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 June 30, 2012

OR

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

Commission File Number: 0-20293

UNION FIRST MARKET BANKSHARES CORPORATION

(Exact name of registrant as specified in its charter)

VIRGINIA	54-1598552
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer 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	¨	Accelerated filer	x
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 July 27, 2012 was 25,952,035

UNION FIRST MARKET BANKSHARES CORPORATION

FORM 10-Q

INDEX

ITEM	PAGE
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets as of June 30, 2012, December 31, 2011 and June 30, 2011		1
Condensed Consolidated Statements of Income for the three and six months ended June 30, 2012 and 2011		2
Condensed Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2012 and 2011		3
Condensed Consolidated Statements of Changes in Stockholders’ Equity for the six months ended June 30, 2012 and 2011		4
Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2012 and 2011		5
Notes to Condensed Consolidated Financial Statements		6
Report of Independent Registered Public Accounting Firm		36
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		37
Item 3. Quantitative and Qualitative Disclosures About Market Risk		59
Item 4. Controls and Procedures		61
PART II—OTHER INFORMATION
Item 1. Legal Proceedings		61
Item 1A. Risk Factors		62
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		62
Item 6. Exhibits		62
Signatures		63

ii

PART I—FINANCIAL INFORMATION

Item 1—Financial Statements

UNION FIRST MARKET BANKSHARES CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

	June 30,		December 31,		June 30,
	2012		2011		2011
	(Unaudited)		(Audited)		(Unaudited)
ASSETS
Cash and cash equivalents:
Cash and due from banks	$	57,245	$	69,786	$	61,465
Interest-bearing deposits in other banks		14,975		26,556		1,583
Money market investments		1		155		27
Federal funds sold		163		162		159
Total cash and cash equivalents		72,384		96,659		63,234
Securities available for sale, at fair value		627,543		620,166		568,177
Restricted stock, at cost		19,291		20,661		22,883
Loans held for sale		100,066		74,823		50,420
Loans, net of unearned income		2,887,790		2,818,583		2,859,569
Less allowance for loan losses		40,985		39,470		39,631
Net loans		2,846,805		2,779,113		2,819,938
Bank premises and equipment, net		91,122		90,589		91,601
Other real estate owned, net of valuation allowance		35,802		32,263		36,935
Core deposit intangibles, net		18,178		20,714		23,658
Goodwill		59,400		59,400		59,400
Other assets		111,697		112,699		115,278
Total assets	$	3,982,288	$	3,907,087	$	3,851,524
LIABILITIES
Noninterest-bearing demand deposits	$	591,757	$	534,535	$	520,511
Interest-bearing deposits:
NOW accounts		425,188		412,605		378,511
Money market accounts		905,739		904,893		842,135
Savings accounts		198,728		179,157		175,709
Time deposits of $100,000 and over		534,682		511,614		505,993
Other time deposits		562,892		632,301		660,194
Total interest-bearing deposits		2,627,229		2,640,570		2,562,542
Total deposits		3,218,986		3,175,105		3,083,053
Securities sold under agreements to repurchase		75,394		62,995		77,324
Other short-term borrowings		—		—		2,900
Trust preferred capital notes		60,310		60,310		60,310
Long-term borrowings		155,625		155,381		155,136
Other liabilities		38,537		31,657		29,685
Total liabilities		3,548,852		3,485,448		3,408,408
Commitments and contingencies
STOCKHOLDERS’ EQUITY
Preferred stock, $10.00 par value, $1,000 liquidation value, shares authorized 500,000; issued and outstanding, 35,595 shares at June 30, 2011 and zero at December 31, 2011 and June 30, 2012.		—		—		35,595
Common stock, $1.33 par value, shares authorized 36,000,000; issued and outstanding, 25,952,035 shares, 26,134,830 shares, and 26,043,633 shares, respectively.		34,415		34,672		34,569
Surplus		185,733		187,493		186,177
Retained earnings		202,278		189,824		178,125
Discount on preferred stock		—		—		(1,048	)
Accumulated other comprehensive income		11,010		9,650		9,698
Total stockholders’ equity		433,436		421,639		443,116
Total liabilities and stockholders’ equity	$	3,982,288	$	3,907,087	$	3,851,524

See accompanying notes to condensed consolidated financial statements.

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UNION FIRST MARKET BANKSHARES CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Dollars in thousands, except per share amounts)

	Three Months Ended					Six Months Ended
	June 30					June 30
	2012		2011			2012		2011
	(Unaudited)		(Unaudited)			(Unaudited)		(Unaudited)
Interest and dividend income:
Interest and fees on loans	$	40,299	$	42,332		$	80,907	$	84,335
Interest on deposits in other banks		34		28			58		33
Interest and dividends on securities:
Taxable		3,182		3,627			6,636		7,257
Nontaxable		1,789		1,769			3,577		3,523
Total interest and dividend income		45,304		47,756			91,178		95,148
Interest expense:
Interest on deposits		5,023		6,166			10,358		12,850
Interest on Federal funds purchased		1		—			1		7
Interest on short-term borrowings		47		82			91		166
Interest on long-term borrowings		2,147		1,885			4,294		3,702
Total interest expense		7,217		8,133			14,744		16,725
Net interest income		38,087		39,623			76,434		78,423
Provision for loan losses		3,000		4,500			6,500		10,800
Net interest income after provision for loan losses		35,087		35,123			69,934		67,623
Noninterest income:
Service charges on deposit accounts		2,291		2,216			4,421		4,274
Other service charges, commissions and fees		3,627		3,351			7,037		6,275
Gains (losses) on securities transactions, net		10		—			5		(16	)
Gains on sales of mortgage loans		7,315		4,303			12,611		9,271
Losses (gains) on sales of other real estate and bank premises, net		195		(791	)		137		(1,090	)
Other operating income		972		884			2,017		1,796
Total noninterest income		14,410		9,963			26,228		20,510
Noninterest expenses:
Salaries and benefits		20,418		17,580			39,925		35,234
Occupancy expenses		3,092		2,668			5,739		5,422
Furniture and equipment expenses		1,868		1,679			3,631		3,341
Other operating expenses		12,386		13,945			24,078		26,642
Total noninterest expenses		37,764		35,872			73,373		70,639
Income before income taxes		11,733		9,214			22,789		17,494
Income tax expense		3,313		2,394			6,446		4,480
Net income	$	8,420	$	6,820		$	16,343	$	13,014
Dividends paid and accumulated on preferred stock		—		462			—		924
Accretion of discount on preferred stock		—		65			—		129
Net income available to common shareholders	$	8,420	$	6,293		$	16,343	$	11,961
Earnings per common share, basic	$	0.32	$	0.24		$	0.63	$	0.46
Earnings per common share, diluted	$	0.32	$	0.24		$	0.63	$	0.46

See accompanying notes to condensed consolidated financial statements.

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UNION FIRST MARKET BANKSHARES CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Dollars in thousands, except per share amounts)

	Three Months Ended						Six Months Ended
	June 30						June 30
	2012			2011			2012			2011
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
Net income	$	8,420		$	6,820		$	16,343		$	13,014
Other comprehensive income:
Change in fair value of interest rate swap (cash flow hedge)		(487	)		(1,192	)		(290	)		(999	)
Unrealized gains on securities:
Unrealized holding gains arising during period (net of tax, $535 and $890 for three and six months ended 2012)		992			4,059			1,653			7,116
Reclassification adjustment for losses included in net income (net of tax, $4 and $2 for three and six months ended 2012)		(6	)		0			(3	)		10
Other comprehensive income		499			2,867			1,360			6,127
Comprehensive income	$	8,919		$	9,687		$	17,703		$	19,141

See accompanying notes to condensed consolidated financial statements.

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UNION FIRST MARKET BANKSHARES CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

SIX MONTHS ENDED JUNE 30, 2012 AND 2011

(Dollars in thousands, except share amounts)

(Unaudited)

	Preferred Stock		Common Stock			Surplus			Retained Earnings			Discount on Preferred Stock			Accumu- lated Other Compre- hensive Income		Total
Balance—December 31, 2010	$	35,595	$	34,532		$	185,763		$	169,801		$	(1,177	)	$	3,571	$	428,085
Net income—2011										13,014								13,014
Other comprehensive income (net of tax, $3,836)																6,127		6,127
Dividends on Common Stock ($.14 per share)										(3,637	)							(3,637	)
Tax benefit from exercise of stock awards							1											1
Dividends on Preferred Stock										(924	)							(924	)
Accretion of discount on Preferred Stock										(129	)		129					—
Issuance of common stock under Dividend Reinvestment Plan (9,747 shares)				13			147											160
Issuance of common stock under Stock Incentive Plan (6,450 shares)				8			47											55
Vesting of restricted stock under Stock Incentive Plan (12,243 shares)				16			(16	)										—
Stock-based compensation expense							235											235
Balance—June 30, 2011	$	35,595	$	34,569		$	186,177		$	178,125		$	(1,048	)	$	9,698	$	443,116
Balance—December 31, 2011	$	—	$	34,672		$	187,493		$	189,824		$	—		$	9,650	$	421,639
Net income—2012										16,343								16,343
Other comprehensive income (net of tax, $888)																1,360		1,360
Dividends on Common Stock ($.15 per share)										(3,632	)							(3,632	)
Stock purchased under stock repurchase plan (220,265 shares)				(293	)		(2,570	)										(2,863	)
Issuance of common stock under Dividend Reinvestment Plan (19,028 shares)				25			232			(257	)							—
Vesting of restricted stock under Stock Incentive Plan (9,647 shares)				13			(13	)										—
Net settle for taxes on Restricted Stock Awards (1,818 shares)				(2	)		(24	)										(26	)
Stock-based compensation expense							615											615
Balance—June 30, 2012	$	—	$	34,415		$	185,733		$	202,278		$	—		$	11,010	$	433,436

See accompanying notes to condensed consolidated financial statements.

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UNION FIRST MARKET BANKSHARES CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

SIX MONTHS ENDED JUNE 30, 2012 AND 2011

(Dollars in thousands)

	2012			2011
Operating activities:
Net income	$	16,343		$	13,014
Adjustments to reconcile net income to net cash and cash equivalents provided by operating activities:
Depreciation of bank premises and equipment		3,412			3,312
Amortization, net		4,835			3,182
Provision for loan losses		6,500			10,800
(Gains) losses on the sale of investment securities		(5	)		16
(Increase) decrease in loans held for sale, net		(25,243	)		23,554
(Gain) loss on sales of other real estate owned and bank premises, net		(137	)		1,090
Stock-based compensation expense		615			235
Decrease in other assets		2,304			3,852
Increase (decrease) in other liabilities		6,590			(1,249	)
Net cash and cash equivalents provided by operating activities		15,214			57,806
Investing activities:
Purchases of securities available for sale		(95,191	)		(72,737	)
Proceeds from sales of securities available for sale		3,583			—
Proceeds from maturities, calls and paydowns of securities available for sale		83,656			60,904
Net (increase) decrease in loans		(84,671	)		30,469
Net increase in bank premises and equipment		(3,602	)		(2,707	)
Proceeds from sales of other real estate owned		7,077			7,271
Improvements to other real estate owned		(343	)		—
Cash paid in bank acquisition		—			(26,437	)
Cash acquired in bank and branch acquisitions		—			230
Net cash and cash equivalents used in investing activities		(89,492	)		(3,007	)
Financing activities:
Net increase in noninterest-bearing deposits		57,222			31,278
Net increase (decrease) in interest-bearing deposits		(13,341	)		(67,153	)
Net increase (decrease) in short-term borrowings		12,399			(12,743	)
Net increase in long-term borrowings		244			244
Cash dividends paid—common stock		(3,632	)		(3,637	)
Cash dividends paid—preferred stock		—			(924	)
Repurchase of common stock		(2,863	)		—
Taxes paid related to net share settlement of equity awards		(26	)		1
Issuance of common stock		—			215
Net cash and cash equivalents provided by (used in) financing activities		50,003			(52,719	)
Increase (decrease) in cash and cash equivalents		(24,275	)		2,081
Cash and cash equivalents at beginning of the period		96,659			61,153
Cash and cash equivalents at end of the period	$	72,384		$	63,234
Supplemental Disclosure of Cash Flow Information
Cash payments for:
Interest	$	15,699		$	16,928
Income taxes		2,914			2,464
Supplemental schedule of noncash investing and financing activities
Unrealized gain on securities available for sale	$	2,538		$	10,052
Changes in fair value of interest rate swap		(290	)		(999	)
Transfers from loans to other real estate owned		10,479			8,546
Transactions related to bank and branch acquisitions
Increase in assets and liabilities:
Loans	$	—		$	70,817
Other assets		—			4,324
Noninterest bearing deposits		—			4,366
Interest bearing deposits		—			44,503
Other liabilities		—			65

See accompanying notes to consolidated financial statements.

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UNION FIRST MARKET BANKSHARES CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

June 30, 2012

1. ACCOUNTING POLICIES

The condensed consolidated financial statements include the accounts of Union First Market Bankshares Corporation and its subsidiaries (collectively, the “Company”). Significant inter-company accounts and transactions have been eliminated in consolidation.

The unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and follow general practice within the banking industry. Accordingly, the unaudited condensed consolidated financial statements do not include all the information and footnotes required by 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 2011 Annual Report on Form 10-K. If needed, certain previously reported amounts have been reclassified to conform to current period presentation.

2. BUSINESS COMBINATIONS

Harrisonburg Branch Acquisition

On May 20, 2011, the Company completed the purchase of the former NewBridge Bank branch in Harrisonburg, Virginia, assets and liabilities related to the branch business, and a potential branch site in Waynesboro, Virginia. Under the parties’ agreement, the Company purchased loans of $72.5 million, assumed deposit liabilities of $48.9 million, and purchased the related fixed assets of the branch. The Company operates the acquired bank branch under the name Union First Market Bank (the “Harrisonburg branch”). The acquisition, which allowed the Company to establish immediately a meaningful presence in a new banking market, is consistent with the Company’s secondary growth strategy of expanding operations along the Interstate Route 81 corridor. The Company’s consolidated statements of income include the results of operations of the Harrisonburg branch from the closing date of the acquisition.

In connection with the acquisition, the Company recorded $1.8 million of goodwill and $9,500 of core deposit intangibles. The core deposit intangible of $9,500 was expensed immediately upon completion of the acquisition. The recorded goodwill was allocated to the community banking segment of the Company and is deductible for tax purposes.

The Company acquired the $72.5 million loan portfolio at a fair value discount of $1.7 million. The discount represents expected credit losses, adjustments to market interest rates and liquidity adjustments. The performing loan portfolio fair value estimate was $70.5 million and the impaired loan portfolio fair value estimate was $276,000.

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In the second quarter, interest income of approximately $692,000 was recorded on loans acquired in the Harrisonburg branch acquisition. The outstanding principal balance and the carrying amount of these loans included in the consolidated balance sheet at June 30, 2012 and December 31, 2011 are as follows (dollars in thousands):

June 30, 2012:
Outstanding principal balance	$	50,869
Carrying amount	$	50,221
December 31, 2011:
Outstanding principal balance	$	54,953
Carrying amount	$	53,359

Loans obtained in the acquisition of the Harrisonburg branch for which there is specific evidence of credit deterioration and for which it was probable that the Company would be unable to collect all contractually required principal and interest payments are not considered to be material to the Company’s consolidated assets.

First Market Bank Acquisition In February 2010, the Company completed the acquisition of First Market Bank (“FMB”). Interest income on acquired loans for the second quarter of 2012 was approximately $6.9 million. The outstanding principal balance and the carrying amount of these loans included in the consolidated balance sheet at June 30, 2012 and December 31, 2011 are as follows (dollars in thousands):

June 30, 2012:
Outstanding principal balance	$	498,927
Carrying amount	$	489,002
December 31, 2011:
Outstanding principal balance	$	632,602
Carrying amount	$	620,048

Loans obtained in the acquisition of FMB for which there is specific evidence of credit deterioration and for which it was probable that the Company would be unable to collect all contractually required principal and interest payments are not considered to be material to the Company’s consolidated assets.

During the second quarter of 2012, the Company compared the expected prepayments at acquisition to actual payments and anticipated future payments on four purchased performing loan pools. The slower prepayment speed noted on real estate, commercial real estate, land, and auto pools during this assessment resulted in an adjustment to the fair value discount accretion rate. This is considered a change in accounting estimate and resulted in a lower effective yield in each pool and had an immaterial impact on the financial statements.

3. STOCK-BASED COMPENSATION

The Company’s 2011 Stock Incentive Plan (the “2011 Plan”) and the 2003 Stock Incentive Plan (the “2003 Plan”) provide for the granting of incentive stock options, non-statutory stock options, and nonvested stock awards to key employees of the Company and its subsidiaries. The 2011 Plan makes available 1,000,000 shares, which may be awarded to employees of the Company and its subsidiaries in the form of incentive stock options intended to comply with the requirements of Section 422 of the Internal Revenue Code of 1986 (“incentive stock options”), non-statutory stock options, and nonvested stock. Approximately 23,000 shares remain available for grant under the 2003 Plan, which expires in 2013. Under both plans, the option price cannot be less than the fair market value of the stock on the grant date. The Company issues new shares to satisfy stock-based awards. A stock option’s maximum term is ten years from the date of grant and vests in equal annual installments of 20% over a five year vesting schedule. Collectively, there remain approximately 743,000 shares available as of June 30, 2012 for issuance under the 2011 and 2003 Plans.

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For the three month and six month periods ended June 30, 2012 and 2011, the Company recognized stock-based compensation expense of approximately $376,000 and $615,000, and $145,000 and $235,000, respectively. These expenses were less than $0.01 per common share for both periods ended June 30, 2011, and $0.01 and $0.02 for the three and six month periods, respectively, ended June 30, 2012.

Stock Options

The following table summarizes the stock option activity for the six months ended June 30, 2012:

	Number of Stock Options			Weighted Average Exercise Price
Options outstanding, December 31, 2011		422,750		$	17.70
Granted		131,657			14.40
Forfeited		(18,429	)		14.52
Expired		(10,905	)		21.10
Options outstanding, June 30, 2012		525,073			16.91
Options exercisable, June 30, 2012		229,136			20.59

The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option valuation model that uses the assumptions noted in the following table for the six months ended June 30, 2012 and 2011:

	Six Months Ended June 30,
	2012			2011
Dividend yield (1)		2.47	%		2.36	%
Expected life in years (2)		7.0			7.0
Expected volatility (3)		41.53	%		41.02	%
Risk-free interest rate (4)		1.24	%		2.71	%
Weighted average fair value per option granted	$	4.76		$	4.31

(1) Calculated as the ratio of historical dividends paid per share of common stock to the stock price on the date of grant.

(2) Based on the average of the contractual life and vesting schedule for the respective option.

(3) Based on the monthly historical volatility of the Company’s stock price over the expected life of the options.

(4) Based upon the U.S. Treasury bill yield curve, for periods within the contractual life of the option, in effect at the time of grant.

The following table summarizes information concerning stock options issued to the Company’s employees that are vested or are expected to vest and stock options exercisable as of June 30, 2012:

	Stock Options Vested or Expected to Vest		Exercisable
Stock options		496,967		229,136
Weighted average remaining contractual life in years		6.64		4.00
Weighted average exercise price on shares above water	$	13.22	$	12.17
Aggregate intrinsic value	$	294,614	$	66,268

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There were no stock options exercised during the second quarter of 2012; the total intrinsic value for stock options exercised during both the three and six months ended June 30, 2012 was $0. The fair value of stock options vested during the six months ended June 30, 2012 was approximately $275,000.

Nonvested Stock

The 2003 and the 2011 Stock Incentive Plans permit the granting of nonvested stock but are limited to one-third of the aggregate number of total awards granted. This equity component of compensation is divided between restricted (time-based) stock grants and performance-based stock grants. Generally, the restricted stock vests 50% on each of the third and fourth anniversaries from the date of the grant. The performance-based stock is subject to vesting on the fourth anniversary of the date of the grant based on the performance of the Company’s stock price. The value of the nonvested stock awards was calculated by multiplying the fair market value of the Company’s common stock on grant date by the number of shares awarded. Employees have the right to vote the shares and to receive cash or stock dividends (restricted stock), if any, except for the nonvested stock under the performance-based component (performance stock).

The following table summarizes the nonvested stock activity for the six months ended June 30, 2012:

	Number of Shares of Restricted Stock			Performance Stock			Weighted Average  Grant- Date Fair Value
Balance, December 31, 2011		140,557			6,000		$	12.62
Granted		70,061			—			14.21
Vested		(7,904	)		—			15.81
Forfeited		(12,904	)		(1,500	)		13.12
Balance, June 30, 2012		189,810			4,500			12.74

The estimated unamortized compensation expense, net of estimated forfeitures, related to nonvested stock and stock options issued and outstanding as of June 30, 2012 that will be recognized in future periods is as follows (dollars in thousands):

	Stock Options		Restricted Stock		Total
For the remaining six months of 2012	$	180	$	460	$	640
For year ending December 31, 2013		368		687		1,055
For year ending December 31, 2014		361		359		720
For year ending December 31, 2015		269		91		360
For year ending December 31, 2016		155		6		161
For year ending December 31, 2017		25		—		25
Total	$	1,358	$	1,603	$	2,961

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4. LOANS AND ALLOWANCE FOR LOAN LOSSES

Loans are stated at their face amount, net of unearned income, and consist of the following at June 30, 2012 and December 31, 2011 (dollars in thousands):

	June 30,		December 31,
	2012		2011
Commercial:
Commercial Construction	$	190,141	$	185,359
Commercial Real Estate—Owner Occupied		478,804		452,407
Commercial Real Estate—Non-Owner Occupied		694,980		655,083
Raw Land and Lots		208,460		214,284
Single Family Investment Real Estate		210,151		192,437
Commercial and Industrial		210,517		212,268
Other Commercial		42,494		44,403
Consumer:
Mortgage		221,063		219,646
Consumer Construction		25,778		20,757
Indirect Auto		158,813		162,708
Indirect Marine		33,729		39,819
HELOCs		280,030		277,101
Credit Card		19,717		19,006
Other Consumer		113,113		123,305
Total	$	2,887,790	$	2,818,583

The following table shows the aging of the Company’s loan portfolio, by class, at June 30, 2012 (dollars in thousands):

	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days and still Accruing		Purchased Impaired (net of credit mark)		Nonaccrual		Current		Total Loans
Commercial:
Commercial Construction	$	—	$	—	$	—	$	—	$	9,763	$	180,378	$	190,141
Commercial Real Estate—Owner Occupied		3,151		50		200		1,234		5,194		468,975		478,804
Commercial Real Estate—Non-Owner Occupied		895		1,721		636		—		517		691,211		694,980
Raw Land and Lots		57		—		153		3,753		12,139		192,358		208,460
Single Family Investment Real Estate		1,059		735		673		372		3,476		203,836		210,151
Commercial and Industrial		510		254		140		382		4,715		204,516		210,517
Other Commercial		2		262		522		—		231		41,477		42,494
Consumer:
Mortgage		4,575		2,078		4,497		—		1,171		208,742		221,063
Consumer Construction		408		—		—		—		201		25,169		25,778
Indirect Auto		1,905		236		251		27		3		156,391		158,813
Indirect Marine		200		191		594		—		26		32,718		33,729
HELOCs		1,528		667		1,788		875		900		274,272		280,030
Credit Card		129		114		182		—		—		19,292		19,717
Other Consumer		1,402		316		1,132		132		835		109,296		113,113
Total	$	15,821	$	6,624	$	10,768	$	6,775	$	39,171	$	2,808,631	$	2,887,790

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The following table shows the aging of the Company’s loan portfolio, by class, at December 31, 2011 (dollars in thousands):

	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days and still Accruing		Purchased Impaired (net  of credit mark)		Nonaccrual		Current		Total Loans
Commercial:
Commercial Construction	$	—	$	—	$	490	$	—	$	10,276	$	174,593	$	185,359
Commercial Real Estate—Owner Occupied		520		—		2,482		1,292		5,962		442,151		452,407
Commercial Real Estate—Non-Owner Occupied		190		64		2,887		1,133		2,031		648,778		655,083
Raw Land and Lots		94		1,124		—		5,623		13,322		194,121		214,284
Single Family Investment Real Estate		779		70		3,637		388		5,048		182,515		192,437
Commercial and Industrial		601		185		3,369		392		5,297		202,424		212,268
Other Commercial		—		25		—		—		238		44,140		44,403
Consumer:
Mortgage		6,748		412		3,804		—		240		208,442		219,646
Consumer Construction		—		—		—		—		207		20,550		20,757
Indirect Auto		2,653		416		443		40		7		159,149		162,708
Indirect Marine		189		795		—		—		544		38,291		39,819
HELOCs		1,678		547		820		865		885		272,306		277,101
Credit Card		245		184		323		—		—		18,254		19,006
Other Consumer		1,421		443		1,657		164		777		118,843		123,305
Total	$	15,118	$	4,265	$	19,912	$	9,897	$	44,834	$	2,724,557	$	2,818,583

Nonaccrual loans totaled $39.2 million and $54.3 million at June 30, 2012 and 2011, respectively. There were no nonaccrual loans excluded from impaired loan disclosure in 2012 or 2011. Loans past due 90 days or more and accruing interest totaled $10.8 million and $9.1 million at June 30, 2012 and 2011, respectively.

The following table shows purchased impaired commercial and consumer loan portfolios, by class and their delinquency status through June 30, 2012 (dollars in thousands):

	30-89 Days Past Due		Greater than 90 Days		Current		Total
Commercial:
Commercial Real Estate—Owner Occupied	$	—	$	1,167	$	67	$	1,234
Raw Land and Lots		—		91		3,662		3,753
Single Family Investment Real Estate		—		—		372		372
Commercial and Industrial		—		382		—		382
Consumer:
Indirect Auto		3		8		16		27
HELOCs		—		55		820		875
Other Consumer		—		46		86		132
Total	$	3	$	1,749	$	5,023	$	6,775

The current column represents loans that are less than 30 days past due.

The following table shows purchased impaired commercial and consumer loan portfolios, by class and their delinquency status through December 31, 2011 (dollars in thousands):

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	30-89 Days Past Due		Greater than 90 Days		Current		Total
Commercial:
Commercial Real Estate—Owner Occupied	$	206	$	50	$	1,036	$	1,292
Commercial Real Estate—Non-Owner Occupied		—		1,133		—		1,133
Raw Land and Lots		—		—		5,623		5,623
Single Family Investment Real Estate		—		—		388		388
Commercial and Industrial		—		302		90		392
Consumer:
Indirect Auto		6		11		23		40
HELOCs		19		32		814		865
Other Consumer		—		77		87		164
Total	$	231	$	1,605	$	8,061	$	9,897

The current column represents loans that are less than 30 days past due.

The Company measures the amount of impairment by evaluating loans either in their collective homogeneous pools or individually. At June 30, 2012, the Company had $201.3 million in loans considered to be impaired of which $11.9 million were collectively evaluated for impairment and $189.4 million were individually evaluated for impairment. The following table shows the Company’s impaired loans individually evaluated for impairment, by class, at June 30, 2012 (dollars in thousands):

	Recorded Investment		Unpaid Principal Balance		Related Allowance		YTD Average Investment		Interest Income Recognized
Loans without a specific allowance
Commercial:
Commercial Construction	$	31,097	$	31,142	$	—	$	31,278	$	831
Commercial Real Estate—Owner Occupied		14,145		14,963		—		15,034		347
Commercial Real Estate—Non-Owner Occupied		29,659		29,730		—		29,977		813
Raw Land and Lots		39,400		39,461		—		40,166		710
Single Family Investment Real Estate		4,601		4,611		—		5,198		158
Commercial and Industrial		5,920		5,964		—		6,189		119
Other Commercial		1,046		1,046		—		1,194		34
Consumer:
Mortgage		2,600		2,600		—		3,199		57
Indirect Auto		27		27		—		30		1
HELOCs		1,425		1,524		—		1,526		6
Other Consumer		904		936		—		948		15
Total impaired loans without a specific allowance	$	130,824	$	132,004	$	—	$	134,739	$	3,091
Loans with a specific allowance
Commercial:
Commercial Construction	$	13,399	$	13,834	$	1,378	$	13,873	$	108
Commercial Real Estate—Owner Occupied		6,641		6,807		1,861		6,855		57
Commercial Real Estate—Non-Owner Occupied		8,505		8,536		387		8,553		227
Raw Land and Lots		11,542		11,750		2,457		11,834		27
Single Family Investment Real Estate		5,250		5,552		1,174		5,617		55
Commercial and Industrial		11,455		12,104		3,393		12,068		187
Consumer:
Mortgage		473		473		59		473		—
Consumer Construction		201		225		80		226		—
HELOCs		754		811		550		1,017		—
Other Consumer		355		355		161		355		—
Total impaired loans with a specific allowance	$	58,575	$	60,447	$	11,500	$	60,871	$	661
Total loans individually evaluated for impairment	$	189,399	$	192,451	$	11,500	$	195,610	$	3,752

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At December 31, 2011, the Company had $255.1 million in loans considered to be impaired of which $12.3 million were collectively evaluated for impairment and $242.8 million were individually evaluated for impairment. The following table shows the Company’s impaired loans individually evaluated for impairment, by class, at December 31, 2011 (dollars in thousands):

	Recorded Investment		Unpaid Principal Balance		Related Allowance		YTD Average Investment		Interest Income Recognized
Loans without a specific allowance
Commercial:
Commercial Construction	$	40,475	$	40,524	$	—	$	37,835	$	1,690
Commercial Real Estate—Owner Occupied		20,487		21,010		—		23,364		1,183
Commercial Real Estate—Non-Owner Occupied		37,799		37,855		—		38,084		2,002
Raw Land and Lots		46,791		46,890		—		47,808		1,306
Single Family Investment Real Estate		11,285		11,349		—		11,684		637
Commercial and Industrial		9,467		9,959		—		10,216		423
Other Commercial		1,257		1,257		—		1,269		75
Consumer:
Mortgage		1,202		1,202		—		1,225		70
HELOCs		349		349		—		350		11
Other Consumer		—		—		—		1		—
Total impaired loans without a specific allowance	$	169,112	$	170,395	$	—	$	171,836	$	7,397
Loans with a specific allowance
Commercial:
Commercial Construction	$	12,927	$	13,297	$	583	$	13,811	$	343
Commercial Real Estate—Owner Occupied		8,679		8,788		1,961		8,681		267
Commercial Real Estate—Non-Owner Occupied		8,858		8,879		1,069		9,010		322
Raw Land and Lots		22,188		22,429		991		24,553		973
Single Family Investment Real Estate		9,020		9,312		1,140		9,571		321
Commercial and Industrial		8,980		9,133		3,320		10,448		369
Other Commercial		150		150		3		153		10
Consumer:
Mortgage		535		535		11		536		32
Consumer Construction		207		226		86		228		—
Indirect Auto		71		71		—		93		5
Indirect Marine		544		547		263		548		9
HELOCs		785		825		587		1,034		—
Other Consumer		777		804		284		815		5
Total impaired loans with a specific allowance	$	73,721	$	74,996	$	10,298	$	79,481	$	2,656
Total loans individually evaluated for impairment	$	242,833	$	245,391	$	10,298	$	251,317	$	10,053

The Company considers troubled debt restructurings (“TDRs”) to be impaired loans. A modification of a loan’s terms constitutes a TDR if the creditor grants a concession to the borrower for economic or legal reasons related to the borrower’s financial difficulties that it would not otherwise consider. Included in the impaired loan disclosures above are $80.2 million and $112.6 million of loans considered to be troubled debt restructurings as of June 30, 2012 and December 31, 2011, respectively. All loans that are considered to be TDRs are specifically evaluated for impairment in accordance with the Company’s allowance for loan loss methodology.

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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 in nonaccrual status, which are considered to be nonperforming, as of June 30, 2012 and December 31, 2011 (dollars in thousands):

	June 30, 2012						December 31, 2011
	No. of Loans		Recorded Investment		Outstanding Commitment		No. of Loans		Recorded Investment		Outstanding Commitment
Performing
Commercial:
Commercial Construction		9	$	12,566	$	2,247		14	$	21,461	$	3,185
Commercial Real Estate—Owner Occupied		11		5,069		—		11		7,996		180
Commercial Real Estate—Non-Owner Occupied		10		16,303		—		16		21,777		13
Raw Land and Lots		15		27,477		251		15		32,450		1
Single Family Investment Real Estate		7		1,101		—		12		8,525		—
Commercial and Industrial		9		2,605		—		12		4,991		204
Other Commercial		2		302		—		4		864		—
Consumer:
Mortgage		7		1,699		—		1		507		—
Indirect Marine		1		283		—		—		—		—
Other Consumer		2		85		—		2		263		—
Total performing		73	$	67,490	$	2,498		87	$	98,834	$	3,583
Nonperforming
Commercial:
Commercial Construction		4	$	5,242	$	—		5	$	5,353	$	—
Commercial Real Estate—Owner Occupied		3		1,182		—		—		—		—
Commercial Real Estate—Non-Owner Occupied		1		212		—		2		292		—
Raw Land and Lots		3		3,861		—		6		4,342		—
Single Family Investment Real Estate		2		443		—		4		1,342		—
Commercial and Industrial		7		1,310		—		3		1,134		—
Consumer:
Mortgage		1		202		—		5		1,076		—
Indirect Marine		1		26		—		—		—		—
Other Consumer		1		202		—		1		265		—
Total nonperforming		23	$	12,680	$	—		26	$	13,804	$	—
Total performing and nonperforming		96	$	80,170	$	2,498		113	$	112,638	$	3,583

The Company considers a default of a restructured loan to occur when subsequent to the restructure, the borrower is 90 days past due or results in foreclosure and repossession of the applicable collateral; the Company identified two restructured loans, totaling approximately $928,000, that went into default in the second quarter that had been restructured during the previous twelve months. These loans included a commercial real estate (owner occupied) loan, totaling approximately $902,000, and an indirect marine loan, totaling approximately $26,000; both of these loans had a term extension at a market rate.

- 14 -

The following table shows, by class and modification type, TDRs that occurred during the three month and six month periods ended June 30, 2012 (dollars in thousands):

	Three months ended June 30, 2012				Six months ended June 30, 2012
	No. of Loans		Recorded investment at period end		No. of Loans		Recorded investment at period end
Modified to interest only
Commercial:
Raw Land and Lots		—	$	—		3	$	327
Single Family Investment Real Estate		—		—		2		179
Consumer:
Indirect Marine		1		283		1		283
Total interest only at market rate of interest		1	$	283		6	$	789
Term modification, at a market rate
Commercial:
Commercial Real Estate—Owner Occupied		1	$	132		3	$	1,822
Raw Land and Lots		—		—		1		604
Commercial and Industrial		5		329		6		430
Consumer:
Mortgage		1		202		2		474
Other Consumer		2		85		3		287
Total loan term extended at a market rate		9	$	748		15	$	3,617
Term modification, below market rate
Commercial:
Commercial Real Estate—Owner Occupied		3	$	649		4	$	658
Total loan term extended at a below market rate		3	$	649		4	$	658
Interest rate modification, below market rate
Commercial:
Commercial Real Estate—Non-Owner Occupied		2	$	2,390		2	$	2,390
Total interest only at below market rate of interest		2	$	2,390		2	$	2,390
Total		15	$	4,070		27	$	7,454

- 15 -

The following table shows the allowance for loan loss activity, by portfolio segment, balances for allowance for credit losses, and loans based on impairment methodology for the six months ended June 30, 2012. 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			Unallocated		Total
Allowance for loan losses:
Balance, beginning of the year	$	27,891		$	11,498		$	81	$	39,470
Recoveries credited to allowance		127			564			—		691
Loans charged off		(2,950	)		(2,726	)		—		(5,676	)
Provision charged to operations		5,485			988			27		6,500
Balance, end of period	$	30,553		$	10,324		$	108	$	40,985
Ending balance: individually evaluated for impairment		10,429			850			—		11,279
Ending balance: collectively evaluated for impairment		19,903			9,474			108		29,485
Ending balance: loans acquired with deteriorated credit quality		221			—			—		221
Total	$	30,553		$	10,324		$	108	$	40,985
Loans:
Ending balance	$	2,035,547		$	852,243		$	—	$	2,887,790
Ending balance: individually evaluated for impairment		176,919			5,705			—		182,624
Ending balance: collectively evaluated for impairment		1,852,887			845,504			—		2,698,391
Ending balance: loans acquired with deteriorated credit quality		5,741			1,034			—		6,775
Total	$	2,035,547		$	852,243		$	—	$	2,887,790

- 16 -

The following table shows the allowance for loan loss activity, portfolio segment types, balances for allowance for loan losses, and loans based on impairment methodology for the year ended December 31, 2011. 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			Unallocated			Total
Allowance for loan losses:
Balance, beginning of the year	$	28,255		$	10,189		$	(38	)	$	38,406
Recoveries credited to allowance		924			1,206			—			2,130
Loans charged off		(10,891	)		(6,975	)		—			(17,866	)
Provision charged to operations		9,603			7,078			119			16,800
Balance, end of period	$	27,891		$	11,498		$	81		$	39,470
Ending balance: individually evaluated for impairment		8,982			1,231			—			10,213
Ending balance: collectively evaluated for impairment		18,824			10,267			81			29,172
Ending balance: loans acquired with deteriorated credit quality		85			—			—			85
Total	$	27,891		$	11,498		$	81		$	39,470
Loans:
Ending balance	$	1,956,241		$	862,342		$	—		$	2,818,583
Ending balance: individually evaluated for impairment		229,535			3,401			—			232,936
Ending balance: collectively evaluated for impairment		1,717,878			857,872			—			2,575,750
Ending balance: loans acquired with deteriorated credit quality		8,828			1,069			—			9,897
Total	$	1,956,241		$	862,342		$	—		$	2,818,583

The Company uses the past due status and 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 1 through 9. A general description of the characteristics of the risk grades follows:

• 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 risk;

• 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;

- 17 -

• 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 all loans, excluding purchased impaired loans, in the commercial portfolios by class with their related risk rating as of June 30, 2012. The risk rating information has been updated through June 30, 2012 (dollars in thousands):

	1-3		4		5		6		7		8		Total
Commercial Construction	$	15,558	$	90,320	$	12,194	$	34,210	$	37,749	$	110	$	190,141
Commercial Real Estate—Owner Occupied		104,138		317,703		20,366		17,309		18,054		—		477,570
Commercial Real Estate—Non-Owner Occupied		156,028		416,649		57,512		32,437		32,354		—		694,980
Raw Land and Lots		2,240		108,866		11,306		38,740		43,049		506		204,707
Single Family Investment Real Estate		33,761		139,779		12,154		13,322		10,024		739		209,779
Commercial and Industrial		41,186		122,147		19,607		8,729		18,302		164		210,135
Other Commercial		5,904		17,903		11,516		5,271		1,839		61		42,494
Total	$	358,815	$	1,213,367	$	144,655	$	150,018	$	161,371	$	1,580	$	2,029,806

The following table shows all loans, excluding purchased impaired loans, in the commercial portfolios by class with their related risk rating as of December 31, 2011. The risk rating information has been updated through December 31, 2011 (dollars in thousands):

	1-3		4		5		6		7		8		Total
Commercial Construction	$	10,099	$	84,299	$	6,079	$	36,650	$	48,232	$	—	$	185,359
Commercial Real Estate—Owner Occupied		88,430		296,825		17,604		21,158		26,389		709		451,115
Commercial Real Estate—Non-Owner Occupied		149,346		367,244		58,844		38,662		39,854		—		653,950
Raw Land and Lots		4,368		99,374		18,767		33,673		52,204		275		208,661
Single Family Investment Real Estate		32,741		116,570		11,928		14,358		16,452		—		192,049
Commercial and Industrial		35,120		123,872		22,079		11,559		19,066		180		211,876
Other Commercial		6,364		15,918		16,739		3,807		1,512		63		44,403
Total	$	326,468	$	1,104,102	$	152,040	$	159,867	$	203,709	$	1,227	$	1,947,413

The following table shows only purchased impaired loans in the commercial portfolios by class with their related risk rating as of June 30, 2012. The credit quality indicator information has been updated through June 30, 2012 (dollars in thousands):

	6		7		8		Total
Commercial Real Estate—Owner Occupied	$	—	$	1,234	$	—	$	1,234
Raw Land and Lots		—		3,753		—		3,753
Single Family Investment Real Estate		355		17		—		372
Commercial and Industrial		—		88		294		382
Total	$	355	$	5,092	$	294	$	5,741

The following table shows only purchased impaired loans in the commercial portfolios by class with their related risk rating as of December 31, 2011. The credit quality indicator information has been updated through December 31, 2011 (dollars in thousands):

	6		7		8		Total
Commercial Real Estate—Owner Occupied	$	—	$	1,292	$	—	$	1,292
Commercial Real Estate—Non-Owner Occupied		—		1,133		—		1,133
Raw Land and Lots		—		5,623		—		5,623
Single Family Investment Real Estate		369		19		—		388
Commercial and Industrial		—		91		301		392
Total	$	369	$	8,158	$	301	$	8,828

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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 contractually required payments, cash flows expected to be collected, and fair value as of the date of acquisition were $1,080,780, $1,072,726, and $1,052,358, respectively (dollars in thousands).

The following shows changes in the Company’s acquired loan portfolio and accretable yield for the following periods (dollars in thousands):

	For the Six Months Ended												For the Twelve Months Ended
	June 30, 2012												December 31, 2011
	Purchased Impaired						Purchased Nonimpaired						Purchased Impaired						Purchased Nonimpaired
	Accretable Yield			Carrying Amount of Loans			Accretable Yield			Carrying Amount of Loans			Accretable Yield			Carrying Amount of Loans			Accretable Yield			Carrying Amount of Loans
Balance at beginning of period	$	5,140		$	9,897		$	9,010		$	663,510		$	8,169		$	13,999		$	13,589		$	799,898
Additions		—			—			—			—			122			276			1,593			70,524
Accretion		(38	)		—			(2,166	)		—			(66	)		—			(6,172	)		—
Charged off		(1,373	)		(212	)		—			(1,032	)		(3,073	)		(1,329	)		—			(5,988	)
Transfers to OREO		—			(2,371	)		—			(2,766	)		(12	)		(174	)		—			(2,341	)
Payments received, net		—			(539	)		—			(127,264	)		—			(2,875	)		—			(198,583	)
Balance at end of period	$	3,729		$	6,775		$	6,844		$	532,448		$	5,140		$	9,897		$	9,010		$	663,510

5. EARNINGS PER SHARE

Basic earnings per common share (“EPS”) was 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. Amortization of discount and dividends on the preferred stock is treated as a reduction of the numerator in calculating basic and diluted EPS. There were approximately 591,124 and 380,657 shares underlying anti-dilutive stock awards as of June 30, 2012 and 2011, respectively.

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The following is a reconcilement of the denominators of the basic and diluted EPS computations for the three and six months ended June 30, 2012 and 2011 (dollars and shares in thousands, except per share amounts):

	Net Income Available to Common Shareholders (Numerator)		Weighted Average Common Shares (Denominator)		Per Share Amount
For the Three Months ended June 30, 2012
Net income, basic	$	8,420		25,868	$	0.32
Add: potentially dilutive common shares—stock awards		—		20		—
Diluted	$	8,420		25,888	$	0.32
For the Three Months ended June 30, 2011
Net income	$	6,820		25,970	$	0.26
Less: dividends paid and accumulated on preferred stock		462		—		0.02
Less: accretion of discount on preferred stock		65		—		—
Basic	$	6,293		25,970	$	0.24
Add: potentially dilutive common shares—stock awards		—		22		—
Diluted	$	6,293		25,992	$	0.24
For the Six Months ended June 30, 2012
Net income, basic	$	16,343		25,900	$	0.63
Add: potentially dilutive common shares—stock awards		—		24		—
Diluted	$	16,343		25,924	$	0.63
For the Six Months ended June 30, 2011
Net income	$	13,014		25,964	$	0.50
Less: dividends paid and accumulated on preferred stock		924		—		0.04
Less: accretion of discount on preferred stock		129		—		—
Basic	$	11,961		25,964	$	0.46
Add: potentially dilutive common shares—stock awards		—		23		—
Diluted	$	11,961		25,987	$	0.46

6. TRUST PREFERRED CAPITAL NOTES

Statutory Trust I, a wholly owned subsidiary of the Company, issued a Trust Preferred Capital Note of $22.5 million through a pooled underwriting for an acquisition in 2004. The securities have an indexed London Interbank Offer Rate (“LIBOR”) floating rate (three month LIBOR rate plus 2.75%) which adjusts and is payable quarterly. The interest rate at June 30, 2012 was 3.21%. The capital securities were redeemable at par beginning on June 17, 2009 and quarterly thereafter until the securities mature on June 17, 2034. The principal asset of Statutory Trust I is $23.2 million of the Company’s junior subordinated debt securities with like maturities and like interest rates to the capital notes. Of the above amount, $696,000 is reflected as the Company’s investment in Statutory Trust I and reported as “Other assets” within the consolidated balance sheet.

Statutory Trust II, a wholly owned subsidiary of the Company, issued a Trust Preferred Capital Note of $36.0 million through a pooled underwriting for an acquisition in 2006. The securities have a LIBOR-indexed floating rate (three month LIBOR plus 1.40%) that adjusts and is payable quarterly. The interest rate at June 30, 2012 was 1.86%. The capital securities were redeemable at par on June 15, 2011 and quarterly thereafter until the securities mature on June 15, 2036. The principal asset of Statutory Trust II is $37.1 million of the Company’s junior subordinated debt securities with like maturities and like interest rates to the capital notes. Of this amount, $1.1 million is reflected as the Company’s investment in Statutory Trust II reported as “Other assets” within the consolidated balance sheet.

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7. SEGMENT REPORTING DISCLOSURES

The Company has two reportable segments: a traditional full service community bank and a mortgage loan origination business. The community bank business for 2012 includes one subsidiary bank, which provides loan, deposit, investment, and trust services to retail and commercial customers throughout its 94 retail locations in Virginia. The mortgage segment provides a variety of mortgage loan products principally in Virginia, North Carolina, South 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 subject the Company to only de minimus 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 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, due largely to the minimal degree of overlapping geographic markets.

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 at the three month LIBOR rate plus 1.5% basis points, floor of 2%. 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 three and six months ended June 30, 2012 and 2011 was as follows (dollars in thousands):

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	Community Bank		Mortgage		Eliminations			Consolidated
Three Months Ended June 30, 2012
Net interest income	$	37,792	$	295	$	—		$	38,087
Provision for loan losses		3,000		—		—			3,000
Net interest income after provision for loan losses		34,792		295		—			35,087
Noninterest income		7,212		7,315		(117	)		14,410
Noninterest expenses		31,061		6,820		(117	)		37,764
Income before income taxes		10,943		790		—			11,733
Income tax expense		2,993		320		—			3,313
Net income	$	7,950	$	470	$	—		$	8,420
Total assets	$	3,967,690	$	110,374	$	(95,776	)	$	3,982,288
Three Months Ended June 30, 2011
Net interest income	$	39,341	$	282	$	—		$	39,623
Provision for loan losses		4,500		—		—			4,500
Net interest income after provision for loan losses		34,841		282		—			35,123
Noninterest income		5,777		4,304		(118	)		9,963
Noninterest expenses		31,665		4,325		(118	)		35,872
Income before income taxes		8,953		261		—			9,214
Income tax expense		2,299		95		—			2,394
Net income	$	6,654	$	167	$	—		$	6,820
Total assets	$	3,846,714	$	57,215	$	(52,405	)	$	3,851,524
Six Months Ended June 30, 2012
Net interest income	$	75,830	$	604	$	—		$	76,434
Provision for loan losses		6,500		—		—			6,500
Net interest income after provision for loan losses		69,330		604		—			69,934
Noninterest income		13,849		12,613		(234	)		26,228
Noninterest expenses		61,555		12,052		(234	)		73,373
Income before income taxes		21,624		1,165		—			22,789
Income tax expense		5,985		461		—			6,446
Net income	$	15,639	$	704	$	—		$	16,343
Total assets	$	3,967,690	$	110,374	$	(95,776	)	$	3,982,288
Six Months Ended June 30, 2011
Net interest income	$	77,654	$	769	$	—		$	78,423
Provision for loan losses		10,800		—		—			10,800
Net interest income after provision for loan losses		66,854		769		—			67,623
Noninterest income		11,472		9,272		(234	)		20,510
Noninterest expenses		61,621		9,252		(234	)		70,639
Income before income taxes		16,705		789		—			17,494
Income tax (benefit) expense		4,186		294		—			4,480
Net income	$	12,519	$	495	$	—		$	13,014
Total assets	$	3,846,714	$	57,215	$	(52,405	)	$	3,851,524

8. RECENT ACCOUNTING PRONOUNCEMENTS

In April 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2011-03, “Transfers and Servicing (Topic 860) – Reconsideration of Effective Control for Repurchase Agreements.” The amendments in this ASU remove from the assessment of effective control (1) the criterion requiring the transferor to have the ability to repurchase or redeem the financial assets on substantially the agreed terms, even in the event of default by the transferee and (2) the collateral maintenance implementation guidance related to that criterion. The amendments in this ASU became effective during the quarter ended June 30, 2012 and were applied prospectively to transactions or modifications of existing transactions that occurred on or after the effective date. The adoption of the new guidance did not have a material impact on the Company’s consolidated financial statements.

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In May 2011, the FASB issued ASU 2011-04, “Fair Value Measurement (Topic 820) – Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs.” This ASU is the result of joint efforts by the FASB and International Accounting Standards Board (IASB) to develop a single, converged fair value framework on how (not when) to measure fair value and what disclosures to provide about fair value measurements. The ASU is largely consistent with existing fair value measurement principles in U.S. GAAP (Topic 820), with many of the amendments made to eliminate unnecessary wording differences between U.S. GAAP and International Financial Reporting Standards (IFRS). The amendments are effective for interim and annual periods beginning after December 15, 2011 with prospective application. The Company has included the required disclosures in its consolidated financial statements.

In June 2011, the FASB issued ASU 2011-05, “Comprehensive Income (Topic 220) – Presentation of Comprehensive Income.” The objective of this ASU is to improve the comparability, consistency and transparency of financial reporting and to increase the prominence of items reported in other comprehensive income by eliminating the option to present components of other comprehensive income as part of the statement of changes in stockholders’ equity. The amendments require that all non-owner changes in stockholders’ equity be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements. The single statement of comprehensive income should include the components of net income, a total for net income, the components of other comprehensive income, a total for other comprehensive income, and a total for comprehensive income. In the two-statement approach, the first statement should present total net income and its components followed consecutively by a second statement that should present all the components of other comprehensive income, a total for other comprehensive income, and a total for comprehensive income. The amendments do not change the items that must be reported in other comprehensive income, the option for an entity to present components of other comprehensive income either net of related tax effects or before related tax effects, or the calculation or reporting of earnings per share. The amendments in this ASU were applied retrospectively. The amendments are effective for fiscal years and interim periods within those years beginning after December 15, 2011. The Company has included the required Statements of Comprehensive Income using the two-statement approach in its consolidated financial statements.

In September 2011, the FASB issued ASU 2011-08, “Intangible – Goodwill and Other (Topic 350) – Testing Goodwill for Impairment.” The amendments in this ASU permit an entity to first assess qualitative factors related to goodwill to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill test described in Topic 350. The more-likely-than-not threshold is defined as having a likelihood of more than 50 percent. Under the amendments in this ASU, an entity is not required to calculate the fair value of a reporting unit unless the entity determines that it is more likely than not that its fair value is less than its carrying amount. The amendments in this ASU are effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. The adoption of the new guidance did not have a material impact on the Company’s consolidated financial statements.

In December 2011, the FASB issued ASU 2011-11, “Balance Sheet (Topic 210) – Disclosures about Offsetting Assets and Liabilities.” This ASU requires entities to disclose both gross information and net information about both instruments and transactions eligible for offset in the balance sheet and instruments and transactions subject to an agreement similar to a master netting arrangement. An entity is required to apply the amendments for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods. An entity should provide the disclosures required by those amendments retrospectively for all comparative periods presented. The Company does not expect the adoption of ASU 2011-11 to have a material impact on its consolidated financial statements.

In December 2011, the FASB issued ASU 2011-12, “Comprehensive Income (Topic 220) – Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05.” The amendments are being made to allow the Board time to redeliberate whether to present on the face of the financial statements the effects of reclassifications out of accumulated other comprehensive income on the components of net income and other comprehensive income for all periods presented. While the Board is considering the operational concerns about the presentation requirements for reclassification adjustments and the needs of financial

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statement users for additional information about reclassification adjustments, entities should continue to report reclassifications out of accumulated other comprehensive income consistent with the presentation requirements in effect before ASU 2011-05. All other requirements in ASU 2011-05 are not affected by ASU 2011-12, including the requirement to report comprehensive income either in a single continuous financial statement or in two separate but consecutive financial statements. Public entities should apply these requirements for fiscal years, and interim periods within those years, beginning after December 15, 2011. The Company has included the required disclosures in its consolidated financial statements.

9. GOODWILL AND INTANGIBLE ASSETS

The Company follows ASC 350, Goodwill and Other Intangible Assets, in accounting for goodwill and intangible assets subsequent to initial recognition. The provisions of this section discontinued the amortization of goodwill and intangible assets with indefinite lives but require an impairment review at least annually and more frequently if certain impairment indicators are evident. Based on the annual testing during the second quarter of each year and the absence of impairment indicators during the quarter ended June 30, 2012, the Company has recorded no impairment charges to date for goodwill or intangible assets.

Core deposit intangible assets are being amortized over the period of expected benefit, which ranges from 4 to 14 years. The acquired trademark intangible is included as a component of other assets in the consolidated balance sheet.

Information concerning goodwill and intangible assets is presented in the following table (in thousands):

	Gross Carrying Value		Accumulated Amortization		Net Carrying Value
June 30, 2012
Amortizable core deposit intangibles	$	46,615	$	28,437	$	18,178
Unamortizable goodwill		59,742		342		59,400
Trademark intangible		1,200		967		233
December 31, 2011
Amortizable core deposit intangibles	$	46,615	$	25,901	$	20,714
Unamortizable goodwill		59,742		342		59,400
Trademark intangible		1,200		767		433
June 30, 2011
Amortizable core deposit intangibles	$	46,615	$	22,957	$	23,658
Unamortizable goodwill		59,742		342		59,400
Trademark intangible		1,200		567		633

Amortization expense of the core deposit intangibles for the three and six month periods ended June 30, 2012 totaled $1.2 million and $2.5 million, respectively, compared to $1.6 million and $3.2 million, respectively in 2011. The Harrisonburg branch core deposit intangible of $9,500 was expensed in the second quarter of 2011. Amortization expense of the trademark intangibles for the three and six month periods ended June 30, 2012 and 2011 was both $100,000 and $200,000, respectively.

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As of June 30, 2012, the estimated remaining amortization expense of core deposit and trademark intangibles for each of the five succeeding fiscal years is as follows (dollars in thousands):

2013	$	4,589
2014		3,349
2015		2,645
2016		2,184
2017		1,635
Thereafter		4,009
	$	18,411

10. COMMITMENTS AND CONTINGENCIES

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 payments of fees. Because many of the commitments may expire without being completely drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company evaluates each customer’s creditworthiness on a case by case basis. At June 30, 2012 and 2011 and at December 31, 2011, the Company had outstanding loan commitments approximating $829.1 million, $773.3 million, and $720.3 million, respectively.

Letters of credit written are conditional commitments issued by the Company to guarantee the performance of customers to third parties. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loans to customers. The amount of standby letters of credit whose contract amounts represent credit risk totaled approximately $48.0 million and $39.7 million at June 30, 2012 and 2011, and $38.1 million at December 31, 2011, respectively.

At June 30, 2012, Union Mortgage Group, Inc. (“Union Mortgage”), a wholly owned subsidiary of Union First Market Bank, a wholly owned subsidiary of Union First Market Bankshares Corporation, had rate lock commitments to originate mortgage loans amounting to $161.3 million and loans held for sale of $100.1 million compared to $109.9 million and $50.4 million at June 30, 2011. At December 31, 2011, Union Mortgage had rate lock commitments to originate mortgage loans amounting to $45.8 million and loans held for sale of $74.8 million. Union Mortgage has entered into corresponding agreements on a best-efforts basis to sell loans on a servicing released basis totaling approximately $261.4 million. These commitments to sell loans are designed to mitigate the mortgage company’s exposure to fluctuations in interest rates in connection with rate lock commitments and loans held for sale.

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11. SECURITIES

The amortized cost, gross unrealized gains and losses, and estimated fair values of investment securities as of June 30, 2012 and December 31, 2011 are summarized as follows (dollars in thousands):

	Amortized		Gross Unrealized					Estimated Fair
	Cost		Gains		(Losses)			Value
June 30, 2012
U.S. government and agency securities	$	3,264	$	312	$	—		$	3,576
Obligations of states and political subdivisions		194,203		13,781		(202	)		207,782
Corporate and other bonds		9,503		308		(420	)		9,391
Mortgage-backed securities		393,954		9,838		(281	)		403,511
Other securities		3,183		100		—			3,283
Total securities	$	604,107	$	24,339	$	(903	)	$	627,543
December 31, 2011
U.S. government and agency securities	$	3,933	$	351	$	—		$	4,284
Obligations of states and political subdivisions		189,117		11,337		(247	)		200,207
Corporate and other bonds		12,839		188		(787	)		12,240
Mortgage-backed securities		390,329		10,434		(445	)		400,318
Other securities		3,044		77		(4	)		3,117
Total securities	$	599,262	$	22,387	$	(1,483	)	$	620,166

Due to restrictions placed upon the Company’s common stock investment in the Federal Reserve Bank of Richmond and Federal Home Loan Bank of Atlanta (“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. The FHLB requires the Bank to maintain stock in an amount equal to 4.5% of outstanding borrowings and a specific percentage of the member’s total assets. The Federal Reserve Bank of Richmond requires the Company to maintain stock with a par value equal to 6% of its outstanding capital. Restricted equity securities consist of Federal Reserve Bank stock in the amount of $6.8 million and $6.7 million and FHLB stock in the amount of $12.5 million and $13.9 million as of June 30, 2012 and December 31, 2011.

The following table shows the gross unrealized losses and fair value (in thousands) of the Company’s 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 and are as follows:

	Less than 12 months					More than 12 months					Total
	Fair value		Unrealized Losses			Fair value		Unrealized Losses			Fair value		Unrealized Losses
June 30, 2012
Obligations of states and political subdivisions	$	10,060	$	(132	)	$	1,484	$	(70	)	$	11,544	$	(202	)
Mortgage-backed securities		60,822		(281	)		—		—			60,822		(281	)
Corporate bonds and other securities		100		—			1,447		(420	)		1,547		(420	)
Totals	$	70,982	$	(413	)	$	2,931	$	(490	)	$	73,913	$	(903	)
December 31, 2011
Obligations of states and political subdivisions	$	5,429	$	(152	)	$	1,090	$	(95	)	$	6,519	$	(247	)
Mortgage-backed securities		97,203		(445	)		—		—			97,203		(445	)
Corporate bonds and other securities		2,342		(165	)		3,790		(626	)		6,132		(791	)
Totals	$	104,974	$	(762	)	$	4,880	$	(721	)	$	109,854	$	(1,483	)

As of June 30, 2012, there were $2.9 million, or 6 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 $490,000 and consisted of corporate and municipal obligations.

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The following table presents the amortized cost and estimated fair value of securities as of June 30, 2012, 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.

	June 30, 2012				December 31, 2011
	Amortized		Estimated		Amortized		Estimated
	Cost		Fair Value		Cost		Fair Value
Due in one year or less	$	5,611	$	5,683	$	6,046	$	6,098
Due after one year through five years		17,735		18,498		18,771		19,408
Due after five years through ten years		70,786		75,127		76,044		80,214
Due after ten years		506,792		524,952		495,357		511,329
Other securities		3,183		3,283		3,044		3,117
Total securities available for sale	$	604,107	$	627,543	$	599,262	$	620,166

Securities with an amortized cost of $171.3 million and $172.1 million as of June 30, 2012 and December 31, 2011, respectively, were pledged to secure public deposits, repurchase agreements and for other purposes.

During each quarter the Company conducts an assessment of the securities portfolio for other-than-temporary impairment (“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 OTTI if any of the following conditions exists: 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 June 30, 2012, and in accordance with the guidance, no OTTI was recognized.

Based on the assessment for the quarter ended September 30, 2011 and in accordance with the guidance, the Company determined that a single issuer Trust Preferred security incurred credit-related OTTI of $400,000, which was recognized in earnings for the quarter ended September 30, 2011. There is a possibility that the Company will sell the security before recovering all unamortized costs. The significant inputs the Company considered in determining the amount of the credit loss are as follows:

• The assessment of security credit rating agencies and research performed by third parties;

• The continued interest payment deferral by the issuer;

• The lack of improving asset quality of the issuer and worsening economic conditions; and

• The security is thinly traded and trading at its historical low, below par.

OTTI recognized for the periods presented is summarized as follow (dollars in thousands):

	OTTI Losses
Cumulative credit losses on investment securities, through December 31, 2011	$	400
Cumulative credit losses on investment securities		—
Additions for credit losses not previously regognized		—
Cumulative credit losses on investment securities, through June 30, 2012	$	400

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12. FAIR VALUE MEASUREMENTS

The Company follows ASC 820 Fair Value Measurements and Disclosures (“ASC 820”) to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. This section 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.

Interest rate swap agreement used for interest rate risk management

Interest rate swaps are recorded at fair value on a recurring basis. The Company utilizes an interest rate swap agreement as part of the management of interest rate risk to modify the repricing 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 interest rate swaps using standard swap valuation techniques and therefore classifies such valuations as Level 2. Third party valuations are validated by the Company using Bloomberg’s derivative pricing functions. The Company has considered counterparty credit risk in the valuation of its interest rate swap assets and has considered its own credit risk in the valuation of its interest rate swap liabilities.

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 modes, vast descriptive terms and conditions databases, as well as extensive quality control programs.

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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 our validation as of June 30, 2012 and December 31, 2011.

The carrying value of restricted Federal Reserve Bank of Richmond 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 June 30, 2012 and December 31, 2011 (dollars in thousands):

	Fair Value Measurements at June 30, 2012 using
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	Level 1		Level 2		Level 3		Balance
ASSETS
Interest rate swap—loans	$	—	$	34	$	—	$	34
Securities available for sale:
U.S. government and agency securities		—		3,576		—		3,576
Obligations of states and political subdivisions		—		207,782		—		207,782
Corporate and other bonds		—		9,391		—		9,391
Mortgage-backed securities		—		403,511		—		403,511
Other securities		—		3,283		—		3,283
LIABILITIES
Interest rate swap—loans	$	—	$	34	$	—	$	34
Cash flow hedge—trust		—		4,582		—		4,582

	Fair Value Measurements at December 31, 2011 using
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	Level 1		Level 2		Level 3		Balance
ASSETS
Interest rate swap—loans	$	—	$	66	$	—	$	66
Securities available for sale:
U.S. government and agency securities		—		4,284		—		4,284
Obligations of states and political subdivisions		—		200,207		—		200,207
Corporate and other bonds		—		12,240		—		12,240
Mortgage-backed securities		—		400,318		—		400,318
Other securities		—		3,117		—		3,117
LIABILITIES
Interest rate swap—loans	$	—	$	66	$	—	$	66
Cash flow hedge—trust		—		4,293		—		4,293

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Certain assets are measured at fair value on a nonrecurring basis in accordance with 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. 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. No nonrecurring fair value adjustments were recorded on loans held for sale during June 30, 2012 and December 31, 2011. Gains and losses on the sale of loans are recorded within income from the mortgage segment on the 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 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, of one year or less, conducted by an independent, licensed appraiser using observable market data (Level 2). However, if the collateral is a house or building in the process of construction or if an appraisal of the property is more than one year old and not solely based on observable market comparables or management determines the fair value of the collateral is further impaired below the appraised value, then a Level 3 valuation is considered to measure the fair value. 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). 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 Consolidated Statements of Income.

Other real estate owned

Fair values of other real estate owned (“OREO”) are carried at the lower of carrying value or 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 the fair value of the collateral is based on an observable market price or a current appraised value, the Company records the foreclosed asset as Level 2 valuation. 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 June 30, 2012 and December 31, 2011 were $0 and $707,000, respectively.

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The following table summarizes the Company’s financial assets that were measured at fair value on a nonrecurring basis at June 30, 2012 and December 31, 2011 (dollars in thousands):

	Fair Value Measurements at June 30, 2012 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	$	—	$	100,066	$	—	$	100,066
Impaired loans		—		—		47,075		47,075
Other real estate owned		—		—		35,802		35,802

	Fair Value Measurements at December 31, 2011 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	$	—	$	74,823	$	—	$	74,823
Impaired loans		—		—		63,423		63,423
Other real estate owned		—		—		32,263		32,263

The changes in Level 3 assets measured at estimated fair value on a nonrecurring basis during the six months ended June 30, 2012 were as follows:

	Fair Value Measurements at June 30, 2012
	Impaired Loans			Other Real Estate Owned
Balance—January 1, 2012	$	63,423		$	32,263
Total gains (losses) realized/unrealized:
Included in earnings		—			(206	)
Additions		19,388			10,822
Sales		—			(7,077	)
Net Payments and Upgrades		(35,736	)		—
Balance—June 30, 2012	$	47,075		$	35,802

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The following table displays quantitative information about Level 3 Fair Value Measurements for June 30, 2012 (dollars in thousands):

	Fair Value Measurements at June 30, 2012
	Fair Value		Valuation Technique(s)	Unobservable Inputs	Weighted Average
ASSETS
Commercial Construction	$	12,021	Market comparables	Discount applied to market comparables (1)		15	%
Commercial Real Estate—Owner Occupied		4,780	Market comparables	Discount applied to market comparables (1)		9	%
Commercial Real Estate—Non-Owner Occupied		8,118	Market comparables	Discount applied to market comparables (1)		0	%
Raw Land and Lots		9,085	Market comparables	Discount applied to market comparables (1)		29	%
Single Family Investment Real Estate		4,076	Market comparables	Discount applied to market comparables (1)		7	%
Commercial and Industrial		8,062	Market comparables	Discount applied to market comparables (1)		9	%
Other (2)		933	Market comparables	Discount applied to market comparables (1)		15	%
Total Impaired Loans		47,075
Other real estate owned		35,802	Market comparables	Discount applied to market comparables (1)		31	%
Total	$	82,877

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

⁽²⁾  The “Other” category of the impaired loans section from the table above consists of Mortgage, Consumer Construction, HELOCs, and Other Consumer.

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.

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 (Level 2). 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.

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 deposits is estimated by discounting the future cash flows using the rates currently offered for deposits of similar remaining maturities (Level 2).

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 (Level 2). 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 (Level 2).

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 June 30, 2012 and December 31, 2011, the fair value of loan commitments and standby letters of credit was immaterial.

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The carrying values and estimated fair values of the Company’s financial instruments as of June 30, 2012 and December 31, 2011 are as follows (dollars in thousands):

			Fair Value Measurements at June 30, 2012 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	$	72,384	$	72,384	$	—	$	—	$	72,384
Securities available for sale		627,543		—		627,543		—		627,543
Restricted stock		19,291		—		19,291		—		19,291
Loans held for sale		100,066		—		100,066		—		100,066
Net loans		2,846,805		—		2,807,105		47,075		2,854,180
Interest rate swap—loans		34		—		34		—		34
Accrued interest receivable		16,947		—		16,947		—		16,947
LIABILITIES
Deposits	$	3,218,986	$	—	$	3,233,300	$	—	$	3,233,300
Borrowings		291,329		—		290,084		—		290,084
Accrued interest payable		911		—		911		—		911
Cash flow hedge—trust		4,582		—		4,582		—		4,582
Interest rate swap—loans		34		—		34		—		34

			Fair Value Measurements at December 31, 2011 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	$	96,659	$	96,659	$	—	$	—	$	96,659
Securities available for sale		620,166		—		620,166		—		620,166
Restricted stock		20,661		—		20,661		—		20,661
Loans held for sale		74,823		—		74,823		—		74,823
Net loans		2,779,113		—		2,731,491		63,423		2,794,914
Interest rate swap—loans		66		—		66		—		66
Accrued interest receivable		16,626		—		16,626		—		16,626
LIABILITIES
Deposits	$	3,175,105	$	—	$	3,191,256	$	—	$	3,191,256
Borrowings		278,686		—		277,374		—		277,374
Accrued interest payable		1,865		—		1,865		—		1,865
Cash flow hedge—trust		4,293		—		4,293		—		4,293
Interest rate swap—loans		66		—		66		—		66

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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13. DERIVATIVES

During the second quarter of 2010, the Company entered into an interest rate swap agreement (the “trust swap”) as part of the management of interest rate risk. The Company designated the trust swap as a cash flow hedge intended to protect against the variability of cash flows associated with the aforementioned Statutory Trust II preferred capital securities. The trust swap hedges the interest rate risk, wherein the Company receives interest of LIBOR from a counterparty and pays a fixed rate of 3.51% to the same counterparty calculated on a notional amount of $36.0 million. The term of the trust swap is six years with a fixed rate that started June 15, 2011. The trust swap was entered into with a counterparty that met the Company’s credit standards and the agreement contains collateral provisions protecting the at-risk party. The Company believes that the credit risk inherent in the contract is not significant.

Amounts receivable or payable are recognized as accrued under the terms of the agreements. In accordance with ASC 815 Derivatives and Hedging, the trust swap is designated as a cash flow hedge, with the effective portion of the derivative’s unrealized gain or loss recorded as a component of other comprehensive income. The ineffective portion of the unrealized gain or loss, if any, would be recorded in other expense. The Company has assessed the effectiveness of the hedging relationship by comparing the changes in cash flows on the designated hedged item. There was no hedge ineffectiveness for this trust swap. At June 30, 2012, the fair value of the trust swap agreement was an unrealized loss of $4.6 million, the amount the Company would have expected to pay if the contract was terminated. The below liability is recorded as a component of other comprehensive income recorded in the Company’s Consolidated Statements of Comprehensive Income.

Shown below is a summary of the derivative designated as a cash flow hedge at June 30, 2012 and December 31, 2011 (dollars in thousands):

			Notional						Receive			Pay			Life
	Positions		Amount		Asset		Liability		Rate			Rate			(Years)
As of June 30, 2012
Pay fixed—receive floating interest rate swaps		1	$	36,000	$	—	$	4,582		0.46	%		3.51	%		4.96

			Notional						Receive			Pay			Life
	Positions		Amount		Asset		Liability		Rate			Rate			(Years)
As of December 31, 2011
Pay fixed—receive floating interest rate swaps		1	$	36,000	$	—	$	4,293		0.58	%		3.51	%		5.46

The Company also acquired two interest rate swap loan relationships (“loan swaps”) as a result of the acquisition of FMB. Upon entering into loan swaps with borrowers to meet their financing needs, offsetting positions with counterparties were entered into in order to minimize interest rate risk. These back-to-back loan swaps qualify as financial derivatives with fair values reported in other assets and other liabilities. As of January 1, 2012, one of the two swaps matured. Shown below is a summary regarding loan swap derivative activities at June 30, 2012 and December 31, 2011 (dollars in thousands):

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	Positions		Notional Amount		Asset		Liability		Receive Rate			Pay Rate			Life (Years)
As of June 30, 2012
Receive fixed—pay floating interest rate swaps		1	$	1,401	$	34	$	—		7.00	%		2.75	%		0.50
Pay fixed—receive floating interest rate swaps		1	$	1,401	$	—	$	34		2.75	%		7.00	%		0.50

	Positions		Notional Amount		Asset		Liability		Receive Rate			Pay Rate			Life (Years)
As of December 31, 2011
Receive fixed—pay floating interest rate swaps		2	$	4,028	$	66	$	—		6.35	%		2.77	%		1.01
Pay fixed—receive floating interest rate swaps		2	$	4,028	$	—	$	66		2.77	%		6.35	%		1.01

14. OTHER OPERATING EXPENSES

The following table presents the consolidated statement of income line “Other Operating Expenses” broken into greater detail for the three and six months ended June 30, 2012 and 2011, respectively (dollars in thousands):

	Three Months Ended June 30				Six Months Ended June 30
	2012		2011		2012		2011
Printing, Postage, & Supplies	$	620	$	556	$	1,206	$	1,095
Communications Expense		737		725		1,463		1,462
Technology & Data Processing		2,234		2,471		4,377		4,750
Professional services		1,177		1,449		2,325		2,512
Marketing & advertising expense		1,422		1,331		2,890		2,495
FDIC assessment premiums and other insurance		661		1,393		1,319		3,144
Other taxes		758		705		1,516		1,410
Loan Related Expenses		884		535		1,583		965
Foreclosed Property Expenses		425		967		716		1,426
Amortization of core deposit premuims		1,325		1,623		2,735		3,378
Acquistion & Conversion Costs		—		204		—		498
Other expenses		2,143		1,986		3,948		3,507
Total other operating expenses	$	12,386	$	13,945	$	24,078	$	26,642

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders

Union First Market Bankshares Corporation

Richmond, Virginia

We have reviewed the accompanying condensed consolidated balance sheet of Union First Market Bankshares Corporation and subsidiaries as of June 30, 2012 and 2011, and the related condensed consolidated statements of income, comprehensive income, changes in stockholders’ equity and cash flows for the three-month period ended June 30, 2012 and 2011. These condensed financial statements are the responsibility of the Company’s management.

We conducted our reviews 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 to financial data 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, 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 reviews, we are not aware of any material modifications that should be made to the condensed financial statements referred to above for them to be in conformity with U.S. generally accepted accounting principles.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board, the consolidated balance sheet of Union First Market Bankshares Corporation and subsidiaries as of December 31, 2011, and the related consolidated statements of income, changes in stockholders’ equity and cash flows for the year then ended (not presented herein); and in our report dated March 14, 2012, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, 2011 is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

Winchester, Virginia

May 9, 2012

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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 First Market 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, 2011. 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 six month periods ended June 30, 2012 and 2011 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 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, changes in the 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 and its subsidiaries are in accordance with accounting principles generally accepted in the United States of America (“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 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, 2011.

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

Allowance for Loan Losses (“ALL”)

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 potential 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 recognize additions 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 internal audit group (or, prior to March 1, 2012, its credit administration 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, and this risk rating scale is our 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 GAAP and loss factors used appropriately reflect the risk characteristics of the loan portfolio.

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

Specific Reserve Component—The specific component relates to commercial loans that are classified as impaired. 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 an allowance is established when the discounted cash flows of the impaired loan is lower than the carrying value of that loan for loans not considered to be collateral dependent. The significant majority of the Company’s impaired loans are collateral dependent. 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. 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 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 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 appraisal date. Any adjustments from 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

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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.

General Reserve Component—The general 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

Unallocated Component—This component may be used to cover uncertainties that could affect management’s estimate of probable losses. The unallocated component of the allowance reflects the margin of imprecision inherent in the underlying assumptions used in the methodologies for estimating specific and general losses in the portfolio. Together, the specific, general, and any unallocated allowance for loan loss represents management’s estimate of losses inherent in the current loan portfolio. Though provisions for loan losses may be based on specific loans, the entire allowance for loan losses is available for any loan management deems necessary to charge-off. At June 30, 2012, there were no material amounts considered unallocated as part of the allowance for loan losses.

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 impairment 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.

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The Company applies payments received on impaired loans to principal and interest based on the contractual terms until they are placed on nonaccrual status at which time all payments received are applied to reduce the principal balance and recognition of interest income is terminated as previously discussed.

Mergers and Acquisitions

The Company accounts for its business combinations under the acquisition method of accounting, a cost allocation process which requires the cost of an acquisition to be allocated to the individual assets acquired and liabilities assumed based on their estimated fair values. 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. Costs that the Company expects, but is not obligated to incur in the future, to affect its plan to exit an activity of an acquiree or to terminate the employment of or relocate an acquiree’s employees are not liabilities at the acquisition date. The Company will not recognize these costs as part of applying the acquisition method. Instead, the Company will recognize these costs in its post-combination financial statements in accordance with other applicable accounting guidance.

Acquisition-related costs are 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 for 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 accounting guidance. These acquisition-related costs are included within the Consolidated Statements of Income classified within the noninterest expense caption.

NewBridge Bank branch acquisition

On May 20, 2011, the Company completed the purchase of the former NewBridge Bank branch in Harrisonburg, Virginia, assets and liabilities relating to the branch business, and a potential branch site in Waynesboro, Virginia. Under the parties’ agreement, the Company purchased loans of $72.5 million and assumed deposit liabilities of $48.9 million, and purchased the related fixed assets of the branch. The Company operates the acquired bank branch under the name Union First Market Bank (the “Harrisonburg branch”). The Company’s condensed consolidated statements of income include the results of operations of the Harrisonburg branch from the closing date of the acquisition.

In connection with the acquisition, the Company recorded $1.8 million of goodwill and $9,500 of core deposit intangible. The core deposit intangible of $9,500 was expensed at acquisition. The recorded goodwill was allocated to the community banking segment of the Company and is deductible for tax purposes.

The Company acquired the $72.5 million loan portfolio at a fair value discount of $1.7 million. The discount represents expected credit losses, adjustments to market interest rates and liquidity adjustments. The performing loan portfolio fair value estimate was $70.5 million and the impaired loan portfolio fair value estimate was $276,000. The estimated fair value of liabilities assumed was based on the discounted value of contractual cash flows and compared to other securities with similar characteristics and remaining maturities. Specifically, First Market Bank’s Federal Home Loan Bank of Atlanta (“FHLB”) advances, subordinated debt and certificates of deposit were assumed at a net premium.

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First Market Bank acquisition

On February 1, 2010, the Company completed its acquisition of First Market Bank, FSB (“First Market Bank” or “FMB”) in an all stock transaction. FMB’s common shareholders received 6,273.259 shares of the Company’s common stock in exchange for each share of FMB’s common stock, resulting in the Company issuing 6,701,478 common shares. The Series A preferred shareholder of FMB received 775,795 shares of the Company’s common stock in exchange for all shares of the Series A preferred stock. In connection with the transaction the Company issued a total of 7,477,273 common shares with an acquisition date fair value of $96.1 million. The Series B and Series C preferred shareholder of FMB received 35,595 shares of the Company’s Series B preferred stock in exchange for all shares of the FMB Series B and Series C preferred stock.

The FMB transaction was accounted for using the acquisition method of accounting and, accordingly, assets acquired, liabilities assumed and consideration exchanged were recorded at estimated fair values on the acquisition date. Assets acquired totaled $1.4 billion, including $981.5 million in net loans and $218.7 million in investment securities. Liabilities assumed were $1.3 billion, including $1.2 billion of deposits. In connection with the acquisition, the Company recorded $1.1 million of goodwill and $26.4 million of core deposit intangible. The core deposit intangible is being amortized over an average of 4.3 years using an accelerated method. In addition, the Company recorded $1.2 million related to a trademark intangible. This is being amortized over a three year time period. Based on the annual testing during the second quarter of each year and the absence of impairment indicators during the quarter ended June 30, 2012, the Company has recorded no impairment charges to date for goodwill or intangible assets.

In many cases, determining the estimated fair value of the acquired assets and assumed liabilities required the Company to estimate cash flows expected to result from those assets and liabilities and to discount those cash flows at appropriate rates of interest. The most significant of these determinations related to the fair valuation of acquired loans. For such loans, the excess of cash flows expected at acquisition over the estimated fair value is recognized as interest income over the remaining lives of the loans. The difference between contractually required payments at acquisition and the cash flows expected to be collected at acquisition reflects the impact of estimated credit losses and other factors, such as prepayments. In accordance with GAAP, there was no carryover of FMB’s or the Harrisonburg branch’s previously established allowance for loan losses. Subsequent decreases in the expected cash flows (credit deterioration) will require the Company to evaluate the need for additions to the Company’s allowance for credit losses. Subsequent improvements in expected cash flows will result in the recognition of additional interest income over the then remaining lives of the loans.

ABOUT UNION FIRST MARKET BANKSHARES CORPORATION

Headquartered in Richmond, Virginia, Union First Market Bankshares Corporation is the holding company for Union First Market Bank, which has 94 branches and more than 150 ATMs throughout Virginia. 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. Union First Market Bank also owns a non-controlling interest in Johnson Mortgage Company, LLC.

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 this report. Shares of the Company’s common stock are traded on the NASDAQ Global Select Market under the symbol UBSH.

RESULTS OF OPERATIONS

Net Income

The Company reported net income of $8.4 million, a 23.5% increase when compared to a year ago, and earnings per share of $0.32 for its second quarter ended June 30, 2012. The quarterly results represent an increase of $497,000 in net income, or an increase of $0.01 earnings per share from the most recent quarter, and an increase of $1.6 million in net income or $0.08 in earnings per share from the quarter ended June 30, 2011. Net income available to common shareholders was $8.4 million, compared to $6.3 million for the prior year’s second quarter which included preferred dividends and discount accretion on preferred stock of $527,000.

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Second quarter net income increased $497,000, or 6.3%, compared to the first quarter. The increase was largely a result of gains on sales of mortgage loans and increased income from service charges, fees, and brokerage commission income partially offset by an increase in mortgage commission expense, other real estate owned (“OREO”) expenses on foreclosed properties, employee training costs, and occupancy costs. In addition, the Company recorded $500,000 less in its provision for loan losses than the prior quarter. Also during the quarter, interest income declined at a faster pace than interest expense, a result of lower yields on loan and investment opportunities in the current low rate environment.

Net income for the quarter ended June 30, 2012 increased $1.6 million, or 23.5%, from the same quarter in the prior year. The increase was principally a result of higher gains on sales of loans in the mortgage segment and a lower provision for loan losses, partially offset by an increase in commission expense related to loan origination volume, lower gains on sales of bank property and an increase in account service charge income and fees. Also during the quarter, interest income declined at a faster pace than interest expense, a result of lower yields on loan and investment opportunities in the current low rate environment.

NET INTEREST INCOME

On a linked quarter basis, tax-equivalent net interest income was $39.1 million, a decrease of $266,000, or 0.7%, from the first quarter of 2012. This decrease was principally due to lower yields on average interest-earning assets outpacing lower costs of interest-bearing liabilities. Second quarter tax-equivalent net interest margin decreased to 4.36% from 4.44% in the most recent quarter. The change in net interest margin was principally attributable to the continued decline in net accretion on the acquired net earning assets (5 bps) and to a decrease in investment and loan yields outpacing lower cost of interest-bearing liabilities (3 bps). Loan yields continue to be affected negatively by competitive pricing and a low rate environment while yields on investment securities were impacted by lower reinvestment rates and faster prepayments related to mortgage-backed securities during the quarter. The cost of interest-bearing deposits was affected positively by a shift in mix from time deposits (CDs) to transaction deposits.

The following table shows average interest-earning assets, interest-bearing liabilities, the related income/expense and change for the periods shown:

	Linked quarter results Dollars in thousands Three Months Ended
	06/30/12			03/31/12			Change
Average interest-earning assets	$	3,615,718		$	3,578,513		$	37,206
Interest income	$	46,340		$	46,919		$	(578	)
Yield on interest-earning assets		5.15	%		5.27	%	$	(12	)bps
Average interest-bearing liabilities	$	2,910,987		$	2,908,822		$	2,165
Interest expense	$	7,215		$	7,528		$	(313	)
Cost of interest-bearing liabilities		1.00	%		1.04	%	$	(4	)bps

For the three months ended June 30, 2012, tax-equivalent net interest income decreased $1.6 million, or 3.9%, when compared to the same period last year. The tax-equivalent net interest margin decreased to 4.36% from 4.68% in the prior year. This decrease was principally due to the continued decline in accretion on the acquired net earning assets (10 bps) and a decline in income from interest-earning assets outpacing lower costs on interest-bearing liabilities (22 bps). Lower interest-earning asset income was principally due to lower yields on loans and investment securities as new loans are originated at lower rates and cash flows from securities investments and loans are reinvested at lower yields.

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The Company continues to expect that its net interest margin will decline slightly over the next several quarters as decreases in earning asset yields are expected to outpace declines in costs of interest-bearing liabilities.

The following table shows average interest-earning assets, interest-bearing liabilities, the related income/expense and change for the periods shown:

				Year-over-year results
				Dollars in thousands
	Three Months Ended
	06/30/12			06/30/11			Change
Average interest-earning assets	$	3,615,718		$	3,486,949		$	128,769
Interest income	$	46,340		$	48,848		$	(2,508	)
Yield on interest-earning assets		5.15	%		5.62	%		(47	)bps
Average interest-bearing liabilities	$	2,910,987		$	2,861,567		$	49,420
Interest expense	$	7,215		$	8,133		$	(918	)
Cost of interest-bearing liabilities		1.00	%		1.14	%		(14	)bps

For the six months ended June 30, 2012, tax-equivalent net interest income decreased $2.1 million, or 2.6%, when compared to the same period last year. The tax-equivalent net interest margin decreased 29 basis points to 4.39% from 4.68% in the prior year. The decline in the net interest margin was principally due to the continued decline in accretion on the acquired net earning assets (8 bps) and a decline in income from interest-earning assets outpacing lower costs on interest-bearing liabilities (21 bps). Lower interest-earning asset income was principally due to lower yields on loans and investment securities as new loans are originated at lower rates and cash flows from securities investments and loans are reinvested at lower yields.

				Year-over-year results
				Dollars in thousands
	Six Months Ended
	06/30/12			06/30/11			Change
Average interest-earning assets	$	3,597,115		$	3,473,467		$	123,648
Interest income	$	93,259		$	97,339		$	(4,080	)
Yield on interest-earning assets		5.21	%		5.65	%		(44	)bps
Average interest-bearing liabilities	$	2,909,904		$	2,859,995		$	49,909
Interest expense	$	14,744		$	16,725		$	(1,981	)
Cost of interest-bearing liabilities		1.02	%		1.18	%		(16	)bps

Acquisition Activity – Net Interest Margin

The favorable impact of acquisition accounting fair value adjustments on net interest income was $951,000 ($787,000 – FMB; $164,000 – Harrisonburg branch) and $2.3 million ($1.9 million – FMB; $378,000 – branch) for the three and six months ended June 30, 2012, respectively. If not for this favorable impact, the net interest margin for the second quarter would have been 4.25%, compared to 4.28% from the first quarter of 2012 and 4.47% from the second quarter of 2011.

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The acquired loan portfolios of the Harrisonburg branch and FMB were marked-to-market with a fair value discount to market rates. Performing loan discount accretion is recognized as interest income over the estimated remaining life of the loans. For the FMB acquisition, the acquired investment security portfolios were marked-to-market with a fair value discount to market rates. The Company also assumed borrowings (FHLB) and subordinated debt. These liabilities were marked-to-market with estimates of fair value on acquisition date. The resulting discount/premium to market is accreted/amortized as an increase/decrease to net interest income over the estimated lives of the liabilities. Additional credit quality deterioration above the original credit mark is recorded as additional provisions for loan losses. The Company also assumed certificates of deposit at a premium to market. These were marked-to-market with estimates of fair value on acquisition date. The resulting premium to market is being amortized as a decrease to interest expense over the estimated lives of the certificates of deposit.

The second quarter and remaining estimated discount/premium are reflected in the following table (dollars in thousands):

	Harrisonburg Branch				First Market Bank
	Loan Accretion		Certificates of Deposit		Loan Accretion		Investment Securities		Borrowings			Certificates of Deposit		Total
For the quarter ended June 30, 2012	$	160	$	3	$	755	$	46	$	(122	)	$	108	$	950
For the remaining six months of 2012		217		5		1,355		93		(245	)		—		1,425
For the years ending:
2013		148		7		2,142		15		(489	)		—		1,823
2014		37		4		1,511		—		(489	)		—		1,063
2015		26		—		903		—		(489	)		—		440
2016		27		—		345		—		(163	)		—		209
2017		23		—		18		—		—			—		41
Thereafter		120		—		—		—		—			—		120

Acquisition Activity – Other Operating Expenses

Acquisition related expenses associated with the acquisition of the Harrisonburg branch were $426,000 for the year ended December 31, 2011 and are recorded in “Other operating expenses” in the Company’s condensed consolidated statements of income. Such costs principally included system conversion and operations integration charges that have been expensed as incurred. There were no acquisition related expenses related to the Harrisonburg branch in 2012. The Company expects no further expenses from the Harrisonburg branch acquisition.

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

	For the Three Months Ended June 30,
	2012								2011								2010
	Average Balance			Interest Income / Expense		Yield / Rate (1)			Average Balance			Interest Income / Expense		Yield / Rate (1)			Average Balance			Interest Income / Expense		Yield / Rate (1)
	(Dollars in thousands)
Assets:
Securities:
Taxable	$	473,158		$	3,185		2.71	%	$	419,747		$	3,627		3.47	%	$	408,964		$	3,503		3.44	%
Tax-exempt		175,963			2,752		6.29	%		166,660			2,722		6.55	%		139,483			2,356		6.77	%
Total securities (2)		649,121			5,937		3.68	%		586,407			6,349		4.34	%		548,447			5,859		4.28	%
Loans, net (3) (4)		2,847,087			39,734		5.61	%		2,823,186			42,004		5.97	%		2,825,183			43,757		6.21	%
Loans held for sale		73,518			637		3.48	%		42,341			468		4.43	%		59,854			717		4.80	%
Federal funds sold		380			0		0.24	%		165			0		0.22	%		7,666			3		0.19	%
Money market investments		10			—		0.00	%		153			—		0.00	%		208			—		0.00	%
Interest-bearing deposits in other banks		45,602			32		0.28	%		34,697			27		0.32	%		60,696			15		0.10	%
Other interest-bearing deposits		—			—		0.00	%		—			—		0.00	%		344			—		0.00	%
Total earning assets		3,615,718			46,340		5.15	%		3,486,949			48,848		5.62	%		3,502,398			50,351		5.77	%
Allowance for loan losses		(40,635	)							(39,999	)							(34,158	)
Total non-earning assets		367,644								383,836								376,016
Total assets	$	3,942,727							$	3,830,786							$	3,844,256
Liabilities and Stockholders’ Equity:
Interest-bearing deposits:
Checking	$	423,044			116		0.11	%	$	386,107			157		0.16	%	$	360,760			206		0.23	%
Money market savings		903,682			881		0.39	%		840,696			1,465		0.70	%		732,353			1,724		0.94	%
Regular savings		196,700			175		0.36	%		175,869			192		0.44	%		151,657			127		0.34	%
Certificates of deposit: (5)
$100,000 and over		543,271			2,054		1.52	%		569,587			2,217		1.56	%		664,418			3,033		1.83	%
Under $100,000		569,693			1,797		1.27	%		600,754			2,135		1.43	%		673,916			2,747		1.63	%
Total interest-bearing deposits		2,636,390			5,023		0.77	%		2,573,013			6,166		0.96	%		2,583,104			7,837		1.22	%
Other borrowings (6)		274,597			2,192		3.21	%		288,554			1,967		2.73	%		334,502			1,918		2.30	%
Total interest-bearing liabilities		2,910,987			7,215		1.00	%		2,861,567			8,133		1.14	%		2,917,606			9,755		1.34	%
Noninterest-bearing liabilities:
Demand deposits		563,626								504,810								484,478
Other liabilities		36,199								24,050								26,055
Total liabilities		3,510,812								3,390,427								3,428,139
Stockholders’ equity		431,915								440,359								416,117
Total liabilities and stockholders’ equity	$	3,942,727							$	3,830,786							$	3,844,256
Net interest income				$	39,125							$	40,715							$	40,596
Interest rate spread (7)							4.16	%							4.48	%							4.43	%
Interest expense as a percent of average earning assets							0.80	%							0.94	%							1.12	%
Net interest margin (8)							4.36	%							4.68	%							4.65	%

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

(2) Interest income on securities includes $46 thousand in accretion of the fair market value adjustments related to the acquisition of FMB. Remaining estimated accretion for 2012 is $93 thousand.

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

(4) Interest income on loans includes $915 thousand in accretion of the fair market value adjustments related to the acquisitions. Remaining estimated accretion for 2012 is $1.6 million.

(5) Interest expense on certificates of deposits includes $111 thousand in accretion of the fair market value adjustments related to the acquisitions. Remaining estimated accretion for 2012 is $5 thousand.

(6) Interest expense on borrowings includes $122 thousand in amortization of the fair market value adjustments related to the acquisition of FMB. Remaining estimated amortization for 2012 is $245 thousand.

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

(8) Core net interest margin excludes purchase accounting adjustments and was 4.25% for the quarter ending 6/30/12.

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

	For the Six Months Ended June 30,
	2012								2011								2010
	Average Balance			Interest Income / Expense		Yield / Rate (1)			Average Balance			Interest Income / Expense		Yield / Rate (1)			Average Balance			Interest Income / Expense		Yield / Rate (1)
	(Dollars in thousands)
Assets:
Securities:
Taxable	$	471,605		$	6,640		2.83	%	$	416,150		$	7,257		3.52	%	$	393,813		$	7,042		3.61	%
Tax-exempt		174,131			5,503		6.36	%		165,799			5,420		6.59	%		129,597			4,456		6.93	%
Total securities (2)		645,736			12,143		3.78	%		581,949			12,677		4.39	%		523,410			11,498		4.43	%
Loans, net (3) (4)		2,838,484			79,825		5.66	%		2,817,829			83,597		5.98	%		2,671,272			81,907		6.18	%
Loans held for sale		70,712			1,236		3.51	%		48,214			1,032		4.32	%		52,273			1,163		4.48	%
Federal funds sold		397			1		0.24	%		215			0		0.23	%		17,719			15		0.18	%
Money market investments		24			—		0.00	%		157			—		0.00	%		160			—		0.00	%
Interest-bearing deposits in other banks		41,762			54		0.26	%		25,103			33		0.26	%		37,822			23		0.12	%
Other interest-bearing deposits		—			—		0.00	%		—			—		0.00	%		1,465			—		0.00	%
Total earning assets		3,597,115			93,259		5.21	%		3,473,467			97,339		5.65	%		3,304,121			94,606		5.75	%
Allowance for loan losses		(40,328	)							(39,386	)							(32,876	)
Total non-earning assets		366,456								385,355								372,044
Total assets	$	3,923,243							$	3,819,436							$	3,643,289
Liabilities and Stockholders’ Equity:
Interest-bearing deposits:
Checking	$	416,557			247		0.12	%	$	380,463			316		0.17	%	$	332,449			383		0.23	%
Money market savings		901,110			1,878		0.42	%		825,717			2,970		0.73	%		683,493			3,200		0.94	%
Regular savings		191,525			353		0.37	%		168,259			295		0.35	%		149,364			316		0.43	%
Certificates of deposit: (5)
$100,000 and over		549,157			4,164		1.52	%		585,173			4,700		1.62	%		624,153			5,886		1.90	%
Under $100,000		576,375			3,716		1.30	%		610,407			4,570		1.51	%		631,683			5,315		1.70	%
Total interest-bearing deposits		2,634,724			10,358		0.79	%		2,570,019			12,851		1.01	%		2,421,142			15,100		1.26	%
Other borrowings (6)		275,180			4,386		3.21	%		289,976			3,874		2.69	%		349,224			3,813		2.20	%
Total interest-bearing liabilities		2,909,904			14,744		1.02	%		2,859,995			16,725		1.18	%		2,770,366			18,913		1.37	%
Noninterest-bearing liabilities:
Demand deposits		549,109								495,886								443,452
Other liabilities		36,128								27,150								26,477
Total liabilities		3,495,141								3,383,031								3,240,295
Stockholders’ equity		428,102								436,405								402,994
Total liabilities and stockholders’ equity	$	3,923,243							$	3,819,436							$	3,643,289
Net interest income				$	78,515							$	80,614							$	75,693
Interest rate spread (7)							4.19	%							4.47	%							4.38	%
Interest expense as a percent of average earning assets							0.82	%							0.97	%							1.15	%
Net interest margin (8)							4.39	%							4.68	%							4.60	%

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

(2) Interest income on securities includes $108 thousand in accretion of the fair market value adjustments related to the acquisition of FMB. Remaining estimated accretion for 2012 is $93 thousand.

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

(4) Interest income on loans includes $2.2 million in accretion of the fair market value adjustments related to the acquisitions. Remaining estimated accretion for 2012 is $1.6 million.

(5) Interest expense on certificates of deposits includes $228 thousand in accretion of the fair market value adjustments related to the acquisitions. Remaining estimated accretion for 2012 is $5 thousand.

(6) Interest expense on borrowings includes $244 thousand in amortization of the fair market value adjustments related to the acquisition of FMB. Remaining estimated amortization for 2012 is $245 thousand.

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

(8) Core net interest margin excludes purchase accounting adjustments and was 4.26% for the six months ending 6/30/12.

- 46 -

Provision for Loan Losses

The provision for loan losses for the current quarter was $3.0 million, a decrease of $500,000 from the first quarter and of $1.5 million from the same quarter a year ago. The decrease in provision is largely due to reduced charge-offs for the quarter, and to a lesser extent, a stabilizing rate of delinquencies. 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 in assessing the adequacy of the allowance for loan losses.

The allowance for loan losses as a percentage of the total loan portfolio was 1.42% at June 30, 2012, 1.41% at March 31, 2012, and 1.39% at June 30, 2011. The increase in the allowance ratio was attributable to an increase in specific reserves on impaired loans. The allowance for loan losses as a percentage of the total loan portfolio, adjusted for loans acquired in the FMB and Harrisonburg branch acquisitions, was 1.74% at June 30, 2012, a decrease from 1.77% at March 31, 2012 and 1.88% from a year ago. The nonaccrual loan coverage ratio significantly improved, as it increased from 94.84% at March 31, 2012 and from 72.96% the same quarter last year to 104.63% at June 30, 2012. The rise in the coverage ratio, which is at the highest level since the first quarter of 2010, further shows that management’s proactive diligence in working through problem credits is having a positive impact on asset quality.

Noninterest Income

On a linked quarter basis, noninterest income increased $2.6 million, or 21.9%, to $14.4 million from $11.8 million in the first quarter. During the quarter, the Company recorded an increase in gains on sales of mortgage loans of $2.0 million driven by an increase in loan origination volume, a result of additional loan originators hired in the first quarter and historically low interest rates. Service charges on deposit accounts and other account fee income increased $378,000 primarily related to higher interchange income, higher brokerage commissions due to improved market conditions and higher fee-based account balances, higher overdraft and returned check fees and commercial account service charges. Gains on sales of bank property increased $253,000 largely due to a sale of a former branch building. Excluding mortgage segment operations and the impact of bank property sales, noninterest income increased $308,000, or 4.06%.

For the quarter ended June 30, 2012, noninterest income increased $4.4 million, or 44.6%, to $14.4 million from $10.0 million in the prior year’s second quarter. Gains on sales of mortgage loans increased $3.0 million, or 70.0%, due to higher origination volume, a result of additional loan originators hired in the first quarter of 2012 and historically low interest rates. Service charges on deposit accounts and other account fee income increased $351,000, driven by higher interchange fee income, and ATM charges. In addition, gains on sales of bank property increased $986,000. During 2011, the Company recorded a loss on sale of a former branch building for $626,000 versus a current quarter gain of $239,000 on the sale of a former branch building. Excluding the mortgage segment operations and the impact of bank property sales, noninterest income increased $440,000, or 6.7%, from the same period a year ago.

	For the Three Months Ended Dollars in thousands
	06/30/12		03/31/12			$			%			06/30/11			$		%
Noninterest income:
Service charges on deposit accounts	$	2,291	$	2,130			161			7.6	%	$	2,216		$	75		3.4	%
Other service charges, commissions and fees		3,627		3,410			217			6.4	%		3,351			276		8.2	%
Losses (gains) on securities transactions, net		10		(5	)		15			NM			—			10		0.0	%
Gains on sales of loans		7,315		5,296			2,019			38.1	%		4,303			3,012		70.0	%
Losses on sales of other real estate owned and bank premises, net		195		(58	)		253			NM			(791	)		986		NM
Other operating income		972		1,045			(73	)		-7.0	%		884			88		10.0	%
Total noninterest income	$	14,410	$	11,818		$	2,592			21.9	%	$	9,963		$	4,447		44.6	%

NM—Not Meaningful

- 47 -

For the six months ending June 30, 2012, noninterest income increased $5.7 million, or 27.9%, to $26.2 million, from $20.5 million a year ago. Gains on sales of loans in the mortgage segment increased $3.3 million driven by an increase in loan origination volume, a result of additional loan originators hired in the first quarter and historically low interest rates. In addition, gains on sales of bank property and OREO increased $1.2 million, a function of current and prior period transactions. During 2011, the Company sold a former branch building as mentioned above and recorded a loss on the sale of $626,000 and incurred losses on sales of OREO of $461,000. Service charges on deposit accounts and other account fee income increased $909,000 primarily related to higher interchange income, higher overdraft and returned check fees and higher ATM fees. Excluding the mortgage segment operations and the impact of sales of bank property and OREO, noninterest income increased $1.3 million or 10.4%, from the same period a year ago.

	For the Six Months Ended Dollars in thousands
	06/30/12		06/30/11			$		%
Noninterest income:
Service charges on deposit accounts	$	4,421	$	4,274			147		3.4	%
Other service charges, commissions and fees		7,037		6,275			762		12.1	%
Losses (gains) on securities transactions, net		5		(16	)		21		NM
Gains on sales of loans		12,611		9,271			3,340		36.0	%
Losses on sales of other real estate owned and bank premises, net		137		(1,090	)		1,227		NM
Other operating income		2,017		1,796			221		12.3	%
Total noninterest income	$	26,228	$	20,510		$	5,718		27.9	%

NM—Not Meaningful

Noninterest Expense

On a linked quarter basis, noninterest expense increased $2.2 million, or 6.1%, to $37.8 million from $35.6 million when compared to the first quarter. Salaries and benefit expense increased $911,000 primarily due to higher commission expense related to loan origination volume in the mortgage segment. Other operating expenses increased $695,000 largely related to expenses on foreclosed properties, employee training costs, and lower recovery of previously charged off deposit account fees. Occupancy expenses increased $445,000. Excluding the mortgage segment operations, noninterest expense increased $567,000, or 1.9%, compared to the first quarter.

For the quarter ended June 30, 2012, noninterest expense increased $1.9 million, or 5.3%, to $37.8 million from $35.9 million for the second quarter of 2011. Salaries and benefits expenses increased $2.8 million, primarily related to origination volume driven commission expense, additional mortgage support personnel, higher group insurance costs due to additional employees, and severance payments to affected employees. Occupancy expenses increased $424,000. Partially offsetting these expense increases, other operating expenses decreased $1.6 million, with $695,000 related to lower Federal Deposit Insurance Corporation (“FDIC”) insurance expense based on lower base assessment and rate and lower amortization expense on acquired deposit portfolio of $297,000. Also contributing to the decline were lower professional fees of $255,000 related to legal fees for problem loan workouts and use of outside consultants, lower loan and OREO expenses of $193,000 related to lower OREO balance levels in 2012, and absence of branch conversion costs in 2012. Excluding the mortgage segment operations and acquisition related costs, noninterest expense decreased $400,000, or 1.3%, compared to the second quarter of 2011.

- 48 -

	For the Three Months Ended Dollars in thousands
	06/30/12			03/31/12			$			%			06/30/11			$			%
Noninterest expense:
Salaries and benefits	$	20,418		$	19,507		$	911			4.7	%	$	17,580		$	2,838			16.1	%
Occupancy expenses		3,092			2,647			445			16.8	%		2,668			424			15.9	%
Furniture and equipment expenses		1,868			1,763			105			6.0	%		1,679			189			11.3	%
Other operating expenses		12,386			11,692			694			5.9	%		13,945			(1,559	)		-11.2	%
Total noninterest expense	$	37,764		$	35,609		$	2,155			6.1	%	$	35,872			1,892			5.3	%
Mortgage segment operations	$	(6,821	)	$	(5,232	)	$	(1,589	)		30.4	%	$	(4,325	)	$	(2,496	)		57.7	%
Acquisition and conversion costs		—			—			—			—			(204	)		204			NM
Intercompany eliminations		118			117			1			0.9	%		118			—			0.0	%
	$	31,061		$	30,494		$	567			1.9	%	$	31,461		$	(400	)		-1.3	%

NM—Not Meaningful

For the six months ending June 30, 2012, noninterest expense increased $2.7 million, to $73.4 million, from $70.6 million a year ago. Salaries and benefits expense increased $4.7 million related to origination volume driven commission expense in the mortgage segment, additional employees and higher group insurance costs, and severance payments to affected employees. Occupancy costs increased $317,000. Partially offsetting these cost increases were other operating expenses which decreased $2.6 million, or 9.6%. Included in the reduction of other operating expenses was a $1.8 million reduction in FDIC insurance due to change in base assessment and rate, lower amortization on the acquired deposit portfolio of $643,000, and a decrease in conversion costs of $355,000 related to acquisition activity during the prior year. These other operating expense declines were partially offset by higher marketing and advertising expenses of $395,000 related to free checking account campaigns. Excluding the mortgage segment operations and prior year conversion costs, noninterest expense increased $432,000, or 0.7%, compared to the same period in 2011.

	For the Six Months Ended Dollars in thousands
	06/30/12			06/30/11			$			%
Noninterest expense:
Salaries and benefits	$	39,925		$	35,234		$	4,691			13.3	%
Occupancy expenses		5,739			5,422			317			5.8	%
Furniture and equipment expenses		3,631			3,341			290			8.7	%
Other operating expenses		24,078			26,642			(2,564	)		-9.6	%
Total noninterest expense	$	73,373		$	70,639		$	2,734			3.9	%
Mortgage segment operations	$	(12,052	)	$	(9,252	)	$	(2,800	)		30.3	%
Acquisition and conversion costs		—			(498	)		498			NM
Intercompany eliminations		234			234			—			0.0	%
	$	61,555		$	61,123		$	432			0.7	%

NM—Not Meaningful

Securities

As of June 30, 2012, 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 Commonwealth of Virginia represented 12% and the State of Texas represented 24% of the municipal portfolio. No other state had a concentration above 10%. Approximately 88% of municipal holdings are considered investment grade by Moody’s or Standard & Poor. 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.

- 49 -

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.

The Company must also evaluate the likelihood that deferred tax assets will be recovered from future taxable income. If any such assets are not likely to be recovered, a valuation allowance must be recognized. The Company has determined that a valuation allowance is not required for deferred tax assets as of June 30, 2012. The assessment of the carrying value of deferred tax assets is based on certain assumptions, changes in which could have a material impact on the Company’s financial statements.

The effective tax rate for the three and six months ended June 30, 2012 and 2011 was 28.2% and 28.3%, and 26.0% and 25.6%, respectively.

Community Bank Segment

On a linked quarter basis, net interest income after provision for loan losses increased $258,000, or 0.7%, from $34.6 million to $34.8 million in the prior quarter, primarily as a result of a $500,000 lower provision for loan losses, offset by lower yields on average interest-earning assets outpacing lower costs of interest-bearing liabilities, a result of a lack of higher yield investment options in the current low rate environment.

On a linked quarter basis, noninterest income increased $570,000, or 8.7%, to $7.2 million from $6.6 million in the first quarter. Service charges on deposit accounts and other account fee income increased $378,000 primarily related to higher interchange income, higher brokerage commissions due to improved market conditions and higher fee-based account balances, higher overdraft and returned check fees and commercial account service charges. Gains on sales of bank property increased $253,000 largely due to a sale of a former branch building.

On a linked quarter basis, noninterest expense increased $567,000, or 1.9%, to $31.1 million from $30.5 million when compared to the first quarter. Operating expenses decreased $484,000 largely related to expenses on foreclosed properties, employee training costs, and lower recovery of previously charged off deposit account fees. Occupancy expenses increased $402,000. Partially offsetting these increases, salaries and benefit expense decreased $366,000.

For the three months ended June 30, 2012, net interest income after provisions for loan losses was nearly unchanged at $34.8 million, or 0.1% lower, from the same period in 2011, principally a result of a lower provision for loan loss of $1.5 million, offset by yields on earning asset declining $2.5 million at a faster pace than the decline in cost of interest bearing liabilities of $916,000, a result of a lack of higher yield investment options in the current low rate environment.

For the quarter ended June 30, 2012, noninterest income increased $1.4 million, or 24.8%, to $7.2 million from $5.8 million in the prior year’s second quarter. Service charges on deposit accounts and other account fee income increased $351,000, related to higher interchange fee income and ATM charges. In addition, gains on sales of bank property increased $986,000. During 2011, the Company recorded a loss on sale of a former branch building for $626,000 versus a current quarter gain of $239,000 on sale of a former bank branch building.

For the quarter ended June 30, 2012, noninterest expense decreased $604,000, or 1.9%, to $31.1 million from $31.7 million for the second quarter of 2011. Operating expenses decreased $1.7 million largely related to lower FDIC insurance expense of $695,000 based on lower base assessment and rate, lower amortization expense of $297,000 on the acquired deposit portfolio. Also contributing to the decline were lower professional fees of $250,000 related to legal fees for problem loan workouts and use of outside consultants, lower loan and OREO expenses of $265,000 related to a lower OREO balance level in 2012, and absence of branch conversion costs in 2012. Partially offsetting these increases, salaries and benefits expenses increased $621,000 primarily related to higher group insurance costs due to additional employees, and severance payments to affected employees. Occupancy expenses increased $379,000.

- 50 -

For the six months ended June 30, 2012, net interest income after provisions for loan losses increased $2.5 million, or 3.7%, from the same period in 2011, principally a result of a lower provision for loan loss of $4.3 million, offset by interest on earning assets declining $3.8 million and at a faster pace than the decline in cost of interest bearing liabilities of $2.0 million, a result of a lack of higher yield investment options in the current low rate environment.

For the six months ending June 30, 2012, noninterest income increased $2.4 million, to $13.9 million, from $11.5 million a year ago. Gains on sales of bank property and OREO increased $1.2 million, a function of current period gain and prior period transactions. During 2011, the Company sold a branch building as mentioned above and accrued a loss on the sale of $626,000 and incurred losses on sales of OREO of $461,000. Service charges on deposit accounts and other account fee income increased $909,000 primarily related to higher interchange income, higher overdraft and returned check fees and higher ATM fee income.

For the six months ending June 30, 2012, noninterest expense was nearly unchanged at $61.5 million, or 0.1% lower from $61.6 million a year ago. Operating expenses decreased $2.7 million, or 10.8%. Included in the reduction of other operating expenses were lower FDIC insurance of $1.8 million due to a change in base assessment and rate, lower amortization of $643,000 on the acquired deposit portfolio, and a decrease in conversion costs of $355,000 related to acquisition activity during the prior year. These other operating expense increases were partially offset by higher marketing and advertising expenses of $362,000 related to free checking account campaigns. Salaries and benefits expense increased $2.2 million related to additional employees and higher group insurance costs, and severance payments to affected employees. Occupancy costs increased $265,000.

Mortgage Segment

On a linked quarter basis, the mortgage segment net income for the second quarter increased $236,000, or 100.9%, from $234,000 in the first quarter to $470,000. In early 2012, the Company hired additional loan originators and support personnel who were formerly employed by a national mortgage company that exited the mortgage origination business. As a result, and aided by historically low interest rates, loan originations increased by $73.4 million from $184.0 million to $257.4 million, or 39.8%, from the first quarter. As a result, gains on the sale of loans increased $2.0 million, or 38.1% to $7.3 million. Salary and benefit expenses increased $1.3 million, or 30.9% to $5.4 million, due to compensation related to the increased loan volume. Operating expenses increased $213,000, or 30.0%, from the prior quarter due to costs incurred in relation to the increases in originations. Refinanced loans represented 45.1% of the originations during the second quarter compared to 56.5% during the first quarter.

For the three months ended June 30, 2012, the mortgage segment net income increased $303,000, from $167,000 to $470,000, or 181.4%, compared to the same period last year. Originations increased by $109.7 million, or 74.2%, from $147.7 million to $257.4 million due to the additions in production personnel described above, and resulted in increased gains on the sale of loans of $3.0 million, or 70.0%, over the same period last year. Salaries and benefits increased $2.2 million, or 69.3%, as a result of personnel additions and higher commissions related to loan origination growth. Refinanced loans represented 45.1% of originations during the second quarter of 2012 compared to 20.2% during the same period a year ago.

For the six months ended June 30, 2012, the mortgage segment net income increased $209,000, or 42.2%, to $704,000 from $495,000 during the same period last year. Originations increased by $144.5 million from $296.8 million to $441.3 million, or 48.7%, during the same period last year due to production hiring efforts and a sustained low interest rate environment. Noninterest income increased $3.3 million, or 36.0%, driven by origination growth. Salary and benefit expenses increased $2.5 million, or 34.9%, primarily due to commissions related to increased loan production. Refinanced loans represented 49.8% of originations during the first six months of the year compared to 29.2% during the same period a year ago.

- 51 -

Beginning in mid-February of 2012 and through the end of the second quarter, the mortgage segment incurred additional operating expenses related to the hiring of additional loan originators and support personnel. As a result, the segment incurred a loss of $65,000 in April. In May and June of 2012, the segment reported consecutive months of net income on the increased production capacity throughout the quarter.

BALANCE SHEET

At June 30, 2012, total cash and cash equivalents were $72.4 million, a decrease of $38.8 million from March 31, 2012, and an increase of $9.2 million from June 30, 2011. During the fourth quarter of 2011, the Company paid the U.S. Department of the Treasury (“the Treasury”) $35.7 million to redeem the preferred stock issued to the Treasury and assumed in the FMB acquisition. At June 30, 2012, investment in securities increased $55.8 million when compared to the prior year’s second quarter. At June 30, 2012, net loans were $2.8 billion, an increase of $45.3 million from the prior quarter, and an increase of $26.9 million from June 30, 2011. Mortgage loans held for sale were $100.1 million, an increase of $26.5 million when compared to the prior quarter, and an increase of $49.6 million from June 30, 2011, which was primarily due to the increase of origination volume from the favorable rate environment and additional loan originators. At June 30, 2012, total assets were $4.0 billion, an increase of $34.5 million compared to the first quarter, and an increase of $130.8 million from $3.9 billion at June 30, 2011.

For three months ended June 30, 2012, total deposits grew $3.3 million, or 0.1%, when compared to March 31, 2012. Of this amount, interest-bearing deposits decreased $23.7 million compared to the prior quarter driven by lower volumes in NOW accounts and certificates of deposit accounts, partially offset by higher volumes of time deposits of $100,000 and over. Total deposits grew $135.9 million, or 4.4%, from June 30, 2011. Of this amount, interest-bearing deposits increased $64.7 million from June 30, 2011, as money market, NOW accounts, saving accounts, and time deposits of $100,000 and over balances increases were partially offset by runoff in certificates of deposit. Total borrowings, including repurchase agreements, increased $22.5 million on a linked quarter basis and decreased $4.3 million from June 30, 2011 as the Company experienced increased customer preference for securities sold under agreements for repurchase. The Company’s equity to assets ratio was 10.88% and 11.50% at June 30, 2012 and 2011, respectively. The decrease in the equity to assets ratio was due to the Company’s redemption of the preferred stock described above. The Company’s tangible common equity to tangible assets ratio was 9.11% and 8.62% at June 30, 2012 and 2011, respectively.

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, 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 June 30, 2012, cash, interest-bearing deposits in other banks, money market investments, Federal funds sold, loans held for sale, investment securities and loans that mature within one year totaled $1.2 billion, or 32.8%, of total earning assets. As of June 30, 2012, approximately $964 million, or 33.4%, of total loans are scheduled to mature within one year. In addition to deposits, the Company utilizes Federal funds purchased, FHLB advances, and customer repurchase agreements to fund the growth in its loan portfolio, securities purchases, and periodically, wholesale leverage transactions.

- 52 -

Loan Portfolio

The following table presents the Company’s composition of loans, net of unearned income in dollar amounts and as a percentage of total gross loans (dollars in thousands) as of:

	June 30,		% of Total			December 31,		% of Total			June 30,		% of Total
	2012		Loans			2011		Loans			2011		Loans
Loans secured by real estate:
Residential 1-4 family	$	458,683		15.9	%	$	447,544		15.9	%	$	448,270		15.7	%
Commercial		1,027,196		35.6	%		985,934		34.9	%		982,986		34.3	%
Construction, land development and other land loans		447,746		15.5	%		444,739		15.8	%		473,604		16.6	%
Second mortgages		49,521		1.7	%		55,630		2.0	%		62,463		2.2	%
Equity lines of credit		304,614		10.5	%		304,320		10.8	%		301,766		10.6	%
Multifamily		137,467		4.8	%		108,260		3.8	%		103,862		3.6	%
Farm land		25,540		0.9	%		26,962		1.0	%		26,033		0.9	%
Total real estate loans		2,450,767		84.9	%		2,373,389		84.2	%		2,398,984		83.9	%
Commercial Loans		170,625		5.9	%		169,695		6.0	%		165,552		5.8	%
Consumer installment loans
Personal		231,289		8.0	%		241,753		8.6	%		257,170		9.0	%
Credit cards		19,717		0.7	%		19,006		0.7	%		17,334		0.6	%
Total consumer installment loans		251,006		8.7	%		260,759		9.3	%		274,504		9.6	%
All other loans		15,392		0.5	%		14,740		0.5	%		20,529		0.7	%
Gross loans	$	2,887,790		100.0	%	$	2,818,583		100.0	%	$	2,859,569		100.0	%

As reflected in the loan table, at June 30, 2012, 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.

Asset Quality

Overview

During the second quarter, the Company experienced encouraging improvement in asset quality. Improving market conditions in the Company’s local market led to a reduction in both OREO and nonaccrual loans, which are at their lowest levels since the first quarter of 2010. The Company’s favorable trends in provisions for loan losses, stable allowance to total loans ratio, and decreased levels of charge-offs, troubled debt restructurings, and impaired loans demonstrate that its focused efforts to improve asset quality are having a positive impact. The allowance to nonperforming loans coverage ratio has increased significantly and is at its highest level since the fourth quarter of 2009. The magnitude of any change in the real estate market and its impact on the Company is still largely dependent upon continued recovery of commercial real estate and residential housing and the pace at which the local economies in the Company’s operating markets improve.

Loans obtained in connection with the FMB and branch acquisitions have been accounted for in accordance with ASC 805, Business Combinations, and/or ASC 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality (“ASC 310-30”), if the loans had experienced deterioration of credit quality at the time of acquisition. Both require that acquired loans be recorded at fair value and prohibit the carryover of the related allowance for loan losses. Determining the fair value of the acquired loans required estimating cash flows expected to be collected on the loans. Because ASC 310-30 loans (i.e., impaired loans) have been recorded at fair value, such loans are not classified as nonaccrual or past due even though some payments may be contractually past due. If there is further deterioration of credit quality on these acquired loans, the deterioration will be reflected through the allowance process and there will be no additional fair value adjustment.

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Troubled Debt Restructurings (“TDRs”)

On July 1, 2011 the Company adopted the amendments in Accounting Standards Update No. 2011-02 Determination of Whether a Restructuring is a Troubled Debt Restructuring (“ASU 2011-02”). The total recorded investment in TDRs as of June 30, 2012 was $80.2 million, a decrease of $19.6 million from $99.8 million at March 31, 2012. Of the $80.2 million of TDRs at June 30, 2012, $67.5 million, or 84.16%, were considered performing while the remaining $12.7 million were considered nonperforming. The decline in the TDR balance from the prior quarter is attributable to $17.6 million loans being removed from TDR status and $6.1 million in net payments, partially offset by additions of $4.1 million. The primary cause for the decline in TDRs is related to restructured loans with a market rate of interest at the time of the restructuring, which were performing in accordance with their modified terms for a consecutive twelve month period and were no longer considered impaired. 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.

The following table provides a summary, by class and modification type, 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 in nonaccrual status, which are considered to be nonperforming, as of June 30, 2012 (dollars in thousands):

	Performing						Nonperforming						Total
	No. of Loans		Recorded Investment		Outstanding Commitment		No. of Loans		Recorded Investment		Outstanding Commitment		No. of Loans		Recorded Investment		Outstanding Commitment
Modified to Interest Only
Commercial:
Commercial Real Estate—Owner Occupied		2	$	398	$	—		—	$	—	$	—		2	$	398	$	—
Commercial Real Estate—Non-Owner Occupied		2		610		—		1		212		—		3		822		—
Raw Land and Lots		3		327		—		1		340		—		4		667		—
Single Family Investment Real Estate		2		179		—		1		90		—		3		269		—
Consumer:
Mortgage		1		394		—		—		—		—		1		394		—
Indirect Marine		1		283		—		—		—		—		1		283		—
Total modified to interest only		11	$	2,191	$	—		3	$	642	$	—		14	$	2,833	$	—
Term Modification, at a market rate
Commercial:
Commercial Construction		9	$	12,566	$	2,247		1	$	709	$	—		10	$	13,275	$	2,247
Commercial Real Estate—Owner Occupied		4		3,650		—		2		1,002		—		6		4,652		—
Commercial Real Estate—Non-Owner Occupied		6		13,303		—		—		—		—		6		13,303		—
Raw Land and Lots		7		20,407		251		—		—		—		7		20,407		251
Single Family Investment Real Estate		4		537		—		—		—		—		4		537		—
Commercial and Industrial		6		2,251		—		7		1,310		—		13		3,561		—
Other Commercial		2		302		—		—		—		—		2		302		—
Consumer:
Mortgage		5		804		—		1		202		—		6		1,006		—
Indirect Marine		—		—		—		1		26		—		1		26		—
Other Consumer		2		85		—		1		202		—		3		287		—
Total term modification, at a market rate		45	$	53,905	$	2,498		13	$	3,451	$	—		58	$	57,356	$	2,498
Term Modification, below market rate
Commercial:
Commercial Construction		—	$	—	$	—		3	$	4,533	$	—		3	$	4,533	$	—
Commercial Real Estate—Owner Occupied		5		1,021		—		1		180		—		6		1,201		—
Raw Land and Lots		5		6,743		—		2		3,521		—		7		10,264		—
Single Family Investment Real Estate		1		385		—		1		353		—		2		738		—
Commercial and Industrial		3		354		—		—		—		—		3		354		—
Consumer:
Mortgage		1		501		—		—		—		—		1		501		—
Total term modification, below market rate		15	$	9,004	$	—		7	$	8,587	$	—		22	$	17,591	$	—
Interest Rate Modification, below market rate
Commercial:
Commercial Real Estate—Non-Owner Occupied		2	$	2,390	$	—		—	$	—	$	—		2	$	2,390	$	—
Total interest rate modification, below market rate		2	$	2,390	$	—		—	$	—	$	—		2	$	2,390	$	—
Total		73	$	67,490	$	2,498		23	$	12,680	$	—		96	$	80,170	$	2,498

Nonperforming Assets (“NPAs”)

At June 30, 2012, nonperforming assets totaled $75.0 million, a decrease of $5.1 million from the first quarter and a decrease of $16.3 million compared to a year ago. In addition, NPAs as a percentage of total outstanding loans declined 22 basis points from 2.82% in the first quarter and 59 basis points from 3.19% in the second quarter of the prior year to 2.60% at June 30, 2012. The current quarter decrease in NPAs from the first quarter related to a net decrease in nonaccrual loans, excluding purchased impaired loans, of $3.2 million as well as a net decrease in OREO of $1.9 million.

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Nonperforming assets at June 30, 2012 included $39.2 million in nonaccrual loans (excluding purchased impaired loans), a net decrease of $3.2 million, or 7.55%, from the prior quarter. The following table shows the activity in nonaccrual loans for the quarter ended (dollars in thousands):

	June 30, 2012			March 31, 2012			December 31, 2011			September 30, 2011			June 30, 2011
Beginning Balance	$	42,391		$	44,834		$	51,965		$	54,322		$	62,642
Net customer payments		(3,174	)		(2,778	)		(6,556	)		(2,343	)		(7,599	)
Additions		2,568			2,805			5,364			1,751			4,223
Charge-offs		(561	)		(1,549	)		(2,304	)		(1,268	)		(3,581	)
Loans returning to accruing status		(1,803	)		—			(1,950	)		(497	)		(658	)
Transfers to OREO		(250	)		(921	)		(1,685	)		—			(705	)
Ending Balance	$	39,171		$	42,391		$	44,834		$	51,965		$	54,322

The nonperforming loans added during the quarter were principally related to commercial loans as borrowers continued to experience financial difficulties with the prolonged economic recovery exhausting their cash reserves and other repayment sources.

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

	June 30, 2012			March 31, 2012			December 31, 2011			September 30, 2011			June 30, 2011
Raw Land and Lots	$	12,139		$	13,064		$	13,322		$	15,997		$	17,587
Commercial Construction		9,763			9,835			10,276			9,818			9,886
Commercial Real Estate		5,711			6,299			7,993			9,204			8,662
Single Family Investment Real Estate		3,476			4,507			5,048			7,969			8,268
Commercial and Industrial		4,715			5,318			5,297			4,000			4,369
Other Commercial		231			233			238			259			262
Consumer		3,136			3,135			2,660			4,718			5,288
Total	$	39,171		$	42,391		$	44,834		$	51,965		$	54,322
Coverage Ratio		104.63	%		94.84	%		88.04	%		79.46	%		72.96	%

Impairment analyses provided appropriate reserves on these nonperforming loans while appropriate reserves on homogenous pools continue to be maintained. The increase in the coverage ratio is primarily related to a decline in nonperforming loans.

Nonperforming assets at June 30, 2012 also included $35.8 million in OREO, a net decrease of $1.9 million, or 5.04%, from the prior quarter. The following table shows the activity in OREO for the quarter ended (dollars in thousands):

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	June 30, 2012			March 31, 2012			December 31, 2011			September 30, 2011			June 30, 2011
Beginning Balance	$	37,663		$	32,263		$	34,464		$	36,935		$	38,674
Additions		3,887			6,593			2,543			449			2,228
Capitalized Improvements		23			319			197			241			52
Valuation Adjustments		—			—			(530	)		—			(165	)
Proceeds from sales		(5,592	)		(1,485	)		(3,674	)		(3,285	)		(3,701	)
Gains (losses) from sales		(179	)		(27	)		(737	)		124			(153	)
Ending Balance	$	35,802		$	37,663		$	32,263		$	34,464		$	36,935

The additions were principally related to commercial real estate and raw land; sales from OREO were principally related to commercial retail property and residential real estate and lots.

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

	June 30, 2012		March 31, 2012		December 31, 2011		September 30, 2011		June 30, 2011
Land	$	6,953	$	6,327	$	6,327	$	8,559	$	8,537
Land Development		11,313		11,559		11,309		11,824		12,088
Residential Real Estate		10,431		12,482		11,024		11,903		14,058
Commercial Real Estate		6,085		6,275		2,583		1,158		1,232
Land Previously Held for Branch Sites		1,020		1,020		1,020		1,020		1,020
Total	$	35,802	$	37,663	$	32,263	$	34,464	$	36,935

Included in land development is $9.1 million related to a residential community in the Northern Neck region of Virginia, which includes developed residential lots, a golf course, and undeveloped land. Foreclosed properties were adjusted to their fair values at the time of each foreclosure and any losses were taken as loan charge-offs against the allowance for loan losses at that time. OREO asset valuations are also evaluated at least quarterly and any necessary write downs to fair values are recorded as impairment.

Charge-offs and Delinquencies

For the quarter ended June 30, 2012, net charge-offs of loans were $2.2 million, or 0 .31% on an annualized basis, compared to $2.8 million, or 0.39%, for the first quarter of 2012 and $5.3 million, or 0.74%, for the same quarter last year. Net charge-offs in the current quarter included commercial loans of $1.5 million and consumer loans of $700,000. At June 30, 2012, total accruing past due loans were $33.2 million, or 1.15% of total loans, a decrease from 1.44% at March 31, 2012 and from 1.33% a year ago.

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	June 30, 2012			March 31, 2012			December 31, 2011			September 30, 2011			June 30, 2011
Nonaccrual loans	$	39,171		$	42,391		$	44,834		$	51,965		$	54,322
Foreclosed properties		34,782			36,643			31,243			33,444			35,915
Real estate investment		1,020			1,020			1,020			1,020			1,020
Total nonperforming assets (“NPAs”)		74,973			80,054			77,097			86,429			91,257
Loans past due 90 days and accruing interest		10,768			12,267			19,911			12,154			9,073
Total nonperforming assets and Loans past due 90 days and accruing interest	$	85,741		$	92,321		$	97,008		$	98,583		$	100,330
Balances
Allowance for loan losses (“ALLL”)	$	40,985		$	40,204		$	39,470		$	41,290		$	39,631
Average loans, net of unearned income		2,847,087			2,829,881			2,804,500			2,831,924			2,823,186
Loans, net of unearned income		2,887,790			2,841,758			2,818,583			2,818,342			2,859,569
Ratios
ALLL to total outstanding loans		1.42	%		1.41	%		1.40	%		1.47	%		1.39	%
ALLL to legacy loans (Non-GAAP)		1.74	%		1.77	%		1.83	%		1.94	%		1.88	%
ALLL to nonaccrual loans		104.63	%		94.84	%		88.04	%		79.46	%		72.96	%
ALLL to nonaccrual loans & loans 90 days past due		82.07	%		73.56	%		60.96	%		64.40	%		62.51	%
NPAs to total loans & OREO		2.56	%		2.78	%		2.70	%		3.03	%		3.15	%
NPAs to total loans		2.60	%		2.82	%		2.74	%		3.07	%		3.19	%
NPAs & loans 90 days past due to total loans & OREO		2.93	%		3.21	%		3.40	%		3.46	%		3.46	%
NPAs & loans 90 days past due to total loans		2.97	%		3.25	%		3.44	%		3.50	%		3.51	%
Net charge-offs to total loans (annualized)		0.31	%		0.39	%		0.59	%		0.27	%		0.74	%

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.

The Board of Governors of the Federal Reserve System (“the Federal Reserve”) and the FDIC have adopted capital guidelines to supplement the existing definitions of capital for regulatory purposes and to establish minimum capital standards. Specifically, the guidelines categorize assets and off-balance sheet items into four risk-weighted categories. The minimum ratio of qualifying total assets is 8.0%, of which 4.0% must be Tier 1 capital, consisting of common equity, retained earnings and a limited amount of perpetual preferred stock, less certain intangible items. The Company had a ratio of total capital to risk-weighted assets of 14.55% and 14.91% on June 30, 2012 and 2011, respectively. The Company’s ratio of Tier 1 capital to risk-weighted assets was 12.99% and 13.26% at June 30, 2012 and 2011, respectively, allowing the Company to meet the definition of “well capitalized” for regulatory purposes. Both of these ratios exceeded the fully phased-in capital requirements in 2012 and 2011. The Company’s equity to asset ratios at June 30, 2012 and 2011 were 10.88% and 11.50%, respectively.

In connection with two bank acquisitions, prior to 2005, the Company issued trust preferred capital notes to fund the cash portion of those acquisitions, collectively totaling $58.5 million. The trust preferred capital notes currently qualify for Tier 1 capital of the Company for regulatory purposes.

The Company’s outstanding series of preferred stock as of December 31, 2010 resulted from the acquisition of FMB. On February 6, 2009, FMB issued and sold to the Treasury 33,900 shares of its Fixed Rate Non-Cumulative Perpetual Preferred Stock, Series B and a warrant to purchase up to 1,695 shares of its Fixed Rate Non-Cumulative Perpetual Preferred Stock, Series C. The Treasury immediately exercised the warrant for the entire 1,695 shares. In connection with the Company’s acquisition of FMB, the Company’s Board of Directors established a series of preferred stock with substantially identical preferences, rights and limitations to the FMB preferred stock,

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except as explained below. Pursuant to the closing of the acquisition, each share of FMB Series B and Series C preferred stock was exchanged for one share of the Company’s Series B Preferred Stock. The Series B Preferred Stock of the Company paid cumulative dividends to the Treasury at a rate of 5.19% year. The 5.19% dividend rate was a blended rate comprised of the dividend rate of the 33,900 shares of FMB 5% Fixed Rate Non-Cumulative Perpetual Preferred Stock, Series B and 1,695 shares of FMB 9% Fixed Rate Non-Cumulative Perpetual Preferred Stock, Series A. The Series B Preferred Stock of the Company was non-voting and had a liquidation preference of $1,000. During the fourth quarter of 2011, the Company received approval from the Treasury and its regulators to redeem the Series B Preferred Stock issued to the Treasury and assumed by the Company as part of the 2010 merger with FMB. On December 7, 2011, the Company paid approximately $35.7 million, from cash, to the Treasury in full redemption of the Series B Preferred Stock.

The following table summarizes the Company’s regulatory capital and related ratios (dollars in thousands):

	June 30,			December 31,			June 30,
	2012			2011			2011
Tier 1 capital	$	403,860		$	390,623		$	408,836
Tier 2 capital		48,267			50,395			50,653
Total risk-based capital		452,127			441,018			459,489
Risk-weighted assets		3,109,278			3,039,099			3,082,408
Capital ratios:
Tier 1 risk-based capital ratio		12.99	%		12.85	%		13.26	%
Total risk-based capital ratio		14.55	%		14.51	%		14.91	%
Leverage ratio (Tier 1 capital to average adjusted assets)		10.44	%		10.14	%		10.90	%
Stockholders' equity to assets		10.88	%		10.79	%		11.50	%
Tangible common equity to tangible assets		9.11	%		8.91	%		8.62	%

In June 2012 the Office of the Comptroller of the Currency, the Federal Reserve, and the FDIC proposed rules that would revise and replace the current capital rules to align with the BASEL III capital standards and meet certain requirements of the Dodd-Frank Act. The BASEL III capital standards substantially increase the complexity of capital calculations and the amount of capital required to be maintained. The proposed rules are in a comment period running through September 7, 2012 and are subject to further modification. The Company is in the process of evaluating the impact these proposed rules may have on its capital position.

NON-GAAP MEASURES

In reporting the results of June 30, 2012, the Company has provided supplemental performance measures on an operating or tangible basis. Such measures exclude amortization expense related to intangible assets, such as core deposit and trademark intangibles. 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. Cash basis operating earnings per share were $0.36 and $0.70 and $0.30 and $0.59 for the three and six months ended June 30, 2012 and 2011, respectively. Cash basis return on average tangible common equity and assets for the three and six months ended June 30, 2012 was 10.56% and 0.97%, respectively.

These measures are a supplement to GAAP used to prepare the Company’s financial statements and should not be viewed as a substitute for 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 GAAP basis measures for the periods ended (dollars in thousands, except share and per share amounts):

	Three Months Ended						Six Months Ended
	June 30						June 30
	2012			2011			2012			2011
Net income	$	8,420		$	6,820		$	16,343		$	13,014
Plus: core deposit intangible amortization, net of tax		796			1,009			1,648			2,066
Plus: trademark intangible amortization, net of tax		65			65			130			130
Cash basis operating earnings	$	9,281		$	7,894		$	18,121		$	15,210
Average assets	$	3,942,727		$	3,830,786		$	3,923,243		$	3,819,435
Less: average trademark intangible		281			681			331			731
Less: average goodwill		59,400			57,582			59,400			57,574
Less: average core deposit intangibles		18,761			24,384			19,386			25,184
Average tangible assets	$	3,864,285		$	3,748,139		$	3,844,126		$	3,735,946
Average equity	$	431,915		$	440,359		$	428,102		$	436,405
Less: average trademark intangible		281			681			331			731
Less: average goodwill		59,400			57,582			59,400			57,574
Less: average core deposit intangibles		18,761			24,384			19,386			25,184
Less: average preferred equity		—			34,518			—			34,483
Average tangible equity	$	353,473		$	323,194		$	348,985		$	318,433
Weighted average shares outstanding, diluted		25,888,151			25,992,190			25,923,505			25,986,640
Cash basis earnings per share, diluted	$	0.36		$	0.30		$	0.70		$	0.59
Cash basis return on average tangible assets		0.97	%		0.84	%		0.95	%		0.82	%
Cash basis return on average tangible equity		10.56	%		9.80	%		10.44	%		9.63	%

The allowance for loan losses as a percentage of the total loan portfolio includes net loans acquired in the FMB and the Harrisonburg branch acquisitions. The Company believes the presentation of the allowance-to-legacy loan ratio (non-GAAP) is useful to investors because the acquired loans were recorded at a market discount (including credit valuation) with no allowance for loan losses carried over to the Company.

Acquired loans that have further deteriorated are included in the loan loss calculation and reflected in both the numerator and denominator of the allowance-to-legacy loan ratio. In order to present the allowance-to-legacy loan ratio, acquired loans with no additional credit deterioration beyond the original credit mark are adjusted out of the loan balance denominator. The following table shows the allowance for loan losses as a percentage of the total loan portfolio, adjusted to remove acquired loans (dollars in thousands):

	For the Six Months Ended June 30,
	2012			2011
Gross loans	$	2,887,790		$	2,859,569
Less: acquired loans without additional credit deterioration		(533,087	)		(755,358	)
Gross loans, net of acquired	$	2,354,703		$	2,104,211
Allowance for loan losses	$	40,985		$	39,631
Allowance for loan losses ratio		1.42	%		1.39	%
Allowance for loan losses ratio, net of acquired		1.74	%		1.88	%

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 Asset and Liability Management Committee (“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.

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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.

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 ended June 30, 2012 (dollars in thousands):

	Change In Net Interest Income
	%			$
Change in Yield Curve:
+300 basis points		4.25			6,717
+200 basis points		2.78			4,403
+100 basis points		1.17			1,846
Most likely rate scenario		—			—
-100 basis points		(1.18	)		(1,866	)
-200 basis points		(1.97	)		(3,116	)
-300 basis points		(2.01	)		(3,181	)

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.

- 60 -

The following chart reflects the estimated change in net economic value over different rate environments using economic value simulation based on the balances at the period ended June 30, 2012 (dollars in thousands):

	Change In Economic Value of Equity
	%			$
Change in Yield Curve:
+300 basis points		(4.22	)		(21,005	)
+200 basis points		(1.28	)		(6,392	)
+100 basis points		0.19			937
Most likely rate scenario		—			—
-100 basis points		(6.58	)		(32,808	)
-200 basis points		(8.48	)		(42,254	)
-300 basis points		(7.89	)		(39,299	)

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.

ITEM 4 – CONTROLS AND PROCEDURES

The Company maintains “disclosure controls and procedures,” as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (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 Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating its disclosure controls and procedures, management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable assurance that the objectives of the disclosure controls and procedures are met. Additionally, in designing disclosure controls and procedures, management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

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 June 30, 2012 that has materially affected, or is reasonably likely to materially affect, the internal control over financial reporting.

PART II—OTHER INFORMATION

ITEM 1 – LEGAL PROCEEDINGS

In the ordinary course of its operations, the Company is a party 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.

- 61 -

ITEM 1A – RISK FACTORS

Update to Risk Factors

In June of 2012, the Board of Governors of the Federal Reserve System announced Notices of Proposed Rulemaking (NPRs) for three sets of capital rules that translate the Basel III capital rules into U.S. regulation. The Basel III capital standards substantially increase the complexity of capital calculations and the amount of required capital to be maintained. Specifically, Basel III reduces the items that count as capital, establishes higher capital ratios for all banks and increases risk weighting of a number of asset classes the Company holds. The potential impact of Basel III includes, but is not limited to, reduced lending and negative pressure on profitability and return on equity due to the higher capital requirements. The cost of implementation and ongoing compliance with Basel III may also negatively impact overhead costs. To the extent the Company is required to increase capital in the future to comply with Basel III, existing shareholders may be diluted and/or our ability to pay common stock dividends may be reduced.

There have been no other material changes with respect to the risk factors disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2011.

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

In December 2011, the Company was authorized to repurchase up to 350,000 shares of its common stock in the open market at prices that management determines to be prudent. No shares were repurchased during 2011. In February 2012, the Company entered into a Stock Purchase Agreement (the “Agreement”) with a member of the board of directors. Pursuant to the Agreement, the Company repurchased 335,649 shares of its common stock for an aggregate purchase price of $4,363,437, or $13.00 per share. The repurchase was funded with cash on hand. The Company transferred 115,384 of the repurchased shares to its Employee Stock Ownership Plan for $13.00 per share. The remaining 220,265 shares were retired. On February 6, 2012, the Company filed a Current Report on Form 8-K with respect to the agreement and repurchase.

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
31.01	Certification of Chief 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 Chief Executive Officer and Principal Financial and Accounting Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.00	Interactive data files pursuant to Rule 405 of Regulation S-T: (i) the Consolidated Balance Sheets as of June 30, 2012 and December 31, 2011, (ii) the Consolidated Statements of Income for the three and six months ended June 30, 2012 and June 30, 2011, (iii) the Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2012 and June 30, 2011, (iv) the Consolidated Statements of Changes in Shareholders’ Equity for the six months ended June 30, 2012 and June 30, 2011, (v) the Consolidated Statements of Cash Flows for the six months ended June 30, 2012 and June 30, 2011 and (v) the Notes to the Consolidated Financial Statements (furnished herewith).

- 62 -

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 First Market Bankshares Corporation
	(Registrant)
Date: August 8, 2012	By:	/s/ G. William Beale
		G. William Beale,
		Chief Executive Officer
		(principal executive officer)
Date: August 8, 2012	By:	/s/ Robert M. Gorman
		Robert M. Gorman
		Executive Vice President and Chief Financial Officer
		(principal financial and accounting officer)

- 63 -

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 First Market 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: August 8, 2012

/s/ G. William Beale

G. William Beale,

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 First Market 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: August 8, 2012

/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 First Market Bankshares Corporation (the “Company”) on Form 10-Q for the period ending June 30, 2012 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, Chief Executive Officer

/s/ Robert M. Gorman

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

August 8, 2012

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

XML

Earnings per Share (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Reconcilement of the denominators of the basic and diluted EPS computations
Net income, basic	$ 8,420	$ 6,293	$ 16,343	$ 11,961
Weighted Average Common Shares, Basic	25,868	25,970	25,900	25,964
Basic, Per Share Amount	$ 0.32	$ 0.24	$ 0.63	$ 0.46
Add: potentially dilutive common shares - stock awards, Net Income Available to Common Shareholders
Add: potentially dilutive common shares - stock awards, Weighted Average Common Shares	20	22	24	23
Add: potentially dilutive common shares - stock awards, Per Share Amount
Diluted, Net Income Available to Common Shareholders	8,420	6,293	16,343	11,961
Diluted, Weighted Average Common Shares	25,888	25,992	25,924	25,987
Diluted, Per Share Amount	$ 0.32	$ 0.24	$ 0.63	$ 0.46
Net income	8,420	6,820	16,343	13,014
Net income, Per Share Amount		$ 0.26		$ 0.50
Less: dividends paid and accumulated on preferred stock		462		924
Less: dividends paid and accumulated on preferred stock, Per Share Amount		$ 0.02		$ 0.04
Less: accretion of discount on preferred stock		$ 65		$ 129

XML

Loans and Allowance for Loan Losses (Details 5) (Interest Only at Market Rate of Interest [Member], USD $) In Thousands, unless otherwise specified	3 Months Ended	6 Months Ended
	Jun. 30, 2012 Loan	Jun. 30, 2012 Loan
Schedule of TDR by class and modification type
No. of Loans	15	27
Recorded investment at period end	$ 4,070	$ 7,454
Commercial Real Estate - Non-Owner Occupied [Member]
Schedule of TDR by class and modification type
No. of Loans	2
Recorded investment at period end	2,390
Commercial [Member]
Schedule of TDR by class and modification type
No. of Loans		2
Recorded investment at period end		2,390
Commercial [Member] | Commercial Real Estate - Non-Owner Occupied [Member]
Schedule of TDR by class and modification type
No. of Loans		2
Recorded investment at period end		2,390
Modified to Interest Only [Member]
Schedule of TDR by class and modification type
No. of Loans	1	6
Recorded investment at period end	283	789
Modified to Interest Only [Member] | Commercial [Member] | Raw Land and Lots [Member]
Schedule of TDR by class and modification type
No. of Loans		3
Recorded investment at period end		327
Modified to Interest Only [Member] | Commercial [Member] | Single Family Investment Real Estate [Member]
Schedule of TDR by class and modification type
No. of Loans		2
Recorded investment at period end		179
Modified to Interest Only [Member] | Consumer [Member] | Mortgage [Member]
Schedule of TDR by class and modification type
No. of Loans	1	1
Recorded investment at period end	283	283
Term modification, at a market rate [Member]
Schedule of TDR by class and modification type
No. of Loans	9	15
Recorded investment at period end	748
Term modification, at a market rate [Member] | Commercial [Member] | Commercial Real Estate - Owner Occupied [Member]
Schedule of TDR by class and modification type
No. of Loans	1	3
Recorded investment at period end	132	1,822
Term modification, at a market rate [Member] | Commercial [Member] | Raw Land and Lots [Member]
Schedule of TDR by class and modification type
No. of Loans		1
Recorded investment at period end		604
Term modification, at a market rate [Member] | Commercial [Member] | Commercial and Industrial [Member]
Schedule of TDR by class and modification type
No. of Loans	5	6
Recorded investment at period end	329	430
Term modification, at a market rate [Member] | Consumer [Member]
Schedule of TDR by class and modification type
Recorded investment at period end		3,617
Term modification, at a market rate [Member] | Consumer [Member] | Mortgage [Member]
Schedule of TDR by class and modification type
No. of Loans	1	2
Recorded investment at period end	202	474
Term modification, at a market rate [Member] | Consumer [Member] | Other Consumer [Member]
Schedule of TDR by class and modification type
No. of Loans	2	3
Recorded investment at period end	85	287
Term modification, below market rate [Member] | Commercial Real Estate - Owner Occupied [Member]
Schedule of TDR by class and modification type
No. of Loans	3
Recorded investment at period end	649
Term modification, below market rate [Member] | Commercial Real Estate - Non-Owner Occupied [Member]
Schedule of TDR by class and modification type
No. of Loans	2
Recorded investment at period end	2,390
Term modification, below market rate [Member] | Commercial [Member]
Schedule of TDR by class and modification type
No. of Loans		4
Recorded investment at period end		658
Term modification, below market rate [Member] | Commercial [Member] | Commercial Real Estate - Owner Occupied [Member]
Schedule of TDR by class and modification type
No. of Loans	3	4
Recorded investment at period end	$ 649	$ 658

XML

Fair Value Measurements (Details 2) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2012
Summary of changes in Level 3 assets measured at estimated fair value on a nonrecurring basis
Ending Balance	$ 47,075
Impaired loans [Member]
Summary of changes in Level 3 assets measured at estimated fair value on a nonrecurring basis
Beginning balance	63,423
Included in earnings
Additions	19,388
Sales
Net Payments and Upgrades	(35,736)
Ending Balance	47,075
Other real estate owned [Member]
Summary of changes in Level 3 assets measured at estimated fair value on a nonrecurring basis
Beginning balance	32,263
Included in earnings	(206)
Additions	10,822
Sales	(7,077)
Net Payments and Upgrades
Ending Balance	$ 35,802

XML

Earnings per Share (Details Textual)	3 Months Ended
	Jun. 30, 2012	Jun. 30, 2011
Earnings Per Share (Textual) [Abstract]
Anti-dilutive stock awards	591,124	380,657

XML

Loans and Allowance for Loan Losses (Details 3) (USD $) In Thousands, unless otherwise specified	6 Months Ended	12 Months Ended
	Jun. 30, 2012	Dec. 31, 2011
Impaired loans individually evaluated for impairment
Loans with a specific allowance, Related Allowance	$ 11,500	$ 10,298
Loans with a specific allowance, Interest Income Recognized	3,752	10,053
Recorded Investment	189,399	242,833
Unpaid Principal Balance	192,451	245,391
Year to Date Average Investment	195,610	251,317
Commercial Construction [Member]
Impaired loans individually evaluated for impairment
Loans without a specific allowance, Recorded Investment	31,097	40,475
Loans without a specific allowance, Unpaid Principle Balance	31,142	40,524
Loans without a specific allowance, Related Allowance
Loans without a specific allowance, YTD Average Investment	31,278	37,835
Loans without a specific allowance, Interest Income Recognized	831	1,690
Loans with a specific allowance, Recorded Investment	13,399	12,927
Loans with a specific allowance, Unpaid Principle Balance	13,834	13,297
Loans with a specific allowance, Related Allowance	1,378	583
Loans with a specific allowance, YTD Average Investment	13,873	13,811
Loans with a specific allowance, Interest Income Recognized	108	343
Commercial Real Estate - Owner Occupied [Member]
Impaired loans individually evaluated for impairment
Loans without a specific allowance, Recorded Investment	14,145	20,487
Loans without a specific allowance, Unpaid Principle Balance	14,963	21,010
Loans without a specific allowance, Related Allowance
Loans without a specific allowance, YTD Average Investment	15,034	23,364
Loans without a specific allowance, Interest Income Recognized	347	1,183
Loans with a specific allowance, Recorded Investment	6,641	8,679
Loans with a specific allowance, Unpaid Principle Balance	6,807	8,788
Loans with a specific allowance, Related Allowance	1,861	1,961
Loans with a specific allowance, YTD Average Investment	6,855	8,681
Loans with a specific allowance, Interest Income Recognized	57	267
Commercial Real Estate - Non-Owner Occupied [Member]
Impaired loans individually evaluated for impairment
Loans without a specific allowance, Recorded Investment	29,659	37,799
Loans without a specific allowance, Unpaid Principle Balance	29,730	37,855
Loans without a specific allowance, Related Allowance
Loans without a specific allowance, YTD Average Investment	29,977	38,084
Loans without a specific allowance, Interest Income Recognized	813	2,002
Loans with a specific allowance, Recorded Investment	8,505	8,858
Loans with a specific allowance, Unpaid Principle Balance	8,536	8,879
Loans with a specific allowance, Related Allowance	387	1,069
Loans with a specific allowance, YTD Average Investment	8,553	9,010
Loans with a specific allowance, Interest Income Recognized	227	322
Raw Land and Lots [Member]
Impaired loans individually evaluated for impairment
Loans without a specific allowance, Recorded Investment	39,400	46,791
Loans without a specific allowance, Unpaid Principle Balance	39,461	46,890
Loans without a specific allowance, Related Allowance
Loans without a specific allowance, YTD Average Investment	40,166	47,808
Loans without a specific allowance, Interest Income Recognized	710	1,306
Loans with a specific allowance, Recorded Investment	11,542	22,188
Loans with a specific allowance, Unpaid Principle Balance	11,750	22,429
Loans with a specific allowance, Related Allowance	2,457	991
Loans with a specific allowance, YTD Average Investment	11,834	24,553
Loans with a specific allowance, Interest Income Recognized	27	973
Single Family Investment Real Estate [Member]
Impaired loans individually evaluated for impairment
Loans without a specific allowance, Recorded Investment	4,601	11,285
Loans without a specific allowance, Unpaid Principle Balance	4,611	11,349
Loans without a specific allowance, Related Allowance
Loans without a specific allowance, YTD Average Investment	5,198	11,684
Loans without a specific allowance, Interest Income Recognized	158	637
Loans with a specific allowance, Recorded Investment	5,250	9,020
Loans with a specific allowance, Unpaid Principle Balance	5,552	9,312
Loans with a specific allowance, Related Allowance	1,174	1,140
Loans with a specific allowance, YTD Average Investment	5,617	9,571
Loans with a specific allowance, Interest Income Recognized	55	321
Commercial and Industrial [Member]
Impaired loans individually evaluated for impairment
Loans without a specific allowance, Recorded Investment	5,920	9,467
Loans without a specific allowance, Unpaid Principle Balance	5,964	9,959
Loans without a specific allowance, Related Allowance
Loans without a specific allowance, YTD Average Investment	6,189	10,216
Loans without a specific allowance, Interest Income Recognized	119	423
Loans with a specific allowance, Recorded Investment	11,455	8,980
Loans with a specific allowance, Unpaid Principle Balance	12,104	9,133
Loans with a specific allowance, Related Allowance	3,393	3,320
Loans with a specific allowance, YTD Average Investment	12,068	10,448
Loans with a specific allowance, Interest Income Recognized	187	369
Other Commercial [Member]
Impaired loans individually evaluated for impairment
Loans without a specific allowance, Recorded Investment	1,046	1,257
Loans without a specific allowance, Unpaid Principle Balance	1,046	1,257
Loans without a specific allowance, Related Allowance
Loans without a specific allowance, YTD Average Investment	1,194	1,269
Loans without a specific allowance, Interest Income Recognized	34	75
Loans with a specific allowance, Recorded Investment		150
Loans with a specific allowance, Unpaid Principle Balance		150
Loans with a specific allowance, Related Allowance		3
Loans with a specific allowance, YTD Average Investment		153
Loans with a specific allowance, Interest Income Recognized		10
Mortgage [Member]
Impaired loans individually evaluated for impairment
Loans without a specific allowance, Recorded Investment	2,600	1,202
Loans without a specific allowance, Unpaid Principle Balance	2,600	1,202
Loans without a specific allowance, Related Allowance
Loans without a specific allowance, YTD Average Investment	3,199	1,225
Loans without a specific allowance, Interest Income Recognized	57	70
Loans with a specific allowance, Recorded Investment	473	535
Loans with a specific allowance, Unpaid Principle Balance	473	535
Loans with a specific allowance, Related Allowance	59	11
Loans with a specific allowance, YTD Average Investment	473	536
Loans with a specific allowance, Interest Income Recognized		32
Consumer Construction [Member]
Impaired loans individually evaluated for impairment
Loans with a specific allowance, Recorded Investment	201	207
Loans with a specific allowance, Unpaid Principle Balance	225	226
Loans with a specific allowance, Related Allowance	80	86
Loans with a specific allowance, YTD Average Investment	226	228
Loans with a specific allowance, Interest Income Recognized
Indirect Marine [Member]
Impaired loans individually evaluated for impairment
Loans with a specific allowance, Recorded Investment		544
Loans with a specific allowance, Unpaid Principle Balance		547
Loans with a specific allowance, Related Allowance		263
Loans with a specific allowance, YTD Average Investment		548
Loans with a specific allowance, Interest Income Recognized		9
Indirect Auto [Member]
Impaired loans individually evaluated for impairment
Loans without a specific allowance, Recorded Investment	27
Loans without a specific allowance, Unpaid Principle Balance	27
Loans without a specific allowance, Related Allowance
Loans without a specific allowance, YTD Average Investment	30
Loans without a specific allowance, Interest Income Recognized	1
Loans with a specific allowance, Recorded Investment		71
Loans with a specific allowance, Unpaid Principle Balance		71
Loans with a specific allowance, Related Allowance
Loans with a specific allowance, YTD Average Investment		93
Loans with a specific allowance, Interest Income Recognized		5
HELOCs [Member]
Impaired loans individually evaluated for impairment
Loans without a specific allowance, Recorded Investment	1,425	349
Loans without a specific allowance, Unpaid Principle Balance	1,524	349
Loans without a specific allowance, Related Allowance
Loans without a specific allowance, YTD Average Investment	1,526	350
Loans without a specific allowance, Interest Income Recognized	6	11
Loans with a specific allowance, Recorded Investment	754	785
Loans with a specific allowance, Unpaid Principle Balance	811	825
Loans with a specific allowance, Related Allowance	550	587
Loans with a specific allowance, YTD Average Investment	1,017	1,034
Loans with a specific allowance, Interest Income Recognized
Other Consumer [Member]
Impaired loans individually evaluated for impairment
Loans without a specific allowance, Recorded Investment	904
Loans without a specific allowance, Unpaid Principle Balance	936
Loans without a specific allowance, Related Allowance
Loans without a specific allowance, YTD Average Investment	948	1
Loans without a specific allowance, Interest Income Recognized	15
Loans with a specific allowance, Recorded Investment	355	777
Loans with a specific allowance, Unpaid Principle Balance	355	804
Loans with a specific allowance, Related Allowance	161	284
Loans with a specific allowance, YTD Average Investment	355	815
Loans with a specific allowance, Interest Income Recognized		5
Loans without a specific allowance [Member]
Impaired loans individually evaluated for impairment
Loans without a specific allowance, Recorded Investment	130,824	169,112
Loans without a specific allowance, Unpaid Principle Balance	132,004	170,395
Loans without a specific allowance, Related Allowance
Loans without a specific allowance, YTD Average Investment	134,739	171,836
Loans without a specific allowance, Interest Income Recognized	3,091	7,397
Loans with a specific allowance [Member]
Impaired loans individually evaluated for impairment
Loans with a specific allowance, Recorded Investment	58,575	73,721
Loans with a specific allowance, Unpaid Principle Balance	60,447	74,996
Loans with a specific allowance, Related Allowance	11,500	10,298
Loans with a specific allowance, YTD Average Investment	60,871	79,481
Loans with a specific allowance, Interest Income Recognized	$ 661	$ 2,656

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Other Operating Expenses (Tables)

6 Months Ended

Jun. 30, 2012

Other Operating Expenses [Abstract]

Other Operating Expenses

	Three Months Ended June 30				Six Months Ended June 30
	2012		2011		2012		2011
Printing, Postage, & Supplies	$	620	$	556	$	1,206	$	1,095
Communications Expense		737		725		1,463		1,462
Technology & Data Processing		2,234		2,471		4,377		4,750
Professional services		1,177		1,449		2,325		2,512
Marketing & advertising expense		1,422		1,331		2,890		2,495
FDIC assessment premiums and other insurance		661		1,393		1,319		3,144
Other taxes		758		705		1,516		1,410
Loan Related Expenses		884		535		1,583		965
Foreclosed Property Expenses		425		967		716		1,426
Amortization of core deposit premuims		1,325		1,623		2,735		3,378
Acquistion & Conversion Costs		—		204		—		498
Other expenses		2,143		1,986		3,948		3,507
Total other operating expenses	$	12,386	$	13,945	$	24,078	$	26,642

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Fair Value Measurements (Details Textual) (USD $)	6 Months Ended	12 Months Ended
	Jun. 30, 2012	Dec. 31, 2011
Fair Value Measurement (Textual) [Abstract]
Nonrecurring fair value adjustments were recorded on loans held for sale	$ 0	$ 0
Total valuation expenses related to OREO properties	$ 0	$ 707,000

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Segment Reporting Disclosures (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011	Dec. 31, 2011
Information about reportable segments and reconciliation
Net interest income	$ 38,087	$ 39,623	$ 76,434	$ 78,423
Provision for loan losses	3,000	4,500	6,500	10,800
Net interest income after provision for loan losses	35,087	35,123	69,934	67,623
Noninterest income	14,410	9,963	26,228	20,510
Noninterest expenses	37,764	35,872	73,373	70,639
Income before income taxes	11,733	9,214	22,789	17,494
Net income	8,420	6,820	16,343	13,014
Total assets	3,982,288	3,851,524	3,982,288	3,851,524	3,907,087
Community Bank [Member]
Information about reportable segments and reconciliation
Net interest income	37,792	39,341	75,830	77,654
Provision for loan losses	3,000	4,500	6,500	10,800
Net interest income after provision for loan losses	34,792	34,841	69,330	66,854
Noninterest income	7,212	5,777	13,849	11,472
Noninterest expenses	31,061	31,665	61,555	61,621
Income before income taxes	10,943	8,953	21,624	16,705
Income tax expense	2,993	2,299	5,985	4,186
Net income	7,950	6,654	15,639	12,519
Total assets	3,967,690	3,846,714	3,967,690	3,846,714
Mortgage [Member]
Information about reportable segments and reconciliation
Net interest income	295	282	604	769
Provision for loan losses
Net interest income after provision for loan losses	295	282	604	769
Noninterest income	7,315	4,304	12,613	9,272
Noninterest expenses	6,820	4,325	12,052	9,252
Income before income taxes	790	261	1,165	789
Income tax expense	320	95	461	294
Net income	470	167	704	495
Total assets	110,374	57,215	110,374	57,215
Eliminations [Member]
Information about reportable segments and reconciliation
Net interest income
Provision for loan losses
Net interest income after provision for loan losses
Noninterest income	(117)	(118)	(234)	(234)
Noninterest expenses	(117)	(118)	(234)	(234)
Income before income taxes
Income tax expense
Net income			0
Total assets	(95,776)	(52,405)	(95,776)	(52,405)
Consolidated [Member]
Information about reportable segments and reconciliation
Net interest income	38,087	39,623	76,434	78,423
Provision for loan losses	3,000	4,500	6,500	10,800
Net interest income after provision for loan losses	35,087	35,123	69,934	67,623
Noninterest income	14,410	9,963	26,228	20,510
Noninterest expenses	37,764	35,872	73,373	70,639
Income before income taxes	11,733	9,214	22,789	17,494
Income tax expense	3,313	2,394	6,446	4,480
Net income	8,420	6,820	16,343	13,014
Total assets	$ 3,982,288	$ 3,851,524	$ 3,982,288	$ 3,851,524

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Derivatives (Details Textual) (USD $) In Millions, unless otherwise specified	6 Months Ended
	Jun. 30, 2012
Derivatives (Textual) [Abstract]
Rate of interest for counterparty	3.51%
Notional Amount	$ 36.0
Trust swap term	6 years
Unrealized loss of fair value of the trust swap agreement	$ 4.6

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Other Operating Expenses (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Other Operating Expenses
Printing, Postage, & Supplies	$ 620	$ 556	$ 1,206	$ 1,095
Communication Expenses	737	725	1,463	1,462
Technology & Data Processing	2,234	2,471	4,377	4,750
Professional services	1,177	1,449	2,325	2,512
Marketing & advertising expense	1,422	1,331	2,890	2,495
FDIC assessment premiums and other insurance	661	1,393	1,319	3,144
Other taxes	758	705	1,516	1,410
Loan Related Expenses	884	535	1,583	965
Foreclosed Property Expenses	425	967	716	1,426
Amortization of core deposit premiums	1,325	1,623	2,735	3,378
Acquisition & Conversion Costs		204		498
Other expenses	2,143	1,986	3,948	3,507
Total other operating expenses	$ 12,386	$ 13,945	$ 24,078	$ 26,642

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Fair Value Measurements (Details 3) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Carrying values and estimated fair values of Company's financial instruments
Total Impaired Loans	$ 47,075
Total	82,877
Impaired loans [Member]
Carrying values and estimated fair values of Company's financial instruments
Total Impaired Loans	47,075	63,423
Other real estate owned [Member]
Carrying values and estimated fair values of Company's financial instruments
Total Impaired Loans	35,802	32,263
Other real estate owned	35,802
Market comparables [Member] | Discount applied to market comparables [Member] | Other real estate owned [Member]
Carrying values and estimated fair values of Company's financial instruments
Weighted Average	31.00%
Commercial Construction [Member]
Carrying values and estimated fair values of Company's financial instruments
Other real estate owned	12,021
Commercial Construction [Member] | Market comparables [Member] | Discount applied to market comparables [Member] | Impaired loans [Member]
Carrying values and estimated fair values of Company's financial instruments
Weighted Average	15.00%
Commercial Real Estate - Owner Occupied [Member]
Carrying values and estimated fair values of Company's financial instruments
Other real estate owned	4,780
Commercial Real Estate - Owner Occupied [Member] | Market comparables [Member] | Discount applied to market comparables [Member] | Impaired loans [Member]
Carrying values and estimated fair values of Company's financial instruments
Weighted Average	9.00%
Commercial Real Estate - Non-Owner Occupied [Member]
Carrying values and estimated fair values of Company's financial instruments
Other real estate owned	8,118
Commercial Real Estate - Non-Owner Occupied [Member] | Market comparables [Member] | Discount applied to market comparables [Member] | Impaired loans [Member]
Carrying values and estimated fair values of Company's financial instruments
Weighted Average	0.00%
Raw Land and Lots [Member]
Carrying values and estimated fair values of Company's financial instruments
Other real estate owned	9,085
Raw Land and Lots [Member] | Market comparables [Member] | Discount applied to market comparables [Member] | Impaired loans [Member]
Carrying values and estimated fair values of Company's financial instruments
Weighted Average	29.00%
Single Family Investment Real Estate [Member]
Carrying values and estimated fair values of Company's financial instruments
Other real estate owned	4,076
Single Family Investment Real Estate [Member] | Market comparables [Member] | Discount applied to market comparables [Member] | Impaired loans [Member]
Carrying values and estimated fair values of Company's financial instruments
Weighted Average	7.00%
Commercial and Industrial [Member]
Carrying values and estimated fair values of Company's financial instruments
Other real estate owned	8,062
Commercial and Industrial [Member] | Market comparables [Member] | Discount applied to market comparables [Member] | Impaired loans [Member]
Carrying values and estimated fair values of Company's financial instruments
Weighted Average	9.00%
Other Consumer [Member]
Carrying values and estimated fair values of Company's financial instruments
Other real estate owned	$ 933
Other Consumer [Member] | Market comparables [Member] | Discount applied to market comparables [Member] | Impaired loans [Member]
Carrying values and estimated fair values of Company's financial instruments
Weighted Average	15.00%

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Stock-Based Compensation (Tables)

6 Months Ended

Jun. 30, 2012

Stock-Based Compensation [Abstract]

Summarizes the stock option activity

	Number of Stock Options			Weighted Average Exercise Price
Options outstanding, December 31, 2011		422,750		$	17.70
Granted		131,657			14.40
Forfeited		(18,429	)		14.52
Expired		(10,905	)		21.10
Options outstanding, June 30, 2012		525,073			16.91
Options exercisable, June 30, 2012		229,136			20.59

Estimated stock option on the date of grant fair value

	Six Months Ended June 30,
	2012			2011
Dividend yield (1)		2.47	%		2.36	%
Expected life in years (2)		7.0			7.0
Expected volatility (3)		41.53	%		41.02	%
Risk-free interest rate (4)		1.24	%		2.71	%
Weighted average fair value per option granted	$	4.76		$	4.31

(1) Calculated as the ratio of historical dividends paid per share of common stock to the stock price on the date of grant.

(2) Based on the average of the contractual life and vesting schedule for the respective option.

(3) Based on the monthly historical volatility of the Company’s stock price over the expected life of the options.

(4) Based upon the U.S. Treasury bill yield curve, for periods within the contractual life of the option, in effect at the time of grant.

Summary of information concerning stock options

	Stock Options Vested or Expected to Vest		Exercisable
Stock options		496,967		229,136
Weighted average remaining contractual life in years		6.64		4.00
Weighted average exercise price on shares above water	$	13.22	$	12.17
Aggregate intrinsic value	$	294,614	$	66,268

Summary the nonvested stock activity

	Number of Shares of Restricted Stock			Performance Stock			Weighted Average  Grant- Date Fair Value
Balance, December 31, 2011		140,557			6,000		$	12.62
Granted		70,061			—			14.21
Vested		(7,904	)		—			15.81
Forfeited		(12,904	)		(1,500	)		13.12
Balance, June 30, 2012		189,810			4,500			12.74

Estimated unamortized compensation expense recognized in future

	Stock Options		Restricted Stock		Total
For the remaining six months of 2012	$	180	$	460	$	640
For year ending December 31, 2013		368		687		1,055
For year ending December 31, 2014		361		359		720
For year ending December 31, 2015		269		91		360
For year ending December 31, 2016		155		6		161
For year ending December 31, 2017		25		—		25
Total	$	1,358	$	1,603	$	2,961

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Loans and Allowance for Loan Losses (Details 7) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Loans receivables related risk rating excluding purchased impaired loans
Loans receivables related risk rating	$ 2,029,806	$ 1,947,413
Commercial Construction [Member]
Loans receivables related risk rating excluding purchased impaired loans
Loans receivables related risk rating	190,141	185,359
Commercial Real Estate - Owner Occupied [Member]
Loans receivables related risk rating excluding purchased impaired loans
Loans receivables related risk rating	477,570	451,115
Commercial Real Estate - Non-Owner Occupied [Member]
Loans receivables related risk rating excluding purchased impaired loans
Loans receivables related risk rating	694,980	653,950
Raw Land and Lots [Member]
Loans receivables related risk rating excluding purchased impaired loans
Loans receivables related risk rating	204,707	208,661
Single Family Investment Real Estate [Member]
Loans receivables related risk rating excluding purchased impaired loans
Loans receivables related risk rating	209,779	192,049
Commercial and Industrial [Member]
Loans receivables related risk rating excluding purchased impaired loans
Loans receivables related risk rating	210,135	211,876
Other Consumer [Member]
Loans receivables related risk rating excluding purchased impaired loans
Loans receivables related risk rating	42,494	44,403
1-3 [Member]
Loans receivables related risk rating excluding purchased impaired loans
Loans receivables related risk rating	358,815	326,468
1-3 [Member] | Commercial Construction [Member]
Loans receivables related risk rating excluding purchased impaired loans
Loans receivables related risk rating	15,558	10,099
1-3 [Member] | Commercial Real Estate - Owner Occupied [Member]
Loans receivables related risk rating excluding purchased impaired loans
Loans receivables related risk rating	104,138	88,430
1-3 [Member] | Commercial Real Estate - Non-Owner Occupied [Member]
Loans receivables related risk rating excluding purchased impaired loans
Loans receivables related risk rating	156,028	149,346
1-3 [Member] | Raw Land and Lots [Member]
Loans receivables related risk rating excluding purchased impaired loans
Loans receivables related risk rating	2,240	4,368
1-3 [Member] | Single Family Investment Real Estate [Member]
Loans receivables related risk rating excluding purchased impaired loans
Loans receivables related risk rating	33,761	32,741
1-3 [Member] | Commercial and Industrial [Member]
Loans receivables related risk rating excluding purchased impaired loans
Loans receivables related risk rating	41,186	35,120
1-3 [Member] | Other Consumer [Member]
Loans receivables related risk rating excluding purchased impaired loans
Loans receivables related risk rating	5,904	6,364
4 [Member]
Loans receivables related risk rating excluding purchased impaired loans
Loans receivables related risk rating	1,213,367	1,104,102
4 [Member] | Commercial Construction [Member]
Loans receivables related risk rating excluding purchased impaired loans
Loans receivables related risk rating	90,320	84,299
4 [Member] | Commercial Real Estate - Owner Occupied [Member]
Loans receivables related risk rating excluding purchased impaired loans
Loans receivables related risk rating	317,703	296,825
4 [Member] | Commercial Real Estate - Non-Owner Occupied [Member]
Loans receivables related risk rating excluding purchased impaired loans
Loans receivables related risk rating	416,649	367,244
4 [Member] | Raw Land and Lots [Member]
Loans receivables related risk rating excluding purchased impaired loans
Loans receivables related risk rating	108,866	99,374
4 [Member] | Single Family Investment Real Estate [Member]
Loans receivables related risk rating excluding purchased impaired loans
Loans receivables related risk rating	139,779	116,570
4 [Member] | Commercial and Industrial [Member]
Loans receivables related risk rating excluding purchased impaired loans
Loans receivables related risk rating	122,147	123,872
4 [Member] | Other Consumer [Member]
Loans receivables related risk rating excluding purchased impaired loans
Loans receivables related risk rating	17,903	15,918
5 [Member]
Loans receivables related risk rating excluding purchased impaired loans
Loans receivables related risk rating	144,655	152,040
5 [Member] | Commercial Construction [Member]
Loans receivables related risk rating excluding purchased impaired loans
Loans receivables related risk rating	12,194	6,079
5 [Member] | Commercial Real Estate - Owner Occupied [Member]
Loans receivables related risk rating excluding purchased impaired loans
Loans receivables related risk rating	20,366	17,604
5 [Member] | Commercial Real Estate - Non-Owner Occupied [Member]
Loans receivables related risk rating excluding purchased impaired loans
Loans receivables related risk rating	57,512	58,844
5 [Member] | Raw Land and Lots [Member]
Loans receivables related risk rating excluding purchased impaired loans
Loans receivables related risk rating	11,306	18,767
5 [Member] | Single Family Investment Real Estate [Member]
Loans receivables related risk rating excluding purchased impaired loans
Loans receivables related risk rating	12,154	11,928
5 [Member] | Commercial and Industrial [Member]
Loans receivables related risk rating excluding purchased impaired loans
Loans receivables related risk rating	19,607	22,079
5 [Member] | Other Consumer [Member]
Loans receivables related risk rating excluding purchased impaired loans
Loans receivables related risk rating	11,516	16,739
6 [Member]
Loans receivables related risk rating excluding purchased impaired loans
Loans receivables related risk rating	150,018	159,867
6 [Member] | Commercial Construction [Member]
Loans receivables related risk rating excluding purchased impaired loans
Loans receivables related risk rating	34,210	36,650
6 [Member] | Commercial Real Estate - Owner Occupied [Member]
Loans receivables related risk rating excluding purchased impaired loans
Loans receivables related risk rating	17,309	21,158
6 [Member] | Commercial Real Estate - Non-Owner Occupied [Member]
Loans receivables related risk rating excluding purchased impaired loans
Loans receivables related risk rating	32,437	38,662
6 [Member] | Raw Land and Lots [Member]
Loans receivables related risk rating excluding purchased impaired loans
Loans receivables related risk rating	38,740	33,673
6 [Member] | Single Family Investment Real Estate [Member]
Loans receivables related risk rating excluding purchased impaired loans
Loans receivables related risk rating	13,322	14,358
6 [Member] | Commercial and Industrial [Member]
Loans receivables related risk rating excluding purchased impaired loans
Loans receivables related risk rating	8,729	11,559
6 [Member] | Other Consumer [Member]
Loans receivables related risk rating excluding purchased impaired loans
Loans receivables related risk rating	5,271	3,807
7 [Member]
Loans receivables related risk rating excluding purchased impaired loans
Loans receivables related risk rating	161,371	203,709
7 [Member] | Commercial Construction [Member]
Loans receivables related risk rating excluding purchased impaired loans
Loans receivables related risk rating	37,749	48,232
7 [Member] | Commercial Real Estate - Owner Occupied [Member]
Loans receivables related risk rating excluding purchased impaired loans
Loans receivables related risk rating	18,054	26,389
7 [Member] | Commercial Real Estate - Non-Owner Occupied [Member]
Loans receivables related risk rating excluding purchased impaired loans
Loans receivables related risk rating	32,354	39,854
7 [Member] | Raw Land and Lots [Member]
Loans receivables related risk rating excluding purchased impaired loans
Loans receivables related risk rating	43,049	52,204
7 [Member] | Single Family Investment Real Estate [Member]
Loans receivables related risk rating excluding purchased impaired loans
Loans receivables related risk rating	10,024	16,452
7 [Member] | Commercial and Industrial [Member]
Loans receivables related risk rating excluding purchased impaired loans
Loans receivables related risk rating	18,302	19,066
7 [Member] | Other Consumer [Member]
Loans receivables related risk rating excluding purchased impaired loans
Loans receivables related risk rating	1,839	1,512
8 [Member]
Loans receivables related risk rating excluding purchased impaired loans
Loans receivables related risk rating	1,580	1,227
8 [Member] | Commercial Construction [Member]
Loans receivables related risk rating excluding purchased impaired loans
Loans receivables related risk rating	110
8 [Member] | Commercial Real Estate - Owner Occupied [Member]
Loans receivables related risk rating excluding purchased impaired loans
Loans receivables related risk rating		709
8 [Member] | Commercial Real Estate - Non-Owner Occupied [Member]
Loans receivables related risk rating excluding purchased impaired loans
Loans receivables related risk rating
8 [Member] | Raw Land and Lots [Member]
Loans receivables related risk rating excluding purchased impaired loans
Loans receivables related risk rating	506	275
8 [Member] | Single Family Investment Real Estate [Member]
Loans receivables related risk rating excluding purchased impaired loans
Loans receivables related risk rating	739
8 [Member] | Commercial and Industrial [Member]
Loans receivables related risk rating excluding purchased impaired loans
Loans receivables related risk rating	164	180
8 [Member] | Other Consumer [Member]
Loans receivables related risk rating excluding purchased impaired loans
Loans receivables related risk rating	$ 61	$ 63

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Stock-Based Compensation (Details Textual) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Stock-Based Compensation (Additional Textual) [Abstract]
Available shares for stock option awards to employees	1,000,000		1,000,000
Shares available for grant	23,000		23,000
Expiry period of stock option plan			2013
Maximum term for stock option's from the grant date			10 years
Vesting proportion per year			20.00%
Maximum vesting period			5 years
Shares available for issuance under stock option plan	743,000		743,000
Recognized stock-based compensation expense	$ 376,000	$ 615,000	$ 145,000	$ 235,000
Stock-based compensation expense per share		less than $0.01		less than $0.01
Stock-based compensation expense per share	$ 0.01		$ 0.02
Intrinsic Value for stock options exercised	0		0
Fair value of stock options vested			$ 275,000
Restricted stock vests			50.00%

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Derivatives (Details 1) (USD $) In Thousands, unless otherwise specified	3 Months Ended	6 Months Ended
	Dec. 31, 2011 position	Jun. 30, 2012 position
Summary regarding loan swap derivative activities
Notional Amount		$ 36,000
Life (Years)		6 years
Receive fixed - pay floating interest rate swaps [Member] | Interest rate swap [Member]
Summary regarding loan swap derivative activities
Positions	2	1
Notional Amount	4,028	1,401
Asset	66	34
Liability
Receive Rate	6.35%	7.00%
Pay Rate	2.77%	2.75%
Life (Years)	1 year 4 days	6 months
Pay fixed - receive floating interest rate swaps [Member]
Summary regarding loan swap derivative activities
Positions	1	1
Notional Amount	36,000	36,000
Asset
Liability	4,293	4,582
Receive Rate	0.58%	0.46%
Pay Rate	3.51%	3.51%
Life (Years)	5 years 5 months 16 days	4 years 11 months 16 days
Pay fixed - receive floating interest rate swaps [Member] | Interest rate swap [Member]
Summary regarding loan swap derivative activities
Positions	2	1
Notional Amount	4,028	1,401
Asset
Liability	$ 66	$ 34
Receive Rate	2.77%	2.75%
Pay Rate	6.35%	7.00%
Life (Years)	1 year 4 days	6 months

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Stock-Based Compensation (Details) (USD $)	6 Months Ended
	Jun. 30, 2012
Summarizes the stock option activity
Number of Stock Options, Outstanding beginning balances	422,750
Weighted Average Exercise Price, Outstanding beginning balances	$ 17.70
Number of Stock Options, Granted	131,657
Weighted Average Exercise Price, Granted	$ 14.40
Number of Stock Options, Forfeited	(18,429)
Weighted Average Exercise Price, Forfeited	$ 14.52
Number of Stock Options, Expired	(10,905)
Weighted Average Exercise Price, Expired	$ 21.10
Number of Stock Options, Outstanding ending balances	525,073
Weighted Average Exercise Price, Outstanding ending balances	$ 16.91
Number of Stock Options, Exercisable	229,136
Weighted Average Exercise Price, Options exercisable	$ 20.59

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Loans and Allowance for Loan Losses (Details 9) (USD $) In Thousands, unless otherwise specified				6 Months Ended	12 Months Ended	6 Months Ended	12 Months Ended
	Jun. 30, 2012	Dec. 31, 2011	Jun. 30, 2011	Jun. 30, 2012 Purchased Impaired [Member]	Dec. 31, 2011 Purchased Impaired [Member]	Jun. 30, 2012 Purchased Non impaired [Member]	Dec. 31, 2011 Purchased Non impaired [Member]
Accretable Yield
Balance at beginning of period				$ 5,140	$ 8,169	$ 9,010	$ 13,589
Additions					122		1,593
Accretion				(38)	(66)	(2,166)	(6,172)
Charged off				(1,373)	(3,073)
Transfers to OREO					(12)
Payments received, net
Balance at end of period				3,729	5,140	6,844	9,010
Carrying Amount of Loans
Balance at beginning of period	40,985	39,470	39,631	9,897	13,999	663,510	799,898
Additions					276		70,524
Accretion
Charged off				(212)	(1,329)	(1,032)	(5,988)
Transfers to OREO				(2,371)	(174)	(2,766)	(2,341)
Payments received, net				(539)	(2,875)	(127,264)	(198,583)
Balance at end of period	$ 40,985	$ 39,470	$ 39,631	$ 6,775	$ 9,897	$ 532,448	$ 663,510

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Securities (Details Textual) (USD $)	3 Months Ended	6 Months Ended
	Sep. 30, 2011	Jun. 30, 2012 Issue	Dec. 31, 2011
Securities (Textual) [Abstract]
Securities had an unrealized loss		$ (490,000)	$ (721,000)
Securities (Additional Textual) [Abstract]
Federal Home Loan Bank requires Bank to maintain percentage of stock equal to outstanding borrowings		4.50%
Federal Reserve Bank require to maintain stock with a percentage par value equal to its outstanding capital		6.00%
Restricted equity securities consist of Federal Reserve Bank stock		6,800,000	6,700,000
Federal Home Loan Bank Stock		12,500,000	13,900,000
Individual securities that had been in a continuous loss position, amount		2,931,000	4,880,000
Individual securities that had been in a continuous loss position		6
Securities with an amortized cost		171,300,000	172,100,000
Credit-related OTTI	400,000
Corporate and municipal obligations [Member]
Securities (Textual) [Abstract]
Securities had an unrealized loss		$ 490,000

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Goodwill and Intangible Assets (Details Textual) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Goodwill and Intangible Assets (Textual) [Abstract]
Amortization expense			$ 4,835,000	$ 3,182,000
Minimum [Member]
Goodwill and Intangible Assets (Textual) [Abstract]
Period of amortization			4 years
Maximum [Member]
Goodwill and Intangible Assets (Textual) [Abstract]
Period of amortization			14 years
Harrisonburg branch acquisition [Member]
Goodwill and Intangible Assets (Textual) [Abstract]
Core deposit intangible	9,500		9,500
Goodwill	1,800,000		1,800,000
Amortizable core deposit intangibles [Member]
Goodwill and Intangible Assets (Textual) [Abstract]
Amortization expense	1,200,000	1,600,000	2,500,000	3,200,000
Amortizable core deposit intangibles [Member] | Harrisonburg branch acquisition [Member]
Goodwill and Intangible Assets (Textual) [Abstract]
Amortization expense				9,500
Trademark intangible [Member]
Goodwill and Intangible Assets (Textual) [Abstract]
Amortization expense	$ 100,000	$ 100,000	$ 200,000	$ 200,000

XML

Loans and Allowance for Loan Losses (Details 4) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012 Loan	Dec. 31, 2011 Loan
Summary, by class and modification type, of continue accrue interest under the terms of restructuring agreement
No. of Loans	96	113
Recorded Investment	$ 80,170	$ 112,638
Outstanding Commitment	2,498	3,583
Performing [Member]
Summary, by class and modification type, of continue accrue interest under the terms of restructuring agreement
No. of Loans	73	87
Recorded Investment	67,490	98,834
Outstanding Commitment	2,498	3,583
Nonperforming [Member]
Summary, by class and modification type, of continue accrue interest under the terms of restructuring agreement
No. of Loans	23	26
Recorded Investment	12,680	13,804
Outstanding Commitment
Commercial Construction [Member] | Performing [Member]
Summary, by class and modification type, of continue accrue interest under the terms of restructuring agreement
No. of Loans	9	14
Recorded Investment	12,566	21,461
Outstanding Commitment	2,247	3,185
Commercial Construction [Member] | Nonperforming [Member]
Summary, by class and modification type, of continue accrue interest under the terms of restructuring agreement
No. of Loans	4	5
Recorded Investment	5,242	5,353
Outstanding Commitment
Commercial Real Estate - Owner Occupied [Member] | Performing [Member]
Summary, by class and modification type, of continue accrue interest under the terms of restructuring agreement
No. of Loans	11	11
Recorded Investment	5,069	7,996
Outstanding Commitment		180
Commercial Real Estate - Owner Occupied [Member] | Nonperforming [Member]
Summary, by class and modification type, of continue accrue interest under the terms of restructuring agreement
No. of Loans	3
Recorded Investment	1,182
Outstanding Commitment
Commercial Real Estate - Non-Owner Occupied [Member] | Performing [Member]
Summary, by class and modification type, of continue accrue interest under the terms of restructuring agreement
No. of Loans	10	16
Recorded Investment	16,303	21,777
Outstanding Commitment		13
Commercial Real Estate - Non-Owner Occupied [Member] | Nonperforming [Member]
Summary, by class and modification type, of continue accrue interest under the terms of restructuring agreement
No. of Loans	1	2
Recorded Investment	212	292
Outstanding Commitment
Raw Land and Lots [Member] | Performing [Member]
Summary, by class and modification type, of continue accrue interest under the terms of restructuring agreement
No. of Loans	15	15
Recorded Investment	27,477	32,450
Outstanding Commitment	251	1
Raw Land and Lots [Member] | Nonperforming [Member]
Summary, by class and modification type, of continue accrue interest under the terms of restructuring agreement
No. of Loans	3	6
Recorded Investment	3,861	4,342
Outstanding Commitment
Single Family Investment Real Estate [Member] | Performing [Member]
Summary, by class and modification type, of continue accrue interest under the terms of restructuring agreement
No. of Loans	7	12
Recorded Investment	1,101	8,525
Outstanding Commitment
Single Family Investment Real Estate [Member] | Nonperforming [Member]
Summary, by class and modification type, of continue accrue interest under the terms of restructuring agreement
No. of Loans	2	4
Recorded Investment	443	1,342
Outstanding Commitment
Commercial and Industrial [Member] | Performing [Member]
Summary, by class and modification type, of continue accrue interest under the terms of restructuring agreement
No. of Loans	9	12
Recorded Investment	2,605	4,991
Outstanding Commitment		204
Commercial and Industrial [Member] | Nonperforming [Member]
Summary, by class and modification type, of continue accrue interest under the terms of restructuring agreement
No. of Loans	7	3
Recorded Investment	1,310	1,134
Outstanding Commitment
Other Commercial [Member] | Performing [Member]
Summary, by class and modification type, of continue accrue interest under the terms of restructuring agreement
No. of Loans	2	4
Recorded Investment	302	864
Outstanding Commitment
Mortgage [Member]
Summary, by class and modification type, of continue accrue interest under the terms of restructuring agreement
No. of Loans	1
Recorded Investment	202
Outstanding Commitment
Mortgage [Member] | Performing [Member]
Summary, by class and modification type, of continue accrue interest under the terms of restructuring agreement
No. of Loans	7	1
Recorded Investment	1,699	507
Outstanding Commitment
Mortgage [Member] | Nonperforming [Member]
Summary, by class and modification type, of continue accrue interest under the terms of restructuring agreement
No. of Loans		5
Recorded Investment		1,076
Outstanding Commitment
Indirect Marine [Member]
Summary, by class and modification type, of continue accrue interest under the terms of restructuring agreement
No. of Loans	1
Recorded Investment	283
Outstanding Commitment
Indirect Marine [Member] | Performing [Member]
Summary, by class and modification type, of continue accrue interest under the terms of restructuring agreement
No. of Loans
Recorded Investment
Outstanding Commitment
Indirect Marine [Member] | Nonperforming [Member]
Summary, by class and modification type, of continue accrue interest under the terms of restructuring agreement
No. of Loans	1
Recorded Investment	26
Outstanding Commitment
Other Consumer [Member] | Performing [Member]
Summary, by class and modification type, of continue accrue interest under the terms of restructuring agreement
No. of Loans	2	2
Recorded Investment	85	263
Outstanding Commitment
Other Consumer [Member] | Nonperforming [Member]
Summary, by class and modification type, of continue accrue interest under the terms of restructuring agreement
No. of Loans	1	1
Recorded Investment	202	265
Outstanding Commitment

XML

Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011
Operating activities:
Net income	$ 16,343	$ 13,014
Adjustments to reconcile net income to net cash and cash equivalents provided by operating activities:
Depreciation of bank premises and equipment	3,412	3,312
Amortization, net	4,835	3,182
Provision for loan losses	6,500	10,800
(Gains) losses on the sale of investment securities	(5)	16
(Increase) decrease in loans held for sale, net	(25,243)	23,554
(Gain) Loss on sales of other real estate owned and bank premises, net	(137)	1,090
Stock-based compensation expense	615	235
Decrease in other assets	2,304	3,852
Increase (decrease) in other liabilities	6,590	(1,249)
Net cash and cash equivalents provided by operating activities	15,214	57,806
Investing activities:
Purchases of securities available for sale	(95,191)	(72,737)
Proceeds from sales of securities available for sale	3,583
Proceeds from maturities, calls and pay downs of securities available for sale	83,656	60,904
Net (increase) decrease in loans	(84,671)	30,469
Net increase in bank premises and equipment	(3,602)	(2,707)
Proceeds from sales of other real estate owned	7,077	7,271
Improvements to other real estate owned	(343)
Cash paid in bank acquisition		(26,437)
Cash acquired in bank and branch acquisitions		230
Net cash and cash equivalents used in investing activities	(89,492)	(3,007)
Financing activities:
Net increase in noninterest-bearing deposits	57,222	31,278
Net increase (decrease) in interest-bearing deposits	(13,341)	(67,153)
Net increase (decrease) in short-term borrowings	12,399	(12,743)
Net increase in long-term borrowings	244	244
Cash dividends paid - common stock	(3,632)	(3,637)
Cash dividends paid - preferred stock		(924)
Repurchase of common stock	(2,863)
Taxes paid related to net share settlement of equity awards	(26)	1
Issuance of common stock		215
Net cash and cash equivalents provided by (used in) financing activities	50,003	(52,719)
Increase (decrease) in cash and cash equivalents	(24,275)	2,081
Cash and cash equivalents at beginning of the period	96,659	61,153
Cash and cash equivalents at end of the period	72,384	63,234
Cash payments for:
Interest	15,699	16,928
Income taxes	2,914	2,464
Supplemental schedule of noncash investing and financing activities
Unrealized gain on securities available for sale	2,538	10,052
Changes in fair value of interest rate swap	(290)	(999)
Transfers from loans to other real estate owned	10,479	8,546
Increase in assets and liabilities:
Loans		70,817
Other assets		4,324
Noninterest bearing deposits		4,366
Interest bearing deposits		44,503
Other liabilities		$ 65

XML

Commitments and Contingencies (Details) (USD $) In Millions, unless otherwise specified	6 Months Ended
	Jun. 30, 2012	Dec. 31, 2011	Jun. 30, 2011
Commitments and Contingencies (Textual) [Abstract]
Outstanding loan commitments	$ 829.1	$ 720.3	$ 773.3
Credit risk	48.0	38.1	39.7
Rate Lock Commitments	161.3	45.8	109.9
Loans held for sale	100.1	74.8	50.4
Selling of loans on a servicing released basis	$ 261.4

XML

Loans and Allowance for Loan Losses (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011	Jun. 30, 2011
Loans stated at face amount, net of unearned income
Loans, net of unearned income	$ 2,887,790	$ 2,818,583	$ 2,859,569
Commercial Construction [Member]
Loans stated at face amount, net of unearned income
Loans, net of unearned income	190,141	185,359
Commercial Real Estate - Owner Occupied [Member]
Loans stated at face amount, net of unearned income
Loans, net of unearned income	478,804	452,407
Commercial Real Estate - Non-Owner Occupied [Member]
Loans stated at face amount, net of unearned income
Loans, net of unearned income	694,980	655,083
Raw Land and Lots [Member]
Loans stated at face amount, net of unearned income
Loans, net of unearned income	208,460	214,284
Single Family Investment Real Estate [Member]
Loans stated at face amount, net of unearned income
Loans, net of unearned income	210,151	192,437
Commercial and Industrial [Member]
Loans stated at face amount, net of unearned income
Loans, net of unearned income	210,517	212,268
Other Commercial [Member]
Loans stated at face amount, net of unearned income
Loans, net of unearned income	42,494	44,403
Mortgage [Member]
Loans stated at face amount, net of unearned income
Loans, net of unearned income	221,063	219,646
Consumer Construction [Member]
Loans stated at face amount, net of unearned income
Loans, net of unearned income	25,778	20,757
Indirect Auto [Member]
Loans stated at face amount, net of unearned income
Loans, net of unearned income	158,813	162,708
Indirect Marine [Member]
Loans stated at face amount, net of unearned income
Loans, net of unearned income	33,729	39,819
HELOCs [Member]
Loans stated at face amount, net of unearned income
Loans, net of unearned income	280,030	277,101
Credit Card [Member]
Loans stated at face amount, net of unearned income
Loans, net of unearned income	19,717	19,006
Other Consumer [Member]
Loans stated at face amount, net of unearned income
Loans, net of unearned income	$ 113,113	$ 123,305

XML

Goodwill and Intangible Assets (Tables)

6 Months Ended

Jun. 30, 2012

Goodwill and Intangible Assets [Abstract]

Information concerning goodwill and intangible assets

	Gross Carrying Value		Accumulated Amortization		Net Carrying Value
June 30, 2012
Amortizable core deposit intangibles	$	46,615	$	28,437	$	18,178
Unamortizable goodwill		59,742		342		59,400
Trademark intangible		1,200		967		233
December 31, 2011
Amortizable core deposit intangibles	$	46,615	$	25,901	$	20,714
Unamortizable goodwill		59,742		342		59,400
Trademark intangible		1,200		767		433
June 30, 2011
Amortizable core deposit intangibles	$	46,615	$	22,957	$	23,658
Unamortizable goodwill		59,742		342		59,400
Trademark intangible		1,200		567		633

Estimated remaining amortization expense of core deposit and trademark intangibles

2013	$	4,589
2014		3,349
2015		2,645
2016		2,184
2017		1,635
Thereafter		4,009
	$	18,411

XML

Segment Reporting Disclosures (Tables)

6 Months Ended

Jun. 30, 2012

Segment Reporting Disclosures [Abstract]

Information about reportable segments and reconciliation

	Community Bank		Mortgage		Eliminations			Consolidated
Three Months Ended June 30, 2012
Net interest income	$	37,792	$	295	$	—		$	38,087
Provision for loan losses		3,000		—		—			3,000
Net interest income after provision for loan losses		34,792		295		—			35,087
Noninterest income		7,212		7,315		(117	)		14,410
Noninterest expenses		31,061		6,820		(117	)		37,764
Income before income taxes		10,943		790		—			11,733
Income tax expense		2,993		320		—			3,313
Net income	$	7,950	$	470	$	—		$	8,420
Total assets	$	3,967,690	$	110,374	$	(95,776	)	$	3,982,288
Three Months Ended June 30, 2011
Net interest income	$	39,341	$	282	$	—		$	39,623
Provision for loan losses		4,500		—		—			4,500
Net interest income after provision for loan losses		34,841		282		—			35,123
Noninterest income		5,777		4,304		(118	)		9,963
Noninterest expenses		31,665		4,325		(118	)		35,872
Income before income taxes		8,953		261		—			9,214
Income tax expense		2,299		95		—			2,394
Net income	$	6,654	$	167	$	—		$	6,820
Total assets	$	3,846,714	$	57,215	$	(52,405	)	$	3,851,524
Six Months Ended June 30, 2012
Net interest income	$	75,830	$	604	$	—		$	76,434
Provision for loan losses		6,500		—		—			6,500
Net interest income after provision for loan losses		69,330		604		—			69,934
Noninterest income		13,849		12,613		(234	)		26,228
Noninterest expenses		61,555		12,052		(234	)		73,373
Income before income taxes		21,624		1,165		—			22,789
Income tax expense		5,985		461		—			6,446
Net income	$	15,639	$	704	$	—		$	16,343
Total assets	$	3,967,690	$	110,374	$	(95,776	)	$	3,982,288
Six Months Ended June 30, 2011
Net interest income	$	77,654	$	769	$	—		$	78,423
Provision for loan losses		10,800		—		—			10,800
Net interest income after provision for loan losses		66,854		769		—			67,623
Noninterest income		11,472		9,272		(234	)		20,510
Noninterest expenses		61,621		9,252		(234	)		70,639
Income before income taxes		16,705		789		—			17,494
Income tax (benefit) expense		4,186		294		—			4,480
Net income	$	12,519	$	495	$	—		$	13,014
Total assets	$	3,846,714	$	57,215	$	(52,405	)	$	3,851,524

XML

Trust Preferred Capital Notes (Details) (USD $)				6 Months Ended		6 Months Ended
	Jun. 30, 2012	Dec. 31, 2011	Jun. 30, 2011	Jun. 30, 2012 Statutory Trust I [Member]	Jun. 30, 2012 Statutory Trust I [Member] Principal asset [Member]	Jun. 30, 2012 Statutory Trust II [Member]	Jun. 30, 2012 Statutory Trust II [Member] Principal asset [Member]
Trust Preferred Capital Notes (Textual) [Abstract]
Trust preferred capital note	$ 60,310,000	$ 60,310,000	$ 60,310,000	$ 22,500,000	$ 23,200,000	$ 36,000,000	$ 37,100,000
LIBOR rate				2.75%		1.40%
Interest rate				3.21%		1.86%
Security maturity date				Jun. 17, 2034		Jun. 15, 2036
Other assets	$ 111,697,000	$ 112,699,000	$ 115,278,000	$ 696,000		$ 1,100,000

XML

Loans and Allowance for Loan Losses (Details 1) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011	Jun. 30, 2011
Summary of aging of the loan portfolio, by class
30-59 Days Past Due	$ 15,821	$ 15,118
60-89 Days Past Due	6,624	4,265
Greater Than 90 Days and still Accruing	10,768	19,912
Purchased Impaired (net of credit mark)	6,775	9,897
Nonaccrual	39,171	44,834
Current	2,808,631	2,724,557
Total Loans	2,887,790	2,818,583	2,859,569
Commercial Construction [Member]
Summary of aging of the loan portfolio, by class
30-59 Days Past Due
60-89 Days Past Due
Greater Than 90 Days and still Accruing		490
Purchased Impaired (net of credit mark)
Nonaccrual	9,763	10,276
Current	180,378	174,593
Total Loans	190,141	185,359
Commercial Real Estate - Owner Occupied [Member]
Summary of aging of the loan portfolio, by class
30-59 Days Past Due	3,151	520
60-89 Days Past Due	50
Greater Than 90 Days and still Accruing	200	2,482
Purchased Impaired (net of credit mark)	1,234	1,292
Nonaccrual	5,194	5,962
Current	468,975	442,151
Total Loans	478,804	452,407
Commercial Real Estate - Non-Owner Occupied [Member]
Summary of aging of the loan portfolio, by class
30-59 Days Past Due	895	190
60-89 Days Past Due	1,721	64
Greater Than 90 Days and still Accruing	636	2,887
Purchased Impaired (net of credit mark)		1,133
Nonaccrual	517	2,031
Current	691,211	648,778
Total Loans	694,980	655,083
Raw Land and Lots [Member]
Summary of aging of the loan portfolio, by class
30-59 Days Past Due	57	94
60-89 Days Past Due		1,124
Greater Than 90 Days and still Accruing	153
Purchased Impaired (net of credit mark)	3,753	5,623
Nonaccrual	12,139	13,322
Current	192,358	194,121
Total Loans	208,460	214,284
Single Family Investment Real Estate [Member]
Summary of aging of the loan portfolio, by class
30-59 Days Past Due	1,059	779
60-89 Days Past Due	735	70
Greater Than 90 Days and still Accruing	673	3,637
Purchased Impaired (net of credit mark)	372	388
Nonaccrual	3,476	5,048
Current	203,836	182,515
Total Loans	210,151	192,437
Commercial and Industrial [Member]
Summary of aging of the loan portfolio, by class
30-59 Days Past Due	510	601
60-89 Days Past Due	254	185
Greater Than 90 Days and still Accruing	140	3,369
Purchased Impaired (net of credit mark)	382	392
Nonaccrual	4,715	5,297
Current	204,516	202,424
Total Loans	210,517	212,268
Other Commercial [Member]
Summary of aging of the loan portfolio, by class
30-59 Days Past Due	2
60-89 Days Past Due	262	25
Greater Than 90 Days and still Accruing	522
Purchased Impaired (net of credit mark)
Nonaccrual	231	238
Current	41,477	44,140
Total Loans	42,494	44,403
Mortgage [Member]
Summary of aging of the loan portfolio, by class
30-59 Days Past Due	4,575	6,748
60-89 Days Past Due	2,078	412
Greater Than 90 Days and still Accruing	4,497	3,804
Purchased Impaired (net of credit mark)
Nonaccrual	1,171	240
Current	208,742	208,442
Total Loans	221,063	219,646
Consumer Construction [Member]
Summary of aging of the loan portfolio, by class
30-59 Days Past Due	408
Greater Than 90 Days and still Accruing
Purchased Impaired (net of credit mark)
Nonaccrual	201	207
Current	25,169	20,550
Total Loans	25,778	20,757
Indirect Auto [Member]
Summary of aging of the loan portfolio, by class
30-59 Days Past Due	1,905	2,653
60-89 Days Past Due	236	416
Greater Than 90 Days and still Accruing	251	443
Purchased Impaired (net of credit mark)	27	40
Nonaccrual	3	7
Current	156,391	159,149
Total Loans	158,813	162,708
Indirect Marine [Member]
Summary of aging of the loan portfolio, by class
30-59 Days Past Due	200	189
60-89 Days Past Due	191	795
Greater Than 90 Days and still Accruing	594
Purchased Impaired (net of credit mark)
Nonaccrual	26	544
Current	32,718	38,291
Total Loans	33,729	39,819
HELOCs [Member]
Summary of aging of the loan portfolio, by class
30-59 Days Past Due	1,528	1,678
60-89 Days Past Due	667	547
Greater Than 90 Days and still Accruing	1,788	820
Purchased Impaired (net of credit mark)	875	865
Nonaccrual	900	885
Current	274,272	272,306
Total Loans	280,030	277,101
Credit Card [Member]
Summary of aging of the loan portfolio, by class
30-59 Days Past Due	129	245
60-89 Days Past Due	114	184
Greater Than 90 Days and still Accruing	182	323
Purchased Impaired (net of credit mark)
Nonaccrual
Current	19,292	18,254
Total Loans	19,717	19,006
Other Consumer [Member]
Summary of aging of the loan portfolio, by class
30-59 Days Past Due	1,402	1,421
60-89 Days Past Due	316	443
Greater Than 90 Days and still Accruing	1,132	1,657
Purchased Impaired (net of credit mark)	132	164
Nonaccrual	835	777
Current	109,296	118,843
Total Loans	$ 113,113	$ 123,305

XML

Securities (Tables)

6 Months Ended

Jun. 30, 2012

Securities [Abstract]

Amortized cost, gross unrealized gains and losses, and estimated fair values of investment securities

	Amortized		Gross Unrealized					Estimated Fair
	Cost		Gains		(Losses)			Value
June 30, 2012
U.S. government and agency securities	$	3,264	$	312	$	—		$	3,576
Obligations of states and political subdivisions		194,203		13,781		(202	)		207,782
Corporate and other bonds		9,503		308		(420	)		9,391
Mortgage-backed securities		393,954		9,838		(281	)		403,511
Other securities		3,183		100		—			3,283
Total securities	$	604,107	$	24,339	$	(903	)	$	627,543
December 31, 2011
U.S. government and agency securities	$	3,933	$	351	$	—		$	4,284
Obligations of states and political subdivisions		189,117		11,337		(247	)		200,207
Corporate and other bonds		12,839		188		(787	)		12,240
Mortgage-backed securities		390,329		10,434		(445	)		400,318
Other securities		3,044		77		(4	)		3,117
Total securities	$	599,262	$	22,387	$	(1,483	)	$	620,166

Schedule of gross unrealized losses and fair value of investments

	Less than 12 months					More than 12 months					Total
	Fair value		Unrealized Losses			Fair value		Unrealized Losses			Fair value		Unrealized Losses
June 30, 2012
Obligations of states and political subdivisions	$	10,060	$	(132	)	$	1,484	$	(70	)	$	11,544	$	(202	)
Mortgage-backed securities		60,822		(281	)		—		—			60,822		(281	)
Corporate bonds and other securities		100		—			1,447		(420	)		1,547		(420	)
Totals	$	70,982	$	(413	)	$	2,931	$	(490	)	$	73,913	$	(903	)
December 31, 2011
Obligations of states and political subdivisions	$	5,429	$	(152	)	$	1,090	$	(95	)	$	6,519	$	(247	)
Mortgage-backed securities		97,203		(445	)		—		—			97,203		(445	)
Corporate bonds and other securities		2,342		(165	)		3,790		(626	)		6,132		(791	)
Totals	$	104,974	$	(762	)	$	4,880	$	(721	)	$	109,854	$	(1,483	)

Schedule of amortized cost and estimated fair value of securities

	June 30, 2012				December 31, 2011
	Amortized		Estimated		Amortized		Estimated
	Cost		Fair Value		Cost		Fair Value
Due in one year or less	$	5,611	$	5,683	$	6,046	$	6,098
Due after one year through five years		17,735		18,498		18,771		19,408
Due after five years through ten years		70,786		75,127		76,044		80,214
Due after ten years		506,792		524,952		495,357		511,329
Other securities		3,183		3,283		3,044		3,117
Total securities available for sale	$	604,107	$	627,543	$	599,262	$	620,166

Schedule of other-than-temporary impairment

	OTTI Losses
Cumulative credit losses on investment securities, through December 31, 2011	$	400
Cumulative credit losses on investment securities		—
Additions for credit losses not previously regognized		—
Cumulative credit losses on investment securities, through June 30, 2012	$	400

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Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2012

Fair Value Measurements [Abstract]

Schedule of financial assets and liabilities measured at fair value on recurring basis

	Fair Value Measurements at June 30, 2012 using
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	Level 1		Level 2		Level 3		Balance
ASSETS
Interest rate swap—loans	$	—	$	34	$	—	$	34
Securities available for sale:
U.S. government and agency securities		—		3,576		—		3,576
Obligations of states and political subdivisions		—		207,782		—		207,782
Corporate and other bonds		—		9,391		—		9,391
Mortgage-backed securities		—		403,511		—		403,511
Other securities		—		3,283		—		3,283
LIABILITIES
Interest rate swap—loans	$	—	$	34	$	—	$	34
Cash flow hedge—trust		—		4,582		—		4,582

	Fair Value Measurements at December 31, 2011 using
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	Level 1		Level 2		Level 3		Balance
ASSETS
Interest rate swap—loans	$	—	$	66	$	—	$	66
Securities available for sale:
U.S. government and agency securities		—		4,284		—		4,284
Obligations of states and political subdivisions		—		200,207		—		200,207
Corporate and other bonds		—		12,240		—		12,240
Mortgage-backed securities		—		400,318		—		400,318
Other securities		—		3,117		—		3,117
LIABILITIES
Interest rate swap—loans	$	—	$	66	$	—	$	66
Cash flow hedge—trust		—		4,293		—		4,293

Schedule of financial assets measured at fair value on nonrecurring basis

	Fair Value Measurements at June 30, 2012 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	$	—	$	100,066	$	—	$	100,066
Impaired loans		—		—		47,075		47,075
Other real estate owned		—		—		35,802		35,802

	Fair Value Measurements at December 31, 2011 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	$	—	$	74,823	$	—	$	74,823
Impaired loans		—		—		63,423		63,423
Other real estate owned		—		—		32,263		32,263

Summary of changes in Level 3 assets measured at estimated fair value on a nonrecurring basis

	Fair Value Measurements at June 30, 2012
	Impaired Loans			Other Real Estate Owned
Balance—January 1, 2012	$	63,423		$	32,263
Total gains (losses) realized/unrealized:
Included in earnings		—			(206	)
Additions		19,388			10,822
Sales		—			(7,077	)
Net Payments and Upgrades		(35,736	)		—
Balance—June 30, 2012	$	47,075		$	35,802

Summary of quantitative information about Level 3 Fair Value Measurements

	Fair Value Measurements at June 30, 2012
	Fair Value		Valuation Technique(s)	Unobservable Inputs	Weighted Average
ASSETS
Commercial Construction	$	12,021	Market comparables	Discount applied to market comparables (1)		15	%
Commercial Real Estate—Owner Occupied		4,780	Market comparables	Discount applied to market comparables (1)		9	%
Commercial Real Estate—Non-Owner Occupied		8,118	Market comparables	Discount applied to market comparables (1)		0	%
Raw Land and Lots		9,085	Market comparables	Discount applied to market comparables (1)		29	%
Single Family Investment Real Estate		4,076	Market comparables	Discount applied to market comparables (1)		7	%
Commercial and Industrial		8,062	Market comparables	Discount applied to market comparables (1)		9	%
Other (2)		933	Market comparables	Discount applied to market comparables (1)		15	%
Total Impaired Loans		47,075
Other real estate owned		35,802	Market comparables	Discount applied to market comparables (1)		31	%
Total	$	82,877

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

⁽²⁾  The “Other” category of the impaired loans section from the table above consists of Mortgage, Consumer Construction, HELOCs, and Other Consumer.

Carrying values and estimated fair values of the Company's financial instruments

			Fair Value Measurements at June 30, 2012 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	$	72,384	$	72,384	$	—	$	—	$	72,384
Securities available for sale		627,543		—		627,543		—		627,543
Restricted stock		19,291		—		19,291		—		19,291
Loans held for sale		100,066		—		100,066		—		100,066
Net loans		2,846,805		—		2,807,105		47,075		2,854,180
Interest rate swap—loans		34		—		34		—		34
Accrued interest receivable		16,947		—		16,947		—		16,947
LIABILITIES
Deposits	$	3,218,986	$	—	$	3,233,300	$	—	$	3,233,300
Borrowings		291,329		—		290,084		—		290,084
Accrued interest payable		911		—		911		—		911
Cash flow hedge—trust		4,582		—		4,582		—		4,582
Interest rate swap—loans		34		—		34		—		34

			Fair Value Measurements at December 31, 2011 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	$	96,659	$	96,659	$	—	$	—	$	96,659
Securities available for sale		620,166		—		620,166		—		620,166
Restricted stock		20,661		—		20,661		—		20,661
Loans held for sale		74,823		—		74,823		—		74,823
Net loans		2,779,113		—		2,731,491		63,423		2,794,914
Interest rate swap—loans		66		—		66		—		66
Accrued interest receivable		16,626		—		16,626		—		16,626
LIABILITIES
Deposits	$	3,175,105	$	—	$	3,191,256	$	—	$	3,191,256
Borrowings		278,686		—		277,374		—		277,374
Accrued interest payable		1,865		—		1,865		—		1,865
Cash flow hedge—trust		4,293		—		4,293		—		4,293
Interest rate swap—loans		66		—		66		—		66

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Condensed Consolidated Statements of Changes in Stockholders' Equity (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011
Condensed Consolidated Statements of Changes in Stockholders' Equity [Abstract]
Other comprehensive income, tax	$ 888	$ 3,836
Dividends on Common Stock, per share $.14 and $.15 in 2011 and 2012	$ 0.15	$ 0.14
Issuance of common stock under Dividend Reinvestment Plan, shares	18,910	9,747
Issuance of common stock under Stock Incentive Plan, shares	9,647	6,450
Vesting of restricted stock under Stock Incentive Plan, shares	1,818	12,243
Stock purchased under stock repurchase plan, shares	220,265
Restricted Stock Awards	1,818

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Derivatives (Tables)

6 Months Ended

Jun. 30, 2012

Derivative [Line Items]

Summary of the derivative designated as a cash flow hedge

			Notional						Receive			Pay			Life
	Positions		Amount		Asset		Liability		Rate			Rate			(Years)
As of June 30, 2012
Pay fixed—receive floating interest rate swaps		1	$	36,000	$	—	$	4,582		0.46	%		3.51	%		4.96

			Notional						Receive			Pay			Life
	Positions		Amount		Asset		Liability		Rate			Rate			(Years)
As of December 31, 2011
Pay fixed—receive floating interest rate swaps		1	$	36,000	$	—	$	4,293		0.58	%		3.51	%		5.46

Interest Rate Swap [Member]

Derivative [Line Items]

Summary of the derivative designated as a cash flow hedge

	Positions		Notional Amount		Asset		Liability		Receive Rate			Pay Rate			Life (Years)
As of June 30, 2012
Receive fixed—pay floating interest rate swaps		1	$	1,401	$	34	$	—		7.00	%		2.75	%		0.50
Pay fixed—receive floating interest rate swaps		1	$	1,401	$	—	$	34		2.75	%		7.00	%		0.50

	Positions		Notional Amount		Asset		Liability		Receive Rate			Pay Rate			Life (Years)
As of December 31, 2011
Receive fixed—pay floating interest rate swaps		2	$	4,028	$	66	$	—		6.35	%		2.77	%		1.01
Pay fixed—receive floating interest rate swaps		2	$	4,028	$	—	$	66		2.77	%		6.35	%		1.01

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Stock-Based Compensation (Details 3) (USD $)	6 Months Ended
	Jun. 30, 2012
Summary of nonvested stock activity
Weighted Average Grant-Date Fair Value, beginning balance	$ 12.62
Weighted Average Grant-Date Fair Value, Granted	$ 14.21
Weighted Average Grant-Date Fair Value, Vested	$ 15.81
Weighted Average Grant-Date Fair Value, Forfeited	$ 13.12
Weighted Average Grant-Date Fair Value, ending balance	$ 12.74
Number of Shares of Restricted Stock [Member]
Summary of nonvested stock activity
Number of Shares of Restricted Stock, beginning balance	140,557
Number of Shares of Restricted Stock, Granted	70,061
Number of Shares of Restricted Stock, Vested	(7,904)
Number of Shares of Restricted Stock, Forfeited	(12,904)
Number of Shares of Restricted Stock, ending balance	189,810
Performance Stock [Member]
Summary of nonvested stock activity
Number of Shares of Restricted Stock, beginning balance	6,000
Number of Shares of Restricted Stock, Forfeited	(1,500)
Number of Shares of Restricted Stock, ending balance	4,500

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Loans and Allowance for Loan Losses (Details Textual) (USD $)						6 Months Ended	12 Months Ended
	Jun. 30, 2012	Dec. 31, 2011	Jun. 30, 2011	Jun. 30, 2012 Nonaccrual Loans [Member]	Jun. 30, 2011 Nonaccrual Loans [Member]	Jun. 30, 2012 Impaired loans [Member]	Dec. 31, 2011 Impaired loans [Member]
Loans and Allowance for Loan Losses (Textual) [Abstract]
Loans	$ 2,887,790,000	$ 2,818,583,000	$ 2,859,569,000	$ 39,200,000	$ 54,300,000	$ 201,300,000	$ 255,100,000
Total accruing interest	10,768,000	19,912,000		10,800,000	9,100,000
Individually evaluated for impairment						189,400,000	242,800,000
Collectively evaluated for impairment	2,698,391,000	2,575,750,000				11,900,000	12,300,000
TDR Recorded investment						80,200,000	112,600,000
Loans and Allowance for Loan Losses (Additional Textual) [Abstract]
Commercial real estate (owner occupied) loan, total	902,000
Indirect marine loan total	26,000
Troubled Debt Restructurings that Subsequently Defaulted	928,000
Contractually required payments	1,080,780
Cash flows expected to be collected	1,072,726
Fair value of loans acquired as on date of acquisition	$ 1,052,358

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Fair Value Measurements (Details 4) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
ASSETS
Cash and cash equivalents	$ 72,384	$ 96,659
Securities available for sale	627,543	620,166
Restricted stock	19,291	20,661
Loans held for sale	100,066	74,823
Net loans	2,854,180	2,794,914
Interest rate swap - loans	34	66
Accrued interest receivable	16,947	16,626
LIABILITIES
Deposits	3,233,300	3,191,256
Borrowings	290,084	277,374
Accrued interest payable	911	1,865
Cash flow hedge - trust	4,582	4,293
Interest rate swap - loans	34	66
Carrying Value [Member]
ASSETS
Cash and cash equivalents	72,384	96,659
Securities available for sale	627,543	620,166
Restricted stock	19,291	20,661
Loans held for sale	100,066	74,823
Net loans	2,846,805	2,779,113
Interest rate swap - loans	34	66
Accrued interest receivable	16,947	16,626
LIABILITIES
Deposits	3,218,986	3,175,105
Borrowings	291,329	278,686
Accrued interest payable	911	1,865
Cash flow hedge - trust	4,582	4,293
Interest rate swap - loans	34	66
Quoted Prices in Active Markets for Identical Assets Level 1 [Member]
ASSETS
Cash and cash equivalents	72,384	96,659
Securities available for sale
Restricted stock
Loans held for sale
Net loans
Interest rate swap - loans
Accrued interest receivable
LIABILITIES
Deposits
Borrowings
Accrued interest payable
Cash flow hedge - trust
Interest rate swap - loans
Significant Other Observable Inputs Level 2 [Member]
ASSETS
Cash and cash equivalents	0
Securities available for sale	627,543	620,166
Restricted stock	19,291	20,661
Loans held for sale	100,066	74,823
Net loans	2,807,105	2,731,491
Interest rate swap - loans	34	66
Accrued interest receivable	16,947	16,626
LIABILITIES
Deposits	3,233,300	3,191,256
Borrowings	290,084	277,374
Accrued interest payable	911	1,865
Cash flow hedge - trust	4,582	4,293
Interest rate swap - loans	34	66
Significant Unobservable Inputs Level 3 [Member]
ASSETS
Cash and cash equivalents
Securities available for sale
Restricted stock
Loans held for sale
Net loans	47,075	63,423
Interest rate swap - loans
Accrued interest receivable
LIABILITIES
Deposits
Borrowings
Accrued interest payable
Cash flow hedge - trust
Interest rate swap - loans

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Condensed Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011	Jun. 30, 2011
Cash and cash equivalents:
Cash and due from banks	$ 57,245	$ 69,786	$ 61,465
Interest-bearing deposits in other banks	14,975	26,556	1,583
Money market investments	1	155	27
Federal funds sold	163	162	159
Total cash and cash equivalents	72,384	96,659	63,234
Securities available for sale, at fair value	627,543	620,166	568,177
Restricted stock, at cost	19,291	20,661	22,883
Loans held for sale	100,066	74,823	50,420
Loans, net of unearned income	2,887,790	2,818,583	2,859,569
Less allowance for loan losses	40,985	39,470	39,631
Net loans	2,846,805	2,779,113	2,819,938
Bank premises and equipment, net	91,122	90,589	91,601
Other real estate owned, net of valuation allowance	35,802	32,263	36,935
Core deposit intangibles, net	18,178	20,714	23,658
Goodwill	59,400	59,400	59,400
Other assets	111,697	112,699	115,278
Total assets	3,982,288	3,907,087	3,851,524
LIABILITIES
Noninterest-bearing demand deposits	591,757	534,535	520,511
Interest-bearing deposits:
NOW accounts	425,188	412,605	378,511
Money market accounts	905,739	904,893	842,135
Savings accounts	198,728	179,157	175,709
Time deposits of $100,000 and over	534,682	511,614	505,993
Other time deposits	562,892	632,301	660,194
Total interest-bearing deposits	2,627,229	2,640,570	2,562,542
Total deposits	3,218,986	3,175,105	3,083,053
Securities sold under agreements to repurchase	75,394	62,995	77,324
Other short-term borrowings			2,900
Trust preferred capital note	60,310	60,310	60,310
Long-term borrowings	155,625	155,381	155,136
Other liabilities	38,537	31,657	29,685
Total liabilities	3,548,852	3,485,448	3,408,408
Commitments and contingencies
STOCKHOLDERS' EQUITY
Preferred stock, $10.00 par value, $1,000 liquidation value, shares authorized 500,000; issued and outstanding, 35,595 shares at June 30, 2011 and zero at December 31, 2011 and June 30, 2012.			35,595
Common stock, $1.33 par value, shares authorized 36,000,000; issued and outstanding, 25,952,035 shares, 26,134,830 shares, and 26,043,633 shares, respectively.	34,415	34,672	34,569
Surplus	185,733	187,493	186,177
Retained earnings	202,278	189,824	178,125
Discount on preferred stock			(1,048)
Accumulated other comprehensive income	11,010	9,650	9,698
Total stockholders' equity	433,436	421,639	443,116
Total liabilities and stockholders' equity	$ 3,982,288	$ 3,907,087	$ 3,851,524

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Loans and Allowance for Loan Losses (Details 2) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Schedule of purchased impaired commercial and consumer loan portfolios, by class
30-89 Days Past Due	$ 3	$ 231
Greater than 90 Days	1,749	1,605
Current	5,023	8,061
Total	6,775	9,897
Commercial Real Estate - Owner Occupied [Member]
Schedule of purchased impaired commercial and consumer loan portfolios, by class
30-89 Days Past Due		206
Greater than 90 Days	1,167	50
Current	67	1,036
Total	1,234	1,292
Commercial Real Estate - Non-Owner Occupied [Member]
Schedule of purchased impaired commercial and consumer loan portfolios, by class
30-89 Days Past Due
Greater than 90 Days		1,133
Current
Total		1,133
Raw Land and Lots [Member]
Schedule of purchased impaired commercial and consumer loan portfolios, by class
30-89 Days Past Due
Greater than 90 Days	91
Current	3,662	5,623
Total	3,753	5,623
Single Family Investment Real Estate [Member]
Schedule of purchased impaired commercial and consumer loan portfolios, by class
30-89 Days Past Due
Greater than 90 Days
Current	372	388
Total	372	388
Commercial and Industrial [Member]
Schedule of purchased impaired commercial and consumer loan portfolios, by class
30-89 Days Past Due
Greater than 90 Days	382	302
Current		90
Total	382	392
Indirect Auto [Member]
Schedule of purchased impaired commercial and consumer loan portfolios, by class
30-89 Days Past Due	3	6
Greater than 90 Days	8	11
Current	16	23
Total	27	40
HELOCs [Member]
Schedule of purchased impaired commercial and consumer loan portfolios, by class
30-89 Days Past Due		19
Greater than 90 Days	55	32
Current	820	814
Total	875	865
Other Consumer [Member]
Schedule of purchased impaired commercial and consumer loan portfolios, by class
30-89 Days Past Due
Greater than 90 Days	46	77
Current	86	87
Total	$ 132	$ 164

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Condensed Consolidated Statements of Comprehensive Income (Parenthetical) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Condensed Consolidated Statements of Comprehensive Income [Abstract]
Unrealized holding gains arising during period, tax	$ 535	$ 0	$ 890	$ 0
Reclassification adjustment for losses included in net income, tax	$ 4	$ 0	$ 2	$ 0

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Goodwill and Intangible Assets (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011	Jun. 30, 2011
Information concerning goodwill and intangible assets
Net Carrying Value	$ 18,411
Amortizable core deposit intangibles [Member]
Information concerning goodwill and intangible assets
Gross Carrying Value	46,615	46,615	46,615
Accumulated Amortization	28,437	25,901	22,957
Net Carrying Value	18,178	20,714	23,658
Unamortizable goodwill [Member]
Information concerning goodwill and intangible assets
Gross Carrying Value	59,742	59,742	59,742
Accumulated Amortization	342	342	342
Net Carrying Value	59,400	59,400	59,400
Trademark intangible [Member]
Information concerning goodwill and intangible assets
Gross Carrying Value	1,200	1,200	1,200
Accumulated Amortization	967	767	567
Net Carrying Value	$ 233	$ 433	$ 633

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Business Combinations (Details 1) (First Market Bank Acquisition [Member], USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
First Market Bank Acquisition [Member]
Outstanding principal balance and carrying amount of acquired loans
Outstanding principal balance	$ 498,927	$ 632,602
Carrying amount	$ 489,002	$ 620,048

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Securities (Details 2) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Schedule of amortized cost and estimated fair value of securities
Due in one year or less, Amortized Cost	$ 5,611	$ 6,046
Due in one year or less, Estimated Fair Value	5,683	6,098
Due after one year through five years, Amortized Cost	17,735	18,771
Due after one year through five years, Estimated Fair Value	18,498	19,408
Due after five years through ten years, Amortized Cost	70,786	76,044
Due after five years through ten years, Estimated Fair Value	75,127	80,214
Due after ten years, Amortized Cost	506,792	495,357
Due after ten years, Estimated Fair Value	524,952	511,329
Other securities, Amortized Cost	3,183	3,044
Other securities, Estimated Fair Value	3,283	3,117
Total securities available for sale, Amortized Cost	604,107	599,262
Total securities available for sale, Estimated Fair Value	$ 627,543	$ 620,166

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Derivatives

6 Months Ended

Jun. 30, 2012

Derivatives [Abstract]

DERIVATIVES

13. DERIVATIVES

During the second quarter of 2010, the Company entered into an interest rate swap agreement (the “trust swap”) as part of the management of interest rate risk. The Company designated the trust swap as a cash flow hedge intended to protect against the variability of cash flows associated with the aforementioned Statutory Trust II preferred capital securities. The trust swap hedges the interest rate risk, wherein the Company receives interest of LIBOR from a counterparty and pays a fixed rate of 3.51% to the same counterparty calculated on a notional amount of $36.0 million. The term of the trust swap is six years with a fixed rate that started June 15, 2011. The trust swap was entered into with a counterparty that met the Company’s credit standards and the agreement contains collateral provisions protecting the at-risk party. The Company believes that the credit risk inherent in the contract is not significant.

Amounts receivable or payable are recognized as accrued under the terms of the agreements. In accordance with ASC 815 Derivatives and Hedging, the trust swap is designated as a cash flow hedge, with the effective portion of the derivative’s unrealized gain or loss recorded as a component of other comprehensive income. The ineffective portion of the unrealized gain or loss, if any, would be recorded in other expense. The Company has assessed the effectiveness of the hedging relationship by comparing the changes in cash flows on the designated hedged item. There was no hedge ineffectiveness for this trust swap. At June 30, 2012, the fair value of the trust swap agreement was an unrealized loss of $4.6 million, the amount the Company would have expected to pay if the contract was terminated. The below liability is recorded as a component of other comprehensive income recorded in the Company’s Consolidated Statements of Comprehensive Income.

Shown below is a summary of the derivative designated as a cash flow hedge at June 30, 2012 and December 31, 2011 (dollars in thousands):

			Notional						Receive			Pay			Life
	Positions		Amount		Asset		Liability		Rate			Rate			(Years)
As of June 30, 2012
Pay fixed—receive floating interest rate swaps		1	$	36,000	$	—	$	4,582		0.46	%		3.51	%		4.96

			Notional						Receive			Pay			Life
	Positions		Amount		Asset		Liability		Rate			Rate			(Years)
As of December 31, 2011
Pay fixed—receive floating interest rate swaps		1	$	36,000	$	—	$	4,293		0.58	%		3.51	%		5.46

The Company also acquired two interest rate swap loan relationships (“loan swaps”) as a result of the acquisition of FMB. Upon entering into loan swaps with borrowers to meet their financing needs, offsetting positions with counterparties were entered into in order to minimize interest rate risk. These back-to-back loan swaps qualify as financial derivatives with fair values reported in other assets and other liabilities. As of January 1, 2012, one of the two swaps matured. Shown below is a summary regarding loan swap derivative activities at June 30, 2012 and December 31, 2011 (dollars in thousands):

	Positions		Notional Amount		Asset		Liability		Receive Rate			Pay Rate			Life (Years)
As of June 30, 2012
Receive fixed—pay floating interest rate swaps		1	$	1,401	$	34	$	—		7.00	%		2.75	%		0.50
Pay fixed—receive floating interest rate swaps		1	$	1,401	$	—	$	34		2.75	%		7.00	%		0.50

	Positions		Notional Amount		Asset		Liability		Receive Rate			Pay Rate			Life (Years)
As of December 31, 2011
Receive fixed—pay floating interest rate swaps		2	$	4,028	$	66	$	—		6.35	%		2.77	%		1.01
Pay fixed—receive floating interest rate swaps		2	$	4,028	$	—	$	66		2.77	%		6.35	%		1.01

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Business Combinations (Details Textual) (USD $)	6 Months Ended
	Jun. 30, 2012
Harrisonburg branch acquisition [Member]
Business Combinations (Textual) [Abstract]
Amount of loans purchased	$ 72,500,000
Deposit liabilities	48,900,000
Company recorded goodwill amount	1,800,000
Core deposit intangible	9,500
Fair value inputs discount value	1,700,000
Fair value estimate loan portfolio	70,500,000
Impaired loan portfolio fair value estimate	276,000
Interest income	692,000
First Market Bank Acquisition [Member]
Business Combinations (Textual) [Abstract]
Interest income	$ 6,900,000

XML

Business Combinations (Tables)

6 Months Ended

Jun. 30, 2012

Harrisonburg branch acquisition [Member]

Business Acquisition [Line Items]

Outstanding principal balance and the carrying amount of acquired loans

June 30, 2012:
Outstanding principal balance	$	50,869
Carrying amount	$	50,221
December 31, 2011:
Outstanding principal balance	$	54,953
Carrying amount	$	53,359

First Market Bank Acquisition [Member]

Business Acquisition [Line Items]

Outstanding principal balance and the carrying amount of acquired loans

June 30, 2012:
Outstanding principal balance	$	498,927
Carrying amount	$	489,002
December 31, 2011:
Outstanding principal balance	$	632,602
Carrying amount	$	620,048

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Fair Value Measurements (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
ASSETS
Interest rate swap - loans	$ 34	$ 66
Securities available for sale	627,543	620,166
Total	82,877
Recurring [Member]
ASSETS
Interest rate swap - loans	34	66
LIABILITIES
Interest rate swap - loans	34	66
Cash flow hedge - trust	4,582	4,293
Quoted Prices in Active Markets for Identical Assets Level 1 [Member]
ASSETS
Interest rate swap - loans
Securities available for sale
Quoted Prices in Active Markets for Identical Assets Level 1 [Member] | Recurring [Member]
ASSETS
Interest rate swap - loans
LIABILITIES
Interest rate swap - loans
Cash flow hedge - trust
Significant Other Observable Inputs Level 2 [Member]
ASSETS
Interest rate swap - loans	34	66
Securities available for sale	627,543	620,166
Significant Other Observable Inputs Level 2 [Member] | Recurring [Member]
ASSETS
Interest rate swap - loans	34	66
LIABILITIES
Interest rate swap - loans	34	66
Cash flow hedge - trust	4,582	4,293
Significant Unobservable Inputs Level 3 [Member] | Recurring [Member]
ASSETS
Interest rate swap - loans
LIABILITIES
Interest rate swap - loans
Cash flow hedge - trust
U.S. government and agency securities [Member]
ASSETS
Securities available for sale	3,576	4,284
U.S. government and agency securities [Member] | Recurring [Member]
ASSETS
Securities available for sale	3,576	4,284
U.S. government and agency securities [Member] | Quoted Prices in Active Markets for Identical Assets Level 1 [Member] | Recurring [Member]
ASSETS
Securities available for sale
U.S. government and agency securities [Member] | Significant Other Observable Inputs Level 2 [Member] | Recurring [Member]
ASSETS
Securities available for sale	3,576	4,284
U.S. government and agency securities [Member] | Significant Unobservable Inputs Level 3 [Member] | Recurring [Member]
ASSETS
Securities available for sale
Obligations of states and political subdivisions [Member]
ASSETS
Securities available for sale	207,782	200,207
Obligations of states and political subdivisions [Member] | Recurring [Member]
ASSETS
Securities available for sale	207,782	200,207
Obligations of states and political subdivisions [Member] | Quoted Prices in Active Markets for Identical Assets Level 1 [Member] | Recurring [Member]
ASSETS
Securities available for sale
Obligations of states and political subdivisions [Member] | Significant Other Observable Inputs Level 2 [Member] | Recurring [Member]
ASSETS
Securities available for sale	207,782	200,207
Obligations of states and political subdivisions [Member] | Significant Unobservable Inputs Level 3 [Member] | Recurring [Member]
ASSETS
Securities available for sale
Corporate and other bonds [Member]
ASSETS
Securities available for sale	9,391	12,240
Corporate and other bonds [Member] | Recurring [Member]
ASSETS
Securities available for sale	9,391	12,240
Corporate and other bonds [Member] | Quoted Prices in Active Markets for Identical Assets Level 1 [Member] | Recurring [Member]
ASSETS
Securities available for sale
Corporate and other bonds [Member] | Significant Other Observable Inputs Level 2 [Member] | Recurring [Member]
ASSETS
Securities available for sale	9,391	12,240
Corporate and other bonds [Member] | Significant Unobservable Inputs Level 3 [Member] | Recurring [Member]
ASSETS
Securities available for sale
Mortgage-backed securities [Member]
ASSETS
Securities available for sale	403,511	400,318
Mortgage-backed securities [Member] | Recurring [Member]
ASSETS
Securities available for sale	403,511	400,318
Mortgage-backed securities [Member] | Quoted Prices in Active Markets for Identical Assets Level 1 [Member] | Recurring [Member]
ASSETS
Securities available for sale
Mortgage-backed securities [Member] | Significant Other Observable Inputs Level 2 [Member] | Recurring [Member]
ASSETS
Securities available for sale	403,511	400,318
Mortgage-backed securities [Member] | Significant Unobservable Inputs Level 3 [Member] | Recurring [Member]
ASSETS
Securities available for sale
Other securities [Member]
ASSETS
Securities available for sale	3,283	3,117
Other securities [Member] | Recurring [Member]
ASSETS
Securities available for sale	3,283	3,117
Other securities [Member] | Quoted Prices in Active Markets for Identical Assets Level 1 [Member] | Recurring [Member]
ASSETS
Securities available for sale
Other securities [Member] | Significant Other Observable Inputs Level 2 [Member] | Recurring [Member]
ASSETS
Securities available for sale	3,283	3,117
Other securities [Member] | Significant Unobservable Inputs Level 3 [Member] | Recurring [Member]
ASSETS
Securities available for sale

XML

Condensed Consolidated Statements of Changes in Stockholders' Equity (USD $) In Thousands	Total	Preferred Stock	Common Stock	Surplus	Retained Earnings	Discount on Preferred Stock	Accumulated Other Comprehensive Income
Balance at Dec. 31, 2010	$ 428,085	$ 35,595	$ 34,532	$ 185,763	$ 169,801	$ (1,177)	$ 3,571
Net income	13,014				13,014
Other comprehensive income	6,127						6,127
Dividends on Common Stock	(3,637)				(3,637)
Tax benefit from exercise of stock awards	1			1
Dividends on Preferred Stock	(924)				(924)
Accretion of discount on Preferred Stock					(129)	129
Issuance of common stock under Dividend Reinvestment Plan	160		13	147
Issuance of common stock under Stock Incentive Plan (6,450 shares)	55		8	47
Vesting of restricted stock under Stock Incentive Plan			16	(16)
Stock-based compensation expense	235			235
Balance at Jun. 30, 2011	443,116	35,595	34,569	186,117	178,125	(1,048)	9,698
Balance at Dec. 31, 2011	421,639		34,672	187,493	189,824		9,650
Net income	16,343				16,343
Other comprehensive income	1,360						1,360
Dividends on Common Stock	(3,632)				(3,632)
Stock purchased under stock repurchase plan	(2,863)		(293)	(2,570)
Issuance of common stock under Dividend Reinvestment Plan			25	232	(257)
Vesting of restricted stock under Stock Incentive Plan			13	(13)
Net settle for taxes on Restricted Stock Awards (1,818 shares)	(26)		(2)	(24)
Stock-based compensation expense	615			615
Balance at Jun. 30, 2012	$ 433,436	$ 0	$ 34,415	$ 185,733	$ 202,278	$ 0	$ 11,010

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Condensed Consolidated Balance Sheets (Parenthetical) (USD $)	Jun. 30, 2012	Dec. 31, 2011	Jun. 30, 2011
Condensed Consolidated Balance Sheets [Abstract]
Preferred stock, par value	$ 10.00	$ 10.00	$ 10.00
Preferred stock, liquidation value	$ 1,000	$ 1,000	$ 1,000
Preferred stock, shares authorized	500,000	500,000	500,000
Preferred stock, shares issued	0	0	35,595
Preferred stock, shares outstanding	0	0	35,595
Common stock, par value	$ 1.33	$ 1.33	$ 1.33
Common stock, shares authorized	36,000,000	36,000,000	36,000,000
Common stock, shares issued	25,952,035	26,134,830	26,043,633
Common stock, shares outstanding	25,952,035	26,134,830	26,043,633

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Recent Accounting Pronouncements

6 Months Ended

Jun. 30, 2012

Recent Accounting Pronouncements [Abstract]

RECENT ACCOUNTING PRONOUNCEMENTS

8. RECENT ACCOUNTING PRONOUNCEMENTS

In April 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2011-03, “Transfers and Servicing (Topic 860) – Reconsideration of Effective Control for Repurchase Agreements.” The amendments in this ASU remove from the assessment of effective control (1) the criterion requiring the transferor to have the ability to repurchase or redeem the financial assets on substantially the agreed terms, even in the event of default by the transferee and (2) the collateral maintenance implementation guidance related to that criterion. The amendments in this ASU became effective during the quarter ended June 30, 2012 and were applied prospectively to transactions or modifications of existing transactions that occurred on or after the effective date. The adoption of the new guidance did not have a material impact on the Company’s consolidated financial statements.

In May 2011, the FASB issued ASU 2011-04, “Fair Value Measurement (Topic 820) – Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs.” This ASU is the result of joint efforts by the FASB and International Accounting Standards Board (IASB) to develop a single, converged fair value framework on how (not when) to measure fair value and what disclosures to provide about fair value measurements. The ASU is largely consistent with existing fair value measurement principles in U.S. GAAP (Topic 820), with many of the amendments made to eliminate unnecessary wording differences between U.S. GAAP and International Financial Reporting Standards (IFRS). The amendments are effective for interim and annual periods beginning after December 15, 2011 with prospective application. The Company has included the required disclosures in its consolidated financial statements.

In June 2011, the FASB issued ASU 2011-05, “Comprehensive Income (Topic 220) – Presentation of Comprehensive Income.” The objective of this ASU is to improve the comparability, consistency and transparency of financial reporting and to increase the prominence of items reported in other comprehensive income by eliminating the option to present components of other comprehensive income as part of the statement of changes in stockholders’ equity. The amendments require that all non-owner changes in stockholders’ equity be presented either in a single continuous statement of comprehensive income or in two separate but consecutive statements. The single statement of comprehensive income should include the components of net income, a total for net income, the components of other comprehensive income, a total for other comprehensive income, and a total for comprehensive income. In the two-statement approach, the first statement should present total net income and its components followed consecutively by a second statement that should present all the components of other comprehensive income, a total for other comprehensive income, and a total for comprehensive income. The amendments do not change the items that must be reported in other comprehensive income, the option for an entity to present components of other comprehensive income either net of related tax effects or before related tax effects, or the calculation or reporting of earnings per share. The amendments in this ASU were applied retrospectively. The amendments are effective for fiscal years and interim periods within those years beginning after December 15, 2011. The Company has included the required Statements of Comprehensive Income using the two-statement approach in its consolidated financial statements.

In September 2011, the FASB issued ASU 2011-08, “Intangible – Goodwill and Other (Topic 350) – Testing Goodwill for Impairment.” The amendments in this ASU permit an entity to first assess qualitative factors related to goodwill to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill test described in Topic 350. The more-likely-than-not threshold is defined as having a likelihood of more than 50 percent. Under the amendments in this ASU, an entity is not required to calculate the fair value of a reporting unit unless the entity determines that it is more likely than not that its fair value is less than its carrying amount. The amendments in this ASU are effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. The adoption of the new guidance did not have a material impact on the Company’s consolidated financial statements.

In December 2011, the FASB issued ASU 2011-11, “Balance Sheet (Topic 210) – Disclosures about Offsetting Assets and Liabilities.” This ASU requires entities to disclose both gross information and net information about both instruments and transactions eligible for offset in the balance sheet and instruments and transactions subject to an agreement similar to a master netting arrangement. An entity is required to apply the amendments for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods. An entity should provide the disclosures required by those amendments retrospectively for all comparative periods presented. The Company does not expect the adoption of ASU 2011-11 to have a material impact on its consolidated financial statements.

In December 2011, the FASB issued ASU 2011-12, “Comprehensive Income (Topic 220) – Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05.” The amendments are being made to allow the Board time to redeliberate whether to present on the face of the financial statements the effects of reclassifications out of accumulated other comprehensive income on the components of net income and other comprehensive income for all periods presented. While the Board is considering the operational concerns about the presentation requirements for reclassification adjustments and the needs of financial statement users for additional information about reclassification adjustments, entities should continue to report reclassifications out of accumulated other comprehensive income consistent with the presentation requirements in effect before ASU 2011-05. All other requirements in ASU 2011-05 are not affected by ASU 2011-12, including the requirement to report comprehensive income either in a single continuous financial statement or in two separate but consecutive financial statements. Public entities should apply these requirements for fiscal years, and interim periods within those years, beginning after December 15, 2011. The Company has included the required disclosures in its consolidated financial statements.

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Document and Entity Information	6 Months Ended
	Jun. 30, 2012	Jul. 27, 2012
Document and Entity Information [Abstract]
Entity Registrant Name	UNION FIRST MARKET BANKSHARES CORP
Entity Central Index Key	0000883948
Document Type	10-Q
Document Period End Date	Jun. 30, 2012
Amendment Flag	false
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q2
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		25,952,035

XML

Goodwill and Intangible Assets

6 Months Ended

Jun. 30, 2012

Goodwill and Intangible Assets [Abstract]

GOODWILL AND INTANGIBLE ASSETS

9. GOODWILL AND INTANGIBLE ASSETS

The Company follows ASC 350, Goodwill and Other Intangible Assets, in accounting for goodwill and intangible assets subsequent to initial recognition. The provisions of this section discontinued the amortization of goodwill and intangible assets with indefinite lives but require an impairment review at least annually and more frequently if certain impairment indicators are evident. Based on the annual testing during the second quarter of each year and the absence of impairment indicators during the quarter ended June 30, 2012, the Company has recorded no impairment charges to date for goodwill or intangible assets.

Core deposit intangible assets are being amortized over the period of expected benefit, which ranges from 4 to 14 years. The acquired trademark intangible is included as a component of other assets in the consolidated balance sheet.

Information concerning goodwill and intangible assets is presented in the following table (in thousands):

	Gross Carrying Value		Accumulated Amortization		Net Carrying Value
June 30, 2012
Amortizable core deposit intangibles	$	46,615	$	28,437	$	18,178
Unamortizable goodwill		59,742		342		59,400
Trademark intangible		1,200		967		233
December 31, 2011
Amortizable core deposit intangibles	$	46,615	$	25,901	$	20,714
Unamortizable goodwill		59,742		342		59,400
Trademark intangible		1,200		767		433
June 30, 2011
Amortizable core deposit intangibles	$	46,615	$	22,957	$	23,658
Unamortizable goodwill		59,742		342		59,400
Trademark intangible		1,200		567		633

Amortization expense of the core deposit intangibles for the three and six month periods ended June 30, 2012 totaled $1.2 million and $2.5 million, respectively, compared to $1.6 million and $3.2 million, respectively in 2011. The Harrisonburg branch core deposit intangible of $9,500 was expensed in the second quarter of 2011. Amortization expense of the trademark intangibles for the three and six month periods ended June 30, 2012 and 2011 was both $100,000 and $200,000, respectively.

As of June 30, 2012, the estimated remaining amortization expense of core deposit and trademark intangibles for each of the five succeeding fiscal years is as follows (dollars in thousands):

2013	$	4,589
2014		3,349
2015		2,645
2016		2,184
2017		1,635
Thereafter		4,009
	$	18,411

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Condensed Consolidated Statements of Income (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Interest and dividend income:
Interest and fees on loans	$ 40,299	$ 42,332	$ 80,907	$ 84,335
Interest on deposits in other banks	34	28	58	33
Interest and dividends on securities:
Taxable	3,182	3,627	6,636	7,257
Nontaxable	1,789	1,769	3,577	3,523
Total interest and dividend income	45,304	47,756	91,178	95,148
Interest expense:
Interest on deposits	5,023	6,166	10,358	12,850
Interest on Federal funds purchased	1		1	7
Interest on short-term borrowings	47	82	91	166
Interest on long-term borrowings	2,147	1,885	4,294	3,702
Total interest expense	7,217	8,133	14,744	16,725
Interest Income (Expense), Net	38,087	39,623	76,434	78,423
Provision for loan losses	3,000	4,500	6,500	10,800
Net interest income after provision for loan losses	35,087	35,123	69,934	67,623
Noninterest income:
Service charges on deposit accounts	2,291	2,216	4,421	4,274
Other service charges, commissions and fees	3,627	3,351	7,037	6,275
Gains (losses) on securities transactions, net	10		5	(16)
Gains on sales of mortgage loans	7,315	4,303	12,611	9,271
Losses (gains) on sales of other real estate and bank premises, net	195	(791)	137	(1,090)
Other operating income	972	884	2,017	1,796
Total noninterest income	14,410	9,963	26,228	20,510
Noninterest expenses:
Salaries and benefits	20,418	17,580	39,925	35,234
Occupancy expenses	3,092	2,668	5,739	5,422
Furniture and equipment expenses	1,868	1,679	3,631	3,341
Other operating expenses	12,386	13,945	24,078	26,642
Total noninterest expenses	37,764	35,872	73,373	70,639
Income before income taxes	11,733	9,214	22,789	17,494
Income tax expense	3,313	2,394	6,446	4,480
Net income	8,420	6,820	16,343	13,014
Dividends paid and accumulated on preferred stock		462		924
Accretion of discount on preferred stock		65		129
Net income available to common shareholders	$ 8,420	$ 6,293	$ 16,343	$ 11,961
Earnings per common share, basic	$ 0.32	$ 0.24	$ 0.63	$ 0.46
Earnings per common share, diluted	$ 0.32	$ 0.24	$ 0.63	$ 0.46

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Stock-Based Compensation

6 Months Ended

Jun. 30, 2012

Stock-Based Compensation [Abstract]

STOCK-BASED COMPENSATION

3. STOCK-BASED COMPENSATION

The Company’s 2011 Stock Incentive Plan (the “2011 Plan”) and the 2003 Stock Incentive Plan (the “2003 Plan”) provide for the granting of incentive stock options, non-statutory stock options, and nonvested stock awards to key employees of the Company and its subsidiaries. The 2011 Plan makes available 1,000,000 shares, which may be awarded to employees of the Company and its subsidiaries in the form of incentive stock options intended to comply with the requirements of Section 422 of the Internal Revenue Code of 1986 (“incentive stock options”), non-statutory stock options, and nonvested stock. Approximately 23,000 shares remain available for grant under the 2003 Plan, which expires in 2013. Under both plans, the option price cannot be less than the fair market value of the stock on the grant date. The Company issues new shares to satisfy stock-based awards. A stock option’s maximum term is ten years from the date of grant and vests in equal annual installments of 20% over a five year vesting schedule. Collectively, there remain approximately 743,000 shares available as of June 30, 2012 for issuance under the 2011 and 2003 Plans.

For the three month and six month periods ended June 30, 2012 and 2011, the Company recognized stock-based compensation expense of approximately $376,000 and $615,000, and $145,000 and $235,000, respectively. These expenses were less than $0.01 per common share for both periods ended June 30, 2011, and $0.01 and $0.02 for the three and six month periods, respectively, ended June 30, 2012.

Stock Options

The following table summarizes the stock option activity for the six months ended June 30, 2012:

	Number of Stock Options			Weighted Average Exercise Price
Options outstanding, December 31, 2011		422,750		$	17.70
Granted		131,657			14.40
Forfeited		(18,429	)		14.52
Expired		(10,905	)		21.10
Options outstanding, June 30, 2012		525,073			16.91
Options exercisable, June 30, 2012		229,136			20.59

The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option valuation model that uses the assumptions noted in the following table for the six months ended June 30, 2012 and 2011:

	Six Months Ended June 30,
	2012			2011
Dividend yield (1)		2.47	%		2.36	%
Expected life in years (2)		7.0			7.0
Expected volatility (3)		41.53	%		41.02	%
Risk-free interest rate (4)		1.24	%		2.71	%
Weighted average fair value per option granted	$	4.76		$	4.31

(1) Calculated as the ratio of historical dividends paid per share of common stock to the stock price on the date of grant.

(2) Based on the average of the contractual life and vesting schedule for the respective option.

(3) Based on the monthly historical volatility of the Company’s stock price over the expected life of the options.

(4) Based upon the U.S. Treasury bill yield curve, for periods within the contractual life of the option, in effect at the time of grant.

The following table summarizes information concerning stock options issued to the Company’s employees that are vested or are expected to vest and stock options exercisable as of June 30, 2012:

	Stock Options Vested or Expected to Vest		Exercisable
Stock options		496,967		229,136
Weighted average remaining contractual life in years		6.64		4.00
Weighted average exercise price on shares above water	$	13.22	$	12.17
Aggregate intrinsic value	$	294,614	$	66,268

There were no stock options exercised during the second quarter of 2012; the total intrinsic value for stock options exercised during both the three and six months ended June 30, 2012 was $0. The fair value of stock options vested during the six months ended June 30, 2012 was approximately $275,000.

Nonvested Stock

The 2003 and the 2011 Stock Incentive Plans permit the granting of nonvested stock but are limited to one-third of the aggregate number of total awards granted. This equity component of compensation is divided between restricted (time-based) stock grants and performance-based stock grants. Generally, the restricted stock vests 50% on each of the third and fourth anniversaries from the date of the grant. The performance-based stock is subject to vesting on the fourth anniversary of the date of the grant based on the performance of the Company’s stock price. The value of the nonvested stock awards was calculated by multiplying the fair market value of the Company’s common stock on grant date by the number of shares awarded. Employees have the right to vote the shares and to receive cash or stock dividends (restricted stock), if any, except for the nonvested stock under the performance-based component (performance stock).

The following table summarizes the nonvested stock activity for the six months ended June 30, 2012:

	Number of Shares of Restricted Stock			Performance Stock			Weighted Average  Grant- Date Fair Value
Balance, December 31, 2011		140,557			6,000		$	12.62
Granted		70,061			—			14.21
Vested		(7,904	)		—			15.81
Forfeited		(12,904	)		(1,500	)		13.12
Balance, June 30, 2012		189,810			4,500			12.74

The estimated unamortized compensation expense, net of estimated forfeitures, related to nonvested stock and stock options issued and outstanding as of June 30, 2012 that will be recognized in future periods is as follows (dollars in thousands):

	Stock Options		Restricted Stock		Total
For the remaining six months of 2012	$	180	$	460	$	640
For year ending December 31, 2013		368		687		1,055
For year ending December 31, 2014		361		359		720
For year ending December 31, 2015		269		91		360
For year ending December 31, 2016		155		6		161
For year ending December 31, 2017		25		—		25
Total	$	1,358	$	1,603	$	2,961

XML

Business Combinations

6 Months Ended

Jun. 30, 2012

Business Combinations [Abstract]

BUSINESS COMBINATIONS

2. BUSINESS COMBINATIONS

Harrisonburg Branch Acquisition

On May 20, 2011, the Company completed the purchase of the former NewBridge Bank branch in Harrisonburg, Virginia, assets and liabilities related to the branch business, and a potential branch site in Waynesboro, Virginia. Under the parties’ agreement, the Company purchased loans of $72.5 million, assumed deposit liabilities of $48.9 million, and purchased the related fixed assets of the branch. The Company operates the acquired bank branch under the name Union First Market Bank (the “Harrisonburg branch”). The acquisition, which allowed the Company to establish immediately a meaningful presence in a new banking market, is consistent with the Company’s secondary growth strategy of expanding operations along the Interstate Route 81 corridor. The Company’s consolidated statements of income include the results of operations of the Harrisonburg branch from the closing date of the acquisition.

In connection with the acquisition, the Company recorded $1.8 million of goodwill and $9,500 of core deposit intangibles. The core deposit intangible of $9,500 was expensed immediately upon completion of the acquisition. The recorded goodwill was allocated to the community banking segment of the Company and is deductible for tax purposes.

The Company acquired the $72.5 million loan portfolio at a fair value discount of $1.7 million. The discount represents expected credit losses, adjustments to market interest rates and liquidity adjustments. The performing loan portfolio fair value estimate was $70.5 million and the impaired loan portfolio fair value estimate was $276,000.

In the second quarter, interest income of approximately $692,000 was recorded on loans acquired in the Harrisonburg branch acquisition. The outstanding principal balance and the carrying amount of these loans included in the consolidated balance sheet at June 30, 2012 and December 31, 2011 are as follows (dollars in thousands):

June 30, 2012:
Outstanding principal balance	$	50,869
Carrying amount	$	50,221
December 31, 2011:
Outstanding principal balance	$	54,953
Carrying amount	$	53,359

Loans obtained in the acquisition of the Harrisonburg branch for which there is specific evidence of credit deterioration and for which it was probable that the Company would be unable to collect all contractually required principal and interest payments are not considered to be material to the Company’s consolidated assets.

First Market Bank Acquisition In February 2010, the Company completed the acquisition of First Market Bank (“FMB”). Interest income on acquired loans for the second quarter of 2012 was approximately $6.9 million. The outstanding principal balance and the carrying amount of these loans included in the consolidated balance sheet at June 30, 2012 and December 31, 2011 are as follows (dollars in thousands):

June 30, 2012:
Outstanding principal balance	$	498,927
Carrying amount	$	489,002
December 31, 2011:
Outstanding principal balance	$	632,602
Carrying amount	$	620,048

Loans obtained in the acquisition of FMB for which there is specific evidence of credit deterioration and for which it was probable that the Company would be unable to collect all contractually required principal and interest payments are not considered to be material to the Company’s consolidated assets.

During the second quarter of 2012, the Company compared the expected prepayments at acquisition to actual payments and anticipated future payments on four purchased performing loan pools. The slower prepayment speed noted on real estate, commercial real estate, land, and auto pools during this assessment resulted in an adjustment to the fair value discount accretion rate. This is considered a change in accounting estimate and resulted in a lower effective yield in each pool and had an immaterial impact on the financial statements.

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Other Operating Expenses

6 Months Ended

Jun. 30, 2012

Other Operating Expenses [Abstract]

OTHER OPERATING EXPENSES

14. OTHER OPERATING EXPENSES

The following table presents the consolidated statement of income line “Other Operating Expenses” broken into greater detail for the three and six months ended June 30, 2012 and 2011, respectively (dollars in thousands):

	Three Months Ended June 30				Six Months Ended June 30
	2012		2011		2012		2011
Printing, Postage, & Supplies	$	620	$	556	$	1,206	$	1,095
Communications Expense		737		725		1,463		1,462
Technology & Data Processing		2,234		2,471		4,377		4,750
Professional services		1,177		1,449		2,325		2,512
Marketing & advertising expense		1,422		1,331		2,890		2,495
FDIC assessment premiums and other insurance		661		1,393		1,319		3,144
Other taxes		758		705		1,516		1,410
Loan Related Expenses		884		535		1,583		965
Foreclosed Property Expenses		425		967		716		1,426
Amortization of core deposit premuims		1,325		1,623		2,735		3,378
Acquistion & Conversion Costs		—		204		—		498
Other expenses		2,143		1,986		3,948		3,507
Total other operating expenses	$	12,386	$	13,945	$	24,078	$	26,642

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2012

Commitments and Contingencies [Abstract]

COMMITMENTS AND CONTINGENCIES

10. COMMITMENTS AND CONTINGENCIES

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 payments of fees. Because many of the commitments may expire without being completely drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company evaluates each customer’s creditworthiness on a case by case basis. At June 30, 2012 and 2011 and at December 31, 2011, the Company had outstanding loan commitments approximating $829.1 million, $773.3 million, and $720.3 million, respectively.

Letters of credit written are conditional commitments issued by the Company to guarantee the performance of customers to third parties. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loans to customers. The amount of standby letters of credit whose contract amounts represent credit risk totaled approximately $48.0 million and $39.7 million at June 30, 2012 and 2011, and $38.1 million at December 31, 2011, respectively.

At June 30, 2012, Union Mortgage Group, Inc. (“Union Mortgage”), a wholly owned subsidiary of Union First Market Bank, a wholly owned subsidiary of Union First Market Bankshares Corporation, had rate lock commitments to originate mortgage loans amounting to $161.3 million and loans held for sale of $100.1 million compared to $109.9 million and $50.4 million at June 30, 2011. At December 31, 2011, Union Mortgage had rate lock commitments to originate mortgage loans amounting to $45.8 million and loans held for sale of $74.8 million. Union Mortgage has entered into corresponding agreements on a best-efforts basis to sell loans on a servicing released basis totaling approximately $261.4 million. These commitments to sell loans are designed to mitigate the mortgage company’s exposure to fluctuations in interest rates in connection with rate lock commitments and loans held for sale.

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Trust Preferred Capital Notes

6 Months Ended

Jun. 30, 2012

Trust Preferred Capital Notes [Abstract]

TRUST PREFERRED CAPITAL NOTES

6. TRUST PREFERRED CAPITAL NOTES

Statutory Trust I, a wholly owned subsidiary of the Company, issued a Trust Preferred Capital Note of $22.5 million through a pooled underwriting for an acquisition in 2004. The securities have an indexed London Interbank Offer Rate (“LIBOR”) floating rate (three month LIBOR rate plus 2.75%) which adjusts and is payable quarterly. The interest rate at June 30, 2012 was 3.21%. The capital securities were redeemable at par beginning on June 17, 2009 and quarterly thereafter until the securities mature on June 17, 2034. The principal asset of Statutory Trust I is $23.2 million of the Company’s junior subordinated debt securities with like maturities and like interest rates to the capital notes. Of the above amount, $696,000 is reflected as the Company’s investment in Statutory Trust I and reported as “Other assets” within the consolidated balance sheet.

Statutory Trust II, a wholly owned subsidiary of the Company, issued a Trust Preferred Capital Note of $36.0 million through a pooled underwriting for an acquisition in 2006. The securities have a LIBOR-indexed floating rate (three month LIBOR plus 1.40%) that adjusts and is payable quarterly. The interest rate at June 30, 2012 was 1.86%. The capital securities were redeemable at par on June 15, 2011 and quarterly thereafter until the securities mature on June 15, 2036. The principal asset of Statutory Trust II is $37.1 million of the Company’s junior subordinated debt securities with like maturities and like interest rates to the capital notes. Of this amount, $1.1 million is reflected as the Company’s investment in Statutory Trust II reported as “Other assets” within the consolidated balance sheet.

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Goodwill and Intangible Assets (Details 1) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012
Estimated remaining amortization expense of core deposit and trademark intangibles
2013	$ 4,589
2014	3,349
2015	2,645
2016	2,184
2017	1,635
Thereafter	4,009
Net Carrying Value	$ 18,411

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Loans and Allowance for Loan Losses

6 Months Ended

Jun. 30, 2012

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 unearned income, and consist of the following at June 30, 2012 and December 31, 2011 (dollars in thousands):

	June 30,		December 31,
	2012		2011
Commercial:
Commercial Construction	$	190,141	$	185,359
Commercial Real Estate—Owner Occupied		478,804		452,407
Commercial Real Estate—Non-Owner Occupied		694,980		655,083
Raw Land and Lots		208,460		214,284
Single Family Investment Real Estate		210,151		192,437
Commercial and Industrial		210,517		212,268
Other Commercial		42,494		44,403
Consumer:
Mortgage		221,063		219,646
Consumer Construction		25,778		20,757
Indirect Auto		158,813		162,708
Indirect Marine		33,729		39,819
HELOCs		280,030		277,101
Credit Card		19,717		19,006
Other Consumer		113,113		123,305
Total	$	2,887,790	$	2,818,583

The following table shows the aging of the Company’s loan portfolio, by class, at June 30, 2012 (dollars in thousands):

	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days and still Accruing		Purchased Impaired (net of credit mark)		Nonaccrual		Current		Total Loans
Commercial:
Commercial Construction	$	—	$	—	$	—	$	—	$	9,763	$	180,378	$	190,141
Commercial Real Estate—Owner Occupied		3,151		50		200		1,234		5,194		468,975		478,804
Commercial Real Estate—Non-Owner Occupied		895		1,721		636		—		517		691,211		694,980
Raw Land and Lots		57		—		153		3,753		12,139		192,358		208,460
Single Family Investment Real Estate		1,059		735		673		372		3,476		203,836		210,151
Commercial and Industrial		510		254		140		382		4,715		204,516		210,517
Other Commercial		2		262		522		—		231		41,477		42,494
Consumer:
Mortgage		4,575		2,078		4,497		—		1,171		208,742		221,063
Consumer Construction		408		—		—		—		201		25,169		25,778
Indirect Auto		1,905		236		251		27		3		156,391		158,813
Indirect Marine		200		191		594		—		26		32,718		33,729
HELOCs		1,528		667		1,788		875		900		274,272		280,030
Credit Card		129		114		182		—		—		19,292		19,717
Other Consumer		1,402		316		1,132		132		835		109,296		113,113
Total	$	15,821	$	6,624	$	10,768	$	6,775	$	39,171	$	2,808,631	$	2,887,790

The following table shows the aging of the Company’s loan portfolio, by class, at December 31, 2011 (dollars in thousands):

	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days and still Accruing		Purchased Impaired (net  of credit mark)		Nonaccrual		Current		Total Loans
Commercial:
Commercial Construction	$	—	$	—	$	490	$	—	$	10,276	$	174,593	$	185,359
Commercial Real Estate—Owner Occupied		520		—		2,482		1,292		5,962		442,151		452,407
Commercial Real Estate—Non-Owner Occupied		190		64		2,887		1,133		2,031		648,778		655,083
Raw Land and Lots		94		1,124		—		5,623		13,322		194,121		214,284
Single Family Investment Real Estate		779		70		3,637		388		5,048		182,515		192,437
Commercial and Industrial		601		185		3,369		392		5,297		202,424		212,268
Other Commercial		—		25		—		—		238		44,140		44,403
Consumer:
Mortgage		6,748		412		3,804		—		240		208,442		219,646
Consumer Construction		—		—		—		—		207		20,550		20,757
Indirect Auto		2,653		416		443		40		7		159,149		162,708
Indirect Marine		189		795		—		—		544		38,291		39,819
HELOCs		1,678		547		820		865		885		272,306		277,101
Credit Card		245		184		323		—		—		18,254		19,006
Other Consumer		1,421		443		1,657		164		777		118,843		123,305
Total	$	15,118	$	4,265	$	19,912	$	9,897	$	44,834	$	2,724,557	$	2,818,583

Nonaccrual loans totaled $39.2 million and $54.3 million at June 30, 2012 and 2011, respectively. There were no nonaccrual loans excluded from impaired loan disclosure in 2012 or 2011. Loans past due 90 days or more and accruing interest totaled $10.8 million and $9.1 million at June 30, 2012 and 2011, respectively.

The following table shows purchased impaired commercial and consumer loan portfolios, by class and their delinquency status through June 30, 2012 (dollars in thousands):

	30-89 Days Past Due		Greater than 90 Days		Current		Total
Commercial:
Commercial Real Estate—Owner Occupied	$	—	$	1,167	$	67	$	1,234
Raw Land and Lots		—		91		3,662		3,753
Single Family Investment Real Estate		—		—		372		372
Commercial and Industrial		—		382		—		382
Consumer:
Indirect Auto		3		8		16		27
HELOCs		—		55		820		875
Other Consumer		—		46		86		132
Total	$	3	$	1,749	$	5,023	$	6,775

The current column represents loans that are less than 30 days past due.

The following table shows purchased impaired commercial and consumer loan portfolios, by class and their delinquency status through December 31, 2011 (dollars in thousands):

	30-89 Days Past Due		Greater than 90 Days		Current		Total
Commercial:
Commercial Real Estate—Owner Occupied	$	206	$	50	$	1,036	$	1,292
Commercial Real Estate—Non-Owner Occupied		—		1,133		—		1,133
Raw Land and Lots		—		—		5,623		5,623
Single Family Investment Real Estate		—		—		388		388
Commercial and Industrial		—		302		90		392
Consumer:
Indirect Auto		6		11		23		40
HELOCs		19		32		814		865
Other Consumer		—		77		87		164
Total	$	231	$	1,605	$	8,061	$	9,897

The current column represents loans that are less than 30 days past due.

The Company measures the amount of impairment by evaluating loans either in their collective homogeneous pools or individually. At June 30, 2012, the Company had $201.3 million in loans considered to be impaired of which $11.9 million were collectively evaluated for impairment and $189.4 million were individually evaluated for impairment. The following table shows the Company’s impaired loans individually evaluated for impairment, by class, at June 30, 2012 (dollars in thousands):

	Recorded Investment		Unpaid Principal Balance		Related Allowance		YTD Average Investment		Interest Income Recognized
Loans without a specific allowance
Commercial:
Commercial Construction	$	31,097	$	31,142	$	—	$	31,278	$	831
Commercial Real Estate—Owner Occupied		14,145		14,963		—		15,034		347
Commercial Real Estate—Non-Owner Occupied		29,659		29,730		—		29,977		813
Raw Land and Lots		39,400		39,461		—		40,166		710
Single Family Investment Real Estate		4,601		4,611		—		5,198		158
Commercial and Industrial		5,920		5,964		—		6,189		119
Other Commercial		1,046		1,046		—		1,194		34
Consumer:
Mortgage		2,600		2,600		—		3,199		57
Indirect Auto		27		27		—		30		1
HELOCs		1,425		1,524		—		1,526		6
Other Consumer		904		936		—		948		15
Total impaired loans without a specific allowance	$	130,824	$	132,004	$	—	$	134,739	$	3,091
Loans with a specific allowance
Commercial:
Commercial Construction	$	13,399	$	13,834	$	1,378	$	13,873	$	108
Commercial Real Estate—Owner Occupied		6,641		6,807		1,861		6,855		57
Commercial Real Estate—Non-Owner Occupied		8,505		8,536		387		8,553		227
Raw Land and Lots		11,542		11,750		2,457		11,834		27
Single Family Investment Real Estate		5,250		5,552		1,174		5,617		55
Commercial and Industrial		11,455		12,104		3,393		12,068		187
Consumer:
Mortgage		473		473		59		473		—
Consumer Construction		201		225		80		226		—
HELOCs		754		811		550		1,017		—
Other Consumer		355		355		161		355		—
Total impaired loans with a specific allowance	$	58,575	$	60,447	$	11,500	$	60,871	$	661
Total loans individually evaluated for impairment	$	189,399	$	192,451	$	11,500	$	195,610	$	3,752

At December 31, 2011, the Company had $255.1 million in loans considered to be impaired of which $12.3 million were collectively evaluated for impairment and $242.8 million were individually evaluated for impairment. The following table shows the Company’s impaired loans individually evaluated for impairment, by class, at December 31, 2011 (dollars in thousands):

	Recorded Investment		Unpaid Principal Balance		Related Allowance		YTD Average Investment		Interest Income Recognized
Loans without a specific allowance
Commercial:
Commercial Construction	$	40,475	$	40,524	$	—	$	37,835	$	1,690
Commercial Real Estate—Owner Occupied		20,487		21,010		—		23,364		1,183
Commercial Real Estate—Non-Owner Occupied		37,799		37,855		—		38,084		2,002
Raw Land and Lots		46,791		46,890		—		47,808		1,306
Single Family Investment Real Estate		11,285		11,349		—		11,684		637
Commercial and Industrial		9,467		9,959		—		10,216		423
Other Commercial		1,257		1,257		—		1,269		75
Consumer:
Mortgage		1,202		1,202		—		1,225		70
HELOCs		349		349		—		350		11
Other Consumer		—		—		—		1		—
Total impaired loans without a specific allowance	$	169,112	$	170,395	$	—	$	171,836	$	7,397
Loans with a specific allowance
Commercial:
Commercial Construction	$	12,927	$	13,297	$	583	$	13,811	$	343
Commercial Real Estate—Owner Occupied		8,679		8,788		1,961		8,681		267
Commercial Real Estate—Non-Owner Occupied		8,858		8,879		1,069		9,010		322
Raw Land and Lots		22,188		22,429		991		24,553		973
Single Family Investment Real Estate		9,020		9,312		1,140		9,571		321
Commercial and Industrial		8,980		9,133		3,320		10,448		369
Other Commercial		150		150		3		153		10
Consumer:
Mortgage		535		535		11		536		32
Consumer Construction		207		226		86		228		—
Indirect Auto		71		71		—		93		5
Indirect Marine		544		547		263		548		9
HELOCs		785		825		587		1,034		—
Other Consumer		777		804		284		815		5
Total impaired loans with a specific allowance	$	73,721	$	74,996	$	10,298	$	79,481	$	2,656
Total loans individually evaluated for impairment	$	242,833	$	245,391	$	10,298	$	251,317	$	10,053

The Company considers troubled debt restructurings (“TDRs”) to be impaired loans. A modification of a loan’s terms constitutes a TDR if the creditor grants a concession to the borrower for economic or legal reasons related to the borrower’s financial difficulties that it would not otherwise consider. Included in the impaired loan disclosures above are $80.2 million and $112.6 million of loans considered to be troubled debt restructurings as of June 30, 2012 and December 31, 2011, respectively. All loans that are considered to be TDRs are specifically evaluated for impairment in accordance with the Company’s allowance for loan loss methodology.

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 in nonaccrual status, which are considered to be nonperforming, as of June 30, 2012 and December 31, 2011 (dollars in thousands):

	June 30, 2012						December 31, 2011
	No. of Loans		Recorded Investment		Outstanding Commitment		No. of Loans		Recorded Investment		Outstanding Commitment
Performing
Commercial:
Commercial Construction		9	$	12,566	$	2,247		14	$	21,461	$	3,185
Commercial Real Estate—Owner Occupied		11		5,069		—		11		7,996		180
Commercial Real Estate—Non-Owner Occupied		10		16,303		—		16		21,777		13
Raw Land and Lots		15		27,477		251		15		32,450		1
Single Family Investment Real Estate		7		1,101		—		12		8,525		—
Commercial and Industrial		9		2,605		—		12		4,991		204
Other Commercial		2		302		—		4		864		—
Consumer:
Mortgage		7		1,699		—		1		507		—
Indirect Marine		1		283		—		—		—		—
Other Consumer		2		85		—		2		263		—
Total performing		73	$	67,490	$	2,498		87	$	98,834	$	3,583
Nonperforming
Commercial:
Commercial Construction		4	$	5,242	$	—		5	$	5,353	$	—
Commercial Real Estate—Owner Occupied		3		1,182		—		—		—		—
Commercial Real Estate—Non-Owner Occupied		1		212		—		2		292		—
Raw Land and Lots		3		3,861		—		6		4,342		—
Single Family Investment Real Estate		2		443		—		4		1,342		—
Commercial and Industrial		7		1,310		—		3		1,134		—
Consumer:
Mortgage		1		202		—		5		1,076		—
Indirect Marine		1		26		—		—		—		—
Other Consumer		1		202		—		1		265		—
Total nonperforming		23	$	12,680	$	—		26	$	13,804	$	—
Total performing and nonperforming		96	$	80,170	$	2,498		113	$	112,638	$	3,583

The Company considers a default of a restructured loan to occur when subsequent to the restructure, the borrower is 90 days past due or results in foreclosure and repossession of the applicable collateral; the Company identified two restructured loans, totaling approximately $928,000, that went into default in the second quarter that had been restructured during the previous twelve months. These loans included a commercial real estate (owner occupied) loan, totaling approximately $902,000, and an indirect marine loan, totaling approximately $26,000; both of these loans had a term extension at a market rate.

The following table shows, by class and modification type, TDRs that occurred during the three month and six month periods ended June 30, 2012 (dollars in thousands):

	Three months ended June 30, 2012				Six months ended June 30, 2012
	No. of Loans		Recorded investment at period end		No. of Loans		Recorded investment at period end
Modified to interest only
Commercial:
Raw Land and Lots		—	$	—		3	$	327
Single Family Investment Real Estate		—		—		2		179
Consumer:
Indirect Marine		1		283		1		283
Total interest only at market rate of interest		1	$	283		6	$	789
Term modification, at a market rate
Commercial:
Commercial Real Estate—Owner Occupied		1	$	132		3	$	1,822
Raw Land and Lots		—		—		1		604
Commercial and Industrial		5		329		6		430
Consumer:
Mortgage		1		202		2		474
Other Consumer		2		85		3		287
Total loan term extended at a market rate		9	$	748		15	$	3,617
Term modification, below market rate
Commercial:
Commercial Real Estate—Owner Occupied		3	$	649		4	$	658
Total loan term extended at a below market rate		3	$	649		4	$	658
Interest rate modification, below market rate
Commercial:
Commercial Real Estate—Non-Owner Occupied		2	$	2,390		2	$	2,390
Total interest only at below market rate of interest		2	$	2,390		2	$	2,390
Total		15	$	4,070		27	$	7,454

The following table shows the allowance for loan loss activity, by portfolio segment, balances for allowance for credit losses, and loans based on impairment methodology for the six months ended June 30, 2012. 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			Unallocated		Total
Allowance for loan losses:
Balance, beginning of the year	$	27,891		$	11,498		$	81	$	39,470
Recoveries credited to allowance		127			564			—		691
Loans charged off		(2,950	)		(2,726	)		—		(5,676	)
Provision charged to operations		5,485			988			27		6,500
Balance, end of period	$	30,553		$	10,324		$	108	$	40,985
Ending balance: individually evaluated for impairment		10,429			850			—		11,279
Ending balance: collectively evaluated for impairment		19,903			9,474			108		29,485
Ending balance: loans acquired with deteriorated credit quality		221			—			—		221
Total	$	30,553		$	10,324		$	108	$	40,985
Loans:
Ending balance	$	2,035,547		$	852,243		$	—	$	2,887,790
Ending balance: individually evaluated for impairment		176,919			5,705			—		182,624
Ending balance: collectively evaluated for impairment		1,852,887			845,504			—		2,698,391
Ending balance: loans acquired with deteriorated credit quality		5,741			1,034			—		6,775
Total	$	2,035,547		$	852,243		$	—	$	2,887,790

The following table shows the allowance for loan loss activity, portfolio segment types, balances for allowance for loan losses, and loans based on impairment methodology for the year ended December 31, 2011. 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			Unallocated			Total
Allowance for loan losses:
Balance, beginning of the year	$	28,255		$	10,189		$	(38	)	$	38,406
Recoveries credited to allowance		924			1,206			—			2,130
Loans charged off		(10,891	)		(6,975	)		—			(17,866	)
Provision charged to operations		9,603			7,078			119			16,800
Balance, end of period	$	27,891		$	11,498		$	81		$	39,470
Ending balance: individually evaluated for impairment		8,982			1,231			—			10,213
Ending balance: collectively evaluated for impairment		18,824			10,267			81			29,172
Ending balance: loans acquired with deteriorated credit quality		85			—			—			85
Total	$	27,891		$	11,498		$	81		$	39,470
Loans:
Ending balance	$	1,956,241		$	862,342		$	—		$	2,818,583
Ending balance: individually evaluated for impairment		229,535			3,401			—			232,936
Ending balance: collectively evaluated for impairment		1,717,878			857,872			—			2,575,750
Ending balance: loans acquired with deteriorated credit quality		8,828			1,069			—			9,897
Total	$	1,956,241		$	862,342		$	—		$	2,818,583

The Company uses the past due status and 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 1 through 9. A general description of the characteristics of the risk grades follows:

• 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 risk;

• 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 all loans, excluding purchased impaired loans, in the commercial portfolios by class with their related risk rating as of June 30, 2012. The risk rating information has been updated through June 30, 2012 (dollars in thousands):

	1-3		4		5		6		7		8		Total
Commercial Construction	$	15,558	$	90,320	$	12,194	$	34,210	$	37,749	$	110	$	190,141
Commercial Real Estate—Owner Occupied		104,138		317,703		20,366		17,309		18,054		—		477,570
Commercial Real Estate—Non-Owner Occupied		156,028		416,649		57,512		32,437		32,354		—		694,980
Raw Land and Lots		2,240		108,866		11,306		38,740		43,049		506		204,707
Single Family Investment Real Estate		33,761		139,779		12,154		13,322		10,024		739		209,779
Commercial and Industrial		41,186		122,147		19,607		8,729		18,302		164		210,135
Other Commercial		5,904		17,903		11,516		5,271		1,839		61		42,494
Total	$	358,815	$	1,213,367	$	144,655	$	150,018	$	161,371	$	1,580	$	2,029,806

The following table shows all loans, excluding purchased impaired loans, in the commercial portfolios by class with their related risk rating as of December 31, 2011. The risk rating information has been updated through December 31, 2011 (dollars in thousands):

	1-3		4		5		6		7		8		Total
Commercial Construction	$	10,099	$	84,299	$	6,079	$	36,650	$	48,232	$	—	$	185,359
Commercial Real Estate—Owner Occupied		88,430		296,825		17,604		21,158		26,389		709		451,115
Commercial Real Estate—Non-Owner Occupied		149,346		367,244		58,844		38,662		39,854		—		653,950
Raw Land and Lots		4,368		99,374		18,767		33,673		52,204		275		208,661
Single Family Investment Real Estate		32,741		116,570		11,928		14,358		16,452		—		192,049
Commercial and Industrial		35,120		123,872		22,079		11,559		19,066		180		211,876
Other Commercial		6,364		15,918		16,739		3,807		1,512		63		44,403
Total	$	326,468	$	1,104,102	$	152,040	$	159,867	$	203,709	$	1,227	$	1,947,413

The following table shows only purchased impaired loans in the commercial portfolios by class with their related risk rating as of June 30, 2012. The credit quality indicator information has been updated through June 30, 2012 (dollars in thousands):

	6		7		8		Total
Commercial Real Estate—Owner Occupied	$	—	$	1,234	$	—	$	1,234
Raw Land and Lots		—		3,753		—		3,753
Single Family Investment Real Estate		355		17		—		372
Commercial and Industrial		—		88		294		382
Total	$	355	$	5,092	$	294	$	5,741

The following table shows only purchased impaired loans in the commercial portfolios by class with their related risk rating as of December 31, 2011. The credit quality indicator information has been updated through December 31, 2011 (dollars in thousands):

	6		7		8		Total
Commercial Real Estate—Owner Occupied	$	—	$	1,292	$	—	$	1,292
Commercial Real Estate—Non-Owner Occupied		—		1,133		—		1,133
Raw Land and Lots		—		5,623		—		5,623
Single Family Investment Real Estate		369		19		—		388
Commercial and Industrial		—		91		301		392
Total	$	369	$	8,158	$	301	$	8,828

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 contractually required payments, cash flows expected to be collected, and fair value as of the date of acquisition were $1,080,780, $1,072,726, and $1,052,358, respectively (dollars in thousands).

The following shows changes in the Company’s acquired loan portfolio and accretable yield for the following periods (dollars in thousands):

	For the Six Months Ended												For the Twelve Months Ended
	June 30, 2012												December 31, 2011
	Purchased Impaired						Purchased Nonimpaired						Purchased Impaired						Purchased Nonimpaired
	Accretable Yield			Carrying Amount of Loans			Accretable Yield			Carrying Amount of Loans			Accretable Yield			Carrying Amount of Loans			Accretable Yield			Carrying Amount of Loans
Balance at beginning of period	$	5,140		$	9,897		$	9,010		$	663,510		$	8,169		$	13,999		$	13,589		$	799,898
Additions		—			—			—			—			122			276			1,593			70,524
Accretion		(38	)		—			(2,166	)		—			(66	)		—			(6,172	)		—
Charged off		(1,373	)		(212	)		—			(1,032	)		(3,073	)		(1,329	)		—			(5,988	)
Transfers to OREO		—			(2,371	)		—			(2,766	)		(12	)		(174	)		—			(2,341	)
Payments received, net		—			(539	)		—			(127,264	)		—			(2,875	)		—			(198,583	)
Balance at end of period	$	3,729		$	6,775		$	6,844		$	532,448		$	5,140		$	9,897		$	9,010		$	663,510

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Earnings per Share

6 Months Ended

Jun. 30, 2012

Earnings per Share [Abstract]

EARNINGS PER SHARE

5. EARNINGS PER SHARE

Basic earnings per common share (“EPS”) was 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. Amortization of discount and dividends on the preferred stock is treated as a reduction of the numerator in calculating basic and diluted EPS. There were approximately 591,124 and 380,657 shares underlying anti-dilutive stock awards as of June 30, 2012 and 2011, respectively.

The following is a reconcilement of the denominators of the basic and diluted EPS computations for the three and six months ended June 30, 2012 and 2011 (dollars and shares in thousands, except per share amounts):

	Net Income Available to Common Shareholders (Numerator)		Weighted Average Common Shares (Denominator)		Per Share Amount
For the Three Months ended June 30, 2012
Net income, basic	$	8,420		25,868	$	0.32
Add: potentially dilutive common shares—stock awards		—		20		—
Diluted	$	8,420		25,888	$	0.32
For the Three Months ended June 30, 2011
Net income	$	6,820		25,970	$	0.26
Less: dividends paid and accumulated on preferred stock		462		—		0.02
Less: accretion of discount on preferred stock		65		—		—
Basic	$	6,293		25,970	$	0.24
Add: potentially dilutive common shares—stock awards		—		22		—
Diluted	$	6,293		25,992	$	0.24
For the Six Months ended June 30, 2012
Net income, basic	$	16,343		25,900	$	0.63
Add: potentially dilutive common shares—stock awards		—		24		—
Diluted	$	16,343		25,924	$	0.63
For the Six Months ended June 30, 2011
Net income	$	13,014		25,964	$	0.50
Less: dividends paid and accumulated on preferred stock		924		—		0.04
Less: accretion of discount on preferred stock		129		—		—
Basic	$	11,961		25,964	$	0.46
Add: potentially dilutive common shares—stock awards		—		23		—
Diluted	$	11,961		25,987	$	0.46

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Segment Reporting Disclosures

6 Months Ended

Jun. 30, 2012

Segment Reporting Disclosures [Abstract]

SEGMENT REPORTING DISCLOSURES

7. SEGMENT REPORTING DISCLOSURES

The Company has two reportable segments: a traditional full service community bank and a mortgage loan origination business. The community bank business for 2012 includes one subsidiary bank, which provides loan, deposit, investment, and trust services to retail and commercial customers throughout its 94 retail locations in Virginia. The mortgage segment provides a variety of mortgage loan products principally in Virginia, North Carolina, South 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 subject the Company to only de minimus 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 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, due largely to the minimal degree of overlapping geographic markets.

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 at the three month LIBOR rate plus 1.5% basis points, floor of 2%. 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 three and six months ended June 30, 2012 and 2011 was as follows (dollars in thousands):

	Community Bank		Mortgage		Eliminations			Consolidated
Three Months Ended June 30, 2012
Net interest income	$	37,792	$	295	$	—		$	38,087
Provision for loan losses		3,000		—		—			3,000
Net interest income after provision for loan losses		34,792		295		—			35,087
Noninterest income		7,212		7,315		(117	)		14,410
Noninterest expenses		31,061		6,820		(117	)		37,764
Income before income taxes		10,943		790		—			11,733
Income tax expense		2,993		320		—			3,313
Net income	$	7,950	$	470	$	—		$	8,420
Total assets	$	3,967,690	$	110,374	$	(95,776	)	$	3,982,288
Three Months Ended June 30, 2011
Net interest income	$	39,341	$	282	$	—		$	39,623
Provision for loan losses		4,500		—		—			4,500
Net interest income after provision for loan losses		34,841		282		—			35,123
Noninterest income		5,777		4,304		(118	)		9,963
Noninterest expenses		31,665		4,325		(118	)		35,872
Income before income taxes		8,953		261		—			9,214
Income tax expense		2,299		95		—			2,394
Net income	$	6,654	$	167	$	—		$	6,820
Total assets	$	3,846,714	$	57,215	$	(52,405	)	$	3,851,524
Six Months Ended June 30, 2012
Net interest income	$	75,830	$	604	$	—		$	76,434
Provision for loan losses		6,500		—		—			6,500
Net interest income after provision for loan losses		69,330		604		—			69,934
Noninterest income		13,849		12,613		(234	)		26,228
Noninterest expenses		61,555		12,052		(234	)		73,373
Income before income taxes		21,624		1,165		—			22,789
Income tax expense		5,985		461		—			6,446
Net income	$	15,639	$	704	$	—		$	16,343
Total assets	$	3,967,690	$	110,374	$	(95,776	)	$	3,982,288
Six Months Ended June 30, 2011
Net interest income	$	77,654	$	769	$	—		$	78,423
Provision for loan losses		10,800		—		—			10,800
Net interest income after provision for loan losses		66,854		769		—			67,623
Noninterest income		11,472		9,272		(234	)		20,510
Noninterest expenses		61,621		9,252		(234	)		70,639
Income before income taxes		16,705		789		—			17,494
Income tax (benefit) expense		4,186		294		—			4,480
Net income	$	12,519	$	495	$	—		$	13,014
Total assets	$	3,846,714	$	57,215	$	(52,405	)	$	3,851,524

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Securities (Details 1) (USD $)	Jun. 30, 2012	Dec. 31, 2011
Schedule of gross unrealized losses and fair value of investments
Less than 12 months, Fair value	$ 70,982,000	$ 104,974,000
Less than 12 months, Unrealized Losses	(413,000)	(762,000)
More than 12 Months, Fair value	2,931,000	4,880,000
More than 12 Months, Unrealized Losses	(490,000)	(721,000)
Fair value, Total	73,913,000	109,854,000
Unrealized Losses, Total	(903,000)	(1,483,000)
Obligations of states and political subdivisions [Member]
Schedule of gross unrealized losses and fair value of investments
Less than 12 months, Fair value	10,060,000	5,429,000
Less than 12 months, Unrealized Losses	(132,000)	(152,000)
More than 12 Months, Fair value	1,484,000	1,090,000
More than 12 Months, Unrealized Losses	(70,000)	(95,000)
Fair value, Total	11,544,000	6,519,000
Unrealized Losses, Total	(202,000)	(247,000)
Corporate bonds and other securities [Member]
Schedule of gross unrealized losses and fair value of investments
Less than 12 months, Fair value	100,000	2,342,000
Less than 12 months, Unrealized Losses		(165,000)
More than 12 Months, Fair value	1,447,000	3,790,000
More than 12 Months, Unrealized Losses	(420,000)	(626,000)
Fair value, Total	1,547,000	6,132,000
Unrealized Losses, Total	(420,000)	(791,000)
Mortgage-backed securities [Member]
Schedule of gross unrealized losses and fair value of investments
Less than 12 months, Fair value	60,822,000	97,203,000
Less than 12 months, Unrealized Losses	(281,000)	(445,000)
More than 12 Months, Fair value
More than 12 Months, Unrealized Losses
Fair value, Total	60,822,000	97,203,000
Unrealized Losses, Total	$ (281,000)	$ (445,000)

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Securities (Details 3) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2012
Schedule of other-than-temporary impairment
Cumulative credit losses on investment securities, through December 31, 2011	$ 400
Cumulative credit losses on investment securities
Additions for credit losses not previously recognized
Cumulative credit losses on investment securities, through June 30, 2012	$ 400

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Securities (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Amortized cost, gross unrealized gains and losses, and estimated fair values of investment securities
Amortized Cost	$ 604,107	$ 599,262
Gross Unrealized Gains	24,339	22,387
Gross Unrealized (Losses)	(903)	(1,483)
Estimated Fair Value	627,543	620,166
U.S. government and agency securities [Member]
Amortized cost, gross unrealized gains and losses, and estimated fair values of investment securities
Amortized Cost	3,264	3,933
Gross Unrealized Gains	312	351
Gross Unrealized (Losses)
Estimated Fair Value	3,576	4,284
Obligations of states and political subdivisions [Member]
Amortized cost, gross unrealized gains and losses, and estimated fair values of investment securities
Amortized Cost	194,203	189,117
Gross Unrealized Gains	13,781	11,337
Gross Unrealized (Losses)	(202)	(247)
Estimated Fair Value	207,782	200,207
Corporate and other bonds [Member]
Amortized cost, gross unrealized gains and losses, and estimated fair values of investment securities
Amortized Cost	9,503	12,839
Gross Unrealized Gains	308	188
Gross Unrealized (Losses)	(420)	(787)
Estimated Fair Value	9,391	12,240
Mortgage-backed securities [Member]
Amortized cost, gross unrealized gains and losses, and estimated fair values of investment securities
Amortized Cost	393,954	390,329
Gross Unrealized Gains	9,838	10,434
Gross Unrealized (Losses)	(281)	(445)
Estimated Fair Value	403,511	400,318
Other securities [Member]
Amortized cost, gross unrealized gains and losses, and estimated fair values of investment securities
Amortized Cost	3,183	3,044
Gross Unrealized Gains	100	77
Gross Unrealized (Losses)		(4)
Estimated Fair Value	$ 3,283	$ 3,117

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Business Combinations (Details) (Harrisonburg branch acquisition [Member], USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Harrisonburg branch acquisition [Member]
Outstanding principal balance and carrying amount of acquired loans
Outstanding principal balance	$ 50,869	$ 54,953
Carrying amount	$ 50,221	$ 53,359

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Loans and Allowance for Loan Losses (Details 8) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011
Loans receivables related risk rating including purchased impaired loans
Loans receivables related risk rating	$ 2,029,806	$ 1,947,413
Commercial Real Estate - Owner Occupied [Member]
Loans receivables related risk rating including purchased impaired loans
Loans receivables related risk rating	477,570	451,115
Commercial Real Estate - Non-Owner Occupied [Member]
Loans receivables related risk rating including purchased impaired loans
Loans receivables related risk rating	694,980	653,950
Raw Land and Lots [Member]
Loans receivables related risk rating including purchased impaired loans
Loans receivables related risk rating	204,707	208,661
Single Family Investment Real Estate [Member]
Loans receivables related risk rating including purchased impaired loans
Loans receivables related risk rating	209,779	192,049
Commercial and Industrial [Member]
Loans receivables related risk rating including purchased impaired loans
Loans receivables related risk rating	210,135	211,876
6 [Member]
Loans receivables related risk rating including purchased impaired loans
Loans receivables related risk rating	150,018	159,867
6 [Member] | Commercial Real Estate - Owner Occupied [Member]
Loans receivables related risk rating including purchased impaired loans
Loans receivables related risk rating	17,309	21,158
6 [Member] | Commercial Real Estate - Non-Owner Occupied [Member]
Loans receivables related risk rating including purchased impaired loans
Loans receivables related risk rating	32,437	38,662
6 [Member] | Raw Land and Lots [Member]
Loans receivables related risk rating including purchased impaired loans
Loans receivables related risk rating	38,740	33,673
6 [Member] | Single Family Investment Real Estate [Member]
Loans receivables related risk rating including purchased impaired loans
Loans receivables related risk rating	13,322	14,358
6 [Member] | Commercial and Industrial [Member]
Loans receivables related risk rating including purchased impaired loans
Loans receivables related risk rating	8,729	11,559
7 [Member]
Loans receivables related risk rating including purchased impaired loans
Loans receivables related risk rating	161,371	203,709
7 [Member] | Commercial Real Estate - Owner Occupied [Member]
Loans receivables related risk rating including purchased impaired loans
Loans receivables related risk rating	18,054	26,389
7 [Member] | Commercial Real Estate - Non-Owner Occupied [Member]
Loans receivables related risk rating including purchased impaired loans
Loans receivables related risk rating	32,354	39,854
7 [Member] | Raw Land and Lots [Member]
Loans receivables related risk rating including purchased impaired loans
Loans receivables related risk rating	43,049	52,204
7 [Member] | Single Family Investment Real Estate [Member]
Loans receivables related risk rating including purchased impaired loans
Loans receivables related risk rating	10,024	16,452
7 [Member] | Commercial and Industrial [Member]
Loans receivables related risk rating including purchased impaired loans
Loans receivables related risk rating	18,302	19,066
8 [Member]
Loans receivables related risk rating including purchased impaired loans
Loans receivables related risk rating	1,580	1,227
8 [Member] | Commercial Real Estate - Owner Occupied [Member]
Loans receivables related risk rating including purchased impaired loans
Loans receivables related risk rating		709
8 [Member] | Commercial Real Estate - Non-Owner Occupied [Member]
Loans receivables related risk rating including purchased impaired loans
Loans receivables related risk rating
8 [Member] | Raw Land and Lots [Member]
Loans receivables related risk rating including purchased impaired loans
Loans receivables related risk rating	506	275
8 [Member] | Single Family Investment Real Estate [Member]
Loans receivables related risk rating including purchased impaired loans
Loans receivables related risk rating	739
8 [Member] | Commercial and Industrial [Member]
Loans receivables related risk rating including purchased impaired loans
Loans receivables related risk rating	164	180
Impaired loans purchased [Member]
Loans receivables related risk rating including purchased impaired loans
Loans receivables related risk rating	5,741	8,828
Impaired loans purchased [Member] | Commercial Real Estate - Owner Occupied [Member]
Loans receivables related risk rating including purchased impaired loans
Loans receivables related risk rating	1,234	1,292
Impaired loans purchased [Member] | Commercial Real Estate - Non-Owner Occupied [Member]
Loans receivables related risk rating including purchased impaired loans
Loans receivables related risk rating		1,133
Impaired loans purchased [Member] | Raw Land and Lots [Member]
Loans receivables related risk rating including purchased impaired loans
Loans receivables related risk rating	3,753	5,623
Impaired loans purchased [Member] | Single Family Investment Real Estate [Member]
Loans receivables related risk rating including purchased impaired loans
Loans receivables related risk rating	372	388
Impaired loans purchased [Member] | Commercial and Industrial [Member]
Loans receivables related risk rating including purchased impaired loans
Loans receivables related risk rating	382	392
Impaired loans purchased [Member] | 6 [Member]
Loans receivables related risk rating including purchased impaired loans
Loans receivables related risk rating	355	369
Impaired loans purchased [Member] | 6 [Member] | Commercial Real Estate - Owner Occupied [Member]
Loans receivables related risk rating including purchased impaired loans
Loans receivables related risk rating
Impaired loans purchased [Member] | 6 [Member] | Commercial Real Estate - Non-Owner Occupied [Member]
Loans receivables related risk rating including purchased impaired loans
Loans receivables related risk rating
Impaired loans purchased [Member] | 6 [Member] | Raw Land and Lots [Member]
Loans receivables related risk rating including purchased impaired loans
Loans receivables related risk rating
Impaired loans purchased [Member] | 6 [Member] | Single Family Investment Real Estate [Member]
Loans receivables related risk rating including purchased impaired loans
Loans receivables related risk rating	355	369
Impaired loans purchased [Member] | 6 [Member] | Commercial and Industrial [Member]
Loans receivables related risk rating including purchased impaired loans
Loans receivables related risk rating
Impaired loans purchased [Member] | 7 [Member]
Loans receivables related risk rating including purchased impaired loans
Loans receivables related risk rating	5,092	8,158
Impaired loans purchased [Member] | 7 [Member] | Commercial Real Estate - Owner Occupied [Member]
Loans receivables related risk rating including purchased impaired loans
Loans receivables related risk rating	1,234	1,292
Impaired loans purchased [Member] | 7 [Member] | Commercial Real Estate - Non-Owner Occupied [Member]
Loans receivables related risk rating including purchased impaired loans
Loans receivables related risk rating		1,133
Impaired loans purchased [Member] | 7 [Member] | Raw Land and Lots [Member]
Loans receivables related risk rating including purchased impaired loans
Loans receivables related risk rating	3,753	5,623
Impaired loans purchased [Member] | 7 [Member] | Single Family Investment Real Estate [Member]
Loans receivables related risk rating including purchased impaired loans
Loans receivables related risk rating	17	19
Impaired loans purchased [Member] | 7 [Member] | Commercial and Industrial [Member]
Loans receivables related risk rating including purchased impaired loans
Loans receivables related risk rating	88	91
Impaired loans purchased [Member] | 8 [Member]
Loans receivables related risk rating including purchased impaired loans
Loans receivables related risk rating	294	301
Impaired loans purchased [Member] | 8 [Member] | Commercial Real Estate - Owner Occupied [Member]
Loans receivables related risk rating including purchased impaired loans
Loans receivables related risk rating
Impaired loans purchased [Member] | 8 [Member] | Commercial Real Estate - Non-Owner Occupied [Member]
Loans receivables related risk rating including purchased impaired loans
Loans receivables related risk rating
Impaired loans purchased [Member] | 8 [Member] | Raw Land and Lots [Member]
Loans receivables related risk rating including purchased impaired loans
Loans receivables related risk rating
Impaired loans purchased [Member] | 8 [Member] | Single Family Investment Real Estate [Member]
Loans receivables related risk rating including purchased impaired loans
Loans receivables related risk rating
Impaired loans purchased [Member] | 8 [Member] | Commercial and Industrial [Member]
Loans receivables related risk rating including purchased impaired loans
Loans receivables related risk rating	$ 294	$ 301

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Fair Value Measurements

6 Months Ended

Jun. 30, 2012

Fair Value Measurements [Abstract]

FAIR VALUE MEASUREMENTS

12. FAIR VALUE MEASUREMENTS

The Company follows ASC 820 Fair Value Measurements and Disclosures (“ASC 820”) to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. This section 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.

Interest rate swap agreement used for interest rate risk management

Interest rate swaps are recorded at fair value on a recurring basis. The Company utilizes an interest rate swap agreement as part of the management of interest rate risk to modify the repricing 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 interest rate swaps using standard swap valuation techniques and therefore classifies such valuations as Level 2. Third party valuations are validated by the Company using Bloomberg’s derivative pricing functions. The Company has considered counterparty credit risk in the valuation of its interest rate swap assets and has considered its own credit risk in the valuation of its interest rate swap liabilities.

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 modes, 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 our validation as of June 30, 2012 and December 31, 2011.

The carrying value of restricted Federal Reserve Bank of Richmond 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 June 30, 2012 and December 31, 2011 (dollars in thousands):

	Fair Value Measurements at June 30, 2012 using
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	Level 1		Level 2		Level 3		Balance
ASSETS
Interest rate swap—loans	$	—	$	34	$	—	$	34
Securities available for sale:
U.S. government and agency securities		—		3,576		—		3,576
Obligations of states and political subdivisions		—		207,782		—		207,782
Corporate and other bonds		—		9,391		—		9,391
Mortgage-backed securities		—		403,511		—		403,511
Other securities		—		3,283		—		3,283
LIABILITIES
Interest rate swap—loans	$	—	$	34	$	—	$	34
Cash flow hedge—trust		—		4,582		—		4,582

	Fair Value Measurements at December 31, 2011 using
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	Level 1		Level 2		Level 3		Balance
ASSETS
Interest rate swap—loans	$	—	$	66	$	—	$	66
Securities available for sale:
U.S. government and agency securities		—		4,284		—		4,284
Obligations of states and political subdivisions		—		200,207		—		200,207
Corporate and other bonds		—		12,240		—		12,240
Mortgage-backed securities		—		400,318		—		400,318
Other securities		—		3,117		—		3,117
LIABILITIES
Interest rate swap—loans	$	—	$	66	$	—	$	66
Cash flow hedge—trust		—		4,293		—		4,293

Certain assets are measured at fair value on a nonrecurring basis in accordance with 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. 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. No nonrecurring fair value adjustments were recorded on loans held for sale during June 30, 2012 and December 31, 2011. Gains and losses on the sale of loans are recorded within income from the mortgage segment on the 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 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, of one year or less, conducted by an independent, licensed appraiser using observable market data (Level 2). However, if the collateral is a house or building in the process of construction or if an appraisal of the property is more than one year old and not solely based on observable market comparables or management determines the fair value of the collateral is further impaired below the appraised value, then a Level 3 valuation is considered to measure the fair value. 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). 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 Consolidated Statements of Income.

Other real estate owned

Fair values of other real estate owned (“OREO”) are carried at the lower of carrying value or 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 the fair value of the collateral is based on an observable market price or a current appraised value, the Company records the foreclosed asset as Level 2 valuation. 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 June 30, 2012 and December 31, 2011 were $0 and $707,000, respectively.

The following table summarizes the Company’s financial assets that were measured at fair value on a nonrecurring basis at June 30, 2012 and December 31, 2011 (dollars in thousands):

	Fair Value Measurements at June 30, 2012 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	$	—	$	100,066	$	—	$	100,066
Impaired loans		—		—		47,075		47,075
Other real estate owned		—		—		35,802		35,802

	Fair Value Measurements at December 31, 2011 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	$	—	$	74,823	$	—	$	74,823
Impaired loans		—		—		63,423		63,423
Other real estate owned		—		—		32,263		32,263

The changes in Level 3 assets measured at estimated fair value on a nonrecurring basis during the six months ended June 30, 2012 were as follows:

	Fair Value Measurements at June 30, 2012
	Impaired Loans			Other Real Estate Owned
Balance—January 1, 2012	$	63,423		$	32,263
Total gains (losses) realized/unrealized:
Included in earnings		—			(206	)
Additions		19,388			10,822
Sales		—			(7,077	)
Net Payments and Upgrades		(35,736	)		—
Balance—June 30, 2012	$	47,075		$	35,802

The following table displays quantitative information about Level 3 Fair Value Measurements for June 30, 2012 (dollars in thousands):

	Fair Value Measurements at June 30, 2012
	Fair Value		Valuation Technique(s)	Unobservable Inputs	Weighted Average
ASSETS
Commercial Construction	$	12,021	Market comparables	Discount applied to market comparables (1)		15	%
Commercial Real Estate—Owner Occupied		4,780	Market comparables	Discount applied to market comparables (1)		9	%
Commercial Real Estate—Non-Owner Occupied		8,118	Market comparables	Discount applied to market comparables (1)		0	%
Raw Land and Lots		9,085	Market comparables	Discount applied to market comparables (1)		29	%
Single Family Investment Real Estate		4,076	Market comparables	Discount applied to market comparables (1)		7	%
Commercial and Industrial		8,062	Market comparables	Discount applied to market comparables (1)		9	%
Other (2)		933	Market comparables	Discount applied to market comparables (1)		15	%
Total Impaired Loans		47,075
Other real estate owned		35,802	Market comparables	Discount applied to market comparables (1)		31	%
Total	$	82,877

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

⁽²⁾  The “Other” category of the impaired loans section from the table above consists of Mortgage, Consumer Construction, HELOCs, and Other Consumer.

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.

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 (Level 2). 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.

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 deposits is estimated by discounting the future cash flows using the rates currently offered for deposits of similar remaining maturities (Level 2).

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 (Level 2). 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 (Level 2).

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 June 30, 2012 and December 31, 2011, 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 as of June 30, 2012 and December 31, 2011 are as follows (dollars in thousands):

			Fair Value Measurements at June 30, 2012 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	$	72,384	$	72,384	$	—	$	—	$	72,384
Securities available for sale		627,543		—		627,543		—		627,543
Restricted stock		19,291		—		19,291		—		19,291
Loans held for sale		100,066		—		100,066		—		100,066
Net loans		2,846,805		—		2,807,105		47,075		2,854,180
Interest rate swap—loans		34		—		34		—		34
Accrued interest receivable		16,947		—		16,947		—		16,947
LIABILITIES
Deposits	$	3,218,986	$	—	$	3,233,300	$	—	$	3,233,300
Borrowings		291,329		—		290,084		—		290,084
Accrued interest payable		911		—		911		—		911
Cash flow hedge—trust		4,582		—		4,582		—		4,582
Interest rate swap—loans		34		—		34		—		34

			Fair Value Measurements at December 31, 2011 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	$	96,659	$	96,659	$	—	$	—	$	96,659
Securities available for sale		620,166		—		620,166		—		620,166
Restricted stock		20,661		—		20,661		—		20,661
Loans held for sale		74,823		—		74,823		—		74,823
Net loans		2,779,113		—		2,731,491		63,423		2,794,914
Interest rate swap—loans		66		—		66		—		66
Accrued interest receivable		16,626		—		16,626		—		16,626
LIABILITIES
Deposits	$	3,175,105	$	—	$	3,191,256	$	—	$	3,191,256
Borrowings		278,686		—		277,374		—		277,374
Accrued interest payable		1,865		—		1,865		—		1,865
Cash flow hedge—trust		4,293		—		4,293		—		4,293
Interest rate swap—loans		66		—		66		—		66

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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Loans and Allowance for Loan Losses (Tables)

6 Months Ended

Jun. 30, 2012

Loans and Allowance for Loan Losses [Abstract]

Loans stated at face amount, net of unearned income

	June 30,		December 31,
	2012		2011
Commercial:
Commercial Construction	$	190,141	$	185,359
Commercial Real Estate—Owner Occupied		478,804		452,407
Commercial Real Estate—Non-Owner Occupied		694,980		655,083
Raw Land and Lots		208,460		214,284
Single Family Investment Real Estate		210,151		192,437
Commercial and Industrial		210,517		212,268
Other Commercial		42,494		44,403
Consumer:
Mortgage		221,063		219,646
Consumer Construction		25,778		20,757
Indirect Auto		158,813		162,708
Indirect Marine		33,729		39,819
HELOCs		280,030		277,101
Credit Card		19,717		19,006
Other Consumer		113,113		123,305
Total	$	2,887,790	$	2,818,583

Summary of aging of the loan portfolio, by class

	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days and still Accruing		Purchased Impaired (net of credit mark)		Nonaccrual		Current		Total Loans
Commercial:
Commercial Construction	$	—	$	—	$	—	$	—	$	9,763	$	180,378	$	190,141
Commercial Real Estate—Owner Occupied		3,151		50		200		1,234		5,194		468,975		478,804
Commercial Real Estate—Non-Owner Occupied		895		1,721		636		—		517		691,211		694,980
Raw Land and Lots		57		—		153		3,753		12,139		192,358		208,460
Single Family Investment Real Estate		1,059		735		673		372		3,476		203,836		210,151
Commercial and Industrial		510		254		140		382		4,715		204,516		210,517
Other Commercial		2		262		522		—		231		41,477		42,494
Consumer:
Mortgage		4,575		2,078		4,497		—		1,171		208,742		221,063
Consumer Construction		408		—		—		—		201		25,169		25,778
Indirect Auto		1,905		236		251		27		3		156,391		158,813
Indirect Marine		200		191		594		—		26		32,718		33,729
HELOCs		1,528		667		1,788		875		900		274,272		280,030
Credit Card		129		114		182		—		—		19,292		19,717
Other Consumer		1,402		316		1,132		132		835		109,296		113,113
Total	$	15,821	$	6,624	$	10,768	$	6,775	$	39,171	$	2,808,631	$	2,887,790

	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days and still Accruing		Purchased Impaired (net  of credit mark)		Nonaccrual		Current		Total Loans
Commercial:
Commercial Construction	$	—	$	—	$	490	$	—	$	10,276	$	174,593	$	185,359
Commercial Real Estate—Owner Occupied		520		—		2,482		1,292		5,962		442,151		452,407
Commercial Real Estate—Non-Owner Occupied		190		64		2,887		1,133		2,031		648,778		655,083
Raw Land and Lots		94		1,124		—		5,623		13,322		194,121		214,284
Single Family Investment Real Estate		779		70		3,637		388		5,048		182,515		192,437
Commercial and Industrial		601		185		3,369		392		5,297		202,424		212,268
Other Commercial		—		25		—		—		238		44,140		44,403
Consumer:
Mortgage		6,748		412		3,804		—		240		208,442		219,646
Consumer Construction		—		—		—		—		207		20,550		20,757
Indirect Auto		2,653		416		443		40		7		159,149		162,708
Indirect Marine		189		795		—		—		544		38,291		39,819
HELOCs		1,678		547		820		865		885		272,306		277,101
Credit Card		245		184		323		—		—		18,254		19,006
Other Consumer		1,421		443		1,657		164		777		118,843		123,305
Total	$	15,118	$	4,265	$	19,912	$	9,897	$	44,834	$	2,724,557	$	2,818,583

Purchased impaired commercial and consumer loan portfolios, by class

	30-89 Days Past Due		Greater than 90 Days		Current		Total
Commercial:
Commercial Real Estate—Owner Occupied	$	—	$	1,167	$	67	$	1,234
Raw Land and Lots		—		91		3,662		3,753
Single Family Investment Real Estate		—		—		372		372
Commercial and Industrial		—		382		—		382
Consumer:
Indirect Auto		3		8		16		27
HELOCs		—		55		820		875
Other Consumer		—		46		86		132
Total	$	3	$	1,749	$	5,023	$	6,775

	30-89 Days Past Due		Greater than 90 Days		Current		Total
Commercial:
Commercial Real Estate—Owner Occupied	$	206	$	50	$	1,036	$	1,292
Commercial Real Estate—Non-Owner Occupied		—		1,133		—		1,133
Raw Land and Lots		—		—		5,623		5,623
Single Family Investment Real Estate		—		—		388		388
Commercial and Industrial		—		302		90		392
Consumer:
Indirect Auto		6		11		23		40
HELOCs		19		32		814		865
Other Consumer		—		77		87		164
Total	$	231	$	1,605	$	8,061	$	9,897

Impaired loans individually evaluated for impairment, by class

	Recorded Investment		Unpaid Principal Balance		Related Allowance		YTD Average Investment		Interest Income Recognized
Loans without a specific allowance
Commercial:
Commercial Construction	$	31,097	$	31,142	$	—	$	31,278	$	831
Commercial Real Estate—Owner Occupied		14,145		14,963		—		15,034		347
Commercial Real Estate—Non-Owner Occupied		29,659		29,730		—		29,977		813
Raw Land and Lots		39,400		39,461		—		40,166		710
Single Family Investment Real Estate		4,601		4,611		—		5,198		158
Commercial and Industrial		5,920		5,964		—		6,189		119
Other Commercial		1,046		1,046		—		1,194		34
Consumer:
Mortgage		2,600		2,600		—		3,199		57
Indirect Auto		27		27		—		30		1
HELOCs		1,425		1,524		—		1,526		6
Other Consumer		904		936		—		948		15
Total impaired loans without a specific allowance	$	130,824	$	132,004	$	—	$	134,739	$	3,091
Loans with a specific allowance
Commercial:
Commercial Construction	$	13,399	$	13,834	$	1,378	$	13,873	$	108
Commercial Real Estate—Owner Occupied		6,641		6,807		1,861		6,855		57
Commercial Real Estate—Non-Owner Occupied		8,505		8,536		387		8,553		227
Raw Land and Lots		11,542		11,750		2,457		11,834		27
Single Family Investment Real Estate		5,250		5,552		1,174		5,617		55
Commercial and Industrial		11,455		12,104		3,393		12,068		187
Consumer:
Mortgage		473		473		59		473		—
Consumer Construction		201		225		80		226		—
HELOCs		754		811		550		1,017		—
Other Consumer		355		355		161		355		—
Total impaired loans with a specific allowance	$	58,575	$	60,447	$	11,500	$	60,871	$	661
Total loans individually evaluated for impairment	$	189,399	$	192,451	$	11,500	$	195,610	$	3,752

	Recorded Investment		Unpaid Principal Balance		Related Allowance		YTD Average Investment		Interest Income Recognized
Loans without a specific allowance
Commercial:
Commercial Construction	$	40,475	$	40,524	$	—	$	37,835	$	1,690
Commercial Real Estate—Owner Occupied		20,487		21,010		—		23,364		1,183
Commercial Real Estate—Non-Owner Occupied		37,799		37,855		—		38,084		2,002
Raw Land and Lots		46,791		46,890		—		47,808		1,306
Single Family Investment Real Estate		11,285		11,349		—		11,684		637
Commercial and Industrial		9,467		9,959		—		10,216		423
Other Commercial		1,257		1,257		—		1,269		75
Consumer:
Mortgage		1,202		1,202		—		1,225		70
HELOCs		349		349		—		350		11
Other Consumer		—		—		—		1		—
Total impaired loans without a specific allowance	$	169,112	$	170,395	$	—	$	171,836	$	7,397
Loans with a specific allowance
Commercial:
Commercial Construction	$	12,927	$	13,297	$	583	$	13,811	$	343
Commercial Real Estate—Owner Occupied		8,679		8,788		1,961		8,681		267
Commercial Real Estate—Non-Owner Occupied		8,858		8,879		1,069		9,010		322
Raw Land and Lots		22,188		22,429		991		24,553		973
Single Family Investment Real Estate		9,020		9,312		1,140		9,571		321
Commercial and Industrial		8,980		9,133		3,320		10,448		369
Other Commercial		150		150		3		153		10
Consumer:
Mortgage		535		535		11		536		32
Consumer Construction		207		226		86		228		—
Indirect Auto		71		71		—		93		5
Indirect Marine		544		547		263		548		9
HELOCs		785		825		587		1,034		—
Other Consumer		777		804		284		815		5
Total impaired loans with a specific allowance	$	73,721	$	74,996	$	10,298	$	79,481	$	2,656
Total loans individually evaluated for impairment	$	242,833	$	245,391	$	10,298	$	251,317	$	10,053

Summary, by class and modification type, of continue accrue interest under the terms of restructuring agreement

	June 30, 2012						December 31, 2011
	No. of Loans		Recorded Investment		Outstanding Commitment		No. of Loans		Recorded Investment		Outstanding Commitment
Performing
Commercial:
Commercial Construction		9	$	12,566	$	2,247		14	$	21,461	$	3,185
Commercial Real Estate—Owner Occupied		11		5,069		—		11		7,996		180
Commercial Real Estate—Non-Owner Occupied		10		16,303		—		16		21,777		13
Raw Land and Lots		15		27,477		251		15		32,450		1
Single Family Investment Real Estate		7		1,101		—		12		8,525		—
Commercial and Industrial		9		2,605		—		12		4,991		204
Other Commercial		2		302		—		4		864		—
Consumer:
Mortgage		7		1,699		—		1		507		—
Indirect Marine		1		283		—		—		—		—
Other Consumer		2		85		—		2		263		—
Total performing		73	$	67,490	$	2,498		87	$	98,834	$	3,583
Nonperforming
Commercial:
Commercial Construction		4	$	5,242	$	—		5	$	5,353	$	—
Commercial Real Estate—Owner Occupied		3		1,182		—		—		—		—
Commercial Real Estate—Non-Owner Occupied		1		212		—		2		292		—
Raw Land and Lots		3		3,861		—		6		4,342		—
Single Family Investment Real Estate		2		443		—		4		1,342		—
Commercial and Industrial		7		1,310		—		3		1,134		—
Consumer:
Mortgage		1		202		—		5		1,076		—
Indirect Marine		1		26		—		—		—		—
Other Consumer		1		202		—		1		265		—
Total nonperforming		23	$	12,680	$	—		26	$	13,804	$	—
Total performing and nonperforming		96	$	80,170	$	2,498		113	$	112,638	$	3,583

Schedule of TDR by class and modification type

	Three months ended June 30, 2012				Six months ended June 30, 2012
	No. of Loans		Recorded investment at period end		No. of Loans		Recorded investment at period end
Modified to interest only
Commercial:
Raw Land and Lots		—	$	—		3	$	327
Single Family Investment Real Estate		—		—		2		179
Consumer:
Indirect Marine		1		283		1		283
Total interest only at market rate of interest		1	$	283		6	$	789
Term modification, at a market rate
Commercial:
Commercial Real Estate—Owner Occupied		1	$	132		3	$	1,822
Raw Land and Lots		—		—		1		604
Commercial and Industrial		5		329		6		430
Consumer:
Mortgage		1		202		2		474
Other Consumer		2		85		3		287
Total loan term extended at a market rate		9	$	748		15	$	3,617
Term modification, below market rate
Commercial:
Commercial Real Estate—Owner Occupied		3	$	649		4	$	658
Total loan term extended at a below market rate		3	$	649		4	$	658
Interest rate modification, below market rate
Commercial:
Commercial Real Estate—Non-Owner Occupied		2	$	2,390		2	$	2,390
Total interest only at below market rate of interest		2	$	2,390		2	$	2,390
Total		15	$	4,070		27	$	7,454

Allowance for loan loss activity, by portfolio segment, balances for allowance for credit losses, and loans based on impairment methodology

	Commercial			Consumer			Unallocated		Total
Allowance for loan losses:
Balance, beginning of the year	$	27,891		$	11,498		$	81	$	39,470
Recoveries credited to allowance		127			564			—		691
Loans charged off		(2,950	)		(2,726	)		—		(5,676	)
Provision charged to operations		5,485			988			27		6,500
Balance, end of period	$	30,553		$	10,324		$	108	$	40,985
Ending balance: individually evaluated for impairment		10,429			850			—		11,279
Ending balance: collectively evaluated for impairment		19,903			9,474			108		29,485
Ending balance: loans acquired with deteriorated credit quality		221			—			—		221
Total	$	30,553		$	10,324		$	108	$	40,985
Loans:
Ending balance	$	2,035,547		$	852,243		$	—	$	2,887,790
Ending balance: individually evaluated for impairment		176,919			5,705			—		182,624
Ending balance: collectively evaluated for impairment		1,852,887			845,504			—		2,698,391
Ending balance: loans acquired with deteriorated credit quality		5,741			1,034			—		6,775
Total	$	2,035,547		$	852,243		$	—	$	2,887,790

	Commercial			Consumer			Unallocated			Total
Allowance for loan losses:
Balance, beginning of the year	$	28,255		$	10,189		$	(38	)	$	38,406
Recoveries credited to allowance		924			1,206			—			2,130
Loans charged off		(10,891	)		(6,975	)		—			(17,866	)
Provision charged to operations		9,603			7,078			119			16,800
Balance, end of period	$	27,891		$	11,498		$	81		$	39,470
Ending balance: individually evaluated for impairment		8,982			1,231			—			10,213
Ending balance: collectively evaluated for impairment		18,824			10,267			81			29,172
Ending balance: loans acquired with deteriorated credit quality		85			—			—			85
Total	$	27,891		$	11,498		$	81		$	39,470
Loans:
Ending balance	$	1,956,241		$	862,342		$	—		$	2,818,583
Ending balance: individually evaluated for impairment		229,535			3,401			—			232,936
Ending balance: collectively evaluated for impairment		1,717,878			857,872			—			2,575,750
Ending balance: loans acquired with deteriorated credit quality		8,828			1,069			—			9,897
Total	$	1,956,241		$	862,342		$	—		$	2,818,583

Loans receivables related risk rating excluding purchased impaired loans

	1-3		4		5		6		7		8		Total
Commercial Construction	$	15,558	$	90,320	$	12,194	$	34,210	$	37,749	$	110	$	190,141
Commercial Real Estate—Owner Occupied		104,138		317,703		20,366		17,309		18,054		—		477,570
Commercial Real Estate—Non-Owner Occupied		156,028		416,649		57,512		32,437		32,354		—		694,980
Raw Land and Lots		2,240		108,866		11,306		38,740		43,049		506		204,707
Single Family Investment Real Estate		33,761		139,779		12,154		13,322		10,024		739		209,779
Commercial and Industrial		41,186		122,147		19,607		8,729		18,302		164		210,135
Other Commercial		5,904		17,903		11,516		5,271		1,839		61		42,494
Total	$	358,815	$	1,213,367	$	144,655	$	150,018	$	161,371	$	1,580	$	2,029,806

The following table shows all loans, excluding purchased impaired loans, in the commercial portfolios by class with their related risk rating as of December 31, 2011. The risk rating information has been updated through December 31, 2011 (dollars in thousands):

	1-3		4		5		6		7		8		Total
Commercial Construction	$	10,099	$	84,299	$	6,079	$	36,650	$	48,232	$	—	$	185,359
Commercial Real Estate—Owner Occupied		88,430		296,825		17,604		21,158		26,389		709		451,115
Commercial Real Estate—Non-Owner Occupied		149,346		367,244		58,844		38,662		39,854		—		653,950
Raw Land and Lots		4,368		99,374		18,767		33,673		52,204		275		208,661
Single Family Investment Real Estate		32,741		116,570		11,928		14,358		16,452		—		192,049
Commercial and Industrial		35,120		123,872		22,079		11,559		19,066		180		211,876
Other Commercial		6,364		15,918		16,739		3,807		1,512		63		44,403
Total	$	326,468	$	1,104,102	$	152,040	$	159,867	$	203,709	$	1,227	$	1,947,413

Loans receivables related risk rating including purchased impaired loans

	6		7		8		Total
Commercial Real Estate—Owner Occupied	$	—	$	1,234	$	—	$	1,234
Raw Land and Lots		—		3,753		—		3,753
Single Family Investment Real Estate		355		17		—		372
Commercial and Industrial		—		88		294		382
Total	$	355	$	5,092	$	294	$	5,741

The following table shows only purchased impaired loans in the commercial portfolios by class with their related risk rating as of December 31, 2011. The credit quality indicator information has been updated through December 31, 2011 (dollars in thousands):

	6		7		8		Total
Commercial Real Estate—Owner Occupied	$	—	$	1,292	$	—	$	1,292
Commercial Real Estate—Non-Owner Occupied		—		1,133		—		1,133
Raw Land and Lots		—		5,623		—		5,623
Single Family Investment Real Estate		369		19		—		388
Commercial and Industrial		—		91		301		392
Total	$	369	$	8,158	$	301	$	8,828

Schedule of acquired loan portfolio and accretable yield

	For the Six Months Ended												For the Twelve Months Ended
	June 30, 2012												December 31, 2011
	Purchased Impaired						Purchased Nonimpaired						Purchased Impaired						Purchased Nonimpaired
	Accretable Yield			Carrying Amount of Loans			Accretable Yield			Carrying Amount of Loans			Accretable Yield			Carrying Amount of Loans			Accretable Yield			Carrying Amount of Loans
Balance at beginning of period	$	5,140		$	9,897		$	9,010		$	663,510		$	8,169		$	13,999		$	13,589		$	799,898
Additions		—			—			—			—			122			276			1,593			70,524
Accretion		(38	)		—			(2,166	)		—			(66	)		—			(6,172	)		—
Charged off		(1,373	)		(212	)		—			(1,032	)		(3,073	)		(1,329	)		—			(5,988	)
Transfers to OREO		—			(2,371	)		—			(2,766	)		(12	)		(174	)		—			(2,341	)
Payments received, net		—			(539	)		—			(127,264	)		—			(2,875	)		—			(198,583	)
Balance at end of period	$	3,729		$	6,775		$	6,844		$	532,448		$	5,140		$	9,897		$	9,010		$	663,510

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Loans and Allowance for Loan Losses (Details 6) (USD $) In Thousands, unless otherwise specified	6 Months Ended	12 Months Ended
	Jun. 30, 2012	Dec. 31, 2011	Jun. 30, 2011
Allowance for loan losses:
Balance, beginning of the year	$ 39,470	$ 38,406
Recoveries credited to allowance	691	2,130
Loans charged off	(5,676)	(17,866)
Provision charged to operations	6,500	16,800
Balance, end of year	40,985	39,470
Ending balance: collectively evaluated for impairment	29,485	29,172
Ending balance: loans acquired with deteriorated credit quality	221	85
Total Allowance for loan losses	40,985	39,470
Ending balance: individually evaluated for impairment	11,279	10,213
Loans:
Ending balance	2,887,790	2,818,583	2,859,569
Ending balance: individually evaluated for impairment	182,624	232,936
Ending balance: collectively evaluated for impairment	2,698,391	2,575,750
Ending balance: loans acquired with deteriorated credit quality	6,775	9,897
Total Loans	2,887,790	2,818,583	2,859,569
Commercial [Member]
Allowance for loan losses:
Balance, beginning of the year	27,891	28,255
Recoveries credited to allowance	127	924
Loans charged off	(2,950)	(10,891)
Provision charged to operations	5,485	9,603
Balance, end of year	30,553	27,891
Ending balance: collectively evaluated for impairment	19,903	18,824
Ending balance: loans acquired with deteriorated credit quality	221	85
Total Allowance for loan losses	30,553	27,891
Ending balance: individually evaluated for impairment	10,429	8,982
Loans:
Ending balance	2,035,547	1,956,241
Ending balance: individually evaluated for impairment	176,919	229,535
Ending balance: collectively evaluated for impairment	1,852,887	1,717,878
Ending balance: loans acquired with deteriorated credit quality	5,741	8,828
Total Loans	2,035,547	1,956,241
Consumer [Member]
Allowance for loan losses:
Balance, beginning of the year	11,498	10,189
Recoveries credited to allowance	564	1,206
Loans charged off	(2,726)	(6,975)
Provision charged to operations	988	7,078
Balance, end of year	10,324	11,498
Ending balance: collectively evaluated for impairment	9,474	10,267
Ending balance: loans acquired with deteriorated credit quality
Total Allowance for loan losses	10,324	11,498
Ending balance: individually evaluated for impairment	850	1,231
Loans:
Ending balance	852,243	862,342
Ending balance: individually evaluated for impairment	5,705	3,401
Ending balance: collectively evaluated for impairment	845,504	857,872
Ending balance: loans acquired with deteriorated credit quality	1,034	1,069
Total Loans	852,243	862,342
Unallocated [Member]
Allowance for loan losses:
Balance, beginning of the year	81	(38)
Recoveries credited to allowance
Loans charged off
Provision charged to operations	27	119
Balance, end of year	108	81
Ending balance: collectively evaluated for impairment	108	81
Ending balance: loans acquired with deteriorated credit quality
Total Allowance for loan losses	108	81
Ending balance: individually evaluated for impairment
Loans:
Ending balance
Ending balance: individually evaluated for impairment
Ending balance: collectively evaluated for impairment
Ending balance: loans acquired with deteriorated credit quality
Total Loans

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Stock-Based Compensation (Details 4) (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2012
Estimated unamortized compensation expense recognized in future
For the remaining six months of 2012	$ 640
For year ending December 31, 2013	1,055
For year ending December 31, 2014	720
For year ending December 31, 2015	360
For year ending December 31, 2016	161
For year ending December 31, 2017	25
Total	2,961
Stock Options [Member]
Estimated unamortized compensation expense recognized in future
For the remaining six months of 2012	180
For year ending December 31, 2013	368
For year ending December 31, 2014	361
For year ending December 31, 2015	269
For year ending December 31, 2016	155
For year ending December 31, 2017	25
Total	1,358
Restricted Stock [Member]
Estimated unamortized compensation expense recognized in future
For the remaining six months of 2012	460
For year ending December 31, 2013	687
For year ending December 31, 2014	359
For year ending December 31, 2015	91
For year ending December 31, 2016	6
Total	$ 1,603

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Condensed Consolidated Statements of Comprehensive Income (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011	Jun. 30, 2012	Jun. 30, 2011
Condensed Consolidated Statements of Comprehensive Income [Abstract]
Net income	$ 8,420	$ 6,820	$ 16,343	$ 13,014
Other comprehensive income:
Change in fair value of interest rate swap (cash flow hedge)	(487)	(1,192)	(290)	(999)
Unrealized gains on securities:
Unrealized holding gains arising during period (net of tax, $535 and $890 for three and six months ended 2012)	992	4,059	1,653	7,116
Reclassification adjustment for losses included in net income (net of tax, $4 and $2 for three and six months ended 2012)	(6)	0	(3)	10
Other comprehensive income	499	2,867	1,360	6,127
Comprehensive income	$ 8,919	$ 9,687	$ 17,703	$ 19,141

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Accounting Policies

6 Months Ended

Jun. 30, 2012

Accounting Policies [Abstract]

ACCOUNTING POLICIES

1. ACCOUNTING POLICIES

The condensed consolidated financial statements include the accounts of Union First Market Bankshares Corporation and its subsidiaries (collectively, the “Company”). Significant inter-company accounts and transactions have been eliminated in consolidation.

The unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and follow general practice within the banking industry. Accordingly, the unaudited condensed consolidated financial statements do not include all the information and footnotes required by 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 2011 Annual Report on Form 10-K. If needed, certain previously reported amounts have been reclassified to conform to current period presentation.

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Segment Reporting Disclosures (Details Textual)	Jun. 30, 2012 Rate Store
Segment Reporting Disclosures (Textual) [Abstract]
Number of retail locations	94
LIBOR rate plus	1.50%
Mortgage banking segment interest - floor	2.00%

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Fair Value Measurements (Details 1) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2012	Dec. 31, 2011	Jun. 30, 2011
Schedule of financial assets measured at fair value on a nonrecurring basis
Other real estate owned	$ 35,802	$ 32,263	$ 36,935
Loans held for sale [Member]
Schedule of financial assets measured at fair value on a nonrecurring basis
Assets	100,066	74,823
Impaired loans [Member]
Schedule of financial assets measured at fair value on a nonrecurring basis
Impaired loans	47,075	63,423
Quoted Prices in Active Markets for Identical Assets Level 1 [Member]
Schedule of financial assets measured at fair value on a nonrecurring basis
Other real estate owned
Quoted Prices in Active Markets for Identical Assets Level 1 [Member] | Loans held for sale [Member]
Schedule of financial assets measured at fair value on a nonrecurring basis
Assets
Quoted Prices in Active Markets for Identical Assets Level 1 [Member] | Impaired loans [Member]
Schedule of financial assets measured at fair value on a nonrecurring basis
Impaired loans
Significant Other Observable Inputs Level 2 [Member]
Schedule of financial assets measured at fair value on a nonrecurring basis
Other real estate owned
Significant Other Observable Inputs Level 2 [Member] | Loans held for sale [Member]
Schedule of financial assets measured at fair value on a nonrecurring basis
Assets	100,066	74,823
Significant Other Observable Inputs Level 2 [Member] | Impaired loans [Member]
Schedule of financial assets measured at fair value on a nonrecurring basis
Impaired loans
Significant Unobservable Inputs Level 3 [Member]
Schedule of financial assets measured at fair value on a nonrecurring basis
Other real estate owned	35,802	32,263
Significant Unobservable Inputs Level 3 [Member] | Loans held for sale [Member]
Schedule of financial assets measured at fair value on a nonrecurring basis
Assets
Significant Unobservable Inputs Level 3 [Member] | Impaired loans [Member]
Schedule of financial assets measured at fair value on a nonrecurring basis
Impaired loans	$ 47,075	$ 63,423

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Earnings per Share (Tables)

6 Months Ended

Jun. 30, 2012

Earnings per Share [Abstract]

Reconcilement of the denominators of the basic and diluted EPS computations

	Net Income Available to Common Shareholders (Numerator)		Weighted Average Common Shares (Denominator)		Per Share Amount
For the Three Months ended June 30, 2012
Net income, basic	$	8,420		25,868	$	0.32
Add: potentially dilutive common shares—stock awards		—		20		—
Diluted	$	8,420		25,888	$	0.32
For the Three Months ended June 30, 2011
Net income	$	6,820		25,970	$	0.26
Less: dividends paid and accumulated on preferred stock		462		—		0.02
Less: accretion of discount on preferred stock		65		—		—
Basic	$	6,293		25,970	$	0.24
Add: potentially dilutive common shares—stock awards		—		22		—
Diluted	$	6,293		25,992	$	0.24
For the Six Months ended June 30, 2012
Net income, basic	$	16,343		25,900	$	0.63
Add: potentially dilutive common shares—stock awards		—		24		—
Diluted	$	16,343		25,924	$	0.63
For the Six Months ended June 30, 2011
Net income	$	13,014		25,964	$	0.50
Less: dividends paid and accumulated on preferred stock		924		—		0.04
Less: accretion of discount on preferred stock		129		—		—
Basic	$	11,961		25,964	$	0.46
Add: potentially dilutive common shares—stock awards		—		23		—
Diluted	$	11,961		25,987	$	0.46

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Derivatives (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended	6 Months Ended
	Dec. 31, 2011 position	Jun. 30, 2012 position
Summary of the derivative designated as a cash flow hedge
Notional Amount		$ 36,000
Life (Years)		6 years
Pay fixed - receive floating interest rate swaps [Member]
Summary of the derivative designated as a cash flow hedge
Positions	1	1
Notional Amount	36,000	36,000
Asset
Liability	$ 4,293	$ 4,582
Receive Rate	0.58%	0.46%
Pay Rate	3.51%	3.51%
Life (Years)	5 years 5 months 16 days	4 years 11 months 16 days

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Stock-Based Compensation (Details 1) (USD $)	6 Months Ended
	Jun. 30, 2012	Jun. 30, 2011
Estimated stock option on the date of grant fair value
Dividend yield	2.47%	2.36%
Expected life in years	7 years	7 years
Expected volatility	41.53%	41.02%
Risk-free interest rate	1.24%	2.71%
Weighted average fair value per option granted	$ 4.76	$ 4.31

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Securities

6 Months Ended

Jun. 30, 2012

Securities [Abstract]

SECURITIES

11. SECURITIES

The amortized cost, gross unrealized gains and losses, and estimated fair values of investment securities as of June 30, 2012 and December 31, 2011 are summarized as follows (dollars in thousands):

	Amortized		Gross Unrealized					Estimated Fair
	Cost		Gains		(Losses)			Value
June 30, 2012
U.S. government and agency securities	$	3,264	$	312	$	—		$	3,576
Obligations of states and political subdivisions		194,203		13,781		(202	)		207,782
Corporate and other bonds		9,503		308		(420	)		9,391
Mortgage-backed securities		393,954		9,838		(281	)		403,511
Other securities		3,183		100		—			3,283
Total securities	$	604,107	$	24,339	$	(903	)	$	627,543
December 31, 2011
U.S. government and agency securities	$	3,933	$	351	$	—		$	4,284
Obligations of states and political subdivisions		189,117		11,337		(247	)		200,207
Corporate and other bonds		12,839		188		(787	)		12,240
Mortgage-backed securities		390,329		10,434		(445	)		400,318
Other securities		3,044		77		(4	)		3,117
Total securities	$	599,262	$	22,387	$	(1,483	)	$	620,166

Due to restrictions placed upon the Company’s common stock investment in the Federal Reserve Bank of Richmond and Federal Home Loan Bank of Atlanta (“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. The FHLB requires the Bank to maintain stock in an amount equal to 4.5% of outstanding borrowings and a specific percentage of the member’s total assets. The Federal Reserve Bank of Richmond requires the Company to maintain stock with a par value equal to 6% of its outstanding capital. Restricted equity securities consist of Federal Reserve Bank stock in the amount of $6.8 million and $6.7 million and FHLB stock in the amount of $12.5 million and $13.9 million as of June 30, 2012 and December 31, 2011.

The following table shows the gross unrealized losses and fair value (in thousands) of the Company’s 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 and are as follows:

	Less than 12 months					More than 12 months					Total
	Fair value		Unrealized Losses			Fair value		Unrealized Losses			Fair value		Unrealized Losses
June 30, 2012
Obligations of states and political subdivisions	$	10,060	$	(132	)	$	1,484	$	(70	)	$	11,544	$	(202	)
Mortgage-backed securities		60,822		(281	)		—		—			60,822		(281	)
Corporate bonds and other securities		100		—			1,447		(420	)		1,547		(420	)
Totals	$	70,982	$	(413	)	$	2,931	$	(490	)	$	73,913	$	(903	)
December 31, 2011
Obligations of states and political subdivisions	$	5,429	$	(152	)	$	1,090	$	(95	)	$	6,519	$	(247	)
Mortgage-backed securities		97,203		(445	)		—		—			97,203		(445	)
Corporate bonds and other securities		2,342		(165	)		3,790		(626	)		6,132		(791	)
Totals	$	104,974	$	(762	)	$	4,880	$	(721	)	$	109,854	$	(1,483	)

As of June 30, 2012, there were $2.9 million, or 6 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 $490,000 and consisted of corporate and municipal obligations.

The following table presents the amortized cost and estimated fair value of securities as of June 30, 2012, 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.

	June 30, 2012				December 31, 2011
	Amortized		Estimated		Amortized		Estimated
	Cost		Fair Value		Cost		Fair Value
Due in one year or less	$	5,611	$	5,683	$	6,046	$	6,098
Due after one year through five years		17,735		18,498		18,771		19,408
Due after five years through ten years		70,786		75,127		76,044		80,214
Due after ten years		506,792		524,952		495,357		511,329
Other securities		3,183		3,283		3,044		3,117
Total securities available for sale	$	604,107	$	627,543	$	599,262	$	620,166

Securities with an amortized cost of $171.3 million and $172.1 million as of June 30, 2012 and December 31, 2011, respectively, were pledged to secure public deposits, repurchase agreements and for other purposes.

During each quarter the Company conducts an assessment of the securities portfolio for other-than-temporary impairment (“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 OTTI if any of the following conditions exists: 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 June 30, 2012, and in accordance with the guidance, no OTTI was recognized.

Based on the assessment for the quarter ended September 30, 2011 and in accordance with the guidance, the Company determined that a single issuer Trust Preferred security incurred credit-related OTTI of $400,000, which was recognized in earnings for the quarter ended September 30, 2011. There is a possibility that the Company will sell the security before recovering all unamortized costs. The significant inputs the Company considered in determining the amount of the credit loss are as follows:

• The assessment of security credit rating agencies and research performed by third parties;

• The continued interest payment deferral by the issuer;

• The lack of improving asset quality of the issuer and worsening economic conditions; and

• The security is thinly traded and trading at its historical low, below par.

OTTI recognized for the periods presented is summarized as follow (dollars in thousands):

	OTTI Losses
Cumulative credit losses on investment securities, through December 31, 2011	$	400
Cumulative credit losses on investment securities		—
Additions for credit losses not previously regognized		—
Cumulative credit losses on investment securities, through June 30, 2012	$	400