10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the Quarterly Period Ended September 30, 2017

OR

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

Commission File Number: 0-20293

UNION BANKSHARES CORPORATION

(Exact name of registrant as specified in its charter)

VIRGINIA	54-1598552
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

 1051 East Cary Street

Suite 1200

Richmond, Virginia 23219

(Address of principal executive offices) (Zip Code)

(804) 633-5031

(Registrant’s telephone number, including area code)

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 ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

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

Large accelerated filer	x	Accelerated filer	¨
Non-accelerated filer	¨	(Do not check if a smaller reporting company)
		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. ¨

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

Yes ¨ No x

The number of shares of common stock outstanding as of November 1, 2017 was 43,732,082.

UNION BANKSHARES CORPORATION

FORM 10-Q

INDEX

ITEM		PAGE
	PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements
	Consolidated Balance Sheets as of September 30, 2017 (unaudited) and December 31, 2016 (audited)	2
	Consolidated Statements of Income (unaudited) for the three and nine months ended September 30, 2017 and 2016	3
	Consolidated Statements of Comprehensive Income (unaudited) for the three and nine months ended September 30, 2017 and 2016	4
	Consolidated Statements of Changes in Stockholders’ Equity (unaudited) for the nine months ended September 30, 2017 and 2016	5
	Consolidated Statements of Cash Flows (unaudited) for the nine months ended September 30, 2017 and 2016	6
	Notes to Consolidated Financial Statements (unaudited)	7
	Report of Independent Registered Public Accounting Firm	44
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	45
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	70
Item 4.	Controls and Procedures	72
	PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	73
Item 1A.	Risk Factors	74
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	74
Item 6.	Exhibits	75
	Signatures	76

Glossary of Acronyms and Defined Terms

2016 Form 10-K	–	Annual Report on Form 10-K for the year ended December 31, 2016
AFS	–	Available for sale
ALCO	–	Asset Liability Committee
ALL	–	Allowance for loan losses
ASC	–	Accounting Standards Codification
ASU	–	Accounting Standards Update
ATM	–	Automated teller machine
the Bank	–	Union Bank & Trust
BOLI	–	Bank-owned life insurance
bps	–	Basis points
the Company	–	Union Bankshares Corporation and its subsidiaries
Dodd-Frank Act	–	Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010
EPS	–	Earnings per share
Exchange Act	–	Securities Exchange Act of 1934
FASB	–	Financial Accounting Standards Board
FDIC	–	Federal Deposit Insurance Corporation
Federal Reserve	–	Board of Governors of the Federal Reserve System
Federal Reserve Bank	–	Federal Reserve Bank of Richmond
FHLB	–	Federal Home Loan Bank of Atlanta
U.S. GAAP or GAAP	–	Accounting principles generally accepted in the United States
HELOC	–	Home equity line of credit
HTM	–	Held to maturity
IDC	–	Interactive Data Corporation
LIBOR	–	London Interbank Offered Rate
NPA	–	Nonperforming assets
ODCM	–	Old Dominion Capital Management, Inc.
OREO	–	Other real estate owned
OTTI	–	Other than temporary impairment
PCI	–	Purchased credit impaired
ROA	–	Return on average assets
ROE	–	Return on average common equity
ROTCE	–	Return on average tangible common equity
SEC	–	Securities and Exchange Commission
StellarOne	–	StellarOne Corporation
TDR	–	Troubled debt restructuring
UMG	–	Union Mortgage Group, Inc.
Xenith	–	Xenith Bankshares, Inc.

PART I – FINANCIAL INFORMATION

ITEM 1 – FINANCIAL STATEMENTS

UNION BANKSHARES CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except share data)

	September 30, 2017		December 31, 2016
	(Unaudited)		(Audited)
ASSETS
Cash and cash equivalents:
Cash and due from banks	$	115,776	$	120,758
Interest-bearing deposits in other banks	60,294		58,030
Federal funds sold	891		449
Total cash and cash equivalents	176,961		179,237
Securities available for sale, at fair value	968,361		946,764
Securities held to maturity, at carrying value	204,801		201,526
Restricted stock, at cost	68,441		60,782
Loans held for sale, at fair value	30,896		36,487
Loans held for investment, net of deferred fees and costs	6,898,729		6,307,060
Less allowance for loan losses	37,162		37,192
Net loans held for investment	6,861,567		6,269,868
Premises and equipment, net	120,808		122,027
Other real estate owned, net of valuation allowance	8,764		10,084
Goodwill	298,191		298,191
Amortizable intangibles, net	16,017		20,602
Bank owned life insurance	181,451		179,318
Other assets	93,178		101,907
Total assets	$	9,029,436	$	8,426,793
LIABILITIES
Noninterest-bearing demand deposits	$	1,535,149	$	1,393,625
Interest-bearing deposits	5,346,677		4,985,864
Total deposits	6,881,826		6,379,489
Securities sold under agreements to repurchase	43,337		59,281
Other short-term borrowings	574,000		517,500
Long-term borrowings	434,750		413,308
Other liabilities	54,152		56,183
Total liabilities	7,988,065		7,425,761
Commitments and contingencies (Note 6)
STOCKHOLDERS' EQUITY
Common stock, $1.33 par value, shares authorized 100,000,000; issued and outstanding, 43,729,229 shares and 43,609,317 shares, respectively.	57,708		57,506
Additional paid-in capital	608,884		605,397
Retained earnings	373,468		341,938
Accumulated other comprehensive income	1,311		(3,809		)
Total stockholders' equity	1,041,371		1,001,032
Total liabilities and stockholders' equity	$	9,029,436	$	8,426,793

See accompanying notes to consolidated financial statements.

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UNION BANKSHARES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

(Dollars in thousands, except share and per share data)

	Three Months Ended				Nine Months Ended
	September 30, 2017		September 30, 2016		September 30, 2017		September 30, 2016
Interest and dividend income:
Interest and fees on loans	$	75,948	$	66,190	$	216,644	$	193,884
Interest on deposits in other banks	181		65		367		178
Interest and dividends on securities:
Taxable	5,175		4,732		15,081		13,558
Nontaxable	3,546		3,446		10,620		10,344
Total interest and dividend income	84,850		74,433		242,712		217,964
Interest expense:
Interest on deposits	7,234		4,552		18,410		12,945
Interest on short-term borrowings	1,871		765		4,221		2,098
Interest on long-term borrowings	4,547		2,088		13,316		6,386
Total interest expense	13,652		7,405		35,947		21,429
Net interest income	71,198		67,028		206,765		196,535
Provision for credit losses	3,050		2,472		7,345		7,376
Net interest income after provision for credit losses	68,148		64,556		199,420		189,159
Noninterest income:
Service charges on deposit accounts	5,153		4,965		14,945		14,454
Other service charges and fees	4,529		4,397		13,575		12,971
Fiduciary and asset management fees	2,794		2,844		8,313		7,315
Mortgage banking income, net	2,305		3,207		7,123		8,324
Gains on securities transactions, net	184		—		782		145
Bank owned life insurance income	1,377		1,389		4,837		4,122
Loan-related interest rate swap fees	416		1,303		2,627		3,056
Other operating income	778		845		2,228		2,470
Total noninterest income	17,536		18,950		54,430		52,857
Noninterest expenses:
Salaries and benefits	29,769		30,493		92,499		87,061
Occupancy expenses	4,939		4,841		14,560		14,627
Furniture and equipment expenses	2,559		2,635		7,882		7,867
Printing, postage, and supplies	1,154		1,147		3,710		3,566
Communications expense	798		948		2,580		2,964
Technology and data processing	4,232		3,917		12,059		11,340
Professional services	1,985		1,895		5,734		6,432
Marketing and advertising expense	1,944		1,975		5,963		5,838
FDIC assessment premiums and other insurance	1,141		1,262		2,793		4,003
Other taxes	2,022		639		6,065		3,864
Loan-related expenses	1,349		1,531		3,959		3,638
OREO and credit-related expenses	1,139		503		2,023		1,965
Amortization of intangible assets	1,480		1,843		4,661		5,468
Training and other personnel costs	887		863		2,900		2,512
Merger-related costs	732		—		3,476		—
Other expenses	1,366		2,421		3,957		5,291
Total noninterest expenses	57,496		56,913		174,821		166,436
Income before income taxes	28,188		26,593		79,029		75,580
Income tax expense	7,530		6,192		21,292		18,881
Net income	$	20,658	$	20,401	$	57,737	$	56,699
Basic earnings per common share	$	0.47	$	0.47	$	1.32	$	1.29
Diluted earnings per common share	$	0.47	$	0.47	$	1.32	$	1.29
Dividends declared per common share	$	0.20	$	0.19	$	0.60	$	0.57
Basic weighted average number of common shares outstanding	43,706,635		43,565,937		43,685,045		43,853,548
Diluted weighted average number of common shares outstanding	43,792,058		43,754,915		43,767,502		43,967,725

See accompanying notes to consolidated financial statements.

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UNION BANKSHARES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

(Dollars in thousands)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
Net income	$	20,658		$	20,401		$	57,737		$	56,699
Other comprehensive income (loss):
Cash flow hedges:
Change in fair value of cash flow hedges	41			(78		)	(766		)	(3,766		)
Reclassification adjustment for losses (gains) included in net income (net of tax, $102 and $83 for the three months and $370 and $233 for the nine months ended September 30, 2017 and 2016, respectively)	189			154			688			433
AFS securities:
Unrealized holding gains (losses) arising during period (net of tax, $1,470 and $604 for the three months and $3,195 and $4,227 for the nine months ended September 30, 2017 and 2016, respectively)	(2,729		)	1,121			5,935			7,851
Reclassification adjustment for losses (gains) included in net income (net of tax, $64 and $0 for the three months and $274 and $51 for the nine months ended September 30, 2017 and 2016, respectively)	(119		)	—			(508		)	(95		)
HTM securities:
Reclassification adjustment for accretion of unrealized gain on AFS securities transferred to HTM (net of tax, $88 and $128 for the three months and $273 and $439 for the nine months ended September 30, 2017 and 2016, respectively)	(163		)	(237		)	(507		)	(816		)
Bank owned life insurance:
Reclassification adjustment for losses included in net income	84			—			278			—
Other comprehensive income (loss)	(2,697		)	960			5,120			3,607
Comprehensive income	$	17,961		$	21,361		$	62,857		$	60,306

See accompanying notes to consolidated financial statements.

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UNION BANKSHARES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED)

NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016

(Dollars in thousands, except share and per share amounts)

	Common Stock			Additional Paid-In Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total
Balance - December 31, 2015	$	59,159		$	631,822		$	298,134		$	6,252		$	995,367
Net income - 2016							56,699						56,699
Other comprehensive income (net of taxes of $3,970)										3,607			3,607
Issuance of common stock in regard to acquisition (17,232 shares)	23			430									453
Dividends on common stock ($0.57 per share)							(24,957		)				(24,957		)
Stock purchased under stock repurchase plan (1,411,131 shares)	(1,876		)	(31,300		)							(33,176		)
Issuance of common stock under Equity Compensation Plans (54,044 shares)	72			681									753
Issuance of common stock for services rendered (14,576 shares)	19			360									379
Vesting of restricted stock, net of shares held for taxes, under Equity Compensation Plans (35,515 shares)	47			(492		)							(445		)
Stock-based compensation expense				2,284									2,284
Balance - September 30, 2016	$	57,444		$	603,785		$	329,876		$	9,859		$	1,000,964
Balance - December 31, 2016	$	57,506		$	605,397		$	341,938		$	(3,809	)	$	1,001,032
Net income - 2017							57,737						57,737
Other comprehensive income (net of taxes of $3,018)										5,120			5,120
Dividends on common stock ($0.60 per share)							(26,207		)				(26,207		)
Issuance of common stock under Equity Compensation Plans (58,421 shares)	78			891									969
Issuance of common stock for services rendered (16,529 shares)	22			539									561
Vesting of restricted stock, net of shares held for taxes, under Equity Compensation Plans (76,505 shares)	102			(1,415		)							(1,313		)
Stock-based compensation expense				3,472									3,472
Balance - September 30, 2017	$	57,708		$	608,884		$	373,468		$	1,311		$	1,041,371

See accompanying notes to consolidated financial statements.

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UNION BANKSHARES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

NINE MONTHS ENDED SEPTEMBER 30, 2017 AND 2016

(Dollars in thousands)

	2017			2016
Operating activities:
Net income	$	57,737		$	56,699
Adjustments to reconcile net income to net cash and cash equivalents provided by (used in) operating activities:
Depreciation of premises and equipment	8,307			7,617
Writedown of OREO	845			879
Amortization, net	10,500			10,241
Amortization (accretion) related to acquisition, net	(158		)	1,400
Provision for credit losses	7,345			7,376
Gains on securities transactions, net	(782		)	(145		)
BOLI income	(3,999		)	(4,122		)
Decrease (increase) in loans held for sale, net	5,591			(10,784		)
Losses (gains) on sales of other real estate owned, net	32			(278		)
Losses on sales of premises, net	51			97
Stock-based compensation expenses	3,472			2,284
Issuance of common stock for services	561			379
Net decrease (increase) in other assets	4,952			(11,169		)
Net increase in other liabilities	909			11,192
Net cash and cash equivalents provided by (used in) operating activities	95,363			71,666
Investing activities:
Purchases of securities available for sale and restricted stock	(205,965		)	(159,863		)
Purchases of securities held to maturity	(7,836		)	—
Proceeds from sales of securities available for sale and restricted stock	91,911			18,272
Proceeds from maturities, calls and paydowns of securities available for sale	88,675			83,942
Proceeds from maturities, calls and paydowns of securities held to maturity	818			1,841
Net increase in loans held for investment	(594,967		)	(479,346		)
Net increase in premises and equipment	(7,139		)	(5,102		)
Proceeds from BOLI settlements	2,497			—
Proceeds from sales of other real estate owned	1,028			4,982
Cash paid in acquisition	—			(4,077		)
Cash acquired in acquisitions	—			207
Net cash and cash equivalents provided by (used in) investing activities	(630,978		)	(539,144		)
Financing activities:
Net increase in noninterest-bearing deposits	141,524			69,331
Net increase in interest-bearing deposits	360,813			225,239
Net increase in short-term borrowings	40,556			276,748
Cash paid for contingent consideration	(3,003		)	—
Proceeds from issuance of long-term debt	20,000			—
Repayments of long-term debt	—			(32,500		)
Cash dividends paid - common stock	(26,207		)	(24,957		)
Repurchase of common stock	—			(33,176		)
Issuance of common stock	969			753
Vesting of restricted stock, net of shares held for taxes	(1,313		)	(445		)
Net cash and cash equivalents provided by (used in) financing activities	533,339			480,993
Increase (decrease) in cash and cash equivalents	(2,276		)	13,515
Cash and cash equivalents at beginning of the period	179,237			142,660
Cash and cash equivalents at end of the period	$	176,961		$	156,175
Supplemental Disclosure of Cash Flow Information
Cash payments for:
Interest	$	33,947		$	21,812
Income taxes	19,600			19,800
Supplemental schedule of noncash investing and financing activities
Transfers between loans and other real estate owned	$	585		$	865
Issuance of common stock in exchange for net assets in acquisition	—			453

See accompanying notes to consolidated financial statements.

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UNION BANKSHARES CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited)

1. ACCOUNTING POLICIES

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. Significant inter-company accounts and transactions have been eliminated in consolidation.

The unaudited consolidated financial statements have been prepared in accordance with U.S. GAAP for interim financial information and follow general practice within the banking industry. Accordingly, the unaudited consolidated financial statements do not include all the information and footnotes required by U.S. GAAP for complete financial statements; however, in the opinion of management, all adjustments (consisting only of normal recurring accruals) necessary for a fair presentation of the results of the interim periods presented have been made. The results of operations for the interim periods are not necessarily indicative of the results that may be expected for the full year.

These financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s 2016 Form 10-K. Certain prior period amounts have been reclassified to conform to current period presentation.

Loans

The Company originates commercial and consumer loans to customers. A substantial portion of the loan portfolio is represented by commercial and residential real estate loans (including acquisition and development loans and residential construction loans) throughout its market area. The ability of the Company’s debtors to honor their contracts on such loans is dependent upon the real estate and general economic conditions in those markets, as well as other factors.

Loans that management has the intent and ability to hold for the foreseeable future or until maturity or pay-off generally are reported at their outstanding unpaid principal balances adjusted for any charge-offs, the allowance for loan losses, and any deferred fees or costs on originated loans. Interest income is accrued on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, are deferred and recognized as an adjustment of the related loan yield using the interest method.

Below is a summary of the Company's loan segments:

Construction and Land Development – construction loans generally made to commercial and residential builders for specific construction projects. The successful repayment of these types of loans is generally dependent upon (a) a commitment for permanent financing from the Company, or (b) from the sale of the constructed property. These loans carry more risk than both types of commercial real estate term loans due to the dynamics of construction projects, changes in interest rates, the long-term financing market, and state and local government regulations. As in commercial real estate term lending, the Company manages risk by using specific underwriting policies and procedures for these types of loans and by avoiding excessive concentrations to any one business or industry.

Also, included in this category are loans generally made to residential home builders to support their lot and home inventory needs. Repayment relies upon the successful performance of the underlying residential real estate project. This type of lending carries a higher level of risk as compared to other commercial lending. This class of lending manages risks related to residential real estate market conditions, a functioning first and secondary market in which to sell residential properties, and the borrower’s ability to manage inventory and run projects. The Company manages this risk by lending to experienced builders and developers by using specific underwriting policies and procedures for these types of loans and by avoiding excessive concentrations with any particular customer or geographic region.

Commercial Real Estate – Owner Occupied – term loans made to support owner occupied real estate properties that rely upon the successful operation of the business occupying the property for repayment. General market conditions and economic activity may affect these types of loans. In addition to using specific underwriting policies and procedures for these types of loans, the Company manages risk by avoiding concentrations to any one business or industry.

Commercial Real Estate – Non-Owner Occupied – term loans typically made to borrowers to support income producing properties that rely upon the successful operation of the property for repayment. General market conditions and economic activity may impact the performance of these types of loans. In addition to using specific underwriting policies and procedures for these types of loans, the Company manages risk by diversifying the lending to various lines of businesses, such as retail, office, office warehouse, and hotel as well as avoiding concentrations to any one business or industry.

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Residential 1-4 Family – loans generally made to both commercial and residential borrowers. Residential 1-4 Family loan portfolios carry risks associated with the creditworthiness of the borrower or the tenant and changes in loan-to-value ratios. The Company manages these risks through policies and procedures such as limiting loan-to-value ratios at origination, experienced underwriting, requiring standards for appraisers, and not making subprime loans.

Multifamily Real Estate – loans made to real estate investors to support permanent financing for multifamily residential income producing properties that rely on the successful operation of the property for repayment. This management mainly involves property maintenance and collection of rents due from tenants. This type of lending carries a lower level of risk as compared to other commercial lending. In addition, underwriting requirements for multifamily properties are stricter than for other non-owner-occupied property types. The Company manages this risk by avoiding concentrations with any particular customer.

Commercial & Industrial – loans generally made to support the Company’s borrowers’ need for equipment/vehicle purchases and short-term or seasonal cash flow needs. Repayment relies upon the successful operation of the business. This type of lending carries a lower level of commercial credit risk as compared to other commercial lending. The Company manages this risk by using general underwriting policies and procedures for these types of loans and by avoiding concentrations to any one business or industry.

HELOC – the consumer HELOC portfolio carries risks associated with the creditworthiness of the borrower and changes in loan-to-value ratios. The Company manages these risks through policies and procedures such as limiting loan-to-value ratios at origination, using experienced underwriting, requiring standards for appraisers, and not making subprime loans.

Auto – the consumer indirect auto lending portfolio generally carries certain risks associated with the values of the collateral that management must mitigate. The Company focuses its indirect auto lending on one to two year old used vehicles where substantial depreciation has already occurred thereby minimizing the risk of significant loss of collateral values in the future. This type of lending places reliance on computer-based loan approval systems to supplement other underwriting standards.

Consumer and all other – portfolios carry risks associated with the creditworthiness of the borrower and changes in the economic environment. The Company manages these risks through policies and procedures such as experienced underwriting, maximum debt to income ratios, and minimum borrower credit scores. Also included in this category are loans that generally support small business lines of credit and agricultural lending, neither of which are a material source of business for the Company.

Affordable Housing Entities

The Company invests in private investment funds that make equity investments in multifamily affordable housing properties that provide affordable housing tax credits for these investments. The activities of these entities are financed with a combination of invested equity capital and debt. For the three and nine months ended September 30, 2017, the Company recognized amortization of $229,000 and $643,000, respectively, and tax credits of $240,000 and $724,000, respectively, associated with these investments within “Income tax expense” on the Company’s Consolidated Statements of Income. For the three and nine months ended September 30, 2016, the Company recognized amortization of $185,000 and $445,000, respectively, and tax credits of $265,000 and $685,000, respectively. The carrying value of the Company’s investments in these qualified affordable housing projects was $9.1 million and $9.9 million as of September 30, 2017 and December 31, 2016, respectively. At September 30, 2017 and December 31, 2016, the Company's recorded liability totaled $4.0 million and $7.1 million, respectively, for the related unfunded commitments, which are expected to be paid from the second half of 2017 through 2019.

Adoption of New Accounting Standards

In March 2016, the FASB issued ASU No. 2016-09, “Compensation - Stock Compensation (Topic 718): Improvements to

Employee Share-Based Payment Accounting.” This ASU simplifies several aspects of the accounting for employee share based payment transactions, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. The Company adopted this standard in the first quarter of 2017. The adoption of ASU 2016-09 did not have a material impact on the Company’s consolidated financial statements.

Recent Accounting Pronouncements

In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers: Topic 606.” This ASU revised guidance for the recognition, measurement, and disclosure of revenue from contracts with customers. The original guidance has been amended through subsequent accounting standard updates that resulted in technical corrections, improvements, and a one-year deferral of the effective date to January 1, 2018. The guidance, as amended, is applicable to all entities and, once effective, will replace significant portions of existing industry and transaction-specific revenue recognition rules with a more principles-

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based recognition model. Most revenue associated with financial instruments, including interest income, loan origination fees, and credit card fees, is outside the scope of the guidance. Gains and losses on investment securities, derivatives, and sales of financial instruments are similarly excluded from the scope. Entities can elect to adopt the guidance either on a full or modified retrospective basis. Full retrospective adoption will require a cumulative effect adjustment to retained earnings as of the beginning of the earliest comparative period presented. Modified retrospective adoption will require a cumulative effect adjustment to retained earnings as of the beginning of the reporting period in which the entity first applies the new guidance. The Company plans to adopt this guidance on the effective date, January 1, 2018 via the modified retrospective approach. The Company performed its assessment of the adoption of this ASU and the related subsequent technical corrections issued. Based on the completed contracts reviewed thus far, the adoption of this accounting guidance is not expected to have a material impact on the Company's consolidated financial statements.

In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842).” This ASU requires lessees to put most leases on their balance sheets, but recognize expenses in the income statement in a manner similar to today’s accounting. The guidance also eliminates the real estate-specific provisions and changes the guidance on sale-leaseback transactions, initial direct costs, and lease executory costs for all entities. For lessors, the standard modifies the classification criteria and the accounting for sales-type and direct financing leases. This ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted. The Company is currently working to identify the complete lease population, including potential embedded leases. The adoption of this standard is expected to result in additional assets and liabilities, as the Company will be required to recognize operating leases on the Consolidated Balance Sheet. Other implementation matters to be addressed include, but are not limited to, the determination of effects on the financial and capital ratios and the quantification of the impacts that this accounting guidance will have on the Company's consolidated financial statements.

In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.”This ASU updates the existing guidance to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. The amendment replaces the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and required consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The amendment is effective for fiscal years beginning after December 15, 2019. The Company is currently assessing the impact ASU No. 2016-13 will have on its consolidated financial statements.

In January 2017, the FASB issued ASU No. 2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business.” This ASU clarifies the definition of a business that appears in ASC 805, Business Combinations. Amendments narrow the definition and provide a framework for making judgments whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The amendment to the Business Combinations Topic is intended to address concerns that the existing definition of a business has been applied too broadly and has resulted in many transactions being recorded as business acquisitions that in substance are more akin to asset acquisitions. ASU 2017-01 is effective for annual periods beginning after December 15, 2017, including interim periods within those annual periods. The Company has concluded the adoption of ASU 2017-01 will not have a material impact on its consolidated financial statements.

In January 2017, the FASB issued ASU No. 2017-03, “Accounting Changes and Error Corrections (Topic 250) and Investments—Equity Method and Joint Ventures (Topic 323): Amendments to SEC Paragraphs Pursuant to Staff Announcements at the September 22, 2016 and November 17, 2016 EITF Meetings (SEC Update).” This ASU incorporates into the Accounting Standards Codification recent SEC guidance about disclosing, under SEC SAB Topic 11.M, the effect on financial statements of adopting the revenue, leases, and credit losses standards. ASU 2017-03 is effective upon issuance. The Company has concluded the adoption of ASU 2017-03 will not have a material impact on its consolidated financial statements.

In January 2017, the FASB issued ASU No. 2017-04, “Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment.” This ASU simplifies accounting for goodwill impairments by eliminating step two (the implied fair value to carrying value of goodwill) from the existing goodwill impairment test. A goodwill impairment will now be the amount by which a reporting unit's carrying value exceeds its fair value, not to exceed the carrying amount of the goodwill. The effective date and transition requirements for the technical corrections will be effective for the Company for reporting periods beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company has concluded the adoption of ASU 2017-04 will not have a material impact on its consolidated financial statements.

In February 2017, the FASB issued ASU No. 2017-05, “Other Income—Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales

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of Nonfinancial Assets.” This ASU conforms the derecognition guidance on nonfinancial assets with the model for transactions in the new revenue standard. The amendments will be effective for the Company for reporting periods beginning after December 15, 2018. The Company concluded that ASU 2017-05 will not have a material impact on its consolidated financial statements.

In March 2017, the FASB issued ASU No. 2017-08, “Receivables—Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities.”This ASU focuses on the amortization period for certain purchased callable debt securities held at a premium. The amendments shorten the amortization period for the premium to the earliest call date. The amendments will be effective for the Company for interim and annual periods beginning after December 15, 2018. The Company has concluded the adoption of ASU 2017-08 will not have a material impact on its consolidated financial statements.

In May 2017, the FASB issued ASU No. 2017-09, “Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting.”This ASU relates to changes in the terms or conditions of a share-based payment award. The amendments provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. The amendments will be effective for the Company for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted. The Company has concluded the adoption of ASU 2017-09 will not have a material impact on its consolidated 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 ASU relates to any entity that elects to apply hedge accounting in accordance with current GAAP. The amendment simplifies the application of the hedge accounting guidance and improves the financial reporting of hedging relationships to better portray the economic results of an entity’s risk management activities in its financial statements. The amendments will be effective for the Company for annual periods, and interim periods within those annual periods, beginning after December 15, 2018. Early adoption is permitted. The Company is currently assessing the impact ASU 2017-12 will have on its consolidated financial statements.

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2. SECURITIES

Available for Sale

The amortized cost, gross unrealized gains and losses, and estimated fair values of securities available for sale as of September 30, 2017 and December 31, 2016 are summarized as follows (dollars in thousands):

	Amortized		Gross Unrealized					Estimated
	Cost		Gains		(Losses)			Fair Value
September 30, 2017
Obligations of states and political subdivisions	$	285,921	$	7,582	$	(1,304	)	$	292,199
Corporate bonds	114,997		1,241		(816		)	115,422
Mortgage-backed securities	546,038		4,119		(3,253		)	546,904
Other securities	13,890		—		(54		)	13,836
Total available for sale securities	$	960,846	$	12,942	$	(5,427	)	$	968,361
December 31, 2016
Obligations of states and political subdivisions	$	274,007	$	4,962	$	(3,079	)	$	275,890
Corporate bonds	123,674		892		(2,786		)	121,780
Mortgage-backed securities	536,031		4,626		(5,371		)	535,286
Other securities	13,885		—		(77		)	13,808
Total available for sale securities	$	947,597	$	10,480	$	(11,313	)	$	946,764

The following table shows the gross unrealized losses and fair value (dollars in thousands) of the Company’s available for sale securities with unrealized losses that are not deemed to be other-than-temporarily impaired as of September 30, 2017 and December 31, 2016. These are aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position.

	Less than 12 months					More than 12 months					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
September 30, 2017
Obligations of states and political subdivisions	$	55,319	$	(700	)	$	9,338	$	(604	)	$	64,657	$	(1,304	)
Mortgage-backed securities	283,466		(2,708		)	42,481		(545		)	325,947		(3,253		)
Corporate bonds and other securities	21,128		(353		)	32,674		(517		)	53,802		(870		)
Total available for sale securities	$	359,913	$	(3,761	)	$	84,493	$	(1,666	)	$	444,406	$	(5,427	)
December 31, 2016
Obligations of states and political subdivisions	$	108,440	$	(3,007	)	$	588	$	(72	)	$	109,028	$	(3,079	)
Mortgage-backed securities	316,469		(4,979		)	42,096		(392		)	358,565		(5,371		)
Corporate bonds and other securities	47,388		(1,537		)	40,468		(1,326		)	87,856		(2,863		)
Total available for sale securities	$	472,297	$	(9,523	)	$	83,152	$	(1,790	)	$	555,449	$	(11,313	)

As of September 30, 2017, there were $84.5 million, or 36 issues, of individual available for sale securities that had been in a continuous loss position for more than 12 months. These securities had an unrealized loss of $1.7 million and consisted of municipal obligations, mortgage-backed securities, and corporate bonds. As of December 31, 2016, there were $83.2 million, or 30 issues, of individual securities that had been in a continuous loss position for more than 12 months. These securities had an unrealized loss of $1.8 million and consisted of municipal obligations, mortgage-backed securities, and corporate bonds. The Company has determined that these securities are temporarily impaired as of September 30, 2017 and December 31, 2016 for the reasons set out below:

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Mortgage-backed securities. This category’s unrealized losses are primarily the result of interest rate fluctuations. Because the decline in market value is attributable to changes in interest rates and not credit quality, the Company does not intend to sell the investments, and it is not likely that the Company will be required to sell the investments before recovery of their amortized cost basis, which may be maturity, the Company does not consider those investments to be other-than-temporarily impaired. Also, the majority of the Company’s mortgage-backed securities are agency-backed securities, which have a government guarantee.

Obligations of state and political subdivisions. This category’s unrealized losses are primarily the result of interest rate fluctuations and also a certain few ratings downgrades brought about by the impact of the credit crisis on states and political subdivisions. The contractual terms of the investments do not permit the issuer to settle the securities at a price less than the cost basis of each investment. Because the Company does not intend to sell any of the investments and the accounting standard of “more likely than not” has not been met for the Company to be required to sell any of the investments before recovery of its amortized cost basis, which may be maturity, the Company does not consider these investments to be other-than-temporarily impaired.

Corporate bonds. The Company’s unrealized losses in corporate debt securities are related to both interest rate fluctuations and ratings downgrades for a limited number of securities. The majority of the securities remain investment grade and the Company’s analysis did not indicate the existence of a credit loss. The contractual terms of the investments do not permit the issuer to settle the securities at a price less than the cost basis of each investment. Because the Company does not intend to sell any of the investments and the accounting standard of “more likely than not” has not been met for the Company to be required to sell any of the investments before recovery of its amortized cost basis, which may be maturity, the Company does not consider these investments to be other-than-temporarily impaired.

The following table presents the amortized cost and estimated fair value of available for sale securities as of September 30, 2017 and December 31, 2016, by contractual maturity (dollars in thousands). Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	September 30, 2017				December 31, 2016
	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
Due in one year or less	$	23,387	$	23,510	$	21,403	$	21,517
Due after one year through five years	128,261		130,107		108,198		109,778
Due after five years through ten years	267,492		271,830		300,552		301,888
Due after ten years	541,706		542,914		517,444		513,581
Total securities available for sale	$	960,846	$	968,361	$	947,597	$	946,764

For information regarding the estimated fair value of available for sale securities which were pledged to secure public deposits, repurchase agreements, and for other purposes as permitted or required by law as of September 30, 2017 and December 31, 2016, see Note 6 “Commitments and Contingencies.”

Held to Maturity

The Company reports securities held to maturity on the Consolidated Balance Sheets at carrying value. Carrying value is amortized cost which includes any unamortized unrealized gains and losses recognized in accumulated other comprehensive income prior to reclassifying the securities from securities available for sale to securities held to maturity. Investment securities transferred into the held to maturity category from the available for sale category are recorded at fair value at the date of transfer. The unrealized holding gain or loss at the date of transfer is retained in accumulated other comprehensive income and in the carrying value of the securities held to maturity. Such unrealized gains or losses are accreted over the remaining life of the security with no impact on future net income.

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The carrying value, gross unrealized gains and losses, and estimated fair values of securities held to maturity as of September 30, 2017 and December 31, 2016 are summarized as follows (dollars in thousands):

	Carrying		Gross Unrealized					Estimated
	Value (1)		Gains		(Losses)			Fair Value
September 30, 2017
Obligations of states and political subdivisions	$	204,801	$	5,111	$	(77	)	$	209,835
December 31, 2016
Obligations of states and political subdivisions	$	201,526	$	1,617	$	(828	)	$	202,315

(1) The carrying value includes $4.0 million as of September 30, 2017 and $5.2 million as of December 31, 2016 of net unrealized gains present at the time of transfer from available for sale securities, net of any accretion.

The following table shows the gross unrealized losses and fair value (dollars in thousands) of the Company’s held to maturity securities with unrealized losses that are not deemed to be other-than-temporarily impaired as of September 30, 2017 and December 31, 2016. These are aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position.

	Less than 12 months					More than 12 months					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
September 30, 2017
Obligations of states and political subdivisions	$	5,130	$	(53	)	$	638	$	(24	)	$	5,768	$	(77	)
December 31, 2016
Obligations of states and political subdivisions	$	92,841	$	(747	)	$	648	$	(81	)	$	93,489	$	(828	)

As of September 30, 2017, there was $638,000, or one issue, of an individual held to maturity security that had been in a continuous loss position for more than 12 months and had an unrealized loss of $24,000. As of December 31, 2016, there was $648,000, or one issue, of an individual held to maturity security that had been in a continuous loss position for more than 12 months and had an unrealized loss of $81,000. This security is a municipal bond with minimal credit exposure and is credit enhanced with a guarantee from the local school board. For this reason, the Company has determined that this security in a loss position is temporarily impaired as of September 30, 2017 and December 31, 2016. Because the Company does not intend to sell this investment and the accounting standard of “more likely than not” has not been met for the Company to be required to sell the investment before recovery of its amortized cost basis, which may be maturity, the Company does not consider this investment to be other-than-temporarily impaired.

The following table presents the amortized cost and estimated fair value of held to maturity securities as of September 30, 2017 and December 31, 2016, by contractual maturity (dollars in thousands). Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	September 30, 2017				December 31, 2016
	Carrying Value (1)		Estimated Fair Value		Carrying Value (1)		Estimated Fair Value
Due in one year or less	$	5,879	$	5,902	$	4,403	$	4,440
Due after one year through five years	41,196		41,959		28,383		28,763
Due after five years through ten years	65,893		67,444		51,730		51,522
Due after ten years	91,833		94,530		117,010		117,590
Total securities held to maturity	$	204,801	$	209,835	$	201,526	$	202,315

(1)The carrying value includes $4.0 million as of September 30, 2017 and $5.2 million as of December 31, 2016 of net unrealized gains present at the time of transfer from available for sale securities, net of any accretion.

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For information regarding the estimated fair value of held to maturity securities which were pledged to secure public deposits as permitted or required by law as of September 30, 2017 and December 31, 2016, see Note 6 “Commitments and Contingencies.”

Restricted Stock, at cost

Due to restrictions placed upon the Bank’s common stock investment in the Federal Reserve Bank and FHLB, these securities have been classified as restricted equity securities and carried at cost. These restricted securities are not subject to the investment security classifications and are included as a separate line item on the Company’s Consolidated Balance Sheets. At September 30, 2017 and December 31, 2016, the FHLB required the Bank to maintain stock in an amount equal to 4.25% of outstanding borrowings and a specific percentage of the Bank’s total assets. The Federal Reserve Bank required the Bank to maintain stock with a par value equal to 6% of its outstanding capital at both September 30, 2017 and December 31, 2016. Restricted equity securities consist of Federal Reserve Bank stock in the amount of $27.6 million and $23.8 million for September 30, 2017 and December 31, 2016 and FHLB stock in the amount of $40.9 million and $37.0 million as of September 30, 2017 and December 31, 2016, respectively.

Other-Than-Temporary-Impairment

During each quarter, the Company conducts an assessment of the securities portfolio for OTTI consideration. The assessment considers factors such as external credit ratings, delinquency coverage ratios, market price, management’s judgment, expectations of future performance, and relevant industry research and analysis. An impairment is other-than-temporary if any of the following conditions exist: the entity intends to sell the security; it is more likely than not that the entity will be required to sell the security before recovery of its amortized cost basis; or the entity does not expect to recover the security’s entire amortized cost basis (even if the entity does not intend to sell). If a credit loss exists, but an entity does not intend to sell the impaired debt security and is not more likely than not to be required to sell before recovery, the impairment is other-than-temporary and should be separated into a credit portion to be recognized in earnings and the remaining amount relating to all other factors recognized as other comprehensive loss. Based on the assessment for the three and nine months ended September 30, 2017, and in accordance with the guidance, no OTTI was recognized.

For the year ended December 31, 2015, the Company determined that a municipal security in the available for sale portfolio incurred credit-related OTTI of $300,000.  During the quarter ended March 31, 2016, the municipal security was sold.  As a result, the Company recognized an additional loss on sale of the previously written down security.

Realized Gains and Losses

The following table presents the gross realized gains and losses on and the proceeds from the sale of securities during the three and nine months ended September 30, 2017 and 2016 (dollars in thousands).

	Three Months Ended September 30, 2017			Nine Months Ended September 30, 2017
Realized gains (losses):
Gross realized gains	$	296		$	958
Gross realized losses	(112		)	(176		)
Net realized gains	$	184		$	782
Proceeds from sales of securities	$	39,284		$	91,911

	Three Months Ended September 30, 2016		Nine Months Ended September 30, 2016
Realized gains (losses):
Gross realized gains	$	—	$	242
Gross realized losses	—		(97		)
Net realized gains	$	—	$	145
Proceeds from sales of securities	$	2,848	$	18,272

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3. LOANS AND ALLOWANCE FOR LOAN LOSSES

Loans are stated at their face amount, net of deferred fees and costs, and consist of the following at September 30, 2017 and December 31, 2016 (dollars in thousands):

	September 30, 2017		December 31, 2016
Construction and Land Development	$	841,738	$	751,131
Commercial Real Estate - Owner Occupied	903,523		857,805
Commercial Real Estate - Non-Owner Occupied	1,748,039		1,564,295
Multifamily Real Estate	368,686		334,276
Commercial & Industrial	554,522		551,526
Residential 1-4 Family	1,083,112		1,029,547
Auto	276,572		262,071
HELOC	535,446		526,884
Consumer and all other	587,091		429,525
Total loans held for investment, net (1)	$	6,898,729	$	6,307,060

(1)Loans, as presented, are net of deferred fees and costs totaling $335,000 and $1.8 million as of September 30, 2017 and December 31, 2016, respectively.

The following table shows the aging of the Company’s loan portfolio, by segment, at September 30, 2017 (dollars in thousands):

	30-59 Days Past Due		60-89 Days Past Due		Greater than 90 Days and still Accruing		PCI		Nonaccrual		Current		Total Loans
Construction and Land Development	$	7,221	$	100	$	54	$	3,026	$	5,671	$	825,666	$	841,738
Commercial Real Estate - Owner Occupied	1,707		689		679		17,668		2,205		880,575		903,523
Commercial Real Estate - Non-Owner Occupied	909		571		298		14,376		2,701		1,729,184		1,748,039
Multifamily Real Estate	—		—		—		77		—		368,609		368,686
Commercial & Industrial	1,558		255		101		625		1,252		550,731		554,522
Residential 1-4 Family	5,633		1,439		2,360		14,077		6,163		1,053,440		1,083,112
Auto	2,415		293		143		—		174		273,547		276,572
HELOC	1,400		628		709		982		1,791		529,936		535,446
Consumer and all other	3,469		1,445		188		210		165		581,614		587,091
Total loans held for investment	$	24,312	$	5,420	$	4,532	$	51,041	$	20,122	$	6,793,302	$	6,898,729

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The following table shows the aging of the Company’s loan portfolio, by segment, at December 31, 2016 (dollars in thousands):

	30-59 Days Past Due		60-89 Days Past Due		Greater than 90 Days and still Accruing		PCI		Nonaccrual		Current		Total Loans
Construction and Land Development	$	1,162	$	232	$	76	$	2,922	$	2,037	$	744,702	$	751,131
Commercial Real Estate - Owner Occupied	1,842		109		35		18,343		794		836,682		857,805
Commercial Real Estate - Non-Owner Occupied	2,369		—		—		17,303		—		1,544,623		1,564,295
Multifamily Real Estate	147		—		—		2,066		—		332,063		334,276
Commercial & Industrial	759		858		9		1,074		124		548,702		551,526
Residential 1-4 Family	7,038		534		2,048		16,200		5,279		998,448		1,029,547
Auto	2,570		317		111		—		169		258,904		262,071
HELOC	1,836		1,140		635		1,161		1,279		520,833		526,884
Consumer and all other	2,522		1,431		91		223		291		424,967		429,525
Total loans held for investment	$	20,245	$	4,621	$	3,005	$	59,292	$	9,973	$	6,209,924	$	6,307,060

The following table shows the PCI loan portfolios, by segment and their delinquency status, at September 30, 2017 (dollars in thousands):

	30-89 Days Past Due		Greater than 90 Days		Current		Total
Construction and Land Development	$	62	$	—	$	2,964	$	3,026
Commercial Real Estate - Owner Occupied	463		643		16,562		17,668
Commercial Real Estate - Non-Owner Occupied	318		1,032		13,026		14,376
Multifamily Real Estate	—		—		77		77
Commercial & Industrial	—		—		625		625
Residential 1-4 Family	949		1,125		12,003		14,077
HELOC	132		128		722		982
Consumer and all other	34		—		176		210
Total	$	1,958	$	2,928	$	46,155	$	51,041

The following table shows the PCI loan portfolios, by segment and their delinquency status, at December 31, 2016 (dollars in thousands):

	30-89 Days Past Due		Greater than 90 Days		Current		Total
Construction and Land Development	$	—	$	84	$	2,838	$	2,922
Commercial Real Estate - Owner Occupied	271		519		17,553		18,343
Commercial Real Estate - Non-Owner Occupied	409		126		16,768		17,303
Multifamily Real Estate	—		—		2,066		2,066
Commercial & Industrial	44		56		974		1,074
Residential 1-4 Family	1,298		945		13,957		16,200
HELOC	175		121		865		1,161
Consumer and all other	—		—		223		223
Total	$	2,197	$	1,851	$	55,244	$	59,292

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The Company measures the amount of impairment by evaluating loans either in their collective homogeneous pools or individually. The following table shows the Company’s impaired loans, excluding PCI loans, by segment at September 30, 2017 and December 31, 2016 (dollars in thousands):

	September 30, 2017						December 31, 2016
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Recorded Investment		Unpaid Principal Balance		Related Allowance
Loans without a specific allowance
Construction and Land Development	$	13,889	$	13,981	$	—	$	13,877	$	14,353	$	—
Commercial Real Estate - Owner Occupied	5,238		5,378		—		5,886		6,042		—
Commercial Real Estate - Non-Owner Occupied	5,548		5,636		—		1,399		1,399		—
Commercial & Industrial	1,632		1,880		—		648		890		—
Residential 1-4 Family	9,510		10,523		—		8,496		9,518		—
HELOC	1,651		1,741		—		1,017		1,094		—
Consumer and all other	521		631		—		230		427		—
Total impaired loans without a specific allowance	$	37,989	$	39,770	$	—	$	31,553	$	33,723	$	—
Loans with a specific allowance
Construction and Land Development	$	1,347	$	1,444	$	113	$	1,395	$	1,404	$	107
Commercial Real Estate - Owner Occupied	2,118		2,132		157		646		646		4
Commercial Real Estate - Non-Owner Occupied	2,032		2,032		42		2,809		2,809		474
Commercial & Industrial	2,511		2,562		909		857		880		14
Residential 1-4 Family	4,421		4,543		249		3,335		3,535		200
Auto	174		235		1		169		235		1
HELOC	766		800		56		323		433		15
Consumer and all other	242		310		43		62		298		1
Total impaired loans with a specific allowance	$	13,611	$	14,058	$	1,570	$	9,596	$	10,240	$	816
Total impaired loans	$	51,600	$	53,828	$	1,570	$	41,149	$	43,963	$	816

The following tables show the average recorded investment and interest income recognized for the Company’s impaired loans, excluding PCI loans, by segment for the three and nine months ended September 30, 2017 and 2016 (dollars in thousands):

	Three Months Ended September 30, 2017				Nine Months Ended September 30, 2017
	Average Investment		Interest Income Recognized		Average Investment		Interest Income Recognized
Construction and Land Development	$	15,654	$	128	$	15,378	$	368
Commercial Real Estate - Owner Occupied	7,354		62		7,407		245
Commercial Real Estate - Non-Owner Occupied	7,597		57		7,584		185
Commercial & Industrial	4,139		36		4,203		121
Residential 1-4 Family	14,218		94		14,358		261
Auto	192		—		223		2
HELOC	2,460		7		2,492		29
Consumer and all other	800		8		690		20
Total impaired loans	$	52,414	$	392	$	52,335	$	1,231

-17-

	Three Months Ended September 30, 2016				Nine Months Ended September 30, 2016
	Average Investment		Interest Income Recognized		Average Investment		Interest Income Recognized
Construction and Land Development	$	28,195	$	464	$	27,645	$	1,346
Commercial Real Estate - Owner Occupied	7,691		72		7,862		230
Commercial Real Estate - Non-Owner Occupied	3,777		33		3,759		98
Commercial & Industrial	4,628		42		4,964		134
Residential 1-4 Family	13,106		89		13,439		267
Auto	271		—		289		4
HELOC	2,118		7		2,185		35
Consumer and all other	453		—		620		6
Total impaired loans	$	60,239	$	707	$	60,763	$	2,120

The Company considers TDRs to be impaired loans. A modification of a loan’s terms constitutes a TDR if the creditor grants a concession that it would not otherwise consider to the borrower for economic or legal reasons related to the borrower’s financial difficulties. All loans that are considered to be TDRs are evaluated for impairment in accordance with the Company’s allowance for loan loss methodology and are included in the preceding impaired loan tables. For the three and nine months ended September 30, 2017, the recorded investment in TDRs prior to modifications was not materially impacted by the modification.

The following table provides a summary, by segment, of TDRs that continue to accrue interest under the terms of the restructuring agreement, which are considered to be performing, and TDRs that have been placed on nonaccrual status, which are considered to be nonperforming, as of September 30, 2017 and December 31, 2016 (dollars in thousands):

	September 30, 2017					December 31, 2016
	No. of Loans	Recorded Investment		Outstanding Commitment		No. of Loans	Recorded Investment		Outstanding Commitment
Performing
Construction and Land Development	7	$	2,841	$	—	8	$	3,793	$	—
Commercial Real Estate - Owner Occupied	7	2,934		—		7	3,106		—
Commercial Real Estate - Non-Owner Occupied	3	2,196		—		2	2,390		—
Commercial & Industrial	12	2,112		—		3	533		—
Residential 1-4 Family	34	5,941		—		28	4,145		—
Consumer and all other	1	495		—		—	—		—
Total performing	64	$	16,519	$	—	48	$	13,967	$	—
Nonperforming
Construction and Land Development	5	$	400	$	—	2	$	215	$	—
Commercial Real Estate - Owner Occupied	2	142		—		2	156		—
Commercial & Industrial	5	1,062		—		1	116		—
Residential 1-4 Family	8	1,095		—		8	948		—
Consumer and all other	1	26		—		—	—		—
Total nonperforming	21	$	2,725	$	—	13	$	1,435	$	—
Total performing and nonperforming	85	$	19,244	$	—	61	$	15,402	$	—

-18-

The Company considers a default of a TDR to occur when the borrower is 90 days past due following the restructure or a foreclosure and repossession of the applicable collateral occurs. The following table shows, by segment, TDRs that were identified by the Company as going into default during the period shown that were restructured in the prior twelve-month period (dollars in thousands):

	Three Months Ended September 30, 2017			Nine Months Ended September 30, 2017
	No. of Loans	Recorded  Investment		No. of Loans	Recorded  Investment
Construction and Land Development	—	$	—	2	$	198
Commercial Real Estate - Owner Occupied	—	—		1	469
Commercial & Industrial	1	350		1	350
Residential 1-4 Family	2	187		4	605
Total	3	$	537	8	$	1,622

During the three and nine months ended September 30, 2016, the Company identified one loan, totaling approximately $23,000, that went into default that had been restructured in the twelve-month period prior to the time of default. This loan was a commercial real estate - owner occupied loan that had a term modification at a market rate.

The following table shows, by segment and modification type, TDRs that occurred during the three and nine months ended September 30, 2017 (dollars in thousands):

	Three Months Ended September 30, 2017			Nine Months Ended September 30, 2017
	No. of Loans	Recorded  Investment at Period End		No. of Loans	Recorded  Investment at Period End
Modified to interest only, at a market rate
Commercial & Industrial	3	$	936	8	$	1,596
Total interest only at market rate of interest	3	$	936	8	$	1,596
Term modification, at a market rate
Construction and Land Development	1	$	160	4	$	1,150
Commercial Real Estate - Owner Occupied	1	380		1	380
Commercial Real Estate - Non-Owner Occupied	1	571		3	2,196
Commercial & Industrial	—	—		4	969
Residential 1-4 Family	3	1,647		8	2,574
Consumer and all other	1	26		2	522
Total loan term extended at a market rate	7	$	2,784	22	$	7,791
Term modification, below market rate
Commercial Real Estate - Owner Occupied	—	$	—	1	$	841
Commercial & Industrial	—	—		3	179
Residential 1-4 Family	1	40		8	1,143
Total loan term extended at a below market rate	1	$	40	12	$	2,163
Total	11	$	3,760	42	$	11,550

-19-

The following table shows, by segment and modification type, TDRs that occurred during the three and nine months ended September 30, 2016 (dollars in thousands):

	Three Months Ended September 30, 2016			Nine Months Ended September 30, 2016
	No. of Loans	Recorded  Investment at Period End		No. of Loans	Recorded  Investment at Period End
Term modification, at a market rate
Construction and Land Development	—	$	—	1	$	1,177
Commercial Real Estate - Owner Occupied	—	—		2	739
Commercial & Industrial	1	457		1	457
Residential 1-4 Family	—	—		2	474
Total loan term extended at a market rate	1	$	457	6	$	2,847
Term modification, below market rate
Residential 1-4 Family	—	$	—	1	$	36
Total loan term extended at a below market rate	—	$	—	1	$	36
Interest rate modification, below market rate
Commercial & Industrial	—	$	—	1	$	125
Total interest only at below market rate of interest	—	$	—	1	$	125
Total	1	$	457	8	$	3,008

The following table shows the allowance for loan loss activity, balances for allowance for loan losses, and loan balances based on impairment methodology by segment for the nine months ended and as of September 30, 2017. The table below includes the provision for loan losses. Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories (dollars in thousands):

	Allowance for loan losses
	Balance, beginning of the year		Recoveries credited to allowance		Loans charged off			Provision charged to operations			Balance, end of period
Construction and Land Development	$	10,055	$	193	$	(2,115	)	$	535		$	8,668
Commercial Real Estate - Owner Occupied	3,801		84		(46		)	(620		)	3,219
Commercial Real Estate - Non-Owner Occupied	6,622		2		(1,181		)	1,825			7,268
Multifamily Real Estate	1,236		—		—			(136		)	1,100
Commercial & Industrial	4,627		451		(1,241		)	1,526			5,363
Residential 1-4 Family	6,399		332		(815		)	(35		)	5,881
Auto	946		352		(761		)	398			935
HELOC	1,328		240		(861		)	675			1,382
Consumer and all other	2,178		905		(2,929		)	3,192			3,346
Total	$	37,192	$	2,559	$	(9,949	)	$	7,360		$	37,162

-20-

	Loans individually evaluated for impairment				Loans collectively evaluated for impairment				Loans acquired with deteriorated credit quality				Total
	Loans		ALL		Loans		ALL		Loans		ALL		Loans		ALL
Construction and Land Development	$	15,236	$	113	$	823,476	$	8,555	$	3,026	$	—	$	841,738	$	8,668
Commercial Real Estate - Owner Occupied	7,356		157		878,499		3,062		17,668		—		903,523		3,219
Commercial Real Estate - Non-Owner Occupied	7,580		42		1,726,083		7,226		14,376		—		1,748,039		7,268
Multifamily Real Estate	—		—		368,609		1,100		77		—		368,686		1,100
Commercial & Industrial	4,143		909		549,754		4,454		625		—		554,522		5,363
Residential 1-4 Family	13,931		249		1,055,104		5,632		14,077		—		1,083,112		5,881
Auto	174		1		276,398		934		—		—		276,572		935
HELOC	2,417		56		532,047		1,326		982		—		535,446		1,382
Consumer and all other	763		43		586,118		3,303		210		—		587,091		3,346
Total loans held for investment, net	$	51,600	$	1,570	$	6,796,088	$	35,592	$	51,041	$	—	$	6,898,729	$	37,162

The following table shows the allowance for loan loss activity, balances for allowance for loan losses, and loan balances based on impairment methodology by segment for the nine months ended and as of September 30, 2016. In addition, a $175,000 provision was recognized during the nine months ended September 30, 2016 for unfunded loan commitments for which the reserves are recorded as a component of “Other Liabilities” on the Company’s Consolidated Balance Sheets. Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories (dollars in thousands):

	Allowance for loan losses
	Balance, beginning of the year		Recoveries credited to allowance		Loans charged off			Provision charged to operations			Balance, end of period
Construction and Land Development	$	6,040	$	165	$	(869	)	$	5,464		$	10,800
Commercial Real Estate - Owner Occupied	4,614		112		(772		)	(770		)	3,184
Commercial Real Estate - Non-Owner Occupied	6,929		3		(1		)	(813		)	6,118
Multifamily Real Estate	1,606		—		—			(658		)	948
Commercial & Industrial	3,163		422		(1,301		)	3,119			5,403
Residential 1-4 Family	5,414		466		(741		)	518			5,657
Auto	1,703		243		(815		)	(260		)	871
HELOC	2,934		229		(1,272		)	(534		)	1,357
Consumer and all other	1,644		382		(957		)	1,135			2,204
Total	$	34,047	$	2,022	$	(6,728	)	$	7,201		$	36,542

	Loans individually evaluated for impairment				Loans collectively evaluated for impairment				Loans acquired with deteriorated credit quality				Total
	Loans		ALL		Loans		ALL		Loans		ALL		Loans		ALL
Construction and Land Development	$	27,241	$	123	$	745,984	$	10,677	$	3,205	$	—	$	776,430	$	10,800
Commercial Real Estate - Owner Occupied	7,612		5		830,466		3,179		19,064		—		857,142		3,184
Commercial Real Estate - Non-Owner Occupied	3,792		1		1,432,895		6,117		18,141		—		1,454,828		6,118
Multifamily Real Estate	—		—		337,234		948		2,079		—		339,313		948
Commercial & Industrial	3,448		642		505,264		4,761		1,145		—		509,857		5,403
Residential 1-4 Family	12,673		115		969,860		5,542		16,828		—		999,361		5,657
Auto	231		1		254,957		870		—		—		255,188		871
HELOC	2,053		17		520,546		1,340		1,498		—		524,097		1,357
Consumer and all other	451		88		431,865		2,116		386		—		432,702		2,204
Total loans held for investment, net	$	57,501	$	992	$	6,029,071	$	35,550	$	62,346	$	—	$	6,148,918	$	36,542

-21-

The Company uses a risk rating system and past due status as the primary credit quality indicators for the loan categories. The risk rating system on a scale of 0 through 9 is used to determine risk level as used in the calculation of the allowance for loan losses; on those loans without a risk rating, the Company uses past due status to determine risk level. The risk levels, as described below, do not necessarily follow the regulatory definitions of risk levels with the same name. A general description of the characteristics of the risk levels follows:

Pass is determined by the following criteria:

•Risk rated 0 loans have little or no risk and are with General Obligation Municipal Borrowers;

•Risk rated 1 loans have little or no risk and are generally secured by cash or cash equivalents;

•Risk rated 2 loans have minimal risk to well qualified borrowers and no significant questions as to safety;

•Risk rated 3 loans are satisfactory loans with strong borrowers and secondary sources of repayment;

•Risk rated 4 loans are satisfactory loans with borrowers not as strong as risk rated 3 loans and may exhibit a greater

degree of financial risk based on the type of business supporting the loan; or

•Loans that are not risk rated but that are 0 to 29 days past due.

Special Mention is determined by the following criteria:

•Risk rated 5 loans are watch loans that warrant more than the normal level of supervision and have the possibility of an

event occurring that may weaken the borrower’s ability to repay;

•Risk rated 6 loans have increasing potential weaknesses beyond those at which the loan originally was granted and if

not addressed could lead to inadequately protecting the Company’s credit position; or

•Loans that are not risk rated but that are 30 to 89 days past due.

Substandard is determined by the following criteria:

•Risk rated 7 loans are substandard loans and are inadequately protected by the current sound worth or paying capacity

of the obligor or the collateral pledged; these have well defined weaknesses that jeopardize the liquidation of the debt

with the distinct possibility the Company will sustain some loss if the deficiencies are not corrected; or

•Loans that are not risk rated but that are 90 to 149 days past due.

Doubtful is determined by the following criteria:

•Risk rated 8 loans are doubtful of collection and the possibility of loss is high but pending specific borrower plans for

recovery, its classification as a loss is deferred until its more exact status is determined;

•Risk rated 9 loans are loss loans which are considered uncollectable and of such little value that their continuance as

    bankable assets is not warranted; or

•Loans that are not risk rated but that are over 149 days past due.

The following table shows the recorded investment in all loans, excluding PCI loans, by segment with their related risk level as of September 30, 2017 (dollars in thousands):

	Pass		Special Mention		Substandard		Doubtful		Total
Construction and Land Development	$	768,206	$	57,190	$	13,201	$	115	$	838,712
Commercial Real Estate - Owner Occupied	834,265		47,019		4,571		—		885,855
Commercial Real Estate - Non-Owner Occupied	1,702,500		23,764		7,399		—		1,733,663
Multifamily Real Estate	361,175		7,434		—		—		368,609
Commercial & Industrial	534,594		16,400		2,903		—		553,897
Residential 1-4 Family	1,045,736		15,878		4,480		2,941		1,069,035
Auto	273,446		2,910		143		73		276,572
HELOC	530,263		2,427		1,051		723		534,464
Consumer and all other	583,728		2,618		530		5		586,881
Total	$	6,633,913	$	175,640	$	34,278	$	3,857	$	6,847,688

-22-

The following table shows the recorded investment in all loans, excluding PCI loans, by segment with their related risk level as of December 31, 2016 (dollars in thousands):

	Pass		Special Mention		Substandard		Doubtful		Total
Construction and Land Development	$	667,018	$	69,311	$	11,857	$	23	$	748,209
Commercial Real Estate - Owner Occupied	801,565		32,364		5,533		—		839,462
Commercial Real Estate - Non-Owner Occupied	1,505,153		37,631		4,208		—		1,546,992
Multifamily Real Estate	312,711		19,499		—		—		332,210
Commercial & Industrial	539,999		9,391		1,062		—		550,452
Residential 1-4 Family	986,973		18,518		4,813		3,043		1,013,347
Auto	258,188		3,648		135		100		262,071
HELOC	519,928		4,225		969		601		525,723
Consumer and all other	425,520		3,491		40		251		429,302
Total	$	6,017,055	$	198,078	$	28,617	$	4,018	$	6,247,768

The following table shows the recorded investment in only PCI loans by segment with their related risk level as of September 30, 2017 (dollars in thousands):

	Pass		Special Mention		Substandard		Doubtful		Total
Construction and Land Development	$	1,460	$	1,311	$	255	$	—	$	3,026
Commercial Real Estate - Owner Occupied	5,521		8,237		3,910		—		17,668
Commercial Real Estate - Non-Owner Occupied	10,676		2,435		1,265		—		14,376
Multifamily Real Estate	—		77		—		—		77
Commercial & Industrial	94		309		222		—		625
Residential 1-4 Family	7,498		4,227		1,577		775		14,077
HELOC	722		132		6		122		982
Consumer and all other	154		46		10		—		210
Total	$	26,125	$	16,774	$	7,245	$	897	$	51,041

The following table shows the recorded investment in only PCI loans by segment with their related risk level as of December 31, 2016 (dollars in thousands):

	Pass		Special Mention		Substandard		Doubtful		Total
Construction and Land Development	$	1,092	$	1,432	$	398	$	—	$	2,922
Commercial Real Estate - Owner Occupied	5,520		8,889		3,934		—		18,343
Commercial Real Estate - Non-Owner Occupied	10,927		4,638		1,738		—		17,303
Multifamily Real Estate	343		1,723		—		—		2,066
Commercial & Industrial	107		480		487		—		1,074
Residential 1-4 Family	8,557		4,455		2,672		516		16,200
HELOC	857		183		7		114		1,161
Consumer and all other	166		37		20		—		223
Total	$	27,569	$	21,837	$	9,256	$	630	$	59,292

Loans acquired are originally recorded at fair value, with certain loans being identified as impaired at the date of purchase. The fair values were determined based on the credit quality of the portfolio, expected future cash flows, and timing of those expected future cash flows.

-23-

The following shows changes in the accretable yield for loans accounted for under ASC 310-30, Receivables – Loans and Debt Securities Acquired with Deteriorated Credit Quality, for the periods presented (dollars in thousands):

	For the Nine Months Ended September 30,
	2017			2016
Balance at beginning of period	$	19,739		$	22,139
Accretion	(4,896		)	(4,232		)
Reclass of nonaccretable difference due to improvement in expected cash flows	2,175			3,580
Other, net (1)	(452		)	(1,149		)
Balance at end of period	$	16,566		$	20,338

(1)This line item represents changes in the cash flows expected to be collected due to the impact of non-credit changes such as prepayment assumptions, changes in interest rates on variable rate PCI loans, and discounted payoffs that occurred in the quarter.

The carrying value of the Company’s PCI loan portfolio, accounted for under ASC 310-30, totaled $51.0 million at September 30, 2017 and $59.3 million at December 31, 2016. The outstanding balance of the Company’s PCI loan portfolio totaled $62.8 million at September 30, 2017 and $73.6 million at December 31, 2016. The carrying value of the Company’s acquired performing loan portfolio, accounted for under ASC 310-20, Receivables – Nonrefundable Fees and Other Costs, totaled $942.0 million at September 30, 2017 and $1.1 billion at December 31, 2016; the remaining discount on these loans totaled $14.6 million at September 30, 2017 and $16.9 million at December 31, 2016.

4.INTANGIBLE ASSETS

The Company’s intangible assets consist of core deposits, goodwill, and other intangibles arising from acquisitions. The Company has determined that core deposit intangibles have finite lives and amortizes them over their estimated useful lives. Core deposit intangible assets are being amortized over the period of expected benefit, which ranges from 4 to 14 years, using an accelerated method. Other amortizable intangible assets are being amortized over the period of expected benefit, which ranges from 5 to 10 years, using a straight-line method.

In accordance with ASC 350, Intangibles-Goodwill and Other, the Company reviews the carrying value of indefinite lived intangible assets at least annually or more frequently if certain impairment indicators exist. The Company performed its annual impairment testing in the second quarter of 2017 and determined that there was no impairment to its goodwill or intangible assets.

Amortization expense of core deposit intangibles for the three and nine months ended September 30, 2017 totaled $1.4 million and $4.3 million, respectively; and the three and nine months ended September 30, 2016 totaled $1.7 million and $5.3 million, respectively. Amortization expense of other intangibles for the three and nine months ended September 30, 2017 totaled $120,000 and $360,000, respectively and $160,000 for theboththree and ninemonths endedSeptember 30, 2016. As of September 30, 2017, the estimated remaining amortization expense of intangibles is as follows (dollars in thousands):

For the remaining three months of 2017	$	1,420
For the year ending December 31, 2018	4,664
For the year ending December 31, 2019	3,599
For the year ending December 31, 2020	2,509
For the year ending December 31, 2021	1,481
Thereafter	2,344
Total estimated amortization expense	$	16,017

-24-

5. BORROWINGS

Short-term Borrowings

The Company classifies all borrowings that will mature within a year from the date on which the Company enters into them as short-term borrowings. Total short-term borrowings consist primarily of advances from the FHLB, federal funds purchased (which are secured overnight borrowings from other financial institutions), and other lines of credit. Also included in total short-term borrowings are securities sold under agreements to repurchase, which are secured transactions with customers and generally mature the day following the date sold. Total short-term borrowings consist of the following as of September 30, 2017 and December 31, 2016 (dollars in thousands):

	September 30, 2017			December 31, 2016
Securities sold under agreements to repurchase	$	43,337		$	59,281
Other short-term borrowings (1)	574,000			517,500
Total short-term borrowings	$	617,337		$	576,781
Maximum month-end outstanding balance	$	696,529		$	678,262
Average outstanding balance during the period	606,441			590,074
Average interest rate (year-to-date)	0.93		%	0.49		%
Average interest rate at end of period	1.15		%	0.60		%

⁽¹⁾ As of September 30, 2017 and December 31, 2016 , all other short-term borrowings were FHLB advances.

The Bank maintains federal funds lines with several correspondent banks; the remaining available balance was $185.0 million and $175.0 million at September 30, 2017 and December 31, 2016, respectively. The Company maintains an alternate line of credit at a correspondent bank; the available balance was $25.0 million at both September 30, 2017 and December 31, 2016. The Company has certain restrictive covenants related to certain asset quality, capital, and profitability metrics associated with these lines and is considered to be in compliance with these covenants. Additionally, the Company had a collateral dependent line of credit with the FHLB of up to $2.7 billion and $2.4 billion at September 30, 2017 and December 31, 2016, respectively.

Long-term Borrowings

In connection with two bank acquisitions prior to 2006, the Company issued trust preferred capital notes to fund the cash portion of those acquisitions, collectively totaling $58.5 million. In connection with the acquisition of StellarOne, the Company acquired trust preferred capital notes totaling $32.0 million with a remaining fair value discount of $6.5 million at September 30, 2017. The trust preferred capital notes currently qualify for Tier 1 capital of the Company for regulatory purposes.

	Trust Preferred Capital Securities (1)		Investment (1)		Spread to  3-Month LIBOR		Rate		Maturity
Trust Preferred Capital Note - Statutory Trust I	$	22,500,000	$	696,000	2.75	%	4.08	%	6/17/2034
Trust Preferred Capital Note - Statutory Trust II	36,000,000		1,114,000		1.40	%	2.73	%	6/15/2036
VFG Limited Liability Trust I Indenture	20,000,000		619,000		2.73	%	4.06	%	3/18/2034
FNB Statutory Trust II Indenture	12,000,000		372,000		3.10	%	4.43	%	6/26/2033
Total	$	90,500,000	$	2,801,000

(1)The total of the trust preferred capital securities and investments in the respective trusts represents the principal asset of the Company's junior subordinated debt securities with like maturities and like interest rates to the capital securities. The Company's investment in the trusts is reported in "Other Assets" on the Consolidated Balance Sheets.

During the fourth quarter of 2016, the Company issued $150.0 million of fixed-to-floating rate subordinated notes with an initial fixed interest rate of 5.00% through December 15, 2021. The interest rate then changes to a floating rate of LIBOR

-25-

plus 3.175% through its maturity date in December 15, 2026. At September 30, 2017 and December 31, 2016, the carrying value of the subordinated debt was $150.0 million, with a remaining discount of $1.8 million, respectively.

On August 23, 2012, the Company modified its fixed rate FHLB advances to floating rate advances, which resulted in reducing the Company’s FHLB borrowing costs. In connection with this modification, the Company incurred a prepayment penalty of $19.6 million on the original advances, which is included as a component of long-term borrowings on the Company’s Consolidated Balance Sheets. In accordance with ASC 470-50, Modifications and Extinguishments, the Company is amortizing this prepayment penalty over the term of the modified advances using the effective rate method. The amortization expense is included as a component of interest expense on long-term borrowings on the Company’s Consolidated Statements of Income. Amortization expense for the three and nine months ended September 30, 2017 and 2016 was $486,000 and $1.4 million and $474,000 and $1.4 million, respectively.

In connection with the StellarOne acquisition, the Company assumed $70.0 million in long-term borrowings with the FHLB of which there is $20.0 million remaining at September 30, 2017 that had a remaining fair value premium of $223,000.

As of September 30, 2017, the Company had long-term advances from the FHLB consisting of the following (dollars in thousands):

Long-term Type	Spread to 3-Month LIBOR		Interest Rate (1)		Maturity Date	Advance Amount
Adjustable Rate Credit	0.44	%	1.77	%	8/23/2022	$	55,000
Adjustable Rate Credit	0.45	%	1.79	%	11/23/2022	65,000
Adjustable Rate Credit	0.45	%	1.79	%	11/23/2022	10,000
Adjustable Rate Credit	0.45	%	1.79	%	11/23/2022	10,000
Fixed Rate	—		3.62	%	11/28/2017	10,000
Fixed Rate	—		3.75	%	7/30/2018	5,000
Fixed Rate	—		3.97	%	7/30/2018	5,000
Fixed Rate Hybrid	—		0.99	%	10/19/2018	30,000
Fixed Rate Hybrid	—		1.58	%	5/18/2020	20,000
						$	210,000
(1)Interest rates calculated using non-rounded numbers.

As of December 31, 2016, the Company had long-term advances from the FHLB consisting of the following (dollars in thousands):

Long-term Type	Spread to 3-Month LIBOR		Interest Rate (1)		Maturity Date	Advance Amount
Adjustable Rate Credit	0.44	%	1.44	%	8/23/2022	$	55,000
Adjustable Rate Credit	0.45	%	1.45	%	11/23/2022	65,000
Adjustable Rate Credit	0.45	%	1.45	%	11/23/2022	10,000
Adjustable Rate Credit	0.45	%	1.45	%	11/23/2022	10,000
Fixed Rate	—		3.62	%	11/28/2017	10,000
Fixed Rate	—		3.75	%	7/30/2018	5,000
Fixed Rate	—		3.97	%	7/30/2018	5,000
Fixed Rate Hybrid	—		0.99	%	10/19/2018	30,000
						$	190,000
(1)Interest rates calculated using non-rounded numbers.

For information on the carrying value of loans and securities pledged as collateral on FHLB advances as of September 30, 2017 and December 31, 2016, refer to Note 6 "Commitments and Contingencies".

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As of September 30, 2017, the contractual maturities of long-term debt are as follows for the years ending (dollars in thousands):

	Trust Preferred Capital Notes		Subordinated Debt		FHLB Advances		Fair Value  Premium (Discount)			Prepayment Penalty			Total Long-term Borrowings
For the remaining three months of 2017	$	—	$	—	$	10,000	$	(21	)	$	(488	)	$	9,491
2018	—		—		40,000		(343		)	(1,970		)	37,687
2019	—		—		—		(486		)	(2,018		)	(2,504		)
2020	—		—		20,000		(501		)	(2,074		)	17,425
2021	—		—		—		(516		)	(2,119		)	(2,635		)
Thereafter	93,301		150,000		140,000		(6,308		)	(1,707		)	375,286
Total Long-term borrowings	$	93,301	$	150,000	$	210,000	$	(8,175	)	$	(10,376	)	$	434,750

6. COMMITMENTS AND CONTINGENCIES

Litigation Matters

On September 7, 2017, Paul Parshall, a purported shareholder of Xenith, filed a putative class action lawsuit (the “Parshall Lawsuit”) in the United States District Court for the Eastern District of Virginia against Xenith, its current directors, and the Company on behalf of all public shareholders of Xenith. The plaintiff in the action alleged that the Company’s registration statement on Form S-4 filed with the SEC, as amended, relating to the Pending Merger omitted certain material information in violation of Section 14(a) of the Exchange Act and Rule 14a-9 promulgated thereunder, and further that the individual defendants were liable for those omissions under Section 20(a) of the Exchange Act. The relief sought in the lawsuit included preliminary and permanent injunction to prevent the completion of the Pending Merger, rescission or rescissory damages if the Pending Merger were completed, costs and attorneys’ fees. On November 6, 2017, Mr. Parshall filed a notice of voluntary dismissal, terminating the Parshall Lawsuit without prejudice.

On September 19, 2017, Shannon Rowe, a purported shareholder of Xenith, filed a putative class action lawsuit (the “Rowe Lawsuit”), also in the United States District Court for the Eastern District of Virginia, against Xenith and its current directors. The Company is not named as a defendant in the Rowe Lawsuit. The allegations in the Rowe Lawsuit are similar to the allegations in the Parshall Lawsuit.

At this time, it is not possible to predict the outcome of the proceeding in the Rowe Lawsuit or its impact on Xenith, the Company, or the Pending Merger. The Company believes that the claims in the Rowe Lawsuit are without merit and has been advised that Xenith and the Xenith board of directors also believe that the claims in the Rowe Lawsuit are without merit and that Xenith and the Xenith board of directors intend to defend vigorously against them.

In addition to the Rowe Lawsuit, in the ordinary course of its operations, the Company and its subsidiaries are parties to various other legal proceedings. Based on the information presently available, and after consultation with legal counsel, management believes that the ultimate outcome in such other legal proceedings, in the aggregate, will not have a material adverse effect on the business or the financial condition or results of operations of the Company.

Financial Instruments with Off-Balance Sheet Risk

The Company is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers and to reduce its own exposure to fluctuations in interest rates. These financial instruments include commitments to extend credit and standby letters of credit. These instruments involve elements of credit and interest rate risk in excess of the amount recognized on the Company’s Consolidated Balance Sheets. The contractual amounts of these instruments reflect the extent of the Company’s involvement in particular classes of financial instruments.

The Company’s exposure to credit loss in the event of nonperformance by the other party to the financial instruments for commitments to extend credit and letters of credit written is represented by the contractual amount of these instruments. The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments. Unless noted otherwise, the Company does not require collateral or other security to support off-balance sheet

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financial instruments with credit risk. The Company considers credit losses related to off-balance sheet commitments by undergoing a similar process in evaluating losses for loans that are carried on the balance sheet. The Company considers historical loss rates, current economic conditions, risk ratings, and past due status among other factors in the consideration of whether credit losses are inherent in the Company’s off-balance sheet commitments to extend credit. The Company also records an indemnification reserve that includes balances relating to mortgage loans previously sold based on historical statistics and loss rates. As of both September 30, 2017 and December 31, 2016, the Company's reserves for off-balance sheet credit risk and indemnification were $1.1 million and are reported as a component of "Other Liabilities" on the Company's Consolidated Balance Sheets.

Commitments to extend credit are agreements to lend to customers as long as there are no violations of any conditions established in the contracts. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Because many of the commitments may expire without being completely drawn upon, the total commitment amounts do not necessarily represent future cash requirements.

Letters of credit are conditional commitments issued by the Company to guarantee the performance of customers to third parties. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loans to customers.

The following table presents the balances of commitments and contingencies (dollars in thousands): 

	September 30, 2017		December 31, 2016
Commitments with off-balance sheet risk:
Commitments to extend credit (1)	$	2,085,103	$	1,924,885
Standby letters of credit	119,977		84,212
Total commitments with off-balance sheet risk	$	2,205,080	$	2,009,097

(1) Includes unfunded overdraft protection.

The Company must maintain a reserve against its deposits in accordance with Regulation D of the Federal Reserve Act. For the final weekly reporting period in the period ended September 30, 2017, the aggregate amount of daily average required reserves was approximately $73.1 million and was satisfied by vault cash holdings and deposits maintained with the Federal Reserve Bank.

As of September 30, 2017, the Company had approximately $45.4 million in deposits in other financial institutions, of which $23.8 million served as collateral for cash flow and loan swap derivatives. The Company had approximately $20.3 million in deposits in other financial institutions that were uninsured at September 30, 2017. At least annually, the Company’s management evaluates the loss risk of its uninsured deposits in financial counterparties.

For asset/liability management purposes, the Company uses interest rate swap agreements to hedge various exposures or to modify the interest rate characteristics of various balance sheet accounts. See Note 7 “Derivatives” for additional information.

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As part of the Company's liquidity management strategy, it pledges collateral to secure various financing and other activities that occur during the normal course of business. The following tables present the types of collateral pledged, at September 30, 2017 and December 31, 2016 (dollars in thousands):

	Pledged Assets as of September 30, 2017
	Cash		AFS Securities (1)		HTM Securities (1)		Loans (2)		Total
Public deposits	$	—	$	224,153	$	206,878	$	—	$	431,031
Repurchase agreements	—		88,257		—		—		88,257
FHLB advances	—		1,022		—		2,404,355		2,405,377
Derivatives	23,831		3,898		—		—		27,729
Other purposes	—		15,580		—		—		15,580
Total pledged assets	$	23,831	$	332,910	$	206,878	$	2,404,355	$	2,967,974

(1) Balance represents market value.

(2) Balance represents book value.

	Pledged Assets as of December 31, 2016
	Cash		AFS Securities (1)		HTM Securities (1)		Loans (2)		Total
Public deposits	$	—	$	210,546	$	197,889	$	—	$	408,435
Repurchase agreements	—		108,208		—		—		108,208
FHLB advances	—		1,475		—		1,959,929		1,961,404
Derivatives	33,595		4,376		—		—		37,971
Other purposes	—		17,499		—		—		17,499
Total pledged assets	$	33,595	$	342,104	$	197,889	$	1,959,929	$	2,533,517

(1) Balance represents market value.

(2) Balance represents book value.

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7. DERIVATIVES

The Company is exposed to economic risks arising from its business operations and uses derivatives primarily to manage risk associated with changing interest rates, and to assist customers with their risk management objectives. The Company designates certain derivatives as hedging instruments in a qualifying hedge accounting relationship (cash flow or fair value hedge). The remaining are classified as free standing derivatives consisting of customer accommodation loan swaps and interest rate lock commitments that do not qualify for hedge accounting.

Cash Flow Hedges

The Company designates derivatives as cash flow hedges when they are used to manage exposure to variability in cash flows related to forecasted transactions on variable rate borrowings, such as trust preferred capital notes, FHLB borrowings, and prime commercial loans. The Company uses interest rate swap agreements as part of its hedging strategy by exchanging a notional amount, equal to the principal amount of the borrowings, for fixed-rate interest based on benchmarked interest rates. The original terms and conditions of the interest rate swaps vary and range in length with a maximum hedging time through November 2022. Amounts receivable or payable are recognized as accrued under the terms of the agreements.

All swaps entered into with counterparties met the Company’s credit standards, and the agreements contain collateral provisions protecting the at-risk party. The Company believes that the credit risk inherent in the contract is not significant.

The Company assesses the effectiveness of each hedging relationship on a periodic basis using statistical regression analysis. The Company also measures the ineffectiveness of each hedging relationship using the change in variable cash flows method which compares the cumulative changes in cash flows of the hedging instrument relative to cumulative changes in the hedged item’s cash flows. In accordance with ASC 815, Derivatives and Hedging, the effective portions of the derivatives’ unrealized gains or losses are recorded as a component of other comprehensive income. Based on the Company’s assessment, its cash flow hedges are highly effective, but to the extent that any ineffectiveness exists in the hedge relationships, the amounts would be recorded in interest income or interest expense on the Company’s Consolidated Statements of Income.

On June 13, 2016, the Company terminated three interest rate swaps designated as cash flow hedges prior to their respective maturity dates. The unrealized gain of $1.3 million within Accumulated Other Comprehensive Income will be reclassified into earnings over a three year period using the effective interest method. The estimated net amount of gains expected to be reclassified into earnings by September 30, 2018 is $395,000.

Fair Value Hedge

Derivatives are designated as fair value hedges when they are used to manage exposure to changes in the fair value of certain financial assets and liabilities, referred to as the hedged items, which fluctuate in value as a result of movements in interest rates. During the normal course of business, the Company enters into interest rate swaps to convert certain long-term fixed-rate loans to floating rates to hedge the Company’s exposure to interest rate risk. The Company pays a fixed interest rate to the counterparty and receives a floating rate from the same counterparty calculated on the aggregate notional amount. At September 30, 2017 and December 31, 2016, the aggregate notional amount of the related hedged items totaled $82.0 million and $65.9 million, respectively, and the fair value of the related hedged items was an unrealized loss of $597,000 and $890,000, respectively.

The Company applies hedge accounting in accordance with ASC 815, Derivatives and Hedging, and the fair value hedge and the underlying hedged item, attributable to the risk being hedged, are recorded at fair value with unrealized gains and losses being recorded on the Company’s Consolidated Statements of Income. Statistical regression analysis is used to assess hedge effectiveness, both at inception of the hedging relationship and on an ongoing basis. The regression analysis involves regressing the periodic change in fair value of the hedging instrument against the periodic changes in fair value of the asset being hedged due to changes in the hedged risk. The Company’s fair value hedges continue to be highly effective and had no material impact on the Consolidated Statements of Income, but if any ineffectiveness exists, portions of the unrealized gains or losses would be recorded in interest income or interest expense on the Company’s Consolidated Statements of Income.

Loan Swaps

During the normal course of business, the Company enters into interest rate swap loan relationships (“loan swaps”) with borrowers to meet their financing needs. Upon entering into the loan swaps, the Company enters into offsetting positions with a third party in order to minimize interest rate risk. These back-to-back loan swaps qualify as financial derivatives with fair values as reported in “Other Assets” and “Other Liabilities” on the Company’s Consolidated Balance Sheets.

Interest Rate Lock Commitments

During the normal course of business, the Company enters into commitments to originate mortgage loans whereby the interest rate on the loan is determined prior to funding (“rate lock commitments”).  Rate lock commitments on mortgage loans that are intended to be sold in the secondary market are considered to be derivatives.  The period of time between issuance of a loan

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commitment, closing, and sale of the loan generally ranges from 30 to 120 days.  The Company protects itself from changes in interest rates through the use of best efforts forward delivery commitments, whereby the Company commits to sell a loan at the time the borrower commits to an interest rate with the intent that the buyer has assumed interest rate risk on the loan.  The correlation between the rate lock commitments and the best efforts contracts is high due to their similarity.

The market values of rate lock commitments and best efforts forward delivery commitments is not readily ascertainable with precision because rate lock commitments and best efforts contracts are not actively traded in stand-alone markets. The Company determines the fair value of rate lock commitments and best efforts contracts by measuring the change in the value of the underlying asset, while taking into consideration the probability that the rate lock commitments will close. The fair value of the rate lock commitments is reported as a component of “Other Assets” on the Company’s Consolidated Balance Sheets; the fair value of the Company’s best efforts forward delivery commitments is recorded as a component of “Other Liabilities” on the Company’s Consolidated Balance Sheets. Any impact to income is recorded in current period earnings as a component of “Mortgage banking income, net” on the Company’s Consolidated Statements of Income.

The following table summarizes key elements of the Company’s derivative instruments as of September 30, 2017 and December 31, 2016, segregated by derivatives that are considered accounting hedges and those that are not (dollars in thousands):

	September 30, 2017							December 31, 2016
			Derivative (2)							Derivative (2)
	Notional or Contractual Amount (1)			Assets		Liabilities		Notional or Contractual Amount (1)			Assets		Liabilities
Derivatives designated as accounting hedges:
Interest rate contracts:
Cash flow hedges	$	152,500		$	120	$	9,460	$	188,500		$	211	$	9,619
Fair value hedges	81,965			1,253		371		65,920			1,437		296
Derivatives not designated as accounting hedges:
Loan Swaps
Pay fixed - receive floating interest rate swaps	506,056			3,051		—		373,355			—		1,005
Pay floating - receive fixed interest rate swaps	506,056			—		3,051		373,355			1,005		—
Other contracts:
Interest rate lock commitments	50,311			685		—		48,743			610		—
Best efforts forward delivery commitments	80,307			245		—		85,400			1,469		—

(1) Notional amounts are not recorded on the balance sheet and are generally used only as a basis on which interest and other payments are determined.

(2) Balancesrepresent fair value of derivative financial instruments.

For information regarding collateral pledged on derivative instruments, see Note 6 “Commitments and Contingencies.”

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8. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The change in accumulated other comprehensive income (loss) for the three and nine months ended September 30, 2017 is summarized as follows, net of tax (dollars in thousands):

	Unrealized Gains (Losses) on AFS Securities			Unrealized Gain for AFS Securities Transferred to HTM			Change in Fair Value of Cash Flow Hedge			Unrealized Gains (Losses) on BOLI			Total
Balance - June 30, 2017	$	7,733		$	3,033		$	(5,487	)	$	(1,271	)	$	4,008
Other comprehensive income (loss)	(2,729		)	—			41			—			(2,688		)
Amounts reclassified from accumulated other comprehensive income	(119		)	(163		)	189			84			(9		)
Net current period other comprehensive income (loss)	(2,848		)	(163		)	230			84			(2,697		)
Balance - September 30, 2017	$	4,885		$	2,870		$	(5,257	)	$	(1,187	)	$	1,311

	Unrealized Gains (Losses) on AFS Securities			Unrealized Gain for AFS Securities Transferred to HTM			Change in Fair Value of Cash Flow Hedge			Unrealized Gains (Losses) on BOLI			Total
Balance - December 31, 2016	$	(542	)	$	3,377		$	(5,179	)	$	(1,465	)	$	(3,809	)
Other comprehensive income (loss)	5,935			—			(766		)	—			5,169
Amounts reclassified from accumulated other comprehensive income	(508		)	(507		)	688			278			(49		)
Net current period other comprehensive income (loss)	5,427			(507		)	(78		)	278			5,120
Balance - September 30, 2017	$	4,885		$	2,870		$	(5,257	)	$	(1,187	)	$	1,311

The change in accumulated other comprehensive income (loss) for the three and nine months ended September 30, 2016 is summarized as follows, net of tax (dollars in thousands):

	Unrealized Gains (Losses) on AFS Securities		Unrealized Gain for AFS Securities Transferred to HTM			Change in Fair Value of Cash Flow Hedge			Total
Balance - June 30, 2016	$	14,412	$	3,853		$	(9,366	)	$	8,899
Other comprehensive income (loss)	1,121		—			(78		)	1,043
Amounts reclassified from accumulated other comprehensive income	—		(237		)	154			(83		)
Net current period other comprehensive income (loss)	$	1,121	$	(237	)	$	76		$	960
Balance - September 30, 2016	$	15,533	$	3,616		$	(9,290	)	$	9,859

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	Unrealized Gains (Losses) on AFS Securities			Unrealized Gain for AFS Securities Transferred to HTM			Change in Fair Value of Cash Flow Hedge			Total
Balance - December 31, 2015	$	7,777		$	4,432		$	(5,957	)	$	6,252
Other comprehensive income (loss)	7,851			—			(3,766		)	4,085
Amounts reclassified from accumulated other comprehensive income	(95		)	(816		)	433			(478		)
Net current period other comprehensive income (loss)	7,756			(816		)	(3,333		)	3,607
Balance - September 30, 2016	$	15,533		$	3,616		$	(9,290	)	$	9,859

Reclassifications of unrealized gains (losses) on available for sale securities are reported on the Company’s Consolidated Statements of Income as “Gains on securities transactions, net” with the corresponding income tax effect being reflected as a component of income tax expense. The Company reported gains of $184,000 and $782,000 for the three and nine months ended September 30, 2017, respectively, and $0 and $145,000 for the three and nine months ended September 30, 2016, respectively, related to the sale of securities. The tax effects of these transactions during the three and nine months ended September 30, 2017 were $64,000 and $274,000, respectively, and were $0 and $51,000 during the three and nine months ended September 30, 2016, respectively, which amounts were included as a component of income tax expense.

During the second quarter of 2015, the Company transferred securities, which it intends and has the ability to hold until maturity, with a fair value of $201.8 million on the date of transfer, from securities available for sale to securities held to maturity. The securities included net pre-tax unrealized gains of $8.1 million at the date of transfer. Reclassifications of the unrealized gains on transferred securities are reported over time as accretion within interest income on the Company's Consolidated Statements of Income with the corresponding income tax effect being reflected as a component of income tax expense. The Company recorded accretion of $251,000 and $780,000 for the three and nine months ended September 30, 2017, respectively, and $365,000 and $1.3 million for the three and nine months ended September 30, 2016, respectively. The tax effect of these transactions during the three and nine months ended September 30, 2017 were $88,000 and $273,000, respectively, and were $128,000 and $439,000 for the three and nine months ended September 30, 2016, respectively, which were included as a component of income tax expense.

Reclassifications of the change in fair value of cash flow hedges are reported in interest income and interest expense on the Company’s Consolidated Statements of Income with the corresponding income tax effect being reflected as a component of income tax expense. The Company reported net interest expense of $291,000 and $1.1 million for the three and nine months ended September 30, 2017, respectively, and $237,000 and $666,000 for the three and nine months ended September 30, 2016, respectively. The tax effects of these transactions during the three and nine months ended September 30, 2017 were $102,000 and $370,000, respectively, and were $83,000 and $233,000 during the three and nine months ended September 30, 2016, which were included as a component of income tax expense.

Reclassifications of unrealized losses on BOLI are reported in salaries and benefits expense on the Company's Consolidated Statements of Income. The Company reported expenses of $84,000 and $278,000 for the three and nine months ended September 30, 2017, respectively, and $0 for the both three and nine months ended September 30, 2016.

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9. FAIR VALUE MEASUREMENTS

The Company follows ASC 820, Fair Value Measurements and Disclosures, to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. This codification clarifies that fair value of certain assets and liabilities is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between willing market participants.

ASC 820 specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions. The three levels of the fair value hierarchy under ASC 820 based on these two types of inputs are as follows:

Level 1	Valuation is based on quoted prices in active markets for identical assets and liabilities.
Level 2	Valuation is based on observable inputs including quoted prices in active markets for similar assets and liabilities, quoted prices for identical or similar assets and liabilities in less active markets, and model-based valuation techniques for which significant assumptions can be derived primarily from or corroborated by observable data in the markets.
Level 3	Valuation is based on model-based techniques that use one or more significant inputs or assumptions that are unobservable in the market.  These unobservable inputs reflect the Company’s assumptions about what market participants would use and information that is reasonably available under the circumstances without undue cost and effort.

The following describes the valuation techniques used by the Company to measure certain financial assets and liabilities recorded at fair value on a recurring basis in the financial statements.

Derivative instruments

As discussed in Note 7 “Derivatives”, the Company records derivative instruments at fair value on a recurring basis. The Company utilizes derivative instruments as part of the management of interest rate risk to modify the re-pricing characteristics of certain portions of the Company’s interest-bearing assets and liabilities. The Company has contracted with a third party vendor to provide valuations for derivatives using standard valuation techniques and therefore classifies such valuations as Level 2. Third party valuations are validated by the Company using Bloomberg Valuation Service’s derivative pricing functions. The Company has considered counterparty credit risk in the valuation of its derivative assets and has considered its own credit risk in the valuation of its derivative liabilities.

During the ordinary course of business, the Company enters into interest rate lock commitments related to the origination of mortgage loans held for sale, as well as best effort forward delivery commitments to mitigate interest rate risk; these instruments are recorded at estimated fair value based on the value of the underlying loan, which in turn is based on quoted prices for similar loans in the secondary market. This value, however, is adjusted by a pull-through rate, which considers the likelihood that the loan in a lock position will ultimately close. The pull-through rate is derived from the Company’s internal data and is adjusted using significant management judgment. The pull-through rate is largely dependent on the loan processing stage that a loan is currently in and the change in prevailing interest rates from the time of the rate lock. As such, interest rate lock commitments are classified as Level 3. An increase in the pull-through rate utilized in the fair value measurement of the interest rate lock commitment derivative will result in positive fair value adjustments, while a decrease in the pull-through rate will result in a negative fair value adjustment. The Company’s weighted average pull-through rate was approximately 80% as of September 30, 2017 and December 31, 2016. The interest rate lock commitments are recorded as a component of “Other Assets” on the Company’s Consolidated Balance Sheets.

Securities available for sale

Securities available for sale are recorded at fair value on a recurring basis. Fair value measurement is based upon quoted market prices, when available (Level 1). If quoted market prices are not available, fair values are measured utilizing independent valuation techniques of identical or similar securities for which significant assumptions are derived primarily from or corroborated by observable market data (Level 2). If the inputs used to provide the evaluation for certain securities are unobservable and/or there is little, if any, market activity, then the security would fall to the lowest level of the hierarchy (Level 3).

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The Company’s investment portfolio is primarily valued using fair value measurements that are considered to be Level 2. The Company has contracted with a third party portfolio accounting service vendor for valuation of its securities portfolio. The vendor’s primary source for security valuation is Interactive Data Corporation (“IDC”), which evaluates securities based on market data. IDC utilizes evaluated pricing models that vary by asset class and include available trade, bid, and other market information. Generally, the methodology includes broker quotes, proprietary models, vast descriptive terms and conditions databases, as well as extensive quality control programs.

The vendor utilizes proprietary valuation matrices for valuing all municipals securities. The initial curves for determining the price, movement, and yield relationships within the municipal matrices are derived from industry benchmark curves or sourced from a municipal trading desk. The securities are further broken down according to issuer, credit support, state of issuance, and rating to incorporate additional spreads to the industry benchmark curves.

The Company primarily uses Bloomberg Valuation Service, an independent information source that draws on quantitative models and market data contributed from over 4,000 market participants, to validate third party valuations. Any material differences between valuation sources are researched by further analyzing the various inputs that are utilized by each pricing source. No material differences were identified during the validation as of September 30, 2017 and December 31, 2016.

The carrying value of restricted Federal Reserve Bank and FHLB stock approximates fair value based on the redemption provisions of each entity and is therefore excluded from the following table.

Loans held for sale

Loans held for sale are carried at fair value. These loans currently consist of residential loans originated for sale in the secondary market. Fair value is based on the price secondary markets are currently offering for similar loans using observable market data which is not materially different than cost due to the short duration between origination and sale (Level 2). Gains and losses on the sale of loans are recorded within the mortgage segment and are reported on a separate line item on the Company’s Consolidated Statements of Income.

The following table presents the balances of financial assets and liabilities measured at fair value on a recurring basis at September 30, 2017 and December 31, 2016 (dollars in thousands): 

	Fair Value Measurements at September 30, 2017 using
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	Level 1		Level 2		Level 3		Balance
ASSETS
Securities available for sale:
Obligations of states and political subdivisions	$	—	$	292,199	$	—	$	292,199
Corporate and other bonds	—		115,422		—		115,422
Mortgage-backed securities	—		546,904		—		546,904
Other securities	—		13,836		—		13,836
Loans held for sale	—		30,896		—		30,896
Derivatives:
Interest rate swap	—		3,051		—		3,051
Cash flow hedges	—		120		—		120
Fair value hedges	—		1,253		—		1,253
Interest rate lock commitments	—		—		685		685
Best efforts forward delivery commitments	—		—		245		245
LIABILITIES
Derivatives:
Interest rate swap	$	—	$	3,051	$	—	$	3,051
Cash flow hedges	—		9,460		—		9,460
Fair value hedges	—		371		—		371

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	Fair Value Measurements at December 31, 2016 using
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	Level 1		Level 2		Level 3		Balance
ASSETS
Securities available for sale:
Obligations of states and political subdivisions	$	—	$	275,890	$	—	$	275,890
Corporate and other bonds	—		121,780		—		121,780
Mortgage-backed securities	—		535,286		—		535,286
Other securities	—		13,808		—		13,808
Loans held for sale	—		36,487		—		36,487
Derivatives:
Interest rate swap	—		1,005		—		1,005
Cash flow hedges	—		211		—		211
Fair value hedges	—		1,437		—		1,437
Interest rate lock commitments	—		—		610		610
Best efforts forward delivery commitments	—		—		1,469		1,469
LIABILITIES
Derivatives:
Interest rate swap	$	—	$	1,005	$	—	$	1,005
Cash flow hedges	—		9,619		—		9,619
Fair value hedges	—		296		—		296

Certain assets are measured at fair value on a nonrecurring basis in accordance with U.S. GAAP. Adjustments to the fair value of these assets usually result from the application of lower-of-cost-or-market accounting or write-downs of individual assets.

The following describes the valuation techniques used by the Company to measure certain assets recorded at fair value on a nonrecurring basis in the financial statements.

Impaired loans

Loans are designated as impaired when, in the judgment of management based on current information and events, it is probable that all amounts due according to the contractual terms of the loan agreements will not be collected. The measurement of loss associated with impaired loans can be based on either the observable market price of the loan or the fair value of the collateral. Collateral dependent loans are reported at the fair value of the underlying collateral if repayment is solely from the underlying value of the collateral. Collateral may be in the form of real estate or business assets including equipment, inventory, and accounts receivable. The vast majority of the Company’s collateral is real estate. The value of real estate collateral is determined utilizing an income or market valuation approach based on an appraisal conducted by an independent, licensed appraiser using observable market data. When evaluating the fair value, management may discount the appraisal further if, based on their understanding of the market conditions, it is determined the collateral is further impaired below the appraised value (Level 3). At September 30, 2017 and December 31, 2016, the Level 3 weighted average adjustments related to impaired loans were 3.3% and 1.5%, respectively. The value of business equipment is based upon an outside appraisal, of one year or less, if deemed significant, or the net book value on the applicable business’s financial statements if not considered significant using observable market data. Likewise, values for inventory and accounts receivables collateral are based on financial statement balances or aging reports (Level 3). Collateral dependent impaired loans allocated to the allowance for loan losses are measured at fair value on a nonrecurring basis. Any fair value adjustments are recorded in the period incurred as provision for loan losses on the Company’s Consolidated Statements of Income.

Other real estate owned

OREO is evaluated for impairment at least quarterly by the Bank’s Special Asset Loan Committee and any necessary write downs to fair values are recorded as impairment and included as a component of noninterest expense. Fair values of OREO are carried at fair value less selling costs. Fair value is based upon independent market prices, appraised values of the collateral, or management’s estimation of the value of the collateral. When an appraised value is not available or management determines the

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fair value of the collateral is further impaired below the appraised value and there is no observable market price, the Company records the foreclosed asset as Level 3 valuation. At September 30, 2017 and December 31, 2016, the Level 3 weighted average adjustments related to OREO were approximately 25.1% and 25.1%, respectively.

Total valuation expenses related to OREO properties for the three months ended September 30, 2017 and 2016 totaled $588,000 and $479,000, respectively. Total valuation expenses related to OREO properties for the nine months ended September 30, 2017 and 2016 totaled $845,000 and $879,000, respectively.

The following tables summarize the Company’s financial assets that were measured at fair value on a nonrecurring basis at September 30, 2017 and December 31, 2016 (dollars in thousands):

	Fair Value Measurements at September 30, 2017 using
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	Level 1		Level 2		Level 3		Balance
ASSETS
Impaired loans	$	—	$	—	$	7,143	$	7,143
Other real estate owned	—		—		8,764		8,764

	Fair Value Measurements at December 31, 2016 using
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	Level 1		Level 2		Level 3		Balance
ASSETS
Impaired loans	$	—	$	—	$	4,344	$	4,344
Other real estate owned	—		—		10,084		10,084

ASC 825, Financial Instruments, requires disclosure about fair value of financial instruments for interim periods and excludes certain financial instruments and all non-financial instruments from its disclosure requirements. Accordingly, the aggregate fair value amounts presented may not necessarily represent the underlying fair value of the Company.

Cash and cash equivalents

For those short-term instruments, the carrying amount is a reasonable estimate of fair value.

Held to Maturity Securities

The Company’s investment portfolio is primarily valued using fair value measurements that are considered to be Level 2. The Company has contracted with a third party portfolio accounting service vendor for valuation of its securities portfolio. The vendor’s primary source for security valuation is IDC, which evaluates securities based on market data. IDC utilizes evaluated pricing models that vary by asset class and include available trade, bid, and other market information. Generally, the methodology includes broker quotes, proprietary models, vast descriptive terms and conditions databases, as well as extensive quality control programs.

The vendor utilizes proprietary valuation matrices for valuing all municipals securities. The initial curves for determining the price, movement, and yield relationships within the municipal matrices are derived from industry benchmark curves or sourced from a municipal trading desk. The securities are further broken down according to issuer, credit support, state of issuance, and rating to incorporate additional spreads to the industry benchmark curves.

The Company primarily uses Bloomberg Valuation Service, an independent information source that draws on quantitative models and market data contributed from over 4,000 market participants, to validate third party valuations. Any material differences between valuation sources are researched by further analyzing the various inputs that are utilized by each pricing source. No material differences were identified during the validation as of September 30, 2017 and December 31, 2016.

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Loans

The fair value of performing loans is estimated by discounting expected future cash flows using a yield curve that is constructed by adding a loan spread to a market yield curve. Loan spreads are based on spreads currently observed in the market for loans of similar type and structure. Fair value for impaired loans and their respective level within the fair value hierarchy, are described in the previous disclosure related to fair value measurements of assets that are measured on a nonrecurring basis.

Bank-owned life insurance

The carrying value of BOLI approximates fair value. The Company records these policies at their cash surrender value, which is estimated using information provided by insurance carriers.

Deposits

The fair value of demand deposits, savings accounts, and certain money market deposits is the amount payable on demand at the reporting date. The fair value of certificates of deposit is estimated by discounting the future cash flows using the rates currently offered for deposits of similar remaining maturities.

Borrowings

The carrying value of the Company’s repurchase agreements is a reasonable estimate of fair value. Other borrowings are discounted using the current yield curve for the same type of borrowing. For borrowings with embedded optionality, a third party source is used to value the instrument. The Company validates all third party valuations for borrowings with optionality using Bloomberg Valuation Service’s derivative pricing functions.

Accrued interest

The carrying amounts of accrued interest approximate fair value.

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The carrying values and estimated fair values of the Company’s financial instruments at September 30, 2017 and December 31, 2016 are as follows (dollars in thousands):

			Fair Value Measurements at September 30, 2017 using
			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs		Total Fair Value
	Carrying Value		Level 1		Level 2		Level 3		Balance
ASSETS
Cash and cash equivalents	$	176,961	$	176,961	$	—	$	—	$	176,961
Securities available for sale	968,361		—		968,361		—		968,361
Held to maturity securities	204,801		—		209,835		—		209,835
Restricted stock	68,441		—		68,441		—		68,441
Loans held for sale	30,896		—		30,896		—		30,896
Net loans	6,861,567		—		—		6,873,609		6,873,609
Derivatives:
Interest rate swap	3,051		—		3,051		—		3,051
Cash flow hedge	120		—		120		—		120
Fair value hedge	1,253		—		1,253		—		1,253
Interest rate lock commitments	685		—		—		685		685
Best efforts forward delivery commitments	245		—		—		245		245
Accrued interest receivable	25,279		—		25,279		—		25,279
Bank owned life insurance	181,451		—		181,451		—		181,451
LIABILITIES
Deposits	$	6,881,826	$	—	$	6,873,124	$	—	$	6,873,124
Borrowings	1,052,087		—		1,031,983		—		1,031,983
Accrued interest payable	4,372		—		4,372		—		4,372
Derivatives:
Interest rate swap	3,051		—		3,051		—		3,051
Cash flow hedges	9,460		—		9,460		—		9,460
Fair value hedges	371		—		371		—		371

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			Fair Value Measurements at December 31, 2016 using
			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs		Total Fair Value
	Carrying Value		Level 1		Level 2		Level 3		Balance
ASSETS
Cash and cash equivalents	$	179,237	$	179,237	$	—	$	—	$	179,237
Securities available for sale	946,764		—		946,764		—		946,764
Held to maturity securities	201,526		—		202,315		—		202,315
Restricted stock	60,782		—		60,782		—		60,782
Loans held for sale	36,487		—		36,487		—		36,487
Net loans	6,269,868		—		—		6,265,443		6,265,443
Derivatives:
Interest rate swap	1,005		—		1,005		—		1,005
Cash flow hedges	211		—		211		—		211
Fair value hedges	1,437		—		1,437		—		1,437
Interest rate lock commitments	610		—		—		610		610
Best efforts forward delivery commitments	1,469		—		—		1,469		1,469
Accrued interest receivable	23,448		—		23,448		—		23,448
Bank owned life insurance	179,318		—		179,318		—		179,318
LIABILITIES
Deposits	$	6,379,489	$	—	$	6,370,457	$	—	$	6,370,457
Borrowings	990,089		—		970,195		—		970,195
Accrued interest payable	2,320		—		2,230		—		2,230
Derivatives:
Interest rate swap	1,005		—		1,005		—		1,005
Cash flow hedges	9,619		—		9,619		—		9,619
Fair value hedges	296		—		296		—		296

The Company assumes interest rate risk (the risk that general interest rate levels will change) as a result of its normal operations. As a result, the fair values of the Company’s financial instruments will change when interest rate levels change and that change may be either favorable or unfavorable to the Company. Management attempts to match maturities of assets and liabilities to the extent believed necessary to minimize interest rate risk. Borrowers with fixed rate obligations, however, are less likely to prepay in a rising rate environment and more likely to prepay in a falling rate environment. Conversely, depositors who are receiving fixed rates are more likely to withdraw funds before maturity in a rising rate environment and less likely to do so in a falling rate environment. Management monitors rates and maturities of assets and liabilities and attempts to minimize interest rate risk by adjusting terms of new loans and deposits and by investing in securities with terms that mitigate the Company’s overall interest rate risk.

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10. EARNINGS PER SHARE

Basic EPS is computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted EPS is computed using the weighted average number of common shares outstanding during the period, including the effect of dilutive potential common shares outstanding attributable to stock awards.

The following is a reconciliation of the denominators of the basic and diluted EPS computations for the three and nine months ended September 30, 2017 and 2016 (dollars in thousands except per share data):

	Net Income Available to Common Stockholders (Numerator)		Weighted Average Common Shares (Denominator)	Per Share Amount
Three months ended September 30, 2017
Basic	20,658		43,707	$	0.47
Add: potentially dilutive common shares - stock awards	—		85	—
Diluted	$	20,658	43,792	$	0.47
Three months ended September 30, 2016
Basic	20,401		43,566	$	0.47
Add: potentially dilutive common shares - stock awards	—		189	—
Diluted	$	20,401	43,755	$	0.47
Nine months ended September 30, 2017
Basic	57,737		43,685	$	1.32
Add: potentially dilutive common shares - stock awards	—		83	—
Diluted	$	57,737	43,768	$	1.32
Nine months ended September 30, 2016
Basic	56,699		43,854	$	1.29
Add: potentially dilutive common shares - stock awards	—		114	—
Diluted	$	56,699	43,968	$	1.29

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11. SEGMENT REPORTING DISCLOSURES

The Company has two reportable segments: a traditional full service community bank segment and a mortgage loan origination business segment. The community bank segment includes one subsidiary bank, the Bank, which provides loan, deposit, investment, and trust services to retail and commercial customers throughout its 111 retail locations in Virginia as of September 30, 2017. The mortgage segment includes UMG, which provides a variety of mortgage loan products principally in Virginia, North Carolina, Maryland, and the Washington D.C. metro area. These loans are originated and sold primarily in the secondary market through purchase commitments from investors, which serves to mitigate the Company’s exposure to interest rate risk.

Profit and loss is measured by net income after taxes including realized gains and losses on the Company’s investment portfolio. The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies. Inter-segment transactions are recorded at cost and eliminated as part of the consolidation process.

Both of the Company’s reportable segments are service-based. The mortgage segment's business is a primarily fee-based business, while the community bank segment is driven principally by net interest income. The community bank segment provides a distribution and referral network through its customers for the mortgage loan origination business. The mortgage segment offers a more limited referral network for the bank segment.

The community bank segment provides the mortgage segment with the short-term funds needed to originate mortgage loans through a warehouse line of credit and charges the mortgage banking segment interest. The interest rate on the warehouse line of credit for the three and nine months ended September 30, 2017 and 2016 was the three month LIBOR rate plus 0.15% with no floor. These transactions are eliminated in the consolidation process.

A management fee for operations and administrative support services is charged to all subsidiaries and eliminated in the consolidated totals.

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Information about reportable segments and reconciliation of such information to the consolidated financial statements for the three and nine months ended September 30, 2017 and 2016 is as follows (dollars in thousands):

UNION BANKSHARES CORPORATION AND SUBSIDIARIES

SEGMENT FINANCIAL INFORMATION

	Community Bank		Mortgage			Eliminations			Consolidated
Three Months Ended September 30, 2017
Net interest income	$	70,718	$	480		$	—		$	71,198
Provision for credit losses	3,056		(6		)	—			3,050
Net interest income after provision for credit losses	67,662		486			—			68,148
Noninterest income	15,121		2,527			(112		)	17,536
Noninterest expenses	55,133		2,475			(112		)	57,496
Income before income taxes	27,650		538			—			28,188
Income tax expense	7,339		191			—			7,530
Net income	$	20,311	$	347		$	—		$	20,658
Total assets	$	9,020,486	$	97,154		$	(88,204	)	$	9,029,436
Three Months Ended September 30, 2016
Net interest income	$	66,605	$	423		$	—		$	67,028
Provision for credit losses	2,455		17			—			2,472
Net interest income after provision for credit losses	64,150		406			—			64,556
Noninterest income	15,589		3,501			(140		)	18,950
Noninterest expenses	54,353		2,700			(140		)	56,913
Income before income taxes	25,386		1,207			—			26,593
Income tax expense	5,770		422			—			6,192
Net income	$	19,616	$	785		$	—		$	20,401
Total assets	$	8,251,351	$	90,692		$	(83,813	)	$	8,258,230
Nine Months Ended September 30, 2017
Net interest income	$	205,534	$	1,231		$	—		$	206,765
Provision for credit losses	7,344		1			—			7,345
Net interest income after provision for credit losses	198,190		1,230			—			199,420
Noninterest income	47,080		7,743			(393		)	54,430
Noninterest expenses	167,643		7,571			(393		)	174,821
Income before income taxes	77,627		1,402			—			79,029
Income tax expense	20,791		501			—			21,292
Net income	$	56,836	$	901		$	—		$	57,737
Total assets	$	9,020,486	$	97,154		$	(88,204	)	$	9,029,436
Nine Months Ended September 30, 2016
Net interest income	$	195,508	$	1,027		$	—		$	196,535
Provision for credit losses	7,215		161			—			7,376
Net interest income after provision for credit losses	188,293		866			—			189,159
Noninterest income	44,137		9,185			(465		)	52,857
Noninterest expenses	158,964		7,937			(465		)	166,436
Income before income taxes	73,466		2,114			—			75,580
Income tax expense	18,145		736			—			18,881
Net income	$	55,321	$	1,378		$	—		$	56,699
Total assets	$	8,251,351	$	90,692		$	(83,813	)	$	8,258,230

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Review Report of Independent Registered Public Accounting Firm

The Stockholders and Board of Directors of Union Bankshares Corporation

We have reviewed the consolidated balance sheet of Union Bankshares Corporation (the “Company”) as of September 30, 2017, and the related consolidated statements of income and comprehensive income for the three and nine-month periods ended September 30, 2017 and 2016, and the consolidated statements of changes in stockholders’ equity and cash flows for the nine-month periods ended September 30, 2017 and 2016. These financial statements are the responsibility of the Company's management.

We conducted our review in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should be made to the consolidated financial statements referred to above for them to be in conformity with U.S. generally accepted accounting principles.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of the Company as of December 31, 2016, and the related consolidated statements of income, comprehensive income, changes in stockholders’ equity, and cash flows for the year then ended, not presented herein, and we expressed an unqualified audit opinion on those consolidated financial statements in our report dated February 28, 2017. In our opinion, the accompanying consolidated balance sheet of the Company as of December 31, 2016, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

/s/ Ernst & Young LLP

Richmond, Virginia

November 7, 2017

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ITEM 2 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Management’s discussion and analysis is presented to aid the reader in understanding and evaluating the financial condition and results of operations of Union Bankshares Corporation and its subsidiaries (collectively, the “Company”). This discussion and analysis should be read with the consolidated financial statements, the notes to the financial statements, and the other financial data included in this report, as well as the Company’s 2016 Form 10-K, including management’s discussion and analysis. Highlighted in the discussion are material changes from prior reporting periods and any identifiable trends affecting the Company. Results of operations for the three and nine months ended September 30, 2017 and 2016 are not necessarily indicative of results that may be attained for any other period. Amounts are rounded for presentation purposes; however, some of the percentages presented are computed based on unrounded amounts.

FORWARD-LOOKING STATEMENTS

Certain statements in this report may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.  Forward-looking statements are statements that include projections, predictions, expectations, or beliefs about future events or results or otherwise are not statements of historical fact, are based on certain assumptions as of the time they are made, and are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified.  Such statements are often characterized by the use of qualified words (and their derivatives) such as “expect,” “believe,” “estimate,” “plan,” “project,” “anticipate,” “intend,” “will,” “may,” “view,” “opportunity,” “potential,” or words of similar meaning or other statements concerning opinions or judgment of the Company and its management about future events.  Although the Company believes that its expectations with respect to forward-looking statements are based upon reasonable assumptions within the bounds of its existing knowledge of its business and operations, there can be no assurance that actual results, performance, or achievements of the Company will not differ materially from any projected future results, performance, or achievements expressed or implied by such forward-looking statements.  Actual future results and trends may differ materially from historical results or those anticipated depending on a variety of factors, including, but not limited to, the effects of or changes in:

• the possibility that any of the anticipated benefits of the acquisition of Xenith pursuant to a definitive merger agreement between the Company and Xenith, dated as of May 19, 2017 (the “Pending Merger”) with Xenith will not be realized or will not be realized within the expected time period, the businesses of the Company and Xenith may not be integrated successfully or such integration may be more difficult, time-consuming or costly than expected, the expected revenue synergies and cost savings from the Pending Merger may not be fully realized or realized within the expected time frame, revenues following the Pending Merger may be lower than expected, customer and employee relationships and business operations may be disrupted by the Pending Merger, or completing the Pending Merger on the expected timeframe, may be more difficult, time-consuming or costly than expected,

• changes in interest rates,

• general economic and financial market conditions,

• the Company’s ability to manage its growth or implement its growth strategy,

• the incremental cost and/or decreased revenues associated with exceeding $10 billion in assets,

• levels of unemployment in the Bank’s lending area,

• real estate values in the Bank’s lending area,

• an insufficient ALL,

• the quality or composition of the loan or investment portfolios,

• concentrations of loans secured by real estate, particularly commercial real estate,

• the effectiveness of the Company’s credit processes and management of the Company’s credit risk,

• demand for loan products and financial services in the Company’s market area,

• the Company’s ability to compete in the market for financial services,

• technological risks and developments, and cyber attacks or events,

• performance by the Company’s counterparties or vendors,

• deposit flows,

• the availability of financing and the terms thereof,

• the level of prepayments on loans and mortgage-backed securities,

• legislative or regulatory changes and requirements,

• monetary and fiscal policies of the U.S. government including policies of the U.S. Department of the Treasury and the Board of Governors of the Federal Reserve System, and

• accounting principles and guidelines.

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More information on risk factors that could affect the Company’s forward-looking statements is available on the Company’s website, http://investors.bankatunion.com, or the Company's Annual Report on Form 10-K for the year ended December 31, 2016, this Quarterly Report on Form 10-Q for the quarter ended September 30, 2017, and other reports filed with the SEC, including without limitation the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2017. The information on the Company’s website is not a part of this Form 10-Q. All risk factors and uncertainties described in those documents should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. The Company does not intend or assume any obligation to update or revise any forward-looking statements that may be made from time to time by or on behalf of the Company.

CRITICAL ACCOUNTING POLICIES

The accounting and reporting policies of the Company are in accordance with U.S. GAAP and conform to general practices within the banking industry. The Company’s financial position and results of operations are affected by management’s application of accounting policies, including estimates, assumptions, and judgments made to arrive at the carrying value of assets and liabilities and amounts reported for revenues, expenses, and related disclosures. Different assumptions in the application of these policies could result in material changes in the Company’s consolidated financial position and/or results of operations. The Company evaluates its critical accounting estimates and assumptions on an ongoing basis and updates them, as needed. Management has discussed the Company’s critical accounting policies and estimates with the Audit Committee of the Board of Directors.

The critical accounting and reporting policies include the Company’s accounting for the allowance for loan losses, acquired loans, and goodwill and intangible assets. The Company’s accounting policies are fundamental to understanding the Company’s consolidated financial position and consolidated results of operations. Accordingly, the Company’s significant accounting policies are discussed in detail in Note 1 “Summary of Significant Accounting Policies” in the “Notes to the Consolidated Financial Statements” contained in Item 8 "Financial Statements and Supplementary Data" of the Company’s 2016 Form 10-K.

The Company provides additional information on its critical accounting policies and estimates listed above under “Management's Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies” in its 2016 Form 10-K.

ABOUT UNION BANKSHARES CORPORATION

Headquartered in Richmond, Union Bankshares Corporation is the largest community banking organization headquartered in Virginia and operates in all major banking markets of the Commonwealth. Union Bankshares Corporation is the holding company for Union Bank & Trust, which provides banking, trust, and wealth management services and has a statewide presence of 111 bank branches and approximately 173 ATMs. Non-bank affiliates of the holding company include: Union Mortgage Group, Inc., which provides a full line of mortgage products; Union Insurance Group, LLC, which offers various lines of insurance products; and Old Dominion Capital Management, Inc., which provides investment advisory services.

Shares of the Company’s common stock are traded on the NASDAQ Global Select Market under the symbol UBSH. Additional information is available on the Company’s website at http://investors.bankatunion.com. The information contained on the Company’s website is not a part of or incorporated into this report.

RESULTS OF OPERATIONS

Executive Overview

For the quarter ended September 30, 2017, the Company reported net income of $20.7 million and earnings per share of $0.47. Excluding after-tax merger-related costs of $661,000, net operating earnings⁽¹⁾ were $21.3 million and operating earnings per share⁽¹⁾ were $0.49 for the third quarter of 2017. The Company's net operating earnings and operating earnings per share for the third quarter of 2017 represent an increase of $918,000, or 4.5%, over net income and an increase of $0.02, or 4.3%, over earnings per share, in each case compared to the third quarter of 2016. These increases are primarily attributable to increases in net interest income, driven by higher average loan balances partially offset by the impact of the decline in net interest margin.

For the nine months ended September 30, 2017, the Company reported net income of $57.7 million and earnings per share of $1.32. Excluding after-tax merger-related costs of $3.0 million, net operating earnings⁽¹⁾ were $60.8 million and operating earnings per share⁽¹⁾ were $1.39 for the first nine months of 2017. The Company's net operating earnings and operating earnings per share for the first nine months of 2017 represent an increase of $4.1 million, or 7.2%, over net income and an increase of $0.10, or 7.8%, over earnings per share, in each case compared to the first nine months of 2016. These increases are primarily attributable to increases in net interest income, driven by higher average loan balances, as well as higher overall noninterest income.

Select highlights for the third quarter of 2017 include:

• The Company entered into a definitive merger agreement during the second quarter of 2017 to acquire Xenith in the Pending Merger, which is expected to close in early January 2018. On October 17, 2017, the Company and Xenith

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jointly announced the receipt of regulatory approval from the Federal Reserve Bank and from the Virginia State Corporation Commission to move forward with the Pending Merger. On October 26, 2017, the Company and Xenith jointly announced that stockholders of both Union and Xenith, at separate special meetings, approved the Pending Merger of Xenith with and into Union.

• Net income for the community bank segment was $20.3 million, or $0.46 per share, for the third quarter of 2017 compared to $19.6 million, or $0.45 per share, for the third quarter of 2016. Net operating earnings⁽¹⁾ for the community bank segment were $21.0 million, or $0.48 per share, for the third quarter of 2017.

• Net income for the community bank segment was $56.8 million, or $1.30 per share, for the nine months ended September 30, 2017 compared to $55.3 million, or $1.26 per share, for the nine months ended September 30, 2016. Net operating earnings⁽¹⁾ for the community bank segment were $59.9 million, or $1.37 per share, for the nine months ended September 30, 2017.

• The mortgage segment reported net income of $347,000 for the third quarter of 2017 compared to net income of $785,000 in the third quarter of 2016. The mortgage segment reported net income of $901,000 for the nine months ended September 30, 2017 compared to $1.4 million for the nine months ended September 30, 2016.

• ROA was 0.91% for the quarter ended September 30, 2017 compared to 1.00% for the third quarter of 2016. Operating ROA⁽¹⁾ for the quarter ended September 30, 2017 was 0.94%. ROA was 0.88% for the nine months ended September 30, 2017 compared to 0.95% for the nine months ended September 30, 2016. Operating ROA⁽¹⁾ for the nine months ended September 30, 2017 was 0.93%.

• ROE was 7.90% for the quarter ended September 30, 2017 compared to 8.14% for the third quarter of 2016. Operating ROE⁽¹⁾ for the quarter ended September 30, 2017 was 8.15%. ROE was 7.53% for the nine months ended September 30, 2017 compared to 7.64% for the nine months ended September 30, 2016. Operating ROE⁽¹⁾ for the nine months ended September 30, 2017 was 7.93%.

• ROTCE was 11.34% for the quarter ended September 30, 2017 compared to 12.00% for the third quarter of 2016. Operating ROTCE⁽¹⁾ for the quarter ended September 30, 2017 was 11.70%. ROTCE was 10.90% for the nine months ended September 30, 2017 compared to 11.25% for the nine months ended September 30, 2016. Operating ROTCE⁽¹⁾ for the nine months ended September 30, 2017 was 11.47%.

• Loans held for investment grew $591.7 million, or 12.5% (annualized), from December 31, 2016. Quarterly average loans held for investment increased $788.8 million, or 13.1%, compared to the quarter ended September 30, 2016.

• Deposits grew $502.3 million, or 10.5% (annualized), from December 31, 2016. Quarterly average deposits increased $592.9 million, or 9.6%, compared to the quarter ended September 30, 2016.

(1)For a reconciliation of the non-GAAP operating measures that exclude merger-related costs unrelated to the Company’s normal operations, refer to “Non-GAAP Measures” section within this Item 2 of this Form 10-Q. Such costs were only incurred during the second and third quarter of 2017; thus each of these operating measures is equivalent to the corresponding GAAP financial measure for the three and nine months ended September 30, 2016.

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Net Interest Income

	For the Three Months Ended September 30,
	2017			2016			Change
	(Dollars in thousands)
Average interest-earning assets	$	8,167,919		$	7,354,684		$	813,235
Interest income	$	84,850		$	74,433		$	10,417
Interest income (FTE) (1)	$	87,498		$	76,860		$	10,638
Yield on interest-earning assets	4.12		%	4.03		%	9			bps
Yield on interest-earning assets (FTE) (1)	4.25		%	4.16		%	9			bps
Average interest-bearing liabilities	$	6,382,452		$	5,681,102		$	701,350
Interest expense	$	13,652		$	7,405		$	6,247
Cost of interest-bearing liabilities	0.85		%	0.52		%	33			bps
Cost of funds	0.66		%	0.40		%	26			bps
Net interest income	$	71,198		$	67,028		$	4,170
Net interest income (FTE) (1)	$	73,846		$	69,455		$	4,391
Net interest margin	3.46		%	3.63		%	(17		)	bps
Net interest margin (FTE) (1)	3.59		%	3.76		%	(17		)	bps

(1) Refer to the “Non-GAAP Measures” section within this Item 2 of this Form 10-Q for more information about this non-GAAP financial measure.

For the third quarter of 2017, net interest income was $71.2 million, an increase of $4.2 million from the third quarter of 2016. For the third quarter of 2017, tax-equivalent net interest income was $73.8 million, an increase of $4.4 million from the third quarter of 2016. The increases in both net interest income and tax-equivalent net interest income were primarily driven by higher average loan balances. Net accretion related to acquisition accounting increased $190,000 from the third quarter of 2016 to $1.7 million in the third quarter of 2017. In the third quarter of 2017, both net interest margin and tax-equivalent net interest margin decreased 17 basis points compared to the third quarter of 2016. The net decreases in net interest margin and tax-equivalent net interest margin measures were primarily driven by the 26 basis point increase in cost of funds, offset by the 9 basis point increase in interest-earning asset yields. The increase in the cost of funds was primarily attributable to subordinated debt that the Company issued in the fourth quarter of 2016 as well as increased interest-bearing deposit and short-term borrowing rates.

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	For the Nine Months Ended September 30,
	2017			2016			Change
	(Dollars in thousands)
Average interest-earning assets	$	7,922,944		$	7,159,813		$	763,131
Interest income	$	242,712		$	217,964		$	24,748
Interest income (FTE) (1)	$	250,548		$	225,331		$	25,217
Yield on interest-earning assets	4.10		%	4.07		%	3			bps
Yield on interest-earning assets (FTE) (1)	4.23		%	4.20		%	3			bps
Average interest-bearing liabilities	$	6,196,663		$	5,528,833		$	667,830
Interest expense	$	35,947		$	21,429		$	14,518
Cost of interest-bearing liabilities	0.78		%	0.52		%	26			bps
Cost of funds	0.61		%	0.40		%	21			bps
Net interest income	$	206,765		$	196,535		$	10,230
Net interest income (FTE) (1)	$	214,601		$	203,902		$	10,699
Net interest margin	3.49		%	3.67		%	(18		)	bps
Net interest margin (FTE) (1)	3.62		%	3.80		%	(18		)	bps

(1) Refer to the “Non-GAAP Measures” section within this Item 2 of this Form 10-Q for more information about this non-GAAP financial measure.

For the first nine months of 2017, net interest income was $206.8 million, an increase of $10.2 million from the first nine months of 2016. For the first nine months of 2017, tax-equivalent net interest income was $214.6 million, an increase of $10.7 million from the first nine months of 2016. The increases in both net interest income and tax-equivalent net interest income were primarily driven by higher average loan balances. Net accretion related to acquisition accounting increased $752,000 from the first nine months of 2016 to $4.8 million in the first nine months of 2017. In the first nine months of 2017, both net interest margin and tax-equivalent net interest margin decreased 18 basis points compared the first nine months of 2016. The net decreases in net interest margin and tax-equivalent net interest margin measures were driven by the 21 basis point increase in cost of funds, offset by the 3 basis point increase in interest-earning asset yields. The increase in the cost of funds was primarily attributable to subordinated debt that the Company issued in the fourth quarter of 2016 as well as increased interest-bearing deposit and short-term borrowing rates.

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The following tables show interest income on earning assets and related average yields as well as interest expense on interest-bearing liabilities and related average rates paid for the periods indicated:

AVERAGE BALANCES, INCOME AND EXPENSES, YIELDS AND RATES (TAXABLE EQUIVALENT BASIS)

	For the Three Months Ended September 30,
	2017							2016
	Average Balance			Interest  Income / Expense (1)		Yield /  Rate (1)(2)		Average Balance			Interest  Income / Expense (1)		Yield /  Rate (1)(2)
	(Dollars in thousands)
Assets:
Securities:
Taxable	$	774,513		$	5,175	2.65	%	$	768,608		$	4,732	2.45	%
Tax-exempt	469,391			5,455		4.61	%	449,944			5,302		4.69	%
Total securities	1,243,904			10,630		3.39	%	1,218,552			10,034		3.28	%
Loans, net (3) (4)	6,822,498			76,333		4.44	%	6,033,723			66,397		4.38	%
Other earning assets	101,517			535		2.09	%	102,409			429		1.67	%
Total earning assets	8,167,919			$	87,498	4.25	%	7,354,684			$	76,860	4.16	%
Allowance for loan losses	(38,138		)					(35,995		)
Total non-earning assets	844,183							835,262
Total assets	$	8,973,964						$	8,153,951
Liabilities and Stockholders' Equity:
Interest-bearing deposits:
Transaction and money market accounts	$	3,457,279		$	3,491	0.40	%	$	3,016,337		$	1,682	0.22	%
Regular savings	555,153			151		0.11	%	598,232			207		0.14	%
Time deposits	1,289,794			3,592		1.10	%	1,181,936			2,663		0.90	%
Total interest-bearing deposits	5,302,226			7,234		0.54	%	4,796,505			4,552		0.38	%
Other borrowings (5)	1,080,226			6,418		2.36	%	884,597			2,853		1.28	%
Total interest-bearing liabilities	6,382,452			$	13,652	0.85	%	5,681,102			$	7,405	0.52	%
Noninterest-bearing liabilities:
Demand deposits	1,495,614							1,408,453
Other liabilities	58,106							67,728
Total liabilities	7,936,172							7,157,283
Stockholders' equity	1,037,792							996,668
Total liabilities and stockholders' equity	$	8,973,964						$	8,153,951
Net interest income				$	73,846						$	69,455
Interest rate spread						3.40	%						3.64	%
Cost of funds						0.66	%						0.40	%
Net interest margin						3.59	%						3.76	%

(1) Income and yields are reported on a taxable equivalent basis using the statutory federal corporate tax rate of 35%.

(2) Rates and yields are annualized and calculated from actual, not rounded, amounts in thousands, which appear above.

(3) Nonaccrual loans are included in average loans outstanding.

(4) Interest income on loans includes $1.7 million and $1.3 million for the three months ended September 30, 2017 and 2016, respectively, in accretion of the fair market value adjustments related to acquisitions.

(5) Interest expense on borrowings includes $47,000 and $181,000 for the three months ended September 30, 2017 and 2016, respectively, in accretion of the fair market value adjustments related to acquisitions.

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AVERAGE BALANCES, INCOME AND EXPENSES, YIELDS AND RATES (TAXABLE EQUIVALENT BASIS)

	For the Nine Months Ended September 30,
	2017							2016
	Average Balance			Interest  Income / Expense (1)		Yield /  Rate (1)(2)		Average Balance			Interest  Income / Expense (1)		Yield /  Rate (1)(2)
	(Dollars in thousands)
Assets:
Securities:
Taxable	$	763,276		$	15,081	2.64	%	$	756,042		$	13,558	2.40	%
Tax-exempt	463,944			16,338		4.71	%	446,840			15,914		4.76	%
Total securities	1,227,220			31,419		3.42	%	1,202,882			29,472		3.27	%
Loans, net (3) (4)	6,613,078			217,910		4.41	%	5,869,511			194,839		4.43	%
Other earning assets	82,646			1,219		1.97	%	87,420			1,020		1.56	%
Total earning assets	7,922,944			$	250,548	4.23	%	7,159,813			$	225,331	4.20	%
Allowance for loan losses	(38,205		)					(35,439		)
Total non-earning assets	846,076							832,467
Total assets	$	8,730,815						$	7,956,841
Liabilities and Stockholders' Equity:
Interest-bearing deposits:
Transaction and money market accounts	$	3,344,248		$	8,189	0.33	%	$	2,903,336		$	4,523	0.21	%
Regular savings	571,735			493		0.12	%	591,699			649		0.15	%
Time deposits	1,250,180			9,728		1.04	%	1,172,856			7,773		0.89	%
Total interest-bearing deposits	5,166,163			18,410		0.48	%	4,667,891			12,945		0.37	%
Other borrowings (5)	1,030,500			17,537		2.28	%	860,942			8,484		1.32	%
Total interest-bearing liabilities	6,196,663			$	35,947	0.78	%	5,528,833			$	21,429	0.52	%
Noninterest-bearing liabilities:
Demand deposits	1,449,555							1,376,001
Other liabilities	59,744							60,910
Total liabilities	7,705,962							6,965,744
Stockholders' equity	1,024,853							991,097
Total liabilities and stockholders' equity	$	8,730,815						$	7,956,841
Net interest income				$	214,601						$	203,902
Interest rate spread						3.45	%						3.68	%
Cost of funds						0.61	%						0.40	%
Net interest margin						3.62	%						3.80	%

(1) Income and yields are reported on a taxable equivalent basis using the statutory federal corporate tax rate of 35%.

(2) Rates and yields are annualized and calculated from actual, not rounded, amounts in thousands, which appear above.

(3) Nonaccrual loans are included in average loans outstanding.

(4) Interest income on loans includes $4.7 million and $3.7 million for the nine months ended September 30, 2017 and 2016, respectively, in accretion of the fair market value adjustments related to acquisitions.

(5) Interest expense on borrowings includes $142,000 and $386,000 for the nine months ended September 30, 2017 and 2016, respectively, in accretion of the fair market value adjustments related to acquisitions.

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The Volume Rate Analysis table below presents changes in interest income and interest expense and distinguishes between the changes related to increases or decreases in average outstanding balances of interest-earning assets and interest-bearing liabilities (volume), and the changes related to increases or decreases in average interest rates on such assets and liabilities (rate). Changes attributable to both volume and rate have been allocated proportionally. Results, on a taxable equivalent basis, are as follows (dollars in thousands):

	Three Months Ended September 30, 2017 vs. September 30, 2016 Increase (Decrease) Due to Change in:									Nine Months Ended September 30, 2017 vs. September 30, 2016 Increase (Decrease) Due to Change in:
	Volume			Rate			Total			Volume			Rate			Total
Earning Assets:
Securities:
Taxable	$	37		$	406		$	443		$	131		$	1,392		$	1,523
Tax-exempt	226			(73		)	153			603			(179		)	424
Total securities	263			333			596			734			1,213			1,947
Loans, net (1)	8,809			1,127			9,936			24,512			(1,441		)	23,071
Other earning assets	(3		)	109			106			(58		)	257			199
Total earning assets	$	9,069		$	1,569		$	10,638		$	25,188		$	29		$	25,217
Interest-Bearing Liabilities:
Interest-bearing deposits:
Transaction and money market accounts	$	276		$	1,533		$	1,809		$	769		$	2,897		$	3,666
Regular savings	(14		)	(42		)	(56		)	(21		)	(135		)	(156		)
Time Deposits	259			670			929			537			1,418			1,955
Total interest-bearing deposits	521			2,161			2,682			1,285			4,180			5,465
Other borrowings (2)	742			2,823			3,565			1,930			7,123			9,053
Total interest-bearing liabilities	1,263			4,984			6,247			3,215			11,303			14,518
Change in net interest income	$	7,806		$	(3,415	)	$	4,391		$	21,973		$	(11,274	)	$	10,699

(1) The rate-related change in interest income on loans includes the impact of higher accretion of the acquisition-related fair market value adjustments of $324,000 and $996,000 for the three- and nine-month change, respectively.

(2) The rate-related change in interest expense on other borrowings includes the impact of lower accretion of the acquisition-related fair market value adjustments of $134,000 and $244,000 for the three- and nine-month change, respectively.

The Company’s fully taxable equivalent net interest margin includes the impact of acquisition accounting fair value adjustments. The impact of net accretion for the first three quarters of 2017 as well as the remaining estimated net accretion are reflected in the following table (dollars in thousands):

	Loan Accretion		Borrowings Accretion (Amortization)			Total
For the quarter ended March 31, 2017	$	1,445	$	48		$	1,493
For the quarter ended June 30, 2017	1,570		47			1,617
For the quarter ended September 30, 2017	1,662		47			1,709
For the remaining three months of 2017 (estimated) (1)	1,358		28			1,386
For the years ending (estimated) (1):
2018	4,842		(143		)	4,699
2019	3,483		(286		)	3,197
2020	2,689		(301		)	2,388
2021	2,187		(316		)	1,871
2022	1,767		(332		)	1,435
Thereafter	6,589		(4,974		)	1,615

⁽¹⁾Estimated accretion only includes accretion for previously executed acquisitions. The effects of the Pending Merger are not included in the information above.

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Noninterest Income

	For the Three Months Ended
	September 30,						Change
	2017			2016			$			%
	(Dollars in thousands)
Noninterest income:
Service charges on deposit accounts	$	5,153		$	4,965		$	188		3.8	%
Other service charges and fees	4,529			4,397			132			3.0	%
Fiduciary and asset management fees	2,794			2,844			(50		)	(1.8	)%
Mortgage banking income, net	2,305			3,207			(902		)	(28.1	)%
Gains on securities transactions, net	184			—			184			NM
Bank owned life insurance income	1,377			1,389			(12		)	(0.9	)%
Loan-related interest rate swap fees	416			1,303			(887		)	(68.1	)%
Other operating income	778			845			(67		)	(7.9	)%
Total noninterest income	$	17,536		$	18,950		$	(1,414	)	(7.5	)%
Community bank segment	$	15,121		$	15,589		$	(468	)	(3.0	)%
Mortgage segment	2,527			3,501			(974		)	(27.8	)%
Intercompany eliminations	(112		)	(140		)	28			20.0	%
Total noninterest income	$	17,536		$	18,950		$	(1,414	)	(7.5	)%

NM - Not meaningful

Noninterest income declined $1.4 million, or 7.5%, to $17.5 million for the quarter ended September 30, 2017 compared to the quarter ended September 30, 2016. The decline was primarily due to lower mortgage banking income of $902,000, driven by declines in mortgage loan originations compared to the third quarter of 2016 and unrealized losses on mortgage banking derivatives in the third quarter of 2017 compared to unrealized gains on mortgage banking derivatives in the third quarter of 2016. Loan-related swap fees also declined $887,000 in the third quarter of 2017 compared to the third quarter of 2016. Customer-related fee income increased $320,000 primarily related to increases in overdraft and debit card interchange fees, and gains on sales of securities were $184,000 higher, in each case as compared to the third quarter of 2016.

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	For the Nine Months Ended
	September 30,						Change
	2017			2016			$			%
	(Dollars in thousands)
Noninterest income:
Service charges on deposit accounts	$	14,945		$	14,454		$	491		3.4	%
Other service charges and fees	13,575			12,971			604			4.7	%
Fiduciary and asset management fees	8,313			7,315			998			13.6	%
Mortgage banking income, net	7,123			8,324			(1,201		)	(14.4	)%
Gains on securities transactions, net	782			145			637			NM
Bank owned life insurance income	4,837			4,122			715			17.3	%
Loan-related interest rate swap fees	2,627			3,056			(429		)	(14.0	)%
Other operating income	2,228			2,470			(242		)	(9.8	)%
Total noninterest income	$	54,430		$	52,857		$	1,573		3.0	%
Community bank segment	$	47,080		$	44,137		$	2,943		6.7	%
Mortgage segment	7,743			9,185			(1,442		)	(15.7	)%
Intercompany eliminations	(393		)	(465		)	72			15.5	%
Total noninterest income	$	54,430		$	52,857		$	1,573		3.0	%

NM - Not meaningful

Noninterest income increased $1.6 million, or 3.0%, to $54.4 million for the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016. For the first nine months of 2017, customer-related fee income increased $1.1 million primarily related to increases in overdraft and debit card interchange fees; fiduciary and asset management fees were $998,000 higher due to the acquisition of ODCM in the second quarter of 2016; bank owned life insurance income increased $715,000 primarily related to death benefit proceeds received in 2017; and gains on sales of securities were $637,000 higher, in each case as compared to the first nine months of 2016. Mortgage banking income decreased $1.2 million primarily related to declines in mortgage loan originations and lower unrealized gains on mortgage banking derivatives in the first nine months of 2017 compared to the first nine months of 2016.

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Noninterest expense

	For the Three Months Ended
	September 30,						Change
	2017			2016			$			%
	(Dollars in thousands)
Noninterest expense:
Salaries and benefits	$	29,769		$	30,493		$	(724	)	(2.4	)%
Occupancy expenses	4,939			4,841			98			2.0	%
Furniture and equipment expenses	2,559			2,635			(76		)	(2.9	)%
Printing, postage, and supplies	1,154			1,147			7			0.6	%
Communications expense	798			948			(150		)	(15.8	)%
Technology and data processing	4,232			3,917			315			8.0	%
Professional services	1,985			1,895			90			4.7	%
Marketing and advertising expense	1,944			1,975			(31		)	(1.6	)%
FDIC assessment premiums and other insurance	1,141			1,262			(121		)	(9.6	)%
Other taxes	2,022			639			1,383			216.4	%
Loan-related expenses	1,349			1,531			(182		)	(11.9	)%
OREO and credit-related expenses	1,139			503			636			126.4	%
Amortization of intangible assets	1,480			1,843			(363		)	(19.7	)%
Training and other personnel costs	887			863			24			2.8	%
Merger-related costs	732			—			732			NM
Other expenses	1,366			2,421			(1,055		)	(43.6	)%
Total noninterest expense	$	57,496		$	56,913		$	583		1.0	%
Community bank segment	$	55,133		$	54,353		$	780		1.4	%
Mortgage segment	2,475			2,700			(225		)	(8.3	)%
Intercompany eliminations	(112		)	(140		)	28			20.0	%
Total noninterest expense	$	57,496		$	56,913		$	583		1.0	%

NM - Not meaningful

Noninterest expense increased $583,000, or 1.0%, to $57.5 million for the quarter ended September 30, 2017 compared to $56.9 million for the third quarter of 2016. Excluding merger-related costs of $732,000, noninterest expense for the quarter ended September 30, 2017 declined $149,000, or 0.3%, compared to the third quarter of 2016. Salaries and benefits expenses declined by $724,000 primarily related to decreases in benefits and incentive compensation, offset by increases related to annual merit adjustments. Declines in other expenses primarily related to lower fraud-related and other losses of $364,000 as well as $400,000 in nonrecurring branch closing costs recognized in the third quarter of 2016. These decreases were partially offset by a nonrecurring reduction in expenses of approximately $900,000 in other taxes related to historic tax credits realized in the third quarter of 2016 related to the Company's investment in a historic rehabilitation project that was completed in that quarter and increased OREO and credit-related expenses due to losses on sales of OREO property in the third quarter of 2017 compared to gains on sales of OREO property in the third quarter of 2016 as well as higher valuation adjustments compared to the third quarter of 2016.

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	For the Nine Months Ended
	September 30,						Change
	2017			2016			$			%
	(Dollars in thousands)
Noninterest expense:
Salaries and benefits	$	92,499		$	87,061		$	5,438		6.2	%
Occupancy expenses	14,560			14,627			(67		)	(0.5	)%
Furniture and equipment expenses	7,882			7,867			15			0.2	%
Printing, postage, and supplies	3,710			3,566			144			4.0	%
Communications expense	2,580			2,964			(384		)	(13.0	)%
Technology and data processing	12,059			11,340			719			6.3	%
Professional services	5,734			6,432			(698		)	(10.9	)%
Marketing and advertising expense	5,963			5,838			125			2.1	%
FDIC assessment premiums and other insurance	2,793			4,003			(1,210		)	(30.2	)%
Other taxes	6,065			3,864			2,201			57.0	%
Loan-related expenses	3,959			3,638			321			8.8	%
OREO and credit-related expenses	2,023			1,965			58			3.0	%
Amortization of intangible assets	4,661			5,468			(807		)	(14.8	)%
Training and other personnel costs	2,900			2,512			388			15.4	%
Merger-related costs	3,476			—			3,476			NM
Other expenses	3,957			5,291			(1,334		)	(25.2	)%
Total noninterest expense	$	174,821		$	166,436		$	8,385		5.0	%
Community bank segment	$	167,643		$	158,964		$	8,679		5.5	%
Mortgage segment	7,571			7,937			(366		)	(4.6	)%
Intercompany eliminations	(393		)	(465		)	72			15.5	%
Total noninterest expense	$	174,821		$	166,436		$	8,385		5.0	%

NM - Not meaningful

Noninterest expense increased $8.4 million, or 5.0%, to $174.8 million for the nine months ended September 30, 2017 compared to $166.4 million for the first nine month of 2016. Excluding merger-related costs of $3.5 million, noninterest expense for the nine months ended September 30, 2017 increased $4.9 million, or 2.9%, compared to the first nine months of 2016. Salaries and benefits expenses increased by $5.4 million primarily related to annual merit adjustments; increases in benefits and equity-based compensation; and increased expenses related to investments in the Company's growth, including the acquisition of ODCM. The increase in other taxes was partially offset by the decrease in FDIC expenses, including assessment premiums and other insurance, due to the impact of the issuance of subordinated debt in the fourth quarter of 2016. The remaining increase in other taxes was primarily related to a nonrecurring reduction in expenses of approximately $900,000 related to the Company's investment in a historic rehabilitation project that was completed, and the related historic tax credits realized, in the third quarter of 2016. Technology and data processing costs increased $719,000, mostly due to higher software maintenance and online banking costs due to increased customer activity compared to the nine months ended September 30, 2016. These increases were partially offset by lower intangible amortization expense of $807,000, declines in professional fees of $698,000 due to lower legal and consulting fees, and declines in fraud-related and other losses of $371,000 in each case as compared to the first nine months of 2016.

SEGMENT INFORMATION

Community Bank Segment

For the three months ended September 30, 2017, the community bank segment reported net income of $20.3 million, which was an increase of $695,000 compared to the third quarter of 2016. Excluding after-tax merger-related costs of $661,000, net operating earnings for the community bank segment for the quarter ended September 30, 2017 were $21.0 million, which was an increase of $1.4 million compared to the net income for the third quarter of 2016. Net interest income increased $4.1 million

year-over-year to $70.7 million for the quarter ended September 30, 2017, primarily driven by higher average loan balances. The provision for credit losses for the quarter ended September 30, 2017 was $3.1 million, which was an increase of $601,000 compared to the provision for credit losses for the quarter ended September 30, 2016, driven by higher loan balances and higher levels of charge-offs in the third quarter of 2017.

Noninterest income decreased $468,000, or 3.0%, from $15.6 million in the third quarter of 2016 to $15.1 million in the third quarter of 2017. The decline was primarily due to lower loan-related swap fees of $887,000 compared to the third quarter of 2016. Customer-related fee income increased $320,000 primarily related to increases in overdraft and debit card interchange fees, and gains on sales of securities were $184,000 higher, in each case as compared to the third quarter of 2016.

Noninterest expense increased $780,000, or 1.4%, from $54.4 million for the third quarter of 2016 to $55.1 million for the quarter ended September 30, 2017. Excluding pre-tax merger-related costs of $732,000, noninterest expense for the quarter ended September 30, 2017 remained relatively flat compared to the third quarter of 2016. Salaries and benefits expenses declined by $623,000 primarily related to decreases in benefits and incentive compensation, offset by increases related to annual merit adjustments. Declines in other expenses primarily related to lower fraud-related and other losses of $364,000 as well as $400,000 in nonrecurring branch closing costs recognized in the third quarter of 2016. These decreases were partially offset by a nonrecurring reduction in expenses of approximately $900,000 related to the Company's investment in a historic rehabilitation project that was completed, and the related historic tax credits realized, in the third quarter of 2016 and increased OREO and credit-related expenses due to losses on sales of OREO property in the third quarter of 2017 compared to gains on sales of OREO property in the third quarter of 2016 as well as higher valuation adjustments compared to the third quarter of 2016.

For the nine months ended September 30, 2017, the community bank segment reported net income of $56.8 million, which was an increase of $1.5 million compared to the first nine months of 2016. Excluding after-tax merger-related costs of $3.0 million, net operating earnings for the community bank segment for the nine months ended September 30, 2017 were $59.9 million, which was an increase of $4.5 million compared to the net income for the first nine months of 2016. Net interest income increased $10.0 million year-over-year to $205.5 million for the nine months ended September 30, 2017, primarily driven by higher average loan balances. The provision for credit losses for the nine months ended September 30, 2017 was $7.3 million, which was an increase of $129,000 compared to the provision for credit losses for the nine months ended September 30, 2016, primarily driven by higher loan balances and higher levels of charge-offs during 2017.

Noninterest income increased $3.0 million, or 6.7%, from $44.1 million in the first nine months of 2016 to $47.1 million in the first nine months of 2017. For the first nine months of 2017, customer-related fee income increased $1.1 million primarily related to increases in overdraft and debit card interchange fees; fiduciary and asset management fees were $998,000 higher due to the acquisition of ODCM in the second quarter of 2016; bank owned life insurance income increased $715,000 primarily related to death benefit proceeds received in 2017; and gains on sales of securities were $637,000 higher, in each case as compared to the first nine months of 2016.

Noninterest expense increased $8.6 million, or 5.5%, from $159.0 million for the first nine months of 2016 to $167.6 million for the nine months ended September 30, 2017. Excluding merger-related costs of $3.5 million, noninterest expense for the nine months ended September 30, 2017 increased $5.2 million, or 3.3%, compared to the first nine months of 2016. Salaries and benefits expenses increased by $5.6 million primarily related to annual merit adjustments; increases in benefits and equity-based compensation; and increased expenses related to investments in the Company's growth, including the acquisition of ODCM. The net increase in FDIC and other insurance expenses and other taxes was primarily related to a nonrecurring reduction in expenses of approximately $900,000 related to the Company's investment in a historic rehabilitation project that was completed, and the related historic tax credits realized, in the third quarter of 2016. Technology and data processing costs increased $708,000, mostly due to higher software maintenance and online banking costs due to increased customer activity compared to the nine months ended September 30, 2016. These increases were partially offset by lower intangible amortization expense of $807,000, declines in professional fees of $792,000 due to lower legal and consulting fees, and declines in fraud-related and other losses of $371,000 in each case as compared to the first nine months of 2016.

Mortgage Segment

The mortgage segment reported net income of $347,000 for the third quarter of 2017, compared to net income of $785,000 in the third quarter of 2016. Mortgage banking income, net of commissions, decreased $902,000, primarily related to declines in mortgage loan originations and unrealized losses on mortgage banking derivatives in the third quarter of 2017 compared to unrealized gains on mortgage banking derivatives in the third quarter of 2016. Mortgage loan originations decreased $29.4 million, or 18.7%, from $156.7 million for the quarter ended September 30, 2016 to $127.3 million for the quarter ended

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September 30, 2017. Noninterest expense decreased $225,000, or 8.3%, when comparing the third quarter of 2017 to the third quarter of 2016, largely a result of declines in personnel-related costs and equipment-related expenses.

The mortgage segment reported net income of $901,000 for the first nine months of 2017, compared to net income of $1.4 million for the first nine months of 2016. Mortgage banking income, net of commissions, decreased $1.2 million, primarily related to declines in mortgage loan originations and lower unrealized gains on mortgage banking derivatives in the first nine months of 2017 compared to the first nine months of 2016. Mortgage loan originations decreased $30.8 million, or 7.8%, from $394.9 million for the nine months ended September 30, 2016 to $364.1 million for the nine months ended September 30, 2017.Noninterest expense decreased $366,000, largely a result of declines in personnel-related costs and equipment-related expenses.

Income Taxes

The provision for income taxes is based upon the results of operations, adjusted for the effect of certain tax-exempt income and non-deductible expenses. In addition, certain items of income and expense are reported in different periods for financial reporting and tax return purposes. The tax effects of these temporary differences are recognized currently in the deferred income tax provision or benefit. Deferred tax assets or liabilities are computed based on the difference between the financial statement and income tax bases of assets and liabilities using the applicable enacted marginal tax rate.

In assessing the ability to realize deferred tax assets, management considers the scheduled reversal of temporary differences, projected future taxable income, and tax planning strategies. Management continues to believe that it is not likely that the Company will realize its deferred tax asset related to net operating losses generated at the state level and accordingly has established a valuation allowance. The Company’s bank subsidiary is not subject to a state income tax in its primary place of business (Virginia). The Company’s other subsidiaries are subject to state income taxes and have generated losses on a consolidated basis for state income tax purposes which the Company is currently unable to utilize. State net operating loss carryovers will begin to expire after 2026.

The effective tax rate for the three months ended September 30, 2017 and 2016 was 26.7% and 23.3%, respectively; the effective tax rate for the nine months ended September 30, 2017 and 2016 was 26.9% and 25.0%, respectively. The increase in the effective tax rate is primarily related to tax-exempt interest and bank owned life insurance income being a smaller percentage of pre-tax income in 2017 compared to 2016 as well as the impact of nondeductible acquisition-related expenses recognized in 2017. Additionally, the Company's effective tax rate in 2016 was lower due to historic tax credits realized in the third quarter of 2016 related to the Company's investment in a historic rehabilitation project that was completed in such quarter.

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BALANCE SHEET

Assets

At September 30, 2017, total assets were $9.0 billion, an increase of $602.6 million, or 9.6% (annualized), from $8.4 billion at December 31, 2016. The increase in assets was mostly related to loan growth.

Loans held for investment, net of deferred fees and costs, were $6.9 billion at September 30, 2017, an increase of $591.7 million, or 12.5% (annualized), from December 31, 2016. Loan growth occurred across all categories. Quarterly average loans increased $788.8 million, or 13.1%, for the quarter ended September 30, 2017 compared to the quarter ended September 30, 2016. For additional information on the Company’s loan activity, please refer to “Loan Portfolio” within this Item 2 or Note 3 “Loans and Allowance for Loan Losses” in Part I, Item 1 “Financial Statements” of this report.

Liabilities and Stockholders’ Equity

At September 30, 2017, total liabilities were $8.0 billion, an increase of $562.3 million from December 31, 2016.

Total deposits were $6.9 billion at September 30, 2017, an increase of $502.3 million, or 10.5% (annualized), from December 31, 2016. Deposits increased in all categories with the exception of savings accounts when compared to year-end 2016, but was primarily driven by increases in demand and interest-bearing deposits consisting of NOW and money market accounts. Quarterly average deposits increased $592.9 million, or 9.6%, for the quarter ended September 30, 2017 compared to the quarter ended September 30, 2016. For further discussion on this topic, see “Deposits” within this Item 2.

At September 30, 2017, stockholders’ equity was $1.0 billion, an increase of $40.3 million from December 31, 2016. The Company’s capital ratios continue to exceed the minimum capital requirements for regulatory purposes but have decreased from prior periods primarily due to asset growth. The total risk-based capital ratios at September 30, 2017 and December 31, 2016 were 12.94% and 13.56%, respectively. The Tier 1 risk-based capital ratios were 10.56% and 10.97% at September 30, 2017 and December 31, 2016, respectively. The common equity Tier 1 risk-based capital ratios were 9.40% and 9.72% at September 30, 2017 and December 31, 2016, respectively. The Company’s common equity to total asset ratios at September 30, 2017 and December 31, 2016 were 11.53% and 11.88%, respectively, while its tangible common equity to tangible assets ratios were 8.34% and 8.41%, respectively, at the same dates.

Also, the Company declared and paid a cash dividend of $0.20 per share during the third quarter of 2017, an increase of $0.01 per share, or 5.3%, compared to the dividend paid during the same quarter in the prior year. Dividends for the nine months ended September 30, 2017 were $0.60 compared to $0.57 for the nine months ended September 30, 2016.

Securities

At September 30, 2017, the Company had total investments in the amount of $1.2 billion, or 13.8 % of total assets, as compared to $1.2 billion, or 14.3% of total assets, at December 31, 2016. The Company seeks to diversify its portfolio to minimize risk. It focuses on purchasing mortgage-backed securities for cash flow and reinvestment opportunities and securities issued by states and political subdivisions due to the tax benefits and the higher yield offered from these securities. The majority of the Company’s mortgage-backed securities are investment grade. The investment portfolio has a high percentage of municipals and mortgage-backed securities; therefore the Company earns a higher taxable equivalent yield on its portfolio as compared to many of its peers. The Company does not engage in structured derivative or hedging activities within the investment portfolio.

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The table below sets forth a summary of the securities available for sale, securities held to maturity, and restricted stock as of the dates indicated (dollars in thousands): 

	September 30, 2017		December 31, 2016
Available for Sale:
Obligations of states and political subdivisions	$	292,199	$	275,890
Corporate and other bonds	115,422		121,780
Mortgage-backed securities	546,904		535,286
Other securities	13,836		13,808
Total securities available for sale, at fair value	968,361		946,764
Held to Maturity:
Obligations of states and political subdivisions, at carrying value	204,801		201,526
Federal Reserve Bank stock	27,559		23,808
Federal Home Loan Bank stock	40,882		36,974
Total restricted stock, at cost	68,441		60,782
Total investments	$	1,241,603	$	1,209,072

During each quarter and at year end, the Company conducts an assessment of the securities portfolio for OTTI consideration. No OTTI was recognized during the three and nine months ended September 30, 2017. For the year ended December 31, 2015, the Company determined that a municipal security in the available for sale portfolio incurred credit-related OTTI of $300,000. During the quarter ended March 31, 2016, the municipal security was sold.  As a result, the Company recognized an additional loss on sale of the previously written down security. The Company monitors the portfolio, which is subject to liquidity needs, market rate changes, and credit risk changes, to determine whether adjustments are needed. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

The following table summarizes the contractual maturity of securities available for sale at fair value and their weighted average yields as of September 30, 2017 (dollars in thousands): 

	1 Year or Less			1 - 5 Years			5 - 10 Years			Over 10 Years			Total
Mortgage backed securities:
Amortized cost	$	197		$	82,828		$	121,469		$	341,544		$	546,038
Fair value	202			83,072			121,515			342,115			546,904
Weighted average yield (1)	3.08		%	2.16		%	2.19		%	2.43		%	2.34		%
Obligations of states and political subdivisions:
Amortized cost	11,795			44,929			82,296			146,901			285,921
Fair value	11,968			46,531			85,491			148,209			292,199
Weighted average yield (1)	5.69		%	4.92		%	4.34		%	3.80		%	4.21		%
Corporate bonds and other securities:
Amortized cost	11,395			504			63,727			53,261			128,887
Fair value	11,340			504			64,824			52,590			129,258
Weighted average yield (1)	0.93		%	1.04		%	4.46		%	2.31		%	3.24		%
Total securities available for sale:
Amortized cost	23,387			128,261			267,492			541,706			960,846
Fair value	23,510			130,107			271,830			542,914			968,361
Weighted average yield (1)	3.35		%	3.12		%	3.39		%	2.79		%	3.01		%

(1) Yields on tax-exempt securities have been computed on a tax-equivalent basis.

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The following table summarizes the contractual maturity of securities held to maturity at carrying value and their weighted average yields as of September 30, 2017 (dollars in thousands):

	1 Year or Less			1 - 5 Years			5 - 10 Years			Over 10 Years			Total
Obligations of states and political subdivisions:
Carrying Value	$	5,879		$	41,196		$	65,893		$	91,833		$	204,801
Fair value	5,902			41,959			67,444			94,530			209,835
Weighted average yield (1)	2.96		%	2.78		%	3.21		%	3.78		%	3.37		%

(1) Yields on tax-exempt securities have been computed on a tax-equivalent basis.

As of September 30, 2017, the Company maintained a diversified municipal bond portfolio with approximately 75% of its holdings in general obligation issues and the majority of the remainder backed by revenue bonds. Issuances within the State of Texas represented 12% and issuances within the State of Washington and the Commonwealth of Virginia both represented 11% of the municipal portfolio; no other state had a concentration above 10%. Substantially all municipal holdings are considered investment grade. When purchasing municipal securities, the Company focuses on strong underlying ratings for general obligation issuers or bonds backed by essential service revenues.

Liquidity

Liquidity represents an institution’s ability to meet present and future financial obligations through either the sale or maturity of existing assets or the acquisition of additional funds through liability management. Liquid assets include cash, interest-bearing deposits with banks, money market investments, federal funds sold, loans held for sale, and securities and loans maturing or re-pricing within one year. Additional sources of liquidity available to the Company include its capacity to borrow additional funds when necessary through federal funds lines with several correspondent banks, a line of credit with the FHLB, the purchase of brokered certificates of deposit, and a corporate line of credit with a large correspondent bank. Management considers the Company’s overall liquidity to be sufficient to satisfy its depositors’ requirements and to meet its customers’ credit needs.

As of September 30, 2017, liquid assets totaled $2.6 billion, or 29.2%, of total assets, and liquid earning assets totaled $2.5 billion, or 30.6% of total earning assets. Asset liquidity is also provided by managing loan and securities maturities and cash flows. As of September 30, 2017, approximately $2.3 billion, or 32.9% of total loans, are scheduled to mature within one year based on contractual maturity, adjusted for expected prepayments, and approximately $156.3 million, or 12.6% of total securities, are scheduled to mature within one year.

Additional sources of liquidity available to the Company include its capacity to borrow additional funds when necessary. For additional information and the available balances on various lines of credit, please refer to Note 5 “Borrowings” in Part I, Item 1 “Financial Statements” of this report. In addition to lines of credit, the Bank may also borrow additional funds by purchasing certificates of deposit through a nationally recognized network of financial institutions. For additional information and outstanding balances on purchased certificates of deposits, please refer to “Deposits” within this Item 2.

Loan Portfolio

Loans held for investment, net of deferred fees and costs, were $6.9 billion at September 30, 2017, $6.3 billion at December 31, 2016, and $6.1 billion at September 30, 2016, respectively. Commercial real estate - non-owner occupied loans continue to represent the Company’s largest category, comprising 25.3% of the total loan portfolio at September 30, 2017.

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The following table presents the Company’s composition of loans held for investment, net of deferred fees and costs, in dollar amounts and as a percentage of total gross loans as of the quarter ended (dollars in thousands): 

	September 30, 2017				June 30, 2017				March 31, 2017				December 31, 2016				September 30, 2016
Construction and Land Development	$	841,738	12.2	%	$	799,938	11.8	%	$	770,287	11.8	%	$	751,131	11.9	%	$	776,430	12.6	%
Commercial Real Estate - Owner Occupied	903,523		13.1	%	888,285		13.1	%	870,559		13.3	%	857,805		13.6	%	857,142		13.9	%
Commercial Real Estate - Non-Owner Occupied	1,748,039		25.3	%	1,698,329		25.1	%	1,631,767		24.9	%	1,564,295		24.8	%	1,454,828		23.7	%
Multifamily Real Estate	368,686		5.4	%	367,257		5.4	%	353,769		5.4	%	334,276		5.3	%	339,313		5.5	%
Commercial & Industrial	554,522		8.0	%	568,602		8.4	%	576,567		8.8	%	551,526		8.7	%	509,857		8.3	%
Residential 1-4 Family	1,083,112		15.7	%	1,066,519		15.8	%	1,057,439		16.1	%	1,029,547		16.3	%	999,361		16.3	%
Auto	276,572		4.0	%	274,162		4.0	%	271,466		4.1	%	262,071		4.2	%	255,188		4.2	%
HELOC	535,446		7.8	%	535,088		7.9	%	527,863		8.1	%	526,884		8.4	%	524,097		8.5	%
Consumer and all other	587,091		8.5	%	573,310		8.5	%	494,329		7.5	%	429,525		6.8	%	432,702		7.0	%
Total loans held for investment	$	6,898,729	100.0	%	$	6,771,490	100.0	%	$	6,554,046	100.0	%	$	6,307,060	100.0	%	$	6,148,918	100.0	%

The following table presents the remaining maturities, based on contractual maturity, by loan type and by rate type (variable or fixed), as of September 30, 2017 (dollars in thousands):

					Variable Rate						Fixed Rate
	Total Maturities		Less than 1 year		Total		1-5 years		More than 5 years		Total		1-5 years		More than 5 years
Construction and Land Development	$	841,738	$	481,566	$	220,078	$	170,885	$	49,193	$	140,094	$	102,639	$	37,455
Commercial Real Estate - Owner Occupied	903,523		106,283		252,090		31,982		220,108		545,150		384,557		160,593
Commercial Real Estate - Non-Owner Occupied	1,748,039		173,965		601,345		198,386		402,959		972,729		693,236		279,493
Multifamily Real Estate	368,686		29,313		145,063		37,143		107,920		194,310		169,340		24,970
Commercial & Industrial	554,522		165,346		153,500		111,836		41,664		235,676		157,121		78,555
Residential 1-4 Family	1,083,112		76,215		337,860		11,569		326,291		669,037		370,497		298,540
Auto	276,572		2,188		—		—		—		274,384		135,387		138,997
HELOC	535,446		39,610		493,368		46,379		446,989		2,468		2,025		443
Consumer and all other	587,091		54,890		70,097		11,524		58,573		462,104		193,576		268,528
Total loans held for investment	$	6,898,729	$	1,129,376	$	2,273,401	$	619,704	$	1,653,697	$	3,495,952	$	2,208,378	$	1,287,574

The Company remains committed to originating soundly underwritten loans to qualifying borrowers within its markets. The Company is focused on providing community-based financial services and discourages the origination of portfolio loans outside of its principal trade areas. As reflected in the loan table, at September 30, 2017, the largest components of the Company’s loan portfolio consisted of commercial real estate loans, residential 1-4 family loans, and construction and land development loans. The risks attributable to these concentrations are mitigated by the Company’s credit underwriting and monitoring processes, including oversight by a centralized credit administration function and credit policy and risk management committee, as well as seasoned bankers focusing their lending to borrowers with proven track records in markets with which the Company is familiar. UMG primarily serves as a secondary mortgage banking operation, selling the majority of its loan production in the secondary market or selling loans to meet the Bank’s current asset/liability management needs.

Asset Quality

Overview

At September 30, 2017, the Company had higher levels of NPAs compared to December 31, 2016 and September 30, 2016, due to the increase in nonaccrual loan levels, primarily related to three unrelated credit relationships that were classified as nonaccrual during the first and second quarters of 2017. Partially offsetting this increase, OREO balances declined compared to the same periods. The Company experienced increases in past due loan levels compared to December 31, 2016 and September 30, 2016 due to performing loans not being renewed prior to quarter end. As the Company's NPAs and past due loan

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levels have been at historic lows over the last several quarters, certain changes from quarter to quarter might stand out in comparison to one another but have an insignificant impact on the Company's overall asset quality position.

Net charge-offs increased for the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016, as some of the nonaccrual additions earlier in 2017 were charged off during the third quarter of 2017. The provision for loan losses also increased for the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016, as a result of the increased charge-offs and loan growth during 2017. The allowance for loan losses at September 30, 2017 was consistent with December 31, 2016.

All nonaccrual and past due loan metrics discussed below exclude PCI loans totaling $51.0 million (net of fair value mark of $11.7 million) at September 30, 2017.

Troubled Debt Restructurings

The total recorded investment in TDRs as of September 30, 2017 was $19.2 million, an increase of $3.8 million, or 24.9%, from $15.4 million at December 31, 2016 and an increase of $5.9 million, or 45.0%, from $13.3 million at September 30, 2016. Of the $19.2 million of TDRs at September 30, 2017, $16.5 million, or 85.8%, were considered performing while the remaining $2.7 million were considered nonperforming.

Loans removed from TDR status represent restructured loans with a market rate of interest at the time of the restructuring. These loans have performed in accordance with their modified terms for twelve consecutive months and were no longer considered impaired. Loans removed from TDR status are collectively evaluated for impairment; due to the significant improvement in the expected future cash flows, these loans are grouped based on their primary risk characteristics, which is included in the Company's general reserve. Impairment is measured based on historical loss experience taking into consideration environmental factors. The significant majority of these loans have been subject to new credit decisions due to the improvement in the expected future cash flows, the financial condition of the borrower, and other factors considered during re-underwriting. The TDR activity during the quarter did not have a material impact on the Company’s allowance for loan losses, financial condition, or results of operations.

Nonperforming Assets

At September 30, 2017, NPAs totaled $28.9 million, an increase of $8.8 million, or 44.0%, from December 31, 2016 and an increase of $5.6 million, or 24.2%, from September 30, 2016. In addition, NPAs as a percentage of total outstanding loans increased 10 basis points to 0.42% at September 30, 2017 from 0.32% at December 31, 2016 and increased 4 basis points from 0.38% at September 30, 2016. These increases are due to the higher levels of nonaccrual loans at September 30, 2017 compared to the prior periods.

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The following table shows a summary of asset quality balances and related ratios as of and for the quarters ended (dollars in thousands):

	September 30, 2017			June 30, 2017			March 31, 2017			December 31, 2016			September 30, 2016
Nonaccrual loans, excluding PCI loans	$	20,122		$	24,574		$	22,338		$	9,973		$	12,677
Foreclosed properties	6,449			6,828			6,951			7,430			7,927
Former bank premises	2,315			2,654			2,654			2,654			2,654
Total nonperforming assets	28,886			34,056			31,943			20,057			23,258
Loans past due 90 days and accruing interest	4,532			3,625			2,323			3,005			3,529
Total nonperforming assets and loans past due 90 days and accruing interest	$	33,418		$	37,681		$	34,266		$	23,062		$	26,787
Performing TDRs	$	16,519		$	14,947		$	14,325		$	13,967		$	11,824
PCI loans	51,041			56,167			57,770			59,292			62,346
Balances
Allowance for loan losses	$	37,162		$	38,214		$	38,414		$	37,192		$	36,542
Average loans, net of deferred fees and costs	6,822,498			6,628,011			6,383,905			6,214,084			6,033,723
Loans, net of deferred fees and costs	6,898,729			6,771,490			6,554,046			6,307,060			6,148,918
Ratios
NPAs to total loans	0.42		%	0.50		%	0.49		%	0.32		%	0.38		%
NPAs & loans 90 days past due to total loans	0.48		%	0.56		%	0.52		%	0.37		%	0.44		%
NPAs to total loans & OREO	0.42		%	0.50		%	0.49		%	0.32		%	0.38		%
NPAs & loans 90 days past due and accruing to total loans & OREO	0.48		%	0.56		%	0.52		%	0.37		%	0.43		%
ALL to nonaccrual loans	184.68		%	155.51		%	171.97		%	372.93		%	288.25		%
ALL to nonaccrual loans & loans 90 days past due and accruing	150.73		%	135.52		%	155.77		%	286.58		%	225.48		%

NPAs at September 30, 2017 included $20.1 million in nonaccrual loans, a net increase of $10.1 million, or 101.8%, from December 31, 2016 and a net increase of $7.4 million, or 58.7%, from September 30, 2016. The following table shows the activity in nonaccrual loans for the quarter ended (dollars in thousands):

	September 30, 2017			June 30, 2017			March 31, 2017			December 31, 2016			September 30, 2016
Beginning Balance	$	24,574		$	22,338		$	9,973		$	12,677		$	10,861
Net customer payments	(4,642		)	(1,498		)	(1,068		)	(1,451		)	(1,645		)
Additions	4,114			5,979			13,557			1,094			4,359
Charge-offs	(3,376		)	(2,004		)	(97		)	(1,216		)	(660		)
Loans returning to accruing status	—			(134		)	(27		)	(1,039		)	(23		)
Transfers to OREO	(548		)	(107		)	—			(92		)	(215		)
Ending Balance	$	20,122		$	24,574		$	22,338		$	9,973		$	12,677

The majority of nonaccrual additions during 2017 relate to three unrelated credit relationships, comprised of commercial real estate - non-owner occupied loans, commercial & industrial loans, and constructions loans.

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The following table presents the composition of nonaccrual loans at the quarters ended (dollars in thousands):

	September 30, 2017		June 30, 2017		March 31, 2017		December 31, 2016		September 30, 2016
Construction and Land Development	$	5,671	$	5,659	$	6,545	$	2,037	$	2,301
Commercial Real Estate - Owner Occupied	2,205		1,279		1,298		794		1,609
Commercial Real Estate - Non-owner Occupied	2,701		4,765		2,798		—		—
Commercial & Industrial	1,252		4,281		3,245		124		1,344
Residential 1-4 Family	6,163		6,128		5,856		5,279		5,279
Auto	174		270		393		169		231
HELOC	1,791		2,059		1,902		1,279		1,464
Consumer and all other	165		133		301		291		449
Total	$	20,122	$	24,574	$	22,338	$	9,973	$	12,677

NPAs at September 30, 2017 also included $8.8 million in OREO, a decline of $1.3 million, or 13.1%, from December 31, 2016 and a decline of $1.8 million, or 17.2%, from September 30, 2016. The following table shows the activity in OREO for the quarters ended (dollars in thousands):

	September 30, 2017			June 30, 2017			March 31, 2017			December 31, 2016			September 30, 2016
Beginning Balance	$	9,482		$	9,605		$	10,084		$	10,581		$	13,381
Additions of foreclosed property	621			132			—			859			246
Valuation adjustments	(588		)	(19		)	(238		)	(138		)	(479		)
Proceeds from sales	(648		)	(272		)	(277		)	(1,282		)	(2,844		)
Gains (losses) from sales	(103		)	36			36			64			277
Ending Balance	$	8,764		$	9,482		$	9,605		$	10,084		$	10,581

The following table presents the composition of the OREO portfolio at the quarter ended (dollars in thousands):

	September 30, 2017		June 30, 2017		March 31, 2017		December 31, 2016		September 30, 2016
Land	$	2,755	$	3,205	$	3,328	$	3,328	$	3,440
Land Development	1,993		2,050		2,111		2,379		2,320
Residential Real Estate	1,562		1,399		1,338		1,549		1,806
Commercial Real Estate	139		174		174		174		361
Former Bank Premises (1)	2,315		2,654		2,654		2,654		2,654
Total	$	8,764	$	9,482	$	9,605	$	10,084	$	10,581

(1)Includes closed branch property and land previously held for branch sites.

Past Due Loans

At September 30, 2017, total accruing past due loans were $34.3 million, or 0.50% of total loans, compared to $27.9 million, or 0.44% of total loans, at December 31, 2016 and $26.9 million, or 0.44% of total loans, at September 30, 2016. Of the total past due loans still accruing interest at September 30, 2017, $4.5 million, or 0.07% of total loans, were past due 90 days or more, compared to $3.0 million, or 0.05% of total loans, at December 31, 2016 and $3.5 million, or 0.06% of total loans, at September 30, 2016. As the Company's past due loan levels have been at historic lows over the last several quarters, certain changes from quarter to quarter might stand out in comparison to one another but have an insignificant impact on the Company's overall asset quality position.

Net Charge-offs

For the quarter ended September 30, 2017, net charge-offs were $4.1 million, or 0.24% of average loans on an annualized basis, compared to $929,000, or 0.06%, for the quarter ended September 30, 2016. Of the net charge-offs in the third quarter of 2017, the majority were previously considered impaired. For the nine months ended September 30, 2017, net charge-offs were $7.4 million, or 0.15% of total average loans on annualized basis, compared to $4.7 million, or 0.11%, for the same period in 2016. Of the net charge-offs during 2017, the majority were previously considered impaired.

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Provision for Loan Losses

The provision for loan losses for the quarter ended September 30, 2017 was $3.1 million, an increase of $653,000 compared with the quarter ended September 30, 2016. The provision for loan losses for the nine months ended September 30, 2017 was $7.4 million compared to $7.2 million for the nine months ended September 30, 2016. The provision for loan losses increased in the first nine months of 2017 compared to the same period in 2016, primarily driven by higher loan balances and higher charge-off levels.

Allowance for Loan Losses

At both September 30, 2017 and December 31, 2016, the allowance for loan losses was $37.2 million. The current level of the allowance for loan losses reflects specific reserves related to nonperforming loans, current risk ratings on loans, net charge-off activity, loan growth, delinquency trends, and other credit risk factors that the Company considers important in assessing the adequacy of the allowance for loan losses. The allowance for loan losses as a percentage of the total loan portfolio was 0.54% at September 30, 2017 compared to 0.59% at both December 31, 2016 and September 30, 2016. The decline is primarily related to lower specific reserves as well as declining historical loss factors.

The following table summarizes activity in the allowance for loan losses during the quarters ended (dollars in thousands):

	September 30, 2017			June 30, 2017			March 31, 2017			December 31, 2016			September 30, 2016
Balance, beginning of period	$	38,214		$	38,414		$	37,192		$	36,542		$	35,074
Loans charged-off:
Commercial	684			316			241			620			16
Real estate	3,049			1,595			374			469			929
Consumer	1,256			1,416			1,018			738			518
Total loans charged-off	4,989			3,327			1,633			1,827			1,463
Recoveries:
Commercial	189			123			139			61			67
Real estate	272			306			273			806			303
Consumer	426			398			433			136			164
Total recoveries	887			827			845			1,003			534
Net charge-offs	4,102			2,500			788			824			929
Provision for loan losses	3,050			2,300			2,010			1,474			2,397
Balance, end of period	$	37,162		$	38,214		$	38,414		$	37,192		$	36,542
ALL to loans	0.54		%	0.56		%	0.59		%	0.59		%	0.59		%
Net charge-offs to average loans	0.24		%	0.15		%	0.05		%	0.05		%	0.06		%
Provision to average loans	0.18		%	0.14		%	0.13		%	0.09		%	0.16		%

The following table shows both an allocation of the allowance for loan losses among loan categories based upon the loan portfolio’s composition and the ratio of the related outstanding loan balances to total loans as of the quarters ended (dollars in thousands):

	September 30, 2017				June 30, 2017				March 31, 2017				December 31, 2016				September 30, 2016
	$		% (1)		$		% (1)		$		% (1)		$		% (1)		$		% (1)
Commercial	$	5,363	8.0	%	$	5,614	8.4	%	$	5,279	8.8	%	$	4,627	8.7	%	$	5,403	8.3	%
Real estate	27,518		79.5	%	28,450		79.1	%	29,356		79.6	%	29,441		80.3	%	28,064		81.0	%
Consumer	4,281		12.5	%	4,150		12.5	%	3,779		11.6	%	3,124		11.0	%	3,075		10.7	%
Total	$	37,162	100.0	%	$	38,414	100.0	%	$	38,414	100.0	%	$	37,192	100.0	%	$	36,542	100.0	%

(1) The percent represents the loan balance divided by total loans.

Deposits

As of September 30, 2017, total deposits were $6.9 billion, an increase of $502.3 million, or 10.5% (annualized), from December 31, 2016. Total interest-bearing deposits consist of NOW, money market, savings, and time deposit account balances. Total time deposit balances of $1.3 billion accounted for 24.7% of total interest-bearing deposits at September 30, 2017.

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The following table presents the deposit balances by major categories as of the quarters ended (dollars in thousands):

	September 30, 2017				December 31, 2016
Deposits:	Amount		% of total deposits		Amount		% of total deposits
Non-interest bearing	$	1,535,149	22.3	%	$	1,393,625	21.8	%
NOW accounts	1,851,327		26.9	%	1,765,956		27.7	%
Money market accounts	1,621,443		23.6	%	1,435,591		22.5	%
Savings accounts	553,082		8.0	%	591,742		9.3	%
Time deposits of $100,000 and over	621,070		9.0	%	530,275		8.3	%
Other time deposits	699,755		10.2	%	662,300		10.4	%
Total Deposits	$	6,881,826	100.0	%	$	6,379,489	100.0	%

The Company may also borrow additional funds by purchasing certificates of deposit through a nationally recognized network of financial institutions. The Company utilizes this funding source when rates are more favorable than other funding sources. As of September 30, 2017 and December 31, 2016, there were $19.4 million and $0, respectively, purchased certificates of deposit included in certificates of deposit on the Company’s Consolidated Balance Sheets. Maturities of time deposits as of September 30, 2017 were as follows (dollars in thousands):

	Within 3 Months		3 - 12 Months		Over 12 Months		Total
Maturities of time deposits of $100,000 and over	$	57,493	$	201,742	$	361,835	$	621,070
Maturities of other time deposits	62,724		273,340		363,691		699,755
Total time deposits	$	120,217	$	475,082	$	725,526	$	1,320,825

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Capital Resources

Capital resources represent funds, earned or obtained, over which financial institutions can exercise greater or longer control in comparison with deposits and borrowed funds. The adequacy of the Company’s capital is reviewed by management on an ongoing basis with reference to size, composition, and quality of the Company’s resources and consistency with regulatory requirements and industry standards. Management seeks to maintain a capital structure that will assure an adequate level of capital to support anticipated asset growth and to absorb potential losses, yet allow management to effectively leverage its capital to maximize return to stockholders.

In July 2013, the Federal Reserve issued final rules to include technical changes to its market risk capital rules to align them with the Basel III regulatory capital framework and meet certain requirements of the Dodd-Frank Act. Effective January 1, 2015, the final rules require the Company and the Bank to comply with the following minimum capital ratios: (i) a new common equity Tier 1 capital ratio of 4.5% of risk-weighted assets; (ii) a Tier 1 capital ratio of 6.0% of risk-weighted assets (increased from the prior requirement of 4.0%); (iii) a total capital ratio of 8.0% of risk-weighted assets (unchanged from the prior requirement); and (iv) a leverage ratio of 4.0% of total assets (unchanged from the prior requirement). These capital requirements will be phased in over a four-year period. When fully phased in on January 1, 2019, the rules will require the Company and the Bank to maintain (i) a minimum ratio of common equity Tier 1 to risk-weighted assets of at least 4.5%, plus a 2.5% “capital conservation buffer” (which is added to the 4.5% common equity Tier 1 ratio as that buffer is phased in, effectively resulting in a minimum ratio of common equity Tier 1 to risk-weighted assets of at least 7.0% upon full implementation), (ii) a minimum ratio of Tier 1 capital to risk-weighted assets of at least 6.0%, plus the 2.5% capital conservation buffer (which is added to the 6.0% Tier 1 capital ratio as that buffer is phased in, effectively resulting in a minimum Tier 1 capital ratio of 8.5% upon full implementation), (iii) a minimum ratio of total capital to risk-weighted assets of at least 8.0%, plus the 2.5% capital conservation buffer (which is added to the 8.0% total capital ratio as that buffer is phased in, effectively resulting in a minimum total capital ratio of 10.5% upon full implementation), and (iv) a minimum leverage ratio of 4.0%, calculated as the ratio of Tier 1 capital to average assets.

Beginning January 1, 2016, the capital conservation buffer requirement began to be phased in at 0.625% of risk-weighted assets, and will increase by the same amount each year until fully implemented at 2.5% on January 1, 2019. As of September 30, 2017, the capital conservation buffer was 1.25% of risk-weighted assets. The capital conservation buffer is designed to absorb losses during periods of economic stress. Banking institutions with a ratio of common equity Tier 1 to risk-weighted assets above the minimum but below the conservation buffer will face constraints on dividends, equity repurchases, and compensation based on the amount of the shortfall. The table summarizes the Company’s regulatory capital and related ratios for the periods presented (dollars in thousands):

	September 30, 2017			December 31, 2016			September 30, 2016
Common equity Tier 1 capital	$	734,892		$	699,728		$	685,329
Tier 1 capital	825,392			790,228			775,829
Tier 2 capital	186,012			185,917			37,032
Total risk-based capital	1,011,404			976,145			812,861
Risk-weighted assets	7,817,079			7,200,778			7,010,112
Capital ratios:
Common equity Tier 1 capital ratio	9.40		%	9.72		%	9.78		%
Tier 1 capital ratio	10.56		%	10.97		%	11.07		%
Total capital ratio	12.94		%	13.56		%	11.60		%
Leverage ratio (Tier 1 capital to average assets)	9.52		%	9.87		%	9.89		%
Capital conservation buffer ratio (1)	4.56		%	4.97		%	3.60		%
Common equity to total assets	11.53		%	11.88		%	12.12		%
Tangible common equity to tangible assets	8.34		%	8.41		%	8.57		%

(1) Calculated by subtracting the regulatory minimum capital ratio requirements from the Company's actual ratio results for Common equity, Tier 1, and Total risk based capital. The lowest of the three measures represents the Company's capital conservation buffer ratio.

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NON-GAAP MEASURES

In reporting the results of September 30, 2017, the Company has provided supplemental performance measures on a tax-equivalent, tangible, and/or operating basis. These measures are a supplement to GAAP used to prepare the Company's financial statements and should not be considered in isolation or as a substitute for comparable measures calculated in accordance with GAAP. In addition, the Company's non-GAAP measures may not be comparable to non-GAAP measures of other companies.

Net interest income (FTE), which is used in computing net interest margin (FTE), provides valuable additional insight into the net interest margin by adjusting for differences in tax treatment of interest income sources.

The Company believes tangible common equity is an important indication of its ability to grow organically and through business combinations as well as its ability to pay dividends and to engage in various capital management strategies. Tangible common equity is used in the calculation of certain profitability, capital, and per share ratios. These ratios are meaningful measures of capital adequacy because they provide a meaningful base for period-to-period and company-to-company comparisons, which the Company believes will assist investors in assessing the capital of the Company and its ability to absorb potential losses.

Operating measures exclude merger-related costs unrelated to the Company’s normal operations. Such costs were only incurred during the second and third quarters of 2017; thus each of these operating measures is equivalent to the corresponding GAAP financial measure for the three and nine months ended September 30, 2016. The Company believes these measures are useful to investors as they exclude certain costs resulting from acquisition activity and allow investors to more clearly see the combined economic results of the organization's operations.

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The following table reconciles these non-GAAP measures from their respective U.S. GAAP basis measures for each of the periods presented (dollars in thousands, except per share amounts):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
Interest Income (FTE)
Interest Income (GAAP)	$	84,850		$	74,433		$	242,712		$	217,964
FTE adjustment	2,648			2,427			7,836			7,367
Interest Income FTE (non-GAAP)	$	87,498		$	76,860		$	250,548		$	225,331
Average earning assets	$	8,167,919		$	7,354,684		$	7,922,944		$	7,159,813
Yield on interest-earning assets (GAAP)	4.12		%	4.03		%	4.10		%	4.07		%
Yield on interest-earning assets (FTE) (non-GAAP)	4.25		%	4.16		%	4.23		%	4.20		%
Net Interest Income (FTE)
Net Interest Income (GAAP)	$	71,198		$	67,028		$	206,765		$	196,535
FTE adjustment	2,648			2,427			7,836			7,367
Net Interest Income FTE (non-GAAP)	73,846			69,455			214,601			203,902
Average earning assets	$	8,167,919		$	7,354,684		$	7,922,944		$	7,159,813
Net interest margin (GAAP)	3.46		%	3.63		%	3.49		%	3.67		%
Net interest margin (FTE) (non-GAAP)	3.59		%	3.76		%	3.62		%	3.80		%
Tangible Assets
Ending Assets (GAAP)	$	9,029,436		$	8,258,230		$	9,029,436		$	8,258,230
Less: Ending goodwill	298,191			298,191			298,191			298,191
Less: Ending amortizable intangibles	16,017			22,343			16,017			22,343
Ending tangible assets (non-GAAP)	$	8,715,228		$	7,937,696		$	8,715,228		$	7,937,696
Tangible Common Equity
Ending Equity (GAAP)	$	1,041,371		$	1,000,964		$	1,041,371		$	1,000,964
Less: Ending goodwill	298,191			298,191			298,191			298,191
Less: Ending amortizable intangibles	16,017			22,343			16,017			22,343
Ending tangible common equity (non-GAAP)	$	727,163		$	680,430		$	727,163		$	680,430
Average equity (GAAP)	$	1,037,792		$	996,668		$	1,024,853		$	991,097
Less: Average goodwill	298,191			297,707			298,191			295,380
Less: Average amortizable intangibles	16,681			22,653			18,184			22,249
Average tangible common equity (non-GAAP)	$	722,920		$	676,308		$	708,478		$	673,468
ROE (GAAP)	7.90		%	8.14		%	7.53		%	7.64		%
ROTCE (non-GAAP)	11.34		%	12.00		%	10.90		%	11.25		%
Common equity to assets (GAAP)	11.53		%	12.12		%	11.53		%	12.12		%
Tangible common equity to tangible assets (non-GAAP)	8.34		%	8.57		%	8.34		%	8.57		%

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	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
Operating Measures
Net income (GAAP)	$	20,658		$	20,401		$	57,737		$	56,699
Merger-related costs, net of tax	661			—			3,020			—
Net operating earnings (non-GAAP)	$	21,319		$	20,401		$	60,757		$	56,699
Weighted average common shares outstanding, diluted	43,792,058			43,754,915			43,767,502			43,967,725
Earnings per common share, diluted (GAAP)	$	0.47		$	0.47		$	1.32		$	1.29
Operating earnings per common share, diluted (non-GAAP)	$	0.49		$	0.47		$	1.39		$	1.29
Average assets (GAAP)	$	8,973,964		$	8,153,951		$	8,730,815		$	7,956,841
ROA (GAAP)	0.91		%	1.00		%	0.88		%	0.95		%
Operating ROA (non-GAAP)	0.94		%	1.00		%	0.93		%	0.95		%
Average common equity (GAAP)	$	1,037,792		$	996,668		$	1,024,853		$	991,097
ROE (GAAP)	7.90		%	8.14		%	7.53		%	7.64		%
Operating ROE (non-GAAP)	8.15		%	8.14		%	7.93		%	7.64		%
Average tangible common equity (non-GAAP)	$	722,920		$	676,308		$	708,478		$	673,468
ROTCE (non-GAAP)	11.34		%	12.00		%	10.90		%	11.25		%
Operating ROTCE (non-GAAP)	11.70		%	12.00		%	11.47		%	11.25		%
Noninterest expense (GAAP)	$	57,496		$	56,913		$	174,821		$	166,436
Less: Merger-related costs	732			—			3,476			—
Operating noninterest expense (non-GAAP)	$	56,764		$	56,913		$	171,345		$	166,436
Net interest income (GAAP)	$	71,198		$	67,028		$	206,765		$	196,535
Net interest income (FTE) (non-GAAP)	73,846			69,455			214,601			203,902
Noninterest income (GAAP)	17,536			18,950			54,430			52,857
Efficiency ratio (GAAP)	64.80		%	66.19		%	66.93		%	66.74		%
Efficiency ratio (FTE) (non-GAAP)	62.92		%	64.38		%	64.98		%	64.82		%
Operating efficiency ratio (FTE) (non-GAAP)	62.12		%	64.38		%	63.69		%	64.82		%
Community Bank Segment Operating Measures
Community bank segment net income (GAAP)	$	20,311		$	19,616		$	56,836		$	55,321
Merger-related costs, net of tax	661			—			3,020			—
Community bank segment net operating earnings (non-GAAP)	$	20,972		$	19,616		$	59,856		$	55,321
Weighted average common shares outstanding, diluted	43,792,058			43,754,915			43,767,502			43,967,725
Earnings per common share, diluted (GAAP)	$	0.46		$	0.45		$	1.30		$	1.26
Operating earnings per common share, diluted (non-GAAP)	$	0.48		$	0.45		$	1.37		$	1.26
Community bank segment noninterest expense (GAAP)	$	55,133		$	54,353		$	167,643		$	158,964
Less: Merger-related costs	732			—			3,476			—
Community bank segment operating noninterest expense (non-GAAP)	$	54,401		$	54,353		$	164,167		$	158,964

ITEM 3 – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk is the risk of loss arising from adverse changes in the fair value of financial instruments due to changes in interest rates, exchange rates, and equity prices. The Company’s market risk is composed primarily of interest rate risk. The ALCO of the Company is responsible for reviewing the interest rate sensitivity position of the Company and establishing policies to

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monitor and limit exposure to this risk. The Company’s Board of Directors reviews and approves the guidelines established by ALCO.

Interest rate risk is monitored through the use of three complementary modeling tools: static gap analysis, earnings simulation modeling, and economic value simulation (net present value estimation). Each of these models measures changes in a variety of interest rate scenarios. While each of the interest rate risk models has limitations, taken together they represent a reasonably comprehensive view of the magnitude of interest rate risk in the Company, the distribution of risk along the yield curve, the level of risk through time, and the amount of exposure to changes in certain interest rate relationships. Static gap, which measures aggregate re-pricing values, is less utilized because it does not effectively measure the options risk impact on the Company and is not addressed here. Earnings simulation and economic value models, which more effectively measure the cash flow and optionality impacts, are utilized by management on a regular basis and are explained below.

The Company determines the overall magnitude of interest sensitivity risk and then formulates policies and practices governing asset generation and pricing, funding sources and pricing, and off-balance sheet commitments. These decisions are based on management’s expectations regarding future interest rate movements, the states of the national, regional, and local economies, and other financial and business risk factors. The Company uses simulation modeling to measure and monitor the effect of various interest rate scenarios and business strategies on net interest income. This modeling reflects interest rate changes and the related impact on net interest income and net income over specified time horizons.

EARNINGS SIMULATION ANALYSIS

Management uses simulation analysis to measure the sensitivity of net interest income to changes in interest rates. The model calculates an earnings estimate based on current and projected balances and rates. This method is subject to the accuracy of the assumptions that underlie the process, but it provides a better analysis of the sensitivity of earnings to changes in interest rates than other analyses, such as the static gap analysis discussed above.

Assumptions used in the model are derived from historical trends and management’s outlook and include loan and deposit growth rates and projected yields and rates. These assumptions may not materialize and unanticipated events and circumstances may occur. The model also does not take into account any future actions of management to mitigate the impact of interest rate changes. Such assumptions are monitored by management and periodically adjusted as appropriate. All maturities, calls, and prepayments in the securities portfolio are assumed to be reinvested in like instruments. Mortgage loans and mortgage-backed securities prepayment assumptions are based on industry estimates of prepayment speeds for portfolios with similar coupon ranges and seasoning. Different interest rate scenarios and yield curves are used to measure the sensitivity of earnings to changing interest rates. Interest rates on different asset and liability accounts move differently when the prime rate changes and are reflected in the different rate scenarios.

The Company uses its simulation model to estimate earnings in rate environments where rates are instantaneously shocked up or down around a “most likely” rate scenario, based on implied forward rates. The analysis assesses the impact on net interest income over a 12 month time horizon after an immediate increase or “shock” in rates, of 100 basis points up to 300 basis points. The shock down 200 or 300 basis points analysis is not as meaningful as interest rates across most of the yield curve are near historic lows and cannot decrease another 200 or 300 basis points. The model, under all scenarios, does not drop the index below zero.

The following table represents the interest rate sensitivity on net interest income for the Company across the rate paths modeled for balances as of September 30, 2017 and 2016 (dollars in thousands):

	Change In Net Interest Income September 30,
	2017				2016
	%		$		%		$
Change in Yield Curve:
+300 basis points	7.65		23,401		11.25		31,821
+200 basis points	5.24		16,034		7.65		21,636
+100 basis points	2.82		8,634		3.91		11,051
Most likely rate scenario	—		—		—		—
-100 basis points	(3.21	)	(9,828	)	(3.30	)	(9,338	)
-200 basis points	(6.69	)	(20,459	)	(4.66	)	(13,197	)
-300 basis points	(7.04	)	(21,528	)	(4.76	)	(13,464	)

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Asset sensitivity indicates that in a rising interest rate environment the Company’s net interest income would increase and in a decreasing interest rate environment the Company’s net interest income would decrease. Liability sensitivity indicates that in a rising interest rate environment the Company’s net interest income would decrease and in a decreasing interest rate environment the Company’s net interest income would increase.

As of September 30, 2017, the Company was less asset sensitive in a rising interest rate environment scenario when compared to September 30, 2016 in part due to the composition of the balance sheet and in part due to the market characteristics of certain deposit products. The Company would expect net interest income to increase with an immediate increase or shock in market rates. In the decreasing interest rate environments, the Company would expect a decline in net interest income as interest-earning assets re-price at lower rates and interest-bearing deposits remain at or near their floors. It should be noted that although net interest income simulation results are presented through the down 300 basis points interest rate environments, the Company does not believe the down 200 and 300 basis point scenarios are plausible given the current level of interest rates.

ECONOMIC VALUE SIMULATION

Economic value simulation is used to calculate the estimated fair value of assets and liabilities over different interest rate environments. Economic values are calculated based on discounted cash flow analysis. The net economic value of equity is the economic value of all assets minus the economic value of all liabilities. The change in net economic value over different rate environments is an indication of the longer-term earnings capability of the balance sheet. The same assumptions are used in the economic value simulation as in the earnings simulation. The economic value simulation uses instantaneous rate shocks to the balance sheet.

The following chart reflects the estimated change in net economic value over different rate environments using economic value simulation for the balances at the quarterly periods ended September 30, 2017 and 2016 (dollars in thousands):

	Change In Economic Value of Equity September 30,
	2017				2016
	%		$		%		$
Change in Yield Curve:
+300 basis points	(1.11	)	(16,200	)	2.67		35,364
+200 basis points	(0.05	)	(800	)	2.65		35,109
+100 basis points	0.41		5,960		1.85		24,533
Most likely rate scenario	—		—		—		—
-100 basis points	(2.72	)	(39,795	)	(4.68	)	(61,889	)
-200 basis points	(8.27	)	(120,822	)	(8.92	)	(117,988	)
-300 basis points	(9.58	)	(139,886	)	(5.86	)	(77,480	)

As of September 30, 2017, the Company was less sensitive to market interest rate fluctuations in the shock down 100, shock down 200 and shock up 100, 200, and 300 basis points scenarios when compared to September 30, 2016. The Company believes that the shock down 200 or 300 basis points analyses are not as meaningful since interest rates across most of the yield curve are near historic lows and are not likely to decrease another 200 or 300 basis points. While management considers this scenario highly unlikely, the natural floor increases the Company's sensitivity in rates down scenarios.

ITEM 4 – CONTROLS AND PROCEDURES

The Company maintains “disclosure controls and procedures,” as such term is defined in Rule 13a-15(e) under the Exchange Act, that are designed to ensure that information required to be disclosed in reports that it files or submits under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating its disclosure controls and procedures, management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable assurance that the objectives of the disclosure controls and procedures are met. Additionally, in designing disclosure controls and procedures, management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

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Based on their evaluation as of the end of the period covered by this quarterly report on Form 10-Q, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that the disclosure controls and procedures were effective at the reasonable assurance level.

There was no change in the internal control over financial reporting that occurred during the quarter ended September 30, 2017 that has materially affected, or is reasonably likely to materially affect, the internal control over financial reporting.

PART II – OTHER INFORMATION

ITEM 1 – LEGAL PROCEEDINGS

On September 7, 2017, Paul Parshall, a purported shareholder of Xenith, filed a putative class action lawsuit (the “Parshall Lawsuit”) in the United States District Court for the Eastern District of Virginia against Xenith, its current directors, and the Company on behalf of all public shareholders of Xenith. The plaintiff in the action alleged that the Company’s registration statement on Form S-4 filed with the SEC, as amended, relating to the Pending Merger omitted certain material information in violation of Section 14(a) of the Exchange Act and Rule 14a-9 promulgated thereunder, and further that the individual defendants were liable for those omissions under Section 20(a) of the Exchange Act. The relief sought in the lawsuit included preliminary and permanent injunction to prevent the completion of the Pending Merger, rescission or rescissory damages if the

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Pending Merger were completed, costs and attorneys’ fees. On November 6, 2017, Mr. Parshall filed a notice of voluntary dismissal, terminating the Parshall Lawsuit without prejudice.

On September 19, 2017, Shannon Rowe, a purported shareholder of Xenith, filed a putative class action lawsuit (the “Rowe Lawsuit”), also in the United States District Court for the Eastern District of Virginia, against Xenith and its current directors. The Company is not named as a defendant in the Rowe Lawsuit. The allegations in the Rowe Lawsuit are similar to the allegations in the Parshall Lawsuit.

At this time, it is not possible to predict the outcome of the proceeding in the Rowe Lawsuit or its impact on Xenith, the Company, or the Pending Merger. The Company believes that the claims in the Rowe Lawsuit are without merit and has been advised that Xenith and the Xenith board of directors also believe that the claims in the Rowe Lawsuit are without merit and that Xenith and the Xenith board of directors intend to defend vigorously against them.

In addition to the Rowe Lawsuit, in the ordinary course of its operations, the Company and its subsidiaries are parties to various other legal proceedings. Based on the information presently available, and after consultation with legal counsel, management believes that the ultimate outcome in such other legal proceedings, in the aggregate, will not have a material adverse effect on the business or the financial condition or results of operations of the Company.

ITEM 1A – RISK FACTORS

There have been no material changes with respect to the risk factors disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016 and the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2017.

ITEM 2 – UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

(a) Sales of Unregistered Securities – None.

(b) Use of Proceeds – Not Applicable.

(c) Issuer Purchases of Securities - None.

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ITEM 6 – EXHIBITS

The following exhibits are filed as part of this Form 10-Q and this list includes the Exhibit Index:

Exhibit No.	Description
2.01	Agreement and Plan of Reorganization, dated as of May 19, 2017, by and between Union Bankshares Corporation and Xenith Bankshares, Inc. (incorporated by reference to Exhibit 2.1 to Current Report on Form 8-K filed on May 23, 2017).
3.01	Articles of Incorporation of Union Bankshares Corporation, as amended April 25, 2014 (incorporated by reference to Exhibit 3.1 to Current Report on Form 8-K filed on April 29, 2014).
3.02	Bylaws of Union Bankshares Corporation, as amended January 21, 2017 (incorporated by reference to Exhibit 3.02 to Annual Report on Form 10-K filed on February 28, 2017).
10.24	Union Bankshares Corporation Executive Severance Plan (as amended and restated effective January 1, 2018) (incorporated by reference to Exhibit 10.24 to Current Report on Form 8-K filed September 26, 2017).
10.32	Severance Agreement and Release of Claims, dated October 24, 2017, by and between Union Bankshares Corporation, Union Bank & Trust and Elizabeth M. Bentley (incorporated by reference to Exhibit 10.32 to Current Report on Form 8-K filed October 24, 2017).
15.01	Letter regarding unaudited interim financial information.
31.01	Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.02	Certification of Principal Financial and Accounting Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.01	Certification of Principal Executive Officer and Principal Financial and Accounting Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.00	Interactive data files formatted in eXtensible Business Reporting Language for the quarter ended September 30, 2017 pursuant to Rule 405 of Regulation S-T (1): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Income (unaudited), (iii) the Consolidated Statements of Comprehensive Income (unaudited), (iv) the Consolidated Statements of Changes in Stockholders’ Equity (unaudited), (v) the Consolidated Statements of Cash Flows (unaudited) and (vi) the Notes to the Consolidated Financial Statements (unaudited).

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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.

	Union Bankshares Corporation
	(Registrant)
Date: November 7, 2017	By:	/s/ John C. Asbury
		John C. Asbury,
		President and Chief Executive Officer
		(principal executive officer)
Date: November 7, 2017	By:	/s/ Robert M. Gorman
		Robert M. Gorman,
		Executive Vice President and Chief Financial Officer
		(principal financial and accounting officer)

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EX-15.01

Exhibit 15.01

The Stockholders and Board of Directors of Union Bankshares Corporation

We are aware of the incorporation by reference in the Registration Statements (Form S-3 No. 333-198710, Form S-3 No. 333-156946, Form S-3 No. 333-102012, Form S-3 No. 333-81199, Form S-4 No. 333-220005, Form S-8 No. 333-203580, Form S-8 No. 333-193364, Form S-8 No. 333-175808, Form S-8 No. 333-113842 and Form S-8 No. 333-113839) of Union Bankshares Corporation of our report dated November 7, 2017 relating to the unaudited consolidated interim financial statements of Union Bankshares Corporation that are included in its Form 10-Q for the quarter ended September 30, 2017.

Under Rule 436(c) of the 1933 Act, our report is not a part of the registration statement prepared or certified by accountants within the meaning of Section 7 or 11 of the 1933 Act.

/s/ Ernst & Young LLP

Richmond, Virginia

November 7, 2017

EX-31.01

Exhibit 31.01

CERTIFICATIONS

I, John C. Asbury, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Union Bankshares Corporation;

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 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: November 7, 2017

/s/ John C. Asbury

John C. Asbury,

President and Chief Executive Officer

A signed original of this written statement required by Section 302 of the Sarbanes-OxleyAct of 2002 has been provided to Union Bankshares Corporation and will be retained by Union Bankshares Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

EX-31.02

Exhibit 31.02

CERTIFICATIONS

I, Robert M. Gorman, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Union Bankshares Corporation;

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 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: November 7, 2017

/s/ Robert M. Gorman

Robert M. Gorman,

Executive Vice President and Chief Financial Officer

A signed original of this written statement required by Section 302 of the Sarbanes-OxleyAct of 2002 has been provided to Union Bankshares Corporation and will be retained by Union Bankshares Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.01

Exhibit 32.01

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 of Union Bankshares Corporation (the “Company”) on Form 10-Q for the quarter ended September 30, 2017 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned Chief Executive Officer and Chief Financial Officer of the Company hereby certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002 that based on their knowledge and belief: 1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and 2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of and for the periods covered in the Report.

/s/ John C. Asbury

John C. Asbury, President and Chief Executive Officer

November 7, 2017

/s/ Robert M. Gorman

Robert M. Gorman, Executive Vice President and Chief Financial Officer

November 7, 2017

A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to Union Bankshares Corporation and will be retained by Union Bankshares Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2017	Nov. 01, 2017
Document and Entity Information [Abstract]
Entity Registrant Name	Union Bankshares Corp
Entity Central Index Key	0000883948
Document Type	10-Q
Document Period End Date	Sep. 30, 2017
Amendment Flag	false
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q3
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		43,732,082

XML

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Cash and cash equivalents:
Cash and due from banks	$ 115,776	$ 120,758
Interest-bearing deposits in other banks	60,294	58,030
Federal funds sold	891	449
Total cash and cash equivalents	176,961	179,237
Securities available for sale, at fair value	968,361	946,764
Securities held to maturity, at carrying value	204,801	201,526
Restricted stock, at cost	68,441	60,782
Loans held for sale, at fair value	30,896	36,487
Loans held for investment, net of deferred fees and costs	6,898,729	6,307,060
Less allowance for loan losses	37,162	37,192
Net loans held for investment	6,861,567	6,269,868
Premises and equipment, net	120,808	122,027
Other real estate owned, net of valuation allowance	8,764	10,084
Goodwill	298,191	298,191
Amortizable intangibles, net	16,017	20,602
Bank owned life insurance	181,451	179,318
Other assets	93,178	101,907
Total assets	9,029,436	8,426,793
LIABILITIES
Noninterest-bearing demand deposits	1,535,149	1,393,625
Interest-bearing deposits	5,346,677	4,985,864
Total deposits	6,881,826	6,379,489
Securities sold under agreements to repurchase	43,337	59,281
Other short-term borrowings	574,000	517,500
Long-term borrowings	434,750	413,308
Other liabilities	54,152	56,183
Total liabilities	7,988,065	7,425,761
Commitments and contingencies
STOCKHOLDERS' EQUITY
Common stock, $1.33 par value, shares authorized 100,000,000; issued and outstanding, 43,729,229 shares and 43,609,317 shares, respectively.	57,708	57,506
Additional paid-in capital	608,884	605,397
Retained earnings	373,468	341,938
Accumulated other comprehensive income	1,311	(3,809)
Total stockholders' equity	1,041,371	1,001,032
Total liabilities and stockholders' equity	$ 9,029,436	$ 8,426,793

XML

CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Sep. 30, 2017	Dec. 31, 2016
Statement of Financial Position [Abstract]
Common stock, par value (in usd per share)	$ 1.33	$ 1.33
Common stock, shares authorized (in shares)	100,000,000	100,000,000
Common stock, shares issued (in shares)	43,729,229	43,609,317
Common stock, shares outstanding (in shares)	43,729,229	43,609,317

XML

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Interest and dividend income:
Interest and fees on loans	$ 75,948	$ 66,190	$ 216,644	$ 193,884
Interest on deposits in other banks	181	65	367	178
Interest and dividends on securities:
Taxable	5,175	4,732	15,081	13,558
Nontaxable	3,546	3,446	10,620	10,344
Total interest and dividend income	84,850	74,433	242,712	217,964
Interest expense:
Interest on deposits	7,234	4,552	18,410	12,945
Interest on short-term borrowings	1,871	765	4,221	2,098
Interest on long-term borrowings	4,547	2,088	13,316	6,386
Total interest expense	13,652	7,405	35,947	21,429
Net interest income	71,198	67,028	206,765	196,535
Provision for credit losses	3,050	2,472	7,345	7,376
Net interest income after provision for credit losses	68,148	64,556	199,420	189,159
Noninterest income:
Service charges on deposit accounts	5,153	4,965	14,945	14,454
Other service charges and fees	4,529	4,397	13,575	12,971
Fiduciary and asset management fees	2,794	2,844	8,313	7,315
Mortgage banking income, net	2,305	3,207	7,123	8,324
Gains on securities transactions, net	184	0	782	145
Bank owned life insurance income	1,377	1,389	4,837	4,122
Loan-related interest rate swap fees	416	1,303	2,627	3,056
Other operating income	778	845	2,228	2,470
Total noninterest income	17,536	18,950	54,430	52,857
Noninterest expenses:
Salaries and benefits	29,769	30,493	92,499	87,061
Occupancy expenses	4,939	4,841	14,560	14,627
Furniture and equipment expenses	2,559	2,635	7,882	7,867
Printing, postage, and supplies	1,154	1,147	3,710	3,566
Communications expense	798	948	2,580	2,964
Technology and data processing	4,232	3,917	12,059	11,340
Professional services	1,985	1,895	5,734	6,432
Marketing and advertising expense	1,944	1,975	5,963	5,838
FDIC assessment premiums and other insurance	1,141	1,262	2,793	4,003
Other taxes	2,022	639	6,065	3,864
Loan-related expenses	1,349	1,531	3,959	3,638
OREO and credit-related expenses	1,139	503	2,023	1,965
Amortization of intangible assets	1,480	1,843	4,661	5,468
Training and other personnel costs	887	863	2,900	2,512
Merger-related costs	732	0	3,476	0
Other expenses	1,366	2,421	3,957	5,291
Total noninterest expenses	57,496	56,913	174,821	166,436
Income before income taxes	28,188	26,593	79,029	75,580
Income tax expense	7,530	6,192	21,292	18,881
Net income	$ 20,658	$ 20,401	$ 57,737	$ 56,699
Basic earnings per common share (in usd per share)	$ 0.47	$ 0.47	$ 1.32	$ 1.29
Diluted earnings per common share (in usd per share)	0.47	0.47	1.32	1.29
Dividends declared per common share (in usd per share)	$ 0.20	$ 0.19	$ 0.6	$ 0.57
Basic weighted average number of common shares outstanding (in shares)	43,706,635	43,565,937	43,685,045	43,853,548
Diluted weighted average number of common shares outstanding (in shares)	43,792,058	43,754,915	43,767,502	43,967,725

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Statement of Comprehensive Income [Abstract]
Net income	$ 20,658	$ 20,401	$ 57,737	$ 56,699
Cash flow hedges:
Change in fair value of cash flow hedges	41	(78)	(766)	(3,766)
Reclassification adjustment for losses (gains) included in net income (net of tax, $102 and $83 for the three months and $370 and $233 for the nine months ended September 30, 2017 and 2016, respectively)	189	154	688	433
AFS securities:
Unrealized holding gains (losses) arising during period (net of tax, $1,470 and $604 for the three months and $3,195 and $4,227 for the nine months ended September 30, 2017 and 2016, respectively)	(2,729)	1,121	5,935	7,851
Reclassification adjustment for losses (gains) included in net income (net of tax, $64 and $0 for the three months and $274 and $51 for the nine months ended September 30, 2017 and 2016, respectively)	(119)	0	(508)	(95)
HTM securities:
Reclassification adjustment for accretion of unrealized gain on AFS securities transferred to HTM (net of tax, $88 and $128 for the three months and $273 and $439 for the nine months ended September 30, 2017 and 2016, respectively)	(163)	(237)	(507)	(816)
Bank owned life insurance:
Reclassification adjustment for losses included in net income	84	0	278	0
Net current period other comprehensive income (loss)	(2,697)	960	5,120	3,607
Comprehensive income	$ 17,961	$ 21,361	$ 62,857	$ 60,306

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED) (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Statement of Comprehensive Income [Abstract]
Tax expense (benefit) related to reclassification adjustment for losses included in net income	$ (102)	$ (83)	$ (370)	$ (233)
Tax expense (benefit) related to unrealized holding (losses) gains arising during period	(1,470)	604	3,195	4,227
Tax expense (benefit) related to (gains) losses on the sale of securities	64	0	274	51
Tax expense (benefit) related to (gains) losses for AFS securities transferred to HTM	$ 88	$ 128	$ 273	$ 439

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CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED) - USD ($) $ in Thousands	Total	Common Stock	Additional Paid-In Capital	Retained Earnings	Accumulated Other Comprehensive Income (Loss)
Beginning balance at Dec. 31, 2015	$ 995,367	$ 59,159	$ 631,822	$ 298,134	$ 6,252
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	56,699			56,699
Other comprehensive income, (net of taxes)	3,607				3,607
Issuance of common stock in regard to acquisition	453	23	430
Dividends on common stock	(24,957)			(24,957)
Stock purchased under stock repurchase plan	(33,176)	(1,876)	(31,300)
Issuance of common stock under Equity Compensation Plans	753	72	681
Issuance of common stock for services rendered	379	19	360
Vesting of restricted stock, net of shares held for taxes, under Equity Compensation Plans	(445)	47	(492)
Stock-based compensation expense	2,284		2,284
Ending balance at Sep. 30, 2016	1,000,964	57,444	603,785	329,876	9,859
Beginning balance at Jun. 30, 2016					8,899
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	20,401
Other comprehensive income, (net of taxes)	960
Ending balance at Sep. 30, 2016	1,000,964	57,444	603,785	329,876	9,859
Beginning balance at Dec. 31, 2016	1,001,032	57,506	605,397	341,938	(3,809)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	57,737			57,737
Other comprehensive income, (net of taxes)	5,120				5,120
Issuance of common stock in regard to acquisition	0
Dividends on common stock	(26,207)			(26,207)
Issuance of common stock under Equity Compensation Plans	969	78	891
Issuance of common stock for services rendered	561	22	539
Vesting of restricted stock, net of shares held for taxes, under Equity Compensation Plans	(1,313)	102	(1,415)
Stock-based compensation expense	3,472		3,472
Ending balance at Sep. 30, 2017	1,041,371	57,708	608,884	373,468	1,311
Beginning balance at Jun. 30, 2017					4,008
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	20,658
Other comprehensive income, (net of taxes)	(2,697)
Ending balance at Sep. 30, 2017	$ 1,041,371	$ 57,708	$ 608,884	$ 373,468	$ 1,311

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CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED) (Parenthetical) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Statement of Stockholders' Equity [Abstract]
Other comprehensive income (loss), tax	$ 3,018	$ 3,970
Issuance of common stock, acquisition, shares		17,232
Dividends on common stock, per share (in usd per share)	$ 0.6	$ 0.57
Stock purchased under stock repurchase plan, shares		1,411,131
Issuance of common stock under Equity Compensation Plan , shares	58,421	54,044
Issuance of common stock for services rendered, shares	16,529	14,576
Vesting of restricted stock under Equity Compensation Plans, shares	76,505	35,515

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CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Operating activities:
Net income	$ 57,737	$ 56,699
Adjustments to reconcile net income to net cash and cash equivalents provided by (used in) operating activities:
Depreciation of premises and equipment	8,307	7,617
Writedown of OREO	845	879
Amortization, net	10,500	10,241
Amortization (accretion) related to acquisition, net	(158)	1,400
Provision for credit losses	7,345	7,376
Gains on securities transactions, net	(782)	(145)
BOLI income	(3,999)	(4,122)
Decrease (increase) in loans held for sale, net	5,591	(10,784)
Losses (gains) on sales of other real estate owned, net	32	(278)
Losses on sales of premises, net	51	97
Stock-based compensation expenses	3,472	2,284
Issuance of common stock for services	561	379
Net decrease (increase) in other assets	4,952	(11,169)
Net increase in other liabilities	909	11,192
Net cash and cash equivalents provided by (used in) operating activities	95,363	71,666
Investing activities:
Purchases of securities available for sale and restricted stock	(205,965)	(159,863)
Purchases of securities held to maturity	(7,836)	0
Proceeds from sales of securities available for sale and restricted stock	91,911	18,272
Proceeds from maturities, calls and paydowns of securities available for sale	88,675	83,942
Proceeds from maturities, calls and paydowns of securities held to maturity	818	1,841
Net increase in loans held for investment	(594,967)	(479,346)
Net increase in premises and equipment	(7,139)	(5,102)
Proceeds from BOLI settlements	2,497	0
Proceeds from sales of other real estate owned	1,028	4,982
Cash paid in acquisition	0	(4,077)
Cash acquired in acquisitions	0	207
Net cash and cash equivalents provided by (used in) investing activities	(630,978)	(539,144)
Financing activities:
Net increase in noninterest-bearing deposits	141,524	69,331
Net increase in interest-bearing deposits	360,813	225,239
Net increase in short-term borrowings	40,556	276,748
Cash paid for contingent consideration	(3,003)	0
Proceeds from issuance of long-term debt	20,000	0
Repayments of long-term debt	0	(32,500)
Cash dividends paid - common stock	(26,207)	(24,957)
Repurchase of common stock	0	(33,176)
Issuance of common stock	969	753
Vesting of restricted stock, net of shares held for taxes	(1,313)	(445)
Net cash and cash equivalents provided by (used in) financing activities	533,339	480,993
Increase (decrease) in cash and cash equivalents	(2,276)	13,515
Cash and cash equivalents at beginning of the period	179,237	142,660
Cash and cash equivalents at end of the period	176,961	156,175
Cash payments for:
Interest	33,947	21,812
Income taxes	19,600	19,800
Supplemental schedule of noncash investing and financing activities
Transfers between loans and other real estate owned	585	865
Issuance of common stock in exchange for net assets in acquisition	$ 0	$ 453

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ACCOUNTING POLICIES

9 Months Ended

Sep. 30, 2017

Accounting Policies [Abstract]

ACCOUNTING POLICIES

ACCOUNTING POLICIES

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. Significant inter-company accounts and transactions have been eliminated in consolidation.

The unaudited consolidated financial statements have been prepared in accordance with U.S. GAAP for interim financial information and follow general practice within the banking industry. Accordingly, the unaudited consolidated financial statements do not include all the information and footnotes required by U.S. GAAP for complete financial statements; however, in the opinion of management, all adjustments (consisting only of normal recurring accruals) necessary for a fair presentation of the results of the interim periods presented have been made. The results of operations for the interim periods are not necessarily indicative of the results that may be expected for the full year.

These financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s 2016 Form 10-K. Certain prior period amounts have been reclassified to conform to current period presentation.

Loans

The Company originates commercial and consumer loans to customers. A substantial portion of the loan portfolio is represented by commercial and residential real estate loans (including acquisition and development loans and residential construction loans) throughout its market area. The ability of the Company’s debtors to honor their contracts on such loans is dependent upon the real estate and general economic conditions in those markets, as well as other factors.

Loans that management has the intent and ability to hold for the foreseeable future or until maturity or pay-off generally are reported at their outstanding unpaid principal balances adjusted for any charge-offs, the allowance for loan losses, and any deferred fees or costs on originated loans. Interest income is accrued on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, are deferred and recognized as an adjustment of the related loan yield using the interest method.

Below is a summary of the Company's loan segments:

Construction and Land Development – construction loans generally made to commercial and residential builders for specific construction projects. The successful repayment of these types of loans is generally dependent upon (a) a commitment for permanent financing from the Company, or (b) from the sale of the constructed property. These loans carry more risk than both types of commercial real estate term loans due to the dynamics of construction projects, changes in interest rates, the long-term financing market, and state and local government regulations. As in commercial real estate term lending, the Company manages risk by using specific underwriting policies and procedures for these types of loans and by avoiding excessive concentrations to any one business or industry.

Also, included in this category are loans generally made to residential home builders to support their lot and home inventory needs. Repayment relies upon the successful performance of the underlying residential real estate project. This type of lending carries a higher level of risk as compared to other commercial lending. This class of lending manages risks related to residential real estate market conditions, a functioning first and secondary market in which to sell residential properties, and the borrower’s ability to manage inventory and run projects. The Company manages this risk by lending to experienced builders and developers by using specific underwriting policies and procedures for these types of loans and by avoiding excessive concentrations with any particular customer or geographic region.

Commercial Real Estate – Owner Occupied – term loans made to support owner occupied real estate properties that rely upon the successful operation of the business occupying the property for repayment. General market conditions and economic activity may affect these types of loans. In addition to using specific underwriting policies and procedures for these types of loans, the Company manages risk by avoiding concentrations to any one business or industry.

Commercial Real Estate – Non-Owner Occupied – term loans typically made to borrowers to support income producing properties that rely upon the successful operation of the property for repayment. General market conditions and economic activity may impact the performance of these types of loans. In addition to using specific underwriting policies and procedures for these types of loans, the Company manages risk by diversifying the lending to various lines of businesses, such as retail, office, office warehouse, and hotel as well as avoiding concentrations to any one business or industry.

Residential 1-4 Family – loans generally made to both commercial and residential borrowers. Residential 1-4 Family loan portfolios carry risks associated with the creditworthiness of the borrower or the tenant and changes in loan-to-value ratios. The Company manages these risks through policies and procedures such as limiting loan-to-value ratios at origination, experienced underwriting, requiring standards for appraisers, and not making subprime loans.

Multifamily Real Estate – loans made to real estate investors to support permanent financing for multifamily residential income producing properties that rely on the successful operation of the property for repayment. This management mainly involves property maintenance and collection of rents due from tenants. This type of lending carries a lower level of risk as compared to other commercial lending. In addition, underwriting requirements for multifamily properties are stricter than for other non-owner-occupied property types. The Company manages this risk by avoiding concentrations with any particular customer.

Commercial & Industrial – loans generally made to support the Company’s borrowers’ need for equipment/vehicle purchases and short-term or seasonal cash flow needs. Repayment relies upon the successful operation of the business. This type of lending carries a lower level of commercial credit risk as compared to other commercial lending. The Company manages this risk by using general underwriting policies and procedures for these types of loans and by avoiding concentrations to any one business or industry.

HELOC – the consumer HELOC portfolio carries risks associated with the creditworthiness of the borrower and changes in loan-to-value ratios. The Company manages these risks through policies and procedures such as limiting loan-to-value ratios at origination, using experienced underwriting, requiring standards for appraisers, and not making subprime loans.

Auto – the consumer indirect auto lending portfolio generally carries certain risks associated with the values of the collateral that management must mitigate. The Company focuses its indirect auto lending on one to two year old used vehicles where substantial depreciation has already occurred thereby minimizing the risk of significant loss of collateral values in the future. This type of lending places reliance on computer-based loan approval systems to supplement other underwriting standards.

Consumer and all other – portfolios carry risks associated with the creditworthiness of the borrower and changes in the economic environment. The Company manages these risks through policies and procedures such as experienced underwriting, maximum debt to income ratios, and minimum borrower credit scores. Also included in this category are loans that generally support small business lines of credit and agricultural lending, neither of which are a material source of business for the Company.

Affordable Housing Entities

The Company invests in private investment funds that make equity investments in multifamily affordable housing properties that provide affordable housing tax credits for these investments. The activities of these entities are financed with a combination of invested equity capital and debt. For the three and nine months ended September 30, 2017, the Company recognized amortization of $229,000 and $643,000, respectively, and tax credits of $240,000 and $724,000, respectively, associated with these investments within “Income tax expense” on the Company’s Consolidated Statements of Income. For the three and nine months ended September 30, 2016, the Company recognized amortization of $185,000 and $445,000, respectively, and tax credits of $265,000 and $685,000, respectively. The carrying value of the Company’s investments in these qualified affordable housing projects was $9.1 million and $9.9 million as of September 30, 2017 and December 31, 2016, respectively. At September 30, 2017 and December 31, 2016, the Company's recorded liability totaled $4.0 million and $7.1 million, respectively, for the related unfunded commitments, which are expected to be paid from the second half of 2017 through 2019.

Adoption of New Accounting Standards

In March 2016, the FASB issued ASU No. 2016-09, “Compensation - Stock Compensation (Topic 718): Improvements to

Employee Share-Based Payment Accounting.” This ASU simplifies several aspects of the accounting for employee share based payment transactions, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. The Company adopted this standard in the first quarter of 2017. The adoption of ASU 2016-09 did not have a material impact on the Company’s consolidated financial statements.

Recent Accounting Pronouncements

In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers: Topic 606.” This ASU revised guidance for the recognition, measurement, and disclosure of revenue from contracts with customers. The original guidance has been amended through subsequent accounting standard updates that resulted in technical corrections, improvements, and a one-year deferral of the effective date to January 1, 2018. The guidance, as amended, is applicable to all entities and, once effective, will replace significant portions of existing industry and transaction-specific revenue recognition rules with a more principles-based recognition model. Most revenue associated with financial instruments, including interest income, loan origination fees, and credit card fees, is outside the scope of the guidance. Gains and losses on investment securities, derivatives, and sales of financial instruments are similarly excluded from the scope. Entities can elect to adopt the guidance either on a full or modified retrospective basis. Full retrospective adoption will require a cumulative effect adjustment to retained earnings as of the beginning of the earliest comparative period presented. Modified retrospective adoption will require a cumulative effect adjustment to retained earnings as of the beginning of the reporting period in which the entity first applies the new guidance. The Company plans to adopt this guidance on the effective date, January 1, 2018 via the modified retrospective approach. The Company performed its assessment of the adoption of this ASU and the related subsequent technical corrections issued. Based on the completed contracts reviewed thus far, the adoption of this accounting guidance is not expected to have a material impact on the Company's consolidated financial statements.

In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842).” This ASU requires lessees to put most leases on their balance sheets, but recognize expenses in the income statement in a manner similar to today’s accounting. The guidance also eliminates the real estate-specific provisions and changes the guidance on sale-leaseback transactions, initial direct costs, and lease executory costs for all entities. For lessors, the standard modifies the classification criteria and the accounting for sales-type and direct financing leases. This ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted. The Company is currently working to identify the complete lease population, including potential embedded leases. The adoption of this standard is expected to result in additional assets and liabilities, as the Company will be required to recognize operating leases on the Consolidated Balance Sheet. Other implementation matters to be addressed include, but are not limited to, the determination of effects on the financial and capital ratios and the quantification of the impacts that this accounting guidance will have on the Company's consolidated financial statements.

In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.”This ASU updates the existing guidance to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. The amendment replaces the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and required consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The amendment is effective for fiscal years beginning after December 15, 2019. The Company is currently assessing the impact ASU No. 2016-13 will have on its consolidated financial statements.

In January 2017, the FASB issued ASU No. 2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business.” This ASU clarifies the definition of a business that appears in ASC 805, Business Combinations. Amendments narrow the definition and provide a framework for making judgments whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The amendment to the Business Combinations Topic is intended to address concerns that the existing definition of a business has been applied too broadly and has resulted in many transactions being recorded as business acquisitions that in substance are more akin to asset acquisitions. ASU 2017-01 is effective for annual periods beginning after December 15, 2017, including interim periods within those annual periods. The Company has concluded the adoption of ASU 2017-01 will not have a material impact on its consolidated financial statements.

In January 2017, the FASB issued ASU No. 2017-03, “Accounting Changes and Error Corrections (Topic 250) and Investments—Equity Method and Joint Ventures (Topic 323): Amendments to SEC Paragraphs Pursuant to Staff Announcements at the September 22, 2016 and November 17, 2016 EITF Meetings (SEC Update).” This ASU incorporates into the Accounting Standards Codification recent SEC guidance about disclosing, under SEC SAB Topic 11.M, the effect on financial statements of adopting the revenue, leases, and credit losses standards. ASU 2017-03 is effective upon issuance. The Company has concluded the adoption of ASU 2017-03 will not have a material impact on its consolidated financial statements.

In January 2017, the FASB issued ASU No. 2017-04, “Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment.” This ASU simplifies accounting for goodwill impairments by eliminating step two (the implied fair value to carrying value of goodwill) from the existing goodwill impairment test. A goodwill impairment will now be the amount by which a reporting unit's carrying value exceeds its fair value, not to exceed the carrying amount of the goodwill. The effective date and transition requirements for the technical corrections will be effective for the Company for reporting periods beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company has concluded the adoption of ASU 2017-04 will not have a material impact on its consolidated financial statements.

In February 2017, the FASB issued ASU No. 2017-05, “Other Income—Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets.” This ASU conforms the derecognition guidance on nonfinancial assets with the model for transactions in the new revenue standard. The amendments will be effective for the Company for reporting periods beginning after December 15, 2018. The Company concluded that ASU 2017-05 will not have a material impact on its consolidated financial statements.

In March 2017, the FASB issued ASU No. 2017-08, “Receivables—Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities.”This ASU focuses on the amortization period for certain purchased callable debt securities held at a premium. The amendments shorten the amortization period for the premium to the earliest call date. The amendments will be effective for the Company for interim and annual periods beginning after December 15, 2018. The Company has concluded the adoption of ASU 2017-08 will not have a material impact on its consolidated financial statements.

In May 2017, the FASB issued ASU No. 2017-09, “Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting.”This ASU relates to changes in the terms or conditions of a share-based payment award. The amendments provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. The amendments will be effective for the Company for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted. The Company has concluded the adoption of ASU 2017-09 will not have a material impact on its consolidated 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 ASU relates to any entity that elects to apply hedge accounting in accordance with current GAAP. The amendment simplifies the application of the hedge accounting guidance and improves the financial reporting of hedging relationships to better portray the economic results of an entity’s risk management activities in its financial statements. The amendments will be effective for the Company for annual periods, and interim periods within those annual periods, beginning after December 15, 2018. Early adoption is permitted. The Company is currently assessing the impact ASU 2017-12 will have on its consolidated financial statements.

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SECURITIES

9 Months Ended

Sep. 30, 2017

Investments, Debt and Equity Securities [Abstract]

SECURITIES

SECURITIES

Available for Sale

The amortized cost, gross unrealized gains and losses, and estimated fair values of securities available for sale as of September 30, 2017 and December 31, 2016 are summarized as follows (dollars in thousands):

	Amortized		Gross Unrealized					Estimated
	Cost		Gains		(Losses)			Fair Value
September 30, 2017
Obligations of states and political subdivisions	$	285,921	$	7,582	$	(1,304	)	$	292,199
Corporate bonds	114,997		1,241		(816		)	115,422
Mortgage-backed securities	546,038		4,119		(3,253		)	546,904
Other securities	13,890		—		(54		)	13,836
Total available for sale securities	$	960,846	$	12,942	$	(5,427	)	$	968,361
December 31, 2016
Obligations of states and political subdivisions	$	274,007	$	4,962	$	(3,079	)	$	275,890
Corporate bonds	123,674		892		(2,786		)	121,780
Mortgage-backed securities	536,031		4,626		(5,371		)	535,286
Other securities	13,885		—		(77		)	13,808
Total available for sale securities	$	947,597	$	10,480	$	(11,313	)	$	946,764

The following table shows the gross unrealized losses and fair value (dollars in thousands) of the Company’s available for sale securities with unrealized losses that are not deemed to be other-than-temporarily impaired as of September 30, 2017 and December 31, 2016. These are aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position.

	Less than 12 months					More than 12 months					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
September 30, 2017
Obligations of states and political subdivisions	$	55,319	$	(700	)	$	9,338	$	(604	)	$	64,657	$	(1,304	)
Mortgage-backed securities	283,466		(2,708		)	42,481		(545		)	325,947		(3,253		)
Corporate bonds and other securities	21,128		(353		)	32,674		(517		)	53,802		(870		)
Total available for sale securities	$	359,913	$	(3,761	)	$	84,493	$	(1,666	)	$	444,406	$	(5,427	)
December 31, 2016
Obligations of states and political subdivisions	$	108,440	$	(3,007	)	$	588	$	(72	)	$	109,028	$	(3,079	)
Mortgage-backed securities	316,469		(4,979		)	42,096		(392		)	358,565		(5,371		)
Corporate bonds and other securities	47,388		(1,537		)	40,468		(1,326		)	87,856		(2,863		)
Total available for sale securities	$	472,297	$	(9,523	)	$	83,152	$	(1,790	)	$	555,449	$	(11,313	)

As of September 30, 2017, there were $84.5 million, or 36 issues, of individual available for sale securities that had been in a continuous loss position for more than 12 months. These securities had an unrealized loss of $1.7 million and consisted of municipal obligations, mortgage-backed securities, and corporate bonds. As of December 31, 2016, there were $83.2 million, or 30 issues, of individual securities that had been in a continuous loss position for more than 12 months. These securities had an unrealized loss of $1.8 million and consisted of municipal obligations, mortgage-backed securities, and corporate bonds. The Company has determined that these securities are temporarily impaired as of September 30, 2017 and December 31, 2016 for the reasons set out below:

Mortgage-backed securities. This category’s unrealized losses are primarily the result of interest rate fluctuations. Because the decline in market value is attributable to changes in interest rates and not credit quality, the Company does not intend to sell the investments, and it is not likely that the Company will be required to sell the investments before recovery of their amortized cost basis, which may be maturity, the Company does not consider those investments to be other-than-temporarily impaired. Also, the majority of the Company’s mortgage-backed securities are agency-backed securities, which have a government guarantee.

Obligations of state and political subdivisions. This category’s unrealized losses are primarily the result of interest rate fluctuations and also a certain few ratings downgrades brought about by the impact of the credit crisis on states and political subdivisions. The contractual terms of the investments do not permit the issuer to settle the securities at a price less than the cost basis of each investment. Because the Company does not intend to sell any of the investments and the accounting standard of “more likely than not” has not been met for the Company to be required to sell any of the investments before recovery of its amortized cost basis, which may be maturity, the Company does not consider these investments to be other-than-temporarily impaired.

Corporate bonds. The Company’s unrealized losses in corporate debt securities are related to both interest rate fluctuations and ratings downgrades for a limited number of securities. The majority of the securities remain investment grade and the Company’s analysis did not indicate the existence of a credit loss. The contractual terms of the investments do not permit the issuer to settle the securities at a price less than the cost basis of each investment. Because the Company does not intend to sell any of the investments and the accounting standard of “more likely than not” has not been met for the Company to be required to sell any of the investments before recovery of its amortized cost basis, which may be maturity, the Company does not consider these investments to be other-than-temporarily impaired.

The following table presents the amortized cost and estimated fair value of available for sale securities as of September 30, 2017 and December 31, 2016, by contractual maturity (dollars in thousands). Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	September 30, 2017				December 31, 2016
	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
Due in one year or less	$	23,387	$	23,510	$	21,403	$	21,517
Due after one year through five years	128,261		130,107		108,198		109,778
Due after five years through ten years	267,492		271,830		300,552		301,888
Due after ten years	541,706		542,914		517,444		513,581
Total securities available for sale	$	960,846	$	968,361	$	947,597	$	946,764

For information regarding the estimated fair value of available for sale securities which were pledged to secure public deposits, repurchase agreements, and for other purposes as permitted or required by law as of September 30, 2017 and December 31, 2016, see Note 6 “Commitments and Contingencies.”

Held to Maturity

The Company reports securities held to maturity on the Consolidated Balance Sheets at carrying value. Carrying value is amortized cost which includes any unamortized unrealized gains and losses recognized in accumulated other comprehensive income prior to reclassifying the securities from securities available for sale to securities held to maturity. Investment securities transferred into the held to maturity category from the available for sale category are recorded at fair value at the date of transfer. The unrealized holding gain or loss at the date of transfer is retained in accumulated other comprehensive income and in the carrying value of the securities held to maturity. Such unrealized gains or losses are accreted over the remaining life of the security with no impact on future net income.

The carrying value, gross unrealized gains and losses, and estimated fair values of securities held to maturity as of September 30, 2017 and December 31, 2016 are summarized as follows (dollars in thousands):

	Carrying		Gross Unrealized					Estimated
	Value (1)		Gains		(Losses)			Fair Value
September 30, 2017
Obligations of states and political subdivisions	$	204,801	$	5,111	$	(77	)	$	209,835
December 31, 2016
Obligations of states and political subdivisions	$	201,526	$	1,617	$	(828	)	$	202,315

(1) The carrying value includes $4.0 million as of September 30, 2017 and $5.2 million as of December 31, 2016 of net unrealized gains present at the time of transfer from available for sale securities, net of any accretion.

The following table shows the gross unrealized losses and fair value (dollars in thousands) of the Company’s held to maturity securities with unrealized losses that are not deemed to be other-than-temporarily impaired as of September 30, 2017 and December 31, 2016. These are aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position.

	Less than 12 months					More than 12 months					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
September 30, 2017
Obligations of states and political subdivisions	$	5,130	$	(53	)	$	638	$	(24	)	$	5,768	$	(77	)
December 31, 2016
Obligations of states and political subdivisions	$	92,841	$	(747	)	$	648	$	(81	)	$	93,489	$	(828	)

As of September 30, 2017, there was $638,000, or one issue, of an individual held to maturity security that had been in a continuous loss position for more than 12 months and had an unrealized loss of $24,000. As of December 31, 2016, there was $648,000, or one issue, of an individual held to maturity security that had been in a continuous loss position for more than 12 months and had an unrealized loss of $81,000. This security is a municipal bond with minimal credit exposure and is credit enhanced with a guarantee from the local school board. For this reason, the Company has determined that this security in a loss position is temporarily impaired as of September 30, 2017 and December 31, 2016. Because the Company does not intend to sell this investment and the accounting standard of “more likely than not” has not been met for the Company to be required to sell the investment before recovery of its amortized cost basis, which may be maturity, the Company does not consider this investment to be other-than-temporarily impaired.

The following table presents the amortized cost and estimated fair value of held to maturity securities as of September 30, 2017 and December 31, 2016, by contractual maturity (dollars in thousands). Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	September 30, 2017				December 31, 2016
	Carrying Value (1)		Estimated Fair Value		Carrying Value (1)		Estimated Fair Value
Due in one year or less	$	5,879	$	5,902	$	4,403	$	4,440
Due after one year through five years	41,196		41,959		28,383		28,763
Due after five years through ten years	65,893		67,444		51,730		51,522
Due after ten years	91,833		94,530		117,010		117,590
Total securities held to maturity	$	204,801	$	209,835	$	201,526	$	202,315

(1)The carrying value includes $4.0 million as of September 30, 2017 and $5.2 million as of December 31, 2016 of net unrealized gains present at the time of transfer from available for sale securities, net of any accretion.

For information regarding the estimated fair value of held to maturity securities which were pledged to secure public deposits as permitted or required by law as of September 30, 2017 and December 31, 2016, see Note 6 “Commitments and Contingencies.”

Restricted Stock, at cost

Due to restrictions placed upon the Bank’s common stock investment in the Federal Reserve Bank and FHLB, these securities have been classified as restricted equity securities and carried at cost. These restricted securities are not subject to the investment security classifications and are included as a separate line item on the Company’s Consolidated Balance Sheets. At September 30, 2017 and December 31, 2016, the FHLB required the Bank to maintain stock in an amount equal to 4.25% of outstanding borrowings and a specific percentage of the Bank’s total assets. The Federal Reserve Bank required the Bank to maintain stock with a par value equal to 6% of its outstanding capital at both September 30, 2017 and December 31, 2016. Restricted equity securities consist of Federal Reserve Bank stock in the amount of $27.6 million and $23.8 million for September 30, 2017 and December 31, 2016 and FHLB stock in the amount of $40.9 million and $37.0 million as of September 30, 2017 and December 31, 2016, respectively.

Other-Than-Temporary-Impairment

During each quarter, the Company conducts an assessment of the securities portfolio for OTTI consideration. The assessment considers factors such as external credit ratings, delinquency coverage ratios, market price, management’s judgment, expectations of future performance, and relevant industry research and analysis. An impairment is other-than-temporary if any of the following conditions exist: the entity intends to sell the security; it is more likely than not that the entity will be required to sell the security before recovery of its amortized cost basis; or the entity does not expect to recover the security’s entire amortized cost basis (even if the entity does not intend to sell). If a credit loss exists, but an entity does not intend to sell the impaired debt security and is not more likely than not to be required to sell before recovery, the impairment is other-than-temporary and should be separated into a credit portion to be recognized in earnings and the remaining amount relating to all other factors recognized as other comprehensive loss. Based on the assessment for the three and nine months ended September 30, 2017, and in accordance with the guidance, no OTTI was recognized.

For the year ended December 31, 2015, the Company determined that a municipal security in the available for sale portfolio incurred credit-related OTTI of $300,000.  During the quarter ended March 31, 2016, the municipal security was sold.  As a result, the Company recognized an additional loss on sale of the previously written down security.

Realized Gains and Losses

The following table presents the gross realized gains and losses on and the proceeds from the sale of securities during the three and nine months ended September 30, 2017 and 2016 (dollars in thousands).

	Three Months Ended September 30, 2017			Nine Months Ended September 30, 2017
Realized gains (losses):
Gross realized gains	$	296		$	958
Gross realized losses	(112		)	(176		)
Net realized gains	$	184		$	782
Proceeds from sales of securities	$	39,284		$	91,911

	Three Months Ended September 30, 2016		Nine Months Ended September 30, 2016
Realized gains (losses):
Gross realized gains	$	—	$	242
Gross realized losses	—		(97		)
Net realized gains	$	—	$	145
Proceeds from sales of securities	$	2,848	$	18,272

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LOANS AND ALLOWANCE FOR LOAN LOSSES

9 Months Ended

Sep. 30, 2017

Loans and Leases Receivable Disclosure [Abstract]

LOANS AND ALLOWANCE FOR LOAN LOSSES

LOANS AND ALLOWANCE FOR LOAN LOSSES

Loans are stated at their face amount, net of deferred fees and costs, and consist of the following at September 30, 2017 and December 31, 2016 (dollars in thousands):

	September 30, 2017		December 31, 2016
Construction and Land Development	$	841,738	$	751,131
Commercial Real Estate - Owner Occupied	903,523		857,805
Commercial Real Estate - Non-Owner Occupied	1,748,039		1,564,295
Multifamily Real Estate	368,686		334,276
Commercial & Industrial	554,522		551,526
Residential 1-4 Family	1,083,112		1,029,547
Auto	276,572		262,071
HELOC	535,446		526,884
Consumer and all other	587,091		429,525
Total loans held for investment, net (1)	$	6,898,729	$	6,307,060

(1)Loans, as presented, are net of deferred fees and costs totaling $335,000 and $1.8 million as of September 30, 2017 and December 31, 2016, respectively.

The following table shows the aging of the Company’s loan portfolio, by segment, at September 30, 2017 (dollars in thousands):

	30-59 Days Past Due		60-89 Days Past Due		Greater than 90 Days and still Accruing		PCI		Nonaccrual		Current		Total Loans
Construction and Land Development	$	7,221	$	100	$	54	$	3,026	$	5,671	$	825,666	$	841,738
Commercial Real Estate - Owner Occupied	1,707		689		679		17,668		2,205		880,575		903,523
Commercial Real Estate - Non-Owner Occupied	909		571		298		14,376		2,701		1,729,184		1,748,039
Multifamily Real Estate	—		—		—		77		—		368,609		368,686
Commercial & Industrial	1,558		255		101		625		1,252		550,731		554,522
Residential 1-4 Family	5,633		1,439		2,360		14,077		6,163		1,053,440		1,083,112
Auto	2,415		293		143		—		174		273,547		276,572
HELOC	1,400		628		709		982		1,791		529,936		535,446
Consumer and all other	3,469		1,445		188		210		165		581,614		587,091
Total loans held for investment	$	24,312	$	5,420	$	4,532	$	51,041	$	20,122	$	6,793,302	$	6,898,729

The following table shows the aging of the Company’s loan portfolio, by segment, at December 31, 2016 (dollars in thousands):

	30-59 Days Past Due		60-89 Days Past Due		Greater than 90 Days and still Accruing		PCI		Nonaccrual		Current		Total Loans
Construction and Land Development	$	1,162	$	232	$	76	$	2,922	$	2,037	$	744,702	$	751,131
Commercial Real Estate - Owner Occupied	1,842		109		35		18,343		794		836,682		857,805
Commercial Real Estate - Non-Owner Occupied	2,369		—		—		17,303		—		1,544,623		1,564,295
Multifamily Real Estate	147		—		—		2,066		—		332,063		334,276
Commercial & Industrial	759		858		9		1,074		124		548,702		551,526
Residential 1-4 Family	7,038		534		2,048		16,200		5,279		998,448		1,029,547
Auto	2,570		317		111		—		169		258,904		262,071
HELOC	1,836		1,140		635		1,161		1,279		520,833		526,884
Consumer and all other	2,522		1,431		91		223		291		424,967		429,525
Total loans held for investment	$	20,245	$	4,621	$	3,005	$	59,292	$	9,973	$	6,209,924	$	6,307,060

The following table shows the PCI loan portfolios, by segment and their delinquency status, at September 30, 2017 (dollars in thousands):

	30-89 Days Past Due		Greater than 90 Days		Current		Total
Construction and Land Development	$	62	$	—	$	2,964	$	3,026
Commercial Real Estate - Owner Occupied	463		643		16,562		17,668
Commercial Real Estate - Non-Owner Occupied	318		1,032		13,026		14,376
Multifamily Real Estate	—		—		77		77
Commercial & Industrial	—		—		625		625
Residential 1-4 Family	949		1,125		12,003		14,077
HELOC	132		128		722		982
Consumer and all other	34		—		176		210
Total	$	1,958	$	2,928	$	46,155	$	51,041

The following table shows the PCI loan portfolios, by segment and their delinquency status, at December 31, 2016 (dollars in thousands):

	30-89 Days Past Due		Greater than 90 Days		Current		Total
Construction and Land Development	$	—	$	84	$	2,838	$	2,922
Commercial Real Estate - Owner Occupied	271		519		17,553		18,343
Commercial Real Estate - Non-Owner Occupied	409		126		16,768		17,303
Multifamily Real Estate	—		—		2,066		2,066
Commercial & Industrial	44		56		974		1,074
Residential 1-4 Family	1,298		945		13,957		16,200
HELOC	175		121		865		1,161
Consumer and all other	—		—		223		223
Total	$	2,197	$	1,851	$	55,244	$	59,292

The Company measures the amount of impairment by evaluating loans either in their collective homogeneous pools or individually. The following table shows the Company’s impaired loans, excluding PCI loans, by segment at September 30, 2017 and December 31, 2016 (dollars in thousands):

	September 30, 2017						December 31, 2016
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Recorded Investment		Unpaid Principal Balance		Related Allowance
Loans without a specific allowance
Construction and Land Development	$	13,889	$	13,981	$	—	$	13,877	$	14,353	$	—
Commercial Real Estate - Owner Occupied	5,238		5,378		—		5,886		6,042		—
Commercial Real Estate - Non-Owner Occupied	5,548		5,636		—		1,399		1,399		—
Commercial & Industrial	1,632		1,880		—		648		890		—
Residential 1-4 Family	9,510		10,523		—		8,496		9,518		—
HELOC	1,651		1,741		—		1,017		1,094		—
Consumer and all other	521		631		—		230		427		—
Total impaired loans without a specific allowance	$	37,989	$	39,770	$	—	$	31,553	$	33,723	$	—
Loans with a specific allowance
Construction and Land Development	$	1,347	$	1,444	$	113	$	1,395	$	1,404	$	107
Commercial Real Estate - Owner Occupied	2,118		2,132		157		646		646		4
Commercial Real Estate - Non-Owner Occupied	2,032		2,032		42		2,809		2,809		474
Commercial & Industrial	2,511		2,562		909		857		880		14
Residential 1-4 Family	4,421		4,543		249		3,335		3,535		200
Auto	174		235		1		169		235		1
HELOC	766		800		56		323		433		15
Consumer and all other	242		310		43		62		298		1
Total impaired loans with a specific allowance	$	13,611	$	14,058	$	1,570	$	9,596	$	10,240	$	816
Total impaired loans	$	51,600	$	53,828	$	1,570	$	41,149	$	43,963	$	816

The following tables show the average recorded investment and interest income recognized for the Company’s impaired loans, excluding PCI loans, by segment for the three and nine months ended September 30, 2017 and 2016 (dollars in thousands):

	Three Months Ended September 30, 2017				Nine Months Ended September 30, 2017
	Average Investment		Interest Income Recognized		Average Investment		Interest Income Recognized
Construction and Land Development	$	15,654	$	128	$	15,378	$	368
Commercial Real Estate - Owner Occupied	7,354		62		7,407		245
Commercial Real Estate - Non-Owner Occupied	7,597		57		7,584		185
Commercial & Industrial	4,139		36		4,203		121
Residential 1-4 Family	14,218		94		14,358		261
Auto	192		—		223		2
HELOC	2,460		7		2,492		29
Consumer and all other	800		8		690		20
Total impaired loans	$	52,414	$	392	$	52,335	$	1,231

	Three Months Ended September 30, 2016				Nine Months Ended September 30, 2016
	Average Investment		Interest Income Recognized		Average Investment		Interest Income Recognized
Construction and Land Development	$	28,195	$	464	$	27,645	$	1,346
Commercial Real Estate - Owner Occupied	7,691		72		7,862		230
Commercial Real Estate - Non-Owner Occupied	3,777		33		3,759		98
Commercial & Industrial	4,628		42		4,964		134
Residential 1-4 Family	13,106		89		13,439		267
Auto	271		—		289		4
HELOC	2,118		7		2,185		35
Consumer and all other	453		—		620		6
Total impaired loans	$	60,239	$	707	$	60,763	$	2,120

The Company considers TDRs to be impaired loans. A modification of a loan’s terms constitutes a TDR if the creditor grants a concession that it would not otherwise consider to the borrower for economic or legal reasons related to the borrower’s financial difficulties. All loans that are considered to be TDRs are evaluated for impairment in accordance with the Company’s allowance for loan loss methodology and are included in the preceding impaired loan tables. For the three and nine months ended September 30, 2017, the recorded investment in TDRs prior to modifications was not materially impacted by the modification.

The following table provides a summary, by segment, of TDRs that continue to accrue interest under the terms of the restructuring agreement, which are considered to be performing, and TDRs that have been placed on nonaccrual status, which are considered to be nonperforming, as of September 30, 2017 and December 31, 2016 (dollars in thousands):

	September 30, 2017					December 31, 2016
	No. of Loans	Recorded Investment		Outstanding Commitment		No. of Loans	Recorded Investment		Outstanding Commitment
Performing
Construction and Land Development	7	$	2,841	$	—	8	$	3,793	$	—
Commercial Real Estate - Owner Occupied	7	2,934		—		7	3,106		—
Commercial Real Estate - Non-Owner Occupied	3	2,196		—		2	2,390		—
Commercial & Industrial	12	2,112		—		3	533		—
Residential 1-4 Family	34	5,941		—		28	4,145		—
Consumer and all other	1	495		—		—	—		—
Total performing	64	$	16,519	$	—	48	$	13,967	$	—
Nonperforming
Construction and Land Development	5	$	400	$	—	2	$	215	$	—
Commercial Real Estate - Owner Occupied	2	142		—		2	156		—
Commercial & Industrial	5	1,062		—		1	116		—
Residential 1-4 Family	8	1,095		—		8	948		—
Consumer and all other	1	26		—		—	—		—
Total nonperforming	21	$	2,725	$	—	13	$	1,435	$	—
Total performing and nonperforming	85	$	19,244	$	—	61	$	15,402	$	—

The Company considers a default of a TDR to occur when the borrower is 90 days past due following the restructure or a foreclosure and repossession of the applicable collateral occurs. The following table shows, by segment, TDRs that were identified by the Company as going into default during the period shown that were restructured in the prior twelve-month period (dollars in thousands):

	Three Months Ended September 30, 2017			Nine Months Ended September 30, 2017
	No. of Loans	Recorded  Investment		No. of Loans	Recorded  Investment
Construction and Land Development	—	$	—	2	$	198
Commercial Real Estate - Owner Occupied	—	—		1	469
Commercial & Industrial	1	350		1	350
Residential 1-4 Family	2	187		4	605
Total	3	$	537	8	$	1,622

During the three and nine months ended September 30, 2016, the Company identified one loan, totaling approximately $23,000, that went into default that had been restructured in the twelve-month period prior to the time of default. This loan was a commercial real estate - owner occupied loan that had a term modification at a market rate.

The following table shows, by segment and modification type, TDRs that occurred during the three and nine months ended September 30, 2017 (dollars in thousands):

	Three Months Ended September 30, 2017			Nine Months Ended September 30, 2017
	No. of Loans	Recorded  Investment at Period End		No. of Loans	Recorded  Investment at Period End
Modified to interest only, at a market rate
Commercial & Industrial	3	$	936	8	$	1,596
Total interest only at market rate of interest	3	$	936	8	$	1,596
Term modification, at a market rate
Construction and Land Development	1	$	160	4	$	1,150
Commercial Real Estate - Owner Occupied	1	380		1	380
Commercial Real Estate - Non-Owner Occupied	1	571		3	2,196
Commercial & Industrial	—	—		4	969
Residential 1-4 Family	3	1,647		8	2,574
Consumer and all other	1	26		2	522
Total loan term extended at a market rate	7	$	2,784	22	$	7,791
Term modification, below market rate
Commercial Real Estate - Owner Occupied	—	$	—	1	$	841
Commercial & Industrial	—	—		3	179
Residential 1-4 Family	1	40		8	1,143
Total loan term extended at a below market rate	1	$	40	12	$	2,163
Total	11	$	3,760	42	$	11,550

The following table shows, by segment and modification type, TDRs that occurred during the three and nine months ended September 30, 2016 (dollars in thousands):

	Three Months Ended September 30, 2016			Nine Months Ended September 30, 2016
	No. of Loans	Recorded  Investment at Period End		No. of Loans	Recorded  Investment at Period End
Term modification, at a market rate
Construction and Land Development	—	$	—	1	$	1,177
Commercial Real Estate - Owner Occupied	—	—		2	739
Commercial & Industrial	1	457		1	457
Residential 1-4 Family	—	—		2	474
Total loan term extended at a market rate	1	$	457	6	$	2,847
Term modification, below market rate
Residential 1-4 Family	—	$	—	1	$	36
Total loan term extended at a below market rate	—	$	—	1	$	36
Interest rate modification, below market rate
Commercial & Industrial	—	$	—	1	$	125
Total interest only at below market rate of interest	—	$	—	1	$	125
Total	1	$	457	8	$	3,008

The following table shows the allowance for loan loss activity, balances for allowance for loan losses, and loan balances based on impairment methodology by segment for the nine months ended and as of September 30, 2017. The table below includes the provision for loan losses. Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories (dollars in thousands):

	Allowance for loan losses
	Balance, beginning of the year		Recoveries credited to allowance		Loans charged off			Provision charged to operations			Balance, end of period
Construction and Land Development	$	10,055	$	193	$	(2,115	)	$	535		$	8,668
Commercial Real Estate - Owner Occupied	3,801		84		(46		)	(620		)	3,219
Commercial Real Estate - Non-Owner Occupied	6,622		2		(1,181		)	1,825			7,268
Multifamily Real Estate	1,236		—		—			(136		)	1,100
Commercial & Industrial	4,627		451		(1,241		)	1,526			5,363
Residential 1-4 Family	6,399		332		(815		)	(35		)	5,881
Auto	946		352		(761		)	398			935
HELOC	1,328		240		(861		)	675			1,382
Consumer and all other	2,178		905		(2,929		)	3,192			3,346
Total	$	37,192	$	2,559	$	(9,949	)	$	7,360		$	37,162

	Loans individually evaluated for impairment				Loans collectively evaluated for impairment				Loans acquired with deteriorated credit quality				Total
	Loans		ALL		Loans		ALL		Loans		ALL		Loans		ALL
Construction and Land Development	$	15,236	$	113	$	823,476	$	8,555	$	3,026	$	—	$	841,738	$	8,668
Commercial Real Estate - Owner Occupied	7,356		157		878,499		3,062		17,668		—		903,523		3,219
Commercial Real Estate - Non-Owner Occupied	7,580		42		1,726,083		7,226		14,376		—		1,748,039		7,268
Multifamily Real Estate	—		—		368,609		1,100		77		—		368,686		1,100
Commercial & Industrial	4,143		909		549,754		4,454		625		—		554,522		5,363
Residential 1-4 Family	13,931		249		1,055,104		5,632		14,077		—		1,083,112		5,881
Auto	174		1		276,398		934		—		—		276,572		935
HELOC	2,417		56		532,047		1,326		982		—		535,446		1,382
Consumer and all other	763		43		586,118		3,303		210		—		587,091		3,346
Total loans held for investment, net	$	51,600	$	1,570	$	6,796,088	$	35,592	$	51,041	$	—	$	6,898,729	$	37,162

The following table shows the allowance for loan loss activity, balances for allowance for loan losses, and loan balances based on impairment methodology by segment for the nine months ended and as of September 30, 2016. In addition, a $175,000 provision was recognized during the nine months ended September 30, 2016 for unfunded loan commitments for which the reserves are recorded as a component of “Other Liabilities” on the Company’s Consolidated Balance Sheets. Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories (dollars in thousands):

	Allowance for loan losses
	Balance, beginning of the year		Recoveries credited to allowance		Loans charged off			Provision charged to operations			Balance, end of period
Construction and Land Development	$	6,040	$	165	$	(869	)	$	5,464		$	10,800
Commercial Real Estate - Owner Occupied	4,614		112		(772		)	(770		)	3,184
Commercial Real Estate - Non-Owner Occupied	6,929		3		(1		)	(813		)	6,118
Multifamily Real Estate	1,606		—		—			(658		)	948
Commercial & Industrial	3,163		422		(1,301		)	3,119			5,403
Residential 1-4 Family	5,414		466		(741		)	518			5,657
Auto	1,703		243		(815		)	(260		)	871
HELOC	2,934		229		(1,272		)	(534		)	1,357
Consumer and all other	1,644		382		(957		)	1,135			2,204
Total	$	34,047	$	2,022	$	(6,728	)	$	7,201		$	36,542

	Loans individually evaluated for impairment				Loans collectively evaluated for impairment				Loans acquired with deteriorated credit quality				Total
	Loans		ALL		Loans		ALL		Loans		ALL		Loans		ALL
Construction and Land Development	$	27,241	$	123	$	745,984	$	10,677	$	3,205	$	—	$	776,430	$	10,800
Commercial Real Estate - Owner Occupied	7,612		5		830,466		3,179		19,064		—		857,142		3,184
Commercial Real Estate - Non-Owner Occupied	3,792		1		1,432,895		6,117		18,141		—		1,454,828		6,118
Multifamily Real Estate	—		—		337,234		948		2,079		—		339,313		948
Commercial & Industrial	3,448		642		505,264		4,761		1,145		—		509,857		5,403
Residential 1-4 Family	12,673		115		969,860		5,542		16,828		—		999,361		5,657
Auto	231		1		254,957		870		—		—		255,188		871
HELOC	2,053		17		520,546		1,340		1,498		—		524,097		1,357
Consumer and all other	451		88		431,865		2,116		386		—		432,702		2,204
Total loans held for investment, net	$	57,501	$	992	$	6,029,071	$	35,550	$	62,346	$	—	$	6,148,918	$	36,542

The Company uses a risk rating system and past due status as the primary credit quality indicators for the loan categories. The risk rating system on a scale of 0 through 9 is used to determine risk level as used in the calculation of the allowance for loan losses; on those loans without a risk rating, the Company uses past due status to determine risk level. The risk levels, as described below, do not necessarily follow the regulatory definitions of risk levels with the same name. A general description of the characteristics of the risk levels follows:

Pass is determined by the following criteria:

•Risk rated 0 loans have little or no risk and are with General Obligation Municipal Borrowers;

•Risk rated 1 loans have little or no risk and are generally secured by cash or cash equivalents;

•Risk rated 2 loans have minimal risk to well qualified borrowers and no significant questions as to safety;

•Risk rated 3 loans are satisfactory loans with strong borrowers and secondary sources of repayment;

•Risk rated 4 loans are satisfactory loans with borrowers not as strong as risk rated 3 loans and may exhibit a greater

degree of financial risk based on the type of business supporting the loan; or

•Loans that are not risk rated but that are 0 to 29 days past due.

Special Mention is determined by the following criteria:

•Risk rated 5 loans are watch loans that warrant more than the normal level of supervision and have the possibility of an

event occurring that may weaken the borrower’s ability to repay;

•Risk rated 6 loans have increasing potential weaknesses beyond those at which the loan originally was granted and if

not addressed could lead to inadequately protecting the Company’s credit position; or

•Loans that are not risk rated but that are 30 to 89 days past due.

Substandard is determined by the following criteria:

•Risk rated 7 loans are substandard loans and are inadequately protected by the current sound worth or paying capacity

of the obligor or the collateral pledged; these have well defined weaknesses that jeopardize the liquidation of the debt

with the distinct possibility the Company will sustain some loss if the deficiencies are not corrected; or

•Loans that are not risk rated but that are 90 to 149 days past due.

Doubtful is determined by the following criteria:

•Risk rated 8 loans are doubtful of collection and the possibility of loss is high but pending specific borrower plans for

recovery, its classification as a loss is deferred until its more exact status is determined;

•Risk rated 9 loans are loss loans which are considered uncollectable and of such little value that their continuance as

    bankable assets is not warranted; or

•Loans that are not risk rated but that are over 149 days past due.

The following table shows the recorded investment in all loans, excluding PCI loans, by segment with their related risk level as of September 30, 2017 (dollars in thousands):

	Pass		Special Mention		Substandard		Doubtful		Total
Construction and Land Development	$	768,206	$	57,190	$	13,201	$	115	$	838,712
Commercial Real Estate - Owner Occupied	834,265		47,019		4,571		—		885,855
Commercial Real Estate - Non-Owner Occupied	1,702,500		23,764		7,399		—		1,733,663
Multifamily Real Estate	361,175		7,434		—		—		368,609
Commercial & Industrial	534,594		16,400		2,903		—		553,897
Residential 1-4 Family	1,045,736		15,878		4,480		2,941		1,069,035
Auto	273,446		2,910		143		73		276,572
HELOC	530,263		2,427		1,051		723		534,464
Consumer and all other	583,728		2,618		530		5		586,881
Total	$	6,633,913	$	175,640	$	34,278	$	3,857	$	6,847,688

The following table shows the recorded investment in all loans, excluding PCI loans, by segment with their related risk level as of December 31, 2016 (dollars in thousands):

	Pass		Special Mention		Substandard		Doubtful		Total
Construction and Land Development	$	667,018	$	69,311	$	11,857	$	23	$	748,209
Commercial Real Estate - Owner Occupied	801,565		32,364		5,533		—		839,462
Commercial Real Estate - Non-Owner Occupied	1,505,153		37,631		4,208		—		1,546,992
Multifamily Real Estate	312,711		19,499		—		—		332,210
Commercial & Industrial	539,999		9,391		1,062		—		550,452
Residential 1-4 Family	986,973		18,518		4,813		3,043		1,013,347
Auto	258,188		3,648		135		100		262,071
HELOC	519,928		4,225		969		601		525,723
Consumer and all other	425,520		3,491		40		251		429,302
Total	$	6,017,055	$	198,078	$	28,617	$	4,018	$	6,247,768

The following table shows the recorded investment in only PCI loans by segment with their related risk level as of September 30, 2017 (dollars in thousands):

	Pass		Special Mention		Substandard		Doubtful		Total
Construction and Land Development	$	1,460	$	1,311	$	255	$	—	$	3,026
Commercial Real Estate - Owner Occupied	5,521		8,237		3,910		—		17,668
Commercial Real Estate - Non-Owner Occupied	10,676		2,435		1,265		—		14,376
Multifamily Real Estate	—		77		—		—		77
Commercial & Industrial	94		309		222		—		625
Residential 1-4 Family	7,498		4,227		1,577		775		14,077
HELOC	722		132		6		122		982
Consumer and all other	154		46		10		—		210
Total	$	26,125	$	16,774	$	7,245	$	897	$	51,041

The following table shows the recorded investment in only PCI loans by segment with their related risk level as of December 31, 2016 (dollars in thousands):

	Pass		Special Mention		Substandard		Doubtful		Total
Construction and Land Development	$	1,092	$	1,432	$	398	$	—	$	2,922
Commercial Real Estate - Owner Occupied	5,520		8,889		3,934		—		18,343
Commercial Real Estate - Non-Owner Occupied	10,927		4,638		1,738		—		17,303
Multifamily Real Estate	343		1,723		—		—		2,066
Commercial & Industrial	107		480		487		—		1,074
Residential 1-4 Family	8,557		4,455		2,672		516		16,200
HELOC	857		183		7		114		1,161
Consumer and all other	166		37		20		—		223
Total	$	27,569	$	21,837	$	9,256	$	630	$	59,292

Loans acquired are originally recorded at fair value, with certain loans being identified as impaired at the date of purchase. The fair values were determined based on the credit quality of the portfolio, expected future cash flows, and timing of those expected future cash flows.

The following shows changes in the accretable yield for loans accounted for under ASC 310-30, Receivables – Loans and Debt Securities Acquired with Deteriorated Credit Quality, for the periods presented (dollars in thousands):

	For the Nine Months Ended September 30,
	2017			2016
Balance at beginning of period	$	19,739		$	22,139
Accretion	(4,896		)	(4,232		)
Reclass of nonaccretable difference due to improvement in expected cash flows	2,175			3,580
Other, net (1)	(452		)	(1,149		)
Balance at end of period	$	16,566		$	20,338

(1)This line item represents changes in the cash flows expected to be collected due to the impact of non-credit changes such as prepayment assumptions, changes in interest rates on variable rate PCI loans, and discounted payoffs that occurred in the quarter.

The carrying value of the Company’s PCI loan portfolio, accounted for under ASC 310-30, totaled $51.0 million at September 30, 2017 and $59.3 million at December 31, 2016. The outstanding balance of the Company’s PCI loan portfolio totaled $62.8 million at September 30, 2017 and $73.6 million at December 31, 2016. The carrying value of the Company’s acquired performing loan portfolio, accounted for under ASC 310-20, Receivables – Nonrefundable Fees and Other Costs, totaled $942.0 million at September 30, 2017 and $1.1 billion at December 31, 2016; the remaining discount on these loans totaled $14.6 million at September 30, 2017 and $16.9 million at December 31, 2016.

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INTANGIBLE ASSETS

9 Months Ended

Sep. 30, 2017

Goodwill and Intangible Assets Disclosure [Abstract]

INTANGIBLE ASSETS

INTANGIBLE ASSETS

The Company’s intangible assets consist of core deposits, goodwill, and other intangibles arising from acquisitions. The Company has determined that core deposit intangibles have finite lives and amortizes them over their estimated useful lives. Core deposit intangible assets are being amortized over the period of expected benefit, which ranges from 4 to 14 years, using an accelerated method. Other amortizable intangible assets are being amortized over the period of expected benefit, which ranges from 5 to 10 years, using a straight-line method.

In accordance with ASC 350, Intangibles-Goodwill and Other, the Company reviews the carrying value of indefinite lived intangible assets at least annually or more frequently if certain impairment indicators exist. The Company performed its annual impairment testing in the second quarter of 2017 and determined that there was no impairment to its goodwill or intangible assets.

Amortization expense of core deposit intangibles for the three and nine months ended September 30, 2017 totaled $1.4 million and $4.3 million, respectively; and the three and nine months ended September 30, 2016 totaled $1.7 million and $5.3 million, respectively. Amortization expense of other intangibles for the three and nine months ended September 30, 2017 totaled $120,000 and $360,000, respectively and $160,000 for theboththree and ninemonths endedSeptember 30, 2016. As of September 30, 2017, the estimated remaining amortization expense of intangibles is as follows (dollars in thousands):

For the remaining three months of 2017	$	1,420
For the year ending December 31, 2018	4,664
For the year ending December 31, 2019	3,599
For the year ending December 31, 2020	2,509
For the year ending December 31, 2021	1,481
Thereafter	2,344
Total estimated amortization expense	$	16,017

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BORROWINGS

9 Months Ended

Sep. 30, 2017

Debt Disclosure [Abstract]

BORROWINGS

BORROWINGS

Short-term Borrowings

The Company classifies all borrowings that will mature within a year from the date on which the Company enters into them as short-term borrowings. Total short-term borrowings consist primarily of advances from the FHLB, federal funds purchased (which are secured overnight borrowings from other financial institutions), and other lines of credit. Also included in total short-term borrowings are securities sold under agreements to repurchase, which are secured transactions with customers and generally mature the day following the date sold. Total short-term borrowings consist of the following as of September 30, 2017 and December 31, 2016 (dollars in thousands):

	September 30, 2017			December 31, 2016
Securities sold under agreements to repurchase	$	43,337		$	59,281
Other short-term borrowings (1)	574,000			517,500
Total short-term borrowings	$	617,337		$	576,781
Maximum month-end outstanding balance	$	696,529		$	678,262
Average outstanding balance during the period	606,441			590,074
Average interest rate (year-to-date)	0.93		%	0.49		%
Average interest rate at end of period	1.15		%	0.60		%

⁽¹⁾ As of September 30, 2017 and December 31, 2016 , all other short-term borrowings were FHLB advances.

The Bank maintains federal funds lines with several correspondent banks; the remaining available balance was $185.0 million and $175.0 million at September 30, 2017 and December 31, 2016, respectively. The Company maintains an alternate line of credit at a correspondent bank; the available balance was $25.0 million at both September 30, 2017 and December 31, 2016. The Company has certain restrictive covenants related to certain asset quality, capital, and profitability metrics associated with these lines and is considered to be in compliance with these covenants. Additionally, the Company had a collateral dependent line of credit with the FHLB of up to $2.7 billion and $2.4 billion at September 30, 2017 and December 31, 2016, respectively.

Long-term Borrowings

In connection with two bank acquisitions prior to 2006, the Company issued trust preferred capital notes to fund the cash portion of those acquisitions, collectively totaling $58.5 million. In connection with the acquisition of StellarOne, the Company acquired trust preferred capital notes totaling $32.0 million with a remaining fair value discount of $6.5 million at September 30, 2017. The trust preferred capital notes currently qualify for Tier 1 capital of the Company for regulatory purposes.

	Trust Preferred Capital Securities (1)		Investment (1)		Spread to  3-Month LIBOR		Rate		Maturity
Trust Preferred Capital Note - Statutory Trust I	$	22,500,000	$	696,000	2.75	%	4.08	%	6/17/2034
Trust Preferred Capital Note - Statutory Trust II	36,000,000		1,114,000		1.40	%	2.73	%	6/15/2036
VFG Limited Liability Trust I Indenture	20,000,000		619,000		2.73	%	4.06	%	3/18/2034
FNB Statutory Trust II Indenture	12,000,000		372,000		3.10	%	4.43	%	6/26/2033
Total	$	90,500,000	$	2,801,000

(1)The total of the trust preferred capital securities and investments in the respective trusts represents the principal asset of the Company's junior subordinated debt securities with like maturities and like interest rates to the capital securities. The Company's investment in the trusts is reported in "Other Assets" on the Consolidated Balance Sheets.

During the fourth quarter of 2016, the Company issued $150.0 million of fixed-to-floating rate subordinated notes with an initial fixed interest rate of 5.00% through December 15, 2021. The interest rate then changes to a floating rate of LIBOR plus 3.175% through its maturity date in December 15, 2026. At September 30, 2017 and December 31, 2016, the carrying value of the subordinated debt was $150.0 million, with a remaining discount of $1.8 million, respectively.

On August 23, 2012, the Company modified its fixed rate FHLB advances to floating rate advances, which resulted in reducing the Company’s FHLB borrowing costs. In connection with this modification, the Company incurred a prepayment penalty of $19.6 million on the original advances, which is included as a component of long-term borrowings on the Company’s Consolidated Balance Sheets. In accordance with ASC 470-50, Modifications and Extinguishments, the Company is amortizing this prepayment penalty over the term of the modified advances using the effective rate method. The amortization expense is included as a component of interest expense on long-term borrowings on the Company’s Consolidated Statements of Income. Amortization expense for the three and nine months ended September 30, 2017 and 2016 was $486,000 and $1.4 million and $474,000 and $1.4 million, respectively.

In connection with the StellarOne acquisition, the Company assumed $70.0 million in long-term borrowings with the FHLB of which there is $20.0 million remaining at September 30, 2017 that had a remaining fair value premium of $223,000.

As of September 30, 2017, the Company had long-term advances from the FHLB consisting of the following (dollars in thousands):

Long-term Type	Spread to 3-Month LIBOR		Interest Rate (1)		Maturity Date	Advance Amount
Adjustable Rate Credit	0.44	%	1.77	%	8/23/2022	$	55,000
Adjustable Rate Credit	0.45	%	1.79	%	11/23/2022	65,000
Adjustable Rate Credit	0.45	%	1.79	%	11/23/2022	10,000
Adjustable Rate Credit	0.45	%	1.79	%	11/23/2022	10,000
Fixed Rate	—		3.62	%	11/28/2017	10,000
Fixed Rate	—		3.75	%	7/30/2018	5,000
Fixed Rate	—		3.97	%	7/30/2018	5,000
Fixed Rate Hybrid	—		0.99	%	10/19/2018	30,000
Fixed Rate Hybrid	—		1.58	%	5/18/2020	20,000
						$	210,000
(1)Interest rates calculated using non-rounded numbers.

As of December 31, 2016, the Company had long-term advances from the FHLB consisting of the following (dollars in thousands):

Long-term Type	Spread to 3-Month LIBOR		Interest Rate (1)		Maturity Date	Advance Amount
Adjustable Rate Credit	0.44	%	1.44	%	8/23/2022	$	55,000
Adjustable Rate Credit	0.45	%	1.45	%	11/23/2022	65,000
Adjustable Rate Credit	0.45	%	1.45	%	11/23/2022	10,000
Adjustable Rate Credit	0.45	%	1.45	%	11/23/2022	10,000
Fixed Rate	—		3.62	%	11/28/2017	10,000
Fixed Rate	—		3.75	%	7/30/2018	5,000
Fixed Rate	—		3.97	%	7/30/2018	5,000
Fixed Rate Hybrid	—		0.99	%	10/19/2018	30,000
						$	190,000
(1)Interest rates calculated using non-rounded numbers.

For information on the carrying value of loans and securities pledged as collateral on FHLB advances as of September 30, 2017 and December 31, 2016, refer to Note 6 "Commitments and Contingencies".

As of September 30, 2017, the contractual maturities of long-term debt are as follows for the years ending (dollars in thousands):

	Trust Preferred Capital Notes		Subordinated Debt		FHLB Advances		Fair Value  Premium (Discount)			Prepayment Penalty			Total Long-term Borrowings
For the remaining three months of 2017	$	—	$	—	$	10,000	$	(21	)	$	(488	)	$	9,491
2018	—		—		40,000		(343		)	(1,970		)	37,687
2019	—		—		—		(486		)	(2,018		)	(2,504		)
2020	—		—		20,000		(501		)	(2,074		)	17,425
2021	—		—		—		(516		)	(2,119		)	(2,635		)
Thereafter	93,301		150,000		140,000		(6,308		)	(1,707		)	375,286
Total Long-term borrowings	$	93,301	$	150,000	$	210,000	$	(8,175	)	$	(10,376	)	$	434,750

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COMMITMENTS AND CONTINGENCIES

9 Months Ended

Sep. 30, 2017

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

Litigation Matters

On September 7, 2017, Paul Parshall, a purported shareholder of Xenith, filed a putative class action lawsuit (the “Parshall Lawsuit”) in the United States District Court for the Eastern District of Virginia against Xenith, its current directors, and the Company on behalf of all public shareholders of Xenith. The plaintiff in the action alleged that the Company’s registration statement on Form S-4 filed with the SEC, as amended, relating to the Pending Merger omitted certain material information in violation of Section 14(a) of the Exchange Act and Rule 14a-9 promulgated thereunder, and further that the individual defendants were liable for those omissions under Section 20(a) of the Exchange Act. The relief sought in the lawsuit included preliminary and permanent injunction to prevent the completion of the Pending Merger, rescission or rescissory damages if the Pending Merger were completed, costs and attorneys’ fees. On November 6, 2017, Mr. Parshall filed a notice of voluntary dismissal, terminating the Parshall Lawsuit without prejudice.

On September 19, 2017, Shannon Rowe, a purported shareholder of Xenith, filed a putative class action lawsuit (the “Rowe Lawsuit”), also in the United States District Court for the Eastern District of Virginia, against Xenith and its current directors. The Company is not named as a defendant in the Rowe Lawsuit. The allegations in the Rowe Lawsuit are similar to the allegations in the Parshall Lawsuit.

At this time, it is not possible to predict the outcome of the proceeding in the Rowe Lawsuit or its impact on Xenith, the Company, or the Pending Merger. The Company believes that the claims in the Rowe Lawsuit are without merit and has been advised that Xenith and the Xenith board of directors also believe that the claims in the Rowe Lawsuit are without merit and that Xenith and the Xenith board of directors intend to defend vigorously against them.

In addition to the Rowe Lawsuit, in the ordinary course of its operations, the Company and its subsidiaries are parties to various other legal proceedings. Based on the information presently available, and after consultation with legal counsel, management believes that the ultimate outcome in such other legal proceedings, in the aggregate, will not have a material adverse effect on the business or the financial condition or results of operations of the Company.

Financial Instruments with Off-Balance Sheet Risk

The Company is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers and to reduce its own exposure to fluctuations in interest rates. These financial instruments include commitments to extend credit and standby letters of credit. These instruments involve elements of credit and interest rate risk in excess of the amount recognized on the Company’s Consolidated Balance Sheets. The contractual amounts of these instruments reflect the extent of the Company’s involvement in particular classes of financial instruments.

The Company’s exposure to credit loss in the event of nonperformance by the other party to the financial instruments for commitments to extend credit and letters of credit written is represented by the contractual amount of these instruments. The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments. Unless noted otherwise, the Company does not require collateral or other security to support off-balance sheet financial instruments with credit risk. The Company considers credit losses related to off-balance sheet commitments by undergoing a similar process in evaluating losses for loans that are carried on the balance sheet. The Company considers historical loss rates, current economic conditions, risk ratings, and past due status among other factors in the consideration of whether credit losses are inherent in the Company’s off-balance sheet commitments to extend credit. The Company also records an indemnification reserve that includes balances relating to mortgage loans previously sold based on historical statistics and loss rates. As of both September 30, 2017 and December 31, 2016, the Company's reserves for off-balance sheet credit risk and indemnification were $1.1 million and are reported as a component of "Other Liabilities" on the Company's Consolidated Balance Sheets.

Commitments to extend credit are agreements to lend to customers as long as there are no violations of any conditions established in the contracts. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Because many of the commitments may expire without being completely drawn upon, the total commitment amounts do not necessarily represent future cash requirements.

Letters of credit are conditional commitments issued by the Company to guarantee the performance of customers to third parties. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loans to customers.

The following table presents the balances of commitments and contingencies (dollars in thousands): 

	September 30, 2017		December 31, 2016
Commitments with off-balance sheet risk:
Commitments to extend credit (1)	$	2,085,103	$	1,924,885
Standby letters of credit	119,977		84,212
Total commitments with off-balance sheet risk	$	2,205,080	$	2,009,097

(1) Includes unfunded overdraft protection.

The Company must maintain a reserve against its deposits in accordance with Regulation D of the Federal Reserve Act. For the final weekly reporting period in the period ended September 30, 2017, the aggregate amount of daily average required reserves was approximately $73.1 million and was satisfied by vault cash holdings and deposits maintained with the Federal Reserve Bank.

As of September 30, 2017, the Company had approximately $45.4 million in deposits in other financial institutions, of which $23.8 million served as collateral for cash flow and loan swap derivatives. The Company had approximately $20.3 million in deposits in other financial institutions that were uninsured at September 30, 2017. At least annually, the Company’s management evaluates the loss risk of its uninsured deposits in financial counterparties.

For asset/liability management purposes, the Company uses interest rate swap agreements to hedge various exposures or to modify the interest rate characteristics of various balance sheet accounts. See Note 7 “Derivatives” for additional information.

As part of the Company's liquidity management strategy, it pledges collateral to secure various financing and other activities that occur during the normal course of business. The following tables present the types of collateral pledged, at September 30, 2017 and December 31, 2016 (dollars in thousands):

	Pledged Assets as of September 30, 2017
	Cash		AFS Securities (1)		HTM Securities (1)		Loans (2)		Total
Public deposits	$	—	$	224,153	$	206,878	$	—	$	431,031
Repurchase agreements	—		88,257		—		—		88,257
FHLB advances	—		1,022		—		2,404,355		2,405,377
Derivatives	23,831		3,898		—		—		27,729
Other purposes	—		15,580		—		—		15,580
Total pledged assets	$	23,831	$	332,910	$	206,878	$	2,404,355	$	2,967,974

(1) Balance represents market value.

(2) Balance represents book value.

	Pledged Assets as of December 31, 2016
	Cash		AFS Securities (1)		HTM Securities (1)		Loans (2)		Total
Public deposits	$	—	$	210,546	$	197,889	$	—	$	408,435
Repurchase agreements	—		108,208		—		—		108,208
FHLB advances	—		1,475		—		1,959,929		1,961,404
Derivatives	33,595		4,376		—		—		37,971
Other purposes	—		17,499		—		—		17,499
Total pledged assets	$	33,595	$	342,104	$	197,889	$	1,959,929	$	2,533,517

(1) Balance represents market value.

(2) Balance represents book value.

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DERIVATIVES

9 Months Ended

Sep. 30, 2017

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVES

DERIVATIVES

The Company is exposed to economic risks arising from its business operations and uses derivatives primarily to manage risk associated with changing interest rates, and to assist customers with their risk management objectives. The Company designates certain derivatives as hedging instruments in a qualifying hedge accounting relationship (cash flow or fair value hedge). The remaining are classified as free standing derivatives consisting of customer accommodation loan swaps and interest rate lock commitments that do not qualify for hedge accounting.

Cash Flow Hedges

The Company designates derivatives as cash flow hedges when they are used to manage exposure to variability in cash flows related to forecasted transactions on variable rate borrowings, such as trust preferred capital notes, FHLB borrowings, and prime commercial loans. The Company uses interest rate swap agreements as part of its hedging strategy by exchanging a notional amount, equal to the principal amount of the borrowings, for fixed-rate interest based on benchmarked interest rates. The original terms and conditions of the interest rate swaps vary and range in length with a maximum hedging time through November 2022. Amounts receivable or payable are recognized as accrued under the terms of the agreements.

All swaps entered into with counterparties met the Company’s credit standards, and the agreements contain collateral provisions protecting the at-risk party. The Company believes that the credit risk inherent in the contract is not significant.

The Company assesses the effectiveness of each hedging relationship on a periodic basis using statistical regression analysis. The Company also measures the ineffectiveness of each hedging relationship using the change in variable cash flows method which compares the cumulative changes in cash flows of the hedging instrument relative to cumulative changes in the hedged item’s cash flows. In accordance with ASC 815, Derivatives and Hedging, the effective portions of the derivatives’ unrealized gains or losses are recorded as a component of other comprehensive income. Based on the Company’s assessment, its cash flow hedges are highly effective, but to the extent that any ineffectiveness exists in the hedge relationships, the amounts would be recorded in interest income or interest expense on the Company’s Consolidated Statements of Income.

On June 13, 2016, the Company terminated three interest rate swaps designated as cash flow hedges prior to their respective maturity dates. The unrealized gain of $1.3 million within Accumulated Other Comprehensive Income will be reclassified into earnings over a three year period using the effective interest method. The estimated net amount of gains expected to be reclassified into earnings by September 30, 2018 is $395,000.

Fair Value Hedge

Derivatives are designated as fair value hedges when they are used to manage exposure to changes in the fair value of certain financial assets and liabilities, referred to as the hedged items, which fluctuate in value as a result of movements in interest rates. During the normal course of business, the Company enters into interest rate swaps to convert certain long-term fixed-rate loans to floating rates to hedge the Company’s exposure to interest rate risk. The Company pays a fixed interest rate to the counterparty and receives a floating rate from the same counterparty calculated on the aggregate notional amount. At September 30, 2017 and December 31, 2016, the aggregate notional amount of the related hedged items totaled $82.0 million and $65.9 million, respectively, and the fair value of the related hedged items was an unrealized loss of $597,000 and $890,000, respectively.

The Company applies hedge accounting in accordance with ASC 815, Derivatives and Hedging, and the fair value hedge and the underlying hedged item, attributable to the risk being hedged, are recorded at fair value with unrealized gains and losses being recorded on the Company’s Consolidated Statements of Income. Statistical regression analysis is used to assess hedge effectiveness, both at inception of the hedging relationship and on an ongoing basis. The regression analysis involves regressing the periodic change in fair value of the hedging instrument against the periodic changes in fair value of the asset being hedged due to changes in the hedged risk. The Company’s fair value hedges continue to be highly effective and had no material impact on the Consolidated Statements of Income, but if any ineffectiveness exists, portions of the unrealized gains or losses would be recorded in interest income or interest expense on the Company’s Consolidated Statements of Income.

Loan Swaps

During the normal course of business, the Company enters into interest rate swap loan relationships (“loan swaps”) with borrowers to meet their financing needs. Upon entering into the loan swaps, the Company enters into offsetting positions with a third party in order to minimize interest rate risk. These back-to-back loan swaps qualify as financial derivatives with fair values as reported in “Other Assets” and “Other Liabilities” on the Company’s Consolidated Balance Sheets.

Interest Rate Lock Commitments

During the normal course of business, the Company enters into commitments to originate mortgage loans whereby the interest rate on the loan is determined prior to funding (“rate lock commitments”).  Rate lock commitments on mortgage loans that are intended to be sold in the secondary market are considered to be derivatives.  The period of time between issuance of a loan commitment, closing, and sale of the loan generally ranges from 30 to 120 days.  The Company protects itself from changes in interest rates through the use of best efforts forward delivery commitments, whereby the Company commits to sell a loan at the time the borrower commits to an interest rate with the intent that the buyer has assumed interest rate risk on the loan.  The correlation between the rate lock commitments and the best efforts contracts is high due to their similarity.

The market values of rate lock commitments and best efforts forward delivery commitments is not readily ascertainable with precision because rate lock commitments and best efforts contracts are not actively traded in stand-alone markets. The Company determines the fair value of rate lock commitments and best efforts contracts by measuring the change in the value of the underlying asset, while taking into consideration the probability that the rate lock commitments will close. The fair value of the rate lock commitments is reported as a component of “Other Assets” on the Company’s Consolidated Balance Sheets; the fair value of the Company’s best efforts forward delivery commitments is recorded as a component of “Other Liabilities” on the Company’s Consolidated Balance Sheets. Any impact to income is recorded in current period earnings as a component of “Mortgage banking income, net” on the Company’s Consolidated Statements of Income.

The following table summarizes key elements of the Company’s derivative instruments as of September 30, 2017 and December 31, 2016, segregated by derivatives that are considered accounting hedges and those that are not (dollars in thousands):

	September 30, 2017							December 31, 2016
			Derivative (2)							Derivative (2)
	Notional or Contractual Amount (1)			Assets		Liabilities		Notional or Contractual Amount (1)			Assets		Liabilities
Derivatives designated as accounting hedges:
Interest rate contracts:
Cash flow hedges	$	152,500		$	120	$	9,460	$	188,500		$	211	$	9,619
Fair value hedges	81,965			1,253		371		65,920			1,437		296
Derivatives not designated as accounting hedges:
Loan Swaps
Pay fixed - receive floating interest rate swaps	506,056			3,051		—		373,355			—		1,005
Pay floating - receive fixed interest rate swaps	506,056			—		3,051		373,355			1,005		—
Other contracts:
Interest rate lock commitments	50,311			685		—		48,743			610		—
Best efforts forward delivery commitments	80,307			245		—		85,400			1,469		—

(1) Notional amounts are not recorded on the balance sheet and are generally used only as a basis on which interest and other payments are determined.

(2) Balancesrepresent fair value of derivative financial instruments.

For information regarding collateral pledged on derivative instruments, see Note 6 “Commitments and Contingencies.”

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ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

9 Months Ended

Sep. 30, 2017

Equity [Abstract]

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The change in accumulated other comprehensive income (loss) for the three and nine months ended September 30, 2017 is summarized as follows, net of tax (dollars in thousands):

	Unrealized Gains (Losses) on AFS Securities			Unrealized Gain for AFS Securities Transferred to HTM			Change in Fair Value of Cash Flow Hedge			Unrealized Gains (Losses) on BOLI			Total
Balance - June 30, 2017	$	7,733		$	3,033		$	(5,487	)	$	(1,271	)	$	4,008
Other comprehensive income (loss)	(2,729		)	—			41			—			(2,688		)
Amounts reclassified from accumulated other comprehensive income	(119		)	(163		)	189			84			(9		)
Net current period other comprehensive income (loss)	(2,848		)	(163		)	230			84			(2,697		)
Balance - September 30, 2017	$	4,885		$	2,870		$	(5,257	)	$	(1,187	)	$	1,311

	Unrealized Gains (Losses) on AFS Securities			Unrealized Gain for AFS Securities Transferred to HTM			Change in Fair Value of Cash Flow Hedge			Unrealized Gains (Losses) on BOLI			Total
Balance - December 31, 2016	$	(542	)	$	3,377		$	(5,179	)	$	(1,465	)	$	(3,809	)
Other comprehensive income (loss)	5,935			—			(766		)	—			5,169
Amounts reclassified from accumulated other comprehensive income	(508		)	(507		)	688			278			(49		)
Net current period other comprehensive income (loss)	5,427			(507		)	(78		)	278			5,120
Balance - September 30, 2017	$	4,885		$	2,870		$	(5,257	)	$	(1,187	)	$	1,311

The change in accumulated other comprehensive income (loss) for the three and nine months ended September 30, 2016 is summarized as follows, net of tax (dollars in thousands):

	Unrealized Gains (Losses) on AFS Securities		Unrealized Gain for AFS Securities Transferred to HTM			Change in Fair Value of Cash Flow Hedge			Total
Balance - June 30, 2016	$	14,412	$	3,853		$	(9,366	)	$	8,899
Other comprehensive income (loss)	1,121		—			(78		)	1,043
Amounts reclassified from accumulated other comprehensive income	—		(237		)	154			(83		)
Net current period other comprehensive income (loss)	$	1,121	$	(237	)	$	76		$	960
Balance - September 30, 2016	$	15,533	$	3,616		$	(9,290	)	$	9,859

	Unrealized Gains (Losses) on AFS Securities			Unrealized Gain for AFS Securities Transferred to HTM			Change in Fair Value of Cash Flow Hedge			Total
Balance - December 31, 2015	$	7,777		$	4,432		$	(5,957	)	$	6,252
Other comprehensive income (loss)	7,851			—			(3,766		)	4,085
Amounts reclassified from accumulated other comprehensive income	(95		)	(816		)	433			(478		)
Net current period other comprehensive income (loss)	7,756			(816		)	(3,333		)	3,607
Balance - September 30, 2016	$	15,533		$	3,616		$	(9,290	)	$	9,859

Reclassifications of unrealized gains (losses) on available for sale securities are reported on the Company’s Consolidated Statements of Income as “Gains on securities transactions, net” with the corresponding income tax effect being reflected as a component of income tax expense. The Company reported gains of $184,000 and $782,000 for the three and nine months ended September 30, 2017, respectively, and $0 and $145,000 for the three and nine months ended September 30, 2016, respectively, related to the sale of securities. The tax effects of these transactions during the three and nine months ended September 30, 2017 were $64,000 and $274,000, respectively, and were $0 and $51,000 during the three and nine months ended September 30, 2016, respectively, which amounts were included as a component of income tax expense.

During the second quarter of 2015, the Company transferred securities, which it intends and has the ability to hold until maturity, with a fair value of $201.8 million on the date of transfer, from securities available for sale to securities held to maturity. The securities included net pre-tax unrealized gains of $8.1 million at the date of transfer. Reclassifications of the unrealized gains on transferred securities are reported over time as accretion within interest income on the Company's Consolidated Statements of Income with the corresponding income tax effect being reflected as a component of income tax expense. The Company recorded accretion of $251,000 and $780,000 for the three and nine months ended September 30, 2017, respectively, and $365,000 and $1.3 million for the three and nine months ended September 30, 2016, respectively. The tax effect of these transactions during the three and nine months ended September 30, 2017 were $88,000 and $273,000, respectively, and were $128,000 and $439,000 for the three and nine months ended September 30, 2016, respectively, which were included as a component of income tax expense.

Reclassifications of the change in fair value of cash flow hedges are reported in interest income and interest expense on the Company’s Consolidated Statements of Income with the corresponding income tax effect being reflected as a component of income tax expense. The Company reported net interest expense of $291,000 and $1.1 million for the three and nine months ended September 30, 2017, respectively, and $237,000 and $666,000 for the three and nine months ended September 30, 2016, respectively. The tax effects of these transactions during the three and nine months ended September 30, 2017 were $102,000 and $370,000, respectively, and were $83,000 and $233,000 during the three and nine months ended September 30, 2016, which were included as a component of income tax expense.

Reclassifications of unrealized losses on BOLI are reported in salaries and benefits expense on the Company's Consolidated Statements of Income. The Company reported expenses of $84,000 and $278,000 for the three and nine months ended September 30, 2017, respectively, and $0 for the both three and nine months ended September 30, 2016.

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FAIR VALUE MEASUREMENTS

9 Months Ended

Sep. 30, 2017

Fair Value Disclosures [Abstract]

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS

The Company follows ASC 820, Fair Value Measurements and Disclosures, to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. This codification clarifies that fair value of certain assets and liabilities is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between willing market participants.

ASC 820 specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions. The three levels of the fair value hierarchy under ASC 820 based on these two types of inputs are as follows:

Level 1	Valuation is based on quoted prices in active markets for identical assets and liabilities.
Level 2	Valuation is based on observable inputs including quoted prices in active markets for similar assets and liabilities, quoted prices for identical or similar assets and liabilities in less active markets, and model-based valuation techniques for which significant assumptions can be derived primarily from or corroborated by observable data in the markets.
Level 3	Valuation is based on model-based techniques that use one or more significant inputs or assumptions that are unobservable in the market.  These unobservable inputs reflect the Company’s assumptions about what market participants would use and information that is reasonably available under the circumstances without undue cost and effort.

The following describes the valuation techniques used by the Company to measure certain financial assets and liabilities recorded at fair value on a recurring basis in the financial statements.

Derivative instruments

As discussed in Note 7 “Derivatives”, the Company records derivative instruments at fair value on a recurring basis. The Company utilizes derivative instruments as part of the management of interest rate risk to modify the re-pricing characteristics of certain portions of the Company’s interest-bearing assets and liabilities. The Company has contracted with a third party vendor to provide valuations for derivatives using standard valuation techniques and therefore classifies such valuations as Level 2. Third party valuations are validated by the Company using Bloomberg Valuation Service’s derivative pricing functions. The Company has considered counterparty credit risk in the valuation of its derivative assets and has considered its own credit risk in the valuation of its derivative liabilities.

During the ordinary course of business, the Company enters into interest rate lock commitments related to the origination of mortgage loans held for sale, as well as best effort forward delivery commitments to mitigate interest rate risk; these instruments are recorded at estimated fair value based on the value of the underlying loan, which in turn is based on quoted prices for similar loans in the secondary market. This value, however, is adjusted by a pull-through rate, which considers the likelihood that the loan in a lock position will ultimately close. The pull-through rate is derived from the Company’s internal data and is adjusted using significant management judgment. The pull-through rate is largely dependent on the loan processing stage that a loan is currently in and the change in prevailing interest rates from the time of the rate lock. As such, interest rate lock commitments are classified as Level 3. An increase in the pull-through rate utilized in the fair value measurement of the interest rate lock commitment derivative will result in positive fair value adjustments, while a decrease in the pull-through rate will result in a negative fair value adjustment. The Company’s weighted average pull-through rate was approximately 80% as of September 30, 2017 and December 31, 2016. The interest rate lock commitments are recorded as a component of “Other Assets” on the Company’s Consolidated Balance Sheets.

Securities available for sale

Securities available for sale are recorded at fair value on a recurring basis. Fair value measurement is based upon quoted market prices, when available (Level 1). If quoted market prices are not available, fair values are measured utilizing independent valuation techniques of identical or similar securities for which significant assumptions are derived primarily from or corroborated by observable market data (Level 2). If the inputs used to provide the evaluation for certain securities are unobservable and/or there is little, if any, market activity, then the security would fall to the lowest level of the hierarchy (Level 3).

The Company’s investment portfolio is primarily valued using fair value measurements that are considered to be Level 2. The Company has contracted with a third party portfolio accounting service vendor for valuation of its securities portfolio. The vendor’s primary source for security valuation is Interactive Data Corporation (“IDC”), which evaluates securities based on market data. IDC utilizes evaluated pricing models that vary by asset class and include available trade, bid, and other market information. Generally, the methodology includes broker quotes, proprietary models, vast descriptive terms and conditions databases, as well as extensive quality control programs.

The vendor utilizes proprietary valuation matrices for valuing all municipals securities. The initial curves for determining the price, movement, and yield relationships within the municipal matrices are derived from industry benchmark curves or sourced from a municipal trading desk. The securities are further broken down according to issuer, credit support, state of issuance, and rating to incorporate additional spreads to the industry benchmark curves.

The Company primarily uses Bloomberg Valuation Service, an independent information source that draws on quantitative models and market data contributed from over 4,000 market participants, to validate third party valuations. Any material differences between valuation sources are researched by further analyzing the various inputs that are utilized by each pricing source. No material differences were identified during the validation as of September 30, 2017 and December 31, 2016.

The carrying value of restricted Federal Reserve Bank and FHLB stock approximates fair value based on the redemption provisions of each entity and is therefore excluded from the following table.

Loans held for sale

Loans held for sale are carried at fair value. These loans currently consist of residential loans originated for sale in the secondary market. Fair value is based on the price secondary markets are currently offering for similar loans using observable market data which is not materially different than cost due to the short duration between origination and sale (Level 2). Gains and losses on the sale of loans are recorded within the mortgage segment and are reported on a separate line item on the Company’s Consolidated Statements of Income.

The following table presents the balances of financial assets and liabilities measured at fair value on a recurring basis at September 30, 2017 and December 31, 2016 (dollars in thousands): 

	Fair Value Measurements at September 30, 2017 using
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	Level 1		Level 2		Level 3		Balance
ASSETS
Securities available for sale:
Obligations of states and political subdivisions	$	—	$	292,199	$	—	$	292,199
Corporate and other bonds	—		115,422		—		115,422
Mortgage-backed securities	—		546,904		—		546,904
Other securities	—		13,836		—		13,836
Loans held for sale	—		30,896		—		30,896
Derivatives:
Interest rate swap	—		3,051		—		3,051
Cash flow hedges	—		120		—		120
Fair value hedges	—		1,253		—		1,253
Interest rate lock commitments	—		—		685		685
Best efforts forward delivery commitments	—		—		245		245
LIABILITIES
Derivatives:
Interest rate swap	$	—	$	3,051	$	—	$	3,051
Cash flow hedges	—		9,460		—		9,460
Fair value hedges	—		371		—		371

	Fair Value Measurements at December 31, 2016 using
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	Level 1		Level 2		Level 3		Balance
ASSETS
Securities available for sale:
Obligations of states and political subdivisions	$	—	$	275,890	$	—	$	275,890
Corporate and other bonds	—		121,780		—		121,780
Mortgage-backed securities	—		535,286		—		535,286
Other securities	—		13,808		—		13,808
Loans held for sale	—		36,487		—		36,487
Derivatives:
Interest rate swap	—		1,005		—		1,005
Cash flow hedges	—		211		—		211
Fair value hedges	—		1,437		—		1,437
Interest rate lock commitments	—		—		610		610
Best efforts forward delivery commitments	—		—		1,469		1,469
LIABILITIES
Derivatives:
Interest rate swap	$	—	$	1,005	$	—	$	1,005
Cash flow hedges	—		9,619		—		9,619
Fair value hedges	—		296		—		296

Certain assets are measured at fair value on a nonrecurring basis in accordance with U.S. GAAP. Adjustments to the fair value of these assets usually result from the application of lower-of-cost-or-market accounting or write-downs of individual assets.

The following describes the valuation techniques used by the Company to measure certain assets recorded at fair value on a nonrecurring basis in the financial statements.

Impaired loans

Loans are designated as impaired when, in the judgment of management based on current information and events, it is probable that all amounts due according to the contractual terms of the loan agreements will not be collected. The measurement of loss associated with impaired loans can be based on either the observable market price of the loan or the fair value of the collateral. Collateral dependent loans are reported at the fair value of the underlying collateral if repayment is solely from the underlying value of the collateral. Collateral may be in the form of real estate or business assets including equipment, inventory, and accounts receivable. The vast majority of the Company’s collateral is real estate. The value of real estate collateral is determined utilizing an income or market valuation approach based on an appraisal conducted by an independent, licensed appraiser using observable market data. When evaluating the fair value, management may discount the appraisal further if, based on their understanding of the market conditions, it is determined the collateral is further impaired below the appraised value (Level 3). At September 30, 2017 and December 31, 2016, the Level 3 weighted average adjustments related to impaired loans were 3.3% and 1.5%, respectively. The value of business equipment is based upon an outside appraisal, of one year or less, if deemed significant, or the net book value on the applicable business’s financial statements if not considered significant using observable market data. Likewise, values for inventory and accounts receivables collateral are based on financial statement balances or aging reports (Level 3). Collateral dependent impaired loans allocated to the allowance for loan losses are measured at fair value on a nonrecurring basis. Any fair value adjustments are recorded in the period incurred as provision for loan losses on the Company’s Consolidated Statements of Income.

Other real estate owned

OREO is evaluated for impairment at least quarterly by the Bank’s Special Asset Loan Committee and any necessary write downs to fair values are recorded as impairment and included as a component of noninterest expense. Fair values of OREO are carried at fair value less selling costs. Fair value is based upon independent market prices, appraised values of the collateral, or management’s estimation of the value of the collateral. When an appraised value is not available or management determines the fair value of the collateral is further impaired below the appraised value and there is no observable market price, the Company records the foreclosed asset as Level 3 valuation. At September 30, 2017 and December 31, 2016, the Level 3 weighted average adjustments related to OREO were approximately 25.1% and 25.1%, respectively.

Total valuation expenses related to OREO properties for the three months ended September 30, 2017 and 2016 totaled $588,000 and $479,000, respectively. Total valuation expenses related to OREO properties for the nine months ended September 30, 2017 and 2016 totaled $845,000 and $879,000, respectively.

The following tables summarize the Company’s financial assets that were measured at fair value on a nonrecurring basis at September 30, 2017 and December 31, 2016 (dollars in thousands):

	Fair Value Measurements at September 30, 2017 using
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	Level 1		Level 2		Level 3		Balance
ASSETS
Impaired loans	$	—	$	—	$	7,143	$	7,143
Other real estate owned	—		—		8,764		8,764

	Fair Value Measurements at December 31, 2016 using
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	Level 1		Level 2		Level 3		Balance
ASSETS
Impaired loans	$	—	$	—	$	4,344	$	4,344
Other real estate owned	—		—		10,084		10,084

ASC 825, Financial Instruments, requires disclosure about fair value of financial instruments for interim periods and excludes certain financial instruments and all non-financial instruments from its disclosure requirements. Accordingly, the aggregate fair value amounts presented may not necessarily represent the underlying fair value of the Company.

Cash and cash equivalents

For those short-term instruments, the carrying amount is a reasonable estimate of fair value.

Held to Maturity Securities

The Company’s investment portfolio is primarily valued using fair value measurements that are considered to be Level 2. The Company has contracted with a third party portfolio accounting service vendor for valuation of its securities portfolio. The vendor’s primary source for security valuation is IDC, which evaluates securities based on market data. IDC utilizes evaluated pricing models that vary by asset class and include available trade, bid, and other market information. Generally, the methodology includes broker quotes, proprietary models, vast descriptive terms and conditions databases, as well as extensive quality control programs.

The vendor utilizes proprietary valuation matrices for valuing all municipals securities. The initial curves for determining the price, movement, and yield relationships within the municipal matrices are derived from industry benchmark curves or sourced from a municipal trading desk. The securities are further broken down according to issuer, credit support, state of issuance, and rating to incorporate additional spreads to the industry benchmark curves.

The Company primarily uses Bloomberg Valuation Service, an independent information source that draws on quantitative models and market data contributed from over 4,000 market participants, to validate third party valuations. Any material differences between valuation sources are researched by further analyzing the various inputs that are utilized by each pricing source. No material differences were identified during the validation as of September 30, 2017 and December 31, 2016.

Loans

The fair value of performing loans is estimated by discounting expected future cash flows using a yield curve that is constructed by adding a loan spread to a market yield curve. Loan spreads are based on spreads currently observed in the market for loans of similar type and structure. Fair value for impaired loans and their respective level within the fair value hierarchy, are described in the previous disclosure related to fair value measurements of assets that are measured on a nonrecurring basis.

Bank-owned life insurance

The carrying value of BOLI approximates fair value. The Company records these policies at their cash surrender value, which is estimated using information provided by insurance carriers.

Deposits

The fair value of demand deposits, savings accounts, and certain money market deposits is the amount payable on demand at the reporting date. The fair value of certificates of deposit is estimated by discounting the future cash flows using the rates currently offered for deposits of similar remaining maturities.

Borrowings

The carrying value of the Company’s repurchase agreements is a reasonable estimate of fair value. Other borrowings are discounted using the current yield curve for the same type of borrowing. For borrowings with embedded optionality, a third party source is used to value the instrument. The Company validates all third party valuations for borrowings with optionality using Bloomberg Valuation Service’s derivative pricing functions.

Accrued interest

The carrying amounts of accrued interest approximate fair value.

The carrying values and estimated fair values of the Company’s financial instruments at September 30, 2017 and December 31, 2016 are as follows (dollars in thousands):

			Fair Value Measurements at September 30, 2017 using
			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs		Total Fair Value
	Carrying Value		Level 1		Level 2		Level 3		Balance
ASSETS
Cash and cash equivalents	$	176,961	$	176,961	$	—	$	—	$	176,961
Securities available for sale	968,361		—		968,361		—		968,361
Held to maturity securities	204,801		—		209,835		—		209,835
Restricted stock	68,441		—		68,441		—		68,441
Loans held for sale	30,896		—		30,896		—		30,896
Net loans	6,861,567		—		—		6,873,609		6,873,609
Derivatives:
Interest rate swap	3,051		—		3,051		—		3,051
Cash flow hedge	120		—		120		—		120
Fair value hedge	1,253		—		1,253		—		1,253
Interest rate lock commitments	685		—		—		685		685
Best efforts forward delivery commitments	245		—		—		245		245
Accrued interest receivable	25,279		—		25,279		—		25,279
Bank owned life insurance	181,451		—		181,451		—		181,451
LIABILITIES
Deposits	$	6,881,826	$	—	$	6,873,124	$	—	$	6,873,124
Borrowings	1,052,087		—		1,031,983		—		1,031,983
Accrued interest payable	4,372		—		4,372		—		4,372
Derivatives:
Interest rate swap	3,051		—		3,051		—		3,051
Cash flow hedges	9,460		—		9,460		—		9,460
Fair value hedges	371		—		371		—		371

			Fair Value Measurements at December 31, 2016 using
			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs		Total Fair Value
	Carrying Value		Level 1		Level 2		Level 3		Balance
ASSETS
Cash and cash equivalents	$	179,237	$	179,237	$	—	$	—	$	179,237
Securities available for sale	946,764		—		946,764		—		946,764
Held to maturity securities	201,526		—		202,315		—		202,315
Restricted stock	60,782		—		60,782		—		60,782
Loans held for sale	36,487		—		36,487		—		36,487
Net loans	6,269,868		—		—		6,265,443		6,265,443
Derivatives:
Interest rate swap	1,005		—		1,005		—		1,005
Cash flow hedges	211		—		211		—		211
Fair value hedges	1,437		—		1,437		—		1,437
Interest rate lock commitments	610		—		—		610		610
Best efforts forward delivery commitments	1,469		—		—		1,469		1,469
Accrued interest receivable	23,448		—		23,448		—		23,448
Bank owned life insurance	179,318		—		179,318		—		179,318
LIABILITIES
Deposits	$	6,379,489	$	—	$	6,370,457	$	—	$	6,370,457
Borrowings	990,089		—		970,195		—		970,195
Accrued interest payable	2,320		—		2,230		—		2,230
Derivatives:
Interest rate swap	1,005		—		1,005		—		1,005
Cash flow hedges	9,619		—		9,619		—		9,619
Fair value hedges	296		—		296		—		296

The Company assumes interest rate risk (the risk that general interest rate levels will change) as a result of its normal operations. As a result, the fair values of the Company’s financial instruments will change when interest rate levels change and that change may be either favorable or unfavorable to the Company. Management attempts to match maturities of assets and liabilities to the extent believed necessary to minimize interest rate risk. Borrowers with fixed rate obligations, however, are less likely to prepay in a rising rate environment and more likely to prepay in a falling rate environment. Conversely, depositors who are receiving fixed rates are more likely to withdraw funds before maturity in a rising rate environment and less likely to do so in a falling rate environment. Management monitors rates and maturities of assets and liabilities and attempts to minimize interest rate risk by adjusting terms of new loans and deposits and by investing in securities with terms that mitigate the Company’s overall interest rate risk.

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EARNINGS PER SHARE

9 Months Ended

Sep. 30, 2017

Earnings Per Share [Abstract]

EARNINGS PER SHARE

EARNINGS PER SHARE

Basic EPS is computed by dividing net income available to common stockholders by the weighted average number of common shares outstanding during the period. Diluted EPS is computed using the weighted average number of common shares outstanding during the period, including the effect of dilutive potential common shares outstanding attributable to stock awards.

The following is a reconciliation of the denominators of the basic and diluted EPS computations for the three and nine months ended September 30, 2017 and 2016 (dollars in thousands except per share data):

	Net Income Available to Common Stockholders (Numerator)		Weighted Average Common Shares (Denominator)	Per Share Amount
Three months ended September 30, 2017
Basic	20,658		43,707	$	0.47
Add: potentially dilutive common shares - stock awards	—		85	—
Diluted	$	20,658	43,792	$	0.47
Three months ended September 30, 2016
Basic	20,401		43,566	$	0.47
Add: potentially dilutive common shares - stock awards	—		189	—
Diluted	$	20,401	43,755	$	0.47
Nine months ended September 30, 2017
Basic	57,737		43,685	$	1.32
Add: potentially dilutive common shares - stock awards	—		83	—
Diluted	$	57,737	43,768	$	1.32
Nine months ended September 30, 2016
Basic	56,699		43,854	$	1.29
Add: potentially dilutive common shares - stock awards	—		114	—
Diluted	$	56,699	43,968	$	1.29

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SEGMENT REPORTING DISCLOSURES

9 Months Ended

Sep. 30, 2017

Segment Reporting [Abstract]

SEGMENT REPORTING DISCLOSURES

SEGMENT REPORTING DISCLOSURES

The Company has two reportable segments: a traditional full service community bank segment and a mortgage loan origination business segment. The community bank segment includes one subsidiary bank, the Bank, which provides loan, deposit, investment, and trust services to retail and commercial customers throughout its 111 retail locations in Virginia as of September 30, 2017. The mortgage segment includes UMG, which provides a variety of mortgage loan products principally in Virginia, North Carolina, Maryland, and the Washington D.C. metro area. These loans are originated and sold primarily in the secondary market through purchase commitments from investors, which serves to mitigate the Company’s exposure to interest rate risk.

Profit and loss is measured by net income after taxes including realized gains and losses on the Company’s investment portfolio. The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies. Inter-segment transactions are recorded at cost and eliminated as part of the consolidation process.

Both of the Company’s reportable segments are service-based. The mortgage segment's business is a primarily fee-based business, while the community bank segment is driven principally by net interest income. The community bank segment provides a distribution and referral network through its customers for the mortgage loan origination business. The mortgage segment offers a more limited referral network for the bank segment.

The community bank segment provides the mortgage segment with the short-term funds needed to originate mortgage loans through a warehouse line of credit and charges the mortgage banking segment interest. The interest rate on the warehouse line of credit for the three and nine months ended September 30, 2017 and 2016 was the three month LIBOR rate plus 0.15% with no floor. These transactions are eliminated in the consolidation process.

A management fee for operations and administrative support services is charged to all subsidiaries and eliminated in the consolidated totals.

Information about reportable segments and reconciliation of such information to the consolidated financial statements for the three and nine months ended September 30, 2017 and 2016 is as follows (dollars in thousands):

UNION BANKSHARES CORPORATION AND SUBSIDIARIES

SEGMENT FINANCIAL INFORMATION

	Community Bank		Mortgage			Eliminations			Consolidated
Three Months Ended September 30, 2017
Net interest income	$	70,718	$	480		$	—		$	71,198
Provision for credit losses	3,056		(6		)	—			3,050
Net interest income after provision for credit losses	67,662		486			—			68,148
Noninterest income	15,121		2,527			(112		)	17,536
Noninterest expenses	55,133		2,475			(112		)	57,496
Income before income taxes	27,650		538			—			28,188
Income tax expense	7,339		191			—			7,530
Net income	$	20,311	$	347		$	—		$	20,658
Total assets	$	9,020,486	$	97,154		$	(88,204	)	$	9,029,436
Three Months Ended September 30, 2016
Net interest income	$	66,605	$	423		$	—		$	67,028
Provision for credit losses	2,455		17			—			2,472
Net interest income after provision for credit losses	64,150		406			—			64,556
Noninterest income	15,589		3,501			(140		)	18,950
Noninterest expenses	54,353		2,700			(140		)	56,913
Income before income taxes	25,386		1,207			—			26,593
Income tax expense	5,770		422			—			6,192
Net income	$	19,616	$	785		$	—		$	20,401
Total assets	$	8,251,351	$	90,692		$	(83,813	)	$	8,258,230
Nine Months Ended September 30, 2017
Net interest income	$	205,534	$	1,231		$	—		$	206,765
Provision for credit losses	7,344		1			—			7,345
Net interest income after provision for credit losses	198,190		1,230			—			199,420
Noninterest income	47,080		7,743			(393		)	54,430
Noninterest expenses	167,643		7,571			(393		)	174,821
Income before income taxes	77,627		1,402			—			79,029
Income tax expense	20,791		501			—			21,292
Net income	$	56,836	$	901		$	—		$	57,737
Total assets	$	9,020,486	$	97,154		$	(88,204	)	$	9,029,436
Nine Months Ended September 30, 2016
Net interest income	$	195,508	$	1,027		$	—		$	196,535
Provision for credit losses	7,215		161			—			7,376
Net interest income after provision for credit losses	188,293		866			—			189,159
Noninterest income	44,137		9,185			(465		)	52,857
Noninterest expenses	158,964		7,937			(465		)	166,436
Income before income taxes	73,466		2,114			—			75,580
Income tax expense	18,145		736			—			18,881
Net income	$	55,321	$	1,378		$	—		$	56,699
Total assets	$	8,251,351	$	90,692		$	(83,813	)	$	8,258,230

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ACCOUNTING POLICIES (Policies)

9 Months Ended

Sep. 30, 2017

Accounting Policies [Abstract]

Loans

Loans

The Company originates commercial and consumer loans to customers. A substantial portion of the loan portfolio is represented by commercial and residential real estate loans (including acquisition and development loans and residential construction loans) throughout its market area. The ability of the Company’s debtors to honor their contracts on such loans is dependent upon the real estate and general economic conditions in those markets, as well as other factors.

Loans that management has the intent and ability to hold for the foreseeable future or until maturity or pay-off generally are reported at their outstanding unpaid principal balances adjusted for any charge-offs, the allowance for loan losses, and any deferred fees or costs on originated loans. Interest income is accrued on the unpaid principal balance. Loan origination fees, net of certain direct origination costs, are deferred and recognized as an adjustment of the related loan yield using the interest method.

Below is a summary of the Company's loan segments:

Construction and Land Development – construction loans generally made to commercial and residential builders for specific construction projects. The successful repayment of these types of loans is generally dependent upon (a) a commitment for permanent financing from the Company, or (b) from the sale of the constructed property. These loans carry more risk than both types of commercial real estate term loans due to the dynamics of construction projects, changes in interest rates, the long-term financing market, and state and local government regulations. As in commercial real estate term lending, the Company manages risk by using specific underwriting policies and procedures for these types of loans and by avoiding excessive concentrations to any one business or industry.

Also, included in this category are loans generally made to residential home builders to support their lot and home inventory needs. Repayment relies upon the successful performance of the underlying residential real estate project. This type of lending carries a higher level of risk as compared to other commercial lending. This class of lending manages risks related to residential real estate market conditions, a functioning first and secondary market in which to sell residential properties, and the borrower’s ability to manage inventory and run projects. The Company manages this risk by lending to experienced builders and developers by using specific underwriting policies and procedures for these types of loans and by avoiding excessive concentrations with any particular customer or geographic region.

Commercial Real Estate – Owner Occupied – term loans made to support owner occupied real estate properties that rely upon the successful operation of the business occupying the property for repayment. General market conditions and economic activity may affect these types of loans. In addition to using specific underwriting policies and procedures for these types of loans, the Company manages risk by avoiding concentrations to any one business or industry.

Commercial Real Estate – Non-Owner Occupied – term loans typically made to borrowers to support income producing properties that rely upon the successful operation of the property for repayment. General market conditions and economic activity may impact the performance of these types of loans. In addition to using specific underwriting policies and procedures for these types of loans, the Company manages risk by diversifying the lending to various lines of businesses, such as retail, office, office warehouse, and hotel as well as avoiding concentrations to any one business or industry.

Residential 1-4 Family – loans generally made to both commercial and residential borrowers. Residential 1-4 Family loan portfolios carry risks associated with the creditworthiness of the borrower or the tenant and changes in loan-to-value ratios. The Company manages these risks through policies and procedures such as limiting loan-to-value ratios at origination, experienced underwriting, requiring standards for appraisers, and not making subprime loans.

Multifamily Real Estate – loans made to real estate investors to support permanent financing for multifamily residential income producing properties that rely on the successful operation of the property for repayment. This management mainly involves property maintenance and collection of rents due from tenants. This type of lending carries a lower level of risk as compared to other commercial lending. In addition, underwriting requirements for multifamily properties are stricter than for other non-owner-occupied property types. The Company manages this risk by avoiding concentrations with any particular customer.

Commercial & Industrial – loans generally made to support the Company’s borrowers’ need for equipment/vehicle purchases and short-term or seasonal cash flow needs. Repayment relies upon the successful operation of the business. This type of lending carries a lower level of commercial credit risk as compared to other commercial lending. The Company manages this risk by using general underwriting policies and procedures for these types of loans and by avoiding concentrations to any one business or industry.

HELOC – the consumer HELOC portfolio carries risks associated with the creditworthiness of the borrower and changes in loan-to-value ratios. The Company manages these risks through policies and procedures such as limiting loan-to-value ratios at origination, using experienced underwriting, requiring standards for appraisers, and not making subprime loans.

Auto – the consumer indirect auto lending portfolio generally carries certain risks associated with the values of the collateral that management must mitigate. The Company focuses its indirect auto lending on one to two year old used vehicles where substantial depreciation has already occurred thereby minimizing the risk of significant loss of collateral values in the future. This type of lending places reliance on computer-based loan approval systems to supplement other underwriting standards.

Consumer and all other – portfolios carry risks associated with the creditworthiness of the borrower and changes in the economic environment. The Company manages these risks through policies and procedures such as experienced underwriting, maximum debt to income ratios, and minimum borrower credit scores. Also included in this category are loans that generally support small business lines of credit and agricultural lending, neither of which are a material source of business for the Company.

Affordable Housing Entities

Affordable Housing Entities

The Company invests in private investment funds that make equity investments in multifamily affordable housing properties that provide affordable housing tax credits for these investments. The activities of these entities are financed with a combination of invested equity capital and debt.

Adoption of New Accounting Standards and Recent Accounting Pronouncements

Adoption of New Accounting Standards

In March 2016, the FASB issued ASU No. 2016-09, “Compensation - Stock Compensation (Topic 718): Improvements to

Employee Share-Based Payment Accounting.” This ASU simplifies several aspects of the accounting for employee share based payment transactions, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. The Company adopted this standard in the first quarter of 2017. The adoption of ASU 2016-09 did not have a material impact on the Company’s consolidated financial statements.

Recent Accounting Pronouncements

In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers: Topic 606.” This ASU revised guidance for the recognition, measurement, and disclosure of revenue from contracts with customers. The original guidance has been amended through subsequent accounting standard updates that resulted in technical corrections, improvements, and a one-year deferral of the effective date to January 1, 2018. The guidance, as amended, is applicable to all entities and, once effective, will replace significant portions of existing industry and transaction-specific revenue recognition rules with a more principles-based recognition model. Most revenue associated with financial instruments, including interest income, loan origination fees, and credit card fees, is outside the scope of the guidance. Gains and losses on investment securities, derivatives, and sales of financial instruments are similarly excluded from the scope. Entities can elect to adopt the guidance either on a full or modified retrospective basis. Full retrospective adoption will require a cumulative effect adjustment to retained earnings as of the beginning of the earliest comparative period presented. Modified retrospective adoption will require a cumulative effect adjustment to retained earnings as of the beginning of the reporting period in which the entity first applies the new guidance. The Company plans to adopt this guidance on the effective date, January 1, 2018 via the modified retrospective approach. The Company performed its assessment of the adoption of this ASU and the related subsequent technical corrections issued. Based on the completed contracts reviewed thus far, the adoption of this accounting guidance is not expected to have a material impact on the Company's consolidated financial statements.

In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842).” This ASU requires lessees to put most leases on their balance sheets, but recognize expenses in the income statement in a manner similar to today’s accounting. The guidance also eliminates the real estate-specific provisions and changes the guidance on sale-leaseback transactions, initial direct costs, and lease executory costs for all entities. For lessors, the standard modifies the classification criteria and the accounting for sales-type and direct financing leases. This ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted. The Company is currently working to identify the complete lease population, including potential embedded leases. The adoption of this standard is expected to result in additional assets and liabilities, as the Company will be required to recognize operating leases on the Consolidated Balance Sheet. Other implementation matters to be addressed include, but are not limited to, the determination of effects on the financial and capital ratios and the quantification of the impacts that this accounting guidance will have on the Company's consolidated financial statements.

In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.”This ASU updates the existing guidance to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. The amendment replaces the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and required consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The amendment is effective for fiscal years beginning after December 15, 2019. The Company is currently assessing the impact ASU No. 2016-13 will have on its consolidated financial statements.

In January 2017, the FASB issued ASU No. 2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business.” This ASU clarifies the definition of a business that appears in ASC 805, Business Combinations. Amendments narrow the definition and provide a framework for making judgments whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The amendment to the Business Combinations Topic is intended to address concerns that the existing definition of a business has been applied too broadly and has resulted in many transactions being recorded as business acquisitions that in substance are more akin to asset acquisitions. ASU 2017-01 is effective for annual periods beginning after December 15, 2017, including interim periods within those annual periods. The Company has concluded the adoption of ASU 2017-01 will not have a material impact on its consolidated financial statements.

In January 2017, the FASB issued ASU No. 2017-03, “Accounting Changes and Error Corrections (Topic 250) and Investments—Equity Method and Joint Ventures (Topic 323): Amendments to SEC Paragraphs Pursuant to Staff Announcements at the September 22, 2016 and November 17, 2016 EITF Meetings (SEC Update).” This ASU incorporates into the Accounting Standards Codification recent SEC guidance about disclosing, under SEC SAB Topic 11.M, the effect on financial statements of adopting the revenue, leases, and credit losses standards. ASU 2017-03 is effective upon issuance. The Company has concluded the adoption of ASU 2017-03 will not have a material impact on its consolidated financial statements.

In January 2017, the FASB issued ASU No. 2017-04, “Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment.” This ASU simplifies accounting for goodwill impairments by eliminating step two (the implied fair value to carrying value of goodwill) from the existing goodwill impairment test. A goodwill impairment will now be the amount by which a reporting unit's carrying value exceeds its fair value, not to exceed the carrying amount of the goodwill. The effective date and transition requirements for the technical corrections will be effective for the Company for reporting periods beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company has concluded the adoption of ASU 2017-04 will not have a material impact on its consolidated financial statements.

In February 2017, the FASB issued ASU No. 2017-05, “Other Income—Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets.” This ASU conforms the derecognition guidance on nonfinancial assets with the model for transactions in the new revenue standard. The amendments will be effective for the Company for reporting periods beginning after December 15, 2018. The Company concluded that ASU 2017-05 will not have a material impact on its consolidated financial statements.

In March 2017, the FASB issued ASU No. 2017-08, “Receivables—Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities.”This ASU focuses on the amortization period for certain purchased callable debt securities held at a premium. The amendments shorten the amortization period for the premium to the earliest call date. The amendments will be effective for the Company for interim and annual periods beginning after December 15, 2018. The Company has concluded the adoption of ASU 2017-08 will not have a material impact on its consolidated financial statements.

In May 2017, the FASB issued ASU No. 2017-09, “Compensation - Stock Compensation (Topic 718): Scope of Modification Accounting.”This ASU relates to changes in the terms or conditions of a share-based payment award. The amendments provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. The amendments will be effective for the Company for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted. The Company has concluded the adoption of ASU 2017-09 will not have a material impact on its consolidated 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 ASU relates to any entity that elects to apply hedge accounting in accordance with current GAAP. The amendment simplifies the application of the hedge accounting guidance and improves the financial reporting of hedging relationships to better portray the economic results of an entity’s risk management activities in its financial statements. The amendments will be effective for the Company for annual periods, and interim periods within those annual periods, beginning after December 15, 2018. Early adoption is permitted. The Company is currently assessing the impact ASU 2017-12 will have on its consolidated financial statements.

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SECURITIES (Tables)

9 Months Ended

Sep. 30, 2017

Schedule of Investments [Line Items]

Gross Realized Gain and Losses on the Sale of Securities

The following table presents the gross realized gains and losses on and the proceeds from the sale of securities during the three and nine months ended September 30, 2017 and 2016 (dollars in thousands).

	Three Months Ended September 30, 2017			Nine Months Ended September 30, 2017
Realized gains (losses):
Gross realized gains	$	296		$	958
Gross realized losses	(112		)	(176		)
Net realized gains	$	184		$	782
Proceeds from sales of securities	$	39,284		$	91,911

	Three Months Ended September 30, 2016		Nine Months Ended September 30, 2016
Realized gains (losses):
Gross realized gains	$	—	$	242
Gross realized losses	—		(97		)
Net realized gains	$	—	$	145
Proceeds from sales of securities	$	2,848	$	18,272

Available-for-sale Securities

Schedule of Investments [Line Items]

Amortized Cost, Gross Unrealized Gains and Losses, and Estimated Fair Values of Investment Securities

The amortized cost, gross unrealized gains and losses, and estimated fair values of securities available for sale as of September 30, 2017 and December 31, 2016 are summarized as follows (dollars in thousands):

	Amortized		Gross Unrealized					Estimated
	Cost		Gains		(Losses)			Fair Value
September 30, 2017
Obligations of states and political subdivisions	$	285,921	$	7,582	$	(1,304	)	$	292,199
Corporate bonds	114,997		1,241		(816		)	115,422
Mortgage-backed securities	546,038		4,119		(3,253		)	546,904
Other securities	13,890		—		(54		)	13,836
Total available for sale securities	$	960,846	$	12,942	$	(5,427	)	$	968,361
December 31, 2016
Obligations of states and political subdivisions	$	274,007	$	4,962	$	(3,079	)	$	275,890
Corporate bonds	123,674		892		(2,786		)	121,780
Mortgage-backed securities	536,031		4,626		(5,371		)	535,286
Other securities	13,885		—		(77		)	13,808
Total available for sale securities	$	947,597	$	10,480	$	(11,313	)	$	946,764

Schedule of Gross Unrealized Losses and Fair Value of Investments

The following table shows the gross unrealized losses and fair value (dollars in thousands) of the Company’s available for sale securities with unrealized losses that are not deemed to be other-than-temporarily impaired as of September 30, 2017 and December 31, 2016. These are aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position.

	Less than 12 months					More than 12 months					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
September 30, 2017
Obligations of states and political subdivisions	$	55,319	$	(700	)	$	9,338	$	(604	)	$	64,657	$	(1,304	)
Mortgage-backed securities	283,466		(2,708		)	42,481		(545		)	325,947		(3,253		)
Corporate bonds and other securities	21,128		(353		)	32,674		(517		)	53,802		(870		)
Total available for sale securities	$	359,913	$	(3,761	)	$	84,493	$	(1,666	)	$	444,406	$	(5,427	)
December 31, 2016
Obligations of states and political subdivisions	$	108,440	$	(3,007	)	$	588	$	(72	)	$	109,028	$	(3,079	)
Mortgage-backed securities	316,469		(4,979		)	42,096		(392		)	358,565		(5,371		)
Corporate bonds and other securities	47,388		(1,537		)	40,468		(1,326		)	87,856		(2,863		)
Total available for sale securities	$	472,297	$	(9,523	)	$	83,152	$	(1,790	)	$	555,449	$	(11,313	)

Schedule of Amortized Cost and Estimated Fair Value of Securities

The following table presents the amortized cost and estimated fair value of available for sale securities as of September 30, 2017 and December 31, 2016, by contractual maturity (dollars in thousands). Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	September 30, 2017				December 31, 2016
	Amortized Cost		Estimated Fair Value		Amortized Cost		Estimated Fair Value
Due in one year or less	$	23,387	$	23,510	$	21,403	$	21,517
Due after one year through five years	128,261		130,107		108,198		109,778
Due after five years through ten years	267,492		271,830		300,552		301,888
Due after ten years	541,706		542,914		517,444		513,581
Total securities available for sale	$	960,846	$	968,361	$	947,597	$	946,764

Held-to-maturity Securities

Schedule of Investments [Line Items]

Schedule of Amortized Cost and Estimated Fair Value of Securities

The following table presents the amortized cost and estimated fair value of held to maturity securities as of September 30, 2017 and December 31, 2016, by contractual maturity (dollars in thousands). Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	September 30, 2017				December 31, 2016
	Carrying Value (1)		Estimated Fair Value		Carrying Value (1)		Estimated Fair Value
Due in one year or less	$	5,879	$	5,902	$	4,403	$	4,440
Due after one year through five years	41,196		41,959		28,383		28,763
Due after five years through ten years	65,893		67,444		51,730		51,522
Due after ten years	91,833		94,530		117,010		117,590
Total securities held to maturity	$	204,801	$	209,835	$	201,526	$	202,315

(1)The carrying value includes $4.0 million as of September 30, 2017 and $5.2 million as of December 31, 2016 of net unrealized gains present at the time of transfer from available for sale securities, net of any accretion.

Schedule of Carrying Values, Gross Unrealized Gains and Losses and Estimated Fair Value of Securities

The carrying value, gross unrealized gains and losses, and estimated fair values of securities held to maturity as of September 30, 2017 and December 31, 2016 are summarized as follows (dollars in thousands):

	Carrying		Gross Unrealized					Estimated
	Value (1)		Gains		(Losses)			Fair Value
September 30, 2017
Obligations of states and political subdivisions	$	204,801	$	5,111	$	(77	)	$	209,835
December 31, 2016
Obligations of states and political subdivisions	$	201,526	$	1,617	$	(828	)	$	202,315

(1) The carrying value includes $4.0 million as of September 30, 2017 and $5.2 million as of December 31, 2016 of net unrealized gains present at the time of transfer from available for sale securities, net of any accretion.

Gross Unrealized Losses and Fair Value of Securities

The following table shows the gross unrealized losses and fair value (dollars in thousands) of the Company’s held to maturity securities with unrealized losses that are not deemed to be other-than-temporarily impaired as of September 30, 2017 and December 31, 2016. These are aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position.

	Less than 12 months					More than 12 months					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
September 30, 2017
Obligations of states and political subdivisions	$	5,130	$	(53	)	$	638	$	(24	)	$	5,768	$	(77	)
December 31, 2016
Obligations of states and political subdivisions	$	92,841	$	(747	)	$	648	$	(81	)	$	93,489	$	(828	)

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LOANS AND ALLOWANCE FOR LOAN LOSSES (Tables)

9 Months Ended

Sep. 30, 2017

Accounts, Notes, Loans and Financing Receivable [Line Items]

Loans Stated at Face Amount, Net of Unearned Income

Loans are stated at their face amount, net of deferred fees and costs, and consist of the following at September 30, 2017 and December 31, 2016 (dollars in thousands):

	September 30, 2017		December 31, 2016
Construction and Land Development	$	841,738	$	751,131
Commercial Real Estate - Owner Occupied	903,523		857,805
Commercial Real Estate - Non-Owner Occupied	1,748,039		1,564,295
Multifamily Real Estate	368,686		334,276
Commercial & Industrial	554,522		551,526
Residential 1-4 Family	1,083,112		1,029,547
Auto	276,572		262,071
HELOC	535,446		526,884
Consumer and all other	587,091		429,525
Total loans held for investment, net (1)	$	6,898,729	$	6,307,060

(1)Loans, as presented, are net of deferred fees and costs totaling $335,000 and $1.8 million as of September 30, 2017 and December 31, 2016, respectively.

Summary of Aging of the Loan Portfolio by Class

The following table shows the aging of the Company’s loan portfolio, by segment, at September 30, 2017 (dollars in thousands):

	30-59 Days Past Due		60-89 Days Past Due		Greater than 90 Days and still Accruing		PCI		Nonaccrual		Current		Total Loans
Construction and Land Development	$	7,221	$	100	$	54	$	3,026	$	5,671	$	825,666	$	841,738
Commercial Real Estate - Owner Occupied	1,707		689		679		17,668		2,205		880,575		903,523
Commercial Real Estate - Non-Owner Occupied	909		571		298		14,376		2,701		1,729,184		1,748,039
Multifamily Real Estate	—		—		—		77		—		368,609		368,686
Commercial & Industrial	1,558		255		101		625		1,252		550,731		554,522
Residential 1-4 Family	5,633		1,439		2,360		14,077		6,163		1,053,440		1,083,112
Auto	2,415		293		143		—		174		273,547		276,572
HELOC	1,400		628		709		982		1,791		529,936		535,446
Consumer and all other	3,469		1,445		188		210		165		581,614		587,091
Total loans held for investment	$	24,312	$	5,420	$	4,532	$	51,041	$	20,122	$	6,793,302	$	6,898,729

The following table shows the aging of the Company’s loan portfolio, by segment, at December 31, 2016 (dollars in thousands):

	30-59 Days Past Due		60-89 Days Past Due		Greater than 90 Days and still Accruing		PCI		Nonaccrual		Current		Total Loans
Construction and Land Development	$	1,162	$	232	$	76	$	2,922	$	2,037	$	744,702	$	751,131
Commercial Real Estate - Owner Occupied	1,842		109		35		18,343		794		836,682		857,805
Commercial Real Estate - Non-Owner Occupied	2,369		—		—		17,303		—		1,544,623		1,564,295
Multifamily Real Estate	147		—		—		2,066		—		332,063		334,276
Commercial & Industrial	759		858		9		1,074		124		548,702		551,526
Residential 1-4 Family	7,038		534		2,048		16,200		5,279		998,448		1,029,547
Auto	2,570		317		111		—		169		258,904		262,071
HELOC	1,836		1,140		635		1,161		1,279		520,833		526,884
Consumer and all other	2,522		1,431		91		223		291		424,967		429,525
Total loans held for investment	$	20,245	$	4,621	$	3,005	$	59,292	$	9,973	$	6,209,924	$	6,307,060

Impaired Loans by Class

The Company measures the amount of impairment by evaluating loans either in their collective homogeneous pools or individually. The following table shows the Company’s impaired loans, excluding PCI loans, by segment at September 30, 2017 and December 31, 2016 (dollars in thousands):

	September 30, 2017						December 31, 2016
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Recorded Investment		Unpaid Principal Balance		Related Allowance
Loans without a specific allowance
Construction and Land Development	$	13,889	$	13,981	$	—	$	13,877	$	14,353	$	—
Commercial Real Estate - Owner Occupied	5,238		5,378		—		5,886		6,042		—
Commercial Real Estate - Non-Owner Occupied	5,548		5,636		—		1,399		1,399		—
Commercial & Industrial	1,632		1,880		—		648		890		—
Residential 1-4 Family	9,510		10,523		—		8,496		9,518		—
HELOC	1,651		1,741		—		1,017		1,094		—
Consumer and all other	521		631		—		230		427		—
Total impaired loans without a specific allowance	$	37,989	$	39,770	$	—	$	31,553	$	33,723	$	—
Loans with a specific allowance
Construction and Land Development	$	1,347	$	1,444	$	113	$	1,395	$	1,404	$	107
Commercial Real Estate - Owner Occupied	2,118		2,132		157		646		646		4
Commercial Real Estate - Non-Owner Occupied	2,032		2,032		42		2,809		2,809		474
Commercial & Industrial	2,511		2,562		909		857		880		14
Residential 1-4 Family	4,421		4,543		249		3,335		3,535		200
Auto	174		235		1		169		235		1
HELOC	766		800		56		323		433		15
Consumer and all other	242		310		43		62		298		1
Total impaired loans with a specific allowance	$	13,611	$	14,058	$	1,570	$	9,596	$	10,240	$	816
Total impaired loans	$	51,600	$	53,828	$	1,570	$	41,149	$	43,963	$	816

The following tables show the average recorded investment and interest income recognized for the Company’s impaired loans, excluding PCI loans, by segment for the three and nine months ended September 30, 2017 and 2016 (dollars in thousands):

	Three Months Ended September 30, 2017				Nine Months Ended September 30, 2017
	Average Investment		Interest Income Recognized		Average Investment		Interest Income Recognized
Construction and Land Development	$	15,654	$	128	$	15,378	$	368
Commercial Real Estate - Owner Occupied	7,354		62		7,407		245
Commercial Real Estate - Non-Owner Occupied	7,597		57		7,584		185
Commercial & Industrial	4,139		36		4,203		121
Residential 1-4 Family	14,218		94		14,358		261
Auto	192		—		223		2
HELOC	2,460		7		2,492		29
Consumer and all other	800		8		690		20
Total impaired loans	$	52,414	$	392	$	52,335	$	1,231

	Three Months Ended September 30, 2016				Nine Months Ended September 30, 2016
	Average Investment		Interest Income Recognized		Average Investment		Interest Income Recognized
Construction and Land Development	$	28,195	$	464	$	27,645	$	1,346
Commercial Real Estate - Owner Occupied	7,691		72		7,862		230
Commercial Real Estate - Non-Owner Occupied	3,777		33		3,759		98
Commercial & Industrial	4,628		42		4,964		134
Residential 1-4 Family	13,106		89		13,439		267
Auto	271		—		289		4
HELOC	2,118		7		2,185		35
Consumer and all other	453		—		620		6
Total impaired loans	$	60,239	$	707	$	60,763	$	2,120

Summary of Modified Loans that Continue to Accrue Interest Under the Terms of Restructuring Agreement

The following table provides a summary, by segment, of TDRs that continue to accrue interest under the terms of the restructuring agreement, which are considered to be performing, and TDRs that have been placed on nonaccrual status, which are considered to be nonperforming, as of September 30, 2017 and December 31, 2016 (dollars in thousands):

	September 30, 2017					December 31, 2016
	No. of Loans	Recorded Investment		Outstanding Commitment		No. of Loans	Recorded Investment		Outstanding Commitment
Performing
Construction and Land Development	7	$	2,841	$	—	8	$	3,793	$	—
Commercial Real Estate - Owner Occupied	7	2,934		—		7	3,106		—
Commercial Real Estate - Non-Owner Occupied	3	2,196		—		2	2,390		—
Commercial & Industrial	12	2,112		—		3	533		—
Residential 1-4 Family	34	5,941		—		28	4,145		—
Consumer and all other	1	495		—		—	—		—
Total performing	64	$	16,519	$	—	48	$	13,967	$	—
Nonperforming
Construction and Land Development	5	$	400	$	—	2	$	215	$	—
Commercial Real Estate - Owner Occupied	2	142		—		2	156		—
Commercial & Industrial	5	1,062		—		1	116		—
Residential 1-4 Family	8	1,095		—		8	948		—
Consumer and all other	1	26		—		—	—		—
Total nonperforming	21	$	2,725	$	—	13	$	1,435	$	—
Total performing and nonperforming	85	$	19,244	$	—	61	$	15,402	$	—

Schedule of TDR by Class and Modification Type

The following table shows, by segment, TDRs that were identified by the Company as going into default during the period shown that were restructured in the prior twelve-month period (dollars in thousands):

	Three Months Ended September 30, 2017			Nine Months Ended September 30, 2017
	No. of Loans	Recorded  Investment		No. of Loans	Recorded  Investment
Construction and Land Development	—	$	—	2	$	198
Commercial Real Estate - Owner Occupied	—	—		1	469
Commercial & Industrial	1	350		1	350
Residential 1-4 Family	2	187		4	605
Total	3	$	537	8	$	1,622

The following table shows, by segment and modification type, TDRs that occurred during the three and nine months ended September 30, 2017 (dollars in thousands):

	Three Months Ended September 30, 2017			Nine Months Ended September 30, 2017
	No. of Loans	Recorded  Investment at Period End		No. of Loans	Recorded  Investment at Period End
Modified to interest only, at a market rate
Commercial & Industrial	3	$	936	8	$	1,596
Total interest only at market rate of interest	3	$	936	8	$	1,596
Term modification, at a market rate
Construction and Land Development	1	$	160	4	$	1,150
Commercial Real Estate - Owner Occupied	1	380		1	380
Commercial Real Estate - Non-Owner Occupied	1	571		3	2,196
Commercial & Industrial	—	—		4	969
Residential 1-4 Family	3	1,647		8	2,574
Consumer and all other	1	26		2	522
Total loan term extended at a market rate	7	$	2,784	22	$	7,791
Term modification, below market rate
Commercial Real Estate - Owner Occupied	—	$	—	1	$	841
Commercial & Industrial	—	—		3	179
Residential 1-4 Family	1	40		8	1,143
Total loan term extended at a below market rate	1	$	40	12	$	2,163
Total	11	$	3,760	42	$	11,550

The following table shows, by segment and modification type, TDRs that occurred during the three and nine months ended September 30, 2016 (dollars in thousands):

	Three Months Ended September 30, 2016			Nine Months Ended September 30, 2016
	No. of Loans	Recorded  Investment at Period End		No. of Loans	Recorded  Investment at Period End
Term modification, at a market rate
Construction and Land Development	—	$	—	1	$	1,177
Commercial Real Estate - Owner Occupied	—	—		2	739
Commercial & Industrial	1	457		1	457
Residential 1-4 Family	—	—		2	474
Total loan term extended at a market rate	1	$	457	6	$	2,847
Term modification, below market rate
Residential 1-4 Family	—	$	—	1	$	36
Total loan term extended at a below market rate	—	$	—	1	$	36
Interest rate modification, below market rate
Commercial & Industrial	—	$	—	1	$	125
Total interest only at below market rate of interest	—	$	—	1	$	125
Total	1	$	457	8	$	3,008

Allowance for Loan Loss Activity, by Portfolio Segment, Balances for Allowance for Credit Losses, and Loans Based on Impairment Methodology

The following table shows the allowance for loan loss activity, balances for allowance for loan losses, and loan balances based on impairment methodology by segment for the nine months ended and as of September 30, 2017. The table below includes the provision for loan losses. Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories (dollars in thousands):

	Allowance for loan losses
	Balance, beginning of the year		Recoveries credited to allowance		Loans charged off			Provision charged to operations			Balance, end of period
Construction and Land Development	$	10,055	$	193	$	(2,115	)	$	535		$	8,668
Commercial Real Estate - Owner Occupied	3,801		84		(46		)	(620		)	3,219
Commercial Real Estate - Non-Owner Occupied	6,622		2		(1,181		)	1,825			7,268
Multifamily Real Estate	1,236		—		—			(136		)	1,100
Commercial & Industrial	4,627		451		(1,241		)	1,526			5,363
Residential 1-4 Family	6,399		332		(815		)	(35		)	5,881
Auto	946		352		(761		)	398			935
HELOC	1,328		240		(861		)	675			1,382
Consumer and all other	2,178		905		(2,929		)	3,192			3,346
Total	$	37,192	$	2,559	$	(9,949	)	$	7,360		$	37,162

	Loans individually evaluated for impairment				Loans collectively evaluated for impairment				Loans acquired with deteriorated credit quality				Total
	Loans		ALL		Loans		ALL		Loans		ALL		Loans		ALL
Construction and Land Development	$	15,236	$	113	$	823,476	$	8,555	$	3,026	$	—	$	841,738	$	8,668
Commercial Real Estate - Owner Occupied	7,356		157		878,499		3,062		17,668		—		903,523		3,219
Commercial Real Estate - Non-Owner Occupied	7,580		42		1,726,083		7,226		14,376		—		1,748,039		7,268
Multifamily Real Estate	—		—		368,609		1,100		77		—		368,686		1,100
Commercial & Industrial	4,143		909		549,754		4,454		625		—		554,522		5,363
Residential 1-4 Family	13,931		249		1,055,104		5,632		14,077		—		1,083,112		5,881
Auto	174		1		276,398		934		—		—		276,572		935
HELOC	2,417		56		532,047		1,326		982		—		535,446		1,382
Consumer and all other	763		43		586,118		3,303		210		—		587,091		3,346
Total loans held for investment, net	$	51,600	$	1,570	$	6,796,088	$	35,592	$	51,041	$	—	$	6,898,729	$	37,162

The following table shows the allowance for loan loss activity, balances for allowance for loan losses, and loan balances based on impairment methodology by segment for the nine months ended and as of September 30, 2016. In addition, a $175,000 provision was recognized during the nine months ended September 30, 2016 for unfunded loan commitments for which the reserves are recorded as a component of “Other Liabilities” on the Company’s Consolidated Balance Sheets. Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories (dollars in thousands):

	Allowance for loan losses
	Balance, beginning of the year		Recoveries credited to allowance		Loans charged off			Provision charged to operations			Balance, end of period
Construction and Land Development	$	6,040	$	165	$	(869	)	$	5,464		$	10,800
Commercial Real Estate - Owner Occupied	4,614		112		(772		)	(770		)	3,184
Commercial Real Estate - Non-Owner Occupied	6,929		3		(1		)	(813		)	6,118
Multifamily Real Estate	1,606		—		—			(658		)	948
Commercial & Industrial	3,163		422		(1,301		)	3,119			5,403
Residential 1-4 Family	5,414		466		(741		)	518			5,657
Auto	1,703		243		(815		)	(260		)	871
HELOC	2,934		229		(1,272		)	(534		)	1,357
Consumer and all other	1,644		382		(957		)	1,135			2,204
Total	$	34,047	$	2,022	$	(6,728	)	$	7,201		$	36,542

	Loans individually evaluated for impairment				Loans collectively evaluated for impairment				Loans acquired with deteriorated credit quality				Total
	Loans		ALL		Loans		ALL		Loans		ALL		Loans		ALL
Construction and Land Development	$	27,241	$	123	$	745,984	$	10,677	$	3,205	$	—	$	776,430	$	10,800
Commercial Real Estate - Owner Occupied	7,612		5		830,466		3,179		19,064		—		857,142		3,184
Commercial Real Estate - Non-Owner Occupied	3,792		1		1,432,895		6,117		18,141		—		1,454,828		6,118
Multifamily Real Estate	—		—		337,234		948		2,079		—		339,313		948
Commercial & Industrial	3,448		642		505,264		4,761		1,145		—		509,857		5,403
Residential 1-4 Family	12,673		115		969,860		5,542		16,828		—		999,361		5,657
Auto	231		1		254,957		870		—		—		255,188		871
HELOC	2,053		17		520,546		1,340		1,498		—		524,097		1,357
Consumer and all other	451		88		431,865		2,116		386		—		432,702		2,204
Total loans held for investment, net	$	57,501	$	992	$	6,029,071	$	35,550	$	62,346	$	—	$	6,148,918	$	36,542

Loans Receivables Related Risk Rating

The following table shows the recorded investment in all loans, excluding PCI loans, by segment with their related risk level as of September 30, 2017 (dollars in thousands):

	Pass		Special Mention		Substandard		Doubtful		Total
Construction and Land Development	$	768,206	$	57,190	$	13,201	$	115	$	838,712
Commercial Real Estate - Owner Occupied	834,265		47,019		4,571		—		885,855
Commercial Real Estate - Non-Owner Occupied	1,702,500		23,764		7,399		—		1,733,663
Multifamily Real Estate	361,175		7,434		—		—		368,609
Commercial & Industrial	534,594		16,400		2,903		—		553,897
Residential 1-4 Family	1,045,736		15,878		4,480		2,941		1,069,035
Auto	273,446		2,910		143		73		276,572
HELOC	530,263		2,427		1,051		723		534,464
Consumer and all other	583,728		2,618		530		5		586,881
Total	$	6,633,913	$	175,640	$	34,278	$	3,857	$	6,847,688

The following table shows the recorded investment in all loans, excluding PCI loans, by segment with their related risk level as of December 31, 2016 (dollars in thousands):

	Pass		Special Mention		Substandard		Doubtful		Total
Construction and Land Development	$	667,018	$	69,311	$	11,857	$	23	$	748,209
Commercial Real Estate - Owner Occupied	801,565		32,364		5,533		—		839,462
Commercial Real Estate - Non-Owner Occupied	1,505,153		37,631		4,208		—		1,546,992
Multifamily Real Estate	312,711		19,499		—		—		332,210
Commercial & Industrial	539,999		9,391		1,062		—		550,452
Residential 1-4 Family	986,973		18,518		4,813		3,043		1,013,347
Auto	258,188		3,648		135		100		262,071
HELOC	519,928		4,225		969		601		525,723
Consumer and all other	425,520		3,491		40		251		429,302
Total	$	6,017,055	$	198,078	$	28,617	$	4,018	$	6,247,768

Schedule of Acquired Loan Portfolio and Accretable Yield

The following shows changes in the accretable yield for loans accounted for under ASC 310-30, Receivables – Loans and Debt Securities Acquired with Deteriorated Credit Quality, for the periods presented (dollars in thousands):

	For the Nine Months Ended September 30,
	2017			2016
Balance at beginning of period	$	19,739		$	22,139
Accretion	(4,896		)	(4,232		)
Reclass of nonaccretable difference due to improvement in expected cash flows	2,175			3,580
Other, net (1)	(452		)	(1,149		)
Balance at end of period	$	16,566		$	20,338

(1)This line item represents changes in the cash flows expected to be collected due to the impact of non-credit changes such as prepayment assumptions, changes in interest rates on variable rate PCI loans, and discounted payoffs that occurred in the quarter.

Purchased Impaired

Accounts, Notes, Loans and Financing Receivable [Line Items]

Summary of Aging of the Loan Portfolio by Class

The following table shows the PCI loan portfolios, by segment and their delinquency status, at September 30, 2017 (dollars in thousands):

	30-89 Days Past Due		Greater than 90 Days		Current		Total
Construction and Land Development	$	62	$	—	$	2,964	$	3,026
Commercial Real Estate - Owner Occupied	463		643		16,562		17,668
Commercial Real Estate - Non-Owner Occupied	318		1,032		13,026		14,376
Multifamily Real Estate	—		—		77		77
Commercial & Industrial	—		—		625		625
Residential 1-4 Family	949		1,125		12,003		14,077
HELOC	132		128		722		982
Consumer and all other	34		—		176		210
Total	$	1,958	$	2,928	$	46,155	$	51,041

The following table shows the PCI loan portfolios, by segment and their delinquency status, at December 31, 2016 (dollars in thousands):

	30-89 Days Past Due		Greater than 90 Days		Current		Total
Construction and Land Development	$	—	$	84	$	2,838	$	2,922
Commercial Real Estate - Owner Occupied	271		519		17,553		18,343
Commercial Real Estate - Non-Owner Occupied	409		126		16,768		17,303
Multifamily Real Estate	—		—		2,066		2,066
Commercial & Industrial	44		56		974		1,074
Residential 1-4 Family	1,298		945		13,957		16,200
HELOC	175		121		865		1,161
Consumer and all other	—		—		223		223
Total	$	2,197	$	1,851	$	55,244	$	59,292

Loans Receivables Related Risk Rating

The following table shows the recorded investment in only PCI loans by segment with their related risk level as of September 30, 2017 (dollars in thousands):

	Pass		Special Mention		Substandard		Doubtful		Total
Construction and Land Development	$	1,460	$	1,311	$	255	$	—	$	3,026
Commercial Real Estate - Owner Occupied	5,521		8,237		3,910		—		17,668
Commercial Real Estate - Non-Owner Occupied	10,676		2,435		1,265		—		14,376
Multifamily Real Estate	—		77		—		—		77
Commercial & Industrial	94		309		222		—		625
Residential 1-4 Family	7,498		4,227		1,577		775		14,077
HELOC	722		132		6		122		982
Consumer and all other	154		46		10		—		210
Total	$	26,125	$	16,774	$	7,245	$	897	$	51,041

The following table shows the recorded investment in only PCI loans by segment with their related risk level as of December 31, 2016 (dollars in thousands):

	Pass		Special Mention		Substandard		Doubtful		Total
Construction and Land Development	$	1,092	$	1,432	$	398	$	—	$	2,922
Commercial Real Estate - Owner Occupied	5,520		8,889		3,934		—		18,343
Commercial Real Estate - Non-Owner Occupied	10,927		4,638		1,738		—		17,303
Multifamily Real Estate	343		1,723		—		—		2,066
Commercial & Industrial	107		480		487		—		1,074
Residential 1-4 Family	8,557		4,455		2,672		516		16,200
HELOC	857		183		7		114		1,161
Consumer and all other	166		37		20		—		223
Total	$	27,569	$	21,837	$	9,256	$	630	$	59,292

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INTANGIBLE ASSETS (Tables)

9 Months Ended

Sep. 30, 2017

Goodwill and Intangible Assets Disclosure [Abstract]

Estimated Remaining Amortization Expense of Core Deposit Intangibles

As of September 30, 2017, the estimated remaining amortization expense of intangibles is as follows (dollars in thousands):

For the remaining three months of 2017	$	1,420
For the year ending December 31, 2018	4,664
For the year ending December 31, 2019	3,599
For the year ending December 31, 2020	2,509
For the year ending December 31, 2021	1,481
Thereafter	2,344
Total estimated amortization expense	$	16,017

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BORROWINGS (Tables)

9 Months Ended

Sep. 30, 2017

Debt Disclosure [Abstract]

Short-Term Borrowings

Total short-term borrowings consist of the following as of September 30, 2017 and December 31, 2016 (dollars in thousands):

	September 30, 2017			December 31, 2016
Securities sold under agreements to repurchase	$	43,337		$	59,281
Other short-term borrowings (1)	574,000			517,500
Total short-term borrowings	$	617,337		$	576,781
Maximum month-end outstanding balance	$	696,529		$	678,262
Average outstanding balance during the period	606,441			590,074
Average interest rate (year-to-date)	0.93		%	0.49		%
Average interest rate at end of period	1.15		%	0.60		%

⁽¹⁾ As of September 30, 2017 and December 31, 2016 , all other short-term borrowings were FHLB advances.

Trust Preferred Capital Notes Qualify for Tier 1 Capital

The trust preferred capital notes currently qualify for Tier 1 capital of the Company for regulatory purposes.

	Trust Preferred Capital Securities (1)		Investment (1)		Spread to  3-Month LIBOR		Rate		Maturity
Trust Preferred Capital Note - Statutory Trust I	$	22,500,000	$	696,000	2.75	%	4.08	%	6/17/2034
Trust Preferred Capital Note - Statutory Trust II	36,000,000		1,114,000		1.40	%	2.73	%	6/15/2036
VFG Limited Liability Trust I Indenture	20,000,000		619,000		2.73	%	4.06	%	3/18/2034
FNB Statutory Trust II Indenture	12,000,000		372,000		3.10	%	4.43	%	6/26/2033
Total	$	90,500,000	$	2,801,000

(1)The total of the trust preferred capital securities and investments in the respective trusts represents the principal asset of the Company's junior subordinated debt securities with like maturities and like interest rates to the capital securities. The Company's investment in the trusts is reported in "Other Assets" on the Consolidated Balance Sheets.

Advances from the FHLB

As of September 30, 2017, the Company had long-term advances from the FHLB consisting of the following (dollars in thousands):

Long-term Type	Spread to 3-Month LIBOR		Interest Rate (1)		Maturity Date	Advance Amount
Adjustable Rate Credit	0.44	%	1.77	%	8/23/2022	$	55,000
Adjustable Rate Credit	0.45	%	1.79	%	11/23/2022	65,000
Adjustable Rate Credit	0.45	%	1.79	%	11/23/2022	10,000
Adjustable Rate Credit	0.45	%	1.79	%	11/23/2022	10,000
Fixed Rate	—		3.62	%	11/28/2017	10,000
Fixed Rate	—		3.75	%	7/30/2018	5,000
Fixed Rate	—		3.97	%	7/30/2018	5,000
Fixed Rate Hybrid	—		0.99	%	10/19/2018	30,000
Fixed Rate Hybrid	—		1.58	%	5/18/2020	20,000
						$	210,000
(1)Interest rates calculated using non-rounded numbers.

As of December 31, 2016, the Company had long-term advances from the FHLB consisting of the following (dollars in thousands):

Long-term Type	Spread to 3-Month LIBOR		Interest Rate (1)		Maturity Date	Advance Amount
Adjustable Rate Credit	0.44	%	1.44	%	8/23/2022	$	55,000
Adjustable Rate Credit	0.45	%	1.45	%	11/23/2022	65,000
Adjustable Rate Credit	0.45	%	1.45	%	11/23/2022	10,000
Adjustable Rate Credit	0.45	%	1.45	%	11/23/2022	10,000
Fixed Rate	—		3.62	%	11/28/2017	10,000
Fixed Rate	—		3.75	%	7/30/2018	5,000
Fixed Rate	—		3.97	%	7/30/2018	5,000
Fixed Rate Hybrid	—		0.99	%	10/19/2018	30,000
						$	190,000
(1)Interest rates calculated using non-rounded numbers.

Contractual Maturities of Long-Term Debt

As of September 30, 2017, the contractual maturities of long-term debt are as follows for the years ending (dollars in thousands):

	Trust Preferred Capital Notes		Subordinated Debt		FHLB Advances		Fair Value  Premium (Discount)			Prepayment Penalty			Total Long-term Borrowings
For the remaining three months of 2017	$	—	$	—	$	10,000	$	(21	)	$	(488	)	$	9,491
2018	—		—		40,000		(343		)	(1,970		)	37,687
2019	—		—		—		(486		)	(2,018		)	(2,504		)
2020	—		—		20,000		(501		)	(2,074		)	17,425
2021	—		—		—		(516		)	(2,119		)	(2,635		)
Thereafter	93,301		150,000		140,000		(6,308		)	(1,707		)	375,286
Total Long-term borrowings	$	93,301	$	150,000	$	210,000	$	(8,175	)	$	(10,376	)	$	434,750

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COMMITMENTS AND CONTINGENCIES (Tables)

9 Months Ended

Sep. 30, 2017

Commitments and Contingencies Disclosure [Abstract]

Balances of Commitments and Contingencies

The following table presents the balances of commitments and contingencies (dollars in thousands): 

	September 30, 2017		December 31, 2016
Commitments with off-balance sheet risk:
Commitments to extend credit (1)	$	2,085,103	$	1,924,885
Standby letters of credit	119,977		84,212
Total commitments with off-balance sheet risk	$	2,205,080	$	2,009,097

(1) Includes unfunded overdraft protection.

Schedule of Pledged Assets Not Separately Reported on Statement of Financial Position

As part of the Company's liquidity management strategy, it pledges collateral to secure various financing and other activities that occur during the normal course of business. The following tables present the types of collateral pledged, at September 30, 2017 and December 31, 2016 (dollars in thousands):

	Pledged Assets as of September 30, 2017
	Cash		AFS Securities (1)		HTM Securities (1)		Loans (2)		Total
Public deposits	$	—	$	224,153	$	206,878	$	—	$	431,031
Repurchase agreements	—		88,257		—		—		88,257
FHLB advances	—		1,022		—		2,404,355		2,405,377
Derivatives	23,831		3,898		—		—		27,729
Other purposes	—		15,580		—		—		15,580
Total pledged assets	$	23,831	$	332,910	$	206,878	$	2,404,355	$	2,967,974

(1) Balance represents market value.

(2) Balance represents book value.

	Pledged Assets as of December 31, 2016
	Cash		AFS Securities (1)		HTM Securities (1)		Loans (2)		Total
Public deposits	$	—	$	210,546	$	197,889	$	—	$	408,435
Repurchase agreements	—		108,208		—		—		108,208
FHLB advances	—		1,475		—		1,959,929		1,961,404
Derivatives	33,595		4,376		—		—		37,971
Other purposes	—		17,499		—		—		17,499
Total pledged assets	$	33,595	$	342,104	$	197,889	$	1,959,929	$	2,533,517

(1) Balance represents market value.

(2) Balance represents book value.

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DERIVATIVES (Tables)

9 Months Ended

Sep. 30, 2017

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Summary of the Derivatives

The following table summarizes key elements of the Company’s derivative instruments as of September 30, 2017 and December 31, 2016, segregated by derivatives that are considered accounting hedges and those that are not (dollars in thousands):

	September 30, 2017							December 31, 2016
			Derivative (2)							Derivative (2)
	Notional or Contractual Amount (1)			Assets		Liabilities		Notional or Contractual Amount (1)			Assets		Liabilities
Derivatives designated as accounting hedges:
Interest rate contracts:
Cash flow hedges	$	152,500		$	120	$	9,460	$	188,500		$	211	$	9,619
Fair value hedges	81,965			1,253		371		65,920			1,437		296
Derivatives not designated as accounting hedges:
Loan Swaps
Pay fixed - receive floating interest rate swaps	506,056			3,051		—		373,355			—		1,005
Pay floating - receive fixed interest rate swaps	506,056			—		3,051		373,355			1,005		—
Other contracts:
Interest rate lock commitments	50,311			685		—		48,743			610		—
Best efforts forward delivery commitments	80,307			245		—		85,400			1,469		—

(1) Notional amounts are not recorded on the balance sheet and are generally used only as a basis on which interest and other payments are determined.

(2) Balancesrepresent fair value of derivative financial instruments.

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ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Tables)

9 Months Ended

Sep. 30, 2017

Equity [Abstract]

Change in Accumulated Other Comprehensive Income

The change in accumulated other comprehensive income (loss) for the three and nine months ended September 30, 2017 is summarized as follows, net of tax (dollars in thousands):

	Unrealized Gains (Losses) on AFS Securities			Unrealized Gain for AFS Securities Transferred to HTM			Change in Fair Value of Cash Flow Hedge			Unrealized Gains (Losses) on BOLI			Total
Balance - June 30, 2017	$	7,733		$	3,033		$	(5,487	)	$	(1,271	)	$	4,008
Other comprehensive income (loss)	(2,729		)	—			41			—			(2,688		)
Amounts reclassified from accumulated other comprehensive income	(119		)	(163		)	189			84			(9		)
Net current period other comprehensive income (loss)	(2,848		)	(163		)	230			84			(2,697		)
Balance - September 30, 2017	$	4,885		$	2,870		$	(5,257	)	$	(1,187	)	$	1,311

	Unrealized Gains (Losses) on AFS Securities			Unrealized Gain for AFS Securities Transferred to HTM			Change in Fair Value of Cash Flow Hedge			Unrealized Gains (Losses) on BOLI			Total
Balance - December 31, 2016	$	(542	)	$	3,377		$	(5,179	)	$	(1,465	)	$	(3,809	)
Other comprehensive income (loss)	5,935			—			(766		)	—			5,169
Amounts reclassified from accumulated other comprehensive income	(508		)	(507		)	688			278			(49		)
Net current period other comprehensive income (loss)	5,427			(507		)	(78		)	278			5,120
Balance - September 30, 2017	$	4,885		$	2,870		$	(5,257	)	$	(1,187	)	$	1,311

The change in accumulated other comprehensive income (loss) for the three and nine months ended September 30, 2016 is summarized as follows, net of tax (dollars in thousands):

	Unrealized Gains (Losses) on AFS Securities		Unrealized Gain for AFS Securities Transferred to HTM			Change in Fair Value of Cash Flow Hedge			Total
Balance - June 30, 2016	$	14,412	$	3,853		$	(9,366	)	$	8,899
Other comprehensive income (loss)	1,121		—			(78		)	1,043
Amounts reclassified from accumulated other comprehensive income	—		(237		)	154			(83		)
Net current period other comprehensive income (loss)	$	1,121	$	(237	)	$	76		$	960
Balance - September 30, 2016	$	15,533	$	3,616		$	(9,290	)	$	9,859

	Unrealized Gains (Losses) on AFS Securities			Unrealized Gain for AFS Securities Transferred to HTM			Change in Fair Value of Cash Flow Hedge			Total
Balance - December 31, 2015	$	7,777		$	4,432		$	(5,957	)	$	6,252
Other comprehensive income (loss)	7,851			—			(3,766		)	4,085
Amounts reclassified from accumulated other comprehensive income	(95		)	(816		)	433			(478		)
Net current period other comprehensive income (loss)	7,756			(816		)	(3,333		)	3,607
Balance - September 30, 2016	$	15,533		$	3,616		$	(9,290	)	$	9,859

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FAIR VALUE MEASUREMENTS (Tables)

9 Months Ended

Sep. 30, 2017

Fair Value Disclosures [Abstract]

Schedule of Financial Assets and Liabilities Measured at Fair Value on Recurring Basis

The following table presents the balances of financial assets and liabilities measured at fair value on a recurring basis at September 30, 2017 and December 31, 2016 (dollars in thousands): 

	Fair Value Measurements at September 30, 2017 using
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	Level 1		Level 2		Level 3		Balance
ASSETS
Securities available for sale:
Obligations of states and political subdivisions	$	—	$	292,199	$	—	$	292,199
Corporate and other bonds	—		115,422		—		115,422
Mortgage-backed securities	—		546,904		—		546,904
Other securities	—		13,836		—		13,836
Loans held for sale	—		30,896		—		30,896
Derivatives:
Interest rate swap	—		3,051		—		3,051
Cash flow hedges	—		120		—		120
Fair value hedges	—		1,253		—		1,253
Interest rate lock commitments	—		—		685		685
Best efforts forward delivery commitments	—		—		245		245
LIABILITIES
Derivatives:
Interest rate swap	$	—	$	3,051	$	—	$	3,051
Cash flow hedges	—		9,460		—		9,460
Fair value hedges	—		371		—		371

	Fair Value Measurements at December 31, 2016 using
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	Level 1		Level 2		Level 3		Balance
ASSETS
Securities available for sale:
Obligations of states and political subdivisions	$	—	$	275,890	$	—	$	275,890
Corporate and other bonds	—		121,780		—		121,780
Mortgage-backed securities	—		535,286		—		535,286
Other securities	—		13,808		—		13,808
Loans held for sale	—		36,487		—		36,487
Derivatives:
Interest rate swap	—		1,005		—		1,005
Cash flow hedges	—		211		—		211
Fair value hedges	—		1,437		—		1,437
Interest rate lock commitments	—		—		610		610
Best efforts forward delivery commitments	—		—		1,469		1,469
LIABILITIES
Derivatives:
Interest rate swap	$	—	$	1,005	$	—	$	1,005
Cash flow hedges	—		9,619		—		9,619
Fair value hedges	—		296		—		296

Schedule of Financial Assets Measured at Fair Value on Nonrecurring Basis

The following tables summarize the Company’s financial assets that were measured at fair value on a nonrecurring basis at September 30, 2017 and December 31, 2016 (dollars in thousands):

	Fair Value Measurements at September 30, 2017 using
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	Level 1		Level 2		Level 3		Balance
ASSETS
Impaired loans	$	—	$	—	$	7,143	$	7,143
Other real estate owned	—		—		8,764		8,764

	Fair Value Measurements at December 31, 2016 using
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	Level 1		Level 2		Level 3		Balance
ASSETS
Impaired loans	$	—	$	—	$	4,344	$	4,344
Other real estate owned	—		—		10,084		10,084

Carrying Values and Estimated Fair Values of the Company's Financial Instruments

The carrying values and estimated fair values of the Company’s financial instruments at September 30, 2017 and December 31, 2016 are as follows (dollars in thousands):

			Fair Value Measurements at September 30, 2017 using
			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs		Total Fair Value
	Carrying Value		Level 1		Level 2		Level 3		Balance
ASSETS
Cash and cash equivalents	$	176,961	$	176,961	$	—	$	—	$	176,961
Securities available for sale	968,361		—		968,361		—		968,361
Held to maturity securities	204,801		—		209,835		—		209,835
Restricted stock	68,441		—		68,441		—		68,441
Loans held for sale	30,896		—		30,896		—		30,896
Net loans	6,861,567		—		—		6,873,609		6,873,609
Derivatives:
Interest rate swap	3,051		—		3,051		—		3,051
Cash flow hedge	120		—		120		—		120
Fair value hedge	1,253		—		1,253		—		1,253
Interest rate lock commitments	685		—		—		685		685
Best efforts forward delivery commitments	245		—		—		245		245
Accrued interest receivable	25,279		—		25,279		—		25,279
Bank owned life insurance	181,451		—		181,451		—		181,451
LIABILITIES
Deposits	$	6,881,826	$	—	$	6,873,124	$	—	$	6,873,124
Borrowings	1,052,087		—		1,031,983		—		1,031,983
Accrued interest payable	4,372		—		4,372		—		4,372
Derivatives:
Interest rate swap	3,051		—		3,051		—		3,051
Cash flow hedges	9,460		—		9,460		—		9,460
Fair value hedges	371		—		371		—		371

			Fair Value Measurements at December 31, 2016 using
			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs		Total Fair Value
	Carrying Value		Level 1		Level 2		Level 3		Balance
ASSETS
Cash and cash equivalents	$	179,237	$	179,237	$	—	$	—	$	179,237
Securities available for sale	946,764		—		946,764		—		946,764
Held to maturity securities	201,526		—		202,315		—		202,315
Restricted stock	60,782		—		60,782		—		60,782
Loans held for sale	36,487		—		36,487		—		36,487
Net loans	6,269,868		—		—		6,265,443		6,265,443
Derivatives:
Interest rate swap	1,005		—		1,005		—		1,005
Cash flow hedges	211		—		211		—		211
Fair value hedges	1,437		—		1,437		—		1,437
Interest rate lock commitments	610		—		—		610		610
Best efforts forward delivery commitments	1,469		—		—		1,469		1,469
Accrued interest receivable	23,448		—		23,448		—		23,448
Bank owned life insurance	179,318		—		179,318		—		179,318
LIABILITIES
Deposits	$	6,379,489	$	—	$	6,370,457	$	—	$	6,370,457
Borrowings	990,089		—		970,195		—		970,195
Accrued interest payable	2,320		—		2,230		—		2,230
Derivatives:
Interest rate swap	1,005		—		1,005		—		1,005
Cash flow hedges	9,619		—		9,619		—		9,619
Fair value hedges	296		—		296		—		296

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EARNINGS PER SHARE (Tables)

9 Months Ended

Sep. 30, 2017

Earnings Per Share [Abstract]

Reconciliation of the Denominators of the Basic and Diluted EPS Computations

The following is a reconciliation of the denominators of the basic and diluted EPS computations for the three and nine months ended September 30, 2017 and 2016 (dollars in thousands except per share data):

	Net Income Available to Common Stockholders (Numerator)		Weighted Average Common Shares (Denominator)	Per Share Amount
Three months ended September 30, 2017
Basic	20,658		43,707	$	0.47
Add: potentially dilutive common shares - stock awards	—		85	—
Diluted	$	20,658	43,792	$	0.47
Three months ended September 30, 2016
Basic	20,401		43,566	$	0.47
Add: potentially dilutive common shares - stock awards	—		189	—
Diluted	$	20,401	43,755	$	0.47
Nine months ended September 30, 2017
Basic	57,737		43,685	$	1.32
Add: potentially dilutive common shares - stock awards	—		83	—
Diluted	$	57,737	43,768	$	1.32
Nine months ended September 30, 2016
Basic	56,699		43,854	$	1.29
Add: potentially dilutive common shares - stock awards	—		114	—
Diluted	$	56,699	43,968	$	1.29

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SEGMENT REPORTING DISCLOSURES (Tables)

9 Months Ended

Sep. 30, 2017

Segment Reporting [Abstract]

Information About Reportable Segments and Reconciliation

Information about reportable segments and reconciliation of such information to the consolidated financial statements for the three and nine months ended September 30, 2017 and 2016 is as follows (dollars in thousands):

UNION BANKSHARES CORPORATION AND SUBSIDIARIES

SEGMENT FINANCIAL INFORMATION

	Community Bank		Mortgage			Eliminations			Consolidated
Three Months Ended September 30, 2017
Net interest income	$	70,718	$	480		$	—		$	71,198
Provision for credit losses	3,056		(6		)	—			3,050
Net interest income after provision for credit losses	67,662		486			—			68,148
Noninterest income	15,121		2,527			(112		)	17,536
Noninterest expenses	55,133		2,475			(112		)	57,496
Income before income taxes	27,650		538			—			28,188
Income tax expense	7,339		191			—			7,530
Net income	$	20,311	$	347		$	—		$	20,658
Total assets	$	9,020,486	$	97,154		$	(88,204	)	$	9,029,436
Three Months Ended September 30, 2016
Net interest income	$	66,605	$	423		$	—		$	67,028
Provision for credit losses	2,455		17			—			2,472
Net interest income after provision for credit losses	64,150		406			—			64,556
Noninterest income	15,589		3,501			(140		)	18,950
Noninterest expenses	54,353		2,700			(140		)	56,913
Income before income taxes	25,386		1,207			—			26,593
Income tax expense	5,770		422			—			6,192
Net income	$	19,616	$	785		$	—		$	20,401
Total assets	$	8,251,351	$	90,692		$	(83,813	)	$	8,258,230
Nine Months Ended September 30, 2017
Net interest income	$	205,534	$	1,231		$	—		$	206,765
Provision for credit losses	7,344		1			—			7,345
Net interest income after provision for credit losses	198,190		1,230			—			199,420
Noninterest income	47,080		7,743			(393		)	54,430
Noninterest expenses	167,643		7,571			(393		)	174,821
Income before income taxes	77,627		1,402			—			79,029
Income tax expense	20,791		501			—			21,292
Net income	$	56,836	$	901		$	—		$	57,737
Total assets	$	9,020,486	$	97,154		$	(88,204	)	$	9,029,436
Nine Months Ended September 30, 2016
Net interest income	$	195,508	$	1,027		$	—		$	196,535
Provision for credit losses	7,215		161			—			7,376
Net interest income after provision for credit losses	188,293		866			—			189,159
Noninterest income	44,137		9,185			(465		)	52,857
Noninterest expenses	158,964		7,937			(465		)	166,436
Income before income taxes	73,466		2,114			—			75,580
Income tax expense	18,145		736			—			18,881
Net income	$	55,321	$	1,378		$	—		$	56,699
Total assets	$	8,251,351	$	90,692		$	(83,813	)	$	8,258,230

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ACCOUNTING POLICIES (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Affordable Housing Projects [Abstract]
Affordable housing projects, recognized amortization	$ 229	$ 185	$ 643	$ 445
Affordable housing projects, tax credits	240	$ 265	724	$ 685
Affordable housing projects, investment amount	9,100		9,100		$ 9,900
Affordable housing projects, liability	$ 4,000		$ 4,000		$ 7,100

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SECURITIES (Amortized Cost, Gross Unrealized Gains and Losses, and Estimated Fair Values of Investment Securities) (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	$ 960,846	$ 947,597
Gross Unrealized Gains	12,942	10,480
Gross Unrealized (Losses)	(5,427)	(11,313)
Estimated Fair Value	968,361	946,764
Obligations of States and Political Subdivisions
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	285,921	274,007
Gross Unrealized Gains	7,582	4,962
Gross Unrealized (Losses)	(1,304)	(3,079)
Estimated Fair Value	292,199	275,890
Corporate and Other Bonds
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	114,997	123,674
Gross Unrealized Gains	1,241	892
Gross Unrealized (Losses)	(816)	(2,786)
Estimated Fair Value	115,422	121,780
Mortgage-Backed Securities
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	546,038	536,031
Gross Unrealized Gains	4,119	4,626
Gross Unrealized (Losses)	(3,253)	(5,371)
Estimated Fair Value	546,904	535,286
Other Securities
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	13,890	13,885
Gross Unrealized Gains	0	0
Gross Unrealized (Losses)	(54)	(77)
Estimated Fair Value	$ 13,836	$ 13,808

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SECURITIES (Schedule of Gross Unrealized Losses and Fair Value of Investments) (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Schedule of Trading Securities and Other Trading Assets [Line Items]
Less than 12 months, Fair Value	$ 359,913	$ 472,297
Less than 12 months, Unrealized Losses	(3,761)	(9,523)
More than 12 Months, Fair Value	84,493	83,152
More than 12 months, Unrealized Losses	(1,666)	(1,790)
Total, Fair Value	444,406	555,449
Total, Unrealized Losses	(5,427)	(11,313)
Obligations of States and Political Subdivisions
Schedule of Trading Securities and Other Trading Assets [Line Items]
Less than 12 months, Fair Value	55,319	108,440
Less than 12 months, Unrealized Losses	(700)	(3,007)
More than 12 Months, Fair Value	9,338	588
More than 12 months, Unrealized Losses	(604)	(72)
Total, Fair Value	64,657	109,028
Total, Unrealized Losses	(1,304)	(3,079)
Mortgage-Backed Securities
Schedule of Trading Securities and Other Trading Assets [Line Items]
Less than 12 months, Fair Value	283,466	316,469
Less than 12 months, Unrealized Losses	(2,708)	(4,979)
More than 12 Months, Fair Value	42,481	42,096
More than 12 months, Unrealized Losses	(545)	(392)
Total, Fair Value	325,947	358,565
Total, Unrealized Losses	(3,253)	(5,371)
Corporate Bonds and Other Securities
Schedule of Trading Securities and Other Trading Assets [Line Items]
Less than 12 months, Fair Value	21,128	47,388
Less than 12 months, Unrealized Losses	(353)	(1,537)
More than 12 Months, Fair Value	32,674	40,468
More than 12 months, Unrealized Losses	(517)	(1,326)
Total, Fair Value	53,802	87,856
Total, Unrealized Losses	$ (870)	$ (2,863)

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SECURITIES (Narrative) (Details)	3 Months Ended		9 Months Ended	12 Months Ended
	Sep. 30, 2017 USD ($) security	Jun. 30, 2015 USD ($)	Sep. 30, 2017 USD ($) security	Dec. 31, 2016 USD ($) security	Dec. 31, 2015 USD ($)
Schedule of Investments [Line Items]
Individual securities that had been in a continuous loss position for more than 12 months, amount	$ 84,493,000		$ 84,493,000	$ 83,152,000
Securities that had been in a continuous loss position for more than 12 months, unrealized loss	1,666,000		1,666,000	1,790,000
Held to maturity securities unrealized gains before tax		$ 8,100,000	4,000,000	5,200,000
Held-to-maturity securities in continuous loss position for more than 12 months	$ 638,000		$ 638,000	$ 648,000
Number of held-to-maturity securities in unrealized loss positions | security	1		1	1
Held-to-maturity securities, continuous unrealized loss position, more than 12 months	$ 24,000		$ 24,000	$ 81,000
Federal Home Loan Bank requires Bank to maintain percentage of stock equal to outstanding borrowings			4.25%	4.25%
Percentage of Federal Reserve Bank of Richmond reserve			6.00%	6.00%
Restricted equity securities consist of Federal Reserve Bank stock	27,600,000		$ 27,600,000	$ 23,800,000
Federal Home Loan Bank stock	40,900,000		40,900,000	$ 37,000,000
Credit-related OTTI	$ 0		$ 0		$ 300,000
Available-for-sale Securities
Schedule of Investments [Line Items]
Individual securities that had been in a continuous loss position | security	36		36	30

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SECURITIES (Schedule of Amortized Cost and Estimated Fair Value of Securities) (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Amortized Cost
Due in one year or less	$ 23,387	$ 21,403
Due after one year through five years	128,261	108,198
Due after five years through ten years	267,492	300,552
Due after ten years	541,706	517,444
Total securities available for sale	960,846	947,597
Estimated Fair Value
Due in one year or less	23,510	21,517
Due after one year through five years	130,107	109,778
Due after five years through ten years	271,830	301,888
Due after ten years	542,914	513,581
Total securities available for sale	968,361	946,764
Carrying Value
Due in one year or less	5,879	4,403
Due after one year through five years	41,196	28,383
Due after five years through ten years	65,893	51,730
Due after ten years	91,833	117,010
Total securities held to maturity	204,801	201,526
Estimated Fair Value
Due in one year or less	5,902	4,440
Due after one year through five years	41,959	28,763
Due after five years through ten years	67,444	51,522
Due after ten years	94,530	117,590
Total securities held to maturity	$ 209,835	$ 202,315

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SECURITIES (Schedule of Carrying Value, Gross Unrealized Gains and Losses and Estimated Fair Value of Securities) (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended	12 Months Ended
	Jun. 30, 2015	Sep. 30, 2017	Dec. 31, 2016
Schedule of Held-to-maturity Securities [Line Items]
Total securities held to maturity		$ 204,801	$ 201,526
Estimated Fair Value		209,835	202,315
Held to maturity securities unrealized gains before tax	$ 8,100	4,000	5,200
Obligations of States and Political Subdivisions
Schedule of Held-to-maturity Securities [Line Items]
Total securities held to maturity		204,801	201,526
Gross Unrealized Gains		5,111	1,617
Gross Unrealized (Losses)		(77)	(828)
Estimated Fair Value		$ 209,835	$ 202,315

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SECURITIES (Gross Unrealized Losses and Fair Value of Securities) (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Schedule of Held-to-maturity Securities [Line Items]
More than 12 months, Fair Value	$ 638	$ 648
More than 12 months, Unrealized Losses	(24)	(81)
Obligations of States and Political Subdivisions
Schedule of Held-to-maturity Securities [Line Items]
Less than 12 months, Fair Value	5,130	92,841
Less than 12 months, Unrealized Losses	(53)	(747)
More than 12 months, Fair Value	638	648
More than 12 months, Unrealized Losses	(24)	(81)
Total, Fair Value	5,768	93,489
Total, Unrealized Losses	$ (77)	$ (828)

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SECURITIES (Gross Realized Gains and Losses on the Sale of Securities) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Realized gains (losses):
Gross realized gains	$ 296	$ 0	$ 958	$ 242
Gross realized losses	(112)	0	(176)	(97)
Net realized gains	184	0	782	145
Proceeds from sales of securities	$ 39,284	$ 2,848	$ 91,911	$ 18,272

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LOANS AND ALLOWANCE FOR LOAN LOSSES (Loans Stated at Face Amount, Net of Deferred Fees and Costs) (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016	Sep. 30, 2016
Loans and Leases Receivable Disclosure [Line Items]
Total loans held for investment, net	$ 6,898,729	$ 6,307,060	$ 6,148,918
Loans receivable, deferred fees and costs	335	1,800
Construction and Land Development
Loans and Leases Receivable Disclosure [Line Items]
Total loans held for investment, net	841,738	751,131	776,430
Commercial Real Estate - Owner Occupied
Loans and Leases Receivable Disclosure [Line Items]
Total loans held for investment, net	903,523	857,805	857,142
Commercial Real Estate - Non-Owner Occupied
Loans and Leases Receivable Disclosure [Line Items]
Total loans held for investment, net	1,748,039	1,564,295	1,454,828
Multifamily Real Estate
Loans and Leases Receivable Disclosure [Line Items]
Total loans held for investment, net	368,686	334,276	339,313
Commercial & Industrial
Loans and Leases Receivable Disclosure [Line Items]
Total loans held for investment, net	554,522	551,526	509,857
Residential 1-4 Family
Loans and Leases Receivable Disclosure [Line Items]
Total loans held for investment, net	1,083,112	1,029,547	999,361
Auto
Loans and Leases Receivable Disclosure [Line Items]
Total loans held for investment, net	276,572	262,071	255,188
HELOC
Loans and Leases Receivable Disclosure [Line Items]
Total loans held for investment, net	535,446	526,884	524,097
Consumer and all other
Loans and Leases Receivable Disclosure [Line Items]
Total loans held for investment, net	$ 587,091	$ 429,525	$ 432,702

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LOANS AND ALLOWANCE FOR LOAN LOSSES (Summary of Aging of the Loan Portfolio by Segment) (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016	Sep. 30, 2016
Financing Receivable, Recorded Investment, Past Due [Line Items]
Greater than 90 Days and still Accruing	$ 4,532	$ 3,005
Total Loans	6,898,729	6,307,060	$ 6,148,918
Nonaccrual	20,122	9,973
Current	6,793,302	6,209,924
Purchased Impaired
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Loans	51,041	59,292	62,346
Current	46,155	55,244
30 to 59 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	24,312	20,245
60 to 89 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	5,420	4,621
Construction and Land Development
Financing Receivable, Recorded Investment, Past Due [Line Items]
Greater than 90 Days and still Accruing	54	76
Total Loans	841,738	751,131	776,430
Nonaccrual	5,671	2,037
Current	825,666	744,702
Construction and Land Development | Purchased Impaired
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Loans	3,026	2,922	3,205
Current	2,964	2,838
Construction and Land Development | 30 to 59 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	7,221	1,162
Construction and Land Development | 60 to 89 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	100	232
Commercial Real Estate - Owner Occupied
Financing Receivable, Recorded Investment, Past Due [Line Items]
Greater than 90 Days and still Accruing	679	35
Total Loans	903,523	857,805	857,142
Nonaccrual	2,205	794
Current	880,575	836,682
Commercial Real Estate - Owner Occupied | Purchased Impaired
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Loans	17,668	18,343	19,064
Current	16,562	17,553
Commercial Real Estate - Owner Occupied | 30 to 59 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	1,707	1,842
Commercial Real Estate - Owner Occupied | 60 to 89 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	689	109
Commercial Real Estate - Non-Owner Occupied
Financing Receivable, Recorded Investment, Past Due [Line Items]
Greater than 90 Days and still Accruing	298	0
Total Loans	1,748,039	1,564,295	1,454,828
Nonaccrual	2,701	0
Current	1,729,184	1,544,623
Commercial Real Estate - Non-Owner Occupied | Purchased Impaired
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Loans	14,376	17,303	18,141
Current	13,026	16,768
Commercial Real Estate - Non-Owner Occupied | 30 to 59 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	909	2,369
Commercial Real Estate - Non-Owner Occupied | 60 to 89 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	571	0
Multifamily Real Estate
Financing Receivable, Recorded Investment, Past Due [Line Items]
Greater than 90 Days and still Accruing	0	0
Total Loans	368,686	334,276	339,313
Nonaccrual	0	0
Current	368,609	332,063
Multifamily Real Estate | Purchased Impaired
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Loans	77	2,066	2,079
Current	77	2,066
Multifamily Real Estate | 30 to 59 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	0	147
Multifamily Real Estate | 60 to 89 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	0	0
Commercial & Industrial
Financing Receivable, Recorded Investment, Past Due [Line Items]
Greater than 90 Days and still Accruing	101	9
Total Loans	554,522	551,526	509,857
Nonaccrual	1,252	124
Current	550,731	548,702
Commercial & Industrial | Purchased Impaired
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Loans	625	1,074	1,145
Current	625	974
Commercial & Industrial | 30 to 59 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	1,558	759
Commercial & Industrial | 60 to 89 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	255	858
Residential 1-4 Family
Financing Receivable, Recorded Investment, Past Due [Line Items]
Greater than 90 Days and still Accruing	2,360	2,048
Total Loans	1,083,112	1,029,547	999,361
Nonaccrual	6,163	5,279
Current	1,053,440	998,448
Residential 1-4 Family | Purchased Impaired
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Loans	14,077	16,200	16,828
Current	12,003	13,957
Residential 1-4 Family | 30 to 59 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	5,633	7,038
Residential 1-4 Family | 60 to 89 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	1,439	534
Auto
Financing Receivable, Recorded Investment, Past Due [Line Items]
Greater than 90 Days and still Accruing	143	111
Total Loans	276,572	262,071	255,188
Nonaccrual	174	169
Current	273,547	258,904
Auto | Purchased Impaired
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Loans	0	0	0
Auto | 30 to 59 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	2,415	2,570
Auto | 60 to 89 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	293	317
HELOC
Financing Receivable, Recorded Investment, Past Due [Line Items]
Greater than 90 Days and still Accruing	709	635
Total Loans	535,446	526,884	524,097
Nonaccrual	1,791	1,279
Current	529,936	520,833
HELOC | Purchased Impaired
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Loans	982	1,161	1,498
Current	722	865
HELOC | 30 to 59 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	1,400	1,836
HELOC | 60 to 89 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	628	1,140
Consumer and all other
Financing Receivable, Recorded Investment, Past Due [Line Items]
Greater than 90 Days and still Accruing	188	91
Total Loans	587,091	429,525	432,702
Nonaccrual	165	291
Current	581,614	424,967
Consumer and all other | Purchased Impaired
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total Loans	210	223	$ 386
Current	176	223
Consumer and all other | 30 to 59 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	3,469	2,522
Consumer and all other | 60 to 89 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	$ 1,445	$ 1,431

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LOANS AND ALLOWANCE FOR LOAN LOSSES (PCI Loan Portfolios by Segment and Delinquency Status) (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016	Sep. 30, 2016
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	$ 6,793,302	$ 6,209,924
Total Loans	6,898,729	6,307,060	$ 6,148,918
Construction and Land Development
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	825,666	744,702
Total Loans	841,738	751,131	776,430
Commercial Real Estate - Owner Occupied
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	880,575	836,682
Total Loans	903,523	857,805	857,142
Commercial Real Estate - Non-Owner Occupied
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	1,729,184	1,544,623
Total Loans	1,748,039	1,564,295	1,454,828
Multifamily Real Estate
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	368,609	332,063
Total Loans	368,686	334,276	339,313
Commercial & Industrial
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	550,731	548,702
Total Loans	554,522	551,526	509,857
Residential 1-4 Family
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	1,053,440	998,448
Total Loans	1,083,112	1,029,547	999,361
HELOC
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	529,936	520,833
Total Loans	535,446	526,884	524,097
Consumer and all other
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	581,614	424,967
Total Loans	587,091	429,525	432,702
Purchased Impaired
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	46,155	55,244
Total Loans	51,041	59,292	62,346
Purchased Impaired | 30 To 89 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	1,958	2,197
Purchased Impaired | Greater than 90 Days
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	2,928	1,851
Purchased Impaired | Construction and Land Development
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	2,964	2,838
Total Loans	3,026	2,922	3,205
Purchased Impaired | Construction and Land Development | 30 To 89 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	62	0
Purchased Impaired | Construction and Land Development | Greater than 90 Days
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	0	84
Purchased Impaired | Commercial Real Estate - Owner Occupied
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	16,562	17,553
Total Loans	17,668	18,343	19,064
Purchased Impaired | Commercial Real Estate - Owner Occupied | 30 To 89 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	463	271
Purchased Impaired | Commercial Real Estate - Owner Occupied | Greater than 90 Days
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	643	519
Purchased Impaired | Commercial Real Estate - Non-Owner Occupied
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	13,026	16,768
Total Loans	14,376	17,303	18,141
Purchased Impaired | Commercial Real Estate - Non-Owner Occupied | 30 To 89 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	318	409
Purchased Impaired | Commercial Real Estate - Non-Owner Occupied | Greater than 90 Days
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	1,032	126
Purchased Impaired | Multifamily Real Estate
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	77	2,066
Total Loans	77	2,066	2,079
Purchased Impaired | Multifamily Real Estate | 30 To 89 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	0	0
Purchased Impaired | Multifamily Real Estate | Greater than 90 Days
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	0	0
Purchased Impaired | Commercial & Industrial
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	625	974
Total Loans	625	1,074	1,145
Purchased Impaired | Commercial & Industrial | 30 To 89 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	0	44
Purchased Impaired | Commercial & Industrial | Greater than 90 Days
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	0	56
Purchased Impaired | Residential 1-4 Family
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	12,003	13,957
Total Loans	14,077	16,200	16,828
Purchased Impaired | Residential 1-4 Family | 30 To 89 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	949	1,298
Purchased Impaired | Residential 1-4 Family | Greater than 90 Days
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	1,125	945
Purchased Impaired | HELOC
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	722	865
Total Loans	982	1,161	1,498
Purchased Impaired | HELOC | 30 To 89 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	132	175
Purchased Impaired | HELOC | Greater than 90 Days
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	128	121
Purchased Impaired | Consumer and all other
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	176	223
Total Loans	210	223	$ 386
Purchased Impaired | Consumer and all other | 30 To 89 Days Past Due
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	34	0
Purchased Impaired | Consumer and all other | Greater than 90 Days
Financing Receivable, Recorded Investment, Past Due [Line Items]
Past Due	$ 0	$ 0

XML

LOANS AND ALLOWANCE FOR LOAN LOSSES (Impaired Loans Individually Evaluated for Impairment by Segment) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Recorded Investment
Loans without a specific allowance	$ 37,989		$ 37,989		$ 31,553
Loans with a specific allowance	13,611		13,611		9,596
Total impaired loans	51,600		51,600		41,149
Unpaid Principal Balance
Loans without a specific allowance	39,770		39,770		33,723
Loans with a specific allowance	14,058		14,058		10,240
Total impaired loans	53,828		53,828		43,963
Related Allowance	1,570		1,570		816
Average Investment	52,414	$ 60,239	52,335	$ 60,763
Interest Income Recognized	392	707	1,231	2,120
Construction and Land Development
Recorded Investment
Loans without a specific allowance	13,889		13,889		13,877
Loans with a specific allowance	1,347		1,347		1,395
Unpaid Principal Balance
Loans without a specific allowance	13,981		13,981		14,353
Loans with a specific allowance	1,444		1,444		1,404
Related Allowance	113		113		107
Average Investment	15,654	28,195	15,378	27,645
Interest Income Recognized	128	464	368	1,346
Commercial Real Estate - Owner Occupied
Recorded Investment
Loans without a specific allowance	5,238		5,238		5,886
Loans with a specific allowance	2,118		2,118		646
Unpaid Principal Balance
Loans without a specific allowance	5,378		5,378		6,042
Loans with a specific allowance	2,132		2,132		646
Related Allowance	157		157		4
Average Investment	7,354	7,691	7,407	7,862
Interest Income Recognized	62	72	245	230
Commercial Real Estate - Non-Owner Occupied
Recorded Investment
Loans without a specific allowance	5,548		5,548		1,399
Loans with a specific allowance	2,032		2,032		2,809
Unpaid Principal Balance
Loans without a specific allowance	5,636		5,636		1,399
Loans with a specific allowance	2,032		2,032		2,809
Related Allowance	42		42		474
Average Investment	7,597	3,777	7,584	3,759
Interest Income Recognized	57	33	185	98
Commercial & Industrial
Recorded Investment
Loans without a specific allowance	1,632		1,632		648
Loans with a specific allowance	2,511		2,511		857
Unpaid Principal Balance
Loans without a specific allowance	1,880		1,880		890
Loans with a specific allowance	2,562		2,562		880
Related Allowance	909		909		14
Average Investment	4,139	4,628	4,203	4,964
Interest Income Recognized	36	42	121	134
Residential 1-4 Family
Recorded Investment
Loans without a specific allowance	9,510		9,510		8,496
Loans with a specific allowance	4,421		4,421		3,335
Unpaid Principal Balance
Loans without a specific allowance	10,523		10,523		9,518
Loans with a specific allowance	4,543		4,543		3,535
Related Allowance	249		249		200
Average Investment	14,218	13,106	14,358	13,439
Interest Income Recognized	94	89	261	267
Auto
Recorded Investment
Loans with a specific allowance	174		174		169
Unpaid Principal Balance
Loans with a specific allowance	235		235		235
Related Allowance	1		1		1
Average Investment	192	271	223	289
Interest Income Recognized	0	0	2	4
HELOC
Recorded Investment
Loans without a specific allowance	1,651		1,651		1,017
Loans with a specific allowance	766		766		323
Unpaid Principal Balance
Loans without a specific allowance	1,741		1,741		1,094
Loans with a specific allowance	800		800		433
Related Allowance	56		56		15
Average Investment	2,460	2,118	2,492	2,185
Interest Income Recognized	7	7	29	35
Consumer and all other
Recorded Investment
Loans without a specific allowance	521		521		230
Loans with a specific allowance	242		242		62
Unpaid Principal Balance
Loans without a specific allowance	631		631		427
Loans with a specific allowance	310		310		298
Related Allowance	43		43		$ 1
Average Investment	800	453	690	620
Interest Income Recognized	$ 8	$ 0	$ 20	$ 6

XML

LOANS AND ALLOWANCE FOR LOAN LOSSES (Summary of Modified Loans that Continue to Accrue Interest Under the Terms of Restructuring Agreement) (Details) $ in Thousands	Sep. 30, 2017 USD ($) loan	Dec. 31, 2016 USD ($) loan
Financing Receivable, Modifications [Line Items]
No. of Loans | loan	85	61
Recorded Investment	$ 19,244	$ 15,402
Outstanding Commitment	$ 0	$ 0
Performing
Financing Receivable, Modifications [Line Items]
No. of Loans | loan	64	48
Recorded Investment	$ 16,519	$ 13,967
Outstanding Commitment	$ 0	$ 0
Performing | Construction and Land Development
Financing Receivable, Modifications [Line Items]
No. of Loans | loan	7	8
Recorded Investment	$ 2,841	$ 3,793
Outstanding Commitment	$ 0	$ 0
Performing | Commercial Real Estate - Owner Occupied
Financing Receivable, Modifications [Line Items]
No. of Loans | loan	7	7
Recorded Investment	$ 2,934	$ 3,106
Outstanding Commitment	$ 0	$ 0
Performing | Commercial Real Estate - Non-Owner Occupied
Financing Receivable, Modifications [Line Items]
No. of Loans | loan	3	2
Recorded Investment	$ 2,196	$ 2,390
Outstanding Commitment	$ 0	$ 0
Performing | Commercial & Industrial
Financing Receivable, Modifications [Line Items]
No. of Loans | loan	12	3
Recorded Investment	$ 2,112	$ 533
Outstanding Commitment	$ 0	$ 0
Performing | Residential 1-4 Family
Financing Receivable, Modifications [Line Items]
No. of Loans | loan	34	28
Recorded Investment	$ 5,941	$ 4,145
Outstanding Commitment	$ 0	$ 0
Performing | Consumer and all other
Financing Receivable, Modifications [Line Items]
No. of Loans | loan	1	0
Recorded Investment	$ 495	$ 0
Outstanding Commitment	$ 0	$ 0
Nonperforming
Financing Receivable, Modifications [Line Items]
No. of Loans | loan	21	13
Recorded Investment	$ 2,725	$ 1,435
Outstanding Commitment	$ 0	$ 0
Nonperforming | Construction and Land Development
Financing Receivable, Modifications [Line Items]
No. of Loans | loan	5	2
Recorded Investment	$ 400	$ 215
Outstanding Commitment	$ 0	$ 0
Nonperforming | Commercial Real Estate - Owner Occupied
Financing Receivable, Modifications [Line Items]
No. of Loans | loan	2	2
Recorded Investment	$ 142	$ 156
Outstanding Commitment	$ 0	$ 0
Nonperforming | Commercial & Industrial
Financing Receivable, Modifications [Line Items]
No. of Loans | loan	5	1
Recorded Investment	$ 1,062	$ 116
Outstanding Commitment	$ 0	$ 0
Nonperforming | Residential 1-4 Family
Financing Receivable, Modifications [Line Items]
No. of Loans | loan	8	8
Recorded Investment	$ 1,095	$ 948
Outstanding Commitment	$ 0	$ 0
Nonperforming | Consumer and all other
Financing Receivable, Modifications [Line Items]
No. of Loans | loan	1	0
Recorded Investment	$ 26	$ 0
Outstanding Commitment	$ 0	$ 0

XML

LOANS AND ALLOWANCE FOR LOAN LOSSES (Narrative) (Details)	3 Months Ended		9 Months Ended
	Sep. 30, 2017 USD ($) loan	Sep. 30, 2016 USD ($) loan	Sep. 30, 2017 USD ($) loan	Sep. 30, 2016 USD ($) loan	Dec. 31, 2016 USD ($)
Financing Receivable, Modifications [Line Items]
Period for restructured loan to be considered default			90 days
No. of Loans | loan	3		8
Recorded Investment	$ 537,000	$ 23,000	$ 1,622,000	$ 23,000
Provision for unfunded commitments				175,000
Total loans held for investment, net	6,898,729,000	6,148,918,000	6,898,729,000	6,148,918,000	$ 6,307,060,000
Acquired Performing Loan Portfolio
Financing Receivable, Modifications [Line Items]
Total loans held for investment, net	942,000,000		942,000,000		1,100,000,000
Remaining discount on acquired loans	14,600,000		14,600,000		16,900,000
Purchased Impaired
Financing Receivable, Modifications [Line Items]
Total loans held for investment, net	51,041,000	$ 62,346,000	51,041,000	$ 62,346,000	59,292,000
Purchased impaired loans (gross)	$ 62,800,000		$ 62,800,000		73,600,000
Commercial Real Estate - Owner Occupied
Financing Receivable, Modifications [Line Items]
No. of Loans | loan	0	1	1	1
Recorded Investment	$ 0		$ 469,000
Total loans held for investment, net	903,523,000	$ 857,142,000	903,523,000	$ 857,142,000	857,805,000
Commercial Real Estate - Owner Occupied | Purchased Impaired
Financing Receivable, Modifications [Line Items]
Total loans held for investment, net	$ 17,668,000	$ 19,064,000	$ 17,668,000	$ 19,064,000	$ 18,343,000

XML

LOANS AND ALLOWANCE FOR LOAN LOSSES (Schedule of TDR by Segment) (Details)	3 Months Ended		9 Months Ended
	Sep. 30, 2017 USD ($) loan	Sep. 30, 2016 USD ($) loan	Sep. 30, 2017 USD ($) loan	Sep. 30, 2016 USD ($) loan
Financing Receivable, Modifications [Line Items]
No. of Loans | loan	3		8
Recorded Investment | $	$ 537,000	$ 23,000	$ 1,622,000	$ 23,000
Construction and Land Development
Financing Receivable, Modifications [Line Items]
No. of Loans | loan	0		2
Recorded Investment | $	$ 0		$ 198,000
Commercial Real Estate - Owner Occupied
Financing Receivable, Modifications [Line Items]
No. of Loans | loan	0	1	1	1
Recorded Investment | $	$ 0		$ 469,000
Commercial & Industrial
Financing Receivable, Modifications [Line Items]
No. of Loans | loan	1		1
Recorded Investment | $	$ 350,000		$ 350,000
Residential 1-4 Family
Financing Receivable, Modifications [Line Items]
No. of Loans | loan	2		4
Recorded Investment | $	$ 187,000		$ 605,000

XML

LOANS AND ALLOWANCE FOR LOAN LOSSES (Schedule of TDR by Class and Modification Type) (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017 USD ($) loan	Sep. 30, 2016 USD ($) loan	Sep. 30, 2017 USD ($) loan	Sep. 30, 2016 USD ($) loan
Financing Receivable, Modifications [Line Items]
No. of Loans | loan	11	1	42	8
Recorded Investment at Period End | $	$ 3,760	$ 457	$ 11,550	$ 3,008
Modified to interest only, at a market rate
Financing Receivable, Modifications [Line Items]
No. of Loans | loan	3		8
Recorded Investment at Period End | $	$ 936		$ 1,596
Modified to interest only, at a market rate | Commercial & Industrial
Financing Receivable, Modifications [Line Items]
No. of Loans | loan	3		8
Recorded Investment at Period End | $	$ 936		$ 1,596
Term modification, at a market rate
Financing Receivable, Modifications [Line Items]
No. of Loans | loan	7	1	22	6
Recorded Investment at Period End | $	$ 2,784	$ 457	$ 7,791	$ 2,847
Term modification, at a market rate | Construction and Land Development
Financing Receivable, Modifications [Line Items]
No. of Loans | loan	1	0	4	1
Recorded Investment at Period End | $	$ 160	$ 0	$ 1,150	$ 1,177
Term modification, at a market rate | Commercial Real Estate - Owner Occupied
Financing Receivable, Modifications [Line Items]
No. of Loans | loan	1	0	1	2
Recorded Investment at Period End | $	$ 380	$ 0	$ 380	$ 739
Term modification, at a market rate | Commercial & Industrial
Financing Receivable, Modifications [Line Items]
No. of Loans | loan	0	1	4	1
Recorded Investment at Period End | $	$ 0	$ 457	$ 969	$ 457
Term modification, at a market rate | Commercial Real Estate - Non-Owner Occupied
Financing Receivable, Modifications [Line Items]
No. of Loans | loan	1		3
Recorded Investment at Period End | $	$ 571		$ 2,196
Term modification, at a market rate | Residential 1-4 Family
Financing Receivable, Modifications [Line Items]
No. of Loans | loan	3	0	8	2
Recorded Investment at Period End | $	$ 1,647	$ 0	$ 2,574	$ 474
Term modification, at a market rate | Consumer and all other
Financing Receivable, Modifications [Line Items]
No. of Loans | loan	1		2
Recorded Investment at Period End | $	$ 26		$ 522
Term modification, below market rate
Financing Receivable, Modifications [Line Items]
No. of Loans | loan	1	0	12	1
Recorded Investment at Period End | $	$ 40	$ 0	$ 2,163	$ 36
Term modification, below market rate | Commercial Real Estate - Owner Occupied
Financing Receivable, Modifications [Line Items]
No. of Loans | loan	0		1
Recorded Investment at Period End | $	$ 0		$ 841
Term modification, below market rate | Commercial & Industrial
Financing Receivable, Modifications [Line Items]
No. of Loans | loan	0		3
Recorded Investment at Period End | $	$ 0		$ 179
Term modification, below market rate | Residential 1-4 Family
Financing Receivable, Modifications [Line Items]
No. of Loans | loan	1	0	8	1
Recorded Investment at Period End | $	$ 40	$ 0	$ 1,143	$ 36
Interest rate modification, below market rate
Financing Receivable, Modifications [Line Items]
No. of Loans | loan		0		1
Recorded Investment at Period End | $		$ 0		$ 125
Interest rate modification, below market rate | Commercial & Industrial
Financing Receivable, Modifications [Line Items]
No. of Loans | loan		0		1
Recorded Investment at Period End | $		$ 0		$ 125

XML

LOANS AND ALLOWANCE FOR LOAN LOSSES (Allowance for Loan Loss Activity, by Portfolio Segment, Balances for Allowance for Credit Losses, and Loans Based on Impairment Methodology) (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Dec. 31, 2016	Sep. 30, 2016
Allowance for loan losses
Balance, beginning of the year	$ 37,192	$ 34,047
Recoveries credited to allowance	2,559	2,022
Loans charged off	(9,949)	(6,728)
Provision charged to operations	7,360	7,201
Balance, end of period	37,162	36,542
Total Loans
Loans individually evaluated for impairment			$ 51,600		$ 57,501
ALL individually evaluated for impairment			1,570		992
Loans collectively evaluated for impairment			6,796,088		6,029,071
ALL collectively evaluated for impairment			35,592		35,550
Total Loans			6,898,729	$ 6,307,060	6,148,918
Total ALL	37,192	34,047	37,162	37,192	36,542
Purchased Impaired
Allowance for loan losses
Balance, end of period	0	0
Total Loans
Total Loans			51,041	59,292	62,346
Total ALL	0	0	0		0
Construction and Land Development
Allowance for loan losses
Balance, beginning of the year	10,055	6,040
Recoveries credited to allowance	193	165
Loans charged off	(2,115)	(869)
Provision charged to operations	535	5,464
Balance, end of period	8,668	10,800
Total Loans
Loans individually evaluated for impairment			15,236		27,241
ALL individually evaluated for impairment			113		123
Loans collectively evaluated for impairment			823,476		745,984
ALL collectively evaluated for impairment			8,555		10,677
Total Loans			841,738	751,131	776,430
Total ALL	10,055	6,040	8,668	10,055	10,800
Construction and Land Development | Purchased Impaired
Allowance for loan losses
Balance, end of period	0	0
Total Loans
Total Loans			3,026	2,922	3,205
Total ALL	0	0	0		0
Commercial Real Estate - Owner Occupied
Allowance for loan losses
Balance, beginning of the year	3,801	4,614
Recoveries credited to allowance	84	112
Loans charged off	(46)	(772)
Provision charged to operations	(620)	(770)
Balance, end of period	3,219	3,184
Total Loans
Loans individually evaluated for impairment			7,356		7,612
ALL individually evaluated for impairment			157		5
Loans collectively evaluated for impairment			878,499		830,466
ALL collectively evaluated for impairment			3,062		3,179
Total Loans			903,523	857,805	857,142
Total ALL	3,801	4,614	3,219	3,801	3,184
Commercial Real Estate - Owner Occupied | Purchased Impaired
Allowance for loan losses
Balance, end of period	0	0
Total Loans
Total Loans			17,668	18,343	19,064
Total ALL	0	0	0		0
Commercial Real Estate - Non-Owner Occupied
Allowance for loan losses
Balance, beginning of the year	6,622	6,929
Recoveries credited to allowance	2	3
Loans charged off	(1,181)	(1)
Provision charged to operations	1,825	(813)
Balance, end of period	7,268	6,118
Total Loans
Loans individually evaluated for impairment			7,580		3,792
ALL individually evaluated for impairment			42		1
Loans collectively evaluated for impairment			1,726,083		1,432,895
ALL collectively evaluated for impairment			7,226		6,117
Total Loans			1,748,039	1,564,295	1,454,828
Total ALL	6,622	6,929	7,268	6,622	6,118
Commercial Real Estate - Non-Owner Occupied | Purchased Impaired
Allowance for loan losses
Balance, end of period	0	0
Total Loans
Total Loans			14,376	17,303	18,141
Total ALL	0	0	0		0
Multifamily Real Estate
Allowance for loan losses
Balance, beginning of the year	1,236	1,606
Recoveries credited to allowance	0	0
Loans charged off	0	0
Provision charged to operations	(136)	(658)
Balance, end of period	1,100	948
Total Loans
Loans individually evaluated for impairment			0		0
ALL individually evaluated for impairment			0		0
Loans collectively evaluated for impairment			368,609		337,234
ALL collectively evaluated for impairment			1,100		948
Total Loans			368,686	334,276	339,313
Total ALL	1,236	1,606	1,100	1,236	948
Multifamily Real Estate | Purchased Impaired
Allowance for loan losses
Balance, end of period	0	0
Total Loans
Total Loans			77	2,066	2,079
Total ALL	0	0	0		0
Commercial & Industrial
Allowance for loan losses
Balance, beginning of the year	4,627	3,163
Recoveries credited to allowance	451	422
Loans charged off	(1,241)	(1,301)
Provision charged to operations	1,526	3,119
Balance, end of period	5,363	5,403
Total Loans
Loans individually evaluated for impairment			4,143		3,448
ALL individually evaluated for impairment			909		642
Loans collectively evaluated for impairment			549,754		505,264
ALL collectively evaluated for impairment			4,454		4,761
Total Loans			554,522	551,526	509,857
Total ALL	4,627	3,163	5,363	4,627	5,403
Commercial & Industrial | Purchased Impaired
Allowance for loan losses
Balance, end of period	0	0
Total Loans
Total Loans			625	1,074	1,145
Total ALL	0	0	0		0
Residential 1-4 Family
Allowance for loan losses
Balance, beginning of the year	6,399	5,414
Recoveries credited to allowance	332	466
Loans charged off	(815)	(741)
Provision charged to operations	(35)	518
Balance, end of period	5,881	5,657
Total Loans
Loans individually evaluated for impairment			13,931		12,673
ALL individually evaluated for impairment			249		115
Loans collectively evaluated for impairment			1,055,104		969,860
ALL collectively evaluated for impairment			5,632		5,542
Total Loans			1,083,112	1,029,547	999,361
Total ALL	6,399	5,414	5,881	6,399	5,657
Residential 1-4 Family | Purchased Impaired
Allowance for loan losses
Balance, end of period	0	0
Total Loans
Total Loans			14,077	16,200	16,828
Total ALL	0	0	0		0
Auto
Allowance for loan losses
Balance, beginning of the year	946	1,703
Recoveries credited to allowance	352	243
Loans charged off	(761)	(815)
Provision charged to operations	398	(260)
Balance, end of period	935	871
Total Loans
Loans individually evaluated for impairment			174		231
ALL individually evaluated for impairment			1		1
Loans collectively evaluated for impairment			276,398		254,957
ALL collectively evaluated for impairment			934		870
Total Loans			276,572	262,071	255,188
Total ALL	946	1,703	935	946	871
Auto | Purchased Impaired
Allowance for loan losses
Balance, end of period	0	0
Total Loans
Total Loans			0	0	0
Total ALL	0	0	0		0
HELOC
Allowance for loan losses
Balance, beginning of the year	1,328	2,934
Recoveries credited to allowance	240	229
Loans charged off	(861)	(1,272)
Provision charged to operations	675	(534)
Balance, end of period	1,382	1,357
Total Loans
Loans individually evaluated for impairment			2,417		2,053
ALL individually evaluated for impairment			56		17
Loans collectively evaluated for impairment			532,047		520,546
ALL collectively evaluated for impairment			1,326		1,340
Total Loans			535,446	526,884	524,097
Total ALL	1,328	2,934	1,382	1,328	1,357
HELOC | Purchased Impaired
Allowance for loan losses
Balance, end of period	0	0
Total Loans
Total Loans			982	1,161	1,498
Total ALL	0	0	0		0
Consumer and all other
Allowance for loan losses
Balance, beginning of the year	2,178	1,644
Recoveries credited to allowance	905	382
Loans charged off	(2,929)	(957)
Provision charged to operations	3,192	1,135
Balance, end of period	3,346	2,204
Total Loans
Loans individually evaluated for impairment			763		451
ALL individually evaluated for impairment			43		88
Loans collectively evaluated for impairment			586,118		431,865
ALL collectively evaluated for impairment			3,303		2,116
Total Loans			587,091	429,525	432,702
Total ALL	2,178	1,644	3,346	2,178	2,204
Consumer and all other | Purchased Impaired
Allowance for loan losses
Balance, end of period	0	0
Total Loans
Total Loans			210	$ 223	386
Total ALL	$ 0	$ 0	$ 0		$ 0

XML

LOANS AND ALLOWANCE FOR LOAN LOSSES (Loans Receivables Related Risk Rating Excluding Purchased Impaired Loans) (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016	Sep. 30, 2016
Financing Receivable, Recorded Investment [Line Items]
Total Loans	$ 6,898,729	$ 6,307,060	$ 6,148,918
Construction and Land Development
Financing Receivable, Recorded Investment [Line Items]
Total Loans	841,738	751,131	776,430
Commercial Real Estate - Owner Occupied
Financing Receivable, Recorded Investment [Line Items]
Total Loans	903,523	857,805	857,142
Commercial Real Estate - Non-Owner Occupied
Financing Receivable, Recorded Investment [Line Items]
Total Loans	1,748,039	1,564,295	1,454,828
Multifamily Real Estate
Financing Receivable, Recorded Investment [Line Items]
Total Loans	368,686	334,276	339,313
Commercial & Industrial
Financing Receivable, Recorded Investment [Line Items]
Total Loans	554,522	551,526	509,857
Residential 1-4 Family
Financing Receivable, Recorded Investment [Line Items]
Total Loans	1,083,112	1,029,547	999,361
Auto
Financing Receivable, Recorded Investment [Line Items]
Total Loans	276,572	262,071	255,188
HELOC
Financing Receivable, Recorded Investment [Line Items]
Total Loans	535,446	526,884	524,097
Consumer and all other
Financing Receivable, Recorded Investment [Line Items]
Total Loans	587,091	429,525	$ 432,702
Excluding Purchased Impaired
Financing Receivable, Recorded Investment [Line Items]
Total Loans	6,847,688	6,247,768
Excluding Purchased Impaired | Pass
Financing Receivable, Recorded Investment [Line Items]
Total Loans	6,633,913	6,017,055
Excluding Purchased Impaired | Special Mention
Financing Receivable, Recorded Investment [Line Items]
Total Loans	175,640	198,078
Excluding Purchased Impaired | Substandard
Financing Receivable, Recorded Investment [Line Items]
Total Loans	34,278	28,617
Excluding Purchased Impaired | Doubtful
Financing Receivable, Recorded Investment [Line Items]
Total Loans	3,857	4,018
Excluding Purchased Impaired | Construction and Land Development
Financing Receivable, Recorded Investment [Line Items]
Total Loans	838,712	748,209
Excluding Purchased Impaired | Construction and Land Development | Pass
Financing Receivable, Recorded Investment [Line Items]
Total Loans	768,206	667,018
Excluding Purchased Impaired | Construction and Land Development | Special Mention
Financing Receivable, Recorded Investment [Line Items]
Total Loans	57,190	69,311
Excluding Purchased Impaired | Construction and Land Development | Substandard
Financing Receivable, Recorded Investment [Line Items]
Total Loans	13,201	11,857
Excluding Purchased Impaired | Construction and Land Development | Doubtful
Financing Receivable, Recorded Investment [Line Items]
Total Loans	115	23
Excluding Purchased Impaired | Commercial Real Estate - Owner Occupied
Financing Receivable, Recorded Investment [Line Items]
Total Loans	885,855	839,462
Excluding Purchased Impaired | Commercial Real Estate - Owner Occupied | Pass
Financing Receivable, Recorded Investment [Line Items]
Total Loans	834,265	801,565
Excluding Purchased Impaired | Commercial Real Estate - Owner Occupied | Special Mention
Financing Receivable, Recorded Investment [Line Items]
Total Loans	47,019	32,364
Excluding Purchased Impaired | Commercial Real Estate - Owner Occupied | Substandard
Financing Receivable, Recorded Investment [Line Items]
Total Loans	4,571	5,533
Excluding Purchased Impaired | Commercial Real Estate - Owner Occupied | Doubtful
Financing Receivable, Recorded Investment [Line Items]
Total Loans	0	0
Excluding Purchased Impaired | Commercial Real Estate - Non-Owner Occupied
Financing Receivable, Recorded Investment [Line Items]
Total Loans	1,733,663	1,546,992
Excluding Purchased Impaired | Commercial Real Estate - Non-Owner Occupied | Pass
Financing Receivable, Recorded Investment [Line Items]
Total Loans	1,702,500	1,505,153
Excluding Purchased Impaired | Commercial Real Estate - Non-Owner Occupied | Special Mention
Financing Receivable, Recorded Investment [Line Items]
Total Loans	23,764	37,631
Excluding Purchased Impaired | Commercial Real Estate - Non-Owner Occupied | Substandard
Financing Receivable, Recorded Investment [Line Items]
Total Loans	7,399	4,208
Excluding Purchased Impaired | Commercial Real Estate - Non-Owner Occupied | Doubtful
Financing Receivable, Recorded Investment [Line Items]
Total Loans	0	0
Excluding Purchased Impaired | Multifamily Real Estate
Financing Receivable, Recorded Investment [Line Items]
Total Loans	368,609	332,210
Excluding Purchased Impaired | Multifamily Real Estate | Pass
Financing Receivable, Recorded Investment [Line Items]
Total Loans	361,175	312,711
Excluding Purchased Impaired | Multifamily Real Estate | Special Mention
Financing Receivable, Recorded Investment [Line Items]
Total Loans	7,434	19,499
Excluding Purchased Impaired | Multifamily Real Estate | Substandard
Financing Receivable, Recorded Investment [Line Items]
Total Loans	0	0
Excluding Purchased Impaired | Multifamily Real Estate | Doubtful
Financing Receivable, Recorded Investment [Line Items]
Total Loans	0	0
Excluding Purchased Impaired | Commercial & Industrial
Financing Receivable, Recorded Investment [Line Items]
Total Loans	553,897	550,452
Excluding Purchased Impaired | Commercial & Industrial | Pass
Financing Receivable, Recorded Investment [Line Items]
Total Loans	534,594	539,999
Excluding Purchased Impaired | Commercial & Industrial | Special Mention
Financing Receivable, Recorded Investment [Line Items]
Total Loans	16,400	9,391
Excluding Purchased Impaired | Commercial & Industrial | Substandard
Financing Receivable, Recorded Investment [Line Items]
Total Loans	2,903	1,062
Excluding Purchased Impaired | Commercial & Industrial | Doubtful
Financing Receivable, Recorded Investment [Line Items]
Total Loans	0	0
Excluding Purchased Impaired | Residential 1-4 Family
Financing Receivable, Recorded Investment [Line Items]
Total Loans	1,069,035	1,013,347
Excluding Purchased Impaired | Residential 1-4 Family | Pass
Financing Receivable, Recorded Investment [Line Items]
Total Loans	1,045,736	986,973
Excluding Purchased Impaired | Residential 1-4 Family | Special Mention
Financing Receivable, Recorded Investment [Line Items]
Total Loans	15,878	18,518
Excluding Purchased Impaired | Residential 1-4 Family | Substandard
Financing Receivable, Recorded Investment [Line Items]
Total Loans	4,480	4,813
Excluding Purchased Impaired | Residential 1-4 Family | Doubtful
Financing Receivable, Recorded Investment [Line Items]
Total Loans	2,941	3,043
Excluding Purchased Impaired | Auto
Financing Receivable, Recorded Investment [Line Items]
Total Loans	276,572	262,071
Excluding Purchased Impaired | Auto | Pass
Financing Receivable, Recorded Investment [Line Items]
Total Loans	273,446	258,188
Excluding Purchased Impaired | Auto | Special Mention
Financing Receivable, Recorded Investment [Line Items]
Total Loans	2,910	3,648
Excluding Purchased Impaired | Auto | Substandard
Financing Receivable, Recorded Investment [Line Items]
Total Loans	143	135
Excluding Purchased Impaired | Auto | Doubtful
Financing Receivable, Recorded Investment [Line Items]
Total Loans	73	100
Excluding Purchased Impaired | HELOC
Financing Receivable, Recorded Investment [Line Items]
Total Loans	534,464	525,723
Excluding Purchased Impaired | HELOC | Pass
Financing Receivable, Recorded Investment [Line Items]
Total Loans	530,263	519,928
Excluding Purchased Impaired | HELOC | Special Mention
Financing Receivable, Recorded Investment [Line Items]
Total Loans	2,427	4,225
Excluding Purchased Impaired | HELOC | Substandard
Financing Receivable, Recorded Investment [Line Items]
Total Loans	1,051	969
Excluding Purchased Impaired | HELOC | Doubtful
Financing Receivable, Recorded Investment [Line Items]
Total Loans	723	601
Excluding Purchased Impaired | Consumer and all other
Financing Receivable, Recorded Investment [Line Items]
Total Loans	586,881	429,302
Excluding Purchased Impaired | Consumer and all other | Pass
Financing Receivable, Recorded Investment [Line Items]
Total Loans	583,728	425,520
Excluding Purchased Impaired | Consumer and all other | Special Mention
Financing Receivable, Recorded Investment [Line Items]
Total Loans	2,618	3,491
Excluding Purchased Impaired | Consumer and all other | Substandard
Financing Receivable, Recorded Investment [Line Items]
Total Loans	530	40
Excluding Purchased Impaired | Consumer and all other | Doubtful
Financing Receivable, Recorded Investment [Line Items]
Total Loans	$ 5	$ 251

XML

LOANS AND ALLOWANCE FOR LOAN LOSSES (Loans Receivables Related Risk Rating Including Purchased Impaired Loans) (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016	Sep. 30, 2016
Financing Receivable, Recorded Investment [Line Items]
Loans held for investment, net of deferred fees and costs	$ 6,898,729	$ 6,307,060	$ 6,148,918
Construction and Land Development
Financing Receivable, Recorded Investment [Line Items]
Loans held for investment, net of deferred fees and costs	841,738	751,131	776,430
Commercial Real Estate - Owner Occupied
Financing Receivable, Recorded Investment [Line Items]
Loans held for investment, net of deferred fees and costs	903,523	857,805	857,142
Commercial Real Estate - Non-Owner Occupied
Financing Receivable, Recorded Investment [Line Items]
Loans held for investment, net of deferred fees and costs	1,748,039	1,564,295	1,454,828
Multifamily Real Estate
Financing Receivable, Recorded Investment [Line Items]
Loans held for investment, net of deferred fees and costs	368,686	334,276	339,313
Commercial & Industrial
Financing Receivable, Recorded Investment [Line Items]
Loans held for investment, net of deferred fees and costs	554,522	551,526	509,857
Residential 1-4 Family
Financing Receivable, Recorded Investment [Line Items]
Loans held for investment, net of deferred fees and costs	1,083,112	1,029,547	999,361
HELOC
Financing Receivable, Recorded Investment [Line Items]
Loans held for investment, net of deferred fees and costs	535,446	526,884	524,097
Consumer and all other
Financing Receivable, Recorded Investment [Line Items]
Loans held for investment, net of deferred fees and costs	587,091	429,525	432,702
Purchased Impaired
Financing Receivable, Recorded Investment [Line Items]
Loans held for investment, net of deferred fees and costs	51,041	59,292	62,346
Purchased Impaired | Pass
Financing Receivable, Recorded Investment [Line Items]
Loans held for investment, net of deferred fees and costs	26,125	27,569
Purchased Impaired | Special Mention
Financing Receivable, Recorded Investment [Line Items]
Loans held for investment, net of deferred fees and costs	16,774	21,837
Purchased Impaired | Substandard
Financing Receivable, Recorded Investment [Line Items]
Loans held for investment, net of deferred fees and costs	7,245	9,256
Purchased Impaired | Doubtful
Financing Receivable, Recorded Investment [Line Items]
Loans held for investment, net of deferred fees and costs	897	630
Purchased Impaired | Construction and Land Development
Financing Receivable, Recorded Investment [Line Items]
Loans held for investment, net of deferred fees and costs	3,026	2,922	3,205
Purchased Impaired | Construction and Land Development | Pass
Financing Receivable, Recorded Investment [Line Items]
Loans held for investment, net of deferred fees and costs	1,460	1,092
Purchased Impaired | Construction and Land Development | Special Mention
Financing Receivable, Recorded Investment [Line Items]
Loans held for investment, net of deferred fees and costs	1,311	1,432
Purchased Impaired | Construction and Land Development | Substandard
Financing Receivable, Recorded Investment [Line Items]
Loans held for investment, net of deferred fees and costs	255	398
Purchased Impaired | Construction and Land Development | Doubtful
Financing Receivable, Recorded Investment [Line Items]
Loans held for investment, net of deferred fees and costs	0	0
Purchased Impaired | Commercial Real Estate - Owner Occupied
Financing Receivable, Recorded Investment [Line Items]
Loans held for investment, net of deferred fees and costs	17,668	18,343	19,064
Purchased Impaired | Commercial Real Estate - Owner Occupied | Pass
Financing Receivable, Recorded Investment [Line Items]
Loans held for investment, net of deferred fees and costs	5,521	5,520
Purchased Impaired | Commercial Real Estate - Owner Occupied | Special Mention
Financing Receivable, Recorded Investment [Line Items]
Loans held for investment, net of deferred fees and costs	8,237	8,889
Purchased Impaired | Commercial Real Estate - Owner Occupied | Substandard
Financing Receivable, Recorded Investment [Line Items]
Loans held for investment, net of deferred fees and costs	3,910	3,934
Purchased Impaired | Commercial Real Estate - Owner Occupied | Doubtful
Financing Receivable, Recorded Investment [Line Items]
Loans held for investment, net of deferred fees and costs	0	0
Purchased Impaired | Commercial Real Estate - Non-Owner Occupied
Financing Receivable, Recorded Investment [Line Items]
Loans held for investment, net of deferred fees and costs	14,376	17,303	18,141
Purchased Impaired | Commercial Real Estate - Non-Owner Occupied | Pass
Financing Receivable, Recorded Investment [Line Items]
Loans held for investment, net of deferred fees and costs	10,676	10,927
Purchased Impaired | Commercial Real Estate - Non-Owner Occupied | Special Mention
Financing Receivable, Recorded Investment [Line Items]
Loans held for investment, net of deferred fees and costs	2,435	4,638
Purchased Impaired | Commercial Real Estate - Non-Owner Occupied | Substandard
Financing Receivable, Recorded Investment [Line Items]
Loans held for investment, net of deferred fees and costs	1,265	1,738
Purchased Impaired | Commercial Real Estate - Non-Owner Occupied | Doubtful
Financing Receivable, Recorded Investment [Line Items]
Loans held for investment, net of deferred fees and costs	0	0
Purchased Impaired | Multifamily Real Estate
Financing Receivable, Recorded Investment [Line Items]
Loans held for investment, net of deferred fees and costs	77	2,066	2,079
Purchased Impaired | Multifamily Real Estate | Pass
Financing Receivable, Recorded Investment [Line Items]
Loans held for investment, net of deferred fees and costs	0	343
Purchased Impaired | Multifamily Real Estate | Special Mention
Financing Receivable, Recorded Investment [Line Items]
Loans held for investment, net of deferred fees and costs	77	1,723
Purchased Impaired | Multifamily Real Estate | Substandard
Financing Receivable, Recorded Investment [Line Items]
Loans held for investment, net of deferred fees and costs	0	0
Purchased Impaired | Multifamily Real Estate | Doubtful
Financing Receivable, Recorded Investment [Line Items]
Loans held for investment, net of deferred fees and costs	0	0
Purchased Impaired | Commercial & Industrial
Financing Receivable, Recorded Investment [Line Items]
Loans held for investment, net of deferred fees and costs	625	1,074	1,145
Purchased Impaired | Commercial & Industrial | Pass
Financing Receivable, Recorded Investment [Line Items]
Loans held for investment, net of deferred fees and costs	94	107
Purchased Impaired | Commercial & Industrial | Special Mention
Financing Receivable, Recorded Investment [Line Items]
Loans held for investment, net of deferred fees and costs	309	480
Purchased Impaired | Commercial & Industrial | Substandard
Financing Receivable, Recorded Investment [Line Items]
Loans held for investment, net of deferred fees and costs	222	487
Purchased Impaired | Commercial & Industrial | Doubtful
Financing Receivable, Recorded Investment [Line Items]
Loans held for investment, net of deferred fees and costs	0	0
Purchased Impaired | Residential 1-4 Family
Financing Receivable, Recorded Investment [Line Items]
Loans held for investment, net of deferred fees and costs	14,077	16,200	16,828
Purchased Impaired | Residential 1-4 Family | Pass
Financing Receivable, Recorded Investment [Line Items]
Loans held for investment, net of deferred fees and costs	7,498	8,557
Purchased Impaired | Residential 1-4 Family | Special Mention
Financing Receivable, Recorded Investment [Line Items]
Loans held for investment, net of deferred fees and costs	4,227	4,455
Purchased Impaired | Residential 1-4 Family | Substandard
Financing Receivable, Recorded Investment [Line Items]
Loans held for investment, net of deferred fees and costs	1,577	2,672
Purchased Impaired | Residential 1-4 Family | Doubtful
Financing Receivable, Recorded Investment [Line Items]
Loans held for investment, net of deferred fees and costs	775	516
Purchased Impaired | HELOC
Financing Receivable, Recorded Investment [Line Items]
Loans held for investment, net of deferred fees and costs	982	1,161	1,498
Purchased Impaired | HELOC | Pass
Financing Receivable, Recorded Investment [Line Items]
Loans held for investment, net of deferred fees and costs	722	857
Purchased Impaired | HELOC | Special Mention
Financing Receivable, Recorded Investment [Line Items]
Loans held for investment, net of deferred fees and costs	132	183
Purchased Impaired | HELOC | Substandard
Financing Receivable, Recorded Investment [Line Items]
Loans held for investment, net of deferred fees and costs	6	7
Purchased Impaired | HELOC | Doubtful
Financing Receivable, Recorded Investment [Line Items]
Loans held for investment, net of deferred fees and costs	122	114
Purchased Impaired | Consumer and all other
Financing Receivable, Recorded Investment [Line Items]
Loans held for investment, net of deferred fees and costs	210	223	$ 386
Purchased Impaired | Consumer and all other | Pass
Financing Receivable, Recorded Investment [Line Items]
Loans held for investment, net of deferred fees and costs	154	166
Purchased Impaired | Consumer and all other | Special Mention
Financing Receivable, Recorded Investment [Line Items]
Loans held for investment, net of deferred fees and costs	46	37
Purchased Impaired | Consumer and all other | Substandard
Financing Receivable, Recorded Investment [Line Items]
Loans held for investment, net of deferred fees and costs	10	20
Purchased Impaired | Consumer and all other | Doubtful
Financing Receivable, Recorded Investment [Line Items]
Loans held for investment, net of deferred fees and costs	$ 0	$ 0

XML

LOANS AND ALLOWANCE FOR LOAN LOSSES (Schedule of Acquired Loan Portfolio and Accretable Yield) (Details) - Purchased Impaired - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Accretable Yield
Balance at beginning of period	$ 19,739	$ 22,139
Accretion	(4,896)	(4,232)
Reclass of nonaccretable difference due to improvement in expected cash flows	2,175	3,580
Other, net	(452)	(1,149)
Balance at end of period	$ 16,566	$ 20,338

XML

INTANGIBLE ASSETS (Narrative) (Details) - USD ($)	3 Months Ended			9 Months Ended
	Sep. 30, 2017	Jun. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Finite-Lived Intangible Assets [Line Items]
Impairment charges		$ 0
Intangible assets, amortization expense	$ 1,480,000		$ 1,843,000	$ 4,661,000	$ 5,468,000
Minimum | ODCM
Finite-Lived Intangible Assets [Line Items]
Intangible assets, amortization period				5 years
Maximum | ODCM
Finite-Lived Intangible Assets [Line Items]
Intangible assets, amortization period				10 years
Amortizable core deposit intangibles
Finite-Lived Intangible Assets [Line Items]
Intangible assets, amortization expense	1,400,000		1,700,000	$ 4,300,000	5,300,000
Amortizable core deposit intangibles | Minimum
Finite-Lived Intangible Assets [Line Items]
Intangible assets, amortization period				4 years
Amortizable core deposit intangibles | Maximum
Finite-Lived Intangible Assets [Line Items]
Intangible assets, amortization period				14 years
Other amortizable intangibles
Finite-Lived Intangible Assets [Line Items]
Intangible assets, amortization expense	$ 120,000		$ 160,000	$ 360,000	$ 160,000

XML

INTANGIBLE ASSETS (Estimated Remaining Amortization Expense of Core Deposit Intangibles) (Details) $ in Thousands	Sep. 30, 2017 USD ($)
Goodwill and Intangible Assets Disclosure [Abstract]
For the remaining three months of 2017	$ 1,420
For the year ending December 31, 2018	4,664
For the year ending December 31, 2019	3,599
For the year ending December 31, 2020	2,509
For the year ending December 31, 2021	1,481
Thereafter	2,344
Net Carrying Value	$ 16,017

XML

BORROWINGS (Short-Term Borrowings) (Details) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2017	Dec. 31, 2016
Debt Disclosure [Abstract]
Securities sold under agreements to repurchase	$ 43,337	$ 59,281
Other short-term borrowings	574,000	517,500
Total short-term borrowings	617,337	576,781
Maximum month-end outstanding balance	696,529	678,262
Average outstanding balance during the period	$ 606,441	$ 590,074
Average interest rate (year-to-date)	0.93%	0.49%
Average interest rate at end of period	1.15%	0.60%

XML

BORROWINGS (Narrative) (Details) $ in Thousands			3 Months Ended			9 Months Ended
	Jan. 01, 2014 USD ($)	Aug. 23, 2012 USD ($)	Sep. 30, 2017 USD ($)	Dec. 31, 2016 USD ($)	Sep. 30, 2016 USD ($)	Sep. 30, 2017 USD ($) acquisition	Sep. 30, 2016 USD ($)
Subordinated Borrowing [Line Items]
Remaining available balance for the federal funds lines			$ 185,000	$ 175,000		$ 185,000
Remaining available balance of alternate line of credit			25,000	25,000		25,000
Maximum collateral dependent line of credit with the FHLB			2,700,000	2,400,000		2,700,000
Subordinated debt			150,000	150,000		150,000
Prepayment penalty		$ 19,600
Prepayment penalty amortization expense			486		$ 474	1,433	$ 1,404
Trust Preferred Capital Notes
Subordinated Borrowing [Line Items]
Trust preferred capital notes principal balance						90,500
Subordinated Debt
Subordinated Borrowing [Line Items]
Remaining fair value discount on acquired notes			1,900	$ 1,800		$ 1,900
Spread on LIBOR				5.00%
Maturity Date						Dec. 15, 2026
Subordinated Debt | LIBOR
Subordinated Borrowing [Line Items]
Spread on LIBOR						3.175%
Acquisitions, Prior To 2006
Subordinated Borrowing [Line Items]
Number of bank acquisitions | acquisition						2
Trust preferred capital notes principal balance						$ 58,500
StellarOne
Subordinated Borrowing [Line Items]
Long-term FHLB borrowings	$ 70,000		20,000			20,000
Remaining fair value premium on acquired FHLB advances			223			223
StellarOne | Trust Preferred Capital Notes
Subordinated Borrowing [Line Items]
Trust preferred capital notes principal balance	$ 32,000
Remaining fair value discount on acquired notes			$ 6,500			$ 6,500

XML

BORROWINGS (Trust Preferred Capital Notes Qualify for Tier 1 Capital) (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2017	Dec. 31, 2016
Debt Instrument [Line Items]
Investment	$ 93,178	$ 101,907
Trust Preferred Capital Notes
Debt Instrument [Line Items]
Trust preferred capital notes principal balance	90,500
Investment	2,801
Statutory Trust I
Debt Instrument [Line Items]
Trust preferred capital notes principal balance	22,500
Investment	$ 696
Rate	4.08%
Maturity	Jun. 17, 2034
Statutory Trust I | LIBOR
Debt Instrument [Line Items]
Spread to 3-Month LIBOR	2.75%
Statutory Trust II
Debt Instrument [Line Items]
Trust preferred capital notes principal balance	$ 36,000
Investment	$ 1,114
Rate	2.73%
Maturity	Jun. 15, 2036
Statutory Trust II | LIBOR
Debt Instrument [Line Items]
Spread to 3-Month LIBOR	1.40%
VFG Limited Liability Trust I Indenture
Debt Instrument [Line Items]
Trust preferred capital notes principal balance	$ 20,000
Investment	$ 619
Rate	4.06%
Maturity	Mar. 18, 2034
VFG Limited Liability Trust I Indenture | LIBOR
Debt Instrument [Line Items]
Spread to 3-Month LIBOR	2.73%
FNB Statutory Trust II Indenture
Debt Instrument [Line Items]
Trust preferred capital notes principal balance	$ 12,000
Investment	$ 372
Rate	4.43%
Maturity	Jun. 26, 2033
FNB Statutory Trust II Indenture | LIBOR
Debt Instrument [Line Items]
Spread to 3-Month LIBOR	3.10%

XML

BORROWINGS (Advances from the FHLB) (Details) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2017	Dec. 31, 2016
Federal Home Loan Bank, Advances [Line Items]
Advance Amount	$ 210,000	$ 190,000
Adjustable Rate Credit One
Federal Home Loan Bank, Advances [Line Items]
Interest Rate	1.77%	1.44%
Maturity Date	Aug. 23, 2022	Aug. 23, 2022
Advance Amount	$ 55,000	$ 55,000
Adjustable Rate Credit One | LIBOR
Federal Home Loan Bank, Advances [Line Items]
Spread to 3-Month LIBOR	0.44%	0.44%
Adjustable Rate Credit Two
Federal Home Loan Bank, Advances [Line Items]
Interest Rate	1.79%	1.45%
Maturity Date	Nov. 23, 2022	Nov. 23, 2022
Advance Amount	$ 65,000	$ 65,000
Adjustable Rate Credit Two | LIBOR
Federal Home Loan Bank, Advances [Line Items]
Spread to 3-Month LIBOR	0.45%	0.45%
Adjustable Rate Credit Three
Federal Home Loan Bank, Advances [Line Items]
Interest Rate	1.79%	1.45%
Maturity Date	Nov. 23, 2022	Nov. 23, 2022
Advance Amount	$ 10,000	$ 10,000
Adjustable Rate Credit Three | LIBOR
Federal Home Loan Bank, Advances [Line Items]
Spread to 3-Month LIBOR	0.45%	0.45%
Adjustable Rate Credit Four
Federal Home Loan Bank, Advances [Line Items]
Interest Rate	1.79%	1.45%
Maturity Date	Nov. 23, 2022	Nov. 23, 2022
Advance Amount	$ 10,000	$ 10,000
Adjustable Rate Credit Four | LIBOR
Federal Home Loan Bank, Advances [Line Items]
Spread to 3-Month LIBOR	0.45%	0.45%
Fixed Rate One
Federal Home Loan Bank, Advances [Line Items]
Interest Rate	3.62%	3.62%
Maturity Date	Nov. 28, 2017	Nov. 28, 2017
Advance Amount	$ 10,000	$ 10,000
Fixed Rate Two
Federal Home Loan Bank, Advances [Line Items]
Interest Rate	3.75%	3.75%
Maturity Date	Jul. 30, 2018	Jul. 30, 2018
Advance Amount	$ 5,000	$ 5,000
Fixed Rate Three
Federal Home Loan Bank, Advances [Line Items]
Interest Rate	3.97%	3.97%
Maturity Date	Jul. 30, 2018	Jul. 30, 2018
Advance Amount	$ 5,000	$ 5,000
Fixed Rate Hybrid One
Federal Home Loan Bank, Advances [Line Items]
Interest Rate	0.99%	0.99%
Maturity Date	Oct. 19, 2018	Oct. 19, 2018
Advance Amount	$ 30,000	$ 30,000
Fixed Rate Hybrid Two
Federal Home Loan Bank, Advances [Line Items]
Interest Rate	1.58%
Maturity Date	May 18, 2020
Advance Amount	$ 20,000

XML

BORROWINGS (Contractual Maturities of Long-Term Debt) (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Fair Value Premium (Discount)
For the remaining three months of 2017	$ (21)
2018	(343)
2019	(486)
2020	(501)
2021	(516)
Thereafter	(6,308)
Total Long-term borrowings	(8,175)
Prepayment Penalty
For the remaining three months of 2017	(488)
2018	(1,970)
2019	(2,018)
2020	(2,074)
2021	(2,119)
Thereafter	(1,707)
Total Long-term borrowings	(10,376)
Total Long-term Borrowings
For the remaining three months of 2017	9,491
2018	37,687
2019	(2,504)
2020	17,425
2021	(2,635)
Thereafter	375,286
Total Long-term borrowings	434,750	$ 413,308
Trust Preferred Capital Notes
Total Long-term Borrowings, Gross
Thereafter	93,301
Total Long-term borrowings	93,301
Subordinated Debt
Total Long-term Borrowings
Thereafter	150,000
Total Long-term borrowings	150,000
FHLB Advances
Total Long-term Borrowings, Gross
For the remaining three months of 2017	10,000
2018	40,000
2020	20,000
Thereafter	140,000
Total Long-term borrowings	$ 210,000

XML

COMMITMENTS AND CONTINGENCIES (Narrative) (Details) - USD ($) $ in Millions	Sep. 30, 2017	Dec. 31, 2016
Other Commitments [Line Items]
Daily average required reserves	$ 73.1
Deposits with other financial institutions	45.4
Uninsured deposits with other financial institutions	20.3
Cash Flow Hedges
Other Commitments [Line Items]
Deposits with other financial institutions serves as collateral	23.8
Reserve for Off-balance Sheet Activities
Other Commitments [Line Items]
Off-balance sheet credit risks, amount, liability	$ 1.1	$ 1.1

XML

COMMITMENTS AND CONTINGENCIES (Balances of Commitments and Contingencies) (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Commitments with off-balance sheet risk:
Total commitments with off-balance sheet risk	$ 2,205,080	$ 2,009,097
Commitments to Extend Credit
Commitments with off-balance sheet risk:
Total commitments with off-balance sheet risk	2,085,103	1,924,885
Standby Letters of Credit
Commitments with off-balance sheet risk:
Total commitments with off-balance sheet risk	$ 119,977	$ 84,212

XML

COMMITMENTS AND CONTINGENCIES (Schedule of Securities Pledged as Collateral) (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Financial Instruments Owned and Pledged as Collateral [Line Items]
Cash	$ 23,831	$ 33,595
Loans	2,404,355	1,959,929
Total pledged assets	2,967,974	2,533,517
AFS Securities
Financial Instruments Owned and Pledged as Collateral [Line Items]
Securities pledged	332,910	342,104
HTM Securities
Financial Instruments Owned and Pledged as Collateral [Line Items]
Securities pledged	206,878	197,889
Public deposits
Financial Instruments Owned and Pledged as Collateral [Line Items]
Cash	0	0
Loans	0	0
Total pledged assets	431,031	408,435
Public deposits | AFS Securities
Financial Instruments Owned and Pledged as Collateral [Line Items]
Securities pledged	224,153	210,546
Public deposits | HTM Securities
Financial Instruments Owned and Pledged as Collateral [Line Items]
Securities pledged	206,878	197,889
Repurchase agreements
Financial Instruments Owned and Pledged as Collateral [Line Items]
Cash	0	0
Loans	0	0
Total pledged assets	88,257	108,208
Repurchase agreements | AFS Securities
Financial Instruments Owned and Pledged as Collateral [Line Items]
Securities pledged	88,257	108,208
Repurchase agreements | HTM Securities
Financial Instruments Owned and Pledged as Collateral [Line Items]
Securities pledged	0	0
FHLB advances
Financial Instruments Owned and Pledged as Collateral [Line Items]
Cash	0	0
Loans	2,404,355	1,959,929
Total pledged assets	2,405,377	1,961,404
FHLB advances | AFS Securities
Financial Instruments Owned and Pledged as Collateral [Line Items]
Securities pledged	1,022	1,475
FHLB advances | HTM Securities
Financial Instruments Owned and Pledged as Collateral [Line Items]
Securities pledged	0	0
Derivatives
Financial Instruments Owned and Pledged as Collateral [Line Items]
Cash	23,831	33,595
Loans	0	0
Total pledged assets	27,729	37,971
Derivatives | AFS Securities
Financial Instruments Owned and Pledged as Collateral [Line Items]
Securities pledged	3,898	4,376
Derivatives | HTM Securities
Financial Instruments Owned and Pledged as Collateral [Line Items]
Securities pledged	0	0
Other purposes
Financial Instruments Owned and Pledged as Collateral [Line Items]
Cash	0	0
Loans	0	0
Total pledged assets	15,580	17,499
Other purposes | AFS Securities
Financial Instruments Owned and Pledged as Collateral [Line Items]
Securities pledged	15,580	17,499
Other purposes | HTM Securities
Financial Instruments Owned and Pledged as Collateral [Line Items]
Securities pledged	$ 0	$ 0

XML

DERIVATIVES (Narrative) (Details) $ in Thousands		9 Months Ended	12 Months Ended
	Jun. 13, 2016 USD ($) derivative_instrument	Sep. 30, 2017 USD ($)	Dec. 31, 2016 USD ($)
Minimum
Derivatives, Fair Value [Line Items]
Interest rate lock commitments period		30 days
Maximum
Derivatives, Fair Value [Line Items]
Interest rate lock commitments period		120 days
Cash Flow Hedges
Derivatives, Fair Value [Line Items]
Number of interest rate swaps terminated | derivative_instrument	3
Unrealized gain within accumulated other comprehensive income, to be reclassified into earnings	$ 1,300
Reclassification of gain (loss) from accumulated other comprehensive income to earnings, estimate of time to transfer	3 years
Estimated net amount of gains expected to be reclassified into earnings within the next twelve months		$ 395
Fair Value Hedges
Derivatives, Fair Value [Line Items]
Aggregate notional amount of the hedged items		82,000	$ 65,900
Fair value of aggregate notional amount of the hedged items, unrealized loss		$ (597)	$ (890)

XML

DERIVATIVES (Summary of the Derivatives) (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
Interest Rate Lock Commitments
Summary of the derivative designated as a cash flow hedge
Derivative Assets	$ 685	$ 610
Designated as Accounting Hedges | Cash Flow Hedges
Summary of the derivative designated as a cash flow hedge
Notional or Contractual Amount	152,500	188,500
Derivative Assets	120	211
Derivative Liabilities	9,460	9,619
Designated as Accounting Hedges | Fair Value Hedges
Summary of the derivative designated as a cash flow hedge
Notional or Contractual Amount	81,965	65,920
Derivative Assets	1,253	1,437
Derivative Liabilities	371	296
Not Designated as Accounting Hedges | Interest Rate Lock Commitments
Summary of the derivative designated as a cash flow hedge
Notional or Contractual Amount	50,311	48,743
Derivative Assets	685	610
Derivative Liabilities	0	0
Not Designated as Accounting Hedges | Best efforts forward delivery commitments
Summary of the derivative designated as a cash flow hedge
Notional or Contractual Amount	80,307	85,400
Derivative Assets	245	1,469
Derivative Liabilities	0	0
Not Designated as Accounting Hedges | Pay Fixed - Receive Floating Interest Rate Swaps
Summary of the derivative designated as a cash flow hedge
Notional or Contractual Amount	506,056	373,355
Derivative Assets	3,051	0
Derivative Liabilities	0	1,005
Not Designated as Accounting Hedges | Pay Floating - Receive Fixed Interest Rate Swaps
Summary of the derivative designated as a cash flow hedge
Notional or Contractual Amount	506,056	373,355
Derivative Assets	0	1,005
Derivative Liabilities	$ 3,051	$ 0

XML

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Change in Accumulated Other Comprehensive Income) (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
AOCI Attributable to Parent, Net of Tax
Beginning balance			$ 1,001,032,000	$ 995,367,000
Other comprehensive income (loss)	$ (2,688,000)	$ 1,043,000	5,169,000	4,085,000
Amounts reclassified from accumulated other comprehensive income	(9,000)	(83,000)	(49,000)	(478,000)
Net current period other comprehensive income (loss)	(2,697,000)	960,000	5,120,000	3,607,000
Ending balance	1,041,371,000	1,000,964,000	1,041,371,000	1,000,964,000
Accumulated Other Comprehensive Income (Loss)
AOCI Attributable to Parent, Net of Tax
Beginning balance	4,008,000	8,899,000	(3,809,000)	6,252,000
Net current period other comprehensive income (loss)			5,120,000	3,607,000
Ending balance	1,311,000	9,859,000	1,311,000	9,859,000
Unrealized Gains (Losses) on AFS Securities
AOCI Attributable to Parent, Net of Tax
Beginning balance	7,733,000	14,412,000	(542,000)	7,777,000
Other comprehensive income (loss)	(2,729,000)	1,121,000	5,935,000	7,851,000
Amounts reclassified from accumulated other comprehensive income	(119,000)	0	(508,000)	(95,000)
Net current period other comprehensive income (loss)	(2,848,000)	1,121,000	5,427,000	7,756,000
Ending balance	4,885,000	15,533,000	4,885,000	15,533,000
Unrealized Gain for AFS Securities Transferred to HTM
AOCI Attributable to Parent, Net of Tax
Beginning balance	3,033,000	3,853,000	3,377,000	4,432,000
Other comprehensive income (loss)	0	0	0	0
Amounts reclassified from accumulated other comprehensive income	(163,000)	(237,000)	(507,000)	(816,000)
Net current period other comprehensive income (loss)	(163,000)	(237,000)	(507,000)	(816,000)
Ending balance	2,870,000	3,616,000	2,870,000	3,616,000
Change in Fair Value of Cash Flow Hedge
AOCI Attributable to Parent, Net of Tax
Beginning balance	(5,487,000)	(9,366,000)	(5,179,000)	(5,957,000)
Other comprehensive income (loss)	41,000	(78,000)	(766,000)	(3,766,000)
Amounts reclassified from accumulated other comprehensive income	189,000	154,000	688,000	433,000
Net current period other comprehensive income (loss)	230,000	76,000	(78,000)	(3,333,000)
Ending balance	(5,257,000)	(9,290,000)	(5,257,000)	(9,290,000)
Unrealized Gains (Losses) on BOLI
AOCI Attributable to Parent, Net of Tax
Beginning balance	(1,271,000)		(1,465,000)
Other comprehensive income (loss)	0		0
Amounts reclassified from accumulated other comprehensive income	84,000	$ 0	278,000	$ 0
Net current period other comprehensive income (loss)	84,000		278,000
Ending balance	$ (1,187,000)		$ (1,187,000)

XML

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Narrative) (Details) - USD ($)	3 Months Ended			9 Months Ended		12 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Jun. 30, 2015	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Accumulated Other Comprehensive Income (Loss) [Line Items]
Gains on securities transactions, net	$ 184,000	$ 0		$ 782,000	$ 145,000
Tax expense (benefit) related to (gains) losses on the sale of securities	64,000	0		274,000	51,000
Transfer from securities available for sale to securities held to maturity			$ 201,800,000
Held to maturity securities unrealized gains before tax			$ 8,100,000	4,000,000		$ 5,200,000
Accretion expense	251,000	365,000		780,000	1,300,000
Tax expense (benefit) related to (gains) losses for AFS securities transferred to HTM	88,000	128,000		273,000	439,000
Tax expense (benefit) related to (gains) losses on the cash flow hedges	(102,000)	(83,000)		(370,000)	(233,000)
Reclassification adjustment for gains (losses) included in net income	(9,000)	(83,000)		(49,000)	(478,000)
Cash Flow Hedges | Interest Expense, Net
Accumulated Other Comprehensive Income (Loss) [Line Items]
Other comprehensive income (loss), reclassification adjustment from AOCI on derivatives, before tax	291,000	237,000		1,100,000	666,000
Unrealized Gains (Losses) on BOLI
Accumulated Other Comprehensive Income (Loss) [Line Items]
Reclassification adjustment for gains (losses) included in net income	$ 84,000	$ 0		$ 278,000	$ 0

XML

FAIR VALUE MEASUREMENTS (Narrative) (Details) participant in Thousands, $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2017 USD ($)	Sep. 30, 2016 USD ($)	Sep. 30, 2017 USD ($) participant	Sep. 30, 2016 USD ($)	Dec. 31, 2016
Fair Value Disclosures [Abstract]
Weighted average pull through rate			80.00%		80.00%
Minimum number of market participants (more than) | participant			4
Level 3 Fair value measurements weighted average related to impaired loans			3.30%		1.50%
Level 3 fair value measurements weighted average related to other real estate owned			25.10%		25.10%
Total valuation expenses related to OREO properties | $	$ 588	$ 479	$ 845	$ 879

XML

FAIR VALUE MEASUREMENTS (Schedule of Financial Assets and Liabilities Measured at Fair Value on Recurring Basis) (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
ASSETS
Securities available for sale	$ 968,361	$ 946,764
Loans held for sale	30,896	36,487
Cash flow hedges	120	211
Fair value hedges	1,253	1,437
Best efforts forward delivery commitments	245	1,469
LIABILITIES
Interest rate swap	3,051	1,005
Cash flow hedges	9,460	9,619
Fair value hedges	371	296
Interest Rate Lock Commitments
ASSETS
Interest rate lock commitments	685	610
Obligations of States and Political Subdivisions
ASSETS
Securities available for sale	292,199	275,890
Corporate and Other Bonds
ASSETS
Securities available for sale	115,422	121,780
Mortgage-Backed Securities
ASSETS
Securities available for sale	546,904	535,286
Other Securities
ASSETS
Securities available for sale	13,836	13,808
Quoted Prices in Active Markets for Identical Assets Level 1
ASSETS
Securities available for sale	0	0
Loans held for sale	0	0
Cash flow hedges	0	0
Fair value hedges	0	0
Best efforts forward delivery commitments	0	0
LIABILITIES
Interest rate swap	0	0
Cash flow hedges	0	0
Fair value hedges	0	0
Quoted Prices in Active Markets for Identical Assets Level 1 | Interest Rate Lock Commitments
ASSETS
Interest rate lock commitments	0	0
Significant Other Observable Inputs Level 2
ASSETS
Securities available for sale	968,361	946,764
Loans held for sale	30,896	36,487
Cash flow hedges	120	211
Fair value hedges	1,253	1,437
Best efforts forward delivery commitments	0	0
LIABILITIES
Interest rate swap	3,051	1,005
Cash flow hedges	9,460	9,619
Fair value hedges	371	296
Significant Other Observable Inputs Level 2 | Interest Rate Lock Commitments
ASSETS
Interest rate lock commitments	0	0
Significant Unobservable Inputs Level 3
ASSETS
Securities available for sale	0	0
Loans held for sale	0	0
Cash flow hedges	0	0
Fair value hedges	0	0
Best efforts forward delivery commitments	245	1,469
LIABILITIES
Interest rate swap	0	0
Cash flow hedges	0	0
Fair value hedges	0	0
Significant Unobservable Inputs Level 3 | Interest Rate Lock Commitments
ASSETS
Interest rate lock commitments	685	610
Recurring
ASSETS
Loans held for sale	30,896	36,487
Interest rate swap	3,051	1,005
Cash flow hedges	120	211
Fair value hedges	1,253	1,437
Best efforts forward delivery commitments	245	1,469
LIABILITIES
Interest rate swap	3,051	1,005
Cash flow hedges	9,460	9,619
Fair value hedges	371	296
Recurring | Interest Rate Lock Commitments
ASSETS
Interest rate lock commitments	685	610
Recurring | Obligations of States and Political Subdivisions
ASSETS
Securities available for sale	292,199	275,890
Recurring | Corporate and Other Bonds
ASSETS
Securities available for sale	115,422	121,780
Recurring | Mortgage-Backed Securities
ASSETS
Securities available for sale	546,904	535,286
Recurring | Other Securities
ASSETS
Securities available for sale	13,836	13,808
Recurring | Quoted Prices in Active Markets for Identical Assets Level 1
ASSETS
Loans held for sale	0	0
Interest rate swap	0	0
Cash flow hedges	0	0
Fair value hedges	0	0
Best efforts forward delivery commitments	0	0
LIABILITIES
Interest rate swap	0	0
Cash flow hedges	0	0
Fair value hedges	0	0
Recurring | Quoted Prices in Active Markets for Identical Assets Level 1 | Interest Rate Lock Commitments
ASSETS
Interest rate lock commitments	0	0
Recurring | Quoted Prices in Active Markets for Identical Assets Level 1 | Obligations of States and Political Subdivisions
ASSETS
Securities available for sale	0	0
Recurring | Quoted Prices in Active Markets for Identical Assets Level 1 | Corporate and Other Bonds
ASSETS
Securities available for sale	0	0
Recurring | Quoted Prices in Active Markets for Identical Assets Level 1 | Mortgage-Backed Securities
ASSETS
Securities available for sale	0	0
Recurring | Quoted Prices in Active Markets for Identical Assets Level 1 | Other Securities
ASSETS
Securities available for sale	0	0
Recurring | Significant Other Observable Inputs Level 2
ASSETS
Loans held for sale	30,896	36,487
Interest rate swap	3,051	1,005
Cash flow hedges	120	211
Fair value hedges	1,253	1,437
Best efforts forward delivery commitments	0	0
LIABILITIES
Interest rate swap	3,051	1,005
Cash flow hedges	9,460	9,619
Fair value hedges	371	296
Recurring | Significant Other Observable Inputs Level 2 | Interest Rate Lock Commitments
ASSETS
Interest rate lock commitments	0	0
Recurring | Significant Other Observable Inputs Level 2 | Obligations of States and Political Subdivisions
ASSETS
Securities available for sale	292,199	275,890
Recurring | Significant Other Observable Inputs Level 2 | Corporate and Other Bonds
ASSETS
Securities available for sale	115,422	121,780
Recurring | Significant Other Observable Inputs Level 2 | Mortgage-Backed Securities
ASSETS
Securities available for sale	546,904	535,286
Recurring | Significant Other Observable Inputs Level 2 | Other Securities
ASSETS
Securities available for sale	13,836	13,808
Recurring | Significant Unobservable Inputs Level 3
ASSETS
Loans held for sale	0	0
Interest rate swap	0	0
Cash flow hedges	0	0
Fair value hedges	0	0
Best efforts forward delivery commitments	245	1,469
LIABILITIES
Interest rate swap	0	0
Cash flow hedges	0	0
Fair value hedges	0	0
Recurring | Significant Unobservable Inputs Level 3 | Interest Rate Lock Commitments
ASSETS
Interest rate lock commitments	685	610
Recurring | Significant Unobservable Inputs Level 3 | Obligations of States and Political Subdivisions
ASSETS
Securities available for sale	0	0
Recurring | Significant Unobservable Inputs Level 3 | Corporate and Other Bonds
ASSETS
Securities available for sale	0	0
Recurring | Significant Unobservable Inputs Level 3 | Mortgage-Backed Securities
ASSETS
Securities available for sale	0	0
Recurring | Significant Unobservable Inputs Level 3 | Other Securities
ASSETS
Securities available for sale	$ 0	$ 0

XML

FAIR VALUE MEASUREMENTS (Schedule of Financial Assets Measured at Fair Value on Nonrecurring Basis) (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
ASSETS
Other real estate owned	$ 8,764	$ 10,084
Nonrecurring
ASSETS
Impaired loans	7,143	4,344
Other real estate owned	8,764	10,084
Nonrecurring | Quoted Prices in Active Markets for Identical Assets Level 1
ASSETS
Impaired loans	0	0
Other real estate owned	0	0
Nonrecurring | Significant Other Observable Inputs Level 2
ASSETS
Impaired loans	0	0
Other real estate owned	0	0
Nonrecurring | Significant Unobservable Inputs Level 3
ASSETS
Impaired loans	7,143	4,344
Other real estate owned	$ 8,764	$ 10,084

XML

FAIR VALUE MEASUREMENTS (Carrying Values and Estimated Fair Values of the Company's Financial Instruments) (Details) - USD ($) $ in Thousands	Sep. 30, 2017	Dec. 31, 2016
ASSETS
Cash and cash equivalents	$ 176,961	$ 179,237
Securities available for sale, at fair value	968,361	946,764
Held to maturity securities	209,835	202,315
Restricted stock	68,441	60,782
Loans held for sale	30,896	36,487
Net loans	6,873,609	6,265,443
Derivatives:
Cash flow hedges	120	211
Fair value hedges	1,253	1,437
Best efforts forward delivery commitments	245	1,469
Accrued interest receivable	25,279	23,448
Bank owned life insurance	181,451	179,318
LIABILITIES
Deposits	6,873,124	6,370,457
Borrowings	1,031,983	970,195
Accrued interest payable	4,372	2,230
Derivatives:
Interest rate swap	3,051	1,005
Cash flow hedges	9,460	9,619
Fair value hedges	371	296
Interest Rate Swap
Derivatives:
Interest rate swap	3,051	1,005
Interest Rate Lock Commitments
Derivatives:
Interest rate lock commitments	685	610
Carrying Value
ASSETS
Cash and cash equivalents	176,961	179,237
Securities available for sale, at fair value	968,361	946,764
Held to maturity securities	204,801	201,526
Restricted stock	68,441	60,782
Loans held for sale	30,896	36,487
Net loans	6,861,567	6,269,868
Derivatives:
Cash flow hedges	120	211
Fair value hedges	1,253	1,437
Best efforts forward delivery commitments	245	1,469
Accrued interest receivable	25,279	23,448
Bank owned life insurance	181,451	179,318
LIABILITIES
Deposits	6,881,826	6,379,489
Borrowings	1,052,087	990,089
Accrued interest payable	4,372	2,320
Derivatives:
Interest rate swap	3,051	1,005
Cash flow hedges	9,460	9,619
Fair value hedges	371	296
Carrying Value | Interest Rate Swap
Derivatives:
Interest rate swap	3,051	1,005
Carrying Value | Interest Rate Lock Commitments
Derivatives:
Interest rate lock commitments	685	610
Quoted Prices in Active Markets for Identical Assets Level 1
ASSETS
Cash and cash equivalents	176,961	179,237
Securities available for sale, at fair value	0	0
Held to maturity securities	0	0
Restricted stock	0	0
Loans held for sale	0	0
Net loans	0	0
Derivatives:
Cash flow hedges	0	0
Fair value hedges	0	0
Best efforts forward delivery commitments	0	0
Accrued interest receivable	0	0
Bank owned life insurance	0	0
LIABILITIES
Deposits	0	0
Borrowings	0	0
Accrued interest payable	0	0
Derivatives:
Interest rate swap	0	0
Cash flow hedges	0	0
Fair value hedges	0	0
Quoted Prices in Active Markets for Identical Assets Level 1 | Interest Rate Swap
Derivatives:
Interest rate swap	0	0
Quoted Prices in Active Markets for Identical Assets Level 1 | Interest Rate Lock Commitments
Derivatives:
Interest rate lock commitments	0	0
Significant Other Observable Inputs Level 2
ASSETS
Cash and cash equivalents	0	0
Securities available for sale, at fair value	968,361	946,764
Held to maturity securities	209,835	202,315
Restricted stock	68,441	60,782
Loans held for sale	30,896	36,487
Net loans	0	0
Derivatives:
Cash flow hedges	120	211
Fair value hedges	1,253	1,437
Best efforts forward delivery commitments	0	0
Accrued interest receivable	25,279	23,448
Bank owned life insurance	181,451	179,318
LIABILITIES
Deposits	6,873,124	6,370,457
Borrowings	1,031,983	970,195
Accrued interest payable	4,372	2,230
Derivatives:
Interest rate swap	3,051	1,005
Cash flow hedges	9,460	9,619
Fair value hedges	371	296
Significant Other Observable Inputs Level 2 | Interest Rate Swap
Derivatives:
Interest rate swap	3,051	1,005
Significant Other Observable Inputs Level 2 | Interest Rate Lock Commitments
Derivatives:
Interest rate lock commitments	0	0
Significant Unobservable Inputs Level 3
ASSETS
Cash and cash equivalents	0	0
Securities available for sale, at fair value	0	0
Held to maturity securities	0	0
Restricted stock	0	0
Loans held for sale	0	0
Net loans	6,873,609	6,265,443
Derivatives:
Cash flow hedges	0	0
Fair value hedges	0	0
Best efforts forward delivery commitments	245	1,469
Accrued interest receivable	0	0
Bank owned life insurance	0	0
LIABILITIES
Deposits	0	0
Borrowings	0	0
Accrued interest payable	0	0
Derivatives:
Interest rate swap	0	0
Cash flow hedges	0	0
Fair value hedges	0	0
Significant Unobservable Inputs Level 3 | Interest Rate Swap
Derivatives:
Interest rate swap	0	0
Significant Unobservable Inputs Level 3 | Interest Rate Lock Commitments
Derivatives:
Interest rate lock commitments	$ 685	$ 610

XML

EARNINGS PER SHARE (Reconciliation of the Denominators of the Basic and Diluted EPS Computations) (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Earnings Per Share [Abstract]
Basic EPS, Net Income Available to Common Stockholders (Numerator)	$ 20,658	$ 20,401	$ 57,737	$ 56,699
Basic EPS, Weighted Average Shares (Denominator)	43,706,635	43,565,937	43,685,045	43,853,548
Basic EPS, Per Share Amount (in usd per share)	$ 0.47	$ 0.47	$ 1.32	$ 1.29
Effect of dilutive stock awards, Weighted Average Shares (Denominator)	85,000	189,000	83,000	114,000
Diluted EPS, Net Income Available to Common Stockholders (Numerator)	$ 20,658	$ 20,401	$ 57,737	$ 56,699
Diluted EPS, Weighted Average Common Shares	43,792,058	43,754,915	43,767,502	43,967,725
Diluted EPS, Per Share Amount (in usd per share)	$ 0.47	$ 0.47	$ 1.32	$ 1.29

XML

SEGMENT REPORTING DISCLOSURES (Narrative) (Details)	3 Months Ended		9 Months Ended
	Sep. 30, 2017 store	Sep. 30, 2016	Sep. 30, 2017 segment bank store	Sep. 30, 2016
Segment Reporting Information [Line Items]
Number of reportable segments | segment			2
Number of subsidiary bank | bank			1
Number of retail locations | store	111		111
Warehouse Line of Credit | LIBOR
Segment Reporting Information [Line Items]
Spread on LIBOR	0.15%	0.15%	0.15%	0.15%
Mortgage banking segment interest - floor	0.00%	0.00%	0.00%	0.00%

XML

SEGMENT REPORTING DISCLOSURES (Information About Reportable Segments and Reconciliation) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016	Dec. 31, 2016
Segment Reporting Information [Line Items]
Net interest income	$ 71,198	$ 67,028	$ 206,765	$ 196,535
Provision for credit losses	3,050	2,472	7,345	7,376
Net interest income after provision for credit losses	68,148	64,556	199,420	189,159
Noninterest income	17,536	18,950	54,430	52,857
Noninterest expenses	57,496	56,913	174,821	166,436
Income before income taxes	28,188	26,593	79,029	75,580
Income tax expense	7,530	6,192	21,292	18,881
Net income	20,658	20,401	57,737	56,699
Total assets	9,029,436	8,258,230	9,029,436	8,258,230	$ 8,426,793
Operating Segments | Community Bank
Segment Reporting Information [Line Items]
Net interest income	70,718	66,605	205,534	195,508
Provision for credit losses	3,056	2,455	7,344	7,215
Net interest income after provision for credit losses	67,662	64,150	198,190	188,293
Noninterest income	15,121	15,589	47,080	44,137
Noninterest expenses	55,133	54,353	167,643	158,964
Income before income taxes	27,650	25,386	77,627	73,466
Income tax expense	7,339	5,770	20,791	18,145
Net income	20,311	19,616	56,836	55,321
Total assets	9,020,486	8,251,351	9,020,486	8,251,351
Operating Segments | Mortgage
Segment Reporting Information [Line Items]
Net interest income	480	423	1,231	1,027
Provision for credit losses	(6)	17	1	161
Net interest income after provision for credit losses	486	406	1,230	866
Noninterest income	2,527	3,501	7,743	9,185
Noninterest expenses	2,475	2,700	7,571	7,937
Income before income taxes	538	1,207	1,402	2,114
Income tax expense	191	422	501	736
Net income	347	785	901	1,378
Total assets	97,154	90,692	97,154	90,692
Eliminations
Segment Reporting Information [Line Items]
Net interest income	0	0	0	0
Provision for credit losses	0	0	0	0
Net interest income after provision for credit losses	0	0	0	0
Noninterest income	(112)	(140)	(393)	(465)
Noninterest expenses	(112)	(140)	(393)	(465)
Income before income taxes	0	0	0	0
Income tax expense	0	0	0	0
Net income	0	0	0	0
Total assets	$ (88,204)	$ (83,813)	$ (88,204)	$ (83,813)