Quarterly report pursuant to Section 13 or 15(d)

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

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ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
 9 Months Ended
Sep. 30, 2017
Equity [Abstract]  
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The change in accumulated other comprehensive income (loss) for the three and nine months ended September 30, 2017 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 Hedge
 
Unrealized Gains (Losses) on BOLI
 
Total
Balance - June 30, 2017
$
7,733

 
$
3,033

 
$
(5,487
)
 
$
(1,271
)
 
$
4,008

Other comprehensive income (loss)
(2,729
)
 
—

 
41

 
—

 
(2,688
)
Amounts reclassified from accumulated other comprehensive income
(119
)
 
(163
)
 
189

 
84

 
(9
)
Net current period other comprehensive income (loss)
(2,848
)
 
(163
)
 
230

 
84

 
(2,697
)
Balance - September 30, 2017
$
4,885

 
$
2,870

 
$
(5,257
)
 
$
(1,187
)
 
$
1,311


 
Unrealized
Gains (Losses)
on AFS
Securities
 
Unrealized Gain
for AFS
Securities
Transferred to
HTM
 
Change in Fair
Value of Cash
Flow Hedge
 
Unrealized Gains (Losses) on BOLI
 
Total
Balance - December 31, 2016
$
(542
)
 
$
3,377

 
$
(5,179
)
 
$
(1,465
)
 
$
(3,809
)
Other comprehensive income (loss)
5,935

 
—

 
(766
)
 
—

 
5,169

Amounts reclassified from accumulated other comprehensive income
(508
)
 
(507
)
 
688

 
278

 
(49
)
Net current period other comprehensive income (loss)
5,427

 
(507
)
 
(78
)
 
278

 
5,120

Balance - September 30, 2017
$
4,885

 
$
2,870

 
$
(5,257
)
 
$
(1,187
)
 
$
1,311

 
The change in accumulated other comprehensive income (loss) for the three and nine months ended September 30, 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 Hedge
 
Total
Balance - June 30, 2016
$
14,412

 
$
3,853

 
$
(9,366
)
 
$
8,899

Other comprehensive income (loss)
1,121

 
—

 
(78
)
 
1,043

Amounts reclassified from accumulated other comprehensive income
—

 
(237
)
 
154

 
(83
)
Net current period other comprehensive income (loss)
$
1,121

 
$
(237
)
 
$
76

 
$
960

Balance - September 30, 2016
$
15,533

 
$
3,616

 
$
(9,290
)
 
$
9,859





 
 
Unrealized Gains
(Losses) on AFS
Securities
 
Unrealized Gain
for AFS
Securities
Transferred to
HTM
 
Change in Fair
Value of Cash
Flow Hedge
 
Total
Balance - December 31, 2015
$
7,777

 
$
4,432

 
$
(5,957
)
 
$
6,252

Other comprehensive income (loss)
7,851

 
—

 
(3,766
)
 
4,085

Amounts reclassified from accumulated other comprehensive income
(95
)
 
(816
)
 
433

 
(478
)
Net current period other comprehensive income (loss)
7,756

 
(816
)
 
(3,333
)
 
3,607

Balance - September 30, 2016
$
15,533

 
$
3,616

 
$
(9,290
)
 
$
9,859


 
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 $184,000 and $782,000 for the three and nine months ended September 30, 2017, respectively, and $0 and $145,000 for the three and nine months ended September 30, 2016, respectively, related to the sale of securities. The tax effects of these transactions during the three and nine months ended September 30, 2017 were $64,000 and $274,000, respectively, and were $0 and $51,000 during the three and nine months ended September 30, 2016, respectively, which amounts were included as a component of income tax expense.
 
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 $251,000 and $780,000 for the three and nine months ended September 30, 2017, respectively, and $365,000 and $1.3 million for the three and nine months ended September 30, 2016, respectively. The tax effect of these transactions during the three and nine months ended September 30, 2017 were $88,000 and $273,000, respectively, and were $128,000 and $439,000 for the three and nine months ended September 30, 2016, 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 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 reported net interest expense of $291,000 and $1.1 million for the three and nine months ended September 30, 2017, respectively, and $237,000 and $666,000 for the three and nine months ended September 30, 2016, respectively. The tax effects of these transactions during the three and nine months ended September 30, 2017 were $102,000 and $370,000, respectively, and were $83,000 and $233,000 during the three and nine months ended September 30, 2016, 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 $84,000 and $278,000 for the three and nine months ended September 30, 2017, respectively, and $0 for the both three and nine months ended September 30, 2016.