15.

New Authoritative Accounting Pronouncements

Accounting Standards Adopted in

2018:

February 2018,

the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)

No.

2018

02,

“Income Statement – Reporting Comprehensive Income (Topic

220

).”

As a result of the Tax Cuts and Jobs Act (the “TCJA”), concerns arose regarding the guidance which requires deferred tax assets and liabilities to be adjusted for the effect of a change in tax laws or rates with the effect included in income from continuing operations in the reporting period that includes the enactment date. The amendments in this ASU require a reclassification for stranded tax effects from accumulated other comprehensive income to retained earnings, furthermore eliminating the stranded tax effects resulting from the TCJA. The amount of the reclassification is the difference between the previous corporate income tax rate of

35%

and the newly enacted corporate income tax rate of

21%.

The amendments of this ASU are effective for fiscal years beginning after

December 15, 2018,

and interim periods within those fiscal years, with early adoption permitted in any interim period or fiscal year before the effective date. We have elected to early adopt this

guidance as of

January 1, 2018.

Our Consolidated Statements of Financial Condition reflect adoption of this ASU and reclassification of

$2.1

million in stranded tax effects from accumulated other comprehensive income to retained earnings. See Note

“Income Taxes” for additional information.

August

2016,

the FASB issued ASU

No.

2016

“Classification of Certain Cash Receipts and Cash Payments”, to clarify how certain cash receipts and cash payments are presented and classified in the statements of cash flows. The amendments are intended to reduce diversity in practice by clarifying whether the following items should be categorized as operating, investing or financing in the statement of cash flows: (i) debt prepayments and extinguishment costs, (ii) settlement of

zero

-coupon debt, (iii) settlement of contingent consideration, (iv) insurance proceeds, (v) settlement of corporate-owned life insurance (COLI) and bank-owned life insurance (BOLI) policies, (vi) distributions from equity method investees, (vii) beneficial interests in securitization transactions, and (viii) receipts and payments with aspects of more than

one

class of cash flows. The ASU will be effective for fiscal years, and interim periods within those fiscal years, beginning after

December 15, 2017.

Early adoption is permitted. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. An entity that elects early adoption must adopt all of the amendments in the same period. This ASU was adopted on

January 1, 2018

and did

not

have a significant impact on the presentation of our cash flows

January

2016,

FASB issued ASU

No.

2016

“Financial Instruments” which requires an entity to: (i) measure equity investments at fair value through net income, with certain exceptions; (ii) present in other comprehensive income the changes in instrument-specific credit risk for financial liabilities measured using the fair value option; (iii) present financial assets and financial liabilities by measurement category and form of financial asset; (iv) calculate the fair value of financial instruments for disclosure purposes based on an exit price and; (v) assess a valuation allowance on deferred tax assets related to unrealized losses of available for sale debt securities in combination with other deferred tax assets. The ASU provides an election to subsequently measure certain nonmarketable equity investments at cost less any impairment and adjusted for certain observable price changes. The ASU also requires a qualitative impairment assessment of such equity investments and amends certain fair value disclosure requirements. This ASU became effective for us on

January 1, 2018.

The adoption of the guidance resulted in a cumulative-effect adjustment totaling

$0.8

million and did

not

have a significant impact on our results of operations, financial condition and cash flows

May 2014,

the FASB issued ASU

2014

09,

“Revenue from Contracts with Customers (Topic

606

)”. This ASU establishes a comprehensive revenue recognition standard for virtually all industries under GAAP, including those that previously followed industry-specific guidance such as real estate, construction and software industries. The revenue standard’s core principle is built on the contract between a vendor and a customer for the provision of goods and services. It attempts to depict the exchange of rights and obligations between the parties in the pattern of revenue recognition based on the consideration to which the vendor is entitled. The guidance in this ASU for public companies is effective for the annual periods beginning after

December 15, 2016,

including interim periods therein. In

August 2015,

the FASB approved a

one

-year delay of the effective date of this standard to reporting periods beginning after

December 15, 2017.

This ASU allows for either full retrospective adoption or modified retrospective adoption. This ASU became effective for us on

January 1, 2018.

We adopted this standard through the modified retrospective transition method

. The modified retrospective method requires application of ASU

2014

to uncompleted contracts at the date of adoption; however, periods prior to the date of adoption have

not

been retrospectively revised as the impact of the new standard on uncompleted contracts as the date of adoption was

not

material as such a cumulative effective adjustment to opening retained earnings was

not

deemed necessary.

Topic

606

does

not

apply to the majority of our revenue streams which are primarily comprised of interest and dividend income and associated fees within those revenue streams. The revenue streams derived by the Company that are within the scope of Topic

606

are primarily certain banking service fees, including wire transfer fees, ATM fees, account maintenance fees, overdraft fees and other deposit fees. We generally satisfy our performance obligations on contracts with customers as services are rendered, and the transaction prices are typically fixed and charged either on a periodic basis or based on activity. Being that performance obligations are satisfied as services are rendered and the transaction prices are fixed, there is little judgment involved in applying Topic

606

that significantly affects the determination of the amount and timing of revenue from contracts with customers. Additionally, the Company will receive revenue from the sale of investment products through a

third

party as part of a revenue sharing agreement. This revenue is included in “Other Income” in the Consolidated Statements of Income. These fees are remitted to the Company monthly as our performance obligation is satisfied. We have evaluated the nature of our contracts with customers and determined that further disaggregation of revenue from contracts with customers into more granular categories beyond what is present in the Consolidated Statements of Income was

not

necessary.

Accounting Standards Pending Adoption:

August 2018,

the FASB issued ASU

No.

2018

14,

“Compensation – Retirement Benefits – Defined Benefit Plans – General (Subtopic

715

)”

providing targeted improvements to the disclosures required for Defined Benefit Plans. The amendments in in this Update are effective for fiscal years ended after

December 15, 2020.

Early adoption is permitted. The amendments are to be applied on a retrospective basis to all periods presented.

We are currently evaluating the impact of adopting this new guidance on our disclosures.

August 2018,

the FASB issued ASU

No.

2018

13,

“Fair Value Measurement (Topic

820

)”. The amendments in this Update modify the disclosure requirements on fair value measurements in Topic

820.

The amendments in in this Update are effective for fiscal years, and interim periods within those fiscal years beginning after

December 15, 2019.

Early adoption is permitted. The amendments are to be applied on a retrospective basis to all periods presented.

We are currently evaluating the impact of adopting this new guidance on our disclosures.

August 2017,

the FASB issued ASU

No.

2017

12,

“Derivatives and Hedging (Topic

815

)”

providing targeted improvements to the accounting for hedging activities, which is effective

January 1, 2019,

with early adoption permitted in any interim period or fiscal year before the effective date. The guidance introduces a number of amendments, several of which are optional, that are designed to simplify the application of hedge accounting, improve financial statement transparency and more closely align hedge accounting with an entity’s risk management strategies. This ASU eliminates the requirement to separately measure and report hedge ineffectiveness and changes the presentation so that all items that affect earnings are in the same income statement line as the hedged item.

We are currently evaluating the impact of adopting this new guidance on our consolidated results of operations, financial

condition and cash flows.

March 2017,

the FASB issued ASU

No.

2017

08,

“Premium Amortization on Purchased Callable Debt Securities” which shortens the amortization period for premiums on purchased callable debt securities to the earliest call date, rather than amortizing over the full contractual term. The ASU does

not

change the accounting for securities held at a discount. The amendments in this ASU require companies to reset the effective yield using the payment terms of the debt security if the call option is

not

exercised on the earliest call date. If the security has additional future call dates, any excess of the amortized cost basis over the amount repayable by the issuer at the next call date should be amortized to the next call date. The amendments in this update are effective for fiscal years beginning after

December 15, 2018,

including interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. The guidance is

not

expected to have an impact on the Company's financial positions, results of operations or disclosures.

January 2017,

the FASB issued ASU

No.

2017

04,

“Intangibles - Goodwill and Other (Topic

350

): Simplifying the Test for Goodwill Impairment.” The ASU simplifies the subsequent measurement of goodwill and eliminates Step

from the goodwill impairment test. Under this ASU, the Company should perform its goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An impairment charge should be recognized for the amount by which the carrying amount exceeds the reporting unit's fair value. The impairment charge is limited to the amount of goodwill allocated to that reporting unit. The amendments in this update are effective for fiscal years beginning after

December 15, 2019,

including interim periods within those fiscal years. Early adoption is permitted for goodwill impairment tests performed on testing dates after

January 1, 2017.

The guidance is

not

expected to have a significant impact on the Company's financial positions, results of operations or disclosures.

June 2016,

the FASB issued ASU

No.

2016

13,

“Financial Instruments – Credit Losses” which sets forth a “current expected credit loss” (“CECL”) model which requires the Company to measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions and reasonable supportable forecasts. This replaces the existing incurred loss model and will apply to the measurement of credit losses on financial assets measured at amortized cost and to some off-balance sheet credit exposures. This ASU will be effective for fiscal years beginning after

December 15, 2019,

including interim periods within those fiscal years. The Company has been collecting and evaluating data and system requirements to implement this standard. Management has developed inter-departmental steering and working committees to evaluate and implement CECL. We have chosen a vendor solution to model CECL results and are in the beginning stages of implementing this solution. The adoption of this update could have a material impact on the Company’s consolidated results of operations and financial condition. The extent of the impact is still unknown and will depend on many factors, such as the composition of the Company’s loan portfolio and expected loss history at adoption.

February 2016,

the FASB issued ASU

No.

2016

02,

“Leases”. From the lessee's perspective, the new standard establishes a right-of-use (“ROU”) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than

months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement for a lessee. From the lessor's perspective, the new standard requires a lessor to classify leases as either sales-type, finance or operating. A lease will be treated as a sale if it transfers all of the risks and rewards, as well as control of the underlying asset, to the lessee. If risks and rewards are conveyed without the transfer of control, the lease is treated as a financing. If the lessor doesn’t convey risks and rewards or control, an operating lease results. The new standard is effective for fiscal years beginning after

December 15, 2018,

including interim periods within those fiscal years. A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements, with certain practical expedients available. A modified retrospective transition approach is required to be applied for leases in existence as of the date of initial application. Reporting entities

may

elect to apply the transition approach either as of the beginning of the earliest period presented in the financial statements, or as of the beginning of the period of adoption. The Company has

not

adopted the new accounting policy as of the filing date. The Company has yet to make an election on the method of adoption

or which practical expedients, if any, will be elected. Our operating leases relate primarily to office space and bank branches. Under current accounting standards, substantially all of the Company’s leases are considered operating leases and, as such, are

not

recognized on the Company’s Consolidated Balance Sheet. Based on our current lease portfolio, upon adoption of the new accounting standard, we anticipate recognizing a lease liability and related right-of-use asset on our balance sheet.

Management is continuing to evaluate the Company’s outstanding inventory of leases and determining the effect of recognizing operating leases on the Consolidated Statements of Financial Condition which is expected to be material.

However, the final impact of the standard will depend on the company’s leases composition as of the adoption date.