10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended June 30, 2019

Commission file number 001‑34096

BRIDGE BANCORP, INC.

(Exact name of registrant as specified in its charter)

NEW YORK	11-2934195
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification Number)
2200 MONTAUK HIGHWAY, BRIDGEHAMPTON, NEW YORK	11932
(Address of principal executive offices)	(Zip Code)

Registrant's telephone number, including area code: (631) 537‑1000

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

Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock	BDGE	NASDAQ STOCK MARKET, LLC

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 [X] No [    ]

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes [X] 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.

Large accelerated filer [  ]	Accelerated filer [X]
Non-accelerated filer [  ]	Smaller reporting company [  ]
	Emerging growth company [  ]

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b‑2 of the Exchange Act). Yes [    ] No [X]

There were 19,843,723 shares of common stock outstanding as of July  31, 2019.

BRIDGE BANCORP, INC.

PART I	FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited)	3
	Consolidated Balance Sheets as of  June 30, 2019 and December 31, 2018	3
	Consolidated Statements of Income for the Three and Six Months Ended June 30, 2019 and 2018	4
	Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2019 and 2018	5
	Consolidated Statements of Stockholders' Equity for the Three and Six Months Ended June 30, 2019 and 2018	6
	Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2019 and 2018	7
	Condensed Notes to the Consolidated Financial Statements	8
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	36
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	52
Item 4.	Controls and Procedures	54
PARTII	OTHERINFORMATION
Item 1.	Legal Proceedings	55
Item 1A.	Risk Factors	55
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	55
Item 3.	Defaults Upon Senior Securities	56
Item 4.	Mine Safety Disclosures	56
Item 5.	Other Information	56
Item 6.	Exhibits	56
Signatures		56

2

Item 1. Financial Statements

BRIDGE BANCORP, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

(In thousands, except share and per share amounts)

	June 30,		December 31,
	2019		2018
	(unaudited)
Assets
Cash and due from banks	$	71,292	$	142,145
Interest-bearing deposits with banks		87,349		153,223
Total cash and cash equivalents		158,641		295,368
Securities available for sale, at fair value		642,897		680,886
Securities held to maturity (fair value of $145,480 and $156,792, respectively)		144,716		160,163
Total securities		787,613		841,049
Securities, restricted		24,104		24,028
Loans held for sale		12,643		—
Loans held for investment		3,430,023		3,275,811
Allowance for loan losses		(31,171)		(31,418)
Loans, net		3,398,852		3,244,393
Premises and equipment, net		34,006		35,008
Operating lease right-of-use assets		37,619		—
Accrued interest receivable		12,397		11,236
Goodwill		105,950		105,950
Other intangible assets		4,025		4,374
Prepaid pension		10,483		10,263
Bank owned life insurance		90,821		89,712
Other real estate owned		—		175
Other assets		37,381		39,188
Total assets	$	4,714,535	$	4,700,744
Liabilities
Demand deposits	$	1,385,709	$	1,448,605
Savings, NOW and money market deposits		2,173,946		2,108,297
Certificates of deposit of $100,000 or more		215,923		207,087
Other time deposits		60,998		122,404
Total deposits		3,836,576		3,886,393
Repurchase agreements		945		539
Federal Home Loan Bank ("FHLB") advances		240,000		240,433
Subordinated debentures, net		78,850		78,781
Operating lease liabilities		40,263		—
Other liabilities and accrued expenses		42,696		40,768
Total liabilities		4,239,330		4,246,914
Commitments and contingencies		—		—
Stockholders’ equity
Preferred stock, par value $.01 per share (2,000,000 shares authorized; none issued)		—		—
Common stock, par value $.01 per share (40,000,000 shares authorized; 19,877,510 and 19,815,680 shares issued, respectively; and 19,834,416 and 19,790,884 shares outstanding, respectively)		199		198
Surplus		353,729		352,093
Retained earnings		131,811		117,432
Treasury stock at cost, 43,094 and 24,796 shares, respectively		(1,337)		(781)
		484,402		468,942
Accumulated other comprehensive loss, net of income taxes		(9,197)		(15,112)
Total stockholders’ equity		475,205		453,830
Total liabilities and stockholders’ equity	$	4,714,535	$	4,700,744

See accompanying condensed notes to the Unaudited Consolidated Financial Statements.

3

BRIDGE BANCORP, INC. AND SUBSIDIARIES

Consolidated Statements of Income (unaudited)

(In thousands, except per share amounts)

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
Interest income:
Loans (including fee income)	$	39,878	$	35,770	$	77,490	$	71,383
Mortgage-backed securities, CMOs and other asset-backed securities		4,443		3,825		9,232		7,549
U.S. GSE securities		166		243		358		522
State and municipal obligations		577		747		1,204		1,559
Corporate bonds		319		358		655		713
Deposits with banks		599		106		1,143		196
Other interest and dividend income		370		502		785		993
Total interest income		46,352		41,551		90,867		82,915
Interest expense:
Savings, NOW and money market deposits		6,997		3,438		13,366		5,952
Certificates of deposit of $100,000 or more		1,079		582		2,062		1,099
Other time deposits		288		493		850		688
Federal funds purchased and repurchase agreements		158		566		203		1,172
FHLB advances		1,178		1,408		2,276		3,266
Subordinated debentures		1,135		1,135		2,270		2,270
Total interest expense		10,835		7,622		21,027		14,447
Net interest income		35,517		33,929		69,840		68,468
Provision for loan losses		3,500		400		4,100		1,200
Net interest income after provision for loan losses		32,017		33,529		65,740		67,268
Non-interest income (loss):
Service charges and other fees		2,556		2,562		4,984		4,725
Net securities gains (losses)		201		(7,921)		201		(7,921)
Title fee income		335		450		641		955
Gain on sale of Small Business Administration ("SBA") loans		844		691		1,061		1,062
BOLI income		556		555		1,109		1,101
Other operating income		1,007		1,085		2,721		1,613
Total non-interest income (loss)		5,499		(2,578)		10,717		1,535
Non-interest expense:
Salaries and employee benefits		13,659		13,055		26,939		25,867
Occupancy and equipment		3,560		3,205		7,091		6,448
Technology and communications		1,869		1,568		3,658		3,211
Marketing and advertising		1,424		1,240		2,447		2,202
Professional services		803		881		1,560		2,093
FDIC assessments		396		436		634		900
Amortization of other intangible assets		210		242		423		488
Other operating expenses		2,083		1,880		3,851		3,896
Total non-interest expense		24,004		22,507		46,603		45,105
Income before income taxes		13,512		8,444		29,854		23,698
Income tax expense		2,859		1,701		6,274		4,882
Net income	$	10,653	$	6,743	$	23,580	$	18,816
Basic earnings per share	$	0.53	$	0.34	$	1.18	$	0.95
Diluted earnings per share	$	0.53	$	0.34	$	1.18	$	0.95

See accompanying condensed notes to the Unaudited Consolidated Financial Statements.

4

BRIDGE BANCORP, INC. AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income (unaudited)

(In thousands)

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2019		2018		2019		2018
Net income	$	10,653	$	6,743	$	23,580	$	18,816
Other comprehensive income (loss):
Change in unrealized net gains (losses) on securities available for sale, net of reclassifications and deferred income taxes		5,871		2,616		9,789		(3,472)
Adjustment to pension liability, net of reclassifications and deferred income taxes		91		68		181		135
Unrealized (losses) gains on cash flow hedges, net of reclassifications and deferred income taxes		(2,530)		479		(4,055)		2,530
Total other comprehensive income (loss)		3,432		3,163		5,915		(807)
Comprehensive income	$	14,085	$	9,906	$	29,495	$	18,009

See accompanying condensed notes to the Unaudited Consolidated Financial Statements.

5

BRIDGE BANCORP, INC. AND SUBSIDIARIES

Consolidated Statements of Stockholders' Equity (unaudited)

(In thousands, except per share amounts)

	Three Months Ended June 30, 2019
									Accumulated
									Other
	Common				Retained		Treasury		Comprehensive
	Stock		Surplus		Earnings		Stock		Loss		Total
Balance at March 31, 2019	$	199	$	352,454	$	125,765	$	(786)	$	(12,629)	$	465,003
Net income						10,653						10,653
Shares issued under the dividend reinvestment plan				221								221
Purchase of treasury stock								(321)				(321)
Stock awards granted and distributed				(164)				164				—
Stock awards forfeited				342				(342)				—
Repurchase of surrendered stock from vesting of stock plans				(18)				(52)				(70)
Share based compensation expense				894								894
Cash dividend declared, $0.23 per share						(4,607)						(4,607)
Other comprehensive income, net of deferred income taxes										3,432		3,432
Balance at June 30, 2019	$	199	$	353,729	$	131,811	$	(1,337)	$	(9,197)	$	475,205

	Three Months Ended June 30, 2018
									Accumulated
									Other
	Common				Retained		Treasury		Comprehensive
	Stock		Surplus		Earnings		Stock		Loss		Total
Balance at March 31, 2018	$	198	$	348,420	$	104,050	$	(436)	$	(18,909)	$	433,323
Net income						6,743						6,743
Shares issued under the dividend reinvestment plan				236								236
Stock awards granted and distributed				(216)				216				—
Stock awards forfeited				95				(95)				—
Repurchase of surrendered stock from vesting of stock plans								(126)				(126)
Share based compensation expense				1,003								1,003
Cash dividend declared, $0.23 per share						(4,587)						(4,587)
Other comprehensive income, net of deferred income taxes										3,163		3,163
Balance at June 30, 2018	$	198	$	349,538	$	106,206	$	(441)	$	(15,746)	$	439,755

	Six Months Ended June 30, 2019
									Accumulated
									Other
	Common				Retained		Treasury		Comprehensive
	Stock		Surplus		Earnings		Stock		Loss		Total
Balance at January 1, 2019	$	198	$	352,093	$	117,432	$	(781)	$	(15,112)	$	453,830
Net income						23,580						23,580
Shares issued under the dividend reinvestment plan				419								419
Purchase of treasury stock								(321)				(321)
Stock awards granted and distributed		1		(955)				954				—
Stock awards forfeited				342				(342)				—
Repurchase of surrendered stock from vesting of stock plans				(18)				(847)				(865)
Share based compensation expense				1,848								1,848
Cash dividend declared, $0.46 per share						(9,201)						(9,201)
Other comprehensive income, net of deferred income taxes										5,915		5,915
Balance at June 30, 2019	$	199	$	353,729	$	131,811	$	(1,337)	$	(9,197)	$	475,205

	Six Months Ended June 30, 2018
									Accumulated
									Other
	Common				Retained		Treasury		Comprehensive
	Stock		Surplus		Earnings		Stock		Loss		Total
Balance at January 1, 2018	$	197	$	347,691	$	96,547	$	(296)	$	(14,939)	$	429,200
Net income						18,816						18,816
Shares issued under the dividend reinvestment plan				468								468
Stock awards granted and distributed		1		(523)				522				—
Stock awards forfeited				115				(115)				—
Repurchase of surrendered stock from vesting of stock plans								(552)				(552)
Share based compensation expense				1,787								1,787
Cash dividend declared, $0.46 per share						(9,157)						(9,157)
Other comprehensive loss, net of deferred income taxes										(807)		(807)
Balance at June 30, 2018	$	198	$	349,538	$	106,206	$	(441)	$	(15,746)	$	439,755

See accompanying condensed notes to the Unaudited Consolidated Financial Statements.

6

BRIDGE BANCORP, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows (unaudited)

(In thousands)

	Six Months Ended
	June 30,
	2019		2018
Cash flows from operating activities:
Net income	$	23,580	$	18,816
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses		4,100		1,200
Depreciation and amortization of premises and equipment		2,083		1,897
Net (accretion) and other amortization		(723)		(1,444)
Net amortization on securities		1,524		2,507
Increase in cash surrender value of bank owned life insurance		(1,109)		(1,101)
Amortization of intangible assets		423		488
Share based compensation expense		1,848		1,787
Net securities (gains) losses		(201)		7,921
(Increase) decrease in accrued interest receivable		(1,161)		27
SBA loans originated for sale		(14,564)		(19,446)
Proceeds from sale of the guaranteed portion of SBA loans		15,897		14,417
Gain on sale of the guaranteed portion of SBA loans		(1,061)		(1,062)
Gain on sale of loans		—		(322)
Decrease in other assets		2,424		279
(Decrease) increase in accrued expenses and other liabilities		(4,067)		2,929
Net cash provided by operating activities		28,993		28,893
Cash flows from investing activities:
Purchases of securities available for sale		(50,767)		(194,835)
Purchases of securities, restricted		(39,156)		(481,422)
Purchases of securities held to maturity		—		(1,000)
Proceeds from sales of securities available for sale		46,478		230,372
Redemption of securities, restricted		39,080		490,024
Maturities, calls and principal payments of securities available for sale		55,116		50,431
Maturities, calls and principal payments of securities held to maturity		15,105		11,696
Net increase in loans		(170,997)		(118,281)
Proceeds from loan sale		—		40,133
Proceeds from sales of other real estate owned ("OREO"), net		297		—
Purchase of premises and equipment		(1,081)		(4,435)
Net cash (used in) provided by investing activities		(105,925)		22,683
Cash flows from financing activities:
Net (decrease) increase in deposits		(49,801)		218,676
Net decrease in federal funds purchased		—		(50,000)
Net decrease in FHLB advances		(432)		(200,427)
Net increase in repurchase agreements		406		560
Net proceeds from issuance of common stock		419		468
Purchase of treasury stock		(321)		—
Repurchase of surrendered stock from vesting of stock plans		(865)		(552)
Cash dividends paid		(9,201)		(9,157)
Net cash used in financing activities		(59,795)		(40,432)
Net (decrease) increase in cash and cash equivalents		(136,727)		11,144
Cash and cash equivalents at beginning of period		295,368		94,747
Cash and cash equivalents at end of period	$	158,641	$	105,891
Supplemental disclosure of cash flow information:
Cash paid for:
Interest	$	20,833	$	14,382
Income taxes	$	2,358	$	2,471
Non-cash investing and financing activities:
Transfers from portfolio loans to loans held for sale	$	12,643	$	—
Transfers from portfolio loans to other real estate owned	$	—	$	175

See accompanying condensed notes to the Unaudited Consolidated Financial Statements.

7

BRIDGE BANCORP, INC. AND SUBSIDIARIES

CONDENSED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1. BASIS OF PRESENTATION

Bridge Bancorp, Inc. (the “Holding Company”), is a bank holding company incorporated under the laws of the State of New York. The Holding Company’s business consists of the operations of its wholly-owned subsidiary, BNB Bank (the “Bank”). The Bank’s operations include its real estate investment trust subsidiary, Bridgehampton Community, Inc.; a financial title insurance subsidiary, Bridge Abstract LLC (“Bridge Abstract”); and an investment services subsidiary, Bridge Financial Services, Inc. (“Bridge Financial Services”).

The unaudited consolidated financial statements presented in this Quarterly Report on Form 10-Q include the collective results of the Holding Company and its wholly-owned subsidiary, the Bank, which are collectively herein referred to as “we”, “us”, “our” and the “Company.”

The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10‑Q and Article 10 of Regulation S-X. The unaudited consolidated financial statements included herein reflect all normal recurring adjustments that are, in the opinion of management, necessary for a fair presentation of the results for the interim periods presented. In preparing the interim financial statements, management has made estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense during the reported periods. Such estimates are subject to change in the future as additional information becomes available or previously existing circumstances are modified. Actual future results could differ significantly from those estimates. The annualized results of operations for the six months ended June  30, 2019 are not necessarily indicative of the results of operations that may be expected for the entire fiscal year. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain reclassifications have been made to prior year amounts, and the related discussion and analysis, to conform to the current year presentation. These reclassifications did not have an impact on net income or total stockholders' equity. The unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10‑K for the year ended December 31, 2018.

2. EARNINGS PER SHARE

Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) No. 260‑10‑45 addresses whether instruments granted in share-based payment transactions are participating securities prior to vesting and, therefore, need to be included in the earnings allocation in computing earnings per share (“EPS”). The restricted stock awards (“RSAs”) and certain restricted stock units (“RSUs”) granted by the Company contain non-forfeitable rights to dividends and therefore are considered participating securities. The two-class method for calculating basic EPS excludes dividends paid to participating securities and any undistributed earnings attributable to participating securities.

8

The following table presents the computation of EPS for the three and six months ended June 30, 2019 and 2018:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
(In thousands, except per share data)	2019		2018		2019		2018
Net income	$	10,653	$	6,743	$	23,580	$	18,816
Dividends paid on and earnings allocated to participating securities		(226)		(148)		(503)		(405)
Income attributable to common stock	$	10,427	$	6,595	$	23,077	$	18,411
Weighted average common shares outstanding, including participating securities		19,965		19,884		19,946		19,859
Weighted average participating securities		(428)		(445)		(427)		(433)
Weighted average common shares outstanding		19,537		19,439		19,519		19,426
Basic earnings per common share	$	0.53	$	0.34	$	1.18	$	0.95
Income attributable to common stock	$	10,427	$	6,595	$	23,077	$	18,411
Weighted average common shares outstanding		19,537		19,439		19,519		19,426
Incremental shares from assumed conversions of options and restricted stock units		28		29		26		27
Weighted average common and equivalent shares outstanding		19,565		19,468		19,545		19,453
Diluted earnings per common share	$	0.53	$	0.34	$	1.18	$	0.95

There were 110,660 stock options outstanding at June 30, 2019 that were not included in the computation of diluted earnings per share for the three and six months ended June 30, 2019 because the options' exercise prices were greater than the average market price of common stock and were, therefore, antidilutive. There were 47,393 stock options outstanding at June 30, 2018 that were not included in the computation of diluted earnings per share for the three and six months ended June 30, 2018 because the options' exercise prices were greater than the average market price of common stock and were, therefore, antidilutive.

There were 32,865 and zero RSUs that were antidilutive for the three months ended June 30, 2019 and 2018, respectively. There were 22,472 and zero RSUs that were antidilutive for the six months ended June 30, 2019 and 2018, respectively.

3. STOCK-BASED COMPENSATION PLANS

In May 2019, the Company’s shareholders approved the Bridge Bancorp, Inc. 2019 Equity Incentive Plan (the “2019 Equity Incentive Plan”), which provides for the grant of stock-based and other incentive awards to officers, employees and directors of the Company. The 2019 Equity Incentive Plan superseded the Bridge Bancorp, Inc. 2012 Stock-Based Incentive Plan (the “2012 Equity Incentive Plan”). The 2012 Equity Incentive Plan superseded the 2006 Stock-Based Incentive Plan. The maximum number of shares of stock, in the aggregate, that may be granted under the 2019 Equity Incentive Plan as stock options, restricted stock, or restricted stock units is 370,000 plus the number of shares of stock which have been reserved but not issued under the 2012 Equity Incentive Plan, and any awards that are forfeited under the 2012 Equity Incentive Plan after the effective date of the 2019 Equity Incentive Plan. No further grants will be made under the 2012 Equity Incentive Plan. Currently outstanding grants under the 2012 Equity Incentive Plan will not be affected.

The number of shares of common stock of Bridge Bancorp, Inc. available for stock-based awards under the 2019 Equity Incentive Plan is 370,000 plus 162,738 shares that were remaining under the 2012 Equity Incentive Plan. At June 30, 2019, 522,794 shares remain available for issuance, including shares that may be granted in the form of stock options, RSAs, or RSUs.

The Compensation Committee of the Board of Directors determines awards under the 2019 Equity Incentive Plan. The Company accounts for the 2019 Equity Incentive Plan under FASB ASC No. 718.

Stock Options

Stock options may be either incentive stock options, which bestow certain tax benefits on the optionee, or non-qualified stock options, not qualifying for such benefits. All options have an exercise price that is not less than the market value of the Company's common stock on the date of the grant.

9

The fair value of each option granted is estimated on the date of the grant using the Black-Scholes option-pricing model. The intrinsic value for stock options is calculated based on the exercise price of the underlying awards and the market price of the Company's common stock as of the exercise or reporting date.

During the six months ended June  30, 2019 and 2018, in accordance with the Long Term Incentive Plan (“LTI Plan”) for Named Executive Officers (“NEOs”), the Company granted 63,267 and 47,393 stock options, respectively, with an exercise price set to equal a 10.0% premium over the grant date stock price. All of the stock options granted vest ratably over three years. The estimated weighted-average grant-date fair value of all stock options granted in the six months ended June  30, 2019 and 2018 was $5.05 and $6.52 per stock option, respectively, using the Black-Scholes option-pricing model with assumptions as follows:

	Six Months Ended
	June 30,
	2019			2018
Dividend yield		2.86	%		2.80	%
Expected volatility		23.80			27.53
Risk-free interest rate		2.52			2.67
Expected option life		6.0	years		6.5	years

Compensation expense attributable to stock options was $52 thousand and $91 thousand for the three and six months ended June 30, 2019, respectively. Compensation expense attributable to stock options was $26 thousand and $39 thousand for the three and six months ended June 30, 2018, respectively. As of June 30, 2019, there was $447 thousand of total unrecognized compensation cost related to unvested stock options. The cost is expected to be recognized over a weighted-average period of 2.3 years.

The following table summarizes the status of the Company's stock options as of and for the six months ended June 30, 2019:

				Weighted
		Weighted		Average
	Number	Average		Remaining			Aggregate
	of	Exercise		Contractual			Intrinsic
(Dollars in thousands, except per share amounts)	Options	Price		Life			Value
Outstanding, January 1, 2019	47,393	$	36.19
Granted	63,267		35.35
Outstanding, June 30, 2019	110,660		35.71		9.2	years	$	—
Vested and Exercisable, June 30, 2019	15,795		36.19		8.6	years		—

	Number of	Exercise
Range of Exercise Prices	Options	Price
$35.35	63,267	$	35.35
36.19	47,393		36.19
	110,660

Restricted Stock Awards

The Company's RSAs are shares of the Company's common stock that are forfeitable and are subject to restrictions on transfer prior to the vesting date. RSAs are forfeited if the award holder departs the Company before vesting. RSAs carry dividend and voting rights from the date of grant. The vesting of time-vested RSAs depends upon the award holder continuing to render services to the Company. The Company's performance-based RSAs vest subject to the achievement of the Company's corporate goals.

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The following table summarizes the unvested RSA activity for the six months ended June 30, 2019:

		Weighted
		Average Grant-Date
	Shares	Fair Value
Unvested, January 1, 2019	324,882	$	29.13
Granted	77,952		31.98
Vested	(88,552)		27.19
Forfeited	(12,317)		31.10
Unvested, June 30, 2019	301,965		30.35

During the six months ended June 30, 2019, the Company granted a total of 77,952 RSAs. Of the 77,952 RSAs granted, 49,925 time-vested RSAs vest ratably over five years and 28,027 time-vested RSAs vest ratably over three years. During the six months ended June 30, 2018, the Company granted a total of 82,982 RSAs. Of the 82,982 RSAs granted, 44,750 time-vested RSAs vest ratably over five years, 13,115 time-vested RSAs vest ratably over three years, and 25,117 performance-based RSAs vest ratably over two years, subject to the achievement of the Company's 2018 corporate goals. As of June 30, 2019, there were 301,965 unvested RSAs consisting of 290,717 time-vested RSAs and 11,248 performance-based RSAs.

Compensation expense attributable to RSAs was $527 thousand and $1.1 million for the three and six months ended June 30, 2019, respectively, and $717 thousand and $1.3 million for the three and six months ended June 30, 2018, respectively. As of June 30, 2019, there was $5.9 million of total unrecognized compensation cost related to non-vested RSAs. The cost is expected to be recognized over a weighted-average period of 3.3 years.

Restricted Stock Units

Long Term Incentive Plan

RSUs represent an obligation to deliver shares to a grantee at a future date if certain vesting conditions are met. RSUs are subject to a time-based vesting schedule, or the satisfaction of performance conditions, and are settled in shares of the Company's common stock. RSUs do not provide voting rights and RSUs may provide dividend equivalent rights from the date of grant.

During the six months ended June 30, 2019, in accordance with the LTI Plan for NEOs, the Company granted 22,305 RSUs. Of the 22,305 RSUs granted, 13,255 time-vested RSUs vest ratably over five years and 9,050 performance-based RSUs vest subject to the achievement of the Company's three-year corporate goal for the three-year period ending December 31, 2021.

The following table summarizes the unvested NEO RSU activity for the six months ended June 30, 2019:

		Weighted
		Average Grant-Date
	Shares	Fair Value
Unvested, January 1, 2019	79,238	$	27.36
Granted	22,305		33.42
Reinvested dividends	1,269		28.46
Forfeited	(16,184)		23.34
Vested	(2,573)		32.90
Unvested, June 30, 2019	84,055		29.59

Compensation expense attributable to LTI Plan RSUs was $173 thousand and $343 thousand for the three and six months ended June 30, 2019, respectively and $119 thousand and $220 thousand for the three and six months ended June 30, 2018, respectively. As of June 30, 2019, there was $1.7 million of total unrecognized compensation cost related to non-vested RSUs. The cost is expected to be recognized over a weighted-average period of 3.0 years.

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Directors Plan

In April 2009, the Company adopted a Directors Deferred Compensation Plan (“Directors Plan”). Under the Directors Plan, independent directors may elect to defer all or a portion of their annual retainer fee in the form of RSUs. In addition, directors receive a non-election retainer in the form of RSUs. These RSUs vest ratably over one year and have dividend rights but no voting rights. In connection with the Directors Plan, the Company recorded expense of $142 thousand and $285 thousand for the three and six months ended June 30, 2019, respectively, and $140 thousand and $275 thousand for the three and six months ended June 30, 2018, respectively.

Employee Stock Purchase Plan

In May 2018, the Board of Directors adopted, and stockholders approved the Employee Stock Purchase Plan (“ESPP”). A total of 1,000,000 shares of the Company’s common stock have been initially authorized for issuance under the ESPP. Subject to any plan limitations, the ESPP allows eligible employees to contribute, normally through payroll deductions, up to $25 thousand for the purchase of the Company’s common stock at a discounted price per share for any calendar year. The current offering period is from July 1, 2019 through December 31, 2019.

During the six months ended June 30, 2019, no shares of common stock were purchased, and no expense was recorded related to the ESPP. During the six months ended June 30, 2018,  no shares of common stock were purchased, and no expense was recorded related to the ESPP.

4. SECURITIES

The following tables summarize the amortized cost and estimated fair value of the available for sale and held to maturity investment securities portfolio at June 30, 2019 and December 31, 2018 and the corresponding amounts of unrealized gains and losses therein:

	June 30, 2019
			Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Fair
(In thousands)	Cost		Gains		Losses		Value
Available for sale:
U.S. GSE securities	$	15,000	$	—	$	(37)	$	14,963
State and municipal obligations		28,108		641		(1)		28,748
U.S. GSE residential mortgage-backed securities		93,898		268		(909)		93,257
U.S. GSE residential collateralized mortgage obligations		333,584		1,628		(1,428)		333,784
U.S. GSE commercial mortgage-backed securities		7,013		38		—		7,051
U.S. GSE commercial collateralized mortgage obligations		97,720		1,306		(629)		98,397
Other asset backed securities		24,250		—		(788)		23,462
Corporate bonds		46,000		—		(2,765)		43,235
Total available for sale		645,573		3,881		(6,557)		642,897
Held to maturity:
State and municipal obligations		42,582		927		(1)		43,508
U.S. GSE residential mortgage-backed securities		8,900		—		(109)		8,791
U.S. GSE residential collateralized mortgage obligations		45,961		655		(315)		46,301
U.S. GSE commercial mortgage-backed securities		18,721		125		(70)		18,776
U.S. GSE commercial collateralized mortgage obligations		28,552		118		(566)		28,104
Total held to maturity		144,716		1,825		(1,061)		145,480
Total securities	$	790,289	$	5,706	$	(7,618)	$	788,377

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	December 31, 2018
			Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Fair
(In thousands)	Cost		Gains		Losses		Value
Available for sale:
U.S. GSE securities	$	29,997	$	—	$	(947)	$	29,050
State and municipal obligations		40,980		105		(354)		40,731
U.S. GSE residential mortgage-backed securities		96,536		38		(3,036)		93,538
U.S. GSE residential collateralized mortgage obligations		362,905		826		(5,954)		357,777
U.S. GSE commercial mortgage-backed securities		3,536		—		(28)		3,508
U.S. GSE commercial collateralized mortgage obligations		93,177		—		(2,539)		90,638
Other asset-backed securities		24,250		—		(1,031)		23,219
Corporate bonds		46,000		—		(3,575)		42,425
Total available for sale		697,381		969		(17,464)		680,886
Held to maturity:
State and municipal obligations		53,540		290		(276)		53,554
U.S. GSE residential mortgage-backed securities		9,688		—		(336)		9,352
U.S. GSE residential collateralized mortgage obligations		48,244		163		(1,130)		47,277
U.S. GSE commercial mortgage-backed securities		19,098		4		(620)		18,482
U.S. GSE commercial collateralized mortgage obligations		29,593		—		(1,466)		28,127
Total held to maturity		160,163		457		(3,828)		156,792
Total securities	$	857,544	$	1,426	$	(21,292)	$	837,678

The following table summarizes the amortized cost and estimated fair value by contractual maturity of the available for sale and held to maturity investment securities portfolio at June 30, 2019. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	June 30, 2019
	Amortized		Estimated
(In thousands)	Cost		Fair Value
Maturity
Available for sale:
Within one year	$	3,066	$	3,065
One to five years		32,267		31,885
Five to ten years		57,250		55,385
Beyond ten years		552,990		552,562
Total	$	645,573	$	642,897
Held to maturity:
Within one year	$	8,779	$	8,800
One to five years		24,495		24,909
Five to ten years		32,654		33,139
Beyond ten years		78,788		78,632
Total	$	144,716	$	145,480

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The following tables summarize securities with gross unrealized losses at June 30, 2019 and December 31, 2018, aggregated by category and length of time that individual securities have been in a continuous unrealized loss position:

	June 30, 2019
	Less than 12 months				Greater than 12 months
	Estimated		Gross		Estimated		Gross
	Fair		Unrealized		Fair		Unrealized
(In thousands)	Value		Losses		Value		Losses
Available for sale:
U.S. GSE securities	$	—	$	—	$	14,963	$	(37)
State and municipal obligations		—		—		2,964		(1)
U.S. GSE residential mortgage-backed securities		—		—		67,117		(909)
U.S. GSE residential collateralized mortgage obligations		35,723		(132)		134,232		(1,296)
U.S. GSE commercial collateralized mortgage obligations		—		—		44,046		(629)
Other asset backed securities		—		—		23,462		(788)
Corporate bonds		—		—		43,235		(2,765)
Total available for sale	$	35,723	$	(132)	$	330,019	$	(6,425)
Held to maturity:
State and municipal obligations	$	—	$	—	$	405	$	(1)
U.S. GSE residential mortgage-backed securities		—		—		8,791		(109)
U.S. GSE residential collateralized mortgage obligations		—		—		24,594		(315)
U.S. GSE commercial mortgage-backed securities		—		—		5,216		(70)
U.S. GSE commercial collateralized mortgage obligations		—		—		18,146		(566)
Total held to maturity	$	—	$	—	$	57,152	$	(1,061)

	December 31, 2018
	Less than 12 months				Greater than 12 months
	Estimated		Gross		Estimated		Gross
	Fair		Unrealized		Fair		Unrealized
(In thousands)	Value		Losses		Value		Losses
Available for sale:
U.S. GSE securities	$	—	$	—	$	29,050	$	(947)
State and municipal obligations		6,655		(15)		21,273		(339)
U.S. GSE residential mortgage-backed securities		—		—		88,762		(3,036)
U.S. GSE residential collateralized mortgage obligations		46,452		(141)		172,468		(5,813)
U.S. GSE commercial mortgage-backed securities		—		—		3,508		(28)
U.S. GSE commercial collateralized mortgage obligations		46,705		(623)		43,933		(1,916)
Other asset-backed securities		—		—		23,219		(1,031)
Corporate bonds		—		—		42,425		(3,575)
Total available for sale	$	99,812	$	(779)	$	424,638	$	(16,685)
Held to maturity:
State and municipal obligations	$	8,286	$	(26)	$	22,142	$	(250)
U.S. GSE residential mortgage-backed securities		—		—		9,352		(336)
U.S. GSE residential collateralized mortgage obligations		—		—		40,665		(1,130)
U.S. GSE commercial mortgage-backed securities		—		—		16,205		(620)
U.S. GSE commercial collateralized mortgage obligations		—		—		28,127		(1,466)
Total held to maturity	$	8,286	$	(26)	$	116,491	$	(3,802)

Other-Than-Temporary Impairment

Management evaluates securities for other-than-temporary impairment (“OTTI”) quarterly and more frequently when economic or market conditions warrant. The investment securities portfolio is evaluated for OTTI by segregating the portfolio into two general segments and applying the appropriate OTTI model. Investment securities classified as available for sale or held to maturity are generally evaluated for OTTI under FASB ASC 320, “Accounting for Certain Investments in Debt and Equity Securities”. In determining OTTI under the FASB ASC 320 model, management considers many factors, including: (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near term prospects of the issuer, (3) whether the market decline was affected by macroeconomic conditions, and (4) whether the Company has the intent to sell the debt security or more likely than not will be required to sell the debt security before its anticipated recovery. If either of the criteria regarding intent or requirement to sell is met, the entire difference between amortized cost and fair value is recognized as impairment through earnings. For debt securities that do

14

not meet these criteria, the amount of impairment is split into two components: (1) OTTI related to credit loss, which must be recognized in the income statement and (2) OTTI related to other factors, which is recognized in other comprehensive income. The credit loss is defined as the difference between the present value of the cash flows expected to be collected and the amortized cost basis. The assessment of whether an other-than-temporary decline exists involves a high degree of subjectivity and judgment and is based on the information available to management at a point in time.

At June 30, 2019, substantially all of the securities in an unrealized loss position had a fixed interest rate and the cause of the temporary impairment was directly related to changes in interest rates. The Company generally views changes in fair value caused by changes in interest rates as temporary, which is consistent with its experience. Other asset backed securities are comprised of student loan backed bonds which are guaranteed by the U.S. Department of Education for 97% to 100% of principal. Additionally, the bonds have credit support of 3% to 5% and have maintained their Aa3 Moody's rating during the time the Bank has owned them. The corporate bonds within the portfolio have all maintained an investment grade rating by either Moody's or Standard and Poor's. None of the unrealized losses is related to credit losses. The Company does not have the intent to sell these securities and it is more likely than not that it will not be required to sell the securities before their anticipated recovery. Therefore, the Company does not consider these securities to be other-than-temporarily impaired at June 30, 2019.

Sales and Calls of Securities

There were $46.5 million in proceeds from sales of securities with gross gain of $0.2 million realized for the three and six months ended June 30, 2019. There were $230.4 million of proceeds from sales of securities with gross losses of $7.9 million realized for the three and six months ended June 30, 2018. There were $2.4 million and $10.3 million of proceeds from calls of securities for the three and six months ended June 30, 2019, respectively. There were $0.9 million and $1.9 million of proceeds from calls of securities for the three and six months ended June 30, 2018, respectively.

Pledged Securities

Securities having a fair value of $324.7 million and $354.3 million at June 30, 2019 and December 31, 2018, respectively, were pledged to secure public deposits and Federal Home Loan Bank (“FHLB”) and Federal Reserve Bank (“FRB”) overnight borrowings.

Trading Securities

The Company did not hold any trading securities during the six months ended June 30, 2019or the year ended December 31, 2018.

Restricted Securities

The Bank is a member of the FHLB of New York. Members are required to own a particular amount of stock based on the level of borrowings and other factors and may invest in additional amounts. The Bank is a member of the Atlantic Central Banker's Bank (“ACBB”) and is required to own ACBB stock. The Bank is also a member of the FRB system and required to own FRB stock. FHLB, ACBB and FRB stock is carried at cost and periodically evaluated for impairment based on ultimate recovery of par value. Both cash and stock dividends are reported as income. The Bank owned $24.1 million and $24.0 million in FHLB, ACBB and FRB stock at June 30, 2019 and December 31, 2018, respectively. These amounts were reported as restricted securities in the consolidated balance sheets.

5. FAIR VALUE

The Company adopted Accounting Standards Update (“ASU”) 2016-01, Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities during the first quarter of 2018.  The Company adopted the amended guidance that requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes.

FASB ASC No. 820‑10 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. FASB ASC 820‑10 also establishes a fair value hierarchy which requires an

15

entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair values:

Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3: Significant unobservable inputs that reflect a reporting entity's own assumptions about the assumptions that market participants would use in pricing an asset or liability.

The following tables summarize assets and liabilities measured at fair value on a recurring basis:

	June 30, 2019
			Fair Value Measurements Using:
			Quoted Prices
			In Active	Significant
			Markets for	Other		Significant
			Identical	Observable		Unobservable
	Carrying		Assets	Inputs		Inputs
(In thousands)	Value		(Level 1)	(Level 2)		(Level 3)
Financial assets:
Available for sale securities:
U.S. GSE securities	$	14,963		$	14,963
State and municipal obligations		28,748			28,748
U.S. GSE residential mortgage-backed securities		93,257			93,257
U.S. GSE residential collateralized mortgage obligations		333,784			333,784
U.S. GSE commercial mortgage-backed securities		7,051			7,051
U.S. GSE commercial collateralized mortgage obligations		98,397			98,397
Other asset-backed securities		23,462			23,462
Corporate bonds		43,235			43,235
Total available for sale securities	$	642,897		$	642,897
Derivatives	$	11,919		$	11,919
Financial liabilities:
Derivatives	$	13,594		$	13,594

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	December 31, 2018
			Fair Value Measurements Using:
			Quoted Prices
			In Active	Significant
			Markets for	Other		Significant
			Identical	Observable		Unobservable
	Carrying		Assets	Inputs		Inputs
(In thousands)	Value		(Level 1)	(Level 2)		(Level 3)
Financial assets:
Available for sale securities:
U.S. GSE securities	$	29,050		$	29,050
State and municipal obligations		40,731			40,731
U.S. GSE residential mortgage-backed securities		93,538			93,538
U.S. GSE residential collateralized mortgage obligations		357,777			357,777
U.S. GSE commercial mortgage-backed securities		3,508			3,508
U.S. GSE commercial collateralized mortgage obligations		90,638			90,638
Other asset-backed securities		23,219			23,219
Corporate bonds		42,425			42,425
Total available for sale securities	$	680,886		$	680,886
Derivatives	$	6,363		$	6,363
Financial liabilities:
Derivatives	$	2,215		$	2,215

The following tables summarize assets measured at fair value on a non-recurring basis:

	June 30, 2019
			Fair Value Measurements Using:
			Quoted Prices
			In Active		Significant
			Markets for		Other	Significant
			Identical		Observable	Unobservable
	Carrying		Assets		Inputs	Inputs
(In thousands)	Value		(Level 1)		(Level 2)	(Level 3)
Loans held for sale	$	12,643		$	12,643
Impaired loans	$	4,791				$	4,791

	December 31, 2018
			Fair Value Measurements Using:
			Quoted Prices
			In Active	Significant
			Markets for	Other	Significant
			Identical	Observable	Unobservable
	Carrying		Assets	Inputs	Inputs
(In thousands)	Value		(Level 1)	(Level 2)	(Level 3)
Impaired loans	$	2,532			$	2,532
Other real estate owned	$	175			$	175

Impaired loans with an allocated allowance for loan losses at June 30, 2019 had a carrying amount of $4.8 million, which is made up of the outstanding balance of $5.5 million, net of a valuation allowance of $0.7 million. This resulted in an additional provision for loan losses of $0.5 million that is included in the amount reported on the consolidated statements of income for the six months ended June 30, 2019. Impaired loans with an allocated allowance for loan losses at December 31, 2018 had a carrying amount of $2.5 million, which is made up of the outstanding balance of $2.7 million, net of a valuation allowance of $0.2 million. This resulted in an additional provision for loan losses of $0.2 million that is included in the amount reported on the consolidated statements of income for the year ended December 31, 2018.

There was no other real estate owned at June 30, 2019. At December 31, 2018, other real estate owned had a carrying amount of $0.2 million with no valuation allowance recorded. Accordingly, there was no additional provision for loan losses included in the amount reported on the consolidated statements of income.

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The Company used the following methods and assumptions in estimating the fair value of its financial instruments:

Securities Available for Sale and Held to Maturity: If available, the estimated fair values are based on independent dealer quotations on nationally recognized securities exchanges and are classified as Level 1. For securities where quoted prices are not available, fair value is based on matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities' relationship to other benchmark quoted securities resulting in a Level 2 classification.

Derivatives: Represents interest rate swaps for which the estimated fair values are based on valuation models using observable market data as of the measurement date resulting in a Level 2 classification.

Loans Held for Sale: Loans held for sale are carried at the lower of cost or fair value. The fair value of loans held for sale is determined using the price we expect to receive for the loans based on commitments received from third-party investors, resulting in a Level 2 classification.

Impaired Loans and Other Real Estate Owned: For impaired loans, the Company evaluates the fair value of the loan in accordance with current accounting guidance. For loans that are collateral dependent, the fair value of the collateral is used to determine the fair value of the loan. The fair value of the collateral is determined based on recent appraised values. The fair value of other real estate owned is also evaluated in accordance with current accounting guidance and determined based on recent appraised values less the estimated cost to sell. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Adjustments may relate to location, square footage, condition, amenities, market rate of leases as well as timing of comparable sales. All appraisals undergo a second review process to ensure that the methodology employed, and the values derived are reasonable. The fair value of the loan is compared to the carrying value to determine if any write-down or specific reserve is required. Impaired loans are evaluated quarterly for additional impairment and adjusted accordingly.

Appraisals for collateral-dependent impaired loans are performed by certified general appraisers (for commercial properties) or certified residential appraisers (for residential properties) whose qualifications and licenses have been reviewed and verified by the Company. Once received, the Credit Department reviews the assumptions and approaches utilized in the appraisal as well as the overall resulting fair value in comparison with independent data sources such as recent market data or industry-wide statistics. Management also considers the appraisal values for commercial properties associated with current loan origination activity. Collectively, this information is reviewed to help assess current trends in commercial property values. For each collateral dependent impaired loan, management considers information that relates to the type of commercial property to determine if such properties may have appreciated or depreciated in value since the date of the most recent appraisal. Adjustments to fair value are made only when the analysis indicates a probable decline in collateral values. Adjustments made in the appraisal process are not deemed material to the overall consolidated financial statements given the level of impaired loans measured at fair value on a nonrecurring basis.

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The following tables summarize the estimated fair values and recorded carrying amounts of the Company's financial instruments at June 30, 2019 and December 31, 2018:  

	June 30, 2019
			Fair Value Measurements Using:
					Significant
			Quoted Prices In		Other		Significant
			Active Markets for		Observable		Unobservable
	Carrying		Identical Assets		Inputs		Inputs		Total
(In thousands)	Amount		(Level 1)		(Level 2)		(Level 3)		Fair Value
Financial assets:
Cash and due from banks	$	71,292	$	71,292	$	—	$	—	$	71,292
Interest-bearing deposits with banks		87,349		87,349		—		—		87,349
Securities available for sale		642,897		—		642,897		—		642,897
Securities restricted		24,104		n/a		n/a		n/a		n/a
Securities held to maturity		144,716		—		145,480		—		145,480
Loans held for sale		12,643		—		12,643		—		12,643
Loans, net		3,398,852		—		—		3,375,662		3,375,662
Derivatives		11,919		—		11,919		—		11,919
Accrued interest receivable		12,397		—		2,532		9,865		12,397
Financial liabilities:
Certificates of deposit		276,921		—		276,929		—		276,929
Demand and other deposits		3,559,655		3,559,655		—		—		3,559,655
FHLB advances		240,000		—		240,206		—		240,206
Repurchase agreements		945		—		945		—		945
Subordinated debentures		78,850		—		80,668		—		80,668
Derivatives		13,594		—		13,594		—		13,594
Accrued interest payable		1,718		—		1,718		—		1,718

	December 31, 2018
			Fair Value Measurements Using:
					Significant
			Quoted Prices In		Other		Significant
			Active Markets for		Observable		Unobservable
	Carrying		Identical Assets		Inputs		Inputs		Total
(In thousands)	Amount		(Level 1)		(Level 2)		(Level 3)		Fair Value
Financial assets:
Cash and due from banks	$	142,145	$	142,145	$	—	$	—	$	142,145
Interest-bearing deposits with banks		153,223		153,223		—		—		153,223
Securities available for sale		680,886		—		680,886		—		680,886
Securities restricted		24,028		n/a		n/a		n/a		n/a
Securities held to maturity		160,163		—		156,792		—		156,792
Loans, net		3,244,393		—		—		3,216,204		3,216,204
Derivatives		6,363		—		6,363		—		6,363
Accrued interest receivable		11,236		—		2,936		8,300		11,236
Financial liabilities:
Certificates of deposit		329,491		—		326,865		—		326,865
Demand and other deposits		3,556,902		3,556,902		—		—		3,556,902
FHLB advances		240,433		—		236,209		—		236,209
Repurchase agreements		539		—		539		—		539
Subordinated debentures		78,781		—		74,400		—		74,400
Derivatives		2,215		—		2,215		—		2,215
Accrued interest payable		1,524		—		1,524		—		1,524

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6. LOANS

The following table sets forth the major classifications of loans:

(In thousands)	June 30, 2019		December 31, 2018
Commercial real estate mortgage loans	$	1,436,221	$	1,373,556
Multi-family mortgage loans		631,146		585,827
Residential real estate mortgage loans		503,354		519,763
Commercial, industrial and agricultural loans		675,168		645,724
Real estate construction and land loans		150,868		123,393
Installment/consumer loans		25,825		20,509
Total loans		3,422,582		3,268,772
Net deferred loan costs and fees		7,441		7,039
Total loans held for investment		3,430,023		3,275,811
Allowance for loan losses		(31,171)		(31,418)
Loans, net	$	3,398,852	$	3,244,393

In June 2015, the Company completed the acquisition of Community National Bank (“CNB”) resulting in the addition of $729.4 million of acquired loans recorded at their fair value. There were approximately $246.3 million and $275.0 million of acquired CNB loans remaining as of June 30, 2019 and December 31, 2018, respectively.

As of June 30, 2019, one commercial real estate (“CRE”) mortgage loan totaling $16.3 million was reclassified from loans held for investment to loans held for sale and written down to the loan’s estimated fair value of $12.6 million, through a $3.7 million charge-off recognized in the 2019 second quarter.

Lending Risk

The principal business of the Bank is lending in CRE mortgage loans, multi-family mortgage loans, residential real estate mortgage loans, construction loans, home equity loans, commercial, industrial and agricultural loans, land loans and consumer loans. The Bank considers its primary lending area to be Nassau and Suffolk Counties located on Long Island and the New York City boroughs. A substantial portion of the Bank's loans is secured by real estate in these areas. Accordingly, the ultimate collectability of the loan portfolio is susceptible to changes in market and economic conditions in this region.

Commercial Real Estate Mortgages

Loans in this classification include income producing investment properties and owner-occupied real estate used for business purposes. The underlying properties are located largely in the Bank's primary market area. The cash flows of the income producing investment properties are adversely impacted by a downturn in the economy as evidenced by increased vacancy rates, which in turn, will have an effect on credit quality. Generally, management seeks to obtain annual financial information for borrowers with loans in excess of $1.0 million in this category. In the case of owner-occupied real estate used for business purposes, a weakened economy and resultant decreased consumer and/or business spending will have an adverse effect on credit quality.

Multi-Family Mortgages

Loans in this classification include income producing residential investment properties of five or more families.  Loans are made to established owners with a proven and demonstrable record of strong performance. Loans are secured by a first mortgage lien on the subject property with a loan to value ratio generally not exceeding 75%. Repayment is derived generally from the rental income generated from the property and may be supplemented by the owners' personal cash flow. Credit risk arises with an increase in vacancy rates, property mismanagement and the predominance of non-recourse loans that are customary in the industry.

Residential Real Estate Mortgages and Home Equity Loans

Loans in these classifications are generally secured by owner-occupied residential real estate and repayment is dependent on the credit quality of the individual borrower. The overall health of the economy, including unemployment rates and

20

housing prices, can have an effect on the credit quality in this loan class. The Bank generally does not originate loans with a loan-to-value ratio greater than 80% and does not grant subprime loans.

Commercial, Industrial and Agricultural Loans

Loans in this classification are made to businesses and include term loans, lines of credit, senior secured loans to corporations, equipment financing and taxi medallion loans. Generally, these loans are secured by assets of the business and repayment is expected from the cash flows of the business. A weakened economy, and resultant decreased consumer and/or business spending, will have an effect on the credit quality in this loan class.

Real Estate Construction and Land Loans

Loans in this classification primarily include land loans to local individuals, contractors and developers for developing the land for sale or for the purpose of making improvements thereon. Repayment is derived primarily from sale of the lots/units including any pre-sold units. Credit risk is affected by market conditions, time to sell at an adequate price and cost overruns. To a lesser extent, this class includes commercial development projects that the Company finances, which in most cases require interest only during construction, and then convert to permanent financing. Construction delays, cost overruns, market conditions and the availability of permanent financing, to the extent such permanent financing is not being provided by the Bank, all affect the credit risk in this loan class.

Installment and Consumer Loans

Loans in this classification may be either secured or unsecured. Repayment is dependent on the credit quality of the individual borrower and, if applicable, sale of the collateral securing the loan, such as automobiles. Therefore, the overall health of the economy, including unemployment rates and housing prices, will have an effect on the credit quality in this loan class.

Credit Quality Indicators

The Company categorizes loans into risk categories of pass, special mention, substandard and doubtful based on relevant information about the ability of borrowers to service their debt including repayment patterns, probable incurred losses, past loss experience, current economic conditions, and various types of concentrations of credit. Assigned risk rating grades are continuously updated as new information is obtained. Loans risk rated special mention, substandard and doubtful are reviewed on a quarterly basis. The Company uses the following definitions for risk rating grades:

Pass: Loans classified as pass include current loans performing in accordance with contractual terms, pools of homogenous residential real estate and installment/consumer loans that are not individually risk rated and loans which do not exhibit certain risk factors that require greater than usual monitoring by management.

Special mention: Loans classified as special mention, while generally not delinquent, have potential weaknesses that deserve management's close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or in the Bank's credit position at some future date.

Substandard: Loans classified as substandard have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. There is a distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected.

Doubtful: Loans classified as doubtful have all the weaknesses inherent in a substandard loan, may also be in delinquency status and have defined weaknesses based on currently existing facts, conditions and values making collection or liquidation in full highly questionable and improbable.

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The following tables represent loans categorized by class and internally assigned risk grades as of June 30, 2019 and December 31, 2018:

	June 30, 2019
(In thousands)	Pass		Special Mention		Substandard		Doubtful		Total
Commercial real estate:
Owner occupied	$	512,123	$	11,596	$	1,610	$	—	$	525,329
Non-owner occupied		896,654		735		13,503		—		910,892
Multi-family		630,735		411		—		—		631,146
Residential real estate:
Residential mortgage		425,836		8,255		1,295		—		435,386
Home equity		66,469		681		818		—		67,968
Commercial and industrial:
Secured		153,055		2,009		9,886		—		164,950
Unsecured		487,922		9,923		12,373		—		510,218
Real estate construction and land loans		150,572		—		296		—		150,868
Installment/consumer loans		25,047		6		772		—		25,825
Total loans	$	3,348,413	$	33,616	$	40,553	$	—	$	3,422,582

	December 31, 2018
(In thousands)	Pass		Special Mention		Substandard		Doubtful		Total
Commercial real estate:
Owner occupied	$	480,503	$	12,045	$	17,850	$	—	$	510,398
Non-owner occupied		858,069		2,188		2,901		—		863,158
Multi-family		585,409		418		—		—		585,827
Residential real estate:
Residential mortgage		438,891		8,510		1,114		—		448,515
Home equity		68,480		1,594		1,174		—		71,248
Commercial and industrial:
Secured		147,474		5,536		15,530		—		168,540
Unsecured		458,526		12,886		5,772		—		477,184
Real estate construction and land loans		123,089		—		304		—		123,393
Installment/consumer loans		20,464		9		36		—		20,509
Total loans	$	3,180,905	$	43,186	$	44,681	$	—	$	3,268,772

Past Due and Non-accrual Loans

The following tables represent the aging of the recorded investment in past due loans as of June 30, 2019 and December 31, 2018 by class of loans, as defined by FASB ASC 310‑10:

	June 30, 2019
					90+ Days		Non-accrual
	30-59		60-89		Past Due		Including 90		Total Past
	Days		Days		And		Days or More		Due and
(In thousands)	Past Due		Past Due		Accruing		Past Due		Non-accrual		Current		Total Loans
Commercial real estate:
Owner occupied	$	—	$	641	$	—	$	573	$	1,214	$	524,115	$	525,329
Non-owner occupied		—		—		—		1,376		1,376		909,516		910,892
Multi-family		—		—		—		—		—		631,146		631,146
Residential real estate:
Residential mortgages		164		—		—		2,138		2,302		433,084		435,386
Home equity		300		51		329		370		1,050		66,918		67,968
Commercial and industrial:
Secured		835		331		—		218		1,384		163,566		164,950
Unsecured		314		708		—		683		1,705		508,513		510,218
Real estate construction and land loans		—		—		—		129		129		150,739		150,868
Installment/consumer loans		38		—		—		22		60		25,765		25,825
Total loans	$	1,651	$	1,731	$	329	$	5,509	$	9,220	$	3,413,362	$	3,422,582

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	December 31, 2018
					90+ Days		Non-accrual
	30-59		60-89		Past Due		Including 90		Total Past
	Days		Days		And		Days or More		Due and
(In thousands)	Past Due		Past Due		Accruing		Past Due		Non-accrual		Current		Total Loans
Commercial real estate:
Owner occupied	$	333	$	194	$	—	$	253	$	780	$	509,618	$	510,398
Non-owner occupied		—		—		—		885		885		862,273		863,158
Multi-family		—		—		—		—		—		585,827		585,827
Residential real estate:
Residential mortgages		892		230		—		199		1,321		447,194		448,515
Home equity		1,033		—		308		624		1,965		69,283		71,248
Commercial and industrial:
Secured		330		196		—		174		700		167,840		168,540
Unsecured		1,108		—		—		621		1,729		475,455		477,184
Real estate construction and land loans		—		—		—		—		—		123,393		123,393
Installment/consumer loans		84		—		—		52		136		20,373		20,509
Total loans	$	3,780	$	620	$	308	$	2,808	$	7,516	$	3,261,256	$	3,268,772

Impaired Loans

At June 30, 2019 and December 31, 2018, the Company had individually impaired loans as defined by FASB ASC No. 310, “Receivables” of $17.7 million and $19.4 million, respectively. The decrease in impaired loans was attributable to the payoff of certain troubled debt restructurings ("TDRs”) and other impaired performing loans, partially offset by new TDRs and an increase in non-accrual loans during the six months ended June 30, 2019. During the six months ended June 30, 2019, the Bank modified certain loans as TDRs totaling $4.1 million. For a loan to be considered impaired, management determines after review whether it is probable that the Bank will not be able to collect all amounts due according to the contractual terms of the loan agreement. Management applies its normal loan review procedures in making these judgments. Impaired loans include individually classified non-accrual loans and TDRs and at December 31, 2018 included $2.7 million in other impaired performing loans related to three taxi medallion loans which paid off in January 2019. For impaired loans, the Bank evaluates the impairment of the loan in accordance with FASB ASC 310‑10‑35‑22. Impairment is determined based on the present value of expected future cash flows discounted at the loan's effective interest rate. For loans that are collateral dependent, the fair value of the collateral is used to determine the fair value of the loan. The fair value of the collateral is determined based on recent appraised values. The fair value of the collateral or present value of expected cash flows is compared to the carrying value to determine if any write-down or specific loan loss allowance allocation is required.

The following tables set forth the recorded investment, unpaid principal balance and related allowance by class of loans at June 30, 2019 and December 31, 2018 for individually impaired loans. The tables also set forth the average recorded

23

investment of individually impaired loans and interest income recognized while the loans were impaired during the three and six months ended June 30, 2019 and 2018:

							Three Months Ended				Six Months Ended
	June 30, 2019						June 30, 2019				June 30, 2019
			Unpaid		Related		Average		Interest		Average		Interest
	Recorded		Principal		Allocated		Recorded		Income		Recorded		Income
(In thousands)	Investment		Balance		Allowance		Investment		Recognized		Investment		Recognized
With no related allowance recorded:
Commercial real estate:
Owner occupied	$	589	$	605	$	—	$	576	$	—	$	524	$	—
Non-owner occupied		3,241		3,258		—		2,904		25		2,842		50
Residential real estate:
Residential mortgages		—		—		—		—		—		—		—
Home equity		—		—		—		—		—		—		—
Commercial and industrial:
Secured		1,644		1,644		—		1,644		19		1,562		36
Unsecured		6,728		6,728		—		6,779		101		6,199		186
Total with no related allowance recorded		12,202		12,235		—		11,903		145		11,127		272
With an allowance recorded:
Commercial real estate:
Owner occupied		—		—		—		—		—		—		—
Non-owner occupied		—		—		—		—		—		—		—
Residential real estate:
Residential mortgages		—		—		—		—		—		—		—
Home equity		—		—		—		—		—		—		—
Commercial and industrial:
Secured		5,162		5,162		371		4,548		42		4,246		77
Unsecured		344		344		344		115		—		57		—
Total with an allowance recorded		5,506		5,506		715		4,663		42		4,303		77
Total:
Commercial real estate:
Owner occupied		589		605		—		576		—		524		—
Non-owner occupied		3,241		3,258		—		2,904		25		2,842		50
Residential real estate:
Residential mortgages		—		—		—		—		—		—		—
Home equity		—		—		—		—		—		—		—
Commercial and industrial:
Secured		6,806		6,806		371		6,192		61		5,808		113
Unsecured		7,072		7,072		344		6,894		101		6,256		186
Total	$	17,708	$	17,741	$	715	$	16,566	$	187	$	15,430	$	349

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							Three Months Ended				Six Months Ended
	December 31, 2018						June 30, 2018				June 30, 2018
			Unpaid		Related		Average		Interest		Average		Interest
	Recorded		Principal		Allocated		Recorded		Income		Recorded		Income
(In thousands)	Investment		Balance		Allowance		Investment		Recognized		Investment		Recognized
With no related allowance recorded:
Commercial real estate:
Owner occupied	$	268	$	278	$	—	$	184	$	—	$	92	$	—
Non-owner occupied		2,816		2,816		—		1,163		7		1,168		8
Residential real estate:
Residential mortgages		—		—		—		—		—		—		—
Home equity		—		—		—		—		—		—		—
Commercial and industrial:
Secured		8,234		8,234		—		8,702		58		8,723		114
Unsecured		5,316		5,316		—		5,178		39		5,055		76
Total with no related allowance recorded		16,634		16,644		—		15,227		104		15,038		198
With an allowance recorded:
Commercial real estate:
Owner occupied		—		—		—		—		—		—		—
Non-owner occupied		—		—		—		—		—		—		—
Residential real estate:
Residential mortgages		—		—		—		—		—		—		—
Home equity		—		—		—		—		—		—		—
Commercial and industrial:
Secured		2,721		2,721		189		—		—		—		—
Unsecured		—		—		—		—		—		—		—
Total with an allowance recorded		2,721		2,721		189		—		—		—		—
Total:
Commercial real estate:
Owner occupied		268		278		—		184		—		92		—
Non-owner occupied		2,816		2,816		—		1,163		7		1,168		8
Residential real estate:
Residential mortgages		—		—		—		—		—		—		—
Home equity		—		—		—		—		—		—		—
Commercial and industrial:
Secured		10,955		10,955		189		8,702		58		8,723		114
Unsecured		5,316		5,316		—		5,178		39		5,055		76
Total	$	19,355	$	19,365	$	189	$	15,227	$	104	$	15,038	$	198

There was no other real estate owned at June 30, 2019. At December 31, 2018, other real estate owned totaled $0.2 million and consisted of one property which was sold during the quarter ended June 30, 2019.

Troubled Debt Restructurings

The terms of certain loans were modified and are considered TDRs. The modification of the terms of such loans generally includes one or a combination of the following: a reduction of the stated interest rate of the loan; an extension of the maturity date at a stated rate of interest lower than the current market rate for new debt with similar risk; or a permanent reduction of the recorded investment in the loan. The modification of these loans involved loans to borrowers who were experiencing financial difficulties.

In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed to determine if that borrower is currently in payment default under any of its obligations or whether there is a probability that the borrower will be in payment default on any of its debt in the foreseeable future without the modification.

During the six months ended June 30, 2019, the Bank modified five commercial and industrial loans, including three taxi medallion loans, totaling $4.1 million as TDRs compared to eight commercial and industrial loans totaling $6.8 million modified as TDRs during the six months ended June 30, 2018. These modifications did not result in a change to the recorded investment of the loans and did not increase the allowance for loan losses for those periods. During the six months ended June 30, 2019, there were three charge-offs totaling $84 thousand relating to TDRs and there were two loans

25

modified as a TDR for which there was a payment default within twelve months following the modification. During the six months ended June 30, 2018, there were no charge-offs relating to TDRs and there were no loans modified as TDRs for which there was a payment default within twelve months following the modification. A loan is considered to be in payment default once it is 30 days contractually past due under the modified terms.

As of June 30, 2019 and December 31, 2018, the Company had $111 thousand and $133 thousand, respectively, of non-accrual TDRs and $16.9 million and $16.9 million, respectively, of performing TDRs. At June 30, 2019 and December 31, 2018, non-accrual TDRs were unsecured. The Bank has no commitment to lend additional funds to these debtors.

The terms of certain other loans were modified during the six months ended June 30, 2019 that did not meet the definition of a TDR. These loans have a total recorded investment at June 30, 2019 of $31.8 million. These loans were to borrowers who were not experiencing financial difficulties.

Purchased Credit Impaired Loans

Loans acquired in a business combination are recorded at their fair value at the acquisition date. Credit discounts are included in the determination of fair value; therefore, an allowance for loan losses is not recorded at the acquisition date.

At the acquisition date, the purchased credit impaired (“PCI”) loans acquired as part of the First National Bank of New York (“FNBNY”) acquisition had contractually required principal and interest payments receivable of $40.3 million, expected cash flows of $28.4 million, and a fair value (initial carrying amount) of $21.8 million. The difference between the contractually required principal and interest payments receivable and the expected cash flows of $11.9 million represented the non-accretable difference. The difference between the expected cash flows and fair value of $6.6 million represented the initial accretable yield. At June 30, 2019, the contractually required principal and interest payments receivable and carrying amount of the PCI loans was $1.1 million and $0.5 million, respectively, with a remaining non-accretable difference of $0.5 million. At December 31, 2018, the contractually required principal and interest payments receivable and carrying amount of the PCI loans was $1.1 million and $0.5 million, respectively, with a remaining non-accretable difference of $0.5 million.

At the acquisition date, the PCI loans acquired as part of the CNB acquisition had contractually required principal and interest payments receivable of $23.4 million, expected cash flows of $10.1 million, and a fair value (initial carrying amount) of $8.7 million. The difference between the contractually required principal and interest payments receivable and the expected cash flows of $13.3 million represented the non-accretable difference. The difference between the expected cash flows and fair value of $1.4 million represented the initial accretable yield. At June  30, 2019, the contractually required principal and interest payments receivable of the PCI loans was $0.6 million and the carrying amount was zero, with a remaining non-accretable difference of $0.5 million. At December 31, 2018, the contractually required principal and interest payments receivable and carrying amount of the PCI loans was $1.2 million and $0.1 million, respectively, with a remaining non-accretable difference of $0.8 million.

The following table summarizes the activity in the accretable yield for the PCI loans:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
(In thousands)	2019		2018		2019		2018
Balance at beginning of period	$	363	$	957	$	460	$	2,151
Accretion		(286)		(269)		(394)		(1,302)
Reclassification from nonaccretable difference during the period		19		424		30		263
Accretable discount at end of period	$	96	$	1,112	$	96	$	1,112

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7. ALLOWANCE FOR LOAN LOSSES

The following tables represent the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment, as defined under FASB ASC 310‑10, and based on impairment method as of June 30, 2019 and December 31, 2018. The tables include loans acquired from CNB and FNBNY.

	June 30, 2019
					Residential		Commercial,		Real Estate
	Commercial				Real Estate		Industrial and		Construction		Installment/
	Real Estate		Multi-family		Mortgage		Agricultural		and Land		Consumer
(In thousands)	Mortgage Loans		Loans		Loans		Loans		Loans		Loans		Total
Allowance for loan losses:
Individually evaluated for impairment	$	—	$	—	$	—	$	715	$	—	$	—	$	715
Collectively evaluated for impairment		10,878		2,545		2,620		12,843		1,333		237		30,456
Loans acquired with deteriorated credit quality		—		—		—		—		—		—		—
Total allowance for loan losses	$	10,878	$	2,545	$	2,620	$	13,558	$	1,333	$	237	$	31,171
Loans:
Individually evaluated for impairment	$	3,830	$	—	$	—	$	13,878	$	—	$	—	$	17,708
Collectively evaluated for impairment		1,432,391		631,146		503,025		661,167		150,868		25,825		3,404,422
Loans acquired with deteriorated credit quality		—		—		329		123		—		—		452
Total loans	$	1,436,221	$	631,146	$	503,354	$	675,168	$	150,868	$	25,825	$	3,422,582

	December 31, 2018
					Residential		Commercial,		Real Estate
	Commercial				Real Estate		Industrial and		Construction		Installment/
	Real Estate		Multi-family		Mortgage		Agricultural		and Land		Consumer
(In thousands)	Mortgage Loans		Loans		Loans		Loans		Loans		Loans		Total
Allowance for loan losses:
Individually evaluated for impairment	$	—	$	—	$	—	$	189	$	—	$	—	$	189
Collectively evaluated for impairment		10,792		2,566		3,935		12,533		1,297		106		31,229
Loans acquired with deteriorated credit quality		—		—		—		—		—		—		—
Total allowance for loan losses	$	10,792	$	2,566	$	3,935	$	12,722	$	1,297	$	106	$	31,418
Loans:
Individually evaluated for impairment	$	3,084	$	—	$	—	$	16,271	$	—	$	—	$	19,355
Collectively evaluated for impairment		1,370,472		585,827		519,455		629,229		123,393		20,509		3,248,885
Loans acquired with deteriorated credit quality		—		—		308		224		—		—		532
Total loans	$	1,373,556	$	585,827	$	519,763	$	645,724	$	123,393	$	20,509	$	3,268,772

The following tables represent the changes in the allowance for loan losses for the three and six months ended June 30, 2019 and 2018, by portfolio segment, as defined under FASB ASC 310‑10. The portfolio segments represent the categories that the Bank uses to determine its allowance for loan losses.

	Three Months Ended June 30, 2019
					Residential		Commercial,		Real Estate
	Commercial				Real Estate		Industrial and		Construction		Installment/
	Real Estate		Multi-family		Mortgage		Agricultural		and Land		Consumer
(In thousands)	Mortgage Loans		Loans		Loans		Loans		Loans		Loans		Total
Allowance for loan losses:
Beginning balance	$	11,099	$	2,557	$	3,374	$	13,073	$	1,526	$	155	$	31,784
Charge-offs		(3,670)		—		—		(554)		—		—		(4,224)
Recoveries		—		—		110		1		—		—		111
Provision (Credit)		3,449		(12)		(864)		1,038		(193)		82		3,500
Ending balance	$	10,878	$	2,545	$	2,620	$	13,558	$	1,333	$	237	$	31,171

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	Three Months Ended June 30, 2018
					Residential		Commercial,		Real Estate
	Commercial				Real Estate		Industrial and		Construction		Installment/
	Real Estate		Multi-family		Mortgage		Agricultural		and Land		Consumer
(In thousands)	Mortgage Loans		Loans		Loans		Loans		Loans		Loans		Total
Allowance for loan losses:
Beginning balance	$	11,334	$	3,002	$	3,495	$	14,055	$	821	$	105	$	32,812
Charge-offs		—		—		(24)		(1,708)		—		—		(1,732)
Recoveries		—		—		—		171		—		1		172
(Credit) Provision		(128)		(536)		766		(160)		442		16		400
Ending balance	$	11,206	$	2,466	$	4,237	$	12,358	$	1,263	$	122	$	31,652

	Six Months Ended June 30, 2019
					Residential		Commercial,		Real Estate
	Commercial				Real Estate		Industrial and		Construction		Installment/
	Real Estate		Multi-family		Mortgage		Agricultural		and Land		Consumer
(In thousands)	Mortgage Loans		Loans		Loans		Loans		Loans		Loans		Total
Allowance for loan losses:
Beginning balance	$	10,792	$	2,566	$	3,935	$	12,722	$	1,297	$	106	$	31,418
Charge-offs		(3,670)		—		—		(796)		—		(4)		(4,470)
Recoveries		—		—		111		12		—		—		123
Provision (Credit)		3,756		(21)		(1,426)		1,620		36		135		4,100
Ending balance	$	10,878	$	2,545	$	2,620	$	13,558	$	1,333	$	237	$	31,171

	Six Months Ended June 30, 2018
					Residential		Commercial,		Real Estate
	Commercial				Real Estate		Industrial and		Construction		Installment/
	Real Estate		Multi-family		Mortgage		Agricultural		and Land		Consumer
(In thousands)	Mortgage Loans		Loans		Loans		Loans		Loans		Loans		Total
Allowance for loan losses:
Beginning balance	$	11,048	$	4,521	$	2,438	$	12,838	$	740	$	122	$	31,707
Charge-offs		—		—		(24)		(1,708)		—		—		(1,732)
Recoveries		—		—		1		475		—		1		477
Provision (Credit)		158		(2,055)		1,822		753		523		(1)		1,200
Ending balance	$	11,206	$	2,466	$	4,237	$	12,358	$	1,263	$	122	$	31,652

8. PENSION AND POSTRETIREMENT PLANS

The Bank maintains a noncontributory pension plan (the “Pension Plan”) covering all eligible employees. The Bank uses a December 31 measurement date for this plan in accordance with FASB ASC 715‑30 “Compensation – Retirement Benefits – Defined Benefit Plans – Pension.” During 2012, the Company amended the Pension Plan by revising the formula for determining benefits effective January 1, 2013, except for certain grandfathered employees. Additionally, new employees hired on or after October 1, 2012 are not eligible for the Pension Plan.

During 2001, the Bank adopted the Bridgehampton National Bank Supplemental Executive Retirement Plan (“SERP”). As recommended by the Compensation Committee of the Board of Directors and approved by the full Board of Directors, the SERP provides benefits to certain employees, whose benefits under the Pension Plan are limited by the applicable provisions of the Internal Revenue Code. The benefit under the SERP is equal to the additional amount the employee would be entitled to under the Pension Plan and the 401(k) Plan in the absence of such Internal Revenue Code limitations. The assets of the SERP are held in a rabbi trust to maintain the tax-deferred status of the plan and are subject to the general, unsecured creditors of the Company. As a result, the assets of the rabbi trust are reflected on the Company’s consolidated balance sheets.

There were no contributions to the Pension Plan during the six months ended June 30, 2019 and 2018, respectively. There were no  contributions to the SERP during the six months ended June  30, 2019 and 2018, respectively. In accordance with the SERP, a retired executive received a distribution totaling $56 thousand during each of the six months ended June  30, 2019 and 2018, respectively.

The Company's funding policy with respect to its benefit plans is to contribute at least the minimum amounts required by applicable laws and regulations.

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The following table presents the components of net periodic benefit cost (credit):

	Three Months Ended June 30,								Six Months Ended June 30,
	Pension Benefits				SERP Benefits				Pension Benefits				SERP Benefits
(In thousands)	2019		2018		2019		2018		2019		2018		2019		2018
Components of net periodic benefit cost and other amounts recognized in other comprehensive income:
Service cost	$	272	$	325	$	66	$	72	$	545	$	650	$	131	$	145
Interest cost		225		198		36		31		450		395		73		63
Expected return on plan assets		(607)		(625)		—		—		(1,215)		(1,250)		—		—
Amortization of net loss		130		82		17		31		260		165		35		61
Amortization of prior service credit		(19)		(19)		—		—		(38)		(38)		—		—
Amortization of transition obligation		—		—		—		1		—		—		—		2
Net periodic benefit cost (credit)	$	1	$	(39)	$	119	$	135	$	2	$	(78)	$	239	$	271

9. SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE

Securities sold under agreements to repurchase totaled $0.9 million at June 30, 2019 and $0.5 million at December 31, 2018. The repurchase agreements were collateralized by investment securities, of which 18% were U.S. GSE residential collateralized mortgage obligations and 82% were U.S. GSE residential mortgage-backed securities with a carrying amount of $2.2 million at June 30, 2019 and 18% were U.S. GSE residential collateralized mortgage obligations and 82% were U.S. GSE residential mortgage-backed securities with a carrying amount of $2.4 million at December 31, 2018.

Securities sold under agreements to repurchase are financing arrangements with $0.9 million maturing during the third quarter of 2019. At maturity, the securities underlying the agreements are returned to the Company. The primary risk associated with these secured borrowings is the requirement to pledge a market value-based balance of collateral in excess of the borrowed amount. The excess collateral pledged represents an unsecured exposure to the lending counterparty. As the market value of the collateral changes, both through changes in discount rates and spreads as well as related cash flows, additional collateral may need to be pledged. In accordance with the Company's policies, eligible counterparties are defined and monitored to minimize exposure.

10. FEDERAL HOME LOAN BANK ADVANCES

The following tables present the contractual maturities and weighted average interest rates of FHLB advances for each of the next five years. There are no FHLB advances with contractual maturities after 2019.

	June 30, 2019
(Dollars in thousands)			Weighted
Contractual Maturity	Amount		AverageRate
Overnight	$	—	—	%
2019		240,000	2.46
Total FHLB advances	$	240,000	2.46	%

	December 31, 2018
(Dollars in thousands)			Weighted
Contractual Maturity	Amount		AverageRate
Overnight	$	—	—	%
2019		240,433	2.72
Total FHLB advances	$	240,433	2.72	%

Each advance is payable at its maturity date, with a prepayment penalty for fixed rate advances. The advances were collateralized by $1.3 billion of residential and commercial mortgage loans under a blanket lien arrangement at June 30, 2019 and December 31, 2018, respectively. Based on this collateral and the Company's holdings of FHLB stock, the Company is eligible to borrow up to a total of $1.4 billion at June  30, 2019.

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11. SUBORDINATED DEBENTURES

In September 2015, the Company issued $80.0 million in aggregate principal amount of fixed-to-floating rate subordinated debentures. $40.0 million of the subordinated debentures are callable at par after five years, have a stated maturity of September 30, 2025 and bear interest at a fixed annual rate of 5.25% per year, from and including September 21, 2015 until but excluding September 30, 2020. From and including September 30, 2020 to the maturity date or early redemption date, the interest rate will reset quarterly to an annual interest rate equal to the then-current three-month LIBOR plus 360 basis points. The remaining $40.0 million of the subordinated debentures are callable at par after ten years, have a stated maturity of September 30, 2030 and bear interest at a fixed annual rate of 5.75% per year, from and including September 21, 2015 until but excluding September 30, 2025. From and including September 30, 2025 to the maturity date or early redemption date, the interest rate will reset quarterly to an annual interest rate equal to the then-current three-month LIBOR plus 345 basis points. The subordinated debentures totaled $78.9 million at June 30, 2019 and $78.8 million at December 31, 2018.

The subordinated debentures are included in tier 2 capital (with certain limitations applicable) under current regulatory guidelines and interpretations.

12. DERIVATIVES

As described in Note 15, Recent Accounting Pronouncements, during the first quarter of 2019 the Company adopted ASU 2017-12, Derivatives and Hedging: Targeted Improvements to Accounting for Hedging Activities. The purpose of this updated guidance is to better align a company’s financial reporting for hedging activities with the economic objectives of those activities. ASU 2017-12 is effective for public business entities for fiscal years beginning after December 15, 2018, with early adoption, including adoption in an interim period, permitted. ASU 2017-12 requires a modified retrospective transition method in which the Company will recognize the cumulative effect of the change on the opening balance of each affected component of equity in the statement of financial position as of the date of adoption. The Company has adopted the standard in 2019 with minimal impact to its financial position upon transition.

The Alternative Reference Rates Committee ("ARRC") has proposed that the Secured Overnight Funding Rate ("SOFR") replace USD-LIBOR. ARRC has proposed that the transition to SOFR from USD-LIBOR will take place by the end of 2021. The Company has material contracts that are indexed to USD-LIBOR. Industry organizations are currently working on the transition plan. The Company is currently monitoring this activity and evaluating the risks involved.

Cash Flow Hedges of Interest Rate Risk

As part of its asset liability management, the Company utilizes interest rate swap agreements to help manage its interest rate risk position. The notional amount of the interest rate swap does not represent the amount exchanged by the parties. The amount exchanged is determined by reference to the notional amount and the other terms of the individual interest rate swap agreements.

Interest rate swaps with notional amounts totaling $290.0 million and $240.0 million at June  30, 2019 and December 31, 2018, respectively, were designated as cash flow hedges of certain FHLB advances. The swaps were determined to be fully effective during the periods presented and therefore no amount of ineffectiveness has been included in net income. The aggregate fair value of the swaps is recorded in other assets or other liabilities, with changes in fair value recorded in other comprehensive income (loss). The amount included in accumulated other comprehensive income (loss) would be reclassified to current earnings should the hedges no longer be considered effective. The Company expects the hedges to remain fully effective during the remaining term of the swaps.

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The following table summarizes information about the interest rate swaps designated as cash flow hedges at June  30, 2019 and December 31, 2018:

(Dollars in thousands)	June 30, 2019			December 31, 2018
Notional amounts	$	290,000		$	240,000
Weighted average pay rates		1.82	%		1.84	%
Weighted average receive rates		2.39	%		2.77	%
Weighted average maturity		2.30	years		2.03	years

Interest income recorded on these swap transactions totaled $466 thousand and $1.0 million for the three and six months ended June  30, 2019, and interest income recorded on these swap transactions totaled $344 thousand and $279 thousand for the three and six months ended June  30, 2018 which is reported as a component of interest expense on FHLB advances. Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest income/expense as interest payments are made/received on the Company's variable-rate assets/liabilities. During the six months ended June  30, 2019, the Company had $466 thousand of reclassifications as a reduction to interest expense. During the next twelve months, the Company estimates that $0.4 million will be reclassified as a decrease in interest expense.

The following table presents the net gains (losses) recorded in accumulated other comprehensive income and the consolidated statements of income relating to the cash flow derivative instruments for the three and six months ended June  30, 2019 and 2018:

					Amount of loss
	Amount of (loss) gain		Amount of gain		recognized in other
(In thousands)	recognized in OCI		reclassified from OCI		non-interest income
Interest rate contracts	(Effective Portion)		to interest expense		(Ineffective Portion)
Three months ended June 30, 2019	$	(3,106)	$	466	$	—
Six months ended June 30, 2019	$	(4,703)	$	1,022	$	—
Three months ended June 30, 2018	$	1,020	$	344	$	—
Six months ended June 30, 2018	$	3,847	$	279	$	—

The following table reflects the cash flow hedges included in the consolidated balance sheets at the dates indicated:

	June 30, 2019						December 31, 2018
			Fair		Fair				Fair		Fair
(In thousands)	Notional		Value		Value		Notional		Value		Value
Included in other assets/(liabilities):	Amount		Asset		Liability		Amount		Asset		Liability
Interest rate swaps related to FHLB advances	$	240,000	$	995	$	(1,159)	$	240,000	$	4,239	$	(4)
Forward starting interest rate swaps related to FHLB advances		50,000		—		(1,432)		—		—		—

Non-Designated Hedges

Derivatives not designated as hedges may be used to manage the Company's exposure to interest rate movements or to provide service to customers but do not meet the requirements for hedge accounting under U.S. GAAP. The Company executes interest rate swaps with commercial lending customers to facilitate their respective risk management strategies. These interest rate swaps with customers are simultaneously offset by interest rate swaps that the Company executes with a third party in order to minimize the net risk exposure resulting from such transactions. These interest-rate swap agreements do not qualify for hedge accounting treatment, and therefore changes in fair value are reported in current period earnings.

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The following table presents summary information about the interest rate swaps at June  30, 2019 and December 31, 2018:

(Dollars in thousands)	June 30, 2019			December 31, 2018
Notional amounts	$	329,103		$	193,401
Weighted average pay rates		4.38	%		4.52	%
Weighted average receive rates		4.38	%		4.52	%
Weighted average maturity		12.06	years		12.25	years
Fair value of combined interest rate swaps	$	—		$	—

Credit-Risk-Related Contingent Features

As of June  30, 2019, the termination value of derivatives in a net liability position, which includes accrued interest but excludes any adjustment for nonperformance risk, related to these agreements was $12.6 million, while there were no derivatives in a net asset position. The Company has minimum collateral posting thresholds with certain of its derivative counterparties. If the termination value of derivatives is a net asset position, the counterparty is required to post collateral against its obligations to the Company under the agreements. However, if the termination value of derivatives is a net liability position, the Company is required to post collateral to the counterparty. At June 30, 2019, the Company posted collateral of $12.3 million to its counterparties under the agreements in a net liability position and received no collateral from its counterparties under the agreements in a net asset position. If the Company had breached any of these provisions at June 30, 2019, it could have been required to settle its obligations under the agreements at the termination value.

13. LEASES

The Company has operating leases for certain branch locations, corporate offices and equipment. Certain leases contain rent escalation clauses, which are reflected in the Company’s operating lease liabilities. The Company’s lease agreements do not contain any material residual value guarantees, restrictions or covenants.

The components of lease cost were as follows:

	Three Months Ended		Six Months Ended
(In thousands)	June 30, 2019		June 30, 2019
Lease cost
Operating lease cost	$	1,688	$	3,351
Sublease income		(15)		(39)
Total lease cost	$	1,673	$	3,312

The Company reports lease cost in occupancy and equipment expense in the consolidated statements of income. The Company subleases a portion of its leased properties to commercial sublessees.  Sublease income is included in other operating income in the consolidated statements of income. 

Supplemental cash flow and balance sheet information related to operating leases were as follows:

	Six Months Ended
(Dollars in thousands)	June 30, 2019
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	3,441
Operating right-of-use assets obtained in exchange for lease liabilities	$	39,825

	June 30, 2019
Weighted-average remaining lease term-operating leases		8.2	years
Weighted-average discount rate-operating leases (1)		3.41	%

1) The Company computes the present value of operating lease liabilities using its incremental borrowing rate as the discount rate.

Certain leases contain renewal options which are not reflected in the tables below.  The exercise of renewal options, which extend the lease term from five to ten years, is at the Company’s discretion.

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The maturities of operating lease liabilities were as follows:

(In thousands)	June 30, 2019
2019	$	3,088
2020		6,046
2021		5,946
2022		5,742
2023		4,759
Thereafter		21,124
Total operating lease payments	$	46,705
Less: Interest		(6,442)
Present value of operating lease liabilities	$	40,263

(In thousands)	December 31, 2018
2019	$	7,248
2020		6,504
2021		6,185
2022		5,903
2023		4,695
Thereafter		18,687
Total operating lease payments	$	49,222

14. ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME

The following table summarizes the components of other comprehensive income (loss) and related income tax effects:

	Three Months Ended				Six Months Ended
(In thousands)	June 30, 2019		June 30, 2018		June 30, 2019		June 30, 2018
Unrealized holding gains (losses) on available for sale securities	$	8,489	$	(4,231)	$	14,020	$	(12,818)
Reclassification adjustment for (gains) losses realized in income		(201)		7,921		(201)		7,921
Income tax effect		(2,417)		(1,074)		(4,030)		1,425
Net change in unrealized gains (losses) on available for sale securities		5,871		2,616		9,789		(3,472)
Reclassification adjustment for amortization realized in income		129		95		257		190
Income tax effect		(38)		(27)		(76)		(55)
Net change in post-retirement obligation		91		68		181		135
Change in fair value of derivatives used for cash flow hedges		(3,106)		1,020		(4,703)		3,847
Reclassification adjustment for gains realized in income		(466)		(344)		(1,022)		(279)
Income tax effect		1,042		(197)		1,670		(1,038)
Net change in unrealized (losses) gains on cash flow hedges		(2,530)		479		(4,055)		2,530
Other comprehensive income (loss)	$	3,432	$	3,163	$	5,915	$	(807)

The following is a summary of the accumulated other comprehensive loss balances, net of income taxes, at the dates indicated:

			Other
	December 31,		Comprehensive			June 30,
(In thousands)	2018		Income			2019
Unrealized (losses) gains on available for sale securities	$	(11,685)	$	9,789	$	(1,896)
Unrealized (losses) gains on pension benefits		(6,365)		181		(6,184)
Unrealized gains (losses) on cash flow hedges		2,938		(4,055)		(1,117)
Accumulated other comprehensive (loss) gain, net of income taxes	$	(15,112)	$	5,915	$	(9,197)

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The following represents the reclassifications out of accumulated other comprehensive (loss) income for the three and six months ended June 30, 2019 and 2018:

	Three Months Ended				Six Months Ended				Affected Line Item
	June 30,		June 30,		June 30,		June 30,		in the Consolidated
(In thousands)	2019		2018		2019		2018		Statements of Income
Realized gains (losses) on sale of available for sale securities	$	201	$	(7,921)	$	201	$	(7,921)	Net securities gains (losses)
Amortization of defined benefit pension plan and defined benefit plan component of the SERP:
Prior service credit		19		19		38		38	Other operating expenses
Transition obligation		—		(1)		—		(2)	Other operating expenses
Actuarial losses		(147)		(113)		(295)		(226)	Other operating expenses
Realized gains on cash flow hedges		466		344		1,022		279	Interest expense
Total reclassifications, before income tax	$	539	$	(7,672)	$	966	$	(7,832)
Income tax (expense) benefit		(157)		2,231		(282)		2,278	Income tax expense
Total reclassifications, net of income tax	$	382	$	(5,441)	$	684	$	(5,554)

15. RECENT ACCOUNTING PRONOUNCEMENTS

Standards Effective in 2019

ASU 2016-02, Leases (Topic 842)

In February 2016, the FASB amended existing guidance that requires lessees recognize the following for all leases (with the exception of short-term leases) at the commencement date (1) a lease liability, which is a lessee's obligation to make lease payments arising from a lease, measured on a discounted basis; and (2) a right-of-use asset, which is an asset that represents the lessee's right to use, or control the use of, a specified asset for the lease term. Under the new guidance, lessor accounting is largely unchanged. The new guidance also requires enhanced disclosure about an entity’s leasing arrangements. The Company adopted Topic 842 using the transition approach of applying the new leases standard at the beginning of the period of adoption on January 1, 2019. The new guidance includes a number of optional transition-related practical expedients that must be elected as a package and applied by a reporting entity to all of its leases consistently.  The Company has elected to apply the package of practical expedients to all of its existing leases, which among other things, allowed the Company to carry forward the historical lease classification as operating leases in accordance with previous GAAP.  The effect of adopting this standard in the Company’s consolidated balance sheets was a $39 million increase in operating right-of-use assets and operating lease liabilities as of January 1, 2019. Refer to Note 13. “Leases” for further details of Leases.

ASU 2017‑12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities

In August 2017, the FASB provided guidance to improve the financial reporting of hedging relationships to better portray the economic results of an entity's risk management activities in its financial statements. The amendments also simplify the application of the hedge accounting guidance. The amendments in the ASU better align an entity's risk management activities and financial reporting for hedging relationships through changes in both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results. The amendments expand and refine hedge accounting for both nonfinancial and financial risk components and align the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. The amendments in this ASU are effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. All transition requirements and elections should be applied to hedging relationships existing on the date of adoption. The effect of adoption should be reflected as of the beginning of the fiscal year of adoption. For cash flow and net investment hedges existing at the date of adoption, an entity shall apply a cumulative-effect adjustment related to eliminating the separate measurement of ineffectiveness to accumulated other comprehensive income with a corresponding adjustment to the opening balance of retained earnings as of the beginning of the fiscal year that an entity adopts the amendments in this ASU. The amended presentation and disclosure guidance is required only prospectively. The adoption of this standard did not have an effect on the Company's consolidated financial statements.

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Standards Effective in 2020

ASU 2016‑13, Financial Instruments – Credit Losses (Topic 326)

In June 2016, FASB issued guidance to replace the incurred loss model with an expected loss model, which is referred to as the current expected credit loss (“CECL”) model. The CECL model is applicable to the measurement of credit losses on financial assets measured at amortized cost, including loan receivables, held to maturity debt securities. It also applies to off-balance sheet credit exposures not accounted for as insurance (loan commitments, standby letters of credit, financial guarantees, and other similar instruments) and net investments in certain leases recognized by a lessor. In addition, the amendments in this ASU require credit losses be presented as an allowance rather than as a write-down on available-for-sale debt securities. For public business entities that meet the definition of an SEC filer, like the Company, the standard is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. For calendar year-end SEC filers, like the Company, the standard is effective for March 31, 2020 interim financial statements. For debt securities with other-than-temporary impairment (“OTTI”), the guidance will be applied prospectively. Existing PCI assets will be grandfathered and classified as purchase credit deteriorated (“PCD”) assets at the date of adoption. The asset will be grossed up for the allowance for expected credit losses for all PCD assets at the date of adoption and will continue to recognize the noncredit discount in interest income based on the yield of such assets as of the adoption date. Subsequent changes in expected credit losses will be recorded through the allowance. For all other assets within the scope of CECL, a cumulative-effect adjustment will be recognized in retained earnings as of the beginning of the first reporting period in which the guidance is effective. The Company has created a cross-functional CECL committee that is assessing data and system needs and implementing required changes to loss estimation methods under the CECL model. The Company plans to adopt ASU 2016‑13 in the first quarter of 2020 using the required modified retrospective method with a cumulative effect adjustment to the allowance for loan losses as of the beginning of the reporting period. The Company expects the adoption will result in an increase to the allowance for loan losses balance. The effect on the Company’s consolidated financial statements is being evaluated.

ASU 2017‑04, Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment

In January 2017, the FASB amended existing guidance to simplify the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. The amendments require an entity to perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and recognizing an impairment charge for the amount by which the carrying amount of the reporting unit exceeds its fair value, not to exceed the total amount of goodwill allocated to that reporting unit. Additionally, an entity should consider income tax effects from any tax-deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. The amendments also eliminate the requirement for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. The amendments are effective for public business entities that are an SEC filer, like the Company, for annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2019. The amendments should be applied prospectively. An entity is required to disclose the nature of and reason for the change in accounting principle upon transition in the first annual period when the entity initially adopts the amendments. The adoption of ASU 2017‑04 is not expected to have a material effect on the Company's consolidated financial statements.

ASU 2018‑15, Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract

In August 2018, the FASB issued ASU 2018-15 to align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). The amendments in this ASU are effective for public business entities, like the Company, for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption of the amendments in this ASU is permitted, including adoption in any interim period. The amendments in this ASU should be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. The adoption of ASU 2018‑15 is not expected to have a material effect on the Company's consolidated financial statements.

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Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

In this Quarterly Report on Form 10-Q, unless otherwise mentioned, the terms the “Company”, “we”, “us” and “our” refer to Bridge Bancorp, Inc. and its wholly owned subsidiary, BNB Bank (the “Bank”). We use the term “Holding Company” to refer solely to Bridge Bancorp, Inc. and not to its consolidated subsidiary.

Private Securities Litigation Reform Act Safe Harbor Statement

This report may contain statements relating to our future results (including certain projections and business trends) that are considered “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995 (the “PSLRA”). Such forward-looking statements, in addition to historical information, which involve risk and uncertainties, are based on the beliefs, assumptions and expectations of our management. Words such as “expects,” “believes,” “should,” “plans,” “anticipates,” “will,” “potential,” “could,” “intend,” “may,” “outlook,” “predict,” “project,” “would,” “estimated,” “assumes,” “likely,” and variations of such similar expressions are intended to identify such forward-looking statements. Examples of forward-looking statements include, but are not limited to, possible or assumed estimates with respect to the financial condition, expected or anticipated revenue, and results of operations and our business, including earnings growth; revenue growth in retail banking, lending and other areas; origination volume in the consumer, commercial and other lending businesses; current and future capital management programs; non-interest income levels, including fees from the title insurance subsidiary and banking services as well as product sales; tangible capital generation; market share; expense levels; and other business operations and strategies. We claim the protection of the safe harbor for forward-looking statements contained in the PSLRA.

Factors that could cause future results to vary from current management expectations include, but are not limited to, changing economic conditions; legislative and regulatory changes, including increases in FDIC insurance rates; monetary and fiscal policies of the federal government; changes in tax policies; rates and regulations of federal, state and local tax authorities; changes in interest rates; deposit flows; the cost of funds; demand for loan products; demand for financial services; competition; our ability to successfully integrate acquired entities; changes in the quality and composition of our loan and investment portfolios; changes in management's business strategies; changes in accounting principles, policies or guidelines; changes in real estate values; expanded regulatory requirements as a result of the Dodd-Frank Act, which could adversely affect operating results; and the “Risk Factors” discussed in the our Annual Report on Form 10‑K for the year ended December 31, 2018, as updated by our Quarterly Reports on Form 10-Q. The forward-looking statements are made as of the date of this report, and we assume no obligation to update the forward-looking statements or to update the reasons why actual results could differ from those projected in the forward-looking statements.

Overview

Who We Are and How We Generate Income

Bridge Bancorp, Inc., a New York corporation, is a bank holding company formed in 1989. On a parent-only basis, the Holding Company has had minimal results of operations. The Holding Company is dependent on dividends from its wholly-owned subsidiary, BNB Bank, its own earnings, additional capital raised, and borrowings as sources of funds. The information in this report reflects principally the financial condition and results of operations of the Bank. The Bank's results of operations are primarily dependent on its net interest income, which is the difference between interest income on loans and investments and interest expense on deposits and borrowings. The Bank also generates non-interest income, such as fee income on deposit accounts and merchant credit and debit card processing programs, investment services, income from its title insurance subsidiary, and net gains on sales of securities and loans. The level of non-interest expenses, such as salaries and benefits, occupancy and equipment costs, other general and administrative expenses, expenses from the Bank’s title insurance subsidiary, and income tax expense, further affects our net income. Certain reclassifications have been made to prior year amounts and the related discussion and analysis to conform to the current year presentation. These reclassifications did not have an impact on net income or total stockholders' equity.

Our Principal Products and Services and Locations of Operations

The Bank was established in 1910 and is headquartered in Bridgehampton, New York. We operate 39 branches in the primary market areas of Suffolk and Nassau Counties on Long Island and the New York City boroughs, including 36 in

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Suffolk and Nassau Counties, two in Queens and one in Manhattan. For over a century, we have maintained our focus on building customer relationships in its market area. Our mission is to grow through the provision of exceptional service to our customers, our employees, and the community. We strive to achieve excellence in financial performance and build long-term shareholder value. We engage in full service commercial and consumer banking business, including accepting time, savings and demand deposits from the consumers, businesses and local municipalities in our market area. These deposits, together with funds generated from operations and borrowings, are invested primarily in: (1) commercial real estate loans; (2) multi-family mortgage loans; (3) residential mortgage loans; (4) secured and unsecured commercial and consumer loans; (5) home equity loans; (6) construction and land loans; (7) Federal Home Loan Bank (“FHLB”), Federal National Mortgage Association (“Fannie Mae”), Government National Mortgage Association (“Ginnie Mae”) and Federal Home Loan Mortgage Corporation (“Freddie Mac”) mortgage-backed securities, collateralized mortgage obligations and other asset backed securities; (8) New York State and local municipal obligations; (9) U.S. government-sponsored enterprise (“U.S. GSE”) securities; and (10) corporate bonds. We also offer the Certificate of Deposit Account Registry Service (“CDARS”) and Insured Cash Sweep (“ICS”) programs, providing multi-millions of dollars of Federal Deposit Insurance Corporation (“FDIC”) insurance on deposits to our customers. In addition, we offer merchant credit and debit card processing, automated teller machines, cash management services, lockbox processing, online banking services, remote deposit capture, safe deposit boxes, and individual retirement accounts as well as investment services through Bridge Financial Services LLC, which offers a full range of investment products and services through a third-party broker dealer. Through its title insurance abstract subsidiary, the Bank acts as a broker for title insurance services. Our customer base is comprised principally of small businesses, municipal relationships and consumer relationships.

Quarterly Highlights

· Net income for the second quarter of 2019 was $10.7 million, or $0.53 per diluted share, compared to $6.7 million and $0.34 per diluted share for the second quarter of 2018, inclusive of pre-tax net securities losses of $7.9 million, or $0.31 per diluted share after tax, related to the Company’s balance sheet restructure for the second quarter of 2018.

· Net interest income increased to $35.5 million for the second quarter of 2019 compared to $33.9 million in 2018.

· Tax-equivalent net interest margin was 3.30% for the second quarter of 2019 compared to 3.31% for the 2018 period.

· Total assets of $4.7 billion at June 30, 2019, increased $13.8 million compared to December 31, 2018 and increased $299.8 million compared to June 30, 2018.

· Total loans held for investment at June 30, 2019 totaled $3.4 billion, an increase of $154.2 million, or 4.7%, from December 31, 2018 and an increase of $249.3 million, or 7.8%, over June 30, 2018.

· Total deposits of $3.8 billion at June 30, 2019, decreased $49.8 million from December 31, 2018 and increased $283.4 million compared to June 30, 2018.

· Allowance for loan losses was 0.91% of loans at June 30, 2019 compared to 0.96% at December 31, 2018.

· A cash dividend of $0.23 per share was declared in July 2019 for the second quarter.

Challenges and Opportunities

Interest rates have been at or near historic lows for an extended period of time. Growth and service strategies have the potential to offset the compression on the net interest margin with volume as the customer base grows through expanding our banking footprint, while maintaining and developing existing relationships. Since 2010, we have opened fifteen Bank branches, including one in November 2018 in Melville, New York. We have also grown the Bank through acquisitions including the June 2015 acquisition of Community National Bank (“CNB”), the February 2014 acquisition of First National Bank of New York (“FNBNY”), and the May 2011 acquisition of Hamptons State Bank (“HSB”). We will continue to seek opportunities to expand our reach into other contiguous markets by network expansion, or through the addition of professionals with established customer relationships. Recent and pending acquisitions of local competitors may also provide additional growth opportunities.

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We continue to face challenges associated with ever-increasing banking regulations and the current low interest rate environment. Over time, additional rate increases should provide some relief to net interest margin compression as new loans are funded and securities are reinvested at higher rates. However, in the short term, the fair value of available for sale securities declines when rates increase, resulting in net unrealized losses and a reduction in stockholders’ equity. Strategies for managing for the eventuality of higher rates have a cost. Extending liability maturities or shortening the term of assets increases interest expense and reduces interest income. An additional method for managing in a higher rate environment is to grow stable core deposits, requiring continued investment in people, technology and branches. Over time, these strategies should provide long-term benefits.

We established five strategic objectives to achieve our vision: (1) acquire new customers in growth markets; (2) build new sales and marketing disciplines; (3) deepen customer relationships; (4) expand use of automation; and (5) improve talent management. We believe there remain opportunities to grow our franchise and that continued investments to generate core funding, quality loans and new sources of revenue remain keys to continue creating long-term shareholder value. Our ability to attract, retain, train and cultivate employees at all levels of our Company remains significant to meeting our corporate objectives. In particular, we are focused on expanding and retaining our loan team as we continue to grow the loan portfolio. We have capitalized on opportunities presented by the market and diligently seek opportunities to grow and strengthen the franchise. We recognize the potential risks of the current economic environment and will monitor the impact of market events as we evaluate loans and investments and consider growth initiatives. Our management and Board of Directors have built a solid foundation for growth, and we are positioned to adapt to anticipated changes in the industry resulting from new regulations and legislative initiatives.

Critical Accounting Policies

Allowance for Loan Losses

We consider the allowance for loan losses accounting policy to be the most critical and requires complex management judgment. The judgments made regarding the allowance for loan losses can have a material effect on our results of operations.

The allowance for loan losses is established and maintained through a provision for loan losses based on probable incurred losses in our loan portfolio. We evaluate the adequacy of the allowance for loan losses on a quarterly basis. The allowance is comprised of both individual valuation allowances and loan pool valuation allowances. We monitor our entire loan portfolio on a regular basis, with consideration given to detailed analysis of classified loans, repayment patterns, probable incurred losses, past loss experience, current economic conditions, and various types of concentrations of credit. Additions to the allowance are charged to expense and realized losses, net of recoveries, are charged to the allowance.

Individual valuation allowances are established in connection with specific loan reviews and the asset classification process including the procedures for impairment testing under Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) No. 310, “Receivables”. Such valuation, which includes a review of loans for which full collectability in accordance with contractual terms is not reasonably assured, considers the estimated fair value of the underlying collateral less the costs to sell, if any, or the present value of expected future cash flows, or the loan’s observable market value. Any shortfall that exists from this analysis results in a specific allowance for the loan. Pursuant to our policy, loan losses must be charged-off in the period the loans, or portions thereof, are deemed uncollectable. Assumptions and judgments by management, in conjunction with outside sources, are used to determine whether full collectability of a loan is not reasonably assured. These assumptions and judgments are also used to determine the estimates of the fair value of the underlying collateral or the present value of expected future cash flows or the loan’s observable market value. Individual loan analyses are periodically performed on specific loans considered impaired. Individual valuation allowances could differ materially as a result of changes in these assumptions and judgments. The results of the individual valuation allowances are aggregated and included in the overall allowance for loan losses.

Loan pool valuation allowances represent loss allowances that have been established to recognize the inherent risks associated with our lending activities, but which, unlike individual allowances, have not been allocated to particular problem assets. Pool evaluations are broken down into loans with homogenous characteristics by loan type and include commercial real estate mortgages, owner and non-owner occupied; multi-family mortgage loans; residential real estate mortgages, home equity loans; commercial, industrial and agricultural loans, secured and unsecured; real estate

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construction and land loans; and consumer loans. We consider a variety of factors in determining the adequacy of the valuation allowance and have developed a range of valuation allowances necessary to adequately provide for probable incurred losses in each pool of loans. We consider our charge-off history along with the growth in the portfolio as well as our credit administration and asset management philosophies and procedures when determining the allowances for each pool. In addition, we evaluate and consider credit risk ratings, which includes our evaluation of: cash flow, collateral, guarantor support, financial disclosures, industry trends and strength of borrowers’ management, the impact that economic and market conditions may have on the portfolio as well as known and inherent risks in the portfolio. Finally, we evaluate and consider the allowance ratios and coverage percentages of both peer group and regulatory agency data. These evaluations are inherently subjective because, even though they are based on objective data, it is our interpretation of that data that determines the amount of the appropriate allowance. If our evaluations prove to be incorrect, the allowance for loan losses may not be sufficient to cover losses inherent in the loan portfolio, resulting in additions to the allowance for loan losses.

For Purchased Credit Impaired (“PCI”) loans, a valuation allowance is established when it is probable that we will be unable to collect all the cash flows expected at acquisition plus additional cash flows expected to be collected arising from changes in estimate after acquisition. A specific allowance is established when subsequent evaluations of expected cash flows from PCI loans reflect a decrease in those estimates. The allowance established represents the excess of the recorded investment in those loans over the present value of the currently estimated future cash flow, discounted at the last effective accounting yield.

We use assumptions and methodologies that are relevant to estimating the level of impairment and probable losses in the loan portfolio. To the extent that the data supporting such assumptions has limitations, management's judgment and experience play a key role in recording the allowance estimates. Additions to the allowance for loan losses are made by provisions charged to earnings. Furthermore, an improvement in the expected cash flows related to PCI loans would result in a reduction of the required specific allowance with a corresponding credit to the provision.

The Credit Risk Management Committee (“CRMC”) is comprised of management. The adequacy of the allowance is analyzed quarterly, with any adjustment to a level deemed appropriate by the CRMC, based on its risk assessment of the entire portfolio. Each quarter, members of the CRMC meet with the Credit Risk Committee of our Board of Directors to review credit risk trends and the adequacy of the allowance for loan losses. Based on the CRMC’s review of the classified loans, delinquency and charge-off trends, and the overall allowance levels as they relate to the entire loan portfolio at June 30, 2019 and December 31, 2018, we believe the allowance for loan losses has been established at levels sufficient to cover the probable incurred losses in our loan portfolio. Future additions or reductions to the allowance may be necessary based on changes in economic, market or other conditions. Changes in estimates could result in a material change in the allowance. In addition, various regulatory agencies, as an integral part of the examination process, periodically review the allowance for loan losses. Such agencies may require us to recognize adjustments to the allowance based on their judgments of the information available to them at the time of their examination.

For additional information regarding the allowance for loan losses, see Note 7 of the Notes to the Consolidated Financial Statements.

Net Income

Net income for the three months ended June 30, 2019 was $10.7 million and $0.53 per diluted share as compared to $6.7 million and $0.34 per diluted share for the same period in 2018.  Changes in net income for the three months ended June 30, 2019 compared to June 30, 2018 include: (i) a $1.6 million, or 4.7%,  increase in net interest income; (ii) a $3.1 million, or 775.0%, increase in the provision for loan losses; (iii) a $8.1 million, or 313.3%, increase in non-interest income; (iv) a $1.5 million, or 6.7%, increase in non-interest expense; and (v) a $1.2 million, or 68.1%, increase in income tax expense.

Net income for the six months ended June 30, 2019 was $23.6 million and $1.18 per diluted share as compared to $18.8 million and $0.95 per diluted share for the same period in 2018.  Changes in net income for the six months ended June 30, 2019 compared to June 30, 2018 include: (i) a $1.4 million, or 2.0%, increase in net interest income; (ii) a $2.9 million, or 241.7%, increase in the provision for loan losses; (iii) a $9.2 million, or 598.2%, increase in non-interest income; (iv) a $1.5 million, or 3.3%, increase in non-interest expense; and (v) a $1.4 million, or 28.5%, increase in income tax expense.

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Net Interest Income

Net interest income, the primary contributor to earnings, represents the difference between income on interest-earning assets and expenses on interest-bearing liabilities. Net interest income depends on the volume of interest-earning assets and interest-bearing liabilities and the interest rates earned or paid on them.

The following table presents certain information relating to our average consolidated balance sheets and our consolidated statements of income for the periods indicated and reflects the average yield on assets and average cost of liabilities for those periods on a tax-equivalent basis based on the U.S. federal statutory tax rate. Such yields and costs are derived by dividing income or expense by the average balance of assets or liabilities, respectively, for the periods shown. Average balances are derived from daily average balances and include non-accrual loans. The yields and costs include fees and costs, which are considered adjustments to yields. Interest on non-accrual loans has been included only to the extent reflected in the consolidated statements of income. For purposes of this table, the average balances for investments in debt and equity securities exclude unrealized appreciation/depreciation due to the application of FASB ASC 320, “Investments - Debt and Equity Securities.”

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	Three Months Ended June 30,
	2019						2018
					Average						Average
	Average				Yield/		Average				Yield/
(Dollars in thousands)	Balance		Interest		Cost		Balance		Interest		Cost
Interest-earning assets:
Loans, net (1)(2)	$	3,373,601	$	40,000	4.76	%	$	3,179,632	$	35,817	4.52	%
Mortgage-backed securities, CMOs and other asset-backed securities		676,100		4,444	2.64			672,108		3,825	2.28
Taxable securities		148,906		1,187	3.20			182,375		1,445	3.18
Tax-exempt securities (2)		35,025		309	3.54			70,496		514	2.92
Deposits with banks		102,515		599	2.34			25,206		106	1.69
Total interest-earning assets (2)		4,336,147		46,539	4.30			4,129,817		41,707	4.05
Non-interest-earning assets:
Cash and due from banks		81,823						80,637
Other assets		319,897						284,401
Total assets	$	4,737,867					$	4,494,855
Interest-bearing liabilities:
Savings, NOW and money market deposits	$	2,202,916	$	6,997	1.27	%	$	1,910,249	$	3,438	0.72	%
Certificates of deposit of $100,000 or more		211,357		1,079	2.05			167,782		582	1.39
Other time deposits		61,206		288	1.89			118,587		493	1.67
Federal funds purchased and repurchase agreements		25,246		158	2.51			122,463		567	1.86
FHLB advances		243,322		1,178	1.94			337,615		1,407	1.67
Subordinated debentures		78,827		1,135	5.78			78,688		1,135	5.79
Total interest-bearing liabilities		2,822,874		10,835	1.54			2,735,384		7,622	1.12
Non-interest-bearing liabilities:
Demand deposits		1,365,279						1,265,370
Other liabilities		78,278						40,633
Total liabilities		4,266,431						4,041,387
Stockholders' equity		471,436						453,468
Total liabilities and stockholders' equity	$	4,737,867					$	4,494,855
Net interest income/net interest rate spread (2) (3)				35,704	2.76	%				34,085	2.93	%
Net interest-earning assets	$	1,513,273					$	1,394,433
Net interest margin (2) (4)					3.30	%					3.31	%
Tax-equivalent adjustment				(187)	(0.01)					(156)	(0.01)
Net interest income			$	35,517					$	33,929
Net interest margin (4)					3.29	%					3.30	%
Ratio of interest-earning assets to interest-bearing liabilities					153.61	%					150.98	%

(1) Amounts are net of deferred origination costs/(fees) and the allowance for loan losses, and include loans held for sale.

(2) Presented on a tax-equivalent basis based on the U.S. federal statutory tax rate of 21%.

(3) Net interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.

(4) Net interest margin represents net interest income divided by average interest-earning assets.

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	Six Months Ended June 30,
	2019						2018
					Average						Average
	Average				Yield/		Average				Yield/
(Dollars in thousands)	Balance		Interest		Cost		Balance		Interest		Cost
Interest-earning assets:
Loans, net (1)(2)	$	3,324,985	$	77,659	4.71	%	$	3,153,909	$	71,477	4.57	%
Mortgage-backed securities, CMOs and other asset-backed securities		682,214		9,233	2.73			679,283		7,549	2.24
Taxable securities		151,198		2,451	3.27			190,984		2,937	3.10
Tax-exempt securities (2)		39,449		698	3.57			76,746		1,078	2.83
Deposits with banks		97,128		1,143	2.37			24,163		196	1.64
Total interest-earning assets(2)		4,294,974		91,184	4.28			4,125,085		83,237	4.07
Non-interest-earning assets:
Cash and due from banks		80,722						73,966
Other assets		316,305						286,027
Total assets	$	4,692,001					$	4,485,078
Interest-bearing liabilities:
Savings, NOW and money market deposits	$	2,161,720	$	13,366	1.25	%	$	1,876,823	$	5,952	0.64	%
Certificates of deposit of $100,000 or more		207,936		2,062	2.00			161,749		1,099	1.37
Other time deposits		90,088		850	1.90			92,623		688	1.50
Federal funds purchased and repurchase agreements		16,517		203	2.48			136,974		1,173	1.73
FHLB advances		243,306		2,276	1.89			382,681		3,265	1.72
Subordinated debentures		78,810		2,270	5.81			78,671		2,270	5.82
Total interest-bearing liabilities		2,798,377		21,027	1.52			2,729,521		14,447	1.07
Non-interest-bearing liabilities:
Demand deposits		1,349,476						1,264,186
Other liabilities		78,677						39,242
Total liabilities		4,226,530						4,032,949
Stockholders' equity		465,471						452,129
Total liabilities and stockholders' equity	$	4,692,001					$	4,485,078
Net interest income/interest rate spread (2) (3)				70,157	2.76	%				68,790	3.00	%
Net interest-earning assets	$	1,496,597					$	1,395,564
Net interest margin (2) (4)					3.29	%					3.36	%
Tax-equivalent adjustment				(317)	(0.01)					(322)	(0.01)
Net interest income			$	69,840					$	68,468
Net interest margin (4)					3.28	%					3.35	%
Ratio of interest-earning assets to interest-bearing liabilities					153.48	%					151.13	%

(1) Amounts are net of deferred origination costs/(fees) and the allowance for loan losses, and include loans held for sale.

(2) Presented on a tax-equivalent basis based on the U.S. federal statutory tax rate of 21%.

(3) Net interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.

(4) Net interest margin represents net interest income divided by average interest-earning assets.

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Rate/Volume Analysis

Net interest income can be analyzed in terms of the impact of changes in rates and volumes. The following table illustrates the extent to which changes in interest rates and in the volume of average interest-earning assets and interest-bearing liabilities have affected our interest income and interest expense during the periods indicated. Information is provided in each category with respect to (i) changes attributable to changes in volume (changes in volume multiplied by prior rate); (ii) changes attributable to changes in rates (changes in rates multiplied by prior volume); and (iii) the net changes. For purposes of this table, changes that are not due solely to volume or rate changes have been allocated to these categories based on the respective percentage changes in average volume and rate. Due to the numerous simultaneous volume and rate changes during the periods analyzed, it is not possible to precisely allocate changes between volume and rate. In addition, average interest-earning assets include non-accrual loans.

	Three Months Ended June 30,						Six Months Ended June 30,
	2019 Over2018						2019 Over 2018
	Changes Due To						Changes Due To
					Net						Net
(In thousands)	Volume		Rate		Change		Volume		Rate		Change
Interest income on interest-earning assets:
Loans, net (1) (2)	$	2,236	$	1,947	$	4,183	$	3,953	$	2,229	$	6,182
Mortgage-backed securities, CMOs and other asset-backed securities		22		597		619		33		1,651		1,684
Taxable securities		(320)		62		(258)		(895)		409		(486)
Tax-exempt securities (2)		(759)		554		(205)		(983)		603		(380)
Deposits with banks		438		55		493		824		123		947
Total interest income on interest-earning assets (2)		1,617		3,215		4,832		2,932		5,015		7,947
Interest expense on interest-bearing liabilities:
Savings, NOW and money market deposits		595		2,964		3,559		1,022		6,392		7,414
Certificates of deposit of $100,000 or more		176		321		497		369		594		963
Other time deposits		(571)		366		(205)		(54)		216		162
Federal funds purchased and repurchase agreements		(1,389)		980		(409)		(2,026)		1,056		(970)
FHLB advances		(1,300)		1,071		(229)		(1,786)		797		(989)
Subordinated debentures		8		(8)		—		8		(8)		—
Total interest expense on interest-bearing liabilities		(2,481)		5,694		3,213		(2,467)		9,047		6,580
Net interest income (2)	$	4,098	$	(2,479)	$	1,619	$	5,399	$	(4,032)	$	1,367

(1) Amounts are net of deferred origination costs/(fees) and the allowance for loan losses, and include loans held for sale.

(2) Presented on a tax-equivalent basis based on the U.S. federal statutory tax rate of 21%.

Analysis of Net Interest Income for the Three Months Ended June 30, 2019 and 2018

Net interest income was $35.5 million for the three months ended June 30, 2019 compared to $33.9 million for the three months ended June 30, 2018. Average net interest-earning assets increased $118.8 million to $1.5 billion for the three months ended June 30, 2019 compared to $1.4 billion for the three months ended June 30, 2018. The increase in average net interest-earning assets reflects organic growth in loans and a decrease in average borrowings, partially offset by an increase in average deposits and a decrease in average investment securities. Tax-equivalent net interest margin decreased to 3.30% for the three months ended June 30, 2019 compared to 3.31% for the three months ended June 30, 2018. The decrease in tax-equivalent net interest margin for 2019 compared to 2018 reflects the higher overall funding costs due in part to the Fed Funds rate increases in 2018, partially offset by a higher average yield on investment securities and loans, coupled with a lower volume of borrowings in 2018.

Total interest income increased $4.8 million, or 11.6%, to $46.4 million for the three months ended June 30, 2019 from $41.6 million for the same period in 2018, as average interest-earning assets increased $206.3 million, or 5.0%, to $4.3 billion for the three months ended June 30, 2019 compared to $4.1 billion for the same period in 2018. The increase in average interest-earning assets for the three months ended June 30, 2019 compared to 2018 reflects organic growth in

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loans, partially offset by a decrease in average investment securities. The tax-equivalent average yield on interest-earning assets was 4.30% for the quarter ended June 30, 2019 compared to 4.05% for the quarter ended June 30, 2018.

Interest income on loans increased $4.1 million to $39.9 million for the three months ended June 30, 2019 over 2018, primarily due to growth in the loan portfolio. For the three months ended June 30, 2019, average loans grew by $194.0 million, or 6.1%, to $3.4 billion as compared to $3.2 billion for the same period in 2018. The increase in average loans was the result of organic growth in commercial real estate mortgage loans, real estate construction and land loans, commercial and industrial loans, multi-family mortgage loans and residential mortgage loans. The tax-equivalent yield on average loans was 4.76% for the second quarter of 2019 and 4.52% for the same period in 2018. We remain committed to growing loans with prudent underwriting, sensible pricing, and limited credit and extension risk.

Interest income on investment securities was $5.9 million for the three months ended June 30, 2019 compared to $5.7 million for the same period in 2018. Interest income on securities included net amortization of premiums on securities of $0.9 million for the three months ended June 30, 2019 compared to $1.2 million for the same period in 2018. For the three months ended June 30, 2019, average total investment securities decreased by $65.0 million, or 7.0%, to $860.0 million as compared to $925.0 million for the same period in 2018. The tax-equivalent average yield on total investment securities was 2.77% for the three months ended June 30, 2019 and 2.51% for the three months ended June 30, 2018.

Total interest expense increased to $10.8 million for the three months ended June 30, 2019 as compared to $7.6 million for the same period in 2018. The increase in interest expense for the three months ended June 30, 2019 is a result of the increase in the cost of average interest-bearing liabilities coupled with an increase in average deposits, partially offset by a decrease in average borrowings. The cost of average interest-bearing liabilities was 1.54% for the three months ended June 30, 2019 and 1.12% for the three months ended June 30, 2018. The increase in the cost of average interest-bearing liabilities is primarily due to higher overall funding costs due in part to the Fed Funds rate increases in 2018. Since the Company's interest-bearing liabilities generally reprice or mature more quickly than its interest-earning assets, in a rising rate environment the cost of funds increases faster than the yields on assets. We began extending the terms of certain matured borrowings at the end of the 2017 first quarter in anticipation of further Fed Funds rate increases. Additionally, the large percentages of deposits in money market accounts reprice at short-term market rates, making the balance sheet more liability sensitive. We continue our prudent management of deposit pricing. Average total interest-bearing liabilities were $2.8 billion for the three months ended June 30, 2019 and $2.7 billion for the same period in 2018 due to an increase in average deposits, partially offset by a decrease in average borrowings.

For the three months ended June 30, 2019, average total deposits increased by $378.8 million to $3.8 billion as compared to $3.5 billion for the three months ended June 30, 2018 due to increases in average savings, NOW and money market accounts, and average demand deposits, partially offset by a decrease in average certificates of deposit. The average balance of savings, NOW and money market accounts increased $292.7 million, or 15.3%, to $2.2 billion for the three months ended June 30, 2019 compared to $1.9 billion for the three months ended June 30, 2018. The cost of average savings, NOW and money market deposits was 1.27% for the 2019 second quarter compared to 0.72% for the 2018 second quarter. Average demand deposits totaled $1.4 billion for the three months ended June 30, 2019 compared to $1.3 billion for the three months ended June 30, 2018. Average balances in certificates of deposit decreased $13.8 million, or 4.8%, to $272.6 million for the three months ended June 30, 2019 compared to $286.4 million for the three months ended June 30, 2018. The cost of average certificates of deposit increased to 2.01% for the three months ended June 30, 2019 compared to 1.51% for the same period in 2018. Average public fund deposits comprised 16.2% of total average deposits during the 2019 second quarter and 16.7% for the 2018 second quarter.

Average federal funds purchased and repurchase agreements decreased $97.3 million, or 79.4%, to $25.2 million for the three months ended June 30, 2019 compared to $122.5 million for the same period in 2018. The cost of average federal funds purchased and repurchase agreements was 2.51% for the 2019 second quarter compared to 1.86% for the 2018 second quarter. Average FHLB advances decreased $94.3 million, or 27.9%, to $243.3 million for the three months ended June 30, 2019 compared to $337.6 million for the three months ended June 30, 2018.

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Analysis of Net Interest Income for the Six Months Ended June 30, 2019 and 2018

Net interest income was $69.8 million for the six months ended June 30, 2019 compared to $68.5 million for the six months ended June 30, 2018. Average net interest-earning assets increased $101.0 million to $1.5 billion for the six months ended June 30, 2019 compared to $1.4 billion for the six months ended June 30, 2018. The increase in average net interest-earning assets reflects organic growth in loans and a decrease in average borrowings, partially offset by an increase in average deposits and a decrease in average investment securities. Tax-equivalent net interest margin decreased to 3.29% for the six months ended June 30, 2019 compared to 3.36% for the six months ended June 30, 2018. The decrease in tax-equivalent net interest margin for 2019 compared to 2018 reflects the higher overall funding costs due in part to the Fed Funds rate increases in 2018, partially offset by a higher average yield on investment securities and loans, coupled with a lower volume of borrowings in 2018.

Total interest income increased $8.0 million, or 9.6%, to $90.9 million for the six months ended June 30, 2019 from $82.9 million for the same period in 2018, as average interest-earning assets increased $169.9 million, or 4.1%, to $4.3 billion for the six months ended June 30, 2019 compared to $4.1 billion for the same period in 2018. The increase in average interest-earning assets for the six months ended June 30, 2019 compared to 2018 reflects organic growth in loans, partially offset by a decrease in average investment securities. The tax-equivalent average yield on interest-earning assets was 4.28% for the six months ended June 30, 2019 compared to 4.07% for the same period in 2018.

Interest income on loans increased $6.1 million to $77.5 million for the six months ended June 30, 2019 over 2018, primarily due to growth in the loan portfolio. For the six months ended June 30, 2019, average loans grew by $171.1 million, or 5.4%, to $3.3 billion as compared to $3.2 billion for the same period in 2018. The increase in average loans was the result of organic growth in commercial real estate mortgage loans, real estate construction and land loans,  commercial and industrial loans, residential mortgage loans and multi-family mortgage loans. The tax-equivalent yield on average loans was 4.71% for the six months ended June 30, 2019 and 4.57% for the same period in 2018. We remain committed to growing loans with prudent underwriting, sensible pricing, and limited credit and extension risk.

Interest income on investment securities was $12.2 million for the six months ended June 30, 2019 compared to $11.3 million for the same period in 2018. Interest income on securities included net amortization of premiums on securities of $1.5 million for the six months ended June 30, 2019 compared to $2.5 million for the same period in 2018. For the six months ended June 30, 2019, average total investment securities decreased by $74.1 million, or 7.8%, to $872.9 million as compared to $947.0 million for the same period in 2018. The tax-equivalent average yield on total investment securities was 2.86% for the six months ended June 30, 2019 and 2.46% for the six months ended June 30, 2018.

Total interest expense increased to $21.0 million for the six months ended June 30, 2019 as compared to $14.4 million for the same period in 2018. The increase in interest expense for the six months ended June 30, 2019 is a result of the increase in the cost of average interest-bearing liabilities coupled with an increase in average deposits, partially offset by a decrease in average borrowings. The cost of average interest-bearing liabilities was 1.52% for the six months ended June 30, 2019 and 1.07% for the six months ended June 30, 2018. The increase in the cost of average interest-bearing liabilities is primarily due to higher overall funding costs due in part to the Fed Funds rate increases in 2018. Since the Company's interest-bearing liabilities generally reprice or mature more quickly than its interest-earning assets, in a rising rate environment the cost of funds increases faster than the yields on assets. We began extending the terms of certain matured borrowings at the end of the 2017 first quarter in anticipation of further Fed Funds rate increases. Additionally, the large percentages of deposits in money market accounts reprice at short-term market rates, making the balance sheet more liability sensitive. We continue our prudent management of deposit pricing. Average total interest-bearing liabilities were $2.8 billion for the six months ended June 30, 2019 and $2.7 billion for the same period in 2018 due to an increase in average deposits, partially offset by a decrease in average borrowings.

For the six months ended June 30, 2019, average total deposits increased by $413.8 million to $3.8 billion as compared to $3.4 billion for the six months ended June 30, 2018 due to increases in average savings, NOW and money market accounts, average demand deposits, and average certificates of deposit. The average balance of savings, NOW and money market accounts increased $284.9 million, or 15.2%, to $2.2 billion for the six months ended June 30, 2019 compared to $1.9 billion for the six months ended June 30, 2018. The cost of average savings, NOW and money market deposits was 1.25% for the six months ended June 30, 2019 compared to 0.64% for the six months ended June 30, 2018. Average demand deposits totaled $1.3 billion for the six months ended June 30, 2019 and 2018. Average balances in certificates of deposit

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increased $43.6 million, or 17.2%, to $298.0 million for the six months ended June 30, 2019 compared to $254.4 million for the six months ended June 30, 2018. The cost of average certificates of deposit increased to 1.97% for the six months ended June 30, 2019 compared to 1.42% for the same period in 2018. Average public fund deposits comprised 16.2% of total average deposits during the six months ended June 30, 2019 compared to 17.3% for the same period in 2018.

Average federal funds purchased and repurchase agreements decreased $120.5 million, or 87.9%, to $16.5 million for the six months ended June 30, 2019 compared to $137.0 million for the same period in 2018. The cost of average federal funds purchased and repurchase agreements was 2.48% for the six months ended June 30, 2019 compared to 1.73% for the same period in 2018. Average FHLB advances decreased $139.4 million, or 36.4%, to $243.3 million for the six months ended June 30, 2019 compared to $382.7 million for the six months ended June 30, 2018.

Provision and Allowance for Loan Losses

Our loan portfolio consists primarily of real estate loans secured by commercial, multi-family and residential real estate properties located in our principal lending areas of Nassau and Suffolk Counties on Long Island and the New York City boroughs. The interest rates we charge on loans are affected primarily by the demand for such loans, the supply of money available for lending purposes, the rates offered by our competitors, our relationship with the customer, and the related credit risks of the transaction. These factors are affected by general and economic conditions including, but not limited to, monetary policies of the federal government, including the Federal Reserve Board, legislative policies and governmental budgetary matters.

Based on our continuing review of the overall loan portfolio, the current asset quality of the portfolio, the growth in the loan portfolio and the net charge-offs, a provision for loan losses of $3.5 million and $4.1 million was recorded during the three and six months ended June 30, 2019, respectively, compared to a provision for loan losses of $0.4 million and $1.2 million, respectively, during the same periods in 2018. Net charge-offs were $4.1 million for the quarter ended June 30, 2019 compared to net charge-offs of $1.6 million for the quarter ended June 30, 2018. Net charge-offs were $4.3 million for the six months ended June 30, 2019 compared to net charge-offs of $1.3 million for the six months ended June 30, 2018. The increase in net charge-offs during the quarter ended June 30, 2019, relates primarily to the $3.7 million charge-off related to one CRE loan totaling $16.3 million which was written down to the loan’s estimated fair value of $12.6 million and moved into loans held for sale as of June 30, 2019. The ratio of the allowance for loan losses to non-accrual loans was 566%, 1,119% and 1,979%, at June 30, 2019, December 31, 2018, and June 30, 2018, respectively. The allowance for loan losses totaled $31.2 million at June 30, 2019 as compared to $31.4 million at December 31, 2018 and $31.7 million at June 30, 2018. The allowance as a percentage of total loans was 0.91% at June 30, 2019, compared to 0.96% at December 31, 2018 and 1.00% at June 30, 2018. We continue to carefully monitor the loan portfolio as well as real estate trends in Nassau and Suffolk Counties and the New York City boroughs.

Loans totaling $74.2 million, or 2.2%, of total loans at June 30, 2019 were categorized as classified loans compared to $87.9 million, or 2.7%, at December 31, 2018 and $75.9 million, or 2.4%, at June 30, 2018. Classified loans include loans with credit quality indicators with the internally assigned grades of special mention, substandard and doubtful. These loans are categorized as classified loans because we have information that indicates the borrower may not be able to comply with the present repayment terms. These loans are subject to increased management attention and their classification is reviewed at least quarterly.

At June 30, 2019, $27.5 million of classified loans were commercial real estate (“CRE”) loans. Of the $27.5 million of CRE loans, $25.1 million were current and $2.4 million were past due. At June 30, 2019, $11.0 million of classified loans were residential real estate loans, with $9.8 million current and $1.2 million past due. Commercial, industrial, and agricultural loans represented $34.2 million of classified loans, with $32.9 million current and $1.3 million past due. Taxi medallion loans represented $9.8 million of the classified commercial, industrial and agricultural loans at June 30, 2019. All of our taxi medallion loans are collateralized by New York City medallions and have personal guarantees. All taxi medallion loans were current as of June 30, 2019. No new originations of taxi medallion loans are currently planned and we expect these balances to continue to decline through amortization and pay-offs. In January 2019, seven taxi medallion loans totaling $6.2 million, net of charge-offs, were paid off under settlements we accepted.  The charge-offs related to these settlements were recognized in the 2018 fourth quarter.  At June 30, 2019, there was $0.8 million of classified consumer loans substantially all of which were current; $0.4 million of classified multi-family loans which were current; and $0.3 million of classified real estate construction and land loans which were current.

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CRE loans, including multi-family loans, represented $2.1 billion, or 60.4%, of the total loan portfolio at June 30, 2019 compared to $2.0 billion, or 59.9%, at December 31, 2018 and $1.9 billion, or 59.8%, at June 30, 2018. Our underwriting standards for CRE loans require an evaluation of the cash flow of the property, the overall cash flow of the borrower and related guarantors as well as the value of the real estate securing the loan. In addition, our underwriting standards for CRE loans are consistent with regulatory requirements with original loan to value ratios generally less than or equal to 75%. We consider charge-off history, delinquency trends, cash flow analysis, and the impact of the local economy on CRE values when evaluating the appropriate level of the allowance for loan losses.

As of June 30, 2019 and December 31, 2018, we had individually impaired loans as defined by FASB ASC No. 310, “Receivables” of $17.7 million and $19.4 million, respectively. For a loan to be considered impaired, we determine after review whether it is probable that we will not be able to collect all amounts due according to the contractual terms of the loan agreement. We apply our normal loan review procedures in making these judgments. Impaired loans include individually classified non-accrual loans and troubled debt restructuring loans (“TDRs”) and at December 31, 2018 included $2.7 million in other impaired performing loans related to three taxi medallion loans which paid off in January 2019. For impaired loans, we evaluate the impairment of the loan in accordance with FASB ASC 310‑10‑35‑22. Impairment is determined based on the present value of expected future cash flows discounted at the loan's effective interest rate. For loans that are collateral dependent, the fair value of the collateral less costs to sell is used to determine the fair value of the loan. The fair value of the collateral is determined based on recent appraised values. The fair value of the collateral less costs to sell or present value of expected cash flows is compared to the carrying value to determine if any write-down or specific loan loss allowance allocation is required. The decrease in impaired loans from December 31, 2018 was attributable to the payoff of certain TDRs and other impaired performing loans, partially offset by new TDRs and an increase in non-accrual loans during the six months ended June 30, 2019. During the six months ended June 30, 2019, we modified certain loans as TDRs totaling $4.1 million.

Non-accrual loans were $5.5 million, or 0.16%, of total loans at June 30, 2019, and $2.8 million, or 0.09%, of total loans at December 31, 2018. TDRs represent $111 thousand of the non-accrual loans at June 30, 2019 and $133 thousand of the non-accrual loans at December 31, 2018.

There was no other real estate owned at June 30, 2019.  At December 31, 2018, other real estate owned totaled $0.2 million.

The following table presents changes in the allowance for loan losses:

	Six Months Ended
(In thousands)	June 30, 2019		June 30, 2018
Beginning balance	$	31,418	$	31,707
Charge-offs:
Commercial real estate mortgage loans		(3,670)		—
Residential real estate mortgage loans		—		(24)
Commercial, industrial and agricultural loans		(796)		(1,708)
Installment/consumer loans		(4)		—
Total		(4,470)		(1,732)
Recoveries:
Commercial real estate mortgage loans		—		—
Residential real estate mortgage loans		111		1
Commercial, industrial and agricultural loans		12		475
Installment/consumer loans		—		1
Total		123		477
Net charge-offs		(4,347)		(1,255)
Provision for loan losses charged to operations		4,100		1,200
Ending balance	$	31,171	$	31,652

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Allocation of Allowance for Loan Losses

The following table presents the allocation of the total allowance for loan losses by loan classification:

	June 30, 2019				December 31, 2018
			Percentage of Loans				Percentage of Loans
(Dollars in thousands)	Amount		to Total Loans		Amount		to Total Loans
Commercial real estate mortgage loans	$	10,878	42.0	%	$	10,792	42.0	%
Multi-family mortgage loans		2,545	18.4			2,566	17.9
Residential real estate mortgage loans		2,620	14.7			3,935	15.9
Commercial, industrial and agricultural loans		13,558	19.7			12,722	19.8
Real estate construction and land loans		1,333	4.4			1,297	3.8
Installment/consumer loans		237	0.8			106	0.6
Total	$	31,171	100.0	%	$	31,418	100.0	%

Non-Interest Income (Loss)

Total non-interest income (loss) increased $8.1 million to $5.5 million during the three months ended June 30, 2019 compared to $(2.6) million for the three months ended June 30, 2018. The increase in total non-interest income is driven by an $8.1 million increase in net securities gain, primarily attributable to a $7.9 million net securities loss related to the balance sheet restructure in the 2018 second quarter, and a $0.2 million increase in gain on sale of Small Business Administration (“SBA”) loans, partially offset by a $0.1 million decrease in title fee income and a $0.1 million decrease in other operating income.

Total non-interest income increased $9.2 million to $10.7 million during the six months ended June 30, 2019 compared to $1.5 million for the six months ended June 30, 2018. The increase in total non-interest income is driven by an $8.1 million increase in net securities gain, primarily attributable to a $7.9 million net securities loss related to the balance sheet restructure in the 2018 second quarter, a $1.1 million increase in other operating income, primarily due to a rise in loan swap fee income, and a $0.3 million increase in service charges and other fees, partially offset by a $0.3 million decrease in title fee income.

Non-Interest Expense

Total non-interest expense was $24.0 million during the three months ended June 30, 2019 compared to $22.5 million for the three months ended June 30, 2018. The increase was primarily due to higher salaries and benefits, occupancy and equipment expenses, technology and communications expenses, other operating expenses and marketing and advertising expenses, partially offset by lower professional services and FDIC assessments.

Total non-interest expense was $46.6 million during the six months ended June 30, 2019 compared to $45.1 million for the six months ended June 30, 2018. The increase was primarily due to higher salaries and benefits, occupancy and equipment expenses, technology and communications expenses and marketing and advertising expenses, partially offset by lower professional services and FDIC assessments.

Salaries and benefits increased $0.6 million to $13.7 million for the three months ended June 30, 2019 compared to the same period in 2018. The increase in salaries and benefits for the three months ended June 30, 2019 compared to the same period in 2018 is primarily due to additional staff related to business development and risk management. Occupancy and equipment increased $0.4 million to $3.6 million for the three months ended June 30, 2019 compared to the same period in 2018. Technology and communications increased $0.3 million to $1.9 million for the three months ended June 30, 2019 compared to the same period in the prior year. Other operating expenses increased $0.2 million to $2.1 million for the three months ended June 30, 2019 compared to the same period in 2018. Professional services expenses decreased $0.1 million to $0.8 million for the three months ended June 30, 2019, compared to the same period in 2018.

Salaries and benefits increased $1.1 million to $26.9 million for the six months ended June 30, 2019 compared to the same period in 2018. The increase in salaries and benefits for the six months ended June 30, 2019 compared to the same period

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in 2018 is primarily due to additional staff related to business development and risk management. Occupancy and equipment increased $0.6 million to $7.1 million for the six months ended June 30, 2019 compared to the same period in 2018. Technology and communications increased $0.4 million to $3.7 million for the six months ended June 30, 2019 compared to the same period in the prior year. Professional services expenses decreased $0.5 million to $1.6 million for the six months ended June 30, 2019, compared to the same period in 2018. FDIC assessments decreased $0.3 million for the six months ended June 30, 2019, compared to the same period in 2018. Other operating expenses were $3.9 million for the six months ended June 30, 2019 and 2018.

Income Taxes

Income tax expense was $2.9 million for the three months ended June 30, 2019 compared to $1.7 million for the three months ended June 30, 2018, reflecting higher income before income taxes. The effective tax rate was 21.2% for the three months ended June 30, 2019 compared to 20.1% for the same period in 2018.

Income tax expense was $6.3 million for the six months ended June 30, 2019 compared to $4.9 million for the six months ended June 30, 2018, reflecting higher income before income taxes. The effective tax rate was 21.0% for the six months ended June 30, 2019 compared to 20.6% for the same period in 2018. We estimate we will record income tax at an effective tax rate of approximately 22% for the remainder of 2019.

Financial Condition

Total assets were $4.7 billion at June 30, 2019, $13.8 million higher than December 31, 2018. Cash and cash equivalents decreased $136.7 million, or 46.3%, to $158.6 million at June 30, 2019 compared to December 31, 2018. Total securities decreased $53.4 million, or 6.2%, to $811.7 million at June 30, 2019 compared to December 31, 2018. Total loans held for investment, net, increased $154.2 million, or 4.7%, to $3.4 billion at June 30, 2019 compared to December 31, 2018. Our focus is on our ability to grow the loan portfolio, while minimizing interest rate risk sensitivity and maintaining credit quality.

Total liabilities decreased $7.6 million, or 0.2%, to $4.2 billion at June 30, 2019 compared to December 31, 2018. Total deposits decreased $49.8 million, or 1.3%, to $3.8 billion at June 30, 2019, compared to December 31, 2018. Certificates of deposit decreased $52.6 million, or 16.0%, to $276.9 million at June 30, 2019 compared to December 31, 2018. Demand deposits decreased $62.9 million, or 4.3%, to $1.4 billion at June 30, 2019 compared to December 31, 2018. Savings, NOW and money market deposits increased $65.6 million, or 3.1%, to $2.2 billion at June 30, 2019 compared to December 31, 2018. FHLB advances decreased $0.4 million to $240.0 million at June 30, 2019 compared to December 31, 2018.

Total stockholders' equity was $475.2 million at June 30, 2019, an increase of $21.4 million, or 4.7%, from December 31, 2018, primarily due to net income of $23.6 million, a decrease in accumulated other comprehensive loss, net of deferred income taxes, of $5.9 million and share based compensation of $1.8 million, partially offset by $9.2 million in dividends. During the six months ended June 30, 2019, there were 11,400 shares purchased under the 2019 Stock Repurchase Program.

Liquidity

Our liquidity management objectives are to ensure the sufficiency of funds available to respond to the needs of depositors and borrowers, and to take advantage of unanticipated opportunities for our growth or earnings enhancement. Liquidity management addresses our ability to meet financial obligations that arise in the normal course of business. Liquidity is primarily needed to meet customer borrowing commitments and deposit withdrawals, either on demand or on contractual maturity, to repay borrowings as they mature, to fund current and planned expenditures and to make new loans and investments as opportunities arise.

The Holding Company’s principal sources of liquidity included cash and cash equivalents of $3.8 million as of June 30, 2019, and dividend capabilities from the Bank. Cash available for distribution of dividends to our shareholders is primarily derived from dividends paid by the Bank to the Holding Company. For the six months ended June 30, 2019, the Bank paid $14.0 million in cash dividends to the Holding Company. Prior regulatory approval is required if the total of all dividends declared by the Bank in any calendar year exceeds the total of the Bank's net income of that year combined with its retained

49

net income of the preceding two years. As of June 30, 2019, the Bank has $62.8 million of retained net income available for dividends to the Holding Company. In the event the Holding Company subsequently expands its current operations, in addition to dividends from the Bank, it will need to rely on its own earnings, additional capital raised and other borrowings to meet liquidity needs. The Holding Company did not make any capital contributions to the Bank during the six months ended June 30, 2019.

The Bank's most liquid assets are cash and cash equivalents, securities available for sale and securities held to maturity due within one year. The levels of these assets are dependent on the Bank's operating, financing, lending and investing activities during any given period. Other sources of liquidity include loan and investment securities principal repayments and maturities, lines of credit with other financial institutions including the FHLB and FRB, growth in core deposits and sources of wholesale funding such as brokered deposits. While scheduled loan amortization, maturing securities and short-term investments are a relatively predictable source of funds, deposit flows and loan and mortgage-backed securities prepayments are greatly influenced by general interest rates, economic conditions and competition. The Bank adjusts its liquidity levels as appropriate to meet funding needs such as seasonal deposit outflows, loans, and asset and liability management objectives. Historically, the Bank has relied on its deposit base, drawn through its full-service branches that serve its market area and local municipal deposits, as its principal source of funding. The Bank seeks to retain existing deposits and loans and maintain customer relationships by offering quality service and competitive interest rates to its customers, while managing the overall cost of funds needed to finance its strategies.

The Bank's Asset/Liability and Funds Management Policy allows for wholesale borrowings of up to 25% of total assets. At June 30, 2019, the Bank had aggregate lines of credit of $373.0 million with unaffiliated correspondent banks to provide short-term credit for liquidity requirements. Of these aggregate lines of credit, $353.0 million is available on an unsecured basis. As of June 30, 2019, the Bank had no overnight borrowings outstanding under these lines. The Bank also has the ability, as a member of the FHLB system, to borrow against unencumbered residential and commercial mortgages owned by the Bank. The Bank also has a master repurchase agreement with the FHLB, which increases its borrowing capacity. As of June 30, 2019, the Bank had no FHLB overnight borrowings outstanding and $240.0 million outstanding in FHLB term borrowings. As of December 31, 2018, the Bank had no FHLB overnight borrowings outstanding and $240.4 million outstanding in FHLB term borrowings. The Bank had $0.9 million and $0.5 million at June 30, 2019 and December 31, 2018, respectively, of securities sold under agreements to repurchase outstanding with customers and no such agreements outstanding with brokers. In addition, the Bank has approved broker relationships for the purpose of issuing brokered deposits. As of June 30, 2019, the Bank had $42.0 million outstanding in brokered certificates of deposit and $80.7 million outstanding in brokered money market accounts. As of December 31, 2018, the Bank had $101.6 million outstanding in brokered certificates of deposit and $150.2 million outstanding in brokered money market accounts.

Liquidity policies are established by senior management and reviewed and approved by the full Board of Directors at least annually. Management continually monitors the liquidity position and believes that sufficient liquidity exists to meet all of the Company’s operating requirements. The Bank’s liquidity levels are affected by the use of short-term and wholesale borrowings and the amount of public funds in the deposit mix. Excess short-term liquidity is invested in overnight federal funds sold or in an interest-earning account at the FRB.

Capital Resources

The Company and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can result in certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company's and the Bank's financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the Bank must meet specific capital requirements that involve quantitative measures of the Company's and Bank's assets, liabilities, and certain off-balance sheet items calculated under regulatory accounting practices. The Company's and Bank's capital amounts and classifications also are subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

Quantitative measures established by regulation to ensure capital adequacy require the Company and the Bank to maintain minimum amounts and ratios of total, tier 1 and common equity tier 1 capital to risk weighted assets and of tier 1 capital to average assets. Tier 1 capital, risk weighted assets and average assets are as defined by regulation. The required

50

minimums for the Company and Bank are set forth in the tables that follow. The Company and the Bank met all capital adequacy requirements at June 30, 2019 and December 31, 2018.

On January 1, 2015, the Basel III Capital Rules became effective and include transition provisions through January 1, 2019. These rules provide for the following minimum capital to risk-weighted assets ratios as of January 1, 2015: a) 4.5% based on common equity tier 1 capital ("CET1"); b) 6.0% based on tier 1 capital; and c) 8.0% based on total regulatory capital. A minimum leverage ratio (tier 1 capital as a percentage of total average assets) of 4.0% is also required under the Basel III Capital Rules. The Basel III Capital Rules additionally require institutions to retain a capital conservation buffer, composed of CET1, of 2.5% above these required minimum capital ratio levels. The capital conservation buffer requirement was phased in beginning January 1, 2016 at 0.625% of risk-weighted assets and increased by 0.625% each subsequent January 1, until fully implemented at 2.5% on January 1, 2019. Including the capital conservation buffer, the Company and the Bank effectively have the following minimum capital to risk-weighted assets ratios: a) 7.0% based on CET1; b) 8.5% based on tier 1 capital; and c) 10.5% based on total regulatory capital.

The Company and the Bank made the one-time, permanent election to continue to exclude the effects of accumulated other comprehensive income or loss items included in stockholders' equity for the purposes of determining the regulatory capital ratios.

As of June 30, 2019, the most recent notification from the FDIC categorized the Bank as “well capitalized” under the regulatory framework for prompt corrective action. To be categorized as “well capitalized,” the Bank must maintain minimum total risk-based, tier 1 risk-based, common equity tier 1 risk-based and tier 1 leverage ratios as set forth in the tables below. Since that notification, there are no conditions or events that management believes have changed the institution's category.

In accordance with the recently enacted Economic Growth, Regulatory Relief, and Consumer Protection Act, the federal banking agencies are required to develop a “Community Bank Leverage Ratio” (the ratio of a bank's tangible equity capital to average total consolidated assets) for financial institutions with assets of less than $10 billion. A “qualifying community bank” that exceeds this ratio will be deemed to be in compliance with all other capital and leverage requirements, including the capital requirements to be considered “well capitalized” under Prompt Corrective Action statutes. The federal banking agencies may consider a financial institution's risk profile when evaluating whether it qualifies as a community bank for purposes of the capital ratio requirement. The federal banking agencies must set the minimum capital for the new Community Bank Leverage Ratio at not less than 8% and not more than 10%, and a financial institution will be able to elect to be subject to this new definition. The agencies have issued a proposed rule that, if finalized, would set the minimum Community Bank Leverage Ratio at 9%.

The following tables present actual capital levels and minimum required levels for the Company and the Bank under Basel III rules at June 30, 2019 and December 31, 2018:

	June 30, 2019
									Minimum Capital				Minimum To Be Well
					Minimum Capital				Adequacy Requirement with				Capitalized Under Prompt
	Actual Capital				Adequacy Requirement				Capital Conservation Buffer				Corrective Action Provisions
(Dollars in thousands)	Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount		Ratio
Common equity tier 1 capital to risk-weighted assets:
Consolidated	$	376,450	10.3	%	$	164,603	4.5	%	$	256,049	7.0	%		n/a	n/a
Bank		452,528	12.4			164,596	4.5			256,039	7.0		$	237,750	6.5	%
Total capital to risk-weighted assets:
Consolidated		487,897	13.3			292,628	8.0			384,074	10.5			n/a	n/a
Bank		483,975	13.2			292,616	8.0			384,058	10.5			365,770	10.0
Tier 1 capital to risk-weighted assets:
Consolidated		376,450	10.3			219,471	6.0			310,917	8.5			n/a	n/a
Bank		452,528	12.4			219,462	6.0			310,904	8.5			292,616	8.0
Tier 1 capital to average assets:
Consolidated		376,450	8.1			185,794	4.0			n/a	n/a			n/a	n/a
Bank		452,528	9.7			185,792	4.0			n/a	n/a			232,240	5.0

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	December 31, 2018
									Minimum Capital				Minimum To Be Well
					Minimum Capital				Adequacy Requirement with				Capitalized Under Prompt
	Actual Capital				Adequacy Requirement				Capital Conservation Buffer				Corrective Action Provisions
(Dollars in thousands)	Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount		Ratio
Common equity tier 1 capital to risk-weighted assets:
Consolidated	$	360,688	10.4	%	$	155,836	4.5	%	$	220,767	6.375	%		n/a	n/a
Bank		438,963	12.7			155,831	4.5			220,761	6.375		$	225,089	6.5	%
Total capital to risk-weighted assets:
Consolidated		472,382	13.6			277,041	8.0			341,973	9.875			n/a	n/a
Bank		470,657	13.6			277,033	8.0			341,963	9.875			346,291	10.0
Tier 1 capital to risk-weighted assets:
Consolidated		360,688	10.4			207,781	6.0			272,712	7.875			n/a	n/a
Bank		438,963	12.7			207,775	6.0			272,704	7.875			277,033	8.0
Tier 1 capital to average assets:
Consolidated		360,688	8.1			177,782	4.0			n/a	n/a			n/a	n/a
Bank		438,963	9.9			177,776	4.0			n/a	n/a			222,220	5.0

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Asset/Liability Management

Management considers interest rate risk to be our most significant market risk. Market risk is the risk of loss from adverse changes in market prices and rates. Interest rate risk is the exposure to adverse changes in our net income as a result of changes in interest rates.

Our primary earnings source is net interest income, which is affected by changes in the level of interest rates, the relationship between rates, the impact of interest rate fluctuations on asset prepayments, the level and composition of deposits and liabilities, and the credit quality of earning assets. Our asset and liability management objectives are to maintain a strong, stable net interest margin, to utilize our capital effectively without taking undue risks, to maintain adequate liquidity, and to reduce vulnerability of our operations to changes in interest rates.

Our Asset and Liability Committee evaluates periodically, but at least four times a year, the impact of changes in market interest rates on assets and liabilities, net interest margin, capital and liquidity. Risk assessments are governed by policies and limits established by senior management, which are reviewed and approved by the full Board of Directors at least annually. The economic environment continually presents uncertainties as to future interest rate trends. The Asset and Liability Committee regularly utilizes a model that projects net interest income based on increasing or decreasing interest rates, in order to be better able to respond to changes in interest rates.

At June 30, 2019, $692.4 million, or 87.9%, of our available for sale and held to maturity securities had fixed interest rates. At June 30, 2019, $2.7 billion, or 77.7%, of our loan portfolio had adjustable or floating interest rates. Changes in interest rates affect the value of our interest-earning assets and, in particular, our securities portfolio. Generally, the value of securities fluctuates inversely with changes in interest rates. Increases in interest rates could result in decreases in the market value of interest-earning assets, which could adversely affect our stockholders' equity and results of operations if sold. We are also subject to reinvestment risk associated with changes in interest rates. Changes in market interest rates also could affect the type (fixed-rate or adjustable-rate) and amount of loans we originate and the average life of loans and securities, which can impact the yields earned on our loans and securities. In periods of decreasing interest rates, the average life of loans and securities we hold may be shortened to the extent increased prepayment activity occurs during such periods which, in turn, may result in the investment of funds from such prepayments in lower yielding assets. Under these circumstances, we are subject to reinvestment risk to the extent that we are unable to reinvest the cash received from such prepayments at rates that are comparable to the rates on existing loans and securities. Additionally, increases in interest rates may result in decreasing loan prepayments with respect to fixed rate loans (and therefore an increase in the average life of such loans), may result in a decrease in loan demand, and may make it more difficult for borrowers to repay adjustable rate loans.

We utilize the results of a detailed and dynamic simulation model to quantify the estimated exposure of net interest income to sustained interest rate changes. Management routinely monitors simulated net interest income sensitivity over a rolling two-year horizon. The simulation model captures the impact of changing interest rates on the interest income received and the interest expense paid on all assets and liabilities reflected on our consolidated balance sheet. This sensitivity analysis is compared to the asset and liability policy limits that specify a maximum tolerance level for net interest income exposure

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over a one-year horizon given 100 and 200-basis point upward shifts in interest rates and a 100-basis point downward shift in interest rates. A parallel and pro-rata shift in rates over a twelve-month period is assumed.

In addition to the above scenarios, we consider other non-parallel rate shifts that would also exert pressure on earnings. The current low interest rate environment presents the possibility for a flattening of the yield curve. During the six months ended June 30, 2019, the yield on U.S. Treasury 10-year notes decreased 69 basis points from 2.69% to 2.00%, while the yield on 3-month Treasury bills decreased 33 basis points from 2.45% to 2.12%. The decreased gap between short-term and long-term yields resulted in a flatter yield curve at June 30, 2019 versus December 31, 2018. A continued flattening of the yield curve in 2019 may adversely affect net interest income as borrowers tend to refinance higher-rate fixed rate loans at lower rates and we may not be able to reinvest those prepayments in assets earning interest rates as high as the rates on those prepaid assets.

The following reflects our net interest income sensitivity analysis at June 30, 2019 and December 31, 2018:

	June 30, 2019
	Potential Change
	in Future Net
Change in Interest	Interest Income
Rates in Basis Points	Year 1				Year 2
(Dollars in thousands)	$ Change		% Change		$ Change		% Change
200	$	(304)	(0.22)	%	$	10,315	7.34	%
100		(216)	(0.15)			6,664	4.74
Static		—	—			—	—
(100)		(1,398)	(1.00)			(2,968)	(2.11)

	December 31, 2018
	Potential Change
	in Future Net
Change in Interest	Interest Income
Rates in Basis Points	Year 1				Year 2
(Dollars in thousands)	$ Change		% Change		$ Change		% Change
200	$	(2,212)	(1.57)	%	$	8,767	6.23	%
100		(898)	(0.64)			7,355	5.23
Static		—	—			—	—
(100)		(435)	(0.31)			(266)	(0.19)

As noted in the table above, a 200-basis point increase in interest rates is projected to decrease net interest income by 0.22% in year 1 and increase net interest income by 7.34% in year 2. Our balance sheet sensitivity to such a move in interest rates at June 30, 2019 decreased as compared to December 31, 2018 (which was a decrease of 1.57% in net interest income over a twelve-month period). This decrease is the result of a decrease in brokered deposits and other borrowings coupled with a higher portion of our loans repricing to market rates. We also continue to show the ability to hold the costs of interest-bearing deposits to below market rates.  Overall, our strategy is shifting to a focus on reducing our exposure to falling rates. Over the intervening year, the effective duration (a measure of price sensitivity to interest rates) of the bond portfolio decreased from 3.05 years at December 31, 2018 to 2.30 years at June 30, 2019.

The preceding sensitivity analysis does not represent a Company forecast and should not be relied on as being indicative of expected operating results. These hypothetical estimates are based on numerous assumptions including, but not limited to, the nature and timing of interest rate levels and yield curve shapes, prepayments on loans and securities, deposit decay rates, pricing decisions on loans and deposits, and reinvestment and replacement of asset and liability cash flows. While assumptions are developed based on perceived current economic and local market conditions, we cannot make any assurances as to the predictive nature of these assumptions including how customer preferences or competitor influences may change. Also, as market conditions vary from those assumed in the sensitivity analysis, actual results will also differ due to prepayment and refinancing levels likely deviating from those assumed, the varying impact of interest rate change caps or floors on adjustable rate assets, the potential effect of changing debt service levels on customers with adjustable rate loans, depositor early withdrawals, prepayment penalties and product preference changes and other internal and external variables. Furthermore, the sensitivity analysis does not reflect actions that management might take in responding to, or anticipating, changes in interest rates and market conditions.

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Item 4. Controls and Procedures

An evaluation was performed under the supervision and with the participation of the Company's management, including the Principal Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures (as defined in Rule 13a‑15(e) promulgated under the Securities and Exchange Act of 1934, as amended) as of June 30, 2019. Based on that evaluation, the Company's Principal Executive Officer and Principal Financial Officer concluded that the Company's disclosure controls and procedures were effective as of the end of the period covered by this quarterly report. There has been no change in the Company's internal control over financial reporting during the quarter that has materially affected, or is 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 Company and its subsidiaries are subject to certain pending and threatened legal actions that arise out of the normal course of business. In the opinion of management, the resolution of any such pending or threatened litigation is not expected to have a material adverse effect on the Company's consolidated financial statements.

Item 1A. Risk Factors

There was one change to the risks disclosed in the “Risk Factors” section of the Company’s Annual Report on Form 10‑K for the year ended December 31, 2018.

The performance of the Bank’s multi-family real estate loans could be adversely impacted by regulation.

Multi-family real estate loans generally involve a greater risk than residential real estate loans because of legislation and government regulations involving rent control and rent stabilization, which are outside the control of the borrower or the Bank, and could impair the value of the security for the loan or the future cash flow of such properties. For example, on June 14, 2019, the State of New York enacted legislation increasing the restrictions on rent increases in a rent-regulated apartment building, including, among other provisions, (i) repealing the vacancy bonus and longevity bonus, which allowed a property owner to raise rents as much as 20% each time a rental unit became vacant, (ii) eliminating high rent vacancy deregulation and high-income deregulation, which allowed a rental unit to be removed from rent stabilization once it crossed a statutory high-rent threshold and became vacant, or the tenant’s income exceeded the statutory amount in the preceding two years, and (iii) eliminating an exception that allowed a property owner who offered preferential rents to tenants to raise the rent to the full legal rent upon renewal.  The new legislation still permits a property owner to charge up to the full legal rent once the tenant vacates. As a result of this new legislation as well as previously existing laws and regulations, it is possible that rental income might not rise sufficiently over time to satisfy increases in the loan rate at repricing or increases in overhead expenses (e.g., utilities, taxes, etc.). In addition, if the cash flow from a collateral property is reduced (e.g., if leases are not obtained or renewed), the borrower’s ability to repay the loan and the value of the security for the loan may be impaired. Therefore, impaired multi-family real estate loans may be more difficult to identify before they become problematic than residential real estate loans.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

(c)   Stock Repurchases.

The following table presents information in connection with repurchases of our shares of common stock during the three months ended June 30, 2019:

				Total Number of
				Shares Purchased	Maximum Number
				as Part of	of Shares That May
	Total Number of			Publicly	Yet Be Purchased
	Shares	Average Price		Announced Plans	Under the Plans or
	Purchased (1)	Paid per Share		or Programs	Programs (2)
April 1, 2019 through April 30, 2019	860	$	31.17	—	1,000,000
May 1, 2019 through May 31, 2019	4,939		28.50	4,600	995,400
June 1, 2019 through June 30, 2019	7,335		28.07	6,800	988,600
Total	13,134		28.43	11,400

(1) Includes shares withheld by the Company to pay the taxes associated with the vesting of restricted stock awards.

(2) The Board of Directors approved a stock repurchase plan in March 2006 that authorized the repurchase of 309,000 shares. In February 2019, the Company announced the adoption of a new stock repurchase plan for up to 1,000,000 shares, replacing the previous plan. There is no expiration date for the stock repurchase plan. 11,400 shares were purchased under the repurchase program during the three months ended June 30, 2019.

55

Item 3. Defaults upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Not applicable.

Item 6. Exhibits

10.1	Bridge Bancorp, Inc. 2019 Equity Incentive Plan (incorporated by reference to Appendix A to Bridge Bancorp, Inc.’s Definitive Proxy Statement, File No. 001-34096, filed April 1, 2019)
31.1	Certification of Principal Executive Officer pursuant to Rule 13a‑14(a)
31.2	Certification of Principal Financial Officer pursuant to Rule 13a‑14(a)
32.1	Certification of Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a‑14(b) and 18 U.S.C. Section 1350
101	The following financial statements from Bridge Bancorp, Inc.'s Quarterly Report on Form 10‑Q for the Quarter Ended June 30, 2019, filed on August 8, 2019, formatted in XBRL: (i) Consolidated Balance Sheets as of June 30, 2019 and December 31, 2018, (ii) Consolidated Statements of Income for the Three and Six Months Ended  June 30, 2019 and 2018, (iii) Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 2019 and 2018, (iv) Consolidated Statements of Stockholders' Equity for the Three and Six Months Ended June 30, 2019 and 2018, (v) Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2019 and 2018, and (vi) the Condensed Notes to Consolidated Financial Statements.
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB	XBRL Taxonomy Extension Labels Linkbase Document
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF	XBRL Taxonomy Extension Definitions Linkbase Document

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.

	BRIDGE BANCORP, INC.
	Registrant
August 8, 2019	/s/ Kevin M. O'Connor
	Kevin M. O'Connor
	President and Chief Executive Officer
August 8, 2019	/s/ John M. McCaffery
	John M. McCaffery
	Executive Vice President and Chief Financial Officer

56

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO RULE 13a‑14(a)

I, Kevin M. O'Connor, certify that:

1) I have reviewed this quarterly report on Form 10‑Q of Bridge 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 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 15(d)‑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 quarterly 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 that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

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

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

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:  August 8, 2019

/s/ Kevin M. O'Connor

Kevin M. O'Connor

President and Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO RULE 13a‑14(a)

I, John M. McCaffery, certify that:

1. I have reviewed this quarterly report on Form 10‑Q of Bridge 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 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 15(d)‑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 quarterly 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 that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

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

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

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:  August 8, 2019

/s/ John M. McCaffery

John M. McCaffery

Executive Vice President and Chief Financial Officer

EX-32.1

This certification is being furnished as required by Rule 13a‑14(b) under the Securities Exchange Act of 1934 (the “Exchange Act”) and Section 1350 of Chapter 63 of Title 18 of the United States Code, and shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that section.  This certification shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act, except as otherwise stated in such filing.

EXHIBIT 32.1

CERTIFICATION PURSUANT TO RULE 13a‑14(b) 18 U.S.C. SECTION 1350,

As adopted pursuant to

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Bridge Bancorp, Inc. (the “Company”) on Form 10‑Q for the period ended June 30, 2019 as filed with the Securities and Exchange Commission, (the “Report”), we, Kevin M. O'Connor, President and Chief Executive Officer of the Company and, John M. McCaffery, Executive Vice President and Chief Financial Officer of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934, as amended; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 8,  2019	/s/ Kevin M. O'Connor
	Kevin M. O'Connor
	President and Chief Executive Officer
	/s/ John M. McCaffery
	John M. McCaffery
	Executive Vice President and Chief Financial Officer

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Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2019	Jul. 31, 2019
Document And Entity Information [Abstract]
Entity Registrant Name	BRIDGE BANCORP INC
Entity Central Index Key	0000846617
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		19,843,723
Document Type	10-Q
Document Period End Date	Jun. 30, 2019
Amendment Flag	false
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q2

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Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Assets
Cash and due from banks	$ 71,292	$ 142,145
Interest-bearing deposits with banks	87,349	153,223
Total cash and cash equivalents	158,641	295,368
Securities available for sale, at fair value	642,897	680,886
Securities held to maturity (fair value of $145,480 and $156,792, respectively)	144,716	160,163
Total securities	787,613	841,049
Securities, restricted	24,104	24,028
Loans held for sale	12,643
Loans held for investment	3,430,023	3,275,811
Allowance for loan losses	(31,171)	(31,418)
Loans, net	3,398,852	3,244,393
Premises and equipment, net	34,006	35,008
Operating lease right-of-use assets	37,619
Accrued interest receivable	12,397	11,236
Goodwill	105,950	105,950
Other intangible assets	4,025	4,374
Prepaid pension	10,483	10,263
Bank owned life insurance	90,821	89,712
Other real estate owned	0	175
Other assets	37,381	39,188
Total assets	4,714,535	4,700,744
Liabilities
Demand deposits	1,385,709	1,448,605
Savings, NOW and money market deposits	2,173,946	2,108,297
Certificates of deposit of $100,000 or more	215,923	207,087
Other time deposits	60,998	122,404
Total deposits	3,836,576	3,886,393
Repurchase agreements	945	539
Federal Home Loan Bank ("FHLB") advances	240,000	240,433
Subordinated debentures, net	78,850	78,781
Operating lease liabilities	40,263
Other liabilities and accrued expenses	42,696	40,768
Total liabilities	4,239,330	4,246,914
Commitments and contingencies
Stockholders' equity
Preferred stock, par value $.01 per share (2,000,000 shares authorized; none issued)
Common stock, par value $.01 per share (40,000,000 shares authorized; 19,877,510 and 19,815,680 shares issued, respectively; and 19,834,416 and 19,790,884 shares outstanding, respectively)	199	198
Surplus	353,729	352,093
Retained earnings	131,811	117,432
Treasury stock at cost, 43,094 and 24,796 shares, respectively	(1,337)	(781)
Total stockholders' equity before accumulated other comprehensive income (loss)	484,402	468,942
Accumulated other comprehensive loss, net of income taxes	(9,197)	(15,112)
Total stockholders' equity	475,205	453,830
Total liabilities and stockholders' equity	$ 4,714,535	$ 4,700,744

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Consolidated Balance Sheets (Parentheticals) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Consolidated Balance Sheets
Securities held to maturity, fair value (in dollars)	$ 145,480	$ 156,792
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized	2,000,000	2,000,000
Preferred stock, shares issued	0	0
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized	40,000,000	40,000,000
Common stock, shares issued	19,877,510	19,815,680
Common stock, shares outstanding	19,834,416	19,790,884
Treasury Stock, shares	43,094	24,796

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Consolidated Statements of Income (unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Interest income:
Loans (including fee income)	$ 39,878	$ 35,770	$ 77,490	$ 71,383
Mortgage-backed securities, CMOs and other asset-backed securities	4,443	3,825	9,232	7,549
U.S. GSE securities	166	243	358	522
State and municipal obligations	577	747	1,204	1,559
Corporate bonds	319	358	655	713
Deposits with banks	599	106	1,143	196
Other interest and dividend income	370	502	785	993
Total interest income	46,352	41,551	90,867	82,915
Interest expense:
Savings, NOW and money market deposits	6,997	3,438	13,366	5,952
Certificates of deposit of $100,000 or more	1,079	582	2,062	1,099
Other time deposits	288	493	850	688
Federal funds purchased and repurchase agreements	158	566	203	1,172
FHLB advances	1,178	1,408	2,276	3,266
Subordinated debentures	1,135	1,135	2,270	2,270
Total interest expense	10,835	7,622	21,027	14,447
Net interest income	35,517	33,929	69,840	68,468
Provision for loan losses	3,500	400	4,100	1,200
Net interest income after provision for loan losses	32,017	33,529	65,740	67,268
Non-interest income (loss):
Service charges and other fees	2,556	2,562	4,984	4,725
Net securities gains (losses)	201	(7,921)	201	(7,921)
Title fee income	335	450	641	955
Gain on sale of Small Business Administration ("SBA") loans	844	691	1,061	1,062
BOLI income	556	555	1,109	1,101
Other operating income	1,007	1,085	2,721	1,613
Total non-interest income (loss)	5,499	(2,578)	10,717	1,535
Non-interest expense:
Salaries and employee benefits	13,659	13,055	26,939	25,867
Occupancy and equipment	3,560	3,205	7,091	6,448
Technology and communications	1,869	1,568	3,658	3,211
Marketing and advertising	1,424	1,240	2,447	2,202
Professional services	803	881	1,560	2,093
FDIC assessments	396	436	634	900
Amortization of other intangible assets	210	242	423	488
Other operating expenses	2,083	1,880	3,851	3,896
Total non-interest expense	24,004	22,507	46,603	45,105
Income before income taxes	13,512	8,444	29,854	23,698
Income tax expense	2,859	1,701	6,274	4,882
Net income	$ 10,653	$ 6,743	$ 23,580	$ 18,816
Basic earnings per share (in dollars per share)	$ 0.53	$ 0.34	$ 1.18	$ 0.95
Diluted earnings per share (in dollars per share)	$ 0.53	$ 0.34	$ 1.18	$ 0.95

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Consolidated Statements of Comprehensive Income (unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Consolidated Statements of Comprehensive Income (unaudited)
Net income	$ 10,653	$ 6,743	$ 23,580	$ 18,816
Other comprehensive income (loss):
Change in unrealized net gains (losses) on securities available for sale, net of reclassifications and deferred income taxes	5,871	2,616	9,789	(3,472)
Adjustment to pension liability, net of reclassifications and deferred income taxes	91	68	181	135
Unrealized (losses) gains on cash flow hedges, net of reclassifications and deferred income taxes	(2,530)	479	(4,055)	2,530
Total other comprehensive income (loss)	3,432	3,163	5,915	(807)
Comprehensive income	$ 14,085	$ 9,906	$ 29,495	$ 18,009

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Consolidated Statements of Stockholders Equity (unaudited) - USD ($) $ in Thousands	Common Stock	Surplus	Retained Earnings	Treasury Stock	Accumulated Other Comprehensive Loss	Total
Balance at Dec. 31, 2017	$ 197	$ 347,691	$ 96,547	$ (296)	$ (14,939)	$ 429,200
Increase (Decrease) in Stockholders' Equity
Net income			18,816			18,816
Shares issued under the dividend reinvestment plan		468				468
Stock awards granted and distributed	1	(523)		522
Stock awards forfeited		115		(115)
Repurchase of surrendered stock from vesting of stock plans				(552)		(552)
Share based compensation expense		1,787				1,787
Cash dividend declared			(9,157)			(9,157)
Other comprehensive income (loss), net of deferred income taxes					(807)	(807)
Balance at Jun. 30, 2018	198	349,538	106,206	(441)	(15,746)	439,755
Balance at Mar. 31, 2018	198	348,420	104,050	(436)	(18,909)	433,323
Increase (Decrease) in Stockholders' Equity
Net income			6,743			6,743
Shares issued under the dividend reinvestment plan		236				236
Stock awards granted and distributed		(216)		216
Stock awards forfeited		95		(95)
Repurchase of surrendered stock from vesting of stock plans				(126)		(126)
Share based compensation expense		1,003				1,003
Cash dividend declared			(4,587)			(4,587)
Other comprehensive income (loss), net of deferred income taxes					3,163	3,163
Balance at Jun. 30, 2018	198	349,538	106,206	(441)	(15,746)	439,755
Balance at Dec. 31, 2018	198	352,093	117,432	(781)	(15,112)	453,830
Increase (Decrease) in Stockholders' Equity
Net income			23,580			23,580
Shares issued under the dividend reinvestment plan		419				419
Purchase of treasury stock				(321)		(321)
Stock awards granted and distributed	1	(955)		954
Stock awards forfeited		342		(342)
Repurchase of surrendered stock from vesting of stock plans		(18)		(847)		(865)
Share based compensation expense		1,848				1,848
Cash dividend declared			(9,201)			(9,201)
Other comprehensive income (loss), net of deferred income taxes					5,915	5,915
Balance at Jun. 30, 2019	199	353,729	131,811	(1,337)	(9,197)	475,205
Balance at Mar. 31, 2019	199	352,454	125,765	(786)	(12,629)	465,003
Increase (Decrease) in Stockholders' Equity
Net income			10,653			10,653
Shares issued under the dividend reinvestment plan		221				221
Purchase of treasury stock				(321)		(321)
Stock awards granted and distributed		(164)		164
Stock awards forfeited		342		(342)
Repurchase of surrendered stock from vesting of stock plans		(18)		(52)		(70)
Share based compensation expense		894				894
Cash dividend declared			(4,607)			(4,607)
Other comprehensive income (loss), net of deferred income taxes					3,432	3,432
Balance at Jun. 30, 2019	$ 199	$ 353,729	$ 131,811	$ (1,337)	$ (9,197)	$ 475,205

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Consolidated Statements of Stockholders Equity (Parentheticals) (unaudited) - $ / shares	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Consolidated Statements of Stockholders Equity (unaudited)
Cash dividend declared (in dollars per share)	$ 0.23	$ 0.23	$ 0.46	$ 0.46

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Consolidated Statements of Cash Flows (unaudited) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
Cash flows from operating activities:
Net income	$ 23,580	$ 18,816
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses	4,100	1,200
Depreciation and amortization of premises and equipment	2,083	1,897
Net (accretion) and other amortization	(723)	(1,444)
Net amortization on securities	1,524	2,507
Increase in cash surrender value of bank owned life insurance	(1,109)	(1,101)
Amortization of intangible assets	423	488
Share based compensation expense	1,848	1,787
Net securities (gains) losses	(201)	7,921
(Increase) decrease in accrued interest receivable	(1,161)	27
SBA loans originated for sale	(14,564)	(19,446)
Proceeds from sale of the guaranteed portion of SBA loans	15,897	14,417
Gain on sale of the guaranteed portion of SBA loans	(1,061)	(1,062)
Gain on sale of loans		(322)
Decrease in other assets	2,424	279
(Decrease) increase in accrued expenses and other liabilities	(4,067)	2,929
Net cash provided by operating activities	28,993	28,893
Cash flows from investing activities:
Purchases of securities available for sale	(50,767)	(194,835)
Purchases of securities, restricted	(39,156)	(481,422)
Purchases of securities held to maturity		(1,000)
Proceeds from sales of securities available for sale	46,478	230,372
Redemption of securities, restricted	39,080	490,024
Maturities, calls and principal payments of securities available for sale	55,116	50,431
Maturities, calls and principal payments of securities held to maturity	15,105	11,696
Net increase in loans	(170,997)	(118,281)
Proceeds from loan sale		40,133
Proceeds from sales of other real estate owned ("OREO"), net	297
Purchase of premises and equipment	(1,081)	(4,435)
Net cash (used in) provided by investing activities	(105,925)	22,683
Cash flows from financing activities:
Net (decrease) increase in deposits	(49,801)	218,676
Net decrease in federal funds purchased		(50,000)
Net decrease in FHLB advances	(432)	(200,427)
Net increase in repurchase agreements	406	560
Net proceeds from issuance of common stock	419	468
Purchase of treasury stock	(321)
Repurchase of surrendered stock from vesting of stock plans	(865)	(552)
Cash dividends paid	(9,201)	(9,157)
Net cash used in financing activities	(59,795)	(40,432)
Net (decrease) increase in cash and cash equivalents	(136,727)	11,144
Cash and cash equivalents at beginning of period	295,368	94,747
Cash and cash equivalents at end of period	158,641	105,891
Cash paid for:
Interest	20,833	14,382
Income taxes	2,358	2,471
Non-cash investing and financing activities:
Transfers from portfolio loans to loans held for sale	$ 12,643
Transfers from portfolio loans to other real estate owned		$ 175

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BASIS OF PRESENTATION

6 Months Ended

Jun. 30, 2019

BASIS OF PRESENTATION.

BASIS OF PRESENTATION

1. BASIS OF PRESENTATION

Bridge Bancorp, Inc. (the “Holding Company”), is a bank holding company incorporated under the laws of the State of New York. The Holding Company’s business consists of the operations of its wholly-owned subsidiary, BNB Bank (the “Bank”). The Bank’s operations include its real estate investment trust subsidiary, Bridgehampton Community, Inc.; a financial title insurance subsidiary, Bridge Abstract LLC (“Bridge Abstract”); and an investment services subsidiary, Bridge Financial Services, Inc. (“Bridge Financial Services”).

The unaudited consolidated financial statements presented in this Quarterly Report on Form 10-Q include the collective results of the Holding Company and its wholly-owned subsidiary, the Bank, which are collectively herein referred to as “we”, “us”, “our” and the “Company.”

The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10‑Q and Article 10 of Regulation S-X. The unaudited consolidated financial statements included herein reflect all normal recurring adjustments that are, in the opinion of management, necessary for a fair presentation of the results for the interim periods presented. In preparing the interim financial statements, management has made estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense during the reported periods. Such estimates are subject to change in the future as additional information becomes available or previously existing circumstances are modified. Actual future results could differ significantly from those estimates. The annualized results of operations for the six months ended June  30, 2019 are not necessarily indicative of the results of operations that may be expected for the entire fiscal year. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain reclassifications have been made to prior year amounts, and the related discussion and analysis, to conform to the current year presentation. These reclassifications did not have an impact on net income or total stockholders' equity. The unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10‑K for the year ended December 31, 2018.

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EARNINGS PER SHARE

6 Months Ended

Jun. 30, 2019

EARNINGS PER SHARE.

EARNINGS PER SHARE

2. EARNINGS PER SHARE

Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) No. 260‑10‑45 addresses whether instruments granted in share-based payment transactions are participating securities prior to vesting and, therefore, need to be included in the earnings allocation in computing earnings per share (“EPS”). The restricted stock awards (“RSAs”) and certain restricted stock units (“RSUs”) granted by the Company contain non-forfeitable rights to dividends and therefore are considered participating securities. The two-class method for calculating basic EPS excludes dividends paid to participating securities and any undistributed earnings attributable to participating securities.

The following table presents the computation of EPS for the three and six months ended June 30, 2019 and 2018:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
(In thousands, except per share data)	2019		2018		2019		2018
Net income	$	10,653	$	6,743	$	23,580	$	18,816
Dividends paid on and earnings allocated to participating securities		(226)		(148)		(503)		(405)
Income attributable to common stock	$	10,427	$	6,595	$	23,077	$	18,411
Weighted average common shares outstanding, including participating securities		19,965		19,884		19,946		19,859
Weighted average participating securities		(428)		(445)		(427)		(433)
Weighted average common shares outstanding		19,537		19,439		19,519		19,426
Basic earnings per common share	$	0.53	$	0.34	$	1.18	$	0.95
Income attributable to common stock	$	10,427	$	6,595	$	23,077	$	18,411
Weighted average common shares outstanding		19,537		19,439		19,519		19,426
Incremental shares from assumed conversions of options and restricted stock units		28		29		26		27
Weighted average common and equivalent shares outstanding		19,565		19,468		19,545		19,453
Diluted earnings per common share	$	0.53	$	0.34	$	1.18	$	0.95

There were 110,660 stock options outstanding at June 30, 2019 that were not included in the computation of diluted earnings per share for the three and six months ended June 30, 2019 because the options' exercise prices were greater than the average market price of common stock and were, therefore, antidilutive. There were 47,393 stock options outstanding at June 30, 2018 that were not included in the computation of diluted earnings per share for the three and six months ended June 30, 2018 because the options' exercise prices were greater than the average market price of common stock and were, therefore, antidilutive.

There were 32,865 and zero RSUs that were antidilutive for the three months ended June 30, 2019 and 2018, respectively. There were 22,472 and zero RSUs that were antidilutive for the six months ended June 30, 2019 and 2018, respectively.

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STOCK-BASED COMPENSATION PLANS

6 Months Ended

Jun. 30, 2019

STOCK-BASED COMPENSATION PLANS.

STOCK-BASED COMPENSATION PLANS

3. STOCK-BASED COMPENSATION PLANS

In May 2019, the Company’s shareholders approved the Bridge Bancorp, Inc. 2019 Equity Incentive Plan (the “2019 Equity Incentive Plan”), which provides for the grant of stock-based and other incentive awards to officers, employees and directors of the Company. The 2019 Equity Incentive Plan superseded the Bridge Bancorp, Inc. 2012 Stock-Based Incentive Plan (the “2012 Equity Incentive Plan”). The 2012 Equity Incentive Plan superseded the 2006 Stock-Based Incentive Plan. The maximum number of shares of stock, in the aggregate, that may be granted under the 2019 Equity Incentive Plan as stock options, restricted stock, or restricted stock units is 370,000 plus the number of shares of stock which have been reserved but not issued under the 2012 Equity Incentive Plan, and any awards that are forfeited under the 2012 Equity Incentive Plan after the effective date of the 2019 Equity Incentive Plan. No further grants will be made under the 2012 Equity Incentive Plan. Currently outstanding grants under the 2012 Equity Incentive Plan will not be affected.

The number of shares of common stock of Bridge Bancorp, Inc. available for stock-based awards under the 2019 Equity Incentive Plan is 370,000 plus 162,738 shares that were remaining under the 2012 Equity Incentive Plan. At June 30, 2019, 522,794 shares remain available for issuance, including shares that may be granted in the form of stock options, RSAs, or RSUs.

The Compensation Committee of the Board of Directors determines awards under the 2019 Equity Incentive Plan. The Company accounts for the 2019 Equity Incentive Plan under FASB ASC No. 718.

Stock Options

Stock options may be either incentive stock options, which bestow certain tax benefits on the optionee, or non-qualified stock options, not qualifying for such benefits. All options have an exercise price that is not less than the market value of the Company's common stock on the date of the grant.

The fair value of each option granted is estimated on the date of the grant using the Black-Scholes option-pricing model. The intrinsic value for stock options is calculated based on the exercise price of the underlying awards and the market price of the Company's common stock as of the exercise or reporting date.

During the six months ended June  30, 2019 and 2018, in accordance with the Long Term Incentive Plan (“LTI Plan”) for Named Executive Officers (“NEOs”), the Company granted 63,267 and 47,393 stock options, respectively, with an exercise price set to equal a 10.0% premium over the grant date stock price. All of the stock options granted vest ratably over three years. The estimated weighted-average grant-date fair value of all stock options granted in the six months ended June  30, 2019 and 2018 was $5.05 and $6.52 per stock option, respectively, using the Black-Scholes option-pricing model with assumptions as follows:

	Six Months Ended
	June 30,
	2019			2018
Dividend yield		2.86	%		2.80	%
Expected volatility		23.80			27.53
Risk-free interest rate		2.52			2.67
Expected option life		6.0	years		6.5	years

Compensation expense attributable to stock options was $52 thousand and $91 thousand for the three and six months ended June 30, 2019, respectively. Compensation expense attributable to stock options was $26 thousand and $39 thousand for the three and six months ended June 30, 2018, respectively. As of June 30, 2019, there was $447 thousand of total unrecognized compensation cost related to unvested stock options. The cost is expected to be recognized over a weighted-average period of 2.3 years.

The following table summarizes the status of the Company's stock options as of and for the six months ended June 30, 2019:

				Weighted
		Weighted		Average
	Number	Average		Remaining			Aggregate
	of	Exercise		Contractual			Intrinsic
(Dollars in thousands, except per share amounts)	Options	Price		Life			Value
Outstanding, January 1, 2019	47,393	$	36.19
Granted	63,267		35.35
Outstanding, June 30, 2019	110,660		35.71		9.2	years	$	—
Vested and Exercisable, June 30, 2019	15,795		36.19		8.6	years		—

	Number of	Exercise
Range of Exercise Prices	Options	Price
$35.35	63,267	$	35.35
36.19	47,393		36.19
	110,660

Restricted Stock Awards

The Company's RSAs are shares of the Company's common stock that are forfeitable and are subject to restrictions on transfer prior to the vesting date. RSAs are forfeited if the award holder departs the Company before vesting. RSAs carry dividend and voting rights from the date of grant. The vesting of time-vested RSAs depends upon the award holder continuing to render services to the Company. The Company's performance-based RSAs vest subject to the achievement of the Company's corporate goals.

The following table summarizes the unvested RSA activity for the six months ended June 30, 2019:

		Weighted
		Average Grant-Date
	Shares	Fair Value
Unvested, January 1, 2019	324,882	$	29.13
Granted	77,952		31.98
Vested	(88,552)		27.19
Forfeited	(12,317)		31.10
Unvested, June 30, 2019	301,965		30.35

During the six months ended June 30, 2019, the Company granted a total of 77,952 RSAs. Of the 77,952 RSAs granted, 49,925 time-vested RSAs vest ratably over five years and 28,027 time-vested RSAs vest ratably over three years. During the six months ended June 30, 2018, the Company granted a total of 82,982 RSAs. Of the 82,982 RSAs granted, 44,750 time-vested RSAs vest ratably over five years, 13,115 time-vested RSAs vest ratably over three years, and 25,117 performance-based RSAs vest ratably over two years, subject to the achievement of the Company's 2018 corporate goals. As of June 30, 2019, there were 301,965 unvested RSAs consisting of 290,717 time-vested RSAs and 11,248 performance-based RSAs.

Compensation expense attributable to RSAs was $527 thousand and $1.1 million for the three and six months ended June 30, 2019, respectively, and $717 thousand and $1.3 million for the three and six months ended June 30, 2018, respectively. As of June 30, 2019, there was $5.9 million of total unrecognized compensation cost related to non-vested RSAs. The cost is expected to be recognized over a weighted-average period of 3.3 years.

Restricted Stock Units

Long Term Incentive Plan

RSUs represent an obligation to deliver shares to a grantee at a future date if certain vesting conditions are met. RSUs are subject to a time-based vesting schedule, or the satisfaction of performance conditions, and are settled in shares of the Company's common stock. RSUs do not provide voting rights and RSUs may provide dividend equivalent rights from the date of grant.

During the six months ended June 30, 2019, in accordance with the LTI Plan for NEOs, the Company granted 22,305 RSUs. Of the 22,305 RSUs granted, 13,255 time-vested RSUs vest ratably over five years and 9,050 performance-based RSUs vest subject to the achievement of the Company's three-year corporate goal for the three-year period ending December 31, 2021.

The following table summarizes the unvested NEO RSU activity for the six months ended June 30, 2019:

		Weighted
		Average Grant-Date
	Shares	Fair Value
Unvested, January 1, 2019	79,238	$	27.36
Granted	22,305		33.42
Reinvested dividends	1,269		28.46
Forfeited	(16,184)		23.34
Vested	(2,573)		32.90
Unvested, June 30, 2019	84,055		29.59

Compensation expense attributable to LTI Plan RSUs was $173 thousand and $343 thousand for the three and six months ended June 30, 2019, respectively and $119 thousand and $220 thousand for the three and six months ended June 30, 2018, respectively. As of June 30, 2019, there was $1.7 million of total unrecognized compensation cost related to non-vested RSUs. The cost is expected to be recognized over a weighted-average period of 3.0 years.

Directors Plan

In April 2009, the Company adopted a Directors Deferred Compensation Plan (“Directors Plan”). Under the Directors Plan, independent directors may elect to defer all or a portion of their annual retainer fee in the form of RSUs. In addition, directors receive a non-election retainer in the form of RSUs. These RSUs vest ratably over one year and have dividend rights but no voting rights. In connection with the Directors Plan, the Company recorded expense of $142 thousand and $285 thousand for the three and six months ended June 30, 2019, respectively, and $140 thousand and $275 thousand for the three and six months ended June 30, 2018, respectively.

Employee Stock Purchase Plan

In May 2018, the Board of Directors adopted, and stockholders approved the Employee Stock Purchase Plan (“ESPP”). A total of 1,000,000 shares of the Company’s common stock have been initially authorized for issuance under the ESPP. Subject to any plan limitations, the ESPP allows eligible employees to contribute, normally through payroll deductions, up to $25 thousand for the purchase of the Company’s common stock at a discounted price per share for any calendar year. The current offering period is from July 1, 2019 through December 31, 2019.

During the six months ended June 30, 2019, no shares of common stock were purchased, and no expense was recorded related to the ESPP. During the six months ended June 30, 2018,  no shares of common stock were purchased, and no expense was recorded related to the ESPP.

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SECURITIES

6 Months Ended

Jun. 30, 2019

SECURITIES.

SECURITIES

4. SECURITIES

The following tables summarize the amortized cost and estimated fair value of the available for sale and held to maturity investment securities portfolio at June 30, 2019 and December 31, 2018 and the corresponding amounts of unrealized gains and losses therein:

	June 30, 2019
			Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Fair
(In thousands)	Cost		Gains		Losses		Value
Available for sale:
U.S. GSE securities	$	15,000	$	—	$	(37)	$	14,963
State and municipal obligations		28,108		641		(1)		28,748
U.S. GSE residential mortgage-backed securities		93,898		268		(909)		93,257
U.S. GSE residential collateralized mortgage obligations		333,584		1,628		(1,428)		333,784
U.S. GSE commercial mortgage-backed securities		7,013		38		—		7,051
U.S. GSE commercial collateralized mortgage obligations		97,720		1,306		(629)		98,397
Other asset backed securities		24,250		—		(788)		23,462
Corporate bonds		46,000		—		(2,765)		43,235
Total available for sale		645,573		3,881		(6,557)		642,897
Held to maturity:
State and municipal obligations		42,582		927		(1)		43,508
U.S. GSE residential mortgage-backed securities		8,900		—		(109)		8,791
U.S. GSE residential collateralized mortgage obligations		45,961		655		(315)		46,301
U.S. GSE commercial mortgage-backed securities		18,721		125		(70)		18,776
U.S. GSE commercial collateralized mortgage obligations		28,552		118		(566)		28,104
Total held to maturity		144,716		1,825		(1,061)		145,480
Total securities	$	790,289	$	5,706	$	(7,618)	$	788,377

	December 31, 2018
			Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Fair
(In thousands)	Cost		Gains		Losses		Value
Available for sale:
U.S. GSE securities	$	29,997	$	—	$	(947)	$	29,050
State and municipal obligations		40,980		105		(354)		40,731
U.S. GSE residential mortgage-backed securities		96,536		38		(3,036)		93,538
U.S. GSE residential collateralized mortgage obligations		362,905		826		(5,954)		357,777
U.S. GSE commercial mortgage-backed securities		3,536		—		(28)		3,508
U.S. GSE commercial collateralized mortgage obligations		93,177		—		(2,539)		90,638
Other asset-backed securities		24,250		—		(1,031)		23,219
Corporate bonds		46,000		—		(3,575)		42,425
Total available for sale		697,381		969		(17,464)		680,886
Held to maturity:
State and municipal obligations		53,540		290		(276)		53,554
U.S. GSE residential mortgage-backed securities		9,688		—		(336)		9,352
U.S. GSE residential collateralized mortgage obligations		48,244		163		(1,130)		47,277
U.S. GSE commercial mortgage-backed securities		19,098		4		(620)		18,482
U.S. GSE commercial collateralized mortgage obligations		29,593		—		(1,466)		28,127
Total held to maturity		160,163		457		(3,828)		156,792
Total securities	$	857,544	$	1,426	$	(21,292)	$	837,678

The following table summarizes the amortized cost and estimated fair value by contractual maturity of the available for sale and held to maturity investment securities portfolio at June 30, 2019. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	June 30, 2019
	Amortized		Estimated
(In thousands)	Cost		Fair Value
Maturity
Available for sale:
Within one year	$	3,066	$	3,065
One to five years		32,267		31,885
Five to ten years		57,250		55,385
Beyond ten years		552,990		552,562
Total	$	645,573	$	642,897
Held to maturity:
Within one year	$	8,779	$	8,800
One to five years		24,495		24,909
Five to ten years		32,654		33,139
Beyond ten years		78,788		78,632
Total	$	144,716	$	145,480

The following tables summarize securities with gross unrealized losses at June 30, 2019 and December 31, 2018, aggregated by category and length of time that individual securities have been in a continuous unrealized loss position:

	June 30, 2019
	Less than 12 months				Greater than 12 months
	Estimated		Gross		Estimated		Gross
	Fair		Unrealized		Fair		Unrealized
(In thousands)	Value		Losses		Value		Losses
Available for sale:
U.S. GSE securities	$	—	$	—	$	14,963	$	(37)
State and municipal obligations		—		—		2,964		(1)
U.S. GSE residential mortgage-backed securities		—		—		67,117		(909)
U.S. GSE residential collateralized mortgage obligations		35,723		(132)		134,232		(1,296)
U.S. GSE commercial collateralized mortgage obligations		—		—		44,046		(629)
Other asset backed securities		—		—		23,462		(788)
Corporate bonds		—		—		43,235		(2,765)
Total available for sale	$	35,723	$	(132)	$	330,019	$	(6,425)
Held to maturity:
State and municipal obligations	$	—	$	—	$	405	$	(1)
U.S. GSE residential mortgage-backed securities		—		—		8,791		(109)
U.S. GSE residential collateralized mortgage obligations		—		—		24,594		(315)
U.S. GSE commercial mortgage-backed securities		—		—		5,216		(70)
U.S. GSE commercial collateralized mortgage obligations		—		—		18,146		(566)
Total held to maturity	$	—	$	—	$	57,152	$	(1,061)

	December 31, 2018
	Less than 12 months				Greater than 12 months
	Estimated		Gross		Estimated		Gross
	Fair		Unrealized		Fair		Unrealized
(In thousands)	Value		Losses		Value		Losses
Available for sale:
U.S. GSE securities	$	—	$	—	$	29,050	$	(947)
State and municipal obligations		6,655		(15)		21,273		(339)
U.S. GSE residential mortgage-backed securities		—		—		88,762		(3,036)
U.S. GSE residential collateralized mortgage obligations		46,452		(141)		172,468		(5,813)
U.S. GSE commercial mortgage-backed securities		—		—		3,508		(28)
U.S. GSE commercial collateralized mortgage obligations		46,705		(623)		43,933		(1,916)
Other asset-backed securities		—		—		23,219		(1,031)
Corporate bonds		—		—		42,425		(3,575)
Total available for sale	$	99,812	$	(779)	$	424,638	$	(16,685)
Held to maturity:
State and municipal obligations	$	8,286	$	(26)	$	22,142	$	(250)
U.S. GSE residential mortgage-backed securities		—		—		9,352		(336)
U.S. GSE residential collateralized mortgage obligations		—		—		40,665		(1,130)
U.S. GSE commercial mortgage-backed securities		—		—		16,205		(620)
U.S. GSE commercial collateralized mortgage obligations		—		—		28,127		(1,466)
Total held to maturity	$	8,286	$	(26)	$	116,491	$	(3,802)

Other-Than-Temporary Impairment

Management evaluates securities for other-than-temporary impairment (“OTTI”) quarterly and more frequently when economic or market conditions warrant. The investment securities portfolio is evaluated for OTTI by segregating the portfolio into two general segments and applying the appropriate OTTI model. Investment securities classified as available for sale or held to maturity are generally evaluated for OTTI under FASB ASC 320, “Accounting for Certain Investments in Debt and Equity Securities”. In determining OTTI under the FASB ASC 320 model, management considers many factors, including: (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near term prospects of the issuer, (3) whether the market decline was affected by macroeconomic conditions, and (4) whether the Company has the intent to sell the debt security or more likely than not will be required to sell the debt security before its anticipated recovery. If either of the criteria regarding intent or requirement to sell is met, the entire difference between amortized cost and fair value is recognized as impairment through earnings. For debt securities that do not meet these criteria, the amount of impairment is split into two components: (1) OTTI related to credit loss, which must be recognized in the income statement and (2) OTTI related to other factors, which is recognized in other comprehensive income. The credit loss is defined as the difference between the present value of the cash flows expected to be collected and the amortized cost basis. The assessment of whether an other-than-temporary decline exists involves a high degree of subjectivity and judgment and is based on the information available to management at a point in time.

At June 30, 2019, substantially all of the securities in an unrealized loss position had a fixed interest rate and the cause of the temporary impairment was directly related to changes in interest rates. The Company generally views changes in fair value caused by changes in interest rates as temporary, which is consistent with its experience. Other asset backed securities are comprised of student loan backed bonds which are guaranteed by the U.S. Department of Education for 97% to 100% of principal. Additionally, the bonds have credit support of 3% to 5% and have maintained their Aa3 Moody's rating during the time the Bank has owned them. The corporate bonds within the portfolio have all maintained an investment grade rating by either Moody's or Standard and Poor's. None of the unrealized losses is related to credit losses. The Company does not have the intent to sell these securities and it is more likely than not that it will not be required to sell the securities before their anticipated recovery. Therefore, the Company does not consider these securities to be other-than-temporarily impaired at June 30, 2019.

Sales and Calls of Securities

There were $46.5 million in proceeds from sales of securities with gross gain of $0.2 million realized for the three and six months ended June 30, 2019. There were $230.4 million of proceeds from sales of securities with gross losses of $7.9 million realized for the three and six months ended June 30, 2018. There were $2.4 million and $10.3 million of proceeds from calls of securities for the three and six months ended June 30, 2019, respectively. There were $0.9 million and $1.9 million of proceeds from calls of securities for the three and six months ended June 30, 2018, respectively.

Pledged Securities

Securities having a fair value of $324.7 million and $354.3 million at June 30, 2019 and December 31, 2018, respectively, were pledged to secure public deposits and Federal Home Loan Bank (“FHLB”) and Federal Reserve Bank (“FRB”) overnight borrowings.

Trading Securities

The Company did not hold any trading securities during the six months ended June 30, 2019or the year ended December 31, 2018.

Restricted Securities

The Bank is a member of the FHLB of New York. Members are required to own a particular amount of stock based on the level of borrowings and other factors and may invest in additional amounts. The Bank is a member of the Atlantic Central Banker's Bank (“ACBB”) and is required to own ACBB stock. The Bank is also a member of the FRB system and required to own FRB stock. FHLB, ACBB and FRB stock is carried at cost and periodically evaluated for impairment based on ultimate recovery of par value. Both cash and stock dividends are reported as income. The Bank owned $24.1 million and $24.0 million in FHLB, ACBB and FRB stock at June 30, 2019 and December 31, 2018, respectively. These amounts were reported as restricted securities in the consolidated balance sheets.

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FAIR VALUE

6 Months Ended

Jun. 30, 2019

FAIR VALUE.

FAIR VALUE

5. FAIR VALUE

The Company adopted Accounting Standards Update (“ASU”) 2016-01, Financial Instruments – Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities during the first quarter of 2018.  The Company adopted the amended guidance that requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes.

FASB ASC No. 820‑10 defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. FASB ASC 820‑10 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair values:

Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3: Significant unobservable inputs that reflect a reporting entity's own assumptions about the assumptions that market participants would use in pricing an asset or liability.

The following tables summarize assets and liabilities measured at fair value on a recurring basis:

	June 30, 2019
			Fair Value Measurements Using:
			Quoted Prices
			In Active	Significant
			Markets for	Other		Significant
			Identical	Observable		Unobservable
	Carrying		Assets	Inputs		Inputs
(In thousands)	Value		(Level 1)	(Level 2)		(Level 3)
Financial assets:
Available for sale securities:
U.S. GSE securities	$	14,963		$	14,963
State and municipal obligations		28,748			28,748
U.S. GSE residential mortgage-backed securities		93,257			93,257
U.S. GSE residential collateralized mortgage obligations		333,784			333,784
U.S. GSE commercial mortgage-backed securities		7,051			7,051
U.S. GSE commercial collateralized mortgage obligations		98,397			98,397
Other asset-backed securities		23,462			23,462
Corporate bonds		43,235			43,235
Total available for sale securities	$	642,897		$	642,897
Derivatives	$	11,919		$	11,919
Financial liabilities:
Derivatives	$	13,594		$	13,594

	December 31, 2018
			Fair Value Measurements Using:
			Quoted Prices
			In Active	Significant
			Markets for	Other		Significant
			Identical	Observable		Unobservable
	Carrying		Assets	Inputs		Inputs
(In thousands)	Value		(Level 1)	(Level 2)		(Level 3)
Financial assets:
Available for sale securities:
U.S. GSE securities	$	29,050		$	29,050
State and municipal obligations		40,731			40,731
U.S. GSE residential mortgage-backed securities		93,538			93,538
U.S. GSE residential collateralized mortgage obligations		357,777			357,777
U.S. GSE commercial mortgage-backed securities		3,508			3,508
U.S. GSE commercial collateralized mortgage obligations		90,638			90,638
Other asset-backed securities		23,219			23,219
Corporate bonds		42,425			42,425
Total available for sale securities	$	680,886		$	680,886
Derivatives	$	6,363		$	6,363
Financial liabilities:
Derivatives	$	2,215		$	2,215

The following tables summarize assets measured at fair value on a non-recurring basis:

	June 30, 2019
			Fair Value Measurements Using:
			Quoted Prices
			In Active		Significant
			Markets for		Other	Significant
			Identical		Observable	Unobservable
	Carrying		Assets		Inputs	Inputs
(In thousands)	Value		(Level 1)		(Level 2)	(Level 3)
Loans held for sale	$	12,643		$	12,643
Impaired loans	$	4,791				$	4,791

	December 31, 2018
			Fair Value Measurements Using:
			Quoted Prices
			In Active	Significant
			Markets for	Other	Significant
			Identical	Observable	Unobservable
	Carrying		Assets	Inputs	Inputs
(In thousands)	Value		(Level 1)	(Level 2)	(Level 3)
Impaired loans	$	2,532			$	2,532
Other real estate owned	$	175			$	175

Impaired loans with an allocated allowance for loan losses at June 30, 2019 had a carrying amount of $4.8 million, which is made up of the outstanding balance of $5.5 million, net of a valuation allowance of $0.7 million. This resulted in an additional provision for loan losses of $0.5 million that is included in the amount reported on the consolidated statements of income for the six months ended June 30, 2019. Impaired loans with an allocated allowance for loan losses at December 31, 2018 had a carrying amount of $2.5 million, which is made up of the outstanding balance of $2.7 million, net of a valuation allowance of $0.2 million. This resulted in an additional provision for loan losses of $0.2 million that is included in the amount reported on the consolidated statements of income for the year ended December 31, 2018.

There was no other real estate owned at June 30, 2019. At December 31, 2018, other real estate owned had a carrying amount of $0.2 million with no valuation allowance recorded. Accordingly, there was no additional provision for loan losses included in the amount reported on the consolidated statements of income.

The Company used the following methods and assumptions in estimating the fair value of its financial instruments:

Securities Available for Sale and Held to Maturity: If available, the estimated fair values are based on independent dealer quotations on nationally recognized securities exchanges and are classified as Level 1. For securities where quoted prices are not available, fair value is based on matrix pricing, which is a mathematical technique widely used in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities' relationship to other benchmark quoted securities resulting in a Level 2 classification.

Derivatives: Represents interest rate swaps for which the estimated fair values are based on valuation models using observable market data as of the measurement date resulting in a Level 2 classification.

Loans Held for Sale: Loans held for sale are carried at the lower of cost or fair value. The fair value of loans held for sale is determined using the price we expect to receive for the loans based on commitments received from third-party investors, resulting in a Level 2 classification.

Impaired Loans and Other Real Estate Owned: For impaired loans, the Company evaluates the fair value of the loan in accordance with current accounting guidance. For loans that are collateral dependent, the fair value of the collateral is used to determine the fair value of the loan. The fair value of the collateral is determined based on recent appraised values. The fair value of other real estate owned is also evaluated in accordance with current accounting guidance and determined based on recent appraised values less the estimated cost to sell. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Adjustments may relate to location, square footage, condition, amenities, market rate of leases as well as timing of comparable sales. All appraisals undergo a second review process to ensure that the methodology employed, and the values derived are reasonable. The fair value of the loan is compared to the carrying value to determine if any write-down or specific reserve is required. Impaired loans are evaluated quarterly for additional impairment and adjusted accordingly.

Appraisals for collateral-dependent impaired loans are performed by certified general appraisers (for commercial properties) or certified residential appraisers (for residential properties) whose qualifications and licenses have been reviewed and verified by the Company. Once received, the Credit Department reviews the assumptions and approaches utilized in the appraisal as well as the overall resulting fair value in comparison with independent data sources such as recent market data or industry-wide statistics. Management also considers the appraisal values for commercial properties associated with current loan origination activity. Collectively, this information is reviewed to help assess current trends in commercial property values. For each collateral dependent impaired loan, management considers information that relates to the type of commercial property to determine if such properties may have appreciated or depreciated in value since the date of the most recent appraisal. Adjustments to fair value are made only when the analysis indicates a probable decline in collateral values. Adjustments made in the appraisal process are not deemed material to the overall consolidated financial statements given the level of impaired loans measured at fair value on a nonrecurring basis.

The following tables summarize the estimated fair values and recorded carrying amounts of the Company's financial instruments at June 30, 2019 and December 31, 2018:  

	June 30, 2019
			Fair Value Measurements Using:
					Significant
			Quoted Prices In		Other		Significant
			Active Markets for		Observable		Unobservable
	Carrying		Identical Assets		Inputs		Inputs		Total
(In thousands)	Amount		(Level 1)		(Level 2)		(Level 3)		Fair Value
Financial assets:
Cash and due from banks	$	71,292	$	71,292	$	—	$	—	$	71,292
Interest-bearing deposits with banks		87,349		87,349		—		—		87,349
Securities available for sale		642,897		—		642,897		—		642,897
Securities restricted		24,104		n/a		n/a		n/a		n/a
Securities held to maturity		144,716		—		145,480		—		145,480
Loans held for sale		12,643		—		12,643		—		12,643
Loans, net		3,398,852		—		—		3,375,662		3,375,662
Derivatives		11,919		—		11,919		—		11,919
Accrued interest receivable		12,397		—		2,532		9,865		12,397
Financial liabilities:
Certificates of deposit		276,921		—		276,929		—		276,929
Demand and other deposits		3,559,655		3,559,655		—		—		3,559,655
FHLB advances		240,000		—		240,206		—		240,206
Repurchase agreements		945		—		945		—		945
Subordinated debentures		78,850		—		80,668		—		80,668
Derivatives		13,594		—		13,594		—		13,594
Accrued interest payable		1,718		—		1,718		—		1,718

	December 31, 2018
			Fair Value Measurements Using:
					Significant
			Quoted Prices In		Other		Significant
			Active Markets for		Observable		Unobservable
	Carrying		Identical Assets		Inputs		Inputs		Total
(In thousands)	Amount		(Level 1)		(Level 2)		(Level 3)		Fair Value
Financial assets:
Cash and due from banks	$	142,145	$	142,145	$	—	$	—	$	142,145
Interest-bearing deposits with banks		153,223		153,223		—		—		153,223
Securities available for sale		680,886		—		680,886		—		680,886
Securities restricted		24,028		n/a		n/a		n/a		n/a
Securities held to maturity		160,163		—		156,792		—		156,792
Loans, net		3,244,393		—		—		3,216,204		3,216,204
Derivatives		6,363		—		6,363		—		6,363
Accrued interest receivable		11,236		—		2,936		8,300		11,236
Financial liabilities:
Certificates of deposit		329,491		—		326,865		—		326,865
Demand and other deposits		3,556,902		3,556,902		—		—		3,556,902
FHLB advances		240,433		—		236,209		—		236,209
Repurchase agreements		539		—		539		—		539
Subordinated debentures		78,781		—		74,400		—		74,400
Derivatives		2,215		—		2,215		—		2,215
Accrued interest payable		1,524		—		1,524		—		1,524

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LOANS

6 Months Ended

Jun. 30, 2019

LOANS.

LOANS

6. LOANS

The following table sets forth the major classifications of loans:

(In thousands)	June 30, 2019		December 31, 2018
Commercial real estate mortgage loans	$	1,436,221	$	1,373,556
Multi-family mortgage loans		631,146		585,827
Residential real estate mortgage loans		503,354		519,763
Commercial, industrial and agricultural loans		675,168		645,724
Real estate construction and land loans		150,868		123,393
Installment/consumer loans		25,825		20,509
Total loans		3,422,582		3,268,772
Net deferred loan costs and fees		7,441		7,039
Total loans held for investment		3,430,023		3,275,811
Allowance for loan losses		(31,171)		(31,418)
Loans, net	$	3,398,852	$	3,244,393

In June 2015, the Company completed the acquisition of Community National Bank (“CNB”) resulting in the addition of $729.4 million of acquired loans recorded at their fair value. There were approximately $246.3 million and $275.0 million of acquired CNB loans remaining as of June 30, 2019 and December 31, 2018, respectively.

As of June 30, 2019, one commercial real estate (“CRE”) mortgage loan totaling $16.3 million was reclassified from loans held for investment to loans held for sale and written down to the loan’s estimated fair value of $12.6 million, through a $3.7 million charge-off recognized in the 2019 second quarter.

Lending Risk

The principal business of the Bank is lending in CRE mortgage loans, multi-family mortgage loans, residential real estate mortgage loans, construction loans, home equity loans, commercial, industrial and agricultural loans, land loans and consumer loans. The Bank considers its primary lending area to be Nassau and Suffolk Counties located on Long Island and the New York City boroughs. A substantial portion of the Bank's loans is secured by real estate in these areas. Accordingly, the ultimate collectability of the loan portfolio is susceptible to changes in market and economic conditions in this region.

Commercial Real Estate Mortgages

Loans in this classification include income producing investment properties and owner-occupied real estate used for business purposes. The underlying properties are located largely in the Bank's primary market area. The cash flows of the income producing investment properties are adversely impacted by a downturn in the economy as evidenced by increased vacancy rates, which in turn, will have an effect on credit quality. Generally, management seeks to obtain annual financial information for borrowers with loans in excess of $1.0 million in this category. In the case of owner-occupied real estate used for business purposes, a weakened economy and resultant decreased consumer and/or business spending will have an adverse effect on credit quality.

Multi-Family Mortgages

Loans in this classification include income producing residential investment properties of five or more families.  Loans are made to established owners with a proven and demonstrable record of strong performance. Loans are secured by a first mortgage lien on the subject property with a loan to value ratio generally not exceeding 75%. Repayment is derived generally from the rental income generated from the property and may be supplemented by the owners' personal cash flow. Credit risk arises with an increase in vacancy rates, property mismanagement and the predominance of non-recourse loans that are customary in the industry.

Residential Real Estate Mortgages and Home Equity Loans

Loans in these classifications are generally secured by owner-occupied residential real estate and repayment is dependent on the credit quality of the individual borrower. The overall health of the economy, including unemployment rates and housing prices, can have an effect on the credit quality in this loan class. The Bank generally does not originate loans with a loan-to-value ratio greater than 80% and does not grant subprime loans.

Commercial, Industrial and Agricultural Loans

Loans in this classification are made to businesses and include term loans, lines of credit, senior secured loans to corporations, equipment financing and taxi medallion loans. Generally, these loans are secured by assets of the business and repayment is expected from the cash flows of the business. A weakened economy, and resultant decreased consumer and/or business spending, will have an effect on the credit quality in this loan class.

Real Estate Construction and Land Loans

Loans in this classification primarily include land loans to local individuals, contractors and developers for developing the land for sale or for the purpose of making improvements thereon. Repayment is derived primarily from sale of the lots/units including any pre-sold units. Credit risk is affected by market conditions, time to sell at an adequate price and cost overruns. To a lesser extent, this class includes commercial development projects that the Company finances, which in most cases require interest only during construction, and then convert to permanent financing. Construction delays, cost overruns, market conditions and the availability of permanent financing, to the extent such permanent financing is not being provided by the Bank, all affect the credit risk in this loan class.

Installment and Consumer Loans

Loans in this classification may be either secured or unsecured. Repayment is dependent on the credit quality of the individual borrower and, if applicable, sale of the collateral securing the loan, such as automobiles. Therefore, the overall health of the economy, including unemployment rates and housing prices, will have an effect on the credit quality in this loan class.

Credit Quality Indicators

The Company categorizes loans into risk categories of pass, special mention, substandard and doubtful based on relevant information about the ability of borrowers to service their debt including repayment patterns, probable incurred losses, past loss experience, current economic conditions, and various types of concentrations of credit. Assigned risk rating grades are continuously updated as new information is obtained. Loans risk rated special mention, substandard and doubtful are reviewed on a quarterly basis. The Company uses the following definitions for risk rating grades:

Pass: Loans classified as pass include current loans performing in accordance with contractual terms, pools of homogenous residential real estate and installment/consumer loans that are not individually risk rated and loans which do not exhibit certain risk factors that require greater than usual monitoring by management.

Special mention: Loans classified as special mention, while generally not delinquent, have potential weaknesses that deserve management's close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or in the Bank's credit position at some future date.

Substandard: Loans classified as substandard have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. There is a distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected.

Doubtful: Loans classified as doubtful have all the weaknesses inherent in a substandard loan, may also be in delinquency status and have defined weaknesses based on currently existing facts, conditions and values making collection or liquidation in full highly questionable and improbable.

The following tables represent loans categorized by class and internally assigned risk grades as of June 30, 2019 and December 31, 2018:

	June 30, 2019
(In thousands)	Pass		Special Mention		Substandard		Doubtful		Total
Commercial real estate:
Owner occupied	$	512,123	$	11,596	$	1,610	$	—	$	525,329
Non-owner occupied		896,654		735		13,503		—		910,892
Multi-family		630,735		411		—		—		631,146
Residential real estate:
Residential mortgage		425,836		8,255		1,295		—		435,386
Home equity		66,469		681		818		—		67,968
Commercial and industrial:
Secured		153,055		2,009		9,886		—		164,950
Unsecured		487,922		9,923		12,373		—		510,218
Real estate construction and land loans		150,572		—		296		—		150,868
Installment/consumer loans		25,047		6		772		—		25,825
Total loans	$	3,348,413	$	33,616	$	40,553	$	—	$	3,422,582

	December 31, 2018
(In thousands)	Pass		Special Mention		Substandard		Doubtful		Total
Commercial real estate:
Owner occupied	$	480,503	$	12,045	$	17,850	$	—	$	510,398
Non-owner occupied		858,069		2,188		2,901		—		863,158
Multi-family		585,409		418		—		—		585,827
Residential real estate:
Residential mortgage		438,891		8,510		1,114		—		448,515
Home equity		68,480		1,594		1,174		—		71,248
Commercial and industrial:
Secured		147,474		5,536		15,530		—		168,540
Unsecured		458,526		12,886		5,772		—		477,184
Real estate construction and land loans		123,089		—		304		—		123,393
Installment/consumer loans		20,464		9		36		—		20,509
Total loans	$	3,180,905	$	43,186	$	44,681	$	—	$	3,268,772

Past Due and Non-accrual Loans

The following tables represent the aging of the recorded investment in past due loans as of June 30, 2019 and December 31, 2018 by class of loans, as defined by FASB ASC 310‑10:

	June 30, 2019
					90+ Days		Non-accrual
	30-59		60-89		Past Due		Including 90		Total Past
	Days		Days		And		Days or More		Due and
(In thousands)	Past Due		Past Due		Accruing		Past Due		Non-accrual		Current		Total Loans
Commercial real estate:
Owner occupied	$	—	$	641	$	—	$	573	$	1,214	$	524,115	$	525,329
Non-owner occupied		—		—		—		1,376		1,376		909,516		910,892
Multi-family		—		—		—		—		—		631,146		631,146
Residential real estate:
Residential mortgages		164		—		—		2,138		2,302		433,084		435,386
Home equity		300		51		329		370		1,050		66,918		67,968
Commercial and industrial:
Secured		835		331		—		218		1,384		163,566		164,950
Unsecured		314		708		—		683		1,705		508,513		510,218
Real estate construction and land loans		—		—		—		129		129		150,739		150,868
Installment/consumer loans		38		—		—		22		60		25,765		25,825
Total loans	$	1,651	$	1,731	$	329	$	5,509	$	9,220	$	3,413,362	$	3,422,582

	December 31, 2018
					90+ Days		Non-accrual
	30-59		60-89		Past Due		Including 90		Total Past
	Days		Days		And		Days or More		Due and
(In thousands)	Past Due		Past Due		Accruing		Past Due		Non-accrual		Current		Total Loans
Commercial real estate:
Owner occupied	$	333	$	194	$	—	$	253	$	780	$	509,618	$	510,398
Non-owner occupied		—		—		—		885		885		862,273		863,158
Multi-family		—		—		—		—		—		585,827		585,827
Residential real estate:
Residential mortgages		892		230		—		199		1,321		447,194		448,515
Home equity		1,033		—		308		624		1,965		69,283		71,248
Commercial and industrial:
Secured		330		196		—		174		700		167,840		168,540
Unsecured		1,108		—		—		621		1,729		475,455		477,184
Real estate construction and land loans		—		—		—		—		—		123,393		123,393
Installment/consumer loans		84		—		—		52		136		20,373		20,509
Total loans	$	3,780	$	620	$	308	$	2,808	$	7,516	$	3,261,256	$	3,268,772

Impaired Loans

At June 30, 2019 and December 31, 2018, the Company had individually impaired loans as defined by FASB ASC No. 310, “Receivables” of $17.7 million and $19.4 million, respectively. The decrease in impaired loans was attributable to the payoff of certain troubled debt restructurings ("TDRs”) and other impaired performing loans, partially offset by new TDRs and an increase in non-accrual loans during the six months ended June 30, 2019. During the six months ended June 30, 2019, the Bank modified certain loans as TDRs totaling $4.1 million. For a loan to be considered impaired, management determines after review whether it is probable that the Bank will not be able to collect all amounts due according to the contractual terms of the loan agreement. Management applies its normal loan review procedures in making these judgments. Impaired loans include individually classified non-accrual loans and TDRs and at December 31, 2018 included $2.7 million in other impaired performing loans related to three taxi medallion loans which paid off in January 2019. For impaired loans, the Bank evaluates the impairment of the loan in accordance with FASB ASC 310‑10‑35‑22. Impairment is determined based on the present value of expected future cash flows discounted at the loan's effective interest rate. For loans that are collateral dependent, the fair value of the collateral is used to determine the fair value of the loan. The fair value of the collateral is determined based on recent appraised values. The fair value of the collateral or present value of expected cash flows is compared to the carrying value to determine if any write-down or specific loan loss allowance allocation is required.

The following tables set forth the recorded investment, unpaid principal balance and related allowance by class of loans at June 30, 2019 and December 31, 2018 for individually impaired loans. The tables also set forth the average recorded investment of individually impaired loans and interest income recognized while the loans were impaired during the three and six months ended June 30, 2019 and 2018:

							Three Months Ended				Six Months Ended
	June 30, 2019						June 30, 2019				June 30, 2019
			Unpaid		Related		Average		Interest		Average		Interest
	Recorded		Principal		Allocated		Recorded		Income		Recorded		Income
(In thousands)	Investment		Balance		Allowance		Investment		Recognized		Investment		Recognized
With no related allowance recorded:
Commercial real estate:
Owner occupied	$	589	$	605	$	—	$	576	$	—	$	524	$	—
Non-owner occupied		3,241		3,258		—		2,904		25		2,842		50
Residential real estate:
Residential mortgages		—		—		—		—		—		—		—
Home equity		—		—		—		—		—		—		—
Commercial and industrial:
Secured		1,644		1,644		—		1,644		19		1,562		36
Unsecured		6,728		6,728		—		6,779		101		6,199		186
Total with no related allowance recorded		12,202		12,235		—		11,903		145		11,127		272
With an allowance recorded:
Commercial real estate:
Owner occupied		—		—		—		—		—		—		—
Non-owner occupied		—		—		—		—		—		—		—
Residential real estate:
Residential mortgages		—		—		—		—		—		—		—
Home equity		—		—		—		—		—		—		—
Commercial and industrial:
Secured		5,162		5,162		371		4,548		42		4,246		77
Unsecured		344		344		344		115		—		57		—
Total with an allowance recorded		5,506		5,506		715		4,663		42		4,303		77
Total:
Commercial real estate:
Owner occupied		589		605		—		576		—		524		—
Non-owner occupied		3,241		3,258		—		2,904		25		2,842		50
Residential real estate:
Residential mortgages		—		—		—		—		—		—		—
Home equity		—		—		—		—		—		—		—
Commercial and industrial:
Secured		6,806		6,806		371		6,192		61		5,808		113
Unsecured		7,072		7,072		344		6,894		101		6,256		186
Total	$	17,708	$	17,741	$	715	$	16,566	$	187	$	15,430	$	349

							Three Months Ended				Six Months Ended
	December 31, 2018						June 30, 2018				June 30, 2018
			Unpaid		Related		Average		Interest		Average		Interest
	Recorded		Principal		Allocated		Recorded		Income		Recorded		Income
(In thousands)	Investment		Balance		Allowance		Investment		Recognized		Investment		Recognized
With no related allowance recorded:
Commercial real estate:
Owner occupied	$	268	$	278	$	—	$	184	$	—	$	92	$	—
Non-owner occupied		2,816		2,816		—		1,163		7		1,168		8
Residential real estate:
Residential mortgages		—		—		—		—		—		—		—
Home equity		—		—		—		—		—		—		—
Commercial and industrial:
Secured		8,234		8,234		—		8,702		58		8,723		114
Unsecured		5,316		5,316		—		5,178		39		5,055		76
Total with no related allowance recorded		16,634		16,644		—		15,227		104		15,038		198
With an allowance recorded:
Commercial real estate:
Owner occupied		—		—		—		—		—		—		—
Non-owner occupied		—		—		—		—		—		—		—
Residential real estate:
Residential mortgages		—		—		—		—		—		—		—
Home equity		—		—		—		—		—		—		—
Commercial and industrial:
Secured		2,721		2,721		189		—		—		—		—
Unsecured		—		—		—		—		—		—		—
Total with an allowance recorded		2,721		2,721		189		—		—		—		—
Total:
Commercial real estate:
Owner occupied		268		278		—		184		—		92		—
Non-owner occupied		2,816		2,816		—		1,163		7		1,168		8
Residential real estate:
Residential mortgages		—		—		—		—		—		—		—
Home equity		—		—		—		—		—		—		—
Commercial and industrial:
Secured		10,955		10,955		189		8,702		58		8,723		114
Unsecured		5,316		5,316		—		5,178		39		5,055		76
Total	$	19,355	$	19,365	$	189	$	15,227	$	104	$	15,038	$	198

There was no other real estate owned at June 30, 2019. At December 31, 2018, other real estate owned totaled $0.2 million and consisted of one property which was sold during the quarter ended June 30, 2019.

Troubled Debt Restructurings

The terms of certain loans were modified and are considered TDRs. The modification of the terms of such loans generally includes one or a combination of the following: a reduction of the stated interest rate of the loan; an extension of the maturity date at a stated rate of interest lower than the current market rate for new debt with similar risk; or a permanent reduction of the recorded investment in the loan. The modification of these loans involved loans to borrowers who were experiencing financial difficulties.

In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed to determine if that borrower is currently in payment default under any of its obligations or whether there is a probability that the borrower will be in payment default on any of its debt in the foreseeable future without the modification.

During the six months ended June 30, 2019, the Bank modified five commercial and industrial loans, including three taxi medallion loans, totaling $4.1 million as TDRs compared to eight commercial and industrial loans totaling $6.8 million modified as TDRs during the six months ended June 30, 2018. These modifications did not result in a change to the recorded investment of the loans and did not increase the allowance for loan losses for those periods. During the six months ended June 30, 2019, there were three charge-offs totaling $84 thousand relating to TDRs and there were two loans modified as a TDR for which there was a payment default within twelve months following the modification. During the six months ended June 30, 2018, there were no charge-offs relating to TDRs and there were no loans modified as TDRs for which there was a payment default within twelve months following the modification. A loan is considered to be in payment default once it is 30 days contractually past due under the modified terms.

As of June 30, 2019 and December 31, 2018, the Company had $111 thousand and $133 thousand, respectively, of non-accrual TDRs and $16.9 million and $16.9 million, respectively, of performing TDRs. At June 30, 2019 and December 31, 2018, non-accrual TDRs were unsecured. The Bank has no commitment to lend additional funds to these debtors.

The terms of certain other loans were modified during the six months ended June 30, 2019 that did not meet the definition of a TDR. These loans have a total recorded investment at June 30, 2019 of $31.8 million. These loans were to borrowers who were not experiencing financial difficulties.

Purchased Credit Impaired Loans

Loans acquired in a business combination are recorded at their fair value at the acquisition date. Credit discounts are included in the determination of fair value; therefore, an allowance for loan losses is not recorded at the acquisition date.

At the acquisition date, the purchased credit impaired (“PCI”) loans acquired as part of the First National Bank of New York (“FNBNY”) acquisition had contractually required principal and interest payments receivable of $40.3 million, expected cash flows of $28.4 million, and a fair value (initial carrying amount) of $21.8 million. The difference between the contractually required principal and interest payments receivable and the expected cash flows of $11.9 million represented the non-accretable difference. The difference between the expected cash flows and fair value of $6.6 million represented the initial accretable yield. At June 30, 2019, the contractually required principal and interest payments receivable and carrying amount of the PCI loans was $1.1 million and $0.5 million, respectively, with a remaining non-accretable difference of $0.5 million. At December 31, 2018, the contractually required principal and interest payments receivable and carrying amount of the PCI loans was $1.1 million and $0.5 million, respectively, with a remaining non-accretable difference of $0.5 million.

At the acquisition date, the PCI loans acquired as part of the CNB acquisition had contractually required principal and interest payments receivable of $23.4 million, expected cash flows of $10.1 million, and a fair value (initial carrying amount) of $8.7 million. The difference between the contractually required principal and interest payments receivable and the expected cash flows of $13.3 million represented the non-accretable difference. The difference between the expected cash flows and fair value of $1.4 million represented the initial accretable yield. At June  30, 2019, the contractually required principal and interest payments receivable of the PCI loans was $0.6 million and the carrying amount was zero, with a remaining non-accretable difference of $0.5 million. At December 31, 2018, the contractually required principal and interest payments receivable and carrying amount of the PCI loans was $1.2 million and $0.1 million, respectively, with a remaining non-accretable difference of $0.8 million.

The following table summarizes the activity in the accretable yield for the PCI loans:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
(In thousands)	2019		2018		2019		2018
Balance at beginning of period	$	363	$	957	$	460	$	2,151
Accretion		(286)		(269)		(394)		(1,302)
Reclassification from nonaccretable difference during the period		19		424		30		263
Accretable discount at end of period	$	96	$	1,112	$	96	$	1,112

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ALLOWANCE FOR LOAN LOSSES

6 Months Ended

Jun. 30, 2019

ALLOWANCE FOR LOAN LOSSES.

ALLOWANCE FOR LOAN LOSSES

7. ALLOWANCE FOR LOAN LOSSES

The following tables represent the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment, as defined under FASB ASC 310‑10, and based on impairment method as of June 30, 2019 and December 31, 2018. The tables include loans acquired from CNB and FNBNY.

	June 30, 2019
					Residential		Commercial,		Real Estate
	Commercial				Real Estate		Industrial and		Construction		Installment/
	Real Estate		Multi-family		Mortgage		Agricultural		and Land		Consumer
(In thousands)	Mortgage Loans		Loans		Loans		Loans		Loans		Loans		Total
Allowance for loan losses:
Individually evaluated for impairment	$	—	$	—	$	—	$	715	$	—	$	—	$	715
Collectively evaluated for impairment		10,878		2,545		2,620		12,843		1,333		237		30,456
Loans acquired with deteriorated credit quality		—		—		—		—		—		—		—
Total allowance for loan losses	$	10,878	$	2,545	$	2,620	$	13,558	$	1,333	$	237	$	31,171
Loans:
Individually evaluated for impairment	$	3,830	$	—	$	—	$	13,878	$	—	$	—	$	17,708
Collectively evaluated for impairment		1,432,391		631,146		503,025		661,167		150,868		25,825		3,404,422
Loans acquired with deteriorated credit quality		—		—		329		123		—		—		452
Total loans	$	1,436,221	$	631,146	$	503,354	$	675,168	$	150,868	$	25,825	$	3,422,582

	December 31, 2018
					Residential		Commercial,		Real Estate
	Commercial				Real Estate		Industrial and		Construction		Installment/
	Real Estate		Multi-family		Mortgage		Agricultural		and Land		Consumer
(In thousands)	Mortgage Loans		Loans		Loans		Loans		Loans		Loans		Total
Allowance for loan losses:
Individually evaluated for impairment	$	—	$	—	$	—	$	189	$	—	$	—	$	189
Collectively evaluated for impairment		10,792		2,566		3,935		12,533		1,297		106		31,229
Loans acquired with deteriorated credit quality		—		—		—		—		—		—		—
Total allowance for loan losses	$	10,792	$	2,566	$	3,935	$	12,722	$	1,297	$	106	$	31,418
Loans:
Individually evaluated for impairment	$	3,084	$	—	$	—	$	16,271	$	—	$	—	$	19,355
Collectively evaluated for impairment		1,370,472		585,827		519,455		629,229		123,393		20,509		3,248,885
Loans acquired with deteriorated credit quality		—		—		308		224		—		—		532
Total loans	$	1,373,556	$	585,827	$	519,763	$	645,724	$	123,393	$	20,509	$	3,268,772

The following tables represent the changes in the allowance for loan losses for the three and six months ended June 30, 2019 and 2018, by portfolio segment, as defined under FASB ASC 310‑10. The portfolio segments represent the categories that the Bank uses to determine its allowance for loan losses.

	Three Months Ended June 30, 2019
					Residential		Commercial,		Real Estate
	Commercial				Real Estate		Industrial and		Construction		Installment/
	Real Estate		Multi-family		Mortgage		Agricultural		and Land		Consumer
(In thousands)	Mortgage Loans		Loans		Loans		Loans		Loans		Loans		Total
Allowance for loan losses:
Beginning balance	$	11,099	$	2,557	$	3,374	$	13,073	$	1,526	$	155	$	31,784
Charge-offs		(3,670)		—		—		(554)		—		—		(4,224)
Recoveries		—		—		110		1		—		—		111
Provision (Credit)		3,449		(12)		(864)		1,038		(193)		82		3,500
Ending balance	$	10,878	$	2,545	$	2,620	$	13,558	$	1,333	$	237	$	31,171

	Three Months Ended June 30, 2018
					Residential		Commercial,		Real Estate
	Commercial				Real Estate		Industrial and		Construction		Installment/
	Real Estate		Multi-family		Mortgage		Agricultural		and Land		Consumer
(In thousands)	Mortgage Loans		Loans		Loans		Loans		Loans		Loans		Total
Allowance for loan losses:
Beginning balance	$	11,334	$	3,002	$	3,495	$	14,055	$	821	$	105	$	32,812
Charge-offs		—		—		(24)		(1,708)		—		—		(1,732)
Recoveries		—		—		—		171		—		1		172
(Credit) Provision		(128)		(536)		766		(160)		442		16		400
Ending balance	$	11,206	$	2,466	$	4,237	$	12,358	$	1,263	$	122	$	31,652

	Six Months Ended June 30, 2019
					Residential		Commercial,		Real Estate
	Commercial				Real Estate		Industrial and		Construction		Installment/
	Real Estate		Multi-family		Mortgage		Agricultural		and Land		Consumer
(In thousands)	Mortgage Loans		Loans		Loans		Loans		Loans		Loans		Total
Allowance for loan losses:
Beginning balance	$	10,792	$	2,566	$	3,935	$	12,722	$	1,297	$	106	$	31,418
Charge-offs		(3,670)		—		—		(796)		—		(4)		(4,470)
Recoveries		—		—		111		12		—		—		123
Provision (Credit)		3,756		(21)		(1,426)		1,620		36		135		4,100
Ending balance	$	10,878	$	2,545	$	2,620	$	13,558	$	1,333	$	237	$	31,171

	Six Months Ended June 30, 2018
					Residential		Commercial,		Real Estate
	Commercial				Real Estate		Industrial and		Construction		Installment/
	Real Estate		Multi-family		Mortgage		Agricultural		and Land		Consumer
(In thousands)	Mortgage Loans		Loans		Loans		Loans		Loans		Loans		Total
Allowance for loan losses:
Beginning balance	$	11,048	$	4,521	$	2,438	$	12,838	$	740	$	122	$	31,707
Charge-offs		—		—		(24)		(1,708)		—		—		(1,732)
Recoveries		—		—		1		475		—		1		477
Provision (Credit)		158		(2,055)		1,822		753		523		(1)		1,200
Ending balance	$	11,206	$	2,466	$	4,237	$	12,358	$	1,263	$	122	$	31,652

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PENSION AND OTHER POSTRETIREMENT PLANS

6 Months Ended

Jun. 30, 2019

PENSION AND OTHER POSTRETIREMENT PLANS.

PENSION AND OTHER POSTRETIREMENT PLANS

8. PENSION AND POSTRETIREMENT PLANS

The Bank maintains a noncontributory pension plan (the “Pension Plan”) covering all eligible employees. The Bank uses a December 31 measurement date for this plan in accordance with FASB ASC 715‑30 “Compensation – Retirement Benefits – Defined Benefit Plans – Pension.” During 2012, the Company amended the Pension Plan by revising the formula for determining benefits effective January 1, 2013, except for certain grandfathered employees. Additionally, new employees hired on or after October 1, 2012 are not eligible for the Pension Plan.

During 2001, the Bank adopted the Bridgehampton National Bank Supplemental Executive Retirement Plan (“SERP”). As recommended by the Compensation Committee of the Board of Directors and approved by the full Board of Directors, the SERP provides benefits to certain employees, whose benefits under the Pension Plan are limited by the applicable provisions of the Internal Revenue Code. The benefit under the SERP is equal to the additional amount the employee would be entitled to under the Pension Plan and the 401(k) Plan in the absence of such Internal Revenue Code limitations. The assets of the SERP are held in a rabbi trust to maintain the tax-deferred status of the plan and are subject to the general, unsecured creditors of the Company. As a result, the assets of the rabbi trust are reflected on the Company’s consolidated balance sheets.

There were no contributions to the Pension Plan during the six months ended June 30, 2019 and 2018, respectively. There were no  contributions to the SERP during the six months ended June  30, 2019 and 2018, respectively. In accordance with the SERP, a retired executive received a distribution totaling $56 thousand during each of the six months ended June  30, 2019 and 2018, respectively.

The Company's funding policy with respect to its benefit plans is to contribute at least the minimum amounts required by applicable laws and regulations.

The following table presents the components of net periodic benefit cost (credit):

	Three Months Ended June 30,								Six Months Ended June 30,
	Pension Benefits				SERP Benefits				Pension Benefits				SERP Benefits
(In thousands)	2019		2018		2019		2018		2019		2018		2019		2018
Components of net periodic benefit cost and other amounts recognized in other comprehensive income:
Service cost	$	272	$	325	$	66	$	72	$	545	$	650	$	131	$	145
Interest cost		225		198		36		31		450		395		73		63
Expected return on plan assets		(607)		(625)		—		—		(1,215)		(1,250)		—		—
Amortization of net loss		130		82		17		31		260		165		35		61
Amortization of prior service credit		(19)		(19)		—		—		(38)		(38)		—		—
Amortization of transition obligation		—		—		—		1		—		—		—		2
Net periodic benefit cost (credit)	$	1	$	(39)	$	119	$	135	$	2	$	(78)	$	239	$	271

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SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE

6 Months Ended

Jun. 30, 2019

SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE.

SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE

9. SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE

Securities sold under agreements to repurchase totaled $0.9 million at June 30, 2019 and $0.5 million at December 31, 2018. The repurchase agreements were collateralized by investment securities, of which 18% were U.S. GSE residential collateralized mortgage obligations and 82% were U.S. GSE residential mortgage-backed securities with a carrying amount of $2.2 million at June 30, 2019 and 18% were U.S. GSE residential collateralized mortgage obligations and 82% were U.S. GSE residential mortgage-backed securities with a carrying amount of $2.4 million at December 31, 2018.

Securities sold under agreements to repurchase are financing arrangements with $0.9 million maturing during the third quarter of 2019. At maturity, the securities underlying the agreements are returned to the Company. The primary risk associated with these secured borrowings is the requirement to pledge a market value-based balance of collateral in excess of the borrowed amount. The excess collateral pledged represents an unsecured exposure to the lending counterparty. As the market value of the collateral changes, both through changes in discount rates and spreads as well as related cash flows, additional collateral may need to be pledged. In accordance with the Company's policies, eligible counterparties are defined and monitored to minimize exposure.

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FEDERAL HOME LOAN BANK ADVANCES

6 Months Ended

Jun. 30, 2019

FEDERAL HOME LOAN BANK ADVANCES.

FEDERAL HOME LOAN BANK ADVANCES

10. FEDERAL HOME LOAN BANK ADVANCES

The following tables present the contractual maturities and weighted average interest rates of FHLB advances for each of the next five years. There are no FHLB advances with contractual maturities after 2019.

	June 30, 2019
(Dollars in thousands)			Weighted
Contractual Maturity	Amount		AverageRate
Overnight	$	—	—	%
2019		240,000	2.46
Total FHLB advances	$	240,000	2.46	%

	December 31, 2018
(Dollars in thousands)			Weighted
Contractual Maturity	Amount		AverageRate
Overnight	$	—	—	%
2019		240,433	2.72
Total FHLB advances	$	240,433	2.72	%

Each advance is payable at its maturity date, with a prepayment penalty for fixed rate advances. The advances were collateralized by $1.3 billion of residential and commercial mortgage loans under a blanket lien arrangement at June 30, 2019 and December 31, 2018, respectively. Based on this collateral and the Company's holdings of FHLB stock, the Company is eligible to borrow up to a total of $1.4 billion at June  30, 2019.

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SUBORDINATED DEBENTURES

6 Months Ended

Jun. 30, 2019

SUBORDINATED DEBENTURES.

SUBORDINATED DEBENTURES

11. SUBORDINATED DEBENTURES

In September 2015, the Company issued $80.0 million in aggregate principal amount of fixed-to-floating rate subordinated debentures. $40.0 million of the subordinated debentures are callable at par after five years, have a stated maturity of September 30, 2025 and bear interest at a fixed annual rate of 5.25% per year, from and including September 21, 2015 until but excluding September 30, 2020. From and including September 30, 2020 to the maturity date or early redemption date, the interest rate will reset quarterly to an annual interest rate equal to the then-current three-month LIBOR plus 360 basis points. The remaining $40.0 million of the subordinated debentures are callable at par after ten years, have a stated maturity of September 30, 2030 and bear interest at a fixed annual rate of 5.75% per year, from and including September 21, 2015 until but excluding September 30, 2025. From and including September 30, 2025 to the maturity date or early redemption date, the interest rate will reset quarterly to an annual interest rate equal to the then-current three-month LIBOR plus 345 basis points. The subordinated debentures totaled $78.9 million at June 30, 2019 and $78.8 million at December 31, 2018.

The subordinated debentures are included in tier 2 capital (with certain limitations applicable) under current regulatory guidelines and interpretations.

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DERIVATIVES

6 Months Ended

Jun. 30, 2019

DERIVATIVES.

DERIVATIVES

12. DERIVATIVES

As described in Note 15, Recent Accounting Pronouncements, during the first quarter of 2019 the Company adopted ASU 2017-12, Derivatives and Hedging: Targeted Improvements to Accounting for Hedging Activities. The purpose of this updated guidance is to better align a company’s financial reporting for hedging activities with the economic objectives of those activities. ASU 2017-12 is effective for public business entities for fiscal years beginning after December 15, 2018, with early adoption, including adoption in an interim period, permitted. ASU 2017-12 requires a modified retrospective transition method in which the Company will recognize the cumulative effect of the change on the opening balance of each affected component of equity in the statement of financial position as of the date of adoption. The Company has adopted the standard in 2019 with minimal impact to its financial position upon transition.

The Alternative Reference Rates Committee ("ARRC") has proposed that the Secured Overnight Funding Rate ("SOFR") replace USD-LIBOR. ARRC has proposed that the transition to SOFR from USD-LIBOR will take place by the end of 2021. The Company has material contracts that are indexed to USD-LIBOR. Industry organizations are currently working on the transition plan. The Company is currently monitoring this activity and evaluating the risks involved.

Cash Flow Hedges of Interest Rate Risk

As part of its asset liability management, the Company utilizes interest rate swap agreements to help manage its interest rate risk position. The notional amount of the interest rate swap does not represent the amount exchanged by the parties. The amount exchanged is determined by reference to the notional amount and the other terms of the individual interest rate swap agreements.

Interest rate swaps with notional amounts totaling $290.0 million and $240.0 million at June  30, 2019 and December 31, 2018, respectively, were designated as cash flow hedges of certain FHLB advances. The swaps were determined to be fully effective during the periods presented and therefore no amount of ineffectiveness has been included in net income. The aggregate fair value of the swaps is recorded in other assets or other liabilities, with changes in fair value recorded in other comprehensive income (loss). The amount included in accumulated other comprehensive income (loss) would be reclassified to current earnings should the hedges no longer be considered effective. The Company expects the hedges to remain fully effective during the remaining term of the swaps.

The following table summarizes information about the interest rate swaps designated as cash flow hedges at June  30, 2019 and December 31, 2018:

(Dollars in thousands)	June 30, 2019			December 31, 2018
Notional amounts	$	290,000		$	240,000
Weighted average pay rates		1.82	%		1.84	%
Weighted average receive rates		2.39	%		2.77	%
Weighted average maturity		2.30	years		2.03	years

Interest income recorded on these swap transactions totaled $466 thousand and $1.0 million for the three and six months ended June  30, 2019, and interest income recorded on these swap transactions totaled $344 thousand and $279 thousand for the three and six months ended June  30, 2018 which is reported as a component of interest expense on FHLB advances. Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest income/expense as interest payments are made/received on the Company's variable-rate assets/liabilities. During the six months ended June  30, 2019, the Company had $466 thousand of reclassifications as a reduction to interest expense. During the next twelve months, the Company estimates that $0.4 million will be reclassified as a decrease in interest expense.

The following table presents the net gains (losses) recorded in accumulated other comprehensive income and the consolidated statements of income relating to the cash flow derivative instruments for the three and six months ended June  30, 2019 and 2018:

					Amount of loss
	Amount of (loss) gain		Amount of gain		recognized in other
(In thousands)	recognized in OCI		reclassified from OCI		non-interest income
Interest rate contracts	(Effective Portion)		to interest expense		(Ineffective Portion)
Three months ended June 30, 2019	$	(3,106)	$	466	$	—
Six months ended June 30, 2019	$	(4,703)	$	1,022	$	—
Three months ended June 30, 2018	$	1,020	$	344	$	—
Six months ended June 30, 2018	$	3,847	$	279	$	—

The following table reflects the cash flow hedges included in the consolidated balance sheets at the dates indicated:

	June 30, 2019						December 31, 2018
			Fair		Fair				Fair		Fair
(In thousands)	Notional		Value		Value		Notional		Value		Value
Included in other assets/(liabilities):	Amount		Asset		Liability		Amount		Asset		Liability
Interest rate swaps related to FHLB advances	$	240,000	$	995	$	(1,159)	$	240,000	$	4,239	$	(4)
Forward starting interest rate swaps related to FHLB advances		50,000		—		(1,432)		—		—		—

Non-Designated Hedges

Derivatives not designated as hedges may be used to manage the Company's exposure to interest rate movements or to provide service to customers but do not meet the requirements for hedge accounting under U.S. GAAP. The Company executes interest rate swaps with commercial lending customers to facilitate their respective risk management strategies. These interest rate swaps with customers are simultaneously offset by interest rate swaps that the Company executes with a third party in order to minimize the net risk exposure resulting from such transactions. These interest-rate swap agreements do not qualify for hedge accounting treatment, and therefore changes in fair value are reported in current period earnings.

The following table presents summary information about the interest rate swaps at June  30, 2019 and December 31, 2018:

(Dollars in thousands)	June 30, 2019			December 31, 2018
Notional amounts	$	329,103		$	193,401
Weighted average pay rates		4.38	%		4.52	%
Weighted average receive rates		4.38	%		4.52	%
Weighted average maturity		12.06	years		12.25	years
Fair value of combined interest rate swaps	$	—		$	—

Credit-Risk-Related Contingent Features

As of June  30, 2019, the termination value of derivatives in a net liability position, which includes accrued interest but excludes any adjustment for nonperformance risk, related to these agreements was $12.6 million, while there were no derivatives in a net asset position. The Company has minimum collateral posting thresholds with certain of its derivative counterparties. If the termination value of derivatives is a net asset position, the counterparty is required to post collateral against its obligations to the Company under the agreements. However, if the termination value of derivatives is a net liability position, the Company is required to post collateral to the counterparty. At June 30, 2019, the Company posted collateral of $12.3 million to its counterparties under the agreements in a net liability position and received no collateral from its counterparties under the agreements in a net asset position. If the Company had breached any of these provisions at June 30, 2019, it could have been required to settle its obligations under the agreements at the termination value.

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LEASES

6 Months Ended

Jun. 30, 2019

LEASES.

LEASES

13. LEASES

The Company has operating leases for certain branch locations, corporate offices and equipment. Certain leases contain rent escalation clauses, which are reflected in the Company’s operating lease liabilities. The Company’s lease agreements do not contain any material residual value guarantees, restrictions or covenants.

The components of lease cost were as follows:

	Three Months Ended		Six Months Ended
(In thousands)	June 30, 2019		June 30, 2019
Lease cost
Operating lease cost	$	1,688	$	3,351
Sublease income		(15)		(39)
Total lease cost	$	1,673	$	3,312

The Company reports lease cost in occupancy and equipment expense in the consolidated statements of income. The Company subleases a portion of its leased properties to commercial sublessees.  Sublease income is included in other operating income in the consolidated statements of income. 

Supplemental cash flow and balance sheet information related to operating leases were as follows:

	Six Months Ended
(Dollars in thousands)	June 30, 2019
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	3,441
Operating right-of-use assets obtained in exchange for lease liabilities	$	39,825

	June 30, 2019
Weighted-average remaining lease term-operating leases		8.2	years
Weighted-average discount rate-operating leases (1)		3.41	%

1) The Company computes the present value of operating lease liabilities using its incremental borrowing rate as the discount rate.

Certain leases contain renewal options which are not reflected in the tables below.  The exercise of renewal options, which extend the lease term from five to ten years, is at the Company’s discretion.

The maturities of operating lease liabilities were as follows:

(In thousands)	June 30, 2019
2019	$	3,088
2020		6,046
2021		5,946
2022		5,742
2023		4,759
Thereafter		21,124
Total operating lease payments	$	46,705
Less: Interest		(6,442)
Present value of operating lease liabilities	$	40,263

(In thousands)	December 31, 2018
2019	$	7,248
2020		6,504
2021		6,185
2022		5,903
2023		4,695
Thereafter		18,687
Total operating lease payments	$	49,222

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ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME

6 Months Ended

Jun. 30, 2019

ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME.

ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME

14. ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME

The following table summarizes the components of other comprehensive income (loss) and related income tax effects:

	Three Months Ended				Six Months Ended
(In thousands)	June 30, 2019		June 30, 2018		June 30, 2019		June 30, 2018
Unrealized holding gains (losses) on available for sale securities	$	8,489	$	(4,231)	$	14,020	$	(12,818)
Reclassification adjustment for (gains) losses realized in income		(201)		7,921		(201)		7,921
Income tax effect		(2,417)		(1,074)		(4,030)		1,425
Net change in unrealized gains (losses) on available for sale securities		5,871		2,616		9,789		(3,472)
Reclassification adjustment for amortization realized in income		129		95		257		190
Income tax effect		(38)		(27)		(76)		(55)
Net change in post-retirement obligation		91		68		181		135
Change in fair value of derivatives used for cash flow hedges		(3,106)		1,020		(4,703)		3,847
Reclassification adjustment for gains realized in income		(466)		(344)		(1,022)		(279)
Income tax effect		1,042		(197)		1,670		(1,038)
Net change in unrealized (losses) gains on cash flow hedges		(2,530)		479		(4,055)		2,530
Other comprehensive income (loss)	$	3,432	$	3,163	$	5,915	$	(807)

The following is a summary of the accumulated other comprehensive loss balances, net of income taxes, at the dates indicated:

			Other
	December 31,		Comprehensive			June 30,
(In thousands)	2018		Income			2019
Unrealized (losses) gains on available for sale securities	$	(11,685)	$	9,789	$	(1,896)
Unrealized (losses) gains on pension benefits		(6,365)		181		(6,184)
Unrealized gains (losses) on cash flow hedges		2,938		(4,055)		(1,117)
Accumulated other comprehensive (loss) gain, net of income taxes	$	(15,112)	$	5,915	$	(9,197)

The following represents the reclassifications out of accumulated other comprehensive (loss) income for the three and six months ended June 30, 2019 and 2018:

	Three Months Ended				Six Months Ended				Affected Line Item
	June 30,		June 30,		June 30,		June 30,		in the Consolidated
(In thousands)	2019		2018		2019		2018		Statements of Income
Realized gains (losses) on sale of available for sale securities	$	201	$	(7,921)	$	201	$	(7,921)	Net securities gains (losses)
Amortization of defined benefit pension plan and defined benefit plan component of the SERP:
Prior service credit		19		19		38		38	Other operating expenses
Transition obligation		—		(1)		—		(2)	Other operating expenses
Actuarial losses		(147)		(113)		(295)		(226)	Other operating expenses
Realized gains on cash flow hedges		466		344		1,022		279	Interest expense
Total reclassifications, before income tax	$	539	$	(7,672)	$	966	$	(7,832)
Income tax (expense) benefit		(157)		2,231		(282)		2,278	Income tax expense
Total reclassifications, net of income tax	$	382	$	(5,441)	$	684	$	(5,554)

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RECENT ACCOUNTING PRONOUNCEMENTS

6 Months Ended

Jun. 30, 2019

RECENT ACCOUNTING PRONOUNCEMENTS.

RECENT ACCOUNTING PRONOUNCEMENTS

15. RECENT ACCOUNTING PRONOUNCEMENTS

Standards Effective in 2019

ASU 2016-02, Leases (Topic 842)

In February 2016, the FASB amended existing guidance that requires lessees recognize the following for all leases (with the exception of short-term leases) at the commencement date (1) a lease liability, which is a lessee's obligation to make lease payments arising from a lease, measured on a discounted basis; and (2) a right-of-use asset, which is an asset that represents the lessee's right to use, or control the use of, a specified asset for the lease term. Under the new guidance, lessor accounting is largely unchanged. The new guidance also requires enhanced disclosure about an entity’s leasing arrangements. The Company adopted Topic 842 using the transition approach of applying the new leases standard at the beginning of the period of adoption on January 1, 2019. The new guidance includes a number of optional transition-related practical expedients that must be elected as a package and applied by a reporting entity to all of its leases consistently.  The Company has elected to apply the package of practical expedients to all of its existing leases, which among other things, allowed the Company to carry forward the historical lease classification as operating leases in accordance with previous GAAP.  The effect of adopting this standard in the Company’s consolidated balance sheets was a $39 million increase in operating right-of-use assets and operating lease liabilities as of January 1, 2019. Refer to Note 13. “Leases” for further details of Leases.

ASU 2017‑12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities

In August 2017, the FASB provided guidance to improve the financial reporting of hedging relationships to better portray the economic results of an entity's risk management activities in its financial statements. The amendments also simplify the application of the hedge accounting guidance. The amendments in the ASU better align an entity's risk management activities and financial reporting for hedging relationships through changes in both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results. The amendments expand and refine hedge accounting for both nonfinancial and financial risk components and align the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. The amendments in this ASU are effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. All transition requirements and elections should be applied to hedging relationships existing on the date of adoption. The effect of adoption should be reflected as of the beginning of the fiscal year of adoption. For cash flow and net investment hedges existing at the date of adoption, an entity shall apply a cumulative-effect adjustment related to eliminating the separate measurement of ineffectiveness to accumulated other comprehensive income with a corresponding adjustment to the opening balance of retained earnings as of the beginning of the fiscal year that an entity adopts the amendments in this ASU. The amended presentation and disclosure guidance is required only prospectively. The adoption of this standard did not have an effect on the Company's consolidated financial statements.

Standards Effective in 2020

ASU 2016‑13, Financial Instruments – Credit Losses (Topic 326)

In June 2016, FASB issued guidance to replace the incurred loss model with an expected loss model, which is referred to as the current expected credit loss (“CECL”) model. The CECL model is applicable to the measurement of credit losses on financial assets measured at amortized cost, including loan receivables, held to maturity debt securities. It also applies to off-balance sheet credit exposures not accounted for as insurance (loan commitments, standby letters of credit, financial guarantees, and other similar instruments) and net investments in certain leases recognized by a lessor. In addition, the amendments in this ASU require credit losses be presented as an allowance rather than as a write-down on available-for-sale debt securities. For public business entities that meet the definition of an SEC filer, like the Company, the standard is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. For calendar year-end SEC filers, like the Company, the standard is effective for March 31, 2020 interim financial statements. For debt securities with other-than-temporary impairment (“OTTI”), the guidance will be applied prospectively. Existing PCI assets will be grandfathered and classified as purchase credit deteriorated (“PCD”) assets at the date of adoption. The asset will be grossed up for the allowance for expected credit losses for all PCD assets at the date of adoption and will continue to recognize the noncredit discount in interest income based on the yield of such assets as of the adoption date. Subsequent changes in expected credit losses will be recorded through the allowance. For all other assets within the scope of CECL, a cumulative-effect adjustment will be recognized in retained earnings as of the beginning of the first reporting period in which the guidance is effective. The Company has created a cross-functional CECL committee that is assessing data and system needs and implementing required changes to loss estimation methods under the CECL model. The Company plans to adopt ASU 2016‑13 in the first quarter of 2020 using the required modified retrospective method with a cumulative effect adjustment to the allowance for loan losses as of the beginning of the reporting period. The Company expects the adoption will result in an increase to the allowance for loan losses balance. The effect on the Company’s consolidated financial statements is being evaluated.

ASU 2017‑04, Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment

In January 2017, the FASB amended existing guidance to simplify the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. The amendments require an entity to perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and recognizing an impairment charge for the amount by which the carrying amount of the reporting unit exceeds its fair value, not to exceed the total amount of goodwill allocated to that reporting unit. Additionally, an entity should consider income tax effects from any tax-deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. The amendments also eliminate the requirement for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. The amendments are effective for public business entities that are an SEC filer, like the Company, for annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2019. The amendments should be applied prospectively. An entity is required to disclose the nature of and reason for the change in accounting principle upon transition in the first annual period when the entity initially adopts the amendments. The adoption of ASU 2017‑04 is not expected to have a material effect on the Company's consolidated financial statements.

ASU 2018‑15, Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract

In August 2018, the FASB issued ASU 2018-15 to align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). The amendments in this ASU are effective for public business entities, like the Company, for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption of the amendments in this ASU is permitted, including adoption in any interim period. The amendments in this ASU should be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. The adoption of ASU 2018‑15 is not expected to have a material effect on the Company's consolidated financial statements.

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Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2019

Accounting Policies

BASIS OF PRESENTATION

BASIS OF PRESENTATION

Bridge Bancorp, Inc. (the “Holding Company”), is a bank holding company incorporated under the laws of the State of New York. The Holding Company’s business consists of the operations of its wholly-owned subsidiary, BNB Bank (the “Bank”). The Bank’s operations include its real estate investment trust subsidiary, Bridgehampton Community, Inc.; a financial title insurance subsidiary, Bridge Abstract LLC (“Bridge Abstract”); and an investment services subsidiary, Bridge Financial Services, Inc. (“Bridge Financial Services”).

The unaudited consolidated financial statements presented in this Quarterly Report on Form 10-Q include the collective results of the Holding Company and its wholly-owned subsidiary, the Bank, which are collectively herein referred to as “we”, “us”, “our” and the “Company.”

The accompanying unaudited consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10‑Q and Article 10 of Regulation S-X. The unaudited consolidated financial statements included herein reflect all normal recurring adjustments that are, in the opinion of management, necessary for a fair presentation of the results for the interim periods presented. In preparing the interim financial statements, management has made estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense during the reported periods. Such estimates are subject to change in the future as additional information becomes available or previously existing circumstances are modified. Actual future results could differ significantly from those estimates. The annualized results of operations for the six months ended June  30, 2019 are not necessarily indicative of the results of operations that may be expected for the entire fiscal year. Certain information and note disclosures normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain reclassifications have been made to prior year amounts, and the related discussion and analysis, to conform to the current year presentation. These reclassifications did not have an impact on net income or total stockholders' equity. The unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10‑K for the year ended December 31, 2018.

RECENT ACCOUNTING PRONOUNCEMENTS

RECENT ACCOUNTING PRONOUNCEMENTS

Standards Effective in 2019

ASU 2016-02, Leases (Topic 842)

In February 2016, the FASB amended existing guidance that requires lessees recognize the following for all leases (with the exception of short-term leases) at the commencement date (1) a lease liability, which is a lessee's obligation to make lease payments arising from a lease, measured on a discounted basis; and (2) a right-of-use asset, which is an asset that represents the lessee's right to use, or control the use of, a specified asset for the lease term. Under the new guidance, lessor accounting is largely unchanged. The new guidance also requires enhanced disclosure about an entity’s leasing arrangements. The Company adopted Topic 842 using the transition approach of applying the new leases standard at the beginning of the period of adoption on January 1, 2019. The new guidance includes a number of optional transition-related practical expedients that must be elected as a package and applied by a reporting entity to all of its leases consistently.  The Company has elected to apply the package of practical expedients to all of its existing leases, which among other things, allowed the Company to carry forward the historical lease classification as operating leases in accordance with previous GAAP.  The effect of adopting this standard in the Company’s consolidated balance sheets was a $39 million increase in operating right-of-use assets and operating lease liabilities as of January 1, 2019. Refer to Note 13. “Leases” for further details of Leases.

ASU 2017‑12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities

In August 2017, the FASB provided guidance to improve the financial reporting of hedging relationships to better portray the economic results of an entity's risk management activities in its financial statements. The amendments also simplify the application of the hedge accounting guidance. The amendments in the ASU better align an entity's risk management activities and financial reporting for hedging relationships through changes in both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results. The amendments expand and refine hedge accounting for both nonfinancial and financial risk components and align the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. The amendments in this ASU are effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. All transition requirements and elections should be applied to hedging relationships existing on the date of adoption. The effect of adoption should be reflected as of the beginning of the fiscal year of adoption. For cash flow and net investment hedges existing at the date of adoption, an entity shall apply a cumulative-effect adjustment related to eliminating the separate measurement of ineffectiveness to accumulated other comprehensive income with a corresponding adjustment to the opening balance of retained earnings as of the beginning of the fiscal year that an entity adopts the amendments in this ASU. The amended presentation and disclosure guidance is required only prospectively. The adoption of this standard did not have an effect on the Company's consolidated financial statements.

Standards Effective in 2020

ASU 2016‑13, Financial Instruments – Credit Losses (Topic 326)

In June 2016, FASB issued guidance to replace the incurred loss model with an expected loss model, which is referred to as the current expected credit loss (“CECL”) model. The CECL model is applicable to the measurement of credit losses on financial assets measured at amortized cost, including loan receivables, held to maturity debt securities. It also applies to off-balance sheet credit exposures not accounted for as insurance (loan commitments, standby letters of credit, financial guarantees, and other similar instruments) and net investments in certain leases recognized by a lessor. In addition, the amendments in this ASU require credit losses be presented as an allowance rather than as a write-down on available-for-sale debt securities. For public business entities that meet the definition of an SEC filer, like the Company, the standard is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. For calendar year-end SEC filers, like the Company, the standard is effective for March 31, 2020 interim financial statements. For debt securities with other-than-temporary impairment (“OTTI”), the guidance will be applied prospectively. Existing PCI assets will be grandfathered and classified as purchase credit deteriorated (“PCD”) assets at the date of adoption. The asset will be grossed up for the allowance for expected credit losses for all PCD assets at the date of adoption and will continue to recognize the noncredit discount in interest income based on the yield of such assets as of the adoption date. Subsequent changes in expected credit losses will be recorded through the allowance. For all other assets within the scope of CECL, a cumulative-effect adjustment will be recognized in retained earnings as of the beginning of the first reporting period in which the guidance is effective. The Company has created a cross-functional CECL committee that is assessing data and system needs and implementing required changes to loss estimation methods under the CECL model. The Company plans to adopt ASU 2016‑13 in the first quarter of 2020 using the required modified retrospective method with a cumulative effect adjustment to the allowance for loan losses as of the beginning of the reporting period. The Company expects the adoption will result in an increase to the allowance for loan losses balance. The effect on the Company’s consolidated financial statements is being evaluated.

ASU 2017‑04, Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment

In January 2017, the FASB amended existing guidance to simplify the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. The amendments require an entity to perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and recognizing an impairment charge for the amount by which the carrying amount of the reporting unit exceeds its fair value, not to exceed the total amount of goodwill allocated to that reporting unit. Additionally, an entity should consider income tax effects from any tax-deductible goodwill on the carrying amount of the reporting unit when measuring the goodwill impairment loss, if applicable. The amendments also eliminate the requirement for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. The amendments are effective for public business entities that are an SEC filer, like the Company, for annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2019. The amendments should be applied prospectively. An entity is required to disclose the nature of and reason for the change in accounting principle upon transition in the first annual period when the entity initially adopts the amendments. The adoption of ASU 2017‑04 is not expected to have a material effect on the Company's consolidated financial statements.

ASU 2018‑15, Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract

In August 2018, the FASB issued ASU 2018-15 to align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). The amendments in this ASU are effective for public business entities, like the Company, for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption of the amendments in this ASU is permitted, including adoption in any interim period. The amendments in this ASU should be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. The adoption of ASU 2018‑15 is not expected to have a material effect on the Company's consolidated financial statements

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EARNINGS PER SHARE (Tables)

6 Months Ended

Jun. 30, 2019

EARNINGS PER SHARE.

Schedule of computation of EPS

	Three Months Ended				Six Months Ended
	June 30,				June 30,
(In thousands, except per share data)	2019		2018		2019		2018
Net income	$	10,653	$	6,743	$	23,580	$	18,816
Dividends paid on and earnings allocated to participating securities		(226)		(148)		(503)		(405)
Income attributable to common stock	$	10,427	$	6,595	$	23,077	$	18,411
Weighted average common shares outstanding, including participating securities		19,965		19,884		19,946		19,859
Weighted average participating securities		(428)		(445)		(427)		(433)
Weighted average common shares outstanding		19,537		19,439		19,519		19,426
Basic earnings per common share	$	0.53	$	0.34	$	1.18	$	0.95
Income attributable to common stock	$	10,427	$	6,595	$	23,077	$	18,411
Weighted average common shares outstanding		19,537		19,439		19,519		19,426
Incremental shares from assumed conversions of options and restricted stock units		28		29		26		27
Weighted average common and equivalent shares outstanding		19,565		19,468		19,545		19,453
Diluted earnings per common share	$	0.53	$	0.34	$	1.18	$	0.95

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STOCK-BASED COMPENSATION PLANS (Tables)

6 Months Ended

Jun. 30, 2019

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Schedule of Share Based Compensation Arrangement By Share Based Payment Award Grants in Period Fair Value Assumptions

	Six Months Ended
	June 30,
	2019			2018
Dividend yield		2.86	%		2.80	%
Expected volatility		23.80			27.53
Risk-free interest rate		2.52			2.67
Expected option life		6.0	years		6.5	years

Schedule of company's stock options

				Weighted
		Weighted		Average
	Number	Average		Remaining			Aggregate
	of	Exercise		Contractual			Intrinsic
(Dollars in thousands, except per share amounts)	Options	Price		Life			Value
Outstanding, January 1, 2019	47,393	$	36.19
Granted	63,267		35.35
Outstanding, June 30, 2019	110,660		35.71		9.2	years	$	—
Vested and Exercisable, June 30, 2019	15,795		36.19		8.6	years		—

	Number of	Exercise
Range of Exercise Prices	Options	Price
$35.35	63,267	$	35.35
36.19	47,393		36.19
	110,660

Restricted stock

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Schedule of status of unvested restricted stock

		Weighted
		Average Grant-Date
	Shares	Fair Value
Unvested, January 1, 2019	324,882	$	29.13
Granted	77,952		31.98
Vested	(88,552)		27.19
Forfeited	(12,317)		31.10
Unvested, June 30, 2019	301,965		30.35

Restricted stock units

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Schedule of status of unvested restricted stock

		Weighted
		Average Grant-Date
	Shares	Fair Value
Unvested, January 1, 2019	79,238	$	27.36
Granted	22,305		33.42
Reinvested dividends	1,269		28.46
Forfeited	(16,184)		23.34
Vested	(2,573)		32.90
Unvested, June 30, 2019	84,055		29.59

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SECURITIES (Tables)

6 Months Ended

Jun. 30, 2019

SECURITIES.

Schedule of amortized cost and fair value of the available for sale and held to maturity

	June 30, 2019
			Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Fair
(In thousands)	Cost		Gains		Losses		Value
Available for sale:
U.S. GSE securities	$	15,000	$	—	$	(37)	$	14,963
State and municipal obligations		28,108		641		(1)		28,748
U.S. GSE residential mortgage-backed securities		93,898		268		(909)		93,257
U.S. GSE residential collateralized mortgage obligations		333,584		1,628		(1,428)		333,784
U.S. GSE commercial mortgage-backed securities		7,013		38		—		7,051
U.S. GSE commercial collateralized mortgage obligations		97,720		1,306		(629)		98,397
Other asset backed securities		24,250		—		(788)		23,462
Corporate bonds		46,000		—		(2,765)		43,235
Total available for sale		645,573		3,881		(6,557)		642,897
Held to maturity:
State and municipal obligations		42,582		927		(1)		43,508
U.S. GSE residential mortgage-backed securities		8,900		—		(109)		8,791
U.S. GSE residential collateralized mortgage obligations		45,961		655		(315)		46,301
U.S. GSE commercial mortgage-backed securities		18,721		125		(70)		18,776
U.S. GSE commercial collateralized mortgage obligations		28,552		118		(566)		28,104
Total held to maturity		144,716		1,825		(1,061)		145,480
Total securities	$	790,289	$	5,706	$	(7,618)	$	788,377

	December 31, 2018
			Gross		Gross		Estimated
	Amortized		Unrealized		Unrealized		Fair
(In thousands)	Cost		Gains		Losses		Value
Available for sale:
U.S. GSE securities	$	29,997	$	—	$	(947)	$	29,050
State and municipal obligations		40,980		105		(354)		40,731
U.S. GSE residential mortgage-backed securities		96,536		38		(3,036)		93,538
U.S. GSE residential collateralized mortgage obligations		362,905		826		(5,954)		357,777
U.S. GSE commercial mortgage-backed securities		3,536		—		(28)		3,508
U.S. GSE commercial collateralized mortgage obligations		93,177		—		(2,539)		90,638
Other asset-backed securities		24,250		—		(1,031)		23,219
Corporate bonds		46,000		—		(3,575)		42,425
Total available for sale		697,381		969		(17,464)		680,886
Held to maturity:
State and municipal obligations		53,540		290		(276)		53,554
U.S. GSE residential mortgage-backed securities		9,688		—		(336)		9,352
U.S. GSE residential collateralized mortgage obligations		48,244		163		(1,130)		47,277
U.S. GSE commercial mortgage-backed securities		19,098		4		(620)		18,482
U.S. GSE commercial collateralized mortgage obligations		29,593		—		(1,466)		28,127
Total held to maturity		160,163		457		(3,828)		156,792
Total securities	$	857,544	$	1,426	$	(21,292)	$	837,678

Schedule of amortized cost, fair value and maturities of the available for sale and held to maturity investment securities portfolio

	June 30, 2019
	Amortized		Estimated
(In thousands)	Cost		Fair Value
Maturity
Available for sale:
Within one year	$	3,066	$	3,065
One to five years		32,267		31,885
Five to ten years		57,250		55,385
Beyond ten years		552,990		552,562
Total	$	645,573	$	642,897
Held to maturity:
Within one year	$	8,779	$	8,800
One to five years		24,495		24,909
Five to ten years		32,654		33,139
Beyond ten years		78,788		78,632
Total	$	144,716	$	145,480

Schedule of securities having a continuous unrealized loss position aggregated by a period of time less than or greater than 12 months

	June 30, 2019
	Less than 12 months				Greater than 12 months
	Estimated		Gross		Estimated		Gross
	Fair		Unrealized		Fair		Unrealized
(In thousands)	Value		Losses		Value		Losses
Available for sale:
U.S. GSE securities	$	—	$	—	$	14,963	$	(37)
State and municipal obligations		—		—		2,964		(1)
U.S. GSE residential mortgage-backed securities		—		—		67,117		(909)
U.S. GSE residential collateralized mortgage obligations		35,723		(132)		134,232		(1,296)
U.S. GSE commercial collateralized mortgage obligations		—		—		44,046		(629)
Other asset backed securities		—		—		23,462		(788)
Corporate bonds		—		—		43,235		(2,765)
Total available for sale	$	35,723	$	(132)	$	330,019	$	(6,425)
Held to maturity:
State and municipal obligations	$	—	$	—	$	405	$	(1)
U.S. GSE residential mortgage-backed securities		—		—		8,791		(109)
U.S. GSE residential collateralized mortgage obligations		—		—		24,594		(315)
U.S. GSE commercial mortgage-backed securities		—		—		5,216		(70)
U.S. GSE commercial collateralized mortgage obligations		—		—		18,146		(566)
Total held to maturity	$	—	$	—	$	57,152	$	(1,061)

	December 31, 2018
	Less than 12 months				Greater than 12 months
	Estimated		Gross		Estimated		Gross
	Fair		Unrealized		Fair		Unrealized
(In thousands)	Value		Losses		Value		Losses
Available for sale:
U.S. GSE securities	$	—	$	—	$	29,050	$	(947)
State and municipal obligations		6,655		(15)		21,273		(339)
U.S. GSE residential mortgage-backed securities		—		—		88,762		(3,036)
U.S. GSE residential collateralized mortgage obligations		46,452		(141)		172,468		(5,813)
U.S. GSE commercial mortgage-backed securities		—		—		3,508		(28)
U.S. GSE commercial collateralized mortgage obligations		46,705		(623)		43,933		(1,916)
Other asset-backed securities		—		—		23,219		(1,031)
Corporate bonds		—		—		42,425		(3,575)
Total available for sale	$	99,812	$	(779)	$	424,638	$	(16,685)
Held to maturity:
State and municipal obligations	$	8,286	$	(26)	$	22,142	$	(250)
U.S. GSE residential mortgage-backed securities		—		—		9,352		(336)
U.S. GSE residential collateralized mortgage obligations		—		—		40,665		(1,130)
U.S. GSE commercial mortgage-backed securities		—		—		16,205		(620)
U.S. GSE commercial collateralized mortgage obligations		—		—		28,127		(1,466)
Total held to maturity	$	8,286	$	(26)	$	116,491	$	(3,802)

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FAIR VALUE (Tables)

6 Months Ended

Jun. 30, 2019

FAIR VALUE.

Schedule of assets and liabilities measured on a recurring basis

	June 30, 2019
			Fair Value Measurements Using:
			Quoted Prices
			In Active	Significant
			Markets for	Other		Significant
			Identical	Observable		Unobservable
	Carrying		Assets	Inputs		Inputs
(In thousands)	Value		(Level 1)	(Level 2)		(Level 3)
Financial assets:
Available for sale securities:
U.S. GSE securities	$	14,963		$	14,963
State and municipal obligations		28,748			28,748
U.S. GSE residential mortgage-backed securities		93,257			93,257
U.S. GSE residential collateralized mortgage obligations		333,784			333,784
U.S. GSE commercial mortgage-backed securities		7,051			7,051
U.S. GSE commercial collateralized mortgage obligations		98,397			98,397
Other asset-backed securities		23,462			23,462
Corporate bonds		43,235			43,235
Total available for sale securities	$	642,897		$	642,897
Derivatives	$	11,919		$	11,919
Financial liabilities:
Derivatives	$	13,594		$	13,594

	December 31, 2018
			Fair Value Measurements Using:
			Quoted Prices
			In Active	Significant
			Markets for	Other		Significant
			Identical	Observable		Unobservable
	Carrying		Assets	Inputs		Inputs
(In thousands)	Value		(Level 1)	(Level 2)		(Level 3)
Financial assets:
Available for sale securities:
U.S. GSE securities	$	29,050		$	29,050
State and municipal obligations		40,731			40,731
U.S. GSE residential mortgage-backed securities		93,538			93,538
U.S. GSE residential collateralized mortgage obligations		357,777			357,777
U.S. GSE commercial mortgage-backed securities		3,508			3,508
U.S. GSE commercial collateralized mortgage obligations		90,638			90,638
Other asset-backed securities		23,219			23,219
Corporate bonds		42,425			42,425
Total available for sale securities	$	680,886		$	680,886
Derivatives	$	6,363		$	6,363
Financial liabilities:
Derivatives	$	2,215		$	2,215

Schedule of assets measured at fair value on a non-recurring basis

	June 30, 2019
			Fair Value Measurements Using:
			Quoted Prices
			In Active		Significant
			Markets for		Other	Significant
			Identical		Observable	Unobservable
	Carrying		Assets		Inputs	Inputs
(In thousands)	Value		(Level 1)		(Level 2)	(Level 3)
Loans held for sale	$	12,643		$	12,643
Impaired loans	$	4,791				$	4,791

	December 31, 2018
			Fair Value Measurements Using:
			Quoted Prices
			In Active	Significant
			Markets for	Other	Significant
			Identical	Observable	Unobservable
	Carrying		Assets	Inputs	Inputs
(In thousands)	Value		(Level 1)	(Level 2)	(Level 3)
Impaired loans	$	2,532			$	2,532
Other real estate owned	$	175			$	175

Schedule of estimated fair values and recorded carrying values of financial instruments

	June 30, 2019
			Fair Value Measurements Using:
					Significant
			Quoted Prices In		Other		Significant
			Active Markets for		Observable		Unobservable
	Carrying		Identical Assets		Inputs		Inputs		Total
(In thousands)	Amount		(Level 1)		(Level 2)		(Level 3)		Fair Value
Financial assets:
Cash and due from banks	$	71,292	$	71,292	$	—	$	—	$	71,292
Interest-bearing deposits with banks		87,349		87,349		—		—		87,349
Securities available for sale		642,897		—		642,897		—		642,897
Securities restricted		24,104		n/a		n/a		n/a		n/a
Securities held to maturity		144,716		—		145,480		—		145,480
Loans held for sale		12,643		—		12,643		—		12,643
Loans, net		3,398,852		—		—		3,375,662		3,375,662
Derivatives		11,919		—		11,919		—		11,919
Accrued interest receivable		12,397		—		2,532		9,865		12,397
Financial liabilities:
Certificates of deposit		276,921		—		276,929		—		276,929
Demand and other deposits		3,559,655		3,559,655		—		—		3,559,655
FHLB advances		240,000		—		240,206		—		240,206
Repurchase agreements		945		—		945		—		945
Subordinated debentures		78,850		—		80,668		—		80,668
Derivatives		13,594		—		13,594		—		13,594
Accrued interest payable		1,718		—		1,718		—		1,718

	December 31, 2018
			Fair Value Measurements Using:
					Significant
			Quoted Prices In		Other		Significant
			Active Markets for		Observable		Unobservable
	Carrying		Identical Assets		Inputs		Inputs		Total
(In thousands)	Amount		(Level 1)		(Level 2)		(Level 3)		Fair Value
Financial assets:
Cash and due from banks	$	142,145	$	142,145	$	—	$	—	$	142,145
Interest-bearing deposits with banks		153,223		153,223		—		—		153,223
Securities available for sale		680,886		—		680,886		—		680,886
Securities restricted		24,028		n/a		n/a		n/a		n/a
Securities held to maturity		160,163		—		156,792		—		156,792
Loans, net		3,244,393		—		—		3,216,204		3,216,204
Derivatives		6,363		—		6,363		—		6,363
Accrued interest receivable		11,236		—		2,936		8,300		11,236
Financial liabilities:
Certificates of deposit		329,491		—		326,865		—		326,865
Demand and other deposits		3,556,902		3,556,902		—		—		3,556,902
FHLB advances		240,433		—		236,209		—		236,209
Repurchase agreements		539		—		539		—		539
Subordinated debentures		78,781		—		74,400		—		74,400
Derivatives		2,215		—		2,215		—		2,215
Accrued interest payable		1,524		—		1,524		—		1,524

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LOANS (Tables)

6 Months Ended

Jun. 30, 2019

LOANS.

Schedule of the major classifications of loans

(In thousands)	June 30, 2019		December 31, 2018
Commercial real estate mortgage loans	$	1,436,221	$	1,373,556
Multi-family mortgage loans		631,146		585,827
Residential real estate mortgage loans		503,354		519,763
Commercial, industrial and agricultural loans		675,168		645,724
Real estate construction and land loans		150,868		123,393
Installment/consumer loans		25,825		20,509
Total loans		3,422,582		3,268,772
Net deferred loan costs and fees		7,441		7,039
Total loans held for investment		3,430,023		3,275,811
Allowance for loan losses		(31,171)		(31,418)
Loans, net	$	3,398,852	$	3,244,393

Schedule of loans by class categorized by internally assigned credit risk grades

	June 30, 2019
(In thousands)	Pass		Special Mention		Substandard		Doubtful		Total
Commercial real estate:
Owner occupied	$	512,123	$	11,596	$	1,610	$	—	$	525,329
Non-owner occupied		896,654		735		13,503		—		910,892
Multi-family		630,735		411		—		—		631,146
Residential real estate:
Residential mortgage		425,836		8,255		1,295		—		435,386
Home equity		66,469		681		818		—		67,968
Commercial and industrial:
Secured		153,055		2,009		9,886		—		164,950
Unsecured		487,922		9,923		12,373		—		510,218
Real estate construction and land loans		150,572		—		296		—		150,868
Installment/consumer loans		25,047		6		772		—		25,825
Total loans	$	3,348,413	$	33,616	$	40,553	$	—	$	3,422,582

	December 31, 2018
(In thousands)	Pass		Special Mention		Substandard		Doubtful		Total
Commercial real estate:
Owner occupied	$	480,503	$	12,045	$	17,850	$	—	$	510,398
Non-owner occupied		858,069		2,188		2,901		—		863,158
Multi-family		585,409		418		—		—		585,827
Residential real estate:
Residential mortgage		438,891		8,510		1,114		—		448,515
Home equity		68,480		1,594		1,174		—		71,248
Commercial and industrial:
Secured		147,474		5,536		15,530		—		168,540
Unsecured		458,526		12,886		5,772		—		477,184
Real estate construction and land loans		123,089		—		304		—		123,393
Installment/consumer loans		20,464		9		36		—		20,509
Total loans	$	3,180,905	$	43,186	$	44,681	$	—	$	3,268,772

Schedule of the aging of the recorded investment in past due loans by class of loans

	June 30, 2019
					90+ Days		Non-accrual
	30-59		60-89		Past Due		Including 90		Total Past
	Days		Days		And		Days or More		Due and
(In thousands)	Past Due		Past Due		Accruing		Past Due		Non-accrual		Current		Total Loans
Commercial real estate:
Owner occupied	$	—	$	641	$	—	$	573	$	1,214	$	524,115	$	525,329
Non-owner occupied		—		—		—		1,376		1,376		909,516		910,892
Multi-family		—		—		—		—		—		631,146		631,146
Residential real estate:
Residential mortgages		164		—		—		2,138		2,302		433,084		435,386
Home equity		300		51		329		370		1,050		66,918		67,968
Commercial and industrial:
Secured		835		331		—		218		1,384		163,566		164,950
Unsecured		314		708		—		683		1,705		508,513		510,218
Real estate construction and land loans		—		—		—		129		129		150,739		150,868
Installment/consumer loans		38		—		—		22		60		25,765		25,825
Total loans	$	1,651	$	1,731	$	329	$	5,509	$	9,220	$	3,413,362	$	3,422,582

	December 31, 2018
					90+ Days		Non-accrual
	30-59		60-89		Past Due		Including 90		Total Past
	Days		Days		And		Days or More		Due and
(In thousands)	Past Due		Past Due		Accruing		Past Due		Non-accrual		Current		Total Loans
Commercial real estate:
Owner occupied	$	333	$	194	$	—	$	253	$	780	$	509,618	$	510,398
Non-owner occupied		—		—		—		885		885		862,273		863,158
Multi-family		—		—		—		—		—		585,827		585,827
Residential real estate:
Residential mortgages		892		230		—		199		1,321		447,194		448,515
Home equity		1,033		—		308		624		1,965		69,283		71,248
Commercial and industrial:
Secured		330		196		—		174		700		167,840		168,540
Unsecured		1,108		—		—		621		1,729		475,455		477,184
Real estate construction and land loans		—		—		—		—		—		123,393		123,393
Installment/consumer loans		84		—		—		52		136		20,373		20,509
Total loans	$	3,780	$	620	$	308	$	2,808	$	7,516	$	3,261,256	$	3,268,772

Schedule of individually impaired loans by class

							Three Months Ended				Six Months Ended
	June 30, 2019						June 30, 2019				June 30, 2019
			Unpaid		Related		Average		Interest		Average		Interest
	Recorded		Principal		Allocated		Recorded		Income		Recorded		Income
(In thousands)	Investment		Balance		Allowance		Investment		Recognized		Investment		Recognized
With no related allowance recorded:
Commercial real estate:
Owner occupied	$	589	$	605	$	—	$	576	$	—	$	524	$	—
Non-owner occupied		3,241		3,258		—		2,904		25		2,842		50
Residential real estate:
Residential mortgages		—		—		—		—		—		—		—
Home equity		—		—		—		—		—		—		—
Commercial and industrial:
Secured		1,644		1,644		—		1,644		19		1,562		36
Unsecured		6,728		6,728		—		6,779		101		6,199		186
Total with no related allowance recorded		12,202		12,235		—		11,903		145		11,127		272
With an allowance recorded:
Commercial real estate:
Owner occupied		—		—		—		—		—		—		—
Non-owner occupied		—		—		—		—		—		—		—
Residential real estate:
Residential mortgages		—		—		—		—		—		—		—
Home equity		—		—		—		—		—		—		—
Commercial and industrial:
Secured		5,162		5,162		371		4,548		42		4,246		77
Unsecured		344		344		344		115		—		57		—
Total with an allowance recorded		5,506		5,506		715		4,663		42		4,303		77
Total:
Commercial real estate:
Owner occupied		589		605		—		576		—		524		—
Non-owner occupied		3,241		3,258		—		2,904		25		2,842		50
Residential real estate:
Residential mortgages		—		—		—		—		—		—		—
Home equity		—		—		—		—		—		—		—
Commercial and industrial:
Secured		6,806		6,806		371		6,192		61		5,808		113
Unsecured		7,072		7,072		344		6,894		101		6,256		186
Total	$	17,708	$	17,741	$	715	$	16,566	$	187	$	15,430	$	349

							Three Months Ended				Six Months Ended
	December 31, 2018						June 30, 2018				June 30, 2018
			Unpaid		Related		Average		Interest		Average		Interest
	Recorded		Principal		Allocated		Recorded		Income		Recorded		Income
(In thousands)	Investment		Balance		Allowance		Investment		Recognized		Investment		Recognized
With no related allowance recorded:
Commercial real estate:
Owner occupied	$	268	$	278	$	—	$	184	$	—	$	92	$	—
Non-owner occupied		2,816		2,816		—		1,163		7		1,168		8
Residential real estate:
Residential mortgages		—		—		—		—		—		—		—
Home equity		—		—		—		—		—		—		—
Commercial and industrial:
Secured		8,234		8,234		—		8,702		58		8,723		114
Unsecured		5,316		5,316		—		5,178		39		5,055		76
Total with no related allowance recorded		16,634		16,644		—		15,227		104		15,038		198
With an allowance recorded:
Commercial real estate:
Owner occupied		—		—		—		—		—		—		—
Non-owner occupied		—		—		—		—		—		—		—
Residential real estate:
Residential mortgages		—		—		—		—		—		—		—
Home equity		—		—		—		—		—		—		—
Commercial and industrial:
Secured		2,721		2,721		189		—		—		—		—
Unsecured		—		—		—		—		—		—		—
Total with an allowance recorded		2,721		2,721		189		—		—		—		—
Total:
Commercial real estate:
Owner occupied		268		278		—		184		—		92		—
Non-owner occupied		2,816		2,816		—		1,163		7		1,168		8
Residential real estate:
Residential mortgages		—		—		—		—		—		—		—
Home equity		—		—		—		—		—		—		—
Commercial and industrial:
Secured		10,955		10,955		189		8,702		58		8,723		114
Unsecured		5,316		5,316		—		5,178		39		5,055		76
Total	$	19,355	$	19,365	$	189	$	15,227	$	104	$	15,038	$	198

Schedule of activity in the accretable yield for the purchased credit impaired loans

	Three Months Ended				Six Months Ended
	June 30,				June 30,
(In thousands)	2019		2018		2019		2018
Balance at beginning of period	$	363	$	957	$	460	$	2,151
Accretion		(286)		(269)		(394)		(1,302)
Reclassification from nonaccretable difference during the period		19		424		30		263
Accretable discount at end of period	$	96	$	1,112	$	96	$	1,112

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ALLOWANCE FOR LOAN LOSSES (Tables)

6 Months Ended

Jun. 30, 2019

ALLOWANCE FOR LOAN LOSSES.

Schedule of allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method

	June 30, 2019
					Residential		Commercial,		Real Estate
	Commercial				Real Estate		Industrial and		Construction		Installment/
	Real Estate		Multi-family		Mortgage		Agricultural		and Land		Consumer
(In thousands)	Mortgage Loans		Loans		Loans		Loans		Loans		Loans		Total
Allowance for loan losses:
Individually evaluated for impairment	$	—	$	—	$	—	$	715	$	—	$	—	$	715
Collectively evaluated for impairment		10,878		2,545		2,620		12,843		1,333		237		30,456
Loans acquired with deteriorated credit quality		—		—		—		—		—		—		—
Total allowance for loan losses	$	10,878	$	2,545	$	2,620	$	13,558	$	1,333	$	237	$	31,171
Loans:
Individually evaluated for impairment	$	3,830	$	—	$	—	$	13,878	$	—	$	—	$	17,708
Collectively evaluated for impairment		1,432,391		631,146		503,025		661,167		150,868		25,825		3,404,422
Loans acquired with deteriorated credit quality		—		—		329		123		—		—		452
Total loans	$	1,436,221	$	631,146	$	503,354	$	675,168	$	150,868	$	25,825	$	3,422,582

	December 31, 2018
					Residential		Commercial,		Real Estate
	Commercial				Real Estate		Industrial and		Construction		Installment/
	Real Estate		Multi-family		Mortgage		Agricultural		and Land		Consumer
(In thousands)	Mortgage Loans		Loans		Loans		Loans		Loans		Loans		Total
Allowance for loan losses:
Individually evaluated for impairment	$	—	$	—	$	—	$	189	$	—	$	—	$	189
Collectively evaluated for impairment		10,792		2,566		3,935		12,533		1,297		106		31,229
Loans acquired with deteriorated credit quality		—		—		—		—		—		—		—
Total allowance for loan losses	$	10,792	$	2,566	$	3,935	$	12,722	$	1,297	$	106	$	31,418
Loans:
Individually evaluated for impairment	$	3,084	$	—	$	—	$	16,271	$	—	$	—	$	19,355
Collectively evaluated for impairment		1,370,472		585,827		519,455		629,229		123,393		20,509		3,248,885
Loans acquired with deteriorated credit quality		—		—		308		224		—		—		532
Total loans	$	1,373,556	$	585,827	$	519,763	$	645,724	$	123,393	$	20,509	$	3,268,772

The following tables represent the changes in the allowance for loan losses for the three and six months ended June 30, 2019 and 2018, by portfolio segment, as defined under FASB ASC 310‑10. The portfolio segments represent the categories that the Bank uses to determine its allowance for loan losses.

	Three Months Ended June 30, 2019
					Residential		Commercial,		Real Estate
	Commercial				Real Estate		Industrial and		Construction		Installment/
	Real Estate		Multi-family		Mortgage		Agricultural		and Land		Consumer
(In thousands)	Mortgage Loans		Loans		Loans		Loans		Loans		Loans		Total
Allowance for loan losses:
Beginning balance	$	11,099	$	2,557	$	3,374	$	13,073	$	1,526	$	155	$	31,784
Charge-offs		(3,670)		—		—		(554)		—		—		(4,224)
Recoveries		—		—		110		1		—		—		111
Provision (Credit)		3,449		(12)		(864)		1,038		(193)		82		3,500
Ending balance	$	10,878	$	2,545	$	2,620	$	13,558	$	1,333	$	237	$	31,171

	Three Months Ended June 30, 2018
					Residential		Commercial,		Real Estate
	Commercial				Real Estate		Industrial and		Construction		Installment/
	Real Estate		Multi-family		Mortgage		Agricultural		and Land		Consumer
(In thousands)	Mortgage Loans		Loans		Loans		Loans		Loans		Loans		Total
Allowance for loan losses:
Beginning balance	$	11,334	$	3,002	$	3,495	$	14,055	$	821	$	105	$	32,812
Charge-offs		—		—		(24)		(1,708)		—		—		(1,732)
Recoveries		—		—		—		171		—		1		172
(Credit) Provision		(128)		(536)		766		(160)		442		16		400
Ending balance	$	11,206	$	2,466	$	4,237	$	12,358	$	1,263	$	122	$	31,652

	Six Months Ended June 30, 2019
					Residential		Commercial,		Real Estate
	Commercial				Real Estate		Industrial and		Construction		Installment/
	Real Estate		Multi-family		Mortgage		Agricultural		and Land		Consumer
(In thousands)	Mortgage Loans		Loans		Loans		Loans		Loans		Loans		Total
Allowance for loan losses:
Beginning balance	$	10,792	$	2,566	$	3,935	$	12,722	$	1,297	$	106	$	31,418
Charge-offs		(3,670)		—		—		(796)		—		(4)		(4,470)
Recoveries		—		—		111		12		—		—		123
Provision (Credit)		3,756		(21)		(1,426)		1,620		36		135		4,100
Ending balance	$	10,878	$	2,545	$	2,620	$	13,558	$	1,333	$	237	$	31,171

	Six Months Ended June 30, 2018
					Residential		Commercial,		Real Estate
	Commercial				Real Estate		Industrial and		Construction		Installment/
	Real Estate		Multi-family		Mortgage		Agricultural		and Land		Consumer
(In thousands)	Mortgage Loans		Loans		Loans		Loans		Loans		Loans		Total
Allowance for loan losses:
Beginning balance	$	11,048	$	4,521	$	2,438	$	12,838	$	740	$	122	$	31,707
Charge-offs		—		—		(24)		(1,708)		—		—		(1,732)
Recoveries		—		—		1		475		—		1		477
Provision (Credit)		158		(2,055)		1,822		753		523		(1)		1,200
Ending balance	$	11,206	$	2,466	$	4,237	$	12,358	$	1,263	$	122	$	31,652

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PENSION AND POSTRETIREMENT PLANS (Tables)

6 Months Ended

Jun. 30, 2019

PENSION AND OTHER POSTRETIREMENT PLANS.

Schedule of components of net periodic benefit cost (credit)

	Three Months Ended June 30,								Six Months Ended June 30,
	Pension Benefits				SERP Benefits				Pension Benefits				SERP Benefits
(In thousands)	2019		2018		2019		2018		2019		2018		2019		2018
Components of net periodic benefit cost and other amounts recognized in other comprehensive income:
Service cost	$	272	$	325	$	66	$	72	$	545	$	650	$	131	$	145
Interest cost		225		198		36		31		450		395		73		63
Expected return on plan assets		(607)		(625)		—		—		(1,215)		(1,250)		—		—
Amortization of net loss		130		82		17		31		260		165		35		61
Amortization of prior service credit		(19)		(19)		—		—		(38)		(38)		—		—
Amortization of transition obligation		—		—		—		1		—		—		—		2
Net periodic benefit cost (credit)	$	1	$	(39)	$	119	$	135	$	2	$	(78)	$	239	$	271

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FEDERAL HOME LOAN BANK ADVANCES (Tables)

6 Months Ended

Jun. 30, 2019

FEDERAL HOME LOAN BANK ADVANCES.

Schedule of contractual maturities and weighted average interest rates of FHLB advances

	June 30, 2019
(Dollars in thousands)			Weighted
Contractual Maturity	Amount		AverageRate
Overnight	$	—	—	%
2019		240,000	2.46
Total FHLB advances	$	240,000	2.46	%

	December 31, 2018
(Dollars in thousands)			Weighted
Contractual Maturity	Amount		AverageRate
Overnight	$	—	—	%
2019		240,433	2.72
Total FHLB advances	$	240,433	2.72	%

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DERIVATIVES (Tables)

6 Months Ended

Jun. 30, 2019

DERIVATIVES.

Schedule of information about the interest rate swap designated as a cash flow hedge

(Dollars in thousands)	June 30, 2019			December 31, 2018
Notional amounts	$	290,000		$	240,000
Weighted average pay rates		1.82	%		1.84	%
Weighted average receive rates		2.39	%		2.77	%
Weighted average maturity		2.30	years		2.03	years

Schedule of the net gains (losses) recorded, net of income tax, in accumulated other comprehensive income and the Consolidated Statements of Income relating to the cash flow derivative instruments

					Amount of loss
	Amount of (loss) gain		Amount of gain		recognized in other
(In thousands)	recognized in OCI		reclassified from OCI		non-interest income
Interest rate contracts	(Effective Portion)		to interest expense		(Ineffective Portion)
Three months ended June 30, 2019	$	(3,106)	$	466	$	—
Six months ended June 30, 2019	$	(4,703)	$	1,022	$	—
Three months ended June 30, 2018	$	1,020	$	344	$	—
Six months ended June 30, 2018	$	3,847	$	279	$	—

Schedule of cash flow hedge included in the Consolidated Balance Sheets

	June 30, 2019						December 31, 2018
			Fair		Fair				Fair		Fair
(In thousands)	Notional		Value		Value		Notional		Value		Value
Included in other assets/(liabilities):	Amount		Asset		Liability		Amount		Asset		Liability
Interest rate swaps related to FHLB advances	$	240,000	$	995	$	(1,159)	$	240,000	$	4,239	$	(4)
Forward starting interest rate swaps related to FHLB advances		50,000		—		(1,432)		—		—		—

Schedule of information about interest rate swaps

(Dollars in thousands)	June 30, 2019			December 31, 2018
Notional amounts	$	329,103		$	193,401
Weighted average pay rates		4.38	%		4.52	%
Weighted average receive rates		4.38	%		4.52	%
Weighted average maturity		12.06	years		12.25	years
Fair value of combined interest rate swaps	$	—		$	—

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LEASES (Tables)

6 Months Ended

Jun. 30, 2019

LEASES.

Summary of lease costs

	Three Months Ended		Six Months Ended
(In thousands)	June 30, 2019		June 30, 2019
Lease cost
Operating lease cost	$	1,688	$	3,351
Sublease income		(15)		(39)
Total lease cost	$	1,673	$	3,312

Summary of supplemental cash flow and balance sheet information related to operating leases

	Six Months Ended
(Dollars in thousands)	June 30, 2019
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	3,441
Operating right-of-use assets obtained in exchange for lease liabilities	$	39,825

	June 30, 2019
Weighted-average remaining lease term-operating leases		8.2	years
Weighted-average discount rate-operating leases (1)		3.41	%

1) The Company computes the present value of operating lease liabilities using its incremental borrowing rate as the discount rate.

Summary of maturities of operating lease liabilities as of June 30, 2019

(In thousands)	June 30, 2019
2019	$	3,088
2020		6,046
2021		5,946
2022		5,742
2023		4,759
Thereafter		21,124
Total operating lease payments	$	46,705
Less: Interest		(6,442)
Present value of operating lease liabilities	$	40,263

Summary of maturities of operating lease liabilities as of December 31, 2018

(In thousands)	December 31, 2018
2019	$	7,248
2020		6,504
2021		6,185
2022		5,903
2023		4,695
Thereafter		18,687
Total operating lease payments	$	49,222

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ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME (Tables)

6 Months Ended

Jun. 30, 2019

ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME.

Schedule of other comprehensive income (loss) and related income tax effects

	Three Months Ended				Six Months Ended
(In thousands)	June 30, 2019		June 30, 2018		June 30, 2019		June 30, 2018
Unrealized holding gains (losses) on available for sale securities	$	8,489	$	(4,231)	$	14,020	$	(12,818)
Reclassification adjustment for (gains) losses realized in income		(201)		7,921		(201)		7,921
Income tax effect		(2,417)		(1,074)		(4,030)		1,425
Net change in unrealized gains (losses) on available for sale securities		5,871		2,616		9,789		(3,472)
Reclassification adjustment for amortization realized in income		129		95		257		190
Income tax effect		(38)		(27)		(76)		(55)
Net change in post-retirement obligation		91		68		181		135
Change in fair value of derivatives used for cash flow hedges		(3,106)		1,020		(4,703)		3,847
Reclassification adjustment for gains realized in income		(466)		(344)		(1,022)		(279)
Income tax effect		1,042		(197)		1,670		(1,038)
Net change in unrealized (losses) gains on cash flow hedges		(2,530)		479		(4,055)		2,530
Other comprehensive income (loss)	$	3,432	$	3,163	$	5,915	$	(807)

Schedule of accumulated other comprehensive loss balances, net of income taxes

			Other
	December 31,		Comprehensive			June 30,
(In thousands)	2018		Income			2019
Unrealized (losses) gains on available for sale securities	$	(11,685)	$	9,789	$	(1,896)
Unrealized (losses) gains on pension benefits		(6,365)		181		(6,184)
Unrealized gains (losses) on cash flow hedges		2,938		(4,055)		(1,117)
Accumulated other comprehensive (loss) gain, net of income taxes	$	(15,112)	$	5,915	$	(9,197)

Schedule of reclassifications out of accumulated other comprehensive (loss) income

	Three Months Ended				Six Months Ended				Affected Line Item
	June 30,		June 30,		June 30,		June 30,		in the Consolidated
(In thousands)	2019		2018		2019		2018		Statements of Income
Realized gains (losses) on sale of available for sale securities	$	201	$	(7,921)	$	201	$	(7,921)	Net securities gains (losses)
Amortization of defined benefit pension plan and defined benefit plan component of the SERP:
Prior service credit		19		19		38		38	Other operating expenses
Transition obligation		—		(1)		—		(2)	Other operating expenses
Actuarial losses		(147)		(113)		(295)		(226)	Other operating expenses
Realized gains on cash flow hedges		466		344		1,022		279	Interest expense
Total reclassifications, before income tax	$	539	$	(7,672)	$	966	$	(7,832)
Income tax (expense) benefit		(157)		2,231		(282)		2,278	Income tax expense
Total reclassifications, net of income tax	$	382	$	(5,441)	$	684	$	(5,554)

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EARNINGS PER SHARE - Computation of EPS (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
EARNINGS PER SHARE.
Net income	$ 10,653	$ 6,743	$ 23,580	$ 18,816
Dividends paid on and earnings allocated to participating securities	(226)	(148)	(503)	(405)
Income attributable to common stock	$ 10,427	$ 6,595	$ 23,077	$ 18,411
Weighted average common shares outstanding, including participating securities	19,965	19,884	19,946	19,859
Weighted average participating securities (in shares)	(428)	(445)	(427)	(433)
Weighted average common shares outstanding	19,537	19,439	19,519	19,426
Basic earnings per common share (in dollars per share)	$ 0.53	$ 0.34	$ 1.18	$ 0.95
Income attributable to common stock	$ 10,427	$ 6,595	$ 23,077	$ 18,411
Weighted average common shares outstanding	19,537	19,439	19,519	19,426
Incremental shares from assumed conversions of options and restricted stock units	28	29	26	27
Weighted average common and equivalent shares outstanding (in shares)	19,565	19,468	19,545	19,453
Diluted earnings per common share (in dollars per share)	$ 0.53	$ 0.34	$ 1.18	$ 0.95

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EARNINGS PER SHARE - Narrative (Details) - shares	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Stock option
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share (in shares)			110,660	47,393
Restricted stock units
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share (in shares)	32,865	0	22,472	0

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STOCK BASED COMPENSATION PLANS - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands	1 Months Ended	3 Months Ended		6 Months Ended
	May 31, 2019	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted				63,267
Stock option
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation expense		$ 52	$ 26	$ 91	$ 39
Unrecognized compensation cost related to unvested stock options		447		$ 447
Cost is expected to be recognized period				2 years 3 months 18 days
Restricted stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation expense		527	717	$ 1,100	$ 1,300
Unrecognized compensation cost related to non-vested RSAs		$ 5,900		$ 5,900
Cost is expected to be recognized period				3 years 3 months 18 days
Restricted stock | Time-vested RSAs vest
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of restricted stock awards unvested		290,717		290,717
Restricted stock | Performance-based RSAs vest
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of restricted stock awards granted					25,117
Vesting period (in years)					2 years
Number of restricted stock awards unvested		11,248		11,248
Directors | Restricted stock units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period (in years)				1 year
Deferred compensation expense		$ 142	140	$ 285	$ 275
2012 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted	0
2012 Plan | Restricted stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of restricted stock awards granted				77,952	82,982
Number of restricted stock awards unvested		301,965		301,965		324,882
2012 Plan | Restricted stock | Time-vested RSAs vest ratably over five years
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of restricted stock awards granted				49,925	44,750
Vesting period (in years)				5 years	5 years
2012 Plan | Restricted stock | Time-vested RSAs vest ratably over three years
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of restricted stock awards granted				28,027	13,115
Vesting period (in years)				3 years	3 years
LTI Plan | Restricted stock units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation expense		$ 173	$ 119	$ 343	$ 220
Number of restricted stock awards granted				22,305
Number of restricted stock awards unvested		84,055		84,055		79,238
Unrecognized compensation cost related to non-vested RSAs		$ 1,700		$ 1,700
Cost is expected to be recognized period				3 years
LTI Plan | Restricted stock units | Time-vested RSAs vest ratably over five years
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of restricted stock awards granted				13,255
Vesting period (in years)				5 years
LTI Plan | Restricted stock units | Performance-based RSAs vest
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of restricted stock awards granted				9,050
Vesting period (in years)				3 years
LTI Plan | NEOs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted				63,267	47,393
Percentage premium over the grant date stock price				10.00%
Vesting period (in years)				3 years
Weighted-average grant-date fair value				$ 5.05	$ 6.52
Method used				Black-Scholes option-pricing model

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STOCK BASED COMPENSATION PLANS - Incentive Plans (Details) - shares	1 Months Ended	6 Months Ended
	May 31, 2019	Jun. 30, 2019
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares granted		63,267
Shares available for grant		522,794
2012 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares granted	0
Shares available for grant	162,738
Equity Incentive Plan 2019
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of shares authorized	370,000
Shares available for grant	370,000

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STOCK-BASED COMPENSATION PLANS - Schedule of Share Based Compensation Arrangement By Share Based Payment Award Grants in Period Fair Value Assumptions (Details) - LTI Plan - NEOs	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Dividend yield	2.86%	2.80%
Expected volatility rate	23.80%	27.53%
Risk-free interest rate	2.52%	2.67%
Expected option life	6 years	6 years 6 months

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STOCK BASED COMPENSATION PLANS - Status of Company's Stock Options (Details) $ / shares in Units, $ in Thousands	6 Months Ended
	Jun. 30, 2019 USD ($) $ / shares shares
Number of Options
Outstanding, January 1, 2019 | shares	47,393
Granted | shares	63,267
Outstanding, June 30, 2019 | shares	110,660
Vested and Exercisable, June 30, 2019 | shares	15,795
Weighted Average Exercise Price
Weighted Average Exercise Price, January 1, 2019 | $ / shares	$ 36.19
Granted | $ / shares	35.35
Weighted Average Exercise Price, June 30, 2019 | $ / shares	35.71
Vested and Exercisable, June 30, 2019 | $ / shares	$ 36.19
Weighted Average Remaining Contractual Life, Outstanding	9 years 2 months 12 days
Weighted Average Remaining Contractual Life, Vested and Exercisable	8 years 7 months 6 days
Aggregate Intrinsic Value, Outstanding | $	$ 0
Aggregate Intrinsic Value, Vested and Exercisable | $	$ 0

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STOCK BASED COMPENSATION PLANS - Exercise Prices (Details) - $ / shares	Jun. 30, 2019	Dec. 31, 2018
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of Options	110,660	47,393
Weighted Average Exercise Price	$ 35.71	$ 36.19
$35.35
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of Options	63,267
Weighted Average Exercise Price	$ 35.35
$36.19
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of Options	47,393
Weighted Average Exercise Price	$ 36.19

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STOCK BASED COMPENSATION PLANS - Restricted Stock Awards (Details) - Restricted stock - 2012 Plan - $ / shares	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
Shares
Unvested, January 1, 2019	324,882
Granted	77,952	82,982
Vested	(88,552)
Forfeited	(12,317)
Unvested, June 30, 2019	301,965
Weighted Average Grant-Date Fair Value
Unvested, January 1, 2019	$ 29.13
Granted	31.98
Vested	27.19
Forfeited	31.10
Unvested, June 30, 2019	$ 30.35

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STOCK BASED COMPENSATION PLANS - Restricted Stock Units (Details) - LTI Plan - Restricted stock units	6 Months Ended
	Jun. 30, 2019 $ / shares shares
Shares
Unvested, January 1, 2019 | shares	79,238
Granted | shares	22,305
Reinvested dividends | shares	1,269
Forfeited | shares	(16,184)
Vested | shares	(2,573)
Unvested, June 30, 2019 | shares	84,055
Weighted Average Grant-Date Fair Value
Unvested, January 1, 2019 | $ / shares	$ 27.36
Granted | $ / shares	33.42
Reinvested dividends | $ / shares	28.46
Forfeited | $ / shares	23.34
Vested | $ / shares	32.90
Unvested, June 30, 2019 | $ / shares	$ 29.59

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STOCK BASED COMPENSATION PLANS - Employee Stock Purchase Plan (Details) - USD ($)	1 Months Ended	6 Months Ended
	May 31, 2018	Jun. 30, 2019	Jun. 30, 2018
STOCK-BASED COMPENSATION PLANS.
Common stock initially authorized for issuance under the ESPP, Shares	1,000,000
Maximum contribution from employees	$ 25,000
Shares of common stock purchased under the ESPP		0	0
Expense recorded related to ESPP		$ 0	$ 0

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SECURITIES - Summary of Available for Sale Investment Securities (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Available for sale:
Amortized Cost	$ 645,573	$ 697,381
Gross Unrealized Gains	3,881	969
Gross Unrealized Losses	(6,557)	(17,464)
Estimated Fair Value	642,897	680,886
U.S. GSE securities
Available for sale:
Amortized Cost	15,000	29,997
Gross Unrealized Gains	0	0
Gross Unrealized Losses	(37)	(947)
Estimated Fair Value	14,963	29,050
State and municipal obligations
Available for sale:
Amortized Cost	28,108	40,980
Gross Unrealized Gains	641	105
Gross Unrealized Losses	(1)	(354)
Estimated Fair Value	28,748	40,731
U.S. GSE residential mortgage-backed securities
Available for sale:
Amortized Cost	93,898	96,536
Gross Unrealized Gains	268	38
Gross Unrealized Losses	(909)	(3,036)
Estimated Fair Value	93,257	93,538
U.S. GSE residential collateralized mortgage obligations
Available for sale:
Amortized Cost	333,584	362,905
Gross Unrealized Gains	1,628	826
Gross Unrealized Losses	(1,428)	(5,954)
Estimated Fair Value	333,784	357,777
U.S. GSE commercial mortgage-backed securities
Available for sale:
Amortized Cost	7,013	3,536
Gross Unrealized Gains	38	0
Gross Unrealized Losses	0	(28)
Estimated Fair Value	7,051	3,508
U.S. GSE commercial collateralized mortgage obligations
Available for sale:
Amortized Cost	97,720	93,177
Gross Unrealized Gains	1,306	0
Gross Unrealized Losses	(629)	(2,539)
Estimated Fair Value	98,397	90,638
Other asset backed securities
Available for sale:
Amortized Cost	24,250	24,250
Gross Unrealized Gains	0	0
Gross Unrealized Losses	(788)	(1,031)
Estimated Fair Value	23,462	23,219
Corporate bonds
Available for sale:
Amortized Cost	46,000	46,000
Gross Unrealized Gains	0	0
Gross Unrealized Losses	(2,765)	(3,575)
Estimated Fair Value	$ 43,235	$ 42,425

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SECURITIES - Summary of Held to Maturity Investment Securities (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Held to maturity:
Amortized Cost	$ 144,716	$ 160,163
Gross Unrealized Gains	1,825	457
Gross Unrealized Losses	(1,061)	(3,828)
Estimated Fair Value	145,480	156,792
State and municipal obligations
Held to maturity:
Amortized Cost	42,582	53,540
Gross Unrealized Gains	927	290
Gross Unrealized Losses	(1)	(276)
Estimated Fair Value	43,508	53,554
U.S. GSE residential mortgage-backed securities
Held to maturity:
Amortized Cost	8,900	9,688
Gross Unrealized Gains	0	0
Gross Unrealized Losses	(109)	(336)
Estimated Fair Value	8,791	9,352
U.S. GSE residential collateralized mortgage obligations
Held to maturity:
Amortized Cost	45,961	48,244
Gross Unrealized Gains	655	163
Gross Unrealized Losses	(315)	(1,130)
Estimated Fair Value	46,301	47,277
U.S. GSE commercial mortgage-backed securities
Held to maturity:
Amortized Cost	18,721	19,098
Gross Unrealized Gains	125	4
Gross Unrealized Losses	(70)	(620)
Estimated Fair Value	18,776	18,482
U.S. GSE commercial collateralized mortgage obligations
Held to maturity:
Amortized Cost	28,552	29,593
Gross Unrealized Gains	118	0
Gross Unrealized Losses	(566)	(1,466)
Estimated Fair Value	$ 28,104	$ 28,127

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SECURITIES - Total Available for Sale and Held to Maturity Investment Securities (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Total securities
Amortized Cost	$ 790,289	$ 857,544
Gross Unrealized Gains	5,706	1,426
Gross Unrealized Losses	(7,618)	(21,292)
Total securities	$ 788,377	$ 837,678

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SECURITIES - Available for Sale Investment Securities by Contractual Maturity (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Amortized Cost, Available for sale:
Within one year	$ 3,066
One to five years	32,267
Five to ten years	57,250
Beyond ten years	552,990
Total	645,573	$ 697,381
Estimated Fair Value, Available for sale:
Within one year	3,065
One to five years	31,885
Five to ten years	55,385
Beyond ten years	552,562
Estimated Fair Value	$ 642,897	$ 680,886

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SECURITIES - Held to Maturity Investment Securities by Contractual Maturity (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Amortized Cost, Held to maturity:
Within one year	$ 8,779
One to five years	24,495
Five to ten years	32,654
Beyond ten years	78,788
Total	144,716	$ 160,163
Estimated Fair Value, Held to maturity:
Within one year	8,800
One to five years	24,909
Five to ten years	33,139
Beyond ten years	78,632
Estimated Fair Value	$ 145,480	$ 156,792

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SECURITIES - Available for Sale Securities in a Continuous Unrealized Loss Position (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Available for sale:
Less than 12 months, Estimated Fair Value	$ 35,723	$ 99,812
Less than 12 months, Gross Unrealized Losses	(132)	(779)
Greater than 12 months, Estimated Fair Value	330,019	424,638
Greater than 12 months, Gross Unrealized Losses	(6,425)	(16,685)
U.S. GSE securities
Available for sale:
Less than 12 months, Estimated Fair Value	0	0
Less than 12 months, Gross Unrealized Losses	0	0
Greater than 12 months, Estimated Fair Value	14,963	29,050
Greater than 12 months, Gross Unrealized Losses	(37)	(947)
State and municipal obligations
Available for sale:
Less than 12 months, Estimated Fair Value	0	6,655
Less than 12 months, Gross Unrealized Losses	0	(15)
Greater than 12 months, Estimated Fair Value	2,964	21,273
Greater than 12 months, Gross Unrealized Losses	(1)	(339)
U.S. GSE residential mortgage-backed securities
Available for sale:
Less than 12 months, Estimated Fair Value	0	0
Less than 12 months, Gross Unrealized Losses	0	0
Greater than 12 months, Estimated Fair Value	67,117	88,762
Greater than 12 months, Gross Unrealized Losses	(909)	(3,036)
U.S. GSE residential collateralized mortgage obligations
Available for sale:
Less than 12 months, Estimated Fair Value	35,723	46,452
Less than 12 months, Gross Unrealized Losses	(132)	(141)
Greater than 12 months, Estimated Fair Value	134,232	172,468
Greater than 12 months, Gross Unrealized Losses	(1,296)	(5,813)
U.S. GSE commercial mortgage-backed securities
Available for sale:
Less than 12 months, Estimated Fair Value		0
Less than 12 months, Gross Unrealized Losses		0
Greater than 12 months, Estimated Fair Value		3,508
Greater than 12 months, Gross Unrealized Losses		(28)
U.S. GSE commercial collateralized mortgage obligations
Available for sale:
Less than 12 months, Estimated Fair Value		46,705
Less than 12 months, Gross Unrealized Losses		(623)
Greater than 12 months, Estimated Fair Value	44,046	43,933
Greater than 12 months, Gross Unrealized Losses	(629)	(1,916)
Other asset backed securities
Available for sale:
Less than 12 months, Estimated Fair Value	0	0
Less than 12 months, Gross Unrealized Losses	0	0
Greater than 12 months, Estimated Fair Value	23,462	23,219
Greater than 12 months, Gross Unrealized Losses	(788)	(1,031)
Corporate bonds
Available for sale:
Less than 12 months, Estimated Fair Value	0	0
Less than 12 months, Gross Unrealized Losses	0	0
Greater than 12 months, Estimated Fair Value	43,235	42,425
Greater than 12 months, Gross Unrealized Losses	$ (2,765)	$ (3,575)

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SECURITIES - Held to Maturity Securities in a Continuous Unrealized Loss Position (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Held to maturity:
Less than 12 months, Estimated Fair Value	$ 0	$ 8,286
Less than 12 months, Gross Unrealized losses	0	(26)
Greater than 12 months, Estimated Fair Value	57,152	116,491
Greater than 12 months, Gross Unrealized losses	(1,061)	(3,802)
State and municipal obligations
Held to maturity:
Less than 12 months, Estimated Fair Value	0	8,286
Less than 12 months, Gross Unrealized losses	0	(26)
Greater than 12 months, Estimated Fair Value	405	22,142
Greater than 12 months, Gross Unrealized losses	(1)	(250)
U.S. GSE residential mortgage-backed securities
Held to maturity:
Less than 12 months, Estimated Fair Value	0	0
Less than 12 months, Gross Unrealized losses	0	0
Greater than 12 months, Estimated Fair Value	8,791	9,352
Greater than 12 months, Gross Unrealized losses	(109)	(336)
U.S. GSE residential collateralized mortgage obligations
Held to maturity:
Less than 12 months, Estimated Fair Value	0	0
Less than 12 months, Gross Unrealized losses	0	0
Greater than 12 months, Estimated Fair Value	24,594	40,665
Greater than 12 months, Gross Unrealized losses	(315)	(1,130)
U.S. GSE commercial mortgage-backed securities
Held to maturity:
Less than 12 months, Estimated Fair Value	0	0
Less than 12 months, Gross Unrealized losses	0	0
Greater than 12 months, Estimated Fair Value	5,216	16,205
Greater than 12 months, Gross Unrealized losses	(70)	(620)
U.S. GSE commercial collateralized mortgage obligations
Held to maturity:
Less than 12 months, Estimated Fair Value	0	0
Less than 12 months, Gross Unrealized losses	0	0
Greater than 12 months, Estimated Fair Value	18,146	28,127
Greater than 12 months, Gross Unrealized losses	$ (566)	$ (1,466)

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SECURITIES - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018
OTTI, Sales and Calls, Pledged, Trading and Restricted Securities
Guaranteed portion of student loan backed bonds			student loan backed bonds which are guaranteed by the U.S. Department of Education for 97% to 100% of principal.
Credit support for student loan backed bonds description			the bonds have credit support of 3% to 5%
Proceeds from sales of securities available for sale	$ 46,500	$ 230,400	$ 46,478	$ 230,372
Gross gains realized on sale of securities available for sale	200	(7,900)	200	(7,900)
Debt and Equity Securities, Gain (Loss)	201	(7,921)	201	(7,921)
Proceeds from calls of securities	2,400	$ 900	10,300	$ 1,900
Fair value of securities pledged to secure public deposits and FHLB and FRB overnight borrowings	324,700		324,700		$ 354,300
Amount owned in FHLB, ACBB and FRB stock	$ 24,104		$ 24,104		$ 24,028

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FAIR VALUE - Summary of Assets and Liabilities measured on a Recurring Basis (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Assets measured at fair value on recurring basis
Available for sale securities	$ 642,897	$ 680,886
U.S. GSE securities
Assets measured at fair value on recurring basis
Available for sale securities	14,963	29,050
State and municipal obligations
Assets measured at fair value on recurring basis
Available for sale securities	28,748	40,731
U.S. GSE residential mortgage-backed securities
Assets measured at fair value on recurring basis
Available for sale securities	93,257	93,538
U.S. GSE residential collateralized mortgage obligations
Assets measured at fair value on recurring basis
Available for sale securities	333,784	357,777
U.S. GSE commercial mortgage-backed securities
Assets measured at fair value on recurring basis
Available for sale securities	7,051	3,508
U.S. GSE commercial collateralized mortgage obligations
Assets measured at fair value on recurring basis
Available for sale securities	98,397	90,638
Other asset backed securities
Assets measured at fair value on recurring basis
Available for sale securities	23,462	23,219
Corporate bonds
Assets measured at fair value on recurring basis
Available for sale securities	43,235	42,425
Carrying Amount
Assets measured at fair value on recurring basis
Available for sale securities	642,897	680,886
Financial Assets: Derivatives	11,919	6,363
Financial Liabilities:
Financial liabilities: Derivatives	13,594	2,215
Quoted Prices In Active Markets for Identical Assets (Level 1)
Assets measured at fair value on recurring basis
Available for sale securities	0	0
Financial Assets: Derivatives	0	0
Financial Liabilities:
Financial liabilities: Derivatives	0	0
Significant Other Observable Inputs (Level 2)
Assets measured at fair value on recurring basis
Available for sale securities	642,897	680,886
Financial Assets: Derivatives	11,919	6,363
Financial Liabilities:
Financial liabilities: Derivatives	13,594	2,215
Significant Unobservable Inputs (Level 3)
Assets measured at fair value on recurring basis
Available for sale securities	0	0
Financial Assets: Derivatives	0	0
Financial Liabilities:
Financial liabilities: Derivatives	0	0
Recurring basis | Carrying Amount
Assets measured at fair value on recurring basis
Available for sale securities	642,897	680,886
Recurring basis | Carrying Amount | U.S. GSE securities
Assets measured at fair value on recurring basis
Available for sale securities	14,963	29,050
Recurring basis | Carrying Amount | State and municipal obligations
Assets measured at fair value on recurring basis
Available for sale securities	28,748	40,731
Recurring basis | Carrying Amount | U.S. GSE residential mortgage-backed securities
Assets measured at fair value on recurring basis
Available for sale securities	93,257	93,538
Recurring basis | Carrying Amount | U.S. GSE residential collateralized mortgage obligations
Assets measured at fair value on recurring basis
Available for sale securities	333,784	357,777
Recurring basis | Carrying Amount | U.S. GSE commercial mortgage-backed securities
Assets measured at fair value on recurring basis
Available for sale securities	7,051	3,508
Recurring basis | Carrying Amount | U.S. GSE commercial collateralized mortgage obligations
Assets measured at fair value on recurring basis
Available for sale securities	98,397	90,638
Recurring basis | Carrying Amount | Other asset backed securities
Assets measured at fair value on recurring basis
Available for sale securities	23,462	23,219
Recurring basis | Carrying Amount | Corporate bonds
Assets measured at fair value on recurring basis
Available for sale securities	43,235	42,425
Recurring basis | Carrying Amount | Derivatives
Assets measured at fair value on recurring basis
Financial Assets: Derivatives	11,919	6,363
Financial Liabilities:
Financial liabilities: Derivatives	13,594	2,215
Recurring basis | Significant Other Observable Inputs (Level 2)
Assets measured at fair value on recurring basis
Available for sale securities	642,897	680,886
Recurring basis | Significant Other Observable Inputs (Level 2) | U.S. GSE securities
Assets measured at fair value on recurring basis
Available for sale securities	14,963	29,050
Recurring basis | Significant Other Observable Inputs (Level 2) | State and municipal obligations
Assets measured at fair value on recurring basis
Available for sale securities	28,748	40,731
Recurring basis | Significant Other Observable Inputs (Level 2) | U.S. GSE residential mortgage-backed securities
Assets measured at fair value on recurring basis
Available for sale securities	93,257	93,538
Recurring basis | Significant Other Observable Inputs (Level 2) | U.S. GSE residential collateralized mortgage obligations
Assets measured at fair value on recurring basis
Available for sale securities	333,784	357,777
Recurring basis | Significant Other Observable Inputs (Level 2) | U.S. GSE commercial mortgage-backed securities
Assets measured at fair value on recurring basis
Available for sale securities	7,051	3,508
Recurring basis | Significant Other Observable Inputs (Level 2) | U.S. GSE commercial collateralized mortgage obligations
Assets measured at fair value on recurring basis
Available for sale securities	98,397	90,638
Recurring basis | Significant Other Observable Inputs (Level 2) | Other asset backed securities
Assets measured at fair value on recurring basis
Available for sale securities	23,462	23,219
Recurring basis | Significant Other Observable Inputs (Level 2) | Corporate bonds
Assets measured at fair value on recurring basis
Available for sale securities	43,235	42,425
Recurring basis | Significant Other Observable Inputs (Level 2) | Derivatives
Assets measured at fair value on recurring basis
Financial Assets: Derivatives	11,919	6,363
Financial Liabilities:
Financial liabilities: Derivatives	$ 13,594	$ 2,215

XML

FAIR VALUE - Summary of Assets and Liabilities measured on a Non-Recurring Basis (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Assets measured at fair value on non-recurring basis
Other real estate owned	$ 0	$ 175
Carrying Amount
Assets measured at fair value on non-recurring basis
Loans held for sale	12,643
Significant Other Observable Inputs (Level 2)
Assets measured at fair value on non-recurring basis
Loans held for sale	12,643
Non-recurring basis | Carrying Amount
Assets measured at fair value on non-recurring basis
Loans held for sale	12,643
Impaired loans	4,791	2,532
Other real estate owned		175
Non-recurring basis | Quoted Prices In Active Markets for Identical Assets (Level 1)
Assets measured at fair value on non-recurring basis
Impaired loans	0	0
Other real estate owned		0
Non-recurring basis | Significant Other Observable Inputs (Level 2)
Assets measured at fair value on non-recurring basis
Loans held for sale	12,643
Impaired loans	0	0
Other real estate owned		0
Non-recurring basis | Significant Unobservable Inputs (Level 3)
Assets measured at fair value on non-recurring basis
Impaired loans	$ 4,791	2,532
Other real estate owned		$ 175

XML

FAIR VALUE - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Additional provision for loan losses	$ 3,500	$ 400	$ 4,100	$ 1,200
Assets measured at fair value on non-recurring basis
Outstanding balance of impaired loans with an allowance recorded	5,506		5,506		$ 2,721
Valuation allowance on impaired loans	715		715		189
Other Real Estate	0		0		175
Other real estate owned valuation allowance	0		0		0
Real estate owned additional provision			0		0
Non-recurring basis
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Additional provision for loan losses			500		200
Assets measured at fair value on non-recurring basis
Outstanding balance of impaired loans with an allowance recorded	5,500		5,500		2,700
Valuation allowance on impaired loans	700		700		200
Carrying Amount | Non-recurring basis
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Carrying amount of impaired loans	$ 4,791		$ 4,791		2,532
Assets measured at fair value on non-recurring basis
Other Real Estate					$ 175

XML

FAIR VALUE - Summary of Estimated Fair Values and Carrying Amounts of Financial Instruments (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Financial assets:
Cash and due from banks	$ 71,292	$ 142,145
Interest-bearing deposits with banks	87,349	153,223
Securities available for sale	642,897	680,886
Securities held to maturity	145,480	156,792
Accrued interest receivable	12,397	11,236
Carrying Amount
Financial assets:
Cash and due from banks	71,292	142,145
Interest-bearing deposits with banks	87,349	153,223
Securities available for sale	642,897	680,886
Securities restricted	24,104	24,028
Securities held to maturity	144,716	160,163
Loans held for sale	12,643
Loans, net	3,398,852	3,244,393
Derivatives	11,919	6,363
Accrued interest receivable	12,397	11,236
Financial liabilities:
Certificates of deposit	276,921	329,491
Demand and other deposits	3,559,655	3,556,902
FHLB advances	240,000	240,433
Repurchase agreements	945	539
Subordinated debentures	78,850	78,781
Derivatives	13,594	2,215
Accrued interest payable	1,718	1,524
Fair Value
Financial assets:
Cash and due from banks	71,292	142,145
Interest-bearing deposits with banks	87,349	153,223
Securities available for sale	642,897	680,886
Securities held to maturity	145,480	156,792
Loans held for sale	12,643
Loans, net	3,375,662	3,216,204
Derivatives	11,919	6,363
Accrued interest receivable	12,397	11,236
Financial liabilities:
Certificates of deposit	276,929	326,865
Demand and other deposits	3,559,655	3,556,902
FHLB advances	240,206	236,209
Repurchase agreements	945	539
Subordinated debentures	80,668	74,400
Derivatives	13,594	2,215
Accrued interest payable	1,718	1,524
Quoted Prices In Active Markets for Identical Assets (Level 1)
Financial assets:
Cash and due from banks	71,292	142,145
Interest-bearing deposits with banks	87,349	153,223
Securities available for sale	0	0
Securities held to maturity	0	0
Loans, net	0	0
Derivatives	0	0
Accrued interest receivable	0	0
Financial liabilities:
Certificates of deposit	0	0
Demand and other deposits	3,559,655	3,556,902
FHLB advances	0	0
Repurchase agreements	0	0
Subordinated debentures	0	0
Derivatives	0	0
Accrued interest payable	0	0
Significant Other Observable Inputs (Level 2)
Financial assets:
Cash and due from banks	0	0
Interest-bearing deposits with banks	0	0
Securities available for sale	642,897	680,886
Securities held to maturity	145,480	156,792
Loans held for sale	12,643
Loans, net	0	0
Derivatives	11,919	6,363
Accrued interest receivable	2,532	2,936
Financial liabilities:
Certificates of deposit	276,929	326,865
Demand and other deposits	0	0
FHLB advances	240,206	236,209
Repurchase agreements	945	539
Subordinated debentures	80,668	74,400
Derivatives	13,594	2,215
Accrued interest payable	1,718	1,524
Significant Unobservable Inputs (Level 3)
Financial assets:
Cash and due from banks	0	0
Interest-bearing deposits with banks	0	0
Securities available for sale	0	0
Securities held to maturity	0	0
Loans, net	3,375,662	3,216,204
Derivatives	0	0
Accrued interest receivable	9,865	8,300
Financial liabilities:
Certificates of deposit	0	0
Demand and other deposits	0	0
FHLB advances	0	0
Repurchase agreements	0	0
Subordinated debentures	0	0
Derivatives	0	0
Accrued interest payable	$ 0	$ 0

XML

LOANS - Major Classifications of Loans and Lending Risk (Details) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2019 USD ($)	Jun. 30, 2019 USD ($) family	Mar. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)	Jun. 30, 2018 USD ($)	Mar. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)	Jun. 19, 2015 USD ($)
Classifications of loans
Total loans	$ 3,422,582	$ 3,422,582		$ 3,268,772
Net deferred loan costs and fees	7,441	7,441		7,039
Total loans held for investment	3,430,023	3,430,023		3,275,811
Allowance for loan losses	(31,171)	(31,171)	$ (31,784)	(31,418)	$ (31,652)	$ (32,812)	$ (31,707)
Loans, net	3,398,852	3,398,852		3,244,393
Commercial Real Estate
Classifications of loans
Mortgage loan reclassified from loans held for investment to loans held for sale	16,300	16,300
Mortgage loan, charge-off recognized	3,700
Commercial Real Estate | Mortgage loans
Classifications of loans
Total loans	1,436,221	1,436,221		1,373,556
Allowance for loan losses	(10,878)	(10,878)	(11,099)	(10,792)	(11,206)	(11,334)	(11,048)
Lending Risk
Loan amount beyond which annual financial information is sought		1,000
Multi-family
Classifications of loans
Allowance for loan losses	(2,545)	(2,545)		(2,566)	(2,466)		(4,521)
Multi-family | Mortgage loans
Classifications of loans
Total loans	631,146	631,146		585,827
Allowance for loan losses	(2,545)	$ (2,545)	(2,557)	(2,566)	(2,466)	(3,002)
Lending Risk
Number of families having income producing residential investment properties | family		5
Residential real estate mortgage loans
Classifications of loans
Allowance for loan losses	(2,620)	$ (2,620)		(3,935)	(4,237)		(2,438)
Residential real estate mortgage loans | Mortgage loans
Classifications of loans
Total loans	503,354	503,354		519,763
Allowance for loan losses	(2,620)	(2,620)	(3,374)	(3,935)	(4,237)	(3,495)
Commercial, industrial and agricultural loans
Classifications of loans
Total loans	675,168	675,168		645,724
Allowance for loan losses	(13,558)	(13,558)	(13,073)	(12,722)	(12,358)	(14,055)	(12,838)
Real estate construction and land loans
Classifications of loans
Total loans	150,868	150,868		123,393
Allowance for loan losses	(1,333)	(1,333)	(1,526)	(1,297)	(1,263)	(821)	(740)
Installment/consumer loans
Classifications of loans
Total loans	25,825	25,825		20,509
Allowance for loan losses	(237)	(237)	$ (155)	(106)	$ (122)	$ (105)	$ (122)
CNB
Classifications of loans
Addition in acquired loans recorded at fair value								$ 729,400
Fair value of loans acquired	246,300	$ 246,300		275,000
Maximum | Multi-family | Mortgage loans
Lending Risk
Loan-to-value ratio (as a percent)		75.00%
Home equity | Residential real estate mortgage loans | Mortgage loans
Classifications of loans
Total loans	67,968	$ 67,968		71,248
Home equity | Minimum | Residential real estate mortgage loans | Mortgage loans
Lending Risk
Loan-to-value ratio (as a percent)		80.00%
Carrying Amount
Classifications of loans
Fair value of loans acquired	3,398,852	$ 3,398,852		$ 3,244,393
Loans held for sale	$ 12,643	$ 12,643

XML

LOANS - Categorized by Class and Internally Assigned Risk Grades (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Loans by class categorized by internally assigned risk grades
Total loans	$ 3,422,582	$ 3,268,772
Pass
Loans by class categorized by internally assigned risk grades
Total loans	3,348,413	3,180,905
Special Mention
Loans by class categorized by internally assigned risk grades
Total loans	33,616	43,186
Substandard
Loans by class categorized by internally assigned risk grades
Total loans	40,553	44,681
Doubtful
Loans by class categorized by internally assigned risk grades
Total loans	0	0
Commercial Real Estate | Mortgage loans
Loans by class categorized by internally assigned risk grades
Total loans	1,436,221	1,373,556
Commercial Real Estate | Mortgage loans | Owner occupied
Loans by class categorized by internally assigned risk grades
Total loans	525,329	510,398
Commercial Real Estate | Mortgage loans | Owner occupied | Pass
Loans by class categorized by internally assigned risk grades
Total loans	512,123	480,503
Commercial Real Estate | Mortgage loans | Owner occupied | Special Mention
Loans by class categorized by internally assigned risk grades
Total loans	11,596	12,045
Commercial Real Estate | Mortgage loans | Owner occupied | Substandard
Loans by class categorized by internally assigned risk grades
Total loans	1,610	17,850
Commercial Real Estate | Mortgage loans | Owner occupied | Doubtful
Loans by class categorized by internally assigned risk grades
Total loans	0	0
Commercial Real Estate | Mortgage loans | Non-owner occupied
Loans by class categorized by internally assigned risk grades
Total loans	910,892	863,158
Commercial Real Estate | Mortgage loans | Non-owner occupied | Pass
Loans by class categorized by internally assigned risk grades
Total loans	896,654	858,069
Commercial Real Estate | Mortgage loans | Non-owner occupied | Special Mention
Loans by class categorized by internally assigned risk grades
Total loans	735	2,188
Commercial Real Estate | Mortgage loans | Non-owner occupied | Substandard
Loans by class categorized by internally assigned risk grades
Total loans	13,503	2,901
Commercial Real Estate | Mortgage loans | Non-owner occupied | Doubtful
Loans by class categorized by internally assigned risk grades
Total loans	0	0
Multi-family | Mortgage loans
Loans by class categorized by internally assigned risk grades
Total loans	631,146	585,827
Multi-family | Mortgage loans | Pass
Loans by class categorized by internally assigned risk grades
Total loans	630,735	585,409
Multi-family | Mortgage loans | Special Mention
Loans by class categorized by internally assigned risk grades
Total loans	411	418
Multi-family | Mortgage loans | Substandard
Loans by class categorized by internally assigned risk grades
Total loans	0	0
Multi-family | Mortgage loans | Doubtful
Loans by class categorized by internally assigned risk grades
Total loans	0	0
Residential real estate mortgage loans | Mortgage loans
Loans by class categorized by internally assigned risk grades
Total loans	503,354	519,763
Residential real estate mortgage loans | Mortgage loans | Residential mortgage
Loans by class categorized by internally assigned risk grades
Total loans	435,386	448,515
Residential real estate mortgage loans | Mortgage loans | Residential mortgage | Pass
Loans by class categorized by internally assigned risk grades
Total loans	425,836	438,891
Residential real estate mortgage loans | Mortgage loans | Residential mortgage | Special Mention
Loans by class categorized by internally assigned risk grades
Total loans	8,255	8,510
Residential real estate mortgage loans | Mortgage loans | Residential mortgage | Substandard
Loans by class categorized by internally assigned risk grades
Total loans	1,295	1,114
Residential real estate mortgage loans | Mortgage loans | Residential mortgage | Doubtful
Loans by class categorized by internally assigned risk grades
Total loans	0	0
Residential real estate mortgage loans | Mortgage loans | Home equity
Loans by class categorized by internally assigned risk grades
Total loans	67,968	71,248
Residential real estate mortgage loans | Mortgage loans | Home equity | Pass
Loans by class categorized by internally assigned risk grades
Total loans	66,469	68,480
Residential real estate mortgage loans | Mortgage loans | Home equity | Special Mention
Loans by class categorized by internally assigned risk grades
Total loans	681	1,594
Residential real estate mortgage loans | Mortgage loans | Home equity | Substandard
Loans by class categorized by internally assigned risk grades
Total loans	818	1,174
Residential real estate mortgage loans | Mortgage loans | Home equity | Doubtful
Loans by class categorized by internally assigned risk grades
Total loans	0	0
Commercial, industrial and agricultural loans
Loans by class categorized by internally assigned risk grades
Total loans	675,168	645,724
Commercial, industrial and agricultural loans | Secured
Loans by class categorized by internally assigned risk grades
Total loans	164,950	168,540
Commercial, industrial and agricultural loans | Secured | Pass
Loans by class categorized by internally assigned risk grades
Total loans	153,055	147,474
Commercial, industrial and agricultural loans | Secured | Special Mention
Loans by class categorized by internally assigned risk grades
Total loans	2,009	5,536
Commercial, industrial and agricultural loans | Secured | Substandard
Loans by class categorized by internally assigned risk grades
Total loans	9,886	15,530
Commercial, industrial and agricultural loans | Secured | Doubtful
Loans by class categorized by internally assigned risk grades
Total loans	0	0
Commercial, industrial and agricultural loans | Unsecured
Loans by class categorized by internally assigned risk grades
Total loans	510,218	477,184
Commercial, industrial and agricultural loans | Unsecured | Pass
Loans by class categorized by internally assigned risk grades
Total loans	487,922	458,526
Commercial, industrial and agricultural loans | Unsecured | Special Mention
Loans by class categorized by internally assigned risk grades
Total loans	9,923	12,886
Commercial, industrial and agricultural loans | Unsecured | Substandard
Loans by class categorized by internally assigned risk grades
Total loans	12,373	5,772
Commercial, industrial and agricultural loans | Unsecured | Doubtful
Loans by class categorized by internally assigned risk grades
Total loans	0	0
Real estate construction and land loans
Loans by class categorized by internally assigned risk grades
Total loans	150,868	123,393
Real estate construction and land loans | Pass
Loans by class categorized by internally assigned risk grades
Total loans	150,572	123,089
Real estate construction and land loans | Special Mention
Loans by class categorized by internally assigned risk grades
Total loans	0	0
Real estate construction and land loans | Substandard
Loans by class categorized by internally assigned risk grades
Total loans	296	304
Real estate construction and land loans | Doubtful
Loans by class categorized by internally assigned risk grades
Total loans	0	0
Installment/consumer loans
Loans by class categorized by internally assigned risk grades
Total loans	25,825	20,509
Installment/consumer loans | Pass
Loans by class categorized by internally assigned risk grades
Total loans	25,047	20,464
Installment/consumer loans | Special Mention
Loans by class categorized by internally assigned risk grades
Total loans	6	9
Installment/consumer loans | Substandard
Loans by class categorized by internally assigned risk grades
Total loans	772	36
Installment/consumer loans | Doubtful
Loans by class categorized by internally assigned risk grades
Total loans	$ 0	$ 0

XML

LOANS - Past Due and Nonaccrual Loans (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Past Due and Nonaccrual Loans
>90 Days Past Due and Accruing	$ 329	$ 308
Nonaccrual Including 90 Days or More Past Due	5,509	2,808
Total Past Due and Nonaccrual	9,220	7,516
Current	3,413,362	3,261,256
Total Loans	3,422,582	3,268,772
30-59 Days Past Due
Past Due and Nonaccrual Loans
Total Past Due and Nonaccrual	1,651	3,780
60-89 Days Past Due
Past Due and Nonaccrual Loans
Total Past Due and Nonaccrual	1,731	620
Commercial Real Estate | Mortgage loans
Past Due and Nonaccrual Loans
Total Loans	1,436,221	1,373,556
Commercial Real Estate | Mortgage loans | Owner occupied
Past Due and Nonaccrual Loans
>90 Days Past Due and Accruing	0	0
Nonaccrual Including 90 Days or More Past Due	573	253
Total Past Due and Nonaccrual	1,214	780
Current	524,115	509,618
Total Loans	525,329	510,398
Commercial Real Estate | Mortgage loans | Owner occupied | 30-59 Days Past Due
Past Due and Nonaccrual Loans
Total Past Due and Nonaccrual	0	333
Commercial Real Estate | Mortgage loans | Owner occupied | 60-89 Days Past Due
Past Due and Nonaccrual Loans
Total Past Due and Nonaccrual	641	194
Commercial Real Estate | Mortgage loans | Non-owner occupied
Past Due and Nonaccrual Loans
>90 Days Past Due and Accruing	0	0
Nonaccrual Including 90 Days or More Past Due	1,376	885
Total Past Due and Nonaccrual	1,376	885
Current	909,516	862,273
Total Loans	910,892	863,158
Commercial Real Estate | Mortgage loans | Non-owner occupied | 30-59 Days Past Due
Past Due and Nonaccrual Loans
Total Past Due and Nonaccrual	0	0
Commercial Real Estate | Mortgage loans | Non-owner occupied | 60-89 Days Past Due
Past Due and Nonaccrual Loans
Total Past Due and Nonaccrual	0	0
Multi-family | Mortgage loans
Past Due and Nonaccrual Loans
>90 Days Past Due and Accruing	0	0
Nonaccrual Including 90 Days or More Past Due	0	0
Total Past Due and Nonaccrual	0	0
Current	631,146	585,827
Total Loans	631,146	585,827
Multi-family | Mortgage loans | 30-59 Days Past Due
Past Due and Nonaccrual Loans
Total Past Due and Nonaccrual	0	0
Multi-family | Mortgage loans | 60-89 Days Past Due
Past Due and Nonaccrual Loans
Total Past Due and Nonaccrual	0	0
Residential real estate mortgage loans | Mortgage loans
Past Due and Nonaccrual Loans
Total Loans	503,354	519,763
Residential real estate mortgage loans | Mortgage loans | Residential mortgage
Past Due and Nonaccrual Loans
>90 Days Past Due and Accruing	0	0
Nonaccrual Including 90 Days or More Past Due	2,138	199
Total Past Due and Nonaccrual	2,302	1,321
Current	433,084	447,194
Total Loans	435,386	448,515
Residential real estate mortgage loans | Mortgage loans | Residential mortgage | 30-59 Days Past Due
Past Due and Nonaccrual Loans
Total Past Due and Nonaccrual	164	892
Residential real estate mortgage loans | Mortgage loans | Residential mortgage | 60-89 Days Past Due
Past Due and Nonaccrual Loans
Total Past Due and Nonaccrual	0	230
Residential real estate mortgage loans | Mortgage loans | Home equity
Past Due and Nonaccrual Loans
>90 Days Past Due and Accruing	329	308
Nonaccrual Including 90 Days or More Past Due	370	624
Total Past Due and Nonaccrual	1,050	1,965
Current	66,918	69,283
Total Loans	67,968	71,248
Residential real estate mortgage loans | Mortgage loans | Home equity | 30-59 Days Past Due
Past Due and Nonaccrual Loans
Total Past Due and Nonaccrual	300	1,033
Residential real estate mortgage loans | Mortgage loans | Home equity | 60-89 Days Past Due
Past Due and Nonaccrual Loans
Total Past Due and Nonaccrual	51	0
Commercial, industrial and agricultural loans
Past Due and Nonaccrual Loans
Total Loans	675,168	645,724
Commercial, industrial and agricultural loans | Secured
Past Due and Nonaccrual Loans
>90 Days Past Due and Accruing	0	0
Nonaccrual Including 90 Days or More Past Due	218	174
Total Past Due and Nonaccrual	1,384	700
Current	163,566	167,840
Total Loans	164,950	168,540
Commercial, industrial and agricultural loans | Secured | 30-59 Days Past Due
Past Due and Nonaccrual Loans
Total Past Due and Nonaccrual	835	330
Commercial, industrial and agricultural loans | Secured | 60-89 Days Past Due
Past Due and Nonaccrual Loans
Total Past Due and Nonaccrual	331	196
Commercial, industrial and agricultural loans | Unsecured
Past Due and Nonaccrual Loans
>90 Days Past Due and Accruing	0	0
Nonaccrual Including 90 Days or More Past Due	683	621
Total Past Due and Nonaccrual	1,705	1,729
Current	508,513	475,455
Total Loans	510,218	477,184
Commercial, industrial and agricultural loans | Unsecured | 30-59 Days Past Due
Past Due and Nonaccrual Loans
Total Past Due and Nonaccrual	314	1,108
Commercial, industrial and agricultural loans | Unsecured | 60-89 Days Past Due
Past Due and Nonaccrual Loans
Total Past Due and Nonaccrual	708	0
Real estate construction and land loans
Past Due and Nonaccrual Loans
>90 Days Past Due and Accruing	0	0
Nonaccrual Including 90 Days or More Past Due	129	0
Total Past Due and Nonaccrual	129	0
Current	150,739	123,393
Total Loans	150,868	123,393
Real estate construction and land loans | 30-59 Days Past Due
Past Due and Nonaccrual Loans
Total Past Due and Nonaccrual	0	0
Real estate construction and land loans | 60-89 Days Past Due
Past Due and Nonaccrual Loans
Total Past Due and Nonaccrual	0	0
Installment/consumer loans
Past Due and Nonaccrual Loans
>90 Days Past Due and Accruing	0	0
Nonaccrual Including 90 Days or More Past Due	22	52
Total Past Due and Nonaccrual	60	136
Current	25,765	20,373
Total Loans	25,825	20,509
Installment/consumer loans | 30-59 Days Past Due
Past Due and Nonaccrual Loans
Total Past Due and Nonaccrual	38	84
Installment/consumer loans | 60-89 Days Past Due
Past Due and Nonaccrual Loans
Total Past Due and Nonaccrual	$ 0	$ 0

XML

LOANS - Impaired Loans (Details) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2019 USD ($)	Jun. 30, 2018 USD ($)	Jun. 30, 2019 USD ($) loan	Jun. 30, 2018 USD ($) loan	Dec. 31, 2018 USD ($) loan property
Impaired loans
Loans modified as TDRs			$ 4,100
Recorded Investment
With no related allowance recorded	$ 12,202		12,202		$ 16,634
With an allowance recorded	5,506		5,506		2,721
Total impaired loans	17,708		17,708		19,355
Unpaid Principal Balance
With no related allowance recorded	12,235		12,235		16,644
With an allowance recorded	5,506		5,506		2,721
Total impaired loans	17,741		17,741		19,365
Related Allocated Allowance
With an allowance recorded	715		715		189
Total impaired loans	715		715		189
Average Recorded Investment
With no related allowance recorded	11,903	$ 15,227	11,127	$ 15,038
With an allowance recorded	4,663	0	4,303	0
Average recorded investment in impaired loans	16,566	15,227	15,430	15,038
Interest Income Recognized
With no related allowance recorded	145	104	272	198
With an allowance recorded	42	0	77	0
Total impaired loans	187	104	349	$ 198
Other real estate	0		$ 0		$ 175
Other real estate owned, number of properties | property					1
Number of loans modified as TDRs for which there was a payment default within twelve months following the modification | loan			2	0
Commercial Real Estate | Mortgage loans | Owner occupied
Recorded Investment
With no related allowance recorded	589		$ 589		$ 268
With an allowance recorded	0		0		0
Total impaired loans	589		589		268
Unpaid Principal Balance
With no related allowance recorded	605		605		278
With an allowance recorded	0		0		0
Total impaired loans	605		605		278
Related Allocated Allowance
With an allowance recorded	0		0		0
Total impaired loans	0		0		0
Average Recorded Investment
With no related allowance recorded	576	184	524	$ 92
With an allowance recorded	0	0	0	0
Average recorded investment in impaired loans	576	184	524	92
Interest Income Recognized
With no related allowance recorded	0	0	0	0
With an allowance recorded	0	0	0	0
Total impaired loans	0	0	0	0
Commercial Real Estate | Mortgage loans | Non-owner occupied
Recorded Investment
With no related allowance recorded	3,241		3,241		2,816
With an allowance recorded	0		0		0
Total impaired loans	3,241		3,241		2,816
Unpaid Principal Balance
With no related allowance recorded	3,258		3,258		2,816
With an allowance recorded	0		0		0
Total impaired loans	3,258		3,258		2,816
Related Allocated Allowance
With an allowance recorded	0		0		0
Total impaired loans	0		0		0
Average Recorded Investment
With no related allowance recorded	2,904	1,163	2,842	1,168
With an allowance recorded	0	0	0	0
Average recorded investment in impaired loans	2,904	1,163	2,842	1,168
Interest Income Recognized
With no related allowance recorded	25	7	50	8
With an allowance recorded	0	0	0	0
Total impaired loans	25	7	50	8
Residential real estate mortgage loans | Mortgage loans | Residential mortgage
Recorded Investment
With no related allowance recorded	0		0		0
With an allowance recorded	0		0		0
Total impaired loans	0		0		0
Unpaid Principal Balance
With no related allowance recorded	0		0		0
With an allowance recorded	0		0		0
Total impaired loans	0		0		0
Related Allocated Allowance
With an allowance recorded	0		0		0
Total impaired loans	0		0		0
Average Recorded Investment
With no related allowance recorded	0	0	0	0
With an allowance recorded	0	0	0	0
Average recorded investment in impaired loans	0	0	0	0
Interest Income Recognized
With no related allowance recorded	0	0	0	0
With an allowance recorded	0	0	0	0
Total impaired loans	0	0	0	0
Residential real estate mortgage loans | Mortgage loans | Home equity
Recorded Investment
With no related allowance recorded	0		0		0
With an allowance recorded	0		0		0
Total impaired loans	0		0		0
Unpaid Principal Balance
With no related allowance recorded	0		0		0
With an allowance recorded	0		0		0
Total impaired loans	0		0		0
Related Allocated Allowance
With an allowance recorded	0		0		0
Total impaired loans	0		0		0
Average Recorded Investment
With no related allowance recorded	0	0	0	0
With an allowance recorded	0	0	0	0
Average recorded investment in impaired loans	0	0	0	0
Interest Income Recognized
With no related allowance recorded	0	0	0	0
With an allowance recorded	0	0	0	0
Total impaired loans	0	0	0	0
Commercial, industrial and agricultural loans
Impaired loans
Loans modified as TDRs			4,100	6,800
Commercial, industrial and agricultural loans | Secured
Recorded Investment
With no related allowance recorded	1,644		1,644		8,234
With an allowance recorded	5,162		5,162		2,721
Total impaired loans	6,806		6,806		10,955
Unpaid Principal Balance
With no related allowance recorded	1,644		1,644		8,234
With an allowance recorded	5,162		5,162		2,721
Total impaired loans	6,806		6,806		10,955
Related Allocated Allowance
With an allowance recorded	371		371		189
Total impaired loans	371		371		189
Average Recorded Investment
With no related allowance recorded	1,644	8,702	1,562	8,723
With an allowance recorded	4,548	0	4,246	0
Average recorded investment in impaired loans	6,192	8,702	5,808	8,723
Interest Income Recognized
With no related allowance recorded	19	58	36	114
With an allowance recorded	42	0	77	0
Total impaired loans	61	58	113	114
Commercial, industrial and agricultural loans | Unsecured
Recorded Investment
With no related allowance recorded	6,728		6,728		5,316
With an allowance recorded	344		344		0
Total impaired loans	7,072		7,072		5,316
Unpaid Principal Balance
With no related allowance recorded	6,728		6,728		5,316
With an allowance recorded	344		344		0
Total impaired loans	7,072		7,072		5,316
Related Allocated Allowance
With an allowance recorded	344		344
Total impaired loans	344		344
Average Recorded Investment
With no related allowance recorded	6,779	5,178	6,199	5,055
With an allowance recorded	115	0	57	0
Average recorded investment in impaired loans	6,894	5,178	6,256	5,055
Interest Income Recognized
With no related allowance recorded	101	39	186	76
With an allowance recorded	0	0	0	0
Total impaired loans	101	$ 39	186	$ 76
Taxi medallion loans
Impaired loans
Loans modified as TDRs					$ 2,700
Interest Income Recognized
Number of loans modified as TDRs for which there was a payment default within twelve months following the modification | loan					3
Non-recurring basis
Recorded Investment
With an allowance recorded	5,500		5,500		$ 2,700
Related Allocated Allowance
With an allowance recorded	700		700		200
Non-recurring basis | Carrying Amount
Interest Income Recognized
Other real estate					175
Non-recurring basis | Carrying Amount | Other real estate owned
Interest Income Recognized
Other real estate	$ 0		$ 0		$ 200

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LOANS - Troubled Debt Restructurings (Details) $ in Thousands	6 Months Ended		12 Months Ended
	Jun. 30, 2019 USD ($) loan	Jun. 30, 2018 USD ($) loan	Dec. 31, 2018 USD ($) loan
Troubled Debt Restructurings
Modified loans | loan	3
Loans modified as TDRs	$ 4,100
Period of modified contractually past due loans to be considered as payment default	30 days
Charge offs relating to TDRs	$ 84	$ 0
Number of loans modified as TDRs for which there was a payment default within twelve months following the modification | loan	2	0
Nonaccrual TDRs loans	$ 111		$ 133
Amount of current and performing TDR loans	16,900		16,900
Post-Modification of other than TDRs, recorded investment	$ 31,800
Commercial, industrial and agricultural loans
Troubled Debt Restructurings
Modified loans | loan	5	8
Loans modified as TDRs	$ 4,100	$ 6,800
Taxi medallion loans
Troubled Debt Restructurings
Modified loans | loan	3
Loans modified as TDRs			$ 2,700
Number of loans modified as TDRs for which there was a payment default within twelve months following the modification | loan			3

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LOANS - Purchased Credit Impaired Loans (Details) - USD ($) $ in Millions	1 Months Ended
	Jun. 19, 2015	Feb. 14, 2014	Jun. 30, 2019	Dec. 31, 2018
FNBNY
Acquired Loans
Contractually required principal and interest payments receivable		$ 40.3
Expected cash flows		28.4
Fair value (initial carrying amount) of purchased credit impaired loans		21.8
Non-accretable difference		11.9
Initial accretable yield		$ 6.6
Outstanding balance of purchased credit impaired loans			$ 1.1	$ 1.1
Carrying amount of purchased credit impaired loans			0.5	0.5
Remaining non-accretable difference			0.5	0.5
CNB
Acquired Loans
Contractually required principal and interest payments receivable	$ 23.4
Expected cash flows	10.1
Fair value (initial carrying amount) of purchased credit impaired loans	8.7
Non-accretable difference	13.3
Initial accretable yield	$ 1.4
Outstanding balance of purchased credit impaired loans			0.6	1.2
Carrying amount of purchased credit impaired loans				0.1
Remaining non-accretable difference			$ 0.5	$ 0.8

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LOANS - Summary of Activity in the Accretable Yield for PCI Loans (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Activity in the accretable yield for the PCI loans:
Balance at beginning of period	$ 363	$ 957	$ 460	$ 2,151
Accretion	(286)	(269)	(394)	(1,302)
Reclassification (to) from nonaccretable difference during the period	19	424	30	263
Accretable discount at end of period	$ 96	$ 1,112	$ 96	$ 1,112

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ALLOWANCE FOR LOAN LOSSES - Balances in Allowance for Loan Losses and Recorded Investment in Loans by Portfolio Segment (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017
Allowance for Loan Losses:
Individually evaluated for impairment	$ 715		$ 189
Collectively evaluated for impairment	30,456		31,229
Loans acquired with deteriorated credit quality	0		0
Total Allowance for Loan Losses	31,171	$ 31,784	31,418	$ 31,652	$ 32,812	$ 31,707
Loans:
Individually evaluated for impairment	17,708		19,355
Collectively evaluated for impairment	3,404,422		3,248,885
Loans acquired with deteriorated credit quality	452		532
Total Loans	3,422,582		3,268,772
Commercial Real Estate | Mortgage loans
Allowance for Loan Losses:
Individually evaluated for impairment	0		0
Collectively evaluated for impairment	10,878		10,792
Loans acquired with deteriorated credit quality	0		0
Total Allowance for Loan Losses	10,878	11,099	10,792	11,206	11,334	11,048
Loans:
Individually evaluated for impairment	3,830		3,084
Collectively evaluated for impairment	1,432,391		1,370,472
Loans acquired with deteriorated credit quality	0		0
Total Loans	1,436,221		1,373,556
Multi-family
Allowance for Loan Losses:
Total Allowance for Loan Losses	2,545		2,566	2,466		4,521
Multi-family | Mortgage loans
Allowance for Loan Losses:
Individually evaluated for impairment	0		0
Collectively evaluated for impairment	2,545		2,566
Loans acquired with deteriorated credit quality	0		0
Total Allowance for Loan Losses	2,545	2,557	2,566	2,466	3,002
Loans:
Individually evaluated for impairment	0		0
Collectively evaluated for impairment	631,146		585,827
Loans acquired with deteriorated credit quality	0		0
Total Loans	631,146		585,827
Residential real estate mortgage loans
Allowance for Loan Losses:
Total Allowance for Loan Losses	2,620		3,935	4,237		2,438
Residential real estate mortgage loans | Mortgage loans
Allowance for Loan Losses:
Individually evaluated for impairment	0		0
Collectively evaluated for impairment	2,620		3,935
Loans acquired with deteriorated credit quality	0		0
Total Allowance for Loan Losses	2,620	3,374	3,935	4,237	3,495
Loans:
Individually evaluated for impairment	0		0
Collectively evaluated for impairment	503,025		519,455
Loans acquired with deteriorated credit quality	329		308
Total Loans	503,354		519,763
Commercial, industrial and agricultural loans
Allowance for Loan Losses:
Individually evaluated for impairment	715		189
Collectively evaluated for impairment	12,843		12,533
Loans acquired with deteriorated credit quality	0		0
Total Allowance for Loan Losses	13,558	13,073	12,722	12,358	14,055	12,838
Loans:
Individually evaluated for impairment	13,878		16,271
Collectively evaluated for impairment	661,167		629,229
Loans acquired with deteriorated credit quality	123		224
Total Loans	675,168		645,724
Real estate construction and land loans
Allowance for Loan Losses:
Individually evaluated for impairment	0		0
Collectively evaluated for impairment	1,333		1,297
Loans acquired with deteriorated credit quality	0		0
Total Allowance for Loan Losses	1,333	1,526	1,297	1,263	821	740
Loans:
Individually evaluated for impairment	0		0
Collectively evaluated for impairment	150,868		123,393
Loans acquired with deteriorated credit quality	0		0
Total Loans	150,868		123,393
Installment/consumer loans
Allowance for Loan Losses:
Individually evaluated for impairment	0		0
Collectively evaluated for impairment	237		106
Loans acquired with deteriorated credit quality	0		0
Total Allowance for Loan Losses	237	$ 155	106	$ 122	$ 105	$ 122
Loans:
Individually evaluated for impairment	0		0
Collectively evaluated for impairment	25,825		20,509
Loans acquired with deteriorated credit quality	0		0
Total Loans	$ 25,825		$ 20,509

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ALLOWANCE FOR LOAN LOSSES - Changes in the Allowance for Loan Losses (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018
Allowance for Loan Losses
Beginning balance	$ 31,784	$ 32,812	$ 31,418	$ 31,707	$ 31,707
Charge-offs	(4,224)	(1,732)	(4,470)	(1,732)
Recoveries	111	172	123	477
Provision (Credit)	3,500	400	4,100	1,200
Ending balance	31,171	31,652	31,171	31,652	31,418
Commercial Real Estate | Mortgage loans
Allowance for Loan Losses
Beginning balance	11,099	11,334	10,792	11,048	11,048
Charge-offs	(3,670)	0	(3,670)	0
Recoveries	0	0	0	0
Provision (Credit)	3,449	(128)	3,756	158
Ending balance	10,878	11,206	10,878	11,206	10,792
Multi-family
Allowance for Loan Losses
Beginning balance			2,566	4,521	4,521
Charge-offs			0	0
Recoveries			0	0
Provision (Credit)			(21)	(2,055)
Ending balance	2,545	2,466	2,545	2,466	2,566
Multi-family | Mortgage loans
Allowance for Loan Losses
Beginning balance	2,557	3,002	2,566
Charge-offs	0	0
Recoveries	0	0
Provision (Credit)	(12)	(536)
Ending balance	2,545	2,466	2,545	2,466	2,566
Residential real estate mortgage loans
Allowance for Loan Losses
Beginning balance			3,935	2,438	2,438
Charge-offs			0	(24)
Recoveries			111	1
Provision (Credit)			(1,426)	1,822
Ending balance	2,620	4,237	2,620	4,237	3,935
Residential real estate mortgage loans | Mortgage loans
Allowance for Loan Losses
Beginning balance	3,374	3,495	3,935
Charge-offs	0	(24)
Recoveries	110	0
Provision (Credit)	(864)	766
Ending balance	2,620	4,237	2,620	4,237	3,935
Commercial, industrial and agricultural loans
Allowance for Loan Losses
Beginning balance	13,073	14,055	12,722	12,838	12,838
Charge-offs	(554)	(1,708)	(796)	(1,708)
Recoveries	1	171	12	475
Provision (Credit)	1,038	(160)	1,620	753
Ending balance	13,558	12,358	13,558	12,358	12,722
Real estate construction and land loans
Allowance for Loan Losses
Beginning balance	1,526	821	1,297	740	740
Charge-offs	0	0	0	0
Recoveries	0	0	0	0
Provision (Credit)	(193)	442	36	523
Ending balance	1,333	1,263	1,333	1,263	1,297
Installment/consumer loans
Allowance for Loan Losses
Beginning balance	155	105	106	122	122
Charge-offs	0	0	(4)	0
Recoveries	0	1	0	1
Provision (Credit)	82	16	135	(1)
Ending balance	$ 237	$ 122	$ 237	$ 122	$ 106

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PENSION AND POSTRETIREMENT PLANS Narrative (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018
Defined Benefit Plan Disclosure [Line Items]
Contribution to the plan	$ 0	$ 0
SERP Benefits
Defined Benefit Plan Disclosure [Line Items]
Contribution to the plan	0	0
Distribution from the plan	$ 56	$ 56

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PENSION AND POSTRETIREMENT PLANS - Components of Net Periodic Benefit Cost (Credit): (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Pension Benefits
Components of net periodic benefit cost and other amounts recognized in Other Comprehensive Income
Service cost	$ 272	$ 325	$ 545	$ 650
Interest cost	225	198	450	395
Expected return on plan assets	(607)	(625)	(1,215)	(1,250)
Amortization of net loss	130	82	260	165
Amortization of prior service credit	(19)	(19)	(38)	(38)
Amortization of transition obligation	0	0	0	0
Net periodic benefit (credit) cost	1	(39)	2	(78)
SERP Benefits
Components of net periodic benefit cost and other amounts recognized in Other Comprehensive Income
Service cost	66	72	131	145
Interest cost	36	31	73	63
Expected return on plan assets	0	0	0	0
Amortization of net loss	17	31	35	61
Amortization of prior service credit	0	0	0	0
Amortization of transition obligation	0	1	0	2
Net periodic benefit (credit) cost	$ 119	$ 135	$ 239	$ 271

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SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE - Narrative (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Securities sold under agreements to repurchase
Repurchase agreements	$ 945	$ 539
Carrying amount of U.S. GSE residential collateralized mortgage obligations and U.S. GSE residential mortgage-backed securities	2,200	$ 2,400
Maturing during the third quarter
Securities sold under agreements to repurchase
Repurchase agreements	$ 900
U.S. GSE residential collateralized mortgage obligations
Securities sold under agreements to repurchase
Percentage of investment securities held as collateral	18.00%	18.00%
U.S. GSE residential mortgage-backed securities
Securities sold under agreements to repurchase
Percentage of investment securities held as collateral	82.00%	82.00%

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FEDERAL HOME LOAN BANK ADVANCES - Contractual Maturities and Weighted Average Interest Rates of FHLB Advances (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Contractual Maturity, Amount
2019	$ 240,000	$ 240,433
Total FHLB advances	$ 240,000	$ 240,433
Weighted Average Rate
2019 (as a percent)	2.46%	2.72%
Weighted Average Rate for total FHLB advances (as a percent)	2.46%	2.72%

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FEDERAL HOME LOAN BANK ADVANCES - Narrative (Details) - USD ($) $ in Billions	Jun. 30, 2019	Dec. 31, 2018
FEDERAL HOME LOAN BANK ADVANCES.
Advances collateralized amount	$ 1.3	$ 1.3
Maximum borrowing amount from FHLB term advances	$ 1.4

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SUBORDINATED DEBENTURES (Details) - USD ($) $ in Thousands	1 Months Ended	6 Months Ended
	Sep. 30, 2015	Jun. 30, 2019	Dec. 31, 2018
Debt Instrument [Line Items]
Fixed-to-floating rate subordinated debentures	$ 80,000
Subordinated debentures, net		$ 78,850	$ 78,781
Subordinated Debentures | Callable Notes After Five Years
Debt Instrument [Line Items]
Fixed-to-floating rate subordinated debentures	$ 40,000
Debt Instrument, Term		5 years
Fixed annual interest rate	5.25%
Debt instrument variable rate description	three-month LIBOR
Basis points	3.60%
Subordinated Debentures | Callable Notes After Ten Years
Debt Instrument [Line Items]
Fixed-to-floating rate subordinated debentures	$ 40,000
Debt Instrument, Term		10 years
Fixed annual interest rate	5.75%
Debt instrument variable rate description	three-month LIBOR
Basis points	3.45%

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DERIVATIVES - Interest Rate Swaps Designated as Cash Flow Hedges (Details) - Interest rate swaps - Derivative designated as a cash flow hedge - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2019	Dec. 31, 2018
Derivatives
Notional amounts	$ 290,000	$ 240,000
Weighted average pay rates (as a percent)	1.82%	1.84%
Weighted average receive rates (as a percent)	2.39%	2.77%
Weighted average maturity	2 years 3 months 18 days	2 years 11 days

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DERIVATIVES - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018	Dec. 31, 2018
Derivative [Line Items]
Derivative liability position net	$ 0		$ 0
Derivative asset position net	12,600		12,600
Collateral received against obligations in net asset position	12,300		12,300
Collateral posted in net liability position	0		0
Interest rate swaps | Derivative designated as a cash flow hedge
Derivative [Line Items]
Notional amounts	290,000		290,000		$ 240,000
Interest rate swaps | Derivative designated as a cash flow hedge | Federal Home Loan Bank of New York
Derivative [Line Items]
Interest (income) expense on derivative	$ (466)	$ (344)	(1,000)	$ (279)
Reduction to interest expense			(466)
Reclassified estimated decrease in interest expense			$ 400

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DERIVATIVES - Net Gains (Losses) Relating to the Cash Flow Derivative Instruments (Details) - Derivative designated as a cash flow hedge - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Net gains (losses) recorded in accumulated other comprehensive income and the Consolidated Statements of Income
Interest rate contracts, Amount of gain reclassified from OCI to interest expense	$ 466	$ 344	$ 1,022	$ 279
Interest rate contracts, Amount of loss recognized in other non-interest income (Ineffective Portion)	0	0	0	0
Accumulated Other Comprehensive Loss
Net gains (losses) recorded in accumulated other comprehensive income and the Consolidated Statements of Income
Interest rate contracts, Amount of gain (loss) recognized in OCI (Effective Portion)	$ (3,106)	$ 1,020	$ (4,703)	$ 3,847

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DERIVATIVES - Cash Flow Hedges included in the Consolidated Balance Sheets (Details) - Derivative designated as a cash flow hedge - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Interest rate swaps | Federal Home Loan Bank of New York | Forward contract
Derivative Instruments, Gain (Loss) [Line Items]
Notional Amount	$ 50,000	$ 0
Fair Value Asset	0	0
Fair Value Liability	(1,432)	0
Interest rate swaps related to FHLB advances
Derivative Instruments, Gain (Loss) [Line Items]
Notional Amount	240,000	240,000
Fair Value Asset	995	4,239
Fair Value Liability	$ (1,159)	$ (4)

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DERIVATIVES - Non-Designated Hedges (Details) - Interest rate swaps - Non-Designated Hedges - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2019	Dec. 31, 2018
Derivatives
Notional amounts	$ 329,103	$ 193,401
Weighted average pay rates (as a percent)	4.38%	4.52%
Weighted average receive rates (as a percent)	4.38%	4.52%
Weighted average maturity	12 years 22 days	12 years 3 months
Fair value of combined interest rate swaps	$ 0	$ 0

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LEASES (Details) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2019 USD ($)	Jun. 30, 2019 USD ($)
Lease cost
Operating lease cost	$ 1,688	$ 3,351
Sublease income	(15)	(39)
Total lease cost	$ 1,673	3,312
Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases		3,441
Operating right-of-use assets obtained in exchange for lease liabilities		$ 39,825
Weighted-average remaining lease term-operating leases	8 years 2 months 12 days	8 years 2 months 12 days
Weighted-average discount rate-operating leases	3.41%	3.41%
Renewal options		true
Minimum
Lease cost
Renewal term	5 years	5 years
Maximum
Lease cost
Renewal term	10 years	10 years

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LEASES - Maturities of operating lease liabilities (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Dec. 31, 2018
Maturities of operating lease liabilities as of June 30, 2019
2019	$ 3,088
2020	6,046
2021	5,946
2022	5,742
2023	4,759
Thereafter	21,124
Total operating lease payments	46,705
Less: Interest	(6,442)
Present value of operating lease liabilities	$ 40,263
Maturities of operating lease liabilities as of December 31, 2018
2019		$ 7,248
2020		6,504
2021		6,185
2022		5,903
2023		4,695
Thereafter		18,687
Total operating lease payments		$ 49,222

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ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME - Components and Related Income Tax Effects (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME.
Unrealized holding gains (losses) on available for sale securities	$ 8,489	$ (4,231)	$ 14,020	$ (12,818)
Reclassification adjustment for losses (gains) realized in income	(201)	7,921	(201)	7,921
Income tax effect	(2,417)	(1,074)	(4,030)	1,425
Net change in unrealized gains (losses) on available for sale securities	5,871	2,616	9,789	(3,472)
Reclassification adjustment for amortization realized in income	129	95	257	190
Income tax effect	(38)	(27)	(76)	(55)
Net change in post-retirement obligation	91	68	181	135
Change in fair value of derivatives used for cash flow hedges	(3,106)	1,020	(4,703)	3,847
Reclassification adjustment for gains realized in income	(466)	(344)	(1,022)	(279)
Income tax effect	1,042	(197)	1,670	(1,038)
Net change in unrealized (losses) gains on cash flow hedges	(2,530)	479	(4,055)	2,530
Other comprehensive income (loss)	$ 3,432	$ 3,163	$ 5,915	$ (807)

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ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME - Summary of the Accumulated Other Comprehensive Loss Balances, Net of Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Unrealized (losses) gains on available for sale securities
Balance at the beginning of the period			$ 11,685
Current Period Change	$ 5,871	$ 2,616	9,789	$ (3,472)
Balance at the end of the period	1,896		1,896
Unrealized (losses) gains on pension benefits
Balance at the beginning of the period			(6,365)
Current Period Change	91	68	181	135
Balance at the end of the period	(6,184)		(6,184)
Unrealized gains (losses) on cash flow hedges
Balance at the beginning of the period			2,938
Current Period Change	(2,530)	479	(4,055)	2,530
Balance at the end of the period	(1,117)		(1,117)
Accumulated other comprehensive (loss) gain, net of income taxes
Balance at the beginning of the period			(15,112)
Current Period Change	3,432	$ 3,163	5,915	$ (807)
Balance at the end of the period	$ (9,197)		$ (9,197)

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ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME - Reclassifications out of Accumulated Other Comprehensive (Loss) Income (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2019	Jun. 30, 2018	Jun. 30, 2019	Jun. 30, 2018
Amounts Reclassified from AOCI
Interest expense	$ 10,835	$ 7,622	$ 21,027	$ 14,447
Income tax (expense) benefit	(2,859)	(1,701)	(6,274)	(4,882)
Net income	10,653	6,743	23,580	18,816
Realized (losses) gains on sale of available for sale securities
Amounts Reclassified from AOCI
Net securities gains (losses)	201	(7,921)	201	(7,921)
Amount Reclassified from Accumulated Other Comprehensive Income
Amounts Reclassified from AOCI
Total reclassifications, before income tax	539	(7,672)	966	(7,832)
Income tax (expense) benefit	(157)	2,231	(282)	2,278
Net income	382	(5,441)	684	(5,554)
Amount Reclassified from Accumulated Other Comprehensive Income | Prior service credit
Amounts Reclassified from AOCI
Other operating expenses	19	19	38	38
Amount Reclassified from Accumulated Other Comprehensive Income | Transition obligation
Amounts Reclassified from AOCI
Other operating expenses		(1)		(2)
Amount Reclassified from Accumulated Other Comprehensive Income | Actuarial losses
Amounts Reclassified from AOCI
Other operating expenses	(147)	(113)	(295)	(226)
Amount Reclassified from Accumulated Other Comprehensive Income | Realized gains (losses) on cash flow hedges
Amounts Reclassified from AOCI
Interest expense	$ 466	$ 344	$ 1,022	$ 279

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RECENT ACCOUNTING PRONOUNCEMENTS - ASU (Details) - USD ($) $ in Thousands	Jun. 30, 2019	Jan. 01, 2019
Leases
Operating lease right-of-use assets	$ 37,619
Operating Lease, Liability	$ 40,263
ASU 2016-02 | Measurement Period Adjustments
Leases
Operating lease right-of-use assets		$ 39,000
Operating Lease, Liability		$ 39,000