10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2020

OR

☐ TRANSITION REPORT PURSUANT 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

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $2.50 par value	CHCO	NASDAQ Global Select Market

Indicate by check mark whether the registrant: (1) has 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  o 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).     Yes  x   No  o 

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 the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated Filer	x	Accelerated filer	o
Non accelerated filer	o	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).     Yes  ☐     No  ☒

The registrant had outstanding 16,030,180 shares of common stock as of July 31, 2020.

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains certain forward-looking statements that are included pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements express only management's beliefs regarding future results or events and are subject to inherent uncertainty, risks, and changes in circumstances, many of which are outside of management's control. Uncertainty, risks, changes in circumstances and other factors could cause the Company's (as hereinafter defined) actual results to differ materially from those projected in the forward-looking statements. Factors that could cause actual results to differ from those discussed in such forward-looking statements include, but are not limited to, those set forth in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019 under “ITEM 1A Risk Factors” and the following: (1) general economic conditions, especially in the communities and markets in which we conduct our business; (2) the uncertainties on the Company’s business, results of operations and financial condition, caused by the COVID-19 pandemic, which will depend on several factors, including the scope and duration of the pandemic, its continued influence on financial markets, the effectiveness of the Company’s work from home arrangements and staffing levels in operational facilities, the impact of market participants on which the Company relies and actions taken by governmental authorities and other third parties in response to the pandemic; (3) credit risk, including risk that negative credit quality trends may lead to a deterioration of asset quality, risk that our allowance for credit losses may not be sufficient to absorb actual losses in our loan portfolio, and risk from concentrations in our loan portfolio; (4) changes in the real estate market, including the value of collateral securing portions of our loan portfolio; (5) changes in the interest rate environment; (6) operational risk, including cybersecurity risk and risk of fraud, data processing system failures, and network breaches; (7) changes in technology and increased competition, including competition from non-bank financial institutions; (8) changes in consumer preferences, spending and borrowing habits, demand for our products and services, and customers' performance and creditworthiness; (9) difficulty growing loan and deposit balances; (10) our ability to effectively execute our business plan, including with respect to future acquisitions; (11) changes in regulations, laws, taxes, government policies, monetary policies and accounting policies affecting bank holding companies and their subsidiaries; (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; (13) regulatory enforcement actions and adverse legal actions; (14) difficulty attracting and retaining key employees; and (15) other economic, competitive, technological, operational, governmental, regulatory, and market factors affecting our operations.  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.

City Holding Company and Subsidiaries

PART I	Financial Information	Pages
Item 1.	Financial Statements (Unaudited)	1
	Consolidated Balance Sheets	2
	Consolidated Statements of Income	3
	Consolidated Statements of Comprehensive Income	5
	Consolidated Statements of Changes in Shareholders’ Equity	7
	Consolidated Statements of Cash Flows	8
	Notes to Consolidated Financial Statements	10
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	37
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	59
Item 4.	Controls and Procedures	59
PART II	Other Information
Item 1.	Legal Proceedings	60
Item 1A.	Risk Factors	60
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	60
Item 3.	Defaults Upon Senior Securities	61
Item 4.	Mine Safety Disclosures	61
Item 5.	Other Information	61
Item 6.	Exhibits	62
Signatures		63

Part I - FINANCIAL INFORMATION

Item 1 - Financial Statements

1

Consolidated Balance Sheets

City Holding Company and Subsidiaries

(in thousands)

	(Unaudited)
	June 30, 2020		December 31, 2019
Assets
Cash and due from banks	$	87,658	$	88,658
Interest-bearing deposits in depository institutions	285,596		51,486
Cash and Cash Equivalents	373,254		140,144
Investment securities available for sale, at fair value	1,055,185		810,106
Investment securities held-to-maturity, at amortized cost (approximate fair value at June 30, 2020 and December 31, 2019 - $0 and $50,598, respectively)	—		49,036
Other securities	26,144		28,490
Total Investment Securities	1,081,329		887,632
Gross loans	3,665,596		3,616,099
Allowance for credit losses	(25,199)		(11,589)
Net Loans	3,640,397		3,604,510
Bank owned life insurance	116,746		115,261
Premises and equipment, net	77,991		76,965
Accrued interest receivable	14,200		11,569
Net deferred tax asset	—		6,669
Goodwill and other intangible assets, net	119,417		120,241
Other assets	105,438		55,765
Total Assets	$	5,528,772	$	5,018,756
Liabilities
Deposits:
Noninterest-bearing	$	1,079,469	$	805,087
Interest-bearing:
Demand deposits	921,761		896,465
Savings deposits	1,067,254		1,009,771
Time deposits	1,342,631		1,364,571
Total Deposits	4,411,115		4,075,894
Short-term borrowings:
Securities sold under agreements to repurchase	282,676		211,255
Long-term debt	—		4,056
Net deferred tax liability	2,598		—
Other liabilities	138,633		69,568
Total Liabilities	4,835,022		4,360,773
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; 19,047,548 shares issued at June 30, 2020 and December 31, 2019, less 2,970,815 and 2,744,109 shares in treasury, respectively	47,619		47,619
Capital surplus	169,881		170,309
Retained earnings	565,804		539,253
Cost of common stock in treasury	(120,583)		(105,038)
Accumulated other comprehensive income:
Unrealized gain on securities available-for-sale	37,299		12,110
Underfunded pension liability	(6,270)		(6,270)
Total Accumulated Other Comprehensive Income	31,029		5,840
Total Shareholders’ Equity	693,750		657,983
Total Liabilities and Shareholders’ Equity	$	5,528,772	$	5,018,756

See notes to consolidated financial statements.

2

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,
	2020		2019		2020		2019
Interest and fees on loans	$	37,718	$	43,174	$	79,053	$	85,453
Interest and dividends on investment securities:
Taxable	5,718		5,732		11,589		11,421
Tax-exempt	821		755		1,528		1,534
Interest on deposits in depository institutions	55		577		360		763
Total Interest Income	44,312		50,238		92,530		99,171
Interest Expense
Interest on deposits	5,963		8,417		13,201		16,184
Interest on short-term borrowings	279		863		743		1,915
Interest on long-term debt	—		47		100		95
Total Interest Expense	6,242		9,327		14,044		18,194
Net Interest Income	38,070		40,911		78,486		80,977
Provision for (recovery of) credit losses	1,250		(600)		9,222		(1,449)
Net Interest Income After Provision for (Recovery of) Credit Losses	36,820		41,511		69,264		82,426
Non-Interest Income
(Losses) gains on sale of investment securities, net	(6)		21		56		109
Unrealized gains (losses) recognized on equity securities still held	242		113		(2,159)		188
Service charges	4,945		7,778		12,667		15,099
Bankcard revenue	5,888		5,522		11,003		10,491
Trust and investment management fee income	1,931		1,699		3,730		3,341
Bank owned  life insurance	848		1,132		2,523		2,148
Sale of VISA shares	—		—		17,837		—
Other income	783		1,560		2,318		2,374
Total Non-Interest Income	14,631		17,825		47,975		33,750
Non-Interest Expense
Salaries and employee benefits	14,873		15,767		30,724		31,010
Occupancy related expense	2,402		2,598		4,890		5,330
Equipment and software related expense	2,504		2,223		4,933		4,414
FDIC insurance expense	167		347		167		638
Advertising	933		920		1,776		1,789
Bankcard expenses	1,498		1,534		2,933		2,716
Postage, delivery, and statement mailings	592		545		1,208		1,169
Office supplies	353		399		747		785
Legal and professional fees	589		605		1,190		1,126
Telecommunications	531		597		1,042		1,323
Repossessed asset losses, net of expenses	76		253		274		469
Merger related costs	—		547		—		797
Other expenses	3,950		4,437		8,052		8,617
Total Non-Interest Expense	28,468		30,772		57,936		60,183
Income Before Income Taxes	22,983		28,564		59,303		55,993
Income tax expense	4,732		5,813		12,054		11,623
Net Income Available to Common Shareholders	$	18,251	$	22,751	$	47,249	$	44,370

3

Average shares outstanding, basic	16,081		16,368		16,123		16,390
Effect of dilutive securities	16		18		19		18
Average shares outstanding, diluted	16,097		16,386		16,142		16,408
Basic earnings per common share	$	1.12	$	1.38	$	2.90	$	2.68
Diluted earnings per common share	$	1.12	$	1.38	$	2.90	$	2.68

See notes to consolidated financial statements.

4

Consolidated Statements of Comprehensive Income (Unaudited)

City Holding Company and Subsidiaries

(in thousands)

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2020		2019		2020		2019
Net income available to common shareholders	$	18,251	$	22,751	$	47,249	$	44,370
Available-for-Sale Securities
Unrealized gains on available-for-sale securities arising during the period	4,652		14,309		31,365		25,671
Reclassification adjustment for gains	6		(21)		(56)		(109)
Reclassification of unrealized gains on held-to-maturity securities to available-for-sale	—		—		1,562		—
Other comprehensive income before income taxes	4,658		14,288		32,871		25,562
Tax effect	(1,089)		(3,349)		(7,682)		(5,992)
Other comprehensive income, net of tax	3,569		10,939		25,189		19,570
Comprehensive Income, Net of Tax	$	21,820	$	33,690	$	72,438	$	63,940

See notes to consolidated financial statements.

5

Consolidated Statements of Changes in Shareholders’ Equity (Unaudited)

City Holding Company and Subsidiaries

Three Months Ended June 30, 2020 and 2019

(in thousands)

	Common Stock		Capital Surplus		Retained Earnings		Treasury Stock		Accumulated Other Comprehensive Income (Loss)		Total Shareholders’ Equity
Balance at March 31, 2019	$	47,619	$	170,215	$	498,847	$	(91,589)	$	(5,851)	$	619,241
Net income	—		—		22,751		—		—		22,751
Other comprehensive income (loss)	—		—		—		—		10,939		10,939
Cash dividends declared ($0.53 per share)	—		—		(8,687)		—		—		(8,687)
Stock-based compensation expense	—		571		—		—		—		571
Restricted awards granted	—		(1,333)		—		1,333		—		—
Exercise of 2,502 stock options	—		(79)		—		192		—		113
Purchase of 107,210 treasury shares	—		—		—		(8,020)		—		(8,020)
Balance at June 30, 2019	$	47,619	$	169,374	$	512,911	$	(98,084)	$	5,088	$	636,908

	Common Stock		Capital Surplus		Retained Earnings		Treasury Stock		Accumulated Other Comprehensive Income		Total Shareholders’ Equity
Balance at March 31, 2020	$	47,619	$	170,096	$	556,718	$	(116,665)	$	27,460	$	685,228
Net income	—		—		18,251		—		—		18,251
Other comprehensive income (loss)	—		—		—		—		3,569		3,569
Cash dividends declared ($0.57 per share)	—		—		(9,165)		—		—		(9,165)
Stock-based compensation expense	—		693		—		—		—		693
Restricted awards granted	—		(879)		—		879		—		—
Exercise of 1,516 stock options	—		(29)		—		96		—		67
Purchase of 79,238 treasury shares	—		—		—		(4,893)		—		(4,893)
Balance at June 30, 2020	$	47,619	$	169,881	$	565,804	$	(120,583)	$	31,029	$	693,750

See notes to consolidated financial statements.

6

Consolidated Statements of Changes in Shareholders’ Equity (Unaudited)

City Holding Company and Subsidiaries

Six Months Ended June 30, 2020 and 2019

(in thousands)

	Common Stock		Capital Surplus		Retained Earnings		Treasury Stock		Accumulated Other Comprehensive Income (Loss)		Total Shareholders’ Equity
Balance at December 31, 2018	$	47,619	$	169,555	$	485,967	$	(87,895)	$	(14,482)	$	600,764
Net income	—		—		44,370		—		—		44,370
Other comprehensive income (loss)	—		—		—		—		19,570		19,570
Cash dividends declared ($1.06 per share)	—		—		(17,426)		—		—		(17,426)
Stock-based compensation expense	—		1,374		—		—		—		1,374
Restricted awards granted	—		(1,557)		—		1,557		—		—
Exercise of 8,140 stock options	—		2		—		363		—		365
Purchase of 161,950 treasury shares	—		—		—		(12,109)		—		(12,109)
Balance at June 30, 2019	$	47,619	$	169,374	$	512,911	$	(98,084)	$	5,088	$	636,908

	Common Stock		Capital Surplus		Retained Earnings		Treasury Stock		Accumulated Other Comprehensive Income		Total Shareholders’ Equity
Balance at December 31, 2019	$	47,619	$	170,309	$	539,253	$	(105,038)	$	5,840	$	657,983
Adoption of ASU 2016-13	—		—		(2,335)		—		—		(2,335)
Net income	—		—		47,249		—		—		47,249
Other comprehensive income (loss)	—		—		—		—		25,189		25,189
Cash dividends declared ($1.14 per share)	—		—		(18,363)		—		—		(18,363)
Stock-based compensation expense	—		1,702		—		—		—		1,702
Restricted awards granted	—		(2,033)		—		2,033		—		—
Exercise of 4,166 stock options	—		(97)		—		286		—		189
Purchase of 261,137 treasury shares	—		—		—		(17,864)		—		(17,864)
Balance at June 30, 2020	$	47,619	$	169,881	$	565,804	$	(120,583)	$	31,029	$	693,750

See notes to consolidated financial statements.

7

Consolidated Statements of Cash Flows (Unaudited)

City Holding Company and Subsidiaries

(in thousands)

	Six months ended June 30,
	2020		2019
Net income	$	47,249	$	44,370
Adjustments to reconcile net income to net cash provided by operating activities:
(Accretion) and amortization, net	873		557
Provision for (recovery of) credit losses	9,222		(1,449)
Depreciation of premises and equipment	2,772		2,467
Deferred income tax expense	2,323		2,134
Net periodic employee benefit cost	362		386
Unrealized and realized investment securities losses (gains), net	2,103		(297)
Stock-compensation expense	1,702		1,374
Excess tax benefit from stock-compensation expense	(137)		(433)
Increase in value of bank-owned life insurance	(2,523)		(2,148)
Loans held for sale
Loans originated for sale	(9,372)		(9,915)
Proceeds from the sale of loans originated for sale	9,854		10,584
Gain on sale of loans	(177)		(284)
Payments for other operating activities	(450)		—
Change in accrued interest receivable	(2,631)		(295)
Change in other assets	(9,515)		(1,231)
Change in other liabilities	16,334		2,600
Net Cash Provided by Operating Activities	67,989		48,420
Net (increase) decrease in loans	(46,146)		68,403
Securities available-for-sale
Purchases	(232,478)		(113,412)
Proceeds from sales	28,548		31,597
Proceeds from maturities and calls	51,246		31,982
Securities held-to-maturity
Proceeds from maturities and calls	—		7,427
Other investments
Purchases	(2,132)		(9,365)
Proceeds from sales	2,282		11,857
Purchases of premises and equipment	(3,798)		(3,017)
Proceeds from bank-owned life insurance policies	1,513		2,211
Sale of Virginia Beach branch, net	—		(24,661)
Other investing activities	(142)		(3,414)
Net Cash Used in Investing Activities	(201,107)		(392)
Net increase in non-interest-bearing deposits	274,382		19,696
Net increase in interest-bearing deposits	61,150		62,574
Net increase (decrease) in short-term borrowings	71,421		(54,878)
Repayment of long-term debt	(4,124)		—
Purchases of treasury stock	(17,864)		(12,109)
Proceeds from exercise of stock options	189		365
Dividends paid	(18,492)		(17,510)
Other financing activities	(434)		(438)
Net Cash Provided by (Used in) Financing Activities	366,228		(2,300)
Increase in Cash and Cash Equivalents	233,110		45,728
Cash and cash equivalents at beginning of period	140,144		122,991
Cash and Cash Equivalents at End of Period	$	373,254	$	168,719

8

Supplemental Cash Flow Information:
Cash paid for interest	$	14,878	$	18,333
Cash paid for income taxes	2,400		7,025

See notes to consolidated financial statements.

9

Notes to Consolidated Financial Statements (Unaudited)

June 30, 2020

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 94 banking offices in West Virginia (58), Kentucky (19), Virginia (13) and southeastern Ohio (4). City National provides credit, deposit, and trust and investment management services to its customers in a broad geographical area that includes many rural and small community markets in addition to larger cities including Charleston (WV), Huntington (WV), Martinsburg (WV), Ashland (KY), Lexington (KY), Winchester (VA) and Staunton (VA). In addition to its branch network, City National's delivery channels include automated-teller-machines ("ATMs"), interactive-teller machines ("ITMs"), 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 30, 2019, the Company announced that City National had signed a definitive agreement to sell its Virginia Beach, Virginia branch. The terms of the agreement provided for the acquirer to assume the majority of deposits and to acquire the equipment and other select assets associated with the branch, while City National retained the loans. The transaction closed during the second quarter of 2019. As a result of this transaction, the Company recognized a gain of $0.7 million and outstanding deposit balances decreased by $25.7 million.

The accompanying consolidated financial statements, which are unaudited, include all of the accounts of City Holding 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 ended June 30, 2020 are not necessarily indicative of the results of operations that can be expected for the year ending December 31, 2020. 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, 2019 has been derived from audited financial statements included in the Company’s 2019 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 2019 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 

Recently Adopted:

CECL

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 credit losses, available-for-sale and held-to-maturity debt securities, purchased financial assets with credit deterioration and certain off-balance sheet credit exposures. In November 2018, the FASB issued ASU No. 2018-19, "Codification Improvements to Topic 326, Financial Instruments—Credit Losses." This amendment clarifies the scope of the guidance in ASU No. 2016-13. In December 2018, the federal bank regulators issued a final rule that would provide an optional three-year phase-in period for the day-one regulatory capital effects of the adoption of ASU No. 2016-13, "Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial

10

Instruments, as amended, on January 1, 2020. In April 2020, federal bank regulators issued an interim final rule which provided banking organizations that implement CECL before the end of 2020 the option to delay for two more years an estimate of CECL's effect on regulatory capital, followed by the three-year transition period as previously issued. Management has elected to utilize the five-year interim final rule.

The Company adopted 2016-13 using the modified retrospective method for all financial assets measured at amortized cost and off-balance sheet ("OBS") credit exposures. Results for reporting periods beginning after January 1, 2020 are presented under ASC 326, while prior period amounts continue to be reported in accordance with previously applicable GAAP.

The Company adopted 2016-13 using the prospective transition approach for financial assets purchased with credit deterioration ("PCD") that were previously classified as purchased-credit impaired ("PCI") and accounted for under ASC 310-30. In accordance with the standard, management did not reassess whether the PCI assets met the criteria of PCD assets as of the date of adoption. On January 1, 2020, the amortized cost basis of the PCD assets was adjusted to reflect the addition of $2.7 million of the allowance for credit losses. The remaining noncredit discount (based on the adjusted amortized cost basis) will be accreted into interest income over the remaining life of the asset.

The following table illustrates the impact of ASC 326 (in thousands):

	As Reported Under		Pre-ASC 326		Impact of ASC 326
	ASC 326		Adoption		Adoption
Gross Loans	$	3,618,825	$	3,616,099	$	2,726
Allowance for Credit Losses	(17,349)		(11,589)		(5,760)
Deferred Tax Assets, net	7,380		6,669		711
Shareholders' Equity	655,648		657,983		(2,335)

As a result of the adoption of ASU 2016-13, the Company revised some of its existing accounting policies as noted below:

Allowance for Credit Losses - Available-for-Sale Securities: For available-for-sale debt securities in an unrealized loss position, the Company first assesses whether it intends to sell, or is more likely than not that it will be required to sell the security before recovery of its amortized cost basis. If either criteria regarding intent or requirement to sell is met, the security's amortized cost basis is written down to fair value through income. For available-for-sale debt securities that do not meet the aforementioned criteria, the Company evaluates whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, management considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security, among other factors. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses is recorded for the credit loss, limited by the amount that the fair value is less than the amortized cost basis. Any impairment that has not been recorded through an allowance for credit losses is recognized in other comprehensive income.

Changes in the allowance for credit losses are recorded as a provision for (or reversal of) credit loss expense. Losses are charged against the allowance when management believes the uncollectibility of an available-for-sale debt security is confirmed or when either of the criteria regarding intent or requirement to sell is met.

Purchased Credit Deteriorated ("PCD") Loans: The Company has purchased loans during its acquisitions, some of which have experienced more than insignificant credit deterioration since origination. PCD loans are recorded at the amount paid. An allowance for credit losses is determined using the same methodology as other loans held for investment. The initial allowance for credit losses determined on a collective basis is allocated to individual loans. The sum of the loan's purchase price and the allowance for credit losses becomes the initial amortized cost basis. The difference between the initial amortized cost basis and the par value of the loan is a noncredit discount or premium, which is accreted or amortized into interest income over the life of the loan. Subsequent changes to the allowance for credit losses are recorded through provision expense.

11

Allowance for Credit Losses - Loans: The allowance for credit losses is a valuation account that is deducted from the loans' amortized cost basis to present the net amount expected to be collected on the loans. Loans are charged off against the allowance when management believes the uncollectibility of a loan balance is confirmed. Expected recoveries do not exceed the aggregate of amounts previously charged-off and expected to be charged-off. Management estimates the allowance balance using relevant available information, from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. Historical credit loss experience provides the basis for the estimation of expected credit losses. Adjustments to historical loss information are made for differences in current loan-specific risk characteristics, such as differences in underwriting standards, portfolio mix, delinquency level, or term as well as for changes in environmental conditions, such as changes in unemployment rates, property values, or other relevant factors. The Company has identified the following portfolio segments and measures the allowance for credit losses using the following methods:

Portfolio Segment	Measurement Method
Commercial and industrial	Migration
Commercial real estate:
1-4 family	Migration
Hotels	Migration
Multi-family	Migration
Non Residential Non-Owner Occupied	Migration
Non Residential Owner Occupied	Migration
Residential real estate	Vintage
Home equity	Vintage
Consumer	Vintage

Migration is an analysis that tracks a closed pool of loans for a configurable period of time and calculates a loss ratio on only those loans in the pool at the start date based on outstanding balance. Vintage is a predictive loss model that includes a reasonable approximation of probable and estimable future losses by tracking each loan's net losses over the life of the loan as compared to its original balance. For demand deposit overdrafts, the allowance for credit losses is measured using the historical loss rate. Loans that do not share risk characteristics are evaluated on an individual basis. Loans evaluated individually are not included in the collective evaluation. When management determines that foreclosure is probable, the expected credit losses are based on the fair value of the collateral at the reporting date, adjusted for selling costs as appropriate.

Expected credit losses are estimated over the contractual term of the loan, adjusted for expected prepayments when appropriate. The contractual term excludes expected extensions, renewals, and modifications unless either of the following applies: management has a reasonable expectation at the reporting date that a troubled-debt restructuring will be executed with an individual borrower or the extension or renewal options are included in the original or modified contract at the reporting date and are not unconditionally cancellable by the Company.

Troubled Debt Restructurings ("TDRs"): A loan for which the terms have been modified resulting in a concession, and for which the borrower is experiencing financial difficulties, is considered to be a TDR. The allowance for credit loss on a TDR is measured using the same method as all other loans held for investment, except when the value of a concession cannot be measured using a method other than the discounted cash flow method. When the value of a concession is measured using the discounted cash flow method, the allowance for credit loss is determined by discounting the expected future cash flows at the original interest rate of the loan.

Others

In January 2017, the FASB issued ASU No. 2017-04, "Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment." This amendment simplifies the measurement of goodwill by eliminating Step 2 from the goodwill impairment test. This ASU became effective for the Company on January 1, 2020. The adoption of ASU No. 2017-04 did not have a material impact on the Company's financial statements.

In August 2017, the FASB issued ASU No. 2017-12, "Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities." This amendment expands and refines hedge accounting for both nonfinancial and financial risk components and aligns the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. This ASU became effective for the Company on January 1, 2019. The adoption of this ASU

12

did not have a material impact on the Company's financial statements. In April 2019, the FASB issued ASU No. 2019-04, "Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments." This amendment clarifies the guidance in ASU No. 2017-12. This amendment became effective for the Company on January 1, 2020. Effective January 1, 2020, the Company reclassified its held-to-maturity securities as available-for-sale utilizing the transition guidance under ASU 2019-04, and the unrealized gains/losses on these investments will be recorded through Other Comprehensive Income.

In August 2018, the FASB issued ASU No. 2018-13, "Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement." This amendment removes, modifies, and clarifies the disclosure requirements on fair value measurements in Topic 820, Fair Value Measurement. This ASU became effective for the Company on January 1, 2020. The adoption of ASU No. 2018-13 did not have a material impact on the Company's financial statements.

In August 2018, the FASB issued ASU No. 2018-15, "Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract." The amendments in this update align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. This ASU became effective for the Company on January 1, 2020. The adoption of ASU No. 2018-15 did not have a material impact on the Company's financial statements.

In October 2018, the FASB issued ASU No. 2018-16, "Derivatives and Hedging (Topic 815): Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes." This amendment permits the use of the OIS rate based on SOFR as a U.S. benchmark interest rate for hedge accounting purposes under Topic 815 in addition to the UST, the LIBOR swap rate, the OIS rate based on the Federal Funds Effective Rate, and the SIFMA Municipal Swap Rate. This ASU became effective for the Company on January 1, 2019 with anticipation the LIBOR index will be phased out by the end of 2021. In March 2020, the FASB issued ASU No. 2020-04, "Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting." This amendment provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform and is effective as of March 12, 2020 through December 31, 2022. The Company is in the process of reviewing all of its contracts that will be impacted by changing from LIBOR to SOFR.

In October 2018, the FASB issued ASU No. 2018-17, "Consolidation (Topic 810): Targeted Improvements to Related Party Guidance for Variable Interest Entities." This amendment simplifies the analysis of fees paid to decision makers or service providers in determining variable interest entities. This ASU became effective for the Company on January 1, 2020. The adoption of ASU No. 2018-17 did not have a material impact on the Company's financial statements.

Pending Adoption:

In August 2018, the FASB issued ASU No. 2018-14, "Compensation—Retirement Benefits—Defined Benefit Plans—General (Subtopic 715-20): Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans." This amendment removes, modifies, and clarifies certain disclosure requirements for defined benefit plans and other post-employment benefit plans. This ASU will become effective for the Company on January 1, 2021. The adoption of ASU No. 2018-14 is not expected to have a material impact on the Company's financial statements.

In December 2019, the FASB issued ASU No. 2019-12, "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes." The amendments in this update simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740 and clarifying and amending existing guidance. This ASU will become effective for the Company on January 1, 2021. The adoption of ASU No. 2019-12 is not expected to have a material impact on the Company's financial statements.

13

Note C – Investments

The aggregate carrying and approximate fair market values of investment securities follow (in thousands).  Fair values are based on quoted market prices, where available.  If quoted market prices are not available, fair values are based on quoted market prices of comparable financial instruments.

	June 30, 2020								December 31, 2019
	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	$	—	$	—	$	—	$	—	$	500	$	2	$	—	$	502
Obligations of states and
political subdivisions	211,439		7,383		595		218,227		112,393		4,800		6		117,187
Mortgage-backed securities:
U.S. government agencies	746,148		40,638		279		786,507		631,637		12,292		1,825		642,104
Private label	10,477		876		4		11,349		10,896		589		—		11,485
Trust preferred securities	4,551		—		1,071		3,480		4,781		27		347		4,461
Corporate securities	31,568		1,857		44		33,381		31,669		500		43		32,126
Total Debt Securities	1,004,183		50,754		1,993		1,052,944		791,876		18,210		2,221		807,865
Certificates of deposit held for investment	2,241		—		—		2,241		2,241		—		—		2,241
Total Securities Available-for-Sale	$	1,006,424	$	50,754	$	1,993	$	1,055,185	$	794,117	$	18,210	$	2,221	$	810,106

Securities held-to-maturity:
Mortgage-backed securities:
U.S. government agencies	$	—	$	—	$	—	$	—	$	49,036	$	1,562	$	—	$	50,598
Total Securities Held-to-Maturity	$	—	$	—	$	—	$	—	$	49,036	$	1,562	$	—	$	50,598

Effective January 1, 2020, the Company reclassified its held-to-maturity securities as available-for-sale utilizing the transition guidance under ASU 2019-04, and the unrealized gains/losses on these investments will be recorded through Other Comprehensive Income.

The Company's other investment securities include marketable and non-marketable equity securities. At June 30, 2020 and December 31, 2019, the Company held $10.5 million and $12.6 million, respectively, in marketable equity securities. Marketable equity securities mainly consist of investments made by the Company in equity positions of various 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%). Changes in the fair value of the marketable equity securities are recorded in "unrealized gains (losses) recognized on equity securities still held" in the consolidated statements of income. The Company's non-marketable securities consist of securities with limited marketability, such as stock in the Federal Reserve Bank ("FRB") or the Federal Home Loan Bank ("FHLB"). At June 30, 2020 and December 31, 2019, the Company held $15.7 million and $15.9 million, respectively, in non-marketable equity securities. These securities are carried at cost due to the restrictions placed on their transferability.

The Company's mortgage-backed U.S. government agency securities consist of both residential and commercial securities, all of which are guaranteed by Fannie Mae ("FNMA"), Freddie Mac ("FHLMC"), or Ginnie Mae ("GNMA"). At June 30, 2020 and December 31, 2019 there were no securities of any non-governmental issuer whose aggregate carrying value or estimated fair value exceeded 10% of shareholders' equity.

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) as of June 30, 2020 and December 31, 2019.  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, 2020
	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	$	35,005	$	595	$	—	$	—	$	35,005	$	595
Mortgage-backed securities:
U.S. Government agencies	83,810		279		38		—		83,848		279
Private Label	275		4		—		—		275		4
Trust preferred securities	—		—		3,480		1,071		3,480		1,071
Corporate securities	445		44		—		—		445		44
Total available-for-sale	$	119,535	$	922	$	3,518	$	1,071	$	123,053	$	1,993

	December 31, 2019
	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	$	230	$	—	$	1,439	$	6	$	1,669	$	6
Mortgage-backed securities:
U.S. Government agencies	123,289		1,247		34,746		578		158,035		1,825
Trust preferred securities	4,200		347		—		—		4,200		347
Corporate securities	11,248		43		—		—		11,248		43
Total available-for-sale	$	138,967	$	1,637	$	36,185	$	584	$	175,152	$	2,221

There were no held-to-maturity securities in an unrealized loss position as of December 31, 2019.

The Company incurred no credit-related investment impairment losses in either the six months ended June 30, 2020 or June 30, 2019.

Declines in the fair value of 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; and (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.

As of June 30, 2020, management does not intend to sell any impaired security and it is not more than likely that it will be required to sell any impaired 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, 2020, management believes the unrealized losses detailed in the table above are temporary and therefore no allowance for credit losses has been recognized on the Company’s securities.

The amortized cost and estimated fair value of debt securities at June 30, 2020, 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.

15

	Amortized Cost		Estimated Fair Value
Available-for-Sale Debt Securities
Due in one year or less	$	2,050	$	2,062
Due after one year through five years	15,327		15,900
Due after five years through ten years	294,981		312,351
Due after ten years	691,825		722,631
Total	$	1,004,183	$	1,052,944

Gross gains and gross losses recognized 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,
	2020		2019		2020		2019
Gross realized gains on securities sold	$	—	$	21	$	133	$	110
Gross realized losses on securities sold	(6)		—		(77)		(1)
Net investment security (losses) gains	$	(6)	$	21	$	56	$	109
Gross unrealized gains recognized on equity securities still held	$	242	$	113	$	36	$	241
Gross unrealized losses recognized on equity securities still held	—		—		(2,195)		(53)
Net unrealized gains (losses) recognized on equity securities still held	$	242	$	113	$	(2,159)	$	188

During January 2020, the Company sold the entirety of its Visa Inc. Class B common shares (86,605) in a cash transaction which resulted in a pre-tax gain of $17.8 million. The carrying value of the Visa Class B shares on the Company's balance sheet was $0, as the Company had no historical cost basis in the shares.

The carrying value of securities pledged to secure public deposits and for other purposes as required or permitted by law approximated $581 million and $519 million at June 30, 2020 and December 31, 2019, respectively.

16

Note D –Loans

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

	June 30, 2020		December 31, 2019
Commercial and industrial	369,122		308,015
1-4 Family	123,814		N/R
Hotels	295,179		N/R
Multi-family	204,580		N/R
Non Residential Non-Owner Occupied	628,628		N/R
Non Residential Owner Occupied	215,472		N/R
Commercial real estate	1,467,673		1,459,737
Residential real estate	1,631,151		1,640,396
Home equity	142,672		148,928
Consumer	52,278		54,263
DDA overdrafts	2,700		4,760
Gross loans	3,665,596		3,616,099
Allowance for credit losses	(25,199)		(11,589)
Net loans	$	3,640,397	$	3,604,510
Construction loans included in:
Residential real estate	$	28,252	$	29,033
Commercial real estate	42,092		64,049
N/R = Not reported. Results for reporting periods beginning after January 1, 2020 are presented under ASC 326, while prior period amounts continue to be reported in accordance with previously applicable GAAP.

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 policies, which are focused on the risk characteristics of the loan portfolio, including construction loans. In the judgment of the Company's management, adequate consideration has been given to these loans in establishing the Company's allowance for credit losses.

The Company originated loans to its customers under the Paycheck Protection Program (“PPP”) administered by the Small Business Administration (“SBA”) under the provisions of the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act"). Loans covered by the PPP may be eligible for loan forgiveness. The remaining loan balances, if any, after the loan forgiveness are fully guaranteed by the SBA. As of June 30, 2020, the Company has funded approximately $90 million of SBA-approved PPP loans to over 1,500 customers. Under the terms of the program, the SBA will pay the lender a processing fee tiered by the size of the loan (5% for loans less than $350,000; 3% for loans greater than $350,000 but less than $2.0 million; and 1% for loans greater than $2.0 million). The Company expects to recognize approximately $3.0 million in PPP loan related processing fees, net of associated expenses, over the term of these loans.

17

Note E – Allowance For Credit Losses

The following table summarizes the activity in the allowance for credit losses, by portfolio loan classification, for the six months ended June 30, 2020 and 2019 (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.

	Commercial and		Commercial		Residential						DDA
	Industrial		Real Estate		Real Estate		Home Equity		Consumer		Overdrafts		Total
Six months ended June 30, 2020
Beginning balance	$	2,059	$	2,606	$	3,448	$	1,187	$	975	$	1,314	$	11,589
Impact of adopting CECL	1,715		3,254		2,139		(598)		(810)		60		5,760
Charge-offs	(77)		(422)		(859)		(206)		(91)		(1,162)		(2,817)
Recoveries	14		331		103		56		141		800		1,445
Provision for credit losses	2,555		4,321		2,492		208		(95)		(259)		9,222
Ending balance	$	6,266	$	10,090	$	7,323	$	647	$	120	$	753	$	25,199
Six months ended June 30, 2019
Beginning balance	$	4,060	$	4,495	$	4,116	$	1,268	$	319	$	1,708	$	15,966
Charge-offs	(51)		(178)		(631)		(117)		(296)		(1,213)		(2,486)
Recoveries	140		607		125		—		143		749		1,764
(Recovery of) Provision for credit losses	(1,353)		(1,455)		349		60		343		607		(1,449)
Ending balance	$	2,796	$	3,469	$	3,959	$	1,211	$	509	$	1,851	$	13,795
Three months ended June 30, 2020
Beginning balance	$	5,855	$	9,389	$	6,958	$	702	$	233	$	1,256	24,393
Charge-offs	—		(39)		(376)		(161)		(36)		(459)		(1,071)
Recoveries	5		128		8		9		128		349		627
(Recovery of) provision	406		612		733		97		(205)		(393)		1,250
Ending balance	$	6,266	$	10,090	$	7,323	$	647	$	120	$	753	$	25,199
Three months ended June 30, 2019
Beginning balance	$	2,970	$	4,640	$	3,820	$	1,248	$	468	$	1,500	$	14,646
Charge-offs	(51)		(133)		(303)		(71)		(111)		(588)		(1,257)
Recoveries	5		575		50		—		46		330		1,006
(Recovery of) provision	(128)		(1,613)		392		34		106		609		(600)
Ending balance	$	2,796	$	3,469	$	3,959	$	1,211	$	509	$	1,851	$	13,795

Management systematically monitors the loan portfolio and the appropriateness of the allowance for credit losses on a quarterly basis to provide for expected 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. The provision for credit losses recorded during the six months ended June 30, 2020 largely reflects the expected economic impact from the COVID-19 pandemic. The Company's estimate of future economic conditions utilized in its provision estimate is primarily dependent on expected unemployment ranges over a two-year period. Beyond two years, a straight line reversion to historical average loss rates is applied over the life of the loan pool in the migration methodology. The vintage methodology applies future average loss rates based on net losses in historical periods where the unemployment rate was within the forecasted range. As a result of COVID-19, expected unemployment ranges have significantly increased and resulted in an increase in the Company's provision for credit losses.

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 types of 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.

18

Non-Performing 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 status 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 credit 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, the borrower 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.

The following tables present the amortized cost basis of loans on non-accrual status and loans past due over 90 days still accruing as of June 30, 2020 (in thousands):

	Non-accrual With No		Non-accrual With		Loans Past Due
	Allowance for		Allowance for		Over 90 Days
	Credit Losses		Credit Losses		Still Accruing
Commercial & Industrial	$	207	$	880	$	—
1-4 Family	—		2,212		—
Hotels	—		2,748		—
Multi-family	—		—		—
Non Residential Non-Owner Occupied	—		346		3
Non Residential Owner Occupied	2,521		888		—
Commercial Real Estate	2,521		6,194		3
Residential Real Estate	232		3,245		4
Home Equity	—		265		61
Consumer	—		—		—
Total	$	2,960	$	10,584	$	68

The following table presents the Company's loans on non-accrual status and loans past due over 90 days still accruing as of December 31, 2019 (in thousands):

			Loans Past Due
			Over 90 Days
	Non-accrual		Still Accruing
Commercial and industrial	$	1,182	$	184
Commercial real estate	6,384		—
Residential real estate	3,393		83
Home equity	531		—
Consumer	—		—
Total	$	11,490	$	267

19

The Company recognized less than $0.1 million of interest income on nonaccrual loans during each of the three months ended June 30, 2020 and 2019 and less than $0.1 million and $0.2 million for the six months ended June 30, 2020 and 2019, respectively.

The following table presents the amortized cost basis of collateral-dependent loans as of June 30, 2020 (in thousands). Changes in the fair value of the collateral for collateral-dependent loans are reported as credit loss expense or a reversal of credit loss expense in the period of change.

	Secured by
	Real Estate		Equipment
Commercial and industrial	$	207	$	—
1-4 Family	—		—
Hotels	2,634		—
Multi-family	—		—
Non Residential Non-Owner Occupied	—		—
Non Residential Owner Occupied	2,520		—
Commercial real estate	5,154		—
Total	$	5,361	$	—

The following table presents the Company’s impaired loans, by class (in thousands) as of December 31, 2019. The difference between the unpaid principal balance and the recorded investment generally reflects amounts that have been previously charged-off. There were no impaired residential, home equity, or consumer loans.

	December 31, 2019
			Unpaid
	Recorded		Principal		Related
	Investment		Balance		Allowance
With no related allowance recorded:
Commercial and industrial	$	501	$	501	$	—
Commercial real estate	3,546		3,572		—
Total	$	4,047	$	4,073	$	—
With an allowance recorded:
Commercial and industrial	$	—	$	—	$	—
Commercial real estate	2,644		2,644		87
Total	$	2,644	$	2,644	$	87

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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), for the three and six months ended June 30, 2019:

	Three months ended June 30, 2019				Six months ended June 30, 2019
	Average		Interest		Average		Interest
	Recorded		Income		Recorded		Income
	Investment		Recognized		Investment		Recognized
With no related allowance recorded:
Commercial and industrial	$	589	—		$	603	$	—
Commercial real estate	3,614		2		5,067		38
Total	$	4,203	$	2	$	5,670	$	38
With an allowance recorded:
Commercial and industrial	$	—	$	—	$	—	$	—
Commercial real estate	5,667		76		4,326		106
Total	$	5,667	$	76	$	4,326	$	106

  The Company would have recognized less than $0.1 million of interest income during each of the three months ended June 30, 2020 and 2019 and less than $0.1 million during each of the six months ended June 30, 2020 and 2019 if such loans had been current in accordance with their original terms.

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 days past due.

The following table presents the aging of the amortized cost basis in past-due loans as of June 30, 2020 by class of loan (in thousands):

	30-59		60-89		90+		Total		Current		Total
	Past Due		Past Due		Past Due		Past Due		Loans		Loans
Commercial and industrial	$	130	$	30	$	—	$	160	$	368,962	$	369,122
1-4 Family	753		—		—		753		123,061		123,814
Hotels	—		—		—		—		295,179		295,179
Multi-family	—		—		—		—		204,580		204,580
Non Residential Non-Owner Occupied	—		—		3		3		628,625		628,628
Non Residential Owner Occupied	161		—		—		161		215,311		215,472
Commercial real estate	914		—		3		917		1,466,756		1,467,673
Residential real estate	3,923		1,334		4		5,261		1,625,890		1,631,151
Home Equity	223		108		61		392		142,280		142,672
Consumer	67		—		—		67		52,211		52,278
Overdrafts	272		1		—		273		2,427		2,700
Total	$	5,529	$	1,473	$	68	$	7,070	$	3,658,526	$	3,665,596

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The following presents an aging analysis of the Company's past-due loans, by class, as of December 31, 2019 (in thousands):

	30-59		60-89		90+		Total		Current		Total
	Past Due		Past Due		Past Due		Past Due		Loans		Loans
Commercial and industrial	$	243	$	31	$	184	$	458	$	307,557	$	308,015
Commercial real estate	1,514		66		—		1,580		1,458,157		1,459,737
Residential real estate	5,758		1,643		83		7,484		1,632,912		1,640,396
Home equity	840		116		—		956		147,972		148,928
Consumer	156		32		—		188		54,075		54,263
Overdrafts	644		86		—		730		4,030		4,760
Total	$	9,155	$	1,974	$	267	$	11,396	$	3,604,703	$	3,616,099

Troubled Debt Restructurings ("TDRs")

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 2011-02, 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. These modifications range from partial deferrals (interest only) to full deferrals (principal and interest). When determining whether the borrower is experiencing financial difficulties, the Company reviews whether the debtor is currently in payment default on any of its debt or whether it is probable that the debtor would be in payment default in the foreseeable future without the modification. Other indicators of financial difficulty include whether the debtor has declared or is in the process of declaring bankruptcy, the debtor’s ability to continue as a going concern, or the debtor’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). Substantially all of the Company's TDRs are accruing interest.

	June 30, 2020		December 31, 2019
Commercial and industrial	$	—	$	—
1-4 Family	126		N/R
Hotels	2,634		N/R
Multi-family	1,921		N/R
Non Residential Non-Owner Occupied	—		N/R
Non Residential Owner Occupied	234		N/R
Commercial real estate	4,915		4,973
Residential real estate	20,631		21,029
Home equity	2,138		3,628
Consumer	185		—
Total	$	27,869	$	29,630
N/R = Not reported. Results for reporting periods beginning after January 1, 2020 are presented under ASC 326, while prior period amounts continue to be reported in accordance with previously applicable GAAP.

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The Company has allocated $1.6 million and $0.8 million of the allowance for credit losses for these loans as of June 30, 2020 and December 31, 2019, respectively. As of June 30, 2020, the Company has not committed to lend any additional amounts in relation to these loans.

The following table presents loans by class, modified as TDRs, that occurred during the six months ended June 30, 2020 and 2019, respectively (dollars in thousands):

	June 30, 2020					June 30, 2019
		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	—	$	—	$	—	—	$	—	$	—
1-4 Family	—	—		—		N/R	N/R		N/R
Hotels	—	—		—		N/R	N/R		N/R
Multi-family	—	—		—		N/R	N/R		N/R
Non Owner Non-Owner Occupied	—	—		—		N/R	N/R		N/R
Non Owner Owner Occupied	—	—		—		N/R	N/R		N/R
Commercial real estate	—	—		—		—	—		—
Residential real estate	24	1,720		1,716		27	2,066		2,066
Home equity	2	70		70		7	194		194
Consumer	—	—		—		—	—		—
Total	26	$	1,790	$	1,786	34	$	2,260	$	2,260
N/R = Not reported. Results for reporting periods beginning after January 1, 2020 are presented under ASC 326, while prior period amounts continue to be reported in accordance with previously applicable GAAP.

The TDRs above increased the allowance for credit losses by less than $0.1 million in each of the six months ended of June 30, 2020 and 2019 and resulted in charge-offs of less than $0.1 million during those same time periods.

The Company had one TDR that subsequently defaulted in 2019. The loan balance was approximately $3.0 million and the subsequent default resulted in a charge-off of $0.7 million and the remaining balance was transferred to OREO during 2019. The Company has had no TDRs that subsequently defaulted in 2020.

COVID-19 Pandemic

In March of 2020, in response to the COVID-19 pandemic, regulatory guidance was issued that clarified the accounting for loan modifications. Modifications of loan terms do not automatically result in a TDR. Short-term modifications made on a good faith basis in response to COVID-19 to borrowers who were current prior to any relief, are not TDRs. This includes short-term (e.g., six months) modifications such as payment deferrals, fee waivers, extension of repayment terms, or other delays that are insignificant. Borrowers considered current are those that are less than 30 days past due on their contractual payments at the time the modification program was implemented. However, these deferrals do not absolve the company from performing its normal risk rating and therefore a loan could be current and have a less than satisfactory risk rating.

Through June 30, 2020, the Company has granted deferrals of approximately $125 million for mortgage borrowers and $430 million for commercial borrowers. As of June 30, 2020, $3.6 million of the mortgage deferrals were previously and currently considered TDRs due to Chapter 7 bankruptcies.

Credit Quality Indicators

All commercial loans within the portfolio are subject to internal risk rating.  All non-commercial loans are evaluated based on payment history.  The Company’s internal risk ratings for commercial loans are:  Exceptional, Good, Acceptable, Pass/Watch, 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

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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 and overall collateral position, along with other economic trends and historical payment performance.  The risk rating for each credit is updated when the Company receives current financial information, the loan is reviewed by the Company’s internal loan review and 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.

Based on the most recent analysis performed, the risk category of loans by class of loans at June 30, 2020 is as follows (in thousands):

													Revolving
	Term Loans												Loans
	Amortized Cost Basis by Origination Year and Risk Level												Amortized
	2020		2019		2018		2017		2016		Prior		Cost Basis		Total
Commercial and industrial
Pass	$	74,977	$	74,675	$	63,750	$	38,259	$	10,177	$	11,707	$	62,386	$	335,931
Special mention	85		46		18		61		—		441		211		862
Substandard	64		830		1,196		816		8,729		2,195		18,499		32,329
Total	$	75,126	$	75,551	$	64,964	$	39,136	$	18,906	$	14,343	$	81,096	$	369,122

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													Revolving
	Term Loans												Loans
	Amortized Cost Basis by Origination Year and Risk Level												Amortized
	2020		2019		2018		2017		2016		Prior		Cost Basis		Total
Commercial real estate -
Total
Pass	$	172,741	$	343,898	$	200,306	$	165,468	$	164,439	$	346,209	$	27,105	$	1,420,166
Special mention	—		5,156		1,222		691		359		6,211		—		13,639
Substandard	220		1,655		4,596		3,927		9,919		13,144		407		33,868
Total	$	172,961	$	350,709	$	206,124	$	170,086	$	174,717	$	365,564	$	27,512	$	1,467,673

Commercial real estate -
1-4 Family
Pass	$	19,584	$	21,409	$	10,445	$	8,686	$	6,918	$	37,060	$	9,734	$	113,836
Special mention	—		—		—		26		334		3,053		—		3,413
Substandard	—		229		—		952		109		5,268		7		6,565
Total	$	19,584	$	21,638	$	10,445	$	9,664	$	7,361	$	45,381	$	9,741	$	123,814

Commercial real estate -
Hotels
Pass	$	14,655	$	110,833	$	35,038	$	49,483	$	21,518	$	56,378	$	—	$	287,905
Substandard	—		—		—		—		4,526		2,748		—		7,274
Total	$	14,655	$	110,833	$	35,038	$	49,483	$	26,044	$	59,126	$	—	$	295,179

Commercial real estate -
Multi-family
Pass	$	57,954	$	57,159	$	2,836	$	22,528	$	32,957	$	27,812	$	770	$	202,016
Special mention	—		1,921		561		—		—		—		—		2,482
Substandard	—		—		—		—		—		82		—		82
Total	$	57,954	$	59,080	$	3,397	$	22,528	$	32,957	$	27,894	$	770	$	204,580

Commercial real estate -
Non Residential Non-Owner Occupied
Pass	$	69,473	$	120,792	$	121,420	$	57,873	$	81,033	$	160,184	$	11,318	$	622,093
Special mention	—		316		602		574		—		595		—		2,087
Substandard	58		98		1,181		78		1,446		1,347		240		4,448
Total	$	69,531	$	121,206	$	123,203	$	58,525	$	82,479	$	162,126	$	11,558	$	628,628

Commercial real estate -
Non Residential Owner Occupied
Pass	$	11,076	$	33,705	$	30,567	$	26,899	$	22,012	$	64,777	$	5,279	$	194,315
Special mention	—		2,919		58		91		24		2,563		—		5,655
Substandard	162		1,329		3,415		2,896		3,839		3,700		161		15,502
Total	$	11,238	$	37,953	$	34,040	$	29,886	$	25,875	$	71,040	$	5,440	$	215,472

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													Revolving
	Term Loans												Loans
	Amortized Cost Basis by Origination Year and Risk Level												Amortized
	2020		2019		2018		2017		2016		Prior		Cost Basis		Total
Residential real estate
Performing	$	197,377	$	281,064	$	223,330	$	165,437	$	129,448	$	507,921	$	123,143	$	1,627,720
Non-performing	—		668		—		124		212		2,374		53		3,431
Total	$	197,377	$	281,732	$	223,330	$	165,561	$	129,660	$	510,295	$	123,196	$	1,631,151

Home equity
Performing	$	5,054	$	7,570	$	7,121	$	2,733	$	2,121	$	12,861	$	105,047	$	142,507
Non-performing	—		—		—		—		—		—		165		165
Total	$	5,054	$	7,570	$	7,121	$	2,733	$	2,121	$	12,861	$	105,212	$	142,672

Consumer
Performing	$	9,689	$	18,922	$	12,199	$	4,492	$	2,485	$	2,284	$	2,207	$	52,278
Non-performing	—		—		—		—		—		—		—		—
Total	$	9,689	$	18,922	$	12,199	$	4,492	$	2,485	$	2,284	$	2,207	$	52,278

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

	Commercial and Industrial		Commercial Real Estate		Total
December 31, 2019
Pass	$	276,847	$	1,408,644	$	1,685,491
Special mention	2,472		13,838		16,310
Substandard	28,696		37,255		65,951
Total	$	308,015	$	1,459,737	$	1,767,752

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

	Performing		Non-Performing		Total
December 31, 2019
Residential real estate	$	1,636,920	$	3,476	$	1,640,396
Home equity	148,397		531		148,928
Consumer	54,263		—		54,263
Total	$	1,839,580	$	4,007	$	1,843,587

Note F –Derivative Instruments

As of June 30, 2020 and December 31, 2019, the Company primarily utilizes non-hedging derivative financial instruments with commercial banking customers to facilitate their interest rate management strategies. For these instruments, the Company acts as an intermediary for its customers and has offsetting contracts with financial institution counterparties. Changes in the fair value of these underlying derivative contracts generally offset each other and do not significantly impact the Company's results of operations.

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

	June 30, 2020				December 31, 2019
	Notional Amount		Fair Value		Notional Amount		Fair Value
Non-hedging interest rate derivatives:
Customer counterparties:
Loan interest rate swap - assets	$	620,392	$	65,882	$	377,534	$	16,094
Loan interest rate swap - liabilities	2,041		279		189,803		3,214
Non-hedging interest rate derivatives:
Financial institution counterparties:
Loan interest rate swap - assets	2,041		279		189,803		3,214
Loan interest rate swap - liabilities	625,038		66,100		382,566		16,133

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,
	2020		2019		2020		2019
Change in Fair Value Non-Hedging Interest Rate Derivatives:
Other income - derivative assets	$	3,807	$	5,128	$	41,718	$	2,249
Other income - derivative liabilities	(3,807)		(5,128)		(41,718)		(2,249)
Other expense - derivative liabilities	10		97		183		154

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.

Pursuant to the Company's agreements with certain of its derivative financial institution counterparties, the Company may receive collateral or post collateral, which may be in the form of cash or securities, based upon mark-to-mark positions.The Company has posted collateral with a market value of $68.5 million as of June 30, 2020.

Loans associated with a customer counterparty loan interest rate swap agreement may be subject to a make whole penalty upon termination of the agreement. The dollar amount of the make whole penalty varies based on the remaining term of the agreement and market rates at that time. The make whole penalty is secured by equity in the specific collateral securing the loan. The Company estimates the make whole penalty when determining if there is sufficient collateral to pay off both the potential make whole penalty and the outstanding loan balance at the origination of the loan. In the event of a customer default, the make whole penalty is capitalized into the existing loan balance; however, no guarantees can be made that the collateral will be sufficient to cover both the make whole provision and the outstanding loan balance at the time of foreclosure.

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Note G –Employee Benefit Plans

Stock Options

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

	Six months ended June 30,
	2020			2019
	Options	Weighted-Average Exercise Price		Options	Weighted-Average Exercise Price
Outstanding at January 1	46,251	$	52.74	57,972	$	51.15
Exercised	(4,166)	45.44		(8,140)	44.85
Outstanding at June 30	42,085	$	53.47	49,832	$	52.18
Exerciseable at June 30	22,214	$	50.22	11,644	$	44.62

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,
	2020		2019
Proceeds from stock option exercises	$	189	$	365
Intrinsic value of stock options exercised	77		263
Stock-based compensation expense associated with stock options	$	34	$	64
At period-end:	June 30, 2020
Unrecognized stock-based compensation expense associated with stock options	$	50
Weighted average period (in years) in which the above amount is expected to be
recognized	1.2

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, 2020 and 2019, all shares issued in connection with stock option exercises were issued from available treasury stock. For the stock options that have performance-based criteria, management has evaluated those criteria and has determined that, as of June 30, 2020, the criteria were probable of being met.

Restricted Shares, Restricted Stock Units, Performance Share Units

The Company records compensation expense with respect to restricted shares, restricted stock units and performance share units in an amount equal to the fair value of the common stock covered by each award on the date of grant. These awards 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, and, except for restricted stock units and performance share units, 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.  For restricted shares that have performance-based criteria, management has evaluated those criteria and has determined that, as of June 30, 2020, the criteria were probable of being met.

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

	Six months ended June 30,
	2020			2019
	Restricted Awards	Average Market Price at Grant		Restricted Awards	Average Market Price at Grant
Outstanding at January 1	148,083	$	62.62	152,692	$	51.85
Granted	37,103	67.40		31,006	79.86
Vested	(26,450)	49.58		(41,657)	39.79
Outstanding at June 30	158,736	$	65.91	142,041	$	61.50

Information regarding stock-based compensation associated with restricted shares is provided in the following table (in thousands):

	Three months ended June 30, 2020				Six months ended June 30,
	2020		2019		2020		2019
Stock-based compensation expense associated with restricted shares	$	681	$	501	$	1,310	$	935
At period-end:					June 30, 2020
Unrecognized stock-based compensation expense associated with restricted shares					$	6,208
Weighted average period (in years) in which the above amount is expected to be recognized					3.2

Shares issued in conjunction 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, 2020 and 2019, 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 a frozen defined benefit pension plan (the “Defined Benefit Plan”), which was inherited from the Company's acquisition of the plan sponsor (Horizon Bancorp, Inc.).

The following table presents the components of the Company's net periodic benefit cost, which is included in the line item "other expenses" in the consolidated statements of income, (in thousands):

	Three months ended June 30,				Six months ended June 30,
	2020		2019		2020		2019
Components of net periodic cost:
Interest cost	$	112	$	174	$	224	$	348
Expected return on plan assets	(203)		(266)		(406)		(531)
Net amortization and deferral	272		285		544		569
Net Periodic Pension Cost	$	181	$	193	$	362	$	386

Note H –Commitments and Contingencies

COVID-19

The COVID-19 pandemic is creating extensive disruptions to the global economy and to the lives of individuals throughout the world. Governments, businesses, and the public are taking unprecedented actions to contain the spread of COVID-19 and to mitigate its effects, including quarantines, travel bans, shelter-in-place orders, closures of businesses and schools, fiscal stimulus, and legislation designed to deliver monetary aid and other relief. While the scope, duration, and full effects of COVID-19 are rapidly evolving and not fully known, the pandemic and related efforts to contain it have disrupted global economic activity, adversely affected the functioning of financial markets, impacted interest rates, increased economic

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and market uncertainty, and disrupted trade and supply chains. If these effects continue for a prolonged period or result in sustained economic stress or recession, the effects could have a material adverse impact on the Company in a number of ways related to credit, collateral, customer demand, funding, operations, interest rate risk, human capital and self-insurance, as well as financial statement related risk associated with critical accounting estimates such as the allowance for credit losses or valuation impairments on the Company's goodwill, intangible assets and deferred taxes.

Credit Related Financial Instruments

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, 2020		December 31, 2019
Commitments to extend credit:
Home equity lines	$	219,045	$	214,715
Commercial real estate	51,646		56,941
Other commitments	247,219		213,904
Standby letters of credit	5,026		6,748
Commercial letters of credit	1,045		1,249

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.

Litigation

In addition, 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 resolved. 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.

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Note I –Accumulated Other Comprehensive Income

The activity in accumulated other comprehensive income 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 23%.

	Three months ended June 30,						Six months ended June 30,
	Defined						Defined
	Benefit		Securities				Benefit		Securities
	Pension		Available-				Pension		Available-
	Plan		-for-Sale		Total		Plan		-for-Sale		Total
2020
Beginning Balance	$	(6,270)	$	33,730	$	27,460	$	(6,270)	$	12,110	$	5,840
Other comprehensive income before reclassifications	—		3,565		3,565		—		24,036		24,036
Amounts reclassified from other comprehensive income	—		4		4		—		(44)		(44)
Reclassification of unrealized gains on held-to-maturity securities to available-for-sale	—		—		—		—		1,197		1,197
	—		3,569		3,569		—		25,189		25,189
Ending Balance	$	(6,270)	$	37,299	$	31,029	$	(6,270)	$	37,299	$	31,029
2019
Beginning Balance	$	(5,871)	$	20	$	(5,851)	$	(5,871)	$	(8,611)	$	(14,482)
Other comprehensive income before reclassifications	—		10,956		10,956		—		19,654		19,654
Amounts reclassified from other comprehensive income	—		(17)		(17)		—		(84)		(84)
	—		10,939		10,939		—		19,570		19,570
Ending Balance	$	(5,871)	$	10,959	$	5,088	$	(5,871)	$	10,959	$	5,088

	Amounts reclassified from Other Comprehensive Income
	Three months ended				Six months ended				Affected line item
	June 30,				June 30,				in the Consolidated Statements
	2020		2019		2020		2019		of Income
Securities available-for-sale:
Net securities (losses) gains reclassified into earnings	$	(6)	$	21	$	56	$	109	(Losses) gains on sale of investment securities, net
Related income tax expense (income)	2		(4)		(12)		(25)		Income tax expense (income)
Net effect on accumulated other comprehensive income	$	(4)	$	17	$	44	$	84

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Note J – 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,
	2020		2019		2020		2019
Net income available to common shareholders	$	18,251	$	22,751	$	47,249	$	44,370
Less: earnings allocated to participating securities	(180)		(197)		(463)		(382)
Net earnings allocated to common shareholders	$	18,071	$	22,554	$	46,786	$	43,988
Distributed earnings allocated to common stock	$	9,073	$	8,615	$	18,147	$	17,231
Undistributed earnings allocated to common stock	8,998		13,939		28,639		26,757
Net earnings allocated to common shareholders	$	18,071	$	22,554	$	46,786	$	43,988
Average shares outstanding	16,081		16,368		16,123		16,390
Effect of dilutive securities:
Employee stock awards	16		18		19		18
Shares for diluted earnings per share	16,097		16,386		16,142		16,408
Basic earnings per share	$	1.12	$	1.38	$	2.90	$	2.68
Diluted earnings per share	$	1.12	$	1.38	$	2.90	$	2.68

Anti-dilutive options are 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. Anti-dilutive options were not significant for any of the periods shown above.

Note K –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) for 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 creditworthiness, 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

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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. On a quarterly basis, the Company reprices its debt securities with a third party that is independent of the primary pricing service provider to verify the reasonableness of the fair values.

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 "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, 2020.

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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 3 inputs based on observable market data for both real estate collateral and 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, 2020
Recurring fair value measurements
Financial Assets
Obligations of states and political subdivisions	$	218,227	$	—	$	218,227	$	—
Mortgage-backed securities:
U.S. Government agencies	786,507		—		786,507		—
Private label	11,349		—		5,987		5,362
Trust preferred securities	3,480		—		3,480		—
Corporate securities	33,381		—		29,331		4,050
Marketable equity securities	10,474		5,960		4,514		—
Certificates of deposit held for investment	2,241		—		2,241		—
Derivative assets	66,161		—		66,161		—
Financial Liabilities
Derivative liabilities	66,526		—		66,526		—
Nonrecurring fair value measurements
Financial Assets
Loans individually evaluated	$	6,447	$	—	$	—	$	6,447	$	(1,150)
Non-Financial Assets
Other real estate owned	3,997		—		—		3,997		(267)
December 31, 2019
Recurring fair value measurements
Financial Assets
U.S. Government agencies	$	502	$	—	$	502	$	—
Obligations of states and political subdivisions	117,187		—		117,187		—
Mortgage-backed securities:
U.S. Government agencies	642,104		—		642,104		—
Private label	11,485		—		5,841		5,644
Trust preferred securities	4,461		—		4,461		—
Corporate securities	32,126		—		28,064		4,062
Marketable equity securities	12,634		7,787		4,847		—
Certificates of deposit held for investment	2,241		—		2,241		—
Derivative assets	19,310		—		19,310		—
Financial Liabilities
Derivative liabilities	19,380		—		19,380		—
Nonrecurring fair value measurements
Financial Assets
Impaired loans	$	8,925	$	—	$	—	$	8,925	$	(87)
Non-Financial Assets
Other real estate owned	4,670		—		—		4,670		(470)
Other assets	100		—		—		100		(297)

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The Company's financial assets and liabilities measured at fair value on a nonrecurring basis using significant unobservable inputs (Level 3) include impaired loans that were remeasured and reported at fair value through a specific valuation allowance allocation of the allowance for credit 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, 2020 and 2019, collateral discounts ranged from 20% to 30%. During the six months ended June 30, 2020 and 2019, the Company had no Level 2 financial assets and liabilities that were measured on a nonrecurring basis.

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.

Fair Value of Financial Instruments

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 rates 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.

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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, 2020
Assets:
Cash and cash equivalents	$	373,254	$	373,254	$	373,254	$	—	$	—
Securities available-for-sale	1,055,185		1,055,185		—		1,045,773		9,412
Marketable equity securities	10,474		10,474		5,960		4,514		—
Net loans	3,640,397		3,634,170		—		—		3,634,170
Accrued interest receivable	14,200		14,200		14,200		—		—
Derivative assets	66,161		66,161		—		66,161		—
Liabilities:
Deposits	4,411,115		4,444,930		3,068,484		1,376,446		—
Short-term debt	282,676		267,186		—		267,186		—
Accrued interest payable	2,257		2,257		2,257		—		—
Derivative liabilities	66,526		66,526		—		66,526		—
December 31, 2019
Assets:
Cash and cash equivalents	$	140,144	$	140,144	$	140,144	$	—	$	—
Securities available-for-sale	810,106		810,106		—		800,400		9,706
Securities held-to-maturity	49,036		50,598		—		50,598		—
Marketable equity securities	12,634		12,634		7,787		4,847		—
Net loans	3,604,510		3,574,435		—		—		3,574,435
Accrued interest receivable	11,569		11,569		11,569		—		—
Derivative assets	19,310		19,310		—		19,310		—
Liabilities:
Deposits	4,075,894		4,094,493		2,711,323		1,383,170		—
Short-term debt	211,255		211,255		—		211,255		—
Long-term debt	4,056		4,124		—		4,124		—
Accrued interest payable	2,849		2,849		2,849		—		—
Derivative liabilities	19,380		19,380		—		19,380		—

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

COVID-19 Pandemic/Update

The COVID-19 pandemic has placed significant health, economic and other major pressure throughout the communities the Company serves, the United States and the entire world. The Company has implemented a number of procedures in response to the pandemic to support the safety and well-being of our employees, customers and shareholders that continue through the date of this report:

•We have addressed the safety of our branches and while the branches generally remain open to customers, we have taken steps, and continue to evaluate, to push as much traffic and transactions as possible to our drive-thru facilities;

•Provided extensions and deferrals to loan customers effected by COVID-19 provided such customers were not 30 days past due at March 19, 2020; As of June 30, 2020, the Company has granted deferrals of approximately $125 million for mortgage borrowers and $430 million for commercial borrowers; and

•We have chosen to participate in the CARES Act Paycheck Protection Program that will provide government guaranteed and forgivable loans to our customers. As of June 30, 2020, the Company has funded approximately $90 million of SBA-approved PPP loans to over 1,500 customers.

The Company continues to closely monitor this pandemic and expects to make future changes to respond to the pandemic as this situation continues to evolve.

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 2019 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 2019 Annual Report of the Company.  Based on the sensitivity of financial statement amounts to the methods, assumptions, and estimates underlying those amounts, management has identified the determination of the allowance for credit losses and income taxes 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.

Allowance for Credit Losses - Loans: The allowance for credit losses is a valuation account that is deducted from the loans' amortized cost basis to present the net amount expected to be collected on the loans. Loans are charged off against the allowance when management believes the uncollectibility of a loan balance is confirmed. Expected recoveries do not exceed the aggregate of amounts previously charged-off and expected to be charged-off. Management estimates the allowance balance using relevant available information, from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. Historical credit loss experience provides the basis for the estimation of expected credit losses. Adjustments to historical loss information are made for differences in current loan-specific risk characteristics, such as differences in underwriting standards, portfolio mix, delinquency level, or term as well as for changes in environmental conditions, such as changes in unemployment rates, property values, or other relevant factors. The Company has identified the following portfolio segments and measures the allowance for credit losses using the following methods:

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Portfolio Segment	Measurement Method
Commercial and industrial	Migration
Commercial real estate:
1-4 family	Migration
Hotels	Migration
Multi-family	Migration
Non Residential Non-Owner Occupied	Migration
Non Residential Owner Occupied	Migration
Residential real estate	Vintage
Home equity	Vintage
Consumer	Vintage

Migration is an analysis that tracks a closed pool of loans for a configurable period of time and calculates a loss ratio on only those loans in the pool at the start date based on outstanding balance. Vintage is a predictive loss model that includes a reasonable approximation of probable and estimable future losses by tracking each loan's net losses over the life of the loan as compared to its original balance. For demand deposit overdrafts, the allowance for credit losses is measured using the historical loss rate. Loans that do not share risk characteristics are evaluated on an individual basis. Loans evaluated individually are not included in the collective evaluation. When management determines that foreclosure is probable, the expected credit losses are based on the fair value of the collateral at the reporting date, adjusted for selling costs as appropriate.

Expected credit losses are estimated over the contractual term of the loan, adjusted for expected prepayments when appropriate. The contractual term excludes expected extensions, renewals, and modifications unless either of the following applies: management has a reasonable expectation at the reporting date that a troubled-debt restructuring will be executed with an individual borrower or the extension or renewal options are included in the original or modified contract at the reporting date and are not unconditionally cancellable by the Company.

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 various state taxing authorities for the years ended December 31, 2016 and forward.

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Financial Summary

Six months ended June 30, 2020 vs. 2019

The Company's financial performance is summarized in the following table:

	Six months ended June 30,
	2020			2019
Net income available to common shareholders (in thousands)	$	47,249		$	44,370
Earnings per common share, basic	$	2.90		$	2.68
Earnings per common share, diluted	$	2.90		$	2.68
Dividend payout ratio	39.3		%	39.5		%
ROA*	1.81		%	1.80		%
ROE*	13.7		%	14.3		%
ROATCE*	16.6		%	17.8		%
Average equity to average assets ratio	13.2		%	12.6		%

*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, 2020 decreased $2.5 million compared to the six months ended June 30, 2019 (see Net Interest Income). The Company recorded a provision for credit losses of $9.2 million for the six months ended June 30, 2020 compared to a recovery of credit losses of $1.4 million for the six months ended June 30, 2019 (see Allowance for Credit Losses). As further discussed under the caption Non-Interest Income and Non-Interest Expense, non-interest income increased $14.2 million and non-interest expense decreased $2.2 million for the six months ended June 30, 2020 from the six months ended June 30, 2019.

Financial Summary

Three months ended June 30, 2020 vs. 2019

The Company's financial performance is summarized in the following table:

	Three months ended June 30,
	2020			2019
Net income available to common shareholders (in thousands)	$	18,251		$	22,751
Earnings per common share, basic	$	1.12		$	1.38
Earnings per common share, diluted	$	1.12		$	1.38
Dividend payout ratio	50.8		%	38.5		%
ROA*	1.35		%	1.84		%
ROE*	10.5		%	14.4		%
ROATCE*	12.6		%	17.9		%
Average equity to average assets ratio	12.9		%	12.8		%

*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 three months ended June 30, 2020 decreased $2.8 million compared to the three months ended June 30, 2019 (see Net Interest Income). The Company recorded a provision for credit losses of $1.3

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million for the three months ended June 30, 2020 compared to a recovery of credit losses of $0.6 million for the three months ended June 30, 2019 (see Allowance for Credit Losses). As further discussed under the caption Non-Interest Income and Non-Interest Expense, non-interest income decreased $3.2 million and non-interest expense decreased $2.3 million for the three months ended June 30, 2020 from the three months ended June 30, 2019.

Balance Sheet Analysis

Selected balance sheet fluctuations from the year ended December 31, 2019 are summarized in the following table (in millions):

	June 30,		December 31,
	2020		2019		$ Change		% Change
Cash and cash equivalents	$	373.3	$	140.1	$	233.2	166.5	%
Investment securities	1,081.3		887.6		193.7		21.8	%
Gross loans	3,665.6		3,616.1		49.5		1.4	%
Other assets	105.4		55.8		49.6		88.9	%
Total deposits	4,411.1		4,075.9		335.2		8.2	%
Customer repurchase agreements	282.7		211.3		71.4		33.8	%
Other liabilities	138.6		69.6		69.0		99.1	%

Cash and cash equivalents increased $233 million from December 31, 2019 to $373 million at June 30, 2020, due to the increase in deposit balances and weak loan demand environment.

Investment securities increased $194 million (21.8%) from December 31, 2019 to $1.1 billion at June 30, 2020, due to the increase in deposit balances and weak loan demand environment.

Gross loans increased $50 million (1.4%) from December 31, 2019 to $3.67 billion at June 30, 2020. As a result of the Company's participation in the Paycheck Protection Program ("PPP") administered by the Small Business Administration ("SBA"), commercial and industrial loans increased $90 million. Excluding these loans, total loans decreased $39 million, (1.1%), from December 31, 2019 to $3.58 billion at June 30, 2020. Commercial and industrial loans decreased $27 million (8.9%) (excluding PPP loans), residential real estate loans decreased $9 million (0.6%), home equity loans decreased $6 million (4.2%) and DDA overdrafts decreased $2 million (43.3%). These decreases were partially offset by an increase in commercial real estate loans of $8 million (0.5%).

Other assets increased $50 million to $105 million and other liabilities increased $69 million to $139 million, respectively, at June 30, 2020, primarily as a result of market value changes in the Company's interest rate swap derivatives.

Total deposits increased $335 million from December 31, 2019 to $4.41 billion at June 30, 2020. This increase was largely attributable to stimulus checks received by the Company's customers from the CARES Act (approximately $90 million), proceeds from PPP loans, and customers not spending as much due to COVID-19.

Customer repurchase agreements increased $71 million to $283 million at June 30, 2020, due to proceeds from PPP loans, and due to the liquidity needs of the Company's customers, specifically customers leaving monies in these deposit accounts due to the security of these deposits.

40

Net Interest Income

Six months ended June 30, 2020 vs. 2019

The Company’s tax equivalent net interest income decreased $2.5 million, or (3.1)%, from $81.4 million for the six months ended June 30, 2019 to $78.9 million for the six months ended June 30, 2020. Excluding the impact of accretion from fair value adjustments, net interest income decreased $3.7 million for the six months ended June 30, 2020. Lower loan yields (54 basis points) and lower investment yields (40 basis points) decreased net interest income by $9.6 million and $1.9 million, respectively. These decreases were partially offset by a decrease in rates paid on interest-bearing liabilities (26 basis points) and increases in investment balances ($128 million) and average loan balances ($77 million), which increased net interest income by $4.3 million, $2.0 million and $1.9 million, respectively. The Company’s reported net interest margin decreased from 3.66% for the six months ended June 30, 2019 to 3.33% for the six months ended June 30, 2020.

As a result of the COVID-19 crisis on March 15, 2020, the Federal Reserve cut the target range for the Fed Funds Rate to a range of 0-25 basis points, which had the impact of lowering interest rates on variable rates tied to Prime, LIBOR or Fed Funds, as well as the decreases in deposit rates. The Company's loan portfolio has historically included a significant portion of adjustable rate residential mortgage loans made in markets where the Company has a presence, and significant commercial loans collateralized with real estate.

41

Table One

Average Balance Sheets and Net Interest Income

(in thousands)

Assets	Six months ended June 30,
	2020						2019
	Average Balance		Interest		Yield/ Rate		Average Balance		Interest		Yield/ Rate
Loan portfolio(1):
Residential real estate(2)	$	1,785,795	$	38,930	4.38	%	$	1,791,263	$	40,904	4.60	%
Commercial, financial, and agriculture(2)	1,791,510		38,141		4.28		1,710,281		42,503		5.01
Installment loans to individuals(2),(3)	57,217		1,715		6.03		56,383		1,728		6.18
Previously securitized loans(4)	***		267		***		***		317		***
Total loans	3,634,522		79,053		4.37		3,557,927		85,452		4.84
Securities:
Taxable	853,882		11,589		2.73		731,976		11,420		3.15
Tax-exempt(5)	107,671		1,934		3.61		101,356		1,942		3.86
Total securities	961,553		13,523		2.83		833,332		13,362		3.23
Deposits in depository institutions	169,626		360		0.43		87,031		767		1.78
Total interest-earning assets	4,765,701		92,936		3.92		4,478,290		99,581		4.48
Cash and due from banks	75,132						64,583
Bank premises and equipment	78,042						78,671
Goodwill and intangible assets	119,886						122,114
Other assets	213,147						192,768
Less: allowance for credit losses	(20,303)						(15,617)
Total assets	$	5,231,605					$	4,920,809
Liabilities
Interest-bearing demand deposits	$	881,904	$	647	0.15	%	$	880,401	$	1,842	0.42	%
Savings deposits	1,021,608		1,063		0.21		963,804		2,302		0.48
Time deposits(2)	1,359,442		11,491		1.70		1,376,284		12,040		1.76
Short-term borrowings	232,900		743		0.64		218,527		1,915		1.77
Long-term debt	1,670		100		12.04		4,053		95		4.73
Total interest-bearing liabilities	3,497,524		14,044		0.81		3,443,069		18,194		1.07
Noninterest-bearing demand deposits	948,196						804,489
Other liabilities	95,516						52,070
Stockholders’ equity	690,369						621,181
Total liabilities and stockholders’ equity	$	5,231,605					$	4,920,809
Net interest income			$	78,892					$	81,387
Net yield on earning assets					3.33	%					3.66	%

42

(1)	For purposes of this table, non-accruing loans have been included in average balances and the following amounts (in thousands) of loan fees have been included in interest income:
	Loan fees	$	725	$	615
(2)	Included in the above table are the following amounts (in thousands) for the accretion of the fair value adjustments related to the Company's acquisitions:
		2020		2019
	Residential real estate	$	345	$	115
	Commercial, financial and agriculture	1,891		858
	Installment loans to individuals	76		(12)
	Time deposits	311		452
		$	2,623	$	1,413
(3)	Includes the Company’s consumer and DDA overdrafts loan categories.
(4)	Effective January 1, 2012, the carrying value of the Company's previously securitized loans was reduced to $0.
(5)	Computed on a fully federal tax-equivalent basis assuming a tax rate of approximately 21%.

Table Two

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

(in thousands)

	Six months ended June 30, 2020 vs. 2019
Interest-earning assets:	Increase (Decrease) Due to Change In:
	Volume		Rate		Net
Loan portfolio
Residential real estate	$	(125)	$	(1,849)	$	(1,974)
Commercial, financial, and agriculture	2,024		(6,386)		(4,362)
Installment loans to individuals	26		(39)		(13)
Previously securitized loans	—		(50)		(50)
Total loans	1,925		(8,324)		(6,399)
Securities:
Taxable	1,907		(1,738)		169
Tax-exempt(1)	121		(129)		(8)
Total securities	2,028		(1,867)		161
Deposits in depository institutions	730		(1,137)		(407)
Total interest-earning assets	$	4,683	$	(11,328)	$	(6,645)
Interest-bearing liabilities:
Interest-bearing demand deposits	$	3	$	(1,198)	$	(1,195)
Savings deposits	138		(1,377)		(1,239)
Time deposits	(148)		(401)		(549)
Short-term borrowings	126		(1,298)		(1,172)
Long-term debt	(56)		61		5
Total interest-bearing liabilities	$	63	$	(4,213)	$	(4,150)
Net Interest Income	$	4,620	$	(7,115)	$	(2,495)

(1)Computed on a fully federal tax-equivalent basis assuming a tax rate of approximately 21%.

43

Net Interest Income

Three months ended June 30, 2020 vs. 2019

The Company’s tax equivalent net interest income decreased $2.8 million, or 6.9%, from $41.1 million for the three months ended June 30, 2019 to $38.3 million for the three months ended June 30, 2020. Excluding the impact of accretion from fair value adjustments, net interest income decreased $2.9 million for the three months ended June 30, 2020. Lower loan yields (76 basis points) and lower investment yields (49 basis points) decreased net interest income by $7.1 million and $1.3 million, respectively. These decreases were partially offset by a decrease in rates paid on interest-bearing liabilities (38 basis points) and increases in average loan balances ($121 million) and investment balances ($168 million), which increased net interest income by $3.3 million, $1.5 million and $1.3 million, respectively. The Company’s reported net interest margin decreased from 3.66% for the three months ended June 30, 2019 to 3.13% for the three months ended June 30, 2020.

As a result of the COVID-19 crisis on March 15, 2020, the Federal Reserve cut the target range for the Fed Funds Rate to a range of 0-25 basis points, which had the impact of lowering interest rates on variable rates tied to Prime, LIBOR or Fed Funds, as well as the decreases in deposit rates. The Company's loan portfolio has historically included a significant portion of adjustable rate residential mortgage loans made in markets where the Company has a presence, and significant commercial loans collateralized with real estate.

44

Table Three

Average Balance Sheets and Net Interest Income

(in thousands)

Assets	Three months ended June 30,
	2020						2019
	Average Balance		Interest		Yield/ Rate		Average Balance		Interest		Yield/ Rate
Loan portfolio(1):
Residential real estate(2)	$	1,785,631	$	19,048	4.29	%	$	1,783,718	$	20,454	4.60	%
Commercial, financial, and agriculture(2)	1,818,344		17,665		3.91		1,698,186		21,658		5.12
Installment loans to individuals(2),(3)	56,199		852		6.10		57,173		889		6.24
Previously securitized loans(4)	***		152		***		***		174		***
Total loans	3,660,174		37,717		4.14		3,539,077		43,175		4.89
Securities:
Taxable	896,997		5,718		2.56		749,346		5,732		3.07
Tax-exempt(5)	120,751		1,039		3.46		100,348		956		3.82
Total securities	1,017,748		6,757		2.67		849,694		6,688		3.16
Deposits in depository institutions	236,320		55		0.09		113,176		577		2.04
Total interest-earning assets	4,914,242		44,529		3.64		4,501,947		50,440		4.49
Cash and due from banks	79,501						64,478
Bank premises and equipment	78,717						79,116
Goodwill and intangible assets	119,681						121,628
Other assets	230,423						189,618
Less: allowance for credit losses	(24,700)						(15,057)
Total assets	$	5,397,864					$	4,941,730
Liabilities
Interest-bearing demand deposits	$	893,832	$	178	0.08	%	$	874,039	$	909	0.42	%
Savings deposits	1,037,387		363		0.14		980,089		1,236		0.51
Time deposits(2)	1,353,619		5,422		1.61		1,384,017		6,272		1.82
Short-term borrowings	256,790		279		0.44		199,648		863		1.73
Long-term debt	—		—		—		4,053		47		4.65
Total interest-bearing liabilities	3,541,628		6,242		0.71		3,441,846		9,327		1.09
Noninterest-bearing demand deposits	1,044,009						820,689
Other liabilities	115,110						48,803
Shareholders’ equity	697,117						630,392
Total liabilities and shareholders’ equity	$	5,397,864					$	4,941,730
Net interest income			$	38,287					$	41,113
Net yield on earning assets					3.13	%					3.66	%

45

(1)	For purposes of this table, non-accruing loans have been included in average balances and the following amounts (in thousands) of loan fees have been included in interest income:
	Loan fees	$	609	$	481
(2)	Included in the above table are the following amounts (in thousands) for the accretion of the fair value adjustments related to the Company's acquisitions:
		2020		2019
	Residential real estate	$	194	$	83
	Commercial, financial and agriculture	651		668
	Installment loans to individuals	37		(6)
	Time deposits	155		196
		$	1,037	$	941
(3)	Includes the Company’s consumer and DDA overdrafts loan categories.
(4)	Effective January 1, 2012, the carrying value of the Company's previously securitized loans was reduced to $0.
(5)	Computed on a fully federal tax-equivalent basis assuming a tax rate of 21%.

Table Four

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

(in thousands)

	Three months ended June 30, 2020 vs. 2019
Interest-earning assets:	Increase (Decrease) Due to Change In:
	Volume		Rate		Net
Loan portfolio
Residential real estate	$	22	$	(1,428)	$	(1,406)
Commercial, financial, and agriculture	1,528		(5,521)		(3,993)
Installment loans to individuals	(15)		(22)		(37)
Previously securitized loans	—		(22)		(22)
Total loans	1,535		(6,993)		(5,458)
Securities:
Taxable	1,126		(1,140)		(14)
Tax-exempt(1)	194		(111)		83
Total securities	1,320		(1,251)		69
Deposits in depository institutions	626		(1,148)		(522)
Total interest-earning assets	$	3,481	$	(9,392)	$	(5,911)
Interest-bearing liabilities:
Interest-bearing demand deposits	$	21	$	(752)	$	(731)
Savings deposits	72		(945)		(873)
Time deposits	(137)		(713)		(850)
Short-term borrowings	246		(830)		(584)
Long-term debt	(47)		—		(47)
Total interest-bearing liabilities	$	155	$	(3,240)	$	(3,085)
Net Interest Income	$	3,326	$	(6,152)	$	(2,826)

(1) Computed on a fully federal taxable equivalent using a tax rate of 21%.

46

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 those 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 with net interest income as derived from the Company's financial statements, as well as other non-GAAP measures (in thousands):

	Three months ended June 30,						Six months ended June 30,
	2020			2019			2020			2019
Net interest income (GAAP)	$	38,070		$	40,911		$	78,486		$	80,977
Taxable equivalent adjustment	217			202			406			410
Net interest income, fully taxable equivalent	$	38,287		$	41,113		$	78,892		$	81,387
Less accretion income	(1,037)			(941)			(2,623)			(1,413)
Net interest income excluding accretion income	$	37,250		$	40,172		$	76,269		$	79,974
Equity to assets (GAAP)	12.55		%	12.89		%
Effect of goodwill and other intangibles, net	(1.93)			(2.19)
Tangible common equity to tangible assets	10.62		%	10.70		%
Return on tangible equity (GAAP)	12.6		%	17.9		%	16.6		%	17.8		%
Impact of merger related expenses	—			0.3			—			0.2
Impact of sale of VISA shares	—			—			(4.8)			—
Return on tangible equity, excluding merger related expenses and sale of VISA shares	12.6		%	18.2		%	11.8		%	18.0		%
Return on assets (GAAP)	1.35		%	1.84		%	1.81		%	1.80		%
Impact of merger related expenses	—			0.04			—			0.03
Impact of sale of VISA shares	—			—			(0.52)			—
Return on assets, excluding merger related expenses and sale of VISA shares	1.35		%	1.88		%	1.29		%	1.83		%

47

Loans

Table Five

Loan Portfolio

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

	June 30, 2020		December 31, 2019		June 30, 2019
Commercial and industrial	369,122		308,015		288,803
1-4 Family	123,814		N/R		N/R
Hotels	295,179		N/R		N/R
Multi-family	204,580		N/R		N/R
Non Residential Non-Owner Occupied	628,628		N/R		N/R
Non Residential Owner Occupied	215,472		N/R		N/R
Commercial real estate	1,467,673		1,459,737		1,378,116
Residential real estate	1,631,151		1,640,396		1,644,494
Home equity	142,672		148,928		150,676
Consumer	52,278		54,263		53,356
DDA overdrafts	2,700		4,760		3,922
Total loans	$	2,197,923	$	2,156,362	$	2,141,251
N/R = Not reported. Results for reporting periods beginning after January 1, 2020 are presented under ASC 326, while prior period amounts continue to be reported in accordance with previously applicable GAAP.

Loan balances increased $49.5 million from December 31, 2019 to June 30, 2020.

Residential real estate loans decreased $9.2 million from December 31, 2019 to June 30, 2020.  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 borrow 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; 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, 2020, $28.3 million of the residential real estate loans were for properties under construction.

Home equity loans decreased $6.3 million during the first six months of 2020.  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 borrow 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 than residential mortgage loans. 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 that are 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 loans increased $61.1 million from December 31, 2019 to June 30, 2020, largely due to approximately $90 million of PPP loans funded.

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

48

December 31, 2019 to June 30, 2020. At June 30, 2020, $42.1 million of the commercial real estate loans were for commercial properties under construction.

In order to group loans with similar risk characteristics, the portfolio is further segmented by product types:

◦Commercial 1-4 Family loans consist of residential single-family, duplex, triplex, and fourplex rental properties and totaled $123.8 million as of June 30, 2020. Risk characteristics are driven by rental housing demand as well as economic and employment conditions. These properties exhibit greater risk than multi-family properties due to fewer income sources.

◦The Hotel portfolio is comprised of all lodging establishments and totaled $295.2 million as of June 30, 2020. Risk characteristics relate to the demand for travel.

◦Multi-family consists of 5 or more family residential apartment lending. The portfolio totaled $204.6 million as of June 30, 2020. Risk characteristics are driven by rental housing demand as well as economic and employment conditions.

◦Non-residential commercial real estate includes properties such as retail, office, warehouse, storage, healthcare, entertainment, religious, and other nonresidential commercial properties. The non-residential product type is further segmented into owner- and non-owner occupied properties. Nonresidential non-owner occupied commercial real estate totaled $628.6 million while nonresidential owner-occupied commercial real estate totaled $215.5 million as of June 30, 2020. Risk characteristics relate to levels of consumer spending and overall economic conditions.

Consumer loans may be secured by automobiles, boats, recreational vehicles and other personal property or they may be unsecured. 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 $2.1 million during the first six months of 2020. 

Allowance for Credit Losses

The Company adopted ASU No. 2016-13, "Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments" effective January 1, 2020, using the modified retrospective method for all financial assets measured at amortized cost and off-balance sheet credit exposures. ASU No. 2016-13 replaced the incurred loss impairment methodology 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 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. Results for reporting periods beginning after January 1, 2020 are presented under ASU No. 2016-13, while prior period amounts continue to be reported in accordance with previously applicable GAAP. As a result of adopting CECL, the Company increased its allowance for credit losses ("ACL") by $3.0 million and decreased retained earnings by $2.3 million on January 1, 2020. In addition, the adoption required the Company to "gross up" its previously purchased credit impaired loans through the allowance at January 1, 2020. As a result, the Company increased its ACL and loan balances as of January 1, 2020 by $2.7 million.

Management systematically monitors the loan portfolio and the appropriateness of the allowance for credit losses on a quarterly basis to provide for expected 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. The Company's estimate of future economic conditions utilized in its provision estimate is primarily dependent on expected unemployment ranges over a two-year period. Beyond two years, a straight line reversion to historical average loss rates is applied over the life of the loan pool in the migration methodology. The vintage methodology applies future average loss rates based on net losses in historical periods where the unemployment rate was within the forecasted range. As a result of COVID-19, expected unemployment ranges have significantly increased and resulted in an increase in the Company's provision for credit losses.

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 types of 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.

Determination of the ACL 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.

49

As a result of the Company’s quarterly analysis of the adequacy of the ACL, the Company recorded a provision for credit losses of $9.2 million during the six months ended June 30, 2020, compared to a recovery of $1.4 million for the comparable period in 2019. The provision for credit losses recorded during the six months ended June 30, 2020 largely reflects the expected economic impact from the COVID-19 pandemic. The Company’s estimate of future economic conditions used in its CECL estimates is primarily dependent on expected unemployment ranges. The expected unemployment ranges utilized at June 30, 2020, have not changed significantly from those utilized at March 31, 2020 which reflected the expected economic impact of the COVID-19 pandemic. Additionally, adjustments in qualitative and other factors have not been revised significantly from March 31, 2020, to June 30, 2020. The provision for credit losses recognized in the second quarter of 2020 primarily relates to updated valuations for two specific credits during the quarter based on current market conditions which increased the Company’s ACL by $1.7 million. Partially offsetting these increases in the ACL was a decrease in the ACL due to lower amounts of DDA overdrafted balances which released $0.5 million of ACL reserves. Due to the guarantee from the SBA for the PPP loans that were issued during the quarter ended June 30, 2020, no reserve for credit losses was deemed necessary for these loans.

The Company had net charge-offs of $1.4 million for the first six months of 2020 and $0.7 million for the first six months of 2019.  Net charge-offs in the first six months of 2020 consisted primarily of net charge-offs of residential real estate loans ($0.8 million), DDA overdrafts ($0.4 million), and home equity loans ($0.2 million).

Based on the Company’s analysis of the adequacy of the allowance for credit losses and in consideration of the known factors utilized in computing the allowance, management believes that the allowance for credit losses as of June 30, 2020 is adequate to provide for expected losses inherent in the Company’s loan portfolio. Future provisions for credit 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.

50

Table Six

Analysis of the Allowance for Credit Losses

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

	Six months ended June 30,						Year ended December 31,
	2020			2019			2019
Balance at beginning of period	$	11,589		$	15,966		$	15,966
Charge-offs:
Commercial and industrial	(77)			(51)			(261)
Commercial real estate	(422)			(178)			(1,358)
Residential real estate	(859)			(631)			(787)
Home equity	(206)			(117)			(294)
Consumer	(91)			(296)			(1,177)
DDA overdrafts	(1,162)			(1,213)			(2,777)
Total charge-offs	(2,817)			(2,486)			(6,654)
Recoveries:
Commercial and industrial	14			140			764
Commercial real estate	331			607			624
Residential real estate	103			125			369
Home equity	56			—			—
Consumer	141			143			265
DDA overdrafts	800			749			1,505
Total recoveries	1,445			1,764			3,527
Net charge-offs	(1,372)			(722)			(3,127)
Impact of adopting CECL	5,760			—			—
Provision for (recovery of) credit losses	9,222			(1,449)			(1,250)
Balance at end of period	$	25,199		$	13,795		$	11,589
As a Percent of Average Total Loans:
Net charge-offs (annualized)	0.08		%	0.04		%	0.09		%
Provision for (recovery of) credit losses (annualized)	0.51		%	(0.08)		%	(0.04)		%
As a Percent of Non-Performing Loans:
Allowance for credit losses	185.12		%	115.32		%	98.57		%
As a Percent of Total Loans:
Allowance for credit losses	0.69		%	0.39		%	0.32		%

51

Table Seven

Allocation of the Allowance for Credit Losses

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

	As of June 30,				As of December 31,
	2020		2019		2019
Commercial and industrial	$	6,266	$	2,796	$	2,059
Commercial real estate	10,090		3,469		2,606
Residential real estate	7,323		3,959		3,448
Home equity	647		1,211		1,187
Consumer	120		509		975
DDA overdrafts	753		1,851		1,314
Allowance for Credit Losses	$	25,199	$	13,795	$	11,589

The ACL increased from $11.6 million at December 31, 2019 to $25.2 million at June 30, 2020.  As previously discussed, the adoption of CECL comprised $5.8 million of this increase from December 31, 2019. Below is a summary of the changes in the components of the ACL from December 31, 2019 to June 30, 2020.

The allowance related to the commercial and industrial loan portfolio increased from $2.1 million at December 31, 2019 to $6.3 million at June 30, 2020. The adoption of CECL increased the allowance by $1.7 million. The remainder of the increase was largely attributable to a change in unemployment forecast range due to the COVID-19 pandemic ("COVID-19"), changes in migration (primarily in the substandard portfolio) and an increase to the qualitative factors utilized related to COVID-19.

The allowance allocated to the commercial real estate portfolio increased from $2.6 million at December 31, 2019 to $10.1 million at June 30, 2020. The adoption of CECL increased the allowance by $3.3 million. The remainder of the increase was largely attributable to a change in the unemployment forecast range due to COVID-19, changes in the migration within the portfolio and an increase to the qualitative factors utilized related to COVID-19.

The allowance related to the residential real estate loan portfolio increased from $3.4 million at December 31, 2019 to $7.3 million at June 30, 2020. The adoption of CECL increased the allowance by $2.1 million. The remainder of the increase was largely attributable to an increase to the qualitative factors utilized related to COVID-19 and an increase in the historical loss rates associated with the portfolio.

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Table Eight

Non-Performing Loans

The Company's nonperforming assets and past-due loans as of June 30, 2020, June 30, 2019 and December 31, 2019 are shown below (dollars in thousands):

	June 30, 2020			June 30, 2019			December 31, 2019
Non-accrual loans with allowance for credit losses	$	10,584		N/R			N/R
Non-accrual loans with no allowance for credit losses	2,960			N/R			N/R
Total non-accrual loans	13,544			11,868			11,490
Accruing loans past due 90 days or more	68			94			267
Total non-performing loans	13,612			11,962			11,757
Other real estate owned ("OREO")	3,997			2,581			4,670
Total non-performing assets	$	17,609		$	14,543		$	16,427
Non-performing loans (as a percent of loans and OREO)	0.48		%	0.41		%	0.45		%
Past-due loans	$	7,071		$	9,475		$	11,396
Past-due loans (as a percentage of total loans)	0.19		%	0.27		%	0.32		%
N/R = Not reported. Results for reporting periods beginning after January 1, 2020 are presented under ASC 326, while prior period amounts continue to be reported in accordance with previously applicable GAAP.

Table Nine

Troubled Debt Restructurings ("TDRs")

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

	As of June 30,				December 31,
	2020		2019		2019
Commercial and industrial	$	—	$	83	$	—
1-4 Family	126		N/R		N/R
Hotels	2,634		N/R		N/R
Multi-family	1,921		N/R		N/R
Non Residential Non-Owner Occupied	—		N/R		N/R
Non Residential Owner Occupied	234		N/R		N/R
Commercial real estate	4,915		8,044		4,973
Residential real estate	20,631		22,373		21,029
Home equity	2,138		3,062		3,628
Consumer	185		—		—
Total TDRs	$	27,869	$	33,562	$	29,630
N/R = Not reported. Results for reporting periods beginning after January 1, 2020 are presented under ASC 326, while prior period amounts continue to be reported in accordance with previously applicable GAAP.

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, 2020. The average age of these TDRs was 12.8 years; the

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average current balance as a percentage of the original balance was 67.4%; and the average loan-to-value ratio was 63.6% as of June 30, 2020. Of the total 435 Chapter 7 related TDRs, 33 had an estimated loss exposure based on the current balance and appraised value at June 30, 2020.

COVID-19 Pandemic

In March of 2020, in response to the COVID-19 pandemic, regulatory guidance was issued that clarified the accounting for loan modifications. Modifications of loan terms do not automatically result in a TDR. Short-term modifications made on a good faith basis in response to COVID-19 to borrowers who were current prior to any relief, are not TDRs. This includes short-term (e.g., six months) modifications such as payment deferrals, fee waivers, extension of repayment terms, or other delays that are insignificant. Borrowers considered current are those that are less than 30 days past due on their contractual payments at the time the modification program was implemented.

As of June 30, 2020, the Company has granted deferrals of approximately $125 million for mortgage borrowers and $430 million for commercial borrowers. As of June 30, 2020, $3.6 million of the mortgage deferrals were previously and currently considered TDRs due to Chapter 7 bankruptcies.

Non-Interest Income and Non-Interest Expense

Six months ended June 30, 2020 vs. 2019

(in millions)

	Six months ended June 30,
	2020		2019		$ Change		% Change
Net investment securities (losses) gains	$	(2.1)	$	0.3	$	(2.4)	(800.0)	%
Sale of VISA shares	17.8		—		17.8		100.0
Non-interest income, excluding net investment securities gains and sale of VISA shares	32.2		33.5		(1.3)		(3.9)
Merger related expenses	—		0.8		(0.8)		(100.0)
Non-interest expense, excluding merger related expenses	57.9		59.4		(1.5)		(2.5)

Non-Interest Income: Non-interest income was $48.0 million for the six months ended June 30, 2020, as compared to $33.8 million for the six months ended June 30, 2019. During the six months ended June 30, 2020, the Company reported $2.1 million of unrealized fair value losses on the Company's equity securities compared to $0.3 million of unrealized fair value gains on the Company's equity securities during the six months ended 2019. Also, during the six months ended June 30, 2020, the Company sold the entirety of its Visa Inc. Class B common shares (86,605) in a cash transaction which resulted in a pre-tax gain of $17.8 million. Excluding these items, non-interest income decreased from $33.5 million for the six months ended June 30, 2019 to $32.2 million for the six months ended June 30, 2020. This decrease was largely attributable to a decrease of $2.4 million, or 16.1%, in service charges as average deposit balances have increased during the COVID-19 pandemic. This decrease was partially offset by increases in the Company's bankcard revenue ($0.5 million), trust and investment management fee income ($0.4 million) and bank owned life insurance income ($0.4 million).

Non-Interest Expense: During the six months ended June 30, 2019, the Company incurred an additional $0.8 million of acquisition and integration expenses associated with the acquisitions of Poage Bankshare, Inc. and Farmers Deposit Bankcorp, Inc. Excluding this expense, non interest expenses decreased $1.5 million (2.5%), from $59.4 million in the first six months of 2019 to $57.9 million in the first six months of 2020. Decreases in other expenses ($0.6 million), FDIC insurance expense ($0.5 million) and occupancy related expenses ($0.4 million) were partially offset by an increase in equipment and software related expenses ($0.5 million).

Income Tax Expense: The Company’s effective income tax rate for the six months ended June 30, 2020 was 20.3% compared to 20.8% for the six months ended June 30, 2019.

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Non-Interest Income and Non-Interest Expense

Three months ended June 30, 2020 vs. 2019

(in millions)

	Three months ended June 30,
	2020		2019		$ Change		% Change
Net investment securities gains	$	0.2	$	0.1	$	0.1	100.0	%
Non-interest income, excluding net investment securities gains	14.4		17.7		(3.3)		(18.6)	%
Merger related expenses	—		0.5		(0.5)		(100.0)	%
Non-interest expense, excluding merger related expenses	28.5		30.2		(1.7)		(5.6)	%

Non-Interest Income: Non-interest income was $14.6 million for the second quarter of 2020, as compared to $17.8 million for the second quarter of 2019. During the second quarter of 2020, the Company reported $0.2 million of unrealized fair value gains on the Company's equity securities compared to $0.1 million of unrealized fair value gains on the Company's equity securities in the second quarter of 2019. Exclusive of these gains, non-interest income decreased from $17.7 million for the second quarter of 2019 to $14.4 million for the second quarter of 2020. This decrease was largely attributable to a decrease of $2.8 million, or 36.4%, in service charges as average deposit balances have increased during the COVID-19 pandemic. In addition, other income decreased $0.8 million primarily due to recognition of a $0.7 million gain from the sale the Company's Virginia Beach, VA, branch in June 2019. These decreases were partially offset by increases in the Company's bankcard revenues ($0.4 million) and trust and investment management fee income ($0.2 million).

Non-Interest Expense: During the quarter ended June 30, 2019, the Company incurred an additional $0.5 million of acquisition and integration expenses associated with the acquisitions of Poage Bankshare, Inc. and Farmers Deposit Bankcorp, Inc. Excluding this expense, non-interest expenses decreased $1.7 million (5.6%), from $30.2 million in the second quarter of 2019 to $28.5 million in the second quarter of 2020. This decrease was primarily due to a decrease in salaries and employee benefits of $0.9 million largely due to lower health insurance and incentive expenses. Additionally, other expenses decreased $0.5 million, occupancy related expenses decreased $0.2 million, FDIC expense decreased $0.2 million and repossessed asset losses decreased $0.2 million. These decreases were partially offset by an increase in equipment and software related expenses of $0.3 million.

Income Tax Expense: The Company's effective income tax rate for the three months ended June 30, 2020 was 20.6% compared to 20.4% for the three months ended June 30, 2019.

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

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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 of 300 points or decrease of 200 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 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, 2020
+400	4.25	%	+22.6	%
+300	3.25		+21.1
+200	2.25		+17.0
+100	1.25		+10.4
December 31, 2019
+300	4.75	%	+3.8%
+200	3.75		+4.8
+100	2.75		+3.7
-50	1.25		-3.9
-100	0.75		-10

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 savings deposit accounts reprice in different interest rate scenarios, changes in the composition of deposit balances, pricing behavior of competitors, prepayments of loans and deposits 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 or decrease during the remainder of 2020 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 level and at the City National level. At the City Holding level, the principal source of cash is dividends from 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, 2020, City National could pay dividends up to $81.8 million plus net profits for the remainder of 2020, as defined by statute, up to the dividend declaration date without prior regulatory permission.

Additionally, City Holding anticipates continuing the payment of dividends on its common stock, which are expected to approximate $36.7 million on an annualized basis over the next 12 months based on common shares outstanding at June 30, 2020.  However, dividends to shareholders can, if necessary, be suspended. 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

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over the next 12 months. As of June 30, 2020, City Holding reported a cash balance of $5.1 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.

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, 2020, 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, 2020, City National has the capacity to borrow $2.1 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 65.8% as of June 30, 2020 and deposit balances fund 79.8% 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 has investment security balances with carrying values that totaled $1.08 billion at June 30, 2020, and that exceeded the Company’s non-deposit sources of borrowing, which totaled $282.7 million.  Further, the Company’s deposit mix has a 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 $68.0 million of cash from operating activities during the first six months of 2020, primarily from interest income received on loans and investments, net of interest expense paid on deposits and borrowings.  The Company used $201.1 million of cash in investing activities during the first six months of 2020, primarily due to purchases of securities available-for-sale of $232.5 million, a net increase in loans of $46.1 million, purchases of premises and equipment of $3.8 million, and purchases of other investments of $2.1 million. These decreases were partially offset by proceeds from sales and maturities of securities available-for-sale of $79.8 million, proceeds from sales of other investments of $2.3 million, and proceeds from bank-owned life insurance policies of $1.5 million. The Company generated $366.2 million of cash in financing activities during the first six months of 2020, principally as a result of an increase in non-interest-bearing deposits of $274.4 million, short-term borrowings of $71.4 million, and interest-bearing deposits of $61.2 million. These increases were partially offset by dividends paid of $18.5 million to the Company's common stockholders, purchases of treasury stock of $17.9 million and repayment of long-term debt of $4.1 million.

Capital Resources

Shareholders' equity increased $35.8 million for the six months ended June 30, 2020 due to net income of $47.2 million, other comprehensive income of $25.2 million, and stock based related compensation expense of $1.7 million. These increases were partially offset by cash dividends declared of $18.4 million, the repurchase of 261,137 common shares at a weighted average price of $68.41 per share ($17.9 million) as part of a one million share repurchase plan authorized by the Board of Directors in February 2019, and the adoption of ASU 2016-13 ($2.3 million).

As of January 1, 2019, the Basel III Capital Rules require City Holding and City National to maintain minimum CET 1, Tier 1 and Total Capital ratios, along with a capital conservation buffer, effectively resulting in new minimum capital ratios (which are shown in the table below). The capital conservation buffer is designed to absorb losses during periods of economic stress. Banking institutions with a ratio of CET 1 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. 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.

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

(in thousands):

June 30, 2020	Actual				Minimum Required - Basel III				Required to be Considered Well Capitalized
	Capital Amount		Ratio		Capital Amount		Ratio		Capital Amount		Ratio
CET I Capital
City Holding Company	$	548,972	16.1	%	$	238,741	7.0	%	$	221,688	6.5	%
City National Bank	492,875		14.6	%	237,098		7.0	%	220,162		6.5	%
Tier I Capital
City Holding Company	548,972		16.1	%	289,900		8.5	%	272,847		8.0	%
City National Bank	492,875		14.6	%	287,904		8.5	%	270,969		8.0	%
Total Capital
City Holding Company	569,213		16.7	%	358,112		10.5	%	341,059		10.0	%
City National Bank	513,115		15.2	%	355,647		10.5	%	338,711		10.0	%
Tier I Leverage Ratio
City Holding Company	548,972		10.5	%	210,060		4.0	%	262,575		5.0	%
City National Bank	492,875		9.3	%	212,162		4.0	%	265,202		5.0	%

December 31, 2019	Actual				Minimum Required - Basel III				Required to be Considered Well Capitalized
	Capital Amount		Ratio		Capital Amount		Ratio		Capital Amount		Ratio
CET I Capital
City Holding Company	$	532,640	16.0	%	$	232,358	7.0	%	$	215,761	6.5	%
City National Bank	459,006		13.9	%	230,808		7.0	%	214,322		6.5	%
Tier I Capital
City Holding Company	536,640		16.2	%	282,150		8.5	%	265,552		8.0	%
City National Bank	459,006		13.9	%	280,267		8.5	%	263,781		8.0	%
Total Capital
City Holding Company	548,291		16.5	%	348,538		10.5	%	331,941		10.0	%
City National Bank	470,656		14.3	%	346,213		10.5	%	329,726		10.0	%
Tier I Leverage Ratio
City Holding Company	536,640		11.0	%	195,558		4.0	%	244,448		5.0	%
City National Bank	459,006		9.5	%	193,074		4.0	%	241,342		5.0	%

As of June 30, 2020, 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, 2020, management believes that City Holding and City National have met all capital adequacy requirements.

In November 2019, the federal banking regulators published final rules implementing a simplified measure of capital adequacy for certain banking organizations that have less than $10 billion in total consolidated assets. Under the final rules, which went into effect on January 1, 2020, depository institutions and depository institution holding companies that have less

58

than $10 billion in total consolidated assets and meet other qualifying criteria, including a leverage ratio of greater than 9%, off–balance–sheet exposures of 25% or less of total consolidated assets and trading assets plus trading liabilities of 5% or less of total consolidated assets, are deemed “qualifying community banking organizations” and are eligible to opt into the “community bank leverage ratio framework.” A qualifying community banking organization that elects to use the community bank leverage ratio framework and that maintains a leverage ratio of greater than 9% is considered to have satisfied the generally applicable risk–based and leverage capital requirements under the Basel III Rules and, if applicable, is considered to have met the “well capitalized” ratio requirements for purposes of its primary federal regulator’s prompt corrective action rules, discussed below. The final rules include a two–quarter grace period during which a qualifying community banking organization that temporarily fails to meet any of the qualifying criteria, including the greater–than–9% leverage capital ratio requirement, is generally still deemed “well capitalized” so long as the banking organization maintains a leverage capital ratio greater than 8%. A banking organization that fails to maintain a leverage capital ratio greater than 8% is not permitted to use the grace period and must comply with the generally applicable requirements under the Basel III Rules and file the appropriate regulatory reports. The Company and its subsidiary bank do not have any immediate plans to elect to use the community bank leverage ratio framework but may make such an election in the future.

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’s management, including the Company’s Chief 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’s Chief 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’s periodic SEC filings.  There has been no change in the Company’s internal control over financial reporting during the quarter ended June 30, 2020 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

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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 resolved. 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

Other than the additional risk factor below, 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, 2019.

The COVID-19 pandemic has adversely impacted our business and financial results. The ultimate impact will depend on future developments, which are highly uncertain and cannot be predicted, including the scope and duration of the pandemic and actions taken by governmental authorities in response to the pandemic.

The COVID-19 pandemic is creating extensive disruptions to the global economy and to the lives of individuals throughout the world. Governments, businesses, and the public are taking unprecedented actions to contain the spread of COVID-19 and to mitigate its effects, including quarantines, travel bans, stay-at-home orders, closures of businesses and schools, fiscal stimulus, and legislation designed to deliver monetary aid and other relief. While the scope, duration, and full effects of COVID-19 are rapidly evolving and not fully known, the pandemic and related efforts to contain it have disrupted global economic activity, adversely affected the functioning of financial markets, impacted interest rates, increased economic and market uncertainty, and disrupted trade and supply chains. If these effects continue for a prolonged period or result in sustained economic stress or recession, many of the risk factors identified in our Form 10-K could be exacerbated and such effects could have a material adverse impact on us in a number of ways related to credit, collateral, customer demand, funding, operations, interest rate risk, human capital and self-insurance.

Any resulting financial impact cannot be reasonably estimated at this time but may materially affect the business and the Company’s financial condition and results of operations. The Company is currently evaluating and quantifying the impact on its consolidated financial statements.

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

On February 27, 2019, the Board of Directors of the Company authorized the Company to buy back up to 1,000,000 of its common shares (the "Program") in open market transactions, in block trades or otherwise at prices that are accretive to the earnings per share of continuing shareholders. The Program, which has no time limit on the duration, permits management to commence or suspend purchases at any time or from time-to-time based upon market and business conditions and without prior notice. The following table sets forth information regarding the Company's common stock repurchases transacted during the quarter ended June 30, 2020:

				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
June 1 - June 30, 2020	79,238	$	61.75	521,901	478,189

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Item 3.Defaults Upon Senior Securities

None.

Item 4.Mine Safety Disclosures

None.

Item 5.Other Information

None.

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Item 6.Exhibits

The exhibits required to be filed or furnished with this Form 10-Q are attached hereto or incorporated herein by reference as shown in the following "Exhibit Index."

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).
2(c)	Agreement and Plan of Merger, dated July 11, 2018, by and among Poage Bankshares, Inc., Town Square 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 July 11, 2018, and filed with the Securities and Exchange Commission on July 12, 2018).
2(d)	Agreement and Plan of Merger, dated July 11, 2018, by and among Farmers Deposit Bancorp, Inc., Farmers Deposit 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 July 11, 2018, and filed with the Securities and Exchange Commission on July 12, 2018).
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).
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).

62

		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)	Articles of Amendment to the Articles of Incorporation of City Holding Company, dated April 19, 2017 (attached to, and incorporated by reference from, City Holding Company's Form 10-Q Quarterly Report for the quarter ended March 31, 2017, filed May 5, 2017 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(a)	Rights Agreement dated as of June 13, 2001 (attached to, and incorporated by reference from, City Holding Company's Form 8–A, filed June 22, 2001, 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	Interactive Data File - The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL 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*
		104	Cover Page Interative Data file (formatted as inline XBRL and contained in Exhibit 101).
*	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.

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

Executive Vice President, Chief Financial Officer and Principal Accounting Officer

(Principal Financial Officer)

63

Date: August 6, 2020

64

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, 2020 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

b.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 6, 2020

/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, 2020 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

(b)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 6, 2020

/s/ David L. Bumgarner

David L. Bumgarner

Executive 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, 2020 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 6, 2020

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, 2020 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

Executive Vice President and Chief Financial Officer

Date: August 6, 2020

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 Document - shares	6 Months Ended
	Jun. 30, 2020	Aug. 04, 2020
Entity Information [Line Items]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2020
Document Transition Report	false
Entity File Number	0-11733
Entity Registrant Name	CITY HOLDING COMPANY
Entity Incorporation, State or Country Code	WV
Entity Tax Identification Number	55-0619957
Entity Address, Address Line One	25 Gatewater Road,
Entity Address, City or Town	Charleston,
Entity Address, State or Province	WV
Entity Address, Postal Zip Code	25313
City Area Code	304
Local Phone Number	769-1100
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		16,030,180
Entity Central Index Key	0000726854
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q2
Amendment Flag	false
NASDAQ/NGS (GLOBAL SELECT MARKET) [Member]
Entity Information [Line Items]
Title of 12(b) Security	Common Stock, $2.50 par value
Trading Symbol	CHCO
Security Exchange Name	NASDAQ

XML

Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Assets [Abstract]
Cash and due from banks	$ 87,658	$ 88,658
Interest-bearing deposits in depository institutions	285,596	51,486
Cash and Cash Equivalents	373,254	140,144
Investment securities available for sale, at fair value	1,055,185	810,106
Investment securities, held-to-maturity, at amortized cost	0	49,036
Securities held-to-maturity, Estimated Fair Value	0	50,598
Other securities	26,144	28,490
Total Investment Securities	1,081,329	887,632
Gross loans	3,665,596	3,616,099
Allowance for credit losses	(25,199)	(11,589)
Net Loans	3,640,397	3,604,510
Bank owned life insurance	116,746	115,261
Premises and equipment, net	77,991	76,965
Accrued interest receivable	14,200	11,569
Net deferred tax asset	0	6,669
Goodwill and other intangible assets, net	119,417	120,241
Other assets	105,438	55,765
Total Assets	5,528,772	5,018,756
Deposits:
Noninterest-bearing	1,079,469	805,087
Interest-bearing:
Demand deposits	921,761	896,465
Savings deposits	1,067,254	1,009,771
Time deposits	1,342,631	1,364,571
Total Deposits	4,411,115	4,075,894
Securities sold under agreements to repurchase	282,676	211,255
Long-term debt	0	4,056
Net deferred tax liability	2,598	0
Other liabilities	138,633	69,568
Total Liabilities	$ 4,835,022	$ 4,360,773
Preferred Stock, Number of Shares, Par Value and Other Disclosures [Abstract]
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, Number of Shares, Par Value and Other Disclosures [Abstract]
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)	19,047,548	19,047,548
Common stock, treasury shares (in shares)	2,970,815	2,744,109
Preferred Stock	$ 0	$ 0
Common Stock	47,619	47,619
Capital surplus	169,881	170,309
Retained earnings	565,804	539,253
Cost of common stock in treasury	(120,583)	(105,038)
Accumulated other comprehensive income:
Unrealized gain on securities available-for-sale	37,299	12,110
Underfunded pension liability	(6,270)	(6,270)
Total Accumulated Other Comprehensive Income	31,029	5,840
Total Shareholders’ Equity	693,750	657,983
Total Liabilities and Shareholders’ Equity	$ 5,528,772	$ 5,018,756

XML

Consolidated Statements Of Income - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Interest Income
Interest and fees on loans	$ 37,718	$ 43,174	$ 79,053	$ 85,453
Interest and dividends on investment securities:
Taxable	5,718	5,732	11,589	11,421
Tax-exempt	821	755	1,528	1,534
Interest on deposits in depository institutions	55	577	360	763
Total Interest Income	44,312	50,238	92,530	99,171
Interest Expense
Interest on deposits	5,963	8,417	13,201	16,184
Interest on short-term borrowings	279	863	743	1,915
Interest on long-term debt	0	47	100	95
Total Interest Expense	6,242	9,327	14,044	18,194
Net Interest Income	38,070	40,911	78,486	80,977
Provision for (recovery of) credit losses	1,250	(600)	9,222	(1,449)
Net Interest Income After Provision for (Recovery of) Credit Losses	36,820	41,511	69,264	82,426
Non-Interest Income
(Losses) gains on sale of investment securities, net	(6)	21	56	109
Unrealized gains (losses) recognized on equity securities still held	242	113	(2,159)	188
Bank owned  life insurance	848	1,132	2,523	2,148
Sale of VISA shares	0	0	17,837	0
Other income	783	1,560	2,318	2,374
Total Non-Interest Income	14,631	17,825	47,975	33,750
Non-Interest Expense
Salaries and employee benefits	14,873	15,767	30,724	31,010
Occupancy related expense	2,402	2,598	4,890	5,330
Equipment and software related expense	2,504	2,223	4,933	4,414
FDIC insurance expense	167	347	167	638
Advertising	933	920	1,776	1,789
Bankcard expenses	1,498	1,534	2,933	2,716
Postage, delivery, and statement mailings	592	545	1,208	1,169
Office supplies	353	399	747	785
Legal and professional fees	589	605	1,190	1,126
Telecommunications	531	597	1,042	1,323
Repossessed asset losses, net of expenses	76	253	274	469
Merger related costs	0	547	0	797
Other expenses	3,950	4,437	8,052	8,617
Total Non-Interest Expense	28,468	30,772	57,936	60,183
Income Before Income Taxes	22,983	28,564	59,303	55,993
Income tax expense	4,732	5,813	12,054	11,623
Net Income Available to Common Shareholders	$ 18,251	$ 22,751	$ 47,249	$ 44,370
Weighted Average Number of Shares Outstanding Reconciliation [Abstract]
Average common shares outstanding, basic (in shares)	16,081	16,368	16,123	16,390
Effect of dilutive securities (in shares)	16	18	19	18
Average common shares outstanding, diluted (in shares)	16,097	16,386	16,142	16,408
Earnings Per Share [Abstract]
Basic earnings per common share (in dollars per share)	$ 1.12	$ 1.38	$ 2.90	$ 2.68
Diluted earnings per common share (in dollars per share)	$ 1.12	$ 1.38	$ 2.90	$ 2.68
Service charges
Non-Interest Income
Revenue from contract with customer	$ 4,945	$ 7,778	$ 12,667	$ 15,099
Bankcard revenue
Non-Interest Income
Revenue from contract with customer	5,888	5,522	11,003	10,491
Trust and investment management fee income
Non-Interest Income
Revenue from contract with customer	$ 1,931	$ 1,699	$ 3,730	$ 3,341

XML

Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Statement of Comprehensive Income [Abstract]
Net income available to common shareholders	$ 18,251	$ 22,751	$ 47,249	$ 44,370
Unrealized gains on available-for-sale securities arising during the period	4,652	14,309	31,365	25,671
Reclassification adjustment for gains	6	(21)	(56)	(109)
Reclassification of unrealized gains on held-to-maturity securities to available-for-sale	0	0	1,562	0
Other comprehensive income before income taxes	4,658	14,288	32,871	25,562
-1089000	(1,089)	(3,349)	(7,682)	(5,992)
Other comprehensive income, net of tax	3,569	10,939	25,189	19,570
Comprehensive Income, Net of Tax	$ 21,820	$ 33,690	$ 72,438	$ 63,940

XML

Consolidated Statements of Changes in Shareholders' Equity - USD ($) $ in Thousands	Total	Common Stock	Capital Surplus	Retained Earnings	Treasury Stock	Total
Beginning Balance at Dec. 31, 2018	$ 600,764	$ 47,619	$ 169,555	$ 485,967	$ (87,895)	$ (14,482)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income available to common shareholders	44,370			44,370
Other comprehensive income, net of tax	19,570					19,570
Cash dividends declared	(17,426)			(17,426)
Stock-based compensation expense	1,374		1,374
Restricted awards granted	0		(1,557)		1,557
Exercise of stock options	365		2		363
Purchase of treasury shares	(12,109)				(12,109)
Ending balance at Jun. 30, 2019	$ 636,908	47,619	169,374	512,911	(98,084)	5,088
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Cash dividends declared (in dollars per share)	$ 1.06
Exercise of stock options (in shares)	8,140
Purchase of treasury shares (in shares)	161,950
Beginning Balance at Mar. 31, 2019	$ 619,241	47,619	170,215	498,847	(91,589)	(5,851)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income available to common shareholders	22,751			22,751
Other comprehensive income, net of tax	10,939					10,939
Cash dividends declared	(8,687)			(8,687)
Stock-based compensation expense	571		571
Restricted awards granted	0		(1,333)		1,333
Exercise of stock options	113		(79)		192
Purchase of treasury shares	(8,020)				(8,020)
Ending balance at Jun. 30, 2019	$ 636,908	47,619	169,374	512,911	(98,084)	5,088
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Cash dividends declared (in dollars per share)	$ 0.53
Exercise of stock options (in shares)	2,502
Purchase of treasury shares (in shares)	107,210
Beginning Balance at Dec. 31, 2019	$ 657,983	47,619	170,309	539,253	(105,038)	5,840
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Impact of adopting CECL	(2,335)			(2,335)
Net income available to common shareholders	47,249			47,249
Other comprehensive income, net of tax	25,189					25,189
Cash dividends declared	(18,363)			(18,363)
Stock-based compensation expense	1,702		1,702
Restricted awards granted	0		(2,033)		2,033
Exercise of stock options	189		(97)		286
Purchase of treasury shares	(17,864)				(17,864)
Ending balance at Jun. 30, 2020	$ 693,750	47,619	169,881	565,804	(120,583)	31,029
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Cash dividends declared (in dollars per share)	$ 1.14
Exercise of stock options (in shares)	4,166
Purchase of treasury shares (in shares)	261,137
Beginning Balance at Mar. 31, 2020	$ 685,228	47,619	170,096	556,718	(116,665)	27,460
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income available to common shareholders	18,251			18,251
Other comprehensive income, net of tax	3,569					3,569
Cash dividends declared	(9,165)			(9,165)
Stock-based compensation expense	693		693
Restricted awards granted	0		(879)		879
Exercise of stock options	67		(29)		96
Purchase of treasury shares	(4,893)				(4,893)
Ending balance at Jun. 30, 2020	$ 693,750	$ 47,619	$ 169,881	$ 565,804	$ (120,583)	$ 31,029
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Cash dividends declared (in dollars per share)	$ 0.57
Exercise of stock options (in shares)	1,516
Purchase of treasury shares (in shares)	79,238

XML

Consolidated Statements Of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019
Operating Activities
Net income available to common shareholders	$ 47,249	$ 44,370
Adjustments to reconcile net income to net cash provided by operating activities:
(Accretion) and amortization, net	873	557
Provision for (recovery of) credit losses	9,222	(1,449)
Depreciation of premises and equipment	2,772	2,467
Deferred income tax expense	2,323	2,134
Net periodic employee benefit cost	362	386
Unrealized and realized investment securities losses (gains), net	2,103	(297)
Stock-compensation expense	1,702	1,374
Excess tax benefit from stock-compensation expense	(137)	(433)
Increase in value of bank-owned life insurance	(2,523)	(2,148)
Loans originated for sale	(9,372)	(9,915)
Proceeds from the sale of loans originated for sale	9,854	10,584
Gain on sale of loans	(177)	(284)
Payments for Other Operating Activities	(450)	0
Change in accrued interest receivable	(2,631)	(295)
Change in other assets	(9,515)	(1,231)
Change in other liabilities	16,334	2,600
Net Cash Provided by Operating Activities	67,989	48,420
Investing Activities
Net (increase) decrease in loans	(46,146)	68,403
Purchases	(232,478)	(113,412)
Proceeds from sales	28,548	31,597
Proceeds from maturities and calls	51,246	31,982
Securities Held-to-maturity: Proceeds from maturities and calls	0	7,427
Other investments: Purchases	(2,132)	(9,365)
Other investments: Proceeds from sales	2,282	11,857
Purchases of premises and equipment	(3,798)	(3,017)
Proceeds from bank-owned life insurance policies	1,513	2,211
Sale of Virginia Beach branch, net	0	(24,661)
Other investing activities	(142)	(3,414)
Net Cash Used in Investing Activities	(201,107)	(392)
Financing Activities
Net increase in non-interest-bearing deposits	274,382	19,696
Net increase in interest-bearing deposits	61,150	62,574
Net increase (decrease) in short-term borrowings	71,421	(54,878)
Repayment of long-term debt	4,124	0
Purchases of treasury stock	(17,864)	(12,109)
Proceeds from exercise of stock options	189	365
Dividends paid	(18,492)	(17,510)
Other financing activities	(434)	(438)
Net Cash Provided by (Used in) Financing Activities	366,228	(2,300)
Increase in Cash and Cash Equivalents	233,110	45,728
Cash and cash equivalents at beginning of period	140,144	122,991
Cash and Cash Equivalents at End of Period	373,254	168,719
Supplemental Cash Flow Information [Abstract]
Cash paid for interest	14,878	18,333
Cash paid for income taxes	$ 2,400	$ 7,025

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Background and Basis of Presentation

6 Months Ended

Jun. 30, 2020

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 94 banking offices in West Virginia (58), Kentucky (19), Virginia (13) and southeastern Ohio (4). City National provides credit, deposit, and trust and investment management services to its customers in a broad geographical area that includes many rural and small community markets in addition to larger cities including Charleston (WV), Huntington (WV), Martinsburg (WV), Ashland (KY), Lexington (KY), Winchester (VA) and Staunton (VA). In addition to its branch network, City National's delivery channels include automated-teller-machines ("ATMs"), interactive-teller machines ("ITMs"), 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 30, 2019, the Company announced that City National had signed a definitive agreement to sell its Virginia Beach, Virginia branch. The terms of the agreement provided for the acquirer to assume the majority of deposits and to acquire the equipment and other select assets associated with the branch, while City National retained the loans. The transaction closed during the second quarter of 2019. As a result of this transaction, the Company recognized a gain of $0.7 million and outstanding deposit balances decreased by $25.7 million.

The accompanying consolidated financial statements, which are unaudited, include all of the accounts of City Holding 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 ended June 30, 2020 are not necessarily indicative of the results of operations that can be expected for the year ending December 31, 2020. 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, 2019 has been derived from audited financial statements included in the Company’s 2019 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 2019 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.

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Recent Accounting Pronouncements

6 Months Ended

Jun. 30, 2020

Recent Accounting Pronouncements

Recent Accounting Pronouncements 

Recently Adopted:

CECL

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 credit losses, available-for-sale and held-to-maturity debt securities, purchased financial assets with credit deterioration and certain off-balance sheet credit exposures. In November 2018, the FASB issued ASU No. 2018-19, "Codification Improvements to Topic 326, Financial Instruments—Credit Losses." This amendment clarifies the scope of the guidance in ASU No. 2016-13. In December 2018, the federal bank regulators issued a final rule that would provide an optional three-year phase-in period for the day-one regulatory capital effects of the adoption of ASU No. 2016-13, "Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial

Instruments, as amended, on January 1, 2020. In April 2020, federal bank regulators issued an interim final rule which provided banking organizations that implement CECL before the end of 2020 the option to delay for two more years an estimate of CECL's effect on regulatory capital, followed by the three-year transition period as previously issued. Management has elected to utilize the five-year interim final rule.

The Company adopted 2016-13 using the modified retrospective method for all financial assets measured at amortized cost and off-balance sheet ("OBS") credit exposures. Results for reporting periods beginning after January 1, 2020 are presented under ASC 326, while prior period amounts continue to be reported in accordance with previously applicable GAAP.

The Company adopted 2016-13 using the prospective transition approach for financial assets purchased with credit deterioration ("PCD") that were previously classified as purchased-credit impaired ("PCI") and accounted for under ASC 310-30. In accordance with the standard, management did not reassess whether the PCI assets met the criteria of PCD assets as of the date of adoption. On January 1, 2020, the amortized cost basis of the PCD assets was adjusted to reflect the addition of $2.7 million of the allowance for credit losses. The remaining noncredit discount (based on the adjusted amortized cost basis) will be accreted into interest income over the remaining life of the asset.

The following table illustrates the impact of ASC 326 (in thousands):

	As Reported Under		Pre-ASC 326		Impact of ASC 326
	ASC 326		Adoption		Adoption
Gross Loans	$	3,618,825	$	3,616,099	$	2,726
Allowance for Credit Losses	(17,349)		(11,589)		(5,760)
Deferred Tax Assets, net	7,380		6,669		711
Shareholders' Equity	655,648		657,983		(2,335)

As a result of the adoption of ASU 2016-13, the Company revised some of its existing accounting policies as noted below:

Allowance for Credit Losses - Available-for-Sale Securities: For available-for-sale debt securities in an unrealized loss position, the Company first assesses whether it intends to sell, or is more likely than not that it will be required to sell the security before recovery of its amortized cost basis. If either criteria regarding intent or requirement to sell is met, the security's amortized cost basis is written down to fair value through income. For available-for-sale debt securities that do not meet the aforementioned criteria, the Company evaluates whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, management considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security, among other factors. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses is recorded for the credit loss, limited by the amount that the fair value is less than the amortized cost basis. Any impairment that has not been recorded through an allowance for credit losses is recognized in other comprehensive income.

Changes in the allowance for credit losses are recorded as a provision for (or reversal of) credit loss expense. Losses are charged against the allowance when management believes the uncollectibility of an available-for-sale debt security is confirmed or when either of the criteria regarding intent or requirement to sell is met.

Purchased Credit Deteriorated ("PCD") Loans: The Company has purchased loans during its acquisitions, some of which have experienced more than insignificant credit deterioration since origination. PCD loans are recorded at the amount paid. An allowance for credit losses is determined using the same methodology as other loans held for investment. The initial allowance for credit losses determined on a collective basis is allocated to individual loans. The sum of the loan's purchase price and the allowance for credit losses becomes the initial amortized cost basis. The difference between the initial amortized cost basis and the par value of the loan is a noncredit discount or premium, which is accreted or amortized into interest income over the life of the loan. Subsequent changes to the allowance for credit losses are recorded through provision expense.

Allowance for Credit Losses - Loans: The allowance for credit losses is a valuation account that is deducted from the loans' amortized cost basis to present the net amount expected to be collected on the loans. Loans are charged off against the allowance when management believes the uncollectibility of a loan balance is confirmed. Expected recoveries do not exceed the aggregate of amounts previously charged-off and expected to be charged-off. Management estimates the allowance balance using relevant available information, from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. Historical credit loss experience provides the basis for the estimation of expected credit losses. Adjustments to historical loss information are made for differences in current loan-specific risk characteristics, such as differences in underwriting standards, portfolio mix, delinquency level, or term as well as for changes in environmental conditions, such as changes in unemployment rates, property values, or other relevant factors. The Company has identified the following portfolio segments and measures the allowance for credit losses using the following methods:

Portfolio Segment	Measurement Method
Commercial and industrial	Migration
Commercial real estate:
1-4 family	Migration
Hotels	Migration
Multi-family	Migration
Non Residential Non-Owner Occupied	Migration
Non Residential Owner Occupied	Migration
Residential real estate	Vintage
Home equity	Vintage
Consumer	Vintage

Migration is an analysis that tracks a closed pool of loans for a configurable period of time and calculates a loss ratio on only those loans in the pool at the start date based on outstanding balance. Vintage is a predictive loss model that includes a reasonable approximation of probable and estimable future losses by tracking each loan's net losses over the life of the loan as compared to its original balance. For demand deposit overdrafts, the allowance for credit losses is measured using the historical loss rate. Loans that do not share risk characteristics are evaluated on an individual basis. Loans evaluated individually are not included in the collective evaluation. When management determines that foreclosure is probable, the expected credit losses are based on the fair value of the collateral at the reporting date, adjusted for selling costs as appropriate.

Expected credit losses are estimated over the contractual term of the loan, adjusted for expected prepayments when appropriate. The contractual term excludes expected extensions, renewals, and modifications unless either of the following applies: management has a reasonable expectation at the reporting date that a troubled-debt restructuring will be executed with an individual borrower or the extension or renewal options are included in the original or modified contract at the reporting date and are not unconditionally cancellable by the Company.

Troubled Debt Restructurings ("TDRs"): A loan for which the terms have been modified resulting in a concession, and for which the borrower is experiencing financial difficulties, is considered to be a TDR. The allowance for credit loss on a TDR is measured using the same method as all other loans held for investment, except when the value of a concession cannot be measured using a method other than the discounted cash flow method. When the value of a concession is measured using the discounted cash flow method, the allowance for credit loss is determined by discounting the expected future cash flows at the original interest rate of the loan.

Others

In January 2017, the FASB issued ASU No. 2017-04, "Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment." This amendment simplifies the measurement of goodwill by eliminating Step 2 from the goodwill impairment test. This ASU became effective for the Company on January 1, 2020. The adoption of ASU No. 2017-04 did not have a material impact on the Company's financial statements.

In August 2017, the FASB issued ASU No. 2017-12, "Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities." This amendment expands and refines hedge accounting for both nonfinancial and financial risk components and aligns the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. This ASU became effective for the Company on January 1, 2019. The adoption of this ASU

did not have a material impact on the Company's financial statements. In April 2019, the FASB issued ASU No. 2019-04, "Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments." This amendment clarifies the guidance in ASU No. 2017-12. This amendment became effective for the Company on January 1, 2020. Effective January 1, 2020, the Company reclassified its held-to-maturity securities as available-for-sale utilizing the transition guidance under ASU 2019-04, and the unrealized gains/losses on these investments will be recorded through Other Comprehensive Income.

In August 2018, the FASB issued ASU No. 2018-13, "Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement." This amendment removes, modifies, and clarifies the disclosure requirements on fair value measurements in Topic 820, Fair Value Measurement. This ASU became effective for the Company on January 1, 2020. The adoption of ASU No. 2018-13 did not have a material impact on the Company's financial statements.

In August 2018, the FASB issued ASU No. 2018-15, "Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract." The amendments in this update align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. This ASU became effective for the Company on January 1, 2020. The adoption of ASU No. 2018-15 did not have a material impact on the Company's financial statements.

In October 2018, the FASB issued ASU No. 2018-16, "Derivatives and Hedging (Topic 815): Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting Purposes." This amendment permits the use of the OIS rate based on SOFR as a U.S. benchmark interest rate for hedge accounting purposes under Topic 815 in addition to the UST, the LIBOR swap rate, the OIS rate based on the Federal Funds Effective Rate, and the SIFMA Municipal Swap Rate. This ASU became effective for the Company on January 1, 2019 with anticipation the LIBOR index will be phased out by the end of 2021. In March 2020, the FASB issued ASU No. 2020-04, "Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting." This amendment provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform and is effective as of March 12, 2020 through December 31, 2022. The Company is in the process of reviewing all of its contracts that will be impacted by changing from LIBOR to SOFR.

In October 2018, the FASB issued ASU No. 2018-17, "Consolidation (Topic 810): Targeted Improvements to Related Party Guidance for Variable Interest Entities." This amendment simplifies the analysis of fees paid to decision makers or service providers in determining variable interest entities. This ASU became effective for the Company on January 1, 2020. The adoption of ASU No. 2018-17 did not have a material impact on the Company's financial statements.

Pending Adoption:

In August 2018, the FASB issued ASU No. 2018-14, "Compensation—Retirement Benefits—Defined Benefit Plans—General (Subtopic 715-20): Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans." This amendment removes, modifies, and clarifies certain disclosure requirements for defined benefit plans and other post-employment benefit plans. This ASU will become effective for the Company on January 1, 2021. The adoption of ASU No. 2018-14 is not expected to have a material impact on the Company's financial statements.

In December 2019, the FASB issued ASU No. 2019-12, "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes." The amendments in this update simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740 and clarifying and amending existing guidance. This ASU will become effective for the Company on January 1, 2021. The adoption of ASU No. 2019-12 is not expected to have a material impact on the Company's financial statements.

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Investments

6 Months Ended

Jun. 30, 2020

Investments [Abstract]

Investments

Investments

The aggregate carrying and approximate fair market values of investment securities follow (in thousands).  Fair values are based on quoted market prices, where available.  If quoted market prices are not available, fair values are based on quoted market prices of comparable financial instruments.

	June 30, 2020								December 31, 2019
	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	$	—	$	—	$	—	$	—	$	500	$	2	$	—	$	502
Obligations of states and
political subdivisions	211,439		7,383		595		218,227		112,393		4,800		6		117,187
Mortgage-backed securities:
U.S. government agencies	746,148		40,638		279		786,507		631,637		12,292		1,825		642,104
Private label	10,477		876		4		11,349		10,896		589		—		11,485
Trust preferred securities	4,551		—		1,071		3,480		4,781		27		347		4,461
Corporate securities	31,568		1,857		44		33,381		31,669		500		43		32,126
Total Debt Securities	1,004,183		50,754		1,993		1,052,944		791,876		18,210		2,221		807,865
Certificates of deposit held for investment	2,241		—		—		2,241		2,241		—		—		2,241
Total Securities Available-for-Sale	$	1,006,424	$	50,754	$	1,993	$	1,055,185	$	794,117	$	18,210	$	2,221	$	810,106

Securities held-to-maturity:
Mortgage-backed securities:
U.S. government agencies	$	—	$	—	$	—	$	—	$	49,036	$	1,562	$	—	$	50,598
Total Securities Held-to-Maturity	$	—	$	—	$	—	$	—	$	49,036	$	1,562	$	—	$	50,598

Effective January 1, 2020, the Company reclassified its held-to-maturity securities as available-for-sale utilizing the transition guidance under ASU 2019-04, and the unrealized gains/losses on these investments will be recorded through Other Comprehensive Income.

The Company's other investment securities include marketable and non-marketable equity securities. At June 30, 2020 and December 31, 2019, the Company held $10.5 million and $12.6 million, respectively, in marketable equity securities. Marketable equity securities mainly consist of investments made by the Company in equity positions of various 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%). Changes in the fair value of the marketable equity securities are recorded in "unrealized gains (losses) recognized on equity securities still held" in the consolidated statements of income. The Company's non-marketable securities consist of securities with limited marketability, such as stock in the Federal Reserve Bank ("FRB") or the Federal Home Loan Bank ("FHLB"). At June 30, 2020 and December 31, 2019, the Company held $15.7 million and $15.9 million, respectively, in non-marketable equity securities. These securities are carried at cost due to the restrictions placed on their transferability.

The Company's mortgage-backed U.S. government agency securities consist of both residential and commercial securities, all of which are guaranteed by Fannie Mae ("FNMA"), Freddie Mac ("FHLMC"), or Ginnie Mae ("GNMA"). At June 30, 2020 and December 31, 2019 there were no securities of any non-governmental issuer whose aggregate carrying value or estimated fair value exceeded 10% of shareholders' equity.

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) as of June 30, 2020 and December 31, 2019.  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, 2020
	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	$	35,005	$	595	$	—	$	—	$	35,005	$	595
Mortgage-backed securities:
U.S. Government agencies	83,810		279		38		—		83,848		279
Private Label	275		4		—		—		275		4
Trust preferred securities	—		—		3,480		1,071		3,480		1,071
Corporate securities	445		44		—		—		445		44
Total available-for-sale	$	119,535	$	922	$	3,518	$	1,071	$	123,053	$	1,993

	December 31, 2019
	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	$	230	$	—	$	1,439	$	6	$	1,669	$	6
Mortgage-backed securities:
U.S. Government agencies	123,289		1,247		34,746		578		158,035		1,825
Trust preferred securities	4,200		347		—		—		4,200		347
Corporate securities	11,248		43		—		—		11,248		43
Total available-for-sale	$	138,967	$	1,637	$	36,185	$	584	$	175,152	$	2,221

There were no held-to-maturity securities in an unrealized loss position as of December 31, 2019.

The Company incurred no credit-related investment impairment losses in either the six months ended June 30, 2020 or June 30, 2019.

Declines in the fair value of 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; and (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.

As of June 30, 2020, management does not intend to sell any impaired security and it is not more than likely that it will be required to sell any impaired 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, 2020, management believes the unrealized losses detailed in the table above are temporary and therefore no allowance for credit losses has been recognized on the Company’s securities.

The amortized cost and estimated fair value of debt securities at June 30, 2020, 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
Available-for-Sale Debt Securities
Due in one year or less	$	2,050	$	2,062
Due after one year through five years	15,327		15,900
Due after five years through ten years	294,981		312,351
Due after ten years	691,825		722,631
Total	$	1,004,183	$	1,052,944

Gross gains and gross losses recognized 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,
	2020		2019		2020		2019
Gross realized gains on securities sold	$	—	$	21	$	133	$	110
Gross realized losses on securities sold	(6)		—		(77)		(1)
Net investment security (losses) gains	$	(6)	$	21	$	56	$	109
Gross unrealized gains recognized on equity securities still held	$	242	$	113	$	36	$	241
Gross unrealized losses recognized on equity securities still held	—		—		(2,195)		(53)
Net unrealized gains (losses) recognized on equity securities still held	$	242	$	113	$	(2,159)	$	188

During January 2020, the Company sold the entirety of its Visa Inc. Class B common shares (86,605) in a cash transaction which resulted in a pre-tax gain of $17.8 million. The carrying value of the Visa Class B shares on the Company's balance sheet was $0, as the Company had no historical cost basis in the shares.

The carrying value of securities pledged to secure public deposits and for other purposes as required or permitted by law approximated $581 million and $519 million at June 30, 2020 and December 31, 2019, respectively.

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Loans

6 Months Ended

Jun. 30, 2020

Loans and Leases Receivable, Net Amount [Abstract]

Loans

Loans

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

	June 30, 2020		December 31, 2019
Commercial and industrial	369,122		308,015
1-4 Family	123,814		N/R
Hotels	295,179		N/R
Multi-family	204,580		N/R
Non Residential Non-Owner Occupied	628,628		N/R
Non Residential Owner Occupied	215,472		N/R
Commercial real estate	1,467,673		1,459,737
Residential real estate	1,631,151		1,640,396
Home equity	142,672		148,928
Consumer	52,278		54,263
DDA overdrafts	2,700		4,760
Gross loans	3,665,596		3,616,099
Allowance for credit losses	(25,199)		(11,589)
Net loans	$	3,640,397	$	3,604,510
Construction loans included in:
Residential real estate	$	28,252	$	29,033
Commercial real estate	42,092		64,049
N/R = Not reported. Results for reporting periods beginning after January 1, 2020 are presented under ASC 326, while prior period amounts continue to be reported in accordance with previously applicable GAAP.

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 policies, which are focused on the risk characteristics of the loan portfolio, including construction loans. In the judgment of the Company's management, adequate consideration has been given to these loans in establishing the Company's allowance for credit losses.

The Company originated loans to its customers under the Paycheck Protection Program (“PPP”) administered by the Small Business Administration (“SBA”) under the provisions of the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act"). Loans covered by the PPP may be eligible for loan forgiveness. The remaining loan balances, if any, after the loan forgiveness are fully guaranteed by the SBA. As of June 30, 2020, the Company has funded approximately $90 million of SBA-approved PPP loans to over 1,500 customers. Under the terms of the program, the SBA will pay the lender a processing fee tiered by the size of the loan (5% for loans less than $350,000; 3% for loans greater than $350,000 but less than $2.0 million; and 1% for loans greater than $2.0 million). The Company expects to recognize approximately $3.0 million in PPP loan related processing fees, net of associated expenses, over the term of these loans.

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Allowance For Credit Losses

6 Months Ended

Jun. 30, 2020

Receivables [Abstract]

Allowance For Credit Losses

Allowance For Credit Losses

The following table summarizes the activity in the allowance for credit losses, by portfolio loan classification, for the six months ended June 30, 2020 and 2019 (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.

	Commercial and		Commercial		Residential						DDA
	Industrial		Real Estate		Real Estate		Home Equity		Consumer		Overdrafts		Total
Six months ended June 30, 2020
Beginning balance	$	2,059	$	2,606	$	3,448	$	1,187	$	975	$	1,314	$	11,589
Impact of adopting CECL	1,715		3,254		2,139		(598)		(810)		60		5,760
Charge-offs	(77)		(422)		(859)		(206)		(91)		(1,162)		(2,817)
Recoveries	14		331		103		56		141		800		1,445
Provision for credit losses	2,555		4,321		2,492		208		(95)		(259)		9,222
Ending balance	$	6,266	$	10,090	$	7,323	$	647	$	120	$	753	$	25,199
Six months ended June 30, 2019
Beginning balance	$	4,060	$	4,495	$	4,116	$	1,268	$	319	$	1,708	$	15,966
Charge-offs	(51)		(178)		(631)		(117)		(296)		(1,213)		(2,486)
Recoveries	140		607		125		—		143		749		1,764
(Recovery of) Provision for credit losses	(1,353)		(1,455)		349		60		343		607		(1,449)
Ending balance	$	2,796	$	3,469	$	3,959	$	1,211	$	509	$	1,851	$	13,795
Three months ended June 30, 2020
Beginning balance	$	5,855	$	9,389	$	6,958	$	702	$	233	$	1,256	24,393
Charge-offs	—		(39)		(376)		(161)		(36)		(459)		(1,071)
Recoveries	5		128		8		9		128		349		627
(Recovery of) provision	406		612		733		97		(205)		(393)		1,250
Ending balance	$	6,266	$	10,090	$	7,323	$	647	$	120	$	753	$	25,199
Three months ended June 30, 2019
Beginning balance	$	2,970	$	4,640	$	3,820	$	1,248	$	468	$	1,500	$	14,646
Charge-offs	(51)		(133)		(303)		(71)		(111)		(588)		(1,257)
Recoveries	5		575		50		—		46		330		1,006
(Recovery of) provision	(128)		(1,613)		392		34		106		609		(600)
Ending balance	$	2,796	$	3,469	$	3,959	$	1,211	$	509	$	1,851	$	13,795

Management systematically monitors the loan portfolio and the appropriateness of the allowance for credit losses on a quarterly basis to provide for expected 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. The provision for credit losses recorded during the six months ended June 30, 2020 largely reflects the expected economic impact from the COVID-19 pandemic. The Company's estimate of future economic conditions utilized in its provision estimate is primarily dependent on expected unemployment ranges over a two-year period. Beyond two years, a straight line reversion to historical average loss rates is applied over the life of the loan pool in the migration methodology. The vintage methodology applies future average loss rates based on net losses in historical periods where the unemployment rate was within the forecasted range. As a result of COVID-19, expected unemployment ranges have significantly increased and resulted in an increase in the Company's provision for credit losses.

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 types of 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.

Non-Performing 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 status 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 credit 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, the borrower 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.

The following tables present the amortized cost basis of loans on non-accrual status and loans past due over 90 days still accruing as of June 30, 2020 (in thousands):

	Non-accrual With No		Non-accrual With		Loans Past Due
	Allowance for		Allowance for		Over 90 Days
	Credit Losses		Credit Losses		Still Accruing
Commercial & Industrial	$	207	$	880	$	—
1-4 Family	—		2,212		—
Hotels	—		2,748		—
Multi-family	—		—		—
Non Residential Non-Owner Occupied	—		346		3
Non Residential Owner Occupied	2,521		888		—
Commercial Real Estate	2,521		6,194		3
Residential Real Estate	232		3,245		4
Home Equity	—		265		61
Consumer	—		—		—
Total	$	2,960	$	10,584	$	68

The following table presents the Company's loans on non-accrual status and loans past due over 90 days still accruing as of December 31, 2019 (in thousands):

			Loans Past Due
			Over 90 Days
	Non-accrual		Still Accruing
Commercial and industrial	$	1,182	$	184
Commercial real estate	6,384		—
Residential real estate	3,393		83
Home equity	531		—
Consumer	—		—
Total	$	11,490	$	267

The Company recognized less than $0.1 million of interest income on nonaccrual loans during each of the three months ended June 30, 2020 and 2019 and less than $0.1 million and $0.2 million for the six months ended June 30, 2020 and 2019, respectively.

The following table presents the amortized cost basis of collateral-dependent loans as of June 30, 2020 (in thousands). Changes in the fair value of the collateral for collateral-dependent loans are reported as credit loss expense or a reversal of credit loss expense in the period of change.

	Secured by
	Real Estate		Equipment
Commercial and industrial	$	207	$	—
1-4 Family	—		—
Hotels	2,634		—
Multi-family	—		—
Non Residential Non-Owner Occupied	—		—
Non Residential Owner Occupied	2,520		—
Commercial real estate	5,154		—
Total	$	5,361	$	—

The following table presents the Company’s impaired loans, by class (in thousands) as of December 31, 2019. The difference between the unpaid principal balance and the recorded investment generally reflects amounts that have been previously charged-off. There were no impaired residential, home equity, or consumer loans.

	December 31, 2019
			Unpaid
	Recorded		Principal		Related
	Investment		Balance		Allowance
With no related allowance recorded:
Commercial and industrial	$	501	$	501	$	—
Commercial real estate	3,546		3,572		—
Total	$	4,047	$	4,073	$	—
With an allowance recorded:
Commercial and industrial	$	—	$	—	$	—
Commercial real estate	2,644		2,644		87
Total	$	2,644	$	2,644	$	87

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), for the three and six months ended June 30, 2019:

	Three months ended June 30, 2019				Six months ended June 30, 2019
	Average		Interest		Average		Interest
	Recorded		Income		Recorded		Income
	Investment		Recognized		Investment		Recognized
With no related allowance recorded:
Commercial and industrial	$	589	—		$	603	$	—
Commercial real estate	3,614		2		5,067		38
Total	$	4,203	$	2	$	5,670	$	38
With an allowance recorded:
Commercial and industrial	$	—	$	—	$	—	$	—
Commercial real estate	5,667		76		4,326		106
Total	$	5,667	$	76	$	4,326	$	106

  The Company would have recognized less than $0.1 million of interest income during each of the three months ended June 30, 2020 and 2019 and less than $0.1 million during each of the six months ended June 30, 2020 and 2019 if such loans had been current in accordance with their original terms.

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 days past due.

The following table presents the aging of the amortized cost basis in past-due loans as of June 30, 2020 by class of loan (in thousands):

	30-59		60-89		90+		Total		Current		Total
	Past Due		Past Due		Past Due		Past Due		Loans		Loans
Commercial and industrial	$	130	$	30	$	—	$	160	$	368,962	$	369,122
1-4 Family	753		—		—		753		123,061		123,814
Hotels	—		—		—		—		295,179		295,179
Multi-family	—		—		—		—		204,580		204,580
Non Residential Non-Owner Occupied	—		—		3		3		628,625		628,628
Non Residential Owner Occupied	161		—		—		161		215,311		215,472
Commercial real estate	914		—		3		917		1,466,756		1,467,673
Residential real estate	3,923		1,334		4		5,261		1,625,890		1,631,151
Home Equity	223		108		61		392		142,280		142,672
Consumer	67		—		—		67		52,211		52,278
Overdrafts	272		1		—		273		2,427		2,700
Total	$	5,529	$	1,473	$	68	$	7,070	$	3,658,526	$	3,665,596

The following presents an aging analysis of the Company's past-due loans, by class, as of December 31, 2019 (in thousands):

	30-59		60-89		90+		Total		Current		Total
	Past Due		Past Due		Past Due		Past Due		Loans		Loans
Commercial and industrial	$	243	$	31	$	184	$	458	$	307,557	$	308,015
Commercial real estate	1,514		66		—		1,580		1,458,157		1,459,737
Residential real estate	5,758		1,643		83		7,484		1,632,912		1,640,396
Home equity	840		116		—		956		147,972		148,928
Consumer	156		32		—		188		54,075		54,263
Overdrafts	644		86		—		730		4,030		4,760
Total	$	9,155	$	1,974	$	267	$	11,396	$	3,604,703	$	3,616,099

Troubled Debt Restructurings ("TDRs")

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 2011-02, 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. These modifications range from partial deferrals (interest only) to full deferrals (principal and interest). When determining whether the borrower is experiencing financial difficulties, the Company reviews whether the debtor is currently in payment default on any of its debt or whether it is probable that the debtor would be in payment default in the foreseeable future without the modification. Other indicators of financial difficulty include whether the debtor has declared or is in the process of declaring bankruptcy, the debtor’s ability to continue as a going concern, or the debtor’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). Substantially all of the Company's TDRs are accruing interest.

	June 30, 2020		December 31, 2019
Commercial and industrial	$	—	$	—
1-4 Family	126		N/R
Hotels	2,634		N/R
Multi-family	1,921		N/R
Non Residential Non-Owner Occupied	—		N/R
Non Residential Owner Occupied	234		N/R
Commercial real estate	4,915		4,973
Residential real estate	20,631		21,029
Home equity	2,138		3,628
Consumer	185		—
Total	$	27,869	$	29,630
N/R = Not reported. Results for reporting periods beginning after January 1, 2020 are presented under ASC 326, while prior period amounts continue to be reported in accordance with previously applicable GAAP.

The Company has allocated $1.6 million and $0.8 million of the allowance for credit losses for these loans as of June 30, 2020 and December 31, 2019, respectively. As of June 30, 2020, the Company has not committed to lend any additional amounts in relation to these loans.

The following table presents loans by class, modified as TDRs, that occurred during the six months ended June 30, 2020 and 2019, respectively (dollars in thousands):

	June 30, 2020					June 30, 2019
		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	—	$	—	$	—	—	$	—	$	—
1-4 Family	—	—		—		N/R	N/R		N/R
Hotels	—	—		—		N/R	N/R		N/R
Multi-family	—	—		—		N/R	N/R		N/R
Non Owner Non-Owner Occupied	—	—		—		N/R	N/R		N/R
Non Owner Owner Occupied	—	—		—		N/R	N/R		N/R
Commercial real estate	—	—		—		—	—		—
Residential real estate	24	1,720		1,716		27	2,066		2,066
Home equity	2	70		70		7	194		194
Consumer	—	—		—		—	—		—
Total	26	$	1,790	$	1,786	34	$	2,260	$	2,260
N/R = Not reported. Results for reporting periods beginning after January 1, 2020 are presented under ASC 326, while prior period amounts continue to be reported in accordance with previously applicable GAAP.

The TDRs above increased the allowance for credit losses by less than $0.1 million in each of the six months ended of June 30, 2020 and 2019 and resulted in charge-offs of less than $0.1 million during those same time periods.

The Company had one TDR that subsequently defaulted in 2019. The loan balance was approximately $3.0 million and the subsequent default resulted in a charge-off of $0.7 million and the remaining balance was transferred to OREO during 2019. The Company has had no TDRs that subsequently defaulted in 2020.

COVID-19 Pandemic

In March of 2020, in response to the COVID-19 pandemic, regulatory guidance was issued that clarified the accounting for loan modifications. Modifications of loan terms do not automatically result in a TDR. Short-term modifications made on a good faith basis in response to COVID-19 to borrowers who were current prior to any relief, are not TDRs. This includes short-term (e.g., six months) modifications such as payment deferrals, fee waivers, extension of repayment terms, or other delays that are insignificant. Borrowers considered current are those that are less than 30 days past due on their contractual payments at the time the modification program was implemented. However, these deferrals do not absolve the company from performing its normal risk rating and therefore a loan could be current and have a less than satisfactory risk rating.

Through June 30, 2020, the Company has granted deferrals of approximately $125 million for mortgage borrowers and $430 million for commercial borrowers. As of June 30, 2020, $3.6 million of the mortgage deferrals were previously and currently considered TDRs due to Chapter 7 bankruptcies.

Credit Quality Indicators

All commercial loans within the portfolio are subject to internal risk rating.  All non-commercial loans are evaluated based on payment history.  The Company’s internal risk ratings for commercial loans are:  Exceptional, Good, Acceptable, Pass/Watch, 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 and overall collateral position, along with other economic trends and historical payment performance.  The risk rating for each credit is updated when the Company receives current financial information, the loan is reviewed by the Company’s internal loan review and 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.

Based on the most recent analysis performed, the risk category of loans by class of loans at June 30, 2020 is as follows (in thousands):

													Revolving
	Term Loans												Loans
	Amortized Cost Basis by Origination Year and Risk Level												Amortized
	2020		2019		2018		2017		2016		Prior		Cost Basis		Total
Commercial and industrial
Pass	$	74,977	$	74,675	$	63,750	$	38,259	$	10,177	$	11,707	$	62,386	$	335,931
Special mention	85		46		18		61		—		441		211		862
Substandard	64		830		1,196		816		8,729		2,195		18,499		32,329
Total	$	75,126	$	75,551	$	64,964	$	39,136	$	18,906	$	14,343	$	81,096	$	369,122

													Revolving
	Term Loans												Loans
	Amortized Cost Basis by Origination Year and Risk Level												Amortized
	2020		2019		2018		2017		2016		Prior		Cost Basis		Total
Commercial real estate -
Total
Pass	$	172,741	$	343,898	$	200,306	$	165,468	$	164,439	$	346,209	$	27,105	$	1,420,166
Special mention	—		5,156		1,222		691		359		6,211		—		13,639
Substandard	220		1,655		4,596		3,927		9,919		13,144		407		33,868
Total	$	172,961	$	350,709	$	206,124	$	170,086	$	174,717	$	365,564	$	27,512	$	1,467,673

Commercial real estate -
1-4 Family
Pass	$	19,584	$	21,409	$	10,445	$	8,686	$	6,918	$	37,060	$	9,734	$	113,836
Special mention	—		—		—		26		334		3,053		—		3,413
Substandard	—		229		—		952		109		5,268		7		6,565
Total	$	19,584	$	21,638	$	10,445	$	9,664	$	7,361	$	45,381	$	9,741	$	123,814

Commercial real estate -
Hotels
Pass	$	14,655	$	110,833	$	35,038	$	49,483	$	21,518	$	56,378	$	—	$	287,905
Substandard	—		—		—		—		4,526		2,748		—		7,274
Total	$	14,655	$	110,833	$	35,038	$	49,483	$	26,044	$	59,126	$	—	$	295,179

Commercial real estate -
Multi-family
Pass	$	57,954	$	57,159	$	2,836	$	22,528	$	32,957	$	27,812	$	770	$	202,016
Special mention	—		1,921		561		—		—		—		—		2,482
Substandard	—		—		—		—		—		82		—		82
Total	$	57,954	$	59,080	$	3,397	$	22,528	$	32,957	$	27,894	$	770	$	204,580

Commercial real estate -
Non Residential Non-Owner Occupied
Pass	$	69,473	$	120,792	$	121,420	$	57,873	$	81,033	$	160,184	$	11,318	$	622,093
Special mention	—		316		602		574		—		595		—		2,087
Substandard	58		98		1,181		78		1,446		1,347		240		4,448
Total	$	69,531	$	121,206	$	123,203	$	58,525	$	82,479	$	162,126	$	11,558	$	628,628

Commercial real estate -
Non Residential Owner Occupied
Pass	$	11,076	$	33,705	$	30,567	$	26,899	$	22,012	$	64,777	$	5,279	$	194,315
Special mention	—		2,919		58		91		24		2,563		—		5,655
Substandard	162		1,329		3,415		2,896		3,839		3,700		161		15,502
Total	$	11,238	$	37,953	$	34,040	$	29,886	$	25,875	$	71,040	$	5,440	$	215,472

													Revolving
	Term Loans												Loans
	Amortized Cost Basis by Origination Year and Risk Level												Amortized
	2020		2019		2018		2017		2016		Prior		Cost Basis		Total
Residential real estate
Performing	$	197,377	$	281,064	$	223,330	$	165,437	$	129,448	$	507,921	$	123,143	$	1,627,720
Non-performing	—		668		—		124		212		2,374		53		3,431
Total	$	197,377	$	281,732	$	223,330	$	165,561	$	129,660	$	510,295	$	123,196	$	1,631,151

Home equity
Performing	$	5,054	$	7,570	$	7,121	$	2,733	$	2,121	$	12,861	$	105,047	$	142,507
Non-performing	—		—		—		—		—		—		165		165
Total	$	5,054	$	7,570	$	7,121	$	2,733	$	2,121	$	12,861	$	105,212	$	142,672

Consumer
Performing	$	9,689	$	18,922	$	12,199	$	4,492	$	2,485	$	2,284	$	2,207	$	52,278
Non-performing	—		—		—		—		—		—		—		—
Total	$	9,689	$	18,922	$	12,199	$	4,492	$	2,485	$	2,284	$	2,207	$	52,278

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

	Commercial and Industrial		Commercial Real Estate		Total
December 31, 2019
Pass	$	276,847	$	1,408,644	$	1,685,491
Special mention	2,472		13,838		16,310
Substandard	28,696		37,255		65,951
Total	$	308,015	$	1,459,737	$	1,767,752

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

	Performing		Non-Performing		Total
December 31, 2019
Residential real estate	$	1,636,920	$	3,476	$	1,640,396
Home equity	148,397		531		148,928
Consumer	54,263		—		54,263
Total	$	1,839,580	$	4,007	$	1,843,587

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Derivative Instruments

6 Months Ended

Jun. 30, 2020

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments

Derivative InstrumentsAs of June 30, 2020 and December 31, 2019, the Company primarily utilizes non-hedging derivative financial instruments with commercial banking customers to facilitate their interest rate management strategies. For these instruments, the Company acts as an intermediary for its customers and has offsetting contracts with financial institution counterparties. Changes in the fair value of these underlying derivative contracts generally offset each other and do not significantly impact the Company's results of operations.

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

	June 30, 2020				December 31, 2019
	Notional Amount		Fair Value		Notional Amount		Fair Value
Non-hedging interest rate derivatives:
Customer counterparties:
Loan interest rate swap - assets	$	620,392	$	65,882	$	377,534	$	16,094
Loan interest rate swap - liabilities	2,041		279		189,803		3,214
Non-hedging interest rate derivatives:
Financial institution counterparties:
Loan interest rate swap - assets	2,041		279		189,803		3,214
Loan interest rate swap - liabilities	625,038		66,100		382,566		16,133

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,
	2020		2019		2020		2019
Change in Fair Value Non-Hedging Interest Rate Derivatives:
Other income - derivative assets	$	3,807	$	5,128	$	41,718	$	2,249
Other income - derivative liabilities	(3,807)		(5,128)		(41,718)		(2,249)
Other expense - derivative liabilities	10		97		183		154

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.

Pursuant to the Company's agreements with certain of its derivative financial institution counterparties, the Company may receive collateral or post collateral, which may be in the form of cash or securities, based upon mark-to-mark positions.The Company has posted collateral with a market value of $68.5 million as of June 30, 2020.

Loans associated with a customer counterparty loan interest rate swap agreement may be subject to a make whole penalty upon termination of the agreement. The dollar amount of the make whole penalty varies based on the remaining term of the agreement and market rates at that time. The make whole penalty is secured by equity in the specific collateral securing the loan. The Company estimates the make whole penalty when determining if there is sufficient collateral to pay off both the potential make whole penalty and the outstanding loan balance at the origination of the loan. In the event of a customer default, the make whole penalty is capitalized into the existing loan balance; however, no guarantees can be made that the collateral will be sufficient to cover both the make whole provision and the outstanding loan balance at the time of foreclosure.

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Employee Benefit Plans

6 Months Ended

Jun. 30, 2020

Share-based Payment Arrangement, Noncash Expense [Abstract]

Employee Benefit Plans

Employee Benefit Plans

Stock Options

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

	Six months ended June 30,
	2020			2019
	Options	Weighted-Average Exercise Price		Options	Weighted-Average Exercise Price
Outstanding at January 1	46,251	$	52.74	57,972	$	51.15
Exercised	(4,166)	45.44		(8,140)	44.85
Outstanding at June 30	42,085	$	53.47	49,832	$	52.18
Exerciseable at June 30	22,214	$	50.22	11,644	$	44.62

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,
	2020		2019
Proceeds from stock option exercises	$	189	$	365
Intrinsic value of stock options exercised	77		263
Stock-based compensation expense associated with stock options	$	34	$	64
At period-end:	June 30, 2020
Unrecognized stock-based compensation expense associated with stock options	$	50
Weighted average period (in years) in which the above amount is expected to be
recognized	1.2

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, 2020 and 2019, all shares issued in connection with stock option exercises were issued from available treasury stock. For the stock options that have performance-based criteria, management has evaluated those criteria and has determined that, as of June 30, 2020, the criteria were probable of being met.

Restricted Shares, Restricted Stock Units, Performance Share Units

The Company records compensation expense with respect to restricted shares, restricted stock units and performance share units in an amount equal to the fair value of the common stock covered by each award on the date of grant. These awards 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, and, except for restricted stock units and performance share units, 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.  For restricted shares that have performance-based criteria, management has evaluated those criteria and has determined that, as of June 30, 2020, the criteria were probable of being met.

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

	Six months ended June 30,
	2020			2019
	Restricted Awards	Average Market Price at Grant		Restricted Awards	Average Market Price at Grant
Outstanding at January 1	148,083	$	62.62	152,692	$	51.85
Granted	37,103	67.40		31,006	79.86
Vested	(26,450)	49.58		(41,657)	39.79
Outstanding at June 30	158,736	$	65.91	142,041	$	61.50

Information regarding stock-based compensation associated with restricted shares is provided in the following table (in thousands):

	Three months ended June 30, 2020				Six months ended June 30,
	2020		2019		2020		2019
Stock-based compensation expense associated with restricted shares	$	681	$	501	$	1,310	$	935
At period-end:					June 30, 2020
Unrecognized stock-based compensation expense associated with restricted shares					$	6,208
Weighted average period (in years) in which the above amount is expected to be recognized					3.2

Shares issued in conjunction 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, 2020 and 2019, 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 a frozen defined benefit pension plan (the “Defined Benefit Plan”), which was inherited from the Company's acquisition of the plan sponsor (Horizon Bancorp, Inc.).

The following table presents the components of the Company's net periodic benefit cost, which is included in the line item "other expenses" in the consolidated statements of income, (in thousands):

	Three months ended June 30,				Six months ended June 30,
	2020		2019		2020		2019
Components of net periodic cost:
Interest cost	$	112	$	174	$	224	$	348
Expected return on plan assets	(203)		(266)		(406)		(531)
Net amortization and deferral	272		285		544		569
Net Periodic Pension Cost	$	181	$	193	$	362	$	386

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2020

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

COVID-19

The COVID-19 pandemic is creating extensive disruptions to the global economy and to the lives of individuals throughout the world. Governments, businesses, and the public are taking unprecedented actions to contain the spread of COVID-19 and to mitigate its effects, including quarantines, travel bans, shelter-in-place orders, closures of businesses and schools, fiscal stimulus, and legislation designed to deliver monetary aid and other relief. While the scope, duration, and full effects of COVID-19 are rapidly evolving and not fully known, the pandemic and related efforts to contain it have disrupted global economic activity, adversely affected the functioning of financial markets, impacted interest rates, increased economic

and market uncertainty, and disrupted trade and supply chains. If these effects continue for a prolonged period or result in sustained economic stress or recession, the effects could have a material adverse impact on the Company in a number of ways related to credit, collateral, customer demand, funding, operations, interest rate risk, human capital and self-insurance, as well as financial statement related risk associated with critical accounting estimates such as the allowance for credit losses or valuation impairments on the Company's goodwill, intangible assets and deferred taxes.

Credit Related Financial Instruments

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, 2020		December 31, 2019
Commitments to extend credit:
Home equity lines	$	219,045	$	214,715
Commercial real estate	51,646		56,941
Other commitments	247,219		213,904
Standby letters of credit	5,026		6,748
Commercial letters of credit	1,045		1,249

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.

Litigation

In addition, 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 resolved. 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.

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Accumulated Other Comprehensive Loss

6 Months Ended

Jun. 30, 2020

Equity [Abstract]

Accumulated Other Comprehensive Loss

Accumulated Other Comprehensive Income

The activity in accumulated other comprehensive income 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 23%.

	Three months ended June 30,						Six months ended June 30,
	Defined						Defined
	Benefit		Securities				Benefit		Securities
	Pension		Available-				Pension		Available-
	Plan		-for-Sale		Total		Plan		-for-Sale		Total
2020
Beginning Balance	$	(6,270)	$	33,730	$	27,460	$	(6,270)	$	12,110	$	5,840
Other comprehensive income before reclassifications	—		3,565		3,565		—		24,036		24,036
Amounts reclassified from other comprehensive income	—		4		4		—		(44)		(44)
Reclassification of unrealized gains on held-to-maturity securities to available-for-sale	—		—		—		—		1,197		1,197
	—		3,569		3,569		—		25,189		25,189
Ending Balance	$	(6,270)	$	37,299	$	31,029	$	(6,270)	$	37,299	$	31,029
2019
Beginning Balance	$	(5,871)	$	20	$	(5,851)	$	(5,871)	$	(8,611)	$	(14,482)
Other comprehensive income before reclassifications	—		10,956		10,956		—		19,654		19,654
Amounts reclassified from other comprehensive income	—		(17)		(17)		—		(84)		(84)
	—		10,939		10,939		—		19,570		19,570
Ending Balance	$	(5,871)	$	10,959	$	5,088	$	(5,871)	$	10,959	$	5,088

	Amounts reclassified from Other Comprehensive Income
	Three months ended				Six months ended				Affected line item
	June 30,				June 30,				in the Consolidated Statements
	2020		2019		2020		2019		of Income
Securities available-for-sale:
Net securities (losses) gains reclassified into earnings	$	(6)	$	21	$	56	$	109	(Losses) gains on sale of investment securities, net
Related income tax expense (income)	2		(4)		(12)		(25)		Income tax expense (income)
Net effect on accumulated other comprehensive income	$	(4)	$	17	$	44	$	84

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Earnings per Share

6 Months Ended

Jun. 30, 2020

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,
	2020		2019		2020		2019
Net income available to common shareholders	$	18,251	$	22,751	$	47,249	$	44,370
Less: earnings allocated to participating securities	(180)		(197)		(463)		(382)
Net earnings allocated to common shareholders	$	18,071	$	22,554	$	46,786	$	43,988
Distributed earnings allocated to common stock	$	9,073	$	8,615	$	18,147	$	17,231
Undistributed earnings allocated to common stock	8,998		13,939		28,639		26,757
Net earnings allocated to common shareholders	$	18,071	$	22,554	$	46,786	$	43,988
Average shares outstanding	16,081		16,368		16,123		16,390
Effect of dilutive securities:
Employee stock awards	16		18		19		18
Shares for diluted earnings per share	16,097		16,386		16,142		16,408
Basic earnings per share	$	1.12	$	1.38	$	2.90	$	2.68
Diluted earnings per share	$	1.12	$	1.38	$	2.90	$	2.68

Anti-dilutive options are 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. Anti-dilutive options were not significant for any of the periods shown above.

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Fair Value Measurements

6 Months Ended

Jun. 30, 2020

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) for 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 creditworthiness, 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. On a quarterly basis, the Company reprices its debt securities with a third party that is independent of the primary pricing service provider to verify the reasonableness of the fair values.

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 "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, 2020.

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 3 inputs based on observable market data for both real estate collateral and 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, 2020
Recurring fair value measurements
Financial Assets
Obligations of states and political subdivisions	$	218,227	$	—	$	218,227	$	—
Mortgage-backed securities:
U.S. Government agencies	786,507		—		786,507		—
Private label	11,349		—		5,987		5,362
Trust preferred securities	3,480		—		3,480		—
Corporate securities	33,381		—		29,331		4,050
Marketable equity securities	10,474		5,960		4,514		—
Certificates of deposit held for investment	2,241		—		2,241		—
Derivative assets	66,161		—		66,161		—
Financial Liabilities
Derivative liabilities	66,526		—		66,526		—
Nonrecurring fair value measurements
Financial Assets
Loans individually evaluated	$	6,447	$	—	$	—	$	6,447	$	(1,150)
Non-Financial Assets
Other real estate owned	3,997		—		—		3,997		(267)
December 31, 2019
Recurring fair value measurements
Financial Assets
U.S. Government agencies	$	502	$	—	$	502	$	—
Obligations of states and political subdivisions	117,187		—		117,187		—
Mortgage-backed securities:
U.S. Government agencies	642,104		—		642,104		—
Private label	11,485		—		5,841		5,644
Trust preferred securities	4,461		—		4,461		—
Corporate securities	32,126		—		28,064		4,062
Marketable equity securities	12,634		7,787		4,847		—
Certificates of deposit held for investment	2,241		—		2,241		—
Derivative assets	19,310		—		19,310		—
Financial Liabilities
Derivative liabilities	19,380		—		19,380		—
Nonrecurring fair value measurements
Financial Assets
Impaired loans	$	8,925	$	—	$	—	$	8,925	$	(87)
Non-Financial Assets
Other real estate owned	4,670		—		—		4,670		(470)
Other assets	100		—		—		100		(297)

The Company's financial assets and liabilities measured at fair value on a nonrecurring basis using significant unobservable inputs (Level 3) include impaired loans that were remeasured and reported at fair value through a specific valuation allowance allocation of the allowance for credit 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, 2020 and 2019, collateral discounts ranged from 20% to 30%. During the six months ended June 30, 2020 and 2019, the Company had no Level 2 financial assets and liabilities that were measured on a nonrecurring basis.

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.

Fair Value of Financial Instruments

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 rates 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 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, 2020
Assets:
Cash and cash equivalents	$	373,254	$	373,254	$	373,254	$	—	$	—
Securities available-for-sale	1,055,185		1,055,185		—		1,045,773		9,412
Marketable equity securities	10,474		10,474		5,960		4,514		—
Net loans	3,640,397		3,634,170		—		—		3,634,170
Accrued interest receivable	14,200		14,200		14,200		—		—
Derivative assets	66,161		66,161		—		66,161		—
Liabilities:
Deposits	4,411,115		4,444,930		3,068,484		1,376,446		—
Short-term debt	282,676		267,186		—		267,186		—
Accrued interest payable	2,257		2,257		2,257		—		—
Derivative liabilities	66,526		66,526		—		66,526		—
December 31, 2019
Assets:
Cash and cash equivalents	$	140,144	$	140,144	$	140,144	$	—	$	—
Securities available-for-sale	810,106		810,106		—		800,400		9,706
Securities held-to-maturity	49,036		50,598		—		50,598		—
Marketable equity securities	12,634		12,634		7,787		4,847		—
Net loans	3,604,510		3,574,435		—		—		3,574,435
Accrued interest receivable	11,569		11,569		11,569		—		—
Derivative assets	19,310		19,310		—		19,310		—
Liabilities:
Deposits	4,075,894		4,094,493		2,711,323		1,383,170		—
Short-term debt	211,255		211,255		—		211,255		—
Long-term debt	4,056		4,124		—		4,124		—
Accrued interest payable	2,849		2,849		2,849		—		—
Derivative liabilities	19,380		19,380		—		19,380		—

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Organization, Consolidation and Presentation of Financial Statements (Policies)

6 Months Ended

Jun. 30, 2020

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Allowance for Credit Losses - Available-for-Sale Securities

Allowance for Credit Losses - Available-for-Sale Securities: For available-for-sale debt securities in an unrealized loss position, the Company first assesses whether it intends to sell, or is more likely than not that it will be required to sell the security before recovery of its amortized cost basis. If either criteria regarding intent or requirement to sell is met, the security's amortized cost basis is written down to fair value through income. For available-for-sale debt securities that do not meet the aforementioned criteria, the Company evaluates whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, management considers the extent to which fair value is less than amortized cost, any changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security, among other factors. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses is recorded for the credit loss, limited by the amount that the fair value is less than the amortized cost basis. Any impairment that has not been recorded through an allowance for credit losses is recognized in other comprehensive income.

Changes in the allowance for credit losses are recorded as a provision for (or reversal of) credit loss expense. Losses are charged against the allowance when management believes the uncollectibility of an available-for-sale debt security is confirmed or when either of the criteria regarding intent or requirement to sell is met.

Purchased Credit Deteriorated ("PCD") Loans

Purchased Credit Deteriorated ("PCD") Loans: The Company has purchased loans during its acquisitions, some of which have experienced more than insignificant credit deterioration since origination. PCD loans are recorded at the amount paid. An allowance for credit losses is determined using the same methodology as other loans held for investment. The initial allowance for credit losses determined on a collective basis is allocated to individual loans. The sum of the loan's purchase price and the allowance for credit losses becomes the initial amortized cost basis. The difference between the initial amortized cost basis and the par value of the loan is a noncredit discount or premium, which is accreted or amortized into interest income over the life of the loan. Subsequent changes to the allowance for credit losses are recorded through provision expense.

Allowance for Credit Losses - Loans

Allowance for Credit Losses - Loans: The allowance for credit losses is a valuation account that is deducted from the loans' amortized cost basis to present the net amount expected to be collected on the loans. Loans are charged off against the allowance when management believes the uncollectibility of a loan balance is confirmed. Expected recoveries do not exceed the aggregate of amounts previously charged-off and expected to be charged-off. Management estimates the allowance balance using relevant available information, from internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. Historical credit loss experience provides the basis for the estimation of expected credit losses. Adjustments to historical loss information are made for differences in current loan-specific risk characteristics, such as differences in underwriting standards, portfolio mix, delinquency level, or term as well as for changes in environmental conditions, such as changes in unemployment rates, property values, or other relevant factors. The Company has identified the following portfolio segments and measures the allowance for credit losses using the following methods:

Portfolio Segment	Measurement Method
Commercial and industrial	Migration
Commercial real estate:
1-4 family	Migration
Hotels	Migration
Multi-family	Migration
Non Residential Non-Owner Occupied	Migration
Non Residential Owner Occupied	Migration
Residential real estate	Vintage
Home equity	Vintage
Consumer	Vintage

Migration is an analysis that tracks a closed pool of loans for a configurable period of time and calculates a loss ratio on only those loans in the pool at the start date based on outstanding balance. Vintage is a predictive loss model that includes a reasonable approximation of probable and estimable future losses by tracking each loan's net losses over the life of the loan as compared to its original balance. For demand deposit overdrafts, the allowance for credit losses is measured using the historical loss rate. Loans that do not share risk characteristics are evaluated on an individual basis. Loans evaluated individually are not included in the collective evaluation. When management determines that foreclosure is probable, the expected credit losses are based on the fair value of the collateral at the reporting date, adjusted for selling costs as appropriate.

Expected credit losses are estimated over the contractual term of the loan, adjusted for expected prepayments when appropriate. The contractual term excludes expected extensions, renewals, and modifications unless either of the following applies: management has a reasonable expectation at the reporting date that a troubled-debt restructuring will be executed with an individual borrower or the extension or renewal options are included in the original or modified contract at the reporting date and are not unconditionally cancellable by the Company.

Troubled Debt Restructuring

Troubled Debt Restructurings ("TDRs"): A loan for which the terms have been modified resulting in a concession, and for which the borrower is experiencing financial difficulties, is considered to be a TDR. The allowance for credit loss on a TDR is measured using the same method as all other loans held for investment, except when the value of a concession cannot be measured using a method other than the discounted cash flow method. When the value of a concession is measured using the discounted cash flow method, the allowance for credit loss is determined by discounting the expected future cash flows at the original interest rate of the loan.

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Recent Accounting Pronouncements (Tables)

6 Months Ended

Jun. 30, 2020

Accounting Standards Update and Change in Accounting Principle

The following table illustrates the impact of ASC 326 (in thousands):

	As Reported Under		Pre-ASC 326		Impact of ASC 326
	ASC 326		Adoption		Adoption
Gross Loans	$	3,618,825	$	3,616,099	$	2,726
Allowance for Credit Losses	(17,349)		(11,589)		(5,760)
Deferred Tax Assets, net	7,380		6,669		711
Shareholders' Equity	655,648		657,983		(2,335)

Portfolio Segments that Measure Allowance for Credit Loss

The following table summarizes the activity in the allowance for credit losses, by portfolio loan classification, for the six months ended June 30, 2020 and 2019 (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.

	Commercial and		Commercial		Residential						DDA
	Industrial		Real Estate		Real Estate		Home Equity		Consumer		Overdrafts		Total
Six months ended June 30, 2020
Beginning balance	$	2,059	$	2,606	$	3,448	$	1,187	$	975	$	1,314	$	11,589
Impact of adopting CECL	1,715		3,254		2,139		(598)		(810)		60		5,760
Charge-offs	(77)		(422)		(859)		(206)		(91)		(1,162)		(2,817)
Recoveries	14		331		103		56		141		800		1,445
Provision for credit losses	2,555		4,321		2,492		208		(95)		(259)		9,222
Ending balance	$	6,266	$	10,090	$	7,323	$	647	$	120	$	753	$	25,199
Six months ended June 30, 2019
Beginning balance	$	4,060	$	4,495	$	4,116	$	1,268	$	319	$	1,708	$	15,966
Charge-offs	(51)		(178)		(631)		(117)		(296)		(1,213)		(2,486)
Recoveries	140		607		125		—		143		749		1,764
(Recovery of) Provision for credit losses	(1,353)		(1,455)		349		60		343		607		(1,449)
Ending balance	$	2,796	$	3,469	$	3,959	$	1,211	$	509	$	1,851	$	13,795
Three months ended June 30, 2020
Beginning balance	$	5,855	$	9,389	$	6,958	$	702	$	233	$	1,256	24,393
Charge-offs	—		(39)		(376)		(161)		(36)		(459)		(1,071)
Recoveries	5		128		8		9		128		349		627
(Recovery of) provision	406		612		733		97		(205)		(393)		1,250
Ending balance	$	6,266	$	10,090	$	7,323	$	647	$	120	$	753	$	25,199
Three months ended June 30, 2019
Beginning balance	$	2,970	$	4,640	$	3,820	$	1,248	$	468	$	1,500	$	14,646
Charge-offs	(51)		(133)		(303)		(71)		(111)		(588)		(1,257)
Recoveries	5		575		50		—		46		330		1,006
(Recovery of) provision	(128)		(1,613)		392		34		106		609		(600)
Ending balance	$	2,796	$	3,469	$	3,959	$	1,211	$	509	$	1,851	$	13,795

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Investments (Tables)

6 Months Ended

Jun. 30, 2020

Investments [Abstract]

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

	June 30, 2020								December 31, 2019
	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	$	—	$	—	$	—	$	—	$	500	$	2	$	—	$	502
Obligations of states and
political subdivisions	211,439		7,383		595		218,227		112,393		4,800		6		117,187
Mortgage-backed securities:
U.S. government agencies	746,148		40,638		279		786,507		631,637		12,292		1,825		642,104
Private label	10,477		876		4		11,349		10,896		589		—		11,485
Trust preferred securities	4,551		—		1,071		3,480		4,781		27		347		4,461
Corporate securities	31,568		1,857		44		33,381		31,669		500		43		32,126
Total Debt Securities	1,004,183		50,754		1,993		1,052,944		791,876		18,210		2,221		807,865
Certificates of deposit held for investment	2,241		—		—		2,241		2,241		—		—		2,241
Total Securities Available-for-Sale	$	1,006,424	$	50,754	$	1,993	$	1,055,185	$	794,117	$	18,210	$	2,221	$	810,106

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

Securities held-to-maturity:
Mortgage-backed securities:
U.S. government agencies	$	—	$	—	$	—	$	—	$	49,036	$	1,562	$	—	$	50,598
Total Securities Held-to-Maturity	$	—	$	—	$	—	$	—	$	49,036	$	1,562	$	—	$	50,598

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, 2020
	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	$	35,005	$	595	$	—	$	—	$	35,005	$	595
Mortgage-backed securities:
U.S. Government agencies	83,810		279		38		—		83,848		279
Private Label	275		4		—		—		275		4
Trust preferred securities	—		—		3,480		1,071		3,480		1,071
Corporate securities	445		44		—		—		445		44
Total available-for-sale	$	119,535	$	922	$	3,518	$	1,071	$	123,053	$	1,993

	December 31, 2019
	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	$	230	$	—	$	1,439	$	6	$	1,669	$	6
Mortgage-backed securities:
U.S. Government agencies	123,289		1,247		34,746		578		158,035		1,825
Trust preferred securities	4,200		347		—		—		4,200		347
Corporate securities	11,248		43		—		—		11,248		43
Total available-for-sale	$	138,967	$	1,637	$	36,185	$	584	$	175,152	$	2,221

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, 2020, 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
Available-for-Sale Debt Securities
Due in one year or less	$	2,050	$	2,062
Due after one year through five years	15,327		15,900
Due after five years through ten years	294,981		312,351
Due after ten years	691,825		722,631
Total	$	1,004,183	$	1,052,944

Gross Gains And Losses Realized

Gross gains and gross losses recognized 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,
	2020		2019		2020		2019
Gross realized gains on securities sold	$	—	$	21	$	133	$	110
Gross realized losses on securities sold	(6)		—		(77)		(1)
Net investment security (losses) gains	$	(6)	$	21	$	56	$	109
Gross unrealized gains recognized on equity securities still held	$	242	$	113	$	36	$	241
Gross unrealized losses recognized on equity securities still held	—		—		(2,195)		(53)
Net unrealized gains (losses) recognized on equity securities still held	$	242	$	113	$	(2,159)	$	188

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Loans (Tables)

6 Months Ended

Jun. 30, 2020

Loans and Leases Receivable, Net Amount [Abstract]

Summary Of Major Classifications For Loans

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

	June 30, 2020		December 31, 2019
Commercial and industrial	369,122		308,015
1-4 Family	123,814		N/R
Hotels	295,179		N/R
Multi-family	204,580		N/R
Non Residential Non-Owner Occupied	628,628		N/R
Non Residential Owner Occupied	215,472		N/R
Commercial real estate	1,467,673		1,459,737
Residential real estate	1,631,151		1,640,396
Home equity	142,672		148,928
Consumer	52,278		54,263
DDA overdrafts	2,700		4,760
Gross loans	3,665,596		3,616,099
Allowance for credit losses	(25,199)		(11,589)
Net loans	$	3,640,397	$	3,604,510
Construction loans included in:
Residential real estate	$	28,252	$	29,033
Commercial real estate	42,092		64,049
N/R = Not reported. Results for reporting periods beginning after January 1, 2020 are presented under ASC 326, while prior period amounts continue to be reported in accordance with previously applicable GAAP.

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Allowance For Credit Losses (Tables)

6 Months Ended

Jun. 30, 2020

Receivables [Abstract]

Financing Receivable, Allowance for Credit Loss

The following table summarizes the activity in the allowance for credit losses, by portfolio loan classification, for the six months ended June 30, 2020 and 2019 (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.

	Commercial and		Commercial		Residential						DDA
	Industrial		Real Estate		Real Estate		Home Equity		Consumer		Overdrafts		Total
Six months ended June 30, 2020
Beginning balance	$	2,059	$	2,606	$	3,448	$	1,187	$	975	$	1,314	$	11,589
Impact of adopting CECL	1,715		3,254		2,139		(598)		(810)		60		5,760
Charge-offs	(77)		(422)		(859)		(206)		(91)		(1,162)		(2,817)
Recoveries	14		331		103		56		141		800		1,445
Provision for credit losses	2,555		4,321		2,492		208		(95)		(259)		9,222
Ending balance	$	6,266	$	10,090	$	7,323	$	647	$	120	$	753	$	25,199
Six months ended June 30, 2019
Beginning balance	$	4,060	$	4,495	$	4,116	$	1,268	$	319	$	1,708	$	15,966
Charge-offs	(51)		(178)		(631)		(117)		(296)		(1,213)		(2,486)
Recoveries	140		607		125		—		143		749		1,764
(Recovery of) Provision for credit losses	(1,353)		(1,455)		349		60		343		607		(1,449)
Ending balance	$	2,796	$	3,469	$	3,959	$	1,211	$	509	$	1,851	$	13,795
Three months ended June 30, 2020
Beginning balance	$	5,855	$	9,389	$	6,958	$	702	$	233	$	1,256	24,393
Charge-offs	—		(39)		(376)		(161)		(36)		(459)		(1,071)
Recoveries	5		128		8		9		128		349		627
(Recovery of) provision	406		612		733		97		(205)		(393)		1,250
Ending balance	$	6,266	$	10,090	$	7,323	$	647	$	120	$	753	$	25,199
Three months ended June 30, 2019
Beginning balance	$	2,970	$	4,640	$	3,820	$	1,248	$	468	$	1,500	$	14,646
Charge-offs	(51)		(133)		(303)		(71)		(111)		(588)		(1,257)
Recoveries	5		575		50		—		46		330		1,006
(Recovery of) provision	(128)		(1,613)		392		34		106		609		(600)
Ending balance	$	2,796	$	3,469	$	3,959	$	1,211	$	509	$	1,851	$	13,795

Financing Receivable, Nonaccrual

The following tables present the amortized cost basis of loans on non-accrual status and loans past due over 90 days still accruing as of June 30, 2020 (in thousands):

	Non-accrual With No		Non-accrual With		Loans Past Due
	Allowance for		Allowance for		Over 90 Days
	Credit Losses		Credit Losses		Still Accruing
Commercial & Industrial	$	207	$	880	$	—
1-4 Family	—		2,212		—
Hotels	—		2,748		—
Multi-family	—		—		—
Non Residential Non-Owner Occupied	—		346		3
Non Residential Owner Occupied	2,521		888		—
Commercial Real Estate	2,521		6,194		3
Residential Real Estate	232		3,245		4
Home Equity	—		265		61
Consumer	—		—		—
Total	$	2,960	$	10,584	$	68

The following table presents the Company's loans on non-accrual status and loans past due over 90 days still accruing as of December 31, 2019 (in thousands):

			Loans Past Due
			Over 90 Days
	Non-accrual		Still Accruing
Commercial and industrial	$	1,182	$	184
Commercial real estate	6,384		—
Residential real estate	3,393		83
Home equity	531		—
Consumer	—		—
Total	$	11,490	$	267

Impaired Financing Receivables

The following table presents the amortized cost basis of collateral-dependent loans as of June 30, 2020 (in thousands). Changes in the fair value of the collateral for collateral-dependent loans are reported as credit loss expense or a reversal of credit loss expense in the period of change.

	Secured by
	Real Estate		Equipment
Commercial and industrial	$	207	$	—
1-4 Family	—		—
Hotels	2,634		—
Multi-family	—		—
Non Residential Non-Owner Occupied	—		—
Non Residential Owner Occupied	2,520		—
Commercial real estate	5,154		—
Total	$	5,361	$	—

The following table presents the Company’s impaired loans, by class (in thousands) as of December 31, 2019. The difference between the unpaid principal balance and the recorded investment generally reflects amounts that have been previously charged-off. There were no impaired residential, home equity, or consumer loans.

	December 31, 2019
			Unpaid
	Recorded		Principal		Related
	Investment		Balance		Allowance
With no related allowance recorded:
Commercial and industrial	$	501	$	501	$	—
Commercial real estate	3,546		3,572		—
Total	$	4,047	$	4,073	$	—
With an allowance recorded:
Commercial and industrial	$	—	$	—	$	—
Commercial real estate	2,644		2,644		87
Total	$	2,644	$	2,644	$	87

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), for the three and six months ended June 30, 2019:

	Three months ended June 30, 2019				Six months ended June 30, 2019
	Average		Interest		Average		Interest
	Recorded		Income		Recorded		Income
	Investment		Recognized		Investment		Recognized
With no related allowance recorded:
Commercial and industrial	$	589	—		$	603	$	—
Commercial real estate	3,614		2		5,067		38
Total	$	4,203	$	2	$	5,670	$	38
With an allowance recorded:
Commercial and industrial	$	—	$	—	$	—	$	—
Commercial real estate	5,667		76		4,326		106
Total	$	5,667	$	76	$	4,326	$	106

Financing Receivable, Past Due

The following table presents the aging of the amortized cost basis in past-due loans as of June 30, 2020 by class of loan (in thousands):

	30-59		60-89		90+		Total		Current		Total
	Past Due		Past Due		Past Due		Past Due		Loans		Loans
Commercial and industrial	$	130	$	30	$	—	$	160	$	368,962	$	369,122
1-4 Family	753		—		—		753		123,061		123,814
Hotels	—		—		—		—		295,179		295,179
Multi-family	—		—		—		—		204,580		204,580
Non Residential Non-Owner Occupied	—		—		3		3		628,625		628,628
Non Residential Owner Occupied	161		—		—		161		215,311		215,472
Commercial real estate	914		—		3		917		1,466,756		1,467,673
Residential real estate	3,923		1,334		4		5,261		1,625,890		1,631,151
Home Equity	223		108		61		392		142,280		142,672
Consumer	67		—		—		67		52,211		52,278
Overdrafts	272		1		—		273		2,427		2,700
Total	$	5,529	$	1,473	$	68	$	7,070	$	3,658,526	$	3,665,596

The following presents an aging analysis of the Company's past-due loans, by class, as of December 31, 2019 (in thousands):

	30-59		60-89		90+		Total		Current		Total
	Past Due		Past Due		Past Due		Past Due		Loans		Loans
Commercial and industrial	$	243	$	31	$	184	$	458	$	307,557	$	308,015
Commercial real estate	1,514		66		—		1,580		1,458,157		1,459,737
Residential real estate	5,758		1,643		83		7,484		1,632,912		1,640,396
Home equity	840		116		—		956		147,972		148,928
Consumer	156		32		—		188		54,075		54,263
Overdrafts	644		86		—		730		4,030		4,760
Total	$	9,155	$	1,974	$	267	$	11,396	$	3,604,703	$	3,616,099

Financing Receivable, Troubled Debt Restructuring

The following tables set forth the Company’s TDRs (in thousands). Substantially all of the Company's TDRs are accruing interest.

	June 30, 2020		December 31, 2019
Commercial and industrial	$	—	$	—
1-4 Family	126		N/R
Hotels	2,634		N/R
Multi-family	1,921		N/R
Non Residential Non-Owner Occupied	—		N/R
Non Residential Owner Occupied	234		N/R
Commercial real estate	4,915		4,973
Residential real estate	20,631		21,029
Home equity	2,138		3,628
Consumer	185		—
Total	$	27,869	$	29,630
N/R = Not reported. Results for reporting periods beginning after January 1, 2020 are presented under ASC 326, while prior period amounts continue to be reported in accordance with previously applicable GAAP.

The following table presents loans by class, modified as TDRs, that occurred during the six months ended June 30, 2020 and 2019, respectively (dollars in thousands):

	June 30, 2020					June 30, 2019
		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	—	$	—	$	—	—	$	—	$	—
1-4 Family	—	—		—		N/R	N/R		N/R
Hotels	—	—		—		N/R	N/R		N/R
Multi-family	—	—		—		N/R	N/R		N/R
Non Owner Non-Owner Occupied	—	—		—		N/R	N/R		N/R
Non Owner Owner Occupied	—	—		—		N/R	N/R		N/R
Commercial real estate	—	—		—		—	—		—
Residential real estate	24	1,720		1,716		27	2,066		2,066
Home equity	2	70		70		7	194		194
Consumer	—	—		—		—	—		—
Total	26	$	1,790	$	1,786	34	$	2,260	$	2,260
N/R = Not reported. Results for reporting periods beginning after January 1, 2020 are presented under ASC 326, while prior period amounts continue to be reported in accordance with previously applicable GAAP.

Financing Receivable, Credit Quality Indicators

Based on the most recent analysis performed, the risk category of loans by class of loans at June 30, 2020 is as follows (in thousands):

													Revolving
	Term Loans												Loans
	Amortized Cost Basis by Origination Year and Risk Level												Amortized
	2020		2019		2018		2017		2016		Prior		Cost Basis		Total
Commercial and industrial
Pass	$	74,977	$	74,675	$	63,750	$	38,259	$	10,177	$	11,707	$	62,386	$	335,931
Special mention	85		46		18		61		—		441		211		862
Substandard	64		830		1,196		816		8,729		2,195		18,499		32,329
Total	$	75,126	$	75,551	$	64,964	$	39,136	$	18,906	$	14,343	$	81,096	$	369,122

													Revolving
	Term Loans												Loans
	Amortized Cost Basis by Origination Year and Risk Level												Amortized
	2020		2019		2018		2017		2016		Prior		Cost Basis		Total
Commercial real estate -
Total
Pass	$	172,741	$	343,898	$	200,306	$	165,468	$	164,439	$	346,209	$	27,105	$	1,420,166
Special mention	—		5,156		1,222		691		359		6,211		—		13,639
Substandard	220		1,655		4,596		3,927		9,919		13,144		407		33,868
Total	$	172,961	$	350,709	$	206,124	$	170,086	$	174,717	$	365,564	$	27,512	$	1,467,673

Commercial real estate -
1-4 Family
Pass	$	19,584	$	21,409	$	10,445	$	8,686	$	6,918	$	37,060	$	9,734	$	113,836
Special mention	—		—		—		26		334		3,053		—		3,413
Substandard	—		229		—		952		109		5,268		7		6,565
Total	$	19,584	$	21,638	$	10,445	$	9,664	$	7,361	$	45,381	$	9,741	$	123,814

Commercial real estate -
Hotels
Pass	$	14,655	$	110,833	$	35,038	$	49,483	$	21,518	$	56,378	$	—	$	287,905
Substandard	—		—		—		—		4,526		2,748		—		7,274
Total	$	14,655	$	110,833	$	35,038	$	49,483	$	26,044	$	59,126	$	—	$	295,179

Commercial real estate -
Multi-family
Pass	$	57,954	$	57,159	$	2,836	$	22,528	$	32,957	$	27,812	$	770	$	202,016
Special mention	—		1,921		561		—		—		—		—		2,482
Substandard	—		—		—		—		—		82		—		82
Total	$	57,954	$	59,080	$	3,397	$	22,528	$	32,957	$	27,894	$	770	$	204,580

Commercial real estate -
Non Residential Non-Owner Occupied
Pass	$	69,473	$	120,792	$	121,420	$	57,873	$	81,033	$	160,184	$	11,318	$	622,093
Special mention	—		316		602		574		—		595		—		2,087
Substandard	58		98		1,181		78		1,446		1,347		240		4,448
Total	$	69,531	$	121,206	$	123,203	$	58,525	$	82,479	$	162,126	$	11,558	$	628,628

Commercial real estate -
Non Residential Owner Occupied
Pass	$	11,076	$	33,705	$	30,567	$	26,899	$	22,012	$	64,777	$	5,279	$	194,315
Special mention	—		2,919		58		91		24		2,563		—		5,655
Substandard	162		1,329		3,415		2,896		3,839		3,700		161		15,502
Total	$	11,238	$	37,953	$	34,040	$	29,886	$	25,875	$	71,040	$	5,440	$	215,472

													Revolving
	Term Loans												Loans
	Amortized Cost Basis by Origination Year and Risk Level												Amortized
	2020		2019		2018		2017		2016		Prior		Cost Basis		Total
Residential real estate
Performing	$	197,377	$	281,064	$	223,330	$	165,437	$	129,448	$	507,921	$	123,143	$	1,627,720
Non-performing	—		668		—		124		212		2,374		53		3,431
Total	$	197,377	$	281,732	$	223,330	$	165,561	$	129,660	$	510,295	$	123,196	$	1,631,151

Home equity
Performing	$	5,054	$	7,570	$	7,121	$	2,733	$	2,121	$	12,861	$	105,047	$	142,507
Non-performing	—		—		—		—		—		—		165		165
Total	$	5,054	$	7,570	$	7,121	$	2,733	$	2,121	$	12,861	$	105,212	$	142,672

Consumer
Performing	$	9,689	$	18,922	$	12,199	$	4,492	$	2,485	$	2,284	$	2,207	$	52,278
Non-performing	—		—		—		—		—		—		—		—
Total	$	9,689	$	18,922	$	12,199	$	4,492	$	2,485	$	2,284	$	2,207	$	52,278

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

	Commercial and Industrial		Commercial Real Estate		Total
December 31, 2019
Pass	$	276,847	$	1,408,644	$	1,685,491
Special mention	2,472		13,838		16,310
Substandard	28,696		37,255		65,951
Total	$	308,015	$	1,459,737	$	1,767,752

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

	Performing		Non-Performing		Total
December 31, 2019
Residential real estate	$	1,636,920	$	3,476	$	1,640,396
Home equity	148,397		531		148,928
Consumer	54,263		—		54,263
Total	$	1,839,580	$	4,007	$	1,843,587

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Derivative Instruments (Tables)

6 Months Ended

Jun. 30, 2020

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, 2020				December 31, 2019
	Notional Amount		Fair Value		Notional Amount		Fair Value
Non-hedging interest rate derivatives:
Customer counterparties:
Loan interest rate swap - assets	$	620,392	$	65,882	$	377,534	$	16,094
Loan interest rate swap - liabilities	2,041		279		189,803		3,214
Non-hedging interest rate derivatives:
Financial institution counterparties:
Loan interest rate swap - assets	2,041		279		189,803		3,214
Loan interest rate swap - liabilities	625,038		66,100		382,566		16,133

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,
	2020		2019		2020		2019
Change in Fair Value Non-Hedging Interest Rate Derivatives:
Other income - derivative assets	$	3,807	$	5,128	$	41,718	$	2,249
Other income - derivative liabilities	(3,807)		(5,128)		(41,718)		(2,249)
Other expense - derivative liabilities	10		97		183		154

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Employee Benefit Plans (Tables)

6 Months Ended

Jun. 30, 2020

Share-based Payment Arrangement, Noncash Expense [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,
	2020			2019
	Options	Weighted-Average Exercise Price		Options	Weighted-Average Exercise Price
Outstanding at January 1	46,251	$	52.74	57,972	$	51.15
Exercised	(4,166)	45.44		(8,140)	44.85
Outstanding at June 30	42,085	$	53.47	49,832	$	52.18
Exerciseable at June 30	22,214	$	50.22	11,644	$	44.62

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,
	2020		2019
Proceeds from stock option exercises	$	189	$	365
Intrinsic value of stock options exercised	77		263
Stock-based compensation expense associated with stock options	$	34	$	64
At period-end:	June 30, 2020
Unrecognized stock-based compensation expense associated with stock options	$	50
Weighted average period (in years) in which the above amount is expected to be
recognized	1.2

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,
	2020			2019
	Restricted Awards	Average Market Price at Grant		Restricted Awards	Average Market Price at Grant
Outstanding at January 1	148,083	$	62.62	152,692	$	51.85
Granted	37,103	67.40		31,006	79.86
Vested	(26,450)	49.58		(41,657)	39.79
Outstanding at June 30	158,736	$	65.91	142,041	$	61.50

Information regarding stock-based compensation associated with restricted shares is provided in the following table (in thousands):

	Three months ended June 30, 2020				Six months ended June 30,
	2020		2019		2020		2019
Stock-based compensation expense associated with restricted shares	$	681	$	501	$	1,310	$	935
At period-end:					June 30, 2020
Unrecognized stock-based compensation expense associated with restricted shares					$	6,208
Weighted average period (in years) in which the above amount is expected to be recognized					3.2

Pension and Other Postretirement Benefits

The following table presents the components of the Company's net periodic benefit cost, which is included in the line item "other expenses" in the consolidated statements of income, (in thousands):

	Three months ended June 30,				Six months ended June 30,
	2020		2019		2020		2019
Components of net periodic cost:
Interest cost	$	112	$	174	$	224	$	348
Expected return on plan assets	(203)		(266)		(406)		(531)
Net amortization and deferral	272		285		544		569
Net Periodic Pension Cost	$	181	$	193	$	362	$	386

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Commitments and Contingencies (Tables)

6 Months Ended

Jun. 30, 2020

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, 2020		December 31, 2019
Commitments to extend credit:
Home equity lines	$	219,045	$	214,715
Commercial real estate	51,646		56,941
Other commitments	247,219		213,904
Standby letters of credit	5,026		6,748
Commercial letters of credit	1,045		1,249

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Accumulated Other Comprehensive Loss (Tables)

6 Months Ended

Jun. 30, 2020

Equity [Abstract]

Schedule of Changes In Each Component of Accumulated Other Comprehensive Income

The activity in accumulated other comprehensive income 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 23%.

	Three months ended June 30,						Six months ended June 30,
	Defined						Defined
	Benefit		Securities				Benefit		Securities
	Pension		Available-				Pension		Available-
	Plan		-for-Sale		Total		Plan		-for-Sale		Total
2020
Beginning Balance	$	(6,270)	$	33,730	$	27,460	$	(6,270)	$	12,110	$	5,840
Other comprehensive income before reclassifications	—		3,565		3,565		—		24,036		24,036
Amounts reclassified from other comprehensive income	—		4		4		—		(44)		(44)
Reclassification of unrealized gains on held-to-maturity securities to available-for-sale	—		—		—		—		1,197		1,197
	—		3,569		3,569		—		25,189		25,189
Ending Balance	$	(6,270)	$	37,299	$	31,029	$	(6,270)	$	37,299	$	31,029
2019
Beginning Balance	$	(5,871)	$	20	$	(5,851)	$	(5,871)	$	(8,611)	$	(14,482)
Other comprehensive income before reclassifications	—		10,956		10,956		—		19,654		19,654
Amounts reclassified from other comprehensive income	—		(17)		(17)		—		(84)		(84)
	—		10,939		10,939		—		19,570		19,570
Ending Balance	$	(5,871)	$	10,959	$	5,088	$	(5,871)	$	10,959	$	5,088

Schedule of Amounts Reclassified Out Of Accumulated Other Comprehensive Income

	Amounts reclassified from Other Comprehensive Income
	Three months ended				Six months ended				Affected line item
	June 30,				June 30,				in the Consolidated Statements
	2020		2019		2020		2019		of Income
Securities available-for-sale:
Net securities (losses) gains reclassified into earnings	$	(6)	$	21	$	56	$	109	(Losses) gains on sale of investment securities, net
Related income tax expense (income)	2		(4)		(12)		(25)		Income tax expense (income)
Net effect on accumulated other comprehensive income	$	(4)	$	17	$	44	$	84

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Earnings per Share (Tables)

6 Months Ended

Jun. 30, 2020

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,
	2020		2019		2020		2019
Net income available to common shareholders	$	18,251	$	22,751	$	47,249	$	44,370
Less: earnings allocated to participating securities	(180)		(197)		(463)		(382)
Net earnings allocated to common shareholders	$	18,071	$	22,554	$	46,786	$	43,988
Distributed earnings allocated to common stock	$	9,073	$	8,615	$	18,147	$	17,231
Undistributed earnings allocated to common stock	8,998		13,939		28,639		26,757
Net earnings allocated to common shareholders	$	18,071	$	22,554	$	46,786	$	43,988
Average shares outstanding	16,081		16,368		16,123		16,390
Effect of dilutive securities:
Employee stock awards	16		18		19		18
Shares for diluted earnings per share	16,097		16,386		16,142		16,408
Basic earnings per share	$	1.12	$	1.38	$	2.90	$	2.68
Diluted earnings per share	$	1.12	$	1.38	$	2.90	$	2.68

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Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2020

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, 2020
Recurring fair value measurements
Financial Assets
Obligations of states and political subdivisions	$	218,227	$	—	$	218,227	$	—
Mortgage-backed securities:
U.S. Government agencies	786,507		—		786,507		—
Private label	11,349		—		5,987		5,362
Trust preferred securities	3,480		—		3,480		—
Corporate securities	33,381		—		29,331		4,050
Marketable equity securities	10,474		5,960		4,514		—
Certificates of deposit held for investment	2,241		—		2,241		—
Derivative assets	66,161		—		66,161		—
Financial Liabilities
Derivative liabilities	66,526		—		66,526		—
Nonrecurring fair value measurements
Financial Assets
Loans individually evaluated	$	6,447	$	—	$	—	$	6,447	$	(1,150)
Non-Financial Assets
Other real estate owned	3,997		—		—		3,997		(267)
December 31, 2019
Recurring fair value measurements
Financial Assets
U.S. Government agencies	$	502	$	—	$	502	$	—
Obligations of states and political subdivisions	117,187		—		117,187		—
Mortgage-backed securities:
U.S. Government agencies	642,104		—		642,104		—
Private label	11,485		—		5,841		5,644
Trust preferred securities	4,461		—		4,461		—
Corporate securities	32,126		—		28,064		4,062
Marketable equity securities	12,634		7,787		4,847		—
Certificates of deposit held for investment	2,241		—		2,241		—
Derivative assets	19,310		—		19,310		—
Financial Liabilities
Derivative liabilities	19,380		—		19,380		—
Nonrecurring fair value measurements
Financial Assets
Impaired loans	$	8,925	$	—	$	—	$	8,925	$	(87)
Non-Financial Assets
Other real estate owned	4,670		—		—		4,670		(470)
Other assets	100		—		—		100		(297)

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, 2020
Assets:
Cash and cash equivalents	$	373,254	$	373,254	$	373,254	$	—	$	—
Securities available-for-sale	1,055,185		1,055,185		—		1,045,773		9,412
Marketable equity securities	10,474		10,474		5,960		4,514		—
Net loans	3,640,397		3,634,170		—		—		3,634,170
Accrued interest receivable	14,200		14,200		14,200		—		—
Derivative assets	66,161		66,161		—		66,161		—
Liabilities:
Deposits	4,411,115		4,444,930		3,068,484		1,376,446		—
Short-term debt	282,676		267,186		—		267,186		—
Accrued interest payable	2,257		2,257		2,257		—		—
Derivative liabilities	66,526		66,526		—		66,526		—
December 31, 2019
Assets:
Cash and cash equivalents	$	140,144	$	140,144	$	140,144	$	—	$	—
Securities available-for-sale	810,106		810,106		—		800,400		9,706
Securities held-to-maturity	49,036		50,598		—		50,598		—
Marketable equity securities	12,634		12,634		7,787		4,847		—
Net loans	3,604,510		3,574,435		—		—		3,574,435
Accrued interest receivable	11,569		11,569		11,569		—		—
Derivative assets	19,310		19,310		—		19,310		—
Liabilities:
Deposits	4,075,894		4,094,493		2,711,323		1,383,170		—
Short-term debt	211,255		211,255		—		211,255		—
Long-term debt	4,056		4,124		—		4,124		—
Accrued interest payable	2,849		2,849		2,849		—		—
Derivative liabilities	19,380		19,380		—		19,380		—

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Background and Basis of Presentation (Details) $ in Millions	6 Months Ended
	Jun. 30, 2020 USD ($) segment store
Entity Location [Line Items]
Number of Reportable Segments | segment	1
Gain (Loss) on Disposition of Business | $	$ 0.7
Deposits Sold | $	$ 25.7
City National
Entity Location [Line Items]
Number of Stores	94
WEST VIRGINIA | City National
Entity Location [Line Items]
Number of Stores	58
KENTUCKY | City National
Entity Location [Line Items]
Number of Stores	19
VIRGINIA | City National
Entity Location [Line Items]
Number of Stores	13
OHIO | City National
Entity Location [Line Items]
Number of Stores	4

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Recent Accounting Pronouncements (Narrative) (Details) - USD ($)	6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Dec. 31, 2019
Impact of ASC 326 Adoption	$ (2,335,000)
Non-governmental issues exceeding 10% shareholders equity threshold	0		$ 0
Credit-related investment impairment losses	0	$ 0
Receivables Acquired with Deteriorated Credit Quality [Domain]
Impact of ASC 326 Adoption	$ 2,700,000

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Recent Accounting Pronouncements (Accounting Standards Update and Change in Accounting Principle) (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2020	Mar. 31, 2020	Jan. 01, 2020	Dec. 31, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018
Gross loans	$ 3,665,596		$ 3,618,825	$ 3,616,099
Allowance for credit losses	(25,199)	$ (24,393)	(17,349)	(11,589)	$ (13,795)	$ (14,646)	$ (15,966)
Deferred Tax Assets, net			7,380	6,669
Shareholders' Equity	693,750	$ 685,228	$ 655,648	$ 657,983	$ 636,908	$ 619,241	$ 600,764
Impact of adopting CECL	(2,335)
Gross Loans
Impact of adopting CECL	2,726
Allowance for Credit Losses
Impact of adopting CECL	(5,760)
Deferred Tax Assets, net
Impact of adopting CECL	711
Shareholders' Equity
Impact of adopting CECL	$ (2,335)

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Investments (Narrative) (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019	Dec. 31, 2019
Schedule of Investments [Line Items]
Federal Home Loan Bank Stock and Federal Reserve Bank Stock	$ 15,700,000		$ 15,700,000		$ 15,900,000
Non-governmental issues exceeding 10% shareholders equity threshold	0		0		0
Held-to-maturity securities in an unrealized loss position					0
Credit-related investment impairment losses			0	$ 0
Sale of VISA shares	0	$ 0	17,837,000	$ 0
Asset Pledged as Collateral
Schedule of Investments [Line Items]
Carrying value of securities pledged	581,000,000		581,000,000		519,000,000
Marketable equity securities
Schedule of Investments [Line Items]
Investment securities	$ 10,500,000		10,500,000		$ 12,600,000
VISA, Inc. (VISA)
Schedule of Investments [Line Items]
Sale of VISA shares			$ 17,800,000
VISA, Inc. (VISA) | Common Class B
Schedule of Investments [Line Items]
Shares of Visa Inc. Class B common shares sold (in shares)	86,605		86,605
VISA, Inc. (VISA) | Marketable equity securities
Schedule of Investments [Line Items]
Investment securities	$ 0		$ 0
Maximum | First National Corporation (FXNC)
Schedule of Investments [Line Items]
Equity ownership positions in the community bank holding companies (percent)	4.00%		4.00%		4.00%
Maximum | Eagle Financial Services, Inc. (EFSI)
Schedule of Investments [Line Items]
Equity ownership positions in the community bank holding companies (percent)	1.50%		1.50%		1.50%

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Investments (Aggregate Carrying And Approximate Market Values Of Available-For-Sale Securities) (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	$ 1,006,424	$ 794,117
Gross Unrealized Gains	50,754	18,210
Gross Unrealized Losses	1,993	2,221
Estimated Fair Value	1,055,185	810,106
U.S Treasuries and U.S. Government Agencies
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	0	500
Gross Unrealized Gains	0	2
Gross Unrealized Losses	0	0
Estimated Fair Value	0	502
Obligations of states and political subdivisions
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	211,439	112,393
Gross Unrealized Gains	7,383	4,800
Gross Unrealized Losses	595	6
Estimated Fair Value	218,227	117,187
Mortgage-backed securities: U.S. government agencies
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	746,148	631,637
Gross Unrealized Gains	40,638	12,292
Gross Unrealized Losses	279	1,825
Estimated Fair Value	786,507	642,104
Mortgage-backed securities: Private label
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	10,477	10,896
Gross Unrealized Gains	876	589
Gross Unrealized Losses	4	0
Estimated Fair Value	11,349	11,485
Trust preferred securities
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	4,551	4,781
Gross Unrealized Gains	0	27
Gross Unrealized Losses	1,071	347
Estimated Fair Value	3,480	4,461
Corporate securities
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	31,568	31,669
Gross Unrealized Gains	1,857	500
Gross Unrealized Losses	44	43
Estimated Fair Value	33,381	32,126
Total Debt Securities
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	1,004,183	791,876
Gross Unrealized Gains	50,754	18,210
Gross Unrealized Losses	1,993	2,221
Estimated Fair Value	1,052,944	807,865
Certificates of deposit held for investment
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	2,241	2,241
Estimated Fair Value	$ 2,241	$ 2,241

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Investments (Aggregate Carrying And Approximate Market Values Of Held-To-Maturity Securities) (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Schedule of Held-to-maturity Securities [Line Items]
Securities Held-to-Maturity, Amortized Cost	$ 0	$ 49,036
Securities held-to-maturity, Accumulated Unrecognized Holding Gain	0	1,562
Securities held-to-maturity, Accumulated Unrecognized Holding Loss	0	0
Securities held-to-maturity, Estimated Fair Value	0	50,598
Mortgage-backed securities: U.S. government agencies
Schedule of Held-to-maturity Securities [Line Items]
Securities Held-to-Maturity, Amortized Cost	0	49,036
Securities held-to-maturity, Accumulated Unrecognized Holding Gain	0	1,562
Securities held-to-maturity, Accumulated Unrecognized Holding Loss	0	0
Securities held-to-maturity, Estimated Fair Value	$ 0	$ 50,598

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Investments (Gross Unrealized Losses And Fair Value Of Investments) (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Schedule of Investments [Line Items]
Securities available-for-sale, Less Than Twelve Months, Estimated Fair Value	$ 119,535	$ 138,967
Securities available-for-sale, Less Than Twelve Months, Unrealized Loss	922	1,637
Securities available-for-sale, Twelve Months or Greater, Estimated Fair Value	3,518	36,185
Securities available-for-sale, Twelve Months or Greater, Unrealized Loss	1,071	584
Securities available-for-sale, Total, Estimated Fair Value	123,053	175,152
Securities available-for-sale, Total, Unrealized Loss	1,993	2,221
Obligations of states and political subdivisions
Schedule of Investments [Line Items]
Securities available-for-sale, Less Than Twelve Months, Estimated Fair Value	35,005	230
Securities available-for-sale, Less Than Twelve Months, Unrealized Loss	595	0
Securities available-for-sale, Twelve Months or Greater, Estimated Fair Value	0	1,439
Securities available-for-sale, Twelve Months or Greater, Unrealized Loss	0	6
Securities available-for-sale, Total, Estimated Fair Value	35,005	1,669
Securities available-for-sale, Total, Unrealized Loss	595	6
U.S. Government Agencies Mortgage-backed Securities
Schedule of Investments [Line Items]
Securities available-for-sale, Less Than Twelve Months, Estimated Fair Value	83,810	123,289
Securities available-for-sale, Less Than Twelve Months, Unrealized Loss	279	1,247
Securities available-for-sale, Twelve Months or Greater, Estimated Fair Value	38	34,746
Securities available-for-sale, Twelve Months or Greater, Unrealized Loss	0	578
Securities available-for-sale, Total, Estimated Fair Value	83,848	158,035
Securities available-for-sale, Total, Unrealized Loss	279	1,825
Mortgage-backed securities: Private label
Schedule of Investments [Line Items]
Securities available-for-sale, Less Than Twelve Months, Estimated Fair Value	275
Securities available-for-sale, Less Than Twelve Months, Unrealized Loss	4
Securities available-for-sale, Twelve Months or Greater, Estimated Fair Value	0
Securities available-for-sale, Twelve Months or Greater, Unrealized Loss	0
Securities available-for-sale, Total, Estimated Fair Value	275
Securities available-for-sale, Total, Unrealized Loss	4
Trust preferred securities
Schedule of Investments [Line Items]
Securities available-for-sale, Less Than Twelve Months, Estimated Fair Value	0	4,200
Securities available-for-sale, Less Than Twelve Months, Unrealized Loss	0	347
Securities available-for-sale, Twelve Months or Greater, Estimated Fair Value	3,480	0
Securities available-for-sale, Twelve Months or Greater, Unrealized Loss	1,071	0
Securities available-for-sale, Total, Estimated Fair Value	3,480	4,200
Securities available-for-sale, Total, Unrealized Loss	1,071	347
Corporate securities
Schedule of Investments [Line Items]
Securities available-for-sale, Less Than Twelve Months, Estimated Fair Value	445	11,248
Securities available-for-sale, Less Than Twelve Months, Unrealized Loss	44	43
Securities available-for-sale, Twelve Months or Greater, Estimated Fair Value	0	0
Securities available-for-sale, Twelve Months or Greater, Unrealized Loss	0	0
Securities available-for-sale, Total, Estimated Fair Value	445	11,248
Securities available-for-sale, Total, Unrealized Loss	$ 44	$ 43

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Investments (Amortized Cost And Estimated Fair Value Of Debt Securities By Contractual Maturity) (Details) $ in Thousands	Jun. 30, 2020 USD ($)
Securities Available-for-Sale, Amortized Cost
Securities Available-for-Sale, Due in one year or less, Amortized Cost	$ 2,050
Securities Available-for-Sale, Due after one year through five years, Amortized Cost	15,327
Securities Available-for-Sale, Due after five years through ten years, Amortized Cost	294,981
Securities Available-for-Sale, Due after ten years, Amortized Cost	691,825
Securities Available-for-Sale, Amortized Cost, Total	1,004,183
Securities Available-for-Sale, Estimated Fair Value
Securities Available-for-Sale, Due in one year or less, Estimated Fair Value	2,062
Securities Available-for-Sale, Due after one year through five years, Estimated Fair Value	15,900
Securities Available-for-Sale, Due after five years through ten years, Estimated Fair Value	312,351
Securities Available-for-Sale, Due after ten years, Estimated Fair Value	722,631
Securities Available-for-Sale, Estimated Fair Value, Total	$ 1,052,944

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Investments (Gross Gains And Losses Realized) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Investments [Abstract]
Gross realized gains on securities sold	$ 0	$ 21	$ 133	$ 110
Gross realized losses on securities sold	(6)	0	(77)	(1)
Net investment security (losses) gains	(6)	21	56	109
Gross unrealized gains recognized on equity securities still held	242	113	36	241
Gross unrealized losses recognized on equity securities still held	0	0	(2,195)	(53)
Net unrealized gains (losses) recognized on equity securities still held	$ 242	$ 113	$ (2,159)	$ 188

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Loans (Details) $ in Thousands	6 Months Ended	9 Months Ended
	Jun. 30, 2020 USD ($) contract	Mar. 31, 2021 USD ($)	Jan. 01, 2020 USD ($)	Dec. 31, 2019 USD ($)
Loans and Leases Receivable Disclosure [Line Items]
Gross loans	$ 3,665,596		$ 3,618,825	$ 3,616,099
Commercial and industrial
Loans and Leases Receivable Disclosure [Line Items]
Gross loans	369,122			$ 308,015
Small Business Administration Paycheck Protection Program | Commercial and industrial
Loans and Leases Receivable Disclosure [Line Items]
Gross loans	$ 90,000
Financing Receivable, Number of Contracts | contract	1,500
Small Business Administration Paycheck Protection Program | Commercial and industrial | Forecast [Member]
Loans and Leases Receivable Disclosure [Line Items]
Interest and Fee Income, Other Loans		$ 3,000

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Loans (Summary Of Major Classifications For Loans) (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Mar. 31, 2020	Jan. 01, 2020	Dec. 31, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018
Accounts, Notes, Loans and Financing Receivable [Line Items]
Gross loans	$ 3,665,596		$ 3,618,825	$ 3,616,099
Allowance for credit losses	(25,199)	$ (24,393)	$ (17,349)	(11,589)	$ (13,795)	$ (14,646)	$ (15,966)
Net loans	3,640,397			3,604,510
Commercial and industrial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Gross loans	369,122			308,015
Allowance for credit losses	(6,266)	(5,855)		(2,059)	(2,796)	(2,970)	(4,060)
Commercial real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Gross loans	1,467,673			1,459,737
Allowance for credit losses	(10,090)	(9,389)		(2,606)	(3,469)	(4,640)	(4,495)
Construction Loan	42,092			64,049
1-4 Family
Accounts, Notes, Loans and Financing Receivable [Line Items]
Gross loans	123,814
Hotels
Accounts, Notes, Loans and Financing Receivable [Line Items]
Gross loans	295,179
Multi-family
Accounts, Notes, Loans and Financing Receivable [Line Items]
Gross loans	204,580
Non Residential Non-Owner Occupied
Accounts, Notes, Loans and Financing Receivable [Line Items]
Gross loans	628,628
Non Residential Owner Occupied
Accounts, Notes, Loans and Financing Receivable [Line Items]
Gross loans	215,472
Residential real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Gross loans	1,631,151			1,640,396
Allowance for credit losses	(7,323)	(6,958)		(3,448)	(3,959)	(3,820)	(4,116)
Construction Loan	28,252			29,033
Home equity
Accounts, Notes, Loans and Financing Receivable [Line Items]
Gross loans	142,672			148,928
Allowance for credit losses	(647)	(702)		(1,187)	(1,211)	(1,248)	(1,268)
Consumer
Accounts, Notes, Loans and Financing Receivable [Line Items]
Gross loans	52,278			54,263
Allowance for credit losses	(120)	(233)		(975)	(509)	(468)	(319)
DDA overdrafts
Accounts, Notes, Loans and Financing Receivable [Line Items]
Gross loans	2,700			4,760
Allowance for credit losses	$ (753)	$ (1,256)		$ (1,314)	$ (1,851)	$ (1,500)	$ (1,708)

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Allowance For Credit Losses (Narrative) (Details) $ in Thousands	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2020 USD ($)	Jun. 30, 2019 USD ($)	Jun. 30, 2020 USD ($) contract	Jun. 30, 2019 USD ($)	Dec. 31, 2019 USD ($) contract
Financing Receivable, Impaired [Line Items]
Threshold Period for Discontinuance of Interest Accrual			90 days	90 days
Financing Receivable, Nonaccrual, Interest Income	$ 100	$ 100	$ 100	$ 200
Interest income	$ 100	$ 100	$ 100	100
Financing Receivable, Threshold Period Past Due	30 days		30 days		30 days
Increase in provision for credit losses for TDRs			$ 100	100
Charge-offs related to TDRs			$ 100	$ 100	$ 700
Number of TDRs that defaulted | contract			0		1
Financing Receivable, Troubled Debt Restructuring	$ 27,869		$ 27,869		$ 29,630
Allowance for credit losses allocated to troubled debt	1,600		1,600		800
Commitment to lend to troubled debt	0		0
TDRs, subsequent default					$ 3,000
Payment Deferral [Member] | COVID-19 [Member] | Consumer Borrower [Member]
Financing Receivable, Impaired [Line Items]
Loan Restructuring, Trial Modifications, Amount			125,000
Financing Receivable, Troubled Debt Restructuring	$ 3,600		3,600
Payment Deferral [Member] | COVID-19 [Member] | Commercial Borrower [Member]
Financing Receivable, Impaired [Line Items]
Loan Restructuring, Trial Modifications, Amount			$ 430,000
Residential real estate
Financing Receivable, Impaired [Line Items]
Threshold period past due for write-off of financing receivable	120 days		120 days		120 days
Commercial Industrial Loans And Commercial Real Estate
Financing Receivable, Impaired [Line Items]
Threshold period past due for write-off of financing receivable	120 days		120 days		120 days
Consumer
Financing Receivable, Impaired [Line Items]
Threshold period past due for write-off of financing receivable	180 days		180 days		180 days

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Allowance For Credit Losses (Financing Receivable, Allowance for Credit Loss) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Allowance for loan loss, Beginning balance	$ 24,393	$ 14,646	$ 11,589	$ 15,966
Impact of adopting CECL			(2,335)
Allowance for loan loss, Charge-offs	(1,071)	(1,257)	(2,817)	(2,486)
Allowance for loan loss, Recoveries	627	1,006	1,445	1,764
Allowance for loan loss, Provision	1,250	(600)	9,222	(1,449)
Allowance for loan loss, Ending balance	25,199	13,795	25,199	13,795
Accounting Standards Update 2016-13
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Impact of adopting CECL			5,760
Commercial and industrial
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Allowance for loan loss, Beginning balance	5,855	2,970	2,059	4,060
Allowance for loan loss, Charge-offs	0	(51)	(77)	(51)
Allowance for loan loss, Recoveries	5	5	14	140
Allowance for loan loss, Provision	406	(128)	2,555	(1,353)
Allowance for loan loss, Ending balance	6,266	2,796	6,266	2,796
Commercial and industrial | Accounting Standards Update 2016-13
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Impact of adopting CECL			1,715
Commercial real estate
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Allowance for loan loss, Beginning balance	9,389	4,640	2,606	4,495
Allowance for loan loss, Charge-offs	(39)	(133)	(422)	(178)
Allowance for loan loss, Recoveries	128	575	331	607
Allowance for loan loss, Provision	612	(1,613)	4,321	(1,455)
Allowance for loan loss, Ending balance	10,090	3,469	10,090	3,469
Commercial real estate | Accounting Standards Update 2016-13
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Impact of adopting CECL			3,254
Residential real estate
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Allowance for loan loss, Beginning balance	6,958	3,820	3,448	4,116
Allowance for loan loss, Charge-offs	(376)	(303)	(859)	(631)
Allowance for loan loss, Recoveries	8	50	103	125
Allowance for loan loss, Provision	733	392	2,492	349
Allowance for loan loss, Ending balance	7,323	3,959	7,323	3,959
Residential real estate | Accounting Standards Update 2016-13
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Impact of adopting CECL			2,139
Home equity
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Allowance for loan loss, Beginning balance	702	1,248	1,187	1,268
Allowance for loan loss, Charge-offs	(161)	(71)	(206)	(117)
Allowance for loan loss, Recoveries	9	0	56	0
Allowance for loan loss, Provision	97	34	208	60
Allowance for loan loss, Ending balance	647	1,211	647	1,211
Home equity | Accounting Standards Update 2016-13
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Impact of adopting CECL			(598)
Consumer
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Allowance for loan loss, Beginning balance	233	468	975	319
Allowance for loan loss, Charge-offs	(36)	(111)	(91)	(296)
Allowance for loan loss, Recoveries	128	46	141	143
Allowance for loan loss, Provision	(205)	106	(95)	343
Allowance for loan loss, Ending balance	120	509	120	509
Consumer | Accounting Standards Update 2016-13
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Impact of adopting CECL			(810)
DDA overdrafts
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Allowance for loan loss, Beginning balance	1,256	1,500	1,314	1,708
Allowance for loan loss, Charge-offs	(459)	(588)	(1,162)	(1,213)
Allowance for loan loss, Recoveries	349	330	800	749
Allowance for loan loss, Provision	(393)	609	(259)	607
Allowance for loan loss, Ending balance	$ 753	$ 1,851	753	$ 1,851
DDA overdrafts | Accounting Standards Update 2016-13
Financing Receivable, Allowance for Credit Loss [Roll Forward]
Impact of adopting CECL			$ 60

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Allowance for Credit Losses (Financing Receivable, Nonaccrual) (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Financing Receivable, Impaired [Line Items]
Financing Receivable, Nonaccrual, No Allowance	$ 2,960
Financing Receivable, Nonaccrual	10,584	$ 11,490
Financing Receivable, 90 Days or More Past Due, Still Accruing	68	267
Commercial and industrial
Financing Receivable, Impaired [Line Items]
Financing Receivable, Nonaccrual, No Allowance	207
Financing Receivable, Nonaccrual	880	1,182
Financing Receivable, 90 Days or More Past Due, Still Accruing	0	184
Commercial real estate
Financing Receivable, Impaired [Line Items]
Financing Receivable, Nonaccrual, No Allowance	2,521
Financing Receivable, Nonaccrual	6,194	6,384
Financing Receivable, 90 Days or More Past Due, Still Accruing	3	0
1-4 Family
Financing Receivable, Impaired [Line Items]
Financing Receivable, Nonaccrual, No Allowance	0
Financing Receivable, Nonaccrual	2,212
Financing Receivable, 90 Days or More Past Due, Still Accruing	0
Hotels
Financing Receivable, Impaired [Line Items]
Financing Receivable, Nonaccrual, No Allowance	0
Financing Receivable, Nonaccrual	2,748
Financing Receivable, 90 Days or More Past Due, Still Accruing	0
Multi-family
Financing Receivable, Impaired [Line Items]
Financing Receivable, Nonaccrual, No Allowance	0
Financing Receivable, Nonaccrual	0
Financing Receivable, 90 Days or More Past Due, Still Accruing	0
Non Residential Non-Owner Occupied
Financing Receivable, Impaired [Line Items]
Financing Receivable, Nonaccrual, No Allowance	0
Financing Receivable, Nonaccrual	346
Financing Receivable, 90 Days or More Past Due, Still Accruing	3
Non Residential Owner Occupied
Financing Receivable, Impaired [Line Items]
Financing Receivable, Nonaccrual, No Allowance	2,521
Financing Receivable, Nonaccrual	888
Financing Receivable, 90 Days or More Past Due, Still Accruing	0
Residential real estate
Financing Receivable, Impaired [Line Items]
Financing Receivable, Nonaccrual, No Allowance	232
Financing Receivable, Nonaccrual	3,245	3,393
Financing Receivable, 90 Days or More Past Due, Still Accruing	4	83
Home equity
Financing Receivable, Impaired [Line Items]
Financing Receivable, Nonaccrual, No Allowance	0
Financing Receivable, Nonaccrual	265	531
Financing Receivable, 90 Days or More Past Due, Still Accruing	61	0
Consumer
Financing Receivable, Impaired [Line Items]
Financing Receivable, Nonaccrual, No Allowance	0
Financing Receivable, Nonaccrual	0	0
Financing Receivable, 90 Days or More Past Due, Still Accruing	$ 0	$ 0

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Allowance For Credit Losses (Schedule Of Impaired Loans) (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2019	Jun. 30, 2019	Jun. 30, 2020	Dec. 31, 2019
Financing Receivable, Impaired [Line Items]
With no related allowance recorded, Recorded investment				$ 4,047
With no related allowance recorded, Unpaid principal balance				4,073
With an allowance recorded, Recorded investment				2,644
With an allowance recorded, Unpaid principal balance				2,644
With an allowance recorded, Related allowance				87
With no related allowance recorded, Average recorded investment	$ 4,203	$ 5,670
With no related allowance recorded, Interest income recognized	2	38
With an allowance recorded, Average recorded investment	5,667	4,326
With an allowance recorded, Interest income recognized	76	106
Real Estate
Financing Receivable, Impaired [Line Items]
Financing Receivable, Collateral Dependent			$ 5,361
Commercial and industrial
Financing Receivable, Impaired [Line Items]
With no related allowance recorded, Recorded investment				501
With no related allowance recorded, Unpaid principal balance				501
With an allowance recorded, Recorded investment				0
With an allowance recorded, Unpaid principal balance				0
With an allowance recorded, Related allowance				0
With no related allowance recorded, Average recorded investment	589	603
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 and industrial | Real Estate
Financing Receivable, Impaired [Line Items]
Financing Receivable, Collateral Dependent			207
Commercial real estate
Financing Receivable, Impaired [Line Items]
With no related allowance recorded, Recorded investment				3,546
With no related allowance recorded, Unpaid principal balance				3,572
With an allowance recorded, Recorded investment				2,644
With an allowance recorded, Unpaid principal balance				2,644
With an allowance recorded, Related allowance				$ 87
With no related allowance recorded, Average recorded investment	3,614	5,067
With no related allowance recorded, Interest income recognized	2	38
With an allowance recorded, Average recorded investment	5,667	4,326
With an allowance recorded, Interest income recognized	$ 76	$ 106
Commercial real estate | Real Estate
Financing Receivable, Impaired [Line Items]
Financing Receivable, Collateral Dependent			5,154
1-4 Family | Real Estate
Financing Receivable, Impaired [Line Items]
Financing Receivable, Collateral Dependent			0
1-4 Family | Equipment
Financing Receivable, Impaired [Line Items]
Financing Receivable, Collateral Dependent			0
Hotels | Real Estate
Financing Receivable, Impaired [Line Items]
Financing Receivable, Collateral Dependent			2,634
Non Residential Owner Occupied | Real Estate
Financing Receivable, Impaired [Line Items]
Financing Receivable, Collateral Dependent			$ 2,520

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Allowance For Credit Losses (Financing Receivable, Past Due) (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Jan. 01, 2020	Dec. 31, 2019
Financing Receivable, Past Due [Line Items]
Financing receivable, recorded investment, past due	$ 7,070		$ 11,396
Current Loans	3,658,526		3,604,703
Gross loans	3,665,596	$ 3,618,825	3,616,099
Commercial and industrial
Financing Receivable, Past Due [Line Items]
Financing receivable, recorded investment, past due	160		458
Current Loans	368,962		307,557
Gross loans	369,122		308,015
Commercial real estate
Financing Receivable, Past Due [Line Items]
Financing receivable, recorded investment, past due	917		1,580
Current Loans	1,466,756		1,458,157
Gross loans	1,467,673		1,459,737
1-4 Family
Financing Receivable, Past Due [Line Items]
Financing receivable, recorded investment, past due	753
Current Loans	123,061
Gross loans	123,814
Hotels
Financing Receivable, Past Due [Line Items]
Financing receivable, recorded investment, past due	0
Current Loans	295,179
Gross loans	295,179
Multi-family
Financing Receivable, Past Due [Line Items]
Financing receivable, recorded investment, past due	0
Current Loans	204,580
Gross loans	204,580
Non Residential Non-Owner Occupied
Financing Receivable, Past Due [Line Items]
Financing receivable, recorded investment, past due	3
Current Loans	628,625
Gross loans	628,628
Non Residential Owner Occupied
Financing Receivable, Past Due [Line Items]
Financing receivable, recorded investment, past due	161
Current Loans	215,311
Gross loans	215,472
Residential real estate
Financing Receivable, Past Due [Line Items]
Financing receivable, recorded investment, past due	5,261		7,484
Current Loans	1,625,890		1,632,912
Gross loans	1,631,151		1,640,396
Home equity
Financing Receivable, Past Due [Line Items]
Financing receivable, recorded investment, past due	392		956
Current Loans	142,280		147,972
Gross loans	142,672		148,928
Consumer
Financing Receivable, Past Due [Line Items]
Financing receivable, recorded investment, past due	67		188
Current Loans	52,211		54,075
Gross loans	52,278		54,263
DDA overdrafts
Financing Receivable, Past Due [Line Items]
Financing receivable, recorded investment, past due	273		730
Current Loans	2,427		4,030
Gross loans	2,700		4,760
Financial Asset, 30 to 59 Days Past Due
Financing Receivable, Past Due [Line Items]
Financing receivable, recorded investment, past due	5,529		9,155
Financial Asset, 30 to 59 Days Past Due | Commercial and industrial
Financing Receivable, Past Due [Line Items]
Financing receivable, recorded investment, past due	130		243
Financial Asset, 30 to 59 Days Past Due | Commercial real estate
Financing Receivable, Past Due [Line Items]
Financing receivable, recorded investment, past due	914		1,514
Financial Asset, 30 to 59 Days Past Due | 1-4 Family
Financing Receivable, Past Due [Line Items]
Financing receivable, recorded investment, past due	753
Financial Asset, 30 to 59 Days Past Due | Hotels
Financing Receivable, Past Due [Line Items]
Financing receivable, recorded investment, past due	0
Financial Asset, 30 to 59 Days Past Due | Multi-family
Financing Receivable, Past Due [Line Items]
Financing receivable, recorded investment, past due	0
Financial Asset, 30 to 59 Days Past Due | Non Residential Non-Owner Occupied
Financing Receivable, Past Due [Line Items]
Financing receivable, recorded investment, past due	0
Financial Asset, 30 to 59 Days Past Due | Non Residential Owner Occupied
Financing Receivable, Past Due [Line Items]
Financing receivable, recorded investment, past due	161
Financial Asset, 30 to 59 Days Past Due | Residential real estate
Financing Receivable, Past Due [Line Items]
Financing receivable, recorded investment, past due	3,923		5,758
Financial Asset, 30 to 59 Days Past Due | Home equity
Financing Receivable, Past Due [Line Items]
Financing receivable, recorded investment, past due	223		840
Financial Asset, 30 to 59 Days Past Due | Consumer
Financing Receivable, Past Due [Line Items]
Financing receivable, recorded investment, past due	67		156
Financial Asset, 30 to 59 Days Past Due | DDA overdrafts
Financing Receivable, Past Due [Line Items]
Financing receivable, recorded investment, past due	272		644
Financial Asset, 60 to 89 Days Past Due
Financing Receivable, Past Due [Line Items]
Financing receivable, recorded investment, past due	1,473		1,974
Financial Asset, 60 to 89 Days Past Due | Commercial and industrial
Financing Receivable, Past Due [Line Items]
Financing receivable, recorded investment, past due	30		31
Financial Asset, 60 to 89 Days Past Due | Commercial real estate
Financing Receivable, Past Due [Line Items]
Financing receivable, recorded investment, past due	0		66
Financial Asset, 60 to 89 Days Past Due | 1-4 Family
Financing Receivable, Past Due [Line Items]
Financing receivable, recorded investment, past due	0
Financial Asset, 60 to 89 Days Past Due | Hotels
Financing Receivable, Past Due [Line Items]
Financing receivable, recorded investment, past due	0
Financial Asset, 60 to 89 Days Past Due | Multi-family
Financing Receivable, Past Due [Line Items]
Financing receivable, recorded investment, past due	0
Financial Asset, 60 to 89 Days Past Due | Non Residential Non-Owner Occupied
Financing Receivable, Past Due [Line Items]
Financing receivable, recorded investment, past due	0
Financial Asset, 60 to 89 Days Past Due | Non Residential Owner Occupied
Financing Receivable, Past Due [Line Items]
Financing receivable, recorded investment, past due	0
Financial Asset, 60 to 89 Days Past Due | Residential real estate
Financing Receivable, Past Due [Line Items]
Financing receivable, recorded investment, past due	1,334		1,643
Financial Asset, 60 to 89 Days Past Due | Home equity
Financing Receivable, Past Due [Line Items]
Financing receivable, recorded investment, past due	108		116
Financial Asset, 60 to 89 Days Past Due | Consumer
Financing Receivable, Past Due [Line Items]
Financing receivable, recorded investment, past due	0		32
Financial Asset, 60 to 89 Days Past Due | DDA overdrafts
Financing Receivable, Past Due [Line Items]
Financing receivable, recorded investment, past due	1		86
Financial Asset, Equal to or Greater than 90 Days Past Due
Financing Receivable, Past Due [Line Items]
Financing receivable, recorded investment, past due	68		267
Financial Asset, Equal to or Greater than 90 Days Past Due | Commercial and industrial
Financing Receivable, Past Due [Line Items]
Financing receivable, recorded investment, past due	0		184
Financial Asset, Equal to or Greater than 90 Days Past Due | Commercial real estate
Financing Receivable, Past Due [Line Items]
Financing receivable, recorded investment, past due	3		0
Financial Asset, Equal to or Greater than 90 Days Past Due | 1-4 Family
Financing Receivable, Past Due [Line Items]
Financing receivable, recorded investment, past due	0
Financial Asset, Equal to or Greater than 90 Days Past Due | Hotels
Financing Receivable, Past Due [Line Items]
Financing receivable, recorded investment, past due	0
Financial Asset, Equal to or Greater than 90 Days Past Due | Multi-family
Financing Receivable, Past Due [Line Items]
Financing receivable, recorded investment, past due	0
Financial Asset, Equal to or Greater than 90 Days Past Due | Non Residential Non-Owner Occupied
Financing Receivable, Past Due [Line Items]
Financing receivable, recorded investment, past due	3
Financial Asset, Equal to or Greater than 90 Days Past Due | Non Residential Owner Occupied
Financing Receivable, Past Due [Line Items]
Financing receivable, recorded investment, past due	0
Financial Asset, Equal to or Greater than 90 Days Past Due | Residential real estate
Financing Receivable, Past Due [Line Items]
Financing receivable, recorded investment, past due	4		83
Financial Asset, Equal to or Greater than 90 Days Past Due | Home equity
Financing Receivable, Past Due [Line Items]
Financing receivable, recorded investment, past due	61		0
Financial Asset, Equal to or Greater than 90 Days Past Due | Consumer
Financing Receivable, Past Due [Line Items]
Financing receivable, recorded investment, past due	0		0
Financial Asset, Equal to or Greater than 90 Days Past Due | DDA overdrafts
Financing Receivable, Past Due [Line Items]
Financing receivable, recorded investment, past due	$ 0		$ 0

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Allowance For Credit Losses (Financing Receivable, Troubled Debt Restructurings) (Details) $ in Thousands	6 Months Ended
	Jun. 30, 2020 USD ($) contract	Jun. 30, 2019 USD ($) contract	Dec. 31, 2019 USD ($)
Financing Receivable, Troubled Debt Restructuring [Line Items]
Number of Contracts | contract	26	34
Pre-Modification Outstanding Recorded Investment	$ 1,790	$ 2,260
Post Modification Outstanding Recorded Investment	1,786	$ 2,260
Financing Receivable, Troubled Debt Restructuring	$ 27,869		$ 29,630
Commercial and industrial
Financing Receivable, Troubled Debt Restructuring [Line Items]
Number of Contracts | contract	0	0
Pre-Modification Outstanding Recorded Investment	$ 0	$ 0
Post Modification Outstanding Recorded Investment	0	$ 0
Financing Receivable, Troubled Debt Restructuring	$ 0		0
Commercial real estate
Financing Receivable, Troubled Debt Restructuring [Line Items]
Number of Contracts | contract	0	0
Pre-Modification Outstanding Recorded Investment	$ 0	$ 0
Post Modification Outstanding Recorded Investment	0	$ 0
Financing Receivable, Troubled Debt Restructuring	$ 4,915		4,973
1-4 Family
Financing Receivable, Troubled Debt Restructuring [Line Items]
Number of Contracts | contract	0
Pre-Modification Outstanding Recorded Investment	$ 0
Post Modification Outstanding Recorded Investment	0
Financing Receivable, Troubled Debt Restructuring	$ 126
Hotels
Financing Receivable, Troubled Debt Restructuring [Line Items]
Number of Contracts | contract	0
Pre-Modification Outstanding Recorded Investment	$ 0
Post Modification Outstanding Recorded Investment	0
Financing Receivable, Troubled Debt Restructuring	$ 2,634
Multi-family
Financing Receivable, Troubled Debt Restructuring [Line Items]
Number of Contracts | contract	0
Pre-Modification Outstanding Recorded Investment	$ 0
Post Modification Outstanding Recorded Investment	0
Financing Receivable, Troubled Debt Restructuring	$ 1,921
Non Residential Non-Owner Occupied
Financing Receivable, Troubled Debt Restructuring [Line Items]
Number of Contracts | contract	0
Pre-Modification Outstanding Recorded Investment	$ 0
Post Modification Outstanding Recorded Investment	0
Financing Receivable, Troubled Debt Restructuring	$ 0
Non Residential Owner Occupied
Financing Receivable, Troubled Debt Restructuring [Line Items]
Number of Contracts | contract	0
Pre-Modification Outstanding Recorded Investment	$ 0
Post Modification Outstanding Recorded Investment	0
Financing Receivable, Troubled Debt Restructuring	$ 234
Residential real estate
Financing Receivable, Troubled Debt Restructuring [Line Items]
Number of Contracts | contract	24	27
Pre-Modification Outstanding Recorded Investment	$ 1,720	$ 2,066
Post Modification Outstanding Recorded Investment	1,716	$ 2,066
Financing Receivable, Troubled Debt Restructuring	$ 20,631		21,029
Home equity
Financing Receivable, Troubled Debt Restructuring [Line Items]
Number of Contracts | contract	2	7
Pre-Modification Outstanding Recorded Investment	$ 70	$ 194
Post Modification Outstanding Recorded Investment	70	$ 194
Financing Receivable, Troubled Debt Restructuring	$ 2,138		3,628
Consumer
Financing Receivable, Troubled Debt Restructuring [Line Items]
Number of Contracts | contract	0	0
Pre-Modification Outstanding Recorded Investment	$ 0	$ 0
Post Modification Outstanding Recorded Investment	0	$ 0
Financing Receivable, Troubled Debt Restructuring	$ 185		$ 0

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Allowance For Credit Losses (Financing Receivable, Credit Quality Indicators) (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Jan. 01, 2020	Dec. 31, 2019
Financing Receivable, Credit Quality Indicator [Line Items]
Total	$ 3,665,596	$ 3,618,825	$ 3,616,099
Commercial and industrial
Financing Receivable, Credit Quality Indicator [Line Items]
2020	75,126
2019	75,551
2018	64,964
2017	39,136
2016	18,906
Prior	14,343
Revolving Loans, Amortized Cost Basis	81,096
Total	369,122		308,015
Commercial real estate
Financing Receivable, Credit Quality Indicator [Line Items]
2020	172,961
2019	350,709
2018	206,124
2017	170,086
2016	174,717
Prior	365,564
Revolving Loans, Amortized Cost Basis	27,512
Total	1,467,673		1,459,737
1-4 Family
Financing Receivable, Credit Quality Indicator [Line Items]
2020	19,584
2019	21,638
2018	10,445
2017	9,664
2016	7,361
Prior	45,381
Revolving Loans, Amortized Cost Basis	9,741
Total	123,814
Hotels
Financing Receivable, Credit Quality Indicator [Line Items]
2020	14,655
2019	110,833
2018	35,038
2017	49,483
2016	26,044
Prior	59,126
Revolving Loans, Amortized Cost Basis	0
Total	295,179
Multi-family
Financing Receivable, Credit Quality Indicator [Line Items]
2020	57,954
2019	59,080
2018	3,397
2017	22,528
2016	32,957
Prior	27,894
Revolving Loans, Amortized Cost Basis	770
Total	204,580
Non Residential Non-Owner Occupied
Financing Receivable, Credit Quality Indicator [Line Items]
2020	69,531
2019	121,206
2018	123,203
2017	58,525
2016	82,479
Prior	162,126
Revolving Loans, Amortized Cost Basis	11,558
Total	628,628
Non Residential Owner Occupied
Financing Receivable, Credit Quality Indicator [Line Items]
2020	11,238
2019	37,953
2018	34,040
2017	29,886
2016	25,875
Prior	71,040
Revolving Loans, Amortized Cost Basis	5,440
Total	215,472
Residential real estate
Financing Receivable, Credit Quality Indicator [Line Items]
2020	197,377
2019	281,732
2018	223,330
2017	165,561
2016	129,660
Prior	510,295
Revolving Loans, Amortized Cost Basis	123,196
Total	1,631,151		1,640,396
Residential real estate | Performing
Financing Receivable, Credit Quality Indicator [Line Items]
2020	197,377
2019	281,064
2018	223,330
2017	165,437
2016	129,448
Prior	507,921
Revolving Loans, Amortized Cost Basis	123,143
Total	1,627,720
Residential real estate | Non-performing
Financing Receivable, Credit Quality Indicator [Line Items]
2020	0
2019	668
2018	0
2017	124
2016	212
Prior	2,374
Revolving Loans, Amortized Cost Basis	53
Total	3,431
Home equity
Financing Receivable, Credit Quality Indicator [Line Items]
2020	5,054
2019	7,570
2018	7,121
2017	2,733
2016	2,121
Prior	12,861
Revolving Loans, Amortized Cost Basis	105,212
Total	142,672		148,928
Home equity | Performing
Financing Receivable, Credit Quality Indicator [Line Items]
2020	5,054
2019	7,570
2018	7,121
2017	2,733
2016	2,121
Prior	12,861
Revolving Loans, Amortized Cost Basis	105,047
Total	142,507
Home equity | Non-performing
Financing Receivable, Credit Quality Indicator [Line Items]
2020	0
2019	0
2018	0
2017	0
2016	0
Prior	0
Revolving Loans, Amortized Cost Basis	165
Total	165
Consumer
Financing Receivable, Credit Quality Indicator [Line Items]
2020	9,689
2019	18,922
2018	12,199
2017	4,492
2016	2,485
Prior	2,284
Revolving Loans, Amortized Cost Basis	2,207
Total	52,278		54,263
Consumer | Performing
Financing Receivable, Credit Quality Indicator [Line Items]
2020	9,689
2019	18,922
2018	12,199
2017	4,492
2016	2,485
Prior	2,284
Revolving Loans, Amortized Cost Basis	2,207
Total	52,278
Consumer | Non-performing
Financing Receivable, Credit Quality Indicator [Line Items]
2020	0
2019	0
2018	0
2017	0
2016	0
Prior	0
Revolving Loans, Amortized Cost Basis	0
Total	0
Noncommercial Loans
Financing Receivable, Credit Quality Indicator [Line Items]
Total			1,843,587
Commercial Industrial Loans And Commercial Real Estate
Financing Receivable, Credit Quality Indicator [Line Items]
Total			1,767,752
Pass
Financing Receivable, Credit Quality Indicator [Line Items]
Total			1,685,491
Pass | Commercial and industrial
Financing Receivable, Credit Quality Indicator [Line Items]
2020	74,977
2019	74,675
2018	63,750
2017	38,259
2016	10,177
Prior	11,707
Revolving Loans, Amortized Cost Basis	62,386
Total	335,931		276,847
Pass | Commercial real estate
Financing Receivable, Credit Quality Indicator [Line Items]
2020	172,741
2019	343,898
2018	200,306
2017	165,468
2016	164,439
Prior	346,209
Revolving Loans, Amortized Cost Basis	27,105
Total	1,420,166		1,408,644
Pass | 1-4 Family
Financing Receivable, Credit Quality Indicator [Line Items]
2020	19,584
2019	21,409
2018	10,445
2017	8,686
2016	6,918
Prior	37,060
Revolving Loans, Amortized Cost Basis	9,734
Total	113,836
Pass | Hotels
Financing Receivable, Credit Quality Indicator [Line Items]
2020	14,655
2019	110,833
2018	35,038
2017	49,483
2016	21,518
Prior	56,378
Revolving Loans, Amortized Cost Basis	0
Total	287,905
Pass | Multi-family
Financing Receivable, Credit Quality Indicator [Line Items]
2020	57,954
2019	57,159
2018	2,836
2017	22,528
2016	32,957
Prior	27,812
Revolving Loans, Amortized Cost Basis	770
Total	202,016
Pass | Non Residential Non-Owner Occupied
Financing Receivable, Credit Quality Indicator [Line Items]
2020	69,473
2019	120,792
2018	121,420
2017	57,873
2016	81,033
Prior	160,184
Revolving Loans, Amortized Cost Basis	11,318
Total	622,093
Pass | Non Residential Owner Occupied
Financing Receivable, Credit Quality Indicator [Line Items]
2020	11,076
2019	33,705
2018	30,567
2017	26,899
2016	22,012
Prior	64,777
Revolving Loans, Amortized Cost Basis	5,279
Total	194,315
Special mention
Financing Receivable, Credit Quality Indicator [Line Items]
Total			16,310
Special mention | Commercial and industrial
Financing Receivable, Credit Quality Indicator [Line Items]
2020	85
2019	46
2018	18
2017	61
2016	0
Prior	441
Revolving Loans, Amortized Cost Basis	211
Total	862		2,472
Special mention | Commercial real estate
Financing Receivable, Credit Quality Indicator [Line Items]
2020	0
2019	5,156
2018	1,222
2017	691
2016	359
Prior	6,211
Revolving Loans, Amortized Cost Basis	0
Total	13,639		13,838
Special mention | 1-4 Family
Financing Receivable, Credit Quality Indicator [Line Items]
2020	0
2019	0
2018	0
2017	26
2016	334
Prior	3,053
Revolving Loans, Amortized Cost Basis	0
Total	3,413
Special mention | Multi-family
Financing Receivable, Credit Quality Indicator [Line Items]
2020	0
2019	1,921
2018	561
2017	0
2016	0
Prior	0
Revolving Loans, Amortized Cost Basis	0
Total	2,482
Special mention | Non Residential Non-Owner Occupied
Financing Receivable, Credit Quality Indicator [Line Items]
2020	0
2019	316
2018	602
2017	574
2016	0
Prior	595
Revolving Loans, Amortized Cost Basis	0
Total	2,087
Special mention | Non Residential Owner Occupied
Financing Receivable, Credit Quality Indicator [Line Items]
2020	0
2019	2,919
2018	58
2017	91
2016	24
Prior	2,563
Revolving Loans, Amortized Cost Basis	0
Total	5,655
Substandard
Financing Receivable, Credit Quality Indicator [Line Items]
Total			65,951
Substandard | Commercial and industrial
Financing Receivable, Credit Quality Indicator [Line Items]
2020	64
2019	830
2018	1,196
2017	816
2016	8,729
Prior	2,195
Revolving Loans, Amortized Cost Basis	18,499
Total	32,329		28,696
Substandard | Commercial real estate
Financing Receivable, Credit Quality Indicator [Line Items]
2020	220
2019	1,655
2018	4,596
2017	3,927
2016	9,919
Prior	13,144
Revolving Loans, Amortized Cost Basis	407
Total	33,868		37,255
Substandard | 1-4 Family
Financing Receivable, Credit Quality Indicator [Line Items]
2020	0
2019	229
2018	0
2017	952
2016	109
Prior	5,268
Revolving Loans, Amortized Cost Basis	7
Total	6,565
Substandard | Hotels
Financing Receivable, Credit Quality Indicator [Line Items]
2020	0
2019	0
2018	0
2017	0
2016	4,526
Prior	2,748
Revolving Loans, Amortized Cost Basis	0
Total	7,274
Substandard | Multi-family
Financing Receivable, Credit Quality Indicator [Line Items]
2020	0
2019	0
2018	0
2017	0
2016	0
Prior	82
Revolving Loans, Amortized Cost Basis	0
Total	82
Substandard | Non Residential Non-Owner Occupied
Financing Receivable, Credit Quality Indicator [Line Items]
2020	58
2019	98
2018	1,181
2017	78
2016	1,446
Prior	1,347
Revolving Loans, Amortized Cost Basis	240
Total	4,448
Substandard | Non Residential Owner Occupied
Financing Receivable, Credit Quality Indicator [Line Items]
2020	162
2019	1,329
2018	3,415
2017	2,896
2016	3,839
Prior	3,700
Revolving Loans, Amortized Cost Basis	161
Total	$ 15,502
Non-performing | Residential real estate
Financing Receivable, Credit Quality Indicator [Line Items]
Total			3,476
Non-performing | Home equity
Financing Receivable, Credit Quality Indicator [Line Items]
Total			531
Non-performing | Consumer
Financing Receivable, Credit Quality Indicator [Line Items]
Total			0
Non-performing | Noncommercial Loans
Financing Receivable, Credit Quality Indicator [Line Items]
Total			4,007
Performing | Residential real estate
Financing Receivable, Credit Quality Indicator [Line Items]
Total			1,636,920
Performing | Home equity
Financing Receivable, Credit Quality Indicator [Line Items]
Total			148,397
Performing | Consumer
Financing Receivable, Credit Quality Indicator [Line Items]
Total			54,263
Performing | Noncommercial Loans
Financing Receivable, Credit Quality Indicator [Line Items]
Total			$ 1,839,580

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Derivative Instruments Derivative Instruments (Narrative) (Details) $ in Millions	Jun. 30, 2020 USD ($)
Derivative Instruments and Hedging Activities Disclosure [Abstract]
Collateral already posted, aggregate fair value	$ 68.5

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Derivative Instruments (Fair Value Of Derivative Instruments) (Details) - Non-hedging interest rate derivatives: - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Customer Counterparties Loan Interest Rate Swap Assets | Other assets
Derivatives, Fair Value [Line Items]
Derivative, Notional Amount	$ 620,392	$ 377,534
Derivative, Fair Value	65,882	16,094
Customer Counterparties Loan Interest Rate Swap Liabilities | Other Liabilities
Derivatives, Fair Value [Line Items]
Derivative, Notional Amount	2,041	189,803
Derivative, Fair Value	279	3,214
Financial Institution Counterparties Loan Interest Rate Swap Asset | Other assets
Derivatives, Fair Value [Line Items]
Derivative, Notional Amount	2,041	189,803
Derivative, Fair Value	279	3,214
Financial Institution Counterparties Loan Interest Rate Swap Liabilities | Other Liabilities
Derivatives, Fair Value [Line Items]
Derivative, Notional Amount	625,038	382,566
Derivative, Fair Value	$ 66,100	$ 16,133

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Derivative Instruments (Change In Fair Value Of Derivative Instruments) (Details) - Non-hedging interest rate derivatives: - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Other assets | Other Income
Derivatives, Fair Value [Line Items]
Change in Fair Value Non-Hedging Interest Rate Derivatives:	$ 3,807	$ 5,128	$ 41,718	$ 2,249
Other Liabilities | Other Income
Derivatives, Fair Value [Line Items]
Change in Fair Value Non-Hedging Interest Rate Derivatives:	(3,807)	(5,128)	(41,718)	(2,249)
Other Liabilities | Other Expense
Derivatives, Fair Value [Line Items]
Change in Fair Value Non-Hedging Interest Rate Derivatives:	$ 10	$ 97	$ 183	$ 154

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Employee Benefit Plans (Summary Of Stock Option Activity) (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Options, Exercised (in shares)	(1,516)	(2,502)	(4,166)	(8,140)
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Roll Forward]
Proceeds from stock option exercises			$ 189	$ 365
Employee Stock Option
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Options Outstanding, beginning balance (in shares)			46,251	57,972
Options, Exercised (in shares)			(4,166)	(8,140)
Options Outstanding, ending balance (in shares)	42,085	49,832	42,085	49,832
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)			$ 52.74	$ 51.15
Weighted-Average Exercise Price, Exercised (in dollars per share)			45.44	44.85
Weighted-Average Exercise Price, Outstanding, ending balance (in dollars per share)	$ 53.47	$ 52.18	$ 53.47	$ 52.18
Exercisable (shares)	22,214	11,644	22,214	11,644
Exercisable, Weighted average exercise price (US$ per share)	$ 50.22	$ 44.62	$ 50.22	$ 44.62
Proceeds from stock option exercises			$ 189	$ 365
Intrinsic value of stock options exercised			77	263
Stock-based compensation expense associated with stock options			34	$ 64
Unrecognized stock-based compensation expense associated with stock options	$ 50		$ 50
Weighted average period (in years) in which the above amount is expected to be recognized			1 year 2 months 12 days

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Employee Benefit Plans (Restricted Shares Activity And Related Information) (Details) - Restricted Stock - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Restricted Awards, Number of Awards [Roll Forward]
Beginning Balance (in shares)			148,083	152,692
Granted (in shares)			37,103	31,006
Vested (in shares)			(26,450)	(41,657)
Ending Balance (in shares)	158,736	142,041	158,736	142,041
Restricted Awards, Number of Awards, Weighted Average Exercise Price [Roll Forward]
Outstanding at period start (in dollars per share)			$ 62.62	$ 51.85
Granted (in dollars per share)			67.40	79.86
Vested (in dollars per share)			49.58	39.79
Outstanding at period end (in dollars per share)	$ 65.91	$ 61.50	$ 65.91	$ 61.50
Stock-based compensation expense associated with restricted shares	$ 681	$ 501	$ 1,310	$ 935
Unrecognized stock-based compensation expense associated with restricted shares	$ 6,208		$ 6,208
Weighted average period (in years) in which the above amount is expected to be recognized			3 years 2 months 12 days

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Employee Benefit Plans (Pension and Other Postretirement Benefits) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Components of net periodic cost:
Interest cost	$ 112	$ 174	$ 224	$ 348
Expected return on plan assets	(203)	(266)	(406)	(531)
Net amortization and deferral	272	285	544	569
Net Periodic Pension Cost	$ 181	$ 193	$ 362	$ 386

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Commitments and Contingencies (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Commitments to extend credit: | Home equity
Other Commitments [Line Items]
Contractual obligations	$ 219,045	$ 214,715
Commitments to extend credit: | Commercial real estate
Other Commitments [Line Items]
Contractual obligations	51,646	56,941
Commitments to extend credit: | Other commitments
Other Commitments [Line Items]
Contractual obligations	247,219	213,904
Standby letters of credit
Other Commitments [Line Items]
Contractual obligations	5,026	6,748
Commercial letters of credit
Other Commitments [Line Items]
Contractual obligations	$ 1,045	$ 1,249

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Accumulated Other Comprehensive Loss (Narrative) (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Combined Federal and State income tax rate (percent)	23.00%	23.00%	23.00%	23.00%

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Accumulated Other Comprehensive Loss - Schedule of Changes In Each Component of Accumulated Other Comprehensive Income (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Six months ended June 30,
Beginning Balance	$ 685,228	$ 619,241	$ 657,983	$ 600,764
Other comprehensive income	3,569	10,939	25,189	19,570
Ending balance	693,750	636,908	693,750	636,908
Defined Benefit Pension Plans
Six months ended June 30,
Beginning Balance	(6,270)	(5,871)	(6,270)	(5,871)
Ending balance	(6,270)	(5,871)	(6,270)	(5,871)
Securities available-for-sale:
Six months ended June 30,
Beginning Balance	33,730	20	12,110	(8,611)
Other comprehensive income before reclassifications	3,565	10,956	24,036	19,654
Amounts reclassified from other comprehensive income	4	(17)	(44)	(84)
Reclassification of unrealized gains on held-to-maturity securities to available-for-sale			1,197
Other comprehensive income	3,569	10,939	25,189	19,570
Ending balance	37,299	10,959	37,299	10,959
Total
Six months ended June 30,
Beginning Balance	27,460	(5,851)	5,840	(14,482)
Other comprehensive income before reclassifications	3,565	10,956	24,036	19,654
Amounts reclassified from other comprehensive income	4	(17)	(44)	(84)
Reclassification of unrealized gains on held-to-maturity securities to available-for-sale			1,197
Other comprehensive income	3,569	10,939	25,189	19,570
Ending balance	$ 31,029	$ 5,088	$ 31,029	$ 5,088

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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, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Net securities (losses) gains reclassified into earnings			$ (2,103)	$ 297
Related income tax expense (income)	$ (4,732)	$ (5,813)	(12,054)	(11,623)
Net income available to common shareholders	18,251	22,751	47,249	44,370
Securities available-for-sale: | Amounts reclassified from Other Comprehensive Income
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Net securities (losses) gains reclassified into earnings	(6)	21	56	109
Related income tax expense (income)	2	(4)	(12)	(25)
Net income available to common shareholders	$ (4)	$ 17	$ 44	$ 84

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Earnings per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2020	Jun. 30, 2019	Jun. 30, 2020	Jun. 30, 2019
Earnings Per Share [Abstract]
Net income available to common shareholders	$ 18,251	$ 22,751	$ 47,249	$ 44,370
Less: earnings allocated to participating securities	(180)	(197)	(463)	(382)
Net earnings allocated to common shareholders	18,071	22,554	46,786	43,988
Distributed earnings allocated to common stock	9,073	8,615	18,147	17,231
Undistributed earnings allocated to common stock	$ 8,998	$ 13,939	$ 28,639	$ 26,757
Average shares outstanding (in shares)	16,081	16,368	16,123	16,390
Effect of dilutive securities:
Employee stock awards (in shares)	16	18	19	18
Average common shares outstanding, diluted (in shares)	16,097	16,386	16,142	16,408
Basic earnings per common share (in dollars per share)	$ 1.12	$ 1.38	$ 2.90	$ 2.68
Diluted earnings per share (in dollars per share)	$ 1.12	$ 1.38	$ 2.90	$ 2.68

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Fair Value Measurements (Narrative) (Details) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Mar. 31, 2020	Jun. 30, 2020	Jun. 30, 2019	Dec. 31, 2019
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Material losses related to counterparty's inability to pay undercollateralized position		$ 0
Significant change in the value of derivative assets and liabilities attributed to credit risk		0	$ 0	$ 0
Derivative credit risk valuation adjustment, derivative liabilities		$ 0	$ 0	$ 0
Minimum
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Collateral discount	20.00%	20.00%	20.00%
Maximum
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Collateral discount	30.00%	30.00%	30.00%

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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, 2020	Dec. 31, 2019
Loans individually evaluated
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Provision For Loan Losses on Impaired Loans During Period	$ (1,150)	$ (87)
Other real estate owned
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Write-downs included in other non-interest expense	(267)	(470)
Other assets
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Write-downs included in other non-interest expense		(297)
Recurring fair value measurements | U.S. Government agencies
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value		502
Recurring fair value measurements | U.S. Government agencies | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value		0
Recurring fair value measurements | U.S. Government agencies | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value		502
Recurring fair value measurements | U.S. Government agencies | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value		0
Recurring fair value measurements | Obligations of states and political subdivisions
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value	218,227	117,187
Recurring fair value measurements | Obligations of states and political subdivisions | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value	0	0
Recurring fair value measurements | Obligations of states and political subdivisions | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value	218,227	117,187
Recurring fair value measurements | Obligations of states and political subdivisions | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value	0	0
Recurring fair value measurements | U.S. Government Agencies Mortgage-backed Securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value	786,507	642,104
Recurring fair value measurements | U.S. Government Agencies Mortgage-backed Securities | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value	0	0
Recurring fair value measurements | U.S. Government Agencies Mortgage-backed Securities | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value	786,507	642,104
Recurring fair value measurements | U.S. Government Agencies Mortgage-backed Securities | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value	0	0
Recurring fair value measurements | Mortgage-backed securities: Private label
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value	11,349	11,485
Recurring fair value measurements | Mortgage-backed securities: Private label | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value	0	0
Recurring fair value measurements | Mortgage-backed securities: Private label | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value	5,987	5,841
Recurring fair value measurements | Mortgage-backed securities: Private label | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value	5,362	5,644
Recurring fair value measurements | Trust preferred securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value	3,480	4,461
Recurring fair value measurements | Trust preferred securities | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value	0	0
Recurring fair value measurements | Trust preferred securities | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value	3,480	4,461
Recurring fair value measurements | Trust preferred securities | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value	0	0
Recurring fair value measurements | Corporate securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value	33,381	32,126
Recurring fair value measurements | Corporate securities | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value	0	0
Recurring fair value measurements | Corporate securities | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value	29,331	28,064
Recurring fair value measurements | Corporate securities | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value	4,050	4,062
Recurring fair value measurements | Marketable equity securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value	10,474	12,634
Recurring fair value measurements | Marketable equity securities | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value	5,960	7,787
Recurring fair value measurements | Marketable equity securities | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value	4,514	4,847
Recurring fair value measurements | Marketable equity securities | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value	0	0
Recurring fair value measurements | Certificates of deposit held for investment
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value	2,241	2,241
Recurring fair value measurements | Certificates of deposit held for investment | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value	0	0
Recurring fair value measurements | Certificates of deposit held for investment | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value	2,241	2,241
Recurring fair value measurements | Certificates of deposit held for investment | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value	0	0
Recurring fair value measurements | Derivative assets
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value	66,161	19,310
Recurring fair value measurements | Derivative assets | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value	0	0
Recurring fair value measurements | Derivative assets | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value	66,161	19,310
Recurring fair value measurements | Derivative assets | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value	0	0
Recurring fair value measurements | Derivative liabilities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Liabilities, fair value	66,526	19,380
Recurring fair value measurements | Derivative liabilities | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Liabilities, fair value	0	0
Recurring fair value measurements | Derivative liabilities | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Liabilities, fair value	66,526	19,380
Recurring fair value measurements | Derivative liabilities | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Liabilities, fair value	0	0
Nonrecurring fair value measurements | Loans individually evaluated
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value	6,447	8,925
Nonrecurring fair value measurements | Loans individually evaluated | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value	0	0
Nonrecurring fair value measurements | Loans individually evaluated | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value	0	0
Nonrecurring fair value measurements | Loans individually evaluated | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value	6,447	8,925
Nonrecurring fair value measurements | Other real estate owned
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value	3,997	4,670
Nonrecurring fair value measurements | Other real estate owned | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value	0	0
Nonrecurring fair value measurements | Other real estate owned | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value	0	0
Nonrecurring fair value measurements | Other real estate owned | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value	$ 3,997	4,670
Nonrecurring fair value measurements | Other assets
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value		100
Nonrecurring fair value measurements | Other assets | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value		0
Nonrecurring fair value measurements | Other assets | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value		0
Nonrecurring fair value measurements | Other assets | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, fair value		$ 100

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Fair Value Measurements (Schedule Of Estimates Of Fair Value Of Financial Instruments) (Details) - USD ($) $ in Thousands	Jun. 30, 2020	Dec. 31, 2019
Assets:
Securities available-for-sale	$ 1,055,185	$ 810,106
Securities held-to-maturity	0	49,036
Other securities	26,144	28,490
Net loans	3,640,397	3,604,510
Accrued interest receivable	14,200	11,569
Liabilities:
Liabilities:	4,411,115	4,075,894
Carrying Amount
Assets:
Cash and cash equivalents	373,254	140,144
Securities available-for-sale	1,055,185	810,106
Securities held-to-maturity		49,036
Other securities	10,474	12,634
Net loans	3,640,397	3,604,510
Accrued interest receivable	14,200	11,569
Derivative assets	66,161	19,310
Liabilities:
Liabilities:	4,411,115	4,075,894
Short-term debt	282,676	211,255
Long-term debt		4,056
Accrued interest payable	2,257	2,849
Derivative liabilities	66,526	19,380
Fair Value
Assets:
Cash and cash equivalents	373,254	140,144
Securities available-for-sale	1,055,185	810,106
Securities held-to-maturity		50,598
Other securities	10,474	12,634
Net loans	3,634,170	3,574,435
Accrued interest receivable	14,200	11,569
Derivative assets	66,161	19,310
Liabilities:
Liabilities:	4,444,930	4,094,493
Short-term debt	267,186	211,255
Long-term debt		4,124
Accrued interest payable	2,257	2,849
Derivative liabilities	66,526	19,380
Level 1
Assets:
Cash and cash equivalents	373,254	140,144
Securities available-for-sale	0	0
Securities held-to-maturity		0
Other securities	5,960	7,787
Net loans	0	0
Accrued interest receivable	14,200	11,569
Derivative assets	0	0
Liabilities:
Liabilities:	3,068,484	2,711,323
Short-term debt	0	0
Long-term debt		0
Accrued interest payable	2,257	2,849
Derivative liabilities	0	0
Level 2
Assets:
Cash and cash equivalents	0	0
Securities available-for-sale	1,045,773	800,400
Securities held-to-maturity		50,598
Other securities	4,514	4,847
Net loans	0	0
Accrued interest receivable	0	0
Derivative assets	66,161	19,310
Liabilities:
Liabilities:	1,376,446	1,383,170
Short-term debt	267,186	211,255
Long-term debt		4,124
Accrued interest payable	0	0
Derivative liabilities	66,526	19,380
Level 3
Assets:
Cash and cash equivalents	0	0
Securities available-for-sale	9,412	9,706
Securities held-to-maturity		0
Other securities	0	0
Net loans	3,634,170	3,574,435
Accrued interest receivable	0	0
Derivative assets	0	0
Liabilities:
Liabilities:	0	0
Short-term debt	0	0
Long-term debt		0
Accrued interest payable	0	0
Derivative liabilities	$ 0	$ 0