8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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FORM 8-K

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CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): December 28, 2010

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StellarOne Corporation

(Exact name of registrant as specified in its charter)

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Commission File Number: 000-22283

Virginia (State or other jurisdiction of incorporation) 54-1829288 (IRS Employer Identification No.)

590 Peter Jefferson Parkway, Suite 250

Charlottesville, Virginia 22911

(Address of principal offices, including zip code)


(434) 964-2211
(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 8.01.  Other Events.

On January 5, 2011, the Company announced an agreement with one of its primary mortgage investors to resolve repurchase and make-whole (indemnification) claims involving certain residential mortgage loans sold by StellarOne’s Wholesale and Retail Mortgage Division prior to 2009.  A copy of the press release in which the Company announced the agreement is attached hereto as Exhibit 99.1 and incorporated herein by reference.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

The following exhibit is filed herewith:

Exhibit
Number		Description
	99.1	Press Release dated January 5, 2011 of StellarOne Corporation

EX-99.1

FOR IMMEDIATE RELEASE

Contact:

 Jeffrey W. Farrar

 Executive Vice President and CFO

 (434) 964-2217

 jfarrar@stellarone.com

STELLARONE CORPORATION ANNOUNCES AGREEMENT TO RESOLVE INDEMNIFICATION AND REPURCHASE CLAIMS WITH A PRIMARY INVESTOR

Charlottesville, VA, January 5, 2011 – StellarOne Corporation (NASDAQ: STEL) (StellarOne) today announced an agreement with one of its primary mortgage investors to resolve repurchase and make-whole  (indemnification) claims involving certain residential mortgage loans sold by StellarOne’s  Wholesale and Retail Mortgage Divisions prior to 2009. This settlement resolved approximately 80% of current claims outstanding with all investors, and extinguishes all outstanding and potential mortgage repurchase and make-whole claims arising out of any alleged breaches of selling representations and warranties related to loans sold by StellarOne or its legacy companies to this particular investor prior to January 1, 2009. The agreement provided for a cash payment to the bank investor of $1.45 million, which wa s made on December 28, 2010. A significant portion of this settlement had been previously reserved, and the Company expects indemnification losses for fourth quarter to be similar to the level recorded in the third quarter.

“This action mitigates current and future off-balance sheet repurchase and indemnification risk, and is in the best interest of our shareholders,” said StellarOne President and Chief Executive Officer O. R Barham, Jr. “The preponderance of our indemnification claims have arisen from pre-2009 mortgage production that was sold to this particular investor through one of our legacy companies.”

About StellarOne

StellarOne Corporation is a traditional community bank, offering a full range of business and consumer banking services, including trust and wealth management services. Through the activities of its sole subsidiary, StellarOne Bank, StellarOne operates 56 full-service financial centers, one loan production office, and 66 ATMs serving the New River Valley, Roanoke Valley, Shenandoah Valley, and Central and North Central Virginia.

Forward-Looking Statements

In addition to historical information, this press release contains forward-looking statements. The forward-looking statements are subject to certain risks and uncertainties, which could cause actual results to differ materially from historical results, or those anticipated. When we use words such as “believes”, “expects”, “anticipates” or similar expressions, we are making forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management’s analysis only as of the date thereof. StellarOne wishes to caution the reader that factors, such as those listed below, in some cases have affected and could affect StellarOne’s actual results, causing actual results to differ materially from those in any forward-looking statement. T hese factors include: (i) expected cost savings from StellarOne’s acquisitions and dispositions, (ii) competitive pressure in the banking industry or in StellarOne’s markets may increase significantly, (iii) changes in the interest rate environment may reduce margins, (iv) general economic conditions, either nationally or regionally, may be less favorable than expected, resulting in, among other things, credit quality deterioration, (v) changes may occur in banking legislation and regulation, (vi) changes may occur in general business conditions, (vii) changes may occur in the securities markets and (viii) the impact of governmental restrictions on entities participating in the U.S. Treasury Department Capital Purchase Program. Please refer to StellarOne’s filings with the Securities and Exchange Commission for additional information, which may be accessed at www.StellarOne.com.