11.

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, disproportional tax effects and changes in unrealized gains and losses on the postretirement liability. The change includes reclassification of net gains or (losses) and impairment charges on sales of securities of $218,000 and $0 for the three months ended September 30, 2016 and 2015, respectively and $604,000 and $11,000 for the nine months ended September 30, 2016 and 2015, respectively. Reclassifications also include amortization of unrealized gains on postretirement plan and accretion of unrealized loss 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			Unrealized Gains (Losses) from Postretirement Plan			Disproportionate Tax Effect from Postretirement Plan		Total
September 30, 2016	(Dollars in thousands)
Balances at beginning of period, net of tax	$	8,379		$	(17,110	)	$	(889	)	$	469		$	511	$	(8,640	)
Other comprehensive income before reclassifications		(1,227	)		—			—			—			—		(1,227	)
Amortization of unrealized gains of postretirement plan recognized in other comprehensive income		—			—			—			(289	)		—		(289	)
Accretion of unrealized losses of securities transferred from available for sale to held to maturity recognized in other comprehensive income		—			—			47			—			—		47
Reclassification adjustment for gains realized in income		(142	)		—			—			—			—		(142	)
Net current period other comprehensive income		(1,369	)		—			47			(289	)		—		(1,611	)
Balances at end of period, net of tax	$	7,010		$	(17,110	)	$	(842	)	$	180		$	511	$	(10,251	)

	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			Unrealized Gains (Losses) from Postretirement Plan		Disproportionate Tax Effect from Postretirement Plan		Total
September 30, 2015	(Dollars in thousands)
Balances at beginning of period, net of tax	$	(6,362	)	$	(17,110	)	$	—		$	916	$	511	$	(22,045	)
Transfer losses from available for sale to held to maturity		999			—			(999	)		—		—		—
Other comprehensive income before reclassifications		5,138			—			—			—		—		5,138
Reclassification adjustment for gains realized in income		—			—			—			—		—		—
Net current period other comprehensive income		5,138			—			—			—		—		5,138
Balances at end of period, net of tax	$	(225	)	$	(17,110	)	$	(999	)	$	916	$	511	$	(16,907	)

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			Unrealized Gains (Losses) from Postretirement Plan			Disproportionate Tax Effect from Postretirement Plan		Total
September 30, 2016	(Dollars in thousands)
Balances at beginning of period, net of tax	$	(2,492	)	$	(17,110	)	$	(960	)	$	831		$	511	$	(19,220	)
Other comprehensive income before reclassifications		9,895			—			—			—			—		9,895
Amortization of unrealized gains of postretirement plan recognized in other comprehensive income		—			—			—			(651	)		—		(651	)
Accretion of unrealized losses of securities transferred from available for sale to held to maturity recognized in other comprehensive income		—			—			118			—			—		118
Reclassification adjustment for gains realized in income		(393	)		—			—			—			—		(393	)
Net current period other comprehensive income		9,502			—			118			(651	)		—		8,969
Balances at end of period, net of tax	$	7,010		$	(17,110	)	$	(842	)	$	180		$	511	$	(10,251	)

	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			Unrealized Gains (Losses) from Postretirement Plan		Disproportionate Tax Effect from Postretirement Plan		Total
September 30, 2015	(Dollars in thousands)
Balances at beginning of period, net of tax	$	(4,315	)	$	(17,110	)	$	—		$	916	$	511	$	(19,998	)
Transfer losses from available for sale to held to maturity		999			—			(999	)		—		—		—
Other comprehensive income before reclassifications		3,098			—			—			—		—		3,098
Reclassification adjustment for gains realized in income		(7	)		—			—			—		—		(7	)
Net current period other comprehensive income		3,091			—			—			—		—		3,091
Balances at end of period, net of tax	$	(225	)	$	(17,110	)	$	(999	)	$	916	$	511	$	(16,907	)

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) totaling approximately a ($16.6) million loss. Almost 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, 2016:

	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	$	218		Net gains on securities available for sale
		(76	)	Tax expense
		142		Net of tax
Amortization of postretirement benefits prior service costs		445		Reduction in salaries and employee benefits
		(156	)	Tax expense
		289		Net of tax
Total reclassification during the period	$	431		Increase to net income

The following is significant amounts reclassified out of each component of accumulated comprehensive income (loss) for the three months ended September 30, 2015:

	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, 2016:

	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	$	604		Net gains on securities available for sale
		(211	)	Tax expense
		393		Net of tax
Amortization of postretirement benefits prior service costs		1,001		Reduction in salaries and employee benefits
		(350	)	Tax expense
		651		Net of tax
Total reclassification during the period	$	1,044		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, 2015:

	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	$	11		Net gains on securities available for sale
		(4	)	Tax expense
Total reclassification during the period	$	7		Increase to net income