Annual report pursuant to Section 13 and 15(d)

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

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ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
 12 Months Ended
Dec. 31, 2016
Equity [Abstract]  
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
 
The change in accumulated other comprehensive income (loss) for the year ended December 31, 2016 is summarized as follows, net of tax (dollars in thousands):
 
 
Unrealized
Gains (Losses)
on AFS
Securities
 
Unrealized
Gain for AFS
Securities
Transferred
to HTM
 
Change in Fair
Value of Cash
Flow Hedges
 
Unrealized Gains (Losses) on BOLI
 
Total
Balance - December 31, 2015
$
7,777

 
$
4,432

 
$
(5,957
)
 
$
—

 
$
6,252

Other comprehensive income (loss)
(8,186
)
 
—

 
270

 
(1,728
)
 
(9,644
)
Amounts reclassified from accumulated other comprehensive income
(133
)
 
(1,055
)
 
508

 
263

 
(417
)
Net current period other comprehensive income (loss)
(8,319
)
 
(1,055
)
 
778

 
(1,465
)
 
(10,061
)
Balance - December 31, 2016
$
(542
)
 
$
3,377

 
$
(5,179
)
 
$
(1,465
)
 
$
(3,809
)
 
The change in accumulated other comprehensive income (loss) for the year ended December 31, 2015 is summarized as follows, net of tax (dollars in thousands): 
 
Unrealized Gains
(Losses) on AFS
Securities
 
Unrealized
Gain for AFS
Securities
Transferred
to HTM
 
Change in Fair
Value of Cash
Flow Hedges
 
Total
Balance - December 31, 2014
$
17,439

 
$
—

 
$
(5,184
)
 
$
12,255

Unrealized gain transferred from AFS to HTM
(5,251
)
 
5,251

 
—

 
—

Other comprehensive income (loss)
(3,640
)
 
—

 
(1,394
)
 
(5,034
)
Amounts reclassified from accumulated other comprehensive income
(771
)
 
(819
)
 
621

 
(969
)
Net current period other comprehensive income (loss)
(4,411
)
 
(819
)
 
(773
)
 
(6,003
)
Balance - December 31, 2015
$
7,777

 
$
4,432

 
$
(5,957
)
 
$
6,252

 
The change in accumulated other comprehensive income (loss) for the year ended December 31, 2014 is summarized as follows, net of tax (dollars in thousands):
 
Unrealized Gains
(Losses) on AFS
Securities
 
Change in Fair
Value of Cash
Flow Hedges
 
Total
Balance - December 31, 2013
$
1,192

 
$
(3,382
)
 
$
(2,190
)
Other comprehensive income (loss)
17,089

 
(2,393
)
 
14,696

Amounts reclassified from accumulated other comprehensive income
(842
)
 
591

 
(251
)
Net current period other comprehensive income (loss)
16,247

 
(1,802
)
 
14,445

Balance - December 31, 2014
$
17,439

 
$
(5,184
)
 
$
12,255


 
Reclassifications of unrealized gains (losses) on available for sale securities are reported on the Company’s Consolidated Statements of Income as “Gains on securities transactions, net” with the corresponding income tax effect being reflected as a component of income tax expense. The Company reported gains of $205,000 and $1.5 million for the years ended December 31, 2016 and 2015, related to the sale of securities. Excluding the OTTI recovery of $400,000 in the second quarter of 2014, the Company reported gains of $1.3 million for the year ended December 31, 2014, related to the sale of securities. The tax effect of these transactions during the years ended December 31, 2016, 2015, and 2014 were $72,000, $415,000, and $453,000, respectively, which were included as a component of income tax expense. See Note 3 “Securities” for additional information.

During the second quarter of 2015, the Company transferred securities, which it intends and has the ability to hold until maturity, with a fair value of $201.8 million on the date of transfer, from securities available for sale to securities held to maturity. The securities included net pre-tax unrealized gains of $8.1 million at the date of transfer. Reclassifications of the unrealized gains on transferred securities are reported over time as accretion within interest income on the Company's Consolidated Statements of Income with the corresponding income tax effect being reflected as a component of income tax expense. The Company recorded accretion of $1.6 million and $1.3 million for the years ended December 31, 2016 and 2015, respectively. The tax effect of these transactions during the years ended December 31, 2016 and 2015 were $568,000 and $441,000, respectively, which were included as a component of income tax expense.
 
Reclassifications of the change in fair value of cash flow hedges are reported in interest income and interest expense in the Company’s Consolidated Statements of Income with the corresponding income tax effect being reflected as a component of income tax expense. The Company reported net interest expense of $782,000, $956,000, and $909,000 for the years ended December 31, 2016, 2015, and 2014, respectively. The tax effect of these transactions during the years ended December 31, 2016, 2015, and 2014 were $274,000, $335,000, and $318,000, respectively, which were included as a component of income tax expense.

Reclassifications of unrealized losses on BOLI are reported in salaries and benefits expense on the Company's Consolidated Statements of Income. The Company reported expenses of $263,000 for the year ended December 31, 2016.