OTHER COMPREHENSIVE INCOME (LOSS)

9 Months Ended

Sep. 30, 2019

12.

OTHER COMPREHENSIVE INCOME (LOSS)

Other comprehensive income (loss) included in the consolidated statements of shareholders’ equity consists of unrealized gains and losses on available for sale securities, accretion of unrealized losses on held to maturity securities, the transfer of the held to maturity securities portfolio to available for sale and disproportionate tax effects. The change includes reclassification of net gains or (losses) on sales of securities of $128,000 and $0 for the three months ended September 30, 2019 and 2018, respectively, and $420,000 and $233,000 for the nine months ended September 30, 2019 and 2018, respectively. Reclassifications also includes accretion of unrealized losses on held to maturity securities.

Other comprehensive income (loss) components and related tax effects for the three-month periods are as follows:

	Unrealized Gains (Losses) on Securities Available for Sale			Disproportionate Tax Effect from Securities Available for Sale			Losses on Securities Transferred From Available for Sale to Held to Maturity		Total
September 30, 2019	(Dollars in thousands)
Balances at beginning of period, net of tax	$	1,930		$	(17,110	)	$	-	$	(15,180	)
Other comprehensive income before reclassifications		2,608			—			—		2,608
Accretion of unrealized losses of securities transferred from available for sale to held to maturity recognized in other comprehensive income		—			—			—		—
Transfer of held to maturity securities to available for sale		—			—			—		—
Reclassification adjustment for gains realized in income		(101	)		—			—		(101	)
Net current period other comprehensive income		2,507			—			—		2,507
Balances at end of period, net of tax	$	4,437		$	(17,110	)	$	—	$	(12,673	)

	Unrealized Gains (Losses) on Securities Available for Sale			Disproportionate Tax Effect from Securities Available for Sale			Losses on Securities Transferred From Available for Sale to Held to Maturity			Total
September 30, 2018	(Dollars in thousands)
Balances at beginning of period, net of tax	$	(6,357	)	$	(17,110	)	$	(610	)	$	(24,077	)
Other comprehensive income before reclassifications		(1,741	)		—			—			(1,741	)
Accretion of unrealized losses of securities transferred from available for sale to held to maturity recognized in other comprehensive income		—			—			35			35
Reclassification adjustment for gains realized in income		—			—			—			—
Net current period other comprehensive income		(1,741	)		—			35			(1,706	)
Balances at end of period, net of tax	$	(8,098	)	$	(17,110	)	$	(575	)	$	(25,783	)

Other comprehensive income (loss) components and related tax effects for the nine-month periods are as follows:

	Unrealized Gains (Losses) on Securities Available for Sale			Disproportionate Tax Effect from Securities Available for Sale			Losses on Securities Transferred From Available for Sale to Held to Maturity			Total
September 30, 2019	(Dollars in thousands)
Balances at beginning of period, net of tax	$	(3,781	)	$	(17,110	)	$	(545	)	$	(21,436	)
Other comprehensive income before reclassifications		9,062			—			—			9,062
Accretion of unrealized losses of securities transferred from available for sale to held to maturity recognized in other comprehensive income		—			—			33			33
Transfer of held to maturity securities to available for sale		(512	)		—			512			—
Reclassification adjustment for gains realized in income		(332	)		—			—			(332	)
Net current period other comprehensive income		8,218			—			545			8,763
Balances at end of period, net of tax	$	4,437		$	(17,110	)	$	—		$	(12,673	)

	Unrealized Gains (Losses) on Securities Available for Sale			Disproportionate Tax Effect from Securities Available for Sale			Losses on Securities Transferred From Available for Sale to Held to Maturity			Total
September 30, 2018	(Dollars in thousands)
Balances at beginning of period, net of tax	$	(904	)	$	(17,110	)	$	(671	)	$	(18,685	)
Other comprehensive income before reclassifications		(7,010	)		—						(7,010	)
Accretion of unrealized losses of securities transferred from available for sale to held to maturity recognized in other comprehensive income		—			—			96			96
Reclassification adjustment for gains realized in income		(184	)		—			—			(184	)
Net current period other comprehensive income		(7,194	)		—			96			(7,098	)
Balances at end of period, net of tax	$	(8,098	)	$	(17,110	)	$	(575	)	$	(25,783	)

As of June 30, 2014, management concluded it was more likely than not that the Company’s net deferred tax asset (DTA) would be realized and accordingly determined a full deferred tax valuation allowance was no longer required. Upon reversal of the former full deferred tax valuation allowance as of June 30, 2014, certain disproportionate tax effects are retained in accumulated other comprehensive income (loss).The entire disproportionate tax effect is attributable to valuation allowance expense recorded through other comprehensive income (loss) on the tax benefit of losses sustained on the available for sale securities portfolio while the Company was in a full deferred tax valuation allowance. This valuation allowance was appropriately reversed through continuing operations at June 30, 2014, leaving the original expense in accumulated other comprehensive income (loss), where it will remain in accordance with the Company’s election of the “portfolio approach”, until such time as the Company would cease to have an available for sale security portfolio.

The following are significant amounts reclassified out of each component of accumulated comprehensive income (loss) for the three months ended September 30, 2019:

	Amount Reclassified			Affected Line Item on
	From Accumulated			the Statement Where
Details About Accumulated Other Comprehensive	Other Comprehensive			Net Income is
Income Components	Income			Presented
	(Dollars in thousands)
Realized net gains on the sale of available for sale securities	$	(128	)	Net gains on securities available for sale
		27		Tax expense
Total reclassification during the period	$	(101	)	Net of tax, increase to net income

The following are significant amounts reclassified out of each component of accumulated comprehensive income (loss) for the three months ended September 30, 2018:

	Amount Reclassified		Affected Line Item on
	From Accumulated		the Statement Where
Details About Accumulated Other Comprehensive	Other Comprehensive		Net Income is
Income Components	Income		Presented
	(Dollars in thousands)
Realized net gains on the sale of available for sale securities	$	—	Net gains on securities available for sale
		—	Tax expense
Total reclassification during the period	$	—	Net of tax, increase to net income

The following are significant amounts reclassified out of each component of accumulated comprehensive income (loss) for the nine months ended September 30, 2019:

	Amount Reclassified			Affected Line Item on
	From Accumulated			the Statement Where
Details About Accumulated Other Comprehensive	Other Comprehensive			Net Income is
Income Components	Income			Presented
	(Dollars in thousands)
Realized net gains on the sale of available for sale securities	$	(420	)	Net gains on securities available for sale
		88		Tax expense
		(332	)	Net of tax

The following are significant amounts reclassified out of each component of accumulated comprehensive income (loss) for the nine months ended September 30, 2018:

	Amount Reclassified			Affected Line Item on
	From Accumulated			the Statement Where
Details About Accumulated Other Comprehensive	Other Comprehensive			Net Income is
Income Components	Income			Presented
	(Dollars in thousands)
Realized net gains on the sale of available for sale securities	$	(233	)	Net gains on securities available for sale
		49		Tax expense
Total reclassification during the period	$	(184	)	Net of tax, increase to net income