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Derivative Instruments
 3 Months Ended
Mar. 31, 2017
Derivative Instruments [Abstract]  
Derivative Instruments
Note 9. Derivative Instruments

Financial derivatives are reported at fair value in other assets or other liabilities. The accounting for changes in the fair value of a derivative depends on whether it has been designated and qualifies as part of a hedging relationship. For derivatives not designated as hedges, the gain or loss is recognized in current period earnings.

Non-hedge derivatives

Pinnacle Financial enters into interest rate swaps (swaps) to facilitate customer transactions and meet their financing needs. Upon entering into these instruments to meet customer needs, Pinnacle Financial enters into offsetting positions in order to minimize the risk to Pinnacle Financial. These swaps are derivatives, but are not designated as hedging instruments. A summary of Pinnacle Financial's interest rate swaps related to customers as of March 31, 2017 and December 31, 2016 is included in the following table (in thousands):

  
March 31, 2017
  
December 31, 2016
 
  
Notional
Amount
  
Estimated
Fair Value
  
Notional
Amount
  
Estimated
Fair Value
 
Interest rate swap agreements:
            
Pay fixed / receive variable swaps
 
$
664,946
  
$
14,856
  
$
666,572
  
$
16,004
 
Pay variable / receive fixed swaps
  
664,946
   
(14,978
)
  
666,572
   
(16,138
)
Total
 
$
1,329,892
  
$
(122
)
 
$
1,333,144
  
$
(134
)
 
Hedge derivatives

A summary of Pinnacle Financial's cash flow hedge relationships as of March 31, 2017 and December 31, 2016 are as follows (in thousands):

              
March 31, 2017
  
December 31, 2016
 
  
Forecasted
Notional
Amount
 
Receive Rate
 
Pay
Rate
 
Term(1)
 
Asset/
(Liabilities)
  
Unrealized Loss in Accumulated Other Comprehensive Income
  
Asset/ (Liabilities)
  
Unrealized
Loss in Accumulated
Other Comprehensive Income
 
Interest Rate Swap
 
$
33,000
 
3 month LIBOR
  
2.265
%
April 2016-April 2020
 
$
(579
)
 
$
(352
)
 
$
(727
)
 
$
(442
)
Interest Rate Swap
  
33,000
 
3 month LIBOR
  
2.646
%
April 2016-April 2022
  
(1,140
)
  
(693
)
  
(1,304
)
  
(792
)
Interest Rate Swap
  
33,000
 
3 month LIBOR
  
2.523
%
Oct. 2016-Oct. 2020
  
(910
)
  
(553
)
  
(1,081
)
  
(657
)
Interest Rate Swap
  
33,000
 
3 month LIBOR
  
2.992
%
Oct. 2017-Oct. 2021
  
(1,160
)
  
(705
)
  
(1,200
)
  
(729
)
Interest Rate Swap
  
34,000
 
3 month LIBOR
  
3.118
%
April 2018-July 2022
  
(1,201
)
  
(730
)
  
(1,222
)
  
(743
)
Interest Rate Swap
  
34,000
 
3 month LIBOR
  
3.158
%
July 2018- Oct. 2022
  
(1,161
)
  
(706
)
  
(1,198
)
  
(728
)
  
$
200,000
          
$
(6,151
)
 
$
(3,739
)
 
$
(6,732
)
 
$
(4,091
)
                           
(1)
No cash will be exchanged prior to the beginning of the term.

The following outlines the interest rate swap agreements in place at March 31, 2017 and December 31, 2016 (in thousands):

              
March 31, 2017
  
December 31, 2016
 
  
Forecasted
Notional
Amount
  
Receive
Rate
 
Pay
Rate
Term(2)
 
Asset/
(Liabilities)
  
Unrealized
Gain in Accumulated Other Comprehensive Income
  
Asset/
(Liabilities)
  
Unrealized Gain (Loss) in Accumulated Other Comprehensive Income
 
Interest Rate Swap
 
$
27,500
   
2.090
%
1 month LIBOR
July 2014 - July 2021
 
$
274
  
$
167
  
$
395
  
$
240
 
Interest Rate Swap
  
25,000
   
2.270
%
1 month LIBOR
July 2014 - July 2022
  
468
   
284
   
610
   
371
 
Interest Rate Swap
  
27,500
   
2.420
%
1 month LIBOR
July 2014 - July 2023
  
713
   
433
   
874
   
531
 
Interest Rate Swap
  
30,000
   
2.500
%
1 month LIBOR
July 2014 - July 2024
  
750
   
456
   
900
   
547
 
Interest Rate Swap
  
-
   
1.048
%
1 month LIBOR
Aug. 2015-Aug. 2018
  
-
   
-
   
-
   
-
 
Interest Rate Swap
  
-
   
1.281
%
1 month LIBOR
Aug. 2015-Aug. 2019
  
-
   
-
   
-
   
-
 
Interest Rate Swap
  
15,000
   
1.470
%
1 month LIBOR
Aug. 2015-Aug. 2020
  
(125
)
  
(76
)
  
(75
)
  
(46
)
  
$
125,000
          
$
2,080
  
$
1,264
  
$
2,704
  
$
1,643
 
The cash flow hedges were determined to be fully effective during the periods presented. 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 accumulated other comprehensive (loss) income, net of tax. If a hedge was deemed to be ineffective, the amount included in accumulated other comprehensive (loss) income would be reclassified into a line item within the statement of income that impacts operating results. The hedge would no longer be considered effective if a portion of the hedge becomes ineffective, the item hedged is no longer in existence or Pinnacle Financial discontinues hedge accounting. Pinnacle Financial expects the hedges to remain fully effective during the remaining terms of the swaps. Pinnacle Financial does not expect any amounts to be reclassified from accumulated other comprehensive (loss) income related to these swaps over the next twelve months.