10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For The Quarterly Period Ended June 30, 2016

OR

[  ] TRANSITION REPORT PURSANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For The Transition Period From ____________To_____________.

Commission File Number 0-11733

CITY HOLDING COMPANY

(Exact name of registrant as specified in its charter)

West Virginia	55-0619957
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
25 Gatewater Road
Charleston, West Virginia	25313
(Address of principal executive offices)	(Zip Code)

(304) 769-1100

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant has (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes [X] No [   ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes [X] No [   ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer [X]	Accelerated filer [ ]
Non-accelerated filer [   ]	Smaller reporting company [   ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes [   ] No [X]

1

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practical date.

Common stock, $2.50 Par Value – 15,005,321 shares as of August 3, 2016.

2

FORWARD-LOOKING STATEMENTS

All statements other than statements of historical fact included in this Quarterly Report on Form 10-Q, including statements in Management’s Discussion and Analysis of Financial Condition and Results of Operations are, or may be deemed to be, forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such information involves risks and uncertainties that could result in the Company's actual results differing materially from those projected in the forward-looking statements. Important factors that could cause actual results to differ materially from those discussed in such forward-looking statements include, but are not limited to, (1) the Company may incur additional loan loss provision due to negative credit quality trends in the future that may lead to a deterioration of asset quality; (2) the Company may incur increased charge-offs in the future; (3) the Company could have adverse legal actions of a material nature; (4) the Company may face competitive loss of customers; (5) the Company may be unable to manage its expense levels; (6) the Company may have difficulty retaining key employees; (7) changes in the interest rate environment may have results on the Company’s operations materially different from those anticipated by the Company’s market risk management functions; (8) changes in general economic conditions and increased competition could adversely affect the Company’s operating results; (9) changes in other regulations and government policies affecting bank holding companies and their subsidiaries, including changes in monetary policies, could negatively impact the Company’s operating results; (10) the Company may experience difficulties growing loan and deposit balances; (11) the current economic environment poses significant challenges for us and could adversely affect our financial condition and results of operations; (12) deterioration in the financial condition of the U.S. banking system may impact the valuations of investments the Company has made in the securities of other financial institutions resulting in either actual losses or other than temporary impairments on such investments; (13) the effects of the Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) and the regulations promulgated and to be promulgated thereunder, which may subject the Company and its subsidiaries to a variety of new and more stringent legal and regulatory requirements which adversely affect their respective businesses; (14) the impact of new minimum capital thresholds established as a part of the implementation of Basel III; and (15) other risk factors relating to the banking industry or the Company as detailed from time to time in the Company’s reports filed with the Securities and Exchange Commission, including those risk factors included in the disclosures under the heading “Item 1A Risk Factors” of the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015.  Forward-looking statements made herein reflect management's expectations as of the date such statements are made. Such information is provided to assist stockholders and potential investors in understanding current and anticipated financial operations of the Company and is included pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances that arise after the date such statements are made.

3

City Holding Company and Subsidiaries

PART I	Financial Information	Pages
Item 1.	Financial Statements (Unaudited)	5
	Consolidated Balance Sheets	5
	Consolidated Statements of Income	7
	Consolidated Statements of Comprehensive Income	9
	Consolidated Statements of Changes in Shareholders’ Equity	10
	Consolidated Statements of Cash Flows	11
	Notes to Consolidated Financial Statements	12
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	39
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	59
Item 4.	Controls and Procedures	59
PART II	Other Information
Item 1.	Legal Proceedings	59
Item 1A.	Risk Factors	59
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	59
Item 3.	Defaults Upon Senior Securities	59
Item 4.	Mine Safety Disclosures	59
Item 5.	Other Information	60
Item 6.	Exhibits	61
Signatures		61

4

Part I - FINANCIAL INFORMATION

Item 1 - Financial Statements

Consolidated Balance Sheets

City Holding Company and Subsidiaries

(in thousands)

	(Unaudited)
	June 30, 2016			December 31, 2015
Assets
Cash and due from banks	$	69,933		$	58,829
Interest-bearing deposits in depository institutions	8,643			11,284
Cash and Cash Equivalents	78,576			70,113
Investment securities available for sale, at fair value	409,039			369,466
Investment securities held-to-maturity, at amortized cost (approximate fair value at June 30, 2016 and December 31, 2015 - $86,944 and $90,810, respectively)	83,208			88,937
Other securities	10,203			12,915
Total Investment Securities	502,450			471,318
Gross loans	2,903,398			2,862,534
Allowance for loan losses	(19,139		)	(19,251		)
Net Loans	2,884,259			2,843,283
Bank owned life insurance	99,446			97,919
Premises and equipment, net	75,040			77,271
Accrued interest receivable	8,428			7,432
Net deferred tax asset	23,995			29,974
Goodwill and other intangible assets, net	79,433			79,792
Other assets	55,234			36,957
Total Assets	$	3,806,861		$	3,714,059
Liabilities
Deposits:
Noninterest-bearing	$	651,867		$	621,073
Interest-bearing:
Demand deposits	701,248			679,735
Savings deposits	758,323			765,611
Time deposits	1,030,841			1,017,556
Total Deposits	3,142,279			3,083,975
Short term borrowings:
Federal funds purchased	—			13,000
Customer repurchase agreements	153,674			141,869
Long-term debt	16,495			16,495
Other liabilities	66,054			39,448
Total Liabilities	3,378,502			3,294,787

5

Shareholders’ Equity
Preferred stock, par value $25 per share: 500,000 shares authorized; none issued	—			—
Common stock, par value $2.50 per share: 50,000,000 shares authorized; 18,499,282 shares issued at June 30, 2016 and December 31, 2015, less 3,493,961 and 3,319,067 shares in treasury, respectively	46,249			46,249
Capital surplus	105,648			106,269
Retained earnings	402,044			390,690
Cost of common stock in treasury	(127,619		)	(120,104		)
Accumulated other comprehensive income (loss):
Unrealized gain on securities available-for-sale	6,796			927
Underfunded pension liability	(4,759		)	(4,759		)
Total Accumulated Other Comprehensive Income (Loss)	2,037			(3,832		)
Total Shareholders’ Equity	428,359			419,272
Total Liabilities and Shareholders’ Equity	$	3,806,861		$	3,714,059

See notes to consolidated financial statements.

6

Consolidated Statements of Income(Unaudited)

City Holding Company and Subsidiaries

(in thousands, except earnings per share data)

Interest Income	Three months ended June 30,				Six months ended June 30,
	2016		2015		2016		2015
Interest and fees on loans	$	29,640	$	28,812	$	58,567	$	58,200
Interest and dividends on investment securities:
Taxable	2,927		2,641		5,933		5,353
Tax-exempt	365		267		722		531
Total Interest Income	32,932		31,720		65,222		64,084
Interest Expense
Interest on deposits	3,011		2,699		5,909		5,440
Interest on short-term borrowings	86		85		193		167
Interest on long-term debt	167		153		331		303
Total Interest Expense	3,264		2,937		6,433		5,910
Net Interest Income	29,668		28,783		58,789		58,174
Provision for loan losses	1,122		2,836		1,661		3,724
Net Interest Income After Provision for Loan Losses	28,546		25,947		57,128		54,450
Non-Interest Income
Net gains on sale of investment securities	845		2,116		845		2,130
Service charges	6,564		6,589		12,867		12,516
Bankcard revenue	4,190		4,002		8,157		8,076
Trust and investment management fee income	1,371		1,201		2,647		2,401
Bank owned  life insurance	768		783		1,528		1,547
Gain on sale of insurance division	—		—		—		11,084
Other income	843		714		1,664		1,672
Total Non-Interest Income	14,581		15,405		27,708		39,426
Non-Interest Expense
Salaries and employee benefits	12,790		12,193		25,463		24,372
Occupancy and equipment	2,708		2,529		5,544		5,119
Depreciation	1,567		1,516		3,134		3,027
FDIC insurance expense	512		445		977		895
Advertising	778		701		1,494		1,405
Bankcard expenses	925		797		1,758		1,615
Postage, delivery, and statement mailings	506		507		1,071		1,068
Office supplies	366		347		719		693
Legal and professional fees	528		542		999		1,109
Telecommunications	431		463		859		938
Repossessed asset losses, net of expenses	53		335		341		555
Merger related expenses	—		108		—		108
Other expenses	3,119		2,761		6,064		5,505
Total Non-Interest Expense	24,283		23,244		48,423		46,409
Income Before Income Taxes	18,844		18,108		36,413		47,467
Income tax expense	6,303		6,125		12,169		17,492
Net Income Available to Common Shareholders	$	12,541	$	11,983	$	24,244	$	29,975

7

Total Comprehensive Income	$	15,667	$	10,344	$	30,113	$	29,242
Average common shares outstanding	14,889		15,104		14,903		15,079
Effect of dilutive securities:
Employee stock awards and warrant outstanding	13		23		12		77
Shares for diluted earnings per share	14,902		15,127		14,915		15,156
Basic earnings per common share	$	0.83	$	0.78	$	1.61	$	1.97
Diluted earnings per common share	$	0.83	$	0.78	$	1.61	$	1.96
Dividends declared per common share	$	0.43	$	0.42	$	0.86	$	0.84

See notes to consolidated financial statements.

8

Consolidated Statements of Comprehensive Income(Unaudited)

City Holding Company and Subsidiaries

(in thousands)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2016			2015			2016			2015
Net income	$	12,541		$	11,983		$	24,244		$	29,975
Unrealized gains (losses) on available-for-sale securities arising during the period	5,800			(482		)	10,148			968
Reclassification adjustment for gains	(845		)	(2,116		)	(845		)	(2,130		)
Other comprehensive income (loss) before income taxes	4,955			(2,598		)	9,303			(1,162		)
Tax effect	(1,829		)	959			(3,434		)	429
Other comprehensive income (loss), net of tax	3,126			(1,639		)	5,869			(733		)
Comprehensive Income, Net of Tax	$	15,667		$	10,344		$	30,113		$	29,242

See notes to consolidated financial statements.

9

Consolidated Statements of Changes in Shareholders’ Equity(Unaudited)

City Holding Company and Subsidiaries

Six Months EndedJune 30, 2016 and 2015

(in thousands)

	Common Stock		Capital Surplus			Retained Earnings			Treasury Stock			Accumulated Other Comprehensive Income (Loss)			Total Shareholders’ Equity
Balance at December 31, 2014	$	46,249	$	107,370		$	362,211		$	(120,818	)	$	(4,159	)	$	390,853
Net income	—		—			29,975			—			—			29,975
Other comprehensive loss	—		—			—			—			(733		)	(733		)
Cash dividends declared ($0.84 per share)	—		—			(12,807		)	—			—			(12,807		)
Stock-based compensation expense, net	—		(408		)	—			1,468			—			1,060
Exercise of 29,250 stock options	—		(306		)	—			1,302			—			996
Exercise of 61,796 warrants	—		(765		)	—			2,661			—			1,896
Balance at June 30, 2015	$	46,249	$	105,891		$	379,379		$	(115,387	)	$	(4,892	)	$	411,240

	Common Stock		Capital Surplus			Retained Earnings			Treasury Stock			Accumulated Other Comprehensive Income (Loss)			Total Shareholders’ Equity
Balance at December 31, 2015	$	46,249	$	106,269		$	390,690		$	(120,104	)	$	(3,832	)	$	419,272
Net income	—		—			24,244			—			—			24,244
Other comprehensive income	—		—			—			—			5,869			5,869
Cash dividends declared ($0.86 per share)	—		—			(12,890		)	—			—			(12,890		)
Stock-based compensation expense, net	—		(417		)	—			1,617			—			1,200
Exercise of 20,250 stock options	—		(204		)	—			886			—			682
Purchase of 231,132 treasury shares	—		—			—			(10,018		)	—			(10,018		)
Balance at June 30, 2016	$	46,249	$	105,648		$	402,044		$	(127,619	)	$	2,037		$	428,359

See notes to consolidated financial statements.

10

Consolidated Statements of Cash Flows(Unaudited)

City Holding Company and Subsidiaries

(in thousands)

	Six months ended June 30,
	2016			2015
Net income	$	24,244		$	29,975
Adjustments to reconcile net income to net cash provided by operating activities:
Accretion and amortization	146			(2,976		)
Provision for loan losses	1,661			3,724
Depreciation of premises and equipment	3,134			3,027
Deferred income tax expense	2,548			4,549
Net periodic employee benefit cost	257			413
Realized investment securities gains	(1,256		)	(2,130		)
Investment securities impairment losses	411			—
Stock-compensation expense	1,200			1,060
Increase in value of bank-owned life insurance	(1,527		)	(1,547		)
Loans originated for sale	(5,913		)	(9,191		)
Proceeds from the sale of loans originated for sale	5,801			9,327
Gain on sale of loans	(139		)	(167		)
Gain on sale of insurance division	—			(11,084		)
Change in accrued interest receivable	(996		)	(1,012		)
Change in other assets	(18,105		)	5,703
Change in other liabilities	26,282			(19,307		)
Net Cash Provided by Operating Activities	37,748			10,364
Proceeds from sales of securities available-for-sale	1,256			290
Proceeds from maturities and calls of securities available-for-sale	34,009			33,323
Proceeds from maturities and calls of securities held-to-maturity	5,549			7,648
Purchases of securities available-for-sale	(63,458		)	(67,911		)
Net increase in loans	(40,883		)	(31,705		)
Purchases of premises and equipment	(1,391		)	(978		)
Disposals of premises and equipment	376			—
Proceeds from sale of insurance division	—			15,250
Net Cash Used in Investing Activities	(64,542		)	(44,083		)
Net increase in non-interest-bearing deposits	30,794			18,250
Net increase in interest-bearing deposits	27,806			11,985
Net increase (decrease) in short-term borrowings	(1,195		)	18,240
Purchases of treasury stock	(10,018		)	—
Proceeds from exercise of stock options, net of tax benefit	682			996
Proceeds from exercise of warrants	—			1,896
Dividends paid	(12,812		)	(12,452		)
Net Cash Provided by Financing Activities	35,257			38,915
Increase in Cash and Cash Equivalents	8,463			5,196
Cash and cash equivalents at beginning of period	70,113			148,228
Cash and Cash Equivalents at End of Period	$	78,576		$	153,424

See notes to consolidated financial statements.

11

Notes to Consolidated Financial Statements (Unaudited)

June 30, 2016

Note A –Background and Basis of Presentation

City Holding Company ("City Holding"), a West Virginia corporation headquartered in Charleston, West Virginia, is a registered financial holding company under the Bank Holding Company Act and conducts its principal activities through its wholly-owned subsidiary, City National Bank of West Virginia ("City National"). City National is a retail and consumer-oriented community bank with 85 banking offices in West Virginia (57), Virginia (14), Kentucky (11) and Ohio (3). City National provides credit, deposit, and trust and investment management services to its customers. In addition to its branch network, City National's delivery channels include ATMs, mobile banking, debit cards, interactive voice response systems, and Internet technology. The Company’s business activities are currently limited to one reportable business segment, which is community banking.

On January 9, 2015 the Company sold its insurance operations, CityInsurance, to The Hilb Group effective January 1, 2015. As a result of this sale, the Company recognized a one-time after tax gain of $5.8 million from this transaction in the first quarter of 2015.

On November 6, 2015, the Company consummated the acquisition of three branch locations from American Founders Bank, Inc. (“AFB”) located in Lexington, Kentucky. The Company acquired approximately $119 million in performing loans and and assumed deposit liabilities of approximately $145 million. The Company paid AFB a deposit premium of 5.5% on non-time deposits, and 1.0% on premium loan balances acquired.

The accompanying consolidated financial statements, which are unaudited, include all of the accounts of the City Holding Company and its wholly-owned subsidiaries (collectively, the "Company”). All material intercompany transactions have been eliminated. The consolidated financial statements include all adjustments that, in the opinion of management, are necessary for a fair presentation of the results of operations and financial condition for each of the periods presented. Such adjustments are of a normal recurring nature. The results of operations for the six months endedJune 30, 2016 are not necessarily indicative of the results of operations that can be expected for the year ending December 31, 2016. The Company’s accounting and reporting policies conform with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Such policies require management to make estimates and develop assumptions that affect the amounts reported in the consolidated financial statements and related footnotes. Actual results could differ from management’s estimates.

The consolidated balance sheet as of December 31, 2015 has been derived from audited financial statements included in the Company’s 2015 Annual Report to Shareholders.  Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with U.S. generally accepted accounting principles have been omitted.  These financial statements should be read in conjunction with the financial statements and notes thereto included in the 2015 Annual Report of the Company.

Certain amounts in the financial statements have been reclassified.  Such reclassifications had no impact on shareholders’ equity or net income for any period.

Note B - Recent Accounting Pronouncements

In February 2015, the FASB issued ASU No. 2015-02, "Consolidation (Topic 810) - Amendments to the Consolidation Analysis." ASU 2015-02 eliminates the deferral of FAS 167 and makes changes to both the variable interest model and the voting model. This ASU became effective for the Company on January 1, 2016. The adoption of ASU 2015-02 did not have a material impact on the Company's financial statements.

In April 2015, the FASB issued ASU No. 2015-03, "Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs." ASU 2015-03 requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. This ASU became effective for the Company on January 1, 2016. The adoption of ASU 2015-03 did not have a material impact on the Company's financial statements.

In April 2015, the FASB issued ASU No. 2015-05, "Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement." ASU 2015-05 provides guidance to clarify the customer’s accounting for fees paid in a cloud computing arrangement. This ASU became effective for

12

the Company on January 1, 2016. The adoption of ASU 2015-05 did not have a material impact on the Company's financial statements.

In May 2015, the FASB issued ASU No. 2015-07, "Fair Value Measurement (Topic 820): Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent)." ASU 2015-07 removes the requirement to categorize within the fair value hierarchy all investments for which fair value is measured using the net asset value per share practical expedient. The ASU also removes the requirement to make certain disclosures for all investments that are eligible to be measured at fair value using the net asset value per share practical expedient. This ASU became effective for the Company on January 1, 2016. The adoption of ASU 2015-07 did not have a material impact on the Company's financial statements.

In September 2015, the FASB issued ASU No. 2015-16, "Business Combinations (Topic 85): Simplifying the Accounting for Measurement-Period Adjustments." The amendments in ASU 2015-16 require that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The effect on earnings of the adjustments as a result of the change to the provisional amounts will be calculated as if the accounting had been completed at the acquisition date. The amount that would've been recorded in the previous reporting periods will be presented separately on the face of the income statement or disclosed in the notes to the financial statements. This ASU became effective for the Company on January 1, 2016. The adoption of ASU 2015-16 did not have a material impact on the Company's financial statements.

In November 2015, the FASB issued ASU No. 2015-17, "Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes." This standard requires that deferred tax liabilities and assets be classified as non-current on the balance sheet. This ASU will become effective for the Company for interim and annual periods on January 1, 2017 and early adoption is permitted. The adoption of ASU No. 2015-17 is not expected to have a material impact on the Company's financial statements.

In January 2016, the FASB issued ASU No. 2016-01, "Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities." This standard makes several modifications to Subtopic 825-10 including the elimination of the available-for-sale classification of equity investments, and requires equity investments with readily determinable fair values to be measured at fair value with changes in fair value recognized in net income. This ASU will become effective for the Company for interim and annual periods on January 1, 2018. The adoption of ASU No. 2016-01 is not expected to have a material impact on the Company's financial statements.

In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842).” This standardrequires organizations to recognizing lease assets and lease liabilities on the balance sheet and disclose key information about leasing requirements for leases that were historically classified as operating leases under previous generally accepted accounting principals. This ASU will become effective for the Company for interim and annual periods on January 1, 2019. The adoption of ASU No. 2016-02 is not expected to have a material impact on the Company’s financial statements.

In March 2016, the FASB issued ASU No. 2016-09, “Compensation-Stock Compensation (Topic 718): Improvements to Employee Share Based Accounting.” This standard makes several modifications to the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. This ASU will become effective for the Company for interim and annual periods on January 1, 2017. The adoption of ASU No. 2016-09 is not expected to have a material impact on the Company’s financial statements.

In April 2016, the FASB issued ASU No. 2016-10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing.” The amendments in this standard clarify identifying performance obligations and the licensing implementation guidance under Topic 606. This ASU will become effective for the Company for interim and annual periods on January 1, 2018. The adoption of ASU No. 2016-10 is not expected to have a material impact on the Company’s financial statements.

In June 2016, the FASB issued ASU No. 2016-13, "Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments" This standard replaces the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The amendments in this update require a financial asset (or a group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected. The new current expected credit losses model (CECL) will apply to the allowance for loan losses, available-for-sale and held to maturity debt securities, purchased financial assets with credit deterioration and certain off-balance sheet credit exposures. This ASU will become effective for the Company for interim and annual periods on January 1, 2020. Management is currently evaluating the potential impact of ASU No. 2016-13 on the Company's financial statements.

13

Note C –Investments

The amortized cost and estimated fair values of the Company's securities are shown in the following table (in thousands):

	June 30, 2016								December 31, 2015
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Securities available-for-sale:
U.S. Treasuries and U.S.
government agencies	$	4	$	—	$	—	$	4	$	5	$	—	$	—	$	5
Obligations of states and
political subdivisions	57,224		2,070		3		59,291		49,725		979		7		50,697
Mortgage-backed securities:
U.S. government agencies	306,201		7,035		128		313,108		287,933		2,285		2,021		288,197
Private label	1,108		3		—		1,111		1,222		9		—		1,231
Trust preferred securities	6,046		1,178		901		6,323		6,550		463		1,155		5,858
Corporate securities	23,930		436		126		24,240		18,793		221		321		18,693
Total Debt Securities	394,513		10,722		1,158		404,077		364,228		3,957		3,504		364,681
Marketable equity  securities	2,136		1,283		—		3,419		2,131		1,142		—		3,273
Investment funds	1,525		18		—		1,543		1,525		—		13		1,512
Total Securities
Available-for-Sale	$	398,174	$	12,023	$	1,158	$	409,039	$	367,884	$	5,099	$	3,517	$	369,466

	June 30, 2016								December 31, 2015
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Securities held-to-maturity:
Mortgage-backed securities
US government agencies	$	79,208	$	3,736	$	—	$	82,944	$	84,937	$	1,949	$	76	$	86,810
Trust preferred securities	4,000		—		—		4,000		4,000		—		—		4,000
Total Securities
Held-to-Maturity	$	83,208	$	3,736	$	—	$	86,944	$	88,937	$	1,949	$	76	$	90,810
Other investment securities:
Non-marketable equity securities	$	10,203	$	—	$	—	$	10,203	$	12,915	$	—	$	—	$	12,915
Total Other Investment
Securities	$	10,203	$	—	$	—	$	10,203	$	12,915	$	—	$	—	$	12,915

Marketable equity securities consist of investments made by the Company in equity positions of various regional community banks. Included within this portfolio are ownership positions in the following community bank holding companies: First National Corporation (FXNC) (4%) and Eagle Financial Services, Inc. (EFSI) (1.5%). Securities with limited marketability, such as stock in the Federal Reserve Bank ("Federal Reserve") or the Federal Home Loan Bank ("FHLB"), are carried at cost and are reported as non-marketable equity securities in the table above.

Certain investment securities owned by the Company were in an unrealized loss position (i.e., amortized cost basis exceeded the estimated fair value of the securities).  The following table shows the gross unrealized losses and fair value of the Company’s investments aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position (in thousands):

14

	June 30, 2016
	Less Than Twelve Months				Twelve Months or Greater				Total
	Estimated Fair Value		Unrealized Loss		Estimated Fair Value		Unrealized Loss		Estimated Fair Value		Unrealized Loss
Securities available-for-sale:
Obligations of states and political subdivisions	$	480	$	3	$	—	$	—	$	480	$	3
Mortgage-backed securities:
U.S. Government agencies	16		—		17,020		128		17,036		128
Trust preferred securities	—		—		4,618		901		4,618		901
Corporate securities	2,273		122		1,025		4		3,298		126
Total	$	2,769	$	125	$	22,663	$	1,033	$	25,432	$	1,158

	December 31, 2015
	Less Than Twelve Months				Twelve Months or Greater				Total
	Estimated Fair Value		Unrealized Loss		Estimated Fair Value		Unrealized Loss		Estimated Fair Value		Unrealized Loss
Securities available-for-sale:
Obligations of states and political subdivisions	$	2,406	$	5	$	128	$	2	$	2,534	$	7
Mortgage-backed securities:
U.S. Government agencies	129,612		688		34,044		1,333		163,656		2,021
Trust preferred securities	—		—		4,769		1,155		4,769		1,155
Corporate securities	10,856		174		2,231		147		13,087		321
Investment funds	—		—		1,488		13		1,488		13
Total	$	142,874	$	867	$	42,660	$	2,650	$	185,534	$	3,517

During the six months ended June 30, 2016, the Company had $0.4 million in investment impairment losses. For the six months ended June 30, 2015 and the year ended December 31, 2015, the Company had no investment impairment losses. At June 30, 2016, the cumulative amount of credit-related investment impairment losses that have been recognized by the Company on investments that remain in the Company's investment portfolio as of those dates was $14.5 million ($12.9 million related to the Company's debt securities and $1.6 million related to the Company's equity securities).

Declines in the fair value of held-to-maturity and available-for-sale securities below their cost that are deemed to be other-than-temporary would be reflected in earnings as realized losses. In estimating other-than-temporary impairment losses, management considers, among other things (i) the length of time and the extent to which the fair value has been less than cost; (ii) the financial condition, capital strength, and near-term (within 12 months) prospects of the issuer, including any specific events which may influence the operations of the issuer such as changes in technology that may impair the earnings potential of the investment or the discontinuance of a segment of the business that may affect the future earnings potential; (iii) the historical volatility in the market value of the investment and/or the liquidity or illiquidity of the investment; (iv) adverse conditions specifically related to the security, an industry, or a geographic area; (v) the intent to sell the investment security and if it’s more likely than not that the Company will not have to sell the security before recovery of its cost basis. In addition, management also employs a continuous monitoring process in regards to its marketable equity securities, specifically its portfolio of regional community bank holdings. Although the regional community bank stocks that are owned by the Company are publicly traded, the trading activity for these stocks is minimal, with trading volumes of less than 0.2% of each respective company being traded on a daily basis. As part of management’s review process for these securities, management reviews the financial condition of each respective regional community bank for any indications of financial weakness.

Management has the ability and intent to hold the securities classified as held-to-maturity until they mature, at which time the Company expects to receive full value for the securities. Furthermore, as of June 30, 2016, management generally does not intend to sell an impaired security and it is not more than likely that it will be required to sell the security before the recovery of its amortized cost basis. The unrealized losses on debt securities are primarily the result of interest rate changes, credit spread fluctuations on agency-issued mortgage related securities, general financial market uncertainty and unprecedented market volatility. These conditions should not prohibit the Company from receiving its contractual principal and interest payments on its debt securities. The fair value is expected to recover as the securities approach their maturity date or repricing date. As of June 30, 2016, management believes the unrealized losses detailed in the table above are temporary and no additional impairment loss has

15

been recognized in the Company’s consolidated income statement. Should the impairment of any of these securities become other-than-temporary, the cost basis of the investment will be reduced and the resulting loss will be recognized in net income in the period the other-than-temporary impairment is identified, while any noncredit loss will be recognized in other comprehensive income.

The amortized cost and estimated fair value of debt securities at June 30, 2016, by contractual maturity, are shown in the following table (in thousands).  Expected maturities will differ from contractual maturities because the issuers of the securities may have the right to prepay obligations without prepayment penalties.  Mortgage-backed securities have been allocated to their respective maturity groupings based on their contractual maturity.

	Amortized Cost		Estimated Fair Value
Securities Available-for-Sale
Due in one year or less	$	4,026	$	4,084
Due after one year through five years	25,063		17,326
Due after five years through ten years	35,413		44,738
Due after ten years	330,011		337,929
	$	394,513	$	404,077
Securities Held-to-Maturity
Due in one year or less	$	—	$	—
Due after one year through five years	—		—
Due after five years through ten years	—		—
Due after ten years	83,208		86,944
	$	83,208	$	86,944

Gross gains and gross losses realized by the Company from investment security transactions are summarized in the table below (in thousands).

	Three months ended June 30,					Six months ended June 30,
	2016			2015		2016			2015
Gross realized gains	$	1,256		$	2,116	$	1,256		$	2,130
Gross realized losses	(411		)	—		(411		)	—
Net investment security gains	$	845		$	2,116	$	845		$	2,130

The carrying value of securities pledged to secure public deposits and for other purposes as required or permitted by law approximated $294 million and $273 million at June 30, 2016 and December 31, 2015, respectively.

Note D –Loans

The following summarizes the Company’s major classifications for loans (in thousands):

	June 30, 2016			December 31, 2015
Residential real estate	$	1,417,137		$	1,383,133
Home equity	142,827			147,036
Commercial and industrial	171,362			165,340
Commercial real estate	1,135,493			1,127,581
Consumer	33,799			36,083
DDA overdrafts	2,780			3,361
Gross loans	2,903,398			2,862,534
Allowance for loan losses	(19,139		)	(19,251		)
Net loans	$	2,884,259		$	2,843,283

16

Construction loans of $12.3 million and $13.1 million are included within residential real estate loans at June 30, 2016 and December 31, 2015, respectively.  Construction loans of $2.2 million and $12.6 million are included within commercial real estate loans at June 30, 2016 and December 31, 2015, respectively.  The Company’s commercial and residential real estate construction loans are primarily secured by real estate within the Company’s principal markets.  These loans were originated under the Company’s loan policy, which is focused on the risk characteristics of residential and commercial real estate lending, including specific risks related to construction lending.  Adequate consideration has been given to these loans in establishing the Company’s allowance for loan losses.

The following table details the loans acquired in conjunction with the Virginia Savings Bancorp, Inc. ("Virginia Savings"), Community Financial Corporation ("Community") and American Founders Bank ("AFB") acquisitions (in thousands):

	Virginia
	Savings		Community		AFB		Total
June 30, 2016
Outstanding loan balance	$	27,113	$	164,558	$	105,398	$	297,069
Credit-impaired loans:
Carrying value	1,714		11,160		—		12,874
Contractual principal and interest	1,924		14,042		—		15,966
December 31, 2015
Outstanding loan balance	$	28,914	$	181,545	$	112,862	$	323,321
Credit-impaired loans:
Carrying value	1,707		12,899		—		14,606
Contractual principal and interest	1,965		16,362		—		18,327

17

Changes in the accretable yield of the credit-impaired loans for the six months ended June 30, 2016 is as follows (in thousands):

	Virginia Savings						Community						Total
				Carrying						Carrying						Carrying
	Accretable			Amount			Accretable			Amount			Accretable			Amount
	Yield			of Loans			Yield			of Loans			Yield			of Loans
Balance at the beginning of the period	$	374		$	1,707		$	6,266		$	12,899		$	6,640		$	14,606
Accretion	(86		)	86			(530		)	530			(616		)	616
Net reclassifications to accretable yield from
non-accretable yield	51			—			(38		)	—			13			—
Payments received, net	—			(79		)	—			(2,011		)	—			(2,090		)
Disposals	—			—			—			(258		)	—			(258		)
Balance at the end of period	$	339		$	1,714		$	5,698		$	11,160		$	6,037		$	12,874

Increases in expected cash flow subsequent to the acquisition are recognized first as a reduction of any previous impairment, then prospectively through adjustment of the yield on the loans or pools over its remaining life, while decreases in expected cash flows are recognized as impairment through a provision for loan loss and an increase in the allowance for purchased credit-impaired loans.

Note E – Allowance For Loan Losses

Management systematically monitors the loan portfolio and the adequacy of the allowance for loan losses on a quarterly basis to provide for probable losses inherent in the portfolio.  Management assesses the risk in each loan type based on historical trends, the general economic environment of its local markets, individual loan performance and other relevant factors.

Individual credits are selected throughout the year for detailed loan reviews, which are utilized by management to assess the risk in the portfolio and the adequacy of the allowance.  Due to the nature of commercial lending, evaluation of the adequacy of the allowance as it relates to these loan types is often based more upon specific credit reviews, with consideration given to the potential impairment of certain credits and historical loss rates, adjusted for economic conditions and other inherent risk factors.

The following table summarizes the activity in the allowance for loan loss, by portfolio segment, for the six months ended June 30, 2016 and 2015 (in thousands).  The allocation of a portion of the allowance in one portfolio segment does not preclude its availability to absorb losses in other portfolio segments. The following table also presents the balance in the allowance for loan loss disaggregated on the basis of the Company’s impairment measurement method and the related recorded investment in loans, by portfolio segment, as of June 30, 2016 and December 31, 2015 (in thousands).

	Commercial &			Commercial			Residential									DDA
	Industrial			Real Estate			Real Estate			Home Equity			Consumer			Overdrafts			Total
Six months ended June 30, 2016
Allowance for loan loss
Beginning balance	$	3,271		$	6,985		$	6,778		$	1,463		$	97		$	657		$	19,251
Charge-offs	(45		)	(1,071		)	(742		)	(175		)	(82		)	(639		)	(2,754		)
Recoveries	4			404			90			—			81			402			981
Provision for acquired loans	—			168			—			—			—			—			168
Provision	861			(213		)	232			135			(5		)	483			1,493
Ending balance	$	4,091		$	6,273		$	6,358		$	1,423		$	91		$	903		$	19,139
Six months ended June 30, 2015
Allowance for loan loss
Beginning balance	$	1,582		$	8,845		$	7,208		$	1,495		$	85		$	859		$	20,074
Charge-offs	(2,538		)	(276		)	(529		)	(108		)	(143		)	(624		)	(4,218		)
Recoveries	27			31			64			—			79			406			607

18

Provision for acquired loans	—		545			—		—		—		—		545
Provision	3,154		(623		)	332		106		99		111		3,179
Ending balance	$	2,225	$	8,522		$	7,075	$	1,493	$	120	$	752	$	20,187
As of June 30, 2016
Allowance for loan loss
Evaluated for impairment:
Individually	$	—	$	—		$	—	$	—	$	—	$	—	$	—
Collectively	4,088		5,670			6,266		1,423		91		903		18,441
Acquired with deteriorated
credit quality	3		603			92		—		—		—		698
Total	$	4,091	$	6,273		$	6,358	$	1,423	$	91	$	903	$	19,139
Loans
Evaluated for impairment:
Individually	$	2,114	$	4,838		$	—	$	—	$	—	$	—	$	6,952
Collectively	168,929		1,120,863			1,414,488		142,827		33,684		2,780		2,883,571
Acquired with deteriorated
credit quality	319		9,792			2,649		—		115		—		12,875
Total	$	171,362	$	1,135,493		$	1,417,137	$	142,827	$	33,799	$	2,780	$	2,903,398
As of December 31, 2015
Allowance for loan loss
Evaluated for impairment:
Individually	$	—	$	—		$	—	$	—	$	—	$	—	$	—
Collectively	3,267		6,173			6,765		1,463		97		657		18,422
Acquired with deteriorated
credit quality	4		812			13		—		—		—		829
Total	$	3,271	$	6,985		$	6,778	$	1,463	$	97	$	657	$	19,251
Loans
Evaluated for impairment:
Individually	$	2,349	$	6,133		$	—	$	—	$	—	$	—	$	8,482
Collectively	162,662		1,109,327			1,381,064		147,036		35,997		3,361		2,839,447
Acquired with deteriorated
credit quality	329		12,121			2,069		—		86		—		14,605
Total	$	165,340	$	1,127,581		$	1,383,133	$	147,036	$	36,083	$	3,361	$	2,862,534

In the second quarter of 2016, parts of West Virginia were impacted by tragic flooding. Upon review of the Company's loan balances in those communities impacted, management has estimated that there are approximately $40 million of loans outstanding, with 90% being residential real estate loans located out of the floodplains. Within zip codes where the flooding occurred, there are approximately 900 loans, mostly residential real estate loans, that have an average balance of under $43,000. It is still early in the recovery process, and while the Company did not recognize any losses related to the flooding in the second quarter of 2016, the exact nature of any future loan losses remains unknown. While it is likely that the Company will experience losses due to the flood, the amount of such loss is currently not estimable.

Credit Quality Indicators

All commercial loans within the portfolio are subject to internal risk grading.  All non-commercial loans are evaluated based on payment history.  The Company’s internal risk ratings for commercial loans are:  Pass, Special Mention, Substandard and Doubtful.  Each internal risk rating is defined in the loan policy using the following criteria:  balance sheet yields; ratios and leverage; cash flow spread and coverage; prior history; capability of management; market position/industry; potential impact of

19

changing economic, legal, regulatory or environmental conditions; purpose; structure; collateral support; and guarantor support.  Risk grades are generally assigned by the primary lending officer and are periodically evaluated by the Company’s internal loan review process.  Based on an individual loan’s risk grade, estimated loss percentages are applied to the outstanding balance of the loan to determine the amount of probable loss.

The Company categorizes loans into risk categories based on relevant information regarding the customer’s debt service ability, capacity, overall collateral position along with other economic trends, and historical payment performance.  The risk grades for each credit are updated when the Company receives current financial information, the loan is reviewed by the Company’s internal loan review/credit administration departments, or the loan becomes delinquent or impaired.  The risk grades are updated a minimum of annually for loans rated exceptional, good, acceptable, or pass/watch.  Loans rated special mention, substandard or doubtful are reviewed at least quarterly.  The Company uses the following definitions for its risk ratings:

Risk Rating	Description
Pass ratings:
(a) Exceptional	Loans classified as exceptional are secured with liquid collateral conforming to the internal loan policy.  Loans rated within this category pose minimal risk of loss to the bank.
(b) Good	Loans classified as good have similar characteristics that include a strong balance sheet, satisfactory debt service coverage ratios, strong management and/or guarantors, and little exposure to economic cycles. Loans in this category generally have a low chance of loss to the bank.
(c) Acceptable	Loans classified as acceptable have acceptable liquidity levels, adequate debt service coverage ratios, experienced management, and have average exposure to economic cycles.  Loans within this category generally have a low risk of loss to the bank.
(d) Pass/watch	Loans classified as pass/watch have erratic levels of leverage and/or liquidity, cash flow is volatile and the borrower is subject to moderate economic risk.  A borrower in this category poses a low to moderate risk of loss to the bank.
Special mention	Loans classified as special mention have a potential weakness(es) that deserves management’s close attention.  The potential weakness could result in deterioration of the loan repayment or the bank’s credit position at some future date.  A loan rated in this category poses a moderate loss risk to the bank.
Substandard	Loans classified as substandard reflect a customer with a well defined weakness that jeopardizes the liquidation of the debt.  Loans in this category have the possibility that the bank will sustain some loss if the deficiencies are not corrected and the bank’s collateral value is weakened by the financial deterioration of the borrower.
Doubtful	Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristics that make collection of the full contract amount highly improbable.  Loans rated in this category are most likely to cause the bank to have a loss due to a collateral shortfall or a negative capital position.

20

The following table presents the Company’s commercial loans by credit quality indicators, by class (in thousands):

	Commercial and industrial		Commercial real estate		Total
June 30, 2016
Pass	$	161,579	$	1,079,105	$	1,240,684
Special mention	2,236		16,021		18,257
Substandard	7,547		40,367		47,914
Doubtful	—		—		—
Total	$	171,362	$	1,135,493	$	1,306,855
December 31, 2015
Pass	$	156,664	$	1,070,506	$	1,227,170
Special mention	4,099		20,942		25,041
Substandard	4,539		36,133		40,672
Doubtful	38		—		38
Total	$	165,340	$	1,127,581	$	1,292,921

The following table presents the Company's non-commercial loans by payment performance, by class (in thousands):

	Performing		Non-Performing		Total
June 30, 2016
Residential real estate	$	1,414,503	$	2,634	$	1,417,137
Home equity	142,612		215		142,827
Consumer	33,711		88		33,799
DDA overdrafts	2,780		—		2,780
Total	$	1,593,606	$	2,937	$	1,596,543
December 31, 2015
Residential real estate	$	1,379,797	$	3,336	$	1,383,133
Home equity	146,877		159		147,036
Consumer	36,049		34		36,083
DDA overdrafts	3,361		—		3,361
Total	$	1,566,084	$	3,529	$	1,569,613

Aging Analysis of Accruing and Non-Accruing Loans

Interest income on loans is accrued and credited to operations based upon the principal amount outstanding, using methods that generally result in level rates of return.  Loan origination fees, and certain direct costs, are deferred and amortized as an adjustment to the yield over the term of the loan.  The accrual of interest generally is discontinued when a loan becomes 90 days past due as to principal or interest for all loan types.  However, any loan may be placed on non-accrual if the Company receives information that indicates a borrower is unable to meet the contractual terms of its respective loan agreement.  Other indicators considered for placing a loan on non-accrual status include the borrower’s involvement in bankruptcies, foreclosures, repossessions, litigation and any other situation resulting in doubt as to whether full collection of contractual principal and interest is attainable.  When interest accruals are discontinued, unpaid interest recognized in income in the current year is reversed, and interest accrued in prior years is charged to the allowance for loan losses.  Management may elect to continue the accrual of interest when the net realizable value of collateral exceeds the principal balance and related accrued interest, and the loan is in the process of collection.

Generally for all loan classes, interest income during the period the loan is non-performing is recorded on a cash basis after recovery of principal is reasonably assured.  Cash payments received on nonperforming loans are typically applied directly against the outstanding principal balance until the loan is fully repaid.  Generally, loans are restored to accrual status when the obligation is brought current, has performed in accordance with the contractual terms for a reasonable period of time, and the ultimate collectability of the total contractual principal and interest is no longer in doubt.

21

Generally, all loan types are considered past due when the contractual terms of a loan are not met and the borrower is 30 days or more past due on a payment.  Furthermore, residential and home equity loans are generally subject to charge-off when the loan becomes 120 days past due, depending on the estimated fair value of the collateral less cost to dispose, versus the outstanding loan balance.  Commercial loans are generally charged off when the loan becomes 120 days past due.  Open-end consumer loans are generally charged off when the loan becomes 180 days past due.

A loan acquired and accounted for under ASC Topic 310-30 is reported as an accruing loan and a performing asset provided that the loan is performing in accordance with the initial expectations. The loan would be considered non-performing if the loan's performance deteriorates below the initial expectations.

The following table presents an aging analysis of the Company’s accruing and non-accruing loans, by class (in thousands):

	June 30, 2016
	Accruing
	Current		30-59 days		60-89 days		Over 90 days		Purchased-Credit Impaired		Non-accrual		Total
Residential real estate	$	1,409,116	$	4,680	$	707	$	103	$	—	$	2,531	$	1,417,137
Home equity	142,067		410		135		50		—		165		142,827
Commercial and industrial	168,334		290		14		—		—		2,724		171,362
Commercial real estate	1,123,968		1,230		—		—		516		9,779		1,135,493
Consumer	33,649		59		3		88		—		—		33,799
DDA overdrafts	2,490		290		—		—		—		—		2,780
Total	$	2,879,624	$	6,959	$	859	$	241	$	516	$	15,199	$	2,903,398
	December 31, 2015
	Accruing
	Current		30-59 days		60-89 days		Over 90 days		Purchased-Credit Impaired		Non-accrual		Total
Residential real estate	$	1,373,604	$	5,261	$	932	$	418	$	—	$	2,918	$	1,383,133
Home equity	146,493		318		65		24		—		136		147,036
Commercial and industrial	162,435		141		—		19		—		2,745		165,340
Commercial real estate	1,114,953		762		211		—		506		11,149		1,127,581
Consumer	35,886		154		9		34		—		—		36,083
DDA overdrafts	3,048		310		3		—		—		—		3,361
Total	$	2,836,419	$	6,946	$	1,220	$	495	$	506	$	16,948	$	2,862,534

22

The following table presents the Company’s impaired loans, by class (in thousands). The difference between the unpaid principal balance and the recorded investment generally reflects amounts that have been previously charged-off. There are no impaired residential, home equity, or consumer loans.

	June 30, 2016						December 31, 2015
			Unpaid						Unpaid
	Recorded		Principal		Related		Recorded		Principal		Related
	Investment		Balance		Allowance		Investment		Balance		Allowance
With no related allowance recorded:
Commercial and industrial	$	2,114	$	5,250	$	—	$	2,349	$	7,547	$	—
Commercial real estate	4,838		7,077		—		6,133		9,502		—
Total	$	6,952	$	12,327	$	—	$	8,482	$	17,049	$	—
With an allowance recorded:
Commercial and industrial	$	—	$	—	$	—	$	—	$	—	$	—
Commercial real estate	—		—		—		—		—		—
Total	$	—	$	—	$	—	$	—	$	—	$	—

     The following table presents information related to the average recorded investment and interest income recognized on the Company’s impaired loans, by class (in thousands):

	Six months ended June 30,
	2016				2015
	Average		Interest		Average		Interest
	Recorded		Income		Recorded		Income
	Investment		Recognized		Investment		Recognized
With no related allowance recorded:
Commercial and industrial	$	2,339	$	—	$	2,814	$	—
Commercial real estate	4,739		9		5,355		9
Total	$	7,078	$	9	$	8,169	$	9
With an allowance recorded:
Commercial and industrial	$	—	$	—	$	—	$	—
Commercial real estate	—		—		1,365		40
Total	$	—	$	—	$	1,365	$	40

23

     Approximately $0.2 million and $0.4 million of interest income would have been recognized during the six months ended June 30, 2016 and 2015, respectively, if such loans had been current in accordance with their original terms.  There were no commitments to provide additional funds on non-accrual, impaired or other potential problem loans at June 30, 2016.

Loan Modifications

The Company’s policy on loan modifications typically does not allow for modifications that would be considered a concession from the Company.  However, when there is a modification, the Company evaluates each modification to determine if the modification constitutes a troubled debt restructuring (“TDR”) in accordance with ASU 2011-2, whereby a modification of a loan would be considered a TDR when both of the following conditions are met: (1) a borrower is experiencing financial difficulty and (2) the modification constitutes a concession.  When determining whether the borrower is experiencing financial difficulties, the Company reviews whether the borrower is currently in payment default on any of its debt or whether it is probable that the borrower would be in payment default in the foreseeable future without the modification.  Other indicators of financial difficulty include whether the borrower has declared or is in the process of declaring bankruptcy, the borrower’s ability to continue as a going concern, and the borrower’s projected cash flow to service its debt (including principal and interest) in accordance with the contractual terms for the foreseeable future, without a modification.

Regulatory guidance requires loans to be accounted for as collateral-dependent loans when borrowers have filed Chapter 7 bankruptcy, the debt has been discharged by the bankruptcy court, and the borrower has not reaffirmed the debt. The filing of bankruptcy is deemed to be evidence that the borrower is in financial difficulty and the discharge of the debt by the bankruptcy court is deemed to be a concession granted to the borrower.

The following tables set forth the Company’s TDRs (in thousands):

	June 30, 2016						December 31, 2015
			Non-						Non-
	Accruing		Accruing		Total		Accruing		Accruing		Total
Commercial and industrial	$	50	$	—	$	50	$	58	$	—	$	58
Commercial real estate	2,743		—		2,743		1,746		—		1,746
Residential real estate	19,685		390		20,075		17,796		191		17,987
Home equity	2,873		44		2,917		2,659		34		2,693
Consumer	—		—		—		—		—		—
	$	25,351	$	434	$	25,785	$	22,259	$	225	$	22,484

	New TDRs
	Six months ended June 30,
	2016					2015
		Pre		Post			Pre		Post
		Modification		Modification			Modification		Modification
		Outstanding		Outstanding			Outstanding		Outstanding
	Number of	Recorded		Recorded		Number of	Recorded		Recorded
	Contracts	Investment		Investment		Contracts	Investment		Investment
Commercial and industrial	—	$	—	$	—	—	$	—	$	—
Commercial real estate	1	2,225		2,225		—	—		—
Residential real estate	20	1,857		1,857		27	2,006		2,006
Home equity	3	69		69		11	259		259
Consumer	—	—		—		—	—		—
	24	$	4,151	$	4,151	38	$	2,265	$	2,265

24

Note F – Long-Term Debt

The components of long-term debt are summarized below (in thousands):

	June 30, 2016		December 31, 2015
Junior subordinated debentures owed to City Holding Capital Trust III, due 2038, interest at a rate of 4.15% and 4.01%, respectively	$	16,495	$	16,495

The Company formed a statutory business trust, City Holding Capital Trust III (“Capital Trust III”), under the laws of Delaware.  Capital Trust III was created for the exclusive purpose of (i) issuing trust-preferred capital securities (“Capital Securities”), which represent preferred undivided beneficial interests in the assets of the trust, (ii) using the proceeds from the sale of the Capital Securities to acquire junior subordinated debentures (“Debentures”) issued by the Company, and (iii) engaging in only those activities necessary or incidental thereto.  The trust is considered a variable interest entity for which the Company is not the primary beneficiary.  Accordingly, the accounts of the trusts are not included in the Company’s consolidated financial statements.

Distributions on the Debentures are cumulative and will be payable quarterly at an interest rate of 3.50% over the three month LIBOR rate, reset quarterly.  Interest payments are due in March, June, September and December.  The Debentures are redeemable prior to maturity at the option of the Company (i) in whole at any time or in part from time-to-time, or (ii) in whole, but not in part, at any time within 90 days following the occurrence and during the continuation of certain predefined events.

Payments of distributions on the Capital Securities and payments on redemption of the Capital Securities are guaranteed by the Company.  The Company also entered into an agreement as to expenses and liabilities with the trust pursuant to which it agreed, on a subordinated basis, to pay any cost, expenses or liabilities of the trust other than those arising under the Capital Securities.  The obligations of the Company under the Debentures, the related indentures, the trust agreement establishing the trust, the guarantees and the agreements as to expenses and liabilities, in the aggregate, constitute a full and unconditional guarantee by the Company of the trust’s obligations under the Capital Securities.  The Capital Securities issued by the statutory business trusts qualify as Tier 1 capital for the Company under current Federal Reserve Board guidelines.

Note G – Derivative Instruments

The Company enters into derivative transactions principally to protect against the risk of adverse price or interest rate movements on the value of certain assets and liabilities on future cash flows. As of June 30, 2016 and December 31, 2015, the Company has derivative financial instruments not included in hedge relationships.  These derivatives consist of interest rate swaps and floors used for interest rate management purposes and derivatives executed with commercial banking customers to facilitate their interest rate management strategies. For the majority of these instruments the Company acts as an intermediary for its customers. Changes in the fair value of the underlying derivative contracts for the most part offset each other and do not significantly impact the Company's results of operations. The Company also has an interest rate swap for the purpose of hedging changes in LIBOR related to commercial real estate loans. Hedge ineffectiveness is assessed quarterly and any ineffectiveness is recorded as non-interest expense. For the three and six months ended June 30, 2016 and three and six months ended June 30, 2015 hedge ineffectiveness was less than $0.1 million for each respective period.

The following table summarizes the notional and fair value of these derivative instruments (in thousands):

	June 30, 2016				December 31, 2015
	Notional Amount		Fair Value		Notional Amount		Fair Value
Non-hedging interest rate derivatives:
Other Assets	$	398,139	$	29,415	$	372,995	$	10,811
Other Liabilities	405,662		29,733		380,995		10,872
Derivatives designated as hedges of fair value:
Other Liabilities	4,842		229		5,475		61

The following table summarizes the change in fair value of these derivative instruments (in thousands):

25

	Three months ended June 30,						Six months ended June 30,
	2016			2015			2016			2015
Change in Fair Value Non-Hedging Interest Rate Derivatives:
Other income - derivative asset	$	(6,744	)	$	(5,310	)	$	(18,090	)	$	(2,428	)
Other income - derivative liability	6,869			5,310			18,498			2,428
Change in Fair Value Hedging Interest Rate Derivatives:
Hedged item - derivative asset	43			(78		)	164			(12		)
Other income - derivative liability	6			(7		)	4			2

Certain financial instruments, including derivatives, may be eligible for offset in the consolidated balance sheet and/or subject to master netting arrangements. The Company's derivative transactions with financial institution counterparties are generally executed under International Swaps and Derivative Association ("ISDA") master agreements which include "right of setoff" provisions. In such cases there is generally a legally enforceable right to offset recognized amounts and there may be an intention to settle such amounts on a net basis. Nonetheless, the Company does not generally offset financial instruments for financial reporting purposes. Information about financial instruments that are eligible for offset in the consolidated balance sheet as of June 30, 2016 is presented in the following tables (in thousands):

Gross Amounts

Not Offset in the Statement

of Financial Position

Total

of Gross

Amounts

Not Offset in

the Statement

of Financial

Position

Netting

Including

Gross

Net Amounts

Adjustment

Applicable

Amounts

of Assets

per

Netting

Gross

Offset in the

Presented in

Applicable

Agreement

Amounts of

Statement of

the Statement

Master

Fair Value

and Fair

Recognized

Financial

of Financial

Netting

of Financial

Value of

Description

Assets

Position

Position

Arrangements

Collateral

Collateral

Net Amount

(a)

(b)

(c)=(a)-(b)

(d)

(c)-(d) *

Non-hedging derivative assets:

Interest rate swap agreements

$

29,415

$

—

$

29,415

$

—

$

29,415

$

29,415

$

—

26

Gross Amounts

Not Offset in the Statement

of Financial Position

Total

of Gross

Amounts

Not Offset in

the Statement

of Financial

Position

Netting

Including

Gross

Net Amounts

Adjustment

Applicable

Amounts

of Liabilities

per

Netting

Gross

Offset in the

Presented in

Applicable

Agreement

Amounts of

Statement of

the Statement

Master

Fair Value

and Fair

Recognized

Financial

of Financial

Netting

of Financial

Value of

Description

Liabilities

Position

Position

Arrangements

Collateral

Collateral

Net Amount

(a)

(b)

(c)=(a)-(b)

(d)

(c)-(d) *

Non-hedging derivative liabilities:

Interest rate swap agreements

$

29,733

$

—

$

29,733

$

—

$

32,954

$

32,954

$

—

Hedging derivative liabilities:

Interest rate swap agreements

$

229

$

—

$

229

$

—

$

254

$

254

$

—

*

For instances where the fair value of financial collateral meets or exceeds the amounts presented in the Statement of Financial Position, no value is displayed to represent full collateralization.

27

Note H – Employee Benefit Plans

Pursuant to the terms of the City Holding Company 2003 Incentive Plan and the City Holding Company 2013 Incentive Plan (the "2003 Plan” and "2013 Plan", respectively), the Compensation Committee of the Board of Directors, or its delegate, may, from time to time, grant stock options, stock appreciation rights (“SARs”), or restricted stock awards to employees, directors and individuals who provide service to the Company (collectively, "Plan Participants").  The 2003 Plan expired in April of 2013 and the 2013 Plan was approved by the Company's shareholders in April 2013. A maximum of 750,000 shares of the Company’s common stock may be issued upon the exercise of stock options, SARs and stock awards under the 2013 Plan.  These limitations may be adjusted in the event of a change in the number of outstanding shares of common stock by reason of a stock dividend, stock split or other similar event.  Specific terms of options and SARs awarded, including vesting periods, exercise prices (stock price at date of grant) and expiration dates are determined at the date of grant and are evidenced by agreements between the Company and the awardee.  The exercise price of the option grants equals the market price of the Company’s common stock on the date of grant.  All incentive stock options and SARs will be exercisable up to 10 years from the date granted and all options and SARs are exercisable for the period specified in the individual agreement. As of June 30, 2016, under the 2003 Plan and 2013 Plan, 462,863 stock options had been awarded and 270,447 restricted stock awards had been awarded, respectively.

Each award from the 2003 Plan and 2013 Plan is evidenced by an award agreement that specifies the option price, the duration of the option, the number of shares to which the option pertains, and such other provisions as the Compensation Committee, or its delegate, determines.  The option price for each grant is equal to the fair market value of a share of the Company’s common stock on the date of the grant.  Options granted expire at such time as the Compensation Committee, or its delegate, determines at the date of the grant and in no event does the exercise period exceed a maximum of ten years.  Upon a change-in-control of the Company, as defined in the 2003 Plan and 2013 Plan, all outstanding options and awards shall immediately vest.

Certain stock options and restricted stock awards granted pursuant to the 2013 Plan have performance-based vesting requirements. These shares will vest in three separate annual installments of approximately 33.33% per installment on the third, fourth and fifth anniversaries of the grant date, subject further to performance-based vesting requirements. The performance-based vesting requirements are as follows:

* First Installment – the mean return on average assets of the Company (excluding merger and acquisition expenses and other nonrecurring items as determined by the Board of Directors of the Company) of the three years immediately prior to the vesting date is equal to or exceeds the median return on average assets over the 20 year period immediately preceding the vesting date of all FDIC insured depository institutions.

* Second Installment – the mean return on average assets of the Company (excluding merger and acquisition expenses and other nonrecurring items as determined by the Board of Directors of the Company) of the four years immediately prior to the vesting date is equal to or exceeds the median return on average assets over the 20 year period immediately preceding the vesting date of all FDIC insured depository institutions.

* Third Installment – the mean return on average assets of the Company (excluding merger and acquisition expenses and other nonrecurring items as determined by the Board of Directors of the Company) of the five years immediately prior to the vesting date is equal to or exceeds the median return on average assets over the 20 year period immediately preceding the vesting date of all FDIC insured depository institutions.

28

Stock Options

A summary of the Company’s stock option activity and related information is presented below:

	Six months ended June 30,
	2016				2015
	Options		Weighted-Average Exercise Price		Options		Weighted-Average Exercise Price
Outstanding at January 1	95,015		$	38.38	167,554		$	36.74
Granted	24,348		43.73		12,961		46.41
Exercised	(20,250	)	33.68		(29,250	)	34.30
Forfeited	—		—		(4,000	)	31.66
Outstanding at June 30	99,113		$	40.68	147,265		$	38.24
Exerciseable at June 30	15,500		$	36.23	72,000		$	37.01

Information regarding stock option exercises and stock-based compensation expense associated with stock options is provided in the following table (in thousands):    

	Six months ended June 30,
	2016		2015
Proceeds from stock option exercises	$	682	$	1,003
Intrinsic value of stock options exercised	302		322
Stock-based compensation expense associated with stock options	$	120	$	105
At period-end:	June 30, 2016
Unrecognized stock-based compensation expense associated with stock options	$	500
Weighted average period (in years) in which the above amount is expected to be
recognized	2.7

Shares issued in connection with stock option exercises are issued from available treasury shares. If no treasury shares are available, new shares would be issued from available authorized shares. During the six months ended June 30, 2016 and 2015, all shares issued in connection with stock option exercises were issued from available treasury stock.

Additional information regarding stock options outstanding and exercisable at June 30, 2016, is provided in the following table:

Ranges of Exercise Prices	No. of Options Outstanding	Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value (in thousands)		No. of Options Currently Exercisable	Weighted-Average Exercise Price of Options Currently Exercisable		Weighted-Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value of Options Currently Exercisable (in thousands)
$25.00 - $29.99	1,250	$	28.15	2.7	$	22	1,250	$	28.15	2.7	$	22
30.00 - 34.99	3,000	30.38		2.4	45		3,000	30.38		2.4	45
35.00 - 39.99	36,601	36.35		6.0	334		4,250	35.09		4.8	44
40.00 - 44.99	45,301	43.51		7.9	89		7,000	40.88		1.8	32
45.00 - 50.00	12,961	46.61		8.7	—		—	—		—	—
	99,113				$	490	15,500				$	143

29

The fair value of the options is estimated at the date of grant using a Black-Scholes option-pricing model.   The following weighted average assumptions were used to estimate the fair value of options granted:

	Six months ended June 30,
	2016		2015
Risk-free interest rate	1.43	%	1.95	%
Expected dividend yield	3.86	%	3.50	%
Volatility factor	30.76	%	45.40	%
Expected life of option	7.0 years		7.0 years

Restricted Shares

The Company records compensation expense with respect to restricted shares in an amount equal to the fair value of the common stock covered by each award on the date of grant. The restricted shares awarded become fully vested after various periods of continued employment from the respective dates of grant. The Company is entitled to an income tax deduction in an amount equal to the taxable income reported by the holders of the restricted shares when the restrictions are released and the shares are issued. Compensation is being charged to expense over the respective vesting periods.

Restricted shares are forfeited if the awardee officer or employee terminates his employment with the Company prior to the lapsing of restrictions. The Company records forfeitures of restricted stock as treasury share repurchases and any compensation cost previously recognized is reversed in the period of forfeiture.  Recipients of restricted shares do not pay any cash consideration to the Company for the shares, have the right to vote all shares subject to such grant and receive all dividends with respect to such shares, whether or not the shares have vested.  

A summary of the Company’s restricted shares activity and related information is presented below:

	Six months ended June 30,
	2016				2015
	Restricted Awards		Average Market Price at Grant		Restricted Awards		Average Market Price at Grant
Outstanding at January 1	172,921		$	37.38	163,431		$	35.50
Granted	27,451		45.99		25,440		46.35
Forfeited	—		—		(500	)	37.50
Vested	(21,700	)	33.89		(16,550	)	33.51
Outstanding at June 30	178,672		$	39.13	171,821		$	37.29

Information regarding stock-based compensation associated with restricted shares during the three months ended June 30, 2016 and 2015 is provided in the following table (in thousands):

	Six months ended June 30,
	2016		2015
Stock-based compensation expense associated with restricted shares	$	661	$	567
At period-end:	June 30, 2016
Unrecognized stock-based compensation expense associated with restricted shares	$	3,498
Weighted average period (in years) in which the above amount is expected to be
recognized	3.3

Shares issued in connection with restricted stock awards are issued from available treasury shares. If no treasury shares are available, new shares would be issued from available authorized shares. During the six months ended June 30, 2016 and 2015, all shares issued in connection with restricted stock awards were issued from available treasury stock.

30

Benefit Plans

The Company provides retirement benefits to its employees through the City Holding Company 401(k) Plan and Trust (the “401(k) Plan”), which is intended to be compliant with Employee Retirement Income Security Act (ERISA) section 404(c). The Company also maintains two frozen defined benefit pension plans (the “Defined Benefit Plans”), which were inherited from the Company's acquisition of the plan sponsors (Horizon Bancorp, Inc. and Community Financial Corporation).

The following table presents details of the Company's activities pursuant to these plans (in thousands):

	Three months ended June 30,						Six months ended June 30,
	2016			2015			2016			2015
Components of net periodic cost:
Interest cost	$	205		$	203		$	410		$	465
Expected return on plan assets	(288		)	(234		)	(577		)	(523		)
Net amortization and deferral	212			244			424			471
Net Periodic Pension Cost	$	129		$	213		$	257		$	413
401(k) Plan expense	$	201		$	182		$	418		$	411
Defined benefit plan contributions	$	—		$	85		$	—		$	170

Note I – Commitments and Contingencies

The Company is a party to certain financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers.  The Company has entered into agreements with certain customers to extend credit or provide a conditional commitment to provide payment on drafts presented in accordance with the terms of the underlying credit documents. The Company also provides overdraft protection to certain demand deposit customers that represent an unfunded commitment.  Overdraft protection commitments, which are included with other commitments below, are uncollateralized and are paid at the Company’s discretion.  Conditional commitments generally include standby and commercial letters of credit. Standby letters of credit represent an obligation of the Company to a designated third party contingent upon the failure of a customer of the Company to perform under the terms of the underlying contract between the customer and the third party. Commercial letters of credit are issued specifically to facilitate trade or commerce. Under the terms of a commercial letter of credit, drafts will be drawn when the underlying transaction is consummated, as intended, between the customer and a third party. The funded portion of these financial instruments is reflected in the Company’s balance sheet, while the unfunded portion of these commitments is not reflected in the balance sheet.  The table below presents a summary of the contractual obligations of the Company resulting from significant commitments (in thousands):

	June 30, 2016		December 31, 2015
Commitments to extend credit:
Home equity lines	$	187,645	$	183,017
Commercial real estate	89,912		84,672
Other commitments	183,241		177,491
Standby letters of credit	5,379		5,086
Commercial letters of credit	1,629		2,312

Loan commitments and standby and commercial letters of credit have credit risks essentially the same as those involved in extending loans to customers and are subject to the Company’s standard credit policies. Collateral is obtained based on management’s credit assessment of the customer. Management does not anticipate any material losses as a result of these commitments.

The Company is engaged in various legal actions that it deems to be in the ordinary course of business. As these legal actions are resolved, the Company could realize positive and/or negative impact to its financial performance in the period in which these legal actions are ultimately decided. There can be no assurance that current legal actions will have an immaterial impact on financial results, either positive or negative, or that no material legal actions may be presented in the future.

31

Note J – Accumulated Other Comprehensive Loss

The activity in accumulated other comprehensive loss is presented in the tables below (in thousands). All amounts are shown net of tax, which is calculated using a combined federal and state income tax rate approximating 37%.

	Accumulated Other Comprehensive Income (Loss)
				Unrealized
				Gains (Losses) on
	Defined Benefit			Securities
	Pension Plans			Available-for-Sale			Total
Balance at December 31, 2014	$	(5,349	)	$	1,190		$	(4,159	)
Other comprehensive income before reclassifications	—			611			611
Amounts reclassified from other comprehensive loss	—			(1,344		)	(1,344		)
	—			(733		)	(733		)
Balance at June 30, 2015	$	(5,349	)	$	457		$	(4,892	)
Balance at December 31, 2015	$	(4,759	)	$	927		$	(3,832	)
Other comprehensive income before reclassifications	—			6,402			6,402
Amounts reclassified from other comprehensive loss	—			(533		)	(533		)
	—			5,869			5,869
Balance at June 30, 2016	$	(4,759	)	$	6,796		$	2,037

	Amount reclassified from Other Comprehensive Loss
	Three months ended						Six months ended						Affected line item
	June 30,						June 30,						in the Statements
	2016			2015			2016			2015			of Income
Securities available-for-sale:
Net securities gains reclassified into earnings	$	(845	)	$	(2,116	)	$	(845	)	$	(2,130	)	Security gains (losses)
Related income tax expense	312			781			312			786			Income tax expense
Net effect on accumulated other comprehensive loss	$	(533	)	$	(1,335	)	$	(533	)	$	(1,344	)

32

Note K – Earnings per Share

The following table sets forth the computation of basic and diluted earnings per share using the two class method (in thousands, except per share data):

	Three months ended June 30,				Six months ended June 30,
	2016		2015		2016		2015
Distributed earnings allocated to common stock	$	6,375	$	6,344	$	12,751	$	12,688
Undistributed earnings allocated to common stock	6,016		5,505		11,204		16,950
Net earnings allocated to common shareholders	$	12,391	$	11,849	$	23,955	$	29,638
Average shares outstanding	14,889		15,104		14,903		15,079
Effect of dilutive securities:
Warrant outstanding	—		—		—		55
Employee stock awards	13		23		12		22
Shares for diluted earnings per share	14,902		15,127		14,915		15,156
Basic earnings per share	$	0.83	$	0.78	$	1.61	$	1.97
Diluted earnings per share	$	0.83	$	0.78	$	1.61	$	1.96

During the three months ended June 30, 2015 there were no anti-dilutive options outstanding. Options to purchase approximately 4,200 shares of common stock were outstanding during the three months ended June 30, 2016 but were not included in the computation of diluted earnings per share because the options’ exercise price was greater than the average market price of the common shares and therefore, the effect would have been anti-dilutive.

Note L – Fair Value Measurements

Fair value of an asset or liability is the price that would be received to sell that asset or paid to transfer that liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.  ASC Topic 820 establishes a fair value hierarchy for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows:

Level 1: Quoted prices (unadjusted) or identical assets or liabilities in active markets that the Company has the ability to access as of the measurement date.

Level 2: Significant other observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, and other inputs that are observable or can be corroborated by observable market data.

Level 3: Significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

The Company bases fair value of assets and liabilities on quoted market prices, prices for similar assets or liabilities, quoted prices in markets that are not active, and other inputs that are observable or can be corroborated by observable market data.  If such information is not available, fair value is based upon internally developed models that primarily use, as inputs, observable market-based parameters.  Valuation adjustments may be made to ensure that financial instruments are recorded at fair value.  These adjustments may include amounts to reflect counterparty credit quality and the Company’s creditworthiness, among other things, as well as unobservable parameters.  Any such valuation adjustments are applied consistently over time.  The Company’s valuation methodologies may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values.  While management believes the Company’s valuation methodologies are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine fair value of certain financial instruments could result in a different estimate of fair value at the reporting date.  Furthermore, the reported fair value amounts have not been comprehensively revalued since the presentation dates, and therefore, estimates of fair value after the balance sheet date may differ significantly from the amount presented herein.  A more detailed description of the valuation methodologies used

33

for assets and liabilities measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below.

Financial Assets and Liabilities

The Company used the following methods and significant assumptions to estimate fair value for financial assets and liabilities measured on a recurring basis.

Securities Available for Sale.  Securities available for sale are reported at fair value utilizing Level 1, Level 2, and Level 3 inputs.  The fair value of securities available for sale is determined by utilizing a market approach by obtaining quoted prices on nationally recognized securities exchanges (other than forced or distressed transactions) that occur in sufficient volume or matrix pricing, which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities.  If such measurements are unavailable, the security is classified as Level 3.  Significant judgment is required to make this determination.

The Company utilizes a third party pricing service provider to value its Level 1 and Level 2 investment securities.  Annually, the Company obtains an independent auditor’s report from its third party pricing service provider regarding its controls over investment securities.  Although no control deficiencies were noted, the report did contain caveats and disclaimers regarding the pricing information, such as the Company should review fair values for reasonableness.  On a quarterly basis, the Company selects a sample of its debt securities and reprices those securities with a third party that is independent of the primary pricing service provider to verify the reasonableness of the fair values. In addition, the Company selects a sample of securities and reviews the underlying support from the primary pricing service provider.

The Company has determined that its pooled trust preferred securities should be priced using Level 3 inputs in accordance with ASC Topic 820 and guidance issued by the SEC.  The Company has determined that there are few observable transactions and market quotations available for pooled trust preferred securities and they are not reliable for purposes of determining fair value at June 30, 2016.  Due to these circumstances, the Company has elected to utilize an income valuation approach produced by a third party pricing source.  This third party model utilizes deferral and default probabilities for the underlying issuers, estimated prepayment rates and assumes no future recoveries of any defaults or deferrals.  The Company then compares the values provided by the third party model with other external sources.  At such time as there are observable transactions or quoted prices that are associated with an orderly and active market for pooled trust preferred securities, the Company will incorporate such market values in its estimate of fair values for these securities.

Derivatives.Derivatives are reported at fair value utilizing Level 2 inputs.  The Company utilizes a market approach by obtaining dealer quotations to value its customer interest rate swaps.  The Company’s derivatives are included within its Other Assets and Other Liabilities in the accompanying consolidated balance sheets. Derivative assets are typically secured through securities with financial counterparties or cross collateralization with a borrowing customer. Derivative liabilities are typically secured through the Company pledging securities to financial counterparties or, in the case of a borrowing customer, by the right of setoff. The Company considers factors such as the likelihood of default by itself and its counterparties, right of setoff, and remaining maturities in determining the appropriate fair value adjustments. All derivative counterparties approved by the Company's Asset and Liability Committee ("ALCO") are regularly reviewed, and appropriate business action is taken to adjust the exposure to certain counterparties, if necessary. Counterparty exposure is evaluated by netting positions that are subject to master netting agreements, as well as considering the amount of marketable collateral securing the position. This approach used to estimate impacted exposures to counterparties is also used by the Company to estimate its own credit risk in derivative liability positions. To date, no material losses have been incurred due to a counterparty's inability to pay any undercollateralized position. There was no significant change in the value of derivative assets and liabilities attributed to credit risk that would have resulted in a derivative credit risk valuation adjustment at June 30, 2016.

The Company may be required, from time to time, to measure certain financial assets and financial liabilities at fair value on a nonrecurring basis.  Financial assets measured at fair value on a nonrecurring basis include impaired loans reported at the fair value of the underlying collateral if repayment is expected solely from the collateral.  Collateral values are estimated using Level 2 inputs based on observable market data for real estate collateral or Level 3 inputs for non-real estate collateral.  The following table presents assets and liabilities measured at fair value (in thousands):

34

	Total		Level 1		Level 2		Level 3		Total Gains (Losses)
June 30, 2016
Recurring fair value measurements
Financial Assets
U.S. Government agencies	$	4	$	—	$	4	$	—
Obligations of states and political subdivisions	59,291		—		59,291		—
Mortgage-backed securities:
U.S. Government agencies	313,108		—		313,108		—
Private label	1,111		—		1,111		—
Trust preferred securities	6,323		—		3,700		2,623
Corporate securities	24,240		—		24,240		—
Marketable equity securities	3,419		3,419		—		—
Investment funds	1,543		1,543		—		—
Derivative assets	29,415		—		29,415		—
Financial Liabilities
Derivative liabilities	29,962		—		29,962		—
Nonrecurring fair value measurements
Impaired loans	$	6,952	$	—	$	—	$	6,952	$	—
Other real estate owned	5,579		—		—		5,579		(312		)
December 31, 2015
Recurring fair value measurements
Financial Assets
U.S. Government agencies	$	5	$	—	$	5	$	—
Obligations of states and political subdivisions	50,697		—		50,697		—
Mortgage-backed securities:
U.S. Government agencies	288,197		—		288,197		—
Private label	1,231		—		1,231		—
Trust preferred securities	5,858		—		3,762		2,096
Corporate securities	18,693		—		18,693		—
Marketable equity securities	3,273		3,273		—		—
Investment funds	1,512		1,512		—		—
Derivative assets	10,811		—		10,811		—
Financial Liabilities
Derivative liabilities	10,933		—		10,933		—
Nonrecurring fair value measurements
Impaired loans	$	8,482	$	—	$	—	$	8,482	$	—
Other real estate owned	6,518		—		—		6,518		(937		)

The table below presents a reconcilement of the Company’s financial assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3), which consist solely of trust preferred securities (in thousands):

35

	Six months ended June 30,
	2016			2015
Beginning balance	$	2,096		$	1,871
Impairment losses on investment securities	(411		)	—
Gains on sale of investment securities	1,256			—
Included in other comprehensive income	(318		)	276
Dispositions	—			—
Transfers into Level 3	—			—
Ending Balance	$	2,623		$	2,147

The Company utilizes a third party model to compute the present value of expected cash flows which considers the structure and term of each of the five respective pooled trust preferred securities and the financial condition of the underlying issuers.  Specifically, the third party model details interest rates, principal balances of note classes and underlying issuers, the timing and amount of interest and principal payments of the underlying issuers, and the allocation of the payments to the note classes. The current estimate of expected cash flows is based on the most recent trustee reports and any other relevant market information including announcements of interest payment deferrals or defaults of underlying trust preferred securities. For issuing banks that have defaulted, management generally assumes no recovery. For issuing banks that have deferred interest payments, management excludes the collateral balance associated with these banks and assumes no recoveries of such collateral balance in the future. The exclusion of such issuing banks in a current deferral position is based on such bank experiencing a certain level of financial difficulty that raises doubt about its ability to satisfy its contractual debt obligation, and accordingly, the Company excludes the associated collateral balance from its estimate of expected cash flows. Other assumptions used in the estimate of expected cash flows include expected future default rates and prepayments. Specifically, the model assumes annual prepayments of 1.0% with 100% at maturity and assumes 150 basis points of additional annual defaults from banks that are currently not in default or deferral.  In addition, the model assumes no recoveries except for one trust preferred security which assumes that one of the banks currently deferring or in default will cure such positions.

The table below presents a reconcilement of the Company's financial assets and liabilities measured at fair value on a nonrecurring basis using significant unobservable inputs (Level 3), which solely relates to impaired loans that were remeasured and reported at fair value through a specific valuation allowance allocation of the allowance for loan losses based upon the fair value of the underlying collateral (in thousands).  The fair value of impaired loans is estimated using one of several methods, including collateral value, liquidation value and discounted cash flows.  The significant unobservable inputs used in the fair value measurement of collateral for collateral-dependent impaired loans primarily relate to discounts applied to the customers’ reported amount of collateral.  The amount of collateral discount depends upon the marketability of the underlying collateral.  During the six months ended June 30, 2016 and 2015, collateral discounts ranged from 20% to 30%. During the six months ended June 30, 2016 and 2015, the Company had no Level 2 financial assets and liabilities that were measured on a nonrecurring basis.

	Six months ended June 30,
	2016			2015
Beginning balance	$	8,482		$	6,517
Loans classified as impaired during the period	—			797
Specific valuation allowance allocations	—			—
	—			797
(Additional) reduction in specific valuation allowance allocations	—			22
Paydowns, payoffs, other activity	(1,530		)	(143		)
Ending balance	$	6,952		$	7,193

Non-Financial Assets and Liabilities

The Company has no non-financial assets or liabilities measured at fair value on a recurring basis.  Certain non-financial assets measured at fair value on a non-recurring basis include other real estate owned (“OREO”), which is measured at the lower

36

of cost or fair value, and goodwill and other intangible assets, which are measured at fair value for impairment assessments. The table below presents OREO that was remeasured and reported at fair value based on significant unobservable inputs (Level 3) (in thousands):

	Six months ended June 30,
	2016			2015
Beginning balance	$	6,518		$	8,179
OREO remeasured at initial recognition:
Carrying value of foreclosed assets prior to remeasurement	1,995			1,862
Charge-offs recognized in the allowance for loan losses	—			—
Fair value	1,995			1,862
OREO remeasured subsequent to initial recognition
Carrying value of foreclosed assets prior to remeasurement	1,228			2,477
Fair value	916			2,112
Write-downs included in other non-interest expense	(312		)	(365		)
Disposed	(2,622		)	(2,947		)
Ending balance	$	5,579		$	6,729

ASC Topic 825“Financial Instruments”, as amended, requires disclosure of fair value information about financial instruments, whether or not recognized in the balance sheet, for which it is practicable to estimate that value.  In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques.  Those techniques are significantly affected by the assumptions used, including discount rate and estimate of future cash flows.  In that regard, the derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases, could not be realized in immediate settlement of the instrument.  ASC Topic 825 excludes certain financial instruments and all nonfinancial instruments from its disclosure requirements.  Accordingly, the aggregate fair value amounts presented do not represent the underlying value of the Company. The following methods and assumptions were used in estimating fair value for financial instruments:

Cash and cash equivalents: Due to their short-term nature, the carrying amounts reported in the consolidated balance sheets approximate fair value.

Securities:  The fair value of securities, both available-for-sale and held-to-maturity, are generally based on quoted market prices or matrix pricing, which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities.

Net loans:  The fair value of the loan portfolio is estimated by discounting the expected future cash flows using the current interest rates at which similar loans would be made to borrowers for the same remaining maturities. Loans were first segregated by type such as commercial, real estate and consumer, and were then further segmented into fixed, adjustable and variable rate categories. Expected future cash flows were projected based on contractual cash flows, adjusted for estimated prepayments.

Deposits:  The fair values of demand deposits (i.e., interest and noninterest-bearing deposits, regular savings and other money market demand accounts) are, by definition, equal to their carrying values. The fair values of time deposits were estimated using discounted cash flow analyses. The discount rates used were based on rates currently offered for deposits with similar remaining maturities. The fair values of the time deposit liabilities do not take into consideration the value of the Company’s long-term relationships with depositors, which may have significant value.

Short-term debt: Securities sold under agreements to repurchase represent borrowings with original maturities of less than 90 days. The carrying amount of borrowings under purchase agreements approximate their fair value.

37

Long-term debt: The fair value of long-term borrowings is estimated using discounted cash flow analyses based on the Company’s current incremental borrowing rates for similar types of borrowing arrangements and market conditions of similar debt instruments.

Commitments and letters of credit: The fair values of commitments are estimated based on fees currently charged to enter into similar agreements, taking into consideration the remaining terms of the agreements and the counterparties’ credit standing.  The fair value of letters of credit is based on fees currently charged for similar agreements or on the estimated cost to terminate them or otherwise settle the obligations with the counterparties at the reporting date.  The amounts of fees currently charged on commitments and letters of credit are deemed insignificant, and therefore, the estimated fair values and carrying values have not been reflected in the table below.

The following table represents the estimates of fair value of financial instruments (in thousands). This table excludes financial instruments for which the carrying amount approximates fair value. For short-term financial assets such as cash and cash equivalents, the carrying amount is a reasonable estimate of fair value due to the relatively short time between the origination of the instrument and its expected realization. For financial liabilities such as noninterest-bearing demand, interest-bearing demand and savings deposits, the carrying amount is a reasonable estimate of fair value due to these products having no stated maturity.

	Carrying Amount		Fair Value		Level 1		Level 2		Level 3
June 30, 2016
Assets:
Cash and cash equivalents	$	78,576	$	78,576	$	78,576	$	—	$	—
Securities available-for-sale	409,039		409,039		4,962		401,454		2,623
Securities held-to-maturity	83,208		86,944		—		86,944		—
Other securities	10,203		10,203		—		10,203		—
Net loans	2,884,259		2,896,490		—		—		2,896,490
Accrued interest receivable	8,428		8,428		8,428		—		—
Derivative assets	29,415		29,415		—		29,415		—
Liabilities:
Deposits	3,142,279		3,151,350		2,111,438		1,039,912		—
Short-term debt	153,674		153,681		—		153,681		—
Long-term debt	16,495		16,460		—		16,460		—
Derivative liabilities	29,962		29,962		—		29,962		—
December 31, 2015
Assets:
Cash and cash equivalents	70,113		70,113		70,113		—		—
Securities available-for-sale	369,466		369,466		4,785		362,585		2,096
Securities held-to-maturity	88,937		90,810		—		90,810		—
Other securities	12,915		12,915		—		12,915		—
Net loans	2,843,283		2,843,973		—		—		2,843,973
Accrued interest receivable	7,432		7,432		7,432		—		—
Derivative assets	10,811		10,811		—		10,811		—
Liabilities:
Deposits	3,083,975		3,085,908		2,066,419		1,019,489		—
Short-term debt	154,869		154,872		—		154,872		—
Long-term debt	16,495		16,457		—		16,457		—
Derivative liabilities	10,933		10,933		—		10,933		—

38

Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations

Critical Accounting Policies

The accounting policies of the Company conform with U.S. generally accepted accounting principles and require management to make estimates and develop assumptions that affect the amounts reported in the financial statements and related footnotes. These estimates and assumptions are based on information available to management as of the date of the financial statements. Actual results could differ significantly from management’s estimates. As this information changes, management’s estimates and assumptions used to prepare the Company’s financial statements and related disclosures may also change. The most significant accounting policies followed by the Company are presented in Note One to the audited financial statements included in the Company’s 2015 Annual Report to Shareholders. The information included in this Quarterly Report on Form 10-Q, including the Consolidated Financial Statements, Notes to Consolidated Financial Statements, and Management’s Discussion and Analysis of Financial Condition and Results of Operations, should be read in conjunction with the financial statements and notes thereto included in the 2015 Annual Report of the Company.  Based on the valuation techniques used and the sensitivity of financial statement amounts to the methods, assumptions, and estimates underlying those amounts, management has identified the determination of the allowance for loan losses, income taxes and purchased credit-impaired loans to be the accounting areas that require the most subjective or complex judgments and, as such, could be most subject to revision as new information becomes available.

The section Allowance and Provision for Loan Losses provides management’s analysis of the Company’s allowance for loan losses and related provision. The allowance for loan losses is maintained at a level that represents management’s best estimate of probable losses in the loan portfolio. Management’s determination of the adequacy of the allowance for loan losses is based upon an evaluation of individual credits in the loan portfolio, historical loan loss experience, current economic conditions, and other relevant factors. This determination is inherently subjective as it requires material estimates including the amounts and timing of future cash flows expected to be received on impaired loans that may be susceptible to significant change. The allowance for loan losses related to loans considered to be impaired is generally evaluated based on the discounted cash flows using the impaired loan’s initial effective interest rate or the fair value of the collateral for certain collateral dependent loans.

The Company is subject to federal and state income taxes in the jurisdictions in which it conducts business.  In computing the provision for income taxes, management must make judgments regarding interpretation of laws in those jurisdictions.  Because the application of tax laws and regulations for many types of transactions is susceptible to varying interpretations, amounts reported in the financial statements could be changed at a later date upon final determinations by taxing authorities.  On a quarterly basis, the Company estimates its annual effective tax rate for the year and uses that rate to provide for income taxes on a year-to-date basis.  The amount of unrecognized tax benefits could change over the next twelve months as a result of various factors.  However, management cannot currently estimate the range of possible change.  The Company is currently open to audit under the statute of limitations by the Internal Revenue Service and state taxing authorities for the years ended December 31, 2012 through 2014.

The Company values purchased credit-impaired loans at fair value in accordance with ASC Topic 310-30. In determining the estimated fair value, management considers several factors, such as estimated future credit losses, estimated prepayments, remaining lives of the acquired loans, estimated value of the underlying collateral and the net present value of the cash flows expected to be received. For these loans, the expected cash flows that exceed the fair value of the loan represent the accretable yield, which is recognized as interest income on a level-yield basis over the expected cash flow periods of the loans. The non-accretable difference represents the difference between the contractually required principal and interest payments and the cash flows expected to be collected based upon management's estimation. Subsequent decreases in the expected cash flows will require the Company to evaluate the need for additions to the Company's allowance for loan losses. Subsequent increases in the expected cash flows will result in a reversal of the provision for loan losses to the extent of prior charges with a corresponding adjustment to the accretable yield, which will result in the recognition of additional interest income over the remaining lives of the loans.

Financial Summary

Six months ended June 30, 2016 vs. 2015

The Company's financial performance for the six months ended June 30, 2016 and 2015 is summarized in the following table:

39

	Six months ended June 30,
	2016			2015
Net income available to common shareholders (in thousands)	$	24,244		$	29,975
Earnings per common share, basic	$	1.61		$	1.97
Earnings per common share, diluted	$	1.61		$	1.96
ROA*	1.28		%	1.69		%
ROE*	11.5		%	14.7		%
ROATCE*	14.1		%	17.8		%

*ROA (Return on Average Assets) is a measure of the effectiveness of asset utilization. ROE (Return on Average Equity) is a measure of the return on shareholders' investment. ROATCE (Return on Average Tangible Common Equity) is a measure of the return on shareholders' equity, less intangible assets.

The Company's net interest income for the six months ended June 30, 2016 increased $0.6 million compared to the six months ended June 30, 2015, primarily as a result of the AFB branch acquisition in the fourth quarter of 2015 (see Net Interest Income). The Company recorded a provision for loan losses of $1.7 million for the six months ended June 30, 2016 compared to $3.7 million for the six months ended June 30, 2015 (see Allowance and Provision for Loan Losses). As further discussed under the caption Non-Interest Income and Non-Interest Expense, non-interest income decreased $11.7 million, primarily due to the sale of CityInsurance in the first quarter of 2015. Non-interest expense for the six months ended June 30, 2016 increased $2.0 million from the six months ended June 30, 2015, primarily as a result of the AFB branch acquisition in the fourth quarter of 2015.

Three months ended June 30, 2016 vs. 2015

The Company's financial performance for the three months ended June 30, 2016 and 2015 is summarized in the following table:

	Three months ended June 30,
	2016			2015
Net income available to common shareholders (in thousands)	$	12,541		$	11,983
Earnings per common share, basic	$	0.83		$	0.78
Earnings per common share, diluted	$	0.83		$	0.78
ROA	1.31		%	1.34		%
ROE	11.8		%	11.6		%
ROATCE	14.5		%	14.0		%

The Company’s net interest income for the three months ended June 30, 2016 increased $0.9 million compared to the three months ended June 30, 2015, primarily as a result of the AFB branch acquisition in the fourth quarter of 2015 (see Net Interest Income). The Company recorded a provision for loan losses of $1.1 million for the three months ended June 30, 2016 compared to $2.8 million for the three months ended June 30, 2015 (see Allowance and Provision for Loan Losses).  As further discussed under the caption Non-Interest Income and Non-Interest Expense, non-interest income decreased $0.8 million and non-interest expense increased $1.0 million from the three months ended June 30, 2015.

Balance Sheet Analysis

Selected balance sheet fluctuations from the year ended December 31, 2015 are summarized in the following table (in millions):

40

	June 30,		December 31,
	2016		2015		$ Change		% Change
Investment securities	$	502.5	$	471.3	$	31.2	6.6	%
Gross loans	2,903.4		2,862.5		40.9		1.4	%
Other assets	55.2		37.0		18.2		49.2	%
Total deposits	3,142.3		3,084.0		58.3		1.9	%
Other liabilities	66.1		39.4		26.7		67.8	%

Investment securities increased $31.2 million from December 31, 2015 to June 30, 2016 primarily due to additional investment purchases made during the six months ended June 30, 2016.

Gross loans increased $40.9 million (1.4%) from December 31, 2015 to $2.90 billion at June 30, 2016. Residential real estate loans increased $34.0 million (2.5%), commercial real estate loans increased $7.9 million (0.7%) and commercial and industrial loans increased $6.0 million (3.6%). These increases were partially offset by decreases in home equity loans of $4.2 million and consumer loans of $2.3 million.

Other assets and other liabilities increased primarily due to an increase in market values and additional customer interest rate swap contracts entered into during the six months ended June 30, 2016, which are primarily used in the Company's back-to-back program and are reported gross on the consolidated balance sheet.

Total deposits increased $58.3 million from December 31, 2015 to $3.14 billion at June 30, 2016 primarily due to a large deposit on the last day of the first quarter. Total average depository balances increased $194.7 million or 6.4% for the quarter ended June 30, 2016 compared to the quarter ended December 31, 2015. The Company experienced increases in non-interest bearing deposits ($98.2 million), interest bearing deposits ($35.9 million), savings deposits ($34.6 million), and time deposits ($26.0 million) during the quarter ended June 30, 2016. The growth is partially attributable to deposits acquired from AFB.

Net Interest Income

Six months ended June 30, 2016 vs. 2015

The Company’s tax equivalent net interest income increased $0.7 million, or 1.2%, from $58.5 million for the six months ended June 30, 2015 to $59.2 million for the six months ended June 30, 2016. The Company’s reported net interest margin decreased from 3.90% for the six months ended June 30, 2015 to 3.55% for the six months ended June 30, 2016. Excluding the favorable impact of accretion, the net interest margin for the six months ended June 30, 2016 and 2015 would have been 3.44% and 3.63%, respectively.

    The following schedule presents the estimated future accretion on net interest income as a result of the Company's acquisitions (in thousands). The amounts in the table below require management to make significant assumptions based on estimated future default, prepayment and discount rates. Actual performance could be significantly different from that assumed, which could result in actual results being materially different than those estimated below.

Estimated Accretion Forecast
Remainder 2016	$	1,058
2017	1,316
2018	988

41

Table One

Average Balance Sheets and Net Interest Income

(in thousands)

Assets	Six months ended June 30,
	2016							2015
	Average Balance			Interest		Yield/ Rate		Average Balance			Interest		Yield/ Rate
Loan portfolio(1):
Residential real estate(2)	$	1,538,095		$	29,957	3.92	%	$	1,450,386		$	28,410	3.95	%
Commercial, financial, and agriculture(2)	1,301,380			26,228		4.05		1,155,483			27,019		4.72
Installment loans to individuals(2),(3)	38,644			1,530		7.96		41,633			1,816		8.80
Previously securitized loans(4)	***			852		***		***			954		***
Total loans	2,878,119			58,567		4.09		2,647,502			58,199		4.43
Securities:
Taxable	423,369			5,933		2.82		334,494			5,353		3.23
Tax-exempt(5)	42,768			1,110		5.22		28,992			816		5.68
Total securities	466,137			7,043		3.04		363,486			6,169		3.42
Deposits in depository institutions	9,858			—		—		9,722			—		—
Total interest-earning assets	3,354,114			65,610		3.93		3,020,710			64,368		4.30
Cash and due from banks	112,915							225,727
Bank premises and equipment	76,372							77,152
Other assets	258,800							244,578
Less: allowance for loan losses	(20,138		)					(20,724		)
Total assets	$	3,782,063						$	3,547,443
Liabilities
Interest-bearing demand deposits	$	682,126		$	321	0.09	%	$	642,431		$	257	0.08	%
Savings deposits	766,985			465		0.12		701,907			355		0.10
Time deposits(2)	1,024,881			5,123		1.01		1,013,883			4,828		0.96
Short-term borrowings	158,046			193		0.25		139,676			166		0.24
Long-term debt	16,495			331		4.04		16,495			303		3.70
Total interest-bearing liabilities	2,648,533			6,433		0.49		2,514,392			5,909		0.47
Noninterest-bearing demand deposits	669,013							578,570
Other liabilities	41,820							46,112
Stockholders’ equity	422,697							408,369
Total liabilities and stockholders’ equity	$	3,782,063						$	3,547,443
Net interest income				$	59,177						$	58,459
Net yield on earning assets						3.55	%						3.90	%

42

(1)	For purposes of this table, non-accruing loans have been included in average balances and loan fees, which are immaterial, have been included in interest income.
(2)	Included in the above table are the following amounts for the accretion of the fair value adjustments related to the acquisitions of Virginia Savings, Community and AFB:
		Six months ended June 30,
		2016		2015
	Residential real estate	$	371	$	440
	Commercial, financial and agriculture	1,050		3,106
	Installment loans to individuals	82		172
	Time deposits	296		339
		$	1,799	$	4,057
(3)	Includes the Company’s consumer and DDA overdrafts loan categories.
(4)	Effective January 1, 2012, there is no carrying value of the Company’s previously securitized loans.
(5)	Computed on a fully federal tax-equivalent basis assuming a tax rate of approximately 35%.

Table Two

Rate/Volume Analysis of Changes in Interest Income and Interest Expense

(in thousands)

	Six months ended June 30, 2016 vs. 2015
Interest-earning assets:	Increase (Decrease) Due to Change In:
	Volume			Rate			Net
Loan portfolio
Residential real estate	$	1,723		$	(176	)	$	1,547
Commercial, financial, and agriculture	3,421			(4,212		)	(791		)
Installment loans to individual	(131		)	(155		)	(286		)
Previously securitized loans	—			(102		)	(102		)
Total loans	5,013			(4,645		)	368
Securities:
Taxable	1,426			(846		)	580
Tax-exempt(1)	389			(95		)	294
Total securities	1,815			(941		)	874
Total interest-earning assets	$	6,828		$	(5,586	)	$	1,242
Interest-bearing liabilities:
Interest-bearing demand deposits	$	16		$	48		$	64
Savings deposits	33			77			110
Time deposits	53			242			295
Short-term borrowings	22			5			27
Long-term debt	—			28			28
Total interest-bearing liabilities	$	124		$	400		$	524
Net Interest Income	$	6,704		$	(5,986	)	$	718

(1) Fully federal taxable equivalent using a tax rate of approximately 35%.

43

Three months ended June 30, 2016 vs. 2015

The Company’s tax equivalent net interest income increased $1.0 million or 3.2%, from $28.9 million for the three months ended June 30, 2015 to $29.9 million for the three months ended June 30, 2016. The Company’s reported net interest margin decreased from 3.82% for the three months ended June 30, 2015 to 3.56% for the three months ended June 30, 2016. Excluding the favorable impact of accretion, the net interest margin for the three months ended June 30, 2016 and 2015 would have been 3.44% and 3.60%, respectively.

44

Table Three

Average Balance Sheets and Net Interest Income

(in thousands)

Assets	Three months ended June 30,
	2016							2015
	Average Balance			Interest		Yield/ Rate		Average Balance			Interest		Yield/ Rate
Loan portfolio(1):
Residential real estate(2)	$	1,545,550		$	15,038	3.91	%	$	1,456,820		$	14,291	3.93	%
Commercial, financial, and agriculture(2)	1,306,931			13,310		4.10		1,160,219			12,993		4.49
Installment loans to individuals(2),(3)	38,811			809		8.38		41,445			1,026		9.93
Previously securitized loans(4)	***			483		***		***			502		***
Total loans	2,891,292			29,640		4.12		2,658,484			28,812		4.35
Securities:
Taxable	425,450			2,927		2.77		341,723			2,641		3.10
Tax-exempt(5)	43,637			561		5.17		29,501			411		5.59
Total securities	469,087			3,488		2.99		371,224			3,052		3.30
Deposits in depository institutions	9,186			—		—		10,468			—		—
Total interest-earning assets	3,369,565			33,128		3.95		3,040,176			31,864		4.20
Cash and due from banks	144,260							229,009
Bank premises and equipment	75,798							76,671
Other assets	261,271							244,661
Less: allowance for loan losses	(19,686		)					(20,789		)
Total assets	$	3,831,208						$	3,569,728
Liabilities
Interest-bearing demand deposits	$	686,403		$	176	0.10	%	$	647,991		$	125	0.08	%
Savings deposits	766,708			238		0.12		709,034			174		0.10
Time deposits(2)	1,030,346			2,598		1.01		1,006,376			2,400		0.96
Short-term borrowings	154,047			86		0.22		149,785			85		0.23
Long-term debt	16,495			167		4.07		16,495			153		3.72
Total interest-bearing liabilities	2,653,999			3,265		0.49		2,529,681			2,937		0.47
Noninterest-bearing demand deposits	707,501							585,720
Other liabilities	43,435							42,273
Stockholders’ equity	426,273							412,054
Total liabilities and stockholders’ equity	$	3,831,208						$	3,569,728
Net interest income				$	29,863						$	28,927
Net yield on earning assets						3.56	%						3.82	%

45

(1)	For purposes of this table, non-accruing loans have been included in average balances and loan fees, which are immaterial, have been included in interest income.
(2)	Included in the above table are the following amounts for the accretion of the fair value adjustments related to the acquisitions of Virginia Savings, Community and AFB:
		Three months ended June 30,
		2016		2015
	Residential real estate	$	190	$	243
	Commercial, financial and agriculture	656		1,120
	Installment loans to individuals	29		75
	Time deposits	148		169
		$	1,023	$	1,607
(3)	Includes the Company’s consumer and DDA overdrafts loan categories.
(4)	Effective January 1, 2012, there is no carrying value of the Company’s previously securitized loans.
(5)	Computed on a fully federal tax-equivalent basis assuming a tax rate of approximately 35%.

Table Four

Rate/Volume Analysis of Changes in Interest Income and Interest Expense

(in thousands)

	Three months ended June 30, 2016 vs. 2015
Interest-earning assets:	Increase (Decrease) Due to Change In:
	Volume			Rate			Net
Loan portfolio
Residential real estate	$	868		$	(121	)	$	747
Commercial, financial, and agriculture	1,638			(1,321		)	317
Installment loans to individual	(65		)	(152		)	(217		)
Previously securitized loans	—			(19		)	(19		)
Total loans	2,441			(1,613		)	828
Securities:
Taxable	645			(359		)	286
Tax-exempt(1)	196			(46		)	150
Total securities	841			(405		)	436
Total interest-earning assets	$	3,282		$	(2,018	)	$	1,264
Interest-bearing liabilities:
Interest-bearing demand deposits	$	7		$	44		$	51
Savings deposits	14			50			64
Time deposits	57			141			198
Short-term borrowings	2			(1		)	1
Long-term debt	—			14			14
Total interest-bearing liabilities	$	80		$	248		$	328
Net Interest Income	$	3,202		$	(2,266	)	$	936

(1) Fully federal taxable equivalent using a tax rate of approximately 35%.

46

Table Five

Non-GAAP Financial Measures

Management of the Company uses measures in its analysis of the Company's performance other than those in accordance with generally accepted accounting principals in the United States of America ("GAAP"). These measures are useful when evaluating the underlying performance of the Company's operations. The Company's management believes that these non-GAAP measures enhance comparability of results with prior periods and demonstrate the effects of significant gains and charges in the current period. The Company's management believes that investors may use these non-GAAP financial measures to evaluate the Company's financial performance without the impact of these items that may obscure trends in the Company's performance. These disclosures should not be viewed as a substitute for financial measures determined in accordance with GAAP, nor are they comparable to non-GAAP financial measures that may be presented by other companies. The following table reconciles fully taxable equivalent net interest income and fully taxable equivalent net interest income excluding accretion with net interest income as derived from the Company's financial statements (in thousands):

	Three months ended June 30,						Six months ended June 30,
	2016			2015			2016			2015
Net interest income ("GAAP")	$	29,668		$	28,783		$	58,789		$	58,174
Taxable equivalent adjustment	195			144			388			285
Net interest income, fully taxable equivalent	$	29,863		$	28,927		$	59,177		$	58,459
Average interest earning assets	$	3,369,565		$	3,040,176		$	3,354,114		$	3,020,710
Net interest margin	3.56		%	3.82		%	3.55		%	3.90		%
Net interest income ("GAAP")	$	29,668		$	28,783		$	58,789		$	58,174
Taxable equivalent adjustment	195			144			388			285
Accretion related to fair value adjustments	(1,022		)	(1,607		)	(1,799		)	(4,057		)
Net interest income ("GAAP")	$	28,841		$	27,320		$	57,378		$	54,402
Average interest earning assets	$	3,369,565		$	3,040,176		$	3,354,114		$	3,020,710
Net interest margin (excluding accretion)	3.44		%	3.60		%	3.44		%	3.63		%

Loans

Table Six

Loan Portfolio

The composition of the Company's loan portfolio as of the dates indicated follows (in thousands):

	June 30, 2016		December 31, 2015		June 30, 2015
Residential real estate	$	1,417,137	$	1,383,133	$	1,325,453
Home equity	142,827		147,036		143,772
Commercial and industrial	171,362		165,340		141,518
Commercial real estate	1,135,493		1,127,581		1,032,258
Consumer	33,799		36,083		37,555
DDA overdrafts	2,780		3,361		3,279
Total loans	$	2,903,398	$	2,862,534	$	2,683,835

47

Loan balances increased $40.9 million from December 31, 2015 to June 30, 2016. Residential real estate loans increased $34.0 million, or 2.5%, from December 31, 2015 to June 30, 2016.  Residential real estate loans represent loans to consumers that are secured by a first lien on residential property. Residential real estate loans provide for the purchase or refinance of a residence and first-lien home equity loans allow consumers to borrower against the equity in their home. These loans primarily consist of single family 3 and 5 year adjustable rate mortgages with terms that amortize up to 30 years. The Company also offers fixed-rate residential real estate loans that are sold in the secondary market that are not included on the Company's balance sheet and the Company does not retain the servicing rights to these loans. Residential mortgage loans are generally underwritten to comply with Fannie Mae guidelines, while the home equity loans are underwritten with typically less documentation, but with lower loan-to-value ratios and shorter maturities.  At June 30, 2016, $12.3 million of the residential real estate loans were for properties under construction.

Home equity loans decreased $4.2 million during the first six months of 2016.  The Company's home equity loans represent loans to consumers that are secured by a second (or junior) lien on a residential property. Home equity loans allow consumers to borrower against the equity in their home without paying off an existing first lien. These loans consist of home equity lines of credit ("HELOC") and amortized home equity loans that require monthly installment payments. Home equity loans are underwritten with less documentation, lower loan-to-value ratios and for shorter terms. The amount of credit extended is directly related to the value of the real estate at the time the loan is made.

The commercial and industrial ("C&I") loan portfolio consists of loans to corporate borrowers primarily in small to mid-size industrial and commercial companies. Collateral securing these loans includes equipment, machinery, inventory, receivables and vehicles. C&I loans are considered to contain a higher level of risk than other loan types, although care is taken to minimize these risks. Numerous risk factors impact this portfolio, including industry specific risks such as the economy, new technology, labor rates and cyclicality, as well as customer specific factors, such as cash flow, financial structure, operating controls and asset quality. C&I increased $6.0 million from December 31, 2015 to June 30, 2016.

Commercial real estate loans consist of commercial mortgages, which generally are secured by nonresidential and multi-family residential properties, including hotel/motel and apartment lending. Commercial real estate loans are to many of the same customers and carry similar industry risks as C&I loans. Commercial real estate loans increased $7.9 million from December 31, 2015 to June 30, 2016, despite the unanticipated repayment of a $16.1 million loan late in the second quarter. This repayment was significant in that it was one of the Company's largest individual loans.  At June 30, 2016, $2.2 million of the commercial real estate loans were for commercial properties under construction.

Consumer loans may be secured by automobiles, boats, recreational vehicles and other personal property. The Company monitors the risk associated with these types of loans by monitoring such factors as portfolio growth, lending policies and economic conditions. Underwriting standards are continually evaluated and modified based upon these factors. Consumer loans decreased $2.3 million during the first six months of 2016. 

48

Allowance and Provision for Loan Losses

Table Seven

Analysis of the Allowance for Loan Losses

An analysis of changes in the Company's allowance for loan losses follows (dollars in thousands):

	Six months ended June 30,						Year ended December 31,
	2016			2015			2015
Balance at beginning of period	$	19,251		$	20,074		$	20,074
Charge-offs:
Commercial and industrial	(45		)	(2,538		)	(5,768		)
Commercial real estate	(1,071		)	(276		)	(580		)
Residential real estate	(742		)	(529		)	(1,144		)
Home equity	(175		)	(108		)	(312		)
Consumer	(82		)	(143		)	(210		)
DDA overdrafts	(639		)	(624		)	(1,414		)
Total charge-offs	(2,754		)	(4,218		)	(9,428		)
Recoveries:
Commercial and industrial	4			27			74
Commercial real estate	404			31			366
Residential real estate	90			64			199
Home equity	—			—			—
Consumer	81			79			187
DDA overdrafts	402			406			791
Total recoveries	981			607			1,617
Net charge-offs	(1,773		)	(3,611		)	(7,811		)
Provision for purchased credit impaired loans	168			545			6,435
Provision for loan losses	1,493			3,179			553
Balance at end of period	$	19,139		$	20,187		$	19,251
As a Percent of Average Total Loans:
Net charge-offs (annualized)	0.12		%	0.27		%	0.26		%
Provision for loan losses (annualized)	0.12		%	0.28		%	0.26		%
As a Percent of Non-Performing Loans:
Allowance for loan losses	124.00		%	127.10		%	110.40		%
As a Percent of Total Loans:
Allowance for loan losses	0.66		%	0.75		%	0.67		%

Management systematically monitors the loan portfolio and the appropriateness of the allowance for loan losses (“ALLL”) on a quarterly basis to provide for probable losses incurred in the portfolio. Management assesses the risk in each loan type based on historical delinquency and loss trends, the general economic environment of its local markets, individual loan performance, and other relevant factors. Individual credits in excess of $1 million are selected at least annually for detailed loan reviews, which are utilized by management to assess the risk in the portfolio and the appropriateness of the allowance. Due to the nature of commercial lending, evaluation of the appropriateness of the allowance as it relates to these loan types is often based more upon specific credit review, with consideration given to the potential impairment of certain credits and historical loss rates, adjusted for general economic conditions and other inherent risk factors. Conversely, due to the homogeneous nature of the real estate and installment portfolios, the portions of the allowance allocated to those portfolios are primarily based on prior loss history of each portfolio, adjusted for general economic conditions and other inherent risk factors. Risk factors considered by the Company in completing this analysis include: (i) unemployment and economic trends in the Company’s markets; (ii) concentrations of credit, if any, among any industries; (iii) trends in loan growth, loan mix, delinquencies, losses or credit impairment; (iv) adherence to lending policies and others. Each risk factor is designated as low, moderate/increasing, or high based on the Company’s assessment of the risk to loss associated with each factor. Each risk factor is then weighted to consider probability of occurrence.

49

In evaluating the adequacy of the ALLL, management considers both quantitative and qualitative factors. Quantitative factors include actual repayment characteristics and loan performance, cash flow analyses, and estimated fair values of underlying collateral. Qualitative factors generally include overall trends within the portfolio, composition of the portfolio, changes in pricing or underwriting, seasoning of the portfolio, and general economic conditions.

The allowance not specifically allocated to individual credits is generally determined by analyzing potential exposure and other qualitative factors that could negatively impact the adequacy of the allowance.  Loans not individually evaluated for impairment are grouped by pools with similar risk characteristics and the related historical loss rates are adjusted to reflect current inherent risk factors, such as unemployment, overall economic conditions, concentrations of credit, loan growth, classified and impaired loan trends, staffing, adherence to lending policies, and loss trends.

Determination of the ALLL is subjective in nature and requires management to periodically reassess the validity of its assumptions. Differences between actual losses and estimated losses are assessed such that management can timely modify its evaluation model to ensure that adequate provision has been made for risk in the total loan portfolio.

As a result of the Company’s quarterly analysis of the adequacy of the ALLL, the Company recorded a provision for loan losses of $1.7 million in the first six months of 2016 and $3.7 million in the first six months of 2015.  The provision for loan losses recorded in the first six months of 2016 reflects the growth in the loan portfolio, changes in the quality of the portfolio, and general improvement in the Company’s historical loss rates used to compute the allowance not specifically allocated to individual credits. Changes in the amount of the provision and related allowance are based on the Company’s detailed systematic methodology and are directionally consistent with changes in the composition and quality of the Company’s loan portfolio. The Company believes its methodology for determining the adequacy of its ALLL adequately provides for probable losses inherent in the loan portfolio and produces a provision and allowance for loan losses that is directionally consistent with changes in asset quality and loss experience.

The Company had net charge-offs of $1.8 million for the first six months of 2016 and $3.6 million for the first six months of 2015.  Net charge-offs in the first six months of 2016 consisted primarily of net charge-offs on commercial real estate loans ($0.7 million) and residential real estate loans ($0.7 million).  

In June 2016, parts of West Virginia were impacted by devastating and tragic flooding. Areas served by the Company that were hardest hit were Greenbrier County (and most particularly, the community of White Sulphur Springs) and Kanawha County (the Elkview/Clendenin communities). Upon review of the Company's loan balances in those communities impacted, management has estimated that there are approximately $40 million of loans outstanding, with 90% being residential real estate loans located out of the floodplains. Within zip codes where the flooding occurred, there are approximately 900 loans, mostly residential real estate loans, that have an average balance of under $43,000. It is still early in the recovery process, and while the Company did not recognize any losses related to the flooding in the second quarter of 2016, the exact nature of any future loan losses remains unknown. However, with the limited information currently available, the Company does not expect to incur significant loan losses associated with the flooding.

Based on the Company’s analysis of the adequacy of the allowance for loan losses and in consideration of the known factors utilized in computing the allowance, management believes that the allowance for loan losses as of June 30, 2016 is adequate to provide for probable losses inherent in the Company’s loan portfolio. Future provisions for loan losses will be dependent upon trends in loan balances including the composition of the loan portfolio, changes in loan quality and loss experience trends, and recoveries of previously charged-off loans, among other factors.

Table Eight

Allocation of the Allowance for Loan Losses

The allocation of the allowance for loan losses is shown in the table below (in thousands). The allocation of a portion of the allowance in one portfolio segment does not preclude its availability to absorb losses in other portfolio segments.

50

	As of June 30,				As of December 31,
	2016		2015		2015
Commercial and industrial	$	4,091	$	2,225	$	3,271
Commercial real estate	6,273		8,522		6,985
Residential real estate	6,358		7,075		6,778
Home equity	1,423		1,493		1,463
Consumer	91		120		97
DDA overdrafts	903		752		657
Allowance for Loan Losses	$	19,139	$	20,187	$	19,251

The ALLL decreased slightly from $19.3 million at December 31, 2015 to $19.1 million at June 30, 2016.  Below is a summary of the changes in the components of the ALLL from December 31, 2015 to June 30, 2016.

The allowance related to the commercial and industrial loan portfolio increased $0.8 million from $3.3 million at December 31, 2015 to $4.1 million at June 30, 2016. This increase is due to an increase in loans classified as substandard as of June 30, 2016 and growth in the loan portfolio.

The allowance allocated to the commercial real estate portfolio decreased $0.7 million from $7.0 million at December 31, 2015 to $6.3 million at June 30, 2016, primarily due to an improvement in the historical loss rate of the portfolio which was partially offset by growth in the loan portfolio.

The allowance allocated to the residential real estate portfolio decreased from at $6.8 million at December 31, 2015 to $6.4 million at June 30, 2016. The decline is due to decreases in the historical loss rates.

The allowance allocated to the home equity loan portfolio decreased slightly from $1.5 million at December 31, 2015 to $1.4 million at June 30, 2016.

The allowance allocated to the consumer loan portfolio remained flat at $0.1 million at December 31, 2015 and June 30, 2016.

The allowance allocated to overdraft deposit accounts increased from $0.7 million at December 31, 2015 to $0.9 million at June 30, 2016, primarily due to an increase in the historical loss rate of the portfolio.

Non-Performing Assets

Table Nine

Non-Performing Loans

The Company's nonperforming assets are shown below (dollars in thousands):

	As of June 30,						December 31,
	2016			2015			2015
Residential real estate	$	2,531		$	2,693		$	2,918
Home equity	165			141			136
Commercial and industrial	2,724			1,271			2,745
Commercial real estate	9,779			11,518			11,149
Consumer	—			—			—
Total non-accrual loans	15,199			15,623			16,948
Accruing loans past due 90 days or more	241			264			495
Total non-performing loans	$	15,440		$	15,887		$	17,443
As a Percent of Loans and Other Real Estate Owned:
Non-performing loans	0.73		%	0.84		%	0.84		%

51

Non-accrual loans decreased $1.7 million from $16.9 million at December 31, 2015 to $15.2 million at June 30, 2016. The average recorded investment in impaired loans during the six months ended June 30, 2016 and 2015 was $7.1 million and $9.5 million, respectively.  There were no commitments to provide additional funds on non-accrual, impaired, or other potential problem loans at June 30, 2016.  

The Company’s ratio of non-performing assets to total loans and other real estate owned improved from 0.84% at December 31, 2015 to 0.73% at June 30, 2016.  Excluded from this ratio are purchased credit-impaired loans in which the Company estimated cash flows and estimated a credit mark. These loans are considered performing loans provided that the loan is performing in accordance with the estimated expectations. Such loans would be considered non-performing loans if the loan's performance deteriorates below the initial expectations. This improvement was primarily related to a single commercial customer engaged in the mining and energy sectors (per the North American Industry Classification System) which filed for bankruptcy and for which the Company recorded a charge-off.

The Company recognized less than $0.1 million of interest income received in cash on non-accrual and impaired loans for both the six months ended June 30,2016 and June 30, 2015.  Approximately $0.2 million and $0.4 million of interest income would have been recognized during both of the six months ended June 30, 2016 and June 30, 2015, if such loans had been current in accordance with their original terms.  Interest on loans is accrued and credited to operations based upon the principal amount outstanding. The accrual of interest income is generally discontinued when a loan becomes 90 days past due as to principal or interest unless the loan is well collateralized and in the process of collection. When interest accruals are discontinued, interest credited to income in the current year that is unpaid and deemed uncollectible is charged to operations. Prior-year interest accruals that are unpaid and deemed uncollectible are charged to the allowance for loan losses, provided that such amounts were specifically reserved.

Table Ten

Troubled Debt Restructurings ("TDRs")

The following table sets forth the Company's troubled debt restructurings ("TDRs") (in thousands):

	As of June 30,				December 31,
	2016		2015		2015
Accruing:
Residential real estate	$	19,685	$	18,624	$	17,796
Home equity	2,873		2,647		2,659
Commercial and industrial	50		66		58
Commercial real estate	2,743		1,872		1,746
Total accruing TDRs	25,351		23,209		22,259
Non-Accruing:
Residential real estate	390		397		191
Home equity	44		15		34
Total non-accruing TDRs	434		412		225
Total TDRs	$	25,785	$	23,621	$	22,484

Regulatory guidance requires that loans be accounted for as collateral-dependent loans when borrowers have filed Chapter 7 bankruptcy, the debt has been discharged by the bankruptcy court and the borrower has not reaffirmed the debt. The filing of bankruptcy is deemed to be evidence that the borrower is in financial difficulty and the discharge of debt by the bankruptcy court is deemed to be a concession granted to the borrower. The Company's troubled debt restructurings ("TDRs") related to its borrowers who had filed for Chapter 7 bankruptcy protection make up 82% of the Company's total TDRs as of June 30, 2016. The average age of these TDRs was 11.6 years; the average current balance as a percentage of the original balance was 68.0%; and the average loan-to-value ratio was 65.4% as of June 30, 2016. Of the total 489 Chapter 7 related TDRs, 40 had an estimated loss exposure based on the current balance and appraised value at June 30, 2016.

Table Eleven

Impaired Loans

52

Information pertaining to the Company's impaired loans is included in the following table (in thousands):

	As of June 30,				As of December 31,
	2016		2015		2015
Impaired loans with a valuation allowance	$	—	$	1,346	$	—
Impaired loans with no valuation allowance	6,952		6,077		8,482
Total impaired loans	$	6,952	$	7,423	$	8,482
Allowance for loan losses allocated to impaired loans	$	—	$	229	$	—

53

Non-Interest Income and Non-Interest Expense

Six months ended June 30, 2016 vs. 2015

(in millions)

	Six months ended June 30,
	2016		2015		$ Change			% Change
Gains on sale of investment securities	$	0.8	$	2.1	$	(1.3	)	(61.9	)%
Gain on sale of insurance division	—		11.1		(11.1		)	(100.0	)%
Non-interest income (excluding above gains)	26.9		26.2		0.7			2.7	%
M&A expenses	—		0.1		(0.1		)	(100.0	)%
Non-interest expense (excluding M&A expenses)	48.4		46.3		2.1			4.5	%

Non-Interest Income: The Company realized $0.8 million of investment gains during the six months ended June 30, 2016 and $2.1 million during the six months ended June 30, 2015. These gains represented partial recoveries of impairment charges previously recognized on pools of trust preferred securities. On January 1, 2015, the Company sold its insurance operations, CityInsurance, which resulted in a pre-tax gain of $11.1 million. Exclusive of these gains, non-interest income increased from $26.2 million for the first six months of 2015 to $26.9 million for the first six months of 2016. This increase was due to service charges increasing $0.4 million to $12.9 million and trust and investment management fee income increasing $0.2 million to $2.6 million.

Non-Interest Expense: Non-interest expenses increased $2.1 million, from $46.3 million in the first six months of 2015 to $48.4 million in the first six months of 2016. This increase was largely due to the acquisition of three branches from AFB (for an increase of $1.0 million) and an increase in other expenses of $0.6 million. The increase in other expenses is primarily related to the fair value adjustment for a $5.0 million notional interest rate swap to protect against changes in long-term fixed interest rates related to commercial loans.

Income Tax Expense: The Company’s effective income tax rate for the six months ended June 30, 2016 was 33.4% compared to 34.4% for the year ended December 31, 2015, and 36.9% for the six months ended June 30, 2015.  As noted previously, the Company sold CityInsurance in the first quarter of 2015. As a result of differences between the book basis and tax basis of the assets that were sold, the Company’s income tax expense increased by $1.1 million. Exclusive of the sale of CityInsurance in the first quarter of 2015, the Company’s tax rate from operations was 33.5% for the six months ended June 30, 2015.

Three months ended June 30, 2016 vs. 2015

(in millions)

	Three months ended June 30,
	2016		2015		$ Change			% Change
Gains on sale of investment securities	$	0.8	$	2.1	$	(1.3	)	(61.9	)%
Non-interest income (excluding investment gains)	$	13.7	$	13.3	$	0.4		3.0	%
Non-interest expense	24.3		23.2		1.1			4.7	%

Non-Interest Income: During the second quarter of 2016, the Company realized investment gains of $0.8 million compared to $2.1 million of realized investment gains during the second quarter of 2015. These gains represented partial recoveries of impairment charges previously recognized on pools of trust preferred securities. Exclusive of these gains, non-interest income increased from $13.3 million for the second quarter of 2015 to $13.7 million for the second quarter of 2016. This increase was mainly due to an increase in bankcard revenues of $0.2 million, or 4.7%, from the second quarter of 2015 to $4.2 million and an increase in trust and investment management fee income of $0.2 million, or 14.2%, to $1.4 million.

Non-Interest Expense: Non-interest expenses increased $1.1 million, from $23.2 million in the second quarter of 2015 to $24.3 million in the second quarter of 2016. This increase was due to the acquisition of three branches from AFB ($0.5 million) during the fourth quarter of 2015, an increase in other expenses ($0.4 million), and an increase in salaries and employee benefits of $0.3 million. The increase in other expenses is primarily related to the fair value adjustment for a $5.0 million notional interest rate swap to protect against changes in long-term fixed interest rates related to commercial loans.

54

Income Tax Expense: The Company's effective income tax rate for the second quarter of 2016 was 33.5% compared to 34.4% for the year ended December 31, 2015, and 33.8% for the quarter ended June 30, 2015. The effective income tax rate is based upon the Company's expected tax rate for the year ended December 31, 2016.

Risk Management

Market risk is the risk of loss due to adverse changes in current and future cash flows, fair values, earnings or capital due to adverse movements in interest rates and other factors, including foreign exchange rates, underlying credit risk and commodity prices. Because the Company has no significant foreign exchange activities and holds no commodities, interest rate risk represents the primary risk factor affecting the Company’s balance sheet and net interest margin. Significant changes in interest rates by the Federal Reserve could result in similar changes in LIBOR interest rates, prime rates, and other benchmark interest rates that could affect the estimated fair value of the Company’s investment securities portfolio, interest paid on the Company’s short-term and long-term borrowings, interest earned on the Company’s loan portfolio and interest paid on its deposit accounts.

The Company’s Asset and Liability Committee (“ALCO”) has been delegated the responsibility of managing the Company’s interest-sensitive balance sheet accounts to maximize earnings while managing interest rate risk. ALCO, comprised of various members of executive and senior management, is also responsible for establishing policies to monitor and limit the Company’s exposure to interest rate risk and to manage the Company’s liquidity position. ALCO satisfies its responsibilities through quarterly meetings during which product pricing issues, liquidity measures, and interest sensitivity positions are monitored.

In order to measure and manage its interest rate risk, the Company uses an asset/liability management and simulation software model to periodically update the interest sensitivity position of the Company’s balance sheet. The model is also used to perform analyses that measure the impact on net interest income and capital as a result of various changes in the interest rate environment. Such analyses quantify the effects of various interest rate scenarios on projected net interest income.

The Company’s policy objective is to avoid negative fluctuations in net income or the economic value of equity of more than 15% within a 12-month period, assuming an immediate parallel increase or decrease of 400 basis points. The Company measures the long-term risk associated with sustained increases and decreases in rates through analysis of the impact to changes in rates on the economic value of equity.

The following table summarizes the sensitivity of the Company’s net income to various interest rate scenarios. The results of the sensitivity analyses presented below differ from the results used internally by ALCO in that, in the analyses below, interest rates are assumed to have an immediate and sustained parallel shock. The Company recognizes that rates are volatile, but rarely move with immediate and parallel effects. Internally, the Company considers a variety of interest rate scenarios that are deemed to be possible while considering the level of risk it is willing to assume in “worst-case” scenarios such as shown by the following:

Immediate Basis Point Change in Interest Rates	Implied Federal Funds Rate Associated with Change in Interest Rates		Estimated Increase (Decrease) in Net Income Over 12 Months
June 30, 2016
+400	4.50	%	+8.5	%
+300	3.50		+10.4
+200	2.50		+10.3
+100	1.50		+5.3
-50	0.00		-5.3
December 31, 2015
+400	4.50	%	+6.0	%
+300	3.50		+7.5
+200	2.50		+6.8
+100	1.50		+3.3

These estimates are highly dependent upon assumptions made by management, including, but not limited to, assumptions regarding the manner in which interest-bearing demand deposit and saving deposit accounts reprice in different interest rate scenarios, changes in the composition of deposit balances, pricing behavior of competitors, prepayments of loans and deposits

55

under alternative rate environments, and new business volumes and pricing. As a result, there can be no assurance that the estimates above will be achieved in the event that interest rates increase during 2016 and beyond.  The estimates above do not necessarily imply that the Company will experience increases in net income if market interest rates rise.  The table above indicates how the Company’s net income behaves relative to an increase or decrease in rates compared to what would otherwise occur if rates remain stable.

Based upon the estimates above, the Company believes that its net income is positively correlated with increasing rates as compared to the level of net income the Company would expect if interest rates remain flat.

Liquidity

The Company evaluates the adequacy of liquidity at both the City Holding Company ("City Holding") level and at the banking subsidiary level. At the City Holding level, the principal source of cash is dividends from its banking subsidiary, City National Bank ("City National"). Dividends paid by City National to City Holding are subject to certain legal and regulatory limitations. Generally, any dividends in amounts that exceed the earnings retained by City National in the current year plus retained net profits for the preceding two years must be approved by regulatory authorities. At June 30, 2016, City National could pay dividends up to $37.2 million plus net profits for the remainder of 2016, as defined by statute, up to the dividend declaration date without prior regulatory permission.

City Holding used cash obtained from the dividends received primarily to: (i) pay common dividends to shareholders, (ii) remit interest payments on the Company’s junior subordinated debentures and (iii) fund repurchases of the Company's common shares.

Over the next 12 months, City Holding has an obligation to remit interest payments approximating $0.7 million on the debentures held by City Holding Capital Trust III. Interest payments on the debentures can be deferred for up to five years under certain circumstances and dividends to shareholders can, if necessary, be suspended. City Holding anticipates continuing the payment of dividends on its common stock, which are expected to approximate $25.8 million on an annualized basis over the next 12 months based on common shareholders outstanding at June 30, 2016.  In addition to these anticipated cash needs, City Holding has operating expenses and other contractual obligations, which are estimated to require $1.4 million of additional cash over the next 12 months. As of June 30, 2016, City Holding reported a cash balance of $25.9 million and management believes that City Holding’s available cash balance, together with cash dividends from City National, will be adequate to satisfy its funding and cash needs over the next 12 months.

Excluding the interest and dividend payments discussed above, City Holding has no significant commitments or obligations in years after 2016 other than the repayment of its $16.5 million obligation under the debentures held by City Holding Capital Trust III. However, this obligation does not mature until June 2038, or earlier at the option of City Holding. It is expected that City Holding will be able to obtain the necessary cash, either through dividends obtained from City National or the issuance of other debt, to fully repay the debentures at their maturity.

City National manages its liquidity position in an effort to effectively and economically satisfy the funding needs of its customers and to accommodate the scheduled repayment of borrowings. Funds are available to City National from a number of sources, including depository relationships, sales and maturities within the investment securities portfolio, and borrowings from the FHLB and other financial institutions. As of June 30, 2016, City National’s assets are significantly funded by deposits and capital. Additionally, City National maintains borrowing facilities with the FHLB and other financial institutions that are accessed as necessary to fund operations and to provide contingency funding mechanisms. As of June 30, 2016, City National has the capacity to borrow an additional $1.6 billion from the FHLB and other financial institutions under existing borrowing facilities. City National maintains a contingency funding plan, incorporating these borrowing facilities, to address liquidity needs in the event of an institution-specific or systemic financial industry crisis. Also, although it has no current intention to do so, City National could liquidate its unpledged securities, if necessary, to provide an additional funding source.  City National also segregates certain mortgage loans, mortgage-backed securities, and other investment securities in a separate subsidiary so that it can separately monitor the asset quality of these primarily mortgage-related assets, which could be used to raise cash through securitization transactions or obtain additional equity or debt financing if necessary.

The Company manages its asset and liability mix to balance its desire to maximize net interest income against its desire to minimize risks associated with capitalization, interest rate volatility, and liquidity. With respect to liquidity, the Company has chosen a conservative posture and believes that its liquidity position is strong. The Company’s net loan to asset ratio is 75.8% as of June 30, 2016 and deposit balances fund 82.5% of total assets. The Company has obligations to extend credit, but these obligations are primarily associated with existing home equity loans that have predictable borrowing patterns across the portfolio. The Company

56

has investment security balances with carrying values that totaled $502.5 million at June 30, 2016, and that greatly exceeded the Company’s non-deposit sources of borrowing, which totaled $170.2 million.  Further, the Company’s deposit mix has a very high proportion of transaction and savings accounts that fund 55.5% of the Company’s total assets.

As illustrated in the Consolidated Statements of Cash Flows, the Company generated $37.7 million of cash from operating activities during the first six months of 2016, primarily from interest income received on loans and investments, net of interest expense paid on deposits and borrowings.  The Company used $64.5 million of cash in investing activities during the first six months of 2016, primarily due to an increase in loans and net purchases of investment securities. The Company generated $35.3 million of cash in financing activities during the first six months of 2016, principally as a result of an increase in noninterest-bearing and interest-bearing deposits, partially offset by cash dividends paid of $12.8 million to the Company’s common stockholders and purchases of treasury stock of $10.0 million.

Capital Resources

During the first six months of 2016, Shareholders’ Equity increased $9.1 million, or 2.2%, from $419.3 million at December 31, 2015 to $428.4 million at June 30, 2016.  This increase was primarily due to net income of $24.2 million and unrealized investment security gains of $5.9 million, partially offset by dividends declared of $12.9 million and the repurchase of the Company's stock pursuant to its stock repurchase program of $10.0 million.

In July 2013, the Federal Reserve published the final rules that established a new comprehensive capital framework for banking organizations, commonly referred to as Basel III. These final rules substantially revised the risk-based capital requirements applicable to bank holding companies and depository institutions. The final rule became effective January 1, 2015 for smaller, non-complex banking organizations with full implementation by January 1, 2019.

Regulatory guidelines require the Company to maintain a minimum common equity tier I ("CET1") capital ratio of 5.125% and a total capital to risk-adjusted assets ratio of 8.625%, with at least one-half of capital consisting of tangible common stockholders’ equity and a minimum Tier I leverage ratio of 6.625%. Similarly, City National is also required to maintain minimum capital levels as set forth by various regulatory agencies. Under capital adequacy guidelines, City National is required to maintain minimum CET1, total capital, Tier I capital, and leverage ratios of 5.125%, 8.625%, 6.625%, and 4.0%, respectively. To be classified as “well capitalized,” City National must maintain CET1, total capital, Tier I capital, and leverage ratios of 6.5%, 10.0%, 8.0%, and 5.0%, respectively.

When fully phased in on January 1, 2019, the Basel III Capital Rules will require City Holding and City National to maintain (i) a minimum ratio of CET1 to risk-weighted assets of at least 4.5%, plus a 2.5% "capital conservation buffer" (which is added to the 4.5% CET1 ratio as that buffer is phased in, effectively resulting in a minimum ratio of CET1 to risk-weighted assets of at least 7.0% upon full implementation), (ii) a minimum ratio of Tier 1 capital to risk-weighted assets of at least 6.0%, plus the capital conservation buffer (which is added to the 6.0% Tier 1 capital ratio as that buffer is phased in, effectively resulting in a minimum Tier 1 capital ratio of 8.5% upon full implementation), (iii) a minimum ratio of total capital (that is, Tier 1 plus Tier 2) to risk-weighted assets of at least 8.0%, plus the capital conservation buffer (which is added to the 8.0% total capital ratio as that buffer is phased in, effectively resulting in a minimum total capital ratio of 10.5% upon full implementation) and (iv) a minimum leverage ratio of 4.0%, calculated as the ratio of Tier 1 capital to average assets (as compared to a current minimum leverage ratio of 3.0% for banking organizations that either have the highest supervisory rating or have implemented the appropriate federal regulatory authority's risk-adjusted measure for market risk).

The implementation of the capital conservation buffer began on January 1, 2016 at the 0.625% level and will be phased in over a four-year period (increasing by that amount on each subsequent January 1, until it reaches 2.5% on January 1, 2019). The Basel III Capital Rules also provide for a “countercyclical capital buffer” that is applicable to only certain covered institutions and does not have any current applicability to City Holding Company or City National Bank.

The aforementioned capital conservation buffer is designed to absorb losses during periods of economic stress. Banking institutions with a ratio of CET1 capital to risk-weighted assets above the minimum but below the conservation buffer (or below the combined capital conservation buffer and countercyclical capital buffer, when the latter is applied) will face constraints on dividends, equity repurchases and compensation based on the amount of the shortfall.

57

The Company’s regulatory capital ratios for both City Holding and City National are illustrated in the following tables

(in thousands):

June 30, 2016	Actual				Minimum Required - Basel III Phase-In Schedule				Minimum Required - Basel III Fully Phased-In (*)				Required to be Considered Well Capitalized
	Capital Amount		Ratio		Capital Amount		Ratio		Capital Amount		Ratio		Capital Amount		Ratio
CET I Capital
City Holding Company	$	348,370	13.2	%	$	135,405	5.125	%	$	184,943	7.0	%	$	171,733	6.5	%
City National Bank	288,588		11.0		134,624		5.125		183,877		7.0		170,743		6.5
Tier I Capital
City Holding Company	364,370		13.8		175,035		6.625		224,573		8.5		211,363		8.0
City National Bank	304,548		11.6		174,026		6.625		223,279		8.5		210,145		8.0
Total Capital
City Holding Company	384,125		14.5		227,876		8.625		277,414		10.5		264,204		10.0
City National Bank	323,726		12.3		226,562		8.625		275,815		10.5		262,681		10.0
Tier I Leverage Ratio
City Holding Company	364,370		9.7		149,878		4.0		149,878		4.0		187,347		5.0
City National Bank	304,548		8.2		149,224		4.0		149,224		4.0		186,530		5.0
(*) Represents the minimum required capital levels as of January 1, 2019 when Basel III Capital Rules have been fully phased in.

December 31, 2015	Actual				Minimum Required - Basel III Phase-In Schedule				Minimum Required - Basel III Fully Phased-In (*)				Required to be Considered Well Capitalized
	Capital Amount		Ratio		Capital Amount		Ratio		Capital Amount		Ratio		Capital Amount		Ratio
CET I Capital
City Holding Company	$	345,620	13.7	%	$	113,919	4.5	%	$	177,207	7.0	%	$	164,549	6.5	%
City National Bank	264,812		10.5		113,209		4.5		176,103		7.0		163,524		6.5
Tier I Capital
City Holding Company	361,620		14.3		151,891		6.0		215,180		8.5		202,522		8.0
City National Bank	288,752		11.5		150,945		6.0		213,839		8.5		201,260		8.0
Total Capital
City Holding Company	382,180		15.1		202,522		8.0		265,810		10.5		253,152		10.0
City National Bank	308,804		12.3		201,260		8.0		264,154		10.5		251,575		10.0
Tier I Leverage Ratio
City Holding Company	361,620		10.2		142,521		4.0		142,521		4.0		178,151		5.0
City National Bank	288,752		8.1		141,874		4.0		141,874		4.0		177,343		5.0
(*) Represents the minimum required capital levels as of January 1, 2019 when Basel III Capital Rules have been fully phased in.

As of June 30, 2016, management believes that City Holding Company, and its banking subsidiary, City National, were “well capitalized.”  City Holding is subject to regulatory capital requirements administered by the Federal Reserve, while City National is subject to regulatory capital requirements administered by the Office of the Comptroller of the Currency (“OCC”) and the Federal Deposit Insurance Corporation (“FDIC”).  Regulatory agencies can initiate certain mandatory actions if either City Holding or City National fails to meet the minimum capital requirements, as shown above.  As of June 30, 2016, management believes that City Holding and City National meet all capital adequacy requirements.

58

Item 3 - Quantitative and Qualitative Disclosures About Market Risk

The information called for by this item is provided under the caption “Risk Management” under Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Item 4 - Controls and Procedures

Pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934, the Company carried out an evaluation, with the participation of the Company’smanagement, including the Company’sChief Executive Officer and Chief Financial Officer, of the effectiveness of the Company’s disclosure controls and procedures (as defined under Rule 13a-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this report. Based upon that evaluation, the Company’sChief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective in timely alerting them to material information relating to the Company required to be included in the Company’speriodic SEC filings.  There has been no change in the Company’s internal control over financial reporting during the quarter ended June 30, 2016 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

Part II - OTHER INFORMATION

Item 1. Legal Proceedings

The Company is engaged in various legal actions that it deems to be in the ordinary course of business. As these legal actions are resolved, the Company could realize positive and/or negative impact to its financial performance in the period in which these legal actions are ultimately decided. There can be no assurance that current actions will have immaterial results, either positive or negative, or that no material actions may be presented in the future.

Item 1A. Risk Factors

There have been no material changes to the factors disclosed in Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2015.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

On September 24, 2014, the Company announced that the Board of Directors authorized the Company to buy back up to 1,000,000 shares of its common shares (approximately 7% of the outstanding shares at that time) in open market transactions at prices that are accretive to the earnings per share of continuing shareholders. No time limit was placed on the duration of the share repurchase program. The following table sets forth information regarding the Company's common stock repurchases transacted during the quarter ended June 30, 2016:    

				Total Number	Maximum Number
				of Shares Purchased	of Shares that May
				as Part of Publicly	Yet Be Purchased
	Total Number of	Average Price		Announced Plans	Under the Plans
Period	Shares Purchased	Paid per Share		or Programs	or Programs
April 1 - April 30, 2016	2,000	$	46.65	2,000	402,248
May 1 - May 31, 2016	-	-		-	402,248
June 1 - June 30, 2016	-	-		-	402,248

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

None.

59

Item 5. Other Information

None.

60

Item 6. Exhibits

The exhibits required to be filed or furnished with this Form 10-Q are attached hereto or incorporated herein by reference. For a list of such exhibits, see "Exhibit Index."

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 thereunto duly authorized.

City Holding Company

(Registrant)

/s/ Charles R. Hageboeck

Charles R. Hageboeck

President and Chief Executive Officer

(Principal Executive Officer)

/s/ David L. Bumgarner

David L. Bumgarner

Senior Vice President, Chief Financial Officer and Principal Accounting Officer

(Principal Financial Officer)

Date: August 4, 2016

Exhibit Index

The following exhibits are filed herewith or are incorporated herein by reference.

2(a)	Agreement and Plan of Merger, dated November 14, 2011, by and among Virginia Savings Bancorp, Inc., Virginia Savings Bank, F.S.B., City Holding Company and City National Bank of West Virginia (attached to, and incorporated by reference from, City Holding Company’s Form 8-K dated November 14, 2011, and filed with the Securities and Exchange Commission on November 14, 2011).
2(b)	Agreement and Plan of Merger, dated August 2, 2012, by and among Community Financial Corporation, Community Bank, City Holding Company and City National Bank of West Virginia (attached to, and incorporated by reference from City Holding Company’s Form 8-K dated August 7, 2012, and filed with the Securities and Exchange Commission on August 7, 2012).
3(a)	Articles of Incorporation of City Holding Company (attached to, and incorporated by reference from, Amendment No. 1 to City Holding Company’s Registration Statement on Form S-4, Registration No. 2-86250, filed November 4, 1983 with the Securities and Exchange Commission).
3(b)	Articles of Amendment to the Articles of Incorporation of City Holding Company, dated March 6, 1984 (attached to, and incorporated by reference from, City Holding Company's Form 8-K Report dated March 7, 1984, and filed with the Securities and Exchange Commission on March 22, 1984).
3(c)	Articles of Amendment to the Articles of Incorporation of City Holding Company, dated March 4, 1986 (attached to, and incorporated by reference from, City Holding Company's Form 10-K Annual Report for the year ended December 31, 1986, filed March 31, 1987 with the Securities and Exchange Commission).
3(d)	Articles of Amendment to the Articles of Incorporation of City Holding Company, dated September 29, 1987 (attached to and incorporated by reference from, City Holding Company's Registration Statement on Form S-4, Registration No. 33-23295, filed with the Securities and Exchange Commission on August 3, 1988).

61

		3(e)	Articles of Amendment to the Articles of Incorporation of City Holding Company, dated May 6, 1991 (attached to, and incorporated by reference from, City Holding Company's Form 10-K Annual Report for the year ended December 31, 1991, filed March 17, 1992 with the Securities and Exchange Commission).
		3(f)	Articles of Amendment to the Articles of Incorporation of City Holding Company, dated May 7, 1991 (attached to, and incorporated by reference from, City Holding Company's Form 10-K Annual Report for the year ended December 31, 1991, filed March 17, 1992 with the Securities and Exchange Commission).
		3(g)	Articles of Amendment to the Articles of Incorporation of City Holding Company, dated August 1, 1994 (attached to, and incorporated by reference from, City Holding Company's Form 10-Q Quarterly Report for the quarter ended September 30, 1994, filed November 14, 1994 with the Securities and Exchange Commission).
		3(h)	Articles of Amendment to the Articles of Incorporation of City Holding Company, dated December 9, 1998 (attached to, and incorporated by reference from, City Holding Company’s Form 10-K Annual Report for the year ended December 31, 1998, filed March 31, 1999 with the Securities and Exchange Commission).
		3(i)	Articles of Amendment to the Articles of Incorporation of City Holding Company, dated June 13, 2001 (attached to, and incorporated by reference from, City Holding Company’s Registration Statement on Form 8-A, filed June 22, 2001 with the Securities and Exchange Commission).
		3(j)	Articles of Amendment to the Articles of Incorporation of City Holding Company, dated May 10, 2006 (attached to, and incorporated by reference from, City Holding Company’s Form 10-Q, Quarterly Report for the quarter ended June 30, 2006, filed August 9, 2006 with the Securities and Exchange Commission).
		3(k)	Amended and Restated Bylaws of City Holding Company, revised February 28, 2007 (attached to, and incorporated by reference from, City Holding Company’s Current Report on Form 8-K filed March 1, 2007 with the Securities and Exchange Commission).
		3(l)	Amended and Restated Bylaws of City Holding Company, revised February 24, 2010 (attached to, and incorporated by reference from, City Holding Company’s Current Report on Form 8-K filed March 1, 2010 with the Securities and Exchange Commission).
		4(b)	Amendment No. 1 to the Rights Agreement dated as of November 30, 2005 (attached to, and incorporated by reference from City Holding Company’s Amendment No. 1 on Form 8-A, filed December 21, 2005, with the Securities and Exchange Commission).
		31(a)	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Charles R. Hageboeck
		31(b)	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for David L. Bumgarner
		32(a)	Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for Charles R. Hageboeck
		32(b)	Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for David L. Bumgarner
		101.INS	XBRL Instance Document*
		101.SCH	XBRL Taxonomy Extension Schema*
		101.CAL	XBRL Taxonomy Extension Calculation Linkbase*
		101.DEF	XBRL Taxonomy Extension Definition Linkbase*
		101.LAB	XBRL Taxonomy Extension Label Linkbase*
		101.PRE	XBRL Taxonomy Extension Presentation Linkbase*
*	Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities Exchange Act of 1934 and otherwise are not subject to liability.

62

EX-31.A

Exhibit 31(a)

CERTIFICATION

I, Charles R. Hageboeck, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q for the quarter ended June 30, 2016 of City Holding Company;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or such persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(a) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: August 4, 2016

/s/ Charles R. Hageboeck

Charles R. Hageboeck

President and Chief Executive Officer

EX-31.B

Exhibit 31(b)

CERTIFICATION

I, David L. Bumgarner, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q for the quarter ended June 30, 2016 of City Holding Company;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or such persons performing the equivalent functions)

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(a) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: August 4, 2016

/s/ David L. Bumgarner

David L. Bumgarner

Senior Vice President and Chief Financial Officer

EX-32.A

Exhibit 32(a)

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of City Holding Company (the “Company”) for the period ending June 30, 2016 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Charles R. Hageboeck, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Charles R. Hageboeck

Charles R. Hageboeck

President and Chief Executive Officer

Date: August 4, 2016

This certification is being furnished as required by Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended (the“Exchange Act”), and Section 1350 of Chapter 63 of Title 18 of the United States Code, and shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that Section. This certification shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act.

EX-32.B

Exhibit 32(b)

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of City Holding Company (the “Company”) for the period ending June 30, 2016 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, David L. Bumgarner, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2)  the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ David L. Bumgarner

David L. Bumgarner

Senior Vice President and Chief Financial Officer

Date: August 4, 2016

This certification is being furnished as required by Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Section 1350 of Chapter 63 of Title 18 of the United States Code, and shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that Section. This certification shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act.

XML

Document And Entity Information - shares	6 Months Ended
	Jun. 30, 2016	Aug. 03, 2016
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2016
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2016
Entity Registrant Name	CITY HOLDING CO
Entity Central Index Key	0000726854
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		15,005,321
Trading Symbol	chco

XML

Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Assets
Cash and due from banks	$ 69,933	$ 58,829
Interest-bearing deposits in depository institutions	8,643	11,284
Cash and Cash Equivalents	78,576	70,113
Investment securities available for sale, at fair value	409,039	369,466
Investment securities held-to-maturity, at amortized cost (approximate fair value at June 30, 2016 and December 31, 2015 - $86,944 and $90,810, respectively)	83,208	88,937
Other securities	10,203	12,915
Total Investment Securities	502,450	471,318
Gross loans	2,903,398	2,862,534
Allowance for loan losses	(19,139)	(19,251)
Net Loans	2,884,259	2,843,283
Bank owned life insurance	99,446	97,919
Premises and equipment, net	75,040	77,271
Accrued interest receivable	8,428	7,432
Net deferred tax asset	23,995	29,974
Goodwill and other intangible assets, net	79,433	79,792
Other assets	55,234	36,957
Total Assets	3,806,861	3,714,059
Liabilities
Noninterest-bearing	651,867	621,073
Interest-bearing:
Demand deposits	701,248	679,735
Savings deposits	758,323	765,611
Time deposits	1,030,841	1,017,556
Total Deposits	3,142,279	3,083,975
Federal funds purchased	0	13,000
Customer repurchase agreements	153,674	141,869
Long-term debt	16,495	16,495
Other liabilities	66,054	39,448
Total Liabilities	3,378,502	3,294,787
Shareholders’ Equity
Preferred stock, par value $25 per share: 500,000 shares authorized; none issued	0	0
Common stock, par value $2.50 per share: 50,000,000 shares authorized; 18,499,282 shares issued at June 30, 2016 and December 31, 2015, less 3,493,961 and 3,319,067 shares in treasury, respectively	46,249	46,249
Capital surplus	105,648	106,269
Retained earnings	402,044	390,690
Cost of common stock in treasury	(127,619)	(120,104)
Accumulated other comprehensive income (loss):
Unrealized gain on securities available-for-sale	6,796	927
Underfunded pension liability	(4,759)	(4,759)
Total Accumulated Other Comprehensive Income (Loss)	2,037	(3,832)
Total Shareholders’ Equity	428,359	419,272
Total Liabilities and Shareholders’ Equity	$ 3,806,861	$ 3,714,059

XML

Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Statement of Financial Position [Abstract]
Securities held-to-maturity, Estimated Fair Value	$ 86,944	$ 90,810
Preferred stock, par value (in dollars per share)	$ 25	$ 25
Preferred stock, shares authorized (in shares)	500,000	500,000
Preferred stock, shares issued (in shares)	0	0
Common stock, par value (in dollars per share)	$ 2.50	$ 2.50
Common stock, shares authorized (in shares)	50,000,000	50,000,000
Common stock, shares issued (in shares)	18,499,282	18,499,282
Common stock, treasury shares (in shares)	3,493,961	3,319,067

XML

Consolidated Statements Of Income - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Interest Income
Interest and fees on loans	$ 29,640	$ 28,812	$ 58,567	$ 58,200
Interest and dividends on investment securities:
Taxable	2,927	2,641	5,933	5,353
Tax-exempt	365	267	722	531
Total Interest Income	32,932	31,720	65,222	64,084
Interest Expense
Interest on deposits	3,011	2,699	5,909	5,440
Interest on short-term borrowings	86	85	193	167
Interest on long-term debt	167	153	331	303
Total Interest Expense	3,264	2,937	6,433	5,910
Net Interest Income	29,668	28,783	58,789	58,174
Provision for loan losses	1,122	2,836	1,661	3,724
Net Interest Income After Provision for Loan Losses	28,546	25,947	57,128	54,450
Non-Interest Income
Net gains on sale of investment securities	845	2,116	845	2,130
Service charges	6,564	6,589	12,867	12,516
Bankcard revenue	4,190	4,002	8,157	8,076
Trust and investment management fee income	1,371	1,201	2,647	2,401
Bank owned life insurance	768	783	1,528	1,547
Gain on sale of insurance division	0	0	0	11,084
Other income	843	714	1,664	1,672
Total Non-Interest Income	14,581	15,405	27,708	39,426
Non-Interest Expense
Salaries and employee benefits	12,790	12,193	25,463	24,372
Occupancy and equipment	2,708	2,529	5,544	5,119
Depreciation	1,567	1,516	3,134	3,027
FDIC insurance expense	512	445	977	895
Advertising	778	701	1,494	1,405
Bankcard expenses	925	797	1,758	1,615
Postage, delivery, and statement mailings	506	507	1,071	1,068
Office supplies	366	347	719	693
Legal and professional fees	528	542	999	1,109
Telecommunications	431	463	859	938
Repossessed asset losses, net of expenses	53	335	341	555
Merger related expenses	0	108	0	108
Other expenses	3,119	2,761	6,064	5,505
Total Non-Interest Expense	24,283	23,244	48,423	46,409
Income Before Income Taxes	18,844	18,108	36,413	47,467
Income tax expense	6,303	6,125	12,169	17,492
Net Income Available to Common Shareholders	12,541	11,983	24,244	29,975
Total Comprehensive Income	$ 15,667	$ 10,344	$ 30,113	$ 29,242
Average common shares outstanding (in shares)	14,889	15,104	14,903	15,079
Effect of dilutive securities, employee stock awards and warrants outstanding (in shares)	13	23	12	77
Effect of dilutive securities:
Shares for diluted earnings per share (in shares)	14,902	15,127	14,915	15,156
Basic earnings per common share (in dollars per share)	$ 0.83	$ 0.78	$ 1.61	$ 1.97
Diluted earnings per common share (in dollars per share)	0.83	0.78	1.61	1.96
Dividends declared per common share (in dollars per share)	$ 0.43	$ 0.42	$ 0.86	$ 0.84

XML

Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Net income	$ 12,541	$ 11,983	$ 24,244	$ 29,975
Unrealized gains (losses) on available-for-sale securities arising during the period	5,800	(482)	10,148	968
Reclassification adjustment for gains	(845)	(2,116)	(845)	(2,130)
Other comprehensive income (loss) before income taxes	4,955	(2,598)	9,303	(1,162)
Tax effect	(1,829)	959	(3,434)	429
Other comprehensive income (loss), net of tax	3,126	(1,639)	5,869	(733)
Comprehensive Income, Net of Tax	$ 15,667	$ 10,344	$ 30,113	$ 29,242

XML

Consolidated Statements Of Changes In Shareholders' Equity - USD ($) $ in Thousands	Total	Common Stock [Member]	Capital Surplus[Member]	Retained Earnings [Member]	Treasury Stock [Member]	Accumulated Other Comprehensive Income (Loss) [Member]
Beginning Balance at Dec. 31, 2014	$ 390,853	$ 46,249	$ 107,370	$ 362,211	$ (120,818)	$ (4,159)
Net income	29,975			29,975
Other comprehensive income (loss)	(733)					(733)
Cash dividends declared	(12,807)			(12,807)
Stock-based compensation expense, net	1,060		(408)		1,468
Exercise of stock options	996		(306)		1,302
Exercise of 61,796 warrants	1,896		(765)		2,661
Ending balance at Jun. 30, 2015	411,240	46,249	105,891	379,379	(115,387)	(4,892)
Beginning Balance at Dec. 31, 2015	419,272	46,249	106,269	390,690	(120,104)	(3,832)
Net income	24,244			24,244
Other comprehensive income (loss)	5,869					5,869
Cash dividends declared	(12,890)			(12,890)
Stock-based compensation expense, net	1,200		(417)		1,617
Exercise of stock options	682		(204)		886
Purchase of 231,132 treasury shares	(10,018)				(10,018)
Ending balance at Jun. 30, 2016	$ 428,359	$ 46,249	$ 105,648	$ 402,044	$ (127,619)	$ 2,037

XML

Consolidated Statements Of Changes In Shareholders' Equity (Parenthetical) - $ / shares	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Statement of Stockholders' Equity [Abstract]
Cash dividends declared (in dollars per share)	$ 0.86	$ 0.84
Exercise of stock options (in shares)	20,250	29,250
Stock Issued During Period, Shares, Other		61,796
Purchase of treasury shares (in shares)	231,132

XML

Consolidated Statements Of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Operating Activities
Net income	$ 24,244	$ 29,975
Adjustments to reconcile net income to net cash provided by operating activities:
Accretion and amortization	146	(2,976)
Provision for loan losses	1,661	3,724
Depreciation	3,134	3,027
Deferred income tax expense	2,548	4,549
Net periodic employee benefit cost	257	413
Realized investment securities gains	(1,256)	(2,130)
Impairment losses on investment securities	411	0
Stock-compensation expense	1,200	1,060
Increase in value of bank-owned life insurance	(1,527)	(1,547)
Loans originated for sale	(5,913)	(9,191)
Proceeds from the sale of loans originated for sale	5,801	9,327
Gain on sale of loans	(139)	(167)
Gain on sale of insurance division	0	(11,084)
Change in accrued interest receivable	(996)	(1,012)
Change in other assets	(18,105)	5,703
Change in other liabilities	26,282	(19,307)
Net Cash Provided by Operating Activities	37,748	10,364
Investing Activities
Proceeds from sales of securities available-for-sale	1,256	290
Proceeds from maturities and calls of securities available-for-sale	34,009	33,323
Proceeds from maturities and calls of securities held-to-maturity	5,549	7,648
Purchases of securities available-for-sale	(63,458)	(67,911)
Net increase in loans	(40,883)	(31,705)
Purchases of premises and equipment	(1,391)	(978)
Disposals of premises and equipment	376	0
Proceeds from sale of insurance division	0	15,250
Net Cash Used in Investing Activities	(64,542)	(44,083)
Financing Activities
Net increase in non-interest-bearing deposits	30,794	18,250
Net increase in interest-bearing deposits	27,806	11,985
Net increase (decrease) in short-term borrowings	(1,195)	18,240
Purchases of treasury stock	(10,018)	0
Proceeds from exercise of stock options, net of tax benefit	682	996
Proceeds from exercise of warrants	0	1,896
Dividends paid	(12,812)	(12,452)
Net Cash Provided by Financing Activities	35,257	38,915
Increase in Cash and Cash Equivalents	8,463	5,196
Cash and cash equivalents at beginning of period	70,113	148,228
Cash and Cash Equivalents at End of Period	$ 78,576	$ 153,424

XML

Background and Basis of Presentation

6 Months Ended

Jun. 30, 2016

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Background and Basis of Presentation

Background and Basis of Presentation

City Holding Company ("City Holding"), a West Virginia corporation headquartered in Charleston, West Virginia, is a registered financial holding company under the Bank Holding Company Act and conducts its principal activities through its wholly-owned subsidiary, City National Bank of West Virginia ("City National"). City National is a retail and consumer-oriented community bank with 85 banking offices in West Virginia (57), Virginia (14), Kentucky (11) and Ohio (3). City National provides credit, deposit, and trust and investment management services to its customers. In addition to its branch network, City National's delivery channels include ATMs, mobile banking, debit cards, interactive voice response systems, and Internet technology. The Company’s business activities are currently limited to one reportable business segment, which is community banking.

On January 9, 2015 the Company sold its insurance operations, CityInsurance, to The Hilb Group effective January 1, 2015. As a result of this sale, the Company recognized a one-time after tax gain of $5.8 million from this transaction in the first quarter of 2015.

On November 6, 2015, the Company consummated the acquisition of three branch locations from American Founders Bank, Inc. (“AFB”) located in Lexington, Kentucky. The Company acquired approximately $119 million in performing loans and and assumed deposit liabilities of approximately $145 million. The Company paid AFB a deposit premium of 5.5% on non-time deposits, and 1.0% on premium loan balances acquired.

The accompanying consolidated financial statements, which are unaudited, include all of the accounts of the City Holding Company and its wholly-owned subsidiaries (collectively, the "Company”). All material intercompany transactions have been eliminated. The consolidated financial statements include all adjustments that, in the opinion of management, are necessary for a fair presentation of the results of operations and financial condition for each of the periods presented. Such adjustments are of a normal recurring nature. The results of operations for the six months endedJune 30, 2016 are not necessarily indicative of the results of operations that can be expected for the year ending December 31, 2016. The Company’s accounting and reporting policies conform with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Such policies require management to make estimates and develop assumptions that affect the amounts reported in the consolidated financial statements and related footnotes. Actual results could differ from management’s estimates.

The consolidated balance sheet as of December 31, 2015 has been derived from audited financial statements included in the Company’s 2015 Annual Report to Shareholders.  Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with U.S. generally accepted accounting principles have been omitted.  These financial statements should be read in conjunction with the financial statements and notes thereto included in the 2015 Annual Report of the Company.

Certain amounts in the financial statements have been reclassified.  Such reclassifications had no impact on shareholders’ equity or net income for any period.

XML

Recent Accounting Pronouncements

6 Months Ended

Jun. 30, 2016

New Accounting Pronouncements and Changes in Accounting Principles [Abstract]

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In February 2015, the FASB issued ASU No. 2015-02, "Consolidation (Topic 810) - Amendments to the Consolidation Analysis." ASU 2015-02 eliminates the deferral of FAS 167 and makes changes to both the variable interest model and the voting model. This ASU became effective for the Company on January 1, 2016. The adoption of ASU 2015-02 did not have a material impact on the Company's financial statements.

In April 2015, the FASB issued ASU No. 2015-03, "Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs." ASU 2015-03 requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. This ASU became effective for the Company on January 1, 2016. The adoption of ASU 2015-03 did not have a material impact on the Company's financial statements.

In April 2015, the FASB issued ASU No. 2015-05, "Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement." ASU 2015-05 provides guidance to clarify the customer’s accounting for fees paid in a cloud computing arrangement. This ASU became effective for the Company on January 1, 2016. The adoption of ASU 2015-05 did not have a material impact on the Company's financial statements.

In May 2015, the FASB issued ASU No. 2015-07, "Fair Value Measurement (Topic 820): Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent)." ASU 2015-07 removes the requirement to categorize within the fair value hierarchy all investments for which fair value is measured using the net asset value per share practical expedient. The ASU also removes the requirement to make certain disclosures for all investments that are eligible to be measured at fair value using the net asset value per share practical expedient. This ASU became effective for the Company on January 1, 2016. The adoption of ASU 2015-07 did not have a material impact on the Company's financial statements.

In September 2015, the FASB issued ASU No. 2015-16, "Business Combinations (Topic 85): Simplifying the Accounting for Measurement-Period Adjustments." The amendments in ASU 2015-16 require that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The effect on earnings of the adjustments as a result of the change to the provisional amounts will be calculated as if the accounting had been completed at the acquisition date. The amount that would've been recorded in the previous reporting periods will be presented separately on the face of the income statement or disclosed in the notes to the financial statements. This ASU became effective for the Company on January 1, 2016. The adoption of ASU 2015-16 did not have a material impact on the Company's financial statements.

In November 2015, the FASB issued ASU No. 2015-17, "Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes." This standard requires that deferred tax liabilities and assets be classified as non-current on the balance sheet. This ASU will become effective for the Company for interim and annual periods on January 1, 2017 and early adoption is permitted. The adoption of ASU No. 2015-17 is not expected to have a material impact on the Company's financial statements.

In January 2016, the FASB issued ASU No. 2016-01, "Financial Instruments—Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities." This standard makes several modifications to Subtopic 825-10 including the elimination of the available-for-sale classification of equity investments, and requires equity investments with readily determinable fair values to be measured at fair value with changes in fair value recognized in net income. This ASU will become effective for the Company for interim and annual periods on January 1, 2018. The adoption of ASU No. 2016-01 is not expected to have a material impact on the Company's financial statements.

In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842).” This standardrequires organizations to recognizing lease assets and lease liabilities on the balance sheet and disclose key information about leasing requirements for leases that were historically classified as operating leases under previous generally accepted accounting principals. This ASU will become effective for the Company for interim and annual periods on January 1, 2019. The adoption of ASU No. 2016-02 is not expected to have a material impact on the Company’s financial statements.

In March 2016, the FASB issued ASU No. 2016-09, “Compensation-Stock Compensation (Topic 718): Improvements to Employee Share Based Accounting.” This standard makes several modifications to the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. This ASU will become effective for the Company for interim and annual periods on January 1, 2017. The adoption of ASU No. 2016-09 is not expected to have a material impact on the Company’s financial statements.

In April 2016, the FASB issued ASU No. 2016-10, “Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing.” The amendments in this standard clarify identifying performance obligations and the licensing implementation guidance under Topic 606. This ASU will become effective for the Company for interim and annual periods on January 1, 2018. The adoption of ASU No. 2016-10 is not expected to have a material impact on the Company’s financial statements.

In June 2016, the FASB issued ASU No. 2016-13, "Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments" This standard replaces the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The amendments in this update require a financial asset (or a group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected. The new current expected credit losses model (CECL) will apply to the allowance for loan losses, available-for-sale and held to maturity debt securities, purchased financial assets with credit deterioration and certain off-balance sheet credit exposures. This ASU will become effective for the Company for interim and annual periods on January 1, 2020. Management is currently evaluating the potential impact of ASU No. 2016-13 on the Company's financial statements.

XML

Investments

6 Months Ended

Jun. 30, 2016

Investments [Abstract]

Investments

Investments

The amortized cost and estimated fair values of the Company's securities are shown in the following table (in thousands):

	June 30, 2016								December 31, 2015
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Securities available-for-sale:
U.S. Treasuries and U.S.
government agencies	$	4	$	—	$	—	$	4	$	5	$	—	$	—	$	5
Obligations of states and
political subdivisions	57,224		2,070		3		59,291		49,725		979		7		50,697
Mortgage-backed securities:
U.S. government agencies	306,201		7,035		128		313,108		287,933		2,285		2,021		288,197
Private label	1,108		3		—		1,111		1,222		9		—		1,231
Trust preferred securities	6,046		1,178		901		6,323		6,550		463		1,155		5,858
Corporate securities	23,930		436		126		24,240		18,793		221		321		18,693
Total Debt Securities	394,513		10,722		1,158		404,077		364,228		3,957		3,504		364,681
Marketable equity  securities	2,136		1,283		—		3,419		2,131		1,142		—		3,273
Investment funds	1,525		18		—		1,543		1,525		—		13		1,512
Total Securities
Available-for-Sale	$	398,174	$	12,023	$	1,158	$	409,039	$	367,884	$	5,099	$	3,517	$	369,466

	June 30, 2016								December 31, 2015
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Securities held-to-maturity:
Mortgage-backed securities
US government agencies	$	79,208	$	3,736	$	—	$	82,944	$	84,937	$	1,949	$	76	$	86,810
Trust preferred securities	4,000		—		—		4,000		4,000		—		—		4,000
Total Securities
Held-to-Maturity	$	83,208	$	3,736	$	—	$	86,944	$	88,937	$	1,949	$	76	$	90,810
Other investment securities:
Non-marketable equity securities	$	10,203	$	—	$	—	$	10,203	$	12,915	$	—	$	—	$	12,915
Total Other Investment
Securities	$	10,203	$	—	$	—	$	10,203	$	12,915	$	—	$	—	$	12,915

Marketable equity securities consist of investments made by the Company in equity positions of various regional community banks. Included within this portfolio are ownership positions in the following community bank holding companies: First National Corporation (FXNC) (4%) and Eagle Financial Services, Inc. (EFSI) (1.5%). Securities with limited marketability, such as stock in the Federal Reserve Bank ("Federal Reserve") or the Federal Home Loan Bank ("FHLB"), are carried at cost and are reported as non-marketable equity securities in the table above.

Certain investment securities owned by the Company were in an unrealized loss position (i.e., amortized cost basis exceeded the estimated fair value of the securities).  The following table shows the gross unrealized losses and fair value of the Company’s investments aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position (in thousands):

	June 30, 2016
	Less Than Twelve Months				Twelve Months or Greater				Total
	Estimated Fair Value		Unrealized Loss		Estimated Fair Value		Unrealized Loss		Estimated Fair Value		Unrealized Loss
Securities available-for-sale:
Obligations of states and political subdivisions	$	480	$	3	$	—	$	—	$	480	$	3
Mortgage-backed securities:
U.S. Government agencies	16		—		17,020		128		17,036		128
Trust preferred securities	—		—		4,618		901		4,618		901
Corporate securities	2,273		122		1,025		4		3,298		126
Total	$	2,769	$	125	$	22,663	$	1,033	$	25,432	$	1,158

	December 31, 2015
	Less Than Twelve Months				Twelve Months or Greater				Total
	Estimated Fair Value		Unrealized Loss		Estimated Fair Value		Unrealized Loss		Estimated Fair Value		Unrealized Loss
Securities available-for-sale:
Obligations of states and political subdivisions	$	2,406	$	5	$	128	$	2	$	2,534	$	7
Mortgage-backed securities:
U.S. Government agencies	129,612		688		34,044		1,333		163,656		2,021
Trust preferred securities	—		—		4,769		1,155		4,769		1,155
Corporate securities	10,856		174		2,231		147		13,087		321
Investment funds	—		—		1,488		13		1,488		13
Total	$	142,874	$	867	$	42,660	$	2,650	$	185,534	$	3,517

During the six months ended June 30, 2016, the Company had $0.4 million in investment impairment losses. For the six months ended June 30, 2015 and the year ended December 31, 2015, the Company had no investment impairment losses. At June 30, 2016, the cumulative amount of credit-related investment impairment losses that have been recognized by the Company on investments that remain in the Company's investment portfolio as of those dates was $14.5 million ($12.9 million related to the Company's debt securities and $1.6 million related to the Company's equity securities).

Declines in the fair value of held-to-maturity and available-for-sale securities below their cost that are deemed to be other-than-temporary would be reflected in earnings as realized losses. In estimating other-than-temporary impairment losses, management considers, among other things (i) the length of time and the extent to which the fair value has been less than cost; (ii) the financial condition, capital strength, and near-term (within 12 months) prospects of the issuer, including any specific events which may influence the operations of the issuer such as changes in technology that may impair the earnings potential of the investment or the discontinuance of a segment of the business that may affect the future earnings potential; (iii) the historical volatility in the market value of the investment and/or the liquidity or illiquidity of the investment; (iv) adverse conditions specifically related to the security, an industry, or a geographic area; (v) the intent to sell the investment security and if it’s more likely than not that the Company will not have to sell the security before recovery of its cost basis. In addition, management also employs a continuous monitoring process in regards to its marketable equity securities, specifically its portfolio of regional community bank holdings. Although the regional community bank stocks that are owned by the Company are publicly traded, the trading activity for these stocks is minimal, with trading volumes of less than 0.2% of each respective company being traded on a daily basis. As part of management’s review process for these securities, management reviews the financial condition of each respective regional community bank for any indications of financial weakness.

Management has the ability and intent to hold the securities classified as held-to-maturity until they mature, at which time the Company expects to receive full value for the securities. Furthermore, as of June 30, 2016, management generally does not intend to sell an impaired security and it is not more than likely that it will be required to sell the security before the recovery of its amortized cost basis. The unrealized losses on debt securities are primarily the result of interest rate changes, credit spread fluctuations on agency-issued mortgage related securities, general financial market uncertainty and unprecedented market volatility. These conditions should not prohibit the Company from receiving its contractual principal and interest payments on its debt securities. The fair value is expected to recover as the securities approach their maturity date or repricing date. As of June 30, 2016, management believes the unrealized losses detailed in the table above are temporary and no additional impairment loss has been recognized in the Company’s consolidated income statement. Should the impairment of any of these securities become other-than-temporary, the cost basis of the investment will be reduced and the resulting loss will be recognized in net income in the period the other-than-temporary impairment is identified, while any noncredit loss will be recognized in other comprehensive income.

The amortized cost and estimated fair value of debt securities at June 30, 2016, by contractual maturity, are shown in the following table (in thousands).  Expected maturities will differ from contractual maturities because the issuers of the securities may have the right to prepay obligations without prepayment penalties.  Mortgage-backed securities have been allocated to their respective maturity groupings based on their contractual maturity.

	Amortized Cost		Estimated Fair Value
Securities Available-for-Sale
Due in one year or less	$	4,026	$	4,084
Due after one year through five years	25,063		17,326
Due after five years through ten years	35,413		44,738
Due after ten years	330,011		337,929
	$	394,513	$	404,077
Securities Held-to-Maturity
Due in one year or less	$	—	$	—
Due after one year through five years	—		—
Due after five years through ten years	—		—
Due after ten years	83,208		86,944
	$	83,208	$	86,944

Gross gains and gross losses realized by the Company from investment security transactions are summarized in the table below (in thousands).

	Three months ended June 30,					Six months ended June 30,
	2016			2015		2016			2015
Gross realized gains	$	1,256		$	2,116	$	1,256		$	2,130
Gross realized losses	(411		)	—		(411		)	—
Net investment security gains	$	845		$	2,116	$	845		$	2,130

The carrying value of securities pledged to secure public deposits and for other purposes as required or permitted by law approximated $294 million and $273 million at June 30, 2016 and December 31, 2015, respectively.

XML

Loans

6 Months Ended

Jun. 30, 2016

Loans Receivable, Net [Abstract]

Loans

Loans

The following summarizes the Company’s major classifications for loans (in thousands):

	June 30, 2016			December 31, 2015
Residential real estate	$	1,417,137		$	1,383,133
Home equity	142,827			147,036
Commercial and industrial	171,362			165,340
Commercial real estate	1,135,493			1,127,581
Consumer	33,799			36,083
DDA overdrafts	2,780			3,361
Gross loans	2,903,398			2,862,534
Allowance for loan losses	(19,139		)	(19,251		)
Net loans	$	2,884,259		$	2,843,283

Construction loans of $12.3 million and $13.1 million are included within residential real estate loans at June 30, 2016 and December 31, 2015, respectively.  Construction loans of $2.2 million and $12.6 million are included within commercial real estate loans at June 30, 2016 and December 31, 2015, respectively.  The Company’s commercial and residential real estate construction loans are primarily secured by real estate within the Company’s principal markets.  These loans were originated under the Company’s loan policy, which is focused on the risk characteristics of residential and commercial real estate lending, including specific risks related to construction lending.  Adequate consideration has been given to these loans in establishing the Company’s allowance for loan losses.

The following table details the loans acquired in conjunction with the Virginia Savings Bancorp, Inc. ("Virginia Savings"), Community Financial Corporation ("Community") and American Founders Bank ("AFB") acquisitions (in thousands):

	Virginia
	Savings		Community		AFB		Total
June 30, 2016
Outstanding loan balance	$	27,113	$	164,558	$	105,398	$	297,069
Credit-impaired loans:
Carrying value	1,714		11,160		—		12,874
Contractual principal and interest	1,924		14,042		—		15,966
December 31, 2015
Outstanding loan balance	$	28,914	$	181,545	$	112,862	$	323,321
Credit-impaired loans:
Carrying value	1,707		12,899		—		14,606
Contractual principal and interest	1,965		16,362		—		18,327

Changes in the accretable yield of the credit-impaired loans for the six months ended June 30, 2016 is as follows (in thousands):

	Virginia Savings						Community						Total
				Carrying						Carrying						Carrying
	Accretable			Amount			Accretable			Amount			Accretable			Amount
	Yield			of Loans			Yield			of Loans			Yield			of Loans
Balance at the beginning of the period	$	374		$	1,707		$	6,266		$	12,899		$	6,640		$	14,606
Accretion	(86		)	86			(530		)	530			(616		)	616
Net reclassifications to accretable yield from
non-accretable yield	51			—			(38		)	—			13			—
Payments received, net	—			(79		)	—			(2,011		)	—			(2,090		)
Disposals	—			—			—			(258		)	—			(258		)
Balance at the end of period	$	339		$	1,714		$	5,698		$	11,160		$	6,037		$	12,874

Increases in expected cash flow subsequent to the acquisition are recognized first as a reduction of any previous impairment, then prospectively through adjustment of the yield on the loans or pools over its remaining life, while decreases in expected cash flows are recognized as impairment through a provision for loan loss and an increase in the allowance for purchased credit-impaired loans.

XML

Allowance For Loan Losses

6 Months Ended

Jun. 30, 2016

Receivables [Abstract]

Allowance For Loan Losses

Allowance For Loan Losses

Management systematically monitors the loan portfolio and the adequacy of the allowance for loan losses on a quarterly basis to provide for probable losses inherent in the portfolio.  Management assesses the risk in each loan type based on historical trends, the general economic environment of its local markets, individual loan performance and other relevant factors.

Individual credits are selected throughout the year for detailed loan reviews, which are utilized by management to assess the risk in the portfolio and the adequacy of the allowance.  Due to the nature of commercial lending, evaluation of the adequacy of the allowance as it relates to these loan types is often based more upon specific credit reviews, with consideration given to the potential impairment of certain credits and historical loss rates, adjusted for economic conditions and other inherent risk factors.

The following table summarizes the activity in the allowance for loan loss, by portfolio segment, for the six months ended June 30, 2016 and 2015 (in thousands).  The allocation of a portion of the allowance in one portfolio segment does not preclude its availability to absorb losses in other portfolio segments. The following table also presents the balance in the allowance for loan loss disaggregated on the basis of the Company’s impairment measurement method and the related recorded investment in loans, by portfolio segment, as of June 30, 2016 and December 31, 2015 (in thousands).

	Commercial &			Commercial			Residential									DDA
	Industrial			Real Estate			Real Estate			Home Equity			Consumer			Overdrafts			Total
Six months ended June 30, 2016
Allowance for loan loss
Beginning balance	$	3,271		$	6,985		$	6,778		$	1,463		$	97		$	657		$	19,251
Charge-offs	(45		)	(1,071		)	(742		)	(175		)	(82		)	(639		)	(2,754		)
Recoveries	4			404			90			—			81			402			981
Provision for acquired loans	—			168			—			—			—			—			168
Provision	861			(213		)	232			135			(5		)	483			1,493
Ending balance	$	4,091		$	6,273		$	6,358		$	1,423		$	91		$	903		$	19,139
Six months ended June 30, 2015
Allowance for loan loss
Beginning balance	$	1,582		$	8,845		$	7,208		$	1,495		$	85		$	859		$	20,074
Charge-offs	(2,538		)	(276		)	(529		)	(108		)	(143		)	(624		)	(4,218		)
Recoveries	27			31			64			—			79			406			607

Provision for acquired loans	—		545			—		—		—		—		545
Provision	3,154		(623		)	332		106		99		111		3,179
Ending balance	$	2,225	$	8,522		$	7,075	$	1,493	$	120	$	752	$	20,187
As of June 30, 2016
Allowance for loan loss
Evaluated for impairment:
Individually	$	—	$	—		$	—	$	—	$	—	$	—	$	—
Collectively	4,088		5,670			6,266		1,423		91		903		18,441
Acquired with deteriorated
credit quality	3		603			92		—		—		—		698
Total	$	4,091	$	6,273		$	6,358	$	1,423	$	91	$	903	$	19,139
Loans
Evaluated for impairment:
Individually	$	2,114	$	4,838		$	—	$	—	$	—	$	—	$	6,952
Collectively	168,929		1,120,863			1,414,488		142,827		33,684		2,780		2,883,571
Acquired with deteriorated
credit quality	319		9,792			2,649		—		115		—		12,875
Total	$	171,362	$	1,135,493		$	1,417,137	$	142,827	$	33,799	$	2,780	$	2,903,398
As of December 31, 2015
Allowance for loan loss
Evaluated for impairment:
Individually	$	—	$	—		$	—	$	—	$	—	$	—	$	—
Collectively	3,267		6,173			6,765		1,463		97		657		18,422
Acquired with deteriorated
credit quality	4		812			13		—		—		—		829
Total	$	3,271	$	6,985		$	6,778	$	1,463	$	97	$	657	$	19,251
Loans
Evaluated for impairment:
Individually	$	2,349	$	6,133		$	—	$	—	$	—	$	—	$	8,482
Collectively	162,662		1,109,327			1,381,064		147,036		35,997		3,361		2,839,447
Acquired with deteriorated
credit quality	329		12,121			2,069		—		86		—		14,605
Total	$	165,340	$	1,127,581		$	1,383,133	$	147,036	$	36,083	$	3,361	$	2,862,534

In the second quarter of 2016, parts of West Virginia were impacted by tragic flooding. Upon review of the Company's loan balances in those communities impacted, management has estimated that there are approximately $40 million of loans outstanding, with 90% being residential real estate loans located out of the floodplains. Within zip codes where the flooding occurred, there are approximately 900 loans, mostly residential real estate loans, that have an average balance of under $43,000. It is still early in the recovery process, and while the Company did not recognize any losses related to the flooding in the second quarter of 2016, the exact nature of any future loan losses remains unknown. While it is likely that the Company will experience losses due to the flood, the amount of such loss is currently not estimable.

Credit Quality Indicators

All commercial loans within the portfolio are subject to internal risk grading.  All non-commercial loans are evaluated based on payment history.  The Company’s internal risk ratings for commercial loans are:  Pass, Special Mention, Substandard and Doubtful.  Each internal risk rating is defined in the loan policy using the following criteria:  balance sheet yields; ratios and leverage; cash flow spread and coverage; prior history; capability of management; market position/industry; potential impact of changing economic, legal, regulatory or environmental conditions; purpose; structure; collateral support; and guarantor support.  Risk grades are generally assigned by the primary lending officer and are periodically evaluated by the Company’s internal loan review process.  Based on an individual loan’s risk grade, estimated loss percentages are applied to the outstanding balance of the loan to determine the amount of probable loss.

The Company categorizes loans into risk categories based on relevant information regarding the customer’s debt service ability, capacity, overall collateral position along with other economic trends, and historical payment performance.  The risk grades for each credit are updated when the Company receives current financial information, the loan is reviewed by the Company’s internal loan review/credit administration departments, or the loan becomes delinquent or impaired.  The risk grades are updated a minimum of annually for loans rated exceptional, good, acceptable, or pass/watch.  Loans rated special mention, substandard or doubtful are reviewed at least quarterly.  The Company uses the following definitions for its risk ratings:

Risk Rating	Description
Pass ratings:
(a) Exceptional	Loans classified as exceptional are secured with liquid collateral conforming to the internal loan policy.  Loans rated within this category pose minimal risk of loss to the bank.
(b) Good	Loans classified as good have similar characteristics that include a strong balance sheet, satisfactory debt service coverage ratios, strong management and/or guarantors, and little exposure to economic cycles. Loans in this category generally have a low chance of loss to the bank.
(c) Acceptable	Loans classified as acceptable have acceptable liquidity levels, adequate debt service coverage ratios, experienced management, and have average exposure to economic cycles.  Loans within this category generally have a low risk of loss to the bank.
(d) Pass/watch	Loans classified as pass/watch have erratic levels of leverage and/or liquidity, cash flow is volatile and the borrower is subject to moderate economic risk.  A borrower in this category poses a low to moderate risk of loss to the bank.
Special mention	Loans classified as special mention have a potential weakness(es) that deserves management’s close attention.  The potential weakness could result in deterioration of the loan repayment or the bank’s credit position at some future date.  A loan rated in this category poses a moderate loss risk to the bank.
Substandard	Loans classified as substandard reflect a customer with a well defined weakness that jeopardizes the liquidation of the debt.  Loans in this category have the possibility that the bank will sustain some loss if the deficiencies are not corrected and the bank’s collateral value is weakened by the financial deterioration of the borrower.
Doubtful	Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristics that make collection of the full contract amount highly improbable.  Loans rated in this category are most likely to cause the bank to have a loss due to a collateral shortfall or a negative capital position.

The following table presents the Company’s commercial loans by credit quality indicators, by class (in thousands):

	Commercial and industrial		Commercial real estate		Total
June 30, 2016
Pass	$	161,579	$	1,079,105	$	1,240,684
Special mention	2,236		16,021		18,257
Substandard	7,547		40,367		47,914
Doubtful	—		—		—
Total	$	171,362	$	1,135,493	$	1,306,855
December 31, 2015
Pass	$	156,664	$	1,070,506	$	1,227,170
Special mention	4,099		20,942		25,041
Substandard	4,539		36,133		40,672
Doubtful	38		—		38
Total	$	165,340	$	1,127,581	$	1,292,921

The following table presents the Company's non-commercial loans by payment performance, by class (in thousands):

	Performing		Non-Performing		Total
June 30, 2016
Residential real estate	$	1,414,503	$	2,634	$	1,417,137
Home equity	142,612		215		142,827
Consumer	33,711		88		33,799
DDA overdrafts	2,780		—		2,780
Total	$	1,593,606	$	2,937	$	1,596,543
December 31, 2015
Residential real estate	$	1,379,797	$	3,336	$	1,383,133
Home equity	146,877		159		147,036
Consumer	36,049		34		36,083
DDA overdrafts	3,361		—		3,361
Total	$	1,566,084	$	3,529	$	1,569,613

Aging Analysis of Accruing and Non-Accruing Loans

Interest income on loans is accrued and credited to operations based upon the principal amount outstanding, using methods that generally result in level rates of return.  Loan origination fees, and certain direct costs, are deferred and amortized as an adjustment to the yield over the term of the loan.  The accrual of interest generally is discontinued when a loan becomes 90 days past due as to principal or interest for all loan types.  However, any loan may be placed on non-accrual if the Company receives information that indicates a borrower is unable to meet the contractual terms of its respective loan agreement.  Other indicators considered for placing a loan on non-accrual status include the borrower’s involvement in bankruptcies, foreclosures, repossessions, litigation and any other situation resulting in doubt as to whether full collection of contractual principal and interest is attainable.  When interest accruals are discontinued, unpaid interest recognized in income in the current year is reversed, and interest accrued in prior years is charged to the allowance for loan losses.  Management may elect to continue the accrual of interest when the net realizable value of collateral exceeds the principal balance and related accrued interest, and the loan is in the process of collection.

Generally for all loan classes, interest income during the period the loan is non-performing is recorded on a cash basis after recovery of principal is reasonably assured.  Cash payments received on nonperforming loans are typically applied directly against the outstanding principal balance until the loan is fully repaid.  Generally, loans are restored to accrual status when the obligation is brought current, has performed in accordance with the contractual terms for a reasonable period of time, and the ultimate collectability of the total contractual principal and interest is no longer in doubt.

Generally, all loan types are considered past due when the contractual terms of a loan are not met and the borrower is 30 days or more past due on a payment.  Furthermore, residential and home equity loans are generally subject to charge-off when the loan becomes 120 days past due, depending on the estimated fair value of the collateral less cost to dispose, versus the outstanding loan balance.  Commercial loans are generally charged off when the loan becomes 120 days past due.  Open-end consumer loans are generally charged off when the loan becomes 180 days past due.

A loan acquired and accounted for under ASC Topic 310-30 is reported as an accruing loan and a performing asset provided that the loan is performing in accordance with the initial expectations. The loan would be considered non-performing if the loan's performance deteriorates below the initial expectations.

The following table presents an aging analysis of the Company’s accruing and non-accruing loans, by class (in thousands):

	June 30, 2016
	Accruing
	Current		30-59 days		60-89 days		Over 90 days		Purchased-Credit Impaired		Non-accrual		Total
Residential real estate	$	1,409,116	$	4,680	$	707	$	103	$	—	$	2,531	$	1,417,137
Home equity	142,067		410		135		50		—		165		142,827
Commercial and industrial	168,334		290		14		—		—		2,724		171,362
Commercial real estate	1,123,968		1,230		—		—		516		9,779		1,135,493
Consumer	33,649		59		3		88		—		—		33,799
DDA overdrafts	2,490		290		—		—		—		—		2,780
Total	$	2,879,624	$	6,959	$	859	$	241	$	516	$	15,199	$	2,903,398
	December 31, 2015
	Accruing
	Current		30-59 days		60-89 days		Over 90 days		Purchased-Credit Impaired		Non-accrual		Total
Residential real estate	$	1,373,604	$	5,261	$	932	$	418	$	—	$	2,918	$	1,383,133
Home equity	146,493		318		65		24		—		136		147,036
Commercial and industrial	162,435		141		—		19		—		2,745		165,340
Commercial real estate	1,114,953		762		211		—		506		11,149		1,127,581
Consumer	35,886		154		9		34		—		—		36,083
DDA overdrafts	3,048		310		3		—		—		—		3,361
Total	$	2,836,419	$	6,946	$	1,220	$	495	$	506	$	16,948	$	2,862,534

The following table presents the Company’s impaired loans, by class (in thousands). The difference between the unpaid principal balance and the recorded investment generally reflects amounts that have been previously charged-off. There are no impaired residential, home equity, or consumer loans.

	June 30, 2016						December 31, 2015
			Unpaid						Unpaid
	Recorded		Principal		Related		Recorded		Principal		Related
	Investment		Balance		Allowance		Investment		Balance		Allowance
With no related allowance recorded:
Commercial and industrial	$	2,114	$	5,250	$	—	$	2,349	$	7,547	$	—
Commercial real estate	4,838		7,077		—		6,133		9,502		—
Total	$	6,952	$	12,327	$	—	$	8,482	$	17,049	$	—
With an allowance recorded:
Commercial and industrial	$	—	$	—	$	—	$	—	$	—	$	—
Commercial real estate	—		—		—		—		—		—
Total	$	—	$	—	$	—	$	—	$	—	$	—

     The following table presents information related to the average recorded investment and interest income recognized on the Company’s impaired loans, by class (in thousands):

	Six months ended June 30,
	2016				2015
	Average		Interest		Average		Interest
	Recorded		Income		Recorded		Income
	Investment		Recognized		Investment		Recognized
With no related allowance recorded:
Commercial and industrial	$	2,339	$	—	$	2,814	$	—
Commercial real estate	4,739		9		5,355		9
Total	$	7,078	$	9	$	8,169	$	9
With an allowance recorded:
Commercial and industrial	$	—	$	—	$	—	$	—
Commercial real estate	—		—		1,365		40
Total	$	—	$	—	$	1,365	$	40

     Approximately $0.2 million and $0.4 million of interest income would have been recognized during the six months ended June 30, 2016 and 2015, respectively, if such loans had been current in accordance with their original terms.  There were no commitments to provide additional funds on non-accrual, impaired or other potential problem loans at June 30, 2016.

Loan Modifications

The Company’s policy on loan modifications typically does not allow for modifications that would be considered a concession from the Company.  However, when there is a modification, the Company evaluates each modification to determine if the modification constitutes a troubled debt restructuring (“TDR”) in accordance with ASU 2011-2, whereby a modification of a loan would be considered a TDR when both of the following conditions are met: (1) a borrower is experiencing financial difficulty and (2) the modification constitutes a concession.  When determining whether the borrower is experiencing financial difficulties, the Company reviews whether the borrower is currently in payment default on any of its debt or whether it is probable that the borrower would be in payment default in the foreseeable future without the modification.  Other indicators of financial difficulty include whether the borrower has declared or is in the process of declaring bankruptcy, the borrower’s ability to continue as a going concern, and the borrower’s projected cash flow to service its debt (including principal and interest) in accordance with the contractual terms for the foreseeable future, without a modification.

Regulatory guidance requires loans to be accounted for as collateral-dependent loans when borrowers have filed Chapter 7 bankruptcy, the debt has been discharged by the bankruptcy court, and the borrower has not reaffirmed the debt. The filing of bankruptcy is deemed to be evidence that the borrower is in financial difficulty and the discharge of the debt by the bankruptcy court is deemed to be a concession granted to the borrower.

The following tables set forth the Company’s TDRs (in thousands):

	June 30, 2016						December 31, 2015
			Non-						Non-
	Accruing		Accruing		Total		Accruing		Accruing		Total
Commercial and industrial	$	50	$	—	$	50	$	58	$	—	$	58
Commercial real estate	2,743		—		2,743		1,746		—		1,746
Residential real estate	19,685		390		20,075		17,796		191		17,987
Home equity	2,873		44		2,917		2,659		34		2,693
Consumer	—		—		—		—		—		—
	$	25,351	$	434	$	25,785	$	22,259	$	225	$	22,484

	New TDRs
	Six months ended June 30,
	2016					2015
		Pre		Post			Pre		Post
		Modification		Modification			Modification		Modification
		Outstanding		Outstanding			Outstanding		Outstanding
	Number of	Recorded		Recorded		Number of	Recorded		Recorded
	Contracts	Investment		Investment		Contracts	Investment		Investment
Commercial and industrial	—	$	—	$	—	—	$	—	$	—
Commercial real estate	1	2,225		2,225		—	—		—
Residential real estate	20	1,857		1,857		27	2,006		2,006
Home equity	3	69		69		11	259		259
Consumer	—	—		—		—	—		—
	24	$	4,151	$	4,151	38	$	2,265	$	2,265

XML

Long-Term Debt

6 Months Ended

Jun. 30, 2016

Long-term Debt, Unclassified [Abstract]

Long-Term Debt

Long-Term Debt

The components of long-term debt are summarized below (in thousands):

	June 30, 2016		December 31, 2015
Junior subordinated debentures owed to City Holding Capital Trust III, due 2038, interest at a rate of 4.15% and 4.01%, respectively	$	16,495	$	16,495

The Company formed a statutory business trust, City Holding Capital Trust III (“Capital Trust III”), under the laws of Delaware.  Capital Trust III was created for the exclusive purpose of (i) issuing trust-preferred capital securities (“Capital Securities”), which represent preferred undivided beneficial interests in the assets of the trust, (ii) using the proceeds from the sale of the Capital Securities to acquire junior subordinated debentures (“Debentures”) issued by the Company, and (iii) engaging in only those activities necessary or incidental thereto.  The trust is considered a variable interest entity for which the Company is not the primary beneficiary.  Accordingly, the accounts of the trusts are not included in the Company’s consolidated financial statements.

Distributions on the Debentures are cumulative and will be payable quarterly at an interest rate of 3.50% over the three month LIBOR rate, reset quarterly.  Interest payments are due in March, June, September and December.  The Debentures are redeemable prior to maturity at the option of the Company (i) in whole at any time or in part from time-to-time, or (ii) in whole, but not in part, at any time within 90 days following the occurrence and during the continuation of certain predefined events.

Payments of distributions on the Capital Securities and payments on redemption of the Capital Securities are guaranteed by the Company.  The Company also entered into an agreement as to expenses and liabilities with the trust pursuant to which it agreed, on a subordinated basis, to pay any cost, expenses or liabilities of the trust other than those arising under the Capital Securities.  The obligations of the Company under the Debentures, the related indentures, the trust agreement establishing the trust, the guarantees and the agreements as to expenses and liabilities, in the aggregate, constitute a full and unconditional guarantee by the Company of the trust’s obligations under the Capital Securities.  The Capital Securities issued by the statutory business trusts qualify as Tier 1 capital for the Company under current Federal Reserve Board guidelines.

XML

Derivative Instruments

6 Months Ended

Jun. 30, 2016

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments

Derivative Instruments

The Company enters into derivative transactions principally to protect against the risk of adverse price or interest rate movements on the value of certain assets and liabilities on future cash flows. As of June 30, 2016 and December 31, 2015, the Company has derivative financial instruments not included in hedge relationships.  These derivatives consist of interest rate swaps and floors used for interest rate management purposes and derivatives executed with commercial banking customers to facilitate their interest rate management strategies. For the majority of these instruments the Company acts as an intermediary for its customers. Changes in the fair value of the underlying derivative contracts for the most part offset each other and do not significantly impact the Company's results of operations. The Company also has an interest rate swap for the purpose of hedging changes in LIBOR related to commercial real estate loans. Hedge ineffectiveness is assessed quarterly and any ineffectiveness is recorded as non-interest expense. For the three and six months ended June 30, 2016 and three and six months ended June 30, 2015 hedge ineffectiveness was less than $0.1 million for each respective period.

The following table summarizes the notional and fair value of these derivative instruments (in thousands):

	June 30, 2016				December 31, 2015
	Notional Amount		Fair Value		Notional Amount		Fair Value
Non-hedging interest rate derivatives:
Other Assets	$	398,139	$	29,415	$	372,995	$	10,811
Other Liabilities	405,662		29,733		380,995		10,872
Derivatives designated as hedges of fair value:
Other Liabilities	4,842		229		5,475		61

The following table summarizes the change in fair value of these derivative instruments (in thousands):

	Three months ended June 30,						Six months ended June 30,
	2016			2015			2016			2015
Change in Fair Value Non-Hedging Interest Rate Derivatives:
Other income - derivative asset	$	(6,744	)	$	(5,310	)	$	(18,090	)	$	(2,428	)
Other income - derivative liability	6,869			5,310			18,498			2,428
Change in Fair Value Hedging Interest Rate Derivatives:
Hedged item - derivative asset	43			(78		)	164			(12		)
Other income - derivative liability	6			(7		)	4			2

Certain financial instruments, including derivatives, may be eligible for offset in the consolidated balance sheet and/or subject to master netting arrangements. The Company's derivative transactions with financial institution counterparties are generally executed under International Swaps and Derivative Association ("ISDA") master agreements which include "right of setoff" provisions. In such cases there is generally a legally enforceable right to offset recognized amounts and there may be an intention to settle such amounts on a net basis. Nonetheless, the Company does not generally offset financial instruments for financial reporting purposes. Information about financial instruments that are eligible for offset in the consolidated balance sheet as of June 30, 2016 is presented in the following tables (in thousands):

Gross Amounts

Not Offset in the Statement

of Financial Position

Total

of Gross

Amounts

Not Offset in

the Statement

of Financial

Position

Netting

Including

Gross

Net Amounts

Adjustment

Applicable

Amounts

of Assets

per

Netting

Gross

Offset in the

Presented in

Applicable

Agreement

Amounts of

Statement of

the Statement

Master

Fair Value

and Fair

Recognized

Financial

of Financial

Netting

of Financial

Value of

Description

Assets

Position

Position

Arrangements

Collateral

Collateral

Net Amount

(a)

(b)

(c)=(a)-(b)

(d)

(c)-(d) *

Non-hedging derivative assets:

Interest rate swap agreements

$

29,415

$

—

$

29,415

$

—

$

29,415

$

29,415

$

—

Gross Amounts

Not Offset in the Statement

of Financial Position

Total

of Gross

Amounts

Not Offset in

the Statement

of Financial

Position

Netting

Including

Gross

Net Amounts

Adjustment

Applicable

Amounts

of Liabilities

per

Netting

Gross

Offset in the

Presented in

Applicable

Agreement

Amounts of

Statement of

the Statement

Master

Fair Value

and Fair

Recognized

Financial

of Financial

Netting

of Financial

Value of

Description

Liabilities

Position

Position

Arrangements

Collateral

Collateral

Net Amount

(a)

(b)

(c)=(a)-(b)

(d)

(c)-(d) *

Non-hedging derivative liabilities:

Interest rate swap agreements

$

29,733

$

—

$

29,733

$

—

$

32,954

$

32,954

$

—

Hedging derivative liabilities:

Interest rate swap agreements

$

229

$

—

$

229

$

—

$

254

$

254

$

—

*

For instances where the fair value of financial collateral meets or exceeds the amounts presented in the Statement of Financial Position, no value is displayed to represent full collateralization.

XML

Employee Benefit Plans

6 Months Ended

Jun. 30, 2016

Share-based Compensation [Abstract]

Employee Benefit Plans

Employee Benefit Plans

Pursuant to the terms of the City Holding Company 2003 Incentive Plan and the City Holding Company 2013 Incentive Plan (the "2003 Plan” and "2013 Plan", respectively), the Compensation Committee of the Board of Directors, or its delegate, may, from time to time, grant stock options, stock appreciation rights (“SARs”), or restricted stock awards to employees, directors and individuals who provide service to the Company (collectively, "Plan Participants").  The 2003 Plan expired in April of 2013 and the 2013 Plan was approved by the Company's shareholders in April 2013. A maximum of 750,000 shares of the Company’s common stock may be issued upon the exercise of stock options, SARs and stock awards under the 2013 Plan.  These limitations may be adjusted in the event of a change in the number of outstanding shares of common stock by reason of a stock dividend, stock split or other similar event.  Specific terms of options and SARs awarded, including vesting periods, exercise prices (stock price at date of grant) and expiration dates are determined at the date of grant and are evidenced by agreements between the Company and the awardee.  The exercise price of the option grants equals the market price of the Company’s common stock on the date of grant.  All incentive stock options and SARs will be exercisable up to 10 years from the date granted and all options and SARs are exercisable for the period specified in the individual agreement. As of June 30, 2016, under the 2003 Plan and 2013 Plan, 462,863 stock options had been awarded and 270,447 restricted stock awards had been awarded, respectively.

Each award from the 2003 Plan and 2013 Plan is evidenced by an award agreement that specifies the option price, the duration of the option, the number of shares to which the option pertains, and such other provisions as the Compensation Committee, or its delegate, determines.  The option price for each grant is equal to the fair market value of a share of the Company’s common stock on the date of the grant.  Options granted expire at such time as the Compensation Committee, or its delegate, determines at the date of the grant and in no event does the exercise period exceed a maximum of ten years.  Upon a change-in-control of the Company, as defined in the 2003 Plan and 2013 Plan, all outstanding options and awards shall immediately vest.

Certain stock options and restricted stock awards granted pursuant to the 2013 Plan have performance-based vesting requirements. These shares will vest in three separate annual installments of approximately 33.33% per installment on the third, fourth and fifth anniversaries of the grant date, subject further to performance-based vesting requirements. The performance-based vesting requirements are as follows:

* First Installment – the mean return on average assets of the Company (excluding merger and acquisition expenses and other nonrecurring items as determined by the Board of Directors of the Company) of the three years immediately prior to the vesting date is equal to or exceeds the median return on average assets over the 20 year period immediately preceding the vesting date of all FDIC insured depository institutions.

* Second Installment – the mean return on average assets of the Company (excluding merger and acquisition expenses and other nonrecurring items as determined by the Board of Directors of the Company) of the four years immediately prior to the vesting date is equal to or exceeds the median return on average assets over the 20 year period immediately preceding the vesting date of all FDIC insured depository institutions.

* Third Installment – the mean return on average assets of the Company (excluding merger and acquisition expenses and other nonrecurring items as determined by the Board of Directors of the Company) of the five years immediately prior to the vesting date is equal to or exceeds the median return on average assets over the 20 year period immediately preceding the vesting date of all FDIC insured depository institutions.

Stock Options

A summary of the Company’s stock option activity and related information is presented below:

	Six months ended June 30,
	2016				2015
	Options		Weighted-Average Exercise Price		Options		Weighted-Average Exercise Price
Outstanding at January 1	95,015		$	38.38	167,554		$	36.74
Granted	24,348		43.73		12,961		46.41
Exercised	(20,250	)	33.68		(29,250	)	34.30
Forfeited	—		—		(4,000	)	31.66
Outstanding at June 30	99,113		$	40.68	147,265		$	38.24
Exerciseable at June 30	15,500		$	36.23	72,000		$	37.01

Information regarding stock option exercises and stock-based compensation expense associated with stock options is provided in the following table (in thousands):    

	Six months ended June 30,
	2016		2015
Proceeds from stock option exercises	$	682	$	1,003
Intrinsic value of stock options exercised	302		322
Stock-based compensation expense associated with stock options	$	120	$	105
At period-end:	June 30, 2016
Unrecognized stock-based compensation expense associated with stock options	$	500
Weighted average period (in years) in which the above amount is expected to be
recognized	2.7

Shares issued in connection with stock option exercises are issued from available treasury shares. If no treasury shares are available, new shares would be issued from available authorized shares. During the six months ended June 30, 2016 and 2015, all shares issued in connection with stock option exercises were issued from available treasury stock.

Additional information regarding stock options outstanding and exercisable at June 30, 2016, is provided in the following table:

Ranges of Exercise Prices	No. of Options Outstanding	Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value (in thousands)		No. of Options Currently Exercisable	Weighted-Average Exercise Price of Options Currently Exercisable		Weighted-Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value of Options Currently Exercisable (in thousands)
$25.00 - $29.99	1,250	$	28.15	2.7	$	22	1,250	$	28.15	2.7	$	22
30.00 - 34.99	3,000	30.38		2.4	45		3,000	30.38		2.4	45
35.00 - 39.99	36,601	36.35		6.0	334		4,250	35.09		4.8	44
40.00 - 44.99	45,301	43.51		7.9	89		7,000	40.88		1.8	32
45.00 - 50.00	12,961	46.61		8.7	—		—	—		—	—
	99,113				$	490	15,500				$	143

The fair value of the options is estimated at the date of grant using a Black-Scholes option-pricing model.   The following weighted average assumptions were used to estimate the fair value of options granted:

	Six months ended June 30,
	2016		2015
Risk-free interest rate	1.43	%	1.95	%
Expected dividend yield	3.86	%	3.50	%
Volatility factor	30.76	%	45.40	%
Expected life of option	7.0 years		7.0 years

Restricted Shares

The Company records compensation expense with respect to restricted shares in an amount equal to the fair value of the common stock covered by each award on the date of grant. The restricted shares awarded become fully vested after various periods of continued employment from the respective dates of grant. The Company is entitled to an income tax deduction in an amount equal to the taxable income reported by the holders of the restricted shares when the restrictions are released and the shares are issued. Compensation is being charged to expense over the respective vesting periods.

Restricted shares are forfeited if the awardee officer or employee terminates his employment with the Company prior to the lapsing of restrictions. The Company records forfeitures of restricted stock as treasury share repurchases and any compensation cost previously recognized is reversed in the period of forfeiture.  Recipients of restricted shares do not pay any cash consideration to the Company for the shares, have the right to vote all shares subject to such grant and receive all dividends with respect to such shares, whether or not the shares have vested.  

A summary of the Company’s restricted shares activity and related information is presented below:

	Six months ended June 30,
	2016				2015
	Restricted Awards		Average Market Price at Grant		Restricted Awards		Average Market Price at Grant
Outstanding at January 1	172,921		$	37.38	163,431		$	35.50
Granted	27,451		45.99		25,440		46.35
Forfeited	—		—		(500	)	37.50
Vested	(21,700	)	33.89		(16,550	)	33.51
Outstanding at June 30	178,672		$	39.13	171,821		$	37.29

Information regarding stock-based compensation associated with restricted shares during the three months ended June 30, 2016 and 2015 is provided in the following table (in thousands):

	Six months ended June 30,
	2016		2015
Stock-based compensation expense associated with restricted shares	$	661	$	567
At period-end:	June 30, 2016
Unrecognized stock-based compensation expense associated with restricted shares	$	3,498
Weighted average period (in years) in which the above amount is expected to be
recognized	3.3

Shares issued in connection with restricted stock awards are issued from available treasury shares. If no treasury shares are available, new shares would be issued from available authorized shares. During the six months ended June 30, 2016 and 2015, all shares issued in connection with restricted stock awards were issued from available treasury stock.

Benefit Plans

The Company provides retirement benefits to its employees through the City Holding Company 401(k) Plan and Trust (the “401(k) Plan”), which is intended to be compliant with Employee Retirement Income Security Act (ERISA) section 404(c). The Company also maintains two frozen defined benefit pension plans (the “Defined Benefit Plans”), which were inherited from the Company's acquisition of the plan sponsors (Horizon Bancorp, Inc. and Community Financial Corporation).

The following table presents details of the Company's activities pursuant to these plans (in thousands):

	Three months ended June 30,						Six months ended June 30,
	2016			2015			2016			2015
Components of net periodic cost:
Interest cost	$	205		$	203		$	410		$	465
Expected return on plan assets	(288		)	(234		)	(577		)	(523		)
Net amortization and deferral	212			244			424			471
Net Periodic Pension Cost	$	129		$	213		$	257		$	413
401(k) Plan expense	$	201		$	182		$	418		$	411
Defined benefit plan contributions	$	—		$	85		$	—		$	170

XML

Commitments and Contingencies

6 Months Ended

Jun. 30, 2016

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

The Company is a party to certain financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers.  The Company has entered into agreements with certain customers to extend credit or provide a conditional commitment to provide payment on drafts presented in accordance with the terms of the underlying credit documents. The Company also provides overdraft protection to certain demand deposit customers that represent an unfunded commitment.  Overdraft protection commitments, which are included with other commitments below, are uncollateralized and are paid at the Company’s discretion.  Conditional commitments generally include standby and commercial letters of credit. Standby letters of credit represent an obligation of the Company to a designated third party contingent upon the failure of a customer of the Company to perform under the terms of the underlying contract between the customer and the third party. Commercial letters of credit are issued specifically to facilitate trade or commerce. Under the terms of a commercial letter of credit, drafts will be drawn when the underlying transaction is consummated, as intended, between the customer and a third party. The funded portion of these financial instruments is reflected in the Company’s balance sheet, while the unfunded portion of these commitments is not reflected in the balance sheet.  The table below presents a summary of the contractual obligations of the Company resulting from significant commitments (in thousands):

	June 30, 2016		December 31, 2015
Commitments to extend credit:
Home equity lines	$	187,645	$	183,017
Commercial real estate	89,912		84,672
Other commitments	183,241		177,491
Standby letters of credit	5,379		5,086
Commercial letters of credit	1,629		2,312

Loan commitments and standby and commercial letters of credit have credit risks essentially the same as those involved in extending loans to customers and are subject to the Company’s standard credit policies. Collateral is obtained based on management’s credit assessment of the customer. Management does not anticipate any material losses as a result of these commitments.

The Company is engaged in various legal actions that it deems to be in the ordinary course of business. As these legal actions are resolved, the Company could realize positive and/or negative impact to its financial performance in the period in which these legal actions are ultimately decided. There can be no assurance that current legal actions will have an immaterial impact on financial results, either positive or negative, or that no material legal actions may be presented in the future.

XML

Accumulated Other Comprehensive Loss

6 Months Ended

Jun. 30, 2016

Equity [Abstract]

Accumulated Other Comprehensive Loss

Accumulated Other Comprehensive Loss

The activity in accumulated other comprehensive loss is presented in the tables below (in thousands). All amounts are shown net of tax, which is calculated using a combined federal and state income tax rate approximating 37%.

	Accumulated Other Comprehensive Income (Loss)
				Unrealized
				Gains (Losses) on
	Defined Benefit			Securities
	Pension Plans			Available-for-Sale			Total
Balance at December 31, 2014	$	(5,349	)	$	1,190		$	(4,159	)
Other comprehensive income before reclassifications	—			611			611
Amounts reclassified from other comprehensive loss	—			(1,344		)	(1,344		)
	—			(733		)	(733		)
Balance at June 30, 2015	$	(5,349	)	$	457		$	(4,892	)
Balance at December 31, 2015	$	(4,759	)	$	927		$	(3,832	)
Other comprehensive income before reclassifications	—			6,402			6,402
Amounts reclassified from other comprehensive loss	—			(533		)	(533		)
	—			5,869			5,869
Balance at June 30, 2016	$	(4,759	)	$	6,796		$	2,037

	Amount reclassified from Other Comprehensive Loss
	Three months ended						Six months ended						Affected line item
	June 30,						June 30,						in the Statements
	2016			2015			2016			2015			of Income
Securities available-for-sale:
Net securities gains reclassified into earnings	$	(845	)	$	(2,116	)	$	(845	)	$	(2,130	)	Security gains (losses)
Related income tax expense	312			781			312			786			Income tax expense
Net effect on accumulated other comprehensive loss	$	(533	)	$	(1,335	)	$	(533	)	$	(1,344	)

XML

Earnings per Share

6 Months Ended

Jun. 30, 2016

Earnings Per Share [Abstract]

Earnings per Share

Earnings per Share

The following table sets forth the computation of basic and diluted earnings per share using the two class method (in thousands, except per share data):

	Three months ended June 30,				Six months ended June 30,
	2016		2015		2016		2015
Distributed earnings allocated to common stock	$	6,375	$	6,344	$	12,751	$	12,688
Undistributed earnings allocated to common stock	6,016		5,505		11,204		16,950
Net earnings allocated to common shareholders	$	12,391	$	11,849	$	23,955	$	29,638
Average shares outstanding	14,889		15,104		14,903		15,079
Effect of dilutive securities:
Warrant outstanding	—		—		—		55
Employee stock awards	13		23		12		22
Shares for diluted earnings per share	14,902		15,127		14,915		15,156
Basic earnings per share	$	0.83	$	0.78	$	1.61	$	1.97
Diluted earnings per share	$	0.83	$	0.78	$	1.61	$	1.96

During the three months ended June 30, 2015 there were no anti-dilutive options outstanding. Options to purchase approximately 4,200 shares of common stock were outstanding during the three months ended June 30, 2016 but were not included in the computation of diluted earnings per share because the options’ exercise price was greater than the average market price of the common shares and therefore, the effect would have been anti-dilutive.

XML

Fair Value Measurements

6 Months Ended

Jun. 30, 2016

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

Fair value of an asset or liability is the price that would be received to sell that asset or paid to transfer that liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.  ASC Topic 820 establishes a fair value hierarchy for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows:

Level 1: Quoted prices (unadjusted) or identical assets or liabilities in active markets that the Company has the ability to access as of the measurement date.

Level 2: Significant other observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, and other inputs that are observable or can be corroborated by observable market data.

Level 3: Significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

The Company bases fair value of assets and liabilities on quoted market prices, prices for similar assets or liabilities, quoted prices in markets that are not active, and other inputs that are observable or can be corroborated by observable market data.  If such information is not available, fair value is based upon internally developed models that primarily use, as inputs, observable market-based parameters.  Valuation adjustments may be made to ensure that financial instruments are recorded at fair value.  These adjustments may include amounts to reflect counterparty credit quality and the Company’s creditworthiness, among other things, as well as unobservable parameters.  Any such valuation adjustments are applied consistently over time.  The Company’s valuation methodologies may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values.  While management believes the Company’s valuation methodologies are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine fair value of certain financial instruments could result in a different estimate of fair value at the reporting date.  Furthermore, the reported fair value amounts have not been comprehensively revalued since the presentation dates, and therefore, estimates of fair value after the balance sheet date may differ significantly from the amount presented herein.  A more detailed description of the valuation methodologies used for assets and liabilities measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below.

Financial Assets and Liabilities

The Company used the following methods and significant assumptions to estimate fair value for financial assets and liabilities measured on a recurring basis.

Securities Available for Sale.  Securities available for sale are reported at fair value utilizing Level 1, Level 2, and Level 3 inputs.  The fair value of securities available for sale is determined by utilizing a market approach by obtaining quoted prices on nationally recognized securities exchanges (other than forced or distressed transactions) that occur in sufficient volume or matrix pricing, which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities.  If such measurements are unavailable, the security is classified as Level 3.  Significant judgment is required to make this determination.

The Company utilizes a third party pricing service provider to value its Level 1 and Level 2 investment securities.  Annually, the Company obtains an independent auditor’s report from its third party pricing service provider regarding its controls over investment securities.  Although no control deficiencies were noted, the report did contain caveats and disclaimers regarding the pricing information, such as the Company should review fair values for reasonableness.  On a quarterly basis, the Company selects a sample of its debt securities and reprices those securities with a third party that is independent of the primary pricing service provider to verify the reasonableness of the fair values. In addition, the Company selects a sample of securities and reviews the underlying support from the primary pricing service provider.

The Company has determined that its pooled trust preferred securities should be priced using Level 3 inputs in accordance with ASC Topic 820 and guidance issued by the SEC.  The Company has determined that there are few observable transactions and market quotations available for pooled trust preferred securities and they are not reliable for purposes of determining fair value at June 30, 2016.  Due to these circumstances, the Company has elected to utilize an income valuation approach produced by a third party pricing source.  This third party model utilizes deferral and default probabilities for the underlying issuers, estimated prepayment rates and assumes no future recoveries of any defaults or deferrals.  The Company then compares the values provided by the third party model with other external sources.  At such time as there are observable transactions or quoted prices that are associated with an orderly and active market for pooled trust preferred securities, the Company will incorporate such market values in its estimate of fair values for these securities.

Derivatives.Derivatives are reported at fair value utilizing Level 2 inputs.  The Company utilizes a market approach by obtaining dealer quotations to value its customer interest rate swaps.  The Company’s derivatives are included within its Other Assets and Other Liabilities in the accompanying consolidated balance sheets. Derivative assets are typically secured through securities with financial counterparties or cross collateralization with a borrowing customer. Derivative liabilities are typically secured through the Company pledging securities to financial counterparties or, in the case of a borrowing customer, by the right of setoff. The Company considers factors such as the likelihood of default by itself and its counterparties, right of setoff, and remaining maturities in determining the appropriate fair value adjustments. All derivative counterparties approved by the Company's Asset and Liability Committee ("ALCO") are regularly reviewed, and appropriate business action is taken to adjust the exposure to certain counterparties, if necessary. Counterparty exposure is evaluated by netting positions that are subject to master netting agreements, as well as considering the amount of marketable collateral securing the position. This approach used to estimate impacted exposures to counterparties is also used by the Company to estimate its own credit risk in derivative liability positions. To date, no material losses have been incurred due to a counterparty's inability to pay any undercollateralized position. There was no significant change in the value of derivative assets and liabilities attributed to credit risk that would have resulted in a derivative credit risk valuation adjustment at June 30, 2016.

The Company may be required, from time to time, to measure certain financial assets and financial liabilities at fair value on a nonrecurring basis.  Financial assets measured at fair value on a nonrecurring basis include impaired loans reported at the fair value of the underlying collateral if repayment is expected solely from the collateral.  Collateral values are estimated using Level 2 inputs based on observable market data for real estate collateral or Level 3 inputs for non-real estate collateral.  The following table presents assets and liabilities measured at fair value (in thousands):

	Total		Level 1		Level 2		Level 3		Total Gains (Losses)
June 30, 2016
Recurring fair value measurements
Financial Assets
U.S. Government agencies	$	4	$	—	$	4	$	—
Obligations of states and political subdivisions	59,291		—		59,291		—
Mortgage-backed securities:
U.S. Government agencies	313,108		—		313,108		—
Private label	1,111		—		1,111		—
Trust preferred securities	6,323		—		3,700		2,623
Corporate securities	24,240		—		24,240		—
Marketable equity securities	3,419		3,419		—		—
Investment funds	1,543		1,543		—		—
Derivative assets	29,415		—		29,415		—
Financial Liabilities
Derivative liabilities	29,962		—		29,962		—
Nonrecurring fair value measurements
Impaired loans	$	6,952	$	—	$	—	$	6,952	$	—
Other real estate owned	5,579		—		—		5,579		(312		)
December 31, 2015
Recurring fair value measurements
Financial Assets
U.S. Government agencies	$	5	$	—	$	5	$	—
Obligations of states and political subdivisions	50,697		—		50,697		—
Mortgage-backed securities:
U.S. Government agencies	288,197		—		288,197		—
Private label	1,231		—		1,231		—
Trust preferred securities	5,858		—		3,762		2,096
Corporate securities	18,693		—		18,693		—
Marketable equity securities	3,273		3,273		—		—
Investment funds	1,512		1,512		—		—
Derivative assets	10,811		—		10,811		—
Financial Liabilities
Derivative liabilities	10,933		—		10,933		—
Nonrecurring fair value measurements
Impaired loans	$	8,482	$	—	$	—	$	8,482	$	—
Other real estate owned	6,518		—		—		6,518		(937		)

The table below presents a reconcilement of the Company’s financial assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3), which consist solely of trust preferred securities (in thousands):

	Six months ended June 30,
	2016			2015
Beginning balance	$	2,096		$	1,871
Impairment losses on investment securities	(411		)	—
Gains on sale of investment securities	1,256			—
Included in other comprehensive income	(318		)	276
Dispositions	—			—
Transfers into Level 3	—			—
Ending Balance	$	2,623		$	2,147

The Company utilizes a third party model to compute the present value of expected cash flows which considers the structure and term of each of the five respective pooled trust preferred securities and the financial condition of the underlying issuers.  Specifically, the third party model details interest rates, principal balances of note classes and underlying issuers, the timing and amount of interest and principal payments of the underlying issuers, and the allocation of the payments to the note classes. The current estimate of expected cash flows is based on the most recent trustee reports and any other relevant market information including announcements of interest payment deferrals or defaults of underlying trust preferred securities. For issuing banks that have defaulted, management generally assumes no recovery. For issuing banks that have deferred interest payments, management excludes the collateral balance associated with these banks and assumes no recoveries of such collateral balance in the future. The exclusion of such issuing banks in a current deferral position is based on such bank experiencing a certain level of financial difficulty that raises doubt about its ability to satisfy its contractual debt obligation, and accordingly, the Company excludes the associated collateral balance from its estimate of expected cash flows. Other assumptions used in the estimate of expected cash flows include expected future default rates and prepayments. Specifically, the model assumes annual prepayments of 1.0% with 100% at maturity and assumes 150 basis points of additional annual defaults from banks that are currently not in default or deferral.  In addition, the model assumes no recoveries except for one trust preferred security which assumes that one of the banks currently deferring or in default will cure such positions.

The table below presents a reconcilement of the Company's financial assets and liabilities measured at fair value on a nonrecurring basis using significant unobservable inputs (Level 3), which solely relates to impaired loans that were remeasured and reported at fair value through a specific valuation allowance allocation of the allowance for loan losses based upon the fair value of the underlying collateral (in thousands).  The fair value of impaired loans is estimated using one of several methods, including collateral value, liquidation value and discounted cash flows.  The significant unobservable inputs used in the fair value measurement of collateral for collateral-dependent impaired loans primarily relate to discounts applied to the customers’ reported amount of collateral.  The amount of collateral discount depends upon the marketability of the underlying collateral.  During the six months ended June 30, 2016 and 2015, collateral discounts ranged from 20% to 30%. During the six months ended June 30, 2016 and 2015, the Company had no Level 2 financial assets and liabilities that were measured on a nonrecurring basis.

	Six months ended June 30,
	2016			2015
Beginning balance	$	8,482		$	6,517
Loans classified as impaired during the period	—			797
Specific valuation allowance allocations	—			—
	—			797
(Additional) reduction in specific valuation allowance allocations	—			22
Paydowns, payoffs, other activity	(1,530		)	(143		)
Ending balance	$	6,952		$	7,193

Non-Financial Assets and Liabilities

The Company has no non-financial assets or liabilities measured at fair value on a recurring basis.  Certain non-financial assets measured at fair value on a non-recurring basis include other real estate owned (“OREO”), which is measured at the lower of cost or fair value, and goodwill and other intangible assets, which are measured at fair value for impairment assessments. The table below presents OREO that was remeasured and reported at fair value based on significant unobservable inputs (Level 3) (in thousands):

	Six months ended June 30,
	2016			2015
Beginning balance	$	6,518		$	8,179
OREO remeasured at initial recognition:
Carrying value of foreclosed assets prior to remeasurement	1,995			1,862
Charge-offs recognized in the allowance for loan losses	—			—
Fair value	1,995			1,862
OREO remeasured subsequent to initial recognition
Carrying value of foreclosed assets prior to remeasurement	1,228			2,477
Fair value	916			2,112
Write-downs included in other non-interest expense	(312		)	(365		)
Disposed	(2,622		)	(2,947		)
Ending balance	$	5,579		$	6,729

ASC Topic 825“Financial Instruments”, as amended, requires disclosure of fair value information about financial instruments, whether or not recognized in the balance sheet, for which it is practicable to estimate that value.  In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques.  Those techniques are significantly affected by the assumptions used, including discount rate and estimate of future cash flows.  In that regard, the derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases, could not be realized in immediate settlement of the instrument.  ASC Topic 825 excludes certain financial instruments and all nonfinancial instruments from its disclosure requirements.  Accordingly, the aggregate fair value amounts presented do not represent the underlying value of the Company. The following methods and assumptions were used in estimating fair value for financial instruments:

Cash and cash equivalents: Due to their short-term nature, the carrying amounts reported in the consolidated balance sheets approximate fair value.

Securities:  The fair value of securities, both available-for-sale and held-to-maturity, are generally based on quoted market prices or matrix pricing, which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities.

Net loans:  The fair value of the loan portfolio is estimated by discounting the expected future cash flows using the current interest rates at which similar loans would be made to borrowers for the same remaining maturities. Loans were first segregated by type such as commercial, real estate and consumer, and were then further segmented into fixed, adjustable and variable rate categories. Expected future cash flows were projected based on contractual cash flows, adjusted for estimated prepayments.

Deposits:  The fair values of demand deposits (i.e., interest and noninterest-bearing deposits, regular savings and other money market demand accounts) are, by definition, equal to their carrying values. The fair values of time deposits were estimated using discounted cash flow analyses. The discount rates used were based on rates currently offered for deposits with similar remaining maturities. The fair values of the time deposit liabilities do not take into consideration the value of the Company’s long-term relationships with depositors, which may have significant value.

Short-term debt: Securities sold under agreements to repurchase represent borrowings with original maturities of less than 90 days. The carrying amount of borrowings under purchase agreements approximate their fair value.

Long-term debt: The fair value of long-term borrowings is estimated using discounted cash flow analyses based on the Company’s current incremental borrowing rates for similar types of borrowing arrangements and market conditions of similar debt instruments.

Commitments and letters of credit: The fair values of commitments are estimated based on fees currently charged to enter into similar agreements, taking into consideration the remaining terms of the agreements and the counterparties’ credit standing.  The fair value of letters of credit is based on fees currently charged for similar agreements or on the estimated cost to terminate them or otherwise settle the obligations with the counterparties at the reporting date.  The amounts of fees currently charged on commitments and letters of credit are deemed insignificant, and therefore, the estimated fair values and carrying values have not been reflected in the table below.

The following table represents the estimates of fair value of financial instruments (in thousands). This table excludes financial instruments for which the carrying amount approximates fair value. For short-term financial assets such as cash and cash equivalents, the carrying amount is a reasonable estimate of fair value due to the relatively short time between the origination of the instrument and its expected realization. For financial liabilities such as noninterest-bearing demand, interest-bearing demand and savings deposits, the carrying amount is a reasonable estimate of fair value due to these products having no stated maturity.

	Carrying Amount		Fair Value		Level 1		Level 2		Level 3
June 30, 2016
Assets:
Cash and cash equivalents	$	78,576	$	78,576	$	78,576	$	—	$	—
Securities available-for-sale	409,039		409,039		4,962		401,454		2,623
Securities held-to-maturity	83,208		86,944		—		86,944		—
Other securities	10,203		10,203		—		10,203		—
Net loans	2,884,259		2,896,490		—		—		2,896,490
Accrued interest receivable	8,428		8,428		8,428		—		—
Derivative assets	29,415		29,415		—		29,415		—
Liabilities:
Deposits	3,142,279		3,151,350		2,111,438		1,039,912		—
Short-term debt	153,674		153,681		—		153,681		—
Long-term debt	16,495		16,460		—		16,460		—
Derivative liabilities	29,962		29,962		—		29,962		—
December 31, 2015
Assets:
Cash and cash equivalents	70,113		70,113		70,113		—		—
Securities available-for-sale	369,466		369,466		4,785		362,585		2,096
Securities held-to-maturity	88,937		90,810		—		90,810		—
Other securities	12,915		12,915		—		12,915		—
Net loans	2,843,283		2,843,973		—		—		2,843,973
Accrued interest receivable	7,432		7,432		7,432		—		—
Derivative assets	10,811		10,811		—		10,811		—
Liabilities:
Deposits	3,083,975		3,085,908		2,066,419		1,019,489		—
Short-term debt	154,869		154,872		—		154,872		—
Long-term debt	16,495		16,457		—		16,457		—
Derivative liabilities	10,933		10,933		—		10,933		—

XML

Investments (Tables)

6 Months Ended

Jun. 30, 2016

Investments [Abstract]

Aggregate Carrying And Approximate Market Values Of Available-For-Sale Securities

The amortized cost and estimated fair values of the Company's securities are shown in the following table (in thousands):

	June 30, 2016								December 31, 2015
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Securities available-for-sale:
U.S. Treasuries and U.S.
government agencies	$	4	$	—	$	—	$	4	$	5	$	—	$	—	$	5
Obligations of states and
political subdivisions	57,224		2,070		3		59,291		49,725		979		7		50,697
Mortgage-backed securities:
U.S. government agencies	306,201		7,035		128		313,108		287,933		2,285		2,021		288,197
Private label	1,108		3		—		1,111		1,222		9		—		1,231
Trust preferred securities	6,046		1,178		901		6,323		6,550		463		1,155		5,858
Corporate securities	23,930		436		126		24,240		18,793		221		321		18,693
Total Debt Securities	394,513		10,722		1,158		404,077		364,228		3,957		3,504		364,681
Marketable equity  securities	2,136		1,283		—		3,419		2,131		1,142		—		3,273
Investment funds	1,525		18		—		1,543		1,525		—		13		1,512
Total Securities
Available-for-Sale	$	398,174	$	12,023	$	1,158	$	409,039	$	367,884	$	5,099	$	3,517	$	369,466

Aggregate Carrying And Approximate Market Values Of Held-To-Maturity Securities

	June 30, 2016								December 31, 2015
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Securities held-to-maturity:
Mortgage-backed securities
US government agencies	$	79,208	$	3,736	$	—	$	82,944	$	84,937	$	1,949	$	76	$	86,810
Trust preferred securities	4,000		—		—		4,000		4,000		—		—		4,000
Total Securities
Held-to-Maturity	$	83,208	$	3,736	$	—	$	86,944	$	88,937	$	1,949	$	76	$	90,810
Other investment securities:
Non-marketable equity securities	$	10,203	$	—	$	—	$	10,203	$	12,915	$	—	$	—	$	12,915
Total Other Investment
Securities	$	10,203	$	—	$	—	$	10,203	$	12,915	$	—	$	—	$	12,915

Gross Unrealized Losses And Fair Value Of Investments

The following table shows the gross unrealized losses and fair value of the Company’s investments aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position (in thousands):

	June 30, 2016
	Less Than Twelve Months				Twelve Months or Greater				Total
	Estimated Fair Value		Unrealized Loss		Estimated Fair Value		Unrealized Loss		Estimated Fair Value		Unrealized Loss
Securities available-for-sale:
Obligations of states and political subdivisions	$	480	$	3	$	—	$	—	$	480	$	3
Mortgage-backed securities:
U.S. Government agencies	16		—		17,020		128		17,036		128
Trust preferred securities	—		—		4,618		901		4,618		901
Corporate securities	2,273		122		1,025		4		3,298		126
Total	$	2,769	$	125	$	22,663	$	1,033	$	25,432	$	1,158

	December 31, 2015
	Less Than Twelve Months				Twelve Months or Greater				Total
	Estimated Fair Value		Unrealized Loss		Estimated Fair Value		Unrealized Loss		Estimated Fair Value		Unrealized Loss
Securities available-for-sale:
Obligations of states and political subdivisions	$	2,406	$	5	$	128	$	2	$	2,534	$	7
Mortgage-backed securities:
U.S. Government agencies	129,612		688		34,044		1,333		163,656		2,021
Trust preferred securities	—		—		4,769		1,155		4,769		1,155
Corporate securities	10,856		174		2,231		147		13,087		321
Investment funds	—		—		1,488		13		1,488		13
Total	$	142,874	$	867	$	42,660	$	2,650	$	185,534	$	3,517

Amortized Cost And Estimated Fair Value Of Debt Securities By Contractual Maturity

The amortized cost and estimated fair value of debt securities at June 30, 2016, by contractual maturity, are shown in the following table (in thousands).  Expected maturities will differ from contractual maturities because the issuers of the securities may have the right to prepay obligations without prepayment penalties.  Mortgage-backed securities have been allocated to their respective maturity groupings based on their contractual maturity.

	Amortized Cost		Estimated Fair Value
Securities Available-for-Sale
Due in one year or less	$	4,026	$	4,084
Due after one year through five years	25,063		17,326
Due after five years through ten years	35,413		44,738
Due after ten years	330,011		337,929
	$	394,513	$	404,077
Securities Held-to-Maturity
Due in one year or less	$	—	$	—
Due after one year through five years	—		—
Due after five years through ten years	—		—
Due after ten years	83,208		86,944
	$	83,208	$	86,944

Gross Gains And Losses Realized

Gross gains and gross losses realized by the Company from investment security transactions are summarized in the table below (in thousands).

	Three months ended June 30,					Six months ended June 30,
	2016			2015		2016			2015
Gross realized gains	$	1,256		$	2,116	$	1,256		$	2,130
Gross realized losses	(411		)	—		(411		)	—
Net investment security gains	$	845		$	2,116	$	845		$	2,130

XML

Loans (Tables)

6 Months Ended

Jun. 30, 2016

Loans Receivable, Net [Abstract]

Summary Of Major Classifications For Loans

The following summarizes the Company’s major classifications for loans (in thousands):

	June 30, 2016			December 31, 2015
Residential real estate	$	1,417,137		$	1,383,133
Home equity	142,827			147,036
Commercial and industrial	171,362			165,340
Commercial real estate	1,135,493			1,127,581
Consumer	33,799			36,083
DDA overdrafts	2,780			3,361
Gross loans	2,903,398			2,862,534
Allowance for loan losses	(19,139		)	(19,251		)
Net loans	$	2,884,259		$	2,843,283

Composition Of Loans Acquired At Acquisition

The following table details the loans acquired in conjunction with the Virginia Savings Bancorp, Inc. ("Virginia Savings"), Community Financial Corporation ("Community") and American Founders Bank ("AFB") acquisitions (in thousands):

	Virginia
	Savings		Community		AFB		Total
June 30, 2016
Outstanding loan balance	$	27,113	$	164,558	$	105,398	$	297,069
Credit-impaired loans:
Carrying value	1,714		11,160		—		12,874
Contractual principal and interest	1,924		14,042		—		15,966
December 31, 2015
Outstanding loan balance	$	28,914	$	181,545	$	112,862	$	323,321
Credit-impaired loans:
Carrying value	1,707		12,899		—		14,606
Contractual principal and interest	1,965		16,362		—		18,327

Activity For The Accretable Yield

Changes in the accretable yield of the credit-impaired loans for the six months ended June 30, 2016 is as follows (in thousands):

	Virginia Savings						Community						Total
				Carrying						Carrying						Carrying
	Accretable			Amount			Accretable			Amount			Accretable			Amount
	Yield			of Loans			Yield			of Loans			Yield			of Loans
Balance at the beginning of the period	$	374		$	1,707		$	6,266		$	12,899		$	6,640		$	14,606
Accretion	(86		)	86			(530		)	530			(616		)	616
Net reclassifications to accretable yield from
non-accretable yield	51			—			(38		)	—			13			—
Payments received, net	—			(79		)	—			(2,011		)	—			(2,090		)
Disposals	—			—			—			(258		)	—			(258		)
Balance at the end of period	$	339		$	1,714		$	5,698		$	11,160		$	6,037		$	12,874

XML

Allowance For Loan Losses (Tables)

6 Months Ended

Jun. 30, 2016

Receivables [Abstract]

Schedule Of Allowance For Loan Loss By Portfolio Segment

The following table summarizes the activity in the allowance for loan loss, by portfolio segment, for the six months ended June 30, 2016 and 2015 (in thousands).  The allocation of a portion of the allowance in one portfolio segment does not preclude its availability to absorb losses in other portfolio segments. The following table also presents the balance in the allowance for loan loss disaggregated on the basis of the Company’s impairment measurement method and the related recorded investment in loans, by portfolio segment, as of June 30, 2016 and December 31, 2015 (in thousands).

	Commercial &			Commercial			Residential									DDA
	Industrial			Real Estate			Real Estate			Home Equity			Consumer			Overdrafts			Total
Six months ended June 30, 2016
Allowance for loan loss
Beginning balance	$	3,271		$	6,985		$	6,778		$	1,463		$	97		$	657		$	19,251
Charge-offs	(45		)	(1,071		)	(742		)	(175		)	(82		)	(639		)	(2,754		)
Recoveries	4			404			90			—			81			402			981
Provision for acquired loans	—			168			—			—			—			—			168
Provision	861			(213		)	232			135			(5		)	483			1,493
Ending balance	$	4,091		$	6,273		$	6,358		$	1,423		$	91		$	903		$	19,139
Six months ended June 30, 2015
Allowance for loan loss
Beginning balance	$	1,582		$	8,845		$	7,208		$	1,495		$	85		$	859		$	20,074
Charge-offs	(2,538		)	(276		)	(529		)	(108		)	(143		)	(624		)	(4,218		)
Recoveries	27			31			64			—			79			406			607

Provision for acquired loans	—		545			—		—		—		—		545
Provision	3,154		(623		)	332		106		99		111		3,179
Ending balance	$	2,225	$	8,522		$	7,075	$	1,493	$	120	$	752	$	20,187
As of June 30, 2016
Allowance for loan loss
Evaluated for impairment:
Individually	$	—	$	—		$	—	$	—	$	—	$	—	$	—
Collectively	4,088		5,670			6,266		1,423		91		903		18,441
Acquired with deteriorated
credit quality	3		603			92		—		—		—		698
Total	$	4,091	$	6,273		$	6,358	$	1,423	$	91	$	903	$	19,139
Loans
Evaluated for impairment:
Individually	$	2,114	$	4,838		$	—	$	—	$	—	$	—	$	6,952
Collectively	168,929		1,120,863			1,414,488		142,827		33,684		2,780		2,883,571
Acquired with deteriorated
credit quality	319		9,792			2,649		—		115		—		12,875
Total	$	171,362	$	1,135,493		$	1,417,137	$	142,827	$	33,799	$	2,780	$	2,903,398
As of December 31, 2015
Allowance for loan loss
Evaluated for impairment:
Individually	$	—	$	—		$	—	$	—	$	—	$	—	$	—
Collectively	3,267		6,173			6,765		1,463		97		657		18,422
Acquired with deteriorated
credit quality	4		812			13		—		—		—		829
Total	$	3,271	$	6,985		$	6,778	$	1,463	$	97	$	657	$	19,251
Loans
Evaluated for impairment:
Individually	$	2,349	$	6,133		$	—	$	—	$	—	$	—	$	8,482
Collectively	162,662		1,109,327			1,381,064		147,036		35,997		3,361		2,839,447
Acquired with deteriorated
credit quality	329		12,121			2,069		—		86		—		14,605
Total	$	165,340	$	1,127,581		$	1,383,133	$	147,036	$	36,083	$	3,361	$	2,862,534

Schedule Of Credit Quality Indicators

The Company uses the following definitions for its risk ratings:

Risk Rating	Description
Pass ratings:
(a) Exceptional	Loans classified as exceptional are secured with liquid collateral conforming to the internal loan policy.  Loans rated within this category pose minimal risk of loss to the bank.
(b) Good	Loans classified as good have similar characteristics that include a strong balance sheet, satisfactory debt service coverage ratios, strong management and/or guarantors, and little exposure to economic cycles. Loans in this category generally have a low chance of loss to the bank.
(c) Acceptable	Loans classified as acceptable have acceptable liquidity levels, adequate debt service coverage ratios, experienced management, and have average exposure to economic cycles.  Loans within this category generally have a low risk of loss to the bank.
(d) Pass/watch	Loans classified as pass/watch have erratic levels of leverage and/or liquidity, cash flow is volatile and the borrower is subject to moderate economic risk.  A borrower in this category poses a low to moderate risk of loss to the bank.
Special mention	Loans classified as special mention have a potential weakness(es) that deserves management’s close attention.  The potential weakness could result in deterioration of the loan repayment or the bank’s credit position at some future date.  A loan rated in this category poses a moderate loss risk to the bank.
Substandard	Loans classified as substandard reflect a customer with a well defined weakness that jeopardizes the liquidation of the debt.  Loans in this category have the possibility that the bank will sustain some loss if the deficiencies are not corrected and the bank’s collateral value is weakened by the financial deterioration of the borrower.
Doubtful	Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristics that make collection of the full contract amount highly improbable.  Loans rated in this category are most likely to cause the bank to have a loss due to a collateral shortfall or a negative capital position.

The following table presents the Company’s commercial loans by credit quality indicators, by class (in thousands):

	Commercial and industrial		Commercial real estate		Total
June 30, 2016
Pass	$	161,579	$	1,079,105	$	1,240,684
Special mention	2,236		16,021		18,257
Substandard	7,547		40,367		47,914
Doubtful	—		—		—
Total	$	171,362	$	1,135,493	$	1,306,855
December 31, 2015
Pass	$	156,664	$	1,070,506	$	1,227,170
Special mention	4,099		20,942		25,041
Substandard	4,539		36,133		40,672
Doubtful	38		—		38
Total	$	165,340	$	1,127,581	$	1,292,921

Schedule Of Noncommercial Loans By Payment Performance

The following table presents the Company's non-commercial loans by payment performance, by class (in thousands):

	Performing		Non-Performing		Total
June 30, 2016
Residential real estate	$	1,414,503	$	2,634	$	1,417,137
Home equity	142,612		215		142,827
Consumer	33,711		88		33,799
DDA overdrafts	2,780		—		2,780
Total	$	1,593,606	$	2,937	$	1,596,543
December 31, 2015
Residential real estate	$	1,379,797	$	3,336	$	1,383,133
Home equity	146,877		159		147,036
Consumer	36,049		34		36,083
DDA overdrafts	3,361		—		3,361
Total	$	1,566,084	$	3,529	$	1,569,613

Schedule Of Aging Analysis Of Accruing And Non-Accruing Loans

The following table presents an aging analysis of the Company’s accruing and non-accruing loans, by class (in thousands):

	June 30, 2016
	Accruing
	Current		30-59 days		60-89 days		Over 90 days		Purchased-Credit Impaired		Non-accrual		Total
Residential real estate	$	1,409,116	$	4,680	$	707	$	103	$	—	$	2,531	$	1,417,137
Home equity	142,067		410		135		50		—		165		142,827
Commercial and industrial	168,334		290		14		—		—		2,724		171,362
Commercial real estate	1,123,968		1,230		—		—		516		9,779		1,135,493
Consumer	33,649		59		3		88		—		—		33,799
DDA overdrafts	2,490		290		—		—		—		—		2,780
Total	$	2,879,624	$	6,959	$	859	$	241	$	516	$	15,199	$	2,903,398
	December 31, 2015
	Accruing
	Current		30-59 days		60-89 days		Over 90 days		Purchased-Credit Impaired		Non-accrual		Total
Residential real estate	$	1,373,604	$	5,261	$	932	$	418	$	—	$	2,918	$	1,383,133
Home equity	146,493		318		65		24		—		136		147,036
Commercial and industrial	162,435		141		—		19		—		2,745		165,340
Commercial real estate	1,114,953		762		211		—		506		11,149		1,127,581
Consumer	35,886		154		9		34		—		—		36,083
DDA overdrafts	3,048		310		3		—		—		—		3,361
Total	$	2,836,419	$	6,946	$	1,220	$	495	$	506	$	16,948	$	2,862,534

Schedule Of Impaired Loans

The following table presents the Company’s impaired loans, by class (in thousands). The difference between the unpaid principal balance and the recorded investment generally reflects amounts that have been previously charged-off. There are no impaired residential, home equity, or consumer loans.

	June 30, 2016						December 31, 2015
			Unpaid						Unpaid
	Recorded		Principal		Related		Recorded		Principal		Related
	Investment		Balance		Allowance		Investment		Balance		Allowance
With no related allowance recorded:
Commercial and industrial	$	2,114	$	5,250	$	—	$	2,349	$	7,547	$	—
Commercial real estate	4,838		7,077		—		6,133		9,502		—
Total	$	6,952	$	12,327	$	—	$	8,482	$	17,049	$	—
With an allowance recorded:
Commercial and industrial	$	—	$	—	$	—	$	—	$	—	$	—
Commercial real estate	—		—		—		—		—		—
Total	$	—	$	—	$	—	$	—	$	—	$	—

Schedule Of Information Related To Average Recorded Investment And Interest Income Recognized On Impaired Loans

The following table presents information related to the average recorded investment and interest income recognized on the Company’s impaired loans, by class (in thousands):

	Six months ended June 30,
	2016				2015
	Average		Interest		Average		Interest
	Recorded		Income		Recorded		Income
	Investment		Recognized		Investment		Recognized
With no related allowance recorded:
Commercial and industrial	$	2,339	$	—	$	2,814	$	—
Commercial real estate	4,739		9		5,355		9
Total	$	7,078	$	9	$	8,169	$	9
With an allowance recorded:
Commercial and industrial	$	—	$	—	$	—	$	—
Commercial real estate	—		—		1,365		40
Total	$	—	$	—	$	1,365	$	40

Schedule Of Troubled Debt Restructurings

The following tables set forth the Company’s TDRs (in thousands):

	June 30, 2016						December 31, 2015
			Non-						Non-
	Accruing		Accruing		Total		Accruing		Accruing		Total
Commercial and industrial	$	50	$	—	$	50	$	58	$	—	$	58
Commercial real estate	2,743		—		2,743		1,746		—		1,746
Residential real estate	19,685		390		20,075		17,796		191		17,987
Home equity	2,873		44		2,917		2,659		34		2,693
Consumer	—		—		—		—		—		—
	$	25,351	$	434	$	25,785	$	22,259	$	225	$	22,484

	New TDRs
	Six months ended June 30,
	2016					2015
		Pre		Post			Pre		Post
		Modification		Modification			Modification		Modification
		Outstanding		Outstanding			Outstanding		Outstanding
	Number of	Recorded		Recorded		Number of	Recorded		Recorded
	Contracts	Investment		Investment		Contracts	Investment		Investment
Commercial and industrial	—	$	—	$	—	—	$	—	$	—
Commercial real estate	1	2,225		2,225		—	—		—
Residential real estate	20	1,857		1,857		27	2,006		2,006
Home equity	3	69		69		11	259		259
Consumer	—	—		—		—	—		—
	24	$	4,151	$	4,151	38	$	2,265	$	2,265

XML

Long-Term Debt (Tables)

6 Months Ended

Jun. 30, 2016

Long-term Debt, Unclassified [Abstract]

Long-Term Debt

The components of long-term debt are summarized below (in thousands):

	June 30, 2016		December 31, 2015
Junior subordinated debentures owed to City Holding Capital Trust III, due 2038, interest at a rate of 4.15% and 4.01%, respectively	$	16,495	$	16,495

XML

Derivative Instruments (Tables)

6 Months Ended

Jun. 30, 2016

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Fair Value Of Derivative Instruments

The following table summarizes the notional and fair value of these derivative instruments (in thousands):

	June 30, 2016				December 31, 2015
	Notional Amount		Fair Value		Notional Amount		Fair Value
Non-hedging interest rate derivatives:
Other Assets	$	398,139	$	29,415	$	372,995	$	10,811
Other Liabilities	405,662		29,733		380,995		10,872
Derivatives designated as hedges of fair value:
Other Liabilities	4,842		229		5,475		61

Change In Fair Value Of Derivative Instruments

The following table summarizes the change in fair value of these derivative instruments (in thousands):

	Three months ended June 30,						Six months ended June 30,
	2016			2015			2016			2015
Change in Fair Value Non-Hedging Interest Rate Derivatives:
Other income - derivative asset	$	(6,744	)	$	(5,310	)	$	(18,090	)	$	(2,428	)
Other income - derivative liability	6,869			5,310			18,498			2,428
Change in Fair Value Hedging Interest Rate Derivatives:
Hedged item - derivative asset	43			(78		)	164			(12		)
Other income - derivative liability	6			(7		)	4			2

Derivative Assets Offset in The Consolidated Balance Sheets

Information about financial instruments that are eligible for offset in the consolidated balance sheet as of June 30, 2016 is presented in the following tables (in thousands):

Gross Amounts

Not Offset in the Statement

of Financial Position

Total

of Gross

Amounts

Not Offset in

the Statement

of Financial

Position

Netting

Including

Gross

Net Amounts

Adjustment

Applicable

Amounts

of Assets

per

Netting

Gross

Offset in the

Presented in

Applicable

Agreement

Amounts of

Statement of

the Statement

Master

Fair Value

and Fair

Recognized

Financial

of Financial

Netting

of Financial

Value of

Description

Assets

Position

Position

Arrangements

Collateral

Collateral

Net Amount

(a)

(b)

(c)=(a)-(b)

(d)

(c)-(d) *

Non-hedging derivative assets:

Interest rate swap agreements

$

29,415

$

—

$

29,415

$

—

$

29,415

$

29,415

$

—

Derivative Liabilities Offset in The Consolidated Balance Sheets

Gross Amounts

Not Offset in the Statement

of Financial Position

Total

of Gross

Amounts

Not Offset in

the Statement

of Financial

Position

Netting

Including

Gross

Net Amounts

Adjustment

Applicable

Amounts

of Liabilities

per

Netting

Gross

Offset in the

Presented in

Applicable

Agreement

Amounts of

Statement of

the Statement

Master

Fair Value

and Fair

Recognized

Financial

of Financial

Netting

of Financial

Value of

Description

Liabilities

Position

Position

Arrangements

Collateral

Collateral

Net Amount

(a)

(b)

(c)=(a)-(b)

(d)

(c)-(d) *

Non-hedging derivative liabilities:

Interest rate swap agreements

$

29,733

$

—

$

29,733

$

—

$

32,954

$

32,954

$

—

Hedging derivative liabilities:

Interest rate swap agreements

$

229

$

—

$

229

$

—

$

254

$

254

$

—

*

For instances where the fair value of financial collateral meets or exceeds the amounts presented in the Statement of Financial Position, no value is displayed to represent full collateralization.

XML

Employee Benefit Plans (Tables)

6 Months Ended

Jun. 30, 2016

Share-based Compensation [Abstract]

Summary Of Stock Option Activity

A summary of the Company’s stock option activity and related information is presented below:

	Six months ended June 30,
	2016				2015
	Options		Weighted-Average Exercise Price		Options		Weighted-Average Exercise Price
Outstanding at January 1	95,015		$	38.38	167,554		$	36.74
Granted	24,348		43.73		12,961		46.41
Exercised	(20,250	)	33.68		(29,250	)	34.30
Forfeited	—		—		(4,000	)	31.66
Outstanding at June 30	99,113		$	40.68	147,265		$	38.24
Exerciseable at June 30	15,500		$	36.23	72,000		$	37.01

Information regarding stock option exercises and stock-based compensation expense associated with stock options is provided in the following table (in thousands):    

	Six months ended June 30,
	2016		2015
Proceeds from stock option exercises	$	682	$	1,003
Intrinsic value of stock options exercised	302		322
Stock-based compensation expense associated with stock options	$	120	$	105
At period-end:	June 30, 2016
Unrecognized stock-based compensation expense associated with stock options	$	500
Weighted average period (in years) in which the above amount is expected to be
recognized	2.7

Stock Options Outstanding And Exercisable

Additional information regarding stock options outstanding and exercisable at June 30, 2016, is provided in the following table:

Ranges of Exercise Prices	No. of Options Outstanding	Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value (in thousands)		No. of Options Currently Exercisable	Weighted-Average Exercise Price of Options Currently Exercisable		Weighted-Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value of Options Currently Exercisable (in thousands)
$25.00 - $29.99	1,250	$	28.15	2.7	$	22	1,250	$	28.15	2.7	$	22
30.00 - 34.99	3,000	30.38		2.4	45		3,000	30.38		2.4	45
35.00 - 39.99	36,601	36.35		6.0	334		4,250	35.09		4.8	44
40.00 - 44.99	45,301	43.51		7.9	89		7,000	40.88		1.8	32
45.00 - 50.00	12,961	46.61		8.7	—		—	—		—	—
	99,113				$	490	15,500				$	143

Weighted Average Assumptions Estimate The Fair Value Of Options Granted

 The following weighted average assumptions were used to estimate the fair value of options granted:

	Six months ended June 30,
	2016		2015
Risk-free interest rate	1.43	%	1.95	%
Expected dividend yield	3.86	%	3.50	%
Volatility factor	30.76	%	45.40	%
Expected life of option	7.0 years		7.0 years

Restricted Shares Activity And Related Information

A summary of the Company’s restricted shares activity and related information is presented below:

	Six months ended June 30,
	2016				2015
	Restricted Awards		Average Market Price at Grant		Restricted Awards		Average Market Price at Grant
Outstanding at January 1	172,921		$	37.38	163,431		$	35.50
Granted	27,451		45.99		25,440		46.35
Forfeited	—		—		(500	)	37.50
Vested	(21,700	)	33.89		(16,550	)	33.51
Outstanding at June 30	178,672		$	39.13	171,821		$	37.29

Information regarding stock-based compensation associated with restricted shares during the three months ended June 30, 2016 and 2015 is provided in the following table (in thousands):

	Six months ended June 30,
	2016		2015
Stock-based compensation expense associated with restricted shares	$	661	$	567
At period-end:	June 30, 2016
Unrecognized stock-based compensation expense associated with restricted shares	$	3,498
Weighted average period (in years) in which the above amount is expected to be
recognized	3.3

Net Periodic Pension Cost Of The Defined Benefit Plan

The following table presents details of the Company's activities pursuant to these plans (in thousands):

	Three months ended June 30,						Six months ended June 30,
	2016			2015			2016			2015
Components of net periodic cost:
Interest cost	$	205		$	203		$	410		$	465
Expected return on plan assets	(288		)	(234		)	(577		)	(523		)
Net amortization and deferral	212			244			424			471
Net Periodic Pension Cost	$	129		$	213		$	257		$	413
401(k) Plan expense	$	201		$	182		$	418		$	411
Defined benefit plan contributions	$	—		$	85		$	—		$	170

XML

Commitments and Contingencies (Tables)

6 Months Ended

Jun. 30, 2016

Commitments and Contingencies Disclosure [Abstract]

Schedule Of Contractual Obligations From Significant Commitments

The table below presents a summary of the contractual obligations of the Company resulting from significant commitments (in thousands):

	June 30, 2016		December 31, 2015
Commitments to extend credit:
Home equity lines	$	187,645	$	183,017
Commercial real estate	89,912		84,672
Other commitments	183,241		177,491
Standby letters of credit	5,379		5,086
Commercial letters of credit	1,629		2,312

XML

Accumulated Other Comprehensive Loss (Tables)

6 Months Ended

Jun. 30, 2016

Equity [Abstract]

Schedule of Changes In Each Component of Accumulated Other Comprehensive Income

The activity in accumulated other comprehensive loss is presented in the tables below (in thousands). All amounts are shown net of tax, which is calculated using a combined federal and state income tax rate approximating 37%.

	Accumulated Other Comprehensive Income (Loss)
				Unrealized
				Gains (Losses) on
	Defined Benefit			Securities
	Pension Plans			Available-for-Sale			Total
Balance at December 31, 2014	$	(5,349	)	$	1,190		$	(4,159	)
Other comprehensive income before reclassifications	—			611			611
Amounts reclassified from other comprehensive loss	—			(1,344		)	(1,344		)
	—			(733		)	(733		)
Balance at June 30, 2015	$	(5,349	)	$	457		$	(4,892	)
Balance at December 31, 2015	$	(4,759	)	$	927		$	(3,832	)
Other comprehensive income before reclassifications	—			6,402			6,402
Amounts reclassified from other comprehensive loss	—			(533		)	(533		)
	—			5,869			5,869
Balance at June 30, 2016	$	(4,759	)	$	6,796		$	2,037

Schedule of Amounts Reclassified Out Of Accumulated Other Comprehensive Income

	Amount reclassified from Other Comprehensive Loss
	Three months ended						Six months ended						Affected line item
	June 30,						June 30,						in the Statements
	2016			2015			2016			2015			of Income
Securities available-for-sale:
Net securities gains reclassified into earnings	$	(845	)	$	(2,116	)	$	(845	)	$	(2,130	)	Security gains (losses)
Related income tax expense	312			781			312			786			Income tax expense
Net effect on accumulated other comprehensive loss	$	(533	)	$	(1,335	)	$	(533	)	$	(1,344	)

XML

Earnings per Share (Tables)

6 Months Ended

Jun. 30, 2016

Earnings Per Share [Abstract]

Schedule Of Computation Of Basic And Diluted Earnings Per Share

The following table sets forth the computation of basic and diluted earnings per share using the two class method (in thousands, except per share data):

	Three months ended June 30,				Six months ended June 30,
	2016		2015		2016		2015
Distributed earnings allocated to common stock	$	6,375	$	6,344	$	12,751	$	12,688
Undistributed earnings allocated to common stock	6,016		5,505		11,204		16,950
Net earnings allocated to common shareholders	$	12,391	$	11,849	$	23,955	$	29,638
Average shares outstanding	14,889		15,104		14,903		15,079
Effect of dilutive securities:
Warrant outstanding	—		—		—		55
Employee stock awards	13		23		12		22
Shares for diluted earnings per share	14,902		15,127		14,915		15,156
Basic earnings per share	$	0.83	$	0.78	$	1.61	$	1.97
Diluted earnings per share	$	0.83	$	0.78	$	1.61	$	1.96

XML

Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2016

Fair Value Disclosures [Abstract]

Schedule Of Assets And Liabilities Measured At Fair Value On A Recurring And Nonrecurring Basis

The following table presents assets and liabilities measured at fair value (in thousands):

	Total		Level 1		Level 2		Level 3		Total Gains (Losses)
June 30, 2016
Recurring fair value measurements
Financial Assets
U.S. Government agencies	$	4	$	—	$	4	$	—
Obligations of states and political subdivisions	59,291		—		59,291		—
Mortgage-backed securities:
U.S. Government agencies	313,108		—		313,108		—
Private label	1,111		—		1,111		—
Trust preferred securities	6,323		—		3,700		2,623
Corporate securities	24,240		—		24,240		—
Marketable equity securities	3,419		3,419		—		—
Investment funds	1,543		1,543		—		—
Derivative assets	29,415		—		29,415		—
Financial Liabilities
Derivative liabilities	29,962		—		29,962		—
Nonrecurring fair value measurements
Impaired loans	$	6,952	$	—	$	—	$	6,952	$	—
Other real estate owned	5,579		—		—		5,579		(312		)
December 31, 2015
Recurring fair value measurements
Financial Assets
U.S. Government agencies	$	5	$	—	$	5	$	—
Obligations of states and political subdivisions	50,697		—		50,697		—
Mortgage-backed securities:
U.S. Government agencies	288,197		—		288,197		—
Private label	1,231		—		1,231		—
Trust preferred securities	5,858		—		3,762		2,096
Corporate securities	18,693		—		18,693		—
Marketable equity securities	3,273		3,273		—		—
Investment funds	1,512		1,512		—		—
Derivative assets	10,811		—		10,811		—
Financial Liabilities
Derivative liabilities	10,933		—		10,933		—
Nonrecurring fair value measurements
Impaired loans	$	8,482	$	—	$	—	$	8,482	$	—
Other real estate owned	6,518		—		—		6,518		(937		)

Schedule Of Reconciliation Of Investment Securities Available For Sale Measured At Fair Value On A Recurring Basis Level 3 Assets

The table below presents a reconcilement of the Company’s financial assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3), which consist solely of trust preferred securities (in thousands):

	Six months ended June 30,
	2016			2015
Beginning balance	$	2,096		$	1,871
Impairment losses on investment securities	(411		)	—
Gains on sale of investment securities	1,256			—
Included in other comprehensive income	(318		)	276
Dispositions	—			—
Transfers into Level 3	—			—
Ending Balance	$	2,623		$	2,147

Schedule Of Level 3 Financial Assets And Liabilities Measured On A Non-Recurring Basis

The table below presents a reconcilement of the Company's financial assets and liabilities measured at fair value on a nonrecurring basis using significant unobservable inputs (Level 3), which solely relates to impaired loans that were remeasured and reported at fair value through a specific valuation allowance allocation of the allowance for loan losses based upon the fair value of the underlying collateral (in thousands).  The fair value of impaired loans is estimated using one of several methods, including collateral value, liquidation value and discounted cash flows.  The significant unobservable inputs used in the fair value measurement of collateral for collateral-dependent impaired loans primarily relate to discounts applied to the customers’ reported amount of collateral.  The amount of collateral discount depends upon the marketability of the underlying collateral.  During the six months ended June 30, 2016 and 2015, collateral discounts ranged from 20% to 30%. During the six months ended June 30, 2016 and 2015, the Company had no Level 2 financial assets and liabilities that were measured on a nonrecurring basis.

	Six months ended June 30,
	2016			2015
Beginning balance	$	8,482		$	6,517
Loans classified as impaired during the period	—			797
Specific valuation allowance allocations	—			—
	—			797
(Additional) reduction in specific valuation allowance allocations	—			22
Paydowns, payoffs, other activity	(1,530		)	(143		)
Ending balance	$	6,952		$	7,193

Schedule Of Level 3 Non-Financial Assets and Liabilities Measured On a Non-Recurring Basis

The table below presents OREO that was remeasured and reported at fair value based on significant unobservable inputs (Level 3) (in thousands):

	Six months ended June 30,
	2016			2015
Beginning balance	$	6,518		$	8,179
OREO remeasured at initial recognition:
Carrying value of foreclosed assets prior to remeasurement	1,995			1,862
Charge-offs recognized in the allowance for loan losses	—			—
Fair value	1,995			1,862
OREO remeasured subsequent to initial recognition
Carrying value of foreclosed assets prior to remeasurement	1,228			2,477
Fair value	916			2,112
Write-downs included in other non-interest expense	(312		)	(365		)
Disposed	(2,622		)	(2,947		)
Ending balance	$	5,579		$	6,729

Schedule Of Estimates Of Fair Value Of Financial Instruments

The following table represents the estimates of fair value of financial instruments (in thousands). This table excludes financial instruments for which the carrying amount approximates fair value. For short-term financial assets such as cash and cash equivalents, the carrying amount is a reasonable estimate of fair value due to the relatively short time between the origination of the instrument and its expected realization. For financial liabilities such as noninterest-bearing demand, interest-bearing demand and savings deposits, the carrying amount is a reasonable estimate of fair value due to these products having no stated maturity.

	Carrying Amount		Fair Value		Level 1		Level 2		Level 3
June 30, 2016
Assets:
Cash and cash equivalents	$	78,576	$	78,576	$	78,576	$	—	$	—
Securities available-for-sale	409,039		409,039		4,962		401,454		2,623
Securities held-to-maturity	83,208		86,944		—		86,944		—
Other securities	10,203		10,203		—		10,203		—
Net loans	2,884,259		2,896,490		—		—		2,896,490
Accrued interest receivable	8,428		8,428		8,428		—		—
Derivative assets	29,415		29,415		—		29,415		—
Liabilities:
Deposits	3,142,279		3,151,350		2,111,438		1,039,912		—
Short-term debt	153,674		153,681		—		153,681		—
Long-term debt	16,495		16,460		—		16,460		—
Derivative liabilities	29,962		29,962		—		29,962		—
December 31, 2015
Assets:
Cash and cash equivalents	70,113		70,113		70,113		—		—
Securities available-for-sale	369,466		369,466		4,785		362,585		2,096
Securities held-to-maturity	88,937		90,810		—		90,810		—
Other securities	12,915		12,915		—		12,915		—
Net loans	2,843,283		2,843,973		—		—		2,843,973
Accrued interest receivable	7,432		7,432		7,432		—		—
Derivative assets	10,811		10,811		—		10,811		—
Liabilities:
Deposits	3,083,975		3,085,908		2,066,419		1,019,489		—
Short-term debt	154,869		154,872		—		154,872		—
Long-term debt	16,495		16,457		—		16,457		—
Derivative liabilities	10,933		10,933		—		10,933		—

XML

Background and Basis of Presentation (Details) - City National [Member]	Jun. 30, 2016 store
Entity Location [Line Items]
Number of Stores	85
WEST VIRGINIA
Entity Location [Line Items]
Number of Stores	57
VIRGINIA
Entity Location [Line Items]
Number of Stores	14
KENTUCKY
Entity Location [Line Items]
Number of Stores	11
OHIO
Entity Location [Line Items]
Number of Stores	3

XML

Background and Basis of Presentation (Business Divestiture) (Details) $ in Millions	12 Months Ended
	Dec. 31, 2015 USD ($)
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Proceeds from Divestiture of Businesses	$ 5.8

XML

Background and Basis of Presentation (Business Combination) (Details) $ in Thousands	Jun. 30, 2016 USD ($)	Dec. 31, 2015 USD ($)	Nov. 06, 2015 USD ($) store
Business Acquisition [Line Items]
Gross loans	$ 2,903,398	$ 2,862,534
Deposits	3,142,279	3,083,975
Business Combination, Premium on Non-Time Deposits			5.50%
Business Combination, Premium on Loans			1.00%
American Founders Bank [Member]
Business Acquisition [Line Items]
Number of Stores | store			3
Gross loans	$ 105,398	$ 112,862	$ 119,000
Deposits			$ 145,000

XML

Investments (Narrative) (Details) - USD ($)	6 Months Ended		12 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
Schedule of Investments [Line Items]
Percent Of Average Daily Trading Volume	0.20%		0.20%
Credit-related net investment impairment losses	$ 400,000.0	$ 0	$ 0
Carrying value of securities pledged	294,000,000		$ 273,000,000
Other Than Temporary Impairment Credit Losses Recognized In Earnings	$ 14,500,000
First National Corporation (FXNC) [Domain] | Maximum [Member]
Schedule of Investments [Line Items]
Equity ownership positions in the community bank holding companies	4.00%		4.00%
Eagle Financial Services, Inc. (EFSI) [Domain] | Maximum [Member]
Schedule of Investments [Line Items]
Equity ownership positions in the community bank holding companies	1.50%		1.50%
Debt Securities [Member]
Schedule of Investments [Line Items]
Other Than Temporary Impairment Credit Losses Recognized In Earnings	$ 12,900,000
Equity Securities [Member]
Schedule of Investments [Line Items]
Other Than Temporary Impairment Credit Losses Recognized In Earnings	$ 1,600,000

XML

Investments (Aggregate Carrying And Approximate Market Values Of Available-For-Sale Securities) (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Schedule of Available-for-sale Securities [Line Items]
Securities available-for-sale, Amortized Cost	$ 398,174	$ 367,884
Available-for-sale Debt Securities, Accumulated Gross Unrealized Gain, before Tax	12,023	5,099
Available-for-sale Debt Securities, Accumulated Gross Unrealized Loss, before Tax	1,158	3,517
Securities available-for-sale	409,039	369,466
U.S Treasuries and U.S. Government Agencies [Member]
Schedule of Available-for-sale Securities [Line Items]
Securities available-for-sale, Amortized Cost	4	5
Available-for-sale Debt Securities, Accumulated Gross Unrealized Gain, before Tax	0	0
Available-for-sale Debt Securities, Accumulated Gross Unrealized Loss, before Tax	0	0
Securities available-for-sale	4	5
Obligations Of States And Political Subdivisions [Member]
Schedule of Available-for-sale Securities [Line Items]
Securities available-for-sale, Amortized Cost	57,224	49,725
Available-for-sale Debt Securities, Accumulated Gross Unrealized Gain, before Tax	2,070	979
Available-for-sale Debt Securities, Accumulated Gross Unrealized Loss, before Tax	3	7
Securities available-for-sale	59,291	50,697
U.S. Government Agencies Mortgage-backed Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Securities available-for-sale, Amortized Cost	306,201	287,933
Available-for-sale Debt Securities, Accumulated Gross Unrealized Gain, before Tax	7,035	2,285
Available-for-sale Debt Securities, Accumulated Gross Unrealized Loss, before Tax	128	2,021
Securities available-for-sale	313,108	288,197
Private Label [Member]
Schedule of Available-for-sale Securities [Line Items]
Securities available-for-sale, Amortized Cost	1,108	1,222
Available-for-sale Debt Securities, Accumulated Gross Unrealized Gain, before Tax	3	9
Available-for-sale Debt Securities, Accumulated Gross Unrealized Loss, before Tax	0	0
Securities available-for-sale	1,111	1,231
Asset-backed Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Securities available-for-sale, Amortized Cost	6,046	6,550
Available-for-sale Debt Securities, Accumulated Gross Unrealized Gain, before Tax	1,178	463
Available-for-sale Debt Securities, Accumulated Gross Unrealized Loss, before Tax	901	1,155
Securities available-for-sale	6,323	5,858
Corporate Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Securities available-for-sale, Amortized Cost	23,930	18,793
Available-for-sale Debt Securities, Accumulated Gross Unrealized Gain, before Tax	436	221
Available-for-sale Debt Securities, Accumulated Gross Unrealized Loss, before Tax	126	321
Securities available-for-sale	24,240	18,693
Debt Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Securities available-for-sale, Amortized Cost	394,513	364,228
Available-for-sale Debt Securities, Accumulated Gross Unrealized Gain, before Tax	10,722	3,957
Available-for-sale Debt Securities, Accumulated Gross Unrealized Loss, before Tax	1,158	3,504
Securities available-for-sale	404,077	364,681
Equity Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Securities available-for-sale, Amortized Cost	2,136	2,131
Available-for-sale Debt Securities, Accumulated Gross Unrealized Gain, before Tax	1,283	1,142
Available-for-sale Debt Securities, Accumulated Gross Unrealized Loss, before Tax	0	0
Securities available-for-sale	3,419	3,273
Money Market Funds [Member]
Schedule of Available-for-sale Securities [Line Items]
Securities available-for-sale, Amortized Cost	1,525	1,525
Available-for-sale Debt Securities, Accumulated Gross Unrealized Gain, before Tax	18	0
Available-for-sale Debt Securities, Accumulated Gross Unrealized Loss, before Tax	0	13
Securities available-for-sale	$ 1,543	$ 1,512

XML

Investments (Aggregate Carrying And Approximate Market Values Of Held-To-Maturity Securities) (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Schedule of Held-to-maturity Securities [Line Items]
Securities held-to-maturity, Amortized Cost	$ 83,208	$ 88,937
Held-to-maturity Securities, Accumulated Unrecognized Holding Gain	3,736	1,949
Held-to-maturity Securities, Accumulated Unrecognized Holding Loss	0	76
Securities held-to-maturity, Estimated Fair Value	86,944	90,810
Other Investments and Securities, at Cost	10,203	12,915
Other Investment Not Readily Marketable, Fair Value	10,203	12,915
U.S. Government Agencies Mortgage-backed Securities [Member]
Schedule of Held-to-maturity Securities [Line Items]
Securities held-to-maturity, Amortized Cost	79,208	84,937
Held-to-maturity Securities, Accumulated Unrecognized Holding Gain	3,736	1,949
Held-to-maturity Securities, Accumulated Unrecognized Holding Loss	0	76
Securities held-to-maturity, Estimated Fair Value	82,944	86,810
Asset-backed Securities [Member]
Schedule of Held-to-maturity Securities [Line Items]
Securities held-to-maturity, Amortized Cost	4,000	4,000
Held-to-maturity Securities, Accumulated Unrecognized Holding Gain	0	0
Held-to-maturity Securities, Accumulated Unrecognized Holding Loss	0	0
Securities held-to-maturity, Estimated Fair Value	4,000	4,000
Non-Marketable Equity Securities [Member]
Schedule of Held-to-maturity Securities [Line Items]
Other Investments and Securities, at Cost	10,203	12,915
Other Investment Not Readily Marketable, Fair Value	$ 10,203	$ 12,915

XML

Investments (Gross Unrealized Losses And Fair Value Of Investments) (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Schedule of Investments [Line Items]
Securities available-for-sale, Less Than Twelve Months, Estimated Fair Value	$ 2,769	$ 142,874
Securities available-for-sale, Less Than Twelve Months, Unrealized Loss	125	867
Securities available-for-sale, Twelve Months or Greater, Estimated Fair Value	22,663	42,660
Securities available-for-sale, Twelve Months or Greater, Unrealized Loss	1,033	2,650
Securities available-for-sale, Total, Estimated Fair Value	25,432	185,534
Securities available-for-sale, Total, Unrealized Loss	1,158	3,517
Obligations Of States And Political Subdivisions [Member]
Schedule of Investments [Line Items]
Securities available-for-sale, Less Than Twelve Months, Estimated Fair Value	480	2,406
Securities available-for-sale, Less Than Twelve Months, Unrealized Loss	3	5
Securities available-for-sale, Twelve Months or Greater, Estimated Fair Value	0	128
Securities available-for-sale, Twelve Months or Greater, Unrealized Loss	0	2
Securities available-for-sale, Total, Estimated Fair Value	480	2,534
Securities available-for-sale, Total, Unrealized Loss	3	7
U.S. Government Agencies Mortgage-backed Securities [Member]
Schedule of Investments [Line Items]
Securities available-for-sale, Less Than Twelve Months, Estimated Fair Value	16	129,612
Securities available-for-sale, Less Than Twelve Months, Unrealized Loss	0	688
Securities available-for-sale, Twelve Months or Greater, Estimated Fair Value	17,020	34,044
Securities available-for-sale, Twelve Months or Greater, Unrealized Loss	128	1,333
Securities available-for-sale, Total, Estimated Fair Value	17,036	163,656
Securities available-for-sale, Total, Unrealized Loss	128	2,021
Corporate Securities [Member]
Schedule of Investments [Line Items]
Securities available-for-sale, Less Than Twelve Months, Estimated Fair Value	2,273	10,856
Securities available-for-sale, Less Than Twelve Months, Unrealized Loss	122	174
Securities available-for-sale, Twelve Months or Greater, Estimated Fair Value	1,025	2,231
Securities available-for-sale, Twelve Months or Greater, Unrealized Loss	4	147
Securities available-for-sale, Total, Estimated Fair Value	3,298	13,087
Securities available-for-sale, Total, Unrealized Loss	126	321
Money Market Funds [Member]
Schedule of Investments [Line Items]
Securities available-for-sale, Less Than Twelve Months, Estimated Fair Value		0
Securities available-for-sale, Less Than Twelve Months, Unrealized Loss		0
Securities available-for-sale, Twelve Months or Greater, Estimated Fair Value		1,488
Securities available-for-sale, Twelve Months or Greater, Unrealized Loss		13
Securities available-for-sale, Total, Estimated Fair Value		1,488
Securities available-for-sale, Total, Unrealized Loss		13
Asset-backed Securities [Member]
Schedule of Investments [Line Items]
Securities available-for-sale, Less Than Twelve Months, Estimated Fair Value	0	0
Securities available-for-sale, Less Than Twelve Months, Unrealized Loss	0	0
Securities available-for-sale, Twelve Months or Greater, Estimated Fair Value	4,618	4,769
Securities available-for-sale, Twelve Months or Greater, Unrealized Loss	901	1,155
Securities available-for-sale, Total, Estimated Fair Value	4,618	4,769
Securities available-for-sale, Total, Unrealized Loss	$ 901	$ 1,155

XML

Investments (Amortized Cost And Estimated Fair Value Of Debt Securities By Contractual Maturity) (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Securities Available-for-Sale, Amortized Cost
Securities Available-for-Sale, Due in one year or less, Cost	$ 4,026
Securities Available-for-Sale, Due after one year through five years, Cost	25,063
Securities Available-for-Sale, Due after five years through ten years, Cost	35,413
Securities Available-for-Sale, Due after ten years, Cost	330,011
Securities Available-for-Sale, Cost, Total	394,513
Securities Available-for-Sale, Estimated Fair Value
Securities Available-for-Sale, Due in one year or less, Estimated Fair Value	4,084
Securities Available-for-Sale, Due after one year through five years, Estimated Fair Value	17,326
Securities Available-for-Sale, Due after five years through ten years, Estimated Fair Value	44,738
Securities Available-for-Sale, Due after ten years, Estimated Fair Value	337,929
Securities Available-for-Sale, Estimated Fair Value, Total	404,077
Held-to-maturity Securities, Debt Maturities, within One Year, Net Carrying Amount	0
Held-to-maturity Securities, Debt Maturities, Next Twelve Months, Fair Value	0
Held-to-maturity Securities, Debt Maturities, after One Through Five Years, Net Carrying Amount	0
Held-to-maturity Securities, Debt Maturities, Year Two Through Five, Fair Value	0
Held-to-maturity Securities, Debt Maturities, after Five Through Ten Years, Net Carrying Amount	0
Held-to-maturity Securities, Debt Maturities, Year Six Through Ten, Fair Value	0
Securities Held-to-Maturity, Amortized Cost
Securities Held-to-Maturity, Due after ten years, Cost	83,208
Securities held-to-maturity, Amortized Cost	83,208	$ 88,937
Securities Held-to-Maturity, Estimated Fair Value
Securities Held-to-Maturity, Due after ten years, Estimated Fair Value	86,944
Securities held-to-maturity, Estimated Fair Value	$ 86,944	$ 90,810

XML

Investments (Gross Gains And Losses Realized) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Investments [Abstract]
Gross realized gains	$ 1,256	$ 2,116	$ 1,256	$ 2,130
Gross realized losses	(411)	0	(411)	0
Net investment security gains	$ 845	$ 2,116	$ 845	$ 2,130

XML

Loans (Narrative) (Details) - USD ($) $ in Millions	Jun. 30, 2016	Dec. 31, 2015
Residential Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Construction loans	$ 12.3	$ 13.1
Commercial Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Construction loans	$ 2.2	$ 12.6

XML

Loans (Summary Of Major Classifications For Loans) (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Accounts, Notes, Loans and Financing Receivable [Line Items]
Gross loans	$ 2,903,398	$ 2,862,534
Allowance for loan losses	(19,139)	(19,251)
Net loans	2,884,259	2,843,283
Residential Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Gross loans	1,417,137	1,383,133
Allowance for loan losses	(6,358)	(6,778)
Home equity - junior liens (including lines of credit) [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Gross loans	142,827	147,036
Allowance for loan losses	(1,423)	(1,463)
Commercial And Industrial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Gross loans	171,362	165,340
Allowance for loan losses	(4,091)	(3,271)
Commercial Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Gross loans	1,135,493	1,127,581
Allowance for loan losses	(6,273)	(6,985)
Consumer Loan [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Gross loans	33,799	36,083
Allowance for loan losses	(91)	(97)
Demand Deposit Account Overdrafts [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Gross loans	2,780	3,361
Allowance for loan losses	$ (903)	$ (657)

XML

Loans (Composition Of Loans Acquired At Acquisition) (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015	Nov. 06, 2015
Financing Receivable, Impaired [Line Items]
Outstanding loan balance	$ 2,903,398	$ 2,862,534
Virginia Savings Bank [Member]
Financing Receivable, Impaired [Line Items]
Outstanding loan balance	27,113	28,914
Credit-impaired loans:
Carrying value	1,714	1,707
Contractual principal and interest	1,924	1,965
Community Bank [Member]
Financing Receivable, Impaired [Line Items]
Outstanding loan balance	164,558	181,545
Credit-impaired loans:
Carrying value	11,160	12,899
Contractual principal and interest	14,042	16,362
American Founders Bank [Member]
Financing Receivable, Impaired [Line Items]
Outstanding loan balance	105,398	112,862	$ 119,000
Credit-impaired loans:
Carrying value	0	0
Contractual principal and interest	0	0
Virginia Savings Bank, Community Financial and American Founders Bank[Member]
Financing Receivable, Impaired [Line Items]
Outstanding loan balance	297,069	323,321
Credit-impaired loans:
Carrying value	12,874	14,606
Contractual principal and interest	$ 15,966	$ 18,327

XML

Loans (Activity For The Accretable Yield) (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2016 USD ($)
Virginia Savings Bank [Member]
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Accretable Yield Movement Schedule [Roll Forward]
Balance at the beginning of the period	$ 374
Accretion	(86)
Net reclassifications to accretable yield from non-accretable yield	51
Disposals	0
Balance at the end of period	339
Certain Loans Acquired In Transfer Not Accounted For As Debt Securities, Carrying Amount Net [Roll Forward]
Balance at the beginning of the period	1,707
Accretion	86
Payments received, net	(79)
Disposals	0
Balance at the end of period	1,714
Community Bank [Member]
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Accretable Yield Movement Schedule [Roll Forward]
Balance at the beginning of the period	6,266
Accretion	(530)
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Accretable Yield, Reclassifications to Nonaccretable Difference	(38)
Disposals	0
Balance at the end of period	5,698
Certain Loans Acquired In Transfer Not Accounted For As Debt Securities, Carrying Amount Net [Roll Forward]
Balance at the beginning of the period	12,899
Accretion	530
Payments received, net	(2,011)
Disposals	(258)
Balance at the end of period	11,160
Virginia Savings Bank and Community Bank [Member]
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Accretable Yield Movement Schedule [Roll Forward]
Balance at the beginning of the period	6,640
Accretion	(616)
Net reclassifications to accretable yield from non-accretable yield	13
Disposals	0
Balance at the end of period	6,037
Certain Loans Acquired In Transfer Not Accounted For As Debt Securities, Carrying Amount Net [Roll Forward]
Balance at the beginning of the period	14,606
Accretion	616
Payments received, net	(2,090)
Disposals	(258)
Balance at the end of period	$ 12,874

XML

Allowance For Loan Losses (Narrative) (Details)	6 Months Ended
	Jun. 30, 2016 USD ($)	Jun. 30, 2015 USD ($)	Dec. 31, 2015 USD ($)
Financing Receivable, Impaired [Line Items]
Gross loans	$ 2,903,398,000		$ 2,862,534,000
Loans and Leases Receivable, Impaired, Interest Lost on Nonaccrual Loans	200,000	$ 400,000
Residential Real Estate [Member]
Financing Receivable, Impaired [Line Items]
Gross loans	1,417,137,000		1,383,133,000
Commercial Industrial Loans And Commercial Real Estate [Member]
Financing Receivable, Impaired [Line Items]
Gross loans	1,306,855,000		1,292,921,000
Consumer Loan [Member]
Financing Receivable, Impaired [Line Items]
Gross loans	33,799,000		$ 36,083,000
Flood [Member]
Financing Receivable, Impaired [Line Items]
Gross loans	$ 40,000,000
% of Loans in Flood Zone	90.00%
Number of Loans	900
Average Loan Balance	$ 43,000

XML

Allowance For Loan Losses (Schedule Of Allowance For Loan Loss By Portfolio Segment) (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Allowance for loan loss, Beginning balance	$ 19,251	$ 20,074
Allowance for loan loss, Charge-offs	(2,754)	(4,218)
Allowance for loan loss, Recoveries	981	607
Allowance for loan loss, Provision for acquired loans	168	545
Allowance for loan loss, Provision	1,493	3,179
Allowance for loan loss, Ending balance	19,139	20,187
Allowance for loan loss, Evaluated for impairment, Individually	0		$ 0
Allowance for loan loss, Evaluated for impairment, Collectively	18,441		18,422
Allowance for loan loss, Total	19,139		19,251
Loans, Evaluated for impairment, Individually	6,952		8,482
Loans, Evaluated for impairment, Collectively	2,883,571		2,839,447
Gross loans	2,903,398		2,862,534
Commercial And Industrial [Member]
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Allowance for loan loss, Beginning balance	3,271	1,582
Allowance for loan loss, Charge-offs	(45)	(2,538)
Allowance for loan loss, Recoveries	4	27
Allowance for loan loss, Provision for acquired loans	0	0
Allowance for loan loss, Provision	861	3,154
Allowance for loan loss, Ending balance	4,091	2,225
Allowance for loan loss, Evaluated for impairment, Individually	0		0
Allowance for loan loss, Evaluated for impairment, Collectively	4,088		3,267
Allowance for loan loss, Total	4,091		3,271
Loans, Evaluated for impairment, Individually	2,114		2,349
Loans, Evaluated for impairment, Collectively	168,929		162,662
Gross loans	171,362		165,340
Commercial Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Allowance for loan loss, Beginning balance	6,985	8,845
Allowance for loan loss, Charge-offs	(1,071)	(276)
Allowance for loan loss, Recoveries	404	31
Allowance for loan loss, Provision for acquired loans	168	545
Allowance for loan loss, Provision	(213)	(623)
Allowance for loan loss, Ending balance	6,273	8,522
Allowance for loan loss, Evaluated for impairment, Individually	0		0
Allowance for loan loss, Evaluated for impairment, Collectively	5,670		6,173
Allowance for loan loss, Total	6,273		6,985
Loans, Evaluated for impairment, Individually	4,838		6,133
Loans, Evaluated for impairment, Collectively	1,120,863		1,109,327
Gross loans	1,135,493		1,127,581
Residential Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Allowance for loan loss, Beginning balance	6,778	7,208
Allowance for loan loss, Charge-offs	(742)	(529)
Allowance for loan loss, Recoveries	90	64
Allowance for loan loss, Provision for acquired loans	0	0
Allowance for loan loss, Provision	232	332
Allowance for loan loss, Ending balance	6,358	7,075
Allowance for loan loss, Evaluated for impairment, Individually	0		0
Allowance for loan loss, Evaluated for impairment, Collectively	6,266		6,765
Allowance for loan loss, Total	6,358		6,778
Loans, Evaluated for impairment, Individually	0		0
Loans, Evaluated for impairment, Collectively	1,414,488		1,381,064
Gross loans	1,417,137		1,383,133
Home equity - junior liens (including lines of credit) [Member]
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Allowance for loan loss, Beginning balance	1,463	1,495
Allowance for loan loss, Charge-offs	(175)	(108)
Allowance for loan loss, Recoveries	0	0
Allowance for loan loss, Provision for acquired loans	0	0
Allowance for loan loss, Provision	135	106
Allowance for loan loss, Ending balance	1,423	1,493
Allowance for loan loss, Evaluated for impairment, Individually	0		0
Allowance for loan loss, Evaluated for impairment, Collectively	1,423		1,463
Allowance for loan loss, Total	1,423		1,463
Loans, Evaluated for impairment, Individually	0		0
Loans, Evaluated for impairment, Collectively	142,827		147,036
Gross loans	142,827		147,036
Consumer Loan [Member]
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Allowance for loan loss, Beginning balance	97	85
Allowance for loan loss, Charge-offs	(82)	(143)
Allowance for loan loss, Recoveries	81	79
Allowance for loan loss, Provision for acquired loans	0	0
Allowance for loan loss, Provision	(5)	99
Allowance for loan loss, Ending balance	91	120
Allowance for loan loss, Evaluated for impairment, Individually	0		0
Allowance for loan loss, Evaluated for impairment, Collectively	91		97
Allowance for loan loss, Total	91		97
Loans, Evaluated for impairment, Individually	0		0
Loans, Evaluated for impairment, Collectively	33,684		35,997
Gross loans	33,799		36,083
Demand Deposit Account Overdrafts [Member]
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Allowance for loan loss, Beginning balance	657	859
Allowance for loan loss, Charge-offs	(639)	(624)
Allowance for loan loss, Recoveries	402	406
Allowance for loan loss, Provision for acquired loans	0	0
Allowance for loan loss, Provision	483	111
Allowance for loan loss, Ending balance	903	$ 752
Allowance for loan loss, Evaluated for impairment, Individually	0		0
Allowance for loan loss, Evaluated for impairment, Collectively	903		657
Allowance for loan loss, Total	903		657
Loans, Evaluated for impairment, Individually	0		0
Loans, Evaluated for impairment, Collectively	2,780		3,361
Gross loans	2,780		3,361
Receivables Acquired with Deteriorated Credit Quality [Domain]
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Allowance for Loan Losses	698		829
Loans, Acquired with Deteriorated Credit Quality	12,875		14,605
Receivables Acquired with Deteriorated Credit Quality [Domain] | Commercial And Industrial [Member]
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Allowance for Loan Losses	3		4
Loans, Acquired with Deteriorated Credit Quality	319		329
Receivables Acquired with Deteriorated Credit Quality [Domain] | Commercial Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Allowance for Loan Losses	603		812
Loans, Acquired with Deteriorated Credit Quality	9,792		12,121
Receivables Acquired with Deteriorated Credit Quality [Domain] | Residential Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Allowance for Loan Losses	92		13
Loans, Acquired with Deteriorated Credit Quality	2,649		2,069
Receivables Acquired with Deteriorated Credit Quality [Domain] | Home equity - junior liens (including lines of credit) [Member]
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Allowance for Loan Losses	0		0
Loans, Acquired with Deteriorated Credit Quality	0		0
Receivables Acquired with Deteriorated Credit Quality [Domain] | Consumer Loan [Member]
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Allowance for Loan Losses	0		0
Loans, Acquired with Deteriorated Credit Quality	115		86
Receivables Acquired with Deteriorated Credit Quality [Domain] | Demand Deposit Account Overdrafts [Member]
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Allowance for Loan Losses	0		0
Loans, Acquired with Deteriorated Credit Quality	$ 0		$ 0

XML

Allowance For Loan Losses (Schedule Of Credit Quality Indicators) (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Financing Receivable, Recorded Investment [Line Items]
Total	$ 2,903,398	$ 2,862,534
Commercial Industrial Loans And Commercial Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	1,306,855	1,292,921
Commercial And Industrial [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	171,362	165,340
Commercial Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	1,135,493	1,127,581
Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	1,240,684	1,227,170
Pass [Member] | Commercial And Industrial [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	161,579	156,664
Pass [Member] | Commercial Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	1,079,105	1,070,506
Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	18,257	25,041
Special Mention [Member] | Commercial And Industrial [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	2,236	4,099
Special Mention [Member] | Commercial Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	16,021	20,942
Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	47,914	40,672
Substandard [Member] | Commercial And Industrial [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	7,547	4,539
Substandard [Member] | Commercial Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	40,367	36,133
Doubtful [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	0	38
Doubtful [Member] | Commercial And Industrial [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	0	38
Doubtful [Member] | Commercial Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	$ 0	$ 0

XML

Allowance For Loan Losses (Schedule Of Non-Commercial Loans By Payment Performance) (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Financing Receivable, Recorded Investment [Line Items]
Total	$ 2,903,398	$ 2,862,534
Residential Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	1,417,137	1,383,133
Residential Real Estate [Member] | Performing [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	1,414,503	1,379,797
Residential Real Estate [Member] | Nonperforming [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	2,634	3,336
Home equity - junior lien [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	142,827	147,036
Home equity - junior lien [Member] | Performing [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	142,612	146,877
Home equity - junior lien [Member] | Nonperforming [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	215	159
Consumer Loan [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	33,799	36,083
Consumer Loan [Member] | Performing [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	33,711	36,049
Consumer Loan [Member] | Nonperforming [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	88	34
Demand Deposit Account Overdrafts [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	2,780	3,361
Demand Deposit Account Overdrafts [Member] | Performing [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	2,780	3,361
Demand Deposit Account Overdrafts [Member] | Nonperforming [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	0	0
Noncommercial Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	1,596,543	1,569,613
Noncommercial Loans [Member] | Performing [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	1,593,606	1,566,084
Noncommercial Loans [Member] | Nonperforming [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	$ 2,937	$ 3,529

XML

Allowance For Loan Losses (Schedule Of Aging Analysis Of Accruing And Non-Accruing Loans) (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due Threshold in Days	30 days
Threshold Period Past Due for Write-off of Financing Receivable		30 days
Current	$ 2,879,624		$ 2,836,419
Financing Receivable, Acquired with Deteriorated Credit Quality, Recorded Investment, Past Due	516		506
Non-accrual	15,199		16,948
Gross loans	$ 2,903,398		2,862,534
Residential Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Threshold Period Past Due for Write-off of Financing Receivable	120 days	120 days
Current	$ 1,409,116		1,373,604
Financing Receivable, Acquired with Deteriorated Credit Quality, Recorded Investment, Past Due	0		0
Non-accrual	2,531		2,918
Gross loans	1,417,137		1,383,133
Home equity - junior lien [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	142,067		146,493
Financing Receivable, Acquired with Deteriorated Credit Quality, Recorded Investment, Past Due	0		0
Non-accrual	165		136
Gross loans	142,827		147,036
Commercial And Industrial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	168,334		162,435
Financing Receivable, Acquired with Deteriorated Credit Quality, Recorded Investment, Past Due	0		0
Non-accrual	2,724		2,745
Gross loans	171,362		165,340
Commercial Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	1,123,968		1,114,953
Financing Receivable, Acquired with Deteriorated Credit Quality, Recorded Investment, Past Due	516		506
Non-accrual	9,779		11,149
Gross loans	$ 1,135,493		1,127,581
Consumer Loan [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Threshold Period Past Due for Write-off of Financing Receivable	180 days	180 days
Current	$ 33,649		35,886
Financing Receivable, Acquired with Deteriorated Credit Quality, Recorded Investment, Past Due	0		0
Non-accrual	0		0
Gross loans	33,799		36,083
Demand Deposit Account Overdrafts [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	2,490		3,048
Financing Receivable, Acquired with Deteriorated Credit Quality, Recorded Investment, Past Due	0		0
Non-accrual	0		0
Gross loans	$ 2,780		3,361
Commercial Industrial Loans And Commercial Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Threshold Period Past Due for Write-off of Financing Receivable	120 days	120 days
Gross loans	$ 1,306,855		1,292,921
Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	6,959		6,946
Financing Receivables, 30 to 59 Days Past Due [Member] | Residential Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	4,680		5,261
Financing Receivables, 30 to 59 Days Past Due [Member] | Home equity - junior lien [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	410		318
Financing Receivables, 30 to 59 Days Past Due [Member] | Commercial And Industrial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	290		141
Financing Receivables, 30 to 59 Days Past Due [Member] | Commercial Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	1,230		762
Financing Receivables, 30 to 59 Days Past Due [Member] | Consumer Loan [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	59		154
Financing Receivables, 30 to 59 Days Past Due [Member] | Demand Deposit Account Overdrafts [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	290		310
Financing Receivables, 60 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	859		1,220
Financing Receivables, 60 to 89 Days Past Due [Member] | Residential Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	707		932
Financing Receivables, 60 to 89 Days Past Due [Member] | Home equity - junior lien [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	135		65
Financing Receivables, 60 to 89 Days Past Due [Member] | Commercial And Industrial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	14		0
Financing Receivables, 60 to 89 Days Past Due [Member] | Commercial Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	0		211
Financing Receivables, 60 to 89 Days Past Due [Member] | Consumer Loan [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	3		9
Financing Receivables, 60 to 89 Days Past Due [Member] | Demand Deposit Account Overdrafts [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	0		3
Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	241		495
Financing Receivables, Equal to Greater than 90 Days Past Due [Member] | Residential Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	103		418
Financing Receivables, Equal to Greater than 90 Days Past Due [Member] | Home equity - junior lien [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	50		24
Financing Receivables, Equal to Greater than 90 Days Past Due [Member] | Commercial And Industrial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	0		19
Financing Receivables, Equal to Greater than 90 Days Past Due [Member] | Commercial Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	0		0
Financing Receivables, Equal to Greater than 90 Days Past Due [Member] | Consumer Loan [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	88		34
Financing Receivables, Equal to Greater than 90 Days Past Due [Member] | Demand Deposit Account Overdrafts [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	$ 0		$ 0

XML

Allowance For Loan Losses (Schedule Of Impaired Loans) (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Financing Receivable, Impaired [Line Items]
With no related allowance recorded, Recorded investment	$ 6,952	$ 8,482
With no related allowance recorded, Unpaid principal balance	12,327	17,049
With an allowance recorded, Recorded investment	0	0
With an allowance recorded, Unpaid principal balance	0	0
Related allowance	0	0
Commercial And Industrial [Member]
Financing Receivable, Impaired [Line Items]
With no related allowance recorded, Recorded investment	2,114	2,349
With no related allowance recorded, Unpaid principal balance	5,250	7,547
With an allowance recorded, Recorded investment	0	0
With an allowance recorded, Unpaid principal balance	0	0
Related allowance	0	0
Commercial Real Estate [Member]
Financing Receivable, Impaired [Line Items]
With no related allowance recorded, Recorded investment	4,838	6,133
With no related allowance recorded, Unpaid principal balance	7,077	9,502
With an allowance recorded, Recorded investment	0	0
With an allowance recorded, Unpaid principal balance	0	0
Related allowance	$ 0	$ 0

XML

Allowance For Loan Losses (Schedule Of Information Related To Average Recorded Investment And Interest Income Recognized On Impaired Loans) (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Financing Receivable, Impaired [Line Items]
With no related allowance recorded, Average recorded investment	$ 7,078	$ 8,169
With no related allowance recorded, Interest income recognized	9	9
With an allowance recorded, Average recorded investment	0	1,365
With an allowance recorded, Interest income recognized	0	40
Commercial And Industrial [Member]
Financing Receivable, Impaired [Line Items]
With no related allowance recorded, Average recorded investment	2,339	2,814
With no related allowance recorded, Interest income recognized	0	0
With an allowance recorded, Average recorded investment	0	0
With an allowance recorded, Interest income recognized	0	0
Commercial Real Estate [Member]
Financing Receivable, Impaired [Line Items]
With no related allowance recorded, Average recorded investment	4,739	5,355
With no related allowance recorded, Interest income recognized	9	9
With an allowance recorded, Average recorded investment	0	1,365
With an allowance recorded, Interest income recognized	$ 0	$ 40

XML

Allowance For Loan Losses (Schedule Of Troubled Debt Restructurings) (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2016 USD ($) contract	Jun. 30, 2015 USD ($) contract	Dec. 31, 2015 USD ($)
Financing Receivable, Modifications [Line Items]
Accruing	$ 25,351		$ 22,259
Non-Accruing	434		225
Total	$ 25,785		22,484
Financing Receivable, Modifications, Number of Contracts | contract	24	38
Financing Receivable, Modifications, Pre-Modification Recorded Investment	$ 4,151	$ 2,265
Financing Receivable, Modifications, Post-Modification Recorded Investment	4,151	$ 2,265
Commercial And Industrial [Member]
Financing Receivable, Modifications [Line Items]
Accruing	50		58
Non-Accruing	0		0
Total	$ 50		58
Financing Receivable, Modifications, Number of Contracts | contract	0	0
Financing Receivable, Modifications, Pre-Modification Recorded Investment	$ 0	$ 0
Financing Receivable, Modifications, Post-Modification Recorded Investment	0	$ 0
Commercial Real Estate [Member]
Financing Receivable, Modifications [Line Items]
Accruing	2,743		1,746
Non-Accruing	0		0
Total	$ 2,743		1,746
Financing Receivable, Modifications, Number of Contracts | contract	1	0
Financing Receivable, Modifications, Pre-Modification Recorded Investment	$ 2,225	$ 0
Financing Receivable, Modifications, Post-Modification Recorded Investment	2,225	$ 0
Residential Real Estate [Member]
Financing Receivable, Modifications [Line Items]
Accruing	19,685		17,796
Non-Accruing	390		191
Total	$ 20,075		17,987
Financing Receivable, Modifications, Number of Contracts | contract	20	27
Financing Receivable, Modifications, Pre-Modification Recorded Investment	$ 1,857	$ 2,006
Financing Receivable, Modifications, Post-Modification Recorded Investment	1,857	$ 2,006
Home equity - junior lien [Member]
Financing Receivable, Modifications [Line Items]
Accruing	2,873		2,659
Non-Accruing	44		34
Total	$ 2,917		2,693
Financing Receivable, Modifications, Number of Contracts | contract	3	11
Financing Receivable, Modifications, Pre-Modification Recorded Investment	$ 69	$ 259
Financing Receivable, Modifications, Post-Modification Recorded Investment	69	$ 259
Consumer Loan [Member]
Financing Receivable, Modifications [Line Items]
Accruing	0		0
Non-Accruing	0		0
Total	$ 0		$ 0
Financing Receivable, Modifications, Number of Contracts | contract	0	0
Financing Receivable, Modifications, Pre-Modification Recorded Investment	$ 0	$ 0
Financing Receivable, Modifications, Post-Modification Recorded Investment	$ 0	$ 0

XML

Long-Term Debt (Components Of Long-Term Debt) (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2016	Dec. 31, 2015
Long-term Debt, Unclassified [Abstract]
Long-term debt	$ 16,495	$ 16,495
Junior subordinated debentures, interest rate	4.15%	4.01%
Junior subordinated debentures, due date	Dec. 31, 2038	Dec. 31, 2038
Percent over three month LIBOR Rate	3.50%	3.50%
Junior subordinated debenture, Threshold in days	90 days	90 days

XML

Derivative Instruments (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Designated as Hedging Instrument [Member]
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Loss on Fair Value Hedge Ineffectiveness	$ 0.1	$ 0.1	$ 0.1	$ 0.1

XML

Derivative Instruments (Fair Value Of Derivative Instruments) (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Designated as Hedging Instrument [Member] | Other Liabilities [Member]
Derivatives, Fair Value [Line Items]
Derivative, Notional Amount	$ 4,842	$ 5,475
Fair Value	229	61
Not Designated as Hedging Instrument [Member] | Other Assets [Member]
Derivatives, Fair Value [Line Items]
Derivative, Notional Amount	398,139	372,995
Fair Value	29,415	10,811
Not Designated as Hedging Instrument [Member] | Other Liabilities [Member]
Derivatives, Fair Value [Line Items]
Derivative, Notional Amount	405,662	380,995
Fair Value	$ 29,733	$ 10,872

XML

Derivative Instruments (Change In Fair Value Of Derivative Instruments) (Details) - Other Income [Member] - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Not Designated as Hedging Instrument [Member] | Derivative Assets [Member]
Derivatives, Fair Value [Line Items]
Change in Fair Value	$ (6,744)	$ (5,310)	$ (18,090)	$ (2,428)
Not Designated as Hedging Instrument [Member] | Derivative Liabilities [Member]
Derivatives, Fair Value [Line Items]
Change in Fair Value	6,869	5,310	18,498	2,428
Designated as Hedging Instrument [Member] | Derivative Assets [Member]
Derivatives, Fair Value [Line Items]
Change in Fair Value	43	(78)	164	(12)
Designated as Hedging Instrument [Member] | Derivative Liabilities [Member]
Derivatives, Fair Value [Line Items]
Change in Fair Value	$ 6	$ (7)	$ 4	$ 2

XML

Derivative Instruments (Derivative Assets Offset in The Consolidated Balance Sheets) (Details) - Not Designated as Hedging Instrument [Member] - Interest Rate Swap [Member] $ in Thousands	Jun. 30, 2016 USD ($)
Offsetting Assets [Line Items]
Gross amounts of recognized assets	$ 29,415
Net Amounts of Assets presented in the Statement of Financial Position	29,415
Fair Value of collateral	29,415
Total Gross amounts not offset in the statement of financial position including applicable netting agreement and fair value of collateral	29,415
Net Amount	$ 0

XML

Derivative Instruments (Derivative Liabilities Offset in The consolidated Balance Sheets) (Details) - Interest Rate Swap [Member] $ in Thousands	Jun. 30, 2016 USD ($)
Not Designated as Hedging Instrument [Member]
Offsetting Liabilities [Line Items]
Gross Amounts of Recognized Liabilities	$ 29,733
Derivative liabilities	29,733
Fair Value of collateral	32,954
Total Gross amounts not offset in the statement of financial position including applicable netting agreement and fair value of collateral	32,954
Net Amount	0
Designated as Hedging Instrument [Member]
Offsetting Liabilities [Line Items]
Gross Amounts of Recognized Liabilities	229
Derivative liabilities	229
Fair Value of collateral	254
Total Gross amounts not offset in the statement of financial position including applicable netting agreement and fair value of collateral	254
Net Amount	$ 0

XML

Employee Benefit Plans (Narrative) (Details)	6 Months Ended
	Jun. 30, 2016 shares
Employee Stock Option [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Incentive stock options and SARs exercisable period	10 years
Stock options awarded	462,863
Restricted Stock [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock options awarded	270,447
Performance Shares [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage	33.33%
Maximum [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Common stock issued upon the exercise of stock options, SARs and stock awards	750,000
Share-based Compensation Award, Tranche One [Member] | Performance Shares [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Median Return on Average Assets of all FDIC Insured Depository Institutions Time Period	20 years
Share-based Compensation Award, Tranche Two [Member] | Performance Shares [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Median Return on Average Assets of all FDIC Insured Depository Institutions Time Period	20 years
Share-based Compensation Award, Tranche Three [Member] | Performance Shares [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Median Return on Average Assets of all FDIC Insured Depository Institutions Time Period	20 years

XML

Employee Benefit Plans (Summary Of Stock Option Activity) (Details) - USD ($) $ / shares in Units, $ in Thousands	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Options Outstanding, beginning balance (in shares)	95,015	167,554
Options, Granted (in shares)	24,348	12,961
Options, Exercised (in shares)	(20,250)	(29,250)
Options, Forfeited (in shares)	0	(4,000)
Options Outstanding, ending balance (in shares)	99,113	147,265
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Roll Forward]
Weighted-Average Exercise Price, Outstanding, beginning balance (in dollars per share)	$ 38.38	$ 36.74
Weighted-Average Exercise Price, Granted (in dollars per share)	43.73	46.41
Weighted-Average Exercise Price, Exercised (in dollars per share)	33.68	34.30
Weighted-Average Exercise Price, Forfeited (in dollars per share)	0.00	31.66
Weighted-Average Exercise Price, Outstanding, ending balance (in dollars per share)	$ 40.68	$ 38.24
Exercisable (shares)	15,500	72,000
Exercisable, Weighted average exercise price (US$ per share)	$ 36.23	$ 37.01
Proceeds from Stock Options Exercised	$ 682	$ 1,003
Intrinsic value of stock options exercised	302	322
Allocated Share-based Compensation Expense	120	$ 105
Employee Service Share-based Compensation, Nonvested Awards, Compensation Not yet Recognized, Stock Options	$ 500
Employee Stock Option [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Roll Forward]
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition	2 years 8 months

XML

Employee Benefit Plans (Stock Options Outstanding And Exercisable) (Details) $ / shares in Units, $ in Thousands	6 Months Ended
	Jun. 30, 2016 USD ($) $ / shares shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
No. of Options Outstanding (in shares) | shares	99,113
Aggregate Intrinsic Value (in thousands) | $	$ 490
No. of Options Currently Exercisable (in shares) | shares	15,500
Aggregate Intrinsic Value of Options Currently Exercisable (in thousands) | $	$ 143
$25.00 - $29.99
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
No. of Options Outstanding (in shares) | shares	1,250
Weighted-Average Exercise Price (in dollars per share)	$ 28.15
Weighted-Average Remaining Contractual Life (Years)	2 years 8 months
Aggregate Intrinsic Value (in thousands) | $	$ 22
No. of Options Currently Exercisable (in shares) | shares	1,250
Weighted-Average Exercise Price of Options Currently Exercisable (in dollars per share)	$ 28.15
Weighted-Average Remaining Contractual Life (Years)	2 years 8 months
Aggregate Intrinsic Value of Options Currently Exercisable (in thousands) | $	$ 22
$25.00 - $29.99 | Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Ranges Of Exercise Prices (in dollars per share)	$ 25.00
$25.00 - $29.99 | Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Ranges Of Exercise Prices (in dollars per share)	$ 29.99
30.00 - 34.99
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
No. of Options Outstanding (in shares) | shares	3,000
Weighted-Average Exercise Price (in dollars per share)	$ 30.38
Weighted-Average Remaining Contractual Life (Years)	2 years 5 months
Aggregate Intrinsic Value (in thousands) | $	$ 45
No. of Options Currently Exercisable (in shares) | shares	3,000
Weighted-Average Exercise Price of Options Currently Exercisable (in dollars per share)	$ 30.38
Weighted-Average Remaining Contractual Life (Years)	2 years 5 months
Aggregate Intrinsic Value of Options Currently Exercisable (in thousands) | $	$ 45
30.00 - 34.99 | Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Ranges Of Exercise Prices (in dollars per share)	$ 30
30.00 - 34.99 | Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Ranges Of Exercise Prices (in dollars per share)	$ 34.99
35.00 - 39.99
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
No. of Options Outstanding (in shares) | shares	36,601
Weighted-Average Exercise Price (in dollars per share)	$ 36.35
Weighted-Average Remaining Contractual Life (Years)	6 years
Aggregate Intrinsic Value (in thousands) | $	$ 334
No. of Options Currently Exercisable (in shares) | shares	4,250
Weighted-Average Exercise Price of Options Currently Exercisable (in dollars per share)	$ 35.09
Weighted-Average Remaining Contractual Life (Years)	4 years 10 months
Aggregate Intrinsic Value of Options Currently Exercisable (in thousands) | $	$ 44
35.00 - 39.99 | Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Ranges Of Exercise Prices (in dollars per share)	$ 35
35.00 - 39.99 | Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Ranges Of Exercise Prices (in dollars per share)	$ 39.99
40.00 - 44.99
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
No. of Options Outstanding (in shares) | shares	45,301
Weighted-Average Exercise Price (in dollars per share)	$ 43.51
Weighted-Average Remaining Contractual Life (Years)	7 years 11 months
Aggregate Intrinsic Value (in thousands) | $	$ 89
No. of Options Currently Exercisable (in shares) | shares	7,000
Weighted-Average Exercise Price of Options Currently Exercisable (in dollars per share)	$ 40.88
Weighted-Average Remaining Contractual Life (Years)	1 year 10 months
Aggregate Intrinsic Value of Options Currently Exercisable (in thousands) | $	$ 32
40.00 - 44.99 | Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Ranges Of Exercise Prices (in dollars per share)	$ 40
40.00 - 44.99 | Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Ranges Of Exercise Prices (in dollars per share)	$ 44.99
45.00 - 50.00
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
No. of Options Outstanding (in shares) | shares	12,961
Weighted-Average Exercise Price (in dollars per share)	$ 46.61
Weighted-Average Remaining Contractual Life (Years)	8 years 8 months
Aggregate Intrinsic Value (in thousands) | $	$ 0
No. of Options Currently Exercisable (in shares) | shares	0
Weighted-Average Exercise Price of Options Currently Exercisable (in dollars per share)	$ 0.00
Aggregate Intrinsic Value of Options Currently Exercisable (in thousands) | $	$ 0
45.00 - 50.00 | Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Ranges Of Exercise Prices (in dollars per share)	$ 45
45.00 - 50.00 | Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Ranges Of Exercise Prices (in dollars per share)	$ 50

XML

Employee Benefit Plans (Weighted Average Assumptions Estimate The Fair Value Of Options Granted) (Details)	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Share-based Compensation [Abstract]
Risk-free interest rate	1.43%	1.95%
Expected dividend yield	3.86%	3.50%
Volatility factor	30.76%	45.40%
Expected life of option	7 years	7 years

XML

Employee Benefit Plans (Restricted Shares Activity And Related Information) (Details) - USD ($) $ / shares in Units, $ in Thousands	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized	$ 3,498
Restricted Stock or Unit Expense	$ 661	$ 567
Restricted Awards, Number of Awards [Roll Forward]
Beginning Balance	172,921	163,431
Granted	27,451	25,440
Forfeited	0	(500)
Vested	(21,700)	(16,550)
Ending Balance	178,672	171,821
Restricted Awards, Number of Awards, Weighted Average Exercise Price [Roll Forward]
Outstanding at January 1	$ 37.38	$ 35.50
Granted	45.99	46.35
Forfeited	0.00	37.50
Vested	33.89	33.51
Outstanding at June 30	$ 39.13	$ 37.29
Restricted Stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition	3 years 3 months

XML

Employee Benefit Plans (Net Periodic Pension Cost Of The Defined Benefit Plan) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Components of net periodic cost:
Interest cost	$ 205	$ 203	$ 410	$ 465
Expected return on plan assets	(288)	(234)	(577)	(523)
Net amortization and deferral	212	244	424	471
Net Periodic Pension Cost	129	213	257	413
Defined Contribution Plan, Cost Recognized	201	182	418	411
Defined Benefit Plan, Contributions by Employer	$ 0	$ 85	$ 0	$ 170

XML

Commitments and Contingencies (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Commitments To Extend Credit [Member] | Home equity - junior liens (including lines of credit) [Member]
Other Commitments [Line Items]
Contractual obligations	$ 187,645	$ 183,017
Commitments To Extend Credit [Member] | Commercial Real Estate [Member]
Other Commitments [Line Items]
Contractual obligations	89,912	84,672
Commitments To Extend Credit [Member] | Other Commitments [Member]
Other Commitments [Line Items]
Contractual obligations	183,241	177,491
Standby Letters Of Credit [Member]
Other Commitments [Line Items]
Contractual obligations	5,379	5,086
Letter of Credit [Member]
Other Commitments [Line Items]
Contractual obligations	$ 1,629	$ 2,312

XML

Accumulated Other Comprehensive Loss (Schedule of Changes In Each Component of Accumulated Other Comprehensive Income) (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Equity [Abstract]
Combined Federal and state income tax rate	37.00%	37.00%
Accumulated Other Comprehensive Income (Loss), Pension and Other Postretirement Benefit Plans, Net of Tax [Roll Forward]
Defined Benefit Pension Plans, Beginning Balance	$ (4,759)	$ (5,349)
Defined Benefit Pension Plans, Ending Balance	(4,759)	(5,349)
Accumulated Other Comprehensive Income (Loss), Available-for-sale Securities Adjustment, Net of Tax [Roll Forward]
Unrealized Gains (Losses) on Securities Available-for-Sale, Beginning Balance	927	1,190
Unrealized Gains (Losses) on Securities Available-for-Sale Securities, Other comprehensive income before reclassifications	6,402	611
Unrealized Gains (Losses) on Securities Available-for-Sale, Amounts reclassified from other comprehensive loss	(533)	(1,344)
Unrealized Gain (Losses) on Securities Available-for-Sale Total	5,869	(733)
Unrealized Gains (Losses) on Securities Available-for-Sale, Ending Balance	6,796	457
Accumulated Other Comprehensive Income (Loss), Net of Income Tax [Roll Forward]
Total, Beginning Balance	(3,832)	(4,159)
Total, Other comprehensive income before reclassifications	6,402	611
Total, Reclassification from Accumulated Other Comprehensive Income, Current Period, Net of Tax	(533)	(1,344)
Total, Accumulated other comprehensive loss	5,869	(733)
Total, Ending Balance	$ 2,037	$ (4,892)

XML

Accumulated Other Comprehensive Loss (Schedule Of Amounts Reclassified Out of Accumulated Other Comprehensive Income) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Reclassifications Out Of Accumulated Other Comprehensive Income [Line Items]
Related income tax expense	$ (6,303)	$ (6,125)	$ (12,169)	$ (17,492)
Other comprehensive income (loss), net of tax	3,126	(1,639)	5,869	(733)
Accumulated Net Unrealized Investment Gain (Loss) [Member] | Reclassification Out Of Accumulated Other Comprehensive Income [Member]
Reclassifications Out Of Accumulated Other Comprehensive Income [Line Items]
Net securities gains reclassified into earnings	(845)	(2,116)	(845)	(2,130)
Related income tax expense	312	781	312	786
Other comprehensive income (loss), net of tax	$ (533)	$ (1,335)	$ (533)	$ (1,344)

XML

Earnings per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Earnings Per Share [Abstract]
Distributed earnings allocated to common stock	$ 6,375	$ 6,344	$ 12,751	$ 12,688
Undistributed earnings allocated to common stock	6,016	5,505	11,204	16,950
Net earnings allocated to common shareholders	$ 12,391	$ 11,849	$ 23,955	$ 29,638
Average shares outstanding (in shares)	14,889,000	15,104,000	14,903,000	15,079,000
Effect of dilutive securities:
Warrant outstanding	0	0	0	55,000
Employee stock awards	13,000	23,000	12,000	22,000
Shares for diluted earnings per share (in shares)	14,902,000	15,127,000	14,915,000	15,156,000
Basic earnings per common share (in dollars per share)	$ 0.83	$ 0.78	$ 1.61	$ 1.97
Diluted earnings per share (in dollars per share)	$ 0.83	$ 0.78	$ 1.61	$ 1.96
Options to purchase shares of common stock, anti-dilutive (in shares)			4,200	0

XML

Fair Value Measurements (Narrative) (Details) - USD ($) $ in Thousands	6 Months Ended		12 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Derivative Credit Risk Valuation Adjustment, Derivative Assets	$ 0		$ 0
Derivative Credit Risk Valuation Adjustment, Derivative Liabilities	$ 0		$ 0
Fair Value Inputs, Prepayment Rate	1.00%		1.00%
Annual prepayments maturity	100.00%		100.00%
Additional basis points	1.50%		1.50%
Maximum [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Collateral discount	30.00%	30.00%
Minimum [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Collateral discount	20.00%	20.00%

XML

Fair Value Measurements (Schedule Of Assets And Liabilities Measured At Fair Value On A Recurring And Nonrecurring Basis) (Details) - USD ($) $ in Thousands	6 Months Ended		12 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impairment losses on investment securities	$ 411	$ 0
Obligations Of States And Political Subdivisions [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets, Recurring	59,291		$ 50,697
Obligations Of States And Political Subdivisions [Member] | Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets, Recurring	0		0
Obligations Of States And Political Subdivisions [Member] | Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets, Recurring	59,291		50,697
Obligations Of States And Political Subdivisions [Member] | Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets, Recurring	0		0
U.S. Government Agencies [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets, Recurring	4		5
U.S. Government Agencies [Member] | Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets, Recurring	0		0
U.S. Government Agencies [Member] | Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets, Recurring	4		5
U.S. Government Agencies [Member] | Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets, Recurring	0		0
U.S. Government Agencies Mortgage-backed Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets, Recurring	313,108		288,197
U.S. Government Agencies Mortgage-backed Securities [Member] | Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets, Recurring	0		0
U.S. Government Agencies Mortgage-backed Securities [Member] | Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets, Recurring	313,108		288,197
U.S. Government Agencies Mortgage-backed Securities [Member] | Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets, Recurring	0		0
Private Label [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets, Recurring	1,111		1,231
Private Label [Member] | Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets, Recurring	0		0
Private Label [Member] | Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets, Recurring	1,111		1,231
Private Label [Member] | Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets, Recurring	0		0
Asset-backed Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets, Recurring	6,323		5,858
Asset-backed Securities [Member] | Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets, Recurring	0		0
Asset-backed Securities [Member] | Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets, Recurring	3,700		3,762
Asset-backed Securities [Member] | Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets, Recurring	2,623		2,096
Corporate Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets, Recurring	24,240		18,693
Corporate Securities [Member] | Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets, Recurring	0		0
Corporate Securities [Member] | Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets, Recurring	24,240		18,693
Corporate Securities [Member] | Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets, Recurring	0		0
Equity Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets, Recurring	3,419		3,273
Equity Securities [Member] | Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets, Recurring	3,419		3,273
Equity Securities [Member] | Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets, Recurring	0		0
Equity Securities [Member] | Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets, Recurring	0		0
Money Market Funds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets, Recurring	1,543		1,512
Money Market Funds [Member] | Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets, Recurring	1,543		1,512
Money Market Funds [Member] | Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets, Recurring	0		0
Money Market Funds [Member] | Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets, Recurring	0		0
Derivative Assets [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets, Recurring	29,415		10,811
Derivative Assets [Member] | Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets, Recurring	0		0
Derivative Assets [Member] | Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets, Recurring	29,415		10,811
Derivative Assets [Member] | Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets, Recurring	0		0
Impaired Loans [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets, Nonrecurring	6,952		8,482
Provision For Loan Losses on Impaired Loans During Period	0		0
Impaired Loans [Member] | Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets, Nonrecurring	0		0
Impaired Loans [Member] | Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets, Nonrecurring	0		0
Impaired Loans [Member] | Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets, Nonrecurring	6,952		8,482
Other Real Estate Owned [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets, Nonrecurring	5,579		6,518
Write-downs included in other non-interest expense	(312)		(937)
Other Real Estate Owned [Member] | Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets, Nonrecurring	0		0
Other Real Estate Owned [Member] | Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets, Nonrecurring	0		0
Other Real Estate Owned [Member] | Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets, Nonrecurring	5,579		6,518
Derivative Liabilities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Liabilities, Recurring	29,962		10,933
Derivative Liabilities [Member] | Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Liabilities, Recurring	0		0
Derivative Liabilities [Member] | Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Liabilities, Recurring	29,962		10,933
Derivative Liabilities [Member] | Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Liabilities, Recurring	$ 0		$ 0

XML

Fair Value Measurements (Schedule Of Reconciliation Of Investment Securities Available For Sale Measured At Fair Value On A Recurring Basis Level 3 Assets) (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Beginning balance	$ 2,096	$ 1,871
Impairment losses on investment securities	(411)	0
Realized Investment Gains (Losses)	1,256	2,130
Included in other comprehensive income	(318)	276
Dispositions	0	0
Transfers into Level 3	0	0
Ending Balance	$ 2,623	$ 2,147

XML

Fair Value Measurements (Schedule Of Level 2 Financial Assets And Liabilities Measured On A Recurring Basis) (Details) - Impaired Loans [Member] - Fair Value, Measurements, Nonrecurring [Member] - Level 3 [Member] - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Fair Value Measurement On Nonrecurring Basis Asset And Liabilities Value [Roll Forward]
Beginning balance	$ 8,482	$ 6,517
Loans classified as impaired during the period	0	797
Specific valuation allowance allocations	0	0
Fair Value	0	797
(Additional) reduction in specific valuation allowance allocations	0	22
Paydowns, payoffs, other activity	(1,530)	(143)
Ending balance	$ 6,952	$ 7,193

XML

Fair Value Measurements (Schedule Of OREO Measured And Reported At Fair Value) (Details) - USD ($) $ in Thousands	6 Months Ended		12 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
Other Real Estate [Roll Forward]
Beginning balance	$ 6,518	$ 8,179	$ 8,179
Disposed	(2,622)	(2,947)
Ending balance	5,579	6,729	$ 6,518
OREO Remeasured At Initial Recognition [Member]
Other Real Estate [Roll Forward]
Carrying value of foreclosed assets prior to remeasurement	1,995	1,862
Charge-offs recognized in the allowance for loan losses	0	0
Fair value	1,995	1,862
OREO Remeasured Subsequent To Initial Recognition [Member]
Other Real Estate [Roll Forward]
Carrying value of foreclosed assets prior to remeasurement	1,228	2,477
Fair value	916	2,112
Write-downs included in other non-interest expense	$ (312)	$ (365)

XML

Fair Value Measurements (Schedule Of Estimates Of Fair Value Of Financial Instruments) (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Assets:
Securities available-for-sale	$ 409,039	$ 369,466
Securities held-to-maturity	83,208	88,937
Other securities	10,203	12,915
Accrued interest receivable	8,428	7,432
Liabilities:
Deposits	3,142,279	3,083,975
Carrying Amount [Member]
Assets:
Cash and cash equivalents	78,576	70,113
Securities available-for-sale	409,039	369,466
Securities held-to-maturity	83,208	88,937
Other securities	10,203	12,915
Net loans	2,884,259	2,843,283
Accrued interest receivable	8,428	7,432
Derivative assets	29,415	10,811
Liabilities:
Deposits	3,142,279	3,083,975
Short-term debt	153,674	154,869
Long-term debt	16,495	16,495
Derivative liabilities	29,962	10,933
Fair Value [Member]
Assets:
Cash and cash equivalents	78,576	70,113
Securities available-for-sale	409,039	369,466
Securities held-to-maturity	86,944	90,810
Other securities	10,203	12,915
Net loans	2,896,490	2,843,973
Accrued interest receivable	8,428	7,432
Derivative assets	29,415	10,811
Liabilities:
Deposits	3,151,350	3,085,908
Short-term debt	153,681	154,872
Long-term debt	16,460	16,457
Derivative liabilities	29,962	10,933
Level 1 [Member]
Assets:
Cash and cash equivalents	78,576	70,113
Securities available-for-sale	4,962	4,785
Securities held-to-maturity	0	0
Other securities	0	0
Net loans	0	0
Accrued interest receivable	8,428	7,432
Derivative assets	0	0
Liabilities:
Deposits	2,111,438	2,066,419
Short-term debt	0	0
Long-term debt	0	0
Derivative liabilities	0	0
Level 2 [Member]
Assets:
Cash and cash equivalents	0	0
Securities available-for-sale	401,454	362,585
Securities held-to-maturity	86,944	90,810
Other securities	10,203	12,915
Net loans	0	0
Accrued interest receivable	0	0
Derivative assets	29,415	10,811
Liabilities:
Deposits	1,039,912	1,019,489
Short-term debt	153,681	154,872
Long-term debt	16,460	16,457
Derivative liabilities	29,962	10,933
Level 3 [Member]
Assets:
Cash and cash equivalents	0	0
Securities available-for-sale	2,623	2,096
Securities held-to-maturity	0	0
Other securities	0	0
Net loans	2,896,490	2,843,973
Accrued interest receivable	0	0
Derivative assets	0	0
Liabilities:
Deposits	0	0
Short-term debt	0	0
Long-term debt	0	0
Derivative liabilities	$ 0	$ 0