8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 29, 2008

StellarOne Corporation

(Exact name of registrant as specified in its charter)

VIRGINIA	000-22283	54-1829288
(State or other jurisdiction of incorporation)	(Commission File Number)	(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)

n/a

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

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):

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

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

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

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

Item 2.02. Results of Operations and Financial Condition.

On July 29, 2008, StellarOne Corporation issued a press release regarding its results of operations and financial condition for the quarter ended June 30, 2008. The text of the press release is included as Exhibit 99.1 to this report.

Item 8.01. Other Events.

The Corporation’s Board of Directors has declared a quarterly cash dividend in the amount of $0.16 per share. The dividend is payable on August 25, 2008 to shareholders of record on August 4, 2008. The payment represents an annual yield to shareholders of 3.71% based on the closing price of StellarOne’s stock on July 25, 2008 ($17.25).

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits

Exhibit No.	Description
99.1	Press Release

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

STELLARONE CORPORATION
By:	/s/ Jeffrey W. Farrar
	Jeffrey W. Farrar
	Executive Vice President and Chief Financial Officer

Date: July 29, 2008

EXHIBIT INDEX

Exhibit No.	Description
99.1	Press Release

EX-99.1

Exhibit 99.1

NEWS RELEASE

FOR IMMEDIATE RELEASE

Contact:

Jeffrey W. Farrar

Executive Vice President and CFO

(434) 964-2217

jfarrar@stellarone.com

STELLARONE CORPORATION

ANNOUNCES EARNINGS OF $6.1 MILLION FOR SECOND QUARTER 2008

Charlottesville, VA, July 29, 2008 – StellarOne Corporation (NASDAQ: STEL) (StellarOne) today reported second quarter 2008 earnings of $6.1 million, up 35.2% from $4.5 million for the second quarter of 2007, and up sequentially greater than 100% from $2.1 million in the first quarter of 2008. Net income per diluted share was $.27, down 35.7% from $.42 per share for the same period in 2007. StellarOne’s earnings for the second quarter of 2008 produced an annualized return on average assets (ROA) of .81% and an annualized return on average equity (ROE) of 6.72%, compared to prior year ratios of 1.15% and 11.82%, respectively. For the first six months of 2008, net income was $8.2 million, down 3.9% from $8.6 million for the same period in 2007. Net income per diluted share was $.44, down 44.3% from $.79 for the first six months of 2007. ROA and ROE for the six month period was .64% and 5.63%, respectively, compared to 1.08% and 11.31% for the same period in 2007. StellarOne’s year to date operating results include the former Virginia Financial Group, Inc. (VFG) for the entire period, but results from the former FNB Corporation (FNB) are only included from February 28, 2008 forward, representing the period subsequent to consummation of the merger of equals transaction between VFG and FNB. This will impact all comparisons to first quarter 2008 contained herein. Historical 2007 data contained herein reflects only the results of the former VFG prior to merger.

Excluding net-of-tax effects of both the nonrecurring merger expenses of $929 thousand and increase in revenues from the amortization of purchase accounting adjustments of $2.4 million associated with the consummation of the merger, earnings for the second quarter would have been $4.6 million or $.21 per diluted share, an increase in earnings of $104 thousand or 2.3% and decrease in earnings per share of $.21 or 50.0% compared to the second quarter of 2007. ROA and ROE would have been .61% and 5.09%, respectively. Excluding, net-of-tax effects of both the nonrecurring merger expenses of $3.3 million and the net increase in income from the amortization of purchase accounting adjustments of $2.4 million associated with the consummation of the merger, earnings for the six month period would have been $9.1 million or $.48 per diluted share, an increase in earnings of $879 thousand or 10.7% and decrease in earnings per share of $.31 or 39.2% compared to the first six months of 2007. ROA and ROE would have been .71% and 6.23%, respectively.

O. R. Barham, Jr., President and CEO, commented, “We had many accomplishments during the second quarter, and are about where we thought we would be from an earnings standpoint in the face of continuing weakness in the economy, real estate markets and turmoil in the banking sector. While we are encouraged by the improvement in our levels of non-performing assets as compared to last quarter, it is tempered by the fact that business activity continues to slow. This contributed to several credit downgrades during the quarter, necessitating an increase in provisioning for loan losses. We will continue to be vigilant in our monitoring and provisioning of our loan portfolio throughout the remaining part of this year. StellarOne’s strong capital levels will help us weather this economic downturn. Once economic conditions improve, this same strong capital position will allow us to further grow our franchise.”

“As anticipated, earnings continued to be impacted by nonrecurring integration expenses associated with putting our affiliate banks together. It has been roughly eight weeks since we completed our merger creating Virginia’s largest commercial based bank. We are encouraged by our initial retention rates and appreciate the loyalty of our customer base. StellarOne now serves over 84,000 households through 64 branches and 80 ATM machines. We have been included in the Russell 3000 index; have approximately 8,500 shareholders and now trade over 74,000 shares (3 month average) of stock a day. We also now possess the fifth largest deposit share in the state of Virginia. We have created a great company with an even greater future, and will continue to manage through a difficult environment and prepare the Company to capitalize on improved market conditions.”

Financial Performance

Net Interest Income

Net interest income amounted to $29.3 million for the second quarter of 2008, up $14.4 million or 96.7% compared with $14.9 million for the same quarter in 2007. Growth in average earning assets of $1.3 billion or 87.6% over 2007 associated with the VFG/FNB merger was the primary contributor to this increase. The net interest margin for the second quarter of 2008 was 4.37%, up sixty-two basis points sequentially compared to 3.75% for the first quarter of 2008, and up fifteen basis points when compared to 4.22% for the second quarter of 2007. Margin for the quarter was positively impacted by the loan discount, CD premium and a borrowing premium associated with the VFG/FNB merger, all of which began amortizing during the quarter. These premiums and discounts stem from adjusting assets and liabilities to their respective market values as part of the purchase adjustments associated with the merger. Margin adjusted for the purchase accounting items for the quarter and six month period amounted to 3.75% and 3.74%, respectively. Core margin is expected to experience modest compression as the rate of improvement in cost of funds slows, the level of loan growth continues to be impacted by market conditions, and the positive effects of amortizing the purchase adjustments lessen. Other factors that could change this result include the level of non-performing assets and the direction of short term rates for the remainder of the year.

Asset yields rose sequentially, with an average yield on assets of 6.51% for the second quarter of 2008, compared to 6.46% for the first quarter of 2008 and decreased forty-eight basis points when compared to 6.99% for the second quarter of 2007. Average cost of interest bearing liabilities decreased to 2.53% for the second quarter of 2008, as compared to 3.23% for the first quarter of 2008 and 3.43% for the second quarter of 2007. This decrease in funding costs during the quarter was predominantly the result of reductions in interest expense of $1.8 million and $758 thousand, which related to the amortization of premiums on CD’s and FHLB advances, respectively, that were adjusted to market value as part of the merger. Additionally, funding costs were also reduced due to recent actions taken by the Fed and an increased level of CD maturities repricing during the quarter. For the six months ended June 30, 2008, net interest income was $46.8 million, an increase of $17.5 million or 60.1% from $29.3 million for the same period in 2007. The net interest margin for the six month period ended June 30, 2008 was 4.08%, compared to 4.14% for the same period in 2007. The amortization of the purchase adjustments affected the margin for the six month period to a lesser degree than the quarter, but still helped to offset compression related to the decline in the targeted Federal funds rate and increases in nonperforming assets when compared to June 30, 2007.

Non-Interest Income

Total non-interest income was $7.6 million for the second quarter of 2008, up $3.3 million or 76.4% compared with $4.3 million for the second quarter of 2007 and up $2.4 million or 48.1% sequentially compared with $5.2 million for the first quarter of 2008. Retail banking fee income increased $2.0 million or greater than 100% to $3.9 million, compared to $1.9 million in the second quarter of 2007. Mortgage banking revenue amounted to $1.4 million, an increase of $712 thousand or greater than 100%, as compared to $645 thousand for the second quarter of 2007, and up sequentially $486 thousand or 55.8% from the first quarter of 2008. Revenues from trust and brokerage for the second quarter were $1.4 million, up $238 thousand or 20.7% compared to $1.2 million in the second quarter of 2007, and up sequentially $172 thousand or 14.1% from the first quarter of 2008. Losses on the sale of foreclosed assets amounted to $260 thousand for the second quarter of 2008, the majority of which related to the sale of a residential development property foreclosed on during the first quarter.

Non-interest Expense

Non-interest expense for the second quarter of 2008 amounted to $24.6 million, up $11.7 million or 91.5% from $12.9 million for the same period in 2007, and up sequentially $5.6 million or 29.3% from the first quarter of 2008. StellarOne’s efficiency ratio was 65.26% for the quarter, compared to 64.85% for the same quarter in 2007. For the six month period ended June 30, 2008, the efficiency ratio was 71.51%, compared to 65.21% for the same period in 2007. Excluding the impact of nonrecurring revenue and expense items noted above, the efficiency ratio was 67.29% and 66.74% for the quarter and six month period ended June 30, 2008, respectively. Excluding the effects of nonrecurring merger expenses of $5.1 million associated with the consummation of the merger of equals transaction between VFG and FNB, non-interest expense for the first six months of 2008 would have amounted to $38.6 million, up $13.4 million or 53.4% from $25.1 million for the same period in 2007. Noninterest expense for the quarter was affected in the same manner as the six month period by the related increases in incremental costs and nonrecurring merger expenses.

Balance Sheet

At June 30, 2008, total assets were $3.03 billion, compared to $1.60 billion at June 30, 2007. Shareholder’s equity at June 30, 2008 was $366.5 million, an increase of $211.5 million or greater than 100% compared to June 30, 2007. Shareholder’s equity represented 12.09% of total assets at June 30, 2008, while tangible equity capital represented 9.57% of tangible assets at June 30, 2008. Book value at June 30, 2008 was $16.22 per share, compared to $14.36 at June 30, 2007.

Average loans for the second quarter were $2.29 billion, up $1.08 billion or 89.3% from the second quarter of 2007, and up sequentially from $1.63 billion for the first quarter of 2008. Average securities were $403.2 million, up $145.1 million or 87.3% from the second quarter of 2007. Average deposits for the second quarter were $2.37 billion, up $800.8 million or 50.9% from the first quarter of 2008. Average borrowings, consisting predominately of FHLB advances and commercial paper for the second quarter amounted to $301.5 million, an increase of $128.6 million or 74.3% compared to the same period in 2007, and up sequentially $11 thousand or 3.8% from the first quarter of 2008.

Goodwill associated with the merger of equals transaction amounted to $59.5 million, resulting in aggregate goodwill of $73.4 million at June 30, 2008. The core deposit intangible associated with the transaction was $8.6 million, resulting in aggregate core deposit intangibles of $11.3 million at June 30, 2008.

Asset Quality

StellarOne’s ratio of non-performing assets as a percentage of total assets amounted to .86% as of June 30, 2008, compared to .20% at June 30, 2007 and 1.02 % at March 31, 2008. The increase compared to the same period in the prior year is a result of declining market conditions in general. The net decrease of $5.8 million on a linked quarter basis relates to significant reductions in nonaccrual loans and the sale of foreclosed assets during the quarter. Net charge-offs as a percentage of average loans receivable amounted to .22% for the quarter ended June 30, 2008, compared to none for the same period in 2007 and .13% for the quarter ended March 31, 2008. At June 30, 2008, the allowance for loan losses approximates the aggregate balance of non-performing loans, while the allowance as a percentage of total loans amounted to 1.25%. StellarOne recorded a provision for loan losses for the second quarter of $2.8 million compared to net charge-offs of $1.3 million for the period, which compares to no provision and $34 thousand in net recoveries for the three months ended June 30, 2007. The increased levels of provisioning reflect actions taken to address the continuing deterioration of credit quality in a small number of larger real estate construction credits and weakened real estate conditions in a few of the market’s served. However, the Company remains well diversified in both the types of loans within the portfolio and markets served throughout the Commonwealth.

Quarterly Dividend

The Board of Directors of StellarOne Corporation has declared a quarterly dividend of $.16 per share, payable on August 25, 2008 to shareholders of record on August 4, 2008. This dividend represents a yield of 3.71% based on the closing price of StellarOne’s stock on July 25, 2008 ($17.25).

About StellarOne

StellarOne Corporation is a traditional community bank, offering a full range of business and consumer banking services, including trust and asset management services, via its trust company division. Through the activities of its sole affiliate, StellarOne Bank, StellarOne operates 64 full-service financial centers, 4 loan production offices, and over 80 ATMs serving the New River Valley, Roanoke Valley, Shenandoah Valley, and Central and North Central Virginia.

Non-GAAP Financial Measures

This report refers to the efficiency ratio, which is computed by dividing non-interest expense by the sum of net interest income on a tax equivalent basis and non-interest income excluding gains or losses on securities, fixed assets and foreclosed assets. Such information is not in accordance with generally accepted accounting principles in the United States (GAAP) and should not be construed as such. This is a non-GAAP financial measure that we believe provides investors with important information regarding our operational efficiency. Comparison of our efficiency ratio with those of other companies may not be possible, because other companies may calculate the efficiency ratio differently. Management believes such financial information is meaningful to the reader in understanding operating performance, but cautions that such information not be viewed as a substitute for GAAP. StellarOne, in referring to its net income, is referring to income under GAAP.

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. These 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 and (vii) changes may occur in the securities markets. Please refer to StellarOne’s filings with the Securities and Exchange Commission for additional information, which may be accessed at www.stellarone.com.

QUARTERLY PERFORMANCE SUMMARY

StellarOne Corporation (NASDAQ: STEL)

(Dollars in thousands, except per share data)

							Percent
	For the Three Months Ended						Increase
	6/30/2008			6/30/2007			(Decrease)
INCOME STATEMENT
Interest income - taxable equivalent	$	44,709		$	25,604		74.62	%
Interest expense		14,720			10,151		45.01	%
Net interest income - taxable equivalent		29,989			15,453		94.07	%
Less: taxable equivalent adjustment		656			538		21.93	%
Net interest income		29,333			14,915		96.67	%
Provision for loan and lease losses		2,835			—		N/A
Net interest income after provision for loan and lease losses		26,498			14,915		77.66	%
Noninterest income		7,647			4,336		76.36	%
Noninterest expense		24,609			12,854		91.45	%
Provision for income taxes		3,396			1,856		82.97	%
Net income	$	6,140		$	4,541		35.21	%
PER SHARE DATA
Basic earnings	$	0.27		$	0.42		-35.71	%
Diluted earnings	$	0.27		$	0.42		-35.71	%
Shares outstanding		22,600,357			10,792,797
Weighted average shares -
Basic		22,585,161			10,792,467
Diluted		22,651,991			10,817,882
Dividends paid on common shares	$	0.16		$	0.16
PERFORMANCE RATIOS
Return on average assets		0.81	%		1.15	%	-29.57	%
Return on average equity		6.72	%		11.82	%	-43.15	%
Return on average realized equity (A)		6.72	%		11.76	%	-42.86	%
Net interest margin (taxable equivalent)		4.37	%		4.22	%	3.54	%
Efficiency (taxable equivalent) (B)		65.26	%		64.85	%	0.63	%
ASSET QUALITY
Allowance for loan losses
Beginning of period	$	27,037		$	14,501
Provision for loan losses		2,835			—
Charge offs		(1,908	)		(34	)
Recoveries		651			28
Net charge-offs		(1,257	)		(6	)
End of period	$	28,615			14,495
Non-performing assets:
Non-accrual loans	$	22,392		$	3,139
Loans 90+ days past due and still accruing		465			—
Foreclosed assets		2,260			—
Troubled debt restructurings		814			—
Total non-performing assets	$	25,931		$	3,139
to total assets:		0.86	%		0.20	%
to total loans plus foreclosed assets:		1.13	%		0.26	%
Allowance for loan losses to total loans		1.25	%		1.21	%
Net charge-offs	$	1,257		$	6
Net charge-offs to average loans outstanding		0.22	%		0.00	%

NOTES:

(A) Excludes the effect on average stockholders’ equity of unrealized gains (losses) that result from changes in market values of securities and other comprehensive pension expense.

(B) Computed by dividing non-interest expense by the sum of net interest income and non-interest income, net of gains or losses on securities, fixed assets and foreclosed assets. This is a non-GAAP financial measure, which we believe provides investors with important information regarding our operational efficiency. Comparison of our efficiency ratio with those of other companies may not be possible, because other companies may calculate the efficiency ratio differently.

(C) Individual amounts shown above are calculated from actual, not rounded amounts in the thousands, which appear above.

QUARTERLY PERFORMANCE SUMMARY

StellarOne Corporation (NASDAQ: STEL)

(Dollars in thousands, except per share data)

							Percent
	For the Six Months Ended						Increase
	6/30/2008			6/30/2007			(Decrease)
INCOME STATEMENT
Interest income - taxable equivalent	$	75,469		$	51,099		47.69	%
Interest expense		27,832			20,742		34.18	%
Net interest income - taxable equivalent		47,637			30,357		56.92	%
Less: taxable equivalent adjustment		790			1,087		-27.32	%
Net interest income		46,847			29,270		60.05	%
Provision for loan and lease losses		3,787			165		>100.00	%
Net interest income after provision for loan and lease losses		43,060			29,105		47.95	%
Noninterest income		12,812			8,164		56.93	%
Noninterest expense		43,647			25,141		73.61	%
Provision for income taxes		3,998			3,568		12.05	%
Net income	$	8,227		$	8,560		-3.89	%
PER SHARE DATA
Basic earnings	$	0.44		$	0.79		-44.30	%
Diluted earnings	$	0.44		$	0.79		-44.30	%
Shares outstanding		22,600,357			10,792,797
Weighted average shares -
Basic		18,831,352			10,791,224
Diluted		18,899,355			10,819,352
Dividends paid on common shares	$	0.32		$	0.32
PERFORMANCE RATIOS
Return on average assets		0.64	%		1.08	%	-40.74	%
Return on average equity		5.63	%		11.31	%	-50.22	%
Return on average realized equity (A)		5.65	%		11.25	%	-49.78	%
Net interest margin (taxable equivalent)		4.08	%		4.14	%	-93.75	%
Efficiency (taxable equivalent) (B)		71.51	%		65.21	%	9.66	%
ASSET QUALITY
Allowance for loan losses
Beginning of period	$	15,082		$	14,500
Provision for loan losses		3,787			165
Charge-offs		(2,526	)		(245	)
Recoveries		733			75
Net (charge-offs) recoveries		(1,793	)		(170	)
Allowance acquired via acquisition		11,539			—
End of period	$	28,615		$	14,495
Allowance for loan losses to total loans		1.25	%		1.21	%
Net charge-offs	$	1,793		$	170
Net charge-offs to average loans outstanding		0.18	%		0.03	%

NOTES:

(A) Excludes the effect on average stockholders’ equity of unrealized gains (losses) that result from changes in market values of securities and other comprehensive pension expense.

(B) Computed by dividing non-interest expense by the sum of net interest income and non-interest income, net of gains or losses on securities, fixed assets and foreclosed assets. This is a non-GAAP financial measure, which we believe provides investors with important information regarding our operational efficiency. Comparison of our efficiency ratio with those of other companies may not be possible, because other companies may calculate the efficiency ratio differently.

(C) Individual amounts shown above are calculated from actual, not rounded amounts in the thousands, which appear above.

QUARTERLY PERFORMANCE SUMMARY

StellarOne Corporation (NASDAQ: STEL)

(Dollars in thousands, except per share data)

							Percent
SELECTED BALANCE SHEET DATA							Increase
(Dollars in thousands)	6/30/2008			6/30/2007			(Decrease)
End of period balances
Cash and cash equivalents	$	136,360		$	41,451		>100.00	%
Securities available for sale		348,716			251,307		38.76	%
Securities held to maturity		929			2,653		-64.98	%
Total securities		349,645			253,960		37.68	%
Real estate - construction		385,290			215,142		79.09	%
Real estate - 1-4 family residential		738,049			317,879		>100.00	%
Real estate - commercial and multifamily		849,978			524,527		62.05	%
Commercial, financial and agricultural		231,377			100,441		>100.00	%
Consumer loans		71,823			29,580		>100.00	%
All other loans		13,716			6,266		>100.00	%
Total loans		2,290,233			1,193,835		91.84	%
Deferred loan costs		841			1,012		-16.90	%
Allowance for loan losses		(28,615	)		(14,495	)	97.41	%
Net loans		2,262,459			1,180,352		91.68	%
Core deposit intangibles, net		11,142			3,546		>100.00	%
Goodwill		73,386			13,896		>100.00	%
Bank owned life insurance		28,208			10,471		>100.00	%
Other assets		169,495			79,953		>100.00	%
Total assets		3,030,695			1,583,629		91.38	%
Noninterest bearing deposits		346,861			233,110		48.80	%
Money market & interest checking		747,711			315,840		>100.00	%
Savings		208,039			91,553		>100.00	%
CD’s and other time deposits		1,112,137			595,839		86.65	%
Total deposits		2,414,748			1,236,342		95.31	%
Federal funds purchased and securities sold under agreements to repurchase		1,746			—		N/A
Federal Home Loan Bank advances		195,733			85,500		>100.00	%
Subordinated debt		32,991			20,619		60.00	%
Commercial paper		—			73,724		-100.00	%
Other borrowed funds		59			873		-93.24	%
Other liabilities		18,874			11,555		63.34	%
Total liabilities		2,664,151			1,428,613		86.49	%
Total stockholders’ equity	$	366,544		$	155,016		>100.00	%
Accumulated comprehensive loss	$	(1,179	)	$	(1,972	)	-40.21	%
Average balances
	For the Three Months Ended						Percent Increase
	6/30/2008			6/30/2007			(Decrease)
Total assets	$	3,049,826		$	1,582,575		92.71	%
Total stockholders’ equity	$	367,327		$	154,045		>100.00	%
	For the Six Months Ended
	6/30/2008			6/30/2007
Total assets	$	2,579,607		$	1,595,169		61.71	%
Total stockholders’ equity	$	293,823		$	152,685		92.44	%
OTHER DATA
End of period full time employees		901			536

QUARTERLY PERFORMANCE SUMMARY

StellarOne Corporation (NASDAQ: STEL)

(Dollars in thousands)

							Percent
	For the Three Months Ended						Increase
	6/30/2008			6/30/2007			(Decrease)
Interest Income
Loans, including fees	$	39,208		$	22,278		75.99	%
Deposits in other banks		9			4		>100.00	%
Investment securities:
Taxable		3,147			1,715		83.50	%
Tax-exempt		995			926		7.45	%
Dividends		339			134		>100.00	%
Federal funds sold		354			9		>100.00	%
Total interest income		44,052			25,066		75.74	%
Interest Expense
Deposits		12,458			7,843		58.84	%
Federal funds repurchased and securities sold under agreements to repurchase		5			117		-95.73	%
Federal Home Loan Bank advances		1,631			969		68.32	%
Subordinated debt		466			421		10.69	%
Commercial paper		156			791		-80.28	%
Other borrowings		3			10		-70.00	%
Total interest expense		14,719			10,151		45.00	%
Net interest income		29,333			14,915		96.67	%
Provision for loan losses		2,835			—		N/A
Net interest income after provision for loan losses		26,498			14,915		77.66	%
Noninterest Income
Retail banking fees		3,896			1,920		>100.00	%
Commissions and fees from fiduciary activities		1,071			857		24.97	%
Brokerage fee income		318			294		8.16	%
Other operating income		1,080			652		65.64	%
(Losses) gains on sale of premises and equipment		(21	)		1		>100.00	%
Gains (losses) on securities available for sale		206			(32	)	>100.00	%
Losses on sales of foreclosed assets		(260	)		(1	)	>100.00	%
Mortgage banking-related fees		1,357			645		>100.00	%
Total noninterest income		7,647			4,336		76.36	%
Noninterest Expense
Compensation and employee benefits		11,763			7,037		67.16	%
Net occupancy		1,834			885		>100.00	%
Supplies and equipment		2,170			1,166		86.11	%
Amortization-intangible assets		531			161		>100.00	%
Marketing		831			393		>100.00	%
State franchise taxes		585			299		95.65	%
Data processing		992			430		>100.00	%
Telecommunications		457			236		93.64	%
Professional fees		640			378		69.31	%
Other operating expenses		4,806			1,869		>100.00	%
Total noninterest expense		24,609			12,854		91.45	%
Income before income taxes		9,536			6,397		49.07	%
Income tax expense		3,396			1,856		82.97	%
Net income	$	6,140		$	4,541		35.21	%

QUARTERLY PERFORMANCE SUMMARY

StellarOne Corporation (NASDAQ: STEL)

(Dollars in thousands)

							Percent
	For the Six Months Ended						Increase
	6/30/2008			6/30/2007			(Decrease)
Interest Income
Loans, including fees	$	66,469		$	44,264		50.16	%
Deposits in other banks		12			10		20.00	%
Investment securities:
Taxable		5,210			3,549		46.80	%
Tax-exempt		1,832			1,869		-1.98	%
Dividends		606			260		>100.00	%
Federal funds sold		551			61		>100.00	%
Total interest income		74,680			50,013		49.32	%
Interest Expense
Deposits		22,663			16,373		38.42	%
Federal funds purchased and securities sold under agreements to repurchase		60			225		-73.33	%
Federal Home Loan Bank advances		3,539			1,746		>100.00	%
Subordinated debt		930			838		10.98	%
Commercial paper		635			1,545		-58.90	%
Other borrowings		6			16		-62.50	%
Total interest expense		27,833			20,743		34.18	%
Net interest income		46,847			29,270		60.05	%
Provision for loan losses		3,787			165		>100.00	%
Net interest income after provision for loan losses		43,060			29,105		47.95	%
Noninterest Income
Retail banking fees		6,463			3,663		76.44	%
Commissions and fees from fiduciary activities		1,969			1,685		16.85	%
Brokerage fee income		638			550		16.00	%
Other operating income		2,099			1,059		98.21	%
Losses on sale of premises and equipment		(64	)		(4	)	>100.00	%
Gains (losses) on securities available for sale		238			(32	)	>100.00	%
Losses on sale of foreclosed assets		(759	)		(1	)	N/A
Mortgage banking-related fees		2,228			1,244		79.10	%
Total noninterest income		12,812			8,164		56.93	%
Noninterest Expense
Compensation and employee benefits		22,931			13,856		65.50	%
Net occupancy		2,995			1,759		70.27	%
Supplies and equipment		3,710			2,286		62.29	%
Amortization-intangible assets		691			325		>100.00	%
Marketing		1,248			642		94.39	%
State franchise taxes		980			543		80.48	%
Data processing		2,076			898		>100.00	%
Telecommunications		746			475		57.05	%
Professional fees		1,214			528		>100.00	%
Other operating expenses		7,056			3,829		84.28	%
Total noninterest expense		43,647			25,141		73.61	%
Income before income taxes		12,225			12,128		0.80	%
Income tax expense		3,998			3,568		12.05	%
Net income	$	8,227		$	8,560		-3.89	%

STELLARONE CORPORATION

CONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES

THREE MONTHS ENDED JUNE 30, 2008 AND 2007

(Dollars in thousands)

	Three months ended June 30,
	(unaudited)
	2008						2007
	Average		Interest		Average		Average		Interest		Average
Dollars in thousands	Balance		Inc/Exp		Rates		Balance		Inc/Exp		Rates
Assets
Loans receivable, net	$	2,288,804	$	39,329	6.91	%	$	1,209,394	$	22,317	7.40	%
Investment securities
Taxable		307,571		3,500	4.50	%		164,210		1,849	4.45	%
Tax exempt		95,604		1,531	6.34	%		93,876		1,425	6.01	%
Total investments		403,175		5,031	4.94	%		258,086		3,274	5.02	%
Interest bearing deposits		3,943		9	0.90	%		378		4	4.19	%
Federal funds sold		63,198		340	2.13	%		667		9	5.34	%
		470,316		5,380	4.53	%		259,131		3,287	5.02	%
Total earning assets		2,759,120		44,709	6.51	%		1,468,525		25,604	6.99	%
Total nonearning assets		290,706						114,050
Total assets	$	3,049,826					$	1,582,575
Liabilities and Stockholders’ Equity
Interest-bearing deposits
Interest checking	$	497,074	$	506	0.41	%	$	164,391	$	70	0.17	%
Money market		191,406		817	1.71	%		149,997		898	2.40	%
Savings		211,158		1,755	3.33	%		95,490		325	1.37	%
Time deposits:
Less than $100,000		769,415		5,664	2.95	%		397,884		4,199	4.23	%
$100,000 and more		364,876		3,717	4.09	%		204,382		2,351	4.61	%
Total interest-bearing deposits		2,033,929		12,459	2.46	%		1,012,144		7,843	3.11	%
Federal funds purchased and securities sold under agreements to repurchase		7,919		5	0.25	%		8,352		117	5.54	%
Federal Home Loan Bank advances		236,186		1,631	2.73	%		73,643		968	5.20	%
Subordinated debt		32,991		466	5.59	%		20,619		421	8.08	%
Commercial paper		23,821		156	2.59	%		69,605		791	4.50	%
Other borrowings		573		3	2.07	%		715		11	6.09	%
		301,490		2,261	2.97	%		172,934		2,308	5.28	%
Total interest-bearing liabilities		2,335,419		14,720	2.53	%		1,185,078		10,151	3.43	%
Total noninterest-bearing liabilities		347,080						243,452
Total liabilities		2,682,499						1,428,530
Stockholders’ equity		367,327						154,045
Total liabilities and stockholders’ equity	$	3,049,826					$	1,582,575
Net interest income (tax equivalent)			$	29,989					$	15,453
Average interest rate spread					3.98	%					3.56	%
Interest expense as percentage of average earning assets					2.14	%					2.77	%
Net interest margin					4.37	%					4.22	%

STELLARONE CORPORATION

CONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES

SIX MONTHS ENDED JUNE 30, 2008 AND 2007

(Dollars in thousands)

	Six months ended June 30,
	(unaudited)
	2008						2007
	Average		Interest		Average		Average		Interest		Average
Dollars in thousands	Balance		Inc/Exp		Rates		Balance		Inc/Exp		Rates
Assets
Loans receivable, net	$	1,958,566	$	66,628	6.84	%	$	1,214,647	$	44,343	7.36	%
Investment securities
Taxable		255,090		6,468	5.02	%		169,495		3,809	4.47	%
Tax exempt		89,971		1,838	4.04	%		94,363		2,876	6.06	%
Total investments		345,061		8,306	4.76	%		263,858		6,685	5.04	%
Interest bearing deposits		2,214		12	1.07	%		501		10	3.97	%
Federal funds sold		44,910		523	2.29	%		2,241		61	5.41	%
		392,185		8,841	4.46	%		266,600		6,756	5.04	%
Total earning assets		2,350,751		75,469	6.45	%		1,481,247		51,099	6.96	%
Total nonearning assets		228,856						113,922
Total assets	$	2,579,607					$	1,595,169
Liabilities and Stockholders’ Equity
Interest-bearing deposits
Interest checking	$	401,052	$	899	0.45	%	$	161,918	$	133	0.17	%
Money market		161,291		1,482	1.84	%		164,755		2,154	2.64	%
Savings		169,115		2,796	3.32	%		96,002		627	1.32	%
Time deposits:
Less than $100,000		641,569		10,962	3.43	%		406,338		8,632	4.28	%
$100,000 and more		310,141		6,525	4.22	%		209,001		4,827	4.66	%
Total interest-bearing deposits		1,683,168		22,664	2.70	%		1,038,014		16,373	3.18	%
Federal funds purchased and securities sold under agreements to repurchase		6,681		59	1.75	%		8,118		225	5.51	%
Federal Home Loan Bank advances		210,851		3,538	3.32	%		67,956		1,745	5.11	%
Subordinated debt		28,708		930	6.41	%		20,619		838	8.08	%
Commercial paper		49,010		635	2.56	%		66,721		1,545	4.61	%
Other borrowings		678		6	1.75	%		531		16	5.99	%
		295,928		5,168	3.45	%		163,945		4,369	5.30	%
Total interest-bearing liabilities		1,979,096		27,832	2.81	%		1,201,959		20,742	3.47	%
Total noninterest-bearing liabilities		306,688						240,525
Total liabilities		2,285,784						1,442,484
Stockholders’ equity		293,823						152,685
Total liabilities and stockholders’ equity	$	2,579,607					$	1,595,169
Net interest income (tax equivalent)			$	47,637					$	30,357
Average interest rate spread					3.64	%					3.49	%
Interest expense as percentage of average earning assets					2.37	%					2.82	%
Net interest margin					4.08	%					4.14	%