181		33		89
Construction		257		257		-		404		2		28
Home equities		1,559		1,621		-		1,606		51		30
Consumer and other		-		-		-		-		-		-
Total impaired loans	$	7,756	$	8,370	$	-	$	8,188	$	250	$	276

		At December 31, 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	$	1,844	$	1,913	$	492	$	1,898	$	62	$	53
Residential real estate:
Residential		71		72		1		72		2		1
Construction		-		-		-		-		-		-
Commercial real estate:
Commercial		1,054		1,083		296		1,062		50		-
Construction		4,179		4,201		1,175		4,180		194		-
Home equities		194		206		20		195		9		1
Consumer and other		43		68		43		45		3		3
Total impaired loans	$	7,385	$	7,543	$	2,027	$	7,452	$	320	$	58

		At December 31, 2016
		Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Foregone		Interest Income Recognized
Total:		(in thousands)
Commercial and industrial	$	3,148	$	3,517	$	492	$	3,353	$	187	$	104
Residential real estate:
Residential		2,584		2,792		1		2,614		41		79
Construction		-		-		-		-		-		-
Commercial real estate:
Commercial		3,177		3,251		296		3,243		83		89
Construction		4,436		4,458		1,175		4,584		196		28
Home equities		1,753		1,827		20		1,801		60		31
Consumer and other		43		68		43		45		3		3
Total impaired loans	$	15,141	$	15,913	$	2,027	$	15,640	$	570	$	334

Loans Classified As Troubled Debt Restructurings

		September 30, 2017
		(in thousands)
		Total		Nonaccruing		Accruing		Related Allowance
Commercial and industrial	$	1,525	$	990	$	535	$	433
Residential real estate:
Residential		1,664		265		1,399		-
Construction		-		-		-		-
Commercial real estate:
Commercial and multi-family		8,623		3,915		4,708		368
Construction		197		-		197		-
Home equities		625		129		496		-
Consumer and other		25		-		25		25
Total troubled restructured loans	$	12,659	$	5,299	$	7,360	$	826

		December 31, 2016
		(in thousands)
		Total		Nonaccruing		Accruing		Related Allowance
Commercial and industrial	$	574	$	532	$	42	$	147
Residential real estate:
Residential		1,949		227		1,722		-
Construction		-		-		-		-
Commercial real estate:
Commercial and multi-family		1,617		313		1,304		-
Construction		257		-		257		-
Home equities		667		175		492		1
Consumer and other		26		-		26		26
Total troubled restructured loans	$	5,090	$	1,247	$	3,843	$	174

TDR Activity By Type Of Concession Granted To Borrower

	Three months ended September 30, 2017					Three months ended September 30, 2016
	(Recorded Investment in thousands)					(Recorded Investment 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	1	$	874	$	874	-	$	-	$	-
Residential Real Estate & Construction:
Extension of maturity	1		133		151	-		-		-
Extension of maturity and
interest rate reduction	-		-		-	1		109		109
Commercial Real Estate & Construction:
Combination of concessions	1		4,179		3,397	-		-		-
Home Equities	-		-		-	-		-		-
Consumer and other loans	-		-		-	-		-		-

	Nine months ended September 30, 2017					Nine months ended September 30, 2016
	(Recorded Investment in thousands)					(Recorded Investment 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	1	$	874	$	874	-	$	-	$	-
Extension of maturity	-		-		-	1		24		24
Term-out line of credit	1		180		180	1		20		20
Residential Real Estate & Construction:
Extension of maturity	1		133		151	1		95		95
Extension of maturity and
interest rate reduction	-		-		-	1		109		109
Commercial Real Estate & Construction:
Extension of maturity	3		5,073		5,073	-		-		-
Combination of concessions	1		4,179		3,397	-		-		-
Home Equities:
Extension of maturity and
interest rate reduction	1		20		20	-		-		-
Consumer and other loans	-		-		-	-		-		-

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Other Comprehensive Income (Tables)

9 Months Ended

Sep. 30, 2017

Other Comprehensive Income [Abstract]

Schedule of Accumulated Other Comprehensive Income (Loss)

	Balance at June 30, 2017		Net Change		Balance at September 30, 2017
	(in thousands)
Net unrealized loss on investment securities	$	(175)	$	(112)	$	(287)
Net defined benefit pension plan adjustments		(1,965)		32		(1,933)
Total	$	(2,140)	$	(80)	$	(2,220)
	Balance at June 30, 2016		Net Change		Balance at September 30, 2016
	(in thousands)
Net unrealized gain (loss) on investment securities	$	1,384	$	(376)	$	1,008
Net defined benefit pension plan adjustments		(2,205)		40		(2,165)
Total	$	(821)	$	(336)	$	(1,157)

	Balance at December 31, 2016		Net Change		Balance at September 30, 2017
	(in thousands)
Net unrealized (loss) gain on investment securities	$	(365)	$	78	$	(287)
Net defined benefit pension plan adjustments		(2,059)		126		(1,933)
Total	$	(2,424)	$	204	$	(2,220)
	Balance at December 31, 2015		Net Change		Balance at September 30, 2016
	(in thousands)
Net unrealized gain on investment securities	$	475	$	533	$	1,008
Net defined benefit pension plan adjustments		(2,285)		120		(2,165)
Total	$	(1,810)	$	653	$	(1,157)

Components Of Other Comprehensive Income (Loss)

	Three months ended September 30, 2017						Three months ended September 30, 2016
	(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 loss on investment
securities:
Unrealized loss on investment
securities	$	(186)	$	74	$	(112)	$	(605)	$	229	$	(376)
Defined benefit pension plan
adjustments:
Reclassifications from accumulated other
comprehensive income for gains
Amortization of prior service cost (a)	$	7	$	(3)	$	4	$	8	$	(3)	$	5
Amortization of actuarial loss (a)		44		(16)		28		56		(21)		35
Net change		51		(19)		32		64		(24)		40
Other Comprehensive Income	$	(135)	$	55	$	(80)	$	(541)	$	205	$	(336)

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

	Nine months ended September 30, 2017						Nine months ended September 30, 2016
	(in thousands)						(in thousands)
	Before-Tax Amount		Income Tax (Provision) Benefit (b)		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	$	117	$	(39)	$	78	$	860	$	(327)	$	533
Defined benefit pension plan
adjustments:
Reclassifications from accumulated other
comprehensive income for gains
Amortization of prior service cost (a)	$	23	$	(4)	$	19	$	24	$	(9)	$	15
Amortization of actuarial loss (a)		130		(23)		107		168		(63)		105
Net change		153		(27)		126		192		(72)		120
Other Comprehensive Income	$	270	$	(66)	$	204	$	1,052	$	(399)	$	653

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

(b) Tax benefit includes impact of re-valuation of deferred tax asset due to increase in marginal federal income tax rate

from 34% to 35%.

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Segment Information (Tables)

9 Months Ended

Sep. 30, 2017

Segment Information [Abstract]

Schedule Of Business Segments

	Three months ended September 30, 2017
		Banking		Insurance Agency
		Activities		Activities		Total
		(in thousands)
Net interest income (expense)	$	11,120	$	(25)	$	11,095
Provision for loan losses		161		-		161
Net interest income (expense) after
provision for loan losses		10,959		(25)		10,934
Non-interest income		1,196		-		1,196
Insurance service and fees		108		2,061		2,169
Amortization expense		-		28		28
Non-interest expense		8,315		1,493		9,808
Income before income taxes		3,948		515		4,463
Income tax provision		542		198		740
Net income	$	3,406	$	317	$	3,723

	Three months ended September 30, 2016
		Banking		Insurance Agency
		Activities		Activities		Total
		(in thousands)
Net interest income (expense)	$	9,103	$	(34)	$	9,069
Provision for loan losses		1,006		-		1,006
Net interest income (expense) after
provision for loan losses		8,097		(34)		8,063
Non-interest income		1,480		-		1,480
Insurance service and fees		100		1,755		1,855
Non-interest expense		7,561		1,150		8,711
Income before income taxes		2,116		571		2,687
Income tax provision		251		220		471
Net income	$	1,865	$	351	$	2,216

	Nine months ended September 30, 2017
		Banking		Insurance Agency
		Activities		Activities		Total
		(in thousands)
Net interest income (expense)	$	30,934	$	(77)	$	30,857
Provision for loan losses		136		-		136
Net interest income (expense) after
provision for loan losses		30,798		(77)		30,721
Non-interest income		3,727		-		3,727
Insurance service and fees		313		5,936		6,249
Amortization expense		-		84		84
Non-interest expense		23,836		4,288		28,124
Income before income taxes		11,002		1,487		12,489
Income tax provision		2,430		572		3,002
Net income	$	8,572	$	915	$	9,487

	Nine months ended September 30, 2016
		Banking		Insurance Agency
		Activities		Activities		Total
		(in thousands)
Net interest income (expense)	$	25,943	$	(98)	$	25,845
Provision for loan losses		838		-		838
Net interest income (expense) after
provision for loan losses		25,105		(98)		25,007
Non-interest income		3,434		-		3,434
Insurance service and fees		332		4,843		5,175
Non-interest expense		22,439		3,519		25,958
Income before income taxes		6,432		1,226		7,658
Income tax provision		1,253		472		1,725
Net income	$	5,179	$	754	$	5,933

XML

Contingent Liabilities And Commitments (Tables)

9 Months Ended

Sep. 30, 2017

Contingent Liabilities And Commitments [Abstract]

Summary Of Commitments And Contingent Liabilities

	September 30,		December 31,
	2017		2016
	(in thousands)
Commitments to extend credit	$	230,790	$	217,581
Standby letters of credit		2,875		3,736
Total	$	233,665	$	221,317

XML

Net Periodic Benefit Costs (Tables)

9 Months Ended

Sep. 30, 2017

Net Periodic Benefit Costs [Abstract]

Schedule Of Net Periodic Cost

		Three months ended September 30,
		(in thousands)
					Supplemental Executive
	Pension Benefits				Retirement Plan
	2017		2016		2017		2016
Service cost	$	-	$	-	$	42	$	47
Interest cost		55		55		35		36
Expected return on plan assets		(69)		(66)		-		-
Amortization of prior service cost		-		-		7		8
Amortization of the net loss		23		22		21		34
Net periodic cost (benefit)	$	9	$	11	$	105	$	125

		Nine months ended September 30,
		(in thousands)
					Supplemental Executive
	Pension Benefits				Retirement Plan
	2017		2016		2017		2016
Service cost	$	-	$	-	$	126	$	141
Interest cost		163		165		103		108
Expected return on plan assets		(206)		(197)		-		-
Amortization of prior service cost		-		-		23		24
Amortization of the net loss		69		66		61		102
Net periodic cost (benefit)	$	26	$	34	$	313	$	375

XML

Income Taxes (Tables)

9 Months Ended

Sep. 30, 2017

Income Taxes [Abstract]

Schedule Of Historic Tax Credit

		Three months ended September 30,			Nine months ended September 30,
		(in thousands)				(in thousands)
	2017		2016		2017		2016
Loss on tax credit investment	$	(1,338)	$	-	$	(2,257)	$	(2,139)
Refundable state historic tax credit		972		-		1,619		1,508
Income tax benefit		660		380		896		757
Total HTC income	$	294	$	380	$	258	$	126

XML

Organization And Summary Of Significant Accounting Policies (Narrative) (Details)	9 Months Ended
	Sep. 30, 2017 entity
Organization And Summary Of Significant Accounting Policies [Abstract]
Number of subsidiaries	2

XML

Securities (Narrative) (Details) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2017	Dec. 31, 2016
Schedule of Available-for-sale Securities [Line Items]
Available for sale securities pledged as collateral	$ 129,000	$ 87,000
Other-than-temporary impairment charges	$ 0	$ 0
Investment Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Contractual maturities duration	3 years 9 months 18 days	3 years 4 months 24 days
Minimum [Member] | Mortgage-Backed Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Contractual maturities duration	10 years

XML

Securities (Schedule Of Amortized Cost And Approximate Fair Value Of Securities) (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Schedule of Available-for-sale Securities [Line Items]
Total securities available for sale, Amortized cost	$ 148,771	$ 95,810
Available for Sale, Unrealized Gains	744	637
Available for Sale, Unrealized Losses	(1,215)	(1,225)
Available for Sale, Fair Value	148,300	95,222
Held to maturity, Amortized cost	4,487	1,983
Held to Maturity, Unrealized Gains	6	5
Held to Maturity, Unrealized Losses	(21)	(29)
Held to Maturity, Fair Value	4,472	1,959
States and Political Subdivisions [Member]
Schedule of Available-for-sale Securities [Line Items]
Held to maturity, Amortized cost	4,487	1,983
Held to Maturity, Unrealized Gains	6	5
Held to Maturity, Unrealized Losses	(21)	(29)
Held to Maturity, Fair Value	4,472	1,959
U.S. Government Agencies [Member]
Schedule of Available-for-sale Securities [Line Items]
Total securities available for sale, Amortized cost	28,461	12,958
Available for Sale, Unrealized Gains	64	67
Available for Sale, Unrealized Losses	(278)	(153)
Available for Sale, Fair Value	28,247	12,872
States and Political Subdivisions [Member]
Schedule of Available-for-sale Securities [Line Items]
Total securities available for sale, Amortized cost	29,985	34,952
Available for Sale, Unrealized Gains	424	356
Available for Sale, Unrealized Losses	(21)	(166)
Available for Sale, Fair Value	30,388	35,142
Total Debt Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Total securities available for sale, Amortized cost	58,446	47,910
Available for Sale, Unrealized Gains	488	423
Available for Sale, Unrealized Losses	(299)	(319)
Available for Sale, Fair Value	58,635	48,014
FNMA [Member]
Schedule of Available-for-sale Securities [Line Items]
Total securities available for sale, Amortized cost	32,772	14,694
Available for Sale, Unrealized Gains	123	96
Available for Sale, Unrealized Losses	(230)	(230)
Available for Sale, Fair Value	32,665	14,560
FHLMC [Member]
Schedule of Available-for-sale Securities [Line Items]
Total securities available for sale, Amortized cost	15,242	3,544
Available for Sale, Unrealized Gains	34	32
Available for Sale, Unrealized Losses	(116)	(51)
Available for Sale, Fair Value	15,160	3,525
GNMA [Member]
Schedule of Available-for-sale Securities [Line Items]
Total securities available for sale, Amortized cost	2,176	2,535
Available for Sale, Unrealized Gains	25	19
Available for Sale, Unrealized Losses	(15)	(21)
Available for Sale, Fair Value	2,186	2,533
SBA [Member]
Schedule of Available-for-sale Securities [Line Items]
Total securities available for sale, Amortized cost	10,310
Available for Sale, Unrealized Gains	24
Available for Sale, Unrealized Losses	(82)
Available for Sale, Fair Value	10,252
CMO [Member]
Schedule of Available-for-sale Securities [Line Items]
Total securities available for sale, Amortized cost	29,825	27,127
Available for Sale, Unrealized Gains	50	67
Available for Sale, Unrealized Losses	(473)	(604)
Available for Sale, Fair Value	29,402	26,590
Mortgage-Backed Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Total securities available for sale, Amortized cost	90,325	47,900
Available for Sale, Unrealized Gains	256	214
Available for Sale, Unrealized Losses	(916)	(906)
Available for Sale, Fair Value	$ 89,665	$ 47,208

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Securities (Scheduled Maturities Of Debt And Mortgage-Backed Securities) (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Securities [Abstract]
Debt securities available for sale, Due in one year or less, Amortized cost	$ 4,557	$ 2,869
Debt securities available for sale, Due after one year through five years, Amortized cost	25,945	30,171
Debt securities available for sale, Due after five years through ten years, Amortized cost	25,989	12,166
Debt securities available for sale, Due after ten years, Amortized cost	1,955	2,704
Debt securities available for sale, Amortized cost	58,446	47,910
Mortgage-backed securities available for sale, Amortized cost	90,325	47,900
Total securities available for sale, Amortized cost	148,771	95,810
Debt securities available for sale, Due in one year or less, Estimated fair value	4,579	2,876
Debt securities available for sale, Due after one year through five years, Estimated fair value	26,170	30,214
Debt securities available for sale, Due after five years through ten years, Estimated fair value	25,887	12,133
Debt securities available for sale, Due after ten years, Estimated fair value	1,999	2,791
Debt securities available for sale, Estimated fair value	58,635	48,014
Mortgage-backed securities available for sale, Estimated fair value	89,665	47,208
Total securities available for sale, Estimated fair value	148,300	95,222
Debt securities held to maturity, Due in one year or less, Amortized cost	3,392	780
Debt securities held to maturity, Due after one year through five years, Amortized cost	495	289
Debt securities held to maturity, Due after five years through ten years, Amortized cost	506	814
Debt securities held to maturity, Due after ten years, Amortized cost	94	100
Held to maturity, Amortized cost	4,487	1,983
Debt securities held to maturity, Due in one year or less, Estimated fair value	3,388	778
Debt securites held to maturity, Due after one year through five years, Estimated fair value	483	283
Debt securites held to maturity, Due after five years through ten years, Estimated fair value	512	805
Debt securities held to maturity, Due after ten years, Estimated fair value	89	93
Held to maturity, Estimated fair value	$ 4,472	$ 1,959

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Securities (Unrealized Losses On Securities) (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Schedule of Available-for-sale Securities [Line Items]
Total temporarily impaired securities, Less than 12 months, Fair Value	$ 70,191	$ 56,701
Total temporarily impaired securities, 12 months or longer, Fair Value	19,963	3,900
Total temporarily impaired securities, Total, Fair Value	90,154	60,601
Total temporarily impaired securities, Less than 12 months, Unrealized Losses	(725)	(1,126)
Total temporarily impaired securities, 12 months or longer, Unrealized Losses	(511)	(128)
Total temporarily impaired securities, Total, Unrealized Losses	(1,236)	(1,254)
States and Political Subdivisions [Member]
Schedule of Available-for-sale Securities [Line Items]
Held To Maturity, Less than 12 months, Fair Value	3,471	863
Held To Maturity, 12 months or longer, Fair Value	561	706
Held To Maturity, Total, Fair Value	4,032	1,569
Held To Maturity, Less than 12 months, Unrealized Losses	(4)	(3)
Held To Maturity, 12 months or longer, Unrealized Losses	(17)	(26)
Held To Maturity, Total, Unrealized Losses	(21)	(29)
U.S. Government Agencies [Member]
Schedule of Available-for-sale Securities [Line Items]
Available for Sale, Less than 12 months, Fair Value	18,540	6,847
Available for Sale, 12 months or longer, Fair Value
Available for Sale, Total, Fair Value	18,540	6,847
Available for Sale, Less than 12 months, Unrealized Losses	(278)	(153)
Available for Sale, 12 months or longer, Unrealized Losses
Available for Sale, Total, Unrealized Losses	(278)	(153)
States and Political Subdivisions [Member]
Schedule of Available-for-sale Securities [Line Items]
Available for Sale, Less than 12 months, Fair Value	2,470	16,895
Available for Sale, 12 months or longer, Fair Value	1,645	731
Available for Sale, Total, Fair Value	4,115	17,626
Available for Sale, Less than 12 months, Unrealized Losses	(8)	(146)
Available for Sale, 12 months or longer, Unrealized Losses	(13)	(20)
Available for Sale, Total, Unrealized Losses	(21)	(166)
Total Debt Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Available for Sale, Less than 12 months, Fair Value	21,010	23,742
Available for Sale, 12 months or longer, Fair Value	1,645	731
Available for Sale, Total, Fair Value	22,655	24,473
Available for Sale, Less than 12 months, Unrealized Losses	(286)	(299)
Available for Sale, 12 months or longer, Unrealized Losses	(13)	(20)
Available for Sale, Total, Unrealized Losses	(299)	(319)
FNMA [Member]
Schedule of Available-for-sale Securities [Line Items]
Available for Sale, Less than 12 months, Fair Value	18,130	9,577
Available for Sale, 12 months or longer, Fair Value	4,079
Available for Sale, Total, Fair Value	22,209	9,577
Available for Sale, Less than 12 months, Unrealized Losses	(141)	(230)
Available for Sale, 12 months or longer, Unrealized Losses	(89)
Available for Sale, Total, Unrealized Losses	(230)	(230)
FHLMC [Member]
Schedule of Available-for-sale Securities [Line Items]
Available for Sale, Less than 12 months, Fair Value	10,281	1,728
Available for Sale, 12 months or longer, Fair Value	1,039	988
Available for Sale, Total, Fair Value	11,320	2,716
Available for Sale, Less than 12 months, Unrealized Losses	(82)	(8)
Available for Sale, 12 months or longer, Unrealized Losses	(34)	(43)
Available for Sale, Total, Unrealized Losses	(116)	(51)
GNMA [Member]
Schedule of Available-for-sale Securities [Line Items]
Available for Sale, Less than 12 months, Fair Value	940	1,046
Available for Sale, 12 months or longer, Fair Value	287	309
Available for Sale, Total, Fair Value	1,227	1,355
Available for Sale, Less than 12 months, Unrealized Losses	(14)	(17)
Available for Sale, 12 months or longer, Unrealized Losses	(1)	(4)
Available for Sale, Total, Unrealized Losses	(15)	(21)
SBA [Member]
Schedule of Available-for-sale Securities [Line Items]
Available for Sale, Less than 12 months, Fair Value	4,354
Available for Sale, 12 months or longer, Fair Value
Available for Sale, Total, Fair Value	4,354
Available for Sale, Less than 12 months, Unrealized Losses	(82)
Available for Sale, 12 months or longer, Unrealized Losses
Available for Sale, Total, Unrealized Losses	(82)
CMO [Member]
Schedule of Available-for-sale Securities [Line Items]
Available for Sale, Less than 12 months, Fair Value	12,005	19,745
Available for Sale, 12 months or longer, Fair Value	12,352	1,166
Available for Sale, Total, Fair Value	24,357	20,911
Available for Sale, Less than 12 months, Unrealized Losses	(116)	(569)
Available for Sale, 12 months or longer, Unrealized Losses	(357)	(35)
Available for Sale, Total, Unrealized Losses	(473)	(604)
Mortgage-Backed Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Available for Sale, Less than 12 months, Fair Value	45,710	32,096
Available for Sale, 12 months or longer, Fair Value	17,757	2,463
Available for Sale, Total, Fair Value	63,467	34,559
Available for Sale, Less than 12 months, Unrealized Losses	(435)	(824)
Available for Sale, 12 months or longer, Unrealized Losses	(481)	(82)
Available for Sale, Total, Unrealized Losses	$ (916)	$ (906)

XML

Fair Value Measurement (Narrative) (Details) - USD ($) $ in Thousands		9 Months Ended	12 Months Ended
	Sep. 30, 2017	Sep. 30, 2017	Dec. 31, 2016
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Impaired loans	$ 20,748	$ 20,748	$ 15,141
Impaired loans, allowance for loan loss	$ 1,737	$ 1,737	2,027
Percentage required stock to capital and surplus	6.00%	6.00%
Impairment charges		$ 0	0
Consumer And Other Loans [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Period past due for loan appraisals		90 days
Impaired loans	$ 35	$ 35	43
Impaired loans, allowance for loan loss	35	35	$ 43
Investment In FRB Stock [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Impairment charges		$ 0
FHLBNY [Member] | Investment In FHLBNY Stock [Member]
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Impairment charges	$ 0

XML

Fair Value Measurement (Financial Instruments Measured At Fair Value On Recurring Basis) (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available-for-sale	$ 148,300	$ 95,222
Mortgage servicing rights	571	527
U.S. Government Agencies [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available-for-sale	28,247	12,872
States and Political Subdivisions [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available-for-sale	30,388	35,142
Mortgage-Backed Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available-for-sale	89,665	47,208
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	571	527
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	28,247	12,872
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	30,388	35,142
Recurring [Member] | 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] | Mortgage-Backed Securities [Member] | Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Securities available-for-sale	$ 89,665	$ 47,208

XML

Fair Value Measurement (Changes In Fair Value For Mortgage Servicing Rights) (Details) - Mortgage Servicing Rights [Member] - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Mortgage servicing rights - Beginning balance	$ 555	$ 466	$ 527	$ 557
Losses included in earnings	(25)	(22)	(46)	(147)
Additions from loan sales	41	15	90	49
Mortgage servicing rights - Ending balance	$ 571	$ 459	$ 571	$ 459

XML

Fair Value Measurement (Quantitative Information About Significant Unobservable Inputs For MSRs) (Details) - Mortgage Servicing Rights [Member] - Level 3 [Member]	9 Months Ended	12 Months Ended
	Sep. 30, 2017	Dec. 31, 2016
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Servicing fees	0.25%	0.25%
Discount rate	9.52%	9.52%
Prepayment rate (CPR)	8.78%	8.12%

XML

Fair Value Measurement (Financial Instruments Measured At Fair Value On Nonrecurring Basis) (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Collateral dependent impaired loans	$ 18,639	$ 13,114
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	$ 18,639	$ 13,114

XML

Fair Value Measurement (Estimated Fair Values Of Financial Instruments) (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Available for sale securities	$ 148,300	$ 95,222
Held to maturity securities	4,472	1,959
Mortgage servicing rights	571	527
Demand deposits	216,250	201,741
NOW deposits	96,741	88,632
Savings deposits	552,559	508,652
Time deposits	166,769	140,949
Carrying Amount [Member] | Level 1 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and cash equivalents	18,055	13,084
Demand deposits	216,250	201,741
NOW deposits	96,741	88,632
Savings deposits	552,559	508,652
Carrying Amount [Member] | Level 2 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Available for sale securities	148,300	95,222
FHLB and FRB stock	4,312	3,731
Securities sold under agreement to repurchase	9,380	10,159
Other borrowed funds	33,600	28,200
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	4,487	1,983
Loans, net	983,823	928,596
Mortgage servicing rights	571	527
Time deposits	166,769	140,949
Fair Value [Member] | Level 1 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Cash and cash equivalents	18,055	13,084
Demand deposits	216,250	201,741
NOW deposits	96,741	88,632
Savings deposits	552,559	508,652
Fair Value [Member] | Level 2 [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Available for sale securities	148,300	95,222
FHLB and FRB stock	4,312	3,731
Securities sold under agreement to repurchase	9,380	10,159
Other borrowed funds	33,558	28,152
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	4,472	1,959
Loans, net	977,975	945,998
Mortgage servicing rights	571	527
Time deposits	$ 168,389	$ 141,758

XML

Loans And The Allowance For Loan Losses (Narrative) (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Accounts, Notes, Loans and Financing Receivable [Line Items]
Net deferred loan origination costs	$ 1,097,000	$ 715,000	$ 1,097,000	$ 715,000	$ 783,000
Loan commitments to lend additional funds to debtors	0		0
Loans restructured in troubled debt restructurings	12,659,000		$ 12,659,000		5,090,000
Period of timely payments before reversion to accruing status			6 months
Nonaccruing [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans restructured in troubled debt restructurings	5,299,000		$ 5,299,000		1,247,000
Total Real Estate Loans [Member] | Residential Mortgages [Member] | Mortgages [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Unpaid principal balance	80,000,000		80,000,000		76,000,000
Mortgage servicing rights	600,000		600,000		500,000
Mortgage loans held-for-sale	100,000		100,000		300,000
Loans restructured in troubled debt restructurings	1,664,000		1,664,000		1,949,000
Total Real Estate Loans [Member] | Residential Mortgages [Member] | Mortgages [Member] | Nonaccruing [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans restructured in troubled debt restructurings	265,000		265,000		$ 227,000
Total Real Estate Loans [Member] | Residential Mortgages [Member] | FNMA Loans [Member] | Mortgages [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Mortgages sold to FNMA	$ 4,400,000	$ 1,700,000	$ 9,700,000	$ 5,200,000

XML

Loans And The Allowance For Loan Losses (Schedule Of Loan Portfolio Composition) (Details) - USD ($) $ in Thousands		Sep. 30, 2017		Dec. 31, 2016	Sep. 30, 2016
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans before deferred loan origination costs		$ 996,908		$ 941,729	$ 912,137
Net deferred loan origination costs		1,097		783	715
Total gross loans		998,005		942,512
Allowance for loan losses		(14,182)		(13,916)
Loans, net		983,823		928,596
Home Equities [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans before deferred loan origination costs		67,343		66,234
Commercial And Industrial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans before deferred loan origination costs		207,110		197,371	187,440
Consumer And Other Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans before deferred loan origination costs		1,521		1,417	1,531
Total Real Estate Loans [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans before deferred loan origination costs		788,277		742,941
Total Real Estate Loans [Member] | Residential Mortgages [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans before deferred loan origination costs	[1]	127,796			112,899
Total Real Estate Loans [Member] | Residential Mortgages [Member] | Mortgages [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans before deferred loan origination costs		125,946		118,542
Total Real Estate Loans [Member] | Residential Mortgages [Member] | Construction [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans before deferred loan origination costs		1,850		2,540
Total Real Estate Loans [Member] | Commercial Real Estate Mortgages [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans before deferred loan origination costs		593,138	[1]	555,625	546,129	[1]
Total Real Estate Loans [Member] | Commercial Real Estate Mortgages [Member] | Mortgages [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans before deferred loan origination costs		492,692		462,385
Total Real Estate Loans [Member] | Commercial Real Estate Mortgages [Member] | Construction [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans before deferred loan origination costs		100,446		93,240
Total Real Estate Loans [Member] | Home Equities [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans before deferred loan origination costs		$ 67,343		$ 66,234	$ 64,138

[1] Includes construction loans

XML

Loans And The Allowance For Loan Losses (Data, At Class Level, Of Credit Quality Indicators Of Certain Loans) (Details) - USD ($) $ in Thousands	Sep. 30, 2017		Dec. 31, 2016	Sep. 30, 2016
Financing Receivable, Recorded Investment [Line Items]
Total gross loans	$ 996,908		$ 941,729	$ 912,137
Total Real Estate Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total gross loans	788,277		742,941
Commercial Real Estate Mortgages [Member] | Total Real Estate Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total gross loans	593,138	[1]	555,625	546,129	[1]
Commercial Real Estate Mortgages [Member] | Total Real Estate Loans [Member] | Corporate Credit Exposure—By Credit Rating 1-3 [Member]
Financing Receivable, Recorded Investment [Line Items]
Total gross loans	448,998		454,755
Commercial Real Estate Mortgages [Member] | Total Real Estate Loans [Member] | Corporate Credit Exposure—By Credit Rating 4 [Member]
Financing Receivable, Recorded Investment [Line Items]
Total gross loans	120,023		80,196
Commercial Real Estate Mortgages [Member] | Total Real Estate Loans [Member] | Corporate Credit Exposure—By Credit Rating 5 [Member]
Financing Receivable, Recorded Investment [Line Items]
Total gross loans	10,417		12,506
Commercial Real Estate Mortgages [Member] | Total Real Estate Loans [Member] | Corporate Credit Exposure—By Credit Rating 6 [Member]
Financing Receivable, Recorded Investment [Line Items]
Total gross loans	13,700		8,168
Commercial Real Estate Mortgages [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 Mortgages [Member] | Total Real Estate Loans [Member] | Construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Total gross loans	100,446		93,240
Commercial Real Estate Mortgages [Member] | Total Real Estate Loans [Member] | Construction [Member] | Corporate Credit Exposure—By Credit Rating 1-3 [Member]
Financing Receivable, Recorded Investment [Line Items]
Total gross loans	74,627		82,520
Commercial Real Estate Mortgages [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	25,819		6,541
Commercial Real Estate Mortgages [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			4,179
Commercial Real Estate Mortgages [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 Mortgages [Member] | Total Real Estate Loans [Member] | Mortgages [Member]
Financing Receivable, Recorded Investment [Line Items]
Total gross loans	492,692		462,385
Commercial Real Estate Mortgages [Member] | Total Real Estate Loans [Member] | Mortgages [Member] | Corporate Credit Exposure—By Credit Rating 1-3 [Member]
Financing Receivable, Recorded Investment [Line Items]
Total gross loans	374,371		372,235
Commercial Real Estate Mortgages [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	94,204		73,655
Commercial Real Estate Mortgages [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	10,417		12,506
Commercial Real Estate Mortgages [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	13,700		3,989
Commercial Real Estate Mortgages [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	207,110		197,371	$ 187,440
Commercial And Industrial [Member] | Corporate Credit Exposure—By Credit Rating 1-3 [Member]
Financing Receivable, Recorded Investment [Line Items]
Total gross loans	133,588		121,414
Commercial And Industrial [Member] | Corporate Credit Exposure—By Credit Rating 4 [Member]
Financing Receivable, Recorded Investment [Line Items]
Total gross loans	59,199		59,117
Commercial And Industrial [Member] | Corporate Credit Exposure—By Credit Rating 5 [Member]
Financing Receivable, Recorded Investment [Line Items]
Total gross loans	8,122		12,623
Commercial And Industrial [Member] | Corporate Credit Exposure—By Credit Rating 6 [Member]
Financing Receivable, Recorded Investment [Line Items]
Total gross loans	4,572		3,404
Commercial And Industrial [Member] | Corporate Credit Exposure—By Credit Rating 7 [Member]
Financing Receivable, Recorded Investment [Line Items]
Total gross loans	$ 1,629		$ 813

[1] Includes construction loans

XML

Loans And The Allowance For Loan Losses (Recorded Investment In Loans Past Due) (Details) - USD ($) $ in Thousands		Sep. 30, 2017		Dec. 31, 2016	Sep. 30, 2016
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		$ 21,030		$ 28,627
Current Balance		975,878		913,102
Total		996,908		941,729	$ 912,137
90+ Days Accruing		1		722
Non-accruing Loans		13,388		11,298
Net deferred loan origination costs		1,097		783	715
30-59 Days [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		11,962		14,712
60-89 Days [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		4,163		4,740
90+ Days [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		4,905		9,175
Commercial And Industrial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		6,415		10,888
Current Balance		200,695		186,483
Total		207,110		197,371	187,440
90+ Days Accruing		1
Non-accruing Loans		2,363		3,106
Commercial And Industrial [Member] | 30-59 Days [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		3,491		6,772
Commercial And Industrial [Member] | 60-89 Days [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		912		2,966
Commercial And Industrial [Member] | 90+ Days [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		2,012		1,150
Home Equities [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		1,489		1,279
Current Balance		65,854		64,955
Total		67,343		66,234
Non-accruing Loans		1,081		1,261
Home Equities [Member] | 30-59 Days [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		538		481
Home Equities [Member] | 60-89 Days [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		381		119
Home Equities [Member] | 90+ Days [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		570		679
Consumer And Other Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		29		30
Current Balance		1,492		1,387
Total		1,521		1,417	1,531
Non-accruing Loans		10		17
Consumer And Other Loans [Member] | 30-59 Days [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		7		15
Consumer And Other Loans [Member] | 60-89 Days [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		12		10
Consumer And Other Loans [Member] | 90+ Days [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		10		5
Total Real Estate Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total		788,277		742,941
Total Real Estate Loans [Member] | Residential Mortgages [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total	[1]	127,796			112,899
Total Real Estate Loans [Member] | Commercial Real Estate Mortgages [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total		593,138	[1]	555,625	546,129	[1]
Total Real Estate Loans [Member] | Home Equities [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total		67,343		66,234	$ 64,138
Mortgages [Member] | Total Real Estate Loans [Member] | Residential Mortgages [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		1,759		1,558
Current Balance		124,187		116,984
Total		125,946		118,542
Non-accruing Loans		1,146		862
Mortgages [Member] | Total Real Estate Loans [Member] | Residential Mortgages [Member] | 30-59 Days [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		829		868
Mortgages [Member] | Total Real Estate Loans [Member] | Residential Mortgages [Member] | 60-89 Days [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		105		123
Mortgages [Member] | Total Real Estate Loans [Member] | Residential Mortgages [Member] | 90+ Days [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		825		567
Mortgages [Member] | Total Real Estate Loans [Member] | Commercial Real Estate Mortgages [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		3,957		10,198
Current Balance		488,735		452,187
Total		492,692		462,385
90+ Days Accruing				483
Non-accruing Loans		8,788		1,874
Mortgages [Member] | Total Real Estate Loans [Member] | Commercial Real Estate Mortgages [Member] | 30-59 Days [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		168		6,319
Mortgages [Member] | Total Real Estate Loans [Member] | Commercial Real Estate Mortgages [Member] | 60-89 Days [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		2,301		1,522
Mortgages [Member] | Total Real Estate Loans [Member] | Commercial Real Estate Mortgages [Member] | 90+ Days [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		1,488		2,357
Construction [Member] | Total Real Estate Loans [Member] | Residential Mortgages [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current Balance		1,850		2,540
Total		1,850		2,540
Construction [Member] | Total Real Estate Loans [Member] | Commercial Real Estate Mortgages [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		7,381		4,674
Current Balance		93,065		88,566
Total		100,446		93,240
90+ Days Accruing				239
Non-accruing Loans				4,178
Construction [Member] | Total Real Estate Loans [Member] | Commercial Real Estate Mortgages [Member] | 30-59 Days [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		6,929		257
Construction [Member] | Total Real Estate Loans [Member] | Commercial Real Estate Mortgages [Member] | 60-89 Days [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due		$ 452
Construction [Member] | Total Real Estate Loans [Member] | Commercial Real Estate Mortgages [Member] | 90+ Days [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Past Due				$ 4,417

[1] Includes construction loans

XML

Loans And The Allowance For Loan Losses (Schedule Of Allowance For Loan Losses According To Portfolio Segment) (Details) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
		Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017		Dec. 31, 2016	Sep. 30, 2016
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan losses: Beginning balance		$ 14,178	$ 12,773	$ 13,916	$ 12,883
Allowance for loan losses: Charge-offs		(163)	(102)	(229)	(158)
Allowance for loan losses: Recoveries		6	35	359	149
Allowance for loan losses: Provision (Credit)		161	1,006	136	838
Allowance for loan losses: Ending balance		14,182	13,712	14,182	13,712
Allowance for loan losses: Individually evaluated for impairment						$ 1,737			$ 1,889
Allowance for loan losses: Collectively evaluated for impairment						12,445			11,823
Allowance for loan losses: Total		14,178	12,773	13,916	12,883	14,182		$ 13,916	13,712
Loans: Individually evaluated for impairment						20,748			18,302
Loans: Collectively evaluated for impairment						976,160			893,835
Total						996,908		941,729	912,137
Net deferred loan origination costs						1,097		783	715
Total Real Estate Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total						788,277		742,941
Commercial And Industrial [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan losses: Beginning balance		4,970	4,195	4,813	4,383
Allowance for loan losses: Charge-offs		(18)	(89)	(51)	(122)
Allowance for loan losses: Recoveries		4	23	335	78
Allowance for loan losses: Provision (Credit)		67	781	(74)	571
Allowance for loan losses: Ending balance		5,023	4,910	5,023	4,910
Allowance for loan losses: Individually evaluated for impairment						808			720
Allowance for loan losses: Collectively evaluated for impairment						4,215			4,190
Allowance for loan losses: Total		4,970	4,195	4,813	4,383	5,023		4,813	4,910
Loans: Individually evaluated for impairment						2,898			6,408
Loans: Collectively evaluated for impairment						204,212			181,032
Total						207,110		197,371	187,440
Commercial Real Estate Mortgages [Member] | Total Real Estate Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan losses: Beginning balance	[1]	7,899	7,308	7,890	7,135
Allowance for loan losses: Charge-offs	[1]	(127)		(127)
Allowance for loan losses: Recoveries	[1]		8		59
Allowance for loan losses: Provision (Credit)	[1]	12	416	21	538
Allowance for loan losses: Ending balance	[1]	7,784	7,732	7,784	7,732
Allowance for loan losses: Individually evaluated for impairment	[1]					877			1,109
Allowance for loan losses: Collectively evaluated for impairment	[1]					6,907			6,623
Allowance for loan losses: Total	[1]	7,899	7,308	7,890	7,135	7,784		7,890	7,732
Loans: Individually evaluated for impairment	[1]					13,693			7,663
Loans: Collectively evaluated for impairment	[1]					579,445			538,466
Total						593,138	[1]	555,625	546,129	[1]
Consumer And Other Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan losses: Beginning balance		104	101	96	85
Allowance for loan losses: Charge-offs		(17)	(13)	(50)	(36)
Allowance for loan losses: Recoveries		1	4	22	11
Allowance for loan losses: Provision (Credit)		21	15	41	47
Allowance for loan losses: Ending balance		109	107	109	107
Allowance for loan losses: Individually evaluated for impairment						35			46
Allowance for loan losses: Collectively evaluated for impairment						74			61
Allowance for loan losses: Total		104	101	96	85	109		96	107
Loans: Individually evaluated for impairment						35			46
Loans: Collectively evaluated for impairment						1,486			1,485
Total						1,521		1,417	1,531
Residential Mortgages [Member] | Total Real Estate Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan losses: Beginning balance	[1]	832	763	769	909
Allowance for loan losses: Charge-offs	[1]
Allowance for loan losses: Recoveries	[1]
Allowance for loan losses: Provision (Credit)	[1]	80	(176)	143	(322)
Allowance for loan losses: Ending balance	[1]	912	587	912	587
Allowance for loan losses: Individually evaluated for impairment	[1]					17			3
Allowance for loan losses: Collectively evaluated for impairment	[1]					895			584
Allowance for loan losses: Total	[1]	832	763	769	909	912		769	587
Loans: Individually evaluated for impairment	[1]					2,545			2,602
Loans: Collectively evaluated for impairment	[1]					125,251			110,297
Total	[1]					127,796			112,899
Home Equities [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Total						67,343		66,234
Home Equities [Member] | Total Real Estate Loans [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance for loan losses: Beginning balance		373	406	348	371
Allowance for loan losses: Charge-offs		(1)		(1)
Allowance for loan losses: Recoveries		1		2	1
Allowance for loan losses: Provision (Credit)		(19)	(30)	5	4
Allowance for loan losses: Ending balance		354	376	354	376
Allowance for loan losses: Individually evaluated for impairment									11
Allowance for loan losses: Collectively evaluated for impairment						354			365
Allowance for loan losses: Total		$ 373	$ 406	$ 348	$ 371	354		348	376
Loans: Individually evaluated for impairment						1,577			1,583
Loans: Collectively evaluated for impairment						65,766			62,555
Total						$ 67,343		$ 66,234	$ 64,138

[1] Includes construction loans

XML

Loans And The Allowance For Loan Losses (Data, At Class Level, Of Impaired Loans) (Details) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2017	Dec. 31, 2016
Financing Receivable, Impaired [Line Items]
Impaired Loans, Recorded Investment, With no related allowance recorded	$ 6,940	$ 7,756
Impaired Loans, Recorded Investment, With a related allowance recorded	13,808	7,385
Impaired Loans, Recorded Investment, Total	20,748	15,141
Impaired Loans, Unpaid Principal Balance, With no related allowance recorded	7,443	8,370
Impaired Loans, Unpaid Principal Balance, With a related allowance recorded	14,118	7,543
Impaired Loans, Unpaid Principal Balance, Total	21,561	15,913
Impaired Loans, Related Allowance	1,737	2,027
Impaired Loans, Average Recorded Investment, With no related allowance recorded	7,211	8,188
Impaired Loans, Average Recorded Investment, With a related allowance recorded	13,940	7,452
Impaired Loans, Average Recorded Investment, Total	21,151	15,640
Impaired Loans, Interest Income Foregone, With no related allowance recorded	212	250
Impaired Loans, Interest Income Foregone, With a related allowance recorded	191	320
Impaired Loans, Interest Income Foregone, Total	403	570
Impaired Loans, Interest Income Recognized, With no related allowance recorded	111	276
Impaired Loans, Interest Income Recognized, With a related allowance recorded	384	58
Impaired Loans, Interest Income Recognized, Total	495	334
Commercial And Industrial [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans, Recorded Investment, With no related allowance recorded	751	1,304
Impaired Loans, Recorded Investment, With a related allowance recorded	2,147	1,844
Impaired Loans, Recorded Investment, Total	2,898	3,148
Impaired Loans, Unpaid Principal Balance, With no related allowance recorded	876	1,604
Impaired Loans, Unpaid Principal Balance, With a related allowance recorded	2,374	1,913
Impaired Loans, Unpaid Principal Balance, Total	3,250	3,517
Impaired Loans, Related Allowance	808	492
Impaired Loans, Average Recorded Investment, With no related allowance recorded	822	1,455
Impaired Loans, Average Recorded Investment, With a related allowance recorded	2,192	1,898
Impaired Loans, Average Recorded Investment, Total	3,014	3,353
Impaired Loans, Interest Income Foregone, With no related allowance recorded	33	125
Impaired Loans, Interest Income Foregone, With a related allowance recorded	101	62
Impaired Loans, Interest Income Foregone, Total	134	187
Impaired Loans, Interest Income Recognized, With no related allowance recorded	6	51
Impaired Loans, Interest Income Recognized, With a related allowance recorded	16	53
Impaired Loans, Interest Income Recognized, Total	22	104
Consumer And Other Loans [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans, Recorded Investment, With no related allowance recorded
Impaired Loans, Recorded Investment, With a related allowance recorded	35	43
Impaired Loans, Recorded Investment, Total	35	43
Impaired Loans, Unpaid Principal Balance, With no related allowance recorded
Impaired Loans, Unpaid Principal Balance, With a related allowance recorded	60	68
Impaired Loans, Unpaid Principal Balance, Total	60	68
Impaired Loans, Related Allowance	35	43
Impaired Loans, Average Recorded Investment, With no related allowance recorded
Impaired Loans, Average Recorded Investment, With a related allowance recorded	38	45
Impaired Loans, Average Recorded Investment, Total	38	45
Impaired Loans, Interest Income Foregone, With no related allowance recorded
Impaired Loans, Interest Income Foregone, With a related allowance recorded	2	3
Impaired Loans, Interest Income Foregone, Total	2	3
Impaired Loans, Interest Income Recognized, With no related allowance recorded
Impaired Loans, Interest Income Recognized, With a related allowance recorded	1	3
Impaired Loans, Interest Income Recognized, Total	1	3
Total Real Estate Loans [Member] | Residential Mortgages [Member] | Mortgages [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans, Recorded Investment, With no related allowance recorded	2,447	2,513
Impaired Loans, Recorded Investment, With a related allowance recorded	98	71
Impaired Loans, Recorded Investment, Total	2,545	2,584
Impaired Loans, Unpaid Principal Balance, With no related allowance recorded	2,607	2,720
Impaired Loans, Unpaid Principal Balance, With a related allowance recorded	98	72
Impaired Loans, Unpaid Principal Balance, Total	2,705	2,792
Impaired Loans, Related Allowance	17	1
Impaired Loans, Average Recorded Investment, With no related allowance recorded	2,472	2,542
Impaired Loans, Average Recorded Investment, With a related allowance recorded	98	72
Impaired Loans, Average Recorded Investment, Total	2,570	2,614
Impaired Loans, Interest Income Foregone, With no related allowance recorded	33	39
Impaired Loans, Interest Income Foregone, With a related allowance recorded	3	2
Impaired Loans, Interest Income Foregone, Total	36	41
Impaired Loans, Interest Income Recognized, With no related allowance recorded	63	78
Impaired Loans, Interest Income Recognized, With a related allowance recorded	1	1
Impaired Loans, Interest Income Recognized, Total	64	79
Total Real Estate Loans [Member] | Residential Mortgages [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 Mortgages [Member] | Mortgages [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans, Recorded Investment, With no related allowance recorded	1,968	2,123
Impaired Loans, Recorded Investment, With a related allowance recorded	11,528	1,054
Impaired Loans, Recorded Investment, Total	13,496	3,177
Impaired Loans, Unpaid Principal Balance, With no related allowance recorded	2,086	2,168
Impaired Loans, Unpaid Principal Balance, With a related allowance recorded	11,586	1,083
Impaired Loans, Unpaid Principal Balance, Total	13,672	3,251
Impaired Loans, Related Allowance	877	296
Impaired Loans, Average Recorded Investment, With no related allowance recorded	2,078	2,181
Impaired Loans, Average Recorded Investment, With a related allowance recorded	11,612	1,062
Impaired Loans, Average Recorded Investment, Total	13,690	3,243
Impaired Loans, Interest Income Foregone, With no related allowance recorded	98	33
Impaired Loans, Interest Income Foregone, With a related allowance recorded	85	50
Impaired Loans, Interest Income Foregone, Total	183	83
Impaired Loans, Interest Income Recognized, With no related allowance recorded	15	89
Impaired Loans, Interest Income Recognized, With a related allowance recorded	366
Impaired Loans, Interest Income Recognized, Total	381	89
Total Real Estate Loans [Member] | Commercial Real Estate Mortgages [Member] | Construction [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans, Recorded Investment, With no related allowance recorded	197	257
Impaired Loans, Recorded Investment, With a related allowance recorded		4,179
Impaired Loans, Recorded Investment, Total	197	4,436
Impaired Loans, Unpaid Principal Balance, With no related allowance recorded	197	257
Impaired Loans, Unpaid Principal Balance, With a related allowance recorded		4,201
Impaired Loans, Unpaid Principal Balance, Total	197	4,458
Impaired Loans, Related Allowance		1,175
Impaired Loans, Average Recorded Investment, With no related allowance recorded	226	404
Impaired Loans, Average Recorded Investment, With a related allowance recorded		4,180
Impaired Loans, Average Recorded Investment, Total	226	4,584
Impaired Loans, Interest Income Foregone, With no related allowance recorded		2
Impaired Loans, Interest Income Foregone, With a related allowance recorded		194
Impaired Loans, Interest Income Foregone, Total		196
Impaired Loans, Interest Income Recognized, With no related allowance recorded	11	28
Impaired Loans, Interest Income Recognized, With a related allowance recorded
Impaired Loans, Interest Income Recognized, Total	11	28
Total Real Estate Loans [Member] | Home Equities [Member]
Financing Receivable, Impaired [Line Items]
Impaired Loans, Recorded Investment, With no related allowance recorded	1,577	1,559
Impaired Loans, Recorded Investment, With a related allowance recorded		194
Impaired Loans, Recorded Investment, Total	1,577	1,753
Impaired Loans, Unpaid Principal Balance, With no related allowance recorded	1,677	1,621
Impaired Loans, Unpaid Principal Balance, With a related allowance recorded		206
Impaired Loans, Unpaid Principal Balance, Total	1,677	1,827
Impaired Loans, Related Allowance		20
Impaired Loans, Average Recorded Investment, With no related allowance recorded	1,613	1,606
Impaired Loans, Average Recorded Investment, With a related allowance recorded		195
Impaired Loans, Average Recorded Investment, Total	1,613	1,801
Impaired Loans, Interest Income Foregone, With no related allowance recorded	48	51
Impaired Loans, Interest Income Foregone, With a related allowance recorded		9
Impaired Loans, Interest Income Foregone, Total	48	60
Impaired Loans, Interest Income Recognized, With no related allowance recorded	16	30
Impaired Loans, Interest Income Recognized, With a related allowance recorded		1
Impaired Loans, Interest Income Recognized, Total	$ 16	$ 31

XML

Loans And The Allowance For Loan Losses (Loans Classified As Troubled Debt Restructurings) (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Financing Receivable, Modifications [Line Items]
Total	$ 12,659	$ 5,090
Related Allowance	826	174
Commercial And Industrial [Member]
Financing Receivable, Modifications [Line Items]
Total	1,525	574
Related Allowance	433	147
Consumer And Other Loans [Member]
Financing Receivable, Modifications [Line Items]
Total	25	26
Related Allowance	25	26
Nonaccruing [Member]
Financing Receivable, Modifications [Line Items]
Total	5,299	1,247
Nonaccruing [Member] | Commercial And Industrial [Member]
Financing Receivable, Modifications [Line Items]
Total	990	532
Nonaccruing [Member] | Consumer And Other Loans [Member]
Financing Receivable, Modifications [Line Items]
Total
Accruing [Member]
Financing Receivable, Modifications [Line Items]
Total	7,360	3,843
Accruing [Member] | Commercial And Industrial [Member]
Financing Receivable, Modifications [Line Items]
Total	535	42
Accruing [Member] | Consumer And Other Loans [Member]
Financing Receivable, Modifications [Line Items]
Total	25	26
Total Real Estate Loans [Member] | Home Equities [Member]
Financing Receivable, Modifications [Line Items]
Total	625	667
Related Allowance		1
Total Real Estate Loans [Member] | Nonaccruing [Member] | Home Equities [Member]
Financing Receivable, Modifications [Line Items]
Total	129	175
Total Real Estate Loans [Member] | Accruing [Member] | Home Equities [Member]
Financing Receivable, Modifications [Line Items]
Total	496	492
Mortgages [Member] | Total Real Estate Loans [Member] | Residential Mortgages [Member]
Financing Receivable, Modifications [Line Items]
Total	1,664	1,949
Related Allowance
Mortgages [Member] | Total Real Estate Loans [Member] | Commercial Real Estate Mortgages [Member]
Financing Receivable, Modifications [Line Items]
Total	8,623	1,617
Related Allowance	368
Mortgages [Member] | Total Real Estate Loans [Member] | Nonaccruing [Member] | Residential Mortgages [Member]
Financing Receivable, Modifications [Line Items]
Total	265	227
Mortgages [Member] | Total Real Estate Loans [Member] | Nonaccruing [Member] | Commercial Real Estate Mortgages [Member]
Financing Receivable, Modifications [Line Items]
Total	3,915	313
Mortgages [Member] | Total Real Estate Loans [Member] | Accruing [Member] | Residential Mortgages [Member]
Financing Receivable, Modifications [Line Items]
Total	1,399	1,722
Mortgages [Member] | Total Real Estate Loans [Member] | Accruing [Member] | Commercial Real Estate Mortgages [Member]
Financing Receivable, Modifications [Line Items]
Total	4,708	1,304
Construction [Member] | Total Real Estate Loans [Member] | Residential Mortgages [Member]
Financing Receivable, Modifications [Line Items]
Total
Related Allowance
Construction [Member] | Total Real Estate Loans [Member] | Commercial Real Estate Mortgages [Member]
Financing Receivable, Modifications [Line Items]
Total	197	257
Related Allowance
Construction [Member] | Total Real Estate Loans [Member] | Nonaccruing [Member] | Residential Mortgages [Member]
Financing Receivable, Modifications [Line Items]
Total
Construction [Member] | Total Real Estate Loans [Member] | Nonaccruing [Member] | Commercial Real Estate Mortgages [Member]
Financing Receivable, Modifications [Line Items]
Total
Construction [Member] | Total Real Estate Loans [Member] | Accruing [Member] | Residential Mortgages [Member]
Financing Receivable, Modifications [Line Items]
Total
Construction [Member] | Total Real Estate Loans [Member] | Accruing [Member] | Commercial Real Estate Mortgages [Member]
Financing Receivable, Modifications [Line Items]
Total	$ 197	$ 257

XML

Loans And The Allowance For Loan Losses (TDR Activity By Type Of Concession Granted To Borrower) (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017 USD ($) contract	Sep. 30, 2016 USD ($) contract	Sep. 30, 2017 USD ($) contract	Sep. 30, 2016 USD ($) contract
Commercial And Industrial [Member] | Deferral Of Principal [Member]
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	1		1
Pre-Modification Outstanding Recorded Investment	$ 874		$ 874
Post-Modification Outstanding Recorded Investment	$ 874		$ 874
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	1
Pre-Modification Outstanding Recorded Investment			$ 180	$ 20
Post-Modification Outstanding Recorded Investment			$ 180	$ 20
Residential Mortgages [Member] | Extension Of Maturity [Member]
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	1
Pre-Modification Outstanding Recorded Investment	$ 133
Post-Modification Outstanding Recorded Investment	$ 151
Residential Mortgages [Member] | Extension Of Maturity And Interest Rate Reduction [Member]
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract		1		1
Pre-Modification Outstanding Recorded Investment		$ 109		$ 109
Post-Modification Outstanding Recorded Investment		$ 109		$ 109
Residential Mortgages [Member] | Total Real Estate Loans [Member] | Extension Of Maturity [Member]
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract			1	1
Pre-Modification Outstanding Recorded Investment			$ 133	$ 95
Post-Modification Outstanding Recorded Investment			$ 151	$ 95
Commercial Real Estate Mortgages [Member] | Combination Of Concessions [Member]
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract	1		1
Pre-Modification Outstanding Recorded Investment	$ 4,179		$ 4,179
Post-Modification Outstanding Recorded Investment	$ 3,397		$ 3,397
Commercial Real Estate Mortgages [Member] | Total Real Estate Loans [Member] | Extension Of Maturity [Member]
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract			3
Pre-Modification Outstanding Recorded Investment			$ 5,073
Post-Modification Outstanding Recorded Investment			$ 5,073
Home Equities [Member] | Total Real Estate Loans [Member] | Extension Of Maturity And Interest Rate Reduction [Member]
Financing Receivable, Modifications [Line Items]
Number of Contracts | contract			1
Pre-Modification Outstanding Recorded Investment			$ 20
Post-Modification Outstanding Recorded Investment			$ 20

XML

Common Equity And Earnings Per Share Data (Narrative) (Details) - USD ($) $ / shares in Units, $ in Thousands	1 Months Ended	3 Months Ended		9 Months Ended
	Jan. 31, 2017	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Common Equity And Earnings Per Share Data [Abstract]
Average dilutive shares outstanding		122,365	75,355	120,890	67,136
Potentially anti-dilutive shares outstanding		0	0	23,593	0
Common stock shares issued	440,000			440,000
Price per share	$ 35.00
Netted additional capital after expenses	$ 14,000			$ 14,142

XML

Other Comprehensive Income (Schedule Of Accumulated Other Comprehensive Income (Loss)) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning Balance	$ (2,140)	$ (821)	$ (2,424)	$ (1,810)
Net Change	(80)	(336)	204	653
Ending Balance	(2,220)	(1,157)	(2,220)	(1,157)
Net Unrealized (Loss) Gain On Investment Securities [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning Balance	(175)	1,384	(365)	475
Net Change	(112)	(376)	78	533
Ending Balance	(287)	1,008	(287)	1,008
Net Defined Benefit Pension Plan Adjustments [Member]
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning Balance	(1,965)	(2,205)	(2,059)	(2,285)
Net Change	32	40	126	120
Ending Balance	$ (1,933)	$ (2,165)	$ (1,933)	$ (2,165)

XML

Other Comprehensive Income (Components Of Other Comprehensive Income (Loss)) (Details) - USD ($) $ in Thousands	3 Months Ended				9 Months Ended
	Sep. 30, 2017		Sep. 30, 2016		Sep. 30, 2017		Sep. 30, 2016
Unrealized (loss) gain on investment securities:
Unrealized (loss) gain on investment securities, Before-Tax Amount	$ (186)		$ (605)		$ 117		$ 860
Defined benefit pension plan adjustments:
Amortization of prior service cost, Before-Tax Amount	7	[1]	8	[1]	23	[2]	24	[2]
Amortization of actuarial loss, Before-Tax Amount	44	[1]	56	[1]	130	[2]	168	[2]
Net change, Before-Tax Amount	51		64		153		192
Other Comprehensive Income (Loss), Before-Tax Amount	(135)		(541)		270		1,052
Unrealized gain (loss) on investment securities, Income Tax (Provision) Benefit	74		229		(39)	[3]	(327)
Amortization of prior service cost, Income Tax (Provision) Benefit	(3)	[1]	(3)	[1]	(4)	[2],[3]	(9)	[2]
Amortization of actuarial loss, Income Tax (Provision) Benefit	(16)	[1]	(21)	[1]	(23)	[2],[3]	(63)	[2]
Net change, Income Tax (Provision) Benefit	(19)		(24)		(27)	[3]	(72)
Other Comprehensive Income (Loss), Income Tax (Provision) Benefit	55		205		(66)	[3]	(399)
Unrealized gain (loss) on investment securities, Net-of-Tax Amount	(112)		(376)		78		533
Amortization of prior service cost, Net-of-Tax Amount	4	[1]	5	[1]	19	[2]	15	[2]
Amortization of actuarial loss, Net-of-Tax Amount	28	[1]	35	[1]	107	[2]	105	[2]
Net change, Net-of-Tax Amount	32		40		126		120
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX	$ (80)		$ (336)		$ 204		$ 653
Federal income tax rate					35.00%		34.00%

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

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

[3] Tax benefit includes impact of re-valuation of deferred tax asset due to increase in marginal federal income tax ratefrom 34% to 35%.

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Segment Information (Schedule Of Business Segments) (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017 USD ($)	Sep. 30, 2016 USD ($)	Sep. 30, 2017 USD ($) segment	Sep. 30, 2016 USD ($)
Number of primary business segments | segment			2
Net interest income (expense)	$ 11,095	$ 9,069	$ 30,857	$ 25,845
Provision for loan losses	161	1,006	136	838
NET INTEREST INCOME (EXPENSE) AFTER PROVISION FOR LOAN LOSSES	10,934	8,063	30,721	25,007
Non-interest income	3,365	3,335	9,976	8,609
Insurance service and fees	2,169	1,855	6,249	5,175
Amortization expense	28		84
Non-interest expense	9,836	8,711	28,208	25,958
INCOME BEFORE INCOME TAXES	4,463	2,687	12,489	7,658
Income tax provision	740	471	3,002	1,725
NET INCOME	3,723	2,216	9,487	5,933
Operating Segments [Member]
Net interest income (expense)	11,095	9,069	30,857	25,845
Provision for loan losses	161	1,006	136	838
NET INTEREST INCOME (EXPENSE) AFTER PROVISION FOR LOAN LOSSES	10,934	8,063	30,721	25,007
Non-interest income	1,196	1,480	3,727	3,434
Insurance service and fees	2,169	1,855	6,249	5,175
Amortization expense	28		84
Non-interest expense	9,808	8,711	28,124	25,958
INCOME BEFORE INCOME TAXES	4,463	2,687	12,489	7,658
Income tax provision	740	471	3,002	1,725
NET INCOME	3,723	2,216	9,487	5,933
Banking Activities [Member] | Operating Segments [Member]
Net interest income (expense)	11,120	9,103	30,934	25,943
Provision for loan losses	161	1,006	136	838
NET INTEREST INCOME (EXPENSE) AFTER PROVISION FOR LOAN LOSSES	10,959	8,097	30,798	25,105
Non-interest income	1,196	1,480	3,727	3,434
Insurance service and fees	108	100	313	332
Non-interest expense	8,315	7,561	23,836	22,439
INCOME BEFORE INCOME TAXES	3,948	2,116	11,002	6,432
Income tax provision	542	251	2,430	1,253
NET INCOME	3,406	1,865	8,572	5,179
Insurance Agency Activities [Member] | Operating Segments [Member]
Net interest income (expense)	(25)	(34)	(77)	(98)
NET INTEREST INCOME (EXPENSE) AFTER PROVISION FOR LOAN LOSSES	(25)	(34)	(77)	(98)
Insurance service and fees	2,061	1,755	5,936	4,843
Amortization expense	28		84
Non-interest expense	1,493	1,150	4,288	3,519
INCOME BEFORE INCOME TAXES	515	571	1,487	1,226
Income tax provision	198	220	572	472
NET INCOME	$ 317	$ 351	$ 915	$ 754

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Contingent Liabilities And Commitments (Narrative) (Details) - USD ($)	9 Months Ended	12 Months Ended
	Sep. 30, 2017	Dec. 31, 2016
Contingent Liabilities And Commitments [Abstract]
Losses on commitments	$ 0	$ 0

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Contingent Liabilities And Commitments (Summary Of Commitments And Contingent Liabilities) (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Loss Contingencies [Line Items]
Commitments and contingent liabilities	$ 233,665	$ 221,317
Commitments To Extend Credit [Member]
Loss Contingencies [Line Items]
Commitments and contingent liabilities	230,790	217,581
Standby Letters Of Credit [Member]
Loss Contingencies [Line Items]
Commitments and contingent liabilities	$ 2,875	$ 3,736

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Net Periodic Benefit Costs (Schedule Of Net Periodic Cost) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Defined Benefit Plan Disclosure [Line Items]
Contributions to defined benefit pension plan			$ 1,000
Pension Benefits [Member]
Defined Benefit Plan Disclosure [Line Items]
Interest cost	$ 55	$ 55	163	$ 165
Expected return on plan assets	(69)	(66)	(206)	(197)
Amortization of the net loss	23	22	69	66
Net periodic cost (benefit)	9	11	26	34
Supplemental Executive Retirement Plan [Member]
Defined Benefit Plan Disclosure [Line Items]
Service cost	42	47	126	141
Interest cost	35	36	103	108
Amortization of prior service cost	7	8	23	24
Amortization of the net loss	21	34	61	102
Net periodic cost (benefit)	$ 105	$ 125	$ 313	$ 375

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Income Taxes (Schedule Of Historic Tax Credit) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Income Tax Contingency [Line Items]
Loss on tax credit investment			$ (2,257)	$ (2,139)
Refundable state historic tax credit	$ 972		1,619	1,508
Income tax benefit	(740)	$ (471)	(3,002)	(1,725)
Historic Structure In New York State [Member]
Income Tax Contingency [Line Items]
Loss on tax credit investment	(1,338)		(2,257)	(2,139)
Refundable state historic tax credit	972		1,619	1,508
Income tax benefit	660	380	896	757
Total HTC income	$ 294	$ 380	$ 258	$ 126

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Recent Accounting Pronouncements (Narrative) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Income tax benefit	$ 740	$ 471	$ 3,002	$ 1,725
ASU 2016-09 [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Income tax benefit	$ 100		$ 300