10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the Quarterly Period Ended September 30, 2015

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, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	x	Accelerated filer	¨
Non-accelerated filer	¨	Smaller reporting company	¨

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

The number of shares of common stock outstanding as of November 2, 2015 was 44,923,602.

UNION BANKSHARES CORPORATION

FORM 10-Q

INDEX

ITEM		PAGE
	PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements
	Consolidated Balance Sheets as of September 30, 2015 and December 31, 2014	2
	Consolidated Statements of Income for the three and nine months ended September 30, 2015 and 2014	3
	Consolidated Statements of Comprehensive Income for the three and nine months ended September 30, 2015 and 2014	4
	Consolidated Statements of Changes in Stockholders’ Equity for the nine months ended September 30, 2015 and 2014	5
	Consolidated Statements of Cash Flows for the nine months ended September 30, 2015 and 2014	6
	Notes to Consolidated Financial Statements	7
	Report of Independent Registered Public Accounting Firm	47
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	48
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	75
Item 4.	Controls and Procedures	77
	PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	78
Item 1A.	Risk Factors	78
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	78
Item 6.	Exhibits	79
	Signatures	80

 ii

Glossary of Acronyms

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, formerly known as Union First Market Bank
bps	–	Basis points
the Company	–	Union Bankshares Corporation
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
LIBOR	–	London Interbank Offered Rate
NPA	–	Nonperforming assets
OREO	–	Other real estate owned
OTTI	–	Other than temporary impairment
PCI	–	Purchased credit impaired
SEC	–	U.S. Securities and Exchange Commission
StellarOne	–	StellarOne Corporation
TDR	–	Troubled debt restructuring
UMG	–	Union Mortgage Group, Inc.

PART I – FINANCIAL INFORMATION

ITEM 1 – FINANCIAL STATEMENTS

UNION BANKSHARES CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(Dollars in thousands, except share data)

	September 30,		December 31,
	2015		2014
ASSETS
Cash and cash equivalents:
Cash and due from banks	$	102,955	$	112,752
Interest-bearing deposits in other banks		76,001		19,344
Money market investments		1		1
Federal funds sold		237		1,163
Total cash and cash equivalents		179,194		133,260
Securities available for sale, at fair value		888,692		1,102,114
Securities held to maturity, at carrying value		199,363		-
Restricted stock, at cost		52,721		54,854
Loans held for sale		65,713		42,519
Loans held for investment, net of deferred fees and costs		5,543,621		5,345,996
Less allowance for loan losses		33,269		32,384
Net loans held for investment		5,510,352		5,313,612
Premises and equipment, net		129,191		135,247
Other real estate owned, net of valuation allowance		22,094		28,118
Core deposit intangibles, net		25,320		31,755
Goodwill		293,522		293,522
Bank owned life insurance		142,433		139,005
Other assets		85,718		84,637
Total assets	$	7,594,313	$	7,358,643
LIABILITIES
Noninterest-bearing demand deposits	$	1,338,045	$	1,199,378
Interest-bearing deposits		4,480,808		4,439,392
Total deposits		5,818,853		5,638,770
Securities sold under agreements to repurchase		99,417		44,393
Other short-term borrowings		332,000		343,000
Long-term borrowings		290,732		299,542
Other liabilities		58,299		55,769
Total liabilities		6,599,301		6,381,474
Commitments and contingencies (Note 7)
STOCKHOLDERS' EQUITY
Common stock, $1.33 par value, shares authorized 100,000,000; issued and outstanding, 44,990,569 shares and 45,162,853 shares, respectively.		59,514		59,795
Surplus		638,511		643,443
Retained earnings		288,841		261,676
Accumulated other comprehensive income		8,146		12,255
Total stockholders' equity		995,012		977,169
Total liabilities and stockholders' equity	$	7,594,313	$	7,358,643

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 data)	Three Months Ended					Nine Months Ended
	September 30,			September 30,		September 30,			September 30,
	2015			2014		2015			2014
Interest and dividend income:
Interest and fees on loans	$	62,651		$	62,340	$	185,706		$	184,996
Interest on federal funds sold		-			-		1			1
Interest on deposits in other banks		23			21		64			41
Interest and dividends on securities:
Taxable		3,954			3,883		11,621			11,391
Nontaxable		3,372			3,347		10,062			10,005
Total interest and dividend income		70,000			69,591		207,454			206,434
Interest expense:
Interest on deposits		4,204			3,027		11,204			7,833
Interest on federal funds purchased		1			3		6			49
Interest on short-term borrowings		223			108		728			373
Interest on long-term borrowings		2,128			1,974		6,287			6,226
Total interest expense		6,556			5,112		18,225			14,481
Net interest income		63,444			64,479		189,229			191,953
Provision for credit losses		2,062			1,800		7,561			3,300
Net interest income after provision for credit losses		61,382			62,679		181,668			188,653
Noninterest income:
Service charges on deposit accounts		4,965			4,458		13,800			13,281
Other service charges and fees		3,983			3,773		11,618			11,281
Fiduciary and asset management fees		2,304			2,120		6,835			6,753
Gains on sales of mortgage loans, net of commissions		2,630			2,598		7,582			7,925
Gains on securities transactions, net		75			995		672			1,449
Other-than-temporary impairment losses		(300	)		-		(300	)		-
Bank owned life insurance income		1,161			1,195		3,431			3,467
Other operating income		1,907			1,179		4,352			2,229
Total noninterest income		16,725			16,318		47,990			46,385
Noninterest expenses:
Salaries and benefits		25,853			25,636		78,905			82,466
Occupancy expenses		4,915			4,902		15,220			15,184
Furniture and equipment expenses		3,015			3,050		8,818			8,555
Printing, postage, and supplies		1,191			1,290		3,970			3,682
Communications expense		1,159			1,291		3,481			3,740
Technology and data processing		3,549			3,280		10,020			9,145
Professional services		1,991			1,400		5,008			3,897
Marketing and advertising expense		1,781			2,064		5,841			4,821
FDIC assessment premiums and other insurance		1,351			1,577		4,030			4,563
Other taxes		1,569			1,460		4,674			4,352
Loan-related expenses		935			814		2,306			1,987
OREO and credit-related expenses		1,263			6,559		4,415			10,254
Amortization of intangible assets		2,074			2,391		6,435			7,462
Acquisition and conversion costs		-			1,695		-			19,524
Other expenses		2,679			2,004		9,282			6,033
Total noninterest expenses		53,325			59,413		162,405			185,665
Income before income taxes		24,782			19,584		67,253			49,373
Income tax expense		6,566			4,767		17,989			12,174
Net income	$	18,216		$	14,817	$	49,264		$	37,199
Basic earnings per common share	$	0.40		$	0.32	$	1.09		$	0.80
Diluted earnings per common share	$	0.40		$	0.32	$	1.09		$	0.80
Dividends declared per common share	$	0.17		$	0.15	$	0.49		$	0.43
Basic weighted average number of common shares outstanding		45,087,409			45,649,309		45,107,290			46,268,996
Diluted weighted average number of common shares outstanding		45,171,610			45,738,554		45,189,578			46,367,156

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						Nine Months Ended
	September 30,						September 30,
	2015			2014			2015			2014
Net income	$	18,216		$	14,817		$	49,264		$	37,199
Other comprehensive income (loss):
Cash flow hedges:
Change in fair value of cash flow hedges		(2,328	)		(228	)		(2,009	)		(431	)
Reclassification adjustment for losses included in net income (net of tax, $84 and $89 for the three months and $253 and $231 for the nine months ended September 30, 2015 and 2014)		157			164			470			428
AFS securities:
Unrealized holding gains (losses) arising during period (net of tax, $673 and $968 for the three months and $976 and $7,992 for the nine months ended September 30, 2015 and 2014)		1,250			1,798			(1,812	)		14,843
Reclassification adjustment for (gains) losses included in net income (net of tax, $79 and $348 for the three months and $130 and $367 for the nine months ended September 30, 2015 and 2014)		146			(647	)		(242	)		(682	)
HTM securities:
Accretion of unrealized gain for AFS securities transferred to HTM (net of tax, $166 and $0 for the three months and $278 and $0 for the nine months ended September 30, 2015 and 2014).		(308	)		-			(516	)		-
Other comprehensive income (loss)		(1,083	)		1,087			(4,109	)		14,158
Comprehensive income	$	17,133		$	15,904		$	45,155		$	51,357

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, 2015 AND 2014

(Dollars in thousands, except share amounts)

	Common Stock			Surplus			Retained Earnings (1)			Accumulated Other Comprehensive Income (Loss)			Total
Balance - December 31, 2013	$	33,020		$	170,770		$	236,210		$	(2,190	)	$	437,810
Net income - 2014								37,199						37,199
Other comprehensive income (net of taxes of $7,625)											14,158			14,158
Issuance of common stock in regard to acquisition (22,147,874 shares)		29,457			520,066									549,523
Dividends on common stock ($0.43 per share)								(19,021	)					(19,021	)
Stock purchased under stock repurchase plan (1,731,025 shares)		(2,303	)		(41,174	)								(43,477	)
Issuance of common stock under Dividend Reinvestment Plan (37,489 shares)		50			828			(878	)					-
Issuance of common stock under Equity Compensation Plans (67,057 shares)		89			983									1,072
Issuance of common stock for services rendered (14,374 shares)		19			343									362
Vesting of restricted stock under Equity Compensation Plans (14,707 shares)		20			(20	)								-
Net settle for taxes on Restricted Stock Awards (63,916 shares)		(85	)		(1,480	)								(1,565	)
Stock-based compensation expense					862									862
Balance - September 30, 2014	$	60,267		$	651,178		$	253,510		$	11,968		$	976,923
Balance - December 31, 2014	$	59,795		$	643,443		$	261,676		$	12,255		$	977,169
Net income - 2015								49,264						49,264
Other comprehensive income (net of taxes of $1,130)											(4,109	)		(4,109	)
Dividends on common stock ($0.49 per share)								(21,000	)					(21,000	)
Stock purchased under stock repurchase plan (347,021 shares)		(460	)		(7,535	)								(7,995	)
Issuance of common stock under Dividend Reinvestment Plan (52,201 shares)		69			1,030			(1,099	)					-
Issuance of common stock under Equity Compensation Plans (37,124 shares)		49			517									566
Issuance of common stock for services rendered (19,417 shares)		26			420									446
Vesting of restricted stock under Equity Compensation Plans (39,652 shares)		52			(52	)								-
Net settle for taxes on Restricted Stock Awards (13,076 shares)		(17	)		(269	)								(286	)
Stock-based compensation expense					957									957
Balance - September 30, 2015	$	59,514		$	638,511		$	288,841		$	8,146		$	995,012

⁽¹⁾ Retained earnings as of December 31, 2013 and 2014 includes the cumulative impact of $429,000 and $856,000, respectively, resulting from the adoption of ASU 2014-01 “Accounting For Investments in Qualified Affordable Housing Projects.” See “Note 1 - Accounting Policies” for additional information.

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, 2015 AND 2014

(Dollars in thousands)

	2015			2014
Operating activities:
Net income	$	49,264		$	37,199
Adjustments to reconcile net income to net cash and cash equivalents provided by (used in) operating activities:
Depreciation of bank premises and equipment		8,097			8,160
Writedown of OREO		1,773			7,265
Other-than-temporary impairment recognized in earnings		300			-
Amortization, net		10,080			10,891
Amortization related to acquisition, net		1,175			(410	)
Provision for loan losses		7,561			3,300
(Gains) on securities transactions, net		(672	)		(1,449	)
Decrease in loans held for sale, net		3,206			33,093
Gains (losses) on sales of other real estate owned, net		80			(128	)
Losses on sales of bank premises, net		98			384
Stock-based compensation expenses		957			862
Issuance of common stock for services		446			362
Net (increase) decrease in other assets		(3,892	)		12,347
Net increase (decrease) in other liabilities		691			(3,703	)
Net cash and cash equivalents provided by operating activities		79,164			108,173
Investing activities:
Purchases of securities		(171,203	)		(351,153	)
Proceeds from sales of securities		63,928			273,447
Proceeds from maturities, calls and paydowns of securities available for sale		110,132			111,390
Proceeds from maturities, calls and paydowns of securities held to maturity		795			-
Net (increase) decrease in loans		(228,839	)		100,844
Net (increase) in bank premises and equipment		(2,541	)		(5,262	)
Proceeds from sales of other real estate owned		6,374			9,929
Improvements to other real estate owned		(308	)		(262	)
Cash paid for equity-method investments		(355	)		-
Cash acquired in bank acquisitions		-			49,989
Net cash and cash equivalents (used in) provided by investing activities		(222,017	)		188,922
Financing activities:
Net increase in noninterest-bearing deposits		138,667			100,629
Net increase (decrease) in interest-bearing deposits		43,259			(175,918	)
Net increase (decrease) in short-term borrowings		44,024			(84,665	)
Net (decrease) increase in long-term borrowings		(8,448	)		1,518
Cash dividends paid - common stock		(21,000	)		(19,020	)
Repurchase of common stock		(7,995	)		(43,477	)
Issuance of common stock		566			1,072
Taxes paid related to net share settlement of equity awards		(286	)		(1,565	)
Net cash and cash equivalents provided by (used in) financing activities		188,787			(221,426	)
Increase in cash and cash equivalents		45,934			75,669
Cash and cash equivalents at beginning of the period		133,260			73,023
Cash and cash equivalents at end of the period	$	179,194		$	148,692
Supplemental Disclosure of Cash Flow Information
Cash payments for:
Interest	$	20,720		$	21,210
Income taxes		13,800			12,400
Supplemental schedule of noncash investing and financing activities
Unrealized (losses) gains on securities available for sale	$	(3,160	)	$	21,786
Transfer from securities available for sale to securities held to maturity		201,822			-
Transfer from loans held for investment to loans held for sale		26,400			-
Changes in fair value of interest rate swap loss		(1,539	)		(3	)
Transfers between loans and other real estate owned		1,493			5,257
Transfers from bank premises to other real estate owned		402			10,866
Issuance of common stock in exchange for net assets in acquisition		-			549,523
Transactions related to bank acquisition
Assets acquired		-			2,957,521
Liabilities assumed		-			2,642,120

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 2014 Annual Report on Form 10-K. Certain prior period amounts have been reclassified to conform to current period presentation.

Adoption of New Accounting Standards

The Company adopted ASU 2014-01, “Accounting for Investments in Qualified Affordable Housing Projects” as of January 1, 2015. As permitted by the guidance, the Company adopted the proportional amortization method of accounting for qualified affordable housing projects. The proportional amortization method amortizes the cost of the investment over the period in which the Company will receive tax credits and other tax benefits, and the resulting amortization is recognized as a component of income taxes attributable to continuing operations. Historically, these investments were accounted for under the equity method of accounting and the passive losses related to the investments were recognized within noninterest expense. The Company adopted this guidance in the first quarter of 2015 with retrospective application as required by the ASU. Prior period results and related metrics have been recast to conform to this presentation. The recast of prior period information did not have a material impact on the Company’s financial condition or results of operations.

For the three and nine months ended September 30, 2015, the Company recognized amortization of $118,000 and $397,000, respectively, and tax credits of $213,000 and $641,000, respectively, associated with these investments within “Income tax expense” on the Company’s Consolidated Statements of Income. The carrying value of the Company’s investments in these qualified affordable housing projects was $10.1 million and $10.4 million as of September 30, 2015 and December 31, 2014, respectively. The Company recorded a liability of $5.1 million for the related unfunded commitments as of September 30, 2015, which are expected to be paid from 2015 to 2019.

Recent Accounting Pronouncements

In January 2015, the FASB issued ASU No. 2015-01, “Income Statement—Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items.” The amendments in this ASU eliminate from U.S. GAAP the concept of extraordinary items. Subtopic 225-20, Income Statement - Extraordinary and Unusual Items, required that an entity separately classify, present, and disclose extraordinary events and transactions. Presently, an event or transaction is presumed to be an ordinary and usual activity of the reporting entity unless evidence clearly supports its classification as an extraordinary item. If an event or transaction meets the criteria for extraordinary classification, an entity is required to segregate the extraordinary item from the results of ordinary operations and show the item separately in the income statement, net of tax, after income from continuing operations. The entity also is required to disclose applicable income taxes and either present or disclose earnings-per-share data applicable to the extraordinary item. The amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted provided that the guidance is applied from the beginning of the fiscal year of adoption. The Company does not expect the adoption of ASU 2015-01 to have a material impact on its consolidated financial statements.

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In February 2015, the FASB issued ASU No. 2015-02, “Amendments to the Consolidation Analysis.” The amendments in this ASU amend the consolidation requirements in ASC 810, Consolidation, and significantly change the consolidation analysis required under U.S. GAAP. Under this guidance, limited partnerships will be considered variable interest entities (“VIEs”) unless the limited partners have either substantive kick-out or participating rights; this amendment will result in more partnerships being considered VIEs, but it will be less likely that a general partner will consolidate a limited partnership. The amendments also change the effect that fees paid to a decision maker or service provider have on the consolidation analysis; it is less likely that the fees themselves will be considered a variable interest, that an entity will be a VIE, or that consolidation will result. The changes modify how a reporting entity considers how its variable interests affect its consolidation process; the related party tiebreaker test and mandatory consolidation by one of the related parties will have to be performed less frequently than under current U.S. GAAP. For entities other than limited partnerships, the amendments clarify how to determine whether the equity holders have power over the entity and could affect whether the entity is a VIE. The amendments are expected to result in the deconsolidation of many entities. The amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted provided that the guidance is applied from the beginning of the fiscal year of adoption. The Company is currently assessing the impact that ASU 2015-02 will have on its consolidated financial statements.

In April 2015, the FASB issued ASU No. 2015-03, “Interest – Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs.” The ASU does not change the existing recognition and measurement guidance for debt issuance costs but requires that debt issuance costs related to a debt liability recorded on the balance sheet be present in the balance sheet as a direct deduction from the carrying amount of that debt liability. The amendments should be disclosed consistent with the disclosure requirement of a change in accounting principle and applied on a retrospective basis. This ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted. The Company does not expect the adoption of ASU 2015-03 to have a material impact on its consolidated financial statements.

In April 2015, the FASB issued ASU No. 2015-05, “Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40: Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement.” This ASU clarifies the circumstances under which a cloud computing customer would account for the arrangement as a license of internal-use software. If a cloud computing arrangement includes a software license, then the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses; otherwise, the customer should account for the arrangement as a service contract. The amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted. The Company is currently assessing the impact of ASU 2015-05 will have on its consolidated financial statements.

In August 2015, the FASB issued ASU No. 2015-15, “Interest—Imputation of Interest (Subtopic 835-30): Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements.” This ASU clarifies the guidance issued within ASU 2015-03 described above. Given the absence of authoritative guidance within Update 2015-03 for debt issuance costs related to line-of-credit arrangements, the SEC staff would not object to an entity presenting the cost of securing a revolving line of credit as an asset, regardless of whether a balance is outstanding. The costs should be amortized over the term of the arrangement. This ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted. The Company does not expect the adoption of ASU 2015-15 to have a material impact on its consolidated financial statements.

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2. ACQUISITIONS

The Company’s merger and acquisition strategy focuses on high-growth areas with strong market demographics and targets organizations that have a comparable corporate culture, strong performance, and good asset quality, among other factors. On January 1, 2014, the Company completed the acquisition of StellarOne, a bank holding company based in Charlottesville, Virginia, in an all-stock transaction. StellarOne’s common shareholders received 0.9739 shares of the Company’s common stock in exchange for each share of StellarOne’s common stock, resulting in the Company issuing 22,147,874 shares of common stock at a fair value of $549.5 million. The fair value of assets acquired totaled $2.96 billion and liabilities assumed totaled $2.64 billion. As a result of the transaction, StellarOne’s former bank subsidiary, StellarOne Bank, became a wholly owned bank subsidiary of the Company. On May 9, 2014, StellarOne Bank was merged with and into the Bank. Information regarding this acquisition is included in the Company’s 2014 Annual Report on Form 10-K. The Company has not completed any acquisitions of businesses in 2015.

The net effect of the amortization and accretion of premiums and discounts associated with the Company’s acquisition accounting adjustments had the following impact on the Consolidated Statements of Income during the three and nine months ended September 30, 2015 and 2014 (dollars in thousands):

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2015			2014			2015			2014
Loans (1)	$	1,364		$	846		$	3,055		$	82
Core deposit intangible (2)		(2,074	)		(2,391	)		(6,435	)		(7,462	)
Borrowings (3)		87			262			362			413
Time deposits (4)		154			1,998			1,843			7,377
Net impact to income before taxes	$	(469	)	$	715		$	(1,175	)	$	410

(1) Loan discount accretion is included in "Interest and fees on loans" in the "Interest and dividend income" section of the Company's Consolidated Statements of Income.

(2) Core deposit intangible premium amortization is included in "Amortization of intangible assets" in the "Noninterest expense" section of the Company's Consolidated Statements of Income.

(3) Borrowings discount accretion is included in "Interest on long-term borrowings" in the "Interest Expense" section of the Company's Consolidated Statements of Income.

(4) Certificate of deposit discount accretion is included in "Interest on deposits" in the "Interest expense" section of the Company's Consolidated Statements of Income.

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3. 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, 2015 and December 31, 2014 are summarized as follows (dollars in thousands):

	Amortized		Gross Unrealized					Estimated
	Cost		Gains		(Losses)			Fair Value
September 30, 2015
U.S. government and agency securities	$	8,068	$	343	$	-		$	8,411
Obligations of states and political subdivisions		241,655		8,750		(512	)		249,893
Corporate bonds		73,917		70		(1,525	)		72,462
Mortgage-backed securities		539,230		9,122		(635	)		547,717
Other securities		10,181		28		-			10,209
Total available for sale securities	$	873,051	$	18,313	$	(2,672	)	$	888,692
December 31, 2014
U.S. government and agency securities	$	8,313	$	166	$	(25	)	$	8,454
Obligations of states and political subdivisions		427,483		18,885		(721	)		445,647
Corporate bonds		78,744		244		(308	)		78,680
Mortgage-backed securities		550,716		9,411		(798	)		559,329
Other securities		9,979		31		(6	)		10,004
Total available for sale securities	$	1,075,235	$	28,737	$	(1,858	)	$	1,102,114

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The following table shows the gross unrealized losses and fair value (in thousands) of the Company’s available for sale investments with unrealized losses that are not deemed to be other-than-temporarily impaired. 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		Unrealized			Fair		Unrealized			Fair		Unrealized
	Value		Losses			Value		Losses			Value		Losses
September 30, 2015
Obligations of states and political subdivisions	$	33,742	$	(252	)	$	6,610	$	(260	)	$	40,352	$	(512	)
Mortgage-backed securities		118,679		(459	)		28,026		(176	)		146,705		(635	)
Corporate bonds and other securities		24,782		(832	)		17,886		(693	)		42,668		(1,525	)
Total available for sale	$	177,203	$	(1,543	)	$	52,522	$	(1,129	)	$	229,725	$	(2,672	)
December 31, 2014
U.S. government and agency securities	$	7,055	$	(25	)	$	-	$	-		$	7,055	$	(25	)
Obligations of states and political subdivisions		13,602		(93	)		42,514		(628	)		56,116		(721	)
Mortgage-backed securities		60,151		(362	)		49,581		(436	)		109,732		(798	)
Corporate bonds and other securities		43,923		(244	)		4,309		(70	)		48,232		(314	)
Total available for sale	$	124,731	$	(724	)	$	96,404	$	(1,134	)	$	221,135	$	(1,858	)

As of September 30, 2015, there were $52.5 million, or 22 issues, of individual available for sale securities that had been in a continuous loss position for more than 12 months. Additionally, these securities had an unrealized loss of $1.1 million and consisted of municipal obligations, mortgage-backed securities, and corporate bonds. As of December 31, 2014, there were $96.4 million, or 60 issues, of individual securities that had been in a continuous loss position for more than 12 months. Additionally, these securities had an unrealized loss of $1.1 million and consisted of municipal obligations, mortgage-backed securities, corporate bonds, and other securities. The Company has determined that these securities are temporarily impaired as of September 30, 2015 and December 31, 2014 for the reasons set out below:

U.S. Government agencies and corporations. The unrealized losses in this category of investments were caused by interest rate fluctuations. 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 these 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.

Mortgage-backed securities. This category’s unrealized losses are primarily the result of interest rate fluctuations. Since 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.

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 economic downturn 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. As discussed below, one security was identified as containing credit-related OTTI.

- 11 -

Corporate debt securities. 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 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, 2015 and December 31, 2014, 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, 2015				December 31, 2014
	Amortized		Estimated		Amortized		Estimated
	Cost		Fair Value		Cost		Fair Value
Due in one year or less	$	16,840	$	16,904	$	19,345	$	19,434
Due after one year through five years		60,862		62,790		41,545		43,070
Due after five years through ten years		263,108		269,177		306,900		314,044
Due after ten years		532,241		539,821		707,445		725,566
Total securities available for sale	$	873,051	$	888,692	$	1,075,235	$	1,102,114

The following table presents 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, 2015 and December 31, 2014 (dollars in thousands):

	September 30, 2015		December 31, 2014
	Fair Value		Fair Value
Public deposits	$	150,632	$	312,793
Repurchase agreements		118,249		51,842
Other purposes (1)		30,256		32,360
Total pledged securities	$	299,137	$	396,995

(1) The "Other purposes" category consists of borrowings, derivatives, and accounts held at the Bank.

Held to Maturity

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 Company transferred these securities to held to maturity to reduce the impact of price volatility on capital and in consideration of changes to the regulatory environment. The securities included net pre-tax unrealized gains of $8.1 million at the date of transfer with a remaining balance of $7.3 million as of September 30, 2015.

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/(losses) are accreted over the remaining life of the security with no impact on future net income.

- 12 -

The carrying value, gross unrealized gains and losses, and estimated fair values of securities held to maturity as of September 30, 2015 are summarized as follows (dollars in thousands):

	Carrying		Gross Unrealized					Estimated
	Value (1)		Gains		(Losses)			Fair Value
September 30, 2015
Obligations of states and political subdivisions	$	199,363	$	2,882	$	(1,926	)	$	200,319

⁽¹⁾ The carrying value includes $7.3 million of unrealized gains and losses present at the time of transfer from available for securities, net of any accretion.

The following table shows the gross unrealized losses and fair value (in thousands) of the Company’s held to maturity securities with unrealized losses that are not deemed to be other-than-temporarily impaired. 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		Unrealized			Fair		Unrealized		Fair		Unrealized
	Value		Losses			Value		Losses		Value		Losses
September 30, 2015
Obligations of states and political subdivisions	$	28,727	$	(1,926	)	$	-	$	-	$	28,727	$	(1,926	)

The following table presents the amortized cost and estimated fair value of held to maturity securities as of September 30, 2015, 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, 2015
	Carrying		Estimated
	Value (1)		Fair Value
Due in one year or less	$	1,314	$	1,321
Due after one year through five years		5,217		5,267
Due after five years through ten years		39,392		39,521
Due after ten years		153,440		154,210
Total securities held to maturity	$	199,363	$	200,319

(1) The carrying value includes $7.3 million of unrealized gains and losses present at the time of transfer from available for securities, net of any accretion.

The following table presents held to maturity securities which were pledged to secure public deposits as permitted or required by law as of September 30, 2015 (dollars in thousands):

	September 30, 2015
	Fair
	Value
Public deposits	$	200,319
Total pledged securities	$	200,319

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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, 2015, 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. At December 31, 2014, the FHLB required the Bank to maintain stock in an amount equal to 4.5% 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, 2015 and December 31, 2014. Restricted equity securities consist of Federal Reserve Bank stock in the amount of $23.8 million for both September 30, 2015 and December 31, 2014 and FHLB stock in the amount of $28.9 million and $31.0 million as of September 30, 2015 and December 31, 2014, 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 quarter ended September 30, 2015 and in accordance with the guidance, the Company determined that a municipal security in the available for sale portfolio incurred credit-related OTTI of $300,000, which was recognized in earnings for the quarter ended September 30, 2015.

Realized Gains and Losses

The following table presents the gross realized gains and losses on the sale of securities available for sale and the proceeds from the sale of securities during the three and nine months ended September 30, 2015 (dollars in thousands). The Company did not sell any investment securities that are held to maturity.

	Three months ended		Nine months ended
	September 30, 2015		September 30, 2015
Realized gains (losses):
Gross realized gains	$	75	$	759
Gross realized losses		-		(87	)
Net realized gains	$	75	$	672
Proceeds from sales of securities	$	5,771	$	63,928

The following table presents the gross realized gains and losses on the sale of securities available for sale and the proceeds from the sale of securities during the three and nine months ended September 30, 2014 (dollars in thousands).

	Three months ended			Nine months ended
	September 30, 2014			September 30, 2014
Realized gains (losses):
Gross realized gains	$	1,034		$	1,498
Gross realized losses		(39	)		(49	)
Net realized gains	$	995		$	1,449
Proceeds from sales of securities	$	14,370		$	273,447

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4. 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, 2015 and December 31, 2014 (dollars in thousands):

	September 30,		December 31,
	2015		2014
Commercial:
Commercial Construction	$	429,645	$	341,280
Commercial Real Estate - Owner Occupied		863,551		875,443
Commercial Real Estate - Non-Owner Occupied		1,586,334		1,509,159
Raw Land and Lots		187,182		211,225
Single Family Investment Real Estate		436,340		412,494
Commercial and Industrial		444,199		393,776
Other Commercial		89,344		81,106
Consumer:
Mortgage		466,418		478,151
Consumer Construction		55,718		74,168
Indirect Auto		217,928		199,411
Indirect Marine		42,763		43,190
HELOCs		492,202		500,579
Credit Card		-		24,225
Other Consumer		231,997		201,789
Total	$	5,543,621	$	5,345,996

The following table shows the aging of the Company’s loan portfolio, by class, at September 30, 2015 (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
Commercial:
Commercial Construction	$	296	$	-	$	126	$	2,459	$	1,786	$	424,978	$	429,645
Commercial Real Estate - Owner Occupied		1,148		165		680		28,695		3,989		828,874		863,551
Commercial Real Estate - Non-Owner Occupied		752		974		1,821		15,172		200		1,567,415		1,586,334
Raw Land and Lots		93		-		-		5,141		493		181,455		187,182
Single Family Investment Real Estate		536		35		228		15,167		1,157		419,217		436,340
Commercial and Industrial		721		696		494		2,249		903		439,136		444,199
Other Commercial		643		-		-		793		61		87,847		89,344
Consumer:
Mortgage		2,485		5,079		875		5,561		2,276		450,142		466,418
Consumer Construction		250		-		-		251		819		54,398		55,718
Indirect Auto		1,319		270		116		-		89		216,134		217,928
Indirect Marine		150		-		94		-		-		42,519		42,763
HELOCs		3,192		1,085		282		1,812		611		485,220		492,202
Other Consumer		1,521		966		448		1,306		582		227,174		231,997
Total	$	13,106	$	9,270	$	5,164	$	78,606	$	12,966	$	5,424,509	$	5,543,621

- 15 -

The following table shows the aging of the Company’s loan portfolio, by class, at December 31, 2014 (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
Commercial:
Commercial Construction	$	815	$	-	$	-	$	3,782	$	968	$	335,715	$	341,280
Commercial Real Estate - Owner Occupied		621		1,542		1,683		31,167		1,060		839,370		875,443
Commercial Real Estate - Non-Owner Occupied		3,984		237		91		28,869		5,902		1,470,076		1,509,159
Raw Land and Lots		145		44		194		7,427		2,359		201,056		211,225
Single Family Investment Real Estate		2,825		338		734		16,879		2,070		389,648		412,494
Commercial and Industrial		1,250		529		549		3,855		3,286		384,307		393,776
Other Commercial		42		2		-		2,256		74		78,732		81,106
Consumer:
Mortgage		12,851		4,300		4,095		7,394		2,485		447,026		478,151
Consumer Construction		120		-		844		516		-		72,688		74,168
Indirect Auto		1,593		263		317		-		-		197,238		199,411
Indirect Marine		150		-		-		-		201		42,839		43,190
HELOCs		3,082		955		820		2,000		258		493,464		500,579
Credit Card		232		108		219		-		-		23,666		24,225
Other Consumer		1,587		412		501		1,643		592		197,054		201,789
Total	$	29,297	$	8,730	$	10,047	$	105,788	$	19,255	$	5,172,879	$	5,345,996

The following table shows the PCI commercial and consumer loan portfolios, by class and their delinquency status, at

September 30, 2015 (dollars in thousands):

	30-89 Days Past Due		Greater than 90 Days		Current		Total
Commercial:
Commercial Construction	$	-	$	459	$	2,000	$	2,459
Commercial Real Estate - Owner Occupied		1,024		1,752		25,919		28,695
Commercial Real Estate - Non-Owner Occupied		1,202		392		13,578		15,172
Raw Land and Lots		196		70		4,875		5,141
Single Family Investment Real Estate		1,225		646		13,296		15,167
Commercial and Industrial		412		69		1,768		2,249
Other Commercial		31		63		699		793
Consumer:
Mortgage		597		1,612		3,352		5,561
Consumer Construction		-		251		-		251
HELOCs		244		365		1,203		1,812
Other Consumer		47		60		1,199		1,306
Total	$	4,978	$	5,739	$	67,889	$	78,606

- 16 -

The following table shows the PCI commercial and consumer loan portfolios, by class and their delinquency status, at December 31, 2014 (dollars in thousands):

	30-89 Days Past Due		Greater than 90 Days		Current		Total
Commercial:
Commercial Construction	$	-	$	652	$	3,130	$	3,782
Commercial Real Estate - Owner Occupied		1,138		843		29,186		31,167
Commercial Real Estate - Non-Owner Occupied		523		1,255		27,091		28,869
Raw Land and Lots		522		-		6,905		7,427
Single Family Investment Real Estate		1,327		1,311		14,241		16,879
Commercial and Industrial		144		538		3,173		3,855
Other Commercial		107		1,133		1,016		2,256
Consumer:
Mortgage		1,975		2,866		2,553		7,394
Consumer Construction		-		516		-		516
HELOCs		356		728		916		2,000
Other Consumer		89		171		1,383		1,643
Total	$	6,181	$	10,013	$	89,594	$	105,788

- 17 -

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 related to the StellarOne acquisition, by class at September 30, 2015 (dollars in thousands):

	Recorded Investment		Unpaid Principal Balance		Related Allowance		YTD Average Investment		Interest Income Recognized
Loans without a specific allowance
Commercial:
Commercial Construction	$	5,760	$	6,036	$	-	$	5,126	$	187
Commercial Real Estate - Owner Occupied		11,801		11,998		-		11,602		356
Commercial Real Estate - Non-Owner Occupied		6,854		7,166		-		7,025		212
Raw Land and Lots		24,762		24,896		-		25,595		1,290
Single Family Investment Real Estate		2,295		2,721		-		2,455		99
Commercial and Industrial		1,983		2,532		-		2,115		47
Other Commercial		876		876		-		895		41
Consumer:
Mortgage		333		333		-		333		8
Consumer Construction		819		821		-		822		29
HELOCs		196		331		-		310		10
Other Consumer		216		339		-		285		15
Total impaired loans without a specific allowance	$	55,895	$	58,049	$	-	$	56,563	$	2,294
Loans with a specific allowance
Commercial:
Commercial Construction	$	561	$	561	$	40	$	629	$	16
Commercial Real Estate - Owner Occupied		6,763		7,874		677		7,107		191
Commercial Real Estate - Non-Owner Occupied		6,863		6,864		178		6,870		304
Raw Land and Lots		1,224		1,221		60		978		34
Single Family Investment Real Estate		3,018		3,035		212		3,052		113
Commercial and Industrial		2,581		2,640		330		2,684		100
Other Commercial		423		451		32		475		16
Consumer:
Mortgage		3,273		3,522		362		3,495		64
Indirect Auto		89		95		1		121		5
HELOCs		1,008		1,038		5		1,032		24
Other Consumer		525		720		115		635		17
Total impaired loans with a specific allowance	$	26,328	$	28,021	$	2,012	$	27,078	$	884
Total impaired loans	$	82,223	$	86,070	$	2,012	$	83,641	$	3,178

- 18 -

The following table shows the Company’s impaired loans, by class, at December 31, 2014 (dollars in thousands):

	Recorded Investment		Unpaid Principal Balance		Related Allowance		YTD Average Investment		Interest Income Recognized
Loans without a specific allowance
Commercial:
Commercial Construction	$	5,281	$	5,367	$	-	$	5,755	$	165
Commercial Real Estate - Owner Occupied		15,722		16,430		-		16,774		737
Commercial Real Estate - Non-Owner Occupied		22,917		22,917		-		23,209		1,116
Raw Land and Lots		44,790		47,662		-		47,988		2,124
Single Family Investment Real Estate		4,197		4,881		-		6,534		170
Commercial and Industrial		4,453		7,933		-		5,070		121
Other Commercial		1,536		1,538		-		1,624		90
Consumer:
Mortgage		1,571		1,582		-		1,583		58
Indirect Auto		-		6		-		4		-
Indirect Marine		201		505		-		281		-
HELOCs		559		699		-		573		8
Other Consumer		89		208		-		107		-
Total impaired loans without a specific allowance	$	101,316	$	109,728	$	-	$	109,502	$	4,589
Loans with a specific allowance
Commercial:
Commercial Construction	$	570	$	570	$	51	$	506	$	13
Commercial Real Estate - Owner Occupied		5,951		5,999		355		5,946		280
Commercial Real Estate - Non-Owner Occupied		10,575		10,572		2,017		10,823		474
Raw Land and Lots		1,343		1,373		98		1,472		59
Single Family Investment Real Estate		4,125		4,144		562		4,293		159
Commercial and Industrial		2,938		3,009		582		3,125		138
Other Commercial		359		378		32		442		29
Consumer:
Mortgage		3,323		3,375		481		3,381		60
Consumer Construction		375		375		34		373		19
Indirect Marine		192		192		5		199		15
HELOCs		434		434		4		436		17
Other Consumer		679		706		310		686		19
Total impaired loans with a specific allowance	$	30,864	$	31,127	$	4,531	$	31,682	$	1,282
Total impaired loans	$	132,180	$	140,855	$	4,531	$	141,184	$	5,871

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. TDRs totaled $11.6 million and $26.8 million as of September 30, 2015 and December 31, 2014, respectively. 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 quarter ended September 30, 2015, the recorded investment in restructured loans prior to modifications was not materially impacted by the modification.

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The following table provides a summary, by class, of modified loans that continue to accrue interest under the terms of the restructuring agreement, which are considered to be performing, and modified loans that have been placed on nonaccrual status, which are considered to be nonperforming, as of September 30, 2015 and December 31, 2014 (dollars in thousands):

	September 30, 2015						December 31, 2014
	No. of Loans		Recorded Investment		Outstanding Commitment		No. of Loans		Recorded Investment		Outstanding Commitment
Performing
Commercial:
Commercial Construction		1	$	296	$	-		1	$	707	$	-
Commercial Real Estate - Owner Occupied		5		1,608		-		3		682		-
Commercial Real Estate - Non-Owner Occupied		2		2,390		-		3		3,362		-
Raw Land and Lots		5		3,081		-		9		14,777		-
Single Family Investment Real Estate		2		444		-		6		1,046		-
Commercial and Industrial		3		103		-		9		722		-
Other Commercial		1		128		-		1		191		-
Consumer:
Mortgage		7		1,331		-		7		1,244		-
Other Consumer		2		87		-		3		98		-
Total performing		28	$	9,468	$	-		42	$	22,829	$	-
Nonperforming
Commercial:
Commercial Construction		1	$	126	$	-		1	$	253	$	-
Commercial Real Estate - Owner Occupied		1		140		-		2		153		-
Commercial Real Estate - Non-Owner Occupied		1		200		-		1		539		-
Raw Land and Lots		1		33		-		2		1,053		-
Single Family Investment Real Estate		2		234		-		1		433		-
Commercial and Industrial		3		485		-		5		616		-
Other Commercial		1		61		-		1		74		-
Consumer:
Mortgage		3		771		-		2		770		-
Other Consumer		1		37		-		1		57		-
Total nonperforming		14	$	2,087	$	-		16	$	3,948	$	-
Total performing and nonperforming		42	$	11,555	$	-		58	$	26,777	$	-

The Company considers a default of a restructured loan to occur when the borrower is 90 days past due following the restructure or a foreclosure and repossession of the applicable collateral occurs. During the three and nine months ended September 30, 2015, the Company did not identify any restructured loans that went into default that had been restructured in the twelve-month period prior to default. During the three months ended September 30, 2014, the Company did not identify any restructured loans that went into default that had been restructured in the twelve-month period prior to default. During the nine months ended September 30, 2014, the Company identified one loan, totaling approximately $24,000, that went into default that had been restructured in the twelve-month period prior to the time of default. This loan was a mortgage loan which had a term modification at a market rate.

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The following table shows, by class and modification type, TDRs that occurred during the three and nine months ended September 30, 2015 (dollars in thousands):

	Three months ended				Nine months ended
	September 30, 2015				September 30, 2015
	No. of Loans		Recorded Investment at Period End		No. of Loans		Recorded Investment at Period End
Term modification, at a market rate
Commercial:
Commercial Real Estate - Owner Occupied		-	$	-		1	$	117
Commercial and Industrial		-		-		1		17
Total loan term extended at a market rate		-	$	-		2	$	134
Term modification, below market rate
Commercial:
Commercial Real Estate - Owner Occupied		-	$	-		1	$	871
Raw Land and Lots		1		400		1		400
Consumer:
Mortgage		2		619		2		619
Other Consumer		1		55		1		55
Total loan term extended at a below market rate		4	$	1,074		5	$	1,945
Total		4	$	1,074		7	$	2,079

The following table shows, by class and modification type, TDRs that occurred during the three and nine months ended September 30, 2014 (dollars in thousands):

	Three months ended				Nine months ended
	September 30, 2014				September 30, 2014
	No. of Loans		Recorded Investment at Period End		No. of Loans		Recorded Investment at Period End
Term modification, at a market rate
Commercial:
Commercial Real Estate - Non-Owner Occupied		1	$	989		1	$	989
Single Family Investment Real Estate		-		-		1		110
Commercial and Industrial		-		-		1		33
Other Commercial		-		-		2		269
Total loan term extended at a market rate		1	$	989		5	$	1,401
Total		1	$	989		5	$	1,401

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The following table shows the allowance for loan loss activity, balances for allowance for loan losses, and loan balances based on impairment methodology by portfolio segment for the nine months ended and as of September 30, 2015. The table below includes the provision for loan losses. In addition, a $300,000 provision was recognized during the nine months ended September 30, 2015 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):

	Commercial			Consumer			Total
Allowance for loan losses:
Balance, beginning of the year	$	22,352		$	10,032		$	32,384
Recoveries credited to allowance		1,921			1,073			2,994
Loans charged off		(6,013	)		(3,357	)		(9,370	)
Provision charged to operations		5,364			1,897			7,261
Balance, end of period	$	23,624		$	9,645		$	33,269
Ending Balance, ALL:
Loans individually evaluated for impairment	$	1,529		$	483		$	2,012
Loans collectively evaluated for impairment		22,095			9,162			31,257
Loans acquired with deteriorated credit quality		-			-			-
Total	$	23,624		$	9,645		$	33,269
Ending Balance, Loans:
Loans individually evaluated for impairment	$	75,308		$	6,310		$	81,618
Loans collectively evaluated for impairment		3,891,611			1,491,786			5,383,397
Loans acquired with deteriorated credit quality		69,676			8,930			78,606
Total	$	4,036,595		$	1,507,026		$	5,543,621

The following table shows the allowance for loan loss activity, balances for allowance for loan losses, and loan balances based on impairment methodology by portfolio segment for the nine months ended and as of September 30, 2014. 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):

	Commercial			Consumer			Total
Allowance for loan losses:
Balance, beginning of the year	$	19,908		$	10,227		$	30,135
Recoveries credited to allowance		1,999			866			2,865
Loans charged off		(1,991	)		(2,200	)		(4,191	)
Provision charged to operations		1,507			1,793			3,300
Balance, end of period	$	21,423		$	10,686		$	32,109
Ending Balance, ALL:
Loans individually evaluated for impairment	$	3,183		$	922		$	4,105
Loans collectively evaluated for impairment		18,240			9,764			28,004
Loans acquired with deteriorated credit quality		-			-			-
Total	$	21,423		$	10,686		$	32,109
Ending Balance, Loans:
Loans individually evaluated for impairment	$	125,310		$	8,855		$	134,165
Loans collectively evaluated for impairment		3,430,451			1,486,644			4,917,095
Loans acquired with deteriorated credit quality		106,021			13,722			119,743
Total	$	3,661,782		$	1,509,221		$	5,171,003

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The Company uses the past due status and delinquency trends as the primary credit quality indicator for the consumer loan portfolio segment while a risk rating system is utilized for commercial loans. Commercial loans are graded on a scale of 0 through 9. A general description of the characteristics of the risk grades follows:

· Risk rated 0 loans have little or no risk and are generally secured by General Obligation Municipal Credits;

· 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;

· 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;

· 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;

· 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; and

· 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.

The following table shows the recorded investment in all loans, excluding PCI loans, in the commercial portfolios by class with their related risk rating current as of September 30, 2015 (dollars in thousands):

	0-3		4		5		6		7		8		Total
Commercial Construction	$	37,671	$	355,150	$	22,661	$	8,857	$	2,847	$	-	$	427,186
Commercial Real Estate - Owner Occupied		179,846		622,852		13,967		6,526		9,433		2,232		834,856
Commercial Real Estate - Non-Owner Occupied		467,026		1,048,396		19,654		22,369		13,717		-		1,571,162
Raw Land and Lots		12,036		122,236		7,307		15,792		24,670		-		182,041
Single Family Investment Real Estate		63,146		339,683		8,430		5,210		4,704		-		421,173
Commercial and Industrial		186,807		235,543		10,732		4,669		4,199		-		441,950
Other Commercial		43,355		40,386		2,613		898		1,299		-		88,551
Total	$	989,887	$	2,764,246	$	85,364	$	64,321	$	60,869	$	2,232	$	3,966,919

The following table shows the recorded investment in all loans, excluding PCI loans, in the commercial portfolios by class with their related risk rating current as of December 31, 2014 (dollars in thousands):

	1-3		4		5		6		7		8		Total
Commercial Construction	$	22,512	$	289,064	$	11,932	$	10,906	$	3,084	$	-	$	337,498
Commercial Real Estate - Owner Occupied		185,789		620,587		15,003		7,688		15,209		-		844,276
Commercial Real Estate - Non-Owner Occupied		356,263		1,041,515		22,358		28,388		31,766		-		1,480,290
Raw Land and Lots		11,162		128,281		16,803		4,783		42,769		-		203,798
Single Family Investment Real Estate		59,638		311,900		9,750		6,680		7,647		-		395,615
Commercial and Industrial		138,973		230,084		9,392		4,383		7,089		-		389,921
Other Commercial		31,571		40,913		3,818		844		1,704		-		78,850
Total	$	805,908	$	2,662,344	$	89,056	$	63,672	$	109,268	$	-	$	3,730,248

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The following table shows the recorded investment in only PCI loans in the commercial portfolios by class with their related risk rating and credit quality indicator information current as of September 30, 2015 (dollars in thousands):

	4		5		6		7		8		Total
Commercial Construction	$	-	$	-	$	2,000	$	-	$	459	$	2,459
Commercial Real Estate - Owner Occupied		5,203		700		9,016		13,776		-		28,695
Commercial Real Estate - Non-Owner Occupied		3,492		6,288		2,867		2,525		-		15,172
Raw Land and Lots		1,425		517		2,317		882		-		5,141
Single Family Investment Real Estate		4,598		1,689		4,322		4,558		-		15,167
Commercial and Industrial		357		12		360		1,498		22		2,249
Other Commercial		86		-		387		320		-		793
Total	$	15,161	$	9,206	$	21,269	$	23,559	$	481	$	69,676

The following table shows the recorded investment in only PCI loans in the commercial portfolios by class with their related risk rating and credit quality indicator information current as of December 31, 2014 (dollars in thousands):

	4		5		6		7		8		Total
Commercial Construction	$	-	$	-	$	3,130	$	194	$	458	$	3,782
Commercial Real Estate - Owner Occupied		1,525		3,546		10,880		15,216		-		31,167
Commercial Real Estate - Non-Owner Occupied		2,837		934		18,736		6,362		-		28,869
Raw Land and Lots		1,564		189		3,148		2,526		-		7,427
Single Family Investment Real Estate		2,807		1,253		6,462		6,357		-		16,879
Commercial and Industrial		437		-		913		2,477		28		3,855
Other Commercial		-		-		510		1,746		-		2,256
Total	$	9,170	$	5,922	$	43,779	$	34,878	$	486	$	94,235

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,
	2015			2014
Balance at beginning of period	$	28,956		$	2,980
Additions		-			34,653
Accretion		(4,707	)		(5,681	)
Reclass of nonaccretable difference due to improvement in expected cash flows		3,168			-
Other, net (1)		(5,624	)		(2,150	)
Balance at end of period	$	21,793		$	29,802

⁽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 $78.6 million at September 30, 2015 and $105.8 million at December 31, 2014. The outstanding balance of the Company’s PCI loan portfolio totaled $95.7 million at September 30, 2015 and $126.3 million at December 31, 2014. The carrying value of the Company’s acquired performing loan portfolio, accounted for under ASC 310-20, Receivables – Nonrefundable Fees and Other Costs, totaled $1.5 billion at September 30, 2015 and $1.8 billion at December 31, 2014; the remaining discount on these loans totaled $21.9 million at September 30, 2015 and $24.3 million at December 31, 2014, respectively.

- 24 -

5. INTANGIBLE ASSETS

The Company’s intangible assets consist of core deposits and goodwill arising from previous acquisitions. The Company has determined that core deposit intangibles have a finite life and amortizes them over their estimated useful life. Core deposit intangible assets are being amortized over the period of expected benefit, which ranges from 4 to 14 years, using an accelerated method. On January 1, 2014, the Company completed the acquisition of StellarOne and acquired intangible assets of $29.6 million and recorded $234.1 million of goodwill.

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 2015 and determined that there was no impairment to its goodwill or intangible assets.

Information concerning intangible assets with a finite life is presented in the following table (dollars in thousands):

	Gross Carrying Value		Accumulated Amortization		Net Carrying Value
September 30, 2015
Amortizable core deposit intangibles	$	76,185	$	50,865	$	25,320
December 31, 2014
Amortizable core deposit intangibles	$	76,185	$	44,430	$	31,755
September 30, 2014
Amortizable core deposit intangibles	$	76,185	$	42,096	$	34,089

Amortization expense of core deposit intangibles for the three and nine months ended September 30, 2015 totaled $2.1 million and $6.4 million, respectively; for the three and nine months ended September 30, 2014 totaled $2.4 million and $7.5 million, respectively; and for the year ended December 31, 2014 was $9.8 million. As of September 30, 2015, the estimated remaining amortization expense of core deposit intangibles is as follows (dollars in thousands):

For the remaining three months of 2015	$	2,011
For the year ending December 31, 2016		6,932
For the year ending December 31, 2017		5,590
For the year ending December 31, 2018		4,144
For the year ending December 31, 2019		3,093
For the year ending December 31, 2020		2,027
Thereafter		1,523
Total estimated amortization expense	$	25,320

- 25 -

6. 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, 2015 and December 31, 2014 (dollars in thousands):

	September 30,			December 31,
	2015			2014
Securities sold under agreements to repurchase	$	99,417		$	44,393
Other short-term borrowings		332,000			343,000
Total short-term borrowings	$	431,417		$	387,393
Maximum month-end outstanding balance	$	445,761		$	387,393
Average outstanding balance during the period		383,554			237,896
Average interest rate during the period		0.26	%		0.24	%
Average interest rate at end of period		0.24	%		0.31	%
Other short-term borrowings:
Federal funds purchased	$	5,000		$	-
FHLB	$	325,000		$	335,000
Other lines of credit		2,000			8,000

The Bank maintains federal funds lines with several correspondent banks; the remaining available balance was $170.0 million and $150.0 million at September 30, 2015 and December 31, 2014, respectively. 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 $1.5 billion and $1.4 billion at September 30, 2015 and December 31, 2014, 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 $7.0 million at September 30, 2015. The trust preferred capital notes currently qualify for Tier 1 capital of the Company for regulatory purposes.

	Principal		Investment(1)		Spread to 3-Month LIBOR			Rate			Maturity
Trust Preferred Capital Note - Statutory Trust I	$	22,500,000	$	696,000		2.75	%		3.08	%	6/17/2034
Trust Preferred Capital Note - Statutory Trust II		36,000,000		1,114,000		1.40	%		1.73	%	6/15/2036
VFG Limited Liability Trust I Indenture		20,000,000		619,000		2.73	%		3.06	%	3/18/2034
FNB Statutory Trust II Indenture		12,000,000		372,000		3.10	%		3.43	%	6/26/2033
Total	$	90,500,000	$	2,801,000

(1) reported as "Other Assets" within the Consolidated Balance Sheets.

As part of a prior acquisition, the Company assumed subordinated debt with terms of LIBOR plus 1.45% and a maturity date of April 2016. At September 30, 2015, the carrying value of the subordinated debt was $17.5 million, with a remaining fair value discount of $285,000.

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 in the Company’s Consolidated Balance Sheets. In accordance with ASC 470-50, Modifications and Extinguishments, the Company will amortize 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 in the Company’s Consolidated Statements of Income. Amortization expense for the three and nine months ended September 30, 2015 and 2014 was $463,000 and $1.4 million and $452,000 and $1.3 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 $60.0 million remaining at September 30, 2015 that had a remaining fair value premium of $1.4 million.

- 26 -

As of September 30, 2015, the Company had advances from the FHLB consisting of the following (dollars in thousands):

Long-term Type	Spread to 3-Month LIBOR			Interest Rate			Maturity Date	Advance Amount
Adjustable Rate Credit		0.44	%		0.77	%	8/23/2022	$	55,000
Adjustable Rate Credit		0.45	%		0.78	%	11/23/2022		65,000
Adjustable Rate Credit		0.45	%		0.78	%	11/23/2022		10,000
Adjustable Rate Credit		0.45	%		0.78	%	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		-			2.11	%	10/5/2016		25,000
Fixed Rate Hybrid		-			0.91	%	7/25/2016		15,000
								$	200,000

As of December 31, 2014, the Company had advances from the FHLB consisting of the following (dollars in thousands):

Long-term Type	Spread to 3-Month LIBOR			Interest Rate			Maturity Date	Advance Amount
Adjustable Rate Credit		0.44	%		0.70	%	8/23/2022	$	55,000
Adjustable Rate Credit		0.45	%		0.71	%	11/23/2022		65,000
Adjustable Rate Credit		0.45	%		0.71	%	11/23/2022		10,000
Adjustable Rate Credit		0.45	%		0.71	%	11/23/2022		10,000
Fixed Rate		-			3.62	%	11/28/2017		10,000
Fixed Rate		-			3.44	%	7/28/2015		10,000
Fixed Rate		-			3.75	%	7/30/2018		5,000
Fixed Rate		-			3.97	%	7/30/2018		5,000
Fixed Rate Hybrid		-			2.11	%	10/5/2016		25,000
Fixed Rate Hybrid		-			0.91	%	7/25/2016		15,000
								$	210,000

The carrying value of the loans and securities pledged as collateral for FHLB advances totaled $1.8 billion and $1.2 billion as of September 30, 2015 and December 31, 2014, respectively.

As of September 30, 2015, 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
Remaining three months in 2015	$	-	$	-	$	-	$	-		$	(466	)	$	(466	)
2016		-		17,500		40,000		271			(1,882	)		55,889
2017		-		-		10,000		170			(1,922	)		8,248
2018		-		-		10,000		(143	)		(1,970	)		7,887
2019		-		-		-		(286	)		(2,018	)		(2,304	)
2020		-		-		-		(301	)		(2,074	)		(2,375	)
Thereafter		93,301		-		140,000		(5,622	)		(3,826	)		223,853
Total Long-term borrowings	$	93,301	$	17,500	$	200,000	$	(5,911	)	$	(14,158	)	$	290,732

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7. COMMITMENTS AND CONTINGENCIES

Litigation Matters

In the ordinary course of its operations, the Company and its subsidiaries are parties to various legal proceedings. Based on the information presently available, and after consultation with legal counsel, management believes that the ultimate outcome in such proceedings, in the aggregate, will not have a material adverse effect on the business, 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 in 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 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 does not expect credit losses arising from off-balance sheet commitments to have a material adverse impact on the Company’s consolidated financial statements.

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.

UMG, a wholly owned subsidiary of the Bank, uses rate lock commitments and best efforts contracts during the origination process and for loans held for sale. These best efforts contracts are designed to mitigate UMG’s exposure to fluctuations in interest rates in connection with rate lock commitments and loans held for sale. The Company held approximately $2.1 million and $2.6 million in loans held for sale in which the related rate lock commitment had expired as of September 30, 2015 and December 31, 2014, respectively. At September 30, 2015 and December 31, 2014, the reserves associated with these loans held for sale were $102,000 and $104,000, respectively, and are reflected on the balance sheet of the mortgage segment.

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

	September 30,		December 31,
	2015		2014
Commitments with off-balance sheet risk:
Commitments to extend credit (1)	$	1,569,094	$	1,601,287
Standby letters of credit		142,848		117,988
Mortgage loan rate lock commitments		61,015		49,552
Total commitments with off-balance sheet risk	$	1,772,957	$	1,768,827
Commitments with balance sheet risk:
Loans held for sale	$	65,713	$	42,519
Total other commitments	$	1,838,670	$	1,811,346

(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 periods ended September 30, 2015 and December 31, 2014, the aggregate amount of daily average required reserves was approximately $41.4 million and $48.7 million, respectively.

The Company has approximately $24.6 million in deposits in other financial institutions, of which $10.0 million and $3.8 million serve as collateral for the cash flow hedges and loan swaps, respectively, as discussed in Note 8 “Derivatives”. The Company had approximately $9.7 million in deposits in other financial institutions that were uninsured at September 30, 2015. On an annual basis, 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 8 “Derivatives” for additional information.

In the ordinary course of business, the Company records an indemnification reserve relating to mortgage loans previously sold based on historical statistics and loss rates; as of September 30, 2015 and December 31, 2014, the Company’s indemnification reserve for such mortgage loans was $384,000 and $662,000, respectively.

8. 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 its derivatives either as hedging instruments in a qualifying hedge accounting relationship (cash flow or fair value hedge) or as a free standing derivative such as interest rate lock commitments that do not qualify for hedge accounting. The Company uses interest rate derivatives to manage its exposure to interest rate movements and add stability to interest income and expense. The Company also enters into back-to-back loan swaps to assist customers in managing the risks due to changing interest rates.

Cash Flow Hedges

As part of its cash flow hedging strategy, the Company uses interest rate swap agreements to limit the variability of expected future cash flows (primarily associated with the Company’s variable rate borrowings) by exchanging a notional amount, equal to the principal amount of the borrowings, for fixed-rate interest based on benchmarked interest rates. As of September 30, 2015, the Company had 11 interest rate swaps designated as cash flow hedges with an aggregate notional amount of $263.0 million.

The Company has entered into three interest rate swap agreements (the “trust swaps”) to mitigate the variable interest rate risk related to the trust preferred capital notes further described in Note 6 “Borrowings.” The Company receives interest of LIBOR from a counterparty and pays a weighted average fixed rate of 2.77% to the same counterparty calculated on a notional amount of $68.0 million. The original terms of the trust swaps range from three to six years.

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The Company has entered into four interest rate swap agreements (the “prime loan swaps”) to mitigate the variable interest rate risks of certain prime commercial loans. The Company receives a fixed interest rate ranging from 4.71% to 5.20% from the counterparty and pays interest based on the Wall Street Journal prime index, with a spread of up to 0.49%, to the same counterparty calculated on a notional amount of $55.0 million. One of the four prime loan swaps contains a floor rate of 4.00%. The original terms of the four prime loan swaps is six years with a fixed rate that started September 17, 2013.

The Company has entered into four interest rate swap agreements (“FHLB advance swaps”) to mitigate variable interest rate risk on certain designated variable rate FHLB borrowings. The Company receives an interest rate based on the three month LIBOR from the counterparty and pays an interest rate ranging from 3.16% to 3.46% to the same counterparty calculated on a notional amount of $140.0 million. The FHLB advance swaps are deferred starting swaps with terms of six years and five years and effective dates of February 23, 2017 and February 23, 2018, respectively.

All swaps were entered into with counterparties that 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. As of September 30, 2015, the Company had $10.0 million of cash pledged as collateral for the cash flow hedges and securities with a market value of $4.3 million pledged as collateral for the prime loan swaps and FHLB advance swaps.

Amounts receivable or payable are recognized as accrued under the terms of the agreements. In accordance with ASC 815, Derivatives and Hedging, the Company has designated the trust swaps, prime loan swaps, and FHLB advance swaps as cash flow hedges, with the effective portions of the derivatives’ unrealized gains or losses recorded as a component of other comprehensive income. The ineffective portions of the unrealized gains or losses, if any, would be recorded in interest income and interest expense in the Company’s Consolidated Statements of Income. The Company has assessed the effectiveness of each hedging relationship by comparing the changes in cash flows of the hedging instrument. Based on the Company’s assessment, its cash flow hedges are highly effective. At September 30, 2015, the fair value of the Company’s cash flow hedges was a net unrealized loss of $10.4 million, the amount the Company would have expected to pay if the contracts were terminated.

Shown below is a summary of the derivatives designated as cash flow hedges at September 30, 2015 and December 31, 2014 (dollars in thousands):

														Weighted Average
	Positions	Notional Amount		Asset		Liability		Receive Rate			Pay Rate			Life (Years)
As of September 30, 2015
Pay fixed - receive floating interest rate swaps	7	$	208,000	$	-	$	11,911		0.33	%(1)		2.77	%(1)		1.38	(1)
Receive fixed - pay floating interest rate swaps	4	$	55,000	$	1,553	$	-		4.93	%		3.55	%		3.97

(1) Due to their deferred nature, the rates and the life exclude the four FHLB advance swaps.

														Weighted Average
	Positions	Notional Amount		Asset		Liability		Receive Rate			Pay Rate			Life (Years)
As of December 31, 2014
Pay fixed - receive floating interest rate swaps	7	$	208,000	$	-	$	8,433		0.26	%(1)		2.77	%(1)		2.12	(1)
Receive fixed - pay floating interest rate swaps	4	$	55,000	$	580	$	-		4.93	%		3.55	%		4.72

(1) Due to their deferred nature, the rates and the life exclude the four FHLB advance swaps.

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Fair Value Hedge

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 applies hedge accounting in accordance with ASC 815, 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 in the Company’s Consolidated Statements of Income. The ineffective portions of the unrealized gains or losses, if any, would be recorded in interest income and interest expense in the Company’s Consolidated Statements of Income. The Company uses statistical regression analysis 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.

As of September 30, 2015, the Company had three swaps constituting fair value hedges, whereby the Company pays a fixed interest rate ranging from 3.23% to 3.53% to the counterparty and receives interest of one month LIBOR plus a spread of up to 2.13% from the same counterparty calculated on an aggregate notional amount of $53.6 million with terms ranging from 15 to 17 years. At December 31, 2014, the Company had one fair value hedge with an aggregate notional amount of $38.3 million. At September 30, 2015, the fair value of the Company’s fair value hedges was an unrealized loss of $1.4 million, the amount the Company would have expected to pay if the contract was terminated; the liability is reported in “Other Liabilities” in the Company’s Consolidated Balance Sheets. At September 30, 2015, the aggregate notional amount of the hedged items was $53.6 million with a fair value of $1.4 million. At December 31, 2014, the Company had one hedged item with an aggregate notional amount and fair value of $38.3 million. The Company’s fair value hedges continue to be highly effective and had no material impact 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 counterparties 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” in the Company’s Consolidated Balance Sheets. As of September 30, 2015, the Company had cash and securities with a market value of $6.6 million pledged as collateral for the loan swaps.

Shown below is a summary regarding loan swap derivative activities at September 30, 2015 and December 31, 2014 (dollars in thousands):

														Weighted Average
	Positions	Notional Amount		Asset		Liability		Receive Rate			Pay Rate			Life (Years)
As of September 30, 2015
Receive fixed - pay floating interest rate swaps	35	$	141,055	$	5,470	$	-		4.26	%		2.45	%		6.84
Pay fixed - receive floating interest rate swaps	35	$	141,055	$	-	$	5,470		2.45	%		4.26	%		6.84

														Weighted Average
	Positions	Notional Amount		Asset		Liability		Receive Rate			Pay Rate			Life (Years)
As of December 31, 2014
Receive fixed - pay floating interest rate swaps	30	$	122,793	$	2,681	$	-		4.29	%		2.50	%		7.14
Pay fixed - receive floating interest rate swaps	30	$	122,793	$	-	$	2,681		2.50	%		4.29	%		7.14

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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 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 as of September 30, 2015 was $1.3 million and is reported as a component of “Other Assets” in the Company’s Consolidated Balance Sheets; the fair value of the Company’s best efforts forward delivery commitments was $544,000 and is recorded as a component of “Other Liabilities” in the Company’s Consolidated Balance Sheets. Any impact to income is recorded in current period earnings as a component of “Gain on sale of mortgage loans, net of commissions” in the Company’s Consolidated Statements of Income. The aggregate notional amount of these derivatives was $61.0 million and $49.6 million at September 30, 2015 and December 31, 2014, respectively.

9. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The change in accumulated other comprehensive income (loss) for the three and nine months ended September 30, 2015 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, 2015	$	8,738	$	5,043		$	(4,552	)	$	9,229
Other comprehensive income (loss)		1,250		(308	)		(2,328	)		(1,386	)
Amounts reclassified from accumulated other comprehensive income		146		-			157			303
Net current period other comprehensive income (loss)		1,396		(308	)		(2,171	)		(1,083	)
Balance - September 30, 2015	$	10,134	$	4,735		$	(6,723	)	$	8,146

	Unrealized Gains (Losses) on AFS Securities			Unrealized Gain for AFS Securities Transferred to HTM			Change in Fair Value of Cash Flow Hedges			Total
Balance - December 31, 2014	$	17,439		$	-		$	(5,184	)	$	12,255
Unrealized gain transferred from AFS to HTM		(5,251	)		5,251			-			-
Other comprehensive income (loss)		(1,812	)		(516	)		(2,009	)		(4,337	)
Amounts reclassified from accumulated other comprehensive income		(242	)		-			470			228
Net current period other comprehensive income (loss)		(2,054	)		(516	)		(1,539	)		(4,109	)
Balance - September 30, 2015	$	10,134		$	4,735		$	(6,723	)	$	8,146

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The change in accumulated other comprehensive income (loss) for the three and nine months ended September 30, 2014 is summarized as follows, net of tax (dollars in thousands):

	Unrealized Gains (Losses) on AFS Securities			Change in Fair Value of Cash Flow Hedge			Total
Balance - June 30, 2014	$	14,202		$	(3,321	)	$	10,881
Other comprehensive income (loss)		1,798			(228	)		1,570
Amounts reclassified from accumulated other comprehensive income		(647	)		164			(483	)
Net current period other comprehensive income (loss)		1,151			(64	)		1,087
Balance - September 30, 2014	$	15,353		$	(3,385	)	$	11,968

	Unrealized Gains (Losses) on AFS Securities			Change in Fair Value of Cash Flow Hedges			Total
Balance - December 31, 2013	$	1,192		$	(3,382	)	$	(2,190	)
Other comprehensive income (loss)		14,843			(431	)		14,412
Amounts reclassified from accumulated other comprehensive income		(682	)		428			(254	)
Net current period other comprehensive income (loss)		14,161			(3	)		14,158
Balance - September 30, 2014	$	15,353		$	(3,385	)	$	11,968

Reclassifications of unrealized gains (losses) on available for sale securities are reported in 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 $75,000 and $672,000 for the three and nine months ended September 30, 2015, respectively, related to the sale of securities. Excluding OTTI recovery of $400,000 in the second quarter of 2014, the Company reported net gains of $995,000 and $1.0 million for the three and nine months ended September 30, 2014, respectively, related to the sale of securities. The Company recorded $300,000 in other-than-temporary impairment in the current quarter on a municipal security in the available for sale portfolio. The tax effect of these transactions during the three and nine months ended September 30, 2015 and 2014 were $79,000 and $130,000 and $348,000 and $367,000, respectively, which amounts 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 in 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 $241,000 and $723,000 and $253,000 and $659,000 for the three and nine months ended September 30, 2015 and 2014, respectively. The tax effect of these transactions during the three and nine months ended September 30, 2015 and 2014 were $84,000 and $253,000 and $89,000 and $231,000, respectively, which amounts were included as a component of income tax expense.

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10. 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 8 “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. However, this value 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, 2015 and approximately 90% as of December 31, 2014. As of September 30, 2015, the interest rate lock commitments are recorded as a component of “Other Assets” and the best effort forward delivery commitments are recorded as a component of “Other Liabilities” 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 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, 2015 and December 31, 2014.

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.

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The following table presents the balances of financial assets and liabilities measured at fair value on a recurring basis at September 30, 2015 and December 31, 2014 (dollars in thousands):

	Fair Value Measurements at September 30, 2015 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:
U.S. government and agency securities	$	-	$	8,411	$	-	$	8,411
Obligations of states and political subdivisions		-		249,893		-		249,893
Corporate and other bonds		-		72,462		-		72,462
Mortgage-backed securities		-		547,717		-		547,717
Other securities		-		10,209		-		10,209
Derivatives:
Interest rate swap		-		5,470		-		5,470
Cash flow hedges		-		1,553		-		1,553
Interest rate lock commitments		-		-		1,321		1,321
LIABILITIES
Derivatives:
Interest rate swap	$	-	$	5,470	$	-	$	5,470
Cash flow hedges		-		11,911		-		11,911
Best effort forward delivery commitments		-		-		544		544

	Fair Value Measurements at December 31, 2014 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:
U.S. government and agency securities	$	-	$	8,454	$	-	$	8,454
Obligations of states and political subdivisions		-		445,647		-		445,647
Corporate bonds		-		78,680		-		78,680
Mortgage-backed securities		-		559,329		-		559,329
Other securities		-		10,004		-		10,004
Derivatives:
Interest rate swap		-		2,681		-		2,681
Cash flow hedges		-		580		-		580
Interest rate lock commitments		-		-		513		513
LIABILITIES
Derivatives:
Interest rate swap	$	-	$	2,681	$	-	$	2,681
Cash flow hedges		-		8,433		-		8,433

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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.

Loans held for sale

Loans held for sale are carried at the lower of cost or market value. These loans currently consist of residential loans originated for sale in the secondary market and the credit card portfolio that was transferred from loans held for investment during the quarter. See Note 13 “Subsequent Events” for additional information. 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). As such, the Company records any fair value adjustments on a nonrecurring basis. Gains and losses on the sale of loans are recorded within the mortgage segment and are reported on a separate line item in the Company’s Consolidated Statements of Income.

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). 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.

Total valuation expenses related to OREO properties for the three and nine months ended September 30, 2015 totaled $473,000 and $1.8 million, respectively, and for the three and nine months ended September 30, 2014 totaled $6.2 million and $7.3 million, respectively.

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The following tables summarize the Company’s financial assets that were measured at fair value on a nonrecurring basis at September 30, 2015 and December 31, 2014 (dollars in thousands):

	Fair Value Measurements at September 30, 2015 using
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	Level 1		Level 2		Level 3		Balance
ASSETS
Loans held for sale	$	-	$	65,713	$	-	$	65,713
Impaired loans		-		-		10,416		10,416
Other real estate owned		-		-		22,094		22,094

	Fair Value Measurements at December 31, 2014 using
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	Level 1		Level 2		Level 3		Balance
ASSETS
Loans held for sale	$	-	$	42,519	$	-	$	42,519
Impaired loans		-		-		15,797		15,797
Other real estate owned		-		-		28,118		28,118

The following table displays quantitative information about Level 3 Fair Value Measurements at September 30, 2015 (dollars in thousands):

	Fair Value Measurements at September 30, 2015
	Fair Value		Valuation Technique(s)	Unobservable Inputs	Weighted Average
ASSETS
Impaired Loans	$	10,416	Market comparables	Discount applied to market comparables (1)		7	%
Other real estate owned		22,094	Market comparables	Discount applied to market comparables (1)		21	%
Total	$	32,510

⁽¹⁾ A discount percentage (in addition to expected selling costs) is applied based on the age of independent appraisals, current market conditions, and experience within the local market.

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The following table displays quantitative information about Level 3 Fair Value Measurements at December 31, 2014 (dollars in thousands):

	Fair Value Measurements at December 31, 2014
	Fair Value		Valuation Technique(s)	Unobservable Inputs	Weighted Average
ASSETS
Impaired Loans	$	15,797	Market comparables	Discount applied to market comparables (1)		13	%
Other real estate owned		28,118	Market comparables	Discount applied to market comparables (1)		32	%
Total	$	43,915

⁽¹⁾ A discount percentage (in addition to expected selling costs) is applied based on the age of independent appraisals, current market conditions, and experience within the local market.

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 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, 2015 and December 31, 2014.

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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 bank owned life insurance 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’s derivative pricing functions.

Accrued interest

The carrying amounts of accrued interest approximate fair value.

Commitments to extend credit and standby letters of credit

The fair value of commitments is estimated using the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the present creditworthiness of the counterparties. For fixed-rate loan commitments, fair value also considers the difference between current levels of interest rates and the committed rates. The fair value of letters of credit is based on fees currently charged for similar agreements or on the estimated cost to terminate them or otherwise settle the obligations with the counterparties at the reporting date. At September 30, 2015 and December 31, 2014, the fair value of loan commitments and standby letters of credit was immaterial.

- 40 -

The carrying values and estimated fair values of the Company’s financial instruments at September 30, 2015 and December 31, 2014 are as follows (dollars in thousands):

			Fair Value Measurements at September 30, 2015 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	$	179,194	$	179,194	$	-	$	-	$	179,194
Securities available for sale		888,692		-		888,692		-		888,692
Held to maturity securities		199,363		-		200,319		-		200,319
Restricted stock		52,721		-		52,721		-		52,721
Loans held for sale		65,713		-		65,713		-		65,713
Net loans		5,510,352		-		-		5,536,118		5,536,118
Derivatives:
Interest rate lock commitments		1,321		-		-		1,321		1,321
Interest rate swap		5,470		-		5,470		-		5,470
Cash flow hedges		1,553		-		1,553		-		1,553
Accrued interest receivable		21,488		-		21,488		-		21,488
Bank owned life insurance		142,433		-		142,433		-		142,433
LIABILITIES
Deposits	$	5,818,853	$	-	$	5,817,840	$	-	$	5,817,840
Borrowings		722,149		-		699,804		-		699,804
Accrued interest payable		1,610		-		1,610		-		1,610
Derivatives:
Interest rate swap		5,470		-		5,470		-		5,470
Cash flow hedges		11,911		-		11,911		-		11,911
Best effort forward delivery commitments		544		-		-		544		544

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			Fair Value Measurements at December 31, 2014 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	$	133,260	$	133,260	$	-	$	-	$	133,260
Securities available for sale		1,102,114		-		1,102,114		-		1,102,114
Restricted stock		54,854		-		54,854		-		54,854
Loans held for sale		42,519		-		42,519		-		42,519
Net loans		5,313,612		-		-		5,340,759		5,340,759
Derivatives:
Interest rate lock commitments		513		-		-		513		513
Interest rate swap		2,681		-		2,681		-		2,681
Cash flow hedges		580		-		580		-		580
Accrued interest receivable		21,775		-		21,775		-		21,775
Bank owned life insurance		139,005		-		139,005		-		139,005
LIABILITIES
Deposits	$	5,638,770	$	-	$	5,637,929	$	-	$	5,637,929
Borrowings		686,935		-		666,224		-		666,224
Accrued interest payable		1,899		-		1,899		-		1,899
Derivatives:
Interest rate swap		2,681		-		2,681		-		2,681
Cash flow hedges		8,433		-		8,433		-		8,433

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. However, borrowers with fixed rate obligations 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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11. 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.

There were approximately 51,179 and 155,433 shares underlying anti-dilutive awards for the three months ended September 30, 2015 and 2014, respectively, and there were approximately 54,475 and 130,499 shares underlying anti-dilutive awards for the nine months ended September 30, 2015 and 2014, respectively. Anti-dilutive awards were excluded from the calculation of diluted EPS.

The following is a reconciliation of the denominators of the basic and diluted EPS computations for the three and nine months ended September 30, 2015 and 2014 (in thousands except per share data):

	Net Income Available to Common Shareholders (Numerator)		Weighted Average Common Shares (Denominator)		Per Share Amount
For the three months ended September 30, 2015
Net income, basic	$	18,216		45,087	$	0.40
Add: potentially dilutive common shares - stock awards		-		84		-
Diluted	$	18,216		45,171	$	0.40
For the three months ended September 30, 2014
Net income, basic	$	14,817		45,649	$	0.32
Add: potentially dilutive common shares - stock awards		-		89		-
Diluted	$	14,817		45,738	$	0.32
For the nine months ended September 30, 2015
Net income, basic	$	49,264		45,107	$	1.09
Add: potentially dilutive common shares - stock awards		-		82		-
Diluted	$	49,264		45,189	$	1.09
For the nine months ended September 30, 2014
Net income, basic	$	37,199		46,269	$	0.80
Add: potentially dilutive common shares - stock awards		-		98		-
Diluted	$	37,199		46,367	$	0.80

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12. 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 124 retail locations in Virginia. 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 business is a primarily fee-based business while the bank is driven principally by net interest income. The 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, 2015 was the three month LIBOR rate plus 0.15% with no floor. During 2014, the interest rate on the warehouse line of credit was the three month LIBOR rate plus 1.5% with a floor of 2.0% through May 31, 2014; beginning on June 1, 2014, the interest rate was one month LIBOR rate plus 1.5% 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, 2015 and 2014 is as follows (dollars in thousands):

UNION BANKSHARES CORPORATION AND SUBSIDIARIES

SEGMENT FINANCIAL INFORMATION

	Community Bank		Mortgage			Eliminations			Consolidated
Three Months Ended September 30, 2015
Net interest income	$	63,075	$	369		$	-		$	63,444
Provision for credit losses		2,000		62			-			2,062
Net interest income after provision for credit losses		61,075		307			-			61,382
Noninterest income		14,287		2,608			(170	)		16,725
Noninterest expenses		50,674		2,821			(170	)		53,325
Income (loss) before income taxes		24,688		94			-			24,782
Income tax expense (benefit)		6,531		35			-			6,566
Net income (loss)	$	18,157	$	59		$	-		$	18,216
Total assets	$	7,588,606	$	62,127		$	(56,420	)	$	7,594,313
Three Months Ended September 30, 2014
Net interest income	$	64,162	$	317		$	-		$	64,479
Provision for credit losses		1,800		-			-			1,800
Net interest income after provision for credit losses		62,362		317			-			62,679
Noninterest income		13,884		2,604			(170	)		16,318
Noninterest expenses		55,680		3,903			(170	)		59,413
Income (loss) before income taxes		20,566		(982	)		-			19,584
Income tax expense (benefit)		5,121		(354	)		-			4,767
Net income (loss)	$	15,445	$	(628	)	$	-		$	14,817
Total assets	$	7,188,596	$	41,857		$	(36,570	)	$	7,193,883
Nine Months Ended September 30, 2015
Net interest income	$	188,240	$	989		$	-		$	189,229
Provision for credit losses		7,450		111			-			7,561
Net interest income after provision for credit losses		180,790		878			-			181,668
Noninterest income		40,658		7,844			(512	)		47,990
Noninterest expenses		154,011		8,906			(512	)		162,405
Income (loss) before income taxes		67,437		(184	)		-			67,253
Income tax expense (benefit)		18,060		(71	)		-			17,989
Net income (loss)	$	49,377	$	(113	)	$	-		$	49,264
Total assets	$	7,588,606	$	62,127		$	(56,420	)	$	7,594,313
Nine Months Ended September 30, 2014
Net interest income	$	191,090	$	863		$	-		$	191,953
Provision for credit losses		3,300		-			-			3,300
Net interest income after provision for credit losses		187,790		863			-			188,653
Noninterest income		38,964		7,932			(511	)		46,385
Noninterest expenses		173,268		12,908			(511	)		185,665
Income (loss) before income taxes		53,486		(4,113	)		-			49,373
Income tax expense (benefit)		13,678		(1,504	)		-			12,174
Net income (loss)	$	39,808	$	(2,609	)	$	-		$	37,199
Total assets	$	7,188,596	$	41,857		$	(36,570	)	$	7,193,883

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13. SUBSEQUENT EVENTS

Sale of Credit Card Portfolio

During the third quarter of 2015, the Company concluded that it met the pertinent criteria for transferring the credit card portfolio from loans held for investment to loans held for sale.

On October 16, 2015, the Company entered into an agreement to sell the credit card portfolio, approximately $26.4 million in outstanding balances, and enter into an outsourced partnership solution with Elan Financial Services. The company sold these loans at a premium which is not expected to have a material impact on the Company’s Consolidated Statements of Income. As part of the agreement, the Company will continue to share in interchange fee income and finance charges.

Share Repurchase Authorization

On October 29, 2015, the Company’s Board of Directors authorized a share repurchase program to purchase up to $25.0 million worth of the Company’s common stock on the open market or in privately negotiated transactions. The repurchase program is authorized through December 31, 2016.

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Review Report of Independent Registered Public Accounting Firm

The Shareholders 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, 2015, and the related consolidated statements of income and comprehensive income for the three- and nine-month periods ended September 30, 2015 and the related consolidated statements of changes in stockholders’ equity and cash flows for the nine-month period ended September 30, 2015. These financial statements are the responsibility of the Company's management. The consolidated financial statements of the Company as of September 30, 2014, and for the three- and nine-month periods then ended, were reviewed by other auditors whose report dated November 5, 2014 stated that based on their review they were not aware of any material modifications that should be made to those statements for them to be in conformity with U.S. generally accepted accounting principles. The consolidated balance sheet of the Company as of December 31, 2014, and the related consolidated statements of income, comprehensive income, shareholders' equity and cash flows for the year then ended (not presented herein) were audited by other auditors whose report dated February 27, 2015 expressed an unqualified opinion on those statements.

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 2015 consolidated financial statements referred to above for them to be in conformity with U.S. generally accepted accounting principles.

/s/ Ernst & Young LLP

Richmond, Virginia

November 5, 2015

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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 Annual Report on Form 10-K and management’s discussion and analysis for the year ended December 31, 2014. 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, 2015 and 2014 are not necessarily indicative of results that may be attained for any other period. Amounts are rounded for presentation purposes while 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.  Such statements are often characterized by the use of qualified words (and their derivatives) such as “expect,” “believe,” “estimate,” “plan,” “project,” “anticipate,” “intend,” “will,” 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 and changes in: general economic and bank industry conditions, the interest rate environment, legislative and regulatory requirements, competitive pressures, new products and delivery systems, inflation, stock and bond markets, accounting standards or interpretations of existing standards, mergers and acquisitions, technology, and consumer spending and savings habits. More information is available on the Company’s website, http://investors.bankatunion.com and on the Securities and Exchange Commission’s website, www.sec.gov. The information on the Company’s website is not a part of this Form 10-Q. 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

General

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 more critical accounting and reporting policies include the Company’s accounting for the allowance for loan losses, mergers and acquisitions, 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 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2014.

The following is a summary of the Company’s critical accounting policies that are highly dependent on estimates, assumptions, and judgments.

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Allowance for Loan Losses

The provision for loan losses charged to operations is an amount sufficient to bring the allowance for loan losses to an estimated balance that management considers adequate to absorb incurred losses in the portfolio. Loans are charged against the allowance when management believes the collectability of the principal is unlikely. Recoveries of amounts previously charged-off are credited to the allowance. Management’s determination of the adequacy of the allowance is based on an evaluation of the composition of the loan portfolio, the value and adequacy of collateral, current economic conditions, historical loan loss experience, and other risk factors. Management believes that the allowance for loan losses is adequate. While management uses available information to recognize losses on loans, future additions to the allowance may be necessary based on changes in economic conditions, particularly those affecting real estate values. In addition, regulatory agencies, as an integral part of their examination process, periodically review the Company’s allowance for loan losses. Such agencies may require the Company to make adjustments to the allowance based on their judgments about information available to them at the time of their examination.

The Company performs regular credit reviews of the loan portfolio to review the credit quality and adherence to its underwriting standards. The credit reviews consist of reviews by its Loan Review group and reviews performed by an independent third party. Upon origination, each commercial loan is assigned a risk rating ranging from one to nine, with loans closer to one having less risk. This risk rating scale is the Company’s primary credit quality indicator. Consumer loans are generally not risk rated; the primary credit quality indicator for this portfolio segment is delinquency status. The Company has various committees that review and ensure that the allowance for loan losses methodology is in accordance with U.S. GAAP and loss factors used appropriately reflect the risk characteristics of the loan portfolio.

The Company’s ALL consists of specific and general components.

Specific Reserve Component – The specific reserve component relates to impaired loans. A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Upon being identified as impaired, for loans not considered to be collateral dependent, an allowance is established when the discounted cash flows of the impaired loan are lower than the carrying value of that loan. Nonaccrual loans under $100,000 and other impaired loans under $500,000 are aggregated based on similar risk characteristics. The level of credit impairment within the pool(s) is determined based on historical loss factors for loans with similar risk characteristics, taking into consideration environmental factors specifically related to the underlying pool. The impairment of collateral dependent loans is measured based on the fair value of the underlying collateral (based on independent appraisals), less selling costs, compared to the carrying value of the loan. If the Company determines that the value of an impaired collateral dependent loan is less than the recorded investment in the loan, it either recognizes an impairment reserve as a specific component to be provided for in the allowance for loan losses or charges off the deficiency if it is determined that such amount represents a confirmed loss. Typically, a loss is confirmed when the Company is moving towards foreclosure (or final disposition) of the underlying collateral, the collateral deficiency has not improved for two consecutive quarters, or when there is a payment default of 180 days, whichever occurs first.

The Company obtains independent appraisals from a pre-approved list of independent, third party appraisal firms located in the market in which the collateral is located. The Company’s approved appraiser list is continuously maintained to ensure the list only includes such appraisers that have the experience, reputation, character, and knowledge of the respective real estate market. At a minimum, it is ascertained that the appraiser is currently licensed in the state in which the property is located, experienced in the appraisal of properties similar to the property being appraised, has knowledge of current real estate market conditions and financing trends, and is reputable. The Company’s internal Real Estate Valuation Group, which reports to the Risk and Compliance Group, performs either a technical or administrative review of all appraisals obtained. A technical review will ensure the overall quality of the appraisal, while an administrative review ensures that all of the required components of an appraisal are present. Generally, independent appraisals are updated every 12 to 24 months or more frequently as necessary. The Company’s impairment analysis documents the date of the appraisal used in the analysis, whether the officer preparing the report deems it current, and, if not, allows for internal valuation adjustments with justification. Adjustments to appraisals generally include discounts for continued market deterioration subsequent to the appraisal date. Any adjustments from the appraised value to carrying value are documented in the impairment analysis, which is reviewed and approved by senior credit administration officers and the Special Assets Loan Committee. External appraisals are the primary source to value collateral dependent loans; however, the Company may also utilize values obtained through broker price opinions or other valuations sources. These alternative sources of value are used only if deemed to be more representative of value based on updated information regarding collateral resolution. Impairment analyses are updated, reviewed, and approved on a quarterly basis at or near the end of each reporting period.

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General Reserve Component – The general reserve component covers non-impaired loans and is derived from an estimate of credit losses adjusted for various environmental factors applicable to both commercial and consumer loan segments. The estimate of credit losses is a function of the product of net charge-off historical loss experience to the loan balance of the loan portfolio averaged during the preceding twelve quarters, as management has determined this to adequately reflect the losses inherent in the loan portfolio. The environmental factors consist of national, local, and portfolio characteristics and are applied to both the commercial and consumer segments. The following table shows the types of environmental factors management considers:

ENVIRONMENTAL FACTORS
Portfolio	National	Local
Experience and ability of lending team	Interest rates	Level of economic activity
Depth of lending team	Inflation	Unemployment
Pace of loan growth	Unemployment	Competition
Franchise expansion	Gross domestic product	Military/government impact
Execution of loan risk rating process	General market risk and other concerns
Degree of oversight / underwriting standards	Legislative and regulatory environment
Value of real estate serving as collateral
Delinquency levels in portfolio
Charge-off levels in portfolio
Credit concentrations / nature and volume of the portfolio

Impaired Loans

A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. A loan that is classified substandard or worse is considered impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed. Impairment is measured on a loan-by-loan basis by either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price, or the fair value of the collateral if the loan is collateral dependent. The impaired loan policy is the same for each of the seven classes within the commercial portfolio segment.

For the consumer loan portfolio segment, large groups of smaller balance homogeneous loans are collectively evaluated for impairment. This evaluation subjects each of the Company’s homogenous pools to a historical loss factor derived from net charge-offs experienced over the preceding twelve quarters. The Company applies payments received on impaired loans to principal and interest based on the contractual terms until they are placed on nonaccrual status. All payments received are then applied to reduce the principal balance and recognition of interest income is terminated.

Business Combinations and Acquired Loans

The Company’s merger and acquisition strategy focuses on high-growth areas with strong market demographics and targets organizations that have a comparable corporate culture, strong performance, and good asset quality, among other factors.

Business combinations are accounted for under ASC 805, Business Combinations, using the acquisition method of accounting. The acquisition method of accounting requires an acquirer to recognize the assets acquired and the liabilities assumed at the acquisition date measured at their fair values as of that date. To determine the fair values, the Company will continue to rely on third party valuations, such as appraisals, or internal valuations based on discounted cash flow analyses or other valuation techniques. Under the acquisition method of accounting, the Company will identify the acquirer and the closing date and apply applicable recognition principles and conditions. If they are necessary to implement its plan to exit an activity of an acquiree, costs that the Company expects, but is not obligated, to incur in the future are not liabilities at the acquisition date, nor are costs to terminate the employment of or relocate an acquiree’s employees. The Company does not recognize these costs as part of applying the acquisition method. Instead, the Company recognizes these costs as expenses in its post-combination financial statements in accordance with other applicable U.S. GAAP.

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Acquisition-related costs are incremental costs the Company incurs to effect a business combination. Those costs include advisory, legal, accounting, valuation, and other professional or consulting fees. Some other examples of acquisition-related costs to the Company include systems conversions, integration planning consultants, and advertising costs. The Company will account for acquisition-related costs as expenses in the periods in which the costs are incurred and the services are received, with one exception. The costs to issue debt or equity securities will be recognized in accordance with other applicable U.S. GAAP. These acquisition-related costs are included within the Consolidated Statements of Income classified within the noninterest expense caption.

Loans acquired in a business combination are recorded at fair value on the date of the acquisition. Loans acquired with deteriorated credit quality are accounted for in accordance with ASC 310-30, Receivables – Loans and Debt Securities Acquired with Deteriorated Credit Quality, and are initially measured at fair value, which includes estimated future credit losses expected to be incurred over the life of the loans. Loans acquired in business combinations with evidence of credit deterioration are not considered to be impaired unless they deteriorate further subsequent to the acquisition. Certain acquired loans, including performing loans and revolving lines of credit (consumer and commercial), are accounted for in accordance with ASC 310-20, Receivables – Nonrefundable Fees and Other Costs, where the discount is accreted through earnings based on estimated cash flows over the estimated life of the loan.

Goodwill and Intangible Assets

The Company follows ASC 350, Intangibles – Goodwill and Other, which prescribes the accounting for goodwill and intangible assets subsequent to initial recognition. Goodwill resulting from business combinations prior to January 1, 2009 represents the excess of the purchase price over the fair value of the net assets of businesses acquired. Goodwill resulting from business combinations after January 1, 2009, is generally determined as the excess of the fair value of the consideration transferred, plus the fair value of any noncontrolling interests in the acquiree, over the fair value of the net assets acquired and liabilities assumed as of the acquisition date. Goodwill and intangible assets acquired in a purchase business combination and determined to have an indefinite useful life are not amortized, but tested for impairment at least annually or more frequently if events and circumstances exists that indicate that a goodwill impairment test should be performed. The Company has selected April 30th as the date to perform the annual impairment test. Intangible assets with definite useful lives are amortized over their estimated useful lives, which range from 4 to 14 years, to their estimated residual values. Goodwill is the only intangible asset with an indefinite life on the Company’s Consolidated Balance Sheets.

The Company performed its annual impairment testing in the second quarter of 2015 and determined that there was no impairment to its goodwill or intangible assets.

Long-lived assets, including purchased intangible assets subject to amortization, such as the core deposit intangible asset, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized in the amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed of would be separately presented in the balance sheet and reported at the lower of the carrying amount or fair value less costs to sell, and are no longer depreciated. Management concluded that no circumstances indicating an impairment of these assets existed as of the balance sheet date.

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 124 bank branches and 202 ATMs. Non-bank affiliates of the holding company include: Union Investment Services, Inc., which provides full brokerage services; Union Mortgage Group, Inc., which provides a full line of mortgage products; and Union Insurance Group, LLC, which offers various lines of insurance products.

The Company announced that, effective February 16, 2015, it had changed its subsidiary bank’s name from “Union First Market Bank” to “Union Bank & Trust”.

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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, 2015, the Company reported net income of $18.2 million and earnings per share of $0.40. These results represent an increase of $3.4 million, or 22.9%, from $14.8 million in earnings from the third quarter of 2014. Excluding after-tax acquisition-related expenses of $1.1 million incurred during the third quarter of 2014, operating earnings⁽¹⁾ increased $2.3 million, or 14.4%, primarily a result of lower operating expenses. Operating earnings per share⁽¹⁾ were $0.40 and $0.35 for the quarters ended September 30, 2015 and 2014, respectively.

For the nine months ended September 30, 2015, the Company reported net income of $49.3 million and earnings per share of $1.09. These results represent an increase of $12.1 million, or 32.4%, from $37.2 million for the first nine months of 2014. Excluding after-tax acquisition-related expenses of $13.2 million incurred during the first nine months of 2014, operating earnings⁽¹⁾ declined $1.1 million, primarily a result of an increase in provision for loan losses, and lower net interest income partially offset by lower noninterest expenses. Operating earnings per share⁽¹⁾ were $1.09 for the nine months ended September 30, 2015 and 2014, respectively.

· Net income for the third quarter of 2015 for the community bank segment was $18.2 million, or $0.40 per share, compared to operating earnings⁽¹⁾ of $16.5 million, or $0.36 per share, in the third quarter of 2014. Net income for the community bank segment for the nine months ended September 30, 2015 was $49.4 million, or $1.09 per share.

· The mortgage segment reported net income of $59,000 for the third quarter of 2015, an improvement of $687,000 from a loss of $628,000 in the third quarter of 2014. The mortgage segment reported a net loss of $113,000 for the first nine months of 2015, an improvement of $2.5 million from a loss of $2.6 million in the first nine months of 2014. The improvement was largely a result of cost control initiatives in personnel costs, loan production costs, and other operating expenses.

· During the third quarter of 2015, the Company transferred its credit card portfolio, totaling $26.4 million at September 30, 2015, from loans held for investment to loans held for sale, resulting from management’s decision to sell the loans in the fourth quarter of 2015.

· Excluding credit cards from the prior period loan portfolio, loans grew $396.4 million, or 7.7%, from September 30, 2014, while year-to-date average loan balances increased $204.6 million, or 3.9%, from September 30, 2014. Period end loan balances grew $221.9 million, or 5.6% (annualized), from December 31, 2014.

· Deposits grew $184.8 million, or 3.3%, from September 30, 2014, while year-to-date average deposit balances increased $41.5 million, or 0.7%, from September 30, 2014. Period end deposit balances grew $180.1 million, or 4.3% (annualized), from December 31, 2014.

· Asset quality continued to improve due to reductions in nonperforming assets and past due loan levels.

⁽¹⁾ These supplementary measures are provided because the Company believes they may be valuable to investors. For a reconciliation of the non-GAAP measures operating earnings, EPS, ROA, ROTCE, and efficiency ratio, see “NON-GAAP MEASURES” included in this Item 2.

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Net Interest Income

	For the Three Months Ended
	September 30,
	2015			2014			Change
	(Dollars in thousands)
Average interest-earning assets	$	6,751,654		$	6,423,743		$	327,911
Interest income (FTE)	$	72,287		$	71,649		$	638
Yield on interest-earning assets		4.25	%		4.43	%		(18	)bps
Core yield on interest-earning assets (1)		4.17	%		4.37	%		(20	)bps
Average interest-bearing liabilities	$	5,162,928		$	5,015,129		$	147,799
Interest expense	$	6,556		$	5,112		$	1,444
Cost of interest-bearing liabilities		0.50	%		0.40	%		10	bps
Core cost of interest-bearing liabilities (1)		0.52	%		0.58	%		(6	)bps
Cost of funds		0.39	%		0.32	%		7	bps
Core cost of funds (1)		0.40	%		0.45	%		(5	)bps
Net Interest Income (FTE)	$	65,731		$	66,537		$	(806	)
Net Interest Margin (FTE)		3.86	%		4.11	%		(25	)bps
Core Net Interest Margin (FTE) (1)		3.77	%		3.92	%		(15	)bps

(1) Core metrics exclude the impact of acquisition accounting accretion and amortization adjustments in net interest income.

For the third quarter of 2015, tax-equivalent net interest income was $65.7 million, a decrease of $806,000 from the third quarter of 2014, primarily driven by the impact of declines in net interest margin and lower net accretion related to acquisition accounting, partially offset by lower interest expense as growth in low cost deposits outpaced the net run-off in higher cost certificates of deposit. Net accretion related to acquisition accounting decreased $1.5 million from the third quarter of 2014 to $1.6 million in the third quarter of 2015. The third quarter 2015 tax-equivalent net interest margin decreased by 25 basis points to 3.86% compared to 4.11% in the comparable quarter in the prior year. Core tax-equivalent net interest margin (which excludes the 9 basis point impact of acquisition accounting accretion in the third quarter of 2015 and 19 basis points in the third quarter of 2014) decreased by 15 basis points to 3.77% in the third quarter of 2015 from 3.92% in the third quarter of 2014. The decrease in core tax-equivalent net interest margin was driven by the 20 basis point decline in interest-earning asset yields outpacing the 5 basis point reduction in cost of funds. The decline in interest-earning asset yields was primarily driven by lower loan yields, as new and renewed loans were originated and re-priced at lower rates.

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	For the Nine Months Ended
	September 30,
	2015			2014			Change
	(Dollars in thousands)
Average interest-earning assets	$	6,668,812		$	6,438,924		$	229,888
Interest income (FTE)	$	214,195		$	212,556		$	1,639
Yield on interest-earning assets		4.29	%		4.41	%		(12	)bps
Core yield on interest-earning assets (1)		4.23	%		4.41	%		(18	)bps
Average interest-bearing liabilities	$	5,131,338		$	5,072,398		$	58,940
Interest expense	$	18,225		$	14,481		$	3,744
Cost of interest-bearing liabilities		0.47	%		0.38	%		9	bps
Core cost of interest-bearing liabilities (1)		0.53	%		0.59	%		(6	)bps
Cost of funds		0.36	%		0.30	%		6	bps
Core cost of funds (1)		0.41	%		0.46	%		(5	)bps
Net Interest Income (FTE)	$	195,970		$	198,075		$	(2,105	)
Net Interest Margin (FTE)		3.93	%		4.11	%		(18	)bps
Core Net Interest Margin (FTE) (1)		3.82	%		3.95	%		(13	)bps

  (1) Core metrics exclude the impact of acquisition accounting accretion and amortization adjustments in net interest income.

For the nine months ended September 30, 2015, tax-equivalent net interest income was $196.0 million, a decrease of $2.1 million from the same period of 2014, primarily driven by the impact of declines in net interest margin and lower net accretion related to acquisition accounting. Net accretion related to acquisition accounting decreased $2.6 million from the first nine months of 2014 to $5.3 million in the first nine months of 2015. The year-to-date tax-equivalent net interest margin decreased by 18 basis points to 3.93% compared to 4.11% in the prior year. Core tax-equivalent net interest margin (which excludes the 11 basis point impact of acquisition accounting in 2015 and 16 basis points in 2014) decreased by 13 basis points from 3.95% for the nine months ended September 30, 2014 to 3.82% for the nine months ended September 30, 2015. The decrease in core tax-equivalent net interest margin was driven by the 18 basis point decline in interest-earning asset yields outpacing the 5 basis point reduction in the cost of funds. The decline in interest-earning asset yields was primarily driven by lower loan yields, as new and renewed loans were originated and re-priced at lower rates.

The Company continues to believe that net interest margin will decline modestly over the next several quarters as decreases in interest-earning asset yields are projected to outpace any further declines in interest-bearing liabilities 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 (dollars in thousands):

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

	For the Three Months Ended September 30,
	2015								2014
	Average Balance			Interest Income / Expense		Yield / Rate (1)			Average Balance			Interest Income / Expense		Yield / Rate (1)
	(Dollars in thousands)
Assets:
Securities:
Taxable	$	710,583		$	3,954		2.21	%	$	738,932		$	3,883		2.08	%
Tax-exempt		427,879			5,187		4.81	%		404,371			5,150		5.05	%
Total securities		1,138,462			9,141		3.19	%		1,143,303			9,033		3.13	%
Loans, net (2) (3)		5,525,119			62,745		4.51	%		5,196,116			62,082		4.74	%
Loans held for sale		44,904			378		3.34	%		50,393			513		4.04	%
Federal funds sold		807			-		0.20	%		684			-		0.18	%
Money market investments		1			-		0.00	%		1			-		0.00	%
Interest-bearing deposits in other banks		42,361			23		0.22	%		33,246			21		0.24	%
Total earning assets		6,751,654		$	72,287		4.25	%		6,423,743		$	71,649		4.43	%
Allowance for loan losses		(32,857	)							(31,631	)
Total non-earning assets		803,044								849,261
Total assets	$	7,521,841							$	7,241,373
Liabilities and Stockholders' Equity:
Interest-bearing deposits:
Transaction and money market accounts	$	2,706,542		$	1,289		0.19	%	$	2,582,746		$	1,247		0.19	%
Regular savings		567,034			248		0.17	%		554,202			275		0.20	%
Time deposits (4)		1,227,835			2,667		0.86	%		1,370,299			1,505		0.44	%
Total interest-bearing deposits		4,501,411			4,204		0.37	%		4,507,247			3,027		0.27	%
Other borrowings (5)		661,517			2,352		1.41	%		507,882			2,085		1.63	%
Total interest-bearing liabilities		5,162,928		$	6,556		0.50	%		5,015,129		$	5,112		0.40	%
Noninterest-bearing liabilities:
Demand deposits		1,312,735								1,194,505
Other liabilities		50,715								52,830
Total liabilities		6,526,378								6,262,464
Stockholders' equity		995,463								978,909
Total liabilities and stockholders' equity	$	7,521,841							$	7,241,373
Net interest income				$	65,731							$	66,537
Interest rate spread (6)							3.75	%							4.03	%
Cost of funds							0.39	%							0.32	%
Net interest margin (7)							3.86	%							4.11	%

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

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

(3) Interest income on loans includes $1.4 million and $846,000 for the three months ended September 30, 2015 and 2014, respectively, in accretion of the fair market value adjustments related to acquisitions.

(4) Interest expense on certificates of deposits includes $154,000 and $2.0 million for the three months ended September 30, 2015 and 2014, respectively, in accretion of the fair market value adjustments related to acquisitions.

(5) Interest expense on borrowings includes $87,000 and $262,000 for the three months ended September 30, 2015 and 2014, respectively, in accretion of the fair market value adjustments related to acquisitions.

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

(7) Core net interest margin excludes purchase accounting adjustments and was 3.77% and 3.92% for the three months ended September 30, 2015 and 2014, respectively.

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

	For the Nine Months Ended September 30,
	2015								2014
	Average Balance			Interest Income / Expense		Yield / Rate (1)			Average Balance			Interest Income / Expense		Yield / Rate (1)
	(Dollars in thousands)
Assets:
Securities:
Taxable	$	720,569		$	11,621		2.16	%	$	716,996		$	11,391		2.12	%
Tax-exempt		421,224			15,480		4.91	%		401,111			15,392		5.13	%
Total securities		1,141,793			27,101		3.17	%		1,118,107			26,783		3.20	%
Loans, net (2) (3)		5,445,243			185,959		4.57	%		5,240,610			184,257		4.70	%
Loans held for sale		42,250			1,070		3.39	%		51,021			1,474		3.86	%
Federal funds sold		724			1		0.19	%		493			1		0.17	%
Money market investments		1			-		0.00	%		1			-		0.00	%
Interest-bearing deposits in other banks		38,801			64		0.22	%		28,692			41		0.19	%
Total earning assets		6,668,812		$	214,195		4.29	%		6,438,924		$	212,556		4.41	%
Allowance for loan losses		(32,507	)							(31,128	)
Total non-earning assets		812,268								847,157
Total assets	$	7,448,573							$	7,254,953
Liabilities and Stockholders' Equity:
Interest-bearing deposits:
Transaction and money market accounts	$	2,644,209		$	3,649		0.18	%	$	2,568,357		$	3,536		0.18	%
Regular savings		562,288			777		0.18	%		553,501			785		0.19	%
Time deposits (4)		1,243,546			6,778		0.73	%		1,414,674			3,512		0.33	%
Total interest-bearing deposits		4,450,043			11,204		0.34	%		4,536,532			7,833		0.23	%
Other borrowings (5)		681,295			7,021		1.38	%		535,866			6,648		1.66	%
Total interest-bearing liabilities		5,131,338		$	18,225		0.47	%		5,072,398		$	14,481		0.38	%
Noninterest-bearing liabilities:
Demand deposits		1,271,937								1,143,942
Other liabilities		55,549								53,959
Total liabilities		6,458,824								6,270,299
Stockholders' equity		989,749								984,654
Total liabilities and stockholders' equity	$	7,448,573							$	7,254,953
Net interest income				$	195,970							$	198,075
Interest rate spread (6)							3.82	%							4.03	%
Cost of funds							0.36	%							0.30	%
Net interest margin (7)							3.93	%							4.11	%

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

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

(3) Interest income on loans includes $3.1 million and $81,000 for the nine months ended September 30, 2015 and 2014, respectively, in accretion of the fair market value adjustments related to acquisitions.

(4) Interest expense on certificates of deposits includes $1.8 million and $7.4 million for the nine months ended September 30, 2015 and 2014, respectively, in accretion of the fair market value adjustments related to acquisitions.

(5) Interest expense on borrowings includes $362,000 and $412,000 for the nine months ended September 30, 2015 and 2014, respectively, in accretion of the fair market value adjustments related to acquisitions.

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

(7) Core net interest margin excludes purchase accounting adjustments and was 3.82% and 3.95% for the nine months ended September 30, 2015 and 2014, respectively.

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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									Nine Months Ended
	September 30, 2015 vs. September 30, 2014									September 30, 2015 vs. September 30, 2014
	Increase (Decrease) Due to Change in:									Increase (Decrease) Due to Change in:
	Volume			Rate			Total			Volume			Rate			Total
Earning Assets:
Securities:
Taxable	$	(156	)	$	227		$	71		$	51		$	179		$	230
Tax-exempt		289			(252	)		37			753			(665	)		88
Total securities		133			(25	)		108			804			(486	)		318
Loans, net (1)		3,820			(3,157	)		663			7,056			(5,354	)		1,702
Loans held for sale		(52	)		(83	)		(135	)		(236	)		(168	)		(404	)
Federal funds sold		-			-			-			-			-			-
Interest-bearing deposits in other banks		4			(2	)		2			16			7			23
Total earning assets	$	3,905		$	(3,267	)	$	638		$	7,640		$	(6,001	)	$	1,639
Interest-Bearing Liabilities:
Interest-bearing deposits:
Transaction and money market accounts	$	50		$	(8	)	$	42		$	63		$	50		$	113
Regular savings		7			(34	)		(27	)		12			(20	)		(8	)
Time Deposits (2)		(171	)		1,333			1,162			(470	)		3,736			3,266
Total interest-bearing deposits		(114	)		1,291			1,177			(395	)		3,766			3,371
Other borrowings (3)		573			(306	)		267			1,619			(1,246	)		373
Total interest-bearing liabilities		459			985			1,444			1,224			2,520			3,744
Change in net interest income	$	3,446		$	(4,252	)	$	(806	)	$	6,416		$	(8,521	)	$	(2,105	)

(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 $518,000 and $3.0 million for the three- and nine-month change, respectively.

(2) The rate-related change in interest expense on time deposits includes the impact of lower accretion of the acquisition-related fair market value adjustments of $1.8 million and $5.5 million for the three- and nine-month change, respectively.

(3) 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 $175,000 and $50,000 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 2015 and remaining estimated net accretion impact are reflected in the following table (dollars in thousands):

	Accretion				Accretion (Amortization)
	Loan		Certificates of Deposit		Borrowings			Total
For the quarter ended March 31, 2015	$	639	$	1,075	$	137		$	1,851
For the quarter ended June 30, 2015		1,052		614		137			1,803
For the quarter ended September 30, 2015		1,364		154		87			1,605
For the remaining three months of 2015		1,051		-		-			1,051
For the years ending:
2016		3,808		-		271			4,079
2017		3,516		-		170			3,686
2018		2,996		-		(143	)		2,853
2019		2,349		-		(286	)		2,063
2020		1,904		-		(301	)		1,603
Thereafter		10,538		-		(5,622	)		4,916

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Noninterest Income

	For the Three Months Ended
	September 30,						Change
	2015			2014			$			%
	(Dollars in thousands)
Noninterest income:
Service charges on deposit accounts	$	4,965		$	4,458		$	507			11.4	%
Other service charges, commissions and fees		3,983			3,773			210			5.6	%
Fiduciary and asset management fees		2,304			2,120			184			8.7	%
Gains on sales of mortgage loans, net of commissions		2,630			2,598			32			1.2	%
Gains on securities transactions, net		75			995			(920	)		(92.5	)%
Other-than-temporary impairment losses		(300	)		-			(300	)		NM
Bank owned life insurance income		1,161			1,195			(34	)		(2.8	)%
Other operating income		1,907			1,179			728			61.7	%
Total noninterest income	$	16,725		$	16,318		$	407			2.5	%
Mortgage segment operations	$	(2,608	)	$	(2,604	)	$	(4	)		0.2	%
Intercompany eliminations		170			170			-			0.0	%
Community Bank segment	$	14,287		$	13,884		$	403			2.9	%

NM - Not Meaningful

For the quarter ended September 30, 2015, noninterest income increased $407,000, or 2.5%, to $16.7 million from $16.3 million in the third quarter of 2014. Customer-related noninterest income (service charge and fiduciary and asset management fees) increased $901,000 primarily due to higher overdraft fees, interchange fees, and brokerage income. Gains of sales of mortgage loans, net of commissions, and bank owned life insurance income remained constant with the prior period. Other noninterest income decreased $494,000, as lower gains on sales of securities of $920,000 and a $300,000 OTTI charge on a municipal security in the available-for-sale portfolio in the current quarter was partially offset by increases in other operating income related to the resolution of a problem credit resulting in a note sale.

	For the Nine Months Ended
	September 30,						Change
	2015			2014			$			%
	(Dollars in thousands)
Noninterest income:
Service charges on deposit accounts	$	13,800		$	13,281		$	519			3.9	%
Other service charges, commissions and fees		11,618			11,281			337			3.0	%
Fiduciary and asset management fees		6,835			6,753			82			1.2	%
Gains on sales of mortgage loans, net of commissions		7,582			7,925			(343	)		(4.3	)%
Gains on securities transactions, net		672			1,449			(777	)		(53.6	)%
Other-than-temporary impairment losses		(300	)		-			(300	)		NM
Bank owned life insurance income		3,431			3,467			(36	)		(1.0	)%
Other operating income		4,352			2,229			2,123			95.2	%
Total noninterest income	$	47,990		$	46,385		$	1,605			3.5	%
Mortgage segment operations	$	(7,844	)	$	(7,932	)	$	88			(1.1	)%
Intercompany eliminations		512			511			1			0.2	%
Community Bank segment	$	40,658		$	38,964		$	1,694			4.3	%

NM - Not Meaningful

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For the nine months ended September 30, 2015, noninterest income increased $1.6 million, or 3.5%, to $48.0 million from $46.4 million in the first nine months of 2014. Customer-related fee income increased $856,000 primarily related to higher overdraft and interchange fees. Other operating income increased $2.1 million primarily driven by higher loan swap fees in 2015, gains from the dissolution of a limited partnership in the first quarter of 2015, and gains on the resolution of a problem credit in the third quarter of 2015. These increases were partially offset by declines in gains on sales of mortgage loans, net of commissions, of $343,000, primarily driven by lower mortgage loan originations. Mortgage loan origination volume decreased $95.1 million from $522.2 million in the first nine months of 2014 to $427.1 million in the first nine months of 2015. Additionally, gains on sales of securities were $777,000 lower compared to the prior year and there was a $300,000 OTTI charge on a municipal security in the available-for-sale portfolio in the current year.

Noninterest expense

	For the Three Months Ended
	September 30,						Change
	2015			2014			$			%
	(Dollars in thousands)
Noninterest expense:
Salaries and benefits	$	25,853		$	25,636		$	217			0.8	%
Occupancy expenses		4,915			4,902			13			0.3	%
Furniture and equipment expenses		3,015			3,050			(35	)		(1.1	)%
Technology and data processing		3,549			3,280			269			8.2	%
Professional services		1,991			1,400			591			42.2	%
Marketing and advertising expense		1,781			2,064			(283	)		(13.7	)%
OREO and credit-related expenses (1)		1,263			6,559			(5,296	)		(80.7	)%
Acquisition-related expenses		-			1,695			(1,695	)		(100.0	)%
Other operating expenses		10,958			10,827			131			1.2	%
Total noninterest expense	$	53,325		$	59,413		$	(6,088	)		(10.2	)%
Mortgage segment operations	$	(2,821	)	$	(3,903	)	$	1,082			(27.7	)%
Intercompany eliminations		170			170			-			0.0	%
Community Bank segment	$	50,674		$	55,680		$	(5,006	)		(9.0	)%

(1) OREO related costs include foreclosure related expenses, gains/losses on the sale of OREO, valuation reserves, and asset resolution related legal expenses.

For the quarter ended September 30, 2015, noninterest expense decreased $6.1 million to $53.3 million from $59.4 million when compared to the third quarter of 2014, partially driven by acquisition expenses incurred in the third quarter of 2014. Excluding acquisition-related costs of $1.7 million in 2014, noninterest expense decreased $4.4 million, or 7.6%. The decrease in noninterest expense is primarily due to a decrease in OREO and credit-related expenses of $5.3 million related to lower valuation adjustments of $5.6 million. In the third quarter of 2014, $6.2 million in valuation adjustments were recorded in connection with a shift in strategy to more aggressively market OREO in inactive rural markets. These decreases were partially offset by increased professional fees of $591,000 relating to consulting fees and higher technology and data processing fees of $269,000 related to software maintenance.

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	For the Nine Months Ended
	September 30,						Change
	2015			2014			$			%
	(Dollars in thousands)
Noninterest expense:
Salaries and benefits	$	78,905		$	82,466		$	(3,561	)		(4.3	)%
Occupancy expenses		15,220			15,184			36			0.2	%
Furniture and equipment expenses		8,818			8,555			263			3.1	%
Technology and data processing		10,020			9,145			875			9.6	%
Professional services		5,008			3,897			1,111			28.5	%
Marketing and advertising expense		5,841			4,821			1,020			21.2	%
OREO and credit-related expenses (1)		4,415			10,254			(5,839	)		(56.9	)%
Acquisition-related expenses		-			19,524			(19,524	)		(100.0	)%
Branch closure expenses		1,280			-			1,280			NM
Other operating expenses		32,898			31,819			1,079			3.4	%
Total noninterest expense	$	162,405		$	185,665		$	(23,260	)		(12.5	)%
Mortgage segment operations	$	(8,906	)	$	(12,908	)	$	4,002			(31.0	)%
Intercompany eliminations		512			511			1			0.2	%
Community Bank segment	$	154,011		$	173,268		$	(19,257	)		(11.1	)%

 NM - Not Meaningful

(1) OREO related costs include foreclosure related expenses, gains/losses on the sale of OREO, valuation reserves, and asset resolution related legal expenses.

For the nine months ended September 30, 2015, noninterest expense decreased $23.3 million to $162.4 million from $185.7 million when compared to the first nine months of 2014, largely driven by acquisition expenses incurred in 2014. Excluding acquisition-related costs of $19.5 million, noninterest expense decreased $3.8 million, or 2.2%. The decrease in noninterest expense is primarily due to a decrease in OREO and credit-related expenses of $5.8 million related to lower valuation adjustments of $5.5 million. In the third quarter of 2014, $6.2 million in valuation adjustments were recorded in connection with a shift in strategy to more aggressively market OREO in inactive rural markets. Salaries and benefits expenses declined $3.6 million due to lower salaries and profit sharing expenses, partially offset by increased incentive compensation. Amortization of core deposit intangible decreased $1.0 million when compared to the same period in the prior year. The decreases were partially offset by $1.1 million in higher professional fees related to consulting and legal fees, $1.0 million in higher marketing expenses related to advertising campaigns in the current year, $919,000 in increased fraud-related losses, $875,000 in higher technology expenses related to online banking and data processing fees, and $630,000 in increased expenses related to employee training.

SEGMENT INFORMATION

Community Bank Segment

For the three months ended September 30, 2015, the community bank segment reported net income of $18.2 million, which was $2.7 million higher than net income in third quarter of 2014. Excluding after-tax acquisition-related costs of $1.1 million in the third quarter of 2014, net income increased $1.6 million, or 9.7%. Net interest income decreased $1.1 million from $64.2 million in the third quarter of 2014 to $63.1 million, primarily driven by the impact of declines in net interest margin and lower net accretion related to acquisition accounting. The provision for loan losses for the quarter ended September 30, 2015 was $1.9 million, an increase of $100,000 compared to the same quarter a year ago. The increase in the provision for loan losses in the current periods compared to the same periods in the prior year was primarily driven by higher loan balances in 2015.

Noninterest income increased $403,000, or 2.9%, from $13.9 million in the third quarter of 2014 to $14.3 million in the third quarter of 2015. Customer-related noninterest income (service charge and fiduciary and asset management fees) increased $901,000 primarily due to higher overdraft fees, interchange fees, and brokerage income. Other noninterest income decreased $495,000, as lower gains on sales of securities of $920,000 and a $300,000 OTTI charge on a municipal security in the available-for-sale portfolio in the current quarter was partially offset by increases in other operating income related to the resolution of a problem credit resulting in a note sale.

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Noninterest expense decreased $5.0 million from $55.7 million in the third quarter of 2014 to $50.7 million in the current quarter. Excluding prior year third quarter acquisition-related costs of $1.7 million, noninterest expense decreased $3.3 million, or 6.1%, compared to the third quarter of 2014. The decrease in noninterest expense is primarily due to a decrease in OREO and credit-related expenses of $5.3 million related to lower valuation adjustments of $5.6 million. In the third quarter of 2014, $6.2 million in valuation adjustments were recorded in connection with a shift in strategy to more aggressively market OREO in inactive rural markets. These decreases were offset by increased salaries and benefits expenses of $836,000 due to higher salaries, incentive compensation, and group insurance costs; higher professional and consulting fees of $720,000; increased employee training costs of $458,000; and higher technology and data processing fees of $326,000 related to software maintenance. The community banking segment’s operating efficiency ratio was 63.7% compared to 67.4% for the third quarter of 2014.

For the nine months ended September 30, 2015, the community bank segment reported net income of $49.4 million, an increase of $9.6 million from $39.8 million for the first nine months of 2014. Excluding after-tax acquisition-related costs of $13.2 million in the first nine months of 2014, net income decreased $3.6 million, or 6.8%. Net interest income decreased $2.9 million from the same period last year, largely a result of lower core net interest margin and lower net accretion related to acquisition accounting. The provision for credit losses increased $4.2 million compared to the first nine months of 2014, primarily driven by higher loan balances in 2015 and an increase in net charge-offs in 2015, primarily due to a net recovery in the first quarter of 2014.

Noninterest income increased $1.7 million, or 4.3%, from $39.0 million in the first nine months of 2014 to $40.7 million in the first nine months of 2015. Customer-related fee income increased $937,000 primarily related to higher overdraft and interchange fees. Other operating income increased $774,000 primarily driven by higher loan swap fees in 2015, gains from the dissolution of a limited partnership in the first quarter of 2015, and gains on the resolution of a problem credit in the third quarter of 2015. These increases were partially offset by declines in gains on sales of securities compared to the prior year, OTTI charge on a municipal security in the available-for-sale portfolio in the current year, and declines in interest recognized on previously charged off loans.

Noninterest expense decreased $19.3 million from $173.3 million in the first nine months of 2014 to $154.0 million in 2015, largely driven by acquisition expenses incurred in 2014. Excluding the prior year acquisition-related costs of $19.5 million, noninterest expense increased $267,000, or 0.2%, compared to the first nine months of 2014. Salaries and benefits declined $936,000, or 1.3%, primarily due to cost savings from the StellarOne acquisition being realized in the current year and lower profit-sharing expense in the current year. OREO and credit-related expenses declined $5.8 million related to lower valuation adjustments of $5.5 million. In the third quarter of 2014, $6.2 million in valuation adjustments were recorded in connection with a shift in strategy to more aggressively market OREO in inactive rural markets. The decreases in noninterest expense were offset by $1.3 million in higher professional fees related to consulting and legal fees, $1.1 million in higher marketing expenses related to advertising campaigns in the current year, $1.1 million in higher technology expenses related to online banking and data processing fees, $916,000 in branch closure costs in the current year, $786,000 in increased fraud-related losses, and $630,000 in increased expenses related to employee training. The community banking segment’s operating efficiency ratio was 65.4% compared to 65.1% for the first nine months of 2014.

Mortgage Segment

The mortgage segment reported net income of $59,000 for the third quarter of 2015, an improvement of $687,000 from a loss of $628,000 in the third quarter of 2014. The improvement was due to a reduction in noninterest expense of $1.1 million, largely a result of cost control initiatives in personnel costs, occupancy expenses, loan production costs, and other operating expenses. Gains on sales of mortgage loans, net of commissions, remained consistent with the third quarter of 2014 at $2.6 million.

The mortgage segment reported a net loss of $113,000 for the first nine months of 2015, an improvement of $2.5 million from a loss of $2.6 million in the first nine months of 2014. The improvement was due to a reduction in noninterest expense of $4.0 million, largely a result of cost control initiatives in personnel costs, occupancy expenses, loan production costs, and other operating expenses. Gains on sales of mortgage loans, net of commissions, declined $343,000, or 4.3 %, primarily driven by lower mortgage loan originations. Mortgage loan origination volume decreased $95.1 million from $522.2 million in the first nine months of 2014 to $427.1 million in the first nine months of 2015.

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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 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, 2015 and 2014 was 26.5% and 24.3%, respectively; the effective tax rate for the nine months ended September 30, 2015 and 2014 was 26.7% and 24.7%, respectively. The increase in the effective tax rate is primarily related to tax-exempt interest income on the investment portfolio and tax-exempt bank-owned life insurance income being a larger percentage of pre-tax income during 2014 due to elevated merger-related costs included in pre-tax income.

BALANCE SHEET

Assets

At September 30, 2015, total assets were $7.6 billion, an increase of $235.7 million from December 31, 2014. The following is a general discussion of changes in certain of the more significant asset line items of the Company’s Consolidated Balance Sheets.

· Investment in securities decreased from $1.2 billion at December 31, 2014 to $1.1 billion at September 30, 2015, mainly due to a decrease in mortgage backed securities, restricted stock, and corporate issues, partially offset by increases in securities issued by states and political subdivisions. For additional information on the Company’s investments, please refer to “Securities” below or Note 3 “Securities” in Part I, Item 1 – Financial Statements, of this report.

· At September 30, 2015, loans held for sale were $65.7 million, an increase of $23.2 million from December 31, 2014. During the third quarter, the Company moved its credit card portfolio, totaling $26.4 million at September 30, 2015, from loans held for investment to loans held for sale, resulting from management’s decision to sell the loans in the fourth quarter of 2015.

· Total loans, net of deferred fees and costs, were $5.5 billion at September 30, 2015, an increase of $197.6 million, or 4.9% (annualized), from December 31, 2014. The increase was primarily driven by a 7.4% (annualized) growth in the commercial loan portfolio, partially offset by a decline in mortgage loans and equity lines. Excluding the credit card portfolio transfer, loans grew $396.4 million, or 7.7%, from September 30, 2014, while year-to-date average loan balances increased $204.6 million, or 3.9%, from September 30, 2014. For additional information on the Company’s loan activity, please refer to “Loan Portfolio” below or Note 4 “Loans and Allowance for Loan Losses” in Part I, Item 1 – Financial Statements, of this report.

Liabilities and Stockholders’ Equity

At September 30, 2015, total liabilities were $6.6 billion, an increase of $217.8 million from December 31, 2014. The following is a general discussion of changes in certain of the more significant line items in the liability and stockholders’ equity sections of the Company’s Consolidated Balance Sheets.

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· Total deposits at September 30, 2015 were $5.8 billion, an increase of $180.1 million, or 4.3% (annualized), when compared to $5.6 billion at December 31, 2014, and were one of the predominate sources that funded asset growth for the three quarters of 2015. Deposits grew $184.8 million, or 3.3%, from September 30, 2014, while year-to-date average deposit balances increased $41.5 million, or 0.7%, from September 30, 2014. The Company continues to experience a shift from time deposits into noninterest bearing demand accounts, driven by the Company’s focus on acquiring low cost funding sources and customer preference for liquidity in response to current market conditions. For further discussion on this topic, see “Deposits” below.

· The Company’s short term borrowings generally include secured financing transactions, such as customer repurchase agreements, advances from the FHLB, and other lines of credit. Short-term borrowings at September 30, 2015 were $431.4 million, an increase of $44.0 million from December 31, 2014, primarily due to increases in customer repurchase agreements, partially offset by declines in FHLB advances. For additional information on the Company’s borrowings activity, please refer to Note 6 “Borrowings” in Part I, Item 1 – Financial Statements, of this report.

At September 30, 2015, stockholders’ equity was $995.0 million, an increase of $17.8 million from $977.2 million reported at December 31, 2014. The Company’s capital ratios continue to exceed the minimum capital requirements for regulatory purposes. The total capital ratios at September 30, 2015 and December 31, 2014 were 12.69% and 13.38%, respectively. The Tier 1 capital ratios were 12.16% and 12.76% at September 30, 2015 and December 31, 2014, respectively. The Company’s common equity to total asset ratios at September 30, 2015 and December 31, 2014 were 13.10% and 13.28%, respectively, while its tangible common equity to tangible assets ratios were 9.29% and 9.27%, respectively, at the same dates.

On January 30, 2014, the Company’s Board of Directors authorized a share repurchase program to purchase up to $65.0 million worth of the Company’s common stock on the open market or in privately negotiated transactions. The repurchase program is authorized through December 31, 2015. During the nine months ended September 30, 2015, approximately 347,000 common shares were repurchased and approximately $4.5 million remained available under the program. Additionally, on October 29, 2015, the Company’s Board of Directors authorized a new share repurchase program to purchase to to $25.0 million worth of the Company’s common stock. This repurchase program is authorized through December 31, 2016.

Also, the Company paid a cash dividend of $0.17 per share during the third quarter of 2015, the same dividend level as the prior quarter, and a $0.02 per share, or 13%, increase over the prior year quarterly dividend rate. The dividends paid year-to-date of $0.49 per share represent a $0.06 per share, or 14%, increase over the first nine months of 2014.

Securities

At September 30, 2015, the Company had total investments in the amount of $1.1 billion, or 15.0% of total assets, as compared to $1.2 billion, or 15.7% of total assets, at December 31, 2014. 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 a higher taxable equivalent yield exists on the portfolio compared to its peers. The Company does not engage in structured derivative or hedging activities within the investment portfolio.

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 Company transferred these securities to held to maturity to reduce the impact of price volatility on capital and in consideration of changes to the regulatory environment. The securities included net pre-tax unrealized gains of $8.1 million at the date of transfer with a remaining balance of $7.3 million as of September 30, 2015.

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The table below sets forth a summary of the securities available for sale, securities held to maturity, and restricted stock, at fair value for the following periods (dollars in thousands):

	September 30,		December 31,
	2015		2014
Available for Sale:
U.S. government and agency securities	$	8,411	$	8,454
Obligations of states and political subdivisions		249,893		445,647
Corporate and other bonds		72,462		78,680
Mortgage-backed securities		547,717		559,329
Other securities		10,209		10,004
Total securities available for sale, at fair value		888,692		1,102,114
Held to Maturity:
Obligations of states and political subdivisions		199,363		-
Federal Reserve Bank stock		23,809		23,834
Federal Home Loan Bank stock		28,912		31,020
Total restricted stock		52,721		54,854
Total investments	$	1,140,776	$	1,156,968

During each quarter and at year end, the Company conducts an assessment of the securities portfolio for OTTI consideration. Based on the assessment for the quarter ended September 30, 2015 and in accordance with the guidance, the Company determined that a municipal security in the available for sale portfolio incurred credit-related OTTI of $300,000, which was recognized in earnings for the quarter ended September 30, 2015. No OTTI was recognized in 2014 or for the first six months of 2015. 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.

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The following table summarizes the contractual maturity of securities available for sale at fair value and their weighted average yields as of September 30, 2015 (dollars in thousands):

	1 Year or Less		1 - 5 Years		5 - 10 Years		Over 10 Years		Total
U.S. government and agency securities:
Amortized cost	$	978	$	7,070	$	-	$	20	$	8,068
Fair value		984		7,220		-		207		8,411
Weighted average yield (1)		2.98		1.99		-		-		2.11
Mortgage backed securities:
Amortized cost		14		27,821		131,323		380,072		539,230
Fair value		14		28,219		133,479		386,005		547,717
Weighted average yield (1)		4.24		2.05		2.13		2.15		2.14
Obligations of states and political subdivisions:
Amortized cost		5,667		25,916		105,280		104,792		241,655
Fair value		5,697		27,296		109,660		107,240		249,893
Weighted average yield (1)		2.76		4.67		4.89		4.47		4.63
Corporate bonds and other securities:
Amortized cost		10,181		55		26,505		47,357		84,098
Fair value		10,209		55		26,038		46,369		82,671
Weighted average yield (1)		2.00		4.49		2.88		1.47		1.98
Total securities available for sale:
Amortized cost		16,840		60,862		263,108		532,241		873,051
Fair value		16,904		62,790		269,177		539,821		888,692
Weighted average yield (1)		2.32		3.16		3.31		2.55		2.82

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

The following table summarizes the contractual maturity of securities held to maturity at carrying value and their weighted average yields as of September 30, 2015 (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	$	1,314	$	5,217	$	39,392	$	153,440	$	199,363
Fair value		1,321		5,267		39,521		154,210		200,319
Weighted average yield (1)		2.23		0.53		2.97		3.28		3.14

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

As of September 30, 2015, the Company maintained a diversified municipal bond portfolio with approximately 74% of its holdings in general obligation issues and the remainder backed by revenue bonds. Issuances within the State of Texas represented 13%, the State of Washington represented 12%, and the Commonwealth of Virginia represented 12% of the municipal portfolio; no other state had a concentration above 10%. Substantially all municipal holdings are considered investment grade by Moody’s or Standard & Poor’s. The non-investment grade securities are principally insured Texas municipalities with no underlying rating.  When purchasing municipal securities, the Company focuses on strong underlying ratings for general obligation issuers or bonds backed by essential service revenues.

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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, securities available for sale, loans held for sale, 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, 2015, the cash, interest-bearing deposits in other banks, money market investments, federal funds sold, loans held for sale, and loans that mature within one year totaled $1.9 billion, or 27.3 %, of total earning assets. As of September 30, 2015, approximately $1.6 billion, or 29.2%, of total loans are scheduled to mature within one year based on contractual maturity, adjusted for expected prepayments.

Loan Portfolio

Loans, net of deferred fees and costs, were $5.5 billion at September 30, 2015, $5.3 billion at December 31, 2014, and $5.2 billion at September 30, 2014. Loans secured by real estate continue to represent the Company’s largest category, comprising 83.7% of the total loan portfolio at September 30, 2015.

The following table presents the Company’s composition of loans, 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,				June 30,				March 31,				December 31,				September 30,
	2015				2015				2015				2014				2014
Loans secured by real estate:
Residential 1-4 family	$	935,266	16.9	%	$	937,557	17.0	%	$	916,557	17.0	%	$	925,371	17.3	%	$	931,672	18.0	%
Commercial		2,087,186	37.6	%		2,092,228	38.0	%		2,078,688	38.6	%		2,051,943	38.3	%		1,994,138	38.5	%
Construction, land development and other land loans		694,644	12.5	%		671,233	12.2	%		657,581	12.2	%		656,418	12.3	%		611,737	11.8	%
Second mortgages		52,547	0.9	%		54,224	1.0	%		54,371	1.0	%		57,650	1.1	%		61,372	1.2	%
Equity lines of credit		514,730	9.3	%		512,499	9.3	%		515,187	9.6	%		523,808	9.8	%		514,705	10.0	%
Multifamily		329,959	6.0	%		316,474	5.7	%		298,651	5.5	%		297,289	5.6	%		280,116	5.4	%
Farm land		26,984	0.5	%		25,061	0.5	%		27,029	0.5	%		26,043	0.5	%		28,724	0.6	%
Total real estate loans		4,641,316	83.7	%		4,609,276	83.7	%		4,548,064	84.4	%		4,538,522	84.9	%		4,422,464	85.5	%
Commercial Loans		409,654	7.4	%		426,024	7.7	%		409,867	7.6	%		374,080	7.0	%		362,361	7.0	%
Consumer installment loans
Personal		389,379	7.0	%		354,485	6.4	%		335,649	6.2	%		333,126	6.2	%		308,719	6.0	%
Credit cards		-	0.0	%		26,349	0.5	%		24,691	0.5	%		24,225	0.5	%		23,736	0.5	%
Total consumer installment loans		389,379	7.0	%		380,834	6.9	%		360,340	6.7	%		357,351	6.7	%		332,455	6.5	%
All other loans		103,272	1.9	%		94,251	1.7	%		69,484	1.3	%		76,043	1.4	%		53,723	1.0	%
Gross loans	$	5,543,621	100.0	%	$	5,510,385	100.0	%	$	5,387,755	100.0	%	$	5,345,996	100.0	%	$	5,171,003	100.0	%

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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, 2015 (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
Loans secured by real estate:
Residential 1-4 family	$	935,266	$	92,458	$	344,157	$	17,955	$	326,202	$	498,651	$	277,875	$	220,776
Commercial		2,087,186		171,604		618,803		145,975		472,828		1,296,779		977,828		318,951
Construction, land development and other land loans		694,644		395,711		187,012		165,255		21,757		111,921		95,594		16,327
Second mortgages		52,547		3,887		7,677		2,502		5,175		40,983		14,375		26,608
Equity lines of credit		514,730		35,168		478,761		45,010		433,751		801		667		134
Multifamily		329,959		39,134		89,458		20,736		68,722		201,367		151,349		50,018
Farm land		26,984		7,278		10,244		6,297		3,947		9,462		9,203		259
Total real estate loans		4,641,316		745,240		1,736,112		403,730		1,332,382		2,159,964		1,526,891		633,073
Commercial Loans		409,654		143,455		104,027		98,353		5,674		162,172		122,880		39,292
Consumer installment loans
Personal		389,379		98,357		3,744		3,535		209		287,278		124,669		162,609
Total consumer installment loans		389,379		98,357		3,744		3,535		209		287,278		124,669		162,609
All other loans		103,272		8,370		33,640		21,008		12,632		61,262		17,468		43,794
Gross loans	$	5,543,621	$	995,422	$	1,877,523	$	526,626	$	1,350,897	$	2,670,676	$	1,791,908	$	878,768

While the current economic environment is challenging, 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, 2015, the largest component of the Company’s loan portfolio consisted of real estate loans, concentrated in commercial, construction, and residential 1-4 family. 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 serves as a mortgage brokerage 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

During the first nine months of 2015, the Company experienced declines in total past due and nonaccrual loan and OREO balances from December 31, 2014. The decline in OREO balances was mostly attributable to sales of closed bank premises and foreclosed residential real estate property and land during the period. The loan loss provision increased from the same period in the prior year driven by higher loan balances in 2015 and an increase in net charge-offs in 2015, primarily due to a net recovery in the first quarter of 2014. The allowance for loan losses to total loans ratios (both unadjusted and adjusted for acquisition accounting) decreased from both December 31, 2014 and September 30, 2014. All nonaccrual and past due loan metrics discussed below exclude PCI loans totaling $78.6 million (net of fair value mark).

Troubled Debt Restructurings

The total recorded investment in TDRs as of September 30, 2015 was $11.6 million, a decrease of $15.2 million, or 56.8%, from $26.8 million at December 31, 2014 and a decline of $17.4 million, or 60.1%, from $29.0 million at September 30, 2014. Of the $11.6 million of TDRs at September 30, 2015, $9.5 million, or 81.9%, were considered performing while the remaining $2.1 million were considered nonperforming. The decrease in the TDR balance from December 31, 2014 is primarily attributable to $12.0 million being removed from TDR status, $50,000 transferred to OREO, $4.7 million in net payments, and $522,000 in charge-offs, partially offset by $2.1 million in additions. 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, typically using the Company’s internal risk rating system as its primary credit quality indicator. 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.

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Nonperforming Assets

At September 30, 2015, nonperforming assets totaled $35.1 million, a decrease of $12.3 million, or 26.0%, from December 31, 2014 and a decrease of $23.0 million, or 39.6%, from a year ago. In addition, NPAs as a percentage of total outstanding loans decreased 26 basis points to 0.63% in the current quarter from 0.89% as of December 31, 2014 and declined 49 basis points from 1.12% a year earlier.

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

	September 30,			June 30,			March 31,			December 31,			September 30,
	2015			2015			2015			2014			2014
Nonaccrual loans, excluding PCI loans	$	12,966		$	9,521		$	17,385		$	19,255		$	20,279
Foreclosed properties		18,789			18,917			21,727			23,058			28,783
Former bank premises		3,305			3,305			3,707			5,060			8,971
Total nonperforming assets		35,060			31,743			42,819			47,373			58,033
Loans past due 90 days and accruing interest		5,164			10,903			7,932			10,047			16,118
Total nonperforming assets and loans past due 90 days and accruing interest	$	40,224		$	42,646		$	50,751		$	57,420		$	74,151
Performing Restructurings	$	9,468		$	19,880		$	21,336		$	22,829		$	26,243
Balances
Allowance for loan losses	$	33,269		$	32,344		$	30,977		$	32,384		$	32,109
Average loans, net of deferred fees and costs		5,525,119			5,448,126			5,360,676			5,220,223			5,196,116
Loans, net of deferred fees and costs		5,543,621			5,510,385			5,387,755			5,345,996			5,171,003
Ratios
NPAs to total loans		0.63	%		0.58	%		0.79	%		0.89	%		1.12	%
NPAs & loans 90 days past due to total loans		0.73	%		0.77	%		0.94	%		1.07	%		1.43	%
NPAs to total loans & OREO		0.63	%		0.57	%		0.79	%		0.88	%		1.11	%
NPAs & loans 90 days past due to total loans & OREO		0.72	%		0.77	%		0.94	%		1.07	%		1.42	%
ALL to nonaccrual loans		256.59	%		339.71	%		178.18	%		168.18	%		158.34	%
ALL to nonaccrual loans & loans 90 days past due		183.50	%		158.36	%		122.36	%		110.52	%		88.22	%

Nonperforming assets at September 30, 2015 included $13.0 million in nonaccrual loans (excluding PCI loans), a net decrease of $6.3 million, or 32.7%, from December 31, 2014 and a decline of $7.3 million, or 36.1%, from September 30, 2014. The following table shows the activity in nonaccrual loans for the quarter ended (dollars in thousands):

	September 30,			June 30,			March 31,			December 31,			September 30,
	2015			2015			2015			2014			2014
Beginning Balance	$	9,521		$	17,385		$	19,255		$	20,279		$	23,099
Net customer payments		(1,104	)		(4,647	)		(2,996	)		(4,352	)		(1,654	)
Additions		5,213			581			4,379			7,413			1,099
Charge-offs		(541	)		(2,171	)		(3,107	)		(1,839	)		(604	)
Loans returning to accruing status		(123	)		(919	)		(53	)		(2,246	)		(723	)
Transfers to OREO		-			(708	)		(93	)		-			(938	)
Ending Balance	$	12,966		$	9,521		$	17,385		$	19,255		$	20,279

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The majority of the additions to nonaccrual loans in the first quarter of 2015 were attributable to three credit relationships. During the second quarter of 2015, the decline in nonaccrual loans was largely due to payments received in settlements, sales of collateral, and liquidation of customer assets. The majority of additions to nonaccrual loans in the third quarter of 2015 were comprised of smaller credit relationships.

The following table presents the composition of nonaccrual loans (excluding PCI loans) and the coverage ratio, which is the allowance for loan losses expressed as a percentage of nonaccrual loans, at the quarters ended (dollars in thousands):

	September 30,			June 30,			March 31,			December 31,			September 30,
	2015			2015			2015			2014			2014
Raw Land and Lots	$	493		$	403		$	1,059		$	2,359		$	5,074
Commercial Construction		1,786			1,907			1,953			968			672
Commercial Real Estate		4,189			3,825			7,609			6,962			1,821
Single Family Investment Real Estate		1,157			782			1,302			2,070			4,202
Commercial and Industrial		903			1,074			2,540			3,286			3,005
Other Commercial		61			65			69			74			62
Consumer		4,377			1,465			2,853			3,536			5,443
Total	$	12,966		$	9,521		$	17,385		$	19,255		$	20,279
Coverage Ratio		256.59	%		339.71	%		178.18	%		168.18	%		158.34	%

Nonperforming assets at September 30, 2015 also included $22.1 million in OREO, a decrease of $6.0 million, or 21.4%, from December 31, 2014 and a decrease of $15.7 million, or 41.5%, from the prior year. The following table shows the activity in OREO for the quarters ended (dollars in thousands):

	September 30,			June 30,			March 31,			December 31,			September 30,
	2015			2015			2015			2014			2014
Beginning Balance	$	22,222		$	25,434		$	28,118		$	37,754		$	38,494
Additions of foreclosed property		1,082			904			158			367			2,553
Additions of former bank premises		-			-			402			63			4,814
Capitalized improvements		9			243			56			424			203
Valuation adjustments		(473	)		(710	)		(590	)		(381	)		(6,192	)
Proceeds from sales		(767	)		(3,511	)		(2,748	)		(11,362	)		(2,216	)
Gains (losses) from sales		21			(138	)		38			1,253			98
Ending Balance	$	22,094		$	22,222		$	25,434		$	28,118		$	37,754

During the first nine months of 2015, the majority of sales of OREO were related to closed bank premises and foreclosed residential real estate and land.

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

	September 30,		June 30,		March 31,		December 31,		September 30,
	2015		2015		2015		2014		2014
Land	$	7,139	$	7,254	$	8,412	$	8,726	$	9,054
Land Development		6,700		7,013		7,192		7,162		7,585
Residential Real Estate		3,517		3,217		4,794		5,736		6,696
Commercial Real Estate		1,433		1,433		1,329		1,434		5,448
Former Bank Premises (1)		3,305		3,305		3,707		5,060		8,971
Total	$	22,094	$	22,222	$	25,434	$	28,118	$	37,754

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

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Past Due Loans

At September 30, 2015, total accruing past due loans, excluding PCI loans, were $27.5 million, or 0.50% of total loans, compared to $48.1 million, or 0.90%, at December 31, 2014 and $58.4 million, or 1.13%, a year ago. At September 30, 2015, loans past due 90 days or more and accruing interest, excluding PCI loans, totaled $5.2 million, or 0.09% of total loans, compared to $10.0 million, or 0.19%, at December 31, 2014 and $16.1 million, or 0.31%, a year ago.

Charge-offs and delinquencies

For the quarter ended September 30, 2015, net charge-offs were $1.0 million, or 0.07% on an annualized basis, compared to $1.1 million, or 0.08%, for the same quarter last year. For the nine months ended September 30, 2015, net charge-offs were $6.4 million, or 0.15% on an annualized basis, compared to $1.3 million, or 0.03% annualized, for the nine months ended September 30, 2014. Of the $6.4 million in loans charged off in the first nine months of 2015, $4.7 million, or 73.4%, related to loans specifically reserved for in the prior period.

Provision

The provision for loan losses for the quarter ended September 30, 2015 was $2.0 million, an increase of $162,000 compared to the same quarter a year ago. During the nine months ended September 30, 2015, the provision for loan losses was $7.3 million, an increase of $4.0 million compared to the first nine months of 2014. The increase in the provision for loan losses in the current periods compared to the same periods in the prior year was primarily driven by higher loan balances in 2015 and an increase in net charge-offs in 2015, primarily due to a net recovery in the first quarter of 2014. Additionally, a $300,000 provision was recognized during the current year for unfunded loan commitments.

Allowance for Loan Losses

The allowance for loan losses of $33.3 million at September 30, 2015, is an increase of $885,000 compared to the allowance for loan losses at December 31, 2014. The ALL as a percentage of the total loan portfolio, adjusted for acquisition accounting (non-GAAP), was 1.01% at September 30, 2015, a decrease from 1.08% at December 31, 2014 and 1.12% at September 30, 2014. The allowance for loan losses as a percentage of the total loan portfolio was 0.60% at September 30, 2015, 0.61% at December 31, 2014, and 0.62% at September 30, 2014. In acquisition accounting, there is no carryover of previously established allowance for loan losses, as acquired loans are recorded at fair value.

Due to the decline in nonaccrual loans during 2015, the nonaccrual loan coverage ratio significantly increased to 256.6% at September 30, 2015, compared to 168.2% at December 31, 2014, and 158.3% at September 30, 2014. 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.

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

	September 30,			June 30,			March 31,			December 31,			September 30,
	2015			2015			2015			2014			2014
Balance, beginning of period	$	32,344		$	30,977		$	32,384		$	32,109		$	31,379
Loans charged-off:
Commercial		388			1,022			671			879			132
Real estate		1,480			1,722			2,596			3,584			1,138
Consumer		468			461			562			365			495
Total loans charged-off		2,336			3,205			3,829			4,828			1,765
Recoveries:
Commercial		559			120			97			59			108
Real estate		565			720			308			318			411
Consumer		175			183			267			226			176
Total recoveries		1,299			1,023			672			603			695
Net charge-offs		1,037			2,182			3,157			4,225			1,070
Provision for loan losses		1,962			3,549			1,750			4,500			1,800
Balance, end of period	$	33,269		$	32,344		$	30,977		$	32,384		$	32,109
Allowance for loan losses to loans		0.60	%		0.59	%		0.57	%		0.61	%		0.62	%
ALL to loans, adjusted for acquisition accounting (Non-GAAP)		1.01	%		1.02	%		1.03	%		1.08	%		1.12	%
Net charge-offs to total loans		0.07	%		0.16	%		0.24	%		0.31	%		0.08	%
Provision to total loans		0.14	%		0.26	%		0.13	%		0.33	%		0.14	%

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,					June 30,					March 31,					December 31,					September 30,
	2015					2015					2015					2014					2014
	$		%(1)			$		%(1)			$		%(1)			$		%(1)			$		%(1)
Commercial	$	2,462		7.4	%	$	2,490		7.7	%	$	2,354		7.6	%	$	2,266		7.0	%	$	2,250		7.0	%
Real estate		27,846		83.7	%		27,072		83.7	%		26,145		84.4	%		27,493		84.9	%		27,461		85.5	%
Consumer		2,961		8.9	%		2,782		8.6	%		2,478		8.0	%		2,625		8.1	%		2,398		7.5	%
Total	$	33,269		100.0	%	$	32,344		100.0	%	$	30,977		100.0	%	$	32,384		100.0	%	$	32,109		100.0	%

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

Deposits

As of September 30, 2015, total deposits were $5.8 billion, an increase of $180.1 million, or 3.2%, from December 31, 2014. Total interest-bearing deposits consist of NOW, money market, savings, and time deposit account balances. Total time deposit balances of $1.2 billion accounted for 27.0% of total interest-bearing deposits at September 30, 2015. The Company continues to experience a shift from time deposits into lower cost transaction accounts (NOW, money market, savings and noninterest bearing demand accounts), driven by the Company’s focus on acquiring low cost funding sources and customer preference for liquidity in response to current market conditions.

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

	September 30,					December 31,
	2015					2014
Deposits:	Amount		% of total  deposits			Amount		% of total  deposits
Non-interest bearing	$	1,338,045		23.0	%	$	1,199,378		21.3	%
NOW accounts		1,382,891		23.8	%		1,332,029		23.6	%
Money market accounts		1,318,229		22.7	%		1,261,520		22.4	%
Savings accounts		569,667		9.8	%		548,526		9.7	%
Time deposits of $100,000 and over		527,642		9.0	%		550,842		9.8	%
Other time deposits		682,379		11.7	%		746,475		13.2	%
Total Deposits	$	5,818,853		100.0	%	$	5,638,770		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, 2015 and December 31, 2014, none were purchased and included in certificates of deposit on the Company’s Consolidated Balance Sheets. Maturities of time deposits as of September 30, 2015 are as follows (dollars in thousands):

	Within 3 Months		3 - 12 Months		Over 12 Months		Total
Maturities of time deposits of $100,000 and over	$	62,328	$	192,874	$	272,440	$	527,642
Maturities of other time deposits		93,810		278,326		310,243		682,379
Total time deposits	$	156,138	$	471,200	$	582,683	$	1,210,021

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 shareholders.

In July 2013, the Federal Reserve issued a final rule that makes technical changes to its market risk capital rule to align it with the Basel III regulatory capital framework and meet certain requirements of the Dodd-Frank Act. Effective January 1, 2015, the final rule requires the Company 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 prior requirement); and (iv) a leverage ratio of 4.0% of total assets (unchanged from the prior requirement). These are the initial capital requirements applicable to the Company. All such capital requirements will be phased in over a four-year period; the next phase does not take effect until January 1, 2016. The capital requirements contained in the final rule also include changes in the risk weights of assets to better reflect credit risk and other risk exposures.

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Beginning January 1, 2015, the Company calculates its regulatory capital under the U.S. Basel III Standardized Approach. The Company calculated regulatory capital measures for periods prior to 2015 under previous regulatory requirements. The table summarizes the Company’s regulatory capital and related ratios for the periods presented (dollars in thousands):

	September 30,			December 31,			September 30,
	2015			2014			2014
Tier 1 capital	$	778,876		$	734,755		$	729,084
Tier 2 capital		33,666			35,830			35,713
Total risk-based capital		812,542			770,585			764,797
Risk-weighted assets		6,403,685			5,758,071			5,583,373
Capital ratios:
Common equity Tier 1 capital ratio		10.75	%		N/A			N/A
Tier 1 capital ratio		12.16	%		12.76	%		13.06	%
Total capital ratio		12.69	%		13.38	%		13.70	%
Leverage ratio (Tier 1 capital to average assets)		10.80	%		10.62	%		10.54	%
Common equity to total assets		13.10	%		13.28	%		13.58	%
Tangible common equity to tangible assets		9.29	%		9.27	%		9.41	%

NON-GAAP MEASURES

In reporting the Company’s results as of and for the periods ended September 30, 2015 and 2014, the Company has provided supplemental performance measures on an operating or tangible basis. Operating measures exclude acquisition costs unrelated to the Company’s normal operations. The Company believes these measures are useful to investors as they exclude non-operating adjustments resulting from acquisition activity and allow investors to see the combined economic results of the organization. Tangible common equity is used in the calculation of certain capital and per share ratios. The Company believes tangible common equity and the related 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.

These measures are a supplement to U.S. GAAP used to prepare the Company’s financial statements and should not be viewed as a substitute for U.S. GAAP measures. In addition, the Company’s non-GAAP measures may not be comparable to non-GAAP measures of other companies.

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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						Nine Months Ended
	September 30,						September 30,
	2015			2014			2015			2014
Operating Earnings
Net Income (GAAP)	$	18,216		$	14,817		$	49,264		$	37,199
Plus: Merger and conversion related expense, after tax		-			1,102			-			13,161
Net operating earnings (non-GAAP)	$	18,216		$	15,919		$	49,264		$	50,360
Operating earnings per share - Basic	$	0.40		$	0.35		$	1.09		$	1.09
Operating earnings per share - Diluted		0.40			0.35			1.09			1.09
Operating ROA		0.96	%		0.87	%		0.88	%		0.93	%
Operating ROE		7.26	%		6.45	%		6.65	%		6.84	%
Operating ROTCE		10.70	%		9.77	%		9.86	%		10.36	%
Community Bank Segment Operating Earnings
Net Income (GAAP)	$	18,157		$	15,445		$	49,377		$	39,808
Plus: Merger and conversion related expense, after tax		-			1,102			-			13,161
Net operating earnings (non-GAAP)	$	18,157		$	16,547		$	49,377		$	52,969
Operating earnings per share - Basic	$	0.40		$	0.36		$	1.09		$	1.14
Operating earnings per share - Diluted		0.40			0.36			1.09			1.14
Operating ROA		0.96	%		0.91	%		0.89	%		0.98	%
Operating ROE		7.26	%		6.73	%		6.69	%		7.25	%
Operating ROTCE		10.71	%		10.21	%		9.93	%		11.04	%
Operating Efficiency Ratio FTE
Net Interest Income (GAAP)	$	63,444		$	64,479		$	189,229		$	191,953
FTE adjustment		2,287			2,058			6,741			6,122
Net Interest Income (FTE)	$	65,731		$	66,537		$	195,970		$	198,075
Noninterest Income (GAAP)		16,725			16,318			47,990			46,385
Noninterest Expense (GAAP)	$	53,325		$	59,413		$	162,405		$	185,665
Merger and conversion related expense		-			1,695			-			19,524
Noninterest Expense (Non-GAAP)	$	53,325		$	57,718		$	162,405		$	166,141
Operating Efficiency Ratio FTE (non-GAAP)		64.67	%		69.66	%		66.57	%		67.96	%
Community Bank Segment Operating Efficiency Ratio FTE
Net Interest Income (GAAP)	$	63,075		$	64,162		$	188,240		$	191,090
FTE adjustment		2,256			2,058			6,707			6,122
Net Interest Income (FTE)	$	65,331		$	66,220		$	194,947		$	197,212
Noninterest Income (GAAP)		14,287			13,884			40,658			38,964
Noninterest Expense (GAAP)	$	50,674		$	55,680		$	154,011		$	173,268
Merger and conversion related expense		-			1,695			-			19,524
Noninterest Expense (Non-GAAP)	$	50,674		$	53,985		$	154,011		$	153,744
Operating Efficiency Ratio FTE (non-GAAP)		63.65	%		67.39	%		65.37	%		65.10	%
Tangible Common Equity
Ending equity	$	995,012		$	976,923		$	995,012		$	976,923
Less: Ending goodwill		293,522			296,876			293,522			296,876
Less: Ending core deposit intangibles		25,320			34,089			25,320			34,089
Ending tangible common equity	$	676,170		$	645,958		$	676,170		$	645,958
Average equity	$	995,463		$	978,909		$	989,749		$	984,654
Less: Average goodwill		293,522			296,876			293,522			296,876
Less: Average core deposit intangibles		26,323			35,310			28,435			37,888
Average tangible common equity	$	675,618		$	646,723		$	667,792		$	649,890

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The allowance for loan losses ratio, adjusted for acquisition accounting (non-GAAP), includes an adjustment for the fair value mark on acquired performing loans. The acquired performing loans are reported net of the related fair value mark in loans, net of deferred fees and costs, on the Company’s Consolidated Balance Sheets; therefore, the fair value mark is added back to the balance to represent the total loan portfolio. The adjusted allowance for loan losses, including the fair value mark, represents the total reserve on the Company’s loan portfolio. The PCI loans, net of the respective fair value mark, are removed from the loans, net of deferred fees and costs, as these PCI loans are not covered by the allowance established by the Company unless changes in expected cash flows indicate that one of the PCI loan pools is impaired, at which time an allowance for PCI loans will be established. U.S. GAAP requires the acquired allowance for loan losses not be carried over in an acquisition or merger. The Company believes the presentation of the allowance for loan losses ratio, adjusted for acquisition accounting, is useful to investors because the acquired loans were purchased at a market discount with no allowance for loan losses carried over to the Company, and the fair value mark on the purchased performing loans represents the allowance associated with those purchased loans. The Company believes that this measure is a better reflection of the reserves on the Company’s loan portfolio. The following table shows the allowance for loan losses as a percentage of the total loan portfolio, adjusted for acquisition accounting, as of the quarters ended (dollars in thousands):

	September 30,			December 31,			September 30,
	2015			2014			2014
Allowance for loan losses	$	33,269		$	32,384		$	32,109
Remaining fair value mark on acquired performing loans		21,884			24,340			25,064
Adjusted allowance for loan losses	$	55,153		$	56,724		$	57,173
Loans, net of unearned income	$	5,543,621		$	5,345,996		$	5,171,003
Remaining fair value mark on acquired performing loans		21,884			24,340			25,064
Less: PCI loans, net of fair value mark		78,606			105,788			119,743
Adjusted loans, net of unearned income	$	5,486,899		$	5,264,548		$	5,076,324
Allowance for loan losses ratio		0.60	%		0.61	%		0.62	%
Allowance for loan losses ratio, adjusted for acquisition accounting		1.01	%		1.08	%		1.12	%

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 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.

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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. 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 at 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, 2015 and 2014 (dollars in thousands):

	Change In Net Interest Income
	September 30,
	2015						2014
	%			$			%			$
Change in Yield Curve:
+300 basis points		6.03			16,192			6.06			15,746
+200 basis points		4.07			10,933			4.19			10,898
+100 basis points		1.72			4,611			1.75			4,540
Most likely rate scenario		-			-			-			-
-100 basis points		(1.72	)		(4,626	)		(1.89	)		(4,914	)
-200 basis points		(3.85	)		(10,334	)		(4.59	)		(11,943	)
-300 basis points		(4.03	)		(10,824	)		(5.16	)		(13,414	)

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, 2015, the Company asset sensitivity is relatively unchanged in a rising interest rate environment when compared to September 30, 2014 due to the composition of the balance sheet. The Company expects net interest income to increase as market rates increase. In the decreasing interest rate environments, the Company shows 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.

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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, 2015 and 2014 (dollars in thousands):

	Change In Economic Value of Equity
	September 30,
	2015						2014
	%			$			%			$
Change in Yield Curve:
+300 basis points		(0.41	)		(5,407	)		(1.66	)		(21,897	)
+200 basis points		0.68			9,006			(0.29	)		(3,768	)
+100 basis points		1.00			13,244			0.35			4,617
Most likely rate scenario		-			-			-			-
-100 basis points		(3.54	)		(47,052	)		(2.93	)		(38,731	)
-200 basis points		(8.94	)		(118,937	)		(8.07	)		(106,701	)
-300 basis points		(9.30	)		(123,658	)		(9.79	)		(129,462	)

The shock down 200 or 300 basis points analysis is not as meaningful since interest rates across most of the yield curve are at historic lows and cannot 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. 

Compared to September 30, 2014, the Company’s economic value of equity model as of September 30, 2015 projects that a instantaneous change in market interest rates would result in a greater overall variation in the Company’s estimated economic value of equity in the shock up 100 or 200 basis point and shock down 100 basis point interest rate scenarios, while the Company is less sensitive to market interest rates in a shock up 300 basis point scenario. The Company believes the down 200 and 300 basis point scenarios are not plausible given the current low level of interest rates.

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 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.

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, 2015 that has materially affected, or is reasonably likely to materially affect, the internal control over financial reporting.

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PART II – OTHER INFORMATION

ITEM 1 – LEGAL PROCEEDINGS

In the ordinary course of its operations, the Company and its subsidiaries are parties to various legal proceedings. Based on the information presently available, and after consultation with legal counsel, management believes that the ultimate outcome in such 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, 2014.

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

Stock Repurchase Program

The following information describes the Company’s common stock repurchases during 2014 and the nine months ended September 30, 2015:

Period	Total number of shares  purchased (1)		Average price paid  per share ($)		Total number of shares  purchased as part of  publicly announced plan  (2)		Approximate value of  shares that may yet be  purchased under the plan  ($) (2)
January 1 - December 31, 2014		2,125,264		24.72		2,125,264		12,460,000
January 1 - January 31, 2015		102,843		23.17		102,843		10,077,000
February 1 - February 28, 2015		-		-		-		10,077,000
March 1 - March 31, 2015		-		-		-		10,077,000
April 1 - April 30, 2015		45,813		21.83		45,813		9,077,000
May 1 - May 31, 2015		-		-		-		9,077,000
June 1 - June 30, 2015		32,700		22.74		32,700		8,333,000
July 1 - July 31, 2015		9,765		22.91		9,765		8,109,000
August 1 - August 31, 2015		48,400		22.97		48,400		6,998,000
September 1 - September 30, 2015		107,500		23.47		107,500		4,475,000
Total		2,472,285		24.48		2,472,285

⁽¹⁾On January 30, 2014, the Company’s Board of Directors authorized a share repurchase program to purchase up to $65.0 million worth of the Company’s common stock on the open market or in privately negotiated transactions. The repurchase program is authorized through December 31, 2015.

⁽²⁾For purposes of the Company’s consolidated financial statements included in this Form 10-Q, the impact of these repurchases is recorded according to settlement dates.

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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
10.12	Union Bankshares Corporation Stock and Incentive Plan (as amended and restated effective April 21, 2015) (incorporated by reference to Exhibit 99.1 to Form S-8 Registration Statement; SEC file no. 333-203580).
10.23	Form of Time-Based Restricted Stock Agreement under Union Bankshares Corporation Stock and Incentive Plan (incorporated by reference to Exhibit 10.23 to Current Report on Form 8-K filed on April 27, 2015).
10.24	Form of Performance Share Unit Agreement under Union Bankshares Corporation Stock and Incentive Plan (incorporated by reference to Exhibit 10.24 to Current Report on Form 8-K filed on April 27, 2015).
10.25	Letter Agreement, dated September 28, 2015, between Union Bankshares Corporation and John C. Neal
	(incorporated by reference to Exhibit 10.2 to Current Report on Form 8-K filed on October 1, 2015).
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, 2015 pursuant to Rule 405 of Regulation S-T: (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Income, (iii) the Consolidated Statements of Comprehensive Income, (iv) the Consolidated Statements of Changes in Shareholders’ Equity, (v) the Consolidated Statements of Cash Flows and (vi) the Notes to the Consolidated Financial Statements.

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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 5, 2015	By:	/s/ G. William Beale
		G. William Beale,
		President and Chief Executive Officer
		(principal executive officer)

Date: November 5, 2015	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 Shareholders 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. 333-165874, Form S-3 No. 333-144481, Form S-3 No. 33-78060, Form S-3 No. 333-102012, Form S-3 No. 333-81199, 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 5, 2015 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, 2015.

Under Rule 436(c) of the 1933 Act, our reports are 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 5, 2015

EX-31.01

Exhibit 31.01

CERTIFICATIONS

I, G. William Beale, certify that:

1.   I have reviewed this 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 5, 2015

/s/ G. William Beale

G. William Beale,

President and Chief Executive Officer

EX-31.02

Exhibit 31.02

CERTIFICATIONS

I, Robert M. Gorman, certify that:

1.   I have reviewed this 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 5, 2015

/s/ Robert M. Gorman

Robert M. Gorman,

Executive Vice President and Chief Financial Officer

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 period ending September 30, 2015 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/ G. William Beale

G. William Beale, President and Chief Executive Officer

/s/ Robert M. Gorman

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

November 5, 2015

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

SECURITIES (Amortized Cost, Gross Unrealized Gains and Losses, and Estimated Fair Values of Investment Securities) (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Amortized cost, gross unrealized gains and losses, and estimated fair values of investment securities
Amortized Cost	$ 873,051	$ 1,075,235
Gross Unrealized Gains	18,313	28,737
Gross Unrealized (Losses)	(2,672)	(1,858)
Estimated Fair Value	888,692	1,102,114
US Government Agencies Debt Securities [Member]
Amortized cost, gross unrealized gains and losses, and estimated fair values of investment securities
Amortized Cost	8,068	8,313
Gross Unrealized Gains	$ 343	166
Gross Unrealized (Losses)		(25)
Estimated Fair Value	$ 8,411	8,454
Obligations of States and Political Subdivisions [Member]
Amortized cost, gross unrealized gains and losses, and estimated fair values of investment securities
Amortized Cost	241,655	427,483
Gross Unrealized Gains	8,750	18,885
Gross Unrealized (Losses)	(512)	(721)
Estimated Fair Value	249,893	445,647
Corporate and Other Securities [Member]
Amortized cost, gross unrealized gains and losses, and estimated fair values of investment securities
Amortized Cost	73,917	78,744
Gross Unrealized Gains	70	244
Gross Unrealized (Losses)	(1,525)	(308)
Estimated Fair Value	72,462	78,680
Mortgage Backed Securities [Member]
Amortized cost, gross unrealized gains and losses, and estimated fair values of investment securities
Amortized Cost	539,230	550,716
Gross Unrealized Gains	9,122	9,411
Gross Unrealized (Losses)	(635)	(798)
Estimated Fair Value	547,717	559,329
Other Securities [Member]
Amortized cost, gross unrealized gains and losses, and estimated fair values of investment securities
Amortized Cost	10,181	9,979
Gross Unrealized Gains	28	31
Gross Unrealized (Losses)		(6)
Estimated Fair Value	$ 10,209	$ 10,004

XML

LOANS AND ALLOWANCE FOR LOAN LOSSES (Loans Receivables Related Risk Rating Excluding Purchased Impaired Loans) (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014	Sep. 30, 2014
Financing Receivable, Recorded Investment [Line Items]
Loans receivables related risk rating	$ 5,543,621	$ 5,345,996	$ 5,171,003
Commercial Construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivables related risk rating	429,645	341,280
Commercial Real Estate - Owner Occupied [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivables related risk rating	863,551	875,443
Commercial Real Estate - Non-Owner Occupied [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivables related risk rating	1,586,334	1,509,159
Raw Land and Lots [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivables related risk rating	187,182	211,225
Single Family Investment Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivables related risk rating	436,340	412,494
Commercial and Industrial [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivables related risk rating	444,199	393,776
Other Commercial [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivables related risk rating	89,344	81,106
Excluding Purchased Impaired [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivables related risk rating	3,966,919	3,730,248
Excluding Purchased Impaired [Member] | Commercial Construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivables related risk rating	427,186	337,498
Excluding Purchased Impaired [Member] | Commercial Real Estate - Owner Occupied [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivables related risk rating	834,856	844,276
Excluding Purchased Impaired [Member] | Commercial Real Estate - Non-Owner Occupied [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivables related risk rating	1,571,162	1,480,290
Excluding Purchased Impaired [Member] | Raw Land and Lots [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivables related risk rating	182,041	203,798
Excluding Purchased Impaired [Member] | Single Family Investment Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivables related risk rating	421,173	395,615
Excluding Purchased Impaired [Member] | Commercial and Industrial [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivables related risk rating	441,950	389,921
Excluding Purchased Impaired [Member] | Other Commercial [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivables related risk rating	88,551	78,850
Excluding Purchased Impaired [Member] | 0-3 [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivables related risk rating	989,887
Excluding Purchased Impaired [Member] | 0-3 [Member] | Commercial Construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivables related risk rating	37,671
Excluding Purchased Impaired [Member] | 0-3 [Member] | Commercial Real Estate - Owner Occupied [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivables related risk rating	179,846
Excluding Purchased Impaired [Member] | 0-3 [Member] | Commercial Real Estate - Non-Owner Occupied [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivables related risk rating	467,026
Excluding Purchased Impaired [Member] | 0-3 [Member] | Raw Land and Lots [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivables related risk rating	12,036
Excluding Purchased Impaired [Member] | 0-3 [Member] | Single Family Investment Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivables related risk rating	63,146
Excluding Purchased Impaired [Member] | 0-3 [Member] | Commercial and Industrial [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivables related risk rating	186,807
Excluding Purchased Impaired [Member] | 0-3 [Member] | Other Commercial [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivables related risk rating	43,355
Excluding Purchased Impaired [Member] | 1-3 [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivables related risk rating		805,908
Excluding Purchased Impaired [Member] | 1-3 [Member] | Commercial Construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivables related risk rating		22,512
Excluding Purchased Impaired [Member] | 1-3 [Member] | Commercial Real Estate - Owner Occupied [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivables related risk rating		185,789
Excluding Purchased Impaired [Member] | 1-3 [Member] | Commercial Real Estate - Non-Owner Occupied [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivables related risk rating		356,263
Excluding Purchased Impaired [Member] | 1-3 [Member] | Raw Land and Lots [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivables related risk rating		11,162
Excluding Purchased Impaired [Member] | 1-3 [Member] | Single Family Investment Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivables related risk rating		59,638
Excluding Purchased Impaired [Member] | 1-3 [Member] | Commercial and Industrial [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivables related risk rating		138,973
Excluding Purchased Impaired [Member] | 1-3 [Member] | Other Commercial [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivables related risk rating		31,571
Excluding Purchased Impaired [Member] | 4 [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivables related risk rating	2,764,246	2,662,344
Excluding Purchased Impaired [Member] | 4 [Member] | Commercial Construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivables related risk rating	355,150	289,064
Excluding Purchased Impaired [Member] | 4 [Member] | Commercial Real Estate - Owner Occupied [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivables related risk rating	622,852	620,587
Excluding Purchased Impaired [Member] | 4 [Member] | Commercial Real Estate - Non-Owner Occupied [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivables related risk rating	1,048,396	1,041,515
Excluding Purchased Impaired [Member] | 4 [Member] | Raw Land and Lots [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivables related risk rating	122,236	128,281
Excluding Purchased Impaired [Member] | 4 [Member] | Single Family Investment Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivables related risk rating	339,683	311,900
Excluding Purchased Impaired [Member] | 4 [Member] | Commercial and Industrial [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivables related risk rating	235,543	230,084
Excluding Purchased Impaired [Member] | 4 [Member] | Other Commercial [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivables related risk rating	40,386	40,913
Excluding Purchased Impaired [Member] | 5 [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivables related risk rating	85,364	89,056
Excluding Purchased Impaired [Member] | 5 [Member] | Commercial Construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivables related risk rating	22,661	11,932
Excluding Purchased Impaired [Member] | 5 [Member] | Commercial Real Estate - Owner Occupied [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivables related risk rating	13,967	15,003
Excluding Purchased Impaired [Member] | 5 [Member] | Commercial Real Estate - Non-Owner Occupied [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivables related risk rating	19,654	22,358
Excluding Purchased Impaired [Member] | 5 [Member] | Raw Land and Lots [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivables related risk rating	7,307	16,803
Excluding Purchased Impaired [Member] | 5 [Member] | Single Family Investment Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivables related risk rating	8,430	9,750
Excluding Purchased Impaired [Member] | 5 [Member] | Commercial and Industrial [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivables related risk rating	10,732	9,392
Excluding Purchased Impaired [Member] | 5 [Member] | Other Commercial [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivables related risk rating	2,613	3,818
Excluding Purchased Impaired [Member] | 6 [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivables related risk rating	64,321	63,672
Excluding Purchased Impaired [Member] | 6 [Member] | Commercial Construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivables related risk rating	8,857	10,906
Excluding Purchased Impaired [Member] | 6 [Member] | Commercial Real Estate - Owner Occupied [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivables related risk rating	6,526	7,688
Excluding Purchased Impaired [Member] | 6 [Member] | Commercial Real Estate - Non-Owner Occupied [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivables related risk rating	22,369	28,388
Excluding Purchased Impaired [Member] | 6 [Member] | Raw Land and Lots [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivables related risk rating	15,792	4,783
Excluding Purchased Impaired [Member] | 6 [Member] | Single Family Investment Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivables related risk rating	5,210	6,680
Excluding Purchased Impaired [Member] | 6 [Member] | Commercial and Industrial [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivables related risk rating	4,669	4,383
Excluding Purchased Impaired [Member] | 6 [Member] | Other Commercial [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivables related risk rating	898	844
Excluding Purchased Impaired [Member] | 7 [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivables related risk rating	60,869	109,268
Excluding Purchased Impaired [Member] | 7 [Member] | Commercial Construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivables related risk rating	2,847	3,084
Excluding Purchased Impaired [Member] | 7 [Member] | Commercial Real Estate - Owner Occupied [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivables related risk rating	9,433	15,209
Excluding Purchased Impaired [Member] | 7 [Member] | Commercial Real Estate - Non-Owner Occupied [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivables related risk rating	13,717	31,766
Excluding Purchased Impaired [Member] | 7 [Member] | Raw Land and Lots [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivables related risk rating	24,670	42,769
Excluding Purchased Impaired [Member] | 7 [Member] | Single Family Investment Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivables related risk rating	4,704	7,647
Excluding Purchased Impaired [Member] | 7 [Member] | Commercial and Industrial [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivables related risk rating	4,199	7,089
Excluding Purchased Impaired [Member] | 7 [Member] | Other Commercial [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivables related risk rating	1,299	$ 1,704
Excluding Purchased Impaired [Member] | 8 [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivables related risk rating	$ 2,232
Excluding Purchased Impaired [Member] | 8 [Member] | Commercial Construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivables related risk rating
Excluding Purchased Impaired [Member] | 8 [Member] | Commercial Real Estate - Owner Occupied [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivables related risk rating	$ 2,232
Excluding Purchased Impaired [Member] | 8 [Member] | Commercial Real Estate - Non-Owner Occupied [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivables related risk rating
Excluding Purchased Impaired [Member] | 8 [Member] | Raw Land and Lots [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivables related risk rating
Excluding Purchased Impaired [Member] | 8 [Member] | Single Family Investment Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivables related risk rating
Excluding Purchased Impaired [Member] | 8 [Member] | Commercial and Industrial [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivables related risk rating
Excluding Purchased Impaired [Member] | 8 [Member] | Other Commercial [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans receivables related risk rating

XML

LOANS AND ALLOWANCE FOR LOAN LOSSES (Summary of Aging of the Loan Portfolio by Class) (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014	Sep. 30, 2014
Summary of aging of the loan portfolio, by class
30-59 Days Past Due	$ 13,106	$ 29,297
60-89 Days Past Due	9,270	8,730
Greater Than 90 Days and still Accruing	5,164	10,047
Purchased Impaired (net of credit mark)	78,606	105,788	$ 119,743
Nonaccrual	12,966	19,255
Current	5,424,509	5,172,879
Total loans	5,543,621	5,345,996	$ 5,171,003
Commercial Construction [Member]
Summary of aging of the loan portfolio, by class
30-59 Days Past Due	$ 296	$ 815
60-89 Days Past Due
Greater Than 90 Days and still Accruing	$ 126
Purchased Impaired (net of credit mark)	2,459	$ 3,782
Nonaccrual	1,786	968
Current	424,978	335,715
Total loans	429,645	341,280
Commercial Real Estate - Owner Occupied [Member]
Summary of aging of the loan portfolio, by class
30-59 Days Past Due	1,148	621
60-89 Days Past Due	165	1,542
Greater Than 90 Days and still Accruing	680	1,683
Purchased Impaired (net of credit mark)	28,695	31,167
Nonaccrual	3,989	1,060
Current	828,874	839,370
Total loans	863,551	875,443
Commercial Real Estate - Non-Owner Occupied [Member]
Summary of aging of the loan portfolio, by class
30-59 Days Past Due	752	3,984
60-89 Days Past Due	974	237
Greater Than 90 Days and still Accruing	1,821	91
Purchased Impaired (net of credit mark)	15,172	28,869
Nonaccrual	200	5,902
Current	1,567,415	1,470,076
Total loans	1,586,334	1,509,159
Raw Land and Lots [Member]
Summary of aging of the loan portfolio, by class
30-59 Days Past Due	$ 93	145
60-89 Days Past Due		44
Greater Than 90 Days and still Accruing		194
Purchased Impaired (net of credit mark)	$ 5,141	7,427
Nonaccrual	493	2,359
Current	181,455	201,056
Total loans	187,182	211,225
Single Family Investment Real Estate [Member]
Summary of aging of the loan portfolio, by class
30-59 Days Past Due	536	2,825
60-89 Days Past Due	35	338
Greater Than 90 Days and still Accruing	228	734
Purchased Impaired (net of credit mark)	15,167	16,879
Nonaccrual	1,157	2,070
Current	419,217	389,648
Total loans	436,340	412,494
Commercial and Industrial [Member]
Summary of aging of the loan portfolio, by class
30-59 Days Past Due	721	1,250
60-89 Days Past Due	696	529
Greater Than 90 Days and still Accruing	494	549
Purchased Impaired (net of credit mark)	2,249	3,855
Nonaccrual	903	3,286
Current	439,136	384,307
Total loans	444,199	393,776
Other Commercial [Member]
Summary of aging of the loan portfolio, by class
30-59 Days Past Due	$ 643	42
60-89 Days Past Due		$ 2
Greater Than 90 Days and still Accruing
Purchased Impaired (net of credit mark)	$ 793	$ 2,256
Nonaccrual	61	74
Current	87,847	78,732
Total loans	89,344	81,106
Mortgage [Member]
Summary of aging of the loan portfolio, by class
30-59 Days Past Due	2,485	12,851
60-89 Days Past Due	5,079	4,300
Greater Than 90 Days and still Accruing	875	4,095
Purchased Impaired (net of credit mark)	5,561	7,394
Nonaccrual	2,276	2,485
Current	450,142	447,026
Total loans	466,418	478,151
Consumer Construction [Member]
Summary of aging of the loan portfolio, by class
30-59 Days Past Due	$ 250	$ 120
60-89 Days Past Due
Greater Than 90 Days and still Accruing		$ 844
Purchased Impaired (net of credit mark)	$ 251	$ 516
Nonaccrual	819
Current	54,398	$ 72,688
Total loans	55,718	74,168
Indirect Auto [Member]
Summary of aging of the loan portfolio, by class
30-59 Days Past Due	1,319	1,593
60-89 Days Past Due	270	263
Greater Than 90 Days and still Accruing	$ 116	$ 317
Purchased Impaired (net of credit mark)
Nonaccrual	$ 89
Current	216,134	$ 197,238
Total loans	217,928	199,411
Indirect Marine [Member]
Summary of aging of the loan portfolio, by class
30-59 Days Past Due	$ 150	$ 150
60-89 Days Past Due
Greater Than 90 Days and still Accruing	$ 94
Purchased Impaired (net of credit mark)
Nonaccrual		$ 201
Current	$ 42,519	42,839
Total loans	42,763	43,190
HELOCs [Member]
Summary of aging of the loan portfolio, by class
30-59 Days Past Due	3,192	3,082
60-89 Days Past Due	1,085	955
Greater Than 90 Days and still Accruing	282	820
Purchased Impaired (net of credit mark)	1,812	2,000
Nonaccrual	611	258
Current	485,220	493,464
Total loans	492,202	500,579
Credit Card [Member]
Summary of aging of the loan portfolio, by class
30-59 Days Past Due		232
60-89 Days Past Due		108
Greater Than 90 Days and still Accruing		$ 219
Purchased Impaired (net of credit mark)
Nonaccrual
Current		$ 23,666
Total loans		24,225
Other Consumer [Member]
Summary of aging of the loan portfolio, by class
30-59 Days Past Due	1,521	1,587
60-89 Days Past Due	966	412
Greater Than 90 Days and still Accruing	448	501
Purchased Impaired (net of credit mark)	1,306	1,643
Nonaccrual	582	592
Current	227,174	197,054
Total loans	$ 231,997	$ 201,789

XML

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Change in Accumulated Other Comprehensive Income) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Change in accumulated other comprehensive income
Unrealized Gains (losses) on Securities, Beginning Balance	$ 8,738	$ 14,202	$ 17,439	$ 1,192
Accretion on unrealized loss for AFS securities transferred to HTM, Beginning Balance	5,043
Change in Fair Value of Cash Flow Hedge, Beginning Balance	(4,552)	(3,321)	(5,184)	(3,382)
Total, Beginning Balance	9,229	10,881	12,255	(2,190)
Unrealized gain transferred from AFS to HTM, Unrealized Gains (Losses) on AFS Securities			(5,251)
Unrealized gain transferred from AFS to HTM, Accretion on unrealized gain for AFS securities transferred to HTM			$ 5,251
Unrealized gain transferred from AFS to HTM, Total
Other comprehensive income (loss) before reclass, Unrealized Gains (losses) on Securities	1,250	1,798	$ (1,812)	14,843
Other comprehensive income (loss) before reclass, Accretion on unrealized loss for AFS securities transferred to HTM	(308)		(516)
Other comprehensive income (loss) before reclass, Change in Fair Value of Cash Flow Hedge	(2,328)	(228)	(2,009)	(431)
Other comprehensive income (loss) before reclass, Total	(1,386)	1,570	(4,337)	14,412
Amounts reclassified from accumulated other comprehensive income, Unrealized Gains (losses) on Securities	146	(647)	(242)	(682)
Amounts reclassified from accumulated other comprehensive income, Change in Fair Value of Cash Flow Hedge	157	164	470	428
Amounts reclassified from accumulated other comprehensive income	303	(483)	228	(254)
Net current period other comprehensive income (loss), Unrealized Gains (losses) on Securities	1,396	1,151	(2,054)	14,161
Net current period other comprehensive income (loss), Accretion on unrealized loss for AFS securities transferred to HTM	(308)		(516)
Net current period other comprehensive income (loss), Change in Fair Value of Cash Flow Hedge	(2,171)	(64)	(1,539)	(3)
Other comprehensive income (loss)	(1,083)	1,087	(4,109)	14,158
Unrealized Gains (losses) on Securities, Ending Balance	10,134	15,353	10,134	15,353
Accretion on unrealized loss for AFS securities transferred to HTM, Ending Balance	4,735		4,735
Change in Fair Value of Cash Flow Hedge, Ending Balance	(6,723)	(3,385)	(6,723)	(3,385)
Total, Ending Balance	$ 9,229	$ 10,881	$ 12,255	$ (2,190)	$ 8,146	$ 11,968

XML

LOANS AND ALLOWANCE FOR LOAN LOSSES (Loans Receivables Related Risk Rating Including Purchased Impaired Loans) (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014	Sep. 30, 2014
Financing Receivable, Recorded Investment [Line Items]
Total	$ 78,606	$ 105,788	$ 119,743
Commercial Construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	2,459	3,782
Commercial Real Estate - Owner Occupied [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	28,695	31,167
Commercial Real Estate - Non-Owner Occupied [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	15,172	28,869
Raw Land and Lots [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	5,141	7,427
Single Family Investment Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	15,167	16,879
Commercial and Industrial [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	2,249	3,855
Other Commercial [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	793	2,256
Commercial [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	$ 69,676	$ 94,235	$ 106,021
4 [Member] | Commercial Construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Total
4 [Member] | Commercial Real Estate - Owner Occupied [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	$ 5,203	$ 1,525
4 [Member] | Commercial Real Estate - Non-Owner Occupied [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	3,492	2,837
4 [Member] | Raw Land and Lots [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	1,425	1,564
4 [Member] | Single Family Investment Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	4,598	2,807
4 [Member] | Commercial and Industrial [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	357	$ 437
4 [Member] | Other Commercial [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	86
4 [Member] | Commercial [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	$ 15,161	$ 9,170
5 [Member] | Commercial Construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Total
5 [Member] | Commercial Real Estate - Owner Occupied [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	$ 700	$ 3,546
5 [Member] | Commercial Real Estate - Non-Owner Occupied [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	6,288	934
5 [Member] | Raw Land and Lots [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	517	189
5 [Member] | Single Family Investment Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	1,689	$ 1,253
5 [Member] | Commercial and Industrial [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	$ 12
5 [Member] | Other Commercial [Member]
Financing Receivable, Recorded Investment [Line Items]
Total
5 [Member] | Commercial [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	$ 9,206	$ 5,922
6 [Member] | Commercial Construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	2,000	3,130
6 [Member] | Commercial Real Estate - Owner Occupied [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	9,016	10,880
6 [Member] | Commercial Real Estate - Non-Owner Occupied [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	2,867	18,736
6 [Member] | Raw Land and Lots [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	2,317	3,148
6 [Member] | Single Family Investment Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	4,322	6,462
6 [Member] | Commercial and Industrial [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	360	913
6 [Member] | Other Commercial [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	387	510
6 [Member] | Commercial [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	$ 21,269	43,779
7 [Member] | Commercial Construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Total		194
7 [Member] | Commercial Real Estate - Owner Occupied [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	$ 13,776	15,216
7 [Member] | Commercial Real Estate - Non-Owner Occupied [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	2,525	6,362
7 [Member] | Raw Land and Lots [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	882	2,526
7 [Member] | Single Family Investment Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	4,558	6,357
7 [Member] | Commercial and Industrial [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	1,498	2,477
7 [Member] | Other Commercial [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	320	1,746
7 [Member] | Commercial [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	23,559	34,878
8 [Member] | Commercial Construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	$ 459	458
8 [Member] | Commercial Real Estate - Owner Occupied [Member]
Financing Receivable, Recorded Investment [Line Items]
Total
8 [Member] | Commercial Real Estate - Non-Owner Occupied [Member]
Financing Receivable, Recorded Investment [Line Items]
Total
8 [Member] | Raw Land and Lots [Member]
Financing Receivable, Recorded Investment [Line Items]
Total
8 [Member] | Single Family Investment Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total
8 [Member] | Commercial and Industrial [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	$ 22	28
8 [Member] | Other Commercial [Member]
Financing Receivable, Recorded Investment [Line Items]
Total
8 [Member] | Commercial [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	$ 481	486
Purchased Impaired [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	78,606	105,788
Purchased Impaired [Member] | Commercial Construction [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	2,459	3,782
Purchased Impaired [Member] | Commercial Real Estate - Owner Occupied [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	28,695	31,167
Purchased Impaired [Member] | Commercial Real Estate - Non-Owner Occupied [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	15,172	28,869
Purchased Impaired [Member] | Raw Land and Lots [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	5,141	7,427
Purchased Impaired [Member] | Single Family Investment Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	15,167	16,879
Purchased Impaired [Member] | Commercial and Industrial [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	2,249	3,855
Purchased Impaired [Member] | Other Commercial [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	$ 793	$ 2,256

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SEGMENT REPORTING DISCLOSURES (Narrative) (Details)	3 Months Ended	5 Months Ended	7 Months Ended	9 Months Ended
	Sep. 30, 2015 store	May. 31, 2014	Dec. 31, 2014	Sep. 30, 2015 store segment
Segment Reporting Information [Line Items]
Number of reportable segments				2
Number of retail locations | store	124			124
Number of subsidiary bank				1
Warehouse Line of Credit [Member] | LIBOR [Member]
Segment Reporting Information [Line Items]
Spread on 3-Month LIBOR	0.15%	1.50%	1.50%	0.15%
Mortgage banking segment interest - floor	0.00%	2.00%	0.00%	0.00%

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LOANS AND ALLOWANCE FOR LOAN LOSSES (Narrative) (Details)	9 Months Ended
	Sep. 30, 2015 USD ($)	Sep. 30, 2014 USD ($) loan	Dec. 31, 2014 USD ($)
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	$ 5,543,621,000	$ 5,171,003,000	$ 5,345,996,000
Period for restructured loan to be considered default	90 days
Loans considered to be trouble debt restructurings	$ 11,555,000		26,777,000
Purchased Impaired (net of credit mark)	78,606,000	$ 119,743,000	105,788,000
Number of restructured loans that defaulted in current period | loan		1
Restructured loans that defaulted in the current period		$ 24,000
Provision for unfunded commitments	300,000
purchased impaired loans (gross)	95,700,000		126,300,000
Acquired Performing Loan Portfolio [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Loans	1,500,000,000		1,800,000,000
Remaining discount on acquired loans	$ 21,900,000		$ 24,300,000

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EARNINGS PER SHARE (Tables)

9 Months Ended

Sep. 30, 2015

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, 2015 and 2014 (in thousands except per share data):

	Net Income Available to Common Shareholders (Numerator)		Weighted Average Common Shares (Denominator)	Per Share Amount
For the three months ended September 30, 2015
Net income, basic	$	18,216	45,087	$	0.40
Add: potentially dilutive common shares - stock awards		-	84		-
Diluted	$	18,216	45,171	$	0.40
For the three months ended September 30, 2014
Net income, basic	$	14,817	45,649	$	0.32
Add: potentially dilutive common shares - stock awards		-	89		-
Diluted	$	14,817	45,738	$	0.32
For the nine months ended September 30, 2015
Net income, basic	$	49,264	45,107	$	1.09
Add: potentially dilutive common shares - stock awards		-	82		-
Diluted	$	49,264	45,189	$	1.09
For the nine months ended September 30, 2014
Net income, basic	$	37,199	46,269	$	0.80
Add: potentially dilutive common shares - stock awards		-	98		-
Diluted	$	37,199	46,367	$	0.80

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SEGMENT REPORTING DISCLOSURES (Information About Reportable Segments and Reconciliation) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014
Information about reportable segments and reconciliation
Net interest income	$ 63,444	$ 64,479	$ 189,229	$ 191,953
Provision for loan losses	2,062	1,800	7,561	3,300
Net interest income after provision for loan losses	61,382	62,679	181,668	188,653
Noninterest income	16,725	16,318	47,990	46,385
Noninterest expenses	53,325	59,413	162,405	185,665
Income before income taxes	24,782	19,584	67,253	49,373
Income tax expense (benefit)	6,566	4,767	17,989	12,174
Net income	18,216	14,817	49,264	37,199
Total assets	7,594,313	7,193,883	7,594,313	7,193,883	$ 7,358,643
Community Bank [Member]
Information about reportable segments and reconciliation
Net interest income	63,075	64,162	188,240	191,090
Provision for loan losses	2,000	1,800	7,450	3,300
Net interest income after provision for loan losses	61,075	62,362	180,790	187,790
Noninterest income	14,287	13,884	40,658	38,964
Noninterest expenses	50,674	55,680	154,011	173,268
Income before income taxes	24,688	20,566	67,437	53,486
Income tax expense (benefit)	6,531	5,121	18,060	13,678
Net income	18,157	15,445	49,377	39,808
Total assets	7,588,606	7,188,596	7,588,606	7,188,596
Mortgage [Member]
Information about reportable segments and reconciliation
Net interest income	369	317	989	863
Provision for loan losses	62		111
Net interest income after provision for loan losses	307	317	878	863
Noninterest income	2,608	2,604	7,844	7,932
Noninterest expenses	2,821	3,903	8,906	12,908
Income before income taxes	94	(982)	(184)	(4,113)
Income tax expense (benefit)	35	(354)	(71)	(1,504)
Net income	59	(628)	(113)	(2,609)
Total assets	62,127	41,857	62,127	41,857
Eliminations [Member]
Information about reportable segments and reconciliation
Noninterest income	(170)	(170)	(512)	(511)
Noninterest expenses	(170)	(170)	(512)	(511)
Total assets	$ (56,420)	$ (36,570)	$ (56,420)	$ (36,570)

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FAIR VALUE MEASUREMENTS (Schedule of Financial Assets Measured at Fair Value on Nonrecurring Basis) (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Schedule of financial assets measured at fair value on nonrecurring basis
Loans held for sale	$ 65,713	$ 42,519
Other real estate owned	22,094	28,118
Fair Value, Measurements, Nonrecurring [Member]
Schedule of financial assets measured at fair value on nonrecurring basis
Loans held for sale	65,713	42,519
Impaired loans	10,416	15,797
Other real estate owned	$ 22,094	$ 28,118
Quoted Prices in Active Markets for Identical Assets Level 1 [Member]
Schedule of financial assets measured at fair value on nonrecurring basis
Loans held for sale
Quoted Prices in Active Markets for Identical Assets Level 1 [Member] | Fair Value, Measurements, Nonrecurring [Member]
Schedule of financial assets measured at fair value on nonrecurring basis
Loans held for sale
Impaired loans
Other real estate owned
Significant Other Observable Inputs Level 2 [Member]
Schedule of financial assets measured at fair value on nonrecurring basis
Loans held for sale	$ 65,713	$ 42,519
Significant Other Observable Inputs Level 2 [Member] | Fair Value, Measurements, Nonrecurring [Member]
Schedule of financial assets measured at fair value on nonrecurring basis
Loans held for sale	$ 65,713	$ 42,519
Impaired loans
Other real estate owned
Significant Unobservable Inputs Level 3 [Member]
Schedule of financial assets measured at fair value on nonrecurring basis
Loans held for sale
Significant Unobservable Inputs Level 3 [Member] | Fair Value, Measurements, Nonrecurring [Member]
Schedule of financial assets measured at fair value on nonrecurring basis
Loans held for sale
Impaired loans	$ 10,416	$ 15,797
Other real estate owned	$ 22,094	$ 28,118

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INTANGIBLE ASSETS (Narrative) (Details) - USD ($) $ in Thousands	3 Months Ended			9 Months Ended		12 Months Ended
	Sep. 30, 2015	Jun. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014	Jan. 01, 2014
Finite-Lived Intangible Assets [Line Items]
Intangible assets, amortization expense	$ 2,074		$ 2,391	$ 6,435	$ 7,462	$ 9,800
Impairment charges		$ 0
Core deposit intangibles, net	25,320		$ 34,089	25,320	$ 34,089	31,755
Goodwill	$ 293,522			$ 293,522		$ 293,522
Core Deposits [Member] | Minimum [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible assets, amortization period				4 years
Core Deposits [Member] | Maximum [Member]
Finite-Lived Intangible Assets [Line Items]
Intangible assets, amortization period				14 years
StellarOne Bank [Member]
Finite-Lived Intangible Assets [Line Items]
Core deposit intangibles, net							$ 29,600
Goodwill							$ 234,100

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EARNINGS PER SHARE (Narrative) (Details) - shares	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
EARNINGS PER SHARE [Abstract]
Anti-dilutive stock awards	51,179	155,433	54,475	130,499

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EARNINGS PER SHARE (Reconcilement 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, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Reconcilement of the denominators of the basic and diluted EPS computations
Basic EPS, Net Income Available to Common Stockholders (Numerator)	$ 18,216	$ 14,817	$ 49,264	$ 37,199
Basic EPS, Weighted Average Shares (Denominator)	45,087,000	45,649,000	45,107,000	46,269,000
Basic EPS, Per Share Amount	$ 0.40	$ 0.32	$ 1.09	$ 0.80
Effect of dilutive stock awards, Weighted Average Shares (Denominator)	84,000	89,000	82,000	98,000
Diluted EPS, Net Income Available to Common Stockholders (Numerator)	$ 18,216	$ 14,817	$ 49,264	$ 37,199
Diluted EPS, Weighted Average Common Shares	45,171,610	45,738,554	45,189,578	46,367,156
Diluted EPS, Per Share Amount	$ 0.40	$ 0.32	$ 1.09	$ 0.80

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FAIR VALUE MEASUREMENTS (Narrative) (Details) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015 USD ($)	Sep. 30, 2014 USD ($)	Sep. 30, 2015 USD ($) item	Sep. 30, 2014 USD ($)	Dec. 31, 2014
FAIR VALUE MEASUREMENTS [Abstract]
Weighted average pull through rate	80.00%		80.00%		90.00%
Minimum number of market participants | item			4,000
Total valuation expenses related to OREO properties	$ 473	$ 6,200	$ 1,773	$ 7,265

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SECURITIES (Tables)

9 Months Ended

Sep. 30, 2015

Gross Realized Gains and Losses of the Sale of Securities

The following table presents the gross realized gains and losses on the sale of securities available for sale and the proceeds from the sale of securities during the three and nine months ended September 30, 2015 (dollars in thousands).  The Company did not sell any investment securities that are held to maturity.

	Three months ended		Nine months ended
	September 30, 2015		September 30, 2015
Realized gains (losses):
Gross realized gains	$	75	$	759
Gross realized losses		-		(87)
Net realized gains	$	75	$	672
Proceeds from sales of securities	$	5,771	$	63,928

The following table presents the gross realized gains and losses on the sale of securities available for sale and the proceeds from the sale of securities during the three and nine months ended September 30, 2014 (dollars in thousands).

	Three months ended		Nine months ended
	September 30, 2014		September 30, 2014
Realized gains (losses):
Gross realized gains	$	1,034	$	1,498
Gross realized losses		(39)		(49)
Net realized gains	$	995	$	1,449
Proceeds from sales of securities	$	14,370	$	273,447

Available-for-sale Securities [Member]

Amortized Cost, Gross Unrealized Gains and Losses, and Estimated Fair Values of Available for Sale Securities

The amortized cost, gross unrealized gains and losses, and estimated fair values of securities available for sale as of September 30, 2015 and December 31, 2014 are summarized as follows (dollars in thousands):

	Amortized		Gross Unrealized				Estimated
	Cost		Gains		(Losses)		Fair Value
September 30, 2015
U.S. government and agency securities	$	8,068	$	343	$	-	$	8,411
Obligations of states and political subdivisions		241,655		8,750		(512)		249,893
Corporate bonds		73,917		70		(1,525)		72,462
Mortgage-backed securities		539,230		9,122		(635)		547,717
Other securities		10,181		28		-		10,209
Total available for sale securities	$	873,051	$	18,313	$	(2,672)	$	888,692
December 31, 2014
U.S. government and agency securities	$	8,313	$	166	$	(25)	$	8,454
Obligations of states and political subdivisions		427,483		18,885		(721)		445,647
Corporate bonds		78,744		244		(308)		78,680
Mortgage-backed securities		550,716		9,411		(798)		559,329
Other securities		9,979		31		(6)		10,004
Total available for sale securities	$	1,075,235	$	28,737	$	(1,858)	$	1,102,114

Schedule of Gross Unrealized Losses and Fair Value of Investments

The following table shows the gross unrealized losses and fair value (in thousands) of the Company’s available for sale investments with unrealized losses that are not deemed to be other-than-temporarily impaired.  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		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
September 30, 2015
Obligations of states and political subdivisions	$	33,742	$	(252)	$	6,610	$	(260)	$	40,352	$	(512)
Mortgage-backed securities		118,679		(459)		28,026		(176)		146,705		(635)
Corporate bonds and other securities		24,782		(832)		17,886		(693)		42,668		(1,525)
Total available for sale	$	177,203	$	(1,543)	$	52,522	$	(1,129)	$	229,725	$	(2,672)
December 31, 2014
U.S. government and agency securities	$	7,055	$	(25)	$	-	$	-	$	7,055	$	(25)
Obligations of states and political subdivisions		13,602		(93)		42,514		(628)		56,116		(721)
Mortgage-backed securities		60,151		(362)		49,581		(436)		109,732		(798)
Corporate bonds and other securities		43,923		(244)		4,309		(70)		48,232		(314)
Total available for sale	$	124,731	$	(724)	$	96,404	$	(1,134)	$	221,135	$	(1,858)

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, 2015 and December 31, 2014, 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, 2015				December 31, 2014
	Amortized		Estimated		Amortized		Estimated
	Cost		Fair Value		Cost		Fair Value
Due in one year or less	$	16,840	$	16,904	$	19,345	$	19,434
Due after one year through five years		60,862		62,790		41,545		43,070
Due after five years through ten years		263,108		269,177		306,900		314,044
Due after ten years		532,241		539,821		707,445		725,566
Total securities available for sale	$	873,051	$	888,692	$	1,075,235	$	1,102,114

Schedule of Securities Pledged to Secure Public Deposits, Repurchase Agreements, and for Other Purposes

The following table presents 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, 2015 and December 31, 2014 (dollars in thousands):

	September 30, 2015		December 31, 2014
	Fair Value		Fair Value
Public deposits	$	150,632	$	312,793
Repurchase agreements		118,249		51,842
Other purposes (1)		30,256		32,360
Total pledged securities	$	299,137	$	396,995
(1)The "Other purposes" category consists of borrowings, derivatives, and accounts held at the Bank.

Held-to-maturity Securities [Member]

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, 2015, 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, 2015
	Carrying		Estimated
	Value (1)		Fair Value
Due in one year or less	$	1,314	$	1,321
Due after one year through five years		5,217		5,267
Due after five years through ten years		39,392		39,521
Due after ten years		153,440		154,210
Total securities held to maturity	$	199,363	$	200,319
(1)The carrying value includes $7.3 million of unrealized gains and losses present at the time of transfer from available for securities, net of any accretion.

Schedule of Securities Pledged to Secure Public Deposits, Repurchase Agreements, and for Other Purposes

The following table presents held to maturity securities which were pledged to secure public deposits as permitted or required by law as of September 30, 2015 (dollars in thousands):

	September 30, 2015
	Fair
	Value
Public deposits	$	200,319
Total pledged securities	$	200,319

Schedule of Carrying Value, 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, 2015 are summarized as follows (dollars in thousands):

	Carrying		Gross Unrealized				Estimated
	Value (1)		Gains		(Losses)		Fair Value
September 30, 2015
Obligations of states and political subdivisions	$	199,363	$	2,882	$	(1,926)	$	200,319
(1)The carrying value includes $7.3 million of unrealized gains and losses present at the time of transfer from available for securities, net of any accretion.

Gross Unrealized Losses and Fair Value of Securities

The following table shows the gross unrealized losses and fair value (in thousands) of the Company’s held to maturity securities with unrealized losses that are not deemed to be other-than-temporarily impaired.  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		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
September 30, 2015
Obligations of states and political subdivisions	$	28,727	$	(1,926)	$	-	$	-	$	28,727	$	(1,926)

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LOANS AND ALLOWANCE FOR LOAN LOSSES (Impaired Loans Individually Evaluated for Impairment by Class) (Details) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2015	Dec. 31, 2014
Financing Receivable, Impaired [Line Items]
Loans without a specific allowance, Recorded Investment	$ 55,895	$ 101,316
Loans without a specific allowance, Unpaid Principal Balance	58,049	109,728
Loans without a specific allowance, YTD Average Investment	56,563	109,502
Loans without a specific allowance, Interest Income Recognized	2,294	4,589
Loans with a specific allowance, Recorded Investment	26,328	30,864
Loans with a specific allowance, Unpaid Principal Balance	28,021	31,127
Loans with a specific allowance, Related Allowance	2,012	4,531
Loans with a specific allowance, YTD Average Investment	27,078	31,682
Loans with a specific allowance, Interest Income Recognized	884	1,282
Recorded Investment	82,223	132,180
Unpaid Principal Balance	86,070	140,855
Year to Date Average Investment	83,641	141,184
Interest Income Recognized	3,178	5,871
Commercial Construction [Member]
Financing Receivable, Impaired [Line Items]
Loans without a specific allowance, Recorded Investment	5,760	5,281
Loans without a specific allowance, Unpaid Principal Balance	6,036	5,367
Loans without a specific allowance, YTD Average Investment	5,126	5,755
Loans without a specific allowance, Interest Income Recognized	187	165
Loans with a specific allowance, Recorded Investment	561	570
Loans with a specific allowance, Unpaid Principal Balance	561	570
Loans with a specific allowance, Related Allowance	40	51
Loans with a specific allowance, YTD Average Investment	629	506
Loans with a specific allowance, Interest Income Recognized	16	13
Commercial Real Estate - Owner Occupied [Member]
Financing Receivable, Impaired [Line Items]
Loans without a specific allowance, Recorded Investment	11,801	15,722
Loans without a specific allowance, Unpaid Principal Balance	11,998	16,430
Loans without a specific allowance, YTD Average Investment	11,602	16,774
Loans without a specific allowance, Interest Income Recognized	356	737
Loans with a specific allowance, Recorded Investment	6,763	5,951
Loans with a specific allowance, Unpaid Principal Balance	7,874	5,999
Loans with a specific allowance, Related Allowance	677	355
Loans with a specific allowance, YTD Average Investment	7,107	5,946
Loans with a specific allowance, Interest Income Recognized	191	280
Commercial Real Estate - Non-Owner Occupied [Member]
Financing Receivable, Impaired [Line Items]
Loans without a specific allowance, Recorded Investment	6,854	22,917
Loans without a specific allowance, Unpaid Principal Balance	7,166	22,917
Loans without a specific allowance, YTD Average Investment	7,025	23,209
Loans without a specific allowance, Interest Income Recognized	212	1,116
Loans with a specific allowance, Recorded Investment	6,863	10,575
Loans with a specific allowance, Unpaid Principal Balance	6,864	10,572
Loans with a specific allowance, Related Allowance	178	2,017
Loans with a specific allowance, YTD Average Investment	6,870	10,823
Loans with a specific allowance, Interest Income Recognized	304	474
Raw Land and Lots [Member]
Financing Receivable, Impaired [Line Items]
Loans without a specific allowance, Recorded Investment	24,762	44,790
Loans without a specific allowance, Unpaid Principal Balance	24,896	47,662
Loans without a specific allowance, YTD Average Investment	25,595	47,988
Loans without a specific allowance, Interest Income Recognized	1,290	2,124
Loans with a specific allowance, Recorded Investment	1,224	1,343
Loans with a specific allowance, Unpaid Principal Balance	1,221	1,373
Loans with a specific allowance, Related Allowance	60	98
Loans with a specific allowance, YTD Average Investment	978	1,472
Loans with a specific allowance, Interest Income Recognized	34	59
Single Family Investment Real Estate [Member]
Financing Receivable, Impaired [Line Items]
Loans without a specific allowance, Recorded Investment	2,295	4,197
Loans without a specific allowance, Unpaid Principal Balance	2,721	4,881
Loans without a specific allowance, YTD Average Investment	2,455	6,534
Loans without a specific allowance, Interest Income Recognized	99	170
Loans with a specific allowance, Recorded Investment	3,018	4,125
Loans with a specific allowance, Unpaid Principal Balance	3,035	4,144
Loans with a specific allowance, Related Allowance	212	562
Loans with a specific allowance, YTD Average Investment	3,052	4,293
Loans with a specific allowance, Interest Income Recognized	113	159
Commercial and Industrial [Member]
Financing Receivable, Impaired [Line Items]
Loans without a specific allowance, Recorded Investment	1,983	4,453
Loans without a specific allowance, Unpaid Principal Balance	2,532	7,933
Loans without a specific allowance, YTD Average Investment	2,115	5,070
Loans without a specific allowance, Interest Income Recognized	47	121
Loans with a specific allowance, Recorded Investment	2,581	2,938
Loans with a specific allowance, Unpaid Principal Balance	2,640	3,009
Loans with a specific allowance, Related Allowance	330	582
Loans with a specific allowance, YTD Average Investment	2,684	3,125
Loans with a specific allowance, Interest Income Recognized	100	138
Other Commercial [Member]
Financing Receivable, Impaired [Line Items]
Loans without a specific allowance, Recorded Investment	876	1,536
Loans without a specific allowance, Unpaid Principal Balance	876	1,538
Loans without a specific allowance, YTD Average Investment	895	1,624
Loans without a specific allowance, Interest Income Recognized	41	90
Loans with a specific allowance, Recorded Investment	423	359
Loans with a specific allowance, Unpaid Principal Balance	451	378
Loans with a specific allowance, Related Allowance	32	32
Loans with a specific allowance, YTD Average Investment	475	442
Loans with a specific allowance, Interest Income Recognized	16	29
Mortgage [Member]
Financing Receivable, Impaired [Line Items]
Loans without a specific allowance, Recorded Investment	333	1,571
Loans without a specific allowance, Unpaid Principal Balance	333	1,582
Loans without a specific allowance, YTD Average Investment	333	1,583
Loans without a specific allowance, Interest Income Recognized	8	58
Loans with a specific allowance, Recorded Investment	3,273	3,323
Loans with a specific allowance, Unpaid Principal Balance	3,522	3,375
Loans with a specific allowance, Related Allowance	362	481
Loans with a specific allowance, YTD Average Investment	3,495	3,381
Loans with a specific allowance, Interest Income Recognized	64	60
Consumer Construction [Member]
Financing Receivable, Impaired [Line Items]
Loans without a specific allowance, Recorded Investment	819
Loans without a specific allowance, Unpaid Principal Balance	821
Loans without a specific allowance, YTD Average Investment	822
Loans without a specific allowance, Interest Income Recognized	29
Loans with a specific allowance, Recorded Investment		375
Loans with a specific allowance, Unpaid Principal Balance		375
Loans with a specific allowance, Related Allowance		34
Loans with a specific allowance, YTD Average Investment		373
Loans with a specific allowance, Interest Income Recognized		19
Indirect Auto [Member]
Financing Receivable, Impaired [Line Items]
Loans without a specific allowance, Unpaid Principal Balance		6
Loans without a specific allowance, YTD Average Investment		4
Loans with a specific allowance, Recorded Investment	89
Loans with a specific allowance, Unpaid Principal Balance	95
Loans with a specific allowance, Related Allowance	1
Loans with a specific allowance, YTD Average Investment	121
Loans with a specific allowance, Interest Income Recognized	5
Indirect Marine [Member]
Financing Receivable, Impaired [Line Items]
Loans without a specific allowance, Recorded Investment		201
Loans without a specific allowance, Unpaid Principal Balance		505
Loans without a specific allowance, YTD Average Investment		281
Loans with a specific allowance, Recorded Investment		192
Loans with a specific allowance, Unpaid Principal Balance		192
Loans with a specific allowance, Related Allowance		5
Loans with a specific allowance, YTD Average Investment		199
Loans with a specific allowance, Interest Income Recognized		15
HELOCs [Member]
Financing Receivable, Impaired [Line Items]
Loans without a specific allowance, Recorded Investment	196	559
Loans without a specific allowance, Unpaid Principal Balance	331	699
Loans without a specific allowance, YTD Average Investment	310	573
Loans without a specific allowance, Interest Income Recognized	10	8
Loans with a specific allowance, Recorded Investment	1,008	434
Loans with a specific allowance, Unpaid Principal Balance	1,038	434
Loans with a specific allowance, Related Allowance	5	4
Loans with a specific allowance, YTD Average Investment	1,032	436
Loans with a specific allowance, Interest Income Recognized	24	17
Other Consumer [Member]
Financing Receivable, Impaired [Line Items]
Loans without a specific allowance, Recorded Investment	216	89
Loans without a specific allowance, Unpaid Principal Balance	339	208
Loans without a specific allowance, YTD Average Investment	285	107
Loans without a specific allowance, Interest Income Recognized	15
Loans with a specific allowance, Recorded Investment	525	679
Loans with a specific allowance, Unpaid Principal Balance	720	706
Loans with a specific allowance, Related Allowance	115	310
Loans with a specific allowance, YTD Average Investment	635	686
Loans with a specific allowance, Interest Income Recognized	$ 17	$ 19

XML

SECURITIES (Schedule of Securities Pledged to Secure Public Deposits, Repurchase Agreements, and for Other Purposes) (Details) - USD ($) $ in Thousands		Sep. 30, 2015	Dec. 31, 2014
Available-for-sale Securities [Member]
Schedule of Investments [Line Items]
Total pledged AFS Securities, fair value		$ 299,137	$ 396,995
Available-for-sale Securities [Member] | Public Deposits [Member]
Schedule of Investments [Line Items]
Total pledged AFS Securities, fair value		150,632	312,793
Available-for-sale Securities [Member] | Repurchase Agreements [Member]
Schedule of Investments [Line Items]
Total pledged AFS Securities, fair value		118,249	51,842
Available-for-sale Securities [Member] | Other Purposes [Member]
Schedule of Investments [Line Items]
Total pledged AFS Securities, fair value	[1]	30,256	$ 32,360
Held-to-maturity Securities [Member]
Schedule of Investments [Line Items]
Total pledged HTM securities, fair value		200,319
Held-to-maturity Securities [Member] | Public Deposits [Member]
Schedule of Investments [Line Items]
Total pledged HTM securities, fair value		$ 200,319

[1] The "Other purposes" category consists of borrowings, derivatives, and accounts held at the Bank.

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FAIR VALUE MEASUREMENTS (Carrying Values and Estimated Fair Values of the Company's Financial Instruments) (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
ASSETS
Cash and cash equivalents	$ 179,194	$ 133,260
Securities available for sale, at fair value	888,692	1,102,114
Held to maturity securities	200,319
Restricted stock	52,721	54,854
Loans held for sale	65,713	42,519
Net loans	5,536,118	5,340,759
Interest rate swap	5,470	2,681
Cash flow hedges	1,553	580
Accrued interest receivable	21,488	21,775
Bank owned life insurance	142,433	139,005
LIABILITIES
Deposits	5,817,840	5,637,929
Borrowings	699,804	666,224
Accrued interest payable	1,610	1,899
Interest rate swap	5,470	2,681
Cash flow hedges	11,911	8,433
Carrying Value [Member]
ASSETS
Cash and cash equivalents	179,194	133,260
Securities available for sale, at fair value	888,692	1,102,114
Held to maturity securities	199,363
Restricted stock	52,721	54,854
Loans held for sale	65,713	42,519
Net loans	5,510,352	5,313,612
Interest rate swap	5,470	2,681
Cash flow hedges	1,553	580
Accrued interest receivable	21,488	21,775
Bank owned life insurance	142,433	139,005
LIABILITIES
Deposits	5,818,853	5,638,770
Borrowings	722,149	686,935
Accrued interest payable	1,610	1,899
Interest rate swap	5,470	2,681
Cash flow hedges	11,911	8,433
Quoted Prices in Active Markets for Identical Assets Level 1 [Member]
ASSETS
Cash and cash equivalents	$ 179,194	133,260
Securities available for sale, at fair value
Held to maturity securities
Restricted stock
Loans held for sale
Net loans
Interest rate swap
Cash flow hedges
Accrued interest receivable
Bank owned life insurance
LIABILITIES
Deposits
Borrowings
Accrued interest payable
Interest rate swap
Cash flow hedges
Significant Other Observable Inputs Level 2 [Member]
ASSETS
Cash and cash equivalents
Securities available for sale, at fair value	$ 888,692	1,102,114
Held to maturity securities	200,319
Restricted stock	52,721	54,854
Loans held for sale	$ 65,713	42,519
Net loans
Interest rate swap	$ 5,470	2,681
Cash flow hedges	1,553	580
Accrued interest receivable	21,488	21,775
Bank owned life insurance	142,433	139,005
LIABILITIES
Deposits	5,817,840	5,637,929
Borrowings	699,804	666,224
Accrued interest payable	1,610	1,899
Interest rate swap	5,470	2,681
Cash flow hedges	$ 11,911	8,433
Significant Unobservable Inputs Level 3 [Member]
ASSETS
Cash and cash equivalents
Securities available for sale, at fair value
Held to maturity securities
Restricted stock
Loans held for sale
Net loans	$ 5,536,118	5,340,759
Interest rate swap
Cash flow hedges
Accrued interest receivable
Bank owned life insurance
LIABILITIES
Deposits
Borrowings
Accrued interest payable
Interest rate swap
Cash flow hedges
Interest Rate Lock Commitments [Member]
ASSETS
Derivative assets	$ 1,321	513
Interest Rate Lock Commitments [Member] | Carrying Value [Member]
ASSETS
Derivative assets	$ 1,321	513
Interest Rate Lock Commitments [Member] | Quoted Prices in Active Markets for Identical Assets Level 1 [Member]
ASSETS
Derivative assets
Interest Rate Lock Commitments [Member] | Significant Other Observable Inputs Level 2 [Member]
ASSETS
Derivative assets
Interest Rate Lock Commitments [Member] | Significant Unobservable Inputs Level 3 [Member]
ASSETS
Derivative assets	$ 1,321	$ 513
Best Effort Forward Delivery Commitments [Member]
LIABILITIES
Liabilities	544
Best Effort Forward Delivery Commitments [Member] | Carrying Value [Member]
LIABILITIES
Liabilities	$ 544
Best Effort Forward Delivery Commitments [Member] | Quoted Prices in Active Markets for Identical Assets Level 1 [Member]
LIABILITIES
Liabilities
Best Effort Forward Delivery Commitments [Member] | Significant Other Observable Inputs Level 2 [Member]
LIABILITIES
Liabilities
Best Effort Forward Delivery Commitments [Member] | Significant Unobservable Inputs Level 3 [Member]
LIABILITIES
Liabilities	$ 544

XML

ACQUISITIONS (Schedule of Effect of Amortization and Accretion Related to Acquisition) (Details) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
		Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
ACQUISITIONS [Abstract]
Loans	[1]	$ 1,364	$ 846	$ 3,055	$ 82
Core deposit intangibles	[2]	(2,074)	(2,391)	(6,435)	(7,462)
Borrowings	[3]	87	262	362	413
Time deposits	[4]	154	1,998	1,843	7,377
Net impact to income before taxes		$ (469)	$ 715	$ (1,175)	$ 410

[1] Loan discount accretion is included in "Interest and fees on loans" in the "Interest and dividend income" section of the Company's Consolidated Statements of Income.

[2] Core deposit intangible premium amortization is included in "Amortization of intangible assets" in the "Noninterest expense" section of the Company's Consolidated Statements of Income.

[3] Borrowings discount accretion is included in "Interest on long-term borrowings" in the "Interest Expense" section of the Company's Consolidated Statements of Income.

[4] Certificate of deposit discount accretion is included in "Interest on deposits" in the "Interest expense" section of the Company's Consolidated Statements of Income.

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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, 2015 USD ($) loan	Sep. 30, 2014 USD ($) loan	Sep. 30, 2015 USD ($) loan	Sep. 30, 2014 USD ($) loan
Financing Receivable, Modifications [Line Items]
No. of Loans	4	1	7	5
Recorded investment at period end | $	$ 1,074	$ 989	$ 2,079	$ 1,401
Troubled Debt Restructuring Term Modification at Market Rate [Member]
Financing Receivable, Modifications [Line Items]
No. of Loans		1	2	5
Recorded investment at period end | $		$ 989	$ 134	$ 1,401
Troubled Debt Restructuring Term Modification at Market Rate [Member] | Commercial Real Estate - Owner Occupied [Member]
Financing Receivable, Modifications [Line Items]
No. of Loans			1
Recorded investment at period end | $			$ 117
Troubled Debt Restructuring Term Modification at Market Rate [Member] | Commercial Real Estate - Non-Owner Occupied [Member]
Financing Receivable, Modifications [Line Items]
No. of Loans		1		1
Recorded investment at period end | $		$ 989		$ 989
Troubled Debt Restructuring Term Modification at Market Rate [Member] | Single Family Investment Real Estate [Member]
Financing Receivable, Modifications [Line Items]
No. of Loans				1
Recorded investment at period end | $				$ 110
Troubled Debt Restructuring Term Modification at Market Rate [Member] | Commercial and Industrial [Member]
Financing Receivable, Modifications [Line Items]
No. of Loans			1	1
Recorded investment at period end | $			$ 17	$ 33
Troubled Debt Restructuring Term Modification at Market Rate [Member] | Other Commercial [Member]
Financing Receivable, Modifications [Line Items]
No. of Loans				2
Recorded investment at period end | $				$ 269
Troubled Debt Restructuring Term Modification Below Market Rate [Member]
Financing Receivable, Modifications [Line Items]
No. of Loans	4		5
Recorded investment at period end | $	$ 1,074		$ 1,945
Troubled Debt Restructuring Term Modification Below Market Rate [Member] | Commercial Real Estate - Owner Occupied [Member]
Financing Receivable, Modifications [Line Items]
No. of Loans			1
Recorded investment at period end | $			$ 871
Troubled Debt Restructuring Term Modification Below Market Rate [Member] | Raw Land and Lots [Member]
Financing Receivable, Modifications [Line Items]
No. of Loans	1		1
Recorded investment at period end | $	$ 400		$ 400
Troubled Debt Restructuring Term Modification Below Market Rate [Member] | Mortgage [Member]
Financing Receivable, Modifications [Line Items]
No. of Loans	2		2
Recorded investment at period end | $	$ 619		$ 619
Troubled Debt Restructuring Term Modification Below Market Rate [Member] | Other Consumer [Member]
Financing Receivable, Modifications [Line Items]
No. of Loans	1		1
Recorded investment at period end | $	$ 55		$ 55

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DERIVATIVES (Narrative) (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2015 USD ($) item loan	Dec. 31, 2014 USD ($) item
Minimum [Member]
Derivatives, Fair Value [Line Items]
Interest rate lock commitments period	30 days
Maximum [Member]
Derivatives, Fair Value [Line Items]
Interest rate lock commitments period	120 days
Trust Swaps [Member]
Derivatives, Fair Value [Line Items]
Notional amount	$ 68,000
Average fixed rate	2.77%
Number of interest rate swaps | item	3
Trust Swaps [Member] | Minimum [Member]
Derivatives, Fair Value [Line Items]
Derivative term	3 years
Trust Swaps [Member] | Maximum [Member]
Derivatives, Fair Value [Line Items]
Derivative term	6 years
Interest Rate Swaps [Member]
Derivatives, Fair Value [Line Items]
Market value of securities pledged as collateral for derivative instruments	$ 6,600
Deposits with other financial institutions serves as collateral	3,800
Cash Flow Hedging [Member]
Derivatives, Fair Value [Line Items]
Notional amount	$ 263,000
Number of interest rate swaps | item	11
Unrealized gain (loss) of fair value of derivative	$ (10,400)
Deposits with other financial institutions serves as collateral	10,000
Prime Loan Swaps [Member]
Derivatives, Fair Value [Line Items]
Notional amount	$ 55,000
Number of loan swaps with floor rates | loan	1
Number of interest rate swaps | item	4
Derivative term	6 years
Interest rate spread calculated on the variable rate	0.49%
Interest rate swaps agreement, effective date	Sep. 17, 2013
Prime Loan Swaps [Member] | Minimum [Member]
Derivatives, Fair Value [Line Items]
Fixed rate	4.71%
Floor interest rate	4.00%
Prime Loan Swaps [Member] | Maximum [Member]
Derivatives, Fair Value [Line Items]
Fixed rate	5.20%
FHLB Advance Swaps [Member]
Derivatives, Fair Value [Line Items]
Notional amount	$ 140,000
Number of interest rate swaps | loan	4
FHLB Advance Swaps [Member] | Minimum [Member]
Derivatives, Fair Value [Line Items]
Fixed rate	3.16%
Derivative term	5 years
Interest rate swaps agreement, effective date	Feb. 23, 2017
FHLB Advance Swaps [Member] | Maximum [Member]
Derivatives, Fair Value [Line Items]
Fixed rate	3.46%
Derivative term	6 years
Interest rate swaps agreement, effective date	Feb. 23, 2018
Fair Value Hedging [Member]
Derivatives, Fair Value [Line Items]
Notional amount	$ 53,600	$ 38,300
Aggregate notional amount of the hedged items	$ 53,600	$ 38,300
Number of interest rate swaps | item	3	1
Fair value of aggregate notional amount of the hedged items	$ 1,400
Unrealized gain (loss) of fair value of derivative	$ (1,400)
Fair Value Hedging [Member] | Minimum [Member]
Derivatives, Fair Value [Line Items]
Fixed rate	3.23%
Derivative term	15 years
Fair Value Hedging [Member] | Maximum [Member]
Derivatives, Fair Value [Line Items]
Fixed rate	3.53%
Derivative term	17 years
Interest rate spread calculated on the variable rate	2.13%
Prime Loan Swaps and FHLB Advance Swaps [Member]
Derivatives, Fair Value [Line Items]
Market value of securities pledged as collateral for derivative instruments	$ 4,300
Interest Rate Lock Commitments [Member]
Derivatives, Fair Value [Line Items]
Notional amount	61,000	$ 49,600
Asset	1,321	$ 513
Best Effort Forward Delivery Commitments [Member]
Derivatives, Fair Value [Line Items]
Liabilities	$ 544

XML

BORROWINGS (Short-Term Borrowings) (Details) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2015	Dec. 31, 2014
Short-term borrowings
Securities sold under agreements to repurchase	$ 99,417	$ 44,393
Other short-term borrowings	332,000	343,000
Total short-term borrowings	431,417	387,393
Maximum month-end outstanding balance	445,761	387,393
Average outstanding balance during the period	$ 383,554	$ 237,896
Average interest rate during the period	0.26%	0.24%
Average interest rate at end of period	0.24%	0.31%
Other short-term borrowings:
Federal Funds purchased	$ 5,000
FHLB	325,000	$ 335,000
Other lines of credit	$ 2,000	$ 8,000

XML

LOANS AND ALLOWANCE FOR LOAN LOSSES (Loans Stated at Face Amount, Net of Unearned Income) (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014	Sep. 30, 2014
Loans stated at face amount, net of unearned income
Loans held for investment, net of deferred fees and costs	$ 5,543,621	$ 5,345,996	$ 5,171,003
Commercial Construction [Member]
Loans stated at face amount, net of unearned income
Loans held for investment, net of deferred fees and costs	429,645	341,280
Commercial Real Estate - Owner Occupied [Member]
Loans stated at face amount, net of unearned income
Loans held for investment, net of deferred fees and costs	863,551	875,443
Commercial Real Estate - Non-Owner Occupied [Member]
Loans stated at face amount, net of unearned income
Loans held for investment, net of deferred fees and costs	1,586,334	1,509,159
Raw Land and Lots [Member]
Loans stated at face amount, net of unearned income
Loans held for investment, net of deferred fees and costs	187,182	211,225
Single Family Investment Real Estate [Member]
Loans stated at face amount, net of unearned income
Loans held for investment, net of deferred fees and costs	436,340	412,494
Commercial and Industrial [Member]
Loans stated at face amount, net of unearned income
Loans held for investment, net of deferred fees and costs	444,199	393,776
Other Commercial [Member]
Loans stated at face amount, net of unearned income
Loans held for investment, net of deferred fees and costs	89,344	81,106
Mortgage [Member]
Loans stated at face amount, net of unearned income
Loans held for investment, net of deferred fees and costs	466,418	478,151
Consumer Construction [Member]
Loans stated at face amount, net of unearned income
Loans held for investment, net of deferred fees and costs	55,718	74,168
Indirect Auto [Member]
Loans stated at face amount, net of unearned income
Loans held for investment, net of deferred fees and costs	217,928	199,411
Indirect Marine [Member]
Loans stated at face amount, net of unearned income
Loans held for investment, net of deferred fees and costs	42,763	43,190
HELOCs [Member]
Loans stated at face amount, net of unearned income
Loans held for investment, net of deferred fees and costs	492,202	500,579
Credit Card [Member]
Loans stated at face amount, net of unearned income
Loans held for investment, net of deferred fees and costs		24,225
Other Consumer [Member]
Loans stated at face amount, net of unearned income
Loans held for investment, net of deferred fees and costs	$ 231,997	$ 201,789

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CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Operating activities:
Net income	$ 49,264	$ 37,199
Adjustments to reconcile net income to net cash and cash equivalents provided by (used in) operating activities:
Depreciation of bank premises and equipment	8,097	8,160
Writedown of OREO	1,773	7,265
Other-than-temporary impairment recognized in earnings	300
Amortization, net	10,080	10,891
Amortization related to acquisition, net	1,175	(410)
Provision for loan losses	7,561	3,300
(Gains) on securities transactions, net	(672)	(1,449)
Decrease in loans held for sale, net	3,206	33,093
Gains (losses) on sales of other real estate owned, net	80	(128)
Losses on sales of bank premises, net	98	384
Stock-based compensation expenses	957	862
Issuance of common stock for services	446	362
Net (increase) decrease in other assets	(3,892)	12,347
Net increase (decrease) in other liabilities	691	(3,703)
Net cash and cash equivalents provided by operating activities	79,164	108,173
Investing activities:
Purchases of securities	(171,203)	(351,153)
Proceeds from sales of securities	63,928	273,447
Proceeds from maturities, calls and paydowns of securities available for sale	110,132	111,390
Proceeds from maturities, calls and paydowns of securities held of maturity	795
Net (increase) decrease in loans	(228,839)	100,844
Net (increase) in bank premises and equipment	(2,541)	(5,262)
Proceeds from sales of other real estate owned	6,374	9,929
Improvements to other real estate owned	(308)	(262)
Cash paid for equity-method investments	(355)
Cash acquired in bank acquisitions		49,989
Net cash and cash equivalents (used in) provided by investing activities	(222,017)	188,922
Financing activities:
Net increase in noninterest-bearing deposits	138,667	100,629
Net increase (decrease) in interest-bearing deposits	43,259	(175,918)
Net increase (decrease) in short-term borrowings	44,024	(84,665)
Net (decrease) increase in long-term borrowings	(8,448)	1,518
Cash dividends paid - common stock	(21,000)	(19,020)
Repurchase of common stock	(7,995)	(43,477)
Issuance of common stock	566	1,072
Taxes paid related to net share settlement of equity awards	(286)	(1,565)
Net cash and cash equivalents provided by (used in) financing activities	188,787	(221,426)
Increase in cash and cash equivalents	45,934	75,669
Cash and cash equivalents at beginning of the period	133,260	73,023
Cash and cash equivalents at end of the period	179,194	148,692
Cash payments for:
Interest	20,720	21,210
Income taxes	13,800	12,400
Supplemental schedule of noncash investing and financing activities
Unrealized (losses) gain on securities available for sale	(3,160)	21,786
Transfer from securities available for sale to securities held to maturity	201,822
Transfer from loans held for investment to loans held for sale	26,400
Changes in fair value of interest rate swap loss	(1,539)	(3)
Transfers between loans and other real estate owned	1,493	5,257
Transfers from bank premises to other real estate owned	$ 402	10,866
Issuance of common stock in exchange for net assets in acquisition		549,523
Transactions related to bank and branch acquisitions
Assets acquired		2,957,521
Liabilities assumed		$ 2,642,120

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BORROWINGS (Trust Preferred Capital Notes Qualify for Tier 1 Capital) (Details) - USD ($)		9 Months Ended
		Sep. 30, 2015	Dec. 31, 2014
Trust preferred capital notes qualify for Tier 1 capital
Investment		$ 85,718,000	$ 84,637,000
Statutory Trust I [Member]
Trust preferred capital notes qualify for Tier 1 capital
Trust preferred capital notes principal balance		22,500,000
Investment	[1]	$ 696,000
Rate		3.08%
Maturity		Jun. 17, 2034
Statutory Trust II [Member]
Trust preferred capital notes qualify for Tier 1 capital
Trust preferred capital notes principal balance		$ 36,000,000
Investment	[1]	$ 1,114,000
Rate		1.73%
Maturity		Jun. 15, 2036
VFG Limited Liability Trust I Indenture [Member]
Trust preferred capital notes qualify for Tier 1 capital
Trust preferred capital notes principal balance		$ 20,000,000
Investment	[1]	$ 619,000
Rate		3.06%
Maturity		Mar. 18, 2034
FNB Statutory Trust II Indenture [Member]
Trust preferred capital notes qualify for Tier 1 capital
Trust preferred capital notes principal balance		$ 12,000,000
Investment	[1]	$ 372,000
Rate		3.43%
Maturity		Jun. 26, 2033
Trust Preferred Capital Notes [Member]
Trust preferred capital notes qualify for Tier 1 capital
Trust preferred capital notes principal balance		$ 90,500,000
Investment	[1]	$ 2,801,000
LIBOR [Member] | Statutory Trust I [Member]
Trust preferred capital notes qualify for Tier 1 capital
Spread on 3-Month LIBOR		2.75%
LIBOR [Member] | Statutory Trust II [Member]
Trust preferred capital notes qualify for Tier 1 capital
Spread on 3-Month LIBOR		1.40%
LIBOR [Member] | VFG Limited Liability Trust I Indenture [Member]
Trust preferred capital notes qualify for Tier 1 capital
Spread on 3-Month LIBOR		2.73%
LIBOR [Member] | FNB Statutory Trust II Indenture [Member]
Trust preferred capital notes qualify for Tier 1 capital
Spread on 3-Month LIBOR		3.10%

[1] reported as "Other Assets" within the Consolidated Balance Sheets.

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SECURITIES (Schedule of Carrying Value, Gross Unrealized Gains and Losses and Estimated Fair Value of Securities) (Details) $ in Thousands	Sep. 30, 2015 USD ($)
Schedule of Held-to-maturity Securities [Line Items]
Carrying Value	$ 199,363	[1]
Estimated Fair Value	200,319
Obligations of States and Political Subdivisions [Member]
Schedule of Held-to-maturity Securities [Line Items]
Carrying Value	199,363	[1]
Gross Unrealized Gains	2,882
Gross Unrealized Losses	(1,926)
Estimated Fair Value	$ 200,319

[1] The carrying value includes $7.3 million of unrealized gains and losses present at the time of transfer from available for securities, net of any accretion.

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COMMITMENTS AND CONTINGENCIES (Tables)

9 Months Ended

Sep. 30, 2015

COMMITMENTS AND CONTINGENCIES [Abstract]

Balances of Commitments and Contingencies

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

	September 30,		December 31,
	2015		2014
Commitments with off-balance sheet risk:
Commitments to extend credit (1)	$	1,569,094	$	1,601,287
Standby letters of credit		142,848		117,988
Mortgage loan rate lock commitments		61,015		49,552
Total commitments with off-balance sheet risk	$	1,772,957	$	1,768,827
Commitments with balance sheet risk:
Loans held for sale	$	65,713	$	42,519
Total other commitments	$	1,838,670	$	1,811,346
(1)Includes unfunded overdraft protection.

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BORROWINGS (Tables)

9 Months Ended

Sep. 30, 2015

BORROWINGS [Abstract]

Short-Term Borrowings

Total short-term borrowings consist of the following as of September 30, 2015 and December 31, 2014  (dollars in thousands):

	September 30,		December 31,
	2015		2014
Securities sold under agreements to repurchase	$	99,417	$	44,393
Other short-term borrowings		332,000		343,000
Total short-term borrowings	$	431,417	$	387,393
Maximum month-end outstanding balance	$	445,761	$	387,393
Average outstanding balance during the period		383,554		237,896
Average interest rate during the period		0.26%		0.24%
Average interest rate at end of period		0.24%		0.31%
Other short-term borrowings:
Federal funds purchased	$	5,000	$	-
FHLB	$	325,000	$	335,000
Other lines of credit		2,000		8,000

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. 

	Principal		Investment(1)		Spread to 3-Month LIBOR	Rate	Maturity
Trust Preferred Capital Note - Statutory Trust I	$	22,500,000	$	696,000	2.75%	3.08%	6/17/2034
Trust Preferred Capital Note - Statutory Trust II		36,000,000		1,114,000	1.40%	1.73%	6/15/2036
VFG Limited Liability Trust I Indenture		20,000,000		619,000	2.73%	3.06%	3/18/2034
FNB Statutory Trust II Indenture		12,000,000		372,000	3.10%	3.43%	6/26/2033
Total	$	90,500,000	$	2,801,000
(1) reported as "Other Assets" within the Consolidated Balance Sheets.

Advances from the FHLB

As of September 30, 2015, the Company had advances from the FHLB consisting of the following (dollars in thousands):

Long-term Type	Spread to 3-Month LIBOR	Interest Rate	Maturity Date	Advance Amount
Adjustable Rate Credit	0.44%	0.77%	8/23/2022	$	55,000
Adjustable Rate Credit	0.45%	0.78%	11/23/2022		65,000
Adjustable Rate Credit	0.45%	0.78%	11/23/2022		10,000
Adjustable Rate Credit	0.45%	0.78%	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	-	2.11%	10/5/2016		25,000
Fixed Rate Hybrid	-	0.91%	7/25/2016		15,000
				$	200,000

As of December 31, 2014, the Company had advances from the FHLB consisting of the following (dollars in thousands):

Long-term Type	Spread to 3-Month LIBOR	Interest Rate	Maturity Date	Advance Amount
Adjustable Rate Credit	0.44%	0.70%	8/23/2022	$	55,000
Adjustable Rate Credit	0.45%	0.71%	11/23/2022		65,000
Adjustable Rate Credit	0.45%	0.71%	11/23/2022		10,000
Adjustable Rate Credit	0.45%	0.71%	11/23/2022		10,000
Fixed Rate	-	3.62%	11/28/2017		10,000
Fixed Rate	-	3.44%	7/28/2015		10,000
Fixed Rate	-	3.75%	7/30/2018		5,000
Fixed Rate	-	3.97%	7/30/2018		5,000
Fixed Rate Hybrid	-	2.11%	10/5/2016		25,000
Fixed Rate Hybrid	-	0.91%	7/25/2016		15,000
				$	210,000

Contractual Maturities of Long-Term Debt

As of September 30, 2015, 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
Remaining three months in 2015	$	-	$	-	$	-	$	-	$	(466)	$	(466)
2016		-		17,500		40,000		271		(1,882)		55,889
2017		-		-		10,000		170		(1,922)		8,248
2018		-		-		10,000		(143)		(1,970)		7,887
2019		-		-		-		(286)		(2,018)		(2,304)
2020		-		-		-		(301)		(2,074)		(2,375)
Thereafter		93,301		-		140,000		(5,622)		(3,826)		223,853
Total Long-term borrowings	$	93,301	$	17,500	$	200,000	$	(5,911)	$	(14,158)	$	290,732

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LOANS AND ALLOWANCE FOR LOAN LOSSES (Schedule of Acquired Loan Portfolio and Accretable Yield) (Details) - USD ($) $ in Thousands		9 Months Ended
		Sep. 30, 2015	Sep. 30, 2014
Accretable Yield
Balance at beginning of period		$ 28,956	$ 2,980
Additions			34,653
Accretion		(4,707)	(5,681)
Reclass of nonaccretable difference due to improvement in expected cash flows		3,168
Other non-credit changes, net	[1]	(5,624)	(2,150)
Balance at end of period		$ 21,793	$ 29,802

[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.

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SECURITIES (Gross Unrealized Losses and Fair Value of Securities) (Details) - Held-to-maturity Securities [Member] - Obligations of States and Political Subdivisions [Member] $ in Thousands	9 Months Ended
	Sep. 30, 2015 USD ($)
Schedule of Held-to-maturity Securities [Line Items]
Less than 12 months, Fair Value	$ 28,727
Less than 12 months, Unrealized Losses	(1,926)
Fair Value, Total	28,727
Unrealized Losses, Total	$ (1,926)

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DERIVATIVES (Tables)

9 Months Ended

Sep. 30, 2015

Cash Flow Hedging [Member]

Derivative [Line Items]

Summary of the Derivatives

Shown below is a summary of the derivatives designated as cash flow hedges at September 30, 2015 and December 31, 2014 (dollars in thousands):

		Notional						Receive		Pay		Weighted Average
	Positions	Amount		Asset		Liability		Rate		Rate		Life (Years)
As of September 30, 2015
Pay fixed - receive floating interest rate swaps	7	$	208,000	$	-	$	11,911	0.33%	(1)	2.77%	(1)	1.38	(1)
Receive fixed - pay floating interest rate swaps	4	$	55,000	$	1,553	$	-	4.93%		3.55%		3.97
(1) Due to their deferred nature, the rates and the life exclude the four FHLB advance swaps.
		Notional						Receive		Pay		Weighted Average
	Positions	Amount		Asset		Liability		Rate		Rate		Life (Years)
As of December 31, 2014
Pay fixed - receive floating interest rate swaps	7	$	208,000	$	-	$	8,433	0.26%	(1)	2.77%	(1)	2.12	(1)
Receive fixed - pay floating interest rate swaps	4	$	55,000	$	580	$	-	4.93%		3.55%		4.72
(1) Due to their deferred nature, the rates and the life exclude the four FHLB advance swaps.

Interest Rate Swaps [Member]

Derivative [Line Items]

Summary of the Derivatives

Shown below is a summary regarding loan swap derivative activities at September 30, 2015 and December 31, 2014 (dollars in thousands):

		Notional						Receive	Pay	Weighted Average
	Positions	Amount		Asset		Liability		Rate	Rate	Life (Years)
As of September 30, 2015
Receive fixed - pay floating interest rate swaps	35	$	141,055	$	5,470	$	-	4.26%	2.45%	6.84
Pay fixed - receive floating interest rate swaps	35	$	141,055	$	-	$	5,470	2.45%	4.26%	6.84
		Notional						Receive	Pay	Weighted Average
	Positions	Amount		Asset		Liability		Rate	Rate	Life (Years)
As of December 31, 2014
Receive fixed - pay floating interest rate swaps	30	$	122,793	$	2,681	$	-	4.29%	2.50%	7.14
Pay fixed - receive floating interest rate swaps	30	$	122,793	$	-	$	2,681	2.50%	4.29%	7.14

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ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Tables)

9 Months Ended

Sep. 30, 2015

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) [Abstract]

Change in Accumulated Other Comprehensive Income

The change in accumulated other comprehensive income (loss) for the three and nine months ended September 30, 2015 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, 2015	$	8,738	$	5,043	$	(4,552)	$	9,229
Other comprehensive income (loss)		1,250		(308)		(2,328)		(1,386)
Amounts reclassified from accumulated other comprehensive income		146		-		157		303
Net current period other comprehensive income (loss)		1,396		(308)		(2,171)		(1,083)
Balance - September 30, 2015	$	10,134	$	4,735	$	(6,723)	$	8,146

	Unrealized Gains (Losses) on AFS Securities			Unrealized Gain for AFS Securities Transferred to HTM	Change in Fair Value of Cash Flow Hedges		Total
Balance - December 31, 2014	$	17,439	$	-	$	(5,184)	$	12,255
Unrealized gain transferred from AFS to HTM		(5,251)		5,251		-		-
Other comprehensive income (loss)		(1,812)		(516)		(2,009)		(4,337)
Amounts reclassified from accumulated other comprehensive income		(242)		-		470		228
Net current period other comprehensive income (loss)		(2,054)		(516)		(1,539)		(4,109)
Balance - September 30, 2015	$	10,134	$	4,735	$	(6,723)	$	8,146

The change in accumulated other comprehensive income (loss) for the three and nine months ended September 30, 2014 is summarized as follows, net of tax (dollars in thousands):

	Unrealized Gains (Losses) on AFS Securities		Change in Fair Value of Cash Flow Hedge		Total
Balance - June 30, 2014	$	14,202	$	(3,321)	$	10,881
Other comprehensive income (loss)		1,798		(228)		1,570
Amounts reclassified from accumulated other comprehensive income		(647)		164		(483)
Net current period other comprehensive income (loss)		1,151		(64)		1,087
Balance - September 30, 2014	$	15,353	$	(3,385)	$	11,968

	Unrealized Gains (Losses) on AFS Securities			Change in Fair Value of Cash Flow Hedges	Total
Balance - December 31, 2013	$	1,192	$	(3,382)	$	(2,190)
Other comprehensive income (loss)		14,843		(431)		14,412
Amounts reclassified from accumulated other comprehensive income		(682)		428		(254)
Net current period other comprehensive income (loss)		14,161		(3)		14,158
Balance - September 30, 2014	$	15,353	$	(3,385)	$	11,968

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CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (Parenthetical) - USD ($)	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014	Dec. 31, 2013
Dividends on common stock, per share	$ 0.49	$ 0.43
Common Stock [Member]
Issuance of Common Stock in regard to acquisition, shares		22,147,874
Stock purchased under stock repurchase plan, shares	347,021	1,731,025
Issuance of common stock under Dividend Reinvestment Plan, shares	52,201	37,489
Issuance of common stock under Equity Compensation Plans, shares	37,124	67,057
Vesting of restricted stock under Equity Compensation Plans, shares	39,652	14,707
Issuance of common stock for services rendered, shares	19,417	14,374
Net settle for taxes on Restricted Stock Awards, shares	13,076	63,916
Retained Earnings [Member]
Dividends on common stock, per share	$ 0.49	$ 0.43
Impact of adoption of ASU 2014-01			$ 856,000	$ 429,000
Accumulated Other Comprehensive Income [Member]
Other comprehensive income (loss), tax	$ 1,130,000	$ 7,625,000

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FAIR VALUE MEASUREMENTS (Tables)

9 Months Ended

Sep. 30, 2015

FAIR VALUE MEASUREMENTS [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, 2015 and December 31, 2014 (dollars in thousands):

	Fair Value Measurements at September 30, 2015 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:
U.S. government and agency securities	$	-	$	8,411	$	-	$	8,411
Obligations of states and political subdivisions		-		249,893		-		249,893
Corporate and other bonds		-		72,462		-		72,462
Mortgage-backed securities		-		547,717		-		547,717
Other securities		-		10,209		-		10,209
Derivatives:
Interest rate swap		-		5,470		-		5,470
Cash flow hedges		-		1,553		-		1,553
Interest rate lock commitments		-		-		1,321		1,321
LIABILITIES
Derivatives:
Interest rate swap	$	-	$	5,470	$	-	$	5,470
Cash flow hedges		-		11,911		-		11,911
Best effort forward delivery commitments		-		-		544		544

		Fair Value Measurements at December 31, 2014 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:
U.S. government and agency securities	$	-	$	8,454	$	-	$	8,454
Obligations of states and political subdivisions		-		445,647		-		445,647
Corporate bonds		-		78,680		-		78,680
Mortgage-backed securities		-		559,329		-		559,329
Other securities		-		10,004		-		10,004
Derivatives:
Interest rate swap		-		2,681		-		2,681
Cash flow hedges		-		580		-		580
Interest rate lock commitments		-		-		513		513
LIABILITIES
Derivatives:
Interest rate swap	$	-	$	2,681	$	-	$	2,681
Cash flow hedges		-		8,433		-		8,433

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, 2015 and December 31, 2014 (dollars in thousands):

		Fair Value Measurements at September 30, 2015 using
	Quoted Prices in Active Markets for Identical Assets			Significant Other Observable Inputs		Significant Unobservable Inputs
	Level 1			Level 2		Level 3		Balance
ASSETS
Loans held for sale	$		-	$	65,713	$	-	$	65,713
Impaired loans			-		-		10,416		10,416
Other real estate owned			-		-		22,094		22,094

		Fair Value Measurements at December 31, 2014 using
	Quoted Prices in Active Markets for Identical Assets			Significant Other Observable Inputs		Significant Unobservable Inputs
	Level 1			Level 2		Level 3		Balance
ASSETS
Loans held for sale	$		-	$	42,519	$	-	$	42,519
Impaired loans			-		-		15,797		15,797
Other real estate owned			-		-		28,118		28,118

Summary of Quantitative Information About Level 3 Fair Value Measurements

The following table displays quantitative information about Level 3 Fair Value Measurements at September 30, 2015 (dollars in thousands):

	Fair Value Measurements at September 30, 2015
	Fair Value		Valuation Technique(s)	Unobservable Inputs	Weighted Average
ASSETS
Impaired Loans	$	10,416	Market comparables	Discount applied to market comparables (1)	7%
Other real estate owned		22,094	Market comparables	Discount applied to market comparables (1)	21%
Total	$	32,510
(1)A discount percentage (in addition to expected selling costs) is applied based on the age of independent appraisals, current market conditions, and experience within the local market.

The following table displays quantitative information about Level 3 Fair Value Measurements at December 31, 2014 (dollars in thousands):

	Fair Value Measurements at December 31, 2014
	Fair Value		Valuation Technique(s)	Unobservable Inputs	Weighted Average
ASSETS
Impaired Loans	$	15,797	Market comparables	Discount applied to market comparables (1)	13%
Other real estate owned		28,118	Market comparables	Discount applied to market comparables (1)	32%
Total	$	43,915
(1)A discount percentage (in addition to expected selling costs) is applied based on the age of independent appraisals, current market conditions, and experience within the local market.

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, 2015 and December 31, 2014 are as follows (dollars in thousands):

			Fair Value Measurements at September 30, 2015 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	$	179,194	$	179,194	$	-	$	-	$	179,194
Securities available for sale		888,692		-		888,692		-		888,692
Held to maturity securities		199,363		-		200,319		-		200,319
Restricted stock		52,721		-		52,721		-		52,721
Loans held for sale		65,713		-		65,713		-		65,713
Net loans		5,510,352		-		-		5,536,118		5,536,118
Derivatives:
Interest rate lock commitments		1,321		-		-		1,321		1,321
Interest rate swap		5,470		-		5,470		-		5,470
Cash flow hedges		1,553		-		1,553		-		1,553
Accrued interest receivable		21,488		-		21,488		-		21,488
Bank owned life insurance		142,433		-		142,433		-		142,433
LIABILITIES
Deposits	$	5,818,853	$	-	$	5,817,840	$	-	$	5,817,840
Borrowings		722,149		-		699,804		-		699,804
Accrued interest payable		1,610		-		1,610		-		1,610
Derivatives:
Interest rate swap		5,470		-		5,470		-		5,470
Cash flow hedges		11,911		-		11,911		-		11,911
Best effort forward delivery commitments		544		-		-		544		544

			Fair Value Measurements at December 31, 2014 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	$	133,260	$	133,260	$	-	$	-	$	133,260
Securities available for sale		1,102,114		-		1,102,114		-		1,102,114
Restricted stock		54,854		-		54,854		-		54,854
Loans held for sale		42,519		-		42,519		-		42,519
Net loans		5,313,612		-		-		5,340,759		5,340,759
Derivatives:
Interest rate lock commitments		513		-		-		513		513
Interest rate swap		2,681		-		2,681		-		2,681
Cash flow hedges		580		-		580		-		580
Accrued interest receivable		21,775		-		21,775		-		21,775
Bank owned life insurance		139,005		-		139,005		-		139,005
LIABILITIES
Deposits	$	5,638,770	$	-	$	5,637,929	$	-	$	5,637,929
Borrowings		686,935		-		666,224		-		666,224
Accrued interest payable		1,899		-		1,899		-		1,899
Derivatives:
Interest rate swap		2,681		-		2,681		-		2,681
Cash flow hedges		8,433		-		8,433		-		8,433

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SECURITIES (Schedule of Gross Unrealized Losses and Fair Value of Investments) (Details) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2015	Dec. 31, 2014
Schedule of gross unrealized losses and fair value of investments
Less than 12 months, Fair value	$ 177,203	$ 124,731
Less than 12 months, Unrealized Losses	(1,543)	(724)
More than 12 Months, Fair value	52,522	96,404
More than 12 Months, Unrealized Losses	(1,129)	(1,134)
Fair value, Total	229,725	221,135
Unrealized Losses, Total	(2,672)	(1,858)
US Government Agencies Debt Securities [Member]
Schedule of gross unrealized losses and fair value of investments
Less than 12 months, Fair value		7,055
Less than 12 months, Unrealized Losses		(25)
Fair value, Total		7,055
Unrealized Losses, Total		(25)
Obligations of States and Political Subdivisions [Member]
Schedule of gross unrealized losses and fair value of investments
Less than 12 months, Fair value	33,742	13,602
Less than 12 months, Unrealized Losses	(252)	(93)
More than 12 Months, Fair value	6,610	42,514
More than 12 Months, Unrealized Losses	(260)	(628)
Fair value, Total	40,352	56,116
Unrealized Losses, Total	(512)	(721)
Mortgage Backed Securities [Member]
Schedule of gross unrealized losses and fair value of investments
Less than 12 months, Fair value	118,679	60,151
Less than 12 months, Unrealized Losses	(459)	(362)
More than 12 Months, Fair value	28,026	49,581
More than 12 Months, Unrealized Losses	(176)	(436)
Fair value, Total	146,705	109,732
Unrealized Losses, Total	(635)	(798)
Corporate Bonds and Other Securities [Member]
Schedule of gross unrealized losses and fair value of investments
Less than 12 months, Fair value	24,782	43,923
Less than 12 months, Unrealized Losses	(832)	(244)
More than 12 Months, Fair value	17,886	4,309
More than 12 Months, Unrealized Losses	(693)	(70)
Fair value, Total	42,668	48,232
Unrealized Losses, Total	$ (1,525)	$ (314)

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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, 2015	Sep. 30, 2014	Sep. 30, 2015	Dec. 31, 2014	Sep. 30, 2014
Allowance for loan losses:
Balance, beginning of the year	$ 32,384	$ 30,135
Recoveries credited to allowance	2,994	2,865
Loans charged off	(9,370)	(4,191)
Provision charged to operations	7,261	3,300
Balance, end of period	33,269	32,109
Ending balance: individually evaluated for impairment			$ 2,012		$ 4,105
Ending balance: collectively evaluated for impairment			31,257		28,004
Total	32,384	30,135	33,269	$ 32,384	32,109
Loans:
Ending balance: individually evaluated for impairment			81,618		134,165
Ending balance: collectively evaluated for impairment			5,383,397		4,917,095
Ending balance: loans acquired with deteriorated credit quality			78,606	105,788	119,743
Total loans			5,543,621	5,345,996	5,171,003
Commercial [Member]
Allowance for loan losses:
Balance, beginning of the year	22,352	19,908
Recoveries credited to allowance	1,921	1,999
Loans charged off	(6,013)	(1,991)
Provision charged to operations	5,364	1,507
Balance, end of period	23,624	21,423
Ending balance: individually evaluated for impairment			1,529		3,183
Ending balance: collectively evaluated for impairment			22,095		18,240
Total	22,352	19,908	23,624	22,352	21,423
Loans:
Ending balance: individually evaluated for impairment			75,308		125,310
Ending balance: collectively evaluated for impairment			3,891,611		3,430,451
Ending balance: loans acquired with deteriorated credit quality			69,676	94,235	106,021
Total loans			4,036,595		3,661,782
Consumer [Member]
Allowance for loan losses:
Balance, beginning of the year	10,032	10,227
Recoveries credited to allowance	1,073	866
Loans charged off	(3,357)	(2,200)
Provision charged to operations	1,897	1,793
Balance, end of period	9,645	10,686
Ending balance: individually evaluated for impairment			483		922
Ending balance: collectively evaluated for impairment			9,162		9,764
Total	$ 10,032	$ 10,227	9,645	$ 10,032	10,686
Loans:
Ending balance: individually evaluated for impairment			6,310		8,855
Ending balance: collectively evaluated for impairment			1,491,786		1,486,644
Ending balance: loans acquired with deteriorated credit quality			8,930		13,722
Total loans			$ 1,507,026		$ 1,509,221

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FAIR VALUE MEASUREMENTS (Schedule of Financial Assets and Liabilities Measured at Fair Value on Recurring Basis) (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
ASSETS:
Interest rate swap	$ 5,470	$ 2,681
Cash flow hedges	1,553	580
Estimated Fair Value	888,692	1,102,114
LIABILITIES:
Interest rate swap	5,470	2,681
Cash flow hedges	$ 11,911	8,433
Quoted Prices in Active Markets for Identical Assets Level 1 [Member]
ASSETS:
Interest rate swap
Cash flow hedges
Estimated Fair Value
LIABILITIES:
Interest rate swap
Cash flow hedges
Significant Other Observable Inputs Level 2 [Member]
ASSETS:
Interest rate swap	$ 5,470	2,681
Cash flow hedges	1,553	580
Estimated Fair Value	888,692	1,102,114
LIABILITIES:
Interest rate swap	5,470	2,681
Cash flow hedges	$ 11,911	8,433
Significant Unobservable Inputs Level 3 [Member]
ASSETS:
Interest rate swap
Cash flow hedges
Estimated Fair Value
LIABILITIES:
Interest rate swap
Cash flow hedges
Recurring [Member]
ASSETS:
Interest rate swap	$ 5,470	2,681
Cash flow hedges	1,553	580
LIABILITIES:
Interest rate swap	5,470	2,681
Cash flow hedges	$ 11,911	$ 8,433
Recurring [Member] | Quoted Prices in Active Markets for Identical Assets Level 1 [Member]
ASSETS:
Interest rate swap
Cash flow hedges
LIABILITIES:
Interest rate swap
Cash flow hedges
Recurring [Member] | Significant Other Observable Inputs Level 2 [Member]
ASSETS:
Interest rate swap	$ 5,470	$ 2,681
Cash flow hedges	1,553	580
LIABILITIES:
Interest rate swap	5,470	2,681
Cash flow hedges	$ 11,911	$ 8,433
Recurring [Member] | Significant Unobservable Inputs Level 3 [Member]
ASSETS:
Interest rate swap
Cash flow hedges
LIABILITIES:
Interest rate swap
Cash flow hedges
US Government Agencies Debt Securities [Member]
ASSETS:
Estimated Fair Value	$ 8,411	$ 8,454
US Government Agencies Debt Securities [Member] | Recurring [Member]
ASSETS:
Estimated Fair Value	$ 8,411	$ 8,454
US Government Agencies Debt Securities [Member] | Recurring [Member] | Quoted Prices in Active Markets for Identical Assets Level 1 [Member]
ASSETS:
Estimated Fair Value
US Government Agencies Debt Securities [Member] | Recurring [Member] | Significant Other Observable Inputs Level 2 [Member]
ASSETS:
Estimated Fair Value	$ 8,411	$ 8,454
US Government Agencies Debt Securities [Member] | Recurring [Member] | Significant Unobservable Inputs Level 3 [Member]
ASSETS:
Estimated Fair Value
Obligations of States and Political Subdivisions [Member]
ASSETS:
Estimated Fair Value	$ 249,893	$ 445,647
Obligations of States and Political Subdivisions [Member] | Recurring [Member]
ASSETS:
Estimated Fair Value	$ 249,893	$ 445,647
Obligations of States and Political Subdivisions [Member] | Recurring [Member] | Quoted Prices in Active Markets for Identical Assets Level 1 [Member]
ASSETS:
Estimated Fair Value
Obligations of States and Political Subdivisions [Member] | Recurring [Member] | Significant Other Observable Inputs Level 2 [Member]
ASSETS:
Estimated Fair Value	$ 249,893	$ 445,647
Obligations of States and Political Subdivisions [Member] | Recurring [Member] | Significant Unobservable Inputs Level 3 [Member]
ASSETS:
Estimated Fair Value
Corporate and Other Securities [Member]
ASSETS:
Estimated Fair Value	$ 72,462	$ 78,680
Corporate and Other Securities [Member] | Recurring [Member]
ASSETS:
Estimated Fair Value	$ 72,462	$ 78,680
Corporate and Other Securities [Member] | Recurring [Member] | Quoted Prices in Active Markets for Identical Assets Level 1 [Member]
ASSETS:
Estimated Fair Value
Corporate and Other Securities [Member] | Recurring [Member] | Significant Other Observable Inputs Level 2 [Member]
ASSETS:
Estimated Fair Value	$ 72,462	$ 78,680
Corporate and Other Securities [Member] | Recurring [Member] | Significant Unobservable Inputs Level 3 [Member]
ASSETS:
Estimated Fair Value
Mortgage Backed Securities [Member]
ASSETS:
Estimated Fair Value	$ 547,717	$ 559,329
Mortgage Backed Securities [Member] | Recurring [Member]
ASSETS:
Estimated Fair Value	$ 547,717	$ 559,329
Mortgage Backed Securities [Member] | Recurring [Member] | Quoted Prices in Active Markets for Identical Assets Level 1 [Member]
ASSETS:
Estimated Fair Value
Mortgage Backed Securities [Member] | Recurring [Member] | Significant Other Observable Inputs Level 2 [Member]
ASSETS:
Estimated Fair Value	$ 547,717	$ 559,329
Mortgage Backed Securities [Member] | Recurring [Member] | Significant Unobservable Inputs Level 3 [Member]
ASSETS:
Estimated Fair Value
Other Securities [Member]
ASSETS:
Estimated Fair Value	$ 10,209	$ 10,004
Other Securities [Member] | Recurring [Member]
ASSETS:
Estimated Fair Value	$ 10,209	$ 10,004
Other Securities [Member] | Recurring [Member] | Quoted Prices in Active Markets for Identical Assets Level 1 [Member]
ASSETS:
Estimated Fair Value
Other Securities [Member] | Recurring [Member] | Significant Other Observable Inputs Level 2 [Member]
ASSETS:
Estimated Fair Value	$ 10,209	$ 10,004
Other Securities [Member] | Recurring [Member] | Significant Unobservable Inputs Level 3 [Member]
ASSETS:
Estimated Fair Value
Best Effort Forward Delivery Commitments [Member]
LIABILITIES:
Liabilities	$ 544
Best Effort Forward Delivery Commitments [Member] | Quoted Prices in Active Markets for Identical Assets Level 1 [Member]
LIABILITIES:
Liabilities
Best Effort Forward Delivery Commitments [Member] | Significant Other Observable Inputs Level 2 [Member]
LIABILITIES:
Liabilities
Best Effort Forward Delivery Commitments [Member] | Significant Unobservable Inputs Level 3 [Member]
LIABILITIES:
Liabilities	$ 544
Best Effort Forward Delivery Commitments [Member] | Recurring [Member]
LIABILITIES:
Liabilities	$ 544
Best Effort Forward Delivery Commitments [Member] | Recurring [Member] | Quoted Prices in Active Markets for Identical Assets Level 1 [Member]
LIABILITIES:
Liabilities
Best Effort Forward Delivery Commitments [Member] | Recurring [Member] | Significant Unobservable Inputs Level 3 [Member]
LIABILITIES:
Liabilities	$ 544
Interest Rate Lock Commitments [Member]
ASSETS:
Derivative assets	$ 1,321	$ 513
Interest Rate Lock Commitments [Member] | Quoted Prices in Active Markets for Identical Assets Level 1 [Member]
ASSETS:
Derivative assets
Interest Rate Lock Commitments [Member] | Significant Other Observable Inputs Level 2 [Member]
ASSETS:
Derivative assets
Interest Rate Lock Commitments [Member] | Significant Unobservable Inputs Level 3 [Member]
ASSETS:
Derivative assets	$ 1,321	513
Interest Rate Lock Commitments [Member] | Recurring [Member]
ASSETS:
Derivative assets	$ 1,321	$ 513
Interest Rate Lock Commitments [Member] | Recurring [Member] | Quoted Prices in Active Markets for Identical Assets Level 1 [Member]
ASSETS:
Derivative assets
Interest Rate Lock Commitments [Member] | Recurring [Member] | Significant Unobservable Inputs Level 3 [Member]
ASSETS:
Derivative assets	$ 1,321	$ 513

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CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands		Sep. 30, 2015	Dec. 31, 2014
Cash and cash equivalents:
Cash and due from banks		$ 102,955	$ 112,752
Interest-bearing deposits in other banks		76,001	19,344
Money market investments		1	1
Federal funds sold		237	1,163
Total cash and cash equivalents		179,194	133,260
Securities available for sale, at fair value		888,692	1,102,114
Securities held to maturity, at carrying value	[1]	199,363
Restricted stock, at cost		52,721	54,854
Loans held for sale		65,713	42,519
Loans held for investment, net of deferred fees and costs		5,543,621	5,345,996
Less allowance for loan losses		33,269	32,384
Net loans held for investment		5,510,352	5,313,612
Premises and equipment, net		129,191	135,247
Other real estate owned, net of valuation allowance		22,094	28,118
Core deposit intangibles, net		25,320	31,755
Goodwill		293,522	293,522
Bank owned life insurance		142,433	139,005
Other assets		85,718	84,637
Total assets		7,594,313	7,358,643
LIABILITIES
Noninterest-bearing demand deposits		1,338,045	1,199,378
Interest-bearing deposits		4,480,808	4,439,392
Total deposits		5,818,853	5,638,770
Securities sold under agreements to repurchase		99,417	44,393
Other short-term borrowings		332,000	343,000
Long-term borrowings		290,732	299,542
Other liabilities		58,299	55,769
Total liabilities		$ 6,599,301	$ 6,381,474
Commitments and contingencies (Note 7)
STOCKHOLDERS' EQUITY
Common stock, $1.33 par value, shares authorized 100,000,000; issued and outstanding, 44,990,569 shares and 45,162,853 shares, respectively.		$ 59,514	$ 59,795
Surplus		638,511	643,443
Retained earnings		288,841	261,676
Accumulated other comprehensive income		8,146	12,255
Total stockholders' equity		995,012	977,169
Total liabilities and stockholders' equity		$ 7,594,313	$ 7,358,643

[1] The carrying value includes $7.3 million of unrealized gains and losses present at the time of transfer from available for securities, net of any accretion.

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SECURITIES (Gross Realized Gains and Losses of the Sale of Securities) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Realized gains (losses):
Gross realized gains	$ 75	$ 1,034	$ 759	$ 1,498
Gross realized losses		(39)	(87)	(49)
Net realized gains	75	995	672	1,449
Proceeds from sales of securities	$ 5,771	$ 14,370	$ 63,928	$ 273,447

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Consolidated Statements of Comprehensive Income [Abstract]
Tax expense (benefit) related to reclassification adjustment for losses included in net income	$ 84,000	$ 89,000	$ 253,000	$ 231,000
Tax expense (benefit) related to unrealized holding (losses) gains arising during period	673,000	968,000	976,000	7,992,000
Tax expense (benefit) related to (gains) losses on AFS securities	79,000	348,000	130,000	367,000
Tax expense (benefit) related to (gains) losses for AFS securities transferred to HTM	$ (166,000)	$ 0	$ (278,000)	$ 0

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INTANGIBLE ASSETS (Estimated Remaining Amortization Expense of Core Deposit Intangibles) (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014	Sep. 30, 2014
Estimated remaining amortization expense of core deposit intangibles
For the remaining three months of 2015	$ 2,011
For the year ending December 31, 2016	6,932
For the year ending December 31, 2017	5,590
For the year ending December 31, 2018	4,144
For the year ending December 31, 2019	3,093
For the year ending December 31, 2020	2,027
Thereafter	1,523
Net Carrying Value/Total estimated amortization expense	$ 25,320	$ 31,755	$ 34,089

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ACCOUNTING POLICIES (Narrative) (Details) - USD ($)	3 Months Ended	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2015	Dec. 31, 2014
ACCOUNTING POLICIES [Abstract]
Investments, recognized amortization	$ 118,000	$ 397,000
Investments, tax credits	213,000	641,000
Carrying value of investments in qualified housing project investments	10,100,000	10,100,000	$ 10,400,000
Unfunded commitment liability	$ 5,100,000	$ 5,100,000

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COMMITMENTS AND CONTINGENCIES (Narrative) (Details) - USD ($)	Sep. 30, 2015	Dec. 31, 2014
Other Commitments [Line Items]
Loans available for sale in which the related rate lock commitment expired	$ 2,100,000	$ 2,600,000
Valuation reserve on aged loans held for sale in which the related rate lock commitment expired	102,000	104,000
Daily average required reserves	41,400,000	48,700,000
Deposits with other financial institutions	24,600,000
Uninsured deposits with other financial institutions	9,700,000
Indemnification reserves	384,000	$ 662,000
Interest Rate Swaps [Member]
Other Commitments [Line Items]
Deposits with other financial institutions serves as collateral	3,800,000
Cash Flow Hedging [Member]
Other Commitments [Line Items]
Deposits with other financial institutions serves as collateral	$ 10,000,000

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SUBSEQUENT EVENTS

9 Months Ended

Sep. 30, 2015

SUBSEQUENT EVENTS [Abstract]

SUBSEQUENT EVENTS

13.  SUBSEQUENT EVENTS

Sale of Credit Card Portfolio

During the third quarter of 2015, the Company concluded that it met the pertinent criteria for transferring the credit card portfolio from loans held for investment to loans held for sale. 

On October 16, 2015, the Company entered into an agreement to sell the credit card portfolio, approximately $26.4 million in outstanding balances, and enter into an outsourced partnership solution with Elan Financial Services.  The company sold these loans at a premium which is not expected to have a material impact on the Company’s Consolidated Statements of Income.  As part of the agreement, the Company will continue to share in interchange fee income and finance charges.  

Share Repurchase Authorization

On October 29, 2015, the Company’s Board of Directors authorized a share repurchase program to purchase up to $25.0 million worth of the Company’s common stock on the open market or in privately negotiated transactions.  The repurchase program is authorized through December 31, 2016.

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ACQUISITIONS (Narrative) (Details) - StellarOne Bank [Member] $ in Millions	Jan. 01, 2014 USD ($) shares
Business Acquisition [Line Items]
Number of shares equivalent to each share of acquired entity | shares	0.9739
Number of common shares issued | shares	22,147,874
Value of Company common stock issued	$ 549.5
Assets acquired	2,960.0
Liabilties assumed	$ 2,640.0

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ACQUISITIONS (Tables)

9 Months Ended

Sep. 30, 2015

ACQUISITIONS [Abstract]

Schedule of Effect of Amortization and Accretion Related to Acquisition

The net effect of the amortization and accretion of premiums and discounts associated with the Company’s acquisition accounting adjustments had the following impact on the Consolidated Statements of Income during the three and nine months ended September 30, 2015 and 2014 (dollars in thousands):

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2015		2014		2015		2014
Loans (1)	$	1,364	$	846	$	3,055	$	82
Core deposit intangible (2)		(2,074)		(2,391)		(6,435)		(7,462)
Borrowings (3)		87		262		362		413
Time deposits (4)		154		1,998		1,843		7,377
Net impact to income before taxes	$	(469)	$	715	$	(1,175)	$	410
(1) Loan discount  accretion  is included in "Interest and fees on loans" in the "Interest and dividend income" section of the Company's Consolidated Statements of Income.
(2) Core deposit intangible premium amortization is included in "Amortization of intangible assets" in the "Noninterest expense" section of the Company's Consolidated Statements of Income.
(3) Borrowings discount accretion is included in "Interest on long-term borrowings" in the "Interest Expense" section of the Company's Consolidated Statements of Income.
(4)Certificate of deposit discount accretion is included in "Interest on deposits" in the "Interest expense" section of the Company's Consolidated Statements of Income.

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DERIVATIVES (Summary of the Derivatives) (Details) $ in Thousands		9 Months Ended	12 Months Ended
		Sep. 30, 2015 USD ($) item	Dec. 31, 2014 USD ($) item
Trust Swaps [Member]
Summary of the derivative designated as a cash flow hedge
Notional Amount		$ 68,000
Cash Flow Hedging [Member]
Summary of the derivative designated as a cash flow hedge
Notional Amount		263,000
Prime Loan Swaps [Member]
Summary of the derivative designated as a cash flow hedge
Notional Amount		$ 55,000
Life (Years)		6 years
Receive fixed - pay floating interest rate swaps [Member] | Cash Flow Hedging [Member]
Summary of the derivative designated as a cash flow hedge
Positions | item		4	4
Notional Amount		$ 55,000	$ 55,000
Asset		$ 1,553	$ 580
Receive Rate		4.93%	4.93%
Pay Rate		3.55%	3.55%
Life (Years)		3 years 11 months 19 days	4 years 8 months 19 days
Receive fixed - pay floating interest rate swaps [Member] | Interest Rate Swaps [Member]
Summary of the derivative designated as a cash flow hedge
Positions | item		35	30
Notional Amount		$ 141,055	$ 122,793
Asset		$ 5,470	$ 2,681
Receive Rate		4.26%	4.29%
Pay Rate		2.45%	2.50%
Life (Years)		6 years 10 months 2 days	7 years 1 month 21 days
Pay fixed - receive floating interest rate swaps [Member] | Cash Flow Hedging [Member]
Summary of the derivative designated as a cash flow hedge
Positions | item		7	7
Notional Amount		$ 208,000	$ 208,000
Asset
Liabilities		$ 11,911	$ 8,433
Receive Rate	[1]	0.33%	0.26%
Pay Rate	[1]	2.77%	2.77%
Life (Years)	[1]	1 year 4 months 17 days	2 years 1 month 13 days
Pay fixed - receive floating interest rate swaps [Member] | Interest Rate Swaps [Member]
Summary of the derivative designated as a cash flow hedge
Positions | item		35	30
Notional Amount		$ 141,055	$ 122,793
Liabilities		$ 5,470	$ 2,681
Receive Rate		2.45%	2.50%
Pay Rate		4.26%	4.29%
Life (Years)		6 years 10 months 2 days	7 years 1 month 21 days
Minimum [Member] | Trust Swaps [Member]
Summary of the derivative designated as a cash flow hedge
Life (Years)		3 years
Maximum [Member] | Trust Swaps [Member]
Summary of the derivative designated as a cash flow hedge
Life (Years)		6 years

[1] Due to their deferred nature, the rates and the life exclude the four FHLB advance swaps

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CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($) $ in Thousands	Common Stock [Member]	Surplus [Member]	Retained Earnings [Member]	[1]	Accumulated Other Comprehensive Income [Member]	Total
Balance at Dec. 31, 2013	$ 33,020	$ 170,770	$ 236,210		$ (2,190)	$ 437,810
Net income			37,199			37,199
Other comprehensive income, (net of tax)					14,158	14,158
Issuance of common stock in regard to acquisition	29,457	520,066				549,523
Dividends on common stock			(19,021)			(19,021)
Stock purchased under stock repurchase plan	(2,303)	(41,174)				(43,477)
Issuance of common stock under Dividend Reinvestment Plan	50	828	(878)
Issuance of common stock under Equity Compensation Plans	89	983				1,072
Issuance of common stock for services rendered	19	343				362
Vesting of restricted stock under Equity Compensation Plans	20	(20)
Net settle for taxes on Restricted Stock Awards	(85)	(1,480)				(1,565)
Stock-based compensation expense		862				862
Balance at Sep. 30, 2014	60,267	651,178	253,510		11,968	976,923
Balance at Dec. 31, 2014	59,795	643,443	261,676		12,255	977,169
Net income			49,264			49,264
Other comprehensive income, (net of tax)					(4,109)	(4,109)
Dividends on common stock			(21,000)			(21,000)
Stock purchased under stock repurchase plan	(460)	(7,535)				(7,995)
Issuance of common stock under Dividend Reinvestment Plan	69	1,030	(1,099)
Issuance of common stock under Equity Compensation Plans	49	517				566
Issuance of common stock for services rendered	26	420				446
Vesting of restricted stock under Equity Compensation Plans	52	(52)
Net settle for taxes on Restricted Stock Awards	(17)	(269)				(286)
Stock-based compensation expense		957				957
Balance at Sep. 30, 2015	$ 59,514	$ 638,511	$ 288,841		$ 8,146	$ 995,012

[1] Retained earnings as of December 31, 2013 and 2014 includes the cumulative impact of $429,000 and $856,000, respectively, resulting from the adoption of ASU 2014-01 "Accounting For Investments in Qualified Affordable Housing Projects." See "Note 1 - Accounting Policies" for additional information.

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CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Sep. 30, 2015	Dec. 31, 2014
Consolidated Balance Sheets [Abstract]
Common stock, par value	$ 1.33	$ 1.33
Common stock, shares authorized	100,000,000	100,000,000
Common stock, shares issued	44,990,569	45,162,853
Common stock, shares outstanding	44,990,569	45,162,853

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DERIVATIVES

9 Months Ended

Sep. 30, 2015

DERIVATIVES [Abstract]

DERIVATIVES

8.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 its derivatives either as hedging instruments in a qualifying hedge accounting relationship (cash flow or fair value hedge) or as a free standing derivative such as interest rate lock commitments that do not qualify for hedge accounting.  The Company uses interest rate derivatives to manage its exposure to interest rate movements and add stability to interest income and expense. The Company also enters into back-to-back loan swaps to assist customers in managing the risks due to changing interest rates.

Cash Flow Hedges

As part of its cash flow hedging strategy, the Company uses interest rate swap agreements to limit the variability of expected future cash flows (primarily associated with the Company’s variable rate borrowings) by exchanging a notional amount, equal to the principal amount of the borrowings, for fixed-rate interest based on benchmarked interest rates.  As of September 30, 2015, the Company had 11 interest rate swaps designated as cash flow hedges with an aggregate notional amount of $263.0 million.

The Company has entered into three interest rate swap agreements (the “trust swaps”) to mitigate the variable interest rate risk related to the trust preferred capital notes further described in Note 6 “Borrowings.”  The Company receives interest of LIBOR from a counterparty and pays a weighted average fixed rate of 2.77% to the same counterparty calculated on a notional amount of $68.0 million.  The original terms of the trust swaps range from three to six years. 

The Company has entered into four interest rate swap agreements (the “prime loan swaps”) to mitigate the variable interest rate risks of certain prime commercial loans.  The Company receives a fixed interest rate ranging from 4.71% to 5.20% from the counterparty and pays interest based on the Wall Street Journal prime index, with a spread of up to 0.49%, to the same counterparty calculated on a notional amount of $55.0 million.  One of the four prime loan swaps contains a floor rate of 4.00%.  The original terms of the four prime loan swaps is six years with a fixed rate that started September 17, 2013.  

The Company has entered into four interest rate swap agreements (“FHLB advance swaps”) to mitigate variable interest rate risk on certain designated variable rate FHLB borrowings. The Company receives an interest rate based on the three month LIBOR from the counterparty and pays an interest rate ranging from 3.16% to 3.46% to the same counterparty calculated on a notional amount of $140.0 million.  The FHLB advance swaps are deferred starting swaps with terms of six years and five years and effective dates of February 23, 2017 and February 23, 2018, respectively. 

All swaps were entered into with counterparties that 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.  As of September 30, 2015, the Company had $10.0 million of cash pledged as collateral for the cash flow hedges and securities with a market value of $4.3 million pledged as collateral for the prime loan swaps and FHLB advance swaps.

Amounts receivable or payable are recognized as accrued under the terms of the agreements.  In accordance with ASC 815, Derivatives and Hedging, the Company has designated the trust swaps, prime loan swaps, and FHLB advance swaps as cash flow hedges, with the effective portions of the derivatives’ unrealized gains or losses recorded as a component of other comprehensive income.  The ineffective portions of the unrealized gains or losses, if any, would be recorded in interest income and interest expense in the Company’s Consolidated Statements of Income.  The Company has assessed the effectiveness of each hedging relationship by comparing the changes in cash flows of the hedging instrument.  Based on the Company’s assessment, its cash flow hedges are highly effective.  At September 30, 2015, the fair value of the Company’s cash flow hedges was a net unrealized loss of $10.4 million, the amount the Company would have expected to pay if the contracts were terminated.

Shown below is a summary of the derivatives designated as cash flow hedges at September 30, 2015 and December 31, 2014 (dollars in thousands):

		Notional						Receive		Pay		Weighted Average
	Positions	Amount		Asset		Liability		Rate		Rate		Life (Years)
As of September 30, 2015
Pay fixed - receive floating interest rate swaps	7	$	208,000	$	-	$	11,911	0.33%	(1)	2.77%	(1)	1.38	(1)
Receive fixed - pay floating interest rate swaps	4	$	55,000	$	1,553	$	-	4.93%		3.55%		3.97
(1) Due to their deferred nature, the rates and the life exclude the four FHLB advance swaps.
		Notional						Receive		Pay		Weighted Average
	Positions	Amount		Asset		Liability		Rate		Rate		Life (Years)
As of December 31, 2014
Pay fixed - receive floating interest rate swaps	7	$	208,000	$	-	$	8,433	0.26%	(1)	2.77%	(1)	2.12	(1)
Receive fixed - pay floating interest rate swaps	4	$	55,000	$	580	$	-	4.93%		3.55%		4.72
(1) Due to their deferred nature, the rates and the life exclude the four FHLB advance swaps.

Fair Value Hedge

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 applies hedge accounting in accordance with ASC 815, 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 in the Company’s Consolidated Statements of Income.  The ineffective portions of the unrealized gains or losses, if any, would be recorded in interest income and interest expense in the Company’s Consolidated Statements of Income.  The Company uses statistical regression analysis 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.

As of September 30, 2015, the Company had three swaps constituting fair value hedges, whereby the Company pays a fixed interest rate ranging from 3.23% to 3.53% to the counterparty and receives interest of one month LIBOR plus a spread of up to 2.13% from the same counterparty calculated on an aggregate notional amount of $53.6 million with terms ranging from 15 to 17 years. At December 31, 2014, the Company had one fair value hedge with an aggregate notional amount of $38.3 million.  At September 30, 2015, the fair value of the Company’s fair value hedges was an unrealized loss of $1.4 million, the amount the Company would have expected to pay if the contract was terminated; the liability is reported in “Other Liabilities” in the Company’s Consolidated Balance Sheets.  At September 30, 2015, the aggregate notional amount of the hedged items was $53.6 million with a fair value of $1.4 million.  At December 31, 2014, the Company had one hedged item with an aggregate notional amount of $38.3 million.  The Company’s fair value hedges continue to be highly effective and had no material impact 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 counterparties 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” in the Company’s Consolidated Balance Sheets.  As of September 30, 2015, the Company had cash and securities with a market value of $6.6 million pledged as collateral for the loan swaps. 

Shown below is a summary regarding loan swap derivative activities at September 30, 2015 and December 31, 2014 (dollars in thousands):

		Notional						Receive	Pay	Weighted Average
	Positions	Amount		Asset		Liability		Rate	Rate	Life (Years)
As of September 30, 2015
Receive fixed - pay floating interest rate swaps	35	$	141,055	$	5,470	$	-	4.26%	2.45%	6.84
Pay fixed - receive floating interest rate swaps	35	$	141,055	$	-	$	5,470	2.45%	4.26%	6.84
		Notional						Receive	Pay	Weighted Average
	Positions	Amount		Asset		Liability		Rate	Rate	Life (Years)
As of December 31, 2014
Receive fixed - pay floating interest rate swaps	30	$	122,793	$	2,681	$	-	4.29%	2.50%	7.14
Pay fixed - receive floating interest rate swaps	30	$	122,793	$	-	$	2,681	2.50%	4.29%	7.14

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 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 as of September 30, 2015 was $1.3 million and is reported as a component of “Other Assets” in the Company’s Consolidated Balance Sheets; the fair value of the Company’s best efforts forward delivery commitments was $544,000 and is recorded as a component of “Other Liabilities” in the Company’s Consolidated Balance Sheets. Any impact to income is recorded in current period earnings as a component of “Gain on sale of mortgage loans, net of commissions” in the Company’s Consolidated Statements of Income.  The aggregate notional amount of these derivatives was $61.0 million and $49.6 million at September 30, 2015 and December 31, 2014, respectively.

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Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2015	Nov. 02, 2015
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, 2015
Amendment Flag	false
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q3
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		44,923,602

XML

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

9 Months Ended

Sep. 30, 2015

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) [Abstract]

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

9.ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

The change in accumulated other comprehensive income (loss) for the three and nine months ended September 30, 2015 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, 2015	$	8,738	$	5,043	$	(4,552)	$	9,229
Other comprehensive income (loss)		1,250		(308)		(2,328)		(1,386)
Amounts reclassified from accumulated other comprehensive income		146		-		157		303
Net current period other comprehensive income (loss)		1,396		(308)		(2,171)		(1,083)
Balance - September 30, 2015	$	10,134	$	4,735	$	(6,723)	$	8,146

	Unrealized Gains (Losses) on AFS Securities			Unrealized Gain for AFS Securities Transferred to HTM	Change in Fair Value of Cash Flow Hedges		Total
Balance - December 31, 2014	$	17,439	$	-	$	(5,184)	$	12,255
Unrealized gain transferred from AFS to HTM		(5,251)		5,251		-		-
Other comprehensive income (loss)		(1,812)		(516)		(2,009)		(4,337)
Amounts reclassified from accumulated other comprehensive income		(242)		-		470		228
Net current period other comprehensive income (loss)		(2,054)		(516)		(1,539)		(4,109)
Balance - September 30, 2015	$	10,134	$	4,735	$	(6,723)	$	8,146

The change in accumulated other comprehensive income (loss) for the three and nine months ended September 30, 2014 is summarized as follows, net of tax (dollars in thousands):

	Unrealized Gains (Losses) on AFS Securities		Change in Fair Value of Cash Flow Hedge		Total
Balance - June 30, 2014	$	14,202	$	(3,321)	$	10,881
Other comprehensive income (loss)		1,798		(228)		1,570
Amounts reclassified from accumulated other comprehensive income		(647)		164		(483)
Net current period other comprehensive income (loss)		1,151		(64)		1,087
Balance - September 30, 2014	$	15,353	$	(3,385)	$	11,968

	Unrealized Gains (Losses) on AFS Securities			Change in Fair Value of Cash Flow Hedges	Total
Balance - December 31, 2013	$	1,192	$	(3,382)	$	(2,190)
Other comprehensive income (loss)		14,843		(431)		14,412
Amounts reclassified from accumulated other comprehensive income		(682)		428		(254)
Net current period other comprehensive income (loss)		14,161		(3)		14,158
Balance - September 30, 2014	$	15,353	$	(3,385)	$	11,968

Reclassifications of unrealized gains (losses) on available for sale securities are reported in 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 $75,000 and $672,000 for the three and nine months ended September 30, 2015, respectively, related to the sale of securities.  Excluding OTTI recovery of $400,000 in the second quarter of 2014, the Company reported net gains of $995,000and $1.0 million for the three and nine months ended September 30, 2014, respectively, related to the sale of securities. The Company recorded $300,000 in other-than-temporary impairment in the current quarter on a municipal security in the available for sale portfolio. The tax effect of these transactions during the three and nine months ended September 30, 2015 and 2014 were $79,000 and $130,000 and $348,000 and $367,000, respectively, which amounts 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 in 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 $241,000 and $723,000 and $253,000 and $659,000 for the three and nine months ended September 30, 2015 and 2014, respectively.  The tax effect of these transactions during the three and nine months ended September 30, 2015 and 2014 were $84,000 and $253,000 and $89,000 and $231,000, respectively, which amounts were included as a component of income tax expense.

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SUBSEQUENT EVENTS (Narrative) (Details) - USD ($) $ in Thousands			9 Months Ended
	Oct. 29, 2015	Oct. 16, 2015	Sep. 30, 2015
Subsequent Event [Line Items]
Transfer from loans held for investment to loans held for sale			$ 26,400
Subsequent Event [Member]
Subsequent Event [Line Items]
Transfer from loans held for investment to loans held for sale		$ 26,400
Stock repurchase program, authorized amount, maximum	$ 25,000
Stock repurchase program, expiration date	Dec. 31, 2016

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CONSOLIDATED STATEMENTS OF INCOME - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Interest and dividend income:
Interest and fees on loans	$ 62,651	$ 62,340	$ 185,706	$ 184,996
Interest on federal funds sold			1	1
Interest on deposits in other banks	23	21	64	41
Interest and dividends on securities:
Taxable	3,954	3,883	11,621	11,391
Nontaxable	3,372	3,347	10,062	10,005
Total interest and dividend income	70,000	69,591	207,454	206,434
Interest expense:
Interest on deposits	4,204	3,027	11,204	7,833
Interest on federal funds purchased	1	3	6	49
Interest on short-term borrowings	223	108	728	373
Interest on long-term borrowings	2,128	1,974	6,287	6,226
Total interest expense	6,556	5,112	18,225	14,481
Net interest income	63,444	64,479	189,229	191,953
Provision for loan losses	2,062	1,800	7,561	3,300
Net interest income after provision for loan losses	61,382	62,679	181,668	188,653
Noninterest income:
Service charges on deposit accounts	4,965	4,458	13,800	13,281
Other service charges and fees	3,983	3,773	11,618	11,281
Fiduciary and asset management fees	2,304	2,120	6,835	6,753
Gains on sales of mortgage loans, net of commissions	2,630	2,598	7,582	7,925
Gains on securities transactions, net	75	995	672	1,449
Other-than-temporary impairment losses	(300)		(300)
Bank owned life insurance income	1,161	1,195	3,431	3,467
Other operating income	1,907	1,179	4,352	2,229
Total noninterest income	16,725	16,318	47,990	46,385
Noninterest expenses:
Salaries and benefits	25,853	25,636	78,905	82,466
Occupancy expenses	4,915	4,902	15,220	15,184
Furniture and equipment expenses	3,015	3,050	8,818	8,555
Printing, postage, and supplies	1,191	1,290	3,970	3,682
Communications expense	1,159	1,291	3,481	3,740
Technology and data processing	3,549	3,280	10,020	9,145
Professional services	1,991	1,400	5,008	3,897
Marketing and advertising expense	1,781	2,064	5,841	4,821
FDIC assessment premiums and other insurance	1,351	1,577	4,030	4,563
Other taxes	1,569	1,460	4,674	4,352
Loan-related expenses	935	814	2,306	1,987
OREO and credit-related expenses	1,263	6,559	4,415	10,254
Amortization of intangible assets	2,074	2,391	6,435	7,462
Acquisition and conversion costs		1,695		19,524
Other expenses	2,679	2,004	9,282	6,033
Total noninterest expenses	53,325	59,413	162,405	185,665
Income before income taxes	24,782	19,584	67,253	49,373
Income tax expense	6,566	4,767	17,989	12,174
Net income	$ 18,216	$ 14,817	$ 49,264	$ 37,199
Earnings per common share:
Basic	$ 0.40	$ 0.32	$ 1.09	$ 0.80
Diluted	0.40	0.32	1.09	0.80
Dividends declared per common share	$ 0.17	$ 0.15	$ 0.49	$ 0.43
Weighted average number of shares outstanding:
Basic	45,087,409	45,649,309	45,107,290	46,268,996
Diluted	45,171,610	45,738,554	45,189,578	46,367,156

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SECURITIES

9 Months Ended

Sep. 30, 2015

SECURITIES [Abstract]

SECURITIES

3.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, 2015 and December 31, 2014 are summarized as follows (dollars in thousands):

	Amortized		Gross Unrealized				Estimated
	Cost		Gains		(Losses)		Fair Value
September 30, 2015
U.S. government and agency securities	$	8,068	$	343	$	-	$	8,411
Obligations of states and political subdivisions		241,655		8,750		(512)		249,893
Corporate bonds		73,917		70		(1,525)		72,462
Mortgage-backed securities		539,230		9,122		(635)		547,717
Other securities		10,181		28		-		10,209
Total available for sale securities	$	873,051	$	18,313	$	(2,672)	$	888,692
December 31, 2014
U.S. government and agency securities	$	8,313	$	166	$	(25)	$	8,454
Obligations of states and political subdivisions		427,483		18,885		(721)		445,647
Corporate bonds		78,744		244		(308)		78,680
Mortgage-backed securities		550,716		9,411		(798)		559,329
Other securities		9,979		31		(6)		10,004
Total available for sale securities	$	1,075,235	$	28,737	$	(1,858)	$	1,102,114

The following table shows the gross unrealized losses and fair value (in thousands) of the Company’s available for sale investments with unrealized losses that are not deemed to be other-than-temporarily impaired.  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		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
September 30, 2015
Obligations of states and political subdivisions	$	33,742	$	(252)	$	6,610	$	(260)	$	40,352	$	(512)
Mortgage-backed securities		118,679		(459)		28,026		(176)		146,705		(635)
Corporate bonds and other securities		24,782		(832)		17,886		(693)		42,668		(1,525)
Total available for sale	$	177,203	$	(1,543)	$	52,522	$	(1,129)	$	229,725	$	(2,672)
December 31, 2014
U.S. government and agency securities	$	7,055	$	(25)	$	-	$	-	$	7,055	$	(25)
Obligations of states and political subdivisions		13,602		(93)		42,514		(628)		56,116		(721)
Mortgage-backed securities		60,151		(362)		49,581		(436)		109,732		(798)
Corporate bonds and other securities		43,923		(244)		4,309		(70)		48,232		(314)
Total available for sale	$	124,731	$	(724)	$	96,404	$	(1,134)	$	221,135	$	(1,858)

As of September 30, 2015,  there were $52.5 million, or 22 issues, of individual available for sale securities that had been in a continuous loss position for more than 12 months.  Additionally, these securities had an unrealized loss of $1.1 million and consisted of municipal obligations, mortgage-backed securities, and corporate bonds.  As of December 31, 2014, there were$96.4 million, or 60 issues, of individual securities that had been in a continuous loss position for more than 12 months.  Additionally, these securities had an unrealized loss of $1.1 million and consisted of municipal obligations, mortgage-backed securities, corporate bonds, and other securities.  The Company has determined that these securities are temporarily impaired as of September 30, 2015 and December 31, 2014 for the reasons set out below:

U.S. Government agencies and corporations.  The unrealized losses in this category of investments were caused by interest rate fluctuations. 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 these 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.

Mortgage-backed securities.  This category’s unrealized losses are primarily the result of interest rate fluctuations.  Since 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.

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 economic downturn 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.  As discussed below, one security was identified as containing credit-related OTTI.

Corporate debt securities.  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 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, 2015 and December 31, 2014, 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, 2015				December 31, 2014
	Amortized		Estimated		Amortized		Estimated
	Cost		Fair Value		Cost		Fair Value
Due in one year or less	$	16,840	$	16,904	$	19,345	$	19,434
Due after one year through five years		60,862		62,790		41,545		43,070
Due after five years through ten years		263,108		269,177		306,900		314,044
Due after ten years		532,241		539,821		707,445		725,566
Total securities available for sale	$	873,051	$	888,692	$	1,075,235	$	1,102,114

The following table presents 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, 2015 and December 31, 2014 (dollars in thousands):

	September 30, 2015		December 31, 2014
	Fair Value		Fair Value
Public deposits	$	150,632	$	312,793
Repurchase agreements		118,249		51,842
Other purposes (1)		30,256		32,360
Total pledged securities	$	299,137	$	396,995
(1)The "Other purposes" category consists of borrowings, derivatives, and accounts held at the Bank.

Held to Maturity

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 Company transferred these securities to held to maturity to reduce the impact of price volatility on capital and in consideration of changes to the regulatory environment.  The securities included net pre-tax unrealized gains of $8.1 million at the date of transfer with a remaining balance of $7.3 million as of September 30, 2015.

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/(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, 2015 are summarized as follows (dollars in thousands):

	Carrying		Gross Unrealized				Estimated
	Value (1)		Gains		(Losses)		Fair Value
September 30, 2015
Obligations of states and political subdivisions	$	199,363	$	2,882	$	(1,926)	$	200,319
(1)The carrying value includes $7.3 million of unrealized gains and losses present at the time of transfer from available for securities, net of any accretion.

The following table shows the gross unrealized losses and fair value (in thousands) of the Company’s held to maturity securities with unrealized losses that are not deemed to be other-than-temporarily impaired.  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		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Losses		Value		Losses		Value		Losses
September 30, 2015
Obligations of states and political subdivisions	$	28,727	$	(1,926)	$	-	$	-	$	28,727	$	(1,926)

The following table presents the amortized cost and estimated fair value of held to maturity securities as of September 30, 2015, 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, 2015
	Carrying		Estimated
	Value (1)		Fair Value
Due in one year or less	$	1,314	$	1,321
Due after one year through five years		5,217		5,267
Due after five years through ten years		39,392		39,521
Due after ten years		153,440		154,210
Total securities held to maturity	$	199,363	$	200,319
(1)The carrying value includes $7.3 million of unrealized gains and losses present at the time of transfer from available for securities, net of any accretion.

The following table presents held to maturity securities which were pledged to secure public deposits as permitted or required by law as of September 30, 2015 (dollars in thousands):

	September 30, 2015
	Fair
	Value
Public deposits	$	200,319
Total pledged securities	$	200,319

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, 2015, 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.  At December 31, 2014, the FHLB required the Bank to maintain stock in an amount equal to 4.5% 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, 2015 and December 31, 2014.  Restricted equity securities consist of Federal Reserve Bank stock in the amount of $23.8 million for both September 30, 2015 and December 31, 2014 and FHLB stock in the amount of $28.9 million and $31.0 million as of September 30, 2015 and December 31, 2014, 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 quarter ended September 30, 2015 and in accordance with the guidance, the Company determined that a municipal security in the availableforsale portfolio incurred credit-related OTTI of $300,000, which was recognized in earnings for the quarter ended September 30, 2015.

Realized Gains and Losses

The following table presents the gross realized gains and losses on the sale of securities available for sale and the proceeds from the sale of securities during the three and nine months ended September 30, 2015 (dollars in thousands).  The Company did not sell any investment securities that are held to maturity.

	Three months ended		Nine months ended
	September 30, 2015		September 30, 2015
Realized gains (losses):
Gross realized gains	$	75	$	759
Gross realized losses		-		(87)
Net realized gains	$	75	$	672
Proceeds from sales of securities	$	5,771	$	63,928

The following table presents the gross realized gains and losses on the sale of securities available for sale and the proceeds from the sale of securities during the three and nine months ended September 30, 2014 (dollars in thousands).

	Three months ended		Nine months ended
	September 30, 2014		September 30, 2014
Realized gains (losses):
Gross realized gains	$	1,034	$	1,498
Gross realized losses		(39)		(49)
Net realized gains	$	995	$	1,449
Proceeds from sales of securities	$	14,370	$	273,447

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ACQUISITIONS

9 Months Ended

Sep. 30, 2015

ACQUISITIONS [Abstract]

ACQUISITIONS

2.ACQUISITIONS

The Company’s merger and acquisition strategy focuses on high-growth areas with strong market demographics and targets organizations that have a comparable corporate culture, strong performance, and good asset quality, among other factors.  On January 1, 2014, the Company completed the acquisition of StellarOne, a bank holding company based in Charlottesville, Virginia, in an all-stock transaction.  StellarOne’s common shareholders received 0.9739 shares of the Company’s common stock in exchange for each share of StellarOne’s common stock, resulting in the Company issuing 22,147,874shares of common stock at a fair value of $549.5 million.  The fair value of assets acquired totaled $2.96 billion and liabilities assumed totaled $2.64 billion. As a result of the transaction, StellarOne’s former bank subsidiary, StellarOne Bank, became a wholly owned bank subsidiary of the Company.  On May 9, 2014, StellarOne Bank was merged with and into the Bank.  Information regarding this acquisition is included in the Company’s 2014 Annual Report on Form 10-K. The Company has not completed any acquisitions of businesses in 2015.

The net effect of the amortization and accretion of premiums and discounts associated with the Company’s acquisition accounting adjustments had the following impact on the Consolidated Statements of Income during the three and nine months ended September 30, 2015 and 2014 (dollars in thousands):

	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2015		2014		2015		2014
Loans (1)	$	1,364	$	846	$	3,055	$	82
Core deposit intangible (2)		(2,074)		(2,391)		(6,435)		(7,462)
Borrowings (3)		87		262		362		413
Time deposits (4)		154		1,998		1,843		7,377
Net impact to income before taxes	$	(469)	$	715	$	(1,175)	$	410
(1) Loan discount  accretion  is included in "Interest and fees on loans" in the "Interest and dividend income" section of the Company's Consolidated Statements of Income.
(2) Core deposit intangible premium amortization is included in "Amortization of intangible assets" in the "Noninterest expense" section of the Company's Consolidated Statements of Income.
(3) Borrowings discount accretion is included in "Interest on long-term borrowings" in the "Interest Expense" section of the Company's Consolidated Statements of Income.
(4)Certificate of deposit discount accretion is included in "Interest on deposits" in the "Interest expense" section of the Company's Consolidated Statements of Income.

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ACCOUNTING POLICIES (Policy)

9 Months Ended

Sep. 30, 2015

ACCOUNTING POLICIES [Abstract]

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In January 2015, the FASB issued ASU No. 2015-01, “Income Statement—Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items.”  The amendments in this ASU eliminate from U.S. GAAP the concept of extraordinary items. Subtopic 225-20, Income Statement - Extraordinary and Unusual Items, required that an entity separately classify, present, and disclose extraordinary events and transactions.  Presently, an event or transaction is presumed to be an ordinary and usual activity of the reporting entity unless evidence clearly supports its classification as an extraordinary item.  If an event or transaction meets the criteria for extraordinary classification, an entity is required to segregate the extraordinary item from the results of ordinary operations and show the item separately in the income statement, net of tax, after income from continuing operations. The entity also is required to disclose applicable income taxes and either present or disclose earnings-per-share data applicable to the extraordinary item.  The amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015.  Early adoption is permitted provided that the guidance is applied from the beginning of the fiscal year of adoption.  The Company does not expect the adoption of ASU 2015-01 to have a material impact on its consolidated financial statements.

In February 2015, the FASB issued ASU No. 2015-02, “Amendments to the Consolidation Analysis.”  The amendments in this ASU amend the consolidation requirements in ASC 810, Consolidation, and significantly change the consolidation analysis required under U.S. GAAP.  Under this guidance, limited partnerships will be considered variable interest entities (“VIEs”) unless the limited partners have either substantive kick-out or participating rights; this amendment will result in more partnerships being considered VIEs, but it will be less likely that a general partner will consolidate a limited partnership.  The amendments also change the effect that fees paid to a decision maker or service provider have on the consolidation analysis; it is less likely that the fees themselves will be considered a variable interest, that an entity will be a VIE, or that consolidation will result.  The changes modify how a reporting entity considers how its variable interests affect its consolidation process; the related party tiebreaker test and mandatory consolidation by one of the related parties will have to be performed less frequently than under current U.S. GAAP.  For entities other than limited partnerships, the amendments clarify how to determine whether the equity holders have power over the entity and could affect whether the entity is a VIE.  The amendments are expected to result in the deconsolidation of many entities.  The amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015.  Early adoption is permitted provided that the guidance is applied from the beginning of the fiscal year of adoption.  The Company is currently assessing the impact that ASU 2015-02 will have on its consolidated financial statements.

In April 2015, the FASB issued ASU No. 2015-03, “Interest – Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs.”  The ASU does not change the existing recognition and measurement guidance for debt issuance costs but requires that debt issuance costs related to a debt liability recorded on the balance sheet be present in the balance sheet as a direct deduction from the carrying amount of that debt liability.  The amendments should be disclosed consistent with the disclosure requirement of a change in accounting principle and applied on a retrospective basis.  This ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015.  Early adoption is permitted.  The Company does not expect the adoption of ASU 2015-03 to have a material impact on its consolidated financial statements.

In April 2015, the FASB issued ASU No. 2015-05, “Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40: Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement.”  This ASU clarifies the circumstances under which a cloud computing customer would account for the arrangement as a license of internal-use software.  If a cloud computing arrangement includes a software license, then the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses; otherwise, the customer should account for the arrangement as a service contract.  The amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015.  Early adoption is permitted.  The Company is currently assessing the impact of ASU 2015-05 will have on its consolidated financial statements.

In August 2015, the FASB issued ASU No. 2015-15, “Interest—Imputation of Interest (Subtopic 835-30): Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements.” This ASU clarifies the guidance issued within ASU 2015-03 described above. Given the absence of authoritative guidance within Update 2015-03 for debt issuance costs related to line-of-credit arrangements, the SEC staff would not object to an entity presenting the cost of securing a revolving line of credit as an asset, regardless of whether a balance is outstanding. The costs should be amortized over the term of the arrangement. This ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015.  Early adoption is permitted.  The Company does not expect the adoption of ASU 2015-15 to have a material impact on its consolidated financial statements.

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FAIR VALUE MEASUREMENTS

9 Months Ended

Sep. 30, 2015

FAIR VALUE MEASUREMENTS [Abstract]

FAIR VALUE MEASUREMENTS

10.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 8 “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.  However, this value 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 ofSeptember 30, 2015 and approximately 90% as of December 31, 2014.  As of September 30, 2015, the interest rate lock commitments are recorded as a component of “Other Assets” and the best effort forward delivery commitments are recorded as a component of “Other Liabilities” 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 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, 2015 and December 31, 2014.  

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.

The following table presents the balances of financial assets and liabilities measured at fair value on a recurring basis at September 30, 2015 and December 31, 2014 (dollars in thousands):

	Fair Value Measurements at September 30, 2015 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:
U.S. government and agency securities	$	-	$	8,411	$	-	$	8,411
Obligations of states and political subdivisions		-		249,893		-		249,893
Corporate and other bonds		-		72,462		-		72,462
Mortgage-backed securities		-		547,717		-		547,717
Other securities		-		10,209		-		10,209
Derivatives:
Interest rate swap		-		5,470		-		5,470
Cash flow hedges		-		1,553		-		1,553
Interest rate lock commitments		-		-		1,321		1,321
LIABILITIES
Derivatives:
Interest rate swap	$	-	$	5,470	$	-	$	5,470
Cash flow hedges		-		11,911		-		11,911
Best effort forward delivery commitments		-		-		544		544

		Fair Value Measurements at December 31, 2014 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:
U.S. government and agency securities	$	-	$	8,454	$	-	$	8,454
Obligations of states and political subdivisions		-		445,647		-		445,647
Corporate bonds		-		78,680		-		78,680
Mortgage-backed securities		-		559,329		-		559,329
Other securities		-		10,004		-		10,004
Derivatives:
Interest rate swap		-		2,681		-		2,681
Cash flow hedges		-		580		-		580
Interest rate lock commitments		-		-		513		513
LIABILITIES
Derivatives:
Interest rate swap	$	-	$	2,681	$	-	$	2,681
Cash flow hedges		-		8,433		-		8,433

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.

Loans held for sale

Loans held for sale are carried at the lower of cost or market value.  These loans currently consist of residential loans originated for sale in the secondary market and the credit card portfolio that was transferred from loans held for investment during the quarter.  See Note 13 “Subsequent Events” for additional information.  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).  As such, the Company records any fair value adjustments on a nonrecurring basis.  Gains and losses on the sale of loans are recorded within the mortgage segment and are reported on a separate line item in the Company’s Consolidated Statements of Income.

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).  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. 

Total valuation expenses related to OREO properties for the three and nine months ended September 30, 2015 totaled $473,000and $1.8 million, respectively, and for the three and nine months ended September 30, 2014 totaled $6.2 million and $7.3 million, respectively.

The following tables summarize the Company’s financial assets that were measured at fair value on a nonrecurring basis at September 30, 2015 and December 31, 2014 (dollars in thousands):

		Fair Value Measurements at September 30, 2015 using
	Quoted Prices in Active Markets for Identical Assets			Significant Other Observable Inputs		Significant Unobservable Inputs
	Level 1			Level 2		Level 3		Balance
ASSETS
Loans held for sale	$		-	$	65,713	$	-	$	65,713
Impaired loans			-		-		10,416		10,416
Other real estate owned			-		-		22,094		22,094

		Fair Value Measurements at December 31, 2014 using
	Quoted Prices in Active Markets for Identical Assets			Significant Other Observable Inputs		Significant Unobservable Inputs
	Level 1			Level 2		Level 3		Balance
ASSETS
Loans held for sale	$		-	$	42,519	$	-	$	42,519
Impaired loans			-		-		15,797		15,797
Other real estate owned			-		-		28,118		28,118

The following table displays quantitative information about Level 3 Fair Value Measurements at September 30, 2015 (dollars in thousands):

	Fair Value Measurements at September 30, 2015
	Fair Value		Valuation Technique(s)	Unobservable Inputs	Weighted Average
ASSETS
Impaired Loans	$	10,416	Market comparables	Discount applied to market comparables (1)	7%
Other real estate owned		22,094	Market comparables	Discount applied to market comparables (1)	21%
Total	$	32,510
(1)A discount percentage (in addition to expected selling costs) is applied based on the age of independent appraisals, current market conditions, and experience within the local market.

The following table displays quantitative information about Level 3 Fair Value Measurements at December 31, 2014 (dollars in thousands):

	Fair Value Measurements at December 31, 2014
	Fair Value		Valuation Technique(s)	Unobservable Inputs	Weighted Average
ASSETS
Impaired Loans	$	15,797	Market comparables	Discount applied to market comparables (1)	13%
Other real estate owned		28,118	Market comparables	Discount applied to market comparables (1)	32%
Total	$	43,915
(1)A discount percentage (in addition to expected selling costs) is applied based on the age of independent appraisals, current market conditions, and experience within the local market.

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 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, 2015 and December 31, 2014.

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 bank owned life insurance 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’s derivative pricing functions.

Accrued interest

The carrying amounts of accrued interest approximate fair value.

Commitments to extend credit and standby letters of credit

The fair value of commitments is estimated using the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the present creditworthiness of the counterparties. For fixed-rate loan commitments, fair value also considers the difference between current levels of interest rates and the committed rates.  The fair value of letters of credit is based on fees currently charged for similar agreements or on the estimated cost to terminate them or otherwise settle the obligations with the counterparties at the reporting date.  At September 30, 2015 and December 31, 2014, the fair value of loan commitments and standby letters of credit was immaterial.

The carrying values and estimated fair values of the Company’s financial instruments at September 30, 2015 and December 31, 2014 are as follows (dollars in thousands):

			Fair Value Measurements at September 30, 2015 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	$	179,194	$	179,194	$	-	$	-	$	179,194
Securities available for sale		888,692		-		888,692		-		888,692
Held to maturity securities		199,363		-		200,319		-		200,319
Restricted stock		52,721		-		52,721		-		52,721
Loans held for sale		65,713		-		65,713		-		65,713
Net loans		5,510,352		-		-		5,536,118		5,536,118
Derivatives:
Interest rate lock commitments		1,321		-		-		1,321		1,321
Interest rate swap		5,470		-		5,470		-		5,470
Cash flow hedges		1,553		-		1,553		-		1,553
Accrued interest receivable		21,488		-		21,488		-		21,488
Bank owned life insurance		142,433		-		142,433		-		142,433
LIABILITIES
Deposits	$	5,818,853	$	-	$	5,817,840	$	-	$	5,817,840
Borrowings		722,149		-		699,804		-		699,804
Accrued interest payable		1,610		-		1,610		-		1,610
Derivatives:
Interest rate swap		5,470		-		5,470		-		5,470
Cash flow hedges		11,911		-		11,911		-		11,911
Best effort forward delivery commitments		544		-		-		544		544

			Fair Value Measurements at December 31, 2014 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	$	133,260	$	133,260	$	-	$	-	$	133,260
Securities available for sale		1,102,114		-		1,102,114		-		1,102,114
Restricted stock		54,854		-		54,854		-		54,854
Loans held for sale		42,519		-		42,519		-		42,519
Net loans		5,313,612		-		-		5,340,759		5,340,759
Derivatives:
Interest rate lock commitments		513		-		-		513		513
Interest rate swap		2,681		-		2,681		-		2,681
Cash flow hedges		580		-		580		-		580
Accrued interest receivable		21,775		-		21,775		-		21,775
Bank owned life insurance		139,005		-		139,005		-		139,005
LIABILITIES
Deposits	$	5,638,770	$	-	$	5,637,929	$	-	$	5,637,929
Borrowings		686,935		-		666,224		-		666,224
Accrued interest payable		1,899		-		1,899		-		1,899
Derivatives:
Interest rate swap		2,681		-		2,681		-		2,681
Cash flow hedges		8,433		-		8,433		-		8,433

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.  However, borrowers with fixed rate obligations 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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BORROWINGS

9 Months Ended

Sep. 30, 2015

BORROWINGS [Abstract]

BORROWINGS

6.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, 2015 and December 31, 2014  (dollars in thousands):

	September 30,		December 31,
	2015		2014
Securities sold under agreements to repurchase	$	99,417	$	44,393
Other short-term borrowings		332,000		343,000
Total short-term borrowings	$	431,417	$	387,393
Maximum month-end outstanding balance	$	445,761	$	387,393
Average outstanding balance during the period		383,554		237,896
Average interest rate during the period		0.26%		0.24%
Average interest rate at end of period		0.24%		0.31%
Other short-term borrowings:
Federal funds purchased	$	5,000	$	-
FHLB	$	325,000	$	335,000
Other lines of credit		2,000		8,000

The Bank maintains federal funds lines with several correspondent banks; the remaining available balance was $170.0million and $150.0 million at September 30, 2015 and December 31, 2014, respectively.  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 $1.5  billion and $1.4 billion at September 30, 2015 and December 31, 2014, 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 $7.0million at September 30, 2015.  The trust preferred capital notes currently qualify for Tier 1 capital of the Company for regulatory purposes. 

	Principal		Investment(1)		Spread to 3-Month LIBOR	Rate	Maturity
Trust Preferred Capital Note - Statutory Trust I	$	22,500,000	$	696,000	2.75%	3.08%	6/17/2034
Trust Preferred Capital Note - Statutory Trust II		36,000,000		1,114,000	1.40%	1.73%	6/15/2036
VFG Limited Liability Trust I Indenture		20,000,000		619,000	2.73%	3.06%	3/18/2034
FNB Statutory Trust II Indenture		12,000,000		372,000	3.10%	3.43%	6/26/2033
Total	$	90,500,000	$	2,801,000
(1) reported as "Other Assets" within the Consolidated Balance Sheets.

As part of a prior acquisition, the Company assumed subordinated debt with terms of LIBOR plus 1.45%  and a maturity date of April 2016.  At September 30, 2015, the carrying value of the subordinated debt was $17.5million, with a remaining fair value discount of $285,000.

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 in the Company’s Consolidated Balance Sheets.  In accordance with ASC 470-50, Modifications and Extinguishments, the Company will amortize 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 in the Company’s Consolidated Statements of Income.  Amortization expense for the three and nine months ended September 30, 2015 and 2014 was $463,000 and $1.4million and $452,000 and $1.3 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 $60.0 million remaining at September 30, 2015 that had a remaining fair value premium of $1.4million.

As of September 30, 2015, the Company had advances from the FHLB consisting of the following (dollars in thousands):

Long-term Type	Spread to 3-Month LIBOR	Interest Rate	Maturity Date	Advance Amount
Adjustable Rate Credit	0.44%	0.77%	8/23/2022	$	55,000
Adjustable Rate Credit	0.45%	0.78%	11/23/2022		65,000
Adjustable Rate Credit	0.45%	0.78%	11/23/2022		10,000
Adjustable Rate Credit	0.45%	0.78%	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	-	2.11%	10/5/2016		25,000
Fixed Rate Hybrid	-	0.91%	7/25/2016		15,000
				$	200,000

As of December 31, 2014, the Company had advances from the FHLB consisting of the following (dollars in thousands):

Long-term Type	Spread to 3-Month LIBOR	Interest Rate	Maturity Date	Advance Amount
Adjustable Rate Credit	0.44%	0.70%	8/23/2022	$	55,000
Adjustable Rate Credit	0.45%	0.71%	11/23/2022		65,000
Adjustable Rate Credit	0.45%	0.71%	11/23/2022		10,000
Adjustable Rate Credit	0.45%	0.71%	11/23/2022		10,000
Fixed Rate	-	3.62%	11/28/2017		10,000
Fixed Rate	-	3.44%	7/28/2015		10,000
Fixed Rate	-	3.75%	7/30/2018		5,000
Fixed Rate	-	3.97%	7/30/2018		5,000
Fixed Rate Hybrid	-	2.11%	10/5/2016		25,000
Fixed Rate Hybrid	-	0.91%	7/25/2016		15,000
				$	210,000

The carrying value of the loans and securities pledged as collateral for FHLB advances totaled $1.8billion and $1.2billion as of September 30, 2015 and December 31, 2014, respectively.

As of September 30, 2015, 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
Remaining three months in 2015	$	-	$	-	$	-	$	-	$	(466)	$	(466)
2016		-		17,500		40,000		271		(1,882)		55,889
2017		-		-		10,000		170		(1,922)		8,248
2018		-		-		10,000		(143)		(1,970)		7,887
2019		-		-		-		(286)		(2,018)		(2,304)
2020		-		-		-		(301)		(2,074)		(2,375)
Thereafter		93,301		-		140,000		(5,622)		(3,826)		223,853
Total Long-term borrowings	$	93,301	$	17,500	$	200,000	$	(5,911)	$	(14,158)	$	290,732

XML

BORROWINGS (Narrative) (Details)	3 Months Ended		9 Months Ended
	Sep. 30, 2015 USD ($)	Sep. 30, 2014 USD ($)	Sep. 30, 2015 USD ($) item	Sep. 30, 2014 USD ($)	Dec. 31, 2014 USD ($)	Jan. 01, 2014 USD ($)
Remaining available balance for the federal funds lines	$ 170,000,000		$ 170,000,000		$ 150,000,000
Maximum collateral dependent line of credit with the FHLB	1,500,000,000		1,500,000,000		1,400,000,000
Prepayment penalty			19,600,000
Prepayment penalty amortization expense	463,000	$ 452,000	1,400,000	$ 1,300,000
Carrying value of the loans and securities pledged as collateral for FHLB	1,800,000,000		$ 1,800,000,000		$ 1,200,000,000
Acquisitions, Prior To 2006 [Member]
Number of bank acquisitions | item			2
Trust preferred capital notes principal balance			$ 58,500,000
Subordinated debt interest rate basis			LIBOR plus 1.45%
Subordinated debt maturity date			Apr. 01, 2016
Subordinated debt	17,500,000		$ 17,500,000
LIBOR [Member] | Acquisitions, Prior To 2006 [Member]
Spread on 3-Month LIBOR			1.45%
StellarOne Bank [Member]
Trust preferred capital notes principal balance			$ 32,000,000
Loans from Other Federal Home Loan Banks	60,000,000		60,000,000			$ 70,000,000
Trust Preferred Capital Notes [Member]
Trust preferred capital notes principal balance			90,500,000
Trust Preferred Capital Notes [Member] | StellarOne Bank [Member]
Remaining fair value discount on acquired notes	7,000,000		7,000,000
Subordinated Debt [Member] | Acquisitions, Prior To 2006 [Member]
Remaining fair value discount on acquired notes	285,000		285,000
Federal Home Loan Bank Advances [Member] | StellarOne Bank [Member]
Remaining fair value premium on acquired FHLB advances	$ 1,400,000		$ 1,400,000

XML

LOANS AND ALLOWANCE FOR LOAN LOSSES

9 Months Ended

Sep. 30, 2015

LOANS AND ALLOWANCE FOR LOAN LOSSES [Abstract]

LOANS AND ALLOWANCE FOR LOAN LOSSES

4.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, 2015 and December 31, 2014 (dollars in thousands):

	September 30,		December 31,
	2015		2014
Commercial:
Commercial Construction	$	429,645	$	341,280
Commercial Real Estate - Owner Occupied		863,551		875,443
Commercial Real Estate - Non-Owner Occupied		1,586,334		1,509,159
Raw Land and Lots		187,182		211,225
Single Family Investment Real Estate		436,340		412,494
Commercial and Industrial		444,199		393,776
Other Commercial		89,344		81,106
Consumer:
Mortgage		466,418		478,151
Consumer Construction		55,718		74,168
Indirect Auto		217,928		199,411
Indirect Marine		42,763		43,190
HELOCs		492,202		500,579
Credit Card		-		24,225
Other Consumer		231,997		201,789
Total	$	5,543,621	$	5,345,996

The following table shows the aging of the Company’s loan portfolio, by class, at September 30, 2015 (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
Commercial:
Commercial Construction	$	296	$	-	$	126	$	2,459	$	1,786	$	424,978	$	429,645
Commercial Real Estate - Owner Occupied		1,148		165		680		28,695		3,989		828,874		863,551
Commercial Real Estate - Non-Owner Occupied		752		974		1,821		15,172		200		1,567,415		1,586,334
Raw Land and Lots		93		-		-		5,141		493		181,455		187,182
Single Family Investment Real Estate		536		35		228		15,167		1,157		419,217		436,340
Commercial and Industrial		721		696		494		2,249		903		439,136		444,199
Other Commercial		643		-		-		793		61		87,847		89,344
Consumer:
Mortgage		2,485		5,079		875		5,561		2,276		450,142		466,418
Consumer Construction		250		-		-		251		819		54,398		55,718
Indirect Auto		1,319		270		116		-		89		216,134		217,928
Indirect Marine		150		-		94		-		-		42,519		42,763
HELOCs		3,192		1,085		282		1,812		611		485,220		492,202
Other Consumer		1,521		966		448		1,306		582		227,174		231,997
Total	$	13,106	$	9,270	$	5,164	$	78,606	$	12,966	$	5,424,509	$	5,543,621

The following table shows the aging of the Company’s loan portfolio, by class, at December 31, 2014 (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
Commercial:
Commercial Construction	$	815	$	-	$	-	$	3,782	$	968	$	335,715	$	341,280
Commercial Real Estate - Owner Occupied		621		1,542		1,683		31,167		1,060		839,370		875,443
Commercial Real Estate - Non-Owner Occupied		3,984		237		91		28,869		5,902		1,470,076		1,509,159
Raw Land and Lots		145		44		194		7,427		2,359		201,056		211,225
Single Family Investment Real Estate		2,825		338		734		16,879		2,070		389,648		412,494
Commercial and Industrial		1,250		529		549		3,855		3,286		384,307		393,776
Other Commercial		42		2		-		2,256		74		78,732		81,106
Consumer:
Mortgage		12,851		4,300		4,095		7,394		2,485		447,026		478,151
Consumer Construction		120		-		844		516		-		72,688		74,168
Indirect Auto		1,593		263		317		-		-		197,238		199,411
Indirect Marine		150		-		-		-		201		42,839		43,190
HELOCs		3,082		955		820		2,000		258		493,464		500,579
Credit Card		232		108		219		-		-		23,666		24,225
Other Consumer		1,587		412		501		1,643		592		197,054		201,789
Total	$	29,297	$	8,730	$	10,047	$	105,788	$	19,255	$	5,172,879	$	5,345,996

The following table shows the PCI commercial and consumer loan portfolios, by class and their delinquency status, at September 30, 2015 (dollars in thousands):

	30-89 Days Past Due		Greater than 90 Days		Current		Total
Commercial:
Commercial Construction	$	-	$	459	$	2,000	$	2,459
Commercial Real Estate - Owner Occupied		1,024		1,752		25,919		28,695
Commercial Real Estate - Non-Owner Occupied		1,202		392		13,578		15,172
Raw Land and Lots		196		70		4,875		5,141
Single Family Investment Real Estate		1,225		646		13,296		15,167
Commercial and Industrial		412		69		1,768		2,249
Other Commercial		31		63		699		793
Consumer:
Mortgage		597		1,612		3,352		5,561
Consumer Construction		-		251		-		251
HELOCs		244		365		1,203		1,812
Other Consumer		47		60		1,199		1,306
Total	$	4,978	$	5,739	$	67,889	$	78,606

The following table shows the PCI commercial and consumer loan portfolios, by class and their delinquency status, at December 31, 2014 (dollars in thousands):

	30-89 Days Past Due		Greater than 90 Days		Current		Total
Commercial:
Commercial Construction	$	-	$	652	$	3,130	$	3,782
Commercial Real Estate - Owner Occupied		1,138		843		29,186		31,167
Commercial Real Estate - Non-Owner Occupied		523		1,255		27,091		28,869
Raw Land and Lots		522		-		6,905		7,427
Single Family Investment Real Estate		1,327		1,311		14,241		16,879
Commercial and Industrial		144		538		3,173		3,855
Other Commercial		107		1,133		1,016		2,256
Consumer:
Mortgage		1,975		2,866		2,553		7,394
Consumer Construction		-		516		-		516
HELOCs		356		728		916		2,000
Other Consumer		89		171		1,383		1,643
Total	$	6,181	$	10,013	$	89,594	$	105,788

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 related to the StellarOne acquisition, by class at September 30, 2015 (dollars in thousands):

	Recorded Investment		Unpaid Principal Balance		Related Allowance		YTD Average Investment		Interest Income Recognized
Loans without a specific allowance
Commercial:
Commercial Construction	$	5,760	$	6,036	$	-	$	5,126	$	187
Commercial Real Estate - Owner Occupied		11,801		11,998		-		11,602		356
Commercial Real Estate - Non-Owner Occupied		6,854		7,166		-		7,025		212
Raw Land and Lots		24,762		24,896		-		25,595		1,290
Single Family Investment Real Estate		2,295		2,721		-		2,455		99
Commercial and Industrial		1,983		2,532		-		2,115		47
Other Commercial		876		876		-		895		41
Consumer:
Mortgage		333		333		-		333		8
Consumer Construction		819		821		-		822		29
HELOCs		196		331		-		310		10
Other Consumer		216		339		-		285		15
Total impaired loans without a specific allowance	$	55,895	$	58,049	$	-	$	56,563	$	2,294
Loans with a specific allowance
Commercial:
Commercial Construction	$	561	$	561	$	40	$	629	$	16
Commercial Real Estate - Owner Occupied		6,763		7,874		677		7,107		191
Commercial Real Estate - Non-Owner Occupied		6,863		6,864		178		6,870		304
Raw Land and Lots		1,224		1,221		60		978		34
Single Family Investment Real Estate		3,018		3,035		212		3,052		113
Commercial and Industrial		2,581		2,640		330		2,684		100
Other Commercial		423		451		32		475		16
Consumer:
Mortgage		3,273		3,522		362		3,495		64
Indirect Auto		89		95		1		121		5
HELOCs		1,008		1,038		5		1,032		24
Other Consumer		525		720		115		635		17
Total impaired loans with a specific allowance	$	26,328	$	28,021	$	2,012	$	27,078	$	884
Total impaired loans	$	82,223	$	86,070	$	2,012	$	83,641	$	3,178

The following table shows the Company’s impaired loans, by class, at December 31, 2014 (dollars in thousands):

	Recorded Investment		Unpaid Principal Balance		Related Allowance		YTD Average Investment		Interest Income Recognized
Loans without a specific allowance
Commercial:
Commercial Construction	$	5,281	$	5,367	$	-	$	5,755	$	165
Commercial Real Estate - Owner Occupied		15,722		16,430		-		16,774		737
Commercial Real Estate - Non-Owner Occupied		22,917		22,917		-		23,209		1,116
Raw Land and Lots		44,790		47,662		-		47,988		2,124
Single Family Investment Real Estate		4,197		4,881		-		6,534		170
Commercial and Industrial		4,453		7,933		-		5,070		121
Other Commercial		1,536		1,538		-		1,624		90
Consumer:
Mortgage		1,571		1,582		-		1,583		58
Indirect Auto		-		6		-		4		-
Indirect Marine		201		505		-		281		-
HELOCs		559		699		-		573		8
Other Consumer		89		208		-		107		-
Total impaired loans without a specific allowance	$	101,316	$	109,728	$	-	$	109,502	$	4,589
Loans with a specific allowance
Commercial:
Commercial Construction	$	570	$	570	$	51	$	506	$	13
Commercial Real Estate - Owner Occupied		5,951		5,999		355		5,946		280
Commercial Real Estate - Non-Owner Occupied		10,575		10,572		2,017		10,823		474
Raw Land and Lots		1,343		1,373		98		1,472		59
Single Family Investment Real Estate		4,125		4,144		562		4,293		159
Commercial and Industrial		2,938		3,009		582		3,125		138
Other Commercial		359		378		32		442		29
Consumer:
Mortgage		3,323		3,375		481		3,381		60
Consumer Construction		375		375		34		373		19
Indirect Marine		192		192		5		199		15
HELOCs		434		434		4		436		17
Other Consumer		679		706		310		686		19
Total impaired loans with a specific allowance	$	30,864	$	31,127	$	4,531	$	31,682	$	1,282
Total impaired loans	$	132,180	$	140,855	$	4,531	$	141,184	$	5,871

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.  TDRs totaled $11.6 million and $26.8 million as of September 30, 2015 and December 31, 2014, respectively.  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 quarter ended September 30, 2015, the recorded investment in restructured loans prior to modifications was not materially impacted by the modification.

The following table provides a summary, by class, of modified loans that continue to accrue interest under the terms of the restructuring agreement, which are considered to be performing, and modified loans that have been placed on nonaccrual status, which are considered to be nonperforming, as of September 30, 2015 and December 31, 2014 (dollars in thousands):

	September 30, 2015					December 31, 2014
	No. of Loans	Recorded Investment		Outstanding Commitment		No. of Loans	Recorded Investment		Outstanding Commitment
Performing
Commercial:
Commercial Construction	1	$	296	$	-	1	$	707	$	-
Commercial Real Estate - Owner Occupied	5		1,608		-	3		682		-
Commercial Real Estate - Non-Owner Occupied	2		2,390		-	3		3,362		-
Raw Land and Lots	5		3,081		-	9		14,777		-
Single Family Investment Real Estate	2		444		-	6		1,046		-
Commercial and Industrial	3		103		-	9		722		-
Other Commercial	1		128		-	1		191		-
Consumer:
Mortgage	7		1,331		-	7		1,244		-
Other Consumer	2		87		-	3		98		-
Total performing	28	$	9,468	$	-	42	$	22,829	$	-
Nonperforming
Commercial:
Commercial Construction	1	$	126	$	-	1	$	253	$	-
Commercial Real Estate - Owner Occupied	1		140		-	2		153		-
Commercial Real Estate - Non-Owner Occupied	1		200		-	1		539		-
Raw Land and Lots	1		33		-	2		1,053		-
Single Family Investment Real Estate	2		234		-	1		433		-
Commercial and Industrial	3		485		-	5		616		-
Other Commercial	1		61		-	1		74		-
Consumer:
Mortgage	3		771		-	2		770		-
Other Consumer	1		37		-	1		57		-
Total nonperforming	14	$	2,087	$	-	16	$	3,948	$	-
Total performing and nonperforming	42	$	11,555	$	-	58	$	26,777	$	-

The Company considers a default of a restructured loan to occur when the borrower is 90 days past due following the restructure or a foreclosure and repossession of the applicable collateral occurs.  During the three and nine months ended September 30, 2015, the Company did not identify any restructured loans that went into default that had been restructured in the twelve-month period prior to default.  During the three months ended September 30, 2014, the Company did not identify any restructured loans that went into default that had been restructured in the twelve-month period prior to default.  During thenine months ended September 30, 2014, the Company identified one loan, totaling approximately $24,000, that went into default that had been restructured in the twelve-month period prior to the time of default. This loan was a mortgage loan which had a term modification at a market rate.

The following table shows, by class and modification type, TDRs that occurred during the three and nine months ended September 30, 2015 (dollars in thousands):

	Three months ended			Nine months ended
	September 30, 2015			September 30, 2015
	No. of Loans	Recorded Investment at Period End		No. of Loans	Recorded Investment at Period End
Term modification, at a market rate
Commercial:
Commercial Real Estate - Owner Occupied	-	$	-	1	$	117
Commercial and Industrial	-		-	1		17
Total loan term extended at a market rate	-	$	-	2	$	134
Term modification, below market rate
Commercial:
Commercial Real Estate - Owner Occupied	-	$	-	1	$	871
Raw Land and Lots	1		400	1		400
Consumer:
Mortgage	2		619	2		619
Other Consumer	1		55	1		55
Total loan term extended at a below market rate	4	$	1,074	5	$	1,945
Total	4	$	1,074	7	$	2,079

The following table shows, by class and modification type, TDRs that occurred during the three and nine months ended September 30, 2014 (dollars in thousands):

	Three months ended			Nine months ended
	September 30, 2014			September 30, 2014
	No. of Loans	Recorded Investment at Period End		No. of Loans	Recorded Investment at Period End
Term modification, at a market rate
Commercial:
Commercial Real Estate - Non-Owner Occupied	1	$	989	1	$	989
Single Family Investment Real Estate	-		-	1		110
Commercial and Industrial	-		-	1		33
Other Commercial	-		-	2		269
Total loan term extended at a market rate	1	$	989	5	$	1,401
Total	1	$	989	5	$	1,401

The following table shows the allowance for loan loss activity, balances for allowance for loan losses, and loan balances based on impairment methodology by portfolio segment for the nine months ended and as of September 30, 2015.  The table below includes the provision for loan losses.  In addition, a $300,000 provision was recognized during the nine months ended September 30, 2015 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):

	Commercial		Consumer		Total
Allowance for loan losses:
Balance, beginning of the year	$	22,352	$	10,032	$	32,384
Recoveries credited to allowance		1,921		1,073		2,994
Loans charged off		(6,013)		(3,357)		(9,370)
Provision charged to operations		5,364		1,897		7,261
Balance, end of period	$	23,624	$	9,645	$	33,269
Ending Balance, ALL:
Loans individually evaluated for impairment	$	1,529	$	483	$	2,012
Loans collectively evaluated for impairment		22,095		9,162		31,257
Loans acquired with deteriorated credit quality		-		-		-
Total	$	23,624	$	9,645	$	33,269
Ending Balance, Loans:
Loans individually evaluated for impairment	$	75,308	$	6,310	$	81,618
Loans collectively evaluated for impairment		3,891,611		1,491,786		5,383,397
Loans acquired with deteriorated credit quality		69,676		8,930		78,606
Total	$	4,036,595	$	1,507,026	$	5,543,621

The following table shows the allowance for loan loss activity, balances for allowance for loan losses, and loan balances based on impairment methodology by portfolio segment for the nine months ended and as of September 30, 2014.  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):

	Commercial		Consumer		Total
Allowance for loan losses:
Balance, beginning of the year	$	19,908	$	10,227	$	30,135
Recoveries credited to allowance		1,999		866		2,865
Loans charged off		(1,991)		(2,200)		(4,191)
Provision charged to operations		1,507		1,793		3,300
Balance, end of period	$	21,423	$	10,686	$	32,109
Ending Balance, ALL:
Loans individually evaluated for impairment	$	3,183	$	922	$	4,105
Loans collectively evaluated for impairment		18,240		9,764		28,004
Loans acquired with deteriorated credit quality		-		-		-
Total	$	21,423	$	10,686	$	32,109
Ending Balance, Loans:
Loans individually evaluated for impairment	$	125,310	$	8,855	$	134,165
Loans collectively evaluated for impairment		3,430,451		1,486,644		4,917,095
Loans acquired with deteriorated credit quality		106,021		13,722		119,743
Total	$	3,661,782	$	1,509,221	$	5,171,003

The Company uses the past due status and delinquency trends as the primary credit quality indicator for the consumer loan portfolio segment while a risk rating system is utilized for commercial loans.  Commercial loans are graded on a scale of 0 through 9.  A general description of the characteristics of the risk grades follows: 

· Risk rated 0 loans have little or no risk and are generally secured by General Obligation Municipal Credits;  

· 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;

· 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;

· 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;

· 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; and

· 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.

The following table shows the recorded investment in all loans, excluding PCI loans, in the commercial portfolios by class with their related risk rating current as of September 30, 2015 (dollars in thousands):

	0-3		4		5		6		7		8		Total
Commercial Construction	$	37,671	$	355,150	$	22,661	$	8,857	$	2,847	$	-	$	427,186
Commercial Real Estate - Owner Occupied		179,846		622,852		13,967		6,526		9,433		2,232		834,856
Commercial Real Estate - Non-Owner Occupied		467,026		1,048,396		19,654		22,369		13,717		-		1,571,162
Raw Land and Lots		12,036		122,236		7,307		15,792		24,670		-		182,041
Single Family Investment Real Estate		63,146		339,683		8,430		5,210		4,704		-		421,173
Commercial and Industrial		186,807		235,543		10,732		4,669		4,199		-		441,950
Other Commercial		43,355		40,386		2,613		898		1,299		-		88,551
Total	$	989,887	$	2,764,246	$	85,364	$	64,321	$	60,869	$	2,232	$	3,966,919

The following table shows the recorded investment in all loans, excluding PCI loans, in the commercial portfolios by class with their related risk rating current as of December 31, 2014 (dollars in thousands):

	1-3		4		5		6		7		8		Total
Commercial Construction	$	22,512	$	289,064	$	11,932	$	10,906	$	3,084	$	-	$	337,498
Commercial Real Estate - Owner Occupied		185,789		620,587		15,003		7,688		15,209		-		844,276
Commercial Real Estate - Non-Owner Occupied		356,263		1,041,515		22,358		28,388		31,766		-		1,480,290
Raw Land and Lots		11,162		128,281		16,803		4,783		42,769		-		203,798
Single Family Investment Real Estate		59,638		311,900		9,750		6,680		7,647		-		395,615
Commercial and Industrial		138,973		230,084		9,392		4,383		7,089		-		389,921
Other Commercial		31,571		40,913		3,818		844		1,704		-		78,850
Total	$	805,908	$	2,662,344	$	89,056	$	63,672	$	109,268	$	-	$	3,730,248

The following table shows the recorded investment in only PCI loans in the commercial portfolios by class with their related risk rating and credit quality indicator information current as of September 30, 2015 (dollars in thousands):

	4		5		6		7		8		Total
Commercial Construction	$	-	$	-	$	2,000	$	-	$	459	$	2,459
Commercial Real Estate - Owner Occupied		5,203		700		9,016		13,776		-		28,695
Commercial Real Estate - Non-Owner Occupied		3,492		6,288		2,867		2,525		-		15,172
Raw Land and Lots		1,425		517		2,317		882		-		5,141
Single Family Investment Real Estate		4,598		1,689		4,322		4,558		-		15,167
Commercial and Industrial		357		12		360		1,498		22		2,249
Other Commercial		86		-		387		320		-		793
Total	$	15,161	$	9,206	$	21,269	$	23,559	$	481	$	69,676

The following table shows the recorded investment in only PCI loans in the commercial portfolios by class with their related risk rating and credit quality indicator information current as of December 31, 2014 (dollars in thousands):

	4		5		6		7		8		Total
Commercial Construction	$	-	$	-	$	3,130	$	194	$	458	$	3,782
Commercial Real Estate - Owner Occupied		1,525		3,546		10,880		15,216		-		31,167
Commercial Real Estate - Non-Owner Occupied		2,837		934		18,736		6,362		-		28,869
Raw Land and Lots		1,564		189		3,148		2,526		-		7,427
Single Family Investment Real Estate		2,807		1,253		6,462		6,357		-		16,879
Commercial and Industrial		437		-		913		2,477		28		3,855
Other Commercial		-		-		510		1,746		-		2,256
Total	$	9,170	$	5,922	$	43,779	$	34,878	$	486	$	94,235

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 June 30,
	September 30,
	2015		2014
Balance at beginning of period	$	28,956	$	2,980
Additions		-		34,653
Accretion		(4,707)		(5,681)
Reclass of nonaccretable difference due to improvement in expected cash flows		3,168		-
Other, net (1)		(5,624)		(2,150)
Balance at end of period	$	21,793	$	29,802
(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 $78.6 million atSeptember 30, 2015 and $105.8 million at December 31, 2014.  The outstanding balance of the Company’s PCI loan portfolio totaled $95.7 million at September 30, 2015 and $126.3 million at December 31, 2014.  The carrying value of the Company’s acquired performing loan portfolio, accounted for under ASC 310-20, Receivables – Nonrefundable Fees and Other Costs, totaled $1.5 billion at September 30, 2015 and $1.8 billion at December 31, 2014; the remaining discount on these loans totaled $21.9 million at September 30, 2015 and $24.3million at December 31, 2014, respectively.

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INTANGIBLE ASSETS

9 Months Ended

Sep. 30, 2015

INTANGIBLE ASSETS [Abstract]

INTANGIBLE ASSETS

5.INTANGIBLE ASSETS

The Company’s intangible assets consist of core deposits and goodwill arising from previous acquisitions.  The Company has determined that core deposit intangibles have a finite life and amortizes them over their estimated useful life.Core deposit intangible assets are being amortized over the period of expected benefit, which ranges from 4 to 14 years, using an accelerated method.  On January 1, 2014, the Company completed the acquisition of StellarOne and acquired intangible assets of $29.6 million and recorded $234.1 million of goodwill.    

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 2015 and determined that there was no impairment to its goodwill or intangible assets.

Information concerning intangible assets with a finite life is presented in the following table (dollars in thousands):

	Gross Carrying Value		Accumulated Amortization		Net Carrying Value
September 30, 2015
Amortizable core deposit intangibles	$	76,185	$	50,865	$	25,320
December 31, 2014
Amortizable core deposit intangibles	$	76,185	$	44,430	$	31,755
September 30, 2014
Amortizable core deposit intangibles	$	76,185	$	42,096	$	34,089

Amortization expense of core deposit intangibles for the three and nine months ended September 30, 2015 totaled $2.1 million and $6.4 million, respectively; for the three and nine months ended September 30, 2014 totaled $2.4 million and $7.5 million, respectively; and for the year ended December 31, 2014 was$9.8 million.  As of September 30, 2015, the estimated remaining amortization expense of core deposit intangibles is as follows (dollars in thousands):

For the remaining three months of 2015	$	2,011
For the year ending December 31, 2016		6,932
For the year ending December 31, 2017		5,590
For the year ending December 31, 2018		4,144
For the year ending December 31, 2019		3,093
For the year ending December 31, 2020		2,027
Thereafter		1,523
Total estimated amortization expense	$	25,320

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COMMITMENTS AND CONTINGENCIES

9 Months Ended

Sep. 30, 2015

COMMITMENTS AND CONTINGENCIES [Abstract]

COMMITMENTS AND CONTINGENCIES

7.COMMITMENTS AND CONTINGENCIES

Litigation Matters

In the ordinary course of its operations, the Company and its subsidiaries are parties to various legal proceedings.  Based on the information presently available, and after consultation with legal counsel, management believes that the ultimate outcome in such proceedings, in the aggregate, will not have a material adverse effect on the business, 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 in 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 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 does not expect credit losses arising from off-balance sheet commitments to have a material adverse impact on the Company’s consolidated financial statements.

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.

UMG, a wholly owned subsidiary of the Bank, uses rate lock commitments and best efforts contracts during the origination process and for loans held for sale.  These best efforts contracts are designed to mitigate UMG’s exposure to fluctuations in interest rates in connection with rate lock commitments and loans held for sale.  The Company held approximately $2.1 million and $2.6 million in loans held for sale in which the related rate lock commitment had expired as of September 30, 2015 and December 31, 2014, respectively.  At September 30, 2015 and December 31, 2014, the reserves associated with these loans held for sale were $102,000 and $104,000, respectively, and are reflected on the balance sheet of the mortgage segment.

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

	September 30,		December 31,
	2015		2014
Commitments with off-balance sheet risk:
Commitments to extend credit (1)	$	1,569,094	$	1,601,287
Standby letters of credit		142,848		117,988
Mortgage loan rate lock commitments		61,015		49,552
Total commitments with off-balance sheet risk	$	1,772,957	$	1,768,827
Commitments with balance sheet risk:
Loans held for sale	$	65,713	$	42,519
Total other commitments	$	1,838,670	$	1,811,346
(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 periods ended September 30, 2015 and December 31, 2014, the aggregate amount of daily average required reserves was approximately $41.4 million and $48.7 million, respectively.

The Company has approximately $24.6 million in deposits in other financial institutions, of which $10.0 million and $3.8 million serve as collateral for the cash flow hedges and loan swaps, respectively, as discussed in Note 8 “Derivatives”.  The Company had approximately $9.7 million in deposits in other financial institutions that were uninsured at September 30, 2015.  On an annual basis, 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 8 “Derivatives” for additional information.

In the ordinary course of business, the Company records an indemnification reserve relating to mortgage loans previously sold based on historical statistics and loss rates; as of September 30, 2015 and December 31, 2014, the Company’s indemnification reserve for such mortgage loans was $384,000 and $662,000, respectively.

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BORROWINGS (Contractual Maturities of Long-Term Debt) (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Contractual maturities of long-term debt
Remaining three months in 2015	$ (466)
2016	55,889
2017	8,248
2018	7,887
2019	(2,304)
2020	(2,375)
Thereafter	223,853
Total long-term Borrowings	290,732	$ 299,542
Trust Preferred Capital Notes [Member]
Contractual maturities of long-term debt
Thereafter	93,301
Total long-term Borrowings	$ 93,301
Subordinated Debt [Member]
Contractual maturities of long-term debt
Remaining three months in 2015
2016	$ 17,500
2017
2018
2019
2020
Thereafter
Total long-term Borrowings	$ 17,500
Federal Home Loan Bank Advances [Member]
Contractual maturities of long-term debt
Remaining three months in 2015
2016	$ 40,000
2017	10,000
2018	$ 10,000
2019
2020
Thereafter	$ 140,000
Total long-term Borrowings	200,000
Fair Value Premium (Discount) [Member]
Contractual maturities of long-term debt
2016	271
2017	170
2018	(143)
2019	(286)
2020	(301)
Thereafter	(5,622)
Total long-term Borrowings	(5,911)
Prepayment Penalty [Member]
Contractual maturities of long-term debt
Remaining three months in 2015	(466)
2016	(1,882)
2017	(1,922)
2018	(1,970)
2019	(2,018)
2020	(2,074)
Thereafter	(3,826)
Total long-term Borrowings	$ (14,158)

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COMMITMENTS AND CONTINGENCIES (Balances of Commitments and Contingencies) (Details) - USD ($) $ in Thousands		Sep. 30, 2015	Dec. 31, 2014
Commitments with off-balance sheet risk:
Total commitments with off-balance sheet risk		$ 1,772,957	$ 1,768,827
Commitments with balance sheet risk:
Loans held for sale		65,713	42,519
Total other commitments		1,838,670	1,811,346
Commitments to Extend Credit [Member]
Commitments with off-balance sheet risk:
Total commitments with off-balance sheet risk	[1]	1,569,094	1,601,287
Standby Letters of Credit [Member]
Commitments with off-balance sheet risk:
Total commitments with off-balance sheet risk		142,848	117,988
Interest Rate Lock Commitments [Member]
Commitments with off-balance sheet risk:
Total commitments with off-balance sheet risk		$ 61,015	$ 49,552

[1] Includes unfunded overdraft protection.

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BORROWINGS (Advances from the FHLB) (Details) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2015	Dec. 31, 2014
Advances from the FHLB
Advance Amount	$ 200,000	$ 210,000
Adjustable Rate Credit One [Member]
Advances from the FHLB
Interest Rate	0.77%	0.70%
Maturity Date	Aug. 23, 2022	Aug. 23, 2022
Advance Amount	$ 55,000	$ 55,000
Adjustable Rate Credit Two [Member]
Advances from the FHLB
Interest Rate	0.78%	0.71%
Maturity Date	Nov. 23, 2022	Nov. 23, 2022
Advance Amount	$ 65,000	$ 65,000
Adjustable Rate Credit Three [Member]
Advances from the FHLB
Interest Rate	0.78%	0.71%
Maturity Date	Nov. 23, 2022	Nov. 23, 2022
Advance Amount	$ 10,000	$ 10,000
Adjustable Rate Credit Four [Member]
Advances from the FHLB
Interest Rate	0.78%	0.71%
Maturity Date	Nov. 23, 2022	Nov. 23, 2022
Advance Amount	$ 10,000	$ 10,000
Fixed Rate One [Member]
Advances from the FHLB
Interest Rate	3.62%	3.62%
Maturity Date	Nov. 28, 2017	Nov. 28, 2017
Advance Amount	$ 10,000	$ 10,000
Fixed Rate Two [Member]
Advances from the FHLB
Interest Rate		3.44%
Maturity Date		Jul. 28, 2015
Advance Amount		$ 10,000
Fixed Rate Three [Member]
Advances from the FHLB
Interest Rate	3.75%	3.75%
Maturity Date	Jul. 30, 2018	Jul. 30, 2018
Advance Amount	$ 5,000	$ 5,000
Fixed Rate Four [Member]
Advances from the FHLB
Interest Rate	3.97%	3.97%
Maturity Date	Jul. 30, 2018	Jul. 30, 2018
Advance Amount	$ 5,000	$ 5,000
Fixed Rate Hybrid One [Member]
Advances from the FHLB
Interest Rate	2.11%	2.11%
Maturity Date	Oct. 05, 2016	Oct. 05, 2016
Advance Amount	$ 25,000	$ 25,000
Fixed Rate Hybrid Two [Member]
Advances from the FHLB
Interest Rate	0.91%	0.91%
Maturity Date	Jul. 25, 2016	Jul. 25, 2016
Advance Amount	$ 15,000	$ 15,000
LIBOR [Member] | Adjustable Rate Credit One [Member]
Advances from the FHLB
Spread on 3-Month LIBOR	0.44%	0.44%
LIBOR [Member] | Adjustable Rate Credit Two [Member]
Advances from the FHLB
Spread on 3-Month LIBOR	0.45%	0.45%
LIBOR [Member] | Adjustable Rate Credit Three [Member]
Advances from the FHLB
Spread on 3-Month LIBOR	0.45%	0.45%
LIBOR [Member] | Adjustable Rate Credit Four [Member]
Advances from the FHLB
Spread on 3-Month LIBOR	0.45%	0.45%

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SEGMENT REPORTING DISCLOSURES (Tables)

9 Months Ended

Sep. 30, 2015

SEGMENT REPORTING DISCLOSURES [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, 2015 and 2014 is as follows (dollars in thousands):

UNION BANKSHARES CORPORATION AND SUBSIDIARIES
SEGMENT FINANCIAL INFORMATION
	Community Bank		Mortgage		Eliminations		Consolidated
Three Months Ended September 30, 2015
Net interest income	$	63,075	$	369	$	-	$	63,444
Provision for credit losses		2,000		62		-		2,062
Net interest income after provision for credit losses		61,075		307		-		61,382
Noninterest income		14,287		2,608		(170)		16,725
Noninterest expenses		50,674		2,821		(170)		53,325
Income (loss) before income taxes		24,688		94		-		24,782
Income tax expense (benefit)		6,531		35		-		6,566
Net income (loss)	$	18,157	$	59	$	-	$	18,216
Total assets	$	7,588,606	$	62,127	$	(56,420)	$	7,594,313
Three Months Ended September 30, 2014
Net interest income	$	64,162	$	317	$	-	$	64,479
Provision for credit losses		1,800		-		-		1,800
Net interest income after provision for credit losses		62,362		317		-		62,679
Noninterest income		13,884		2,604		(170)		16,318
Noninterest expenses		55,680		3,903		(170)		59,413
Income (loss) before income taxes		20,566		(982)		-		19,584
Income tax expense (benefit)		5,121		(354)		-		4,767
Net income (loss)	$	15,445	$	(628)	$	-	$	14,817
Total assets	$	7,188,596	$	41,857	$	(36,570)	$	7,193,883
Nine Months Ended September 30, 2015
Net interest income	$	188,240	$	989	$	-	$	189,229
Provision for credit losses		7,450		111		-		7,561
Net interest income after provision for credit losses		180,790		878		-		181,668
Noninterest income		40,658		7,844		(512)		47,990
Noninterest expenses		154,011		8,906		(512)		162,405
Income (loss) before income taxes		67,437		(184)		-		67,253
Income tax expense (benefit)		18,060		(71)		-		17,989
Net income (loss)	$	49,377	$	(113)	$	-	$	49,264
Total assets	$	7,588,606	$	62,127	$	(56,420)	$	7,594,313
Nine Months Ended September 30, 2014
Net interest income	$	191,090	$	863	$	-	$	191,953
Provision for credit losses		3,300		-		-		3,300
Net interest income after provision for credit losses		187,790		863		-		188,653
Noninterest income		38,964		7,932		(511)		46,385
Noninterest expenses		173,268		12,908		(511)		185,665
Income (loss) before income taxes		53,486		(4,113)		-		49,373
Income tax expense (benefit)		13,678		(1,504)		-		12,174
Net income (loss)	$	39,808	$	(2,609)	$	-	$	37,199
Total assets	$	7,188,596	$	41,857	$	(36,570)	$	7,193,883

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LOANS AND ALLOWANCE FOR LOAN LOSSES (Summary of Modified Loans that Continue to Accrue Interest Under the Terms of Restructuring Agreement) (Details) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2015 USD ($) loan	Dec. 31, 2014 USD ($) loan
Financing Receivable, Modifications [Line Items]
No. of Loans | loan	42	58
Recorded Investment	$ 11,555	$ 26,777
Outstanding Commitment
Performing Financing Receivable [Member]
Financing Receivable, Modifications [Line Items]
No. of Loans | loan	28	42
Recorded Investment	$ 9,468	$ 22,829
Outstanding Commitment
Nonperforming Financing Receivable [Member]
Financing Receivable, Modifications [Line Items]
No. of Loans | loan	14	16
Recorded Investment	$ 2,087	$ 3,948
Outstanding Commitment
Commercial Construction [Member] | Performing Financing Receivable [Member]
Financing Receivable, Modifications [Line Items]
No. of Loans | loan	1	1
Recorded Investment	$ 296	$ 707
Outstanding Commitment
Commercial Construction [Member] | Nonperforming Financing Receivable [Member]
Financing Receivable, Modifications [Line Items]
No. of Loans | loan	1	1
Recorded Investment	$ 126	$ 253
Outstanding Commitment
Commercial Real Estate - Owner Occupied [Member] | Performing Financing Receivable [Member]
Financing Receivable, Modifications [Line Items]
No. of Loans | loan	5	3
Recorded Investment	$ 1,608	$ 682
Outstanding Commitment
Commercial Real Estate - Owner Occupied [Member] | Nonperforming Financing Receivable [Member]
Financing Receivable, Modifications [Line Items]
No. of Loans | loan	1	2
Recorded Investment	$ 140	$ 153
Outstanding Commitment
Commercial Real Estate - Non-Owner Occupied [Member] | Performing Financing Receivable [Member]
Financing Receivable, Modifications [Line Items]
No. of Loans | loan	2	3
Recorded Investment	$ 2,390	$ 3,362
Outstanding Commitment
Commercial Real Estate - Non-Owner Occupied [Member] | Nonperforming Financing Receivable [Member]
Financing Receivable, Modifications [Line Items]
No. of Loans | loan	1	1
Recorded Investment	$ 200	$ 539
Outstanding Commitment
Raw Land and Lots [Member] | Performing Financing Receivable [Member]
Financing Receivable, Modifications [Line Items]
No. of Loans | loan	5	9
Recorded Investment	$ 3,081	$ 14,777
Outstanding Commitment
Raw Land and Lots [Member] | Nonperforming Financing Receivable [Member]
Financing Receivable, Modifications [Line Items]
No. of Loans | loan	1	2
Recorded Investment	$ 33	$ 1,053
Outstanding Commitment
Single Family Investment Real Estate [Member] | Performing Financing Receivable [Member]
Financing Receivable, Modifications [Line Items]
No. of Loans | loan	2	6
Recorded Investment	$ 444	$ 1,046
Outstanding Commitment
Single Family Investment Real Estate [Member] | Nonperforming Financing Receivable [Member]
Financing Receivable, Modifications [Line Items]
No. of Loans | loan	2	1
Recorded Investment	$ 234	$ 433
Outstanding Commitment
Commercial and Industrial [Member] | Performing Financing Receivable [Member]
Financing Receivable, Modifications [Line Items]
No. of Loans | loan	3	9
Recorded Investment	$ 103	$ 722
Outstanding Commitment
Commercial and Industrial [Member] | Nonperforming Financing Receivable [Member]
Financing Receivable, Modifications [Line Items]
No. of Loans | loan	3	5
Recorded Investment	$ 485	$ 616
Outstanding Commitment
Other Commercial [Member] | Performing Financing Receivable [Member]
Financing Receivable, Modifications [Line Items]
No. of Loans | loan	1	1
Recorded Investment	$ 128	$ 191
Outstanding Commitment
Other Commercial [Member] | Nonperforming Financing Receivable [Member]
Financing Receivable, Modifications [Line Items]
No. of Loans | loan	1	1
Recorded Investment	$ 61	$ 74
Outstanding Commitment
Mortgage [Member] | Performing Financing Receivable [Member]
Financing Receivable, Modifications [Line Items]
No. of Loans | loan	7	7
Recorded Investment	$ 1,331	$ 1,244
Outstanding Commitment
Mortgage [Member] | Nonperforming Financing Receivable [Member]
Financing Receivable, Modifications [Line Items]
No. of Loans | loan	3	2
Recorded Investment	$ 771	$ 770
Outstanding Commitment
Other Consumer [Member] | Performing Financing Receivable [Member]
Financing Receivable, Modifications [Line Items]
No. of Loans | loan	2	3
Recorded Investment	$ 87	$ 98
Outstanding Commitment
Other Consumer [Member] | Nonperforming Financing Receivable [Member]
Financing Receivable, Modifications [Line Items]
No. of Loans | loan	1	1
Recorded Investment	$ 37	$ 57
Outstanding Commitment

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SEGMENT REPORTING DISCLOSURES

9 Months Ended

Sep. 30, 2015

SEGMENT REPORTING DISCLOSURES [Abstract]

SEGMENT REPORTING DISCLOSURES

12.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 124 retail locations in Virginia.  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 business is a primarily fee-based business while the bank is driven principally by net interest income.  The 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, 2015 was the three month LIBOR rate plus 0.15% with no floor.  During 2014, the interest rate on the warehouse line of credit was the three month LIBOR rate plus 1.5% with a floor of 2.0% through May 31, 2014; beginning on June 1, 2014, the interest rate was one month LIBOR rate plus 1.5% 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, 2015 and 2014 is as follows (dollars in thousands):

UNION BANKSHARES CORPORATION AND SUBSIDIARIES
SEGMENT FINANCIAL INFORMATION
	Community Bank		Mortgage		Eliminations		Consolidated
Three Months Ended September 30, 2015
Net interest income	$	63,075	$	369	$	-	$	63,444
Provision for credit losses		2,000		62		-		2,062
Net interest income after provision for credit losses		61,075		307		-		61,382
Noninterest income		14,287		2,608		(170)		16,725
Noninterest expenses		50,674		2,821		(170)		53,325
Income (loss) before income taxes		24,688		94		-		24,782
Income tax expense (benefit)		6,531		35		-		6,566
Net income (loss)	$	18,157	$	59	$	-	$	18,216
Total assets	$	7,588,606	$	62,127	$	(56,420)	$	7,594,313
Three Months Ended September 30, 2014
Net interest income	$	64,162	$	317	$	-	$	64,479
Provision for credit losses		1,800		-		-		1,800
Net interest income after provision for credit losses		62,362		317		-		62,679
Noninterest income		13,884		2,604		(170)		16,318
Noninterest expenses		55,680		3,903		(170)		59,413
Income (loss) before income taxes		20,566		(982)		-		19,584
Income tax expense (benefit)		5,121		(354)		-		4,767
Net income (loss)	$	15,445	$	(628)	$	-	$	14,817
Total assets	$	7,188,596	$	41,857	$	(36,570)	$	7,193,883
Nine Months Ended September 30, 2015
Net interest income	$	188,240	$	989	$	-	$	189,229
Provision for credit losses		7,450		111		-		7,561
Net interest income after provision for credit losses		180,790		878		-		181,668
Noninterest income		40,658		7,844		(512)		47,990
Noninterest expenses		154,011		8,906		(512)		162,405
Income (loss) before income taxes		67,437		(184)		-		67,253
Income tax expense (benefit)		18,060		(71)		-		17,989
Net income (loss)	$	49,377	$	(113)	$	-	$	49,264
Total assets	$	7,588,606	$	62,127	$	(56,420)	$	7,594,313
Nine Months Ended September 30, 2014
Net interest income	$	191,090	$	863	$	-	$	191,953
Provision for credit losses		3,300		-		-		3,300
Net interest income after provision for credit losses		187,790		863		-		188,653
Noninterest income		38,964		7,932		(511)		46,385
Noninterest expenses		173,268		12,908		(511)		185,665
Income (loss) before income taxes		53,486		(4,113)		-		49,373
Income tax expense (benefit)		13,678		(1,504)		-		12,174
Net income (loss)	$	39,808	$	(2,609)	$	-	$	37,199
Total assets	$	7,188,596	$	41,857	$	(36,570)	$	7,193,883

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LOANS AND ALLOWANCE FOR LOAN LOSSES (Tables)

9 Months Ended

Sep. 30, 2015

LOANS AND ALLOWANCE FOR LOAN LOSSES [Abstract]

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, 2015 and December 31, 2014 (dollars in thousands):

	September 30,		December 31,
	2015		2014
Commercial:
Commercial Construction	$	429,645	$	341,280
Commercial Real Estate - Owner Occupied		863,551		875,443
Commercial Real Estate - Non-Owner Occupied		1,586,334		1,509,159
Raw Land and Lots		187,182		211,225
Single Family Investment Real Estate		436,340		412,494
Commercial and Industrial		444,199		393,776
Other Commercial		89,344		81,106
Consumer:
Mortgage		466,418		478,151
Consumer Construction		55,718		74,168
Indirect Auto		217,928		199,411
Indirect Marine		42,763		43,190
HELOCs		492,202		500,579
Credit Card		-		24,225
Other Consumer		231,997		201,789
Total	$	5,543,621	$	5,345,996

Summary of Aging of the Loan Portfolio by Class

The following table shows the aging of the Company’s loan portfolio, by class, at September 30, 2015 (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
Commercial:
Commercial Construction	$	296	$	-	$	126	$	2,459	$	1,786	$	424,978	$	429,645
Commercial Real Estate - Owner Occupied		1,148		165		680		28,695		3,989		828,874		863,551
Commercial Real Estate - Non-Owner Occupied		752		974		1,821		15,172		200		1,567,415		1,586,334
Raw Land and Lots		93		-		-		5,141		493		181,455		187,182
Single Family Investment Real Estate		536		35		228		15,167		1,157		419,217		436,340
Commercial and Industrial		721		696		494		2,249		903		439,136		444,199
Other Commercial		643		-		-		793		61		87,847		89,344
Consumer:
Mortgage		2,485		5,079		875		5,561		2,276		450,142		466,418
Consumer Construction		250		-		-		251		819		54,398		55,718
Indirect Auto		1,319		270		116		-		89		216,134		217,928
Indirect Marine		150		-		94		-		-		42,519		42,763
HELOCs		3,192		1,085		282		1,812		611		485,220		492,202
Other Consumer		1,521		966		448		1,306		582		227,174		231,997
Total	$	13,106	$	9,270	$	5,164	$	78,606	$	12,966	$	5,424,509	$	5,543,621

The following table shows the aging of the Company’s loan portfolio, by class, at December 31, 2014 (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
Commercial:
Commercial Construction	$	815	$	-	$	-	$	3,782	$	968	$	335,715	$	341,280
Commercial Real Estate - Owner Occupied		621		1,542		1,683		31,167		1,060		839,370		875,443
Commercial Real Estate - Non-Owner Occupied		3,984		237		91		28,869		5,902		1,470,076		1,509,159
Raw Land and Lots		145		44		194		7,427		2,359		201,056		211,225
Single Family Investment Real Estate		2,825		338		734		16,879		2,070		389,648		412,494
Commercial and Industrial		1,250		529		549		3,855		3,286		384,307		393,776
Other Commercial		42		2		-		2,256		74		78,732		81,106
Consumer:
Mortgage		12,851		4,300		4,095		7,394		2,485		447,026		478,151
Consumer Construction		120		-		844		516		-		72,688		74,168
Indirect Auto		1,593		263		317		-		-		197,238		199,411
Indirect Marine		150		-		-		-		201		42,839		43,190
HELOCs		3,082		955		820		2,000		258		493,464		500,579
Credit Card		232		108		219		-		-		23,666		24,225
Other Consumer		1,587		412		501		1,643		592		197,054		201,789
Total	$	29,297	$	8,730	$	10,047	$	105,788	$	19,255	$	5,172,879	$	5,345,996

Summary of Aging of the Acquired with Deteriorated Credit Quality Loan Portfolio by Class

The following table shows the PCI commercial and consumer loan portfolios, by class and their delinquency status, at September 30, 2015 (dollars in thousands):

	30-89 Days Past Due		Greater than 90 Days		Current		Total
Commercial:
Commercial Construction	$	-	$	459	$	2,000	$	2,459
Commercial Real Estate - Owner Occupied		1,024		1,752		25,919		28,695
Commercial Real Estate - Non-Owner Occupied		1,202		392		13,578		15,172
Raw Land and Lots		196		70		4,875		5,141
Single Family Investment Real Estate		1,225		646		13,296		15,167
Commercial and Industrial		412		69		1,768		2,249
Other Commercial		31		63		699		793
Consumer:
Mortgage		597		1,612		3,352		5,561
Consumer Construction		-		251		-		251
HELOCs		244		365		1,203		1,812
Other Consumer		47		60		1,199		1,306
Total	$	4,978	$	5,739	$	67,889	$	78,606

The following table shows the PCI commercial and consumer loan portfolios, by class and their delinquency status, at December 31, 2014 (dollars in thousands):

	30-89 Days Past Due		Greater than 90 Days		Current		Total
Commercial:
Commercial Construction	$	-	$	652	$	3,130	$	3,782
Commercial Real Estate - Owner Occupied		1,138		843		29,186		31,167
Commercial Real Estate - Non-Owner Occupied		523		1,255		27,091		28,869
Raw Land and Lots		522		-		6,905		7,427
Single Family Investment Real Estate		1,327		1,311		14,241		16,879
Commercial and Industrial		144		538		3,173		3,855
Other Commercial		107		1,133		1,016		2,256
Consumer:
Mortgage		1,975		2,866		2,553		7,394
Consumer Construction		-		516		-		516
HELOCs		356		728		916		2,000
Other Consumer		89		171		1,383		1,643
Total	$	6,181	$	10,013	$	89,594	$	105,788

Impaired Loans by Class

The following table shows the Company’s impaired loans, excluding PCI loans related to the StellarOne acquisition, by class at September 30, 2015 (dollars in thousands):

	Recorded Investment		Unpaid Principal Balance		Related Allowance		YTD Average Investment		Interest Income Recognized
Loans without a specific allowance
Commercial:
Commercial Construction	$	5,760	$	6,036	$	-	$	5,126	$	187
Commercial Real Estate - Owner Occupied		11,801		11,998		-		11,602		356
Commercial Real Estate - Non-Owner Occupied		6,854		7,166		-		7,025		212
Raw Land and Lots		24,762		24,896		-		25,595		1,290
Single Family Investment Real Estate		2,295		2,721		-		2,455		99
Commercial and Industrial		1,983		2,532		-		2,115		47
Other Commercial		876		876		-		895		41
Consumer:
Mortgage		333		333		-		333		8
Consumer Construction		819		821		-		822		29
HELOCs		196		331		-		310		10
Other Consumer		216		339		-		285		15
Total impaired loans without a specific allowance	$	55,895	$	58,049	$	-	$	56,563	$	2,294
Loans with a specific allowance
Commercial:
Commercial Construction	$	561	$	561	$	40	$	629	$	16
Commercial Real Estate - Owner Occupied		6,763		7,874		677		7,107		191
Commercial Real Estate - Non-Owner Occupied		6,863		6,864		178		6,870		304
Raw Land and Lots		1,224		1,221		60		978		34
Single Family Investment Real Estate		3,018		3,035		212		3,052		113
Commercial and Industrial		2,581		2,640		330		2,684		100
Other Commercial		423		451		32		475		16
Consumer:
Mortgage		3,273		3,522		362		3,495		64
Indirect Auto		89		95		1		121		5
HELOCs		1,008		1,038		5		1,032		24
Other Consumer		525		720		115		635		17
Total impaired loans with a specific allowance	$	26,328	$	28,021	$	2,012	$	27,078	$	884
Total impaired loans	$	82,223	$	86,070	$	2,012	$	83,641	$	3,178

The following table shows the Company’s impaired loans, by class, at December 31, 2014 (dollars in thousands):

	Recorded Investment		Unpaid Principal Balance		Related Allowance		YTD Average Investment		Interest Income Recognized
Loans without a specific allowance
Commercial:
Commercial Construction	$	5,281	$	5,367	$	-	$	5,755	$	165
Commercial Real Estate - Owner Occupied		15,722		16,430		-		16,774		737
Commercial Real Estate - Non-Owner Occupied		22,917		22,917		-		23,209		1,116
Raw Land and Lots		44,790		47,662		-		47,988		2,124
Single Family Investment Real Estate		4,197		4,881		-		6,534		170
Commercial and Industrial		4,453		7,933		-		5,070		121
Other Commercial		1,536		1,538		-		1,624		90
Consumer:
Mortgage		1,571		1,582		-		1,583		58
Indirect Auto		-		6		-		4		-
Indirect Marine		201		505		-		281		-
HELOCs		559		699		-		573		8
Other Consumer		89		208		-		107		-
Total impaired loans without a specific allowance	$	101,316	$	109,728	$	-	$	109,502	$	4,589
Loans with a specific allowance
Commercial:
Commercial Construction	$	570	$	570	$	51	$	506	$	13
Commercial Real Estate - Owner Occupied		5,951		5,999		355		5,946		280
Commercial Real Estate - Non-Owner Occupied		10,575		10,572		2,017		10,823		474
Raw Land and Lots		1,343		1,373		98		1,472		59
Single Family Investment Real Estate		4,125		4,144		562		4,293		159
Commercial and Industrial		2,938		3,009		582		3,125		138
Other Commercial		359		378		32		442		29
Consumer:
Mortgage		3,323		3,375		481		3,381		60
Consumer Construction		375		375		34		373		19
Indirect Marine		192		192		5		199		15
HELOCs		434		434		4		436		17
Other Consumer		679		706		310		686		19
Total impaired loans with a specific allowance	$	30,864	$	31,127	$	4,531	$	31,682	$	1,282
Total impaired loans	$	132,180	$	140,855	$	4,531	$	141,184	$	5,871

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

The following table provides a summary, by class, of modified loans that continue to accrue interest under the terms of the restructuring agreement, which are considered to be performing, and modified loans that have been placed on nonaccrual status, which are considered to be nonperforming, as of September 30, 2015 and December 31, 2014 (dollars in thousands):

	September 30, 2015					December 31, 2014
	No. of Loans	Recorded Investment		Outstanding Commitment		No. of Loans	Recorded Investment		Outstanding Commitment
Performing
Commercial:
Commercial Construction	1	$	296	$	-	1	$	707	$	-
Commercial Real Estate - Owner Occupied	5		1,608		-	3		682		-
Commercial Real Estate - Non-Owner Occupied	2		2,390		-	3		3,362		-
Raw Land and Lots	5		3,081		-	9		14,777		-
Single Family Investment Real Estate	2		444		-	6		1,046		-
Commercial and Industrial	3		103		-	9		722		-
Other Commercial	1		128		-	1		191		-
Consumer:
Mortgage	7		1,331		-	7		1,244		-
Other Consumer	2		87		-	3		98		-
Total performing	28	$	9,468	$	-	42	$	22,829	$	-
Nonperforming
Commercial:
Commercial Construction	1	$	126	$	-	1	$	253	$	-
Commercial Real Estate - Owner Occupied	1		140		-	2		153		-
Commercial Real Estate - Non-Owner Occupied	1		200		-	1		539		-
Raw Land and Lots	1		33		-	2		1,053		-
Single Family Investment Real Estate	2		234		-	1		433		-
Commercial and Industrial	3		485		-	5		616		-
Other Commercial	1		61		-	1		74		-
Consumer:
Mortgage	3		771		-	2		770		-
Other Consumer	1		37		-	1		57		-
Total nonperforming	14	$	2,087	$	-	16	$	3,948	$	-
Total performing and nonperforming	42	$	11,555	$	-	58	$	26,777	$	-

Schedule of TDR by Class and Modification Type

The following table shows, by class and modification type, TDRs that occurred during the three and nine months ended September 30, 2015 (dollars in thousands):

	Three months ended			Nine months ended
	September 30, 2015			September 30, 2015
	No. of Loans	Recorded Investment at Period End		No. of Loans	Recorded Investment at Period End
Term modification, at a market rate
Commercial:
Commercial Real Estate - Owner Occupied	-	$	-	1	$	117
Commercial and Industrial	-		-	1		17
Total loan term extended at a market rate	-	$	-	2	$	134
Term modification, below market rate
Commercial:
Commercial Real Estate - Owner Occupied	-	$	-	1	$	871
Raw Land and Lots	1		400	1		400
Consumer:
Mortgage	2		619	2		619
Other Consumer	1		55	1		55
Total loan term extended at a below market rate	4	$	1,074	5	$	1,945
Total	4	$	1,074	7	$	2,079

The following table shows, by class and modification type, TDRs that occurred during the three and nine months ended September 30, 2014 (dollars in thousands):

	Three months ended			Nine months ended
	September 30, 2014			September 30, 2014
	No. of Loans	Recorded Investment at Period End		No. of Loans	Recorded Investment at Period End
Term modification, at a market rate
Commercial:
Commercial Real Estate - Non-Owner Occupied	1	$	989	1	$	989
Single Family Investment Real Estate	-		-	1		110
Commercial and Industrial	-		-	1		33
Other Commercial	-		-	2		269
Total loan term extended at a market rate	1	$	989	5	$	1,401
Total	1	$	989	5	$	1,401

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 portfolio segment for the nine months ended and as of September 30, 2015.  The table below includes the provision for loan losses.  In addition, a $300,000 provision was recognized during the nine months ended September 30, 2015 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):

	Commercial		Consumer		Total
Allowance for loan losses:
Balance, beginning of the year	$	22,352	$	10,032	$	32,384
Recoveries credited to allowance		1,921		1,073		2,994
Loans charged off		(6,013)		(3,357)		(9,370)
Provision charged to operations		5,364		1,897		7,261
Balance, end of period	$	23,624	$	9,645	$	33,269
Ending Balance, ALL:
Loans individually evaluated for impairment	$	1,529	$	483	$	2,012
Loans collectively evaluated for impairment		22,095		9,162		31,257
Loans acquired with deteriorated credit quality		-		-		-
Total	$	23,624	$	9,645	$	33,269
Ending Balance, Loans:
Loans individually evaluated for impairment	$	75,308	$	6,310	$	81,618
Loans collectively evaluated for impairment		3,891,611		1,491,786		5,383,397
Loans acquired with deteriorated credit quality		69,676		8,930		78,606
Total	$	4,036,595	$	1,507,026	$	5,543,621

The following table shows the allowance for loan loss activity, balances for allowance for loan losses, and loan balances based on impairment methodology by portfolio segment for the nine months ended and as of September 30, 2014.  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):

	Commercial		Consumer		Total
Allowance for loan losses:
Balance, beginning of the year	$	19,908	$	10,227	$	30,135
Recoveries credited to allowance		1,999		866		2,865
Loans charged off		(1,991)		(2,200)		(4,191)
Provision charged to operations		1,507		1,793		3,300
Balance, end of period	$	21,423	$	10,686	$	32,109
Ending Balance, ALL:
Loans individually evaluated for impairment	$	3,183	$	922	$	4,105
Loans collectively evaluated for impairment		18,240		9,764		28,004
Loans acquired with deteriorated credit quality		-		-		-
Total	$	21,423	$	10,686	$	32,109
Ending Balance, Loans:
Loans individually evaluated for impairment	$	125,310	$	8,855	$	134,165
Loans collectively evaluated for impairment		3,430,451		1,486,644		4,917,095
Loans acquired with deteriorated credit quality		106,021		13,722		119,743
Total	$	3,661,782	$	1,509,221	$	5,171,003

Loans Receivables Related Risk Rating Excluding Purchased Impaired Loans

The following table shows the recorded investment in all loans, excluding PCI loans, in the commercial portfolios by class with their related risk rating current as of September 30, 2015 (dollars in thousands):

	0-3		4		5		6		7		8		Total
Commercial Construction	$	37,671	$	355,150	$	22,661	$	8,857	$	2,847	$	-	$	427,186
Commercial Real Estate - Owner Occupied		179,846		622,852		13,967		6,526		9,433		2,232		834,856
Commercial Real Estate - Non-Owner Occupied		467,026		1,048,396		19,654		22,369		13,717		-		1,571,162
Raw Land and Lots		12,036		122,236		7,307		15,792		24,670		-		182,041
Single Family Investment Real Estate		63,146		339,683		8,430		5,210		4,704		-		421,173
Commercial and Industrial		186,807		235,543		10,732		4,669		4,199		-		441,950
Other Commercial		43,355		40,386		2,613		898		1,299		-		88,551
Total	$	989,887	$	2,764,246	$	85,364	$	64,321	$	60,869	$	2,232	$	3,966,919

The following table shows the recorded investment in all loans, excluding PCI loans, in the commercial portfolios by class with their related risk rating current as of December 31, 2014 (dollars in thousands):

	1-3		4		5		6		7		8		Total
Commercial Construction	$	22,512	$	289,064	$	11,932	$	10,906	$	3,084	$	-	$	337,498
Commercial Real Estate - Owner Occupied		185,789		620,587		15,003		7,688		15,209		-		844,276
Commercial Real Estate - Non-Owner Occupied		356,263		1,041,515		22,358		28,388		31,766		-		1,480,290
Raw Land and Lots		11,162		128,281		16,803		4,783		42,769		-		203,798
Single Family Investment Real Estate		59,638		311,900		9,750		6,680		7,647		-		395,615
Commercial and Industrial		138,973		230,084		9,392		4,383		7,089		-		389,921
Other Commercial		31,571		40,913		3,818		844		1,704		-		78,850
Total	$	805,908	$	2,662,344	$	89,056	$	63,672	$	109,268	$	-	$	3,730,248

Purchased Credit Impaired Loan Receivables Related Risk Rating

The following table shows the recorded investment in only PCI loans in the commercial portfolios by class with their related risk rating and credit quality indicator information current as of September 30, 2015 (dollars in thousands):

	4		5		6		7		8		Total
Commercial Construction	$	-	$	-	$	2,000	$	-	$	459	$	2,459
Commercial Real Estate - Owner Occupied		5,203		700		9,016		13,776		-		28,695
Commercial Real Estate - Non-Owner Occupied		3,492		6,288		2,867		2,525		-		15,172
Raw Land and Lots		1,425		517		2,317		882		-		5,141
Single Family Investment Real Estate		4,598		1,689		4,322		4,558		-		15,167
Commercial and Industrial		357		12		360		1,498		22		2,249
Other Commercial		86		-		387		320		-		793
Total	$	15,161	$	9,206	$	21,269	$	23,559	$	481	$	69,676

The following table shows the recorded investment in only PCI loans in the commercial portfolios by class with their related risk rating and credit quality indicator information current as of December 31, 2014 (dollars in thousands):

	4		5		6		7		8		Total
Commercial Construction	$	-	$	-	$	3,130	$	194	$	458	$	3,782
Commercial Real Estate - Owner Occupied		1,525		3,546		10,880		15,216		-		31,167
Commercial Real Estate - Non-Owner Occupied		2,837		934		18,736		6,362		-		28,869
Raw Land and Lots		1,564		189		3,148		2,526		-		7,427
Single Family Investment Real Estate		2,807		1,253		6,462		6,357		-		16,879
Commercial and Industrial		437		-		913		2,477		28		3,855
Other Commercial		-		-		510		1,746		-		2,256
Total	$	9,170	$	5,922	$	43,779	$	34,878	$	486	$	94,235

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 June 30,
	September 30,
	2015		2014
Balance at beginning of period	$	28,956	$	2,980
Additions		-		34,653
Accretion		(4,707)		(5,681)
Reclass of nonaccretable difference due to improvement in expected cash flows		3,168		-
Other, net (1)		(5,624)		(2,150)
Balance at end of period	$	21,793	$	29,802
(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.

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LOANS AND ALLOWANCE FOR LOAN LOSSES (Summary of Aging of the Acquired with Deteriorated Credit Quality Loan Portfolio by Class) (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014	Sep. 30, 2014
Schedule of purchased impaired commercial and consumer loan portfolios, by class
Current	$ 5,424,509	$ 5,172,879
Total	78,606	105,788	$ 119,743
Commercial Construction [Member]
Schedule of purchased impaired commercial and consumer loan portfolios, by class
Current	424,978	335,715
Total	2,459	3,782
Commercial Real Estate - Owner Occupied [Member]
Schedule of purchased impaired commercial and consumer loan portfolios, by class
Current	828,874	839,370
Total	28,695	31,167
Commercial Real Estate - Non-Owner Occupied [Member]
Schedule of purchased impaired commercial and consumer loan portfolios, by class
Current	1,567,415	1,470,076
Total	15,172	28,869
Raw Land and Lots [Member]
Schedule of purchased impaired commercial and consumer loan portfolios, by class
Current	181,455	201,056
Total	5,141	7,427
Single Family Investment Real Estate [Member]
Schedule of purchased impaired commercial and consumer loan portfolios, by class
Current	419,217	389,648
Total	15,167	16,879
Commercial and Industrial [Member]
Schedule of purchased impaired commercial and consumer loan portfolios, by class
Current	439,136	384,307
Total	2,249	3,855
Other Commercial [Member]
Schedule of purchased impaired commercial and consumer loan portfolios, by class
Current	87,847	78,732
Total	793	2,256
Indirect Auto [Member]
Schedule of purchased impaired commercial and consumer loan portfolios, by class
Current	$ 216,134	$ 197,238
Total
Mortgage [Member]
Schedule of purchased impaired commercial and consumer loan portfolios, by class
Current	$ 450,142	$ 447,026
Total	5,561	7,394
Consumer Construction [Member]
Schedule of purchased impaired commercial and consumer loan portfolios, by class
Current	54,398	72,688
Total	251	516
HELOCs [Member]
Schedule of purchased impaired commercial and consumer loan portfolios, by class
Current	485,220	493,464
Total	1,812	2,000
Other Consumer [Member]
Schedule of purchased impaired commercial and consumer loan portfolios, by class
Current	227,174	197,054
Total	1,306	1,643
Purchased Impaired [Member]
Schedule of purchased impaired commercial and consumer loan portfolios, by class
30-89 Days Past Due	4,978	6,181
Greater than 90 Days	5,739	10,013
Current	67,889	89,594
Total	$ 78,606	$ 105,788
Purchased Impaired [Member] | Commercial Construction [Member]
Schedule of purchased impaired commercial and consumer loan portfolios, by class
30-89 Days Past Due
Greater than 90 Days	$ 459	$ 652
Current	2,000	3,130
Total	2,459	3,782
Purchased Impaired [Member] | Commercial Real Estate - Owner Occupied [Member]
Schedule of purchased impaired commercial and consumer loan portfolios, by class
30-89 Days Past Due	1,024	1,138
Greater than 90 Days	1,752	843
Current	25,919	29,186
Total	28,695	31,167
Purchased Impaired [Member] | Commercial Real Estate - Non-Owner Occupied [Member]
Schedule of purchased impaired commercial and consumer loan portfolios, by class
30-89 Days Past Due	1,202	523
Greater than 90 Days	392	1,255
Current	13,578	27,091
Total	15,172	28,869
Purchased Impaired [Member] | Raw Land and Lots [Member]
Schedule of purchased impaired commercial and consumer loan portfolios, by class
30-89 Days Past Due	196	$ 522
Greater than 90 Days	70
Current	4,875	$ 6,905
Total	5,141	7,427
Purchased Impaired [Member] | Single Family Investment Real Estate [Member]
Schedule of purchased impaired commercial and consumer loan portfolios, by class
30-89 Days Past Due	1,225	1,327
Greater than 90 Days	646	1,311
Current	13,296	14,241
Total	15,167	16,879
Purchased Impaired [Member] | Commercial and Industrial [Member]
Schedule of purchased impaired commercial and consumer loan portfolios, by class
30-89 Days Past Due	412	144
Greater than 90 Days	69	538
Current	1,768	3,173
Total	2,249	3,855
Purchased Impaired [Member] | Other Commercial [Member]
Schedule of purchased impaired commercial and consumer loan portfolios, by class
30-89 Days Past Due	31	107
Greater than 90 Days	63	1,133
Current	699	1,016
Total	793	2,256
Purchased Impaired [Member] | Mortgage [Member]
Schedule of purchased impaired commercial and consumer loan portfolios, by class
30-89 Days Past Due	597	1,975
Greater than 90 Days	1,612	2,866
Current	3,352	2,553
Total	$ 5,561	$ 7,394
Purchased Impaired [Member] | Consumer Construction [Member]
Schedule of purchased impaired commercial and consumer loan portfolios, by class
30-89 Days Past Due
Greater than 90 Days	$ 251	$ 516
Current
Total	251	$ 516
Purchased Impaired [Member] | HELOCs [Member]
Schedule of purchased impaired commercial and consumer loan portfolios, by class
30-89 Days Past Due	244	356
Greater than 90 Days	365	728
Current	1,203	916
Total	1,812	2,000
Purchased Impaired [Member] | Other Consumer [Member]
Schedule of purchased impaired commercial and consumer loan portfolios, by class
30-89 Days Past Due	47	89
Greater than 90 Days	60	171
Current	1,199	1,383
Total	$ 1,306	$ 1,643

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SECURITIES (Schedule of Amortized Cost and Estimated Fair Value of Securities) (Details) - USD ($) $ in Thousands		Sep. 30, 2015	Dec. 31, 2014
Available-for-sale Securities
Due in one year or less, Amortized Cost		$ 16,840	$ 19,345
Due in one year or less, Estimated Fair Value		16,904	19,434
Due after one year through five years, Amortized Cost		60,862	41,545
Due after one year through five years, Estimated Fair Value		62,790	43,070
Due after five years through ten years, Amortized Cost		263,108	306,900
Due after five years through ten years, Estimated Fair Value		269,177	314,044
Due after ten years, Amortized Cost		532,241	707,445
Due after ten years, Estimated Fair Value		539,821	725,566
Total securities available for sale, Amortized Cost		873,051	1,075,235
Total securities available for sale, Estimated Fair Value		888,692	$ 1,102,114
Held to maturity Securities
Due in one year or less, Carrying Value	[1]	1,314
Due in one year or less, Estimated Fair Value		1,321
Due after one year through five years, Carrying Value	[1]	5,217
Due after one year through five years, Estimated Fair Value		5,267
Due after five years through ten years, Carrying Value	[1]	39,392
Due after five years through ten years, Estimated Fair Value		39,521
Due after ten years, Carrying Value	[1]	153,440
Due after ten years, Estimated Fair Value		154,210
Held-to-maturity Securities, Total	[1]	199,363
Total securities held to maturity, Estimated Fair Value		$ 200,319

[1] The carrying value includes $7.3 million of unrealized gains and losses present at the time of transfer from available for securities, net of any accretion.

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Consolidated Statements of Comprehensive Income [Abstract]
Net income	$ 18,216	$ 14,817	$ 49,264	$ 37,199
Other comprehensive income (loss):
Change in fair value of cash flow hedges	(2,328)	(228)	(2,009)	(431)
Reclassification adjustment for losses included in net income (net of tax, $84 and $89 for the three months and $253 and $231 for the nine months ended September 30, 2015 and 2014)	157	164	470	428
Unrealized gains (losses) on available-for-sale (AFS) securities:
Unrealized holding gains (losses) arising during period (net of tax, $673 and $968 for the three months and $976 and $7,992 for the nine months ended September 30, 2015 and 2014)	1,250	1,798	(1,812)	14,843
Reclassification adjustment for (gains) losses included in net income (net of tax, $79 and $348 for the three months and $130 and $367 for the nine months ended September 30, 2015 and 2014)	146	(647)	(242)	(682)
Unrealized gains (losses) on held-to-maturity (HTM) securities:
Accretion of unrealized gain for AFS securities transferred to HTM (net of tax, $166 and $0 for the three months and $278 and $0 for the nine months ended September 30, 2015 and 2014).	(308)		(516)
Other comprehensive income (loss)	(1,083)	1,087	(4,109)	14,158
Comprehensive income	$ 17,133	$ 15,904	$ 45,155	$ 51,357

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ACCOUNTING POLICIES

9 Months Ended

Sep. 30, 2015

ACCOUNTING POLICIES [Abstract]

ACCOUNTING POLICIES

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 2014 Annual Report on Form 10-K.  Certain prior period amounts have been reclassified to conform to current period presentation. 

Adoption of New Accounting Standards

The Company adopted ASU 2014-01, “Accounting for Investments in Qualified Affordable Housing Projects” as of January 1, 2015.  As permitted by the guidance, the Company adopted the proportional amortization method of accounting for qualified affordable housing projects.  The proportional amortization method amortizes the cost of the investment over the period in which the Company will receive tax credits and other tax benefits, and the resulting amortization is recognized as a component of income taxes attributable to continuing operations.  Historically, these investments were accounted for under the equity method of accounting and the passive losses related to the investments were recognized within noninterest expense.  The Company adopted this guidance in the first quarter of 2015 with retrospective application as required by the ASU.  Prior period results and related metrics have been recast to conform to this presentation.  The recast of prior period information did not have a material impact on the Company’s financial condition or results of operations.

For the three and nine months ended September 30, 2015, the Company recognized amortization of $118,000 and $397,000, respectively, and tax credits of $213,000 and $641,000, respectively, associated with these investments within “Income tax expense” on the Company’s Consolidated Statements of Income.  The carrying value of the Company’s investments in these qualified affordable housing projects was $10.1 million and $10.4 million as of September 30, 2015 and December 31, 2014, respectively.  The Company recorded a liability of $5.1 million for the related unfunded commitments as of September 30, 2015, which are expected to be paid from 2015 to 2019.  

Recent Accounting Pronouncements

In January 2015, the FASB issued ASU No. 2015-01, “Income Statement—Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items.”  The amendments in this ASU eliminate from U.S. GAAP the concept of extraordinary items. Subtopic 225-20, Income Statement - Extraordinary and Unusual Items, required that an entity separately classify, present, and disclose extraordinary events and transactions.  Presently, an event or transaction is presumed to be an ordinary and usual activity of the reporting entity unless evidence clearly supports its classification as an extraordinary item.  If an event or transaction meets the criteria for extraordinary classification, an entity is required to segregate the extraordinary item from the results of ordinary operations and show the item separately in the income statement, net of tax, after income from continuing operations. The entity also is required to disclose applicable income taxes and either present or disclose earnings-per-share data applicable to the extraordinary item.  The amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015.  Early adoption is permitted provided that the guidance is applied from the beginning of the fiscal year of adoption.  The Company does not expect the adoption of ASU 2015-01 to have a material impact on its consolidated financial statements.

In February 2015, the FASB issued ASU No. 2015-02, “Amendments to the Consolidation Analysis.”  The amendments in this ASU amend the consolidation requirements in ASC 810, Consolidation, and significantly change the consolidation analysis required under U.S. GAAP.  Under this guidance, limited partnerships will be considered variable interest entities (“VIEs”) unless the limited partners have either substantive kick-out or participating rights; this amendment will result in more partnerships being considered VIEs, but it will be less likely that a general partner will consolidate a limited partnership.  The amendments also change the effect that fees paid to a decision maker or service provider have on the consolidation analysis; it is less likely that the fees themselves will be considered a variable interest, that an entity will be a VIE, or that consolidation will result.  The changes modify how a reporting entity considers how its variable interests affect its consolidation process; the related party tiebreaker test and mandatory consolidation by one of the related parties will have to be performed less frequently than under current U.S. GAAP.  For entities other than limited partnerships, the amendments clarify how to determine whether the equity holders have power over the entity and could affect whether the entity is a VIE.  The amendments are expected to result in the deconsolidation of many entities.  The amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015.  Early adoption is permitted provided that the guidance is applied from the beginning of the fiscal year of adoption.  The Company is currently assessing the impact that ASU 2015-02 will have on its consolidated financial statements.

In April 2015, the FASB issued ASU No. 2015-03, “Interest – Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs.”  The ASU does not change the existing recognition and measurement guidance for debt issuance costs but requires that debt issuance costs related to a debt liability recorded on the balance sheet be present in the balance sheet as a direct deduction from the carrying amount of that debt liability.  The amendments should be disclosed consistent with the disclosure requirement of a change in accounting principle and applied on a retrospective basis.  This ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015.  Early adoption is permitted.  The Company does not expect the adoption of ASU 2015-03 to have a material impact on its consolidated financial statements.

In April 2015, the FASB issued ASU No. 2015-05, “Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40: Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement.”  This ASU clarifies the circumstances under which a cloud computing customer would account for the arrangement as a license of internal-use software.  If a cloud computing arrangement includes a software license, then the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses; otherwise, the customer should account for the arrangement as a service contract.  The amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015.  Early adoption is permitted.  The Company is currently assessing the impact of ASU 2015-05 will have on its consolidated financial statements.

In August 2015, the FASB issued ASU No. 2015-15, “Interest—Imputation of Interest (Subtopic 835-30): Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements.” This ASU clarifies the guidance issued within ASU 2015-03 described above. Given the absence of authoritative guidance within Update 2015-03 for debt issuance costs related to line-of-credit arrangements, the SEC staff would not object to an entity presenting the cost of securing a revolving line of credit as an asset, regardless of whether a balance is outstanding. The costs should be amortized over the term of the arrangement. This ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015.  Early adoption is permitted.  The Company does not expect the adoption of ASU 2015-15 to have a material impact on its consolidated financial statements.

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INTANGIBLE ASSETS (Information Concerning Intangible Assets with Finite Life) (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014	Sep. 30, 2014
Information concerning intangible assets with finite life
Gross Carrying Value	$ 76,185	$ 76,185	$ 76,185
Accumulated Amortization	50,865	44,430	42,096
Net Carrying Value/Total estimated amortization expense	$ 25,320	$ 31,755	$ 34,089

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ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Narrative) (Details) - USD ($)	3 Months Ended			9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Jun. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) [Abstract]
OTTI recovery amount			$ 400,000
Reclassifications of unrealized gains (losses) on AFS	$ 75,000	$ 995,000		$ 672,000	$ 1,449,000
Tax expense (benefit) related to (gains) losses on the sale of securities	79,000	348,000		130,000	367,000
Reclassification of unrealized gains (losses) on cash flow hedges	241,000	253,000		723,000	659,000
Tax expense (benefit) related to (gains) losses on the cash flow hedges	84,000	89,000		253,000	231,000
Net gain (loss) on sale of securities, excluding OTTI recovery		$ 995,000			$ 1.0
Credit-related OTTI	$ 300,000			$ 300,000

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INTANGIBLE ASSETS (Tables)

9 Months Ended

Sep. 30, 2015

INTANGIBLE ASSETS [Abstract]

Information Concerning Intangible Assets with Finite Life

Information concerning intangible assets with a finite life is presented in the following table (dollars in thousands):

	Gross Carrying Value		Accumulated Amortization		Net Carrying Value
September 30, 2015
Amortizable core deposit intangibles	$	76,185	$	50,865	$	25,320
December 31, 2014
Amortizable core deposit intangibles	$	76,185	$	44,430	$	31,755
September 30, 2014
Amortizable core deposit intangibles	$	76,185	$	42,096	$	34,089

Estimated Remaining Amortization Expense of Core Deposit Intangibles

As of September 30, 2015, the estimated remaining amortization expense of core deposit intangibles is as follows (dollars in thousands):

For the remaining three months of 2015	$	2,011
For the year ending December 31, 2016		6,932
For the year ending December 31, 2017		5,590
For the year ending December 31, 2018		4,144
For the year ending December 31, 2019		3,093
For the year ending December 31, 2020		2,027
Thereafter		1,523
Total estimated amortization expense	$	25,320

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FAIR VALUE MEASUREMENTS (Summary of Quantitative Information About Level 3 Fair Value Measurements) (Details) - USD ($) $ in Thousands		9 Months Ended	12 Months Ended
		Sep. 30, 2015	Dec. 31, 2014
Market comparables [Member]
Summary of quantitative information about Level 3 Fair Value Measurements
Total		$ 32,510	$ 43,915
Other Real Estate Owned [Member]
Summary of quantitative information about Level 3 Fair Value Measurements
Level 3 fair value unobservable inputs	[1]	Discount applied to market comparables (1)	Discount applied to market comparables (1)
Other Real Estate Owned [Member] | Market comparables [Member]
Summary of quantitative information about Level 3 Fair Value Measurements
Other real estate owned		$ 22,094	$ 28,118
Discount applied to market comparables [Member] | Other Real Estate Owned [Member]
Summary of quantitative information about Level 3 Fair Value Measurements
Weighted Average		21.00%	32.00%
Impaired loans [Member]
Summary of quantitative information about Level 3 Fair Value Measurements
Level 3 fair value unobservable inputs	[1]	Discount applied to market comparables (1)	Discount applied to market comparables (1)
Impaired loans [Member] | Market comparables [Member]
Summary of quantitative information about Level 3 Fair Value Measurements
Total Impaired Loans		$ 10,416	$ 15,797
Impaired loans [Member] | Discount applied to market comparables [Member]
Summary of quantitative information about Level 3 Fair Value Measurements
Weighted Average		7.00%	13.00%

[1] A discount percentage (in addition to expected selling costs) is applied based on the age of independent appraisals, current market conditions, and experience within the local market.

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SECURITIES (Narrative) (Details) $ in Thousands	1 Months Ended	3 Months Ended		9 Months Ended	12 Months Ended
	Apr. 30, 2015 USD ($)	Sep. 30, 2015 USD ($) item	Jun. 30, 2015 USD ($)	Sep. 30, 2015 USD ($) item	Dec. 31, 2014 USD ($) item
Schedule of Investments [Line Items]
Federal Home Loan Bank requires Bank to maintain percentage of stock equal to outstanding borrowings				4.25%	4.50%
Percentage of Federal Reserve Bank of Richmond reserve				6.00%	6.00%
Restricted equity securities consist of Federal Reserve Bank stock		$ 23,800		$ 23,800	$ 23,800
Federal Home Loan Bank Stock		28,900		28,900	31,000
Securities in a continuous loss position, more than 12 months, unrealized losses				1,129	1,134
Individual securities that had been in a continuous loss position for more than 12 months, amount		52,522		52,522	$ 96,404
Transfer from securities available for sale to securities held to maturity			$ 201,800	201,822
Held to maturity securities unrealized gains before tax	$ 8,100	7,300
Credit-related OTTI		$ 300		$ 300
Available-for-sale Securities [Member]
Schedule of Investments [Line Items]
Individual securities that had been in a continuous loss position | item		22		22	60
Obligations of States and Political Subdivisions [Member]
Schedule of Investments [Line Items]
Securities in a continuous loss position, more than 12 months, unrealized losses				$ 260	$ 628
Individual securities that had been in a continuous loss position for more than 12 months, amount		$ 6,610		$ 6,610	$ 42,514

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EARNINGS PER SHARE

9 Months Ended

Sep. 30, 2015

EARNINGS PER SHARE [Abstract]

EARNINGS PER SHARE

11.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. 

There were approximately 51,179and 155,433 shares underlying anti-dilutive awards for the three months ended September 30, 2015 and 2014, respectively, and there were approximately 54,475and 130,499 shares underlying anti-dilutive awards for the nine months ended September 30, 2015 and 2014, respectively. Anti-dilutive awards were excluded from the calculation of diluted EPS.

The following is a reconciliation of the denominators of the basic and diluted EPS computations for the three and nine months ended September 30, 2015 and 2014 (in thousands except per share data):

	Net Income Available to Common Shareholders (Numerator)		Weighted Average Common Shares (Denominator)	Per Share Amount
For the three months ended September 30, 2015
Net income, basic	$	18,216	45,087	$	0.40
Add: potentially dilutive common shares - stock awards		-	84		-
Diluted	$	18,216	45,171	$	0.40
For the three months ended September 30, 2014
Net income, basic	$	14,817	45,649	$	0.32
Add: potentially dilutive common shares - stock awards		-	89		-
Diluted	$	14,817	45,738	$	0.32
For the nine months ended September 30, 2015
Net income, basic	$	49,264	45,107	$	1.09
Add: potentially dilutive common shares - stock awards		-	82		-
Diluted	$	49,264	45,189	$	1.09
For the nine months ended September 30, 2014
Net income, basic	$	37,199	46,269	$	0.80
Add: potentially dilutive common shares - stock awards		-	98		-
Diluted	$	37,199	46,367	$	0.80