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, 2015

or

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

For the transition period from ________ to ________

Commission File Number: 000-23565

EASTERN VIRGINIA BANKSHARES, INC.

(Exact name of registrant as specified in its charter)

VIRGINIA	54-1866052
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
330 Hospital Road, Tappahannock, Virginia	22560
(Address of principal executive office)	(Zip Code)

(804) 443-8400

(Registrant’s telephone number, including area code)

N/A

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

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

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 the registrant’s Common Stock outstanding as of August 12, 2015 was 13,029,550.

EASTERN VIRGINIA BANKSHARES, INC.

INDEX

PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements
	Consolidated Balance Sheets as of June 30, 2015 (unaudited) and December 31, 2014	2
	Consolidated Statements of Income (unaudited) for the Three Months Ended June 30, 2015 and June 30, 2014	3
	Consolidated Statements of Comprehensive (Loss) Income (unaudited) for the Three Months Ended June 30, 2015 and June 30, 2014	4
	Consolidated Statements of Income (unaudited) for the Six Months Ended June 30, 2015 and June 30, 2014	5
	Consolidated Statements of Comprehensive Income (unaudited) for the Six Months Ended June 30, 2015 and June 30, 2014	6
	Consolidated Statements of Shareholders’ Equity (unaudited) for the Six Months Ended June 30, 2015 and June 30, 2014	7
	Consolidated Statements of Cash Flows (unaudited) for the Six Months Ended June 30, 2015 and June 30, 2014	8
	Notes to the Interim Consolidated Financial Statements (unaudited)	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	49
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	74
Item 4.	Controls and Procedures	74
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	75
Item 1A.	Risk Factors	75
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	75
Item 3.	Defaults Upon Senior Securities	75
Item 4.	Mine Safety Disclosures	75
Item 5.	Other Information	75
Item 6.	Exhibits	76
	SIGNATURES	77

1

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

Eastern Virginia Bankshares, Inc. and Subsidiaries

Consolidated Balance Sheets

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

	June 30, 2015			December 31, 2014*
	(unaudited)
Assets:
Cash and due from banks	$	14,416		$	14,024
Interest bearing deposits with banks		6,467			5,272
Federal funds sold		-			334
Securities available for sale, at fair value		227,932			214,011
Securities held to maturity, at carrying value (fair value of $31,542 and $33,367, respectively)		30,671			32,163
Restricted securities, at cost		8,118			7,533
Loans, net of allowance for loan losses of $12,287 and $13,021, respectively		828,423			807,548
Deferred income taxes, net		16,937			17,529
Bank premises and equipment, net		28,628			27,433
Accrued interest receivable		3,990			4,013
Other real estate owned, net of valuation allowance of $3 and $76, respectively		1,344			1,838
Goodwill		17,085			17,085
Bank owned life insurance		24,786			24,463
Other assets		10,394			8,726
Total assets	$	1,219,191		$	1,181,972
Liabilities and Shareholders' Equity:
Liabilities
Noninterest-bearing demand accounts	$	178,844		$	162,328
Interest-bearing deposits		778,378			776,926
Total deposits		957,222			939,254
Federal funds purchased and repurchase agreements		8,489			14,885
Short-term borrowings		94,605			76,818
Junior subordinated debt		10,310			10,310
Senior subordinated debt		19,140			-
Accrued interest payable		530			316
Other liabilities		6,986			6,115
Total liabilities		1,097,282			1,047,698
Shareholders' Equity
Preferred stock, $2 par value per share, authorized 10,000,000 shares, issued:
Series A; $1,000 stated value per share, 0 and 14,000 shares fixed rate cumulative perpetual preferred in 2015 and 2014, respectively		-			14,000
Series B; 5,240,192 shares non-voting mandatorily convertible non-cumulative preferred		10,480			10,480
Common stock, $2 par value per share, authorized 50,000,000 shares, issued and outstanding 13,023,550 and 12,978,934 including 138,092 and 104,142 nonvested shares in 2015 and 2014, respectively		25,771			25,750
Surplus		48,797			47,339
Retained earnings		41,494			39,290
Warrant		-			1,481
Accumulated other comprehensive loss, net		(4,633	)		(4,066	)
Total shareholders' equity		121,909			134,274
Total liabilities and shareholders' equity	$	1,219,191		$	1,181,972

*Derived from audited consolidated financial statements.

The accompanying notes are an integral part of the consolidated financial statements.

2

Eastern Virginia Bankshares, Inc. and Subsidiaries

Consolidated Statements of Income (unaudited)

(dollars in thousands, except per share amounts)

	Three Months Ended
	June 30,
	2015			2014
Interest and Dividend Income
Interest and fees on loans	$	10,382		$	8,562
Interest on investments:
Taxable interest income		1,185			1,338
Tax exempt interest income		268			204
Dividends		96			89
Interest on deposits with banks		4			4
Total interest and dividend income		11,935			10,197
Interest Expense
Deposits		934			978
Federal funds purchased and repurchase agreements		13			5
Short-term borrowings		37			36
Junior subordinated debt		81			88
Senior subordinated debt		264			-
Total interest expense		1,329			1,107
Net interest income		10,606			9,090
Provision for Loan Losses		-			-
Net interest income after provision for loan losses		10,606			9,090
Noninterest Income
Service charges and fees on deposit accounts		673			837
Debit/credit card fees		442			378
Gain on sale of available for sale securities, net		26			109
(Loss) on sale of bank premises and equipment		(30	)		-
Other operating income		421			315
Total noninterest income		1,532			1,639
Noninterest Expenses
Salaries and employee benefits		5,523			4,748
Occupancy and equipment expenses		1,392			1,267
Telephone		210			211
FDIC expense		254			305
Consultant fees		546			279
Collection, repossession and other real estate owned		126			89
Marketing and advertising		347			270
(Gain) loss on sale of other real estate owned		(6	)		28
Impairment losses on other real estate owned		-			6
Other operating expenses		1,807			1,316
Total noninterest expenses		10,199			8,519
Income before income taxes		1,939			2,210
Income Tax Expense		432			555
Net Income	$	1,507		$	1,655
Effective dividend on Series A Preferred Stock		166			541
Net income available to common shareholders	$	1,341		$	1,114
Net income per common share: basic	$	0.07		$	0.06
Net income per common share: diluted	$	0.07		$	0.06

The accompanying notes are an integral part of the consolidated financial statements.

3

Eastern Virginia Bankshares, Inc. and Subsidiaries

Consolidated Statements of Comprehensive (Loss) Income (unaudited)

(dollars in thousands)

	Three Months Ended
	June 30,
	2015			2014
Net income	$	1,507		$	1,655
Other comprehensive (loss) income, net of tax:
Unrealized securities (losses) gains arising during period (net of tax, ($1,066) and $893, respectively)		(2,070	)		1,732
Amortization of unrealized losses on securities transferred from available for sale to held to maturity (net of tax, $19 and $26, respectively)		38			52
Less: reclassification adjustment for securities gains included in net income (net of tax, $8 and $37, respectively)		(18	)		(72	)
Other comprehensive (loss) income		(2,050	)		1,712
Comprehensive (loss) income	$	(543	)	$	3,367

The accompanying notes are an integral part of the consolidated financial statements.

4

Eastern Virginia Bankshares, Inc. and Subsidiaries

Consolidated Statements of Income (unaudited)

(dollars in thousands, except per share amounts)

	Six Months Ended
	June 30,
	2015			2014
Interest and Dividend Income
Interest and fees on loans	$	20,573		$	17,112
Interest on investments:
Taxable interest income		2,387			2,845
Tax exempt interest income		528			417
Dividends		204			191
Interest on deposits with banks		8			8
Total interest and dividend income		23,700			20,573
Interest Expense
Deposits		1,985			1,965
Federal funds purchased and repurchase agreements		31			10
Short-term borrowings		79			71
Junior subordinated debt		161			176
Senior subordinated debt		264			-
Total interest expense		2,520			2,222
Net interest income		21,180			18,351
Provision for Loan Losses		-			250
Net interest income after provision for loan losses		21,180			18,101
Noninterest Income
Service charges and fees on deposit accounts		1,336			1,659
Debit/credit card fees		805			687
Gain on sale of available for sale securities, net		51			489
(Loss) gain on sale of bank premises and equipment		(27	)		5
Other operating income		886			691
Total noninterest income		3,051			3,531
Noninterest Expenses
Salaries and employee benefits		11,113			9,334
Occupancy and equipment expenses		2,913			2,586
Telephone		407			422
FDIC expense		426			637
Consultant fees		951			622
Collection, repossession and other real estate owned		215			156
Marketing and advertising		668			437
Loss on sale of other real estate owned		26			15
Impairment losses on other real estate owned		5			11
Other operating expenses		3,442			2,477
Total noninterest expenses		20,166			16,697
Income before income taxes		4,065			4,935
Income Tax Expense		949			1,284
Net Income	$	3,116		$	3,651
Effective dividend on Series A Preferred Stock		386			1,059
Net income available to common shareholders	$	2,730		$	2,592
Net income per common share: basic	$	0.15		$	0.15
Net income per common share: diluted	$	0.15		$	0.15

The accompanying notes are an integral part of the consolidated financial statements.

5

Eastern Virginia Bankshares, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income (unaudited)

(dollars in thousands)

	Six Months Ended
	June 30,
	2015			2014
Net income	$	3,116		$	3,651
Other comprehensive (loss) income, net of tax:
Unrealized securities (losses) gains arising during period (net of tax, ($308) and $2,248, respectively)		(597	)		4,364
Amortization of unrealized losses on securities transferred from available for sale to held to maturity (net of tax, $33 and $41, respectively)		64			80
Less: reclassification adjustment for securities gains included in net income (net of tax, $17 and $166, respectively)		(34	)		(323	)
Other comprehensive (loss) income		(567	)		4,121
Comprehensive income	$	2,549		$	7,772

The accompanying notes are an integral part of the consolidated financial statements.

6

Eastern Virginia Bankshares, Inc. and Subsidiaries

Consolidated Statements of Shareholders’ Equity (unaudited)

For the Six Months Ended June 30, 2015 and 2014

(dollars in thousands)

															Accumulated
				Preferred			Preferred								Other
	Common			Stock			Stock					Retained			Comprehensive
	Stock			Series A (1)			Series B		Surplus			Earnings			(Loss) Income			Total
Balance, December 31, 2013	$	23,578		$	25,481		$	10,480	$	42,697		$	39,581		$	(8,868	)	$	132,949
Net income													3,651						3,651
Other comprehensive income																4,121			4,121
Stock based compensation										39									39
Restricted common stock vested		30			-			-		(30	)		-			-			-
Balance, June 30, 2014	$	23,608		$	25,481		$	10,480	$	42,706		$	43,232		$	(4,747	)	$	140,760
Balance, December 31, 2014	$	25,750		$	15,481		$	10,480	$	47,339		$	39,290		$	(4,066	)	$	134,274
Net income													3,116						3,116
Other comprehensive (loss)																(567	)		(567	)
Cash dividends - preferred, Series A													(547	)					(547	)
Cash dividends - preferred, Series B													(105	)					(105	)
Cash dividends - common ($0.02 per share)													(260	)					(260	)
Repurchase of preferred stock					(14,000	)													(14,000	)
Repurchase of common stock		(1	)																(1	)
Repurchase of warrants					(1,481	)				1,366									(115	)
Stock based compensation										114									114
Restricted common stock vested		22			-			-		(22	)		-			-			-
Balance, June 30, 2015	$	25,771		$	-		$	10,480	$	48,797		$	41,494		$	(4,633	)	$	121,909

(1) For the purposes of this table, Preferred Stock Series A includes the effect of the warrant (prior to its repurchase by the Company during the second quarter of 2015) issued in connection with the sale of the Series A Preferred Stock and the discount on such preferred stock.

The accompanying notes are an integral part of the consolidated financial statements.

7

Eastern Virginia Bankshares, Inc. and Subsidiaries

Consolidated Statements of Cash Flows (unaudited)

(dollars in thousands)

	Six Months Ended
	June 30,
	2015			2014
Operating Activities:
Net income	$	3,116		$	3,651
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses		-			250
Depreciation and amortization		1,250			1,048
Stock based compensation		114			39
Amortization of debt issuance costs		15			-
Net accretion of certain acquisition related fair value adjustments		(402	)		-
Net amortization of premiums and accretion of discounts on investment securities, net		1,506			1,626
(Gain) on sale of securities available for sale transactions, net		(51	)		(489	)
Loss (gain) on sale of bank premises and equipment		27			(5	)
Loss on sale of other real estate owned		26			15
Impairment losses on other real estate owned		5			11
Loss on LLC investments		145			23
Earnings on life insurance policies		(323	)		(274	)
Net change in:
Accrued interest receivable		23			131
Other assets		(1,942	)		(1,294	)
Accrued interest payable		214			(983	)
Other liabilities		1,756			1,108
Net cash provided by operating activities		5,479			4,857
Investing Activities:
Purchase of securities available for sale		(48,580	)		(17,000	)
Purchase of securities held to maturity		(22	)		-
Purchase of restricted securities		(4,347	)		(5,228	)
Purchases of bank premises and equipment		(2,727	)		(1,127	)
Improvements to other real estate owned		(1	)		-
Net change in loans		(21,363	)		(41,484	)
Proceeds from:
Maturities, calls, and paydowns of securities available for sale		12,537			9,053
Maturities, calls, and paydowns of securities held to maturity		1,351			1,248
Sale of securities available for sale		19,970			20,527
Sale of restricted securities		3,762			3,547
Sale of bank premises and equipment		255			5
Sale of other real estate owned		1,548			462
Net cash used in investing activities		(37,617	)		(29,997	)
Financing Activities:
Net change in:
Demand, interest-bearing demand and savings deposits		33,650			(13,723	)
Time deposits		(15,747	)		787
Federal funds purchased and repurchase agreements		(6,396	)		473
Short-term borrowings		17,787			34,820
Senior subordinated debt		20,000			-
Debt issuance costs		(875	)		-
Repurchase of preferred stock		(14,000	)		-
Repurchase of common stock		(1	)		-
Repurchase of warrants		(115	)		-
Dividends paid - preferred, Series A		(547	)		-
Dividends paid - preferred, Series B		(105	)		-
Dividends paid - common		(260	)		-
Net cash provided by financing activities		33,391			22,357
Net increase (decrease) in cash and cash equivalents		1,253			(2,783	)
Cash and cash equivalents, December 31		19,630			19,346
Cash and cash equivalents, June 30	$	20,883		$	16,563
Supplemental disclosure:
Interest paid	$	2,306		$	3,205
Supplemental disclosure of noncash investing and financing activities:
Unrealized (losses) gains on securities available for sale	$	(956	)	$	6,123
Loans transferred to other real estate owned	$	(1,084	)	$	(289	)

The accompanying notes are an integral part of the consolidated financial statements.

8

EASTERN VIRGINIA BANKSHARES, INC. AND SUBSIDIARIES

Notes to the Interim Consolidated Financial Statements

(unaudited)

Note 1. Summary of Significant Accounting Policies

Principles of Consolidation

The accompanying unaudited consolidated financial statements of Eastern Virginia Bankshares, Inc. (the “Parent”) and its subsidiaries, EVB Statutory Trust I (the “Trust”), and EVB (the “Bank”) and its subsidiaries, are in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q adopted by the Securities and Exchange Commission (“SEC”). Accordingly, these financial statements do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. Operating results for the three and six months ended June 30, 2015 are not necessarily indicative of the results that may be expected for the year ending December 31, 2015. These interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014 (the “2014 Form 10-K”).

The accompanying unaudited consolidated financial statements include the accounts of the Parent, the Bank and its subsidiaries, collectively referred to as the “Company.” All significant intercompany balances and transactions have been eliminated in consolidation. In addition, the Parent owns the Trust which is an unconsolidated subsidiary. The subordinated debt owed to the Trust is reported as a liability of the Parent.

Nature of Operations

Eastern Virginia Bankshares, Inc. is a bank holding company headquartered in Tappahannock, Virginia that was organized and chartered under the laws of the Commonwealth of Virginia on September 5, 1997 and commenced operations on December 29, 1997. The Company conducts its primary operations through its wholly-owned bank subsidiary, EVB. Two of EVB’s three predecessor banks, Bank of Northumberland, Inc. and Southside Bank, were established in 1910. The third bank, Hanover Bank, was established as a de novo bank in 2000. In April 2006, these three banks were merged and the surviving bank was re-branded as EVB. Additionally, the Parent acquired Virginia Company Bank (“VCB”) (see Note 2 – Business Combinations) on November 14, 2014 and merged VCB with and into the Bank, with the Bank surviving, thus adding three additional branches to the Bank located in Newport News, Williamsburg, and Hampton, respectively. The Bank provides a full range of banking and related financial services to individuals and businesses through its network of retail branches. With twenty-four retail branches, the Bank serves diverse markets that primarily are in the counties of Essex, Gloucester, Hanover, Henrico, King and Queen, King William, Lancaster, Middlesex, New Kent, Northumberland, Southampton, Surry, Sussex and the cities of Colonial Heights, Hampton, Newport News, Richmond, and Williamsburg. The Bank also operates a loan production office in Chesterfield County, Virginia, that the Bank opened during the second quarter of 2014. The Bank operates under a state bank charter and as such is subject to regulation by the Virginia State Corporation Commission Bureau of Financial Institutions (the “Bureau”) and the Board of Governors of the Federal Reserve System (the “Federal Reserve”).

The Bank owns EVB Financial Services, Inc., which in turn has a 100% ownership interest in EVB Investments, Inc. EVB Investments, Inc. is a full-service brokerage firm offering a comprehensive range of investment services. On May 15, 2014, the Bank acquired a 4.9% ownership interest in Southern Trust Mortgage, LLC. Pursuant to an independent contractor agreement with Southern Trust Mortgage, LLC, the Company advises and consults with Southern Trust Mortgage, LLC and facilitates the marketing and brand recognition of their mortgage business. In addition, the Company provides Southern Trust Mortgage, LLC with offices at four retail branches in the Company’s market area and access to office equipment at these locations during normal business hours. For its services, the Company receives fixed monthly compensation from Southern Trust Mortgage, LLC in the amount of $3 thousand, which is adjustable on a quarterly basis.

9

The Bank had a 75% ownership interest in EVB Title, LLC, which primarily sold title insurance to the mortgage loan customers of the Bank and EVB Mortgage, LLC. Effective January 2014, the Bank ceased operations of EVB Title, LLC due to low volume and profitability. On October 1, 2014, the Bank acquired a 6.0% ownership interest in Bankers Title, LLC. Bankers Title, LLC is a multi-bank owned title agency providing a full range of title insurance settlement and related financial services. The Bank has a 2.33% ownership in Bankers Insurance, LLC, which primarily sells insurance products to customers of the Bank, and other financial institutions that have an equity interest in the agency. The Bank also has a 100% ownership interest in Dunston Hall LLC, POS LLC, Tartan Holdings LLC and ECU-RE LLC which were formed to hold the title to real estate acquired by the Bank upon foreclosure on property of real estate secured loans. The financial position and operating results of all of these subsidiaries are not significant to the Company as a whole and are not considered principal activities of the Company at this time. The Company’s common stock trades on the NASDAQ Global Select Market under the symbol “EVBS.”

Basis of Presentation

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan losses, impairment of loans, impairment of securities, the valuation of other real estate owned, the projected benefit obligation under the defined benefit pension plan, the valuation of deferred taxes, goodwill impairment and fair value of financial instruments. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, which are necessary for a fair presentation of the results of operations in these interim financial statements, have been made. Certain prior year amounts have been reclassified to conform to the 2015 presentation. These reclassifications have no effect on previously reported net income.

Recent Accounting Pronouncements

In January 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-01, “Investments—Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Qualified Affordable Housing Projects (a consensus of the FASB Emerging Issues Task Force).” The amendments in this ASU permit reporting entities to make an accounting policy election to account for their investments in qualified affordable housing projects using the proportional amortization method if certain conditions are met. Under the proportional amortization method, an entity amortizes the initial cost of the investment in proportion to the tax credits and other tax benefits received and recognizes the net investment performance in the income statement as a component of income tax expense (benefit). The amendments in this ASU should be applied retrospectively to all periods presented. A reporting entity that uses the effective yield method to account for its investments in qualified affordable housing projects before the date of adoption may continue to apply the effective yield method for those preexisting investments. The amendments in this ASU are effective for public business entities for annual periods and interim reporting periods within those annual periods, beginning after December 15, 2014. Early adoption is permitted. The adoption of the new guidance did not have a material impact on our consolidated financial statements.

In January 2014, the FASB issued ASU 2014-04, “Receivables—Troubled Debt Restructurings by Creditors (Subtopic 310-40): Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure (a consensus of the FASB Emerging Issues Task Force).” The amendments in this ASU clarify that an in substance repossession or foreclosure occurs, and a creditor is considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan, upon either (1) the creditor obtaining legal title to the residential real estate property upon completion of a foreclosure or (2) the borrower conveying all interest in the residential real estate property to the creditor to satisfy that loan through completion of a deed in lieu of foreclosure or through a similar legal agreement. Additionally, the amendments require interim and annual disclosure of both (1) the amount of foreclosed residential real estate property held by the creditor and (2) the recorded investment in consumer mortgage loans collateralized by residential real estate property that are in the process of foreclosure according to local requirements of the applicable jurisdiction. The amendments in this ASU are effective for public business entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2014. The adoption of the new guidance did not have a material impact on our consolidated financial statements.

In June 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606).” This ASU applies to any entity using U.S. GAAP that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards. The guidance supersedes the revenue recognition requirements in “Revenue Recognition (Topic 605),” most industry-specific guidance, and some cost guidance included in “Revenue Recognition—Construction-Type and Production-Type Contracts (Subtopic 605-35).” The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To be in alignment with the core principle, an entity must apply a five step process including: identification of the contract(s) with a customer, identification of performance obligations in the contract(s), determination of the transaction price, allocation of the transaction price to the performance obligations, and recognition of revenue when (or as) the entity satisfies a performance obligation. Additionally, the existing requirements for the recognition of a gain or loss on the transfer of nonfinancial assets that are not in a contract with a customer have also been amended to be consistent with the guidance on recognition and measurement. The amendments in this ASU were scheduled to be effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Early adoption is not permitted. In April 2015, the FASB voted in favor of a one year deferral of the effective date of this amendment. An exposure draft is expected with a thirty day comment period. The Company is currently assessing the impact that ASU 2014-09 will have on its consolidated financial statements.

10

In June 2014, the FASB issued ASU 2014-11, “Transfers and Servicing (Topic 860): Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures.” This ASU aligns the accounting for repurchase-to-maturity transactions and repurchase agreements executed as a repurchase financing with the accounting for other typical repurchase agreements. The new guidance eliminates sale accounting for repurchase-to-maturity transactions and supersedes the guidance under which a transfer of a financial asset and a contemporaneous repurchase financing could be accounted for on a combined basis as a forward agreement. The amendments in the ASU also require a new disclosure for transactions economically similar to repurchase agreements in which the transferor retains substantially all of the exposure to the economic return on the transferred financial assets throughout the term of the transaction. Additional disclosures will be required for the nature of collateral pledged in repurchase agreements and similar transactions accounted for as secured borrowings. The amendments in this ASU are effective for the first interim or annual period beginning after December 15, 2014. However, the disclosure for transactions accounted for as secured borrowings is required to be presented for annual periods beginning after December 15, 2014, and interim periods beginning after March 15, 2015. Early adoption is not permitted. The adoption of the new guidance did not have a material impact on our consolidated financial statements.

In June 2014, the FASB issued ASU 2014-12, “Compensation – Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period.” The new guidance applies to reporting entities that grant employees share-based payments in which the terms of the award allow a performance target to be achieved after the requisite service period. The amendments in the ASU require that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. Existing guidance in “Compensation – Stock Compensation (Topic 718)” should be applied to account for these types of awards. The amendments in this ASU are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. Early adoption is permitted, and reporting entities may choose to apply the amendments in the ASU either on a prospective or retrospective basis. The Company is currently assessing the impact that ASU 2014-12 will have on its consolidated financial statements.

In August 2014, the FASB issued ASU 2014-14, “Receivables – Troubled Debt Restructurings by Creditors (Subtopic 310-40): Classification of Certain Government-Guaranteed Mortgage Loans upon Foreclosure.” The amendments in this ASU apply to creditors that hold government-guaranteed mortgage loans and are intended to eliminate the diversity in practice related to the classification of these guaranteed loans upon foreclosure. The new guidance stipulates that a mortgage loan be derecognized and a separate other receivable be recognized upon foreclosure if (1) the mortgage loan has a government guarantee that is not separable from the mortgage loan prior to foreclosure, (2) at the time of foreclosure, the creditor has the intent to convey the real estate property to the guarantor and make a claim on the guarantee, and the creditor has the ability to recover under that claim and (3) at the time of foreclosure, any amount of the claim that is determined on the basis of the fair value of the real estate is fixed. Upon foreclosure, the other receivable should be measured on the amount of the loan balance (principal and interest) expected to be recovered from the guarantor. The amendments in this ASU are effective for annual periods and interim periods within those annual periods beginning after December 15, 2014. Entities may adopt the amendments on a prospective basis or modified retrospective basis as of the beginning of the annual period of adoption; however, the entity must apply the same method of transition as elected under ASU 2014-04. Early adoption is permitted provided the entity has already adopted ASU 2014-04. The adoption of the new guidance did not have a material impact on our consolidated financial statements.

In August 2014, the FASB issued ASU 2014-15, “Presentation of Financial Statements – Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern.” This update is intended to provide guidance about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. Management is required under the new guidance to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date the financial statements are issued when preparing financial statements for each interim and annual reporting period. If conditions or events are identified, the ASU specifies the process that must be followed by management and also clarifies the timing and content of going concern footnote disclosures in order to reduce diversity in practice. The amendments in this ASU are effective for annual periods and interim periods within those annual periods beginning after December 15, 2016. Early adoption is permitted. The Company does not expect the adoption of ASU 2014-15 to have a material impact on its consolidated financial statements.

11

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

In February 2015, the FASB issued ASU No. 2015-02, “Consolidation (Topic 810): Amendments to the Consolidation Analysis.” The amendments in this ASU are intended to improve targeted areas of consolidation guidance for legal entities such as limited partnerships, limited liability corporations, and securitization structures (collateralized debt obligations, collateralized loan obligations, and mortgage-backed security transactions). In addition to reducing the number of consolidation models from four to two, the new standard simplifies the FASB Accounting Standards Codification (“ASC”) and improves current U.S. GAAP by placing more emphasis on risk of loss when determining a controlling financial interest, reducing the frequency of the application of related-party guidance when determining a controlling financial interest in a variable interest entity (“VIE”), and changing consolidation conclusions for public and private companies in several industries that typically make use of limited partnerships or VIEs. The amendments in this ASU are effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted, including adoption in an interim period. ASU 2015-02 may be applied retrospectively in previously issued financial statements for one or more years with a cumulative-effect adjustment to retained earnings as of the beginning of the first year restated. The Company does not expect the adoption of ASU 2015-02 to have a material impact on its consolidated financial statements.

In April 2015, the FASB issued ASU No. 2015-03, “Interest – Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs.” The amendments in this ASU are intended to simplify the presentation of debt issuance costs. These amendments require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this ASU. The amendments in this ASU are effective for public business entities for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. Early adoption is permitted for financial statements that have not been previously issued, and as such, the Company adopted ASU 2015-03 in the second quarter of 2015. The adoption of the new guidance did not have a material impact on the Company’s consolidated financial statements.

In April 2015, the FASB issued ASU No. 2015-05, “Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement.” The amendments in this ASU provide guidance to customers regarding cloud computing arrangements that include a software license. If a cloud computing arrangement includes a software license, then the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. The amendments do not change the accounting for a customer’s accounting for service contracts. As a result of the amendments, all software licenses within the scope of Subtopic 350-40 will be accounted for consistent with other licenses of intangible assets. The amendments in this ASU are effective for public business entities for annual periods, including interim periods within those annual periods, beginning after December 15, 2015. Early adoption is permitted. An entity can elect to adopt the amendments either: (1) prospectively to all arrangements entered into or materially modified after the effective date; or (2) retrospectively. The Company is currently assessing the impact that ASU 2015-05 will have on its consolidated financial statements.

12

In May 2015, the FASB issued ASU No. 2015-08, “Business Combinations (Topic 805): Pushdown Accounting – Amendments to SEC Paragraphs Pursuant to Staff Accounting Bulletin No. 115.” The amendments in ASU 2015-08 amend various SEC paragraphs pursuant to the issuance of Staff Accounting Bulletin No. 115, Topic 5: Miscellaneous Accounting, regarding various pushdown accounting issues, and did not have a material impact on our consolidated financial statements.

Note 2. Business Combinations

On November 14, 2014, the Company completed its acquisition of VCB. Pursuant to the Agreement and Plan of Reorganization dated May 29, 2014, VCB's common shareholders received for each share of VCB common stock they owned either (i) cash at a rate of $6.25 per share of VCB common stock, or approximately $2.4 million in the aggregate, or (ii) the Company’s common stock at a rate of 0.9259 shares of the Company’s common stock per share of VCB common stock, which totaled approximately $6.7 million based on the Company’s closing common stock price on November 14, 2014 of $6.27 per share. In addition, the Company purchased VCB’s Series A Preferred Stock for $4.3 million. VCB was established in 2005 and was headquartered in Newport News, Virginia. VCB operated three branches, one each in Newport News, Hampton and Williamsburg, Virginia.

The Company accounted for the acquisition using the acquisition method of accounting in accordance with FASB ASC 805, “Business Combinations.” Under the acquisition method of accounting, the assets and liabilities of VCB were recorded at their respective acquisition date fair values. Determining the fair value of assets and liabilities, particularly related to the loan portfolio, is a complicated process involving significant judgment regarding methods and assumptions used to calculate the estimated fair values. The fair values are preliminary and subject to refinement for up to one year after the acquisition date as additional information relative to the acquisition date fair values becomes available. The Company recognized goodwill of $1.1 million in connection with the acquisition, none of which is deductible for income tax purposes.

13

The following table details the total consideration paid by the Company on November 14, 2014 in connection with the acquisition of VCB, the fair values of the assets acquired and liabilities assumed, and the resulting goodwill.

						As Recorded
	As Recorded		Fair Value			by the
(dollars in thousands)	by VCB		Adjustments			Company
Consideration paid:
Cash						$	6,688
EVBS common stock							6,676
Total consideration paid						$	13,364
Identifiable assets acquired:
Cash and due from banks	$	1,377	$	-		$	1,377
Interest bearing deposits with banks		249		-			249
Securities available for sale, at fair value		11,277		-			11,277
Restricted securities, at cost		557		-			557
Loans		103,791		(2,322	)		101,469
Deferred income taxes		-		3,513			3,513
Bank premises and equipment		7,020		(1,044	)		5,976
Accrued interest receivable		344		-			344
Other real estate owned		211		(108	)		103
Core deposit intangible		-		1,010			1,010
Bank owned life insurance		2,742		-			2,742
Other assets		243		-			243
Total identifiable assets acquired		127,811		1,049			128,860
Identifiable liabilities assumed:
Noninterest-bearing demand accounts		18,797		-			18,797
Interest-bearing deposits		85,791		(149	)		85,642
Federal funds purchased and repurchase agreements		3,119		-			3,119
Federal Home Loan Bank advances		8,650		-			8,650
Accrued interest payable		30		-			30
Other liabilities		373		-			373
Total identifiable liabilities assumed		116,760		(149	)		116,611
Net identifiable assets acquired	$	11,051	$	1,198		$	12,249
Goodwill resulting from acquisition						$	1,115

The following table illustrates the unaudited pro forma revenue and net income of the combined entities had the acquisition taken place on January 1, 2014. The unaudited combined pro forma revenue and net income combines the historical results of VCB with the Company's consolidated statements of income for the periods listed below and, while certain adjustments were made for the estimated effect of certain fair value adjustments and other acquisition-related activity, they are not indicative of what would have occurred had the acquisition actually taken place on January 1, 2014. Acquisition related expenses of $168 thousand and $224 thousand were included in the Company's actual consolidated statements of income for the three and six months ended June 30, 2015, respectively, but were excluded from the unaudited pro forma information listed below. Additionally, the Company expects to achieve further operational cost savings and other efficiencies as a result of the acquisition which are not reflected in the unaudited pro forma amounts below:

	Unaudited		Unaudited		Unaudited		Unaudited
	Pro Forma		Pro Forma		Pro Forma		Pro Forma
	Three Months Ended		Three Months Ended		Six Months Ended		Six Months Ended
	June 30,		June 30,		June 30,		June 30,
(dollars in thousands)	2015		2014		2015		2014
Net interest income	$	10,606	$	10,066	$	21,180	$	20,554
Net income		1,675		1,232		3,340		2,804

14

Note 3. Investment Securities

The amortized cost and estimated fair value, with gross unrealized gains and losses, of securities at June 30, 2015 and December 31, 2014 were as follows:

(dollars in thousands)	June 30, 2015
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
Available for Sale:
Obligations of U.S. Government agencies	$	13,491	$	-	$	410	$	13,081
SBA Pool securities		71,966		114		1,073		71,007
Agency residential mortgage-backed securities		19,731		53		384		19,400
Agency commercial mortgage-backed securities		6,574		-		87		6,487
Agency CMO securities		53,589		285		720		53,154
Non agency CMO securities		670		34		-		704
State and political subdivisions		65,102		301		1,313		64,090
FNMA and FHLMC preferred stock		2		7		-		9
Total	$	231,125	$	794	$	3,987	$	227,932

(dollars in thousands)	December 31, 2014
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
Available for Sale:
Obligations of U.S. Government agencies	$	14,991	$	-	$	422	$	14,569
SBA Pool securities		76,469		70		1,740		74,799
Agency residential mortgage-backed securities		28,740		208		319		28,629
Agency CMO securities		39,343		302		430		39,215
Non agency CMO securities		820		11		3		828
State and political subdivisions		55,877		510		461		55,926
FNMA and FHLMC preferred stock		7		38		-		45
Total	$	216,247	$	1,139	$	3,375	$	214,011

15

(dollars in thousands)	June 30, 2015
			Unrealized
			Losses				Gross		Gross
	Amortized		Recorded		Carrying		Unrealized		Unrealized		Fair
	Cost		in AOCI*		Value		Gains		Losses		Value
Held to Maturity:
Agency CMO securities	$	11,814	$	71	$	11,743	$	338	$	-	$	12,081
State and political subdivisions		19,484		556		18,928		536		3		19,461
Total	$	31,298	$	627	$	30,671	$	874	$	3	$	31,542

*Represents the unrealized holding gain or loss at the date of transfer from available for sale to held to maturity, net of any accretion.

(dollars in thousands)	December 31, 2014
			Unrealized
			Losses				Gross		Gross
	Amortized		Recorded		Carrying		Unrealized		Unrealized		Fair
	Cost		in AOCI*		Value		Gains		Losses		Value
Held to Maturity:
Agency CMO securities	$	12,073	$	80	$	11,993	$	294	$	-	$	12,287
State and political subdivisions		20,814		644		20,170		928		18		21,080
Total	$	32,887	$	724	$	32,163	$	1,222	$	18	$	33,367

*Represents the unrealized holding gain or loss at the date of transfer from available for sale to held to maturity, net of any accretion.

There are no securities classified as “Trading” at June 30, 2015 or December 31, 2014. During the fourth quarter of 2013, the Company transferred securities with an amortized cost of $35.5 million, previously designated as “Available for Sale”, to “Held to Maturity” classification. The fair value of those securities as of the date of the transfer was $34.5 million, reflecting a gross unrealized loss of $994 thousand. The gross unrealized loss net of tax at the time of transfer remained in Accumulated Other Comprehensive (Loss) and is being accreted over the remaining life of the securities as an adjustment to interest income. At June 30, 2015, the Company’s mortgage-backed securities consisted of commercial and residential mortgage-backed securities. The Company’s mortgage-backed securities are all backed by an Agency of the U.S. government and rated Aaa and AA+ by Moody and S&P, respectively, with no subprime issues.

The Company’s pooled trust preferred securities included one senior issue of Preferred Term Securities XXVII which remained current on all payments and on which the Company took an impairment charge in the third quarter of 2009 to reduce the Company’s book value to the market value at September 30, 2009. On December 9, 2014 the Company sold this security resulting in a gain on sale of $82 thousand and the Company reversed the related impairment reserve. During the second quarter of 2010, the Company recognized an impairment charge in the amount of $77 thousand on the Company’s investment in Preferred Term Securities XXIII mezzanine tranche, thus reducing the book value of this investment to $0. On September 22, 2014 the Company sold this security resulting in a gain on sale of $2 thousand and the Company reversed the related impairment reserve. The decision to recognize the other-than-temporary impairment had been based upon an analysis of the market value of the discounted cash flow for the security as provided by Moody’s at June 30, 2010, which indicated that the Company was unlikely to recover any of its remaining investment in these securities.

16

The amortized cost, carrying value and estimated fair values of securities at June 30, 2015, by the earlier of contractual maturity or expected maturity, are shown below. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations without penalties.

(dollars in thousands)	June 30, 2015
	Amortized Cost		Fair Value
Available for Sale:
Due in one year or less	$	2,378	$	2,327
Due after one year through five years		82,927		82,425
Due after five years through ten years		136,796		134,357
Due after ten years		9,024		8,823
Total	$	231,125	$	227,932

(dollars in thousands)	June 30, 2015
	Carrying Value		Fair Value
Held to Maturity:
Due in one year or less	$	-	$	-
Due after one year through five years		21,379		22,005
Due after five years through ten years		8,545		8,791
Due after ten years		747		746
Total	$	30,671	$	31,542

Proceeds from the sales of securities available for sale for the six months ended June 30, 2015 and 2014 were $20.0 million and $20.5 million, respectively. Net realized gains on the sales of securities available for sale for the six months ended June 30, 2015 and 2014 were $51 thousand and $489 thousand, respectively. Proceeds from maturities, calls and paydowns of securities available for sale for the six months ended June 30, 2015 and 2014 were $12.5 million and $9.1 million, respectively. Proceeds from maturities, calls and paydowns of securities held to maturity for the six months ended June 30, 2015 and 2014 were $1.4 million and $1.2 million, respectively.

The Company pledges securities to secure public deposits, balances with the Federal Reserve Bank of Richmond (the “Reserve Bank”) and repurchase agreements. Securities with an aggregate book value of $50.6 million and an aggregate fair value of $51.3 million were pledged at June 30, 2015. Securities with an aggregate book value of $86.9 million and an aggregate fair value of $87.1 million were pledged at December 31, 2014.

Securities in an unrealized loss position at June 30, 2015, by duration of the period of the unrealized loss, are shown below:

	June 30, 2015
(dollars in thousands)	Less than 12 months				12 months or more				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
Description of Securities	Value		Loss		Value		Loss		Value		Loss
Obligations of U.S. Government agencies	$	4,385	$	110	$	8,696	$	300	$	13,081	$	410
SBA Pool securities		9,137		48		50,950		1,025		60,087		1,073
Agency residential mortgage-backed securities		7,619		111		9,967		273		17,586		384
Agency commercial mortgage-backed securities		6,487		87		-		-		6,487		87
Agency CMO securities		25,483		418		8,720		302		34,203		720
State and political subdivisions		41,816		960		9,258		356		51,074		1,316
Total	$	94,927	$	1,734	$	87,591	$	2,256	$	182,518	$	3,990

17

The Company reviews the investment securities portfolio on a quarterly basis to monitor its exposure to other-than-temporary impairment that may result due to adverse economic conditions and associated credit deterioration. A determination as to whether a security’s decline in market value is other-than-temporary takes into consideration numerous factors and the relative significance of any single factor can vary by security. Some factors the Company may consider in the other-than-temporary impairment analysis include the length of time the security has been in an unrealized loss position, changes in security ratings, financial condition of the issuer, as well as security and industry specific economic conditions. In addition, the Company may also evaluate payment structure, whether there are defaulted payments or expected defaults, prepayment speeds, and the value of any underlying collateral. For certain securities in unrealized loss positions, the Company will enlist independent third-party firms to prepare cash flow analyses to compare the present value of cash flows expected to be collected from the security with the amortized cost basis of the security.

Based on the Company’s evaluation, management does not believe any unrealized losses at June 30, 2015, represent an other-than-temporary impairment as these unrealized losses are primarily attributable to current financial market conditions for these types of investments, particularly changes in interest rates, which rose during 2013 causing bond prices to decline, and are not attributable to credit deterioration. During 2014 and the first three months of 2015, interest rates had fallen, specifically in the middle and long-end of the yield curve, which had caused bond prices to rise and thereby reduced the amount of unrealized losses. However, during the second quarter of 2015, interest rates generally increased which caused bond prices to decline, which in turn increased the amount of unrealized losses at the end of that quarter. At June 30, 2015, there were 154 debt securities with fair values totaling $182.5 million considered temporarily impaired. Of these debt securities, 90 with fair values totaling $94.9 million were in an unrealized loss position of less than 12 months and 64 with fair values totaling $87.6 million were in an unrealized loss position of 12 months or more. Because the Company intends to hold these investments in debt securities until recovery of the amortized cost basis and it is more likely than not that the Company will not be required to sell these investments before a recovery of unrealized losses, the Company does not consider these investments to be other-than-temporarily impaired at June 30, 2015 and no impairment has been recognized. At June 30, 2015, there were no equity securities in an unrealized loss position.

Securities in an unrealized loss position at December 31, 2014, by duration of the period of the unrealized loss, are shown below.

	December 31, 2014
(dollars in thousands)	Less than 12 months				12 months or more				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
Description of Securities	Value		Loss		Value		Loss		Value		Loss
Obligations of U.S. Government agencies	$	-	$	-	$	14,587	$	422	$	14,587	$	422
SBA Pool securities		3,520		73		63,290		1,667		66,810		1,740
Agency residential mortgage-backed securities		-		-		15,343		319		15,343		319
Agency CMO securities		5,140		34		16,478		396		21,618		430
Non agency CMO securities		281		3		44		-		325		3
State and political subdivisions		3,663		36		21,509		443		25,172		479
Total	$	12,604	$	146	$	131,251	$	3,247	$	143,855	$	3,393

The Company’s investment in Federal Home Loan Bank of Atlanta (“FHLB”) stock totaled $5.1 million and $4.5 million at June 30, 2015 and December 31, 2014, respectively. FHLB stock is generally viewed as a long-term investment and as a restricted investment security, which is carried at cost, because there is no market for the stock other than the FHLBs or member institutions. Therefore, when evaluating FHLB stock for impairment, its value is based on the ultimate recoverability of the par value rather than by recognizing temporary declines in value. Because the FHLB generated positive net income for each quarterly period beginning July 1, 2014, and ending June 30, 2015, the Company does not consider this investment to be other-than-temporarily impaired at June 30, 2015 and no impairment has been recognized. FHLB stock is included in a separate line item on the consolidated balance sheets (Restricted securities, at cost) and is not part of the Company’s investment securities portfolio. The Company’s restricted securities also include investments in the Reserve Bank and Community Bankers Bank, which are carried at cost.

18

Note 4. Loan Portfolio

The following table sets forth the composition of the Company’s loan portfolio in dollar amounts and as a percentage of the Company’s total gross loans at the dates indicated:

	June 30, 2015						December 31, 2014
(dollars in thousands)	Amount			Percent			Amount			Percent
Commercial, industrial and agricultural	$	85,845			10.21	%	$	85,119			10.37	%
Real estate - one to four family residential:
Closed end first and seconds		243,072			28.91	%		236,761			28.86	%
Home equity lines		111,007			13.20	%		110,100			13.42	%
Total real estate - one to four family residential		354,079			42.11	%		346,861			42.28	%
Real estate - multifamily residential		29,802			3.54	%		25,157			3.07	%
Real estate - construction:
One to four family residential		19,091			2.27	%		19,698			2.40	%
Other construction, land development and other land		36,620			4.36	%		35,591			4.34	%
Total real estate - construction		55,711			6.63	%		55,289			6.74	%
Real estate - farmland		10,553			1.26	%		9,471			1.15	%
Real estate - non-farm, non-residential:
Owner occupied		168,861			20.09	%		157,745			19.22	%
Non-owner occupied		99,287			11.81	%		104,827			12.77	%
Total real estate - non-farm, non-residential		268,148			31.90	%		262,572			31.99	%
Consumer		14,443			1.72	%		15,919			1.94	%
Other		22,129			2.63	%		20,181			2.46	%
Total loans		840,710			100.00	%		820,569			100.00	%
Less allowance for loan losses		(12,287	)					(13,021	)
Loans, net	$	828,423					$	807,548

Deferred costs, net are included in the table above and totaled $1.5 million and $1.4 million for June 30, 2015 and December 31, 2014, respectively.

19

The following table presents the aging of the recorded investment in past due loans as of June 30, 2015 by class of loans:

(dollars in thousands)	30-59 Days Past Due		60-89 Days Past Due		Over 90 Days Past Due		Total Past Due		Total Current*		Total Loans
Commercial, industrial and agricultural	$	206	$	14	$	383	$	603	$	85,242	$	85,845
Real estate - one to four family residential:
Closed end first and seconds		6,038		1,662		3,359		11,059		232,013		243,072
Home equity lines		234		104		250		588		110,419		111,007
Total real estate - one to four family residential		6,272		1,766		3,609		11,647		342,432		354,079
Real estate - multifamily residential		-		-		-		-		29,802		29,802
Real estate - construction:
One to four family residential		80		-		189		269		18,822		19,091
Other construction, land development and other land		-		-		1		1		36,619		36,620
Total real estate - construction		80		-		190		270		55,441		55,711
Real estate - farmland		273		280		-		553		10,000		10,553
Real estate - non-farm, non-residential:
Owner occupied		172		1,686		568		2,426		166,435		168,861
Non-owner occupied		215		-		676		891		98,396		99,287
Total real estate - non-farm, non-residential		387		1,686		1,244		3,317		264,831		268,148
Consumer		8		26		4		38		14,405		14,443
Other		-		-		-		-		22,129		22,129
Total loans	$	7,226	$	3,772	$	5,430	$	16,428	$	824,282	$	840,710

* For purposes of this table only, the "Total Current" column includes loans that are 1-29 days past due.

The following table presents the aging of the recorded investment in past due loans as of December 31, 2014 by class of loans:

(dollars in thousands)	30-59 Days Past Due		60-89 Days Past Due		Over 90 Days Past Due		Total Past Due		Total Current*		Total Loans
Commercial, industrial and agricultural	$	278	$	6	$	373	$	657	$	84,462	$	85,119
Real estate - one to four family residential:
Closed end first and seconds		5,515		1,123		1,247		7,885		228,876		236,761
Home equity lines		366		-		360		726		109,374		110,100
Total real estate - one to four family residential		5,881		1,123		1,607		8,611		338,250		346,861
Real estate - multifamily residential		-		-		-		-		25,157		25,157
Real estate - construction:
One to four family residential		150		-		221		371		19,327		19,698
Other construction, land development and other land		5		-		-		5		35,586		35,591
Total real estate - construction		155		-		221		376		54,913		55,289
Real estate - farmland		-		-		590		590		8,881		9,471
Real estate - non-farm, non-residential:
Owner occupied		1,873		158		1,738		3,769		153,976		157,745
Non-owner occupied		-		-		-		-		104,827		104,827
Total real estate - non-farm, non-residential		1,873		158		1,738		3,769		258,803		262,572
Consumer		157		32		-		189		15,730		15,919
Other		-		-		-		-		20,181		20,181
Total loans	$	8,344	$	1,319	$	4,529	$	14,192	$	806,377	$	820,569

* For purposes of this table only, the "Total Current" column includes loans that are 1-29 days past due.

20

The following table presents nonaccrual loans, loans past due 90 days and accruing interest, and troubled debt restructurings (accruing) at the dates indicated:

	June 30,		December 31,
(dollars in thousands)	2015		2014
Nonaccrual loans	$	7,263	$	6,622
Loans past due 90 days and accruing interest		240		53
Troubled debt restructurings (accruing)		14,843		15,223

At June 30, 2015 and December 31, 2014, there were approximately $2.3 million and $3.4 million, respectively, in troubled debt restructurings (“TDRs”) included in nonaccrual loans.

The past due status of a loan is based on the contractual due date of the most delinquent payment due. Loans, including impaired loans, are generally classified as nonaccrual if they are past due as to maturity or payment of principal or interest for a period of more than 90 days, unless such loans are well-secured and in the process of collection. Loans greater than 90 days past due may remain on an accrual status if management determines it has adequate collateral to cover the principal and interest. If a loan or a portion of a loan is adversely classified, or is partially charged off, the loan is generally classified as nonaccrual. Additionally, whenever management becomes aware of facts or circumstances that may adversely impact the collectability of principal or interest on loans, it is management’s practice to place such loans on a nonaccrual status immediately, rather than delaying such action until the loans become 90 days past due.

When a loan is placed on nonaccrual status, previously accrued and uncollected interest is reversed, and the amortization of related deferred loan fees or costs is suspended. While a loan is classified as nonaccrual and the future collectability of the recorded loan balance is doubtful, collections of interest and principal are generally applied as a reduction to principal outstanding. When the future collectability of the recorded loan balance is expected, interest income may be recognized on a cash basis. In the case where a nonaccrual loan has been partially charged off, recognition of interest on a cash basis is limited to that which would have been recognized on the recorded loan balance at the contractual interest rate. Cash interest receipts in excess of that amount are recorded as recoveries to the allowance for loan losses until prior charge-offs have been fully recovered. These policies are applied consistently across our loan portfolio.

A loan (including a TDR) may be returned to accrual status if the borrower has demonstrated a sustained period of repayment performance (typically six months) in accordance with the contractual terms of the loan and there is reasonable assurance the borrower will continue to make payments as agreed.

21

Outstanding principal balance and the carrying amount of loans acquired pursuant to the Company’s acquisition of VCB (or “Acquired Loans”) that were recorded at fair value at the acquisition date and are included in the consolidated balance sheet at June 30, 2015 and December 31, 2014 were as follows:

	June 30, 2015						December 31, 2014
(dollars in thousands)	Acquired Loans - Purchased Credit Impaired		Acquired Loans - Purchased Performing		Acquired Loans - Total		Acquired Loans - Purchased Credit Impaired		Acquired Loans - Purchased Performing		Acquired Loans - Total
Commercial, industrial and agricultural	$	577	$	7,051	$	7,628	$	1,023	$	15,673	$	16,696
Real estate - one to four family residential:
Closed end first and seconds		1,347		7,758		9,105		1,374		6,475		7,849
Home equity lines		33		10,850		10,883		33		11,858		11,891
Total real estate - one to four family residential		1,380		18,608		19,988		1,407		18,333		19,740
Real estate - multifamily residential		-		3,790		3,790		-		3,539		3,539
Real estate - construction:
One to four family residential		-		1,945		1,945		-		3,206		3,206
Other construction, land development and other land		286		1,875		2,161		79		3,674		3,753
Total real estate - construction		286		3,820		4,106		79		6,880		6,959
Real estate - farmland		-		-		-		-		-		-
Real estate - non-farm, non-residential:
Owner occupied		4,408		17,998		22,406		1,841		21,037		22,878
Non-owner occupied		1,661		12,460		14,121		3,472		20,762		24,234
Total real estate - non-farm, non-residential		6,069		30,458		36,527		5,313		41,799		47,112
Consumer		-		435		435		-		1,462		1,462
Other		-		845		845		-		-		-
Total loans	$	8,312	$	65,007	$	73,319	$	7,822	$	87,686	$	95,508

The following table presents the recorded investment in nonaccrual loans and loans past due 90 days and accruing interest by class at June 30, 2015 and December 31, 2014:

					Over 90 Days Past
	Nonaccrual				Due and Accruing
	June 30,		December 31,		June 30,		December 31,
(dollars in thousands)	2015		2014		2015		2014
Commercial, industrial and agricultural	$	383	$	334	$	-	$	53
Real estate - one to four family residential:
Closed end first and seconds		4,996		3,364		240		-
Home equity lines		425		564		-		-
Total real estate - one to four family residential		5,421		3,928		240		-
Real estate - construction:
One to four family residential		189		221		-		-
Other construction, land development and other land		1		-		-		-
Total real estate - construction		190		221		-		-
Real estate - farmland		-		590		-		-
Real estate - non-farm, non-residential:
Owner occupied		568		1,521		-		-
Non-owner occupied		677		-		-		-
Total real estate - non-farm, non-residential		1,245		1,521		-		-
Consumer		24		28		-		-
Total loans	$	7,263	$	6,622	$	240	$	53

22

The Company uses a risk grading system for real estate (including multifamily residential, construction, farmland and non-farm, non-residential) and commercial loans. Loans are graded on a scale from 1 to 9. Non-impaired real estate and commercial loans are assigned an allowance factor which increases with the severity of risk grading. A general description of the characteristics of the risk grades is as follows:

Pass Grades

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

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

· Risk Grade 3 loans are satisfactory loans with strong borrowers and secondary sources of repayment;

· Risk Grade 4 loans are satisfactory loans with borrowers not as strong as risk grade 3 loans but may exhibit a higher degree of financial risk based on the type of business supporting the loan; and

· Risk Grade 5 loans are 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.

Special Mention

· Risk Grade 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.

Classified Grades

· Risk Grade 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 Grade 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 Grade 9 loans are loss loans which are considered uncollectable and of such little value that their continuance as a bank asset is not warranted.

The Company uses a past due grading system for consumer loans, including one to four family residential first and seconds and home equity lines. The past due status of a loan is based on the contractual due date of the most delinquent payment due. The past due grading of consumer loans is based on the following categories: current, 1-29 days past due, 30-59 days past due, 60-89 days past due and over 90 days past due. The consumer loans are segregated between performing and nonperforming loans. Performing loans are those that have made timely payments in accordance with the terms of the loan agreement and are not past due 90 days or more. Nonperforming loans are those that do not accrue interest, or are greater than 90 days past due and accruing interest. Non-impaired consumer loans are assigned an allowance factor which increases with the severity of past due status. This 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 loan portfolio.

The allocation methodology applied by the Company includes management’s ongoing review and grading of the loan portfolio into criticized loan categories (defined as specific loans warranting either specific allocation, or a classified status of substandard, doubtful or loss). The allocation methodology focuses on evaluation of several factors, including but not limited to: evaluation of facts and issues related to specific loans, management’s ongoing review and grading of the loan portfolio, consideration of migration analysis tracking movement of loans through past due classifications and delinquency experience on each portfolio category, trends in past due and nonaccrual loans, the level of classified loans, the risk characteristics of the various classifications of loans, changes in the size and character of the loan portfolio, concentrations of loans to specific borrowers or industries, existing economic conditions, the fair value of underlying collateral, and other qualitative and quantitative factors which could affect potential credit losses. Because each of the criteria used is subject to change, the allocation of the allowance for loan losses is made for analytical purposes and is not necessarily indicative of the trend of future loan losses in any particular loan category. The total allowance is available to absorb losses from any segment of the portfolio. In determining the allowance for loan losses, the Company considers its portfolio segments and loan classes to be the same.

23

The following table presents commercial loans by credit quality indicator at June 30, 2015:

(dollars in thousands)	Pass		Special Mention		Substandard		Doubtful		Impaired		Acquired Loans - Purchased Credit Impaired		Total
Commercial, industrial and agricultural	$	80,879	$	3,269	$	553	$	230	$	337	$	577	$	85,845
Real estate - multifamily residential		29,802		-		-		-		-		-		29,802
Real estate - construction:
One to four family residential		18,623		87		121		-		260		-		19,091
Other construction, land development and other land		27,504		1,786		1,410		-		5,634		286		36,620
Total real estate - construction		46,127		1,873		1,531		-		5,894		286		55,711
Real estate - farmland		9,496		875		182		-		-		-		10,553
Real estate - non-farm, non-residential:
Owner occupied		141,218		8,012		3,955		-		11,268		4,408		168,861
Non-owner occupied		82,331		2,804		1,485		-		11,006		1,661		99,287
Total real estate - non-farm, non-residential		223,549		10,816		5,440		-		22,274		6,069		268,148
Total commercial loans	$	389,853	$	16,833	$	7,706	$	230	$	28,505	$	6,932	$	450,059

The following table presents commercial loans by credit quality indicator at December 31, 2014:

(dollars in thousands)	Pass		Special Mention		Substandard		Doubtful		Impaired		Acquired Loans - Purchased  Credit Impaired		Total
Commercial, industrial and agricultural	$	79,191	$	2,779	$	675	$	-	$	1,451	$	1,023	$	85,119
Real estate - multifamily residential		25,157		-		-		-		-		-		25,157
Real estate - construction:
One to four family residential		18,978		300		244		-		176		-		19,698
Other construction, land development and other land		26,916		1,791		1,144		-		5,661		79		35,591
Total real estate - construction		45,894		2,091		1,388		-		5,837		79		55,289
Real estate - farmland		9,471		-		-		-		-		-		9,471
Real estate - non-farm, non-residential:
Owner occupied		132,266		11,339		2,253		-		10,046		1,841		157,745
Non-owner occupied		84,951		4,771		1,817		-		9,816		3,472		104,827
Total real estate - non-farm, non-residential		217,217		16,110		4,070		-		19,862		5,313		262,572
Total commercial loans	$	376,930	$	20,980	$	6,133	$	-	$	27,150	$	6,415	$	437,608

At June 30, 2015 and December 31, 2014, the Company did not have any loans classified as Loss.

24

The following table presents consumer loans, including one to four family residential first and seconds and home equity lines, by payment activity at June 30, 2015:

(dollars in thousands)	Performing		Nonperforming		Total
Real estate - one to four family residential:
Closed end first and seconds	$	232,426	$	10,646	$	243,072
Home equity lines		110,132		875		111,007
Total real estate - one to four family residential		342,558		11,521		354,079
Consumer		14,091		352		14,443
Other		22,125		4		22,129
Total consumer loans	$	378,774	$	11,877	$	390,651

The following table presents consumer loans, including one to four family residential first and seconds and home equity lines, by payment activity at December 31, 2014:

(dollars in thousands)	Performing		Nonperforming		Total
Real estate - one to four family residential:
Closed end first and seconds	$	226,801	$	9,960	$	236,761
Home equity lines		109,565		535		110,100
Total real estate - one to four family residential		336,366		10,495		346,861
Consumer		15,548		371		15,919
Other		20,175		6		20,181
Total consumer loans	$	372,089	$	10,872	$	382,961

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. The Company measures impaired loans based on the present value of expected future cash flows discounted at the effective interest rate of the loan or, as a practical expedient, at the loan’s observable market price or the fair value of the collateral if the loan is collateral dependent. The Company maintains a valuation allowance to the extent that the measure of the impaired loan is less than the recorded investment. TDRs are considered impaired loans. TDRs occur when we agree to modify the original terms of a loan by granting a concession due to the deterioration in the financial condition of the borrower. These concessions can be temporary and are made in an attempt to avoid foreclosure and with the intent to restore the loan to a performing status once sufficient payment history can be demonstrated. These concessions could include, without limitation, rate reductions to below market rates, payment deferrals, forbearance, and, in some cases, forgiveness of principal or interest.

At the time of a TDR, the loan is placed on nonaccrual status. A loan (including a TDR) may be returned to accrual status if the borrower has demonstrated a sustained period of repayment performance (typically six months) in accordance with the contractual terms of the loan and there is reasonable assurance the borrower will continue to make payments as agreed.

25

The following table presents a rollforward of the Company’s allowance for loan losses for the six months ended June 30, 2015:

	Beginning Balance										Ending Balance
(dollars in thousands)	January 1, 2015		Charge-offs			Recoveries		Provision			June 30, 2015
Commercial, industrial and agricultural	$	1,168	$	(80	)	$	21	$	510		$	1,619
Real estate - one to four family residential:
Closed end first and seconds		1,884		(332	)		13		134			1,699
Home equity lines		1,678		(137	)		5		467			2,013
Total real estate - one to four family residential		3,562		(469	)		18		601			3,712
Real estate - multifamily residential		89		-			-		13			102
Real estate - construction:
One to four family residential		235		(102	)		1		123			257
Other construction, land development and other land		2,670		-			-		(80	)		2,590
Total real estate - construction		2,905		(102	)		1		43			2,847
Real estate - farmland		144		-			-		(65	)		79
Real estate - non-farm, non-residential:
Owner occupied		2,416		(139	)		1		(440	)		1,838
Non-owner occupied		1,908		-			-		(740	)		1,168
Total real estate - non-farm, non-residential		4,324		(139	)		1		(1,180	)		3,006
Consumer		305		(7	)		34		(75	)		257
Other		524		(24	)		12		153			665
Total	$	13,021	$	(821	)	$	87	$	-		$	12,287

The following table presents a rollforward of the Company’s allowance for loan losses for the six months ended June 30, 2014:

	Beginning Balance										Ending Balance
(dollars in thousands)	January 1, 2014		Charge-offs			Recoveries		Provision			June 30, 2014
Commercial, industrial and agricultural	$	1,787	$	(290	)	$	30	$	(331	)	$	1,196
Real estate - one to four family residential:
Closed end first and seconds		2,859		(304	)		211		(188	)		2,578
Home equity lines		1,642		(54	)		13		244			1,845
Total real estate - one to four family residential		4,501		(358	)		224		56			4,423
Real estate - multifamily residential		79		-			-		29			108
Real estate - construction:
One to four family residential		364		-			6		(69	)		301
Other construction, land development and other land		1,989		-			2		501			2,492
Total real estate - construction		2,353		-			8		432			2,793
Real estate - farmland		116		-			-		11			127
Real estate - non-farm, non-residential:
Owner occupied		3,236		-			27		(1,144	)		2,119
Non-owner occupied		1,770		-			3		855			2,628
Total real estate - non-farm, non-residential		5,006		-			30		(289	)		4,747
Consumer		387		(86	)		55		(1	)		355
Other		538		(26	)		14		343			869
Total	$	14,767	$	(760	)	$	361	$	250		$	14,618

26

The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio class based on impairment method as of June 30, 2015:

	Allowance allocated to loans:								Total Loans:
(dollars in thousands)	Individually evaluated for impairment		Collectively evaluated for impairment		Acquired loans - purchased credit impaired		Total		Individually evaluated for impairment		Collectively evaluated for impairment		Acquired loans - purchased credit impaired		Total
Commercial, industrial and agricultural	$	309	$	1,310	$	-	$	1,619	$	337	$	84,931	$	577	$	85,845
Real estate - one to four family residential:
Closed end first and seconds		592		1,107		-		1,699		8,192		233,533		1,347		243,072
Home equity lines		265		1,748		-		2,013		625		110,349		33		111,007
Total real estate - one to four family residential		857		2,855		-		3,712		8,817		343,882		1,380		354,079
Real estate - multifamily residential		-		102		-		102		-		29,802		-		29,802
Real estate - construction:
One to four family residential		73		184		-		257		260		18,831		-		19,091
Other construction, land development and other land		1,604		986		-		2,590		5,634		30,700		286		36,620
Total real estate - construction		1,677		1,170		-		2,847		5,894		49,531		286		55,711
Real estate - farmland		-		79		-		79		-		10,553		-		10,553
Real estate - non-farm, non-residential:
Owner occupied		911		927		-		1,838		11,268		153,185		4,408		168,861
Non-owner occupied		718		450		-		1,168		11,006		86,620		1,661		99,287
Total real estate - non-farm, non-residential		1,629		1,377		-		3,006		22,274		239,805		6,069		268,148
Consumer		89		168		-		257		348		14,095		-		14,443
Other		-		665		-		665		4		22,125		-		22,129
Total	$	4,561	$	7,726	$	-	$	12,287	$	37,674	$	794,724	$	8,312	$	840,710

27

The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio class based on impairment method as of December 31, 2014:

	Allowance allocated to loans:								Total Loans:
(dollars in thousands)	Individually evaluated for impairment		Collectively evaluated for impairment		Acquired loans - purchased credit impaired		Total		Individually evaluated for impairment		Collectively evaluated for impairment		Acquired loans - purchased credit impaired		Total
Commercial, industrial and agricultural	$	-	$	1,168	$	-	$	1,168	$	1,451	$	82,645	$	1,023	$	85,119
Real estate - one to four family residential:
Closed end first and seconds		1,006		878		-		1,884		8,713		226,674		1,374		236,761
Home equity lines		-		1,678		-		1,678		175		109,892		33		110,100
Total real estate - one to four family residential		1,006		2,556		-		3,562		8,888		336,566		1,407		346,861
Real estate - multifamily residential		-		89		-		89		-		25,157		-		25,157
Real estate - construction:
One to four family residential		78		157		-		235		176		19,522		-		19,698
Other construction, land development and other land		1,632		1,038		-		2,670		5,661		29,851		79		35,591
Total real estate - construction		1,710		1,195		-		2,905		5,837		49,373		79		55,289
Real estate - farmland		-		144		-		144		-		9,471		-		9,471
Real estate - non-farm, non-residential:
Owner occupied		1,240		1,176		-		2,416		10,046		145,858		1,841		157,745
Non-owner occupied		1,262		646		-		1,908		9,816		91,539		3,472		104,827
Total real estate - non-farm, non-residential		2,502		1,822		-		4,324		19,862		237,397		5,313		262,572
Consumer		106		199		-		305		371		15,548		-		15,919
Other		-		524		-		524		6		20,175		-		20,181
Total	$	5,324	$	7,697	$	-	$	13,021	$	36,415	$	776,332	$	7,822	$	820,569

28

The following table presents loans individually evaluated for impairment by class of loans as of June 30, 2015:

(dollars in thousands)	Recorded Investment		Unpaid Principal Balance		Recorded Investment With  No Allowance		Recorded Investment With Allowance		Related Allowance		Average Recorded Investment		Interest Income Recognized
Commercial, industrial and agricultural	$	337	$	337	$	-	$	337	$	309	$	931	$	11
Real estate - one to four family residential:
Closed end first and seconds		8,192		8,755		3,481		4,711		592		8,517		199
Home equity lines		625		625		175		450		265		432		9
Total real estate - one to four family residential		8,817		9,380		3,656		5,161		857		8,949		208
Real estate - construction:
One to four family residential		260		362		89		171		73		246		4
Other construction, land development and other land		5,634		5,634		1		5,633		1,604		5,638		133
Total real estate - construction		5,894		5,996		90		5,804		1,677		5,884		137
Real estate - non-farm, non-residential:
Owner occupied		11,268		11,620		8,367		2,901		911		10,399		290
Non-owner occupied		11,006		11,006		6,642		4,364		718		10,918		262
Total real estate - non-farm, non-residential		22,274		22,626		15,009		7,265		1,629		21,317		552
Consumer		348		358		16		332		89		360		9
Other		4		4		4		-		-		5		-
Total loans*	$	37,674	$	38,701	$	18,775	$	18,899	$	4,561	$	37,446	$	917

* PCI loans are excluded from this table.

The following table presents loans individually evaluated for impairment by class of loans as of December 31, 2014:

(dollars in thousands)	Recorded Investment		Unpaid Principal Balance		Recorded Investment With  No Allowance		Recorded Investment With Allowance		Related Allowance		Average Recorded Investment		Interest Income Recognized
Commercial, industrial and agricultural	$	1,451	$	1,451	$	1,451	$	-	$	-	$	2,010	$	128
Real estate - one to four family residential:
Closed end first and seconds		8,713		8,813		3,611		5,102		1,006		9,800		474
Home equity lines		175		175		175		-		-		289		-
Total real estate - one to four family residential		8,888		8,988		3,786		5,102		1,006		10,089		474
Real estate - construction:
One to four family residential		176		176		-		176		78		312		7
Other construction, land development and other land		5,661		5,661		-		5,661		1,632		5,399		256
Total real estate - construction		5,837		5,837		-		5,837		1,710		5,711		263
Real estate - non-farm, non-residential:
Owner occupied		10,046		10,146		3,734		6,312		1,240		12,056		534
Non-owner occupied		9,816		9,816		4,262		5,554		1,262		9,356		456
Total real estate - non-farm, non-residential		19,862		19,962		7,996		11,866		2,502		21,412		990
Consumer		371		371		-		371		106		420		21
Other		6		6		6		-		-		328		-
Total loans*	$	36,415	$	36,615	$	13,239	$	23,176	$	5,324	$	39,970	$	1,876

* PCI loans are excluded from this table.

29

Determining the fair value of purchased credit-impaired (“PCI”) loans at November 14, 2014 required the Company to estimate cash flows expected to result from those loans and to discount those cash flows at appropriate rates of interest. For such loans, the excess of the cash flows expected at acquisition over the estimated fair value is recognized as interest income over the remaining lives of the loans and is called the accretable yield. The difference between contractually required payments at acquisition and the cash flows expected to be collected at acquisition is the nonaccretable difference and is not recorded. In accordance with U.S. GAAP, the Company did not “carry over” any allowances for loan losses that were reserved for the VCB loan portfolio prior to the Company’s acquisition of VCB. PCI loans had unpaid principal balances of $9.3 million and $8.8 million and recorded carrying values of $8.3 million and $7.8 million at June 30, 2015 and December 31, 2014, respectively.

Loans acquired from VCB that constituted PCI loans were recorded by the Company at fair value on the date of acquisition as follows:

	November 14,
(dollars in thousands)	2014
Contractual principal and interest at acquisition	$	9,977
Nonaccretable difference		937
Accretable yield		1,185
PCI loans at acquisition, at estimated fair value	$	7,855

The following table presents a summary of the changes in the accretable yield of the PCI loan portfolio for the periods indicated:

	Three months ended			Six months ended
	June 30, 2015			June 30, 2015
(dollars in thousands)	Accretable Yield			Accretable Yield
Balance at beginning of period	$	1,029		$	1,131
Accretion		(104	)		(206	)
Reclassification of nonaccretable difference due to improvement in expected cash flows		-			-
Other changes, net		-			-
Balance at end of period	$	925		$	925

30

The following tables present, by loan class, information related to loans modified as TDRs during the three and six months ended June 30, 2015 and 2014:

	Three Months Ended June 30, 2015						Three Months Ended June 30, 2014
(dollars in thousands)	Number of Loans		Pre- Modification Recorded Balance		Post- Modification Recorded Balance*		Number of Loans		Pre- Modification Recorded Balance		Post- Modification Recorded Balance*
Real estate - one to four family residential:
Closed end first and seconds		-	$	-	$	-		3	$	512	$	513
Consumer		-		-		-		2		385		385
Total		-	$	-	$	-		5	$	897	$	898

*The period end balances are inclusive of all partial paydowns and charge-offs since the modification date. Loans modified as TDRs that were fully paid down, charged-off, or foreclosed upon by period end are not reported.

	Six Months Ended June 30, 2015						Six Months Ended June 30, 2014
(dollars in thousands)	Number of Loans		Pre- Modification Recorded Balance		Post- Modification Recorded Balance*		Number of Loans		Pre- Modification Recorded Balance		Post- Modification Recorded Balance*
Real estate - one to four family residential:
Closed end first and seconds		-	$	-	$	-		3	$	512	$	513
Consumer		-		-		-		2		385		385
Total		-	$	-	$	-		5	$	897	$	898

* The period end balances are inclusive of all partial paydowns and charge-offs since the modification date. Loans modified as TDRs that were fully paid down, charged-off, or foreclosed upon by period end are not reported.

The following tables present, by loan class, information related to the loans modified as TDRs that subsequently defaulted (i.e., 90 days or more past due following a modification) during the three and six months ended June 30, 2015 and 2014 and were modified as TDRs within the 12 months prior to default:

	Three Months Ended June 30, 2015				Three Months Ended June 30, 2014
(dollars in thousands)	Number of Loans		Recorded Balance		Number of Loans		Recorded Balance
Real estate - one to four family residential:
Closed end first and seconds		1	$	68		-	$	-
Total		1	$	68		-	$	-

	Six Months Ended June 30, 2015				Six Months Ended June 30, 2014
(dollars in thousands)	Number of Loans		Recorded Balance		Number of Loans		Recorded Balance
Real estate - one to four family residential:
Closed end first and seconds		1	$	68		-	$	-
Total		1	$	68		-	$	-

At June 30, 2015, there were no foreclosed residential real estate properties included in other real estate owned. However, at June 30, 2015, there were $514 thousand in residential real estate loans in the process of foreclosure.

31

Note 5. Deferred Income Taxes

As of June 30, 2015 and December 31, 2014, the Company had recorded net deferred income tax assets of approximately $16.9 million and $17.5 million, respectively. The realization of deferred income tax assets is assessed quarterly and a valuation allowance is recorded if it is “more likely than not” that all or a portion of the deferred tax asset will not be realized. “More likely than not” is defined as greater than a 50% chance. Management considers all available evidence, both positive and negative, to determine whether, based on the weight of that evidence, a valuation allowance is needed.  Management’s assessment is primarily dependent on historical taxable income and projections of future taxable income, which are directly related to the Company’s core earnings capacity and its prospects to generate core earnings in the future.  Projections of core earnings and taxable income are inherently subject to uncertainty and estimates that may change given the uncertain economic outlook, banking industry conditions and other factors. Further, management has considered future reversals of existing taxable temporary differences and limited, prudent and feasible tax-planning strategies, such as changes in investment security income (tax-exempt to taxable), additional sales of loans and sales of branches/buildings with an appreciated asset value over the tax basis. Based upon an analysis of available evidence, management has determined that it is “more likely than not” that the Company’s deferred income tax assets as of June 30, 2015 will be fully realized and therefore no valuation allowance to the Company’s deferred income tax assets was recorded. However, the Company can give no assurance that in the future its deferred income tax assets will not be impaired because such determination is based on projections of future earnings and the possible effect of certain transactions which are subject to uncertainty and based on estimates that may change due to changing economic conditions and other factors.  Due to the uncertainty of estimates and projections, it is possible that the Company will be required to record adjustments to the valuation allowance in future reporting periods.

The Company’s ability to realize its deferred income tax assets may be limited if the Company experiences an ownership change as defined by Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”). For additional information see Part I, Item 1A. “Risk Factors” included in the 2014 Form 10-K.

Note 6. Bank Premises and Equipment

Bank premises and equipment are summarized as follows:

	June 30,			December 31,
(dollars in thousands)	2015			2014
Land and improvements	$	6,699		$	6,929
Buildings and leasehold improvements		27,254			28,001
Furniture, fixtures and equipment		21,078			21,719
Construction in progress		2,658			553
		57,689			57,202
Less accumulated depreciation		(29,061	)		(29,769	)
Net balance	$	28,628		$	27,433

Depreciation and amortization of bank premises and equipment for the six months ended June 30, 2015 and 2014 amounted to $1.3 million and $1.0 million, respectively.

Note 7. Borrowings

Federal funds purchased and repurchase agreements. The Company has unsecured lines of credit with SunTrust Bank, Community Bankers Bank and Pacific Coast Bankers Bank for the purchase of federal funds in the amount of $20.0 million, $15.0 million and $5.0 million, respectively. These lines of credit have a variable rate based on the lending bank’s daily federal funds sold rate and are due on demand. Repurchase agreements are secured transactions and generally mature the day following the day sold. Customer repurchases are standard transactions that involve a Bank customer instead of a wholesale bank or broker. The Company offers this product as an accommodation to larger retail and commercial customers that request safety for their funds beyond the Federal Deposit Insurance Corporation (“FDIC”) deposit insurance limits. The Company does not use or have any open repurchase agreements with broker-dealers.

32

The tables below present selected information on federal funds purchased and repurchase agreements during the six months ended June 30, 2015 and the year ended December 31, 2014:

Federal funds purchased	June 30,			December 31,
(dollars in thousands)	2015			2014
Balance outstanding at period end	$	-		$	-
Maximum balance at any month end during the period	$	2,440		$	2,000
Average balance for the period	$	85		$	174
Weighted average rate for the period		0.71	%		0.78	%
Weighted average rate at period end		0.00	%		0.00	%

Repurchase agreements	June 30,			December 31,
(dollars in thousands)	2015			2014
Balance outstanding at period end	$	8,489		$	14,885
Maximum balance at any month end during the period	$	12,392		$	14,885
Average balance for the period	$	9,969		$	4,523
Weighted average rate for the period		0.62	%		0.59	%
Weighted average rate at period end		0.61	%		0.60	%

Short-term borrowings. Short-term borrowings consist of advances from the FHLB, which are secured by a blanket floating lien on all qualifying closed-end and revolving open-end loans that are secured by 1-4 family residential properties. Short-term advances from the FHLB at June 30, 2015 consisted of $3.1 million using a daily rate credit, which was due on demand, and $91.5 million in fixed rate one month advances. Short-term advances from the FHLB at December 31, 2014 consisted of $16.4 million using a daily rate credit, which was due on demand, and $60.4 million in fixed rate one month advances.

The table below presents selected information on short-term borrowings during the six months ended June 30, 2015 and the year ended December 31, 2014:

Short-term borrowings	June 30,			December 31,
(dollars in thousands)	2015			2014
Balance outstanding at period end	$	94,605		$	76,818
Maximum balance at any month end during the period	$	94,605		$	82,930
Average balance for the period	$	77,453		$	72,565
Weighted average rate for the period		0.21	%		0.21	%
Weighted average rate at period end		0.21	%		0.22	%

Long-term borrowings. From time to time, the Company may obtain long-term borrowings from the FHLB, which consist of advances from the FHLB that are secured by a blanket floating lien on all qualifying closed-end and revolving open-end loans that are secured by 1-4 family residential properties. At June 30, 2015 and December 31, 2014, the Company had no long-term FHLB advances outstanding.

The Company’s line of credit with the FHLB can equal up to 30% of the Company’s gross assets or approximately $365.9 million at June 30, 2015. This line of credit totaled $225.3 million with approximately $117.6 million available at June 30, 2015. As of June 30, 2015 and December 31, 2014, loans with a carrying value of $304.5 million are pledged to the FHLB as collateral for borrowings. Additional loans are available that can be pledged as collateral for future borrowings from the FHLB above the current lendable collateral value. Short-term borrowings outstanding under the FHLB line of credit were $94.6 million and $76.8 million as of June 30, 2015 and December 31, 2014, respectively.

Note 8. Net Income Per Common Share

The Company applies the two-class method of computing basic and diluted net income per common share.  Under the two-class method, net income per common share is determined for each class of common stock and participating security according to dividends declared and participation rights in undistributed earnings. Based on FASB guidance, the Company considers its Series B Preferred Stock (defined below) to be a participating security. FASB guidance requires that all outstanding unvested share-based payment awards that contain rights to nonforfeitable dividends participate in undistributed earnings with common shareholders.  Accordingly, the weighted average number of shares of the Company’s common stock used in the calculation of basic and diluted net income per common share includes unvested shares of the Company’s common stock outstanding.

33

The following tables show the computation of basic and diluted net income per common share for the periods presented. 

	Three Months Ended
	June 30, 2015		June 30, 2014
(dollars in thousands, except share and per share amounts)
Basic Net Income Per Common Share
Net income available to common shareholders	$	1,341	$	1,114
Less: Net income allocated to participating securities, Series B Preferred Stock		385		341
Net income allocated to common shareholders	$	956	$	773
Weighted average common shares outstanding for basic net income per common share		13,023,550		11,862,367
Basic net income per common share	$	0.07	$	0.06
Diluted Net Income Per Common Share
Net income available to common shareholders	$	1,341	$	1,114
Weighted average common shares outstanding for basic net income per common share		13,023,550		11,862,367
Effect of dilutive securities, stock options		-		-
Effect of dilutive securities, Series B Preferred Stock		5,240,192		5,240,192
Weighted average common shares outstanding for diluted net income per common share		18,263,742		17,102,559
Diluted net income per common share	$	0.07	$	0.06

	Six Months Ended
	June 30, 2015		June 30, 2014
(dollars in thousands, except share and per share amounts)
Basic Net Income Per Common Share
Net income available to common shareholders	$	2,730	$	2,592
Less: Net income allocated to participating securities, Series B Preferred Stock		784		794
Net income allocated to common shareholders	$	1,946	$	1,798
Weighted average common shares outstanding for basic net income per common share		13,004,595		11,862,367
Basic net income per common share	$	0.15	$	0.15
Diluted Net Income Per Common Share
Net income available to common shareholders	$	2,730	$	2,592
Weighted average common shares outstanding for basic net income per common share		13,004,595		11,862,367
Effect of dilutive securities, stock options		-		-
Effect of dilutive securities, Series B Preferred Stock		5,240,192		5,240,192
Weighted average common shares outstanding for diluted net income per common share		18,244,787		17,102,559
Diluted net income per common share	$	0.15	$	0.15

At June 30, 2015 and 2014, options to acquire 102,887 and 145,437 shares of common stock, respectively, were not included in computing diluted net income per common share because their effects were anti-dilutive.

On June 12, 2013, the Company issued 5,240,192 shares of non-voting mandatorily convertible non-cumulative preferred stock, Series B (the “Series B Preferred Stock”) through private placements to certain investors. Each share of Series B Preferred Stock can, under certain limited circumstances as set forth in the Company’s articles of incorporation, be converted into one share of the Company’s common stock, and is therefore reflected in the dilutive weighted average common shares outstanding. For more information related to the conversion rights on these preferred shares, see Note 12 – Preferred Stock and Warrant.

Additionally, the impact of warrants to acquire shares of the Company’s common stock that were issued to the U.S. Department of the Treasury (“Treasury”) in connection with the Company’s participation in the Capital Purchase Program is not included, as the warrants were anti-dilutive. As previously disclosed, these warrants were repurchased by the Company during May 2015. For additional information on preferred stock warrants, see Note 12 – Preferred Stock and Warrant.

The Company identified and corrected an immaterial error affecting the calculation of basic net income per common share for certain periods prior to the second quarter of 2015.  Previously, the Company did not consider the Series B Preferred Stock as a participating security when calculating basic net income per common share.  The Company will correct basic net income per common share for historical periods as such measures are disclosed in future public reports, filings and statements.  This immaterial error had no impact on previously reported diluted net income per common share for any historical periods.

34

Note 9. Stock Based Compensation Plans

On September 21, 2000, the Company adopted the Eastern Virginia Bankshares, Inc. 2000 Stock Option Plan (the “2000 Plan”) to provide a means for selected key employees and directors to increase their personal financial interest in the Company, thereby stimulating their efforts and strengthening their desire to remain with the Company. Under the 2000 Plan, up to 400,000 shares of Company common stock could be granted in the form of stock options. On April 17, 2003, the shareholders approved the Eastern Virginia Bankshares, Inc. 2003 Stock Incentive Plan, amending and restating the 2000 Plan (the “2003 Plan”) still authorizing the issuance of up to 400,000 shares of common stock under the plan, but expanding the award types available under the plan to include stock options, stock appreciation rights, common stock, restricted stock and phantom stock. Under the terms of the 2003 Plan, after April 17, 2013 no additional awards may be granted under the 2003 Plan. Any awards previously granted under the 2003 Plan that were outstanding as of April 17, 2013 remain outstanding and will vest in accordance with their regular terms.

On April 19, 2007, the Company’s shareholders approved the Eastern Virginia Bankshares, Inc. 2007 Equity Compensation Plan (the “2007 Plan”) to enhance the Company’s ability to recruit and retain officers, directors, employees, consultants and advisors with ability and initiative and to encourage such persons to have a greater financial interest in the Company. The 2007 Plan authorizes the Company to issue up to 400,000 additional shares of common stock pursuant to grants of stock options, stock appreciation rights, common stock, restricted stock, performance shares, incentive awards and stock units. There were 225,642 shares still available to be granted as awards under the 2007 Plan as of June 30, 2015.

Accounting standards require companies to recognize the cost of employee services received in exchange for awards of equity instruments, such as stock options, based on the fair value of those awards at the date of grant.

Accounting standards also require that new awards to employees eligible for accelerated vesting at retirement prior to the awards becoming fully vested be recognized as compensation cost over the period through the date that the employee first becomes eligible to retire and is no longer required to provide service to earn the award.

Stock option compensation expense is the estimated fair value of options granted, amortized on a straight-line basis over the requisite service period for each stock option award. There were no stock options granted or exercised in the six months ended June 30, 2015 and 2014. There was no remaining unrecognized compensation expense related to stock options.

A summary of the Company’s stock option activity and related information is as follows:

						Remaining		Aggregate
	Options			Weighted Average		Contractual Life		Intrinsic Value
	Outstanding			Exercise Price		(in years)		(in thousands)
Stock options outstanding at January 1, 2015		110,487		$	18.76
Forfeited		(7,600	)		18.65
Stock options outstanding at June 30, 2015		102,887		$	18.77		1.56	$	-
Stock options exercisable at June 30, 2015		102,887		$	18.77		1.56	$	-

* Intrinsic value is the amount by which the fair value of the underlying common stock exceeds the exercise price of a stock option on exercise date.

35

The table below summarizes information concerning stock options outstanding and exercisable at June 30, 2015:

Stock Options Outstanding and Exercisable
Exercise		Number		Weighted Average
Price		Outstanding		Remaing Term
$	20.57		26,862	0.00 years*
$	21.16		31,525	1.25 years
$	19.25		23,500	2.25 years
$	12.36		21,000	3.25 years
$	18.77		102,887	1.56 years

*These options expire on July 1, 2015.

On March 19, 2015, the Company granted 45,000 shares of restricted stock under the 2007 Plan to its executive officers. Fifty percent (50%) of the shares are subject to time vesting in five equal annual installments beginning on March 31, 2016.  The remaining fifty percent (50%) of the shares are subject to performance vesting and will vest on March 31, 2018 to the extent certain financial performance requirements for fiscal year 2017 are met. On October 15, 2014, the Company granted 42,500 shares of restricted stock under the 2007 Plan to its executive officers.  Fifty percent (50%) of the shares are subject to time vesting in five equal annual installments beginning on March 31, 2015.  The remaining fifty percent (50%) of the shares are subject to performance vesting and will vest on March 31, 2017 to the extent certain financial performance requirements for fiscal year 2016 are met. On November 20, 2014, the Company granted 3,242 shares of restricted stock under the 2007 Plan to one of its executive officers.  All of these shares are subject to time vesting over a two year period, and generally vest fifty percent (50%) on the first and second anniversaries of the grant date. On November 18, 2013, the Company granted 38,000 shares of restricted stock under the 2007 Plan to its executive officers in the form of Troubled Asset Relief Program (“TARP”) compliant restricted stock awards. All of these shares are subject to time vesting over a five year period, and generally vest forty percent (40%) on the second anniversary of the grant date and twenty percent (20%) on each of the third, fourth and fifth anniversaries of the grant date. On June 29, 2012, the Company granted 34,000 shares of restricted stock under the 2007 Plan to its executive officers in the form of TARP compliant restricted stock awards. All of these shares are subject to time vesting over a five year period, and generally vest forty percent (40%) on the second anniversary of the grant date and twenty percent (20%) on each of the third, fourth and fifth anniversaries of the grant date.

For the three and six months ended June 30, 2015 and 2014, restricted stock compensation expense was $63 thousand and $114 thousand, respectively, compared to restricted stock compensation expense of $19 thousand and $39 thousand, respectively, and was included in salaries and employee benefits expense in the consolidated statements of income. Restricted stock compensation expense is accounted for using the fair market value of the Company’s common stock on the date the restricted shares were awarded, which was $6.28 per share for the March 19, 2015 awards, $6.10 per share for the October 15, 2014 awards, $6.17 per share for the November 20, 2014 award, $6.70 per share for the 2013 awards and $3.72 per share for the 2012 awards.

A summary of the status of the Company’s nonvested shares in relation to the Company’s restricted stock awards as of June 30, 2015, and changes during the six months ended June 30, 2015, is presented below; the weighted average price is the weighted average fair value at the date of grant:

				Weighted-Average
	Shares			Price
Nonvested as of January 1, 2015		104,142		$	5.85
Granted		45,000			6.28
Vested		(11,050	)		4.64
Nonvested as of June 30, 2015		138,092		$	6.09

At June 30, 2015, there was $615 thousand of total unrecognized compensation expense related to restricted stock awards. This unearned compensation is being amortized over the remaining vesting period for the time and performance based shares.

36

Note 10. Employee Benefit Plan – Pension

The Company has historically maintained a defined benefit pension plan covering substantially all of the Company’s employees. The plan was amended January 28, 2008 to freeze the plan with no additional contributions for a majority of participants. Employees age 55 or greater or with 10 years of credited service were grandfathered in the plan. No additional participants have been added to the plan. The plan was again amended February 28, 2011 to freeze the plan with no additional contributions for grandfathered participants. Benefits for all participants have remained frozen in the plan since such action was taken. Effective January 1, 2012, the plan was amended and restated as a cash balance plan. Under a cash balance plan, participant benefits are stated as an account balance. An opening account balance was established for each participant based on the lump sum value of his or her accrued benefit as of December 31, 2011 in the original defined benefit pension plan. Each participants’ account will be credited with an “interest” credit each year. The interest rate for each year is determined as the average annual interest rate on the 2 year U.S. Treasury securities for the month of December preceding the plan year. Components of net periodic pension benefit related to the Company’s pension plan were as follows for the periods indicated:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
(dollars in thousands)	2015			2014			2015			2014
Components of net periodic pension cost (benefit)
Interest cost	$	101		$	111		$	202		$	223
Expected return on plan assets		(179	)		(186	)		(357	)		(372	)
Amortization of prior service cost		3			2			5			4
Recognized net actuarial loss		27			-			54			-
Net settlement loss		53			-			53			-
Net periodic pension cost (benefit)	$	5		$	(73	)	$	(43	)	$	(145	)

The Company made no contributions to the pension plan during 2014. The Company has not determined at this time how much, if any, contributions to the plan will be made for the year ending December 31, 2015.

Note 11. Fair Value Measurements

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. U.S. GAAP requires that valuation techniques maximize the use of observable inputs and minimize the use of unobservable inputs. U.S. GAAP also establishes a fair value hierarchy which prioritizes the valuation inputs into three broad levels. Based on the underlying inputs, each fair value measurement in its entirety is reported in one of the three levels. These levels are:

· Level 1 – Valuation is based upon quoted prices (unadjusted) for identical instruments traded in active markets.

· Level 2 – Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

· Level 3 – Valuation is determined using model-based techniques with significant assumptions not observable in the market.

U.S. GAAP allows an entity the irrevocable option to elect fair value (the fair value option) for the initial and subsequent measurement for certain financial assets and liabilities on a contract-by-contract basis. The Company has not made any fair value option elections as of June 30, 2015.

Following is a description of the valuation methodologies used for instruments measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy.

37

Assets Measured at Fair Value on a Recurring Basis

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. Third party vendors compile prices from various sources and may determine the fair value of identical or similar securities by using pricing models that consider observable market data (Level 2). In certain cases where there is limited activity or less transparency around inputs to the valuation, securities are classified within Level 3 of the valuation hierarchy. Currently, all of the Company’s available for sale securities are considered to be Level 2 securities.

The following table summarizes financial assets measured at fair value on a recurring basis as of June 30, 2015 and December 31, 2014, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:

Assets Measured at Fair Value on a Recurring Basis at June 30, 2015 Using
	Quoted Prices in		Significant Other		Significant
	Active Markets for		Observable		Unobservable		Balance at
	Identical Assets		Inputs		Inputs		June 30,
(dollars in thousands)	(Level 1)		(Level 2)		(Level 3)		2015
Assets
Securities available for sale
Obligations of U.S. Government agencies	$	-	$	13,081	$	-	$	13,081
SBA Pool securities		-		71,007		-		71,007
Agency residential mortgage-backed securities		-		19,400		-		19,400
Agency commercial mortgage-backed securities		-		6,487		-		6,487
Agency CMO securities		-		53,154		-		53,154
Non agency CMO securities		-		704		-		704
State and political subdivisions		-		64,090		-		64,090
FNMA and FHLMC preferred stock		-		9		-		9
Total securities available for sale	$	-	$	227,932	$	-	$	227,932

Assets Measured at Fair Value on a Recurring Basis at December 31, 2014 Using
	Quoted Prices in		Significant Other		Significant
	Active Markets for		Observable		Unobservable		Balance at
	Identical Assets		Inputs		Inputs		December 31,
(dollars in thousands)	(Level 1)		(Level 2)		(Level 3)		2014
Assets
Securities available for sale
Obligations of U.S. Government agencies	$	-	$	14,569	$	-	$	14,569
SBA Pool securities		-		74,799		-		74,799
Agency residential mortgage-backed securities		-		28,629		-		28,629
Agency CMO securities		-		39,215		-		39,215
Non agency CMO securities		-		828		-		828
State and political subdivisions		-		55,926		-		55,926
FNMA and FHLMC preferred stock		-		45		-		45
Total securities available for sale	$	-	$	214,011	$	-	$	214,011

38

Assets Measured at Fair Value on a Non-Recurring Basis

Certain assets are measured at fair value on a non-recurring basis in accordance with U.S. GAAP. These adjustments to fair value usually result from the application of fair value accounting or impairment write-downs of individual assets.

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 agreement will not be collected when due. 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 collateral is real estate. The value of real estate collateral is determined utilizing an income or market valuation approach based on an appraisal conducted by an independent, licensed appraiser outside of the Company using observable market data (Level 2). However, if the collateral value is significantly adjusted due to differences in the comparable properties, or is discounted by the Company because of marketability, then the fair value is considered Level 3.

The value of business equipment is based upon an outside appraisal if deemed significant, or the net book value on the applicable business’ financial statements if not considered significant. 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 non-recurring 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. Other real estate owned (“OREO”) is measured at fair value less cost to sell, based on an appraisal conducted by an independent, licensed appraiser outside of the Company using observable market data (Level 2). If the collateral value is significantly adjusted due to differences in the comparable properties, or is discounted by the Company because of marketability, then the fair value is considered Level 3. OREO is measured at fair value on a non-recurring basis. Any initial fair value adjustment is charged against the allowance for loan losses. Subsequent fair value adjustments are recorded in the period incurred and included in other noninterest expense on the consolidated statements of income.

The following table summarizes assets measured at fair value on a non-recurring basis as of June 30, 2015 and December 31, 2014, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:

Assets Measured at Fair Value on a Non-Recurring Basis at June 30, 2015 Using
	Quoted Prices in		Significant Other		Significant
	Active Markets for		Observable		Unobservable		Balance at
	Identical Assets		Inputs		Inputs		June 30,
	(Level 1)		(Level 2)		(Level 3)		2015
	(dollars in thousands)
Assets
Impaired loans	$	-	$	-	$	14,338	$	14,338
Other real estate owned	$	-	$	-	$	1,344	$	1,344

Assets Measured at Fair Value on a Non-Recurring Basis at December 31, 2014 Using
	Quoted Prices in		Significant Other		Significant
	Active Markets for		Observable		Unobservable		Balance at
	Identical Assets		Inputs		Inputs		December 31,
	(Level 1)		(Level 2)		(Level 3)		2014
	(dollars in thousands)
Assets
Impaired loans	$	-	$	-	$	17,852	$	17,852
Other real estate owned	$	-	$	-	$	1,838	$	1,838

39

The following table displays quantitative information about Level 3 Fair Value Measurements as of June 30, 2015 and December 31, 2014:

Quantitative information about Level 3 Fair Value Measurements at June 30, 2015
(dollars in thousands)	Fair Value		Valuation Technique(s)	Unobservable Input	Range (Weighted Average)
Assets
Impaired loans	$	14,338	Discounted appraised value	Selling cost	0% - 24% (12%)
				Discount for lack of marketability and age of appraisal	0% - 25% (9%)
Other real estate owned	$	1,344	Discounted appraised value	Selling cost	10% (10%)
				Discount for lack of marketability and age of appraisal	0% -34% (29%)

Quantitative information about Level 3 Fair Value Measurements at December 31, 2014
(dollars in thousands)	Fair Value		Valuation Technique(s)	Unobservable Input	Range (Weighted Average)
Assets
Impaired loans	$	17,852	Discounted appraised value	Selling cost	0% - 30% (9%)
				Discount for lack of marketability and age of appraisal	0% - 35% (13%)
Other real estate owned	$	1,838	Discounted appraised value	Selling cost	10% (10%)
				Discount for lack of marketability and age of appraisal	0% - 22% (2%)

Fair Value of Financial Instruments

U.S. GAAP requires disclosure of the fair value of financial assets and financial liabilities, including those financial assets and financial liabilities that are not measured and reported at fair value on a recurring basis or non-recurring basis. The methodologies and assumptions for estimating the fair value of financial assets and financial liabilities that are measured at fair value on a recurring or non-recurring basis are discussed above. The methodologies and assumptions for other financial assets and financial liabilities are discussed below:

Cash and Short-Term Investments. For those short-term instruments, the carrying amount is a reasonable estimate of fair value.

Investment Securities. For securities and marketable equity securities held for investment purposes, fair values are based on quoted market prices or dealer quotes. For other securities held as investments, fair value equals quoted market price, if available. If a quoted market price is not available, fair value is estimated using quoted prices for similar securities. All securities prices are provided by independent third party vendors.

Restricted Securities. The carrying amount approximates fair value based on the redemption provisions of the correspondent banks.

40

Loans. The fair value of performing loans is estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar remaining maturities. This calculation ignores loan fees and certain factors affecting the interest rates charged on various loans such as the borrower’s creditworthiness and compensating balances and dissimilar types of real estate held as collateral. The fair value of impaired loans is measured as described within the Impaired Loans section of this note.

Bank Owned Life Insurance. Bank owned life insurance represents insurance policies on officers of the Company. The cash values of the policies are estimated using information provided by insurance carriers. The policies are carried at their cash surrender value, which approximates fair value.

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 fixed maturity certificates of deposit is estimated using market rates for deposits of similar remaining maturities.

Short-Term Borrowings. The carrying amounts of federal funds purchased and other short-term borrowings maturing within 90 days approximate their fair values. Fair values of other short-term borrowings are estimated using discounted cash flow analyses based on the current incremental borrowing rates for similar types of borrowing arrangements.

Long-Term Borrowings. The fair values of the Company’s long-term borrowings are estimated using discounted cash flow analyses based on the Company’s current incremental borrowing rates for similar types of borrowing arrangements.

Accrued Interest Receivable and Accrued Interest Payable. The carrying amounts of accrued interest approximate fair value.

Off-Balance Sheet Financial Instruments. The fair value of commitments to extend credit is estimated using the fees currently charged to enter similar agreements, taking into account the remaining terms of the agreements and the present credit worthiness 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 standby letters of credit is based on fees currently charged for similar agreements or on the estimated cost to terminate them or otherwise settle the obligations with the counterparties at the reporting date. The fair value of guarantees of credit card accounts previously sold is based on the estimated cost to settle the obligations with the counterparty at the reporting date. At June 30, 2015 and December 31, 2014, the fair value of loan commitments, standby letters of credit and credit card guarantees are not significant and are not included in the table below.

41

The estimated fair value and the carrying value of the Company’s recorded financial instruments are as follows:

			Fair Value Measurements at June 30, 2015 Using
			Quoted Prices in		Significant Other		Significant
			Active Markets for		Observable		Unobservable		Balance at
			Identical Assets		Inputs		Inputs		June 30,
(dollars in thousands)	Carrying Amount		(Level 1)		(Level 2)		(Level 3)		2015
Assets:
Cash and short-term investments	$	14,416	$	14,416	$	-	$	-	$	14,416
Interest bearing deposits with banks		6,467		6,467		-		-		6,467
Securities available for sale		227,932		-		227,932		-		227,932
Securities held to maturity		30,671		-		31,542		-		31,542
Restricted securities		8,118		-		8,118		-		8,118
Loans, net		828,423		-		-		831,604		831,604
Bank owned life insurance		24,786		-		24,786		-		24,786
Accrued interest receivable		3,990		-		3,990		-		3,990
Total	$	1,144,803	$	20,883	$	296,368	$	831,604	$	1,148,855
Liabilities:
Noninterest-bearing demand deposits	$	178,844	$	178,844	$	-	$	-	$	178,844
Interest-bearing deposits		778,378		-		729,618		-		729,618
Short-term borrowings		103,094		103,094		-		-		103,094
Junior subordinated debt		10,310		-		10,310		-		10,310
Senior subordinated debt		19,140		-		19,359		-		19,359
Accrued interest payable		530		-		530		-		530
Total	$	1,090,296	$	281,938	$	759,817	$	-	$	1,041,755

			Fair Value Measurements at December 31, 2014 Using
			Quoted Prices in		Significant Other		Significant
			Active Markets for		Observable		Unobservable		Balance at
			Identical Assets		Inputs		Inputs		December 31,
(dollars in thousands)	Carrying Amount		(Level 1)		(Level 2)		(Level 3)		2014
Assets:
Cash and short-term investments	$	14,024	$	14,024	$	-	$	-	$	14,024
Interest bearing deposits with banks		5,272		5,272		-		-		5,272
Securities available for sale		214,011		-		214,011		-		214,011
Securities held to maturity		32,163		-		33,367		-		33,367
Restricted securities		7,533		-		7,533		-		7,533
Loans, net		807,548		-		-		812,429		812,429
Bank owned life insurance		24,463		-		24,463		-		24,463
Accrued interest receivable		4,013		-		4,013		-		4,013
Total	$	1,109,027	$	19,296	$	283,387	$	812,429	$	1,115,112
Liabilities:
Noninterest-bearing demand deposits	$	162,328	$	162,328	$	-	$	-	$	162,328
Interest-bearing deposits		776,926		-		721,240		-		721,240
Short-term borrowings		91,703		91,703		-		-		91,703
Junior subordinated debt		10,310		-		10,310		-		10,310
Accrued interest payable		316		-		316		-		316
Total	$	1,041,583	$	254,031	$	731,866	$	-	$	985,897

42

The Company assumes interest rate risk (the risk that general interest rate levels will change) as a result of the Company’s 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. The Company 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. 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. The Company 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.

Note 12. Preferred Stock and Warrant

On January 9, 2009, the Company signed a definitive agreement with the Treasury under the Emergency Economic Stabilization Act of 2008 to participate in the Treasury’s Capital Purchase Program. Pursuant to this agreement, the Company sold 24,000 shares of its Series A fixed rate cumulative perpetual preferred stock, liquidation value $1,000 per share (the “Series A Preferred Stock”), to the Treasury for an aggregate purchase price of $24 million. The Series A Preferred Stock paid a cumulative dividend at a rate of 5% for the first five years, and effective January 9, 2014, paid a rate of 9%. As part of its purchase of the Series A Preferred Stock, the Treasury was also issued a warrant (the “Warrant”) to purchase, on its initial terms, up to 373,832 shares of the Company’s common stock at an initial exercise price of $9.63 per share. If not exercised, the Warrant expires after ten years. On October 21, 2013, the Treasury sold all 24,000 shares of Series A Preferred Stock that were held by Treasury to private investors. Capital stock transactions by the Company subsequent to the Warrant’s issuance adjusted the Warrant’s exercise price per share to $9.374 and increased the number of shares that may be acquired upon exercise to 384,041.19 shares.

On May 13, 2015, the Company repurchased from the Treasury the Warrant for an aggregate repurchase price of $115 thousand, based on the fair value of the Warrant as agreed upon by the Company and the Treasury. Following the repurchase of the Warrant, the Treasury has no remaining equity investment in the Company. Additionally, on June 15, 2015, the Company redeemed the remaining $9.0 million of its Series A Preferred Stock.

Accounting for the issuance of the Series A Preferred Stock included entries to the equity portion of the Company’s consolidated balance sheet to recognize the Series A Preferred Stock at the full amount of the issuance, the warrant and discount on the Series A Preferred Stock at values calculated by discounting the future cash flows by a prevailing interest rate that a similar security would receive in the current market environment. At the time of issuance, that discount rate was determined to be 12%. The fair value of the warrant of $950 thousand was calculated using the Black-Scholes model with inputs of 7 year volatility, average rate of quarterly dividends, 7 year Treasury strip rate and the exercise price of $9.63 per share exercisable for up to 10 years. The present value of the Series A Preferred Stock using a 12% discount rate was $14.4 million. The Series A Preferred Stock discount determined by the allocation of discount to the warrant was accreted quarterly over a 5 year period on a constant effective yield method at a rate of approximately 6.4%. Allocation of the Series A Preferred Stock discount and the warrant as of January 9, 2009 is provided in the tables below:

	2009
Warrant Value
Series A Preferred Stock	$	24,000,000
Price	$	9.63
Warrant - shares		373,832
Value per warrant	$	2.54
Fair value of warrant	$	949,533

43

NPV of Series A Preferred Stock
@ 12% discount rate	(dollars in thousands)
			Relative			Relative
	Fair Value		Value %			Value
$24 million 1/09/2009
NPV of Series A Preferred Stock (12% discount rate)	$	14,446		93.8	%	$	22,519
Fair value of warrant		950		6.2	%		1,481
	$	15,396		100.0	%	$	24,000

From February 2011 to May 2014, the Company deferred its regularly scheduled dividend payments on its Series A Preferred Stock. Deferral of dividends on the Series A Preferred Stock did not constitute an event of default.  Dividends on the Series A Preferred Stock were, however, cumulative, and the Company had accumulated the dividends in accordance with the terms of the Series A Preferred Stock and U.S. GAAP and reflected the accumulated dividends as a portion of the effective dividend on Series A Preferred Stock on the consolidated statements of income.  On August 15, 2014, the Company paid $5.5 million of current and all deferred but accumulated dividends on its Series A Preferred Stock.

In connection with its private placements, on June 12, 2013, the Company issued 5,240,192 shares of its Series B Preferred Stock for a gross purchase price of $23.8 million, or $4.55 per share. The Series B Preferred Stock has no maturity date. The holders of Series B Preferred Stock are entitled to receive dividends if, as and when declared by the Company’s Board of Directors, in an identical form of consideration and at the same time, as those dividends or distributions that would have been payable on the number of whole shares of the Company’s common stock that such shares of Series B Preferred Stock would be convertible into upon satisfaction of certain conditions. The Company will not pay any dividends with respect to its common stock unless an equivalent dividend also is paid to the holders of Series B Preferred Stock. The Series B Preferred Stock ranks junior with regard to dividends to any class or series of capital stock of the Company the terms of which expressly provide that such class or series will rank senior to the common stock or the Series B Preferred Stock as to dividend rights and/or as to rights on liquidation, dissolution or winding up of the Company.

Note 13. Junior and Senior Subordinated Debt

On September 17, 2003, $10 million of trust preferred securities were placed through EVB Statutory Trust I in a pooled underwriting totaling approximately $650 million. The trust issuer has invested the total proceeds from the sale of the trust preferred securities in Floating Rate Junior Subordinated Deferrable Interest Debentures (“Junior Subordinated Debt”) issued by the Parent. The trust preferred securities pay cumulative cash distributions quarterly at a variable rate per annum, reset quarterly, equal to the 3-month LIBOR plus 2.95%. As of June 30, 2015 and December 31, 2014, the interest rate was 3.23% and 3.21%, respectively. The dividends paid to holders of the trust preferred securities, which are recorded as interest expense, are deductible for income tax purposes. The trust preferred securities have a mandatory redemption date of September 17, 2033, and became subject to varying call provisions beginning September 17, 2008. The Parent has fully and unconditionally guaranteed the trust preferred securities through the combined operation of the Junior Subordinated Debt and other related documents. The Parent’s obligation under the guarantee is unsecured and subordinate to senior and subordinated indebtedness of the Parent.

The trust preferred securities may be included in Tier 1 capital for regulatory capital adequacy determination purposes up to 25% of Tier 1 capital after its inclusion. At June 30, 2015 and December 31, 2014, all of the trust preferred securities qualified as Tier 1 capital.

Subject to certain exceptions and limitations, the Company is permitted to elect from time to time to defer regularly scheduled interest payments on its outstanding Junior Subordinated Debt relating to its trust preferred securities. If the Company defers interest payments on the Junior Subordinated Debt for more than 20 consecutive quarters, the Company would be in default under the governing agreements for such notes and the amount due under such agreements would be immediately due and payable.

From June 2011 to March 2014, the Company deferred its regularly scheduled interest payments on its outstanding Junior Subordinated Debt relating to its trust preferred securities due to prohibitions on such payments under provisions of regulatory agreements with the Company’s and the Bank’s federal and state banking regulators. On June 17, 2014, the Company paid all current and deferred interest on these outstanding Junior Subordinated Debt, and the Company has not deferred any subsequent interest payments through June 30, 2015.

44

On April 22, 2015, the Company entered in a Senior Subordinated Note Purchase Agreement with certain institutional accredited investors pursuant to which the Company sold $20.0 million in aggregate principal amount of its 6.50% Fixed-to-Floating Rate Subordinated Notes due 2025 ("Senior Subordinated Debt") to the investors at a price equal to 100% of the aggregate principal amount of the Senior Subordinated Debt. The Senior Subordinated Debt bears interest at an annual rate of 6.50%, payable semi-annually in arrears on May 1 and November 1 of each year ending on May 1, 2020. From and including May 1, 2020 to, but excluding, the maturity date, the Senior Subordinated Debt will bear interest at an annual rate, reset quarterly, equal to LIBOR determined on the determination date of the applicable interest period plus 502 basis points, payable quarterly in arrears on February 1, May 1, August 1 and November 1 of each year, beginning on August 1, 2020. The Company may, at its option, redeem, in whole or in part, the Senior Subordinated Debt as early as May 1, 2020, and any partial redemption would be made pro rata among all of the holders. At June 30, 2015, all of the Senior Subordinated Debt qualified as Tier 2 capital. At June 30, 2015, the remaining unamortized debt issuance costs related to the Senior Subordinated Debt totaled $860 thousand.

Note 14. Capital Requirements

The Company and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s and the Bank’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the Bank must meet specific capital guidelines that involve quantitative measures of their assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components (such as interest rate risk), risk weightings and other factors. Prompt corrective action provisions are not applicable to bank holding companies.

In July 2013, the federal bank regulatory agencies adopted rules to implement the Basel III capital framework and a revised framework for calculating risk-weighted assets (the “Basel III Capital Rules”). The Basel III Capital Rules were effective for the Company and the Bank on January 1, 2015 (subject to a phase-in period for certain portions of the new rules). For a summary of these final rules, see Part I, Item 1 “Business” under the heading “Regulation and Supervision – Capital Requirements” included in the 2014 Form 10-K.

45

As of June 30, 2015, the most recent notification from the Reserve Bank categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized, an institution must maintain minimum total risk-based, common equity Tier 1 (“CET1”) risk-based, Tier 1 risk-based, and Tier 1 leverage ratios as set forth in the following tables. There are no conditions or events since the notification that management believes have changed the Bank’s category. The capital ratios of the Company and the Bank as of June 30, 2015 and December 31, 2014, presented with related minimum regulatory guidelines, is as follows:

							Minimum To Be
As of June 30, 2015							Well-Capitalized
				Minimum			Under Prompt
				Capital			Corrective Action
	Actual Capital			Requirements			Provisions
CET1 to risk weighted assets:
Company		9.59	%		4.50	%		N/A
Bank		12.53	%		4.50	%		6.50	%
Tier 1 capital to risk weighted assets:
Company		12.58	%		6.00	%		N/A
Bank		12.53	%		6.00	%		8.00	%
Total capital to risk weighted assets:
Company		16.12	%		8.00	%		N/A
Bank		13.78	%		8.00	%		10.00	%
Tier 1 capital to average assets:
Company		9.44	%		4.00	%		N/A
Bank		9.39	%		4.00	%		5.00	%

							Minimum to be
As of December 31, 2014							Well-Capitalized
				Minimum			Under Prompt
				Capital			Corrective Action
	Actual Capital			Requirements			Provisions
Tier 1 capital to risk weighted assets:
Company		14.06	%		4.00	%		N/A
Bank		12.28	%		4.00	%		6.00	%
Total capital to risk weighted assets:
Company		15.31	%		8.00	%		N/A
Bank		13.53	%		8.00	%		10.00	%
Tier 1 capital to average assets:
Company		10.76	%		4.00	%		N/A
Bank		9.40	%		4.00	%		5.00	%

46

Note 15. Low Income Housing Tax Credits

The Company has invested in four separate housing equity funds at June 30, 2015. The general purpose of these funds is to encourage and assist participants in investing in low-income residential rental properties located in the Commonwealth of Virginia, develop and implement strategies to maintain projects as low-income housing, deliver Federal Low Income Housing Credits to investors, allocate tax losses and other possible tax benefits to investors, and to preserve and protect project assets. The investments in these funds were recorded as other assets on the consolidated balance sheets and were $3.0 million and $2.2 million at June 30, 2015 and December 31, 2014, respectively. These investments and related tax benefits have expected terms through 2032, with the majority maturing by 2027. Tax credits and other tax benefits recognized related to these investments during the six months ended June 30, 2015 and 2014 were $238 thousand and $191 thousand, respectively. Total projected tax credits to be received for 2015 are $366 thousand, which is based on the most recent quarterly estimates received from the funds. Additional capital calls expected for the funds totaled $1.0 million and $35 thousand at June 30, 2015 and December 31, 2014, respectively, and are included in other liabilities on the consolidated balance sheets.

Note 16. Accumulated Other Comprehensive Loss

The changes in accumulated other comprehensive loss for the six months ended June 30, 2015 and 2014 are summarized as follows:

(dollars in thousands)	Unrealized Securities Gains (Losses)			Adjustments Related to Pension Plan			Accumulated Other Comprehensive Loss
Balance at December 31, 2014	$	(1,954	)	$	(2,112	)	$	(4,066	)
Other comprehensive (loss) before reclassification and amortization		(597	)		-			(597	)
Reclassification adjustment for gains included in net income		(34	)		-			(34	)
Net amortization of unrealized losses on securities transferred from available for sale to held to maturity		64			-			64
Net current period other comprehensive (loss)		(567	)		-			(567	)
Balance at June 30, 2015	$	(2,521	)	$	(2,112	)	$	(4,633	)
Balance at December 31, 2013	$	(8,396	)	$	(472	)	$	(8,868	)
Other comprehensive income before reclassification and amortization		4,364			-			4,364
Reclassification adjustment for gains included in net income		(323	)		-			(323	)
Net amortization of unrealized losses on securities transferred from available for sale to held to maturity		80			-			80
Net current period other comprehensive income		4,121			-			4,121
Balance at June 30, 2014	$	(4,275	)	$	(472	)	$	(4,747	)

Reclassifications of gains on securities available for sale are reported in the consolidated statements of income as “Gain on sale of available for sale securities, net” with the corresponding income tax effect being reflected as a component of income tax expense. Amortization of unrealized losses on securities transferred from available for sale to held to maturity is included in interest income on investments (taxable or non-taxable, as appropriate) in the Company’s consolidated statements of income.

47

During the three and six months ended June 30, 2015 and 2014, the Company reported gains on the sale of available for sale securities and amortization of unrealized losses on securities transferred from available for sale to held to maturity as shown in the following table:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
(dollars in thousands)	2015			2014			2015			2014
Gains on sale of available for sale securities	$	26		$	109		$	51		$	489
Less: tax effect		(8	)		(37	)		(17	)		(166	)
Net gains on the sale of available for sale securities	$	18		$	72		$	34		$	323
Amortization of unrealized losses on securities transferred from available for sale to held to maturity	$	(57	)	$	(78	)	$	(97	)	$	(121	)
Less: tax effect		19			26			33			41
Net amortization of unrealized losses on securities transferred from available for sale to held to maturity	$	(38	)	$	(52	)	$	(64	)	$	(80	)

48

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

We present management’s discussion and analysis of financial information to aid the reader in understanding and evaluating our financial condition and results of operations. This discussion provides information about the major components of our results of operations, financial condition, liquidity and capital resources. This discussion should be read in conjunction with the Unaudited Consolidated Financial Statements and Notes to the Interim Consolidated Financial Statements presented elsewhere in this report and the Consolidated Financial Statements and Notes to Consolidated Financial Statements presented in the 2014 Form 10-K. Operating results include those of all our operating entities combined for all periods presented.

Internet Access to Corporate Documents

Information about the Company can be found on the Company’s investor relations website at http://www.evb.org. The Company posts its annual reports, quarterly reports, current reports, definitive proxy materials and any amendments to those documents as soon as reasonably practicable after they are electronically filed with or furnished to the SEC. All such filings are available at no charge. The information on the Company’s website is not, and shall not be deemed to be, a part of this Quarterly Report on Form 10-Q or incorporated into any other filings the Company makes with the SEC.

Forward Looking Statements

Certain statements contained in this Quarterly Report on Form 10-Q that are not historical facts may constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”), as amended. In addition, certain statements may be contained in the Company’s future filings with the SEC, in press releases, and in oral and written statements made by or with the approval of the Company that are not statements of historical fact and constitute forward-looking statements within the meaning of the Exchange Act. Examples of forward-looking statements include, but are not limited to: (i) projections of revenues, expenses, income or loss, income or loss per share, the payment or nonpayment of dividends, capital structure and other financial items; (ii) statements of plans, objectives and expectations of the Company or its management or Board of Directors, including those relating to products or services, the performance or disposition of portions of the Company’s asset portfolio, future changes to the Bank’s branch network and the payment of dividends; (iii) statements of future financial performance and economic conditions; (iv) statements regarding the adequacy of the allowance for loan losses; (v) statements regarding the effect of future sales of investment securities or foreclosed properties; (vi) statements regarding the Company’s liquidity; (vii) statements of management’s expectations regarding future trends in interest rates, real estate values, and economic conditions generally and in the Company’s markets; (viii) statements regarding future asset quality, including expected levels of charge-offs; (ix) statements regarding potential changes to laws, regulations or administrative guidance; (x) statements regarding strategic initiatives of the Company or the Bank and the results of these initiatives; and (xi) statements of assumptions underlying such statements. Words such as “believes,” “anticipates,” “expects,” “intends,” “targeted,” “continue,” “remain,” “will,” “should,” “may” and other similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements.

Forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from those in such statements. Factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to:

q factors that adversely affect our strategic and business initiatives, including, without limitation, changes in the economic or business conditions in the Company’s markets;

q our ability and efforts to assess, manage and improve our asset quality;

q the strength of the economy in our target market area, as well as general economic, market, political, or business factors;

q changes in the quality or composition of our loan or investment portfolios, including adverse developments in borrower industries or in the repayment ability of individual borrowers or issuers;

q concentrations in segments of the loan portfolio or declines in real estate values in the Company’s markets;

q the effects of our adjustments to the composition of our investment portfolio;

q the strength of the Company’s counterparties;

q an insufficient allowance for loan losses;

q our ability to meet the capital requirements of our regulatory agencies;

q changes in laws, regulations and the policies of federal or state regulators and agencies, the implementation of the Basel III capital framework and for calculating risk-weighted assets;

q changes in the interest rates affecting our deposits and loans;

49

q the loss of any of our key employees;

q failure, interruption or breach of any of the Company’s communication or information systems, including those provided by external vendors;

q our potential growth, including our entrance or expansion into new markets, the opportunities that may be presented to and pursued by us and the need for sufficient capital to support that growth;

q future mergers or acquisitions, if any;

q changes in government monetary policy, interest rates, deposit flow, the cost of funds, and demand for loan products and financial services;

q our ability to maintain internal control over financial reporting;

q our ability to realize our deferred tax assets, including in the event we experience an ownership change as defined by Section 382 of the Code;

q our ability to raise capital as needed by our business;

q our reliance on secondary sources, such as FHLB advances, sales of securities and loans and federal funds lines of credit from correspondent banks to meet our liquidity needs; and

q other circumstances, many of which are beyond our control.

Although the Company believes that its expectations with respect to the forward-looking statements are based upon reliable assumptions and projections within the bounds of its knowledge of its business and operations, there can be no assurance that actual results, performance, actions or achievements of the Company will not differ materially from any future results, performance, actions or achievements expressed or implied by such forward-looking statements. Readers should not place undue reliance on such statements, which speak only as of the date of this report. The Company does not undertake any steps to update any forward-looking statement that may be made from time to time by it or on its behalf. For additional information on risk factors that could affect the Company’s forward-looking statements, see the Company’s Annual Report on Form 10-K for the year ended December 31, 2014 and other reports filed with the SEC.

Critical Accounting Policies

The preparation of financial statements requires us to make estimates and assumptions. Those accounting policies with the greatest uncertainty and that require our most difficult, subjective or complex judgments affecting the application of these policies, and the likelihood that materially different amounts would be reported under different conditions, or using different assumptions, are described below.

Allowance for Loan Losses

The Company establishes the allowance for loan losses through charges to earnings in the form of a provision for loan losses. Loan losses are charged against the allowance when we believe that the collection of the principal is unlikely. Subsequent recoveries of losses previously charged against the allowance are credited to the allowance. The allowance represents an amount that, in our judgment, will be adequate to absorb any losses on existing loans that may become uncollectible. Our judgment in determining the level of the allowance is based on evaluations of the collectability of loans while taking into consideration such factors as trends in delinquencies and charge-offs, changes in the nature and volume of the loan portfolio, current economic conditions that may affect a borrower’s ability to repay and the value of collateral, overall portfolio quality and review of specific potential losses. This evaluation is inherently subjective because it requires estimates that are susceptible to significant revision as more information becomes available. For more information see the section titled “Asset Quality” within this Item 2.

Impairment of Loans

The Company considers a loan impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal and interest when due, according to the contractual terms of the loan agreement. The Company does not consider a loan impaired during a period of insignificant payment shortfalls if we expect the ultimate collection of all amounts due. Impairment is measured on a loan by loan basis for real estate (including multifamily residential, construction, farmland and non-farm, non-residential) and commercial loans 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. Large groups of smaller balance homogeneous loans, representing consumer, one to four family residential first and seconds and home equity lines, are collectively evaluated for impairment. The Company maintains a valuation allowance to the extent that the measure of the impaired loan is less than the recorded investment. TDRs are also considered impaired loans. A TDR occurs when the Company, for economic or legal reasons related to the borrower’s financial condition, grants a concession (including, without limitation, rate reductions to below-market rates, payment deferrals, forbearance and, in some cases, forgiveness of principal or interest) to the borrower that it would not otherwise consider. For more information see the section titled “Asset Quality” within Item 2.

50

Loans Acquired in a Business Combination

The Company accounts for loans acquired in a business combination, such as the Company’s acquisition of VCB, in accordance with the FASB ASC Topic 805, “Business Combinations.” Accordingly, acquired loans are segregated between PCI loans and purchased performing loans and are recorded at estimated fair value on the date of acquisition without the carryover of the related allowance for loan losses.

PCI loans are those for which there is evidence of credit deterioration since origination and for which it is probable at the date of acquisition that the Company will not collect all contractually required principal and interest payments. When determining fair market value, PCI loans were aggregated into pools of loans based on common characteristics as of the date of acquisition such as loan type, date of origination, and evidence of credit quality deterioration such as internal risk grades and past due and nonaccrual status. The Company estimates the amount and timing of expected cash flows for each loan or pool, and the expected cash flows in excess of amount paid is recorded as interest income over the remaining life of the loan or pool (accretable yield). The excess of the loan’s or pool’s contractual principal and interest over expected cash flows is not recorded (nonaccretable difference). Over the life of the loan or pool, expected cash flows continue to be estimated. If the present value of expected cash flows is less than the carrying amount, a loss is recorded as a provision for loan losses. If the present value of expected cash flows is greater than the carrying amount, it is recognized as part of future interest income. Loans not designated PCI loans as of the acquisition date are designated purchased performing loans. The Company accounts for purchased performing loans using the contractual cash flows method of recognizing discount accretion based on the acquired loans’ contractual cash flows. Purchased performing loans are recorded at fair value, including a credit discount. The fair value discount is accreted as an adjustment to yield over the estimated lives of the loans. There is no allowance for loan losses established at the acquisition date for purchased performing or PCI loans. A provision for loan losses is recorded for any deterioration in these loans subsequent to the acquisition.

Impairment of Securities

Impairment of securities occurs when the fair value of a security is less than its amortized cost. For debt securities, impairment is considered other-than-temporary and recognized in its entirety in net income if either (i) the Company intends to sell the security or (ii) it is more likely than not that the Company will be required to sell the security before recovery of its amortized cost basis. If, however, the Company does not intend to sell the security and it is not more likely than not that the Company will be required to sell the security before recovery, the Company must determine what portion of the impairment is attributable to a credit loss, which occurs when the amortized cost basis of the security exceeds the present value of the cash flows expected to be collected from the security. If there is no credit loss, there is no other-than-temporary impairment. If there is a credit loss, other-than-temporary impairment exists, and the credit loss must be recognized in net income and the remaining portion of impairment must be recognized in other comprehensive income. For equity securities, impairment is considered to be other-than-temporary based on the Company’s ability and intent to hold the investment until a recovery of fair value. Other-than-temporary impairment of an equity security results in a write-down that must be included in net income. The Company regularly reviews each investment security for other-than-temporary impairment based on criteria that include the extent to which cost exceeds market price, the duration of that market decline, the financial health of and specific prospects for the issuer, the Company’s best estimate of the present value of cash flows expected to be collected from debt securities, the Company’s intention with regard to holding the security to maturity and the likelihood that the Company would be required to sell the security before recovery.

Other Real Estate Owned

Real estate acquired through, or in lieu of, foreclosure is held for sale and is stated at estimated fair market value of the property, less estimated disposal costs, if any. Any excess of cost over the estimated fair market value less costs to sell at the time of acquisition is charged to the allowance for loan losses. The estimated fair market value is reviewed periodically by management and any write-downs are charged against current earnings.

51

Goodwill

With the adoption of ASU 2011-08, “Intangible-Goodwill and Other-Testing Goodwill for Impairment,” the Company is no longer required to perform a test for impairment unless, based on an assessment of qualitative factors related to goodwill, it determines that it is more likely than not that the fair value of goodwill is less than its carrying amount. If the likelihood of impairment is more than 50 percent, the Company must perform a test for impairment and we may be required to record impairment charges. In assessing the recoverability of the Company’s goodwill, the Company must make assumptions in order to determine the fair value of the respective assets. Major assumptions used in the impairment analysis were discounted cash flows, merger and acquisition transaction values (including as compared to tangible book value), and stock market capitalization. The Company chose to bypass the preliminary assessment of qualitative impairment factors and completed its annual goodwill impairment test during the fourth quarter of 2014 through the use of an independent third party specialist and determined there was no impairment to be recognized in 2014. If the underlying estimates and related assumptions change in the future, the Company may be required to record impairment charges.

Retirement Plan

The Company has historically maintained a defined benefit pension plan. Effective January 28, 2008, the Company took action to freeze the plan with no additional contributions for a majority of participants. Employees age 55 or greater or with 10 years of credited service were grandfathered in the plan. No additional participants have been added to the plan. The plan was again amended on February 28, 2011 to freeze the plan with no additional contributions for grandfathered participants. Benefits for all participants have remained frozen in the plan since such action was taken. Effective January 1, 2012, the plan was amended and restated as a cash balance plan. Under a cash balance plan, participant benefits are stated as an account balance. An opening account balance was established for each participant based on the lump sum value of his or her accrued benefit as of December 31, 2011 in the original defined benefit pension plan. Each participant’s account will be credited with an “interest” credit each year. The interest rate for each year is determined as the average annual interest rate on the 2 year U.S. Treasury securities for the month of December preceding the plan year. Plan assets, which consist primarily of mutual funds invested in marketable equity securities and corporate and government fixed income securities, are valued using market quotations. The Company’s actuary determines plan obligations and annual pension expense using a number of key assumptions. Key assumptions may include the discount rate, the estimated return on plan assets and the anticipated rate of compensation increases. Changes in these assumptions in the future, if any, or in the method under which benefits are calculated may impact pension assets, liabilities or expense.

Accounting for Income Taxes

Determining the Company’s effective tax rate requires judgment. In the ordinary course of business, there are transactions and calculations for which the ultimate tax outcomes are uncertain. In addition, the Company’s tax returns are subject to audit by various tax authorities. Although we believe that the estimates are reasonable, no assurance can be given that the final tax outcome will not be materially different than that which is reflected in the income tax provision and accrual.

The realization of deferred income tax assets is assessed and a valuation allowance is recorded if it is “more likely than not” that all or a portion of the deferred tax asset will not be realized.  “More likely than not” is defined as greater than a 50% chance.  Management considers all available evidence, both positive and negative, to determine whether, based on the weight of that evidence, a valuation allowance is needed. For more information, see Item 1. “Financial Statements,” under the heading “Note 5. Deferred Income Taxes” in this Quarterly Report on Form 10-Q and Item 8. “Financial Statements and Supplementary Data,” under the headings “Note 1. Summary of Significant Accounting Policies” and “Note 11. Income Taxes” in the 2014 Form 10-K.

For further information concerning accounting policies, refer to Item 8. “Financial Statements and Supplementary Data,” under the heading “Note 1. Summary of Significant Accounting Policies” in the 2014 Form 10-K.

Business Overview

The Company provides a broad range of personal and commercial banking services including commercial, consumer and real estate loans. We complement our lending operations with an array of retail and commercial deposit products and fee-based services. Our services are delivered locally by well-trained and experienced bankers, whom we empower to make decisions at the local level, so they can provide timely lending decisions and respond promptly to customer inquiries. Having been in many of our markets for over 100 years, we have established relationships with and an understanding of our customers. We believe that, by offering our customers personalized service and a breadth of products, we can compete effectively as we expand within our existing markets and into new markets.

52

The Company is committed to delivering strong, long-term earnings using a prudent allocation of capital, in business lines where we have demonstrated the ability to compete successfully. During the first six months of 2015, the national and local economies continued to show measured signs of recovery with the main challenges continuing to be persistent unemployment above historical levels and uneven economic growth. Macro-economic and political issues continue to temper the global economic outlook and, as such, the Company remains cautiously optimistic regarding the limited signs of improvement seen in our local markets. Despite this, the Company believes that our local markets are poised for stronger growth in the coming months and years than the economic recovery has provided in our markets in recent periods.

Since 2013 the Company has completed strategic initiatives that have significantly improved the Company’s financial condition. These initiatives represent significant progress toward the Company’s long-term goal of growing a more robust community banking business, and will provide the platform for continued growth and success in future periods. These initiatives include:

· Raising in 2013 an aggregate of $50.0 million of gross proceeds from sales of the Company’s common stock and Series B Preferred Stock in private placements to certain institutional investors ($45.0 million in gross proceeds) and a rights offering to existing shareholders ($5.0 million in gross proceeds) (collectively, the “2013 Capital Initiative”);

· Using a portion of the proceeds from the 2013 Capital Initiative to prepay long-term, higher-rate FHLB advances and to accelerate the disposition of adversely classified assets;

· Paying all current and previously deferred interest and all current and previously deferred, but accumulated, dividends on the Company’s Junior Subordinated Debt and Series A Preferred Stock, respectively;

· Redeeming all of the Company’s Series A Preferred Stock, which eliminated one of the Company’s most expensive sources of capital;

· Acquiring VCB effective November 14, 2014, thus adding three branches to the Bank’s branch network and an aggregate of $128.9 million of assets to the Company’s balance sheet. All former VCB branches have been fully integrated into the Bank’s branch network and operate as branches of the Bank, expanding the Bank’s branch network into the Virginia cities of Hampton, Newport News and Williamsburg;

· Opening a loan production office in Chesterfield County, Virginia to increase the Bank’s presence in the Richmond metropolitan area;

· Declaring dividends to holders of both the Company’s common stock and Series B Preferred Stock of $0.01 as of March 6, 2015 and May 8, 2015, which were paid on March 20, 2015 and May 22, 2015, respectively; and

· Raising in the second quarter of 2015 an aggregate of $20.0 million in gross proceeds from sales of Senior Subordinated Debt in private placements to certain institutional investors. A portion of these proceeds were used to redeem the remainder of the Company’s Series A Preferred Stock and to repurchase the Warrant that was issued to the Treasury through the Capital Purchase Program.

The Company expects to recognize the continued benefits of these initiatives during the remainder of 2015, including through lower interest expense related to the extinguished FHLB advances, elimination of the Series A Preferred Stock Dividend as of June 15, 2015, additional interest income and cost savings related to the acquisition of VCB and positive contributions to the Company’s loan portfolio generated by the three branches acquired from VCB and the Chesterfield County, Virginia loan production office. During the remainder of 2015 the Company also plans to continue its focus on developing online and mobile banking options and offering these products and services to the Bank’s customers.

While the Company has largely worked through the economic challenges of the past few years and believes that it is positioned for future success, in significant part due to the successful execution of the strategic initiatives summarized above, the Company will continue to evaluate business development and other strategic initiatives and opportunities it identifies during 2015. These opportunities and initiatives could include opportunities to grow the Company’s business or strengthen the Bank’s branch network in existing or new markets. Also, during the first half of 2015, the Company engaged an independent consultant to conduct a comprehensive assessment of its operations. This assessment identified operating efficiencies and revenue enhancement opportunities. Throughout the balance of 2015 and forward, we plan to evaluate and implement strategies that we believe will improve our performance and profitability and will increase the value of our company.

53

Summary of Second Quarter 2015 and Year to Date Operating Results and Financial Condition

Table 1: Performance Summary

	Three Months Ended June 30,
(dollars in thousands, except per share data)	2015			2014
Net income (1)	$	1,507		$	1,655
Net income available to common shareholders (1)	$	1,341		$	1,114
Basic net income per common share	$	0.07		$	0.06
Diluted net income per common share	$	0.07		$	0.06
Return on average assets (annualized)		0.45	%		0.43	%
Return on average common shareholders' equity (annualized)		5.29	%		4.76	%
Net interest margin (tax equivalent basis) (2)		3.93	%		3.82	%

	Six Months Ended June 30,
(dollars in thousands, except per share data)	2015			2014
Net income (1)	$	3,116		$	3,651
Net income available to common shareholders (1)	$	2,730		$	2,592
Basic net income per common share	$	0.15		$	0.15
Diluted net income per common share	$	0.15		$	0.15
Return on average assets (annualized)		0.46	%		0.50	%
Return on average common shareholders' equity (annualized)		5.46	%		5.68	%
Net interest margin (tax equivalent basis) (2)		3.97	%		3.88	%

(1) The difference between net income and net income available to common shareholders is the effective dividend to holders of the Company’s Series A Preferred Stock. The Company redeemed the remaining shares of Series A Preferred Stock during the second quarter of 2015.

(2) For more information on the calculation of net interest margin on a tax equivalent basis, see the average balance sheet and net interest margin analysis for the three and six months ended June 30, 2015 and 2014 contained in "Results of Operations" in this Item 2.

For the three months ended June 30, 2015, the following were significant factors in the Company’s reported results:

· Increase in net interest income of $1.5 million from the same period in 2014, principally due to a $1.8 million increase in interest and fees on loans driven primarily by loans acquired through the acquisition of VCB, partially offset by a decrease in interest income on investment securities and an increase in interest expense associated with the issuance of $20.0 million in Senior Subordinated Debt during the second quarter of 2015;

· Net interest margin (tax equivalent basis) increased 11 basis points to 3.93% during the second quarter of 2015 as compared to 3.82% for the same period in 2014;

· Increase in salaries and employee benefits of $775 thousand from the same period in 2014, primarily due to increased staff levels and support positions associated with the addition of three branches through the acquisition of VCB;

· Operating results were impacted by accounting adjustments which were recorded in relation to the VCB acquisition. As a result, yields on acquired loans increased and were partially offset by amortization of the core deposit intangible and the fair value adjustment for time deposits. The net accretion attributable to these adjustments was $224 thousand;

· No provision for loan losses was recorded during the second quarter of 2015 or 2014. Net charge-offs increased to $371 thousand for the second quarter of 2015 from $288 thousand in the same period of 2014;

· Consultant fees increased $267 thousand during the second quarter of 2015 as compared to the same period in 2014 and were driven primarily by the Company’s engagement of an independent consultant to conduct a comprehensive assessment of its operations;

· Other operating expenses increased $491 thousand during the second quarter of 2015 as compared to the same period in 2014 and were driven primarily by increased costs associated with outsourcing of the Bank’s core information technology processing; and

54

· Decrease in the effective dividend on preferred stock of $375 thousand from the same period in 2014. This was due to the redemption of the Company’s Series A Preferred Stock (10,000, 5,000 and 9,000 shares on October 15, 2014, January 15, 2015 and June 15, 2015, respectively).

For the six months ended June 30, 2015, the following were significant factors in the Company’s reported results:

· Increase in net interest income of $2.8 million from the same period in 2014, principally due to a $3.5 million increase in interest and fees on loans driven primarily by loans acquired through the acquisition of VCB, partially offset by a decrease in interest income on investment securities and an increase in interest expense associated with the issuance of $20.0 million in Senior Subordinated Debt;

· Increase in net interest margin (tax equivalent basis) of 9 basis points to 3.97% for the six months ended June 30, 2015 as compared to 3.88% for the six months ended June 30, 2014;

· The net accretion attributable to accounting adjustments related to the VCB acquisition was $402 thousand;

· No provision for loan losses was recorded during the six months ended June 30, 2015 compared to $250 thousand for the same period in 2014. Net charge-offs increased to $734 thousand for the six months ended June 30, 2015 from $399 thousand in the same period of 2014;

· Nonperforming assets at June 30, 2015 decreased $1.5 million from June 30, 2014, primarily due to a $2.5 million decline in nonaccrual loans which was partially offset by a $743 thousand increase in other real estate owned;

· Expenses related to FDIC insurance premiums declined to $426 thousand as compared to $637 thousand for the same period in 2014. The Company faced lower FDIC insurance assessment rates following termination of its memorandum of understanding with its federal and state banking regulators (the “MOU”), which was partially offset by higher average asset balances due to the VCB acquisition;

· Consultant fees increased $329 thousand for the six months ended June 30, 2015 as compared to the same period in 2014 and were driven primarily by the Company’s engagement of an independent consultant to conduct a comprehensive assessment of its operations;

· Other operating expenses increased $965 thousand for the six months ended June 30, 2015 as compared to the same period in 2014 and were driven primarily by increased costs associated with outsourcing of the Bank’s core information technology processing; and

· Decrease in the effective dividend on preferred stock of $673 thousand from the same period in 2014. This was due to the redemption of the Company’s Series A Preferred Stock (10,000, 5,000 and 9,000 shares on October 15, 2014, January 15, 2015 and June 15, 2015, respectively).

Results of Operations

Net Interest Income and Net Interest Margin

Net interest income, the fundamental source of the Company’s earnings, is defined as the difference between income on earning assets and the cost of funds supporting those assets. Significant categories of earning assets are loans and investment securities, while deposits, short-term borrowings, Junior Subordinated Debt and Senior Subordinated Debt represent the major portion of interest-bearing liabilities. The level of net interest income is impacted primarily by variations in the volume and mix of these assets and liabilities, as well as changes in interest rates when compared to previous periods of operations and the yield of our interest earning assets compared to our cost of funding these assets.

Net interest margin is calculated by expressing tax-equivalent net interest income as a percentage of average interest earning assets, and represents the Company’s net yield on its earning assets. Net interest margin is an indicator of the Company’s effectiveness in generating income from its earning assets. The net interest margin is affected by the structure of the balance sheet as well as by competitive pressures, Federal Reserve policies and the economy. The spread that can be earned between interest earning assets and interest-bearing liabilities is also dependent to a large extent on the slope of the yield curve, which in recent periods has been significantly impacted by initiatives of the Federal Reserve intended to lower long-term interest rates.

Table 2 presents the average balances of assets and liabilities, the average yields earned on such assets (on a tax equivalent basis) and rates paid on such liabilities, and the net interest margin for the three and six months ended June 30, 2015 and 2014.

55

Table 2: Average Balance Sheet and Net Interest Margin Analysis

(dollars in thousands)

	Three Months Ended June 30,
	2015								2014
	Average			Income/		Yield/			Average			Income/		Yield/
	Balance			Expense		Rate (1)			Balance			Expense		Rate (1)
Assets:
Securities
Taxable	$	221,747		$	1,185		2.14	%	$	236,634		$	1,338		2.27	%
Restricted securities		7,198			96		5.35	%		6,779			89		5.27	%
Tax exempt (2)		38,794			385		3.99	%		29,521			294		3.99	%
Total securities		267,739			1,666		2.50	%		272,934			1,721		2.53	%
Interest bearing deposits in other banks		6,886			4		0.23	%		5,097			4		0.31	%
Federal funds sold		188			-		0.00	%		121			-		0.00	%
Loans, net of unearned income (3)		819,061			10,382		5.08	%		685,491			8,562		5.01	%
Total earning assets		1,093,874			12,052		4.42	%		963,643			10,287		4.28	%
Less allowance for loan losses		(12,524	)							(14,898	)
Total non-earning assets		113,370								98,403
Total assets	$	1,194,720							$	1,047,148
Liabilities & Shareholders' Equity:
Interest-bearing deposits
Checking	$	289,473		$	269		0.37	%	$	259,279		$	233		0.36	%
Savings		92,733			31		0.13	%		89,334			30		0.13	%
Money market savings		163,105			190		0.47	%		113,929			116		0.41	%
Large dollar certificates of deposit (4)		107,358			173		0.65	%		99,525			307		1.24	%
Other certificates of deposit		126,341			271		0.86	%		124,096			292		0.94	%
Total interest-bearing deposits		779,010			934		0.48	%		686,163			978		0.57	%
Federal funds purchased and repurchase agreements		8,275			13		0.63	%		3,274			5		0.61	%
Short-term borrowings		72,526			37		0.20	%		68,547			36		0.21	%
Junior subordinated debt		10,310			81		3.15	%		10,310			88		3.42	%
Senior subordinated debt		15,034			264		7.04	%		-			-		0.00	%
Total interest-bearing liabilities		885,155			1,329		0.60	%		768,294			1,107		0.58	%
Noninterest-bearing liabilities
Demand deposits		171,957								134,605
Other liabilities		6,947								4,801
Total liabilities		1,064,059								907,700
Shareholders' equity		130,661								139,448
Total liabilities and shareholders' equity	$	1,194,720							$	1,047,148
Net interest income (2)				$	10,723							$	9,180
Interest rate spread (2)(5)							3.82	%							3.70	%
Interest expense as a percent of average earning assets							0.49	%							0.46	%
Net interest margin (2)(6)							3.93	%							3.82	%

Notes:

(1) Yields are annualized and based on average daily balances.

(2) Income and yields are reported on a tax equivalent basis assuming a federal tax rate of 34%, with a $117 adjustment for 2015 and a $90 adjustment in 2014.

(3) Nonaccrual loans have been included in the computations of average loan balances.

(4) Large dollar certificates of deposit are certificates issued in amounts of $100 or greater.

(5) Interest rate spread is the average yield on earning assets, calculated on a fully taxable basis, less the average rate incurred on interest-bearing liabilities.

(6) Net interest margin is the net interest income, calculated on a fully taxable basis, expressed as a percentage of average earning assets.

56

(dollars in thousands)
	Six Months Ended June 30,
	2015								2014
	Average			Income/		Yield/			Average			Income/		Yield/
	Balance			Expense		Rate (1)			Balance			Expense		Rate (1)
Assets:
Securities
Taxable	$	217,733		$	2,387		2.21	%	$	238,849		$	2,845		2.40	%
Restricted securities		7,490			204		5.49	%		7,006			191		5.50	%
Tax exempt (2)		38,504			760		3.98	%		29,893			600		4.05	%
Total securities		263,727			3,351		2.56	%		275,748			3,636		2.66	%
Interest bearing deposits in other banks		6,926			8		0.23	%		6,288			8		0.26	%
Federal funds sold		232			-		0.00	%		132			-		0.00	%
Loans, net of unearned income (3)		818,059			20,573		5.07	%		681,821			17,112		5.06	%
Total earning assets		1,088,944			23,932		4.43	%		963,989			20,756		4.34	%
Less allowance for loan losses		(12,714	)							(14,842	)
Total non-earning assets		113,530								98,946
Total assets	$	1,189,760							$	1,048,093
Liabilities & Shareholders' Equity:
Interest-bearing deposits
Checking	$	285,428		$	523		0.37	%	$	258,234		$	461		0.36	%
Savings		92,033			60		0.13	%		89,757			60		0.13	%
Money market savings		164,421			385		0.47	%		116,494			241		0.42	%
Large dollar certificates of deposit (4)		108,536			466		0.87	%		100,143			608		1.22	%
Other certificates of deposit		129,347			551		0.86	%		124,591			595		0.96	%
Total interest-bearing deposits		779,765			1,985		0.51	%		689,219			1,965		0.57	%
Federal funds purchased and repurchase agreements		10,055			31		0.62	%		3,329			10		0.61	%
Short-term borrowings		77,453			79		0.21	%		70,754			71		0.20	%
Junior subordinated debt		10,310			161		3.15	%		10,310			176		3.44	%
Senior subordianted debt		7,558			264		7.04	%		-			-		0.00	%
Total interest-bearing liabilities		885,141			2,520		0.57	%		773,612			2,222		0.58	%
Noninterest-bearing liabilities
Demand deposits		166,823								132,074
Other liabilities		6,796								4,745
Total liabilities		1,058,760								910,431
Shareholders' equity		131,000								137,662
Total liabilities and shareholders' equity	$	1,189,760							$	1,048,093
Net interest income (2)				$	21,412							$	18,534
Interest rate spread (2)(5)							3.86	%							3.76	%
Interest expense as a percent of average earning assets							0.47	%							0.46	%
Net interest margin (2)(6)							3.97	%							3.88	%

Notes:

(1) Yields are annualized and based on average daily balances.

(2) Income and yields are reported on a tax equivalent basis assuming a federal tax rate of 34%, with a $232 adjustment for 2015 and a $183 adjustment in 2014.

(3) Nonaccrual loans have been included in the computations of average loan balances.

(4) Large dollar certificates of deposit are certificates issued in amounts of $100 or greater.

(5) Interest rate spread is the average yield on earning assets, calculated on a fully taxable basis, less the average rate incurred on interest-bearing liabilities.

(6) Net interest margin is the net interest income, calculated on a fully taxable basis, expressed as a percentage of average earning assets.

57

Interest Income and Expense

Net interest income and net interest margin

Net interest income in the second quarter of 2015 increased $1.5 million, or 16.7%, when compared to the second quarter of 2014. Net interest income for the six months ended June 30, 2015 increased $2.8 million, or 15.4%, as compared to the first half of 2014. The Company's net interest margin increased to 3.93% and 3.97% for the three and six months ended June 30, 2015, representing 11 and 9 basis point increases, respectively, over the Company's net interest margins for the three and six months ended June 30, 2014. The most significant factors impacting net interest income during these periods were as follows:

Positive Impacts:

· Average loan balances increased primarily due to the acquisition of VCB; and

· Average rates paid on total interest-bearing deposits decreased for the three and six months ended June 30, 2015. However, higher average interest-bearing deposit balances during the first half of 2015 over the comparable 2014 period, due to interest-bearing deposits added from the VCB acquisition, offset the favorable impacts of the lower rates paid on interest-bearing deposits and drove a slight increase in interest expense attributable to the Company’s deposit portfolio.

Negative Impacts:

· Decreases in the average balances of and average rates earned on total investment securities for both the three and six months ended June 30, 2015; and

· Private placement of $20.0 million of Senior Subordinated Debt resulting in increases to total average interest-bearing liabilities and related interest expense. The issuance of the Senior Subordinated Debt was the primary driver of the 7 basis point decline in the Company’s net interest margin from the first quarter of 2015 to the second quarter of 2015.

Total interest and dividend income

Total interest and dividend income increased 17.0% and 15.2% for the three and six months ended June 30, 2015, respectively, as compared to the same periods in 2014. The increase in total interest and dividend income during the three and six months ended June 30, 2015 was primarily driven by an increase in average loan balances and slight increases in average loan yields, and partially offset by a decrease in average investment securities balances and declines in investment securities yields.

Loans

Average loan balances increased for the three and six month periods ended June 30, 2015, as compared to the same periods in 2014, due primarily to the acquisition of VCB loans totaling $101.5 million as of November 14, 2014, net of fair value adjustments, the purchase of $11.3 million in performing one-to-four family residential mortgage loans and government guaranteed loans in June 2015, organic loan growth, the opening of a new loan production office in Chesterfield County, Virginia in the second quarter of 2014 and the origination of a line of credit to fund loan originations through Southern Trust Mortgage, LLC (balance of $12.3 million as of June 30, 2015) in the second quarter of 2014.  Despite a 3% increase in loans during the current period, loan growth came in lower than our expectations.  Loan growth in the Company’s rural markets, primarily on the consumer side, remains weak while competition for commercial loans, especially in the Richmond and Tidewater markets, has been and we expect will continue to be intense given the historically low rate environment.  The Company’s average loan balances increased $133.6 million for the three months ended June 30, 2015 and increased $136.2 million for the six months ended June 30, 2015, as compared to average loan balances for the same periods in 2014.  Total average loans were 74.9% of total average interest-earning assets for the three months ended June 30, 2015, compared to 71.1% for the three months ended June 30, 2014.  Total average loans were 75.1% of total average interest-earning assets for the six months ended June 30, 2015, compared to 70.7% for the six months ended June 30, 3014.

Investment securities

Average investment securities balances declined 1.9% and 4.4% for the three and six month periods ended June 30, 2015, respectively, as compared to the same periods in 2014. These declines were the result of the Company moving towards its long term target of the investment securities portfolio comprising 20% of the Company’s total assets, the lack of investment opportunities with acceptable risk-adjusted rates of return and liquidity needs to support the Company’s operations and strategic initiatives. The yields on investment securities decreased 3 and 10 basis points for the three and six months ended June 30, 2015, respectively, as compared to the same periods in 2014, driven by lower interest rates and sales/calls of higher yielding municipal securities since the first and second quarters of 2014.

58

Interest-bearing deposits

Average total interest-bearing deposit balances increased for the three and six month periods ended June 30, 2015, as compared to the same periods in 2014, primarily due to the acquisition of VCB’s interest-bearing deposit liabilities, which totaled $85.6 million as of November 14, 2014.

Borrowings

Average total borrowings increased for the three and six month periods ended June 30, 2015, as compared to the same periods in 2014, primarily due to the issuance of $20.0 million in Senior Subordinated Debt in April 2015, the assumption of $8.7 million in short-term FHLB advances as a result of the VCB acquisition and increased repurchase agreement balances related to a significant customer deposit relationship.

Noninterest Income

Noninterest income is comprised of all sources of income other than interest and dividend income on our earning assets. Significant revenue items include fees collected on certain deposit account transactions, debit and credit card fees, fees from other general services, earnings from other investments we own in part or in full, gains or losses from investments, and gains or losses on sales of investment securities, loans, and fixed assets.

The following tables depict the components of noninterest income for the three and six months ended June 30, 2015 and 2014:

Table 3: Noninterest Income
	Three Months Ended June 30,
(dollars in thousands)	2015			2014		Change $			Change %
Service charges and fees on deposit accounts	$	673		$	837	$	(164	)		-19.6	%
Debit/credit card fees		442			378		64			16.9	%
Gain on sale of available for sale securities, net		26			109		(83	)		-76.1	%
(Loss) on sale of bank premises and equipment		(30	)		-		(30	)		-100.0	%
Other operating income		421			315		106			33.7	%
Total noninterest income	$	1,532		$	1,639	$	(107	)		-6.5	%

	Six Months Ended June 30,
(dollars in thousands)	2015			2014		Change $			Change %
Service charges and fees on deposit accounts	$	1,336		$	1,659	$	(323	)		-19.5	%
Debit/credit card fees		805			687		118			17.2	%
Gain on sale of available for sale securities, net		51			489		(438	)		-89.6	%
(Loss) gain on sale of bank premises and equipment		(27	)		5		(32	)		-640.0	%
Other operating income		886			691		195			28.2	%
Total noninterest income	$	3,051		$	3,531	$	(480	)		-13.6	%

Key changes in the components of noninterest income for the three and six months ended June 30, 2015, as compared to the same periods in 2014, are discussed below:

· Service charges and fees on deposit accounts declined due to decreases in service charge and overdraft fees on checking accounts;

· Debit/credit card fees increased primarily due to an increase in debit card fees driven by the acquisition of VCB and a higher utilization rate of debit cards by the Company’s customer base;

59

· Gain on sale of available for sale securities, net decreased for the second quarter of 2015 compared to the same period of 2014 primarily as a result of the Company adjusting the composition of the investment securities portfolio as part of the Company’s overall asset/liability management strategy. Additionally, gains decreased during the first six months of 2015 primarily due to the sale of a portion of its previously impaired agency preferred securities (FNMA & FHLMC) during the first quarter of 2014, and because the Company did not generate comparable gains during 2015;

· (Loss) gain on sale of bank premises and equipment was primarily due to the sale of the Bank’s former Heathsville branch building as operations were relocated to a new facility, with no similar losses occurring during 2014; and

· Other operating income increased primarily due to higher earnings from the Bank’s subsidiaries, its investment in Bankers Insurance, LLC and bank owned life insurance policies, partially offset by higher losses from the Bank’s investments in Housing Equity Funds. Additionally, other operating income includes earnings from the Bank’s investments in Southern Trust Mortgage, LLC (acquired 4.9% ownership on May 15, 2014) and Bankers Title, LLC (acquired 6.0% ownership on October 1, 2014).

Noninterest Expense

Noninterest expense includes all expenses with the exception of those paid for interest on borrowings and deposits. Significant expense items included in this component are salaries and employee benefits, occupancy and equipment expenses and other operating expenses.

The following tables depict the components of noninterest expense for the three and six months ended June 30, 2015 and 2014:

Table 4: Noninterest Expense
	Three Months Ended June 30,
(dollars in thousands)	2015			2014		Change $			Change %
Salaries and employee benefits	$	5,523		$	4,748	$	775			16.3	%
Occupancy and equipment expenses		1,392			1,267		125			9.9	%
Telephone		210			211		(1	)		-0.5	%
FDIC expense		254			305		(51	)		-16.7	%
Consultant fees		546			279		267			95.7	%
Collection, repossession and other real estate owned		126			89		37			41.6	%
Marketing and advertising		347			270		77			28.5	%
(Gain) loss on sale of other real estate owned		(6	)		28		(34	)		-121.4	%
Impairment losses on other real estate owned		-			6		(6	)		-100.0	%
Other operating expenses		1,807			1,316		491			37.3	%
Total noninterest expenses	$	10,199		$	8,519	$	1,680			19.7	%

	Six Months Ended June 30,
(dollars in thousands)	2015		2014		Change $			Change %
Salaries and employee benefits	$	11,113	$	9,334	$	1,779			19.1	%
Occupancy and equipment expenses		2,913		2,586		327			12.6	%
Telephone		407		422		(15	)		-3.6	%
FDIC expense		426		637		(211	)		-33.1	%
Consultant fees		951		622		329			52.9	%
Collection, repossession and other real estate owned		215		156		59			37.8	%
Marketing and advertising		668		437		231			52.9	%
Loss on sale of other real estate owned		26		15		11			73.3	%
Impairment losses on other real estate owned		5		11		(6	)		-54.5	%
Other operating expenses		3,442		2,477		965			39.0	%
Total noninterest expenses	$	20,166	$	16,697	$	3,469			20.8	%

60

Key changes in the components of noninterest expense for the three and six months ended June 30, 2015, as compared to the same periods in 2014, are discussed below:

· Salaries and employee benefits increased due to annual merit salary increases, increased restricted stock compensation expense, increased bonuses, commissions and other incentive compensation and valuation adjustments related to pension plan liabilities, partially offset by an increase in deferred compensation on loan originations and reduced expense related to paid time off accrual adjustments for the six month period. Additionally, the Bank incurred higher personnel costs associated with increased staff levels and support positions due to the addition of three branches through the acquisition of VCB;

· Occupancy and equipment expenses increased primarily due to depreciation expense associated with certain acquired VCB assets and increased rent, building repairs and maintenance and real estate tax expenses related to the acquired VCB branch locations;

· FDIC expense decreased due to lower base insurance assessment rates resulting from the improvement in the Bank’s overall composite rating in connection with the termination of the MOU in March 2014;

· Consultant fees increased due to the Company’s engagement of an independent consultant to conduct a comprehensive assessment of its operations;

· Collection, repossession and other real estate owned expenses increased due to increases in carrying balances of and costs associated with other real estate owned and classified assets;

· Marketing and advertising expenses increased due to the timing of campaigns and costs associated with the acquisition of VCB; and

· Other operating expenses increased primarily due to elevated costs associated with outsourcing of the Bank’s core information technology processing. Other operating expenses also increased due to higher franchise taxes, education and training, dues and subscriptions, legal expenses and core deposit intangible amortization expense.

Income Taxes

The Company recorded income tax expense of $432 thousand for the three months ended June 30, 2015, as compared to $555 thousand for the same period of 2014, reflecting a $123 thousand decrease in income tax expense. The Company recorded income tax expense of $949 thousand for the six months ended June 30, 2015, as compared to $1.3 million for the same period of 2014, reflecting a $335 thousand decrease in income tax expense.

The decrease in income tax expense from the second quarter and first six months of 2014 to the same periods of 2015 was primarily the result of the Company’s pretax income decreasing by $271 thousand and $870 thousand, respectively for the three and six months ended June 30, 2015 as compared to the same periods of 2014.

The effective tax rate for the three and six months ended June 30, 2015 was 22.3% and 23.3%, respectively, as compared to 25.1% and 26.0%, respectively for the same periods in 2014. The decrease in the effective tax rate from the second quarter and first six months of 2014 to the same periods in 2015 is primarily related to increased tax-exempt interest income on the investment portfolio and tax-exempt bank owned life insurance income as a percentage of pre-tax income.

Asset Quality

Provision and Allowance for Loan Losses

The allowance for loan losses is a reserve for estimated credit losses on individually evaluated loans determined to be impaired as well as probable credit losses inherent in the loan portfolio, and is based on periodic evaluations of the collectability and historical loss experience of loans. A provision for loan losses, which is a charge against earnings, is recorded to bring the allowance for loan losses to a level that, in management’s judgment, is appropriate to absorb probable losses in the loan portfolio.

Actual credit losses are deducted from the allowance for loan losses for the difference between the carrying value of the loan and the estimated net realizable value or fair value of the collateral, if collateral dependent. Subsequent recoveries, if any, are credited to the allowance for loan losses.

61

The allowance for loan losses is comprised of a specific allowance for identified problem loans and a general allowance representing estimations done pursuant to either FASB ASC Topic 450 “Accounting for Contingencies”, or FASB ASC Topic 310 “Accounting by Creditors for Impairment of a Loan.” The specific component relates to loans that are classified as impaired, and is established when the discounted cash flows (or collateral value or observable market price) of the impaired loan is lower than the carrying value of that loan. For collateral dependent loans, an updated appraisal will be ordered if a current one is not on file. Appraisals are performed by independent third-party appraisers with relevant industry experience. Adjustments to the appraised value may be made based on recent sales of like properties or general market conditions when deemed appropriate. The general component covers non-classified or performing loans and those loans classified as substandard, doubtful or loss that are not impaired. The general component is based on migration analysis adjusted for qualitative factors, such as economic conditions, interest rates and unemployment rates. The Company uses a risk grading system for real estate (including multifamily residential, construction, farmland and non-farm, non-residential) and commercial loans. Loans are graded on a scale from 1 to 9. Non-impaired real estate and commercial loans are assigned an allowance factor which increases with the severity of risk grading. A general description of the characteristics of the risk grades is as follows:

Pass Grades

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

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

· Risk Grade 3 loans are satisfactory loans with strong borrowers and secondary sources of repayment;

· Risk Grade 4 loans are satisfactory loans with borrowers not as strong as risk grade 3 loans but may exhibit a higher degree of financial risk based on the type of business supporting the loan; and

· Risk Grade 5 loans are 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.

Special Mention

· Risk Grade 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.

Classified Grades

· Risk Grade 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 Grade 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 Grade 9 loans are loss loans which are considered uncollectable and of such little value that their continuance as a bank asset is not warranted.

The Company uses a past due grading system for consumer loans, including one to four family residential first and seconds and home equity lines. The past due status of a loan is based on the contractual due date of the most delinquent payment due. The past due grading of consumer loans is based on the following categories: current, 1-29 days past due, 30-59 days past due, 60-89 days past due and over 90 days past due. The consumer loans are segregated between performing and nonperforming loans. Performing loans are those that have made timely payments in accordance with the terms of the loan agreement and are not past due 90 days or more. Nonperforming loans are those that do not accrue interest, are greater than 90 days past due and accruing interest or considered impaired. Non-impaired consumer loans are assigned an allowance factor which increases with the severity of past due status. This 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 loan portfolio.

The Company's ALL Committee is responsible for assessing the overall appropriateness of the allowance for loan losses and monitoring the Company's allowance for loan losses methodology, particularly in the context of current economic conditions and a rapidly changing regulatory environment.  The ALL Committee reviews at least annually the Company's allowance for loan losses methodology.

The allocation methodology applied by the Company includes management’s ongoing review and grading of the loan portfolio into criticized loan categories (defined as specific loans warranting either specific allocation, or a classified status of substandard, doubtful or loss). The allocation methodology focuses on evaluation of several factors, including but not limited to: evaluation of facts and issues related to specific loans, management’s ongoing review and grading of the loan portfolio, consideration of migration analysis and delinquency experience on each portfolio category, trends in past due and nonaccrual loans, the level of classified loans, the risk characteristics of the various classifications of loans, changes in the size and character of the loan portfolio, concentrations of loans to specific borrowers or industries, existing economic conditions, the fair value of underlying collateral, and other qualitative and quantitative factors which could affect potential credit losses. Because each of the criteria used is subject to change, the allocation of the allowance for loan losses is made for analytical purposes and is not necessarily indicative of the trend of future loan losses in any particular loan category. The total allowance is available to absorb losses from any segment of the portfolio. In determining the allowance for loan losses, the Company considers its portfolio segments and loan classes to be the same.

62

Management believes that the level of the allowance for loan losses is appropriate in light of the credit quality and anticipated risk of loss in the loan portfolio. While management uses available information to recognize losses on loans, future additions to the allowance for loan losses may be necessary based on changes in economic conditions. In addition, various 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 for loan losses through increased provisions for loan losses or may require that certain loan balances be charged-off or downgraded into classified loan categories when their credit evaluations differ from those of management based on their judgments about information available to them at the time of their examinations.

63

The following table presents the Company’s loan loss experience for the periods indicated:

Table 5: Allowance for Loan Losses
	Six Months Ended June 30,
(dollars in thousands)	2015			2014
Average loans outstanding*	$	818,059		$	681,821
Allowance for loan losses, January 1	$	13,021		$	14,767
Charge-offs:
Commercial, industrial and agricultural		(80	)		(290	)
Real estate - one to four family residential:
Closed end first and seconds		(332	)		(304	)
Home equity lines		(137	)		(54	)
Real estate - construction:
One to four family residential		(102	)		-
Real estate - non-farm, non-residential:
Owner occupied		(139	)		-
Consumer		(7	)		(86	)
Other		(24	)		(26	)
Total loans charged-off		(821	)		(760	)
Recoveries:
Commercial, industrial and agricultural		21			30
Real estate - one to four family residential:
Closed end first and seconds		13			211
Home equity lines		5			13
Real estate - construction:
One to four family residential		1			6
Other construction, land development and other land		-			2
Real estate - non-farm, non-residential:
Owner occupied		1			27
Non-owner occupied		-			3
Consumer		34			55
Other		12			14
Total recoveries		87			361
Net charge-offs		(734	)		(399	)
Provision for loan losses		-			250
Allowance for loan losses, June 30	$	12,287		$	14,618
Ratios:
Ratio of allowance for loan losses to total loans outstanding, end of period		1.46	%		2.09	%
Ratio of annualized net charge-offs to average loans outstanding during the period		0.18	%		0.12	%

*Net of unearned income and includes nonaccrual loans.

64

No provision for loan losses was recorded for the three and six months ended June 30, 2015 compared to $0 and $250 thousand, respectively for the same periods in 2014.  The allowance for loan losses totaled $12.3 million at June 30, 2015, representing a decline of $734 thousand from December 31, 2014 and a decline of $2.3 million from June 30, 2014.  The decline in the allowance for loan losses from December 31, 2014 was primarily due to measured improvements in the economic and financial conditions in the Company’s markets, improvements in the Company’s asset quality and charge-offs of loans for which the Company had specifically reserved.  Impaired loans increased approximately $1.3 million from December 31, 2014, primarily due to the deteriorating financial condition of two large commercial borrowers.  As appropriate, the Company applied specific reserves against these impaired loans recorded prior to December 31, 2014.  The decline in the allowance for loan losses from June 30, 2014 was due to improvements in economic and financial market conditions, both nationally and in the Company’s markets, that improved the general allowance for loan losses and improvements in the Company’s asset quality.  Additionally, due to purchase accounting related to the Company’s acquisition of VCB, the Company recorded loans acquired from VCB at fair value at the effective time of the acquisition, and any allowance for loan losses previously established by VCB was not recorded on the Company’s financial statements.  Net charge-offs for the six months ended June 30, 2015 were $734 thousand, compared to $399 thousand for the same period of 2014.  This represents, on an annualized basis, 0.18% of average loans outstanding for the six months ended June 30, 2015 and 0.12% of average loans outstanding for the same period of 2014. 

The allowance for loan losses at June 30, 2015 was $12.3 million, compared with $13.0 million at December 31, 2014. This represented 1.46% of period end loans at June 30, 2015, compared with 1.59% of year end loans at December 31, 2014.

The following table shows the allocation of the allowance for loan losses at the dates indicated. Notwithstanding these allocations, the entire allowance for loan losses is available to absorb charge-offs in any category of loan.

Table 6: Allocation of Allowance for Loan Losses
	At June 30,					At December 31,
	2015					2014
(dollars in thousands)	Allowance		Percent			Allowance		Percent
Commercial, industrial and agricultural	$	1,619		10.21	%	$	1,168		10.37	%
Real estate - one to four family residential:
Closed end first and seconds		1,699		28.91	%		1,884		28.86	%
Home equity lines		2,013		13.20	%		1,678		13.42	%
Real estate - multifamily residential		102		3.54	%		89		3.07	%
Real estate - construction:
One to four family residential		257		2.27	%		235		2.40	%
Other construction, land development and other land		2,590		4.36	%		2,670		4.34	%
Real estate - farmland		79		1.26	%		144		1.15	%
Real estate - non-farm, non-residential:
Owner occupied		1,838		20.09	%		2,416		19.22	%
Non-owner occupied		1,168		11.81	%		1,908		12.77	%
Consumer		257		1.72	%		305		1.94	%
Other		665		2.63	%		524		2.46	%
Total allowance for loan losses	$	12,287		100.00	%	$	13,021		100.00	%

(Percent is portfolio loans in category divided by total loans)

Tabular presentations of commercial loans by credit quality indicator and consumer loans, including one to four family residential first and seconds and home equity lines, by payment activity at June 30, 2015 and December 31, 2014 can be found under Item 1. “Financial Statements,” under the heading “Note 4. Loan Portfolio.”

65

Nonperforming Assets

The past due status of a loan is based on the contractual due date of the most delinquent payment due. Loans, including impaired loans, are generally classified as nonaccrual if they are past due as to maturity or payment of principal or interest for a period of more than 90 days, unless such loans are well-secured and in the process of collection. Loans greater than 90 days past due may remain on an accrual status if management determines it has adequate collateral to cover the principal and interest. If a loan or a portion of a loan is adversely classified, or is partially charged off, the loan is generally classified as nonaccrual. Additionally, whenever management becomes aware of facts or circumstances that may adversely impact the collectability of principal or interest on loans, it is management’s practice to place such loans on a nonaccrual status immediately, rather than delaying such action until the loans become 90 days past due. As of June 30, 2015, management is not aware of any potential problem loans to place immediately on nonaccrual status.

When a loan is placed on nonaccrual status, previously accrued and uncollected interest is reversed, and the amortization of related deferred loan fees or costs is suspended. While a loan is classified as nonaccrual and the future collectability of the recorded loan balance is doubtful, collections of interest and principal are generally applied as a reduction to principal outstanding. When the future collectability of the recorded loan balance is expected, interest income may be recognized on a cash basis. In the case where a nonaccrual loan has been partially charged off, recognition of interest on a cash basis is limited to that which would have been recognized on the recorded loan balance at the contractual interest rate. Cash interest receipts in excess of that amount are recorded as recoveries to the allowance for loan losses until prior charge-offs have been fully recovered. These policies are applied consistently across our loan portfolio.

A loan (including a TDR) may be returned to accrual status if the borrower has demonstrated a sustained period of repayment performance (typically six months) in accordance with the contractual terms of the loan and there is reasonable assurance the borrower will continue to make payments as agreed.

Real estate acquired through, or in lieu of, foreclosure is held for sale and is stated at estimated fair market value of the property, less estimated disposal costs, if any. Cost includes loan principal and accrued interest. Any excess of cost over the estimated fair market value less costs to sell at the time of acquisition is charged to the allowance for loan losses. The estimated fair market value is reviewed periodically by management and any write-downs are charged against current earnings. Development and improvement costs relating to property are capitalized. Net operating income or expenses of such properties are included in collection, repossession and other real estate owned expenses.

The following table presents information concerning nonperforming assets as of and for the six months ended June 30, 2015 and the year ended December 31, 2014:

Table 7:  Nonperforming Assets

	June 30,			December 31,
(dollars in thousands)	2015			2014			Change $			Change %
Nonaccrual loans*	$	7,263		$	6,622		$	641			9.7	%
Loans past due 90 days and accruing interest		240			53			187			352.8	%
Total nonperforming loans	$	7,503		$	6,675		$	828			12.4	%
Other real estate owned		1,344			1,838			(494	)		-26.9	%
Total nonperforming assets	$	8,847		$	8,513		$	334			3.9	%
Nonperforming assets to total loans and   other real estate owned		1.05	%		1.04	%
Allowance for loan losses to nonaccrual loans		169.17	%		196.63	%
Annualized net charge-offs to average loans for the period		0.18	%		0.28	%
Allowance for loan losses to period end loans		1.46	%		1.59	%

* Includes $2.3 million and $3.4 million in nonaccrual TDRs at June 30, 2015 and December 31, 2014, respectively.

66

The following table presents the change in the OREO balance for the six months ended June 30, 2015 and 2014:

Table 8: OREO Changes

	June 30,
(dollars in thousands)	2015			2014			Change $			Change %
Balance at the beginning of period, gross	$	1,914		$	1,054		$	860			81.6	%
Transfers from loans		1,084			289			795			275.1	%
Capitalized costs		1			-			1			100.0	%
Sales proceeds		(1,548	)		(462	)		(1,086	)		-235.1	%
Previously recognized impairment losses on disposition		(78	)		(157	)		79			50.3	%
Loss on disposition		(26	)		(15	)		(11	)		-73.3	%
Balance at the end of period, gross		1,347			709			638			90.0	%
Less valuation allowance		(3	)		(108	)		105			97.2	%
Balance at the end of period, net	$	1,344		$	601		$	743			123.6	%

The following table presents the change in the valuation allowance for OREO for the six months ended June 30, 2015 and 2014:

Table 9: OREO Valuation Allowance Changes

	June 30,
(dollars in thousands)	2015			2014
Balance at the beginning of period	$	76		$	254
Valuation allowance		5			11
Charge-offs		(78	)		(157	)
Balance at the end of period	$	3		$	108

Nonperforming assets were $8.8 million or 1.05% of total loans and other real estate owned at June 30, 2015 compared to $8.5 million or 1.04% at December 31, 2014. The sluggish economic recovery and continuing asset quality issues in the Company’s loan portfolio have prompted the Company to maintain the heightened level of the allowance for loan losses as compared to pre-2009 levels, which is 169.17% of nonaccrual loans at June 30, 2015, compared to 196.63% at December 31, 2014. Nonperforming loans increased $828 thousand or 12.4% during the six months ended June 30, 2015 to $7.5 million, primarily due to increases in nonaccrual loans.

Nonaccrual loans were $7.3 million at June 30, 2015, an increase of approximately $641 thousand or 9.7% from $6.6 million at December 31, 2014. Of the current $7.3 million in nonaccrual loans, $6.9 million or 94.4% is secured by real estate in our market area. Of these real estate secured loans, $5.4 million are one to four family residential real estate, $1.3 million are commercial properties and $190 thousand are real estate construction. Nonaccrual loans decreased $677 thousand during the second quarter of 2015 primarily due to the foreclosure of a large commercial property that was transferred to other real estate owned. Subsequent to June 30, 2015, this foreclosed property was sold for gross proceeds of approximately $825 thousand.

Other real estate owned, net of valuation allowance at June 30, 2015 was $1.3 million, a decrease of approximately $494 thousand or 26.9% from December 31, 2014. The balance of other real estate owned at June 30, 2015 was comprised of five properties of which $92 thousand are real estate construction properties and $1.3 million are commercial properties. During the six months ended June 30, 2015, new foreclosures included seven properties totaling $1.1 million transferred from loans, including one commercial property during the second quarter of 2015 totaling $700 thousand. Sales of twelve other real estate owned properties for the six months ended June 30, 3015 resulted in a net loss of $26 thousand. The remaining properties are being actively marketed and the Company does not anticipate any material losses associated with these properties. The Company recorded losses of $5 thousand in its consolidated statements of income for the six months ended June 30, 2015, due to valuation adjustments on other real estate owned properties as compared to $11 thousand for the same period of 2014. Asset quality continues to be a top priority for the Company. The Company continues to allocate significant resources to the expedient disposition and collection of nonperforming and other lower quality assets.

67

As discussed earlier in this Item 2, the Company measures impaired loans based on the present value of expected future cash flows discounted at the effective interest rate of the loan or, as a practical expedient, at the loan’s observable market price or the fair value of the collateral if the loan is collateral dependent. The Company maintains a valuation allowance to the extent that the measure of the impaired loan is less than the recorded investment. TDRs are considered impaired loans. TDRs occur when we agree to modify the original terms of a loan by granting a concession due to the deterioration in the financial condition of the borrower. These concessions can be temporary and are made in an attempt to avoid foreclosure and with the intent to restore the loan to a performing status once sufficient payment history can be demonstrated. These concessions could include, without limitation, rate reductions to below market rates, payment deferrals, forbearance, and, in some cases, forgiveness of principal or interest.

A tabular presentation of loans individually evaluated for impairment by class of loans at June 30, 2015 and December 31, 2014 can be found under Item 1. “Financial Statements,” under the heading “Note 4. Loan Portfolio.”

At June 30, 2015, the balance of impaired loans was $37.7 million, for which there were specific valuation allowances of $4.6 million. At December 31, 2014, the balance of impaired loans was $36.4 million, for which there were specific valuation allowances of $5.3 million. The average balance of impaired loans was $37.4 million for the six months ended June 30, 2015, compared to $40.0 million for the year ended December 31, 2014. Impaired loans increased by approximately $1.3 million from December 31, 2014 to June 30, 2015, primarily due to the deteriorating financial condition of two large commercial relationships. As appropriate, the Company applied specific reserves against these impaired loans. The Company’s balance of impaired loans remains elevated over historical levels as a result of the continued challenging economic conditions which have significantly increased unemployment, reduced profitability of local businesses, and reduced the ability of many of our customers to keep their loans current.

The following table presents the balances of TDRs at June 30, 2015 and December 31, 2014:

Table 10: Troubled Debt Restructurings (TDRs)

	June 30,		December 31,
(dollars in thousands)	2015		2014		Change $			Change %
Performing TDRs	$	14,843	$	15,223	$	(380	)		-2.5	%
Nonperforming TDRs*		2,252		3,438		(1,186	)		-34.5	%
Total TDRs	$	17,095	$	18,661	$	(1,566	)		-8.4	%

* Included in nonaccrual loans in Table 7: Nonperforming Assets.

At the time of a TDR, the loan is placed on nonaccrual status. A loan (including a TDR) may be returned to accrual status if the borrower has demonstrated a sustained period of repayment performance (typically six months) in accordance with the contractual terms of the loan and there is reasonable assurance the borrower will continue to make payments as agreed.

68

Financial Condition

Summary

At June 30, 2015, the Company had total assets of $1.22 billion, an increase of approximately $37.2 million or 3.1% from $1.18 billion at December 31, 2014. The increase in total assets was principally the result of increases in loans and investment securities principally funded by short term borrowings, the Company’s issuance of Senior Subordinated Debt during the second quarter of 2015, and continued deposit growth. Major categories and changes in our balance sheet are as detailed in the following schedule.

Table 11: Balance Sheet Changes

	June 30,		December 31,
(dollars in thousands)	2015		2014		Change $			Change %
Total assets	$	1,219,191	$	1,181,972	$	37,219			3.1	%
Cash and short-term investments		14,416		14,024		392			2.8	%
Interest bearing deposits with banks		6,467		5,272		1,195			22.7	%
Securities available for sale, at fair value		227,932		214,011		13,921			6.5	%
Securities held to maturity, at carrying value		30,671		32,163		(1,492	)		-4.6	%
Restricted securities, at cost		8,118		7,533		585			7.8	%
Total loans		840,710		820,569		20,141			2.5	%
Deferred income taxes, net		16,937		17,529		(592	)		-3.4	%
Other real estate owned, net		1,344		1,838		(494	)		-26.9	%
Bank owned life insurance		24,786		24,463		323			1.3	%
Total deposits		957,222		939,254		17,968			1.9	%
Total borrowings		132,544		102,013		30,531			29.9	%
Total shareholders' equity		121,909		134,274		(12,365	)		-9.2	%

Investment Securities

The investment portfolio plays a primary role in the management of the Company’s interest rate sensitivity. In addition, the portfolio serves as a source of liquidity and is used as needed to meet collateral requirements, such as those related to secure public deposits, balances with the Reserve Bank and repurchase agreements. The investment portfolio consists of held to maturity and available for sale securities. We classify securities as available for sale or held to maturity based on our investment strategy and management’s assessment of our intent and ability to hold the securities until maturity. Management determines the appropriate classification of securities at the time of purchase. If management has the intent and the Company has the ability at the time of purchase to hold the investment securities to maturity, they are classified as investment securities held to maturity and are stated at amortized cost, adjusted for amortization of premiums and accretion of discounts using the interest method. Investment securities which the Company may not hold to maturity are classified as investment securities available for sale, as management has the intent and ability to hold such investment securities for an indefinite period of time, but not necessarily to maturity. Securities available for sale may be sold in response to changes in market interest rates, changes in prepayment risk, increases in loan demand, general liquidity needs and other similar factors and are carried at estimated fair value.

69

Table 12: Investment Securities

	June 30,		December 31,
(dollars in thousands)	2015		2014		Change $			Change %
Available for Sale (at Fair Value):
Obligations of U.S. Government agencies	$	13,081	$	14,569	$	(1,488	)		-10.2	%
SBA Pool securities		71,007		74,799		(3,792	)		-5.1	%
Agency residential mortgage-backed securities		19,400		28,629		(9,229	)		-32.2	%
Agency commercial mortgage-backed securities		6,487		-		6,487			100.0	%
Agency CMO securities		53,154		39,215		13,939			35.5	%
Non agency CMO securities		704		828		(124	)		-15.0	%
State and political subdivisions		64,090		55,926		8,164			14.6	%
FNMA and FHLMC preferred stock		9		45		(36	)		-80.0	%
Total	$	227,932	$	214,011	$	13,921			6.5	%

	June 30,		December 31,
(dollars in thousands)	2015		2014		Change $			Change %
Held to Maturity (at Carrying Value):
Agency CMO securities	$	11,743	$	11,993	$	(250	)		-2.1	%
State and political subdivisions		18,928		20,170		(1,242	)		-6.2	%
Total	$	30,671	$	32,163	$	(1,492	)		-4.6	%

Total investment securities were $258.6 million at June 30, 2015, reflecting an increase of $12.4 million or 5.0% from $246.2 million at December 31, 2014. The increase in the investment portfolio during the first six months of 2015 was the result of investing excess liquidity that resulted from increases in total deposits and borrowings.

During the first six months of 2015, the Company primarily invested in Agency commercial mortgage-backed securities, Agency CMO securities and securities issued by State and political subdivisions. The Company decreased its investments in Agency residential mortgage-backed securities while increasing its investments in Agency commercial mortgage-backed securities and Agency CMO securities in an effort to enhance the portfolio’s overall structure and provide more consistent cash flows and reinvestment opportunities. The increased investment in securities issued by State and political subdivisions was due to the related tax benefits and the higher yield offered by these securities. In addition, the Company decreased its investments in SBA Pool securities in order to diversify its securities portfolio and target investments with a higher risk-adjusted rate of return. As part of our overall asset/liability management strategy, we are targeting our investment portfolio to be approximately 20% of our total assets. As of June 30, 2015 and December 31, 2014, our investment portfolio was 21.2% and 20.8%, respectively, of total assets.

The available for sale portfolio had an unrealized (loss), net of tax benefit, of ($2.1) million at June 30, 2015 compared with an unrealized (loss), net of tax benefit, of ($1.5) million at December 31, 2014. These unrealized (losses) as of June 30, 2015 are principally due to financial market conditions for these types of investments, particularly changes in interest rates, which increased during the first six months of 2015 causing bond prices to decrease and thereby increased the amount of unrealized losses at June 30, 2015.

70

Loans

The Company offers an array of lending and credit services to customers including mortgage, commercial and consumer loans. A substantial portion of the loan portfolio is represented by commercial and residential mortgage loans in our market area. The ability of our debtors to honor their contracts is dependent upon the real estate and general economic conditions in our market area. The loan portfolio is the largest component of earning assets and accounts for the greatest portion of total interest income. Total loans were $840.7 million at June 30, 2015, an increase of approximately $20.1 million, or 2.5%, from $820.6 million at December 31, 2014. The following table presents the composition of the Company’s loan portfolio at the dates indicated.

Table 13: Loan Portfolio

	June 30,		December 31,
(dollars in thousands)	2015		2014		Change $			Change %
Commercial, industrial and agricultural	$	85,845	$	85,119	$	726			0.9	%
Real estate - one to four family residential:
Closed end first and seconds		243,072		236,761		6,311			2.7	%
Home equity lines		111,007		110,100		907			0.8	%
Total real estate - one to four family residential		354,079		346,861		7,218			2.1	%
Real estate - multifamily residential		29,802		25,157		4,645			18.5	%
Real estate - construction:
One to four family residential		19,091		19,698		(607	)		-3.1	%
Other construction, land development and other land		36,620		35,591		1,029			2.9	%
Total real estate - construction		55,711		55,289		422			0.8	%
Real estate - farmland		10,553		9,471		1,082			11.4	%
Real estate - non-farm, non-residential:
Owner occupied		168,861		157,745		11,116			7.0	%
Non-owner occupied		99,287		104,827		(5,540	)		-5.3	%
Total real estate - non-farm, non-residential		268,148		262,572		5,576			2.1	%
Consumer		14,443		15,919		(1,476	)		-9.3	%
Other		22,129		20,181		1,948			9.7	%
Total loans	$	840,710	$	820,569	$	20,141			2.5	%

Total loans increased 2.5% during the first six months of 2015.  Loan growth in the Company’s rural markets, primarily on the consumer side, remained weak while competition for commercial loans, especially in the Richmond and Tidewater markets, has been and is expected to continue to be intense given the historically low rate environment.

Deposits

The Company’s predominant source of funds is depository accounts. The Company’s deposit base, which is provided by individuals and businesses located within the communities served, is comprised of demand deposits, savings and money market accounts, and time deposits. The Company augments its deposit base through conservative use of brokered deposits, including through the Certificate of Deposit Account Registry Service program (“CDARS”). The Company’s balance sheet growth is largely determined by the availability of deposits in its markets, the cost of attracting the deposits and the prospects of profitably utilizing the available deposits by increasing the loan or investment portfolios.

71

Total deposits were $957.2 million as of June 30, 2015, an increase of approximately $18.0 million or 1.9% from $939.3 million as of December 31, 2014. The following table presents the composition of the Company’s deposits at the dates indicated.

Table 14: Deposits

	June 30,		December 31,
(dollars in thousands)	2015		2014		Change $			Change %
Noninterest-bearing demand deposits	$	178,844	$	162,328	$	16,516			10.2	%
Interest-bearing deposits:
Checking		293,202		277,937		15,265			5.5	%
Savings deposits		91,959		89,849		2,110			2.3	%
Money market savings		162,554		162,794		(240	)		-0.1	%
Time deposits $100 and over		105,418		136,977		(31,559	)		-23.0	%
Other time deposits		125,245		109,369		15,876			14.5	%
Total interest-bearing deposits		778,378		776,926		1,452			0.2	%
Total deposits	$	957,222	$	939,254	$	17,968			1.9	%

During the first six months of 2015, the Company’s deposits increased due to customer growth and cyclical increases in deposit balances, partially offset by a decline in brokered certificates of deposit. Additionally, the Company believes the increase in our noninterest-bearing demand deposits as well as our lower cost non-maturity interest-bearing deposits is the result of customers seeking the liquidity and safety of deposit accounts in light of continuing economic uncertainty in general. At June 30, 2015 and December 31, 2014, the Company had $35.5 million and $55.7 million in brokered certificates of deposits, respectively. The interest rates paid on these deposits are consistent, if not lower, than the market rates offered in our local area. Amounts included in these brokered certificates of deposits also include deposits under the CDARS program.

Borrowings

The Company’s ability to borrow funds through non-deposit sources provides additional flexibility in meeting the liquidity needs of customers while enhancing its cost of funds structure. Total borrowings were $132.5 million at June 30, 2015, an increase of approximately $30.5 million or 29.9% from $102.0 million at December 31, 2014. The increase in borrowings was primarily driven by the issuance of $20.0 million in Senior Subordinated Debt on April 22, 2015 and a $17.8 million increase in short-term borrowings. Borrowings increased as the Company funded loan growth, purchased additional investment securities and redeemed the remaining $14.0 million of its Series A Preferred Stock during the first six months of 2015. The Company will continue to consider lower cost, short-term borrowings as a favorable funding option and may use these funding sources in connection with executing the Company’s strategic initiatives during the remainder of 2015.

Off-Balance Sheet Arrangements

As of June 30, 2015, there have been no material changes to the off-balance sheet arrangements disclosed in the Company’s 2014 Form 10-K.

Contractual Obligations

As of June 30, 2015, there have been no material changes outside the ordinary course of business to the contractual obligations disclosed in the Company’s 2014 Form 10-K.

72

Liquidity

Liquidity represents an institution’s ability to meet present and future financial obligations, including through the sale of existing assets or the acquisition of additional funds through short-term borrowings. Our liquidity is provided from cash and due from banks, interest bearing deposits with other banks, federal funds sold, repayments from loans, sales of loans, increases in deposits, lines of credit from the FHLB and three correspondent banks, sales of investments, interest and dividend payments received from investments and maturing investments. We also use other short and long-term borrowings to provide additional liquidity when available on terms favorable to the Company, including entering into repurchase agreements with customers and issuing subordinated debt and notes. Our ability to maintain sufficient liquidity may be affected by numerous factors, including economic conditions nationally and in our markets and available borrowing capacity under certain of our borrowing sources. Depending on our liquidity levels, our capital position, conditions in the capital markets and other factors, we may from time to time consider the issuance of debt, equity or other securities, or other possible capital market transactions, the proceeds of which could provide additional liquidity for operations.

As a result of our management of liquid assets and our ability to generate liquidity through liability funding, we believe that we maintain overall liquidity to satisfy our depositors’ requirements and to meet customers’ credit needs. We also take into account any liquidity needs generated by off-balance sheet transactions such as commitments to extend credit, commitments to purchase securities and standby letters of credit.

We monitor and plan our liquidity position for future periods. Liquidity strategies are implemented and monitored by our Asset/Liability Committee.

Cash, cash equivalents and federal funds sold totaled $20.9 million as of June 30, 2015 compared to $19.6 million as of December 31, 2014. At June 30, 2015, cash, cash equivalents, federal funds sold and unpledged securities available for sale were $207.1 million or 18.7% of total assets, compared to $179.9 million or 15.2% of total assets at December 31, 2014.

As disclosed in the Company’s consolidated statements of cash flows, net cash provided by operating activities was $5.5 million, net cash used in investing activities was $37.6 million and net cash provided by financing activities was $33.4 million for the six months ended June 30, 2015. Combined, this contributed to a $1.3 million increase in cash and cash equivalents for the six months ended June 30, 2015.

The Company maintains access to short-term funding sources as well, including federal funds lines of credit with three correspondent banks up to $40.0 million and the ability to borrow from the FHLB up to $225.3 million. The Company has no reason to believe these arrangements will not be renewed at maturity. Additional loans and securities are available that can be pledged as collateral for future borrowings from the FHLB above the current lendable collateral value.

Certificates of deposit of $100,000 or more, maturing in one year or less, totaled $71.3 million at June 30, 2015. Certificates of deposit of $100,000 or more, maturing in more than one year, totaled $59.3 million at June 30, 2015.

As of June 30, 2015, and other than referenced in this Quarterly Report on Form 10-Q, the Company was not aware of any other known trends, events or risks that have or are reasonably likely to have a material impact on our liquidity. As of June 30, 2015, the Company has no material commitments or long-term debt for capital expenditures.

Capital Resources

The assessment of capital adequacy depends on such factors as asset quality, liquidity, earnings performance, and changing competitive conditions and economic forces. The Company regularly reviews the adequacy of the Company’s capital. The Company maintains a capital structure that it believes will assure an adequate level of capital to support anticipated asset growth and to absorb potential losses.

The Company and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on our financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, banks must meet specific capital guidelines that involve quantitative measures of the bank’s assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. Capital amounts and classification are also subject to qualitative judgments by the regulators about components (such as interest rate risk), risk weighting, and other factors.

In July 2013, the federal bank regulatory agencies adopted rules to implement the Basel III capital framework and a revised framework for calculating risk-weighted assets. The Basel III Capital Rules were effective for the Company and the Bank on January 1, 2015 (subject to a phase-in period for certain portions of the new rules). For a summary of these final rules, see Part I, Item 1 under the heading “Regulation and Supervision – Capital Requirements” included in the 2014 Form 10-K.

73

Quantitative measures established by regulation to ensure capital adequacy require that the Bank maintain minimum amounts and ratios of total, common equity Tier 1 (or CET1) and Tier 1 capital (as defined in the regulations) to risk-weighted assets (as defined), and of Tier 1 capital (as defined) to average assets (as defined). Management believes, as of June 30, 2015, the Bank meets all capital adequacy requirements to which it is subject.

As of June 30, 2015, the Bank was categorized as “well capitalized,” the highest level of capital adequacy. To be categorized as well capitalized, the Bank must maintain minimum total risk-based, CET1 risked-based, Tier 1 risk-based, and Tier 1 leverage ratios. The Company’s and the Bank’s actual capital ratios as of June 30, 2015 and December 31, 2014 are presented under Item 1. “Financial Statements,” under the heading “Note 14. Capital Requirements.”

Cash Dividends

The Bank, as a Virginia banking corporation, may pay dividends only out of retained earnings. In addition, regulatory authorities may limit payment of dividends by any bank, when it is determined that such limitation is in the public interest and necessary to ensure financial soundness of the bank. Regulatory agencies place certain restrictions on dividends paid and loans or advances made by the Bank to the Company. The amount of dividends the Bank may pay to the Company, without prior approval, is limited to current year earnings plus retained net profits for the two preceding years. For the six months ended June 30, 2015 and 2014, no cash dividends have been paid from the Bank to the Company.

The Company’s Board of Directors determines whether to declare dividends and the amount of any dividends declared. Such determinations by the Board take into account the Company’s financial condition, results of operations and other relevant factors, including any relevant regulatory restrictions.

For the six months ended June 30, 2015, the Company paid $0.02 of cash dividends to common shareholders and the holders of the Company’s Series B Preferred Stock, as compared to paying no cash dividends in the same period of 2014.

From February 2011 to May 2014, the Company deferred dividend payments on its Series A Preferred Stock. On August 15, 2014, the Company paid dividends of $5.5 million, including both current and accumulated but unpaid dividends on its Series A Preferred Stock, and has paid all subsequent dividends on the Series A Preferred Stock as due pursuant to the terms of the Series A Preferred Stock. The Company redeemed the final $14.0 million of the Series A Preferred Stock during the first half of 2015.

Effects of Inflation

The effect of changing prices on financial institutions is typically different from other industries as the Company’s assets and liabilities are monetary in nature. The primary effect of inflation on the Company’s operations is reflected in increased operating costs. In management’s opinion, changes in interest rates affect the financial condition of a financial institution to a far greater degree than changes in the inflation rate. While interest rates are significantly impacted by changes in the inflation rate, they do not necessarily change at the same time or in the same magnitude as the inflation rate. For additional information, see the Company’s 2014 10-K in Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” under the heading “Impact of Inflation and Changing Prices.”

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no significant changes from the quantitative and qualitative disclosures made in the Company’s 2014 Form 10-K.

Item 4. Controls and Procedures

The Company’s management, including the Company’s Chief Executive Officer and the Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer have concluded that the Company’s disclosure controls and procedures were effective as of June 30, 2015 to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and that such information is accumulated and communicated to the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that the Company’s disclosure controls and procedures will detect or uncover every situation involving the failure of persons within the Company or its subsidiary to disclose material information required to be set forth in the Company’s periodic reports.

74

Management of the Company is also responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). There were no changes in the Company’s internal control over financial reporting during the Company’s quarter ended June 30, 2015 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

In the ordinary course of operations, the Company and its subsidiaries may become a party to legal proceedings, or property of the Company or its subsidiaries may become subject to legal proceedings. As of June 30, 2015 and based on information currently available, there are no pending legal proceedings to which the Company, or any of its subsidiaries, is a party or to which the property of the Company or any of its subsidiaries is subject that, in the opinion of management, may materially impact the financial condition of the Company.

Item 1A. Risk Factors

There have been no material changes in the risk factors faced by the Company from those disclosed under Part I, Item 1A. “Risk Factors” in the Company’s 2014 Form 10-K. These risk factors could materially affect our business, financial condition or future results.  Additional risks not presently known to us, or that we currently deem immaterial, may also adversely affect our business, financial condition or results of operations.

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

In January 2001, the Company announced a stock repurchase program by which management was authorized to repurchase up to 300,000 shares of the Company’s common stock. This plan was amended in 2003 and the number of shares by which management is authorized to repurchase is up to 5% of the outstanding shares of the Company’s common stock on January 1 of each year. There is no stated expiration date for the program. During the six months ended June 30, 2015, the Company did not repurchase any shares of its common stock under the program.

There were no repurchases of the Company’s common stock during the three months ended June 30, 2015.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

None.

Item 5. Other Information

None.

75

Item 6. Exhibits

2.1	Agreement and Plan of Reorganization, dated as of May 29, 2014 by and among Eastern Virginia Bankshares, Inc., EVB and Virginia Company Bank (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed May 30, 2014).
3.1	Amended and Restated Articles of Incorporation of Eastern Virginia Bankshares, Inc., effective December 29, 2008 (incorporated by reference to Exhibit 3.1 to the Company’s Annual Report on Form 10-K filed March 10, 2009).
3.1.1	Articles of Amendment to the Articles of Incorporation of Eastern Virginia Bankshares, Inc., effective January 6, 2009 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed January 13, 2009).
3.1.2	Articles of Amendment to the Articles of Incorporation of Eastern Virginia Bankshares, Inc., effective June 10, 2013 (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed June 14, 2013).
3.2	Bylaws of Eastern Virginia Bankshares, Inc., as amended June 4, 2013 (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed June 14, 2013).
4.3	Indenture, dated April 22, 2015, by and between Eastern Virginia Bankshares, Inc. and U.S. Bank National Association, as trustee (incorporated by reference to Exhibit 4.3 to the Company’s Current Report on Form 8-K filed April 24, 2015).
4.4	Forms of 6.50% Subordinated Note due 2025 (included as Exhibit A-1 and Exhibit A-2 in Exhibit 4.3 filed with, and incorporated herein by reference to, the Company’s Current Report on Form 8-K filed April 24, 2015).
10.26	Subordinated Note Purchase Agreement, dated April 22, 2015, by and among Eastern Virginia Bankshares, Inc. and the purchasers identified therein (incorporated by reference to Exhibit 10.26 to the Company’s Current Report on Form 8-K filed April 24, 2015).
10.27	Registration Rights Agreement, dated April 22, 2015, by and among Eastern Virginia Bankshares, Inc. and the purchasers identified therein (incorporated by reference to Exhibit 10.27 to the Company’s Current Report on Form 8-K filed April 24, 2015).
31.1	Rule 13a-14(a) Certification of Chief Executive Officer.
31.2	Rule 13a-14(a) Certification of Chief Financial Officer.
32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350.
32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350.
101	The following materials from Eastern Virginia Bankshares, Inc. Quarterly Report on Form 10-Q for the quarter ended June 30, 2015, formatted in XBRL (Extensible Business Reporting Language), filed herewith: (i) Consolidated Balance Sheets (unaudited), (ii) Consolidated Statements of Income (unaudited), (iii) Consolidated Statements of Comprehensive (Loss) Income (unaudited), (iv) Consolidated Statements of Shareholders’ Equity (unaudited), (v) Consolidated Statements of Cash Flows (unaudited), and (vi) Notes to the Interim Consolidated Financial Statements (unaudited).

76

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.

Eastern Virginia Bankshares, Inc.

(Registrant)

Date:    August 14, 2015	/s/ Joe A. Shearin
	Joe A. Shearin
	President and Chief Executive Officer
	(Principal Executive Officer)
Date:    August 14, 2015	/s/ J. Adam Sothen
	J. Adam Sothen
	Executive Vice President and Chief Financial Officer
	(Principal Financial and Accounting Officer)

77

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Joe A. Shearin, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Eastern Virginia Bankshares, Inc.;

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 14, 2015
	/s/ Joe A. Shearin
	Joe A. Shearin
	President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, J. Adam Sothen, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Eastern Virginia Bankshares, Inc.;

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 14, 2015
	/s/ J. Adam Sothen
	J. Adam Sothen
	Executive Vice President and Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

Pursuant to § 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. § 1350) I, Joe A. Shearin, as the President and Chief Executive Officer of Eastern Virginia Bankshares, Inc., certify that, to the best of my knowledge and belief, the Quarterly Report on Form 10-Q for the fiscal period ended June 30, 2015, which accompanies this certification, fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 and the information contained in the Quarterly Report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of Eastern Virginia Bankshares, Inc. at the dates and for the periods indicated. The foregoing certification is made pursuant to § 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. § 1350) and shall not be relied upon for any other purpose. The undersigned expressly disclaims any obligation to update the foregoing certification except as required by law.

Dated:  August 14, 2015	/s/ Joe A. Shearin
	Joe A. Shearin
	President and Chief Executive Officer

EX-32.2

Exhibit 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

Pursuant to § 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. § 1350) I, J. Adam Sothen, as the Executive Vice President and Chief Financial Officer of Eastern Virginia Bankshares, Inc., certify that, to the best of my knowledge and belief, the Quarterly Report on Form 10-Q for the fiscal period ended June 30, 2015, which accompanies this certification, fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 and the information contained in the Quarterly Report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of Eastern Virginia Bankshares, Inc. at the dates and for the periods indicated. The foregoing certification is made pursuant to § 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. § 1350) and shall not be relied upon for any other purpose. The undersigned expressly disclaims any obligation to update the foregoing certification except as required by law.

Dated:  August 14, 2015	/s/ J. Adam Sothen
	J. Adam Sothen
	Executive Vice President and Chief Financial Officer

XML

Summary of Significant Accounting Policies - Additional Information (Detail) $ in Thousands		6 Months Ended
	May. 15, 2014 USD ($)	Jun. 30, 2015
Accounting Policies [Line Items]
Number of retail branches		24
Fixed monthly compensation	$ 3
EVB Investments, Inc.
Accounting Policies [Line Items]
Ownership interest percentage		100.00%
EVB Mortgage, LLC.
Accounting Policies [Line Items]
Ownership interest percentage	4.90%
EVB Title, LLC
Accounting Policies [Line Items]
Ownership interest percentage		75.00%
Virginia Bankers Insurance Center, LLC
Accounting Policies [Line Items]
Ownership interest percentage		2.33%
Dunston Hall LLC
Accounting Policies [Line Items]
Ownership interest percentage		100.00%
Bankers Title, LLC
Accounting Policies [Line Items]
Ownership interest percentage		6.00%

XML

Roll Forward of Allowance for Loan Losses (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance at beginning of period			$ 13,021	$ 14,767
Charge-offs			(821)	(760)
Recoveries			87	361
Provision	$ 0	$ 0	0	250
Balance at end of period	12,287	14,618	12,287	14,618
Consumer Loan
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance at beginning of period			305	387
Charge-offs			(7)	(86)
Recoveries			34	55
Provision			(75)	(1)
Balance at end of period	257	355	257	355
Commercial, industrial and agricultural
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance at beginning of period			1,168	1,787
Charge-offs			(80)	(290)
Recoveries			21	30
Provision			510	(331)
Balance at end of period	1,619	1,196	1,619	1,196
Real Estate - One to Four Family Residential
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance at beginning of period			3,562	4,501
Charge-offs			(469)	(358)
Recoveries			18	224
Provision			601	56
Balance at end of period	3,712	4,423	3,712	4,423
Real Estate - One to Four Family Residential | Closed end first and seconds
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance at beginning of period			1,884	2,859
Charge-offs			(332)	(304)
Recoveries			13	211
Provision			134	(188)
Balance at end of period	1,699	2,578	1,699	2,578
Real Estate - One to Four Family Residential | Home Equity Line of Credit
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance at beginning of period			1,678	1,642
Charge-offs			(137)	(54)
Recoveries			5	13
Provision			467	244
Balance at end of period	2,013	1,845	2,013	1,845
Real estate - multifamily residential
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance at beginning of period			89	79
Charge-offs			0	0
Recoveries			0	0
Provision			13	29
Balance at end of period	102	108	102	108
real estate - construction
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance at beginning of period			2,905	2,353
Charge-offs			(102)	0
Recoveries			1	8
Provision			43	432
Balance at end of period	2,847	2,793	2,847	2,793
real estate - construction | One To Four Family Residential
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance at beginning of period			235	364
Charge-offs			(102)	0
Recoveries			1	6
Provision			123	(69)
Balance at end of period	257	301	257	301
real estate - construction | Other construction, land development and other land
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance at beginning of period			2,670	1,989
Charge-offs			0	0
Recoveries			0	2
Provision			(80)	501
Balance at end of period	2,590	2,492	2,590	2,492
Real estate - farmland
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance at beginning of period			144	116
Charge-offs			0	0
Recoveries			0	0
Provision			(65)	11
Balance at end of period	79	127	79	127
Real Estate - Non-farm, Non-residential
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance at beginning of period			4,324	5,006
Charge-offs			(139)	0
Recoveries			1	30
Provision			(1,180)	(289)
Balance at end of period	3,006	4,747	3,006	4,747
Real Estate - Non-farm, Non-residential | Owner Occupied
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance at beginning of period			2,416	3,236
Charge-offs			(139)	0
Recoveries			1	27
Provision			(440)	(1,144)
Balance at end of period	1,838	2,119	1,838	2,119
Real Estate - Non-farm, Non-residential | Non-owner Occupied
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance at beginning of period			1,908	1,770
Charge-offs			0	0
Recoveries			0	3
Provision			(740)	855
Balance at end of period	1,168	2,628	1,168	2,628
Other
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance at beginning of period			524	538
Charge-offs			(24)	(26)
Recoveries			12	14
Provision			153	343
Balance at end of period	$ 665	$ 869	$ 665	$ 869

XML

Aging of Recorded Investment in Past Due Loans (Detail) - USD ($) $ in Thousands		Jun. 30, 2015	Dec. 31, 2014
Financing Receivable Recorded Investment Nonaccrual Status [Line Items]
Total Past Due		$ 16,428	$ 14,192
Total Current	[1]	824,282	806,377
Total Loans		840,710	820,569
Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable Recorded Investment Nonaccrual Status [Line Items]
Total Past Due		7,226	8,344
Financing Receivables, 60 to 89 Days Past Due [Member]
Financing Receivable Recorded Investment Nonaccrual Status [Line Items]
Total Past Due		3,772	1,319
Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Financing Receivable Recorded Investment Nonaccrual Status [Line Items]
Total Past Due		5,430	4,529
Commercial, industrial and agricultural
Financing Receivable Recorded Investment Nonaccrual Status [Line Items]
Total Past Due		603	657
Total Current	[1]	85,242	84,462
Total Loans		85,845	85,119
Commercial, industrial and agricultural | Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable Recorded Investment Nonaccrual Status [Line Items]
Total Past Due		206	278
Commercial, industrial and agricultural | Financing Receivables, 60 to 89 Days Past Due [Member]
Financing Receivable Recorded Investment Nonaccrual Status [Line Items]
Total Past Due		14	6
Commercial, industrial and agricultural | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Financing Receivable Recorded Investment Nonaccrual Status [Line Items]
Total Past Due		383	373
Real estate - one to four family residential
Financing Receivable Recorded Investment Nonaccrual Status [Line Items]
Total Past Due		11,647	8,611
Total Current	[1]	342,432	338,250
Total Loans		354,079	346,861
Real estate - one to four family residential | Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable Recorded Investment Nonaccrual Status [Line Items]
Total Past Due		6,272	5,881
Real estate - one to four family residential | Financing Receivables, 60 to 89 Days Past Due [Member]
Financing Receivable Recorded Investment Nonaccrual Status [Line Items]
Total Past Due		1,766	1,123
Real estate - one to four family residential | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Financing Receivable Recorded Investment Nonaccrual Status [Line Items]
Total Past Due		3,609	1,607
Real estate - one to four family residential | Closed end first and seconds
Financing Receivable Recorded Investment Nonaccrual Status [Line Items]
Total Past Due		11,059	7,885
Total Current	[1]	232,013	228,876
Total Loans		243,072	236,761
Real estate - one to four family residential | Closed end first and seconds | Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable Recorded Investment Nonaccrual Status [Line Items]
Total Past Due		6,038	5,515
Real estate - one to four family residential | Closed end first and seconds | Financing Receivables, 60 to 89 Days Past Due [Member]
Financing Receivable Recorded Investment Nonaccrual Status [Line Items]
Total Past Due		1,662	1,123
Real estate - one to four family residential | Closed end first and seconds | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Financing Receivable Recorded Investment Nonaccrual Status [Line Items]
Total Past Due		3,359	1,247
Real estate - one to four family residential | Home Equity Line of Credit
Financing Receivable Recorded Investment Nonaccrual Status [Line Items]
Total Past Due		588	726
Total Current	[1]	110,419	109,374
Total Loans		111,007	110,100
Real estate - one to four family residential | Home Equity Line of Credit | Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable Recorded Investment Nonaccrual Status [Line Items]
Total Past Due		234	366
Real estate - one to four family residential | Home Equity Line of Credit | Financing Receivables, 60 to 89 Days Past Due [Member]
Financing Receivable Recorded Investment Nonaccrual Status [Line Items]
Total Past Due		104	0
Real estate - one to four family residential | Home Equity Line of Credit | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Financing Receivable Recorded Investment Nonaccrual Status [Line Items]
Total Past Due		250	360
Real estate - multifamily residential
Financing Receivable Recorded Investment Nonaccrual Status [Line Items]
Total Past Due		0	0
Total Current	[1]	29,802	25,157
Total Loans		29,802	25,157
Real estate - multifamily residential | Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable Recorded Investment Nonaccrual Status [Line Items]
Total Past Due		0	0
Real estate - multifamily residential | Financing Receivables, 60 to 89 Days Past Due [Member]
Financing Receivable Recorded Investment Nonaccrual Status [Line Items]
Total Past Due		0	0
Real estate - multifamily residential | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Financing Receivable Recorded Investment Nonaccrual Status [Line Items]
Total Past Due		0	0
Real Estate - Construction
Financing Receivable Recorded Investment Nonaccrual Status [Line Items]
Total Past Due		270	376
Total Current	[1]	55,441	54,913
Total Loans		55,711	55,289
Real Estate - Construction | Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable Recorded Investment Nonaccrual Status [Line Items]
Total Past Due		80	155
Real Estate - Construction | Financing Receivables, 60 to 89 Days Past Due [Member]
Financing Receivable Recorded Investment Nonaccrual Status [Line Items]
Total Past Due		0	0
Real Estate - Construction | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Financing Receivable Recorded Investment Nonaccrual Status [Line Items]
Total Past Due		190	221
Real Estate - Construction | One To Four Family Residential
Financing Receivable Recorded Investment Nonaccrual Status [Line Items]
Total Past Due		269	371
Total Current	[1]	18,822	19,327
Total Loans		19,091	19,698
Real Estate - Construction | One To Four Family Residential | Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable Recorded Investment Nonaccrual Status [Line Items]
Total Past Due		80	150
Real Estate - Construction | One To Four Family Residential | Financing Receivables, 60 to 89 Days Past Due [Member]
Financing Receivable Recorded Investment Nonaccrual Status [Line Items]
Total Past Due		0	0
Real Estate - Construction | One To Four Family Residential | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Financing Receivable Recorded Investment Nonaccrual Status [Line Items]
Total Past Due		189	221
Real Estate - Construction | Other construction, land development and other land
Financing Receivable Recorded Investment Nonaccrual Status [Line Items]
Total Past Due		1	5
Total Current	[1]	36,619	35,586
Total Loans		36,620	35,591
Real Estate - Construction | Other construction, land development and other land | Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable Recorded Investment Nonaccrual Status [Line Items]
Total Past Due		0	5
Real Estate - Construction | Other construction, land development and other land | Financing Receivables, 60 to 89 Days Past Due [Member]
Financing Receivable Recorded Investment Nonaccrual Status [Line Items]
Total Past Due		0	0
Real Estate - Construction | Other construction, land development and other land | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Financing Receivable Recorded Investment Nonaccrual Status [Line Items]
Total Past Due		1	0
Real estate - farmland
Financing Receivable Recorded Investment Nonaccrual Status [Line Items]
Total Past Due		553	590
Total Current	[1]	10,000	8,881
Total Loans		10,553	9,471
Real estate - farmland | Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable Recorded Investment Nonaccrual Status [Line Items]
Total Past Due		273	0
Real estate - farmland | Financing Receivables, 60 to 89 Days Past Due [Member]
Financing Receivable Recorded Investment Nonaccrual Status [Line Items]
Total Past Due		280	0
Real estate - farmland | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Financing Receivable Recorded Investment Nonaccrual Status [Line Items]
Total Past Due		0	590
Real Estate - Non-farm, Non-residential
Financing Receivable Recorded Investment Nonaccrual Status [Line Items]
Total Past Due		3,317	3,769
Total Current	[1]	264,831	258,803
Total Loans		268,148	262,572
Real Estate - Non-farm, Non-residential | Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable Recorded Investment Nonaccrual Status [Line Items]
Total Past Due		387	1,873
Real Estate - Non-farm, Non-residential | Financing Receivables, 60 to 89 Days Past Due [Member]
Financing Receivable Recorded Investment Nonaccrual Status [Line Items]
Total Past Due		1,686	158
Real Estate - Non-farm, Non-residential | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Financing Receivable Recorded Investment Nonaccrual Status [Line Items]
Total Past Due		1,244	1,738
Real Estate - Non-farm, Non-residential | Owner Occupied
Financing Receivable Recorded Investment Nonaccrual Status [Line Items]
Total Past Due		2,426	3,769
Total Current	[1]	166,435	153,976
Total Loans		168,861	157,745
Real Estate - Non-farm, Non-residential | Owner Occupied | Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable Recorded Investment Nonaccrual Status [Line Items]
Total Past Due		172	1,873
Real Estate - Non-farm, Non-residential | Owner Occupied | Financing Receivables, 60 to 89 Days Past Due [Member]
Financing Receivable Recorded Investment Nonaccrual Status [Line Items]
Total Past Due		1,686	158
Real Estate - Non-farm, Non-residential | Owner Occupied | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Financing Receivable Recorded Investment Nonaccrual Status [Line Items]
Total Past Due		568	1,738
Real Estate - Non-farm, Non-residential | Non-owner Occupied
Financing Receivable Recorded Investment Nonaccrual Status [Line Items]
Total Past Due		891	0
Total Current	[1]	98,396	104,827
Total Loans		99,287	104,827
Real Estate - Non-farm, Non-residential | Non-owner Occupied | Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable Recorded Investment Nonaccrual Status [Line Items]
Total Past Due		215	0
Real Estate - Non-farm, Non-residential | Non-owner Occupied | Financing Receivables, 60 to 89 Days Past Due [Member]
Financing Receivable Recorded Investment Nonaccrual Status [Line Items]
Total Past Due		0	0
Real Estate - Non-farm, Non-residential | Non-owner Occupied | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Financing Receivable Recorded Investment Nonaccrual Status [Line Items]
Total Past Due		676	0
Consumer Loan
Financing Receivable Recorded Investment Nonaccrual Status [Line Items]
Total Past Due		38	189
Total Current	[1]	14,405	15,730
Total Loans		14,443	15,919
Consumer Loan | Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable Recorded Investment Nonaccrual Status [Line Items]
Total Past Due		8	157
Consumer Loan | Financing Receivables, 60 to 89 Days Past Due [Member]
Financing Receivable Recorded Investment Nonaccrual Status [Line Items]
Total Past Due		26	32
Consumer Loan | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Financing Receivable Recorded Investment Nonaccrual Status [Line Items]
Total Past Due		4	0
Other
Financing Receivable Recorded Investment Nonaccrual Status [Line Items]
Total Past Due		0	0
Total Current	[1]	22,129	20,181
Total Loans		22,129	20,181
Other | Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable Recorded Investment Nonaccrual Status [Line Items]
Total Past Due		0	0
Other | Financing Receivables, 60 to 89 Days Past Due [Member]
Financing Receivable Recorded Investment Nonaccrual Status [Line Items]
Total Past Due		0	0
Other | Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Financing Receivable Recorded Investment Nonaccrual Status [Line Items]
Total Past Due		$ 0	$ 0

[1] For purposes of this table only, the "Total Current" column includes loans that are 1-29 days past due.

XML

Stock Options Outstanding and Exercisable (Detail) - $ / shares		6 Months Ended
		Jun. 30, 2015	Dec. 31, 2014
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Stock Options Outstanding, Exercise Price		$ 18.77	$ 18.76
Stock Options Outstanding, Number Outstanding		102,887
Stock Options Outstanding, Weighted Average Remaining Term		1 year 6 months 22 days
Range One
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Stock Options Outstanding, Exercise Price		$ 20.57
Stock Options Outstanding, Number Outstanding		26,862
Stock Options Outstanding, Weighted Average Remaining Term	[1]
Range Two
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Stock Options Outstanding, Exercise Price		$ 21.16
Stock Options Outstanding, Number Outstanding		31,525
Stock Options Outstanding, Weighted Average Remaining Term		1 year 3 months
Range Three
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Stock Options Outstanding, Exercise Price		$ 19.25
Stock Options Outstanding, Number Outstanding		23,500
Stock Options Outstanding, Weighted Average Remaining Term		2 years 3 months
Range Four
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Stock Options Outstanding, Exercise Price		$ 12.36
Stock Options Outstanding, Number Outstanding		21,000
Stock Options Outstanding, Weighted Average Remaining Term		3 years 3 months

[1] These options expire on July 1, 2015.

XML

Allowance for Loan Losses and Recorded Investment in Loans by Portfolio Class Based on Impairment (Detail) - Entity [Domain] - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014	Jun. 30, 2014	Dec. 31, 2013
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance allocated to loans, Individually evaluated for impairment	$ 4,561	$ 5,324
Allowance allocated to loans, Collectively evaluated for impairment	7,726	7,697
Allowance allocated to loans, total	12,287	13,021	$ 14,618	$ 14,767
Individually evaluated for impairment, Total Loans	37,674	36,415
Collectively evaluated for impairment, Total Loans	794,724	776,332
Total Loans	840,710	820,569
Receivables Acquired with Deteriorated Credit Quality [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance allocated to loans,Acquired loans -purchase credit impaired	0	0
Acquired loans -purchase credit impaired,Total Loans	8,312	7,822
Consumer
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance allocated to loans, Individually evaluated for impairment	89	106
Allowance allocated to loans, Collectively evaluated for impairment	168	199
Allowance allocated to loans, total	257	305	355	387
Individually evaluated for impairment, Total Loans	348	371
Collectively evaluated for impairment, Total Loans	14,095	15,548
Total Loans	14,443	15,919
Consumer | Receivables Acquired with Deteriorated Credit Quality [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance allocated to loans,Acquired loans -purchase credit impaired	0	0
Acquired loans -purchase credit impaired,Total Loans	0	0
Commercial, industrial and agricultural
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance allocated to loans, Individually evaluated for impairment	309	0
Allowance allocated to loans, Collectively evaluated for impairment	1,310	1,168
Allowance allocated to loans, total	1,619	1,168	1,196	1,787
Individually evaluated for impairment, Total Loans	337	1,451
Collectively evaluated for impairment, Total Loans	84,931	82,645
Total Loans	85,845	85,119
Commercial, industrial and agricultural | Receivables Acquired with Deteriorated Credit Quality [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance allocated to loans,Acquired loans -purchase credit impaired	0	0
Acquired loans -purchase credit impaired,Total Loans	577	1,023
Real Estate - One to Four Family Residential
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance allocated to loans, Individually evaluated for impairment	857	1,006
Allowance allocated to loans, Collectively evaluated for impairment	2,855	2,556
Allowance allocated to loans, total	3,712	3,562	4,423	4,501
Individually evaluated for impairment, Total Loans	8,817	8,888
Collectively evaluated for impairment, Total Loans	343,882	336,566
Total Loans	354,079	346,861
Real Estate - One to Four Family Residential | Receivables Acquired with Deteriorated Credit Quality [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance allocated to loans,Acquired loans -purchase credit impaired	0	0
Acquired loans -purchase credit impaired,Total Loans	1,380	1,407
Real Estate - One to Four Family Residential | Closed end first and seconds
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance allocated to loans, Individually evaluated for impairment	592	1,006
Allowance allocated to loans, Collectively evaluated for impairment	1,107	878
Allowance allocated to loans, total	1,699	1,884	2,578	2,859
Individually evaluated for impairment, Total Loans	8,192	8,713
Collectively evaluated for impairment, Total Loans	233,533	226,674
Total Loans	243,072	236,761
Real Estate - One to Four Family Residential | Closed end first and seconds | Receivables Acquired with Deteriorated Credit Quality [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance allocated to loans,Acquired loans -purchase credit impaired	0	0
Acquired loans -purchase credit impaired,Total Loans	1,347	1,374
Real Estate - One to Four Family Residential | Home Equity Line of Credit
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance allocated to loans, Individually evaluated for impairment	265	0
Allowance allocated to loans, Collectively evaluated for impairment	1,748	1,678
Allowance allocated to loans, total	2,013	1,678	1,845	1,642
Individually evaluated for impairment, Total Loans	625	175
Collectively evaluated for impairment, Total Loans	110,349	109,892
Total Loans	111,007	110,100
Real Estate - One to Four Family Residential | Home Equity Line of Credit | Receivables Acquired with Deteriorated Credit Quality [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance allocated to loans,Acquired loans -purchase credit impaired	0	0
Acquired loans -purchase credit impaired,Total Loans	33	33
Real estate - multifamily residential
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance allocated to loans, Individually evaluated for impairment	0	0
Allowance allocated to loans, Collectively evaluated for impairment	102	89
Allowance allocated to loans, total	102	89	108	79
Individually evaluated for impairment, Total Loans	0	0
Collectively evaluated for impairment, Total Loans	29,802	25,157
Total Loans	29,802	25,157
Real estate - multifamily residential | Receivables Acquired with Deteriorated Credit Quality [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance allocated to loans,Acquired loans -purchase credit impaired	0	0
Acquired loans -purchase credit impaired,Total Loans	0	0
real estate - construction
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance allocated to loans, Individually evaluated for impairment	1,677	1,710
Allowance allocated to loans, Collectively evaluated for impairment	1,170	1,195
Allowance allocated to loans, total	2,847	2,905	2,793	2,353
Individually evaluated for impairment, Total Loans	5,894	5,837
Collectively evaluated for impairment, Total Loans	49,531	49,373
Total Loans	55,711	55,289
real estate - construction | Receivables Acquired with Deteriorated Credit Quality [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance allocated to loans,Acquired loans -purchase credit impaired	0	0
Acquired loans -purchase credit impaired,Total Loans	286	79
real estate - construction | One To Four Family Residential
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance allocated to loans, Individually evaluated for impairment	73	78
Allowance allocated to loans, Collectively evaluated for impairment	184	157
Allowance allocated to loans, total	257	235	301	364
Individually evaluated for impairment, Total Loans	260	176
Collectively evaluated for impairment, Total Loans	18,831	19,522
Total Loans	19,091	19,698
real estate - construction | One To Four Family Residential | Receivables Acquired with Deteriorated Credit Quality [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance allocated to loans,Acquired loans -purchase credit impaired	0	0
Acquired loans -purchase credit impaired,Total Loans	0	0
real estate - construction | Other construction, land development and other land
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance allocated to loans, Individually evaluated for impairment	1,604	1,632
Allowance allocated to loans, Collectively evaluated for impairment	986	1,038
Allowance allocated to loans, total	2,590	2,670	2,492	1,989
Individually evaluated for impairment, Total Loans	5,634	5,661
Collectively evaluated for impairment, Total Loans	30,700	29,851
Total Loans	36,620	35,591
real estate - construction | Other construction, land development and other land | Receivables Acquired with Deteriorated Credit Quality [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance allocated to loans,Acquired loans -purchase credit impaired	0	0
Acquired loans -purchase credit impaired,Total Loans	286	79
Real estate - farmland
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance allocated to loans, Individually evaluated for impairment	0	0
Allowance allocated to loans, Collectively evaluated for impairment	79	144
Allowance allocated to loans, total	79	144	127	116
Individually evaluated for impairment, Total Loans	0	0
Collectively evaluated for impairment, Total Loans	10,553	9,471
Total Loans	10,553	9,471
Real estate - farmland | Receivables Acquired with Deteriorated Credit Quality [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance allocated to loans,Acquired loans -purchase credit impaired	0	0
Acquired loans -purchase credit impaired,Total Loans	0	0
Real Estate - Non-farm, Non-residential
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance allocated to loans, Individually evaluated for impairment	1,629	2,502
Allowance allocated to loans, Collectively evaluated for impairment	1,377	1,822
Allowance allocated to loans, total	3,006	4,324	4,747	5,006
Individually evaluated for impairment, Total Loans	22,274	19,862
Collectively evaluated for impairment, Total Loans	239,805	237,397
Total Loans	268,148	262,572
Real Estate - Non-farm, Non-residential | Receivables Acquired with Deteriorated Credit Quality [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance allocated to loans,Acquired loans -purchase credit impaired	0	0
Acquired loans -purchase credit impaired,Total Loans	6,069	5,313
Real Estate - Non-farm, Non-residential | Owner Occupied
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance allocated to loans, Individually evaluated for impairment	911	1,240
Allowance allocated to loans, Collectively evaluated for impairment	927	1,176
Allowance allocated to loans, total	1,838	2,416	2,119	3,236
Individually evaluated for impairment, Total Loans	11,268	10,046
Collectively evaluated for impairment, Total Loans	153,185	145,858
Total Loans	168,861	157,745
Real Estate - Non-farm, Non-residential | Owner Occupied | Receivables Acquired with Deteriorated Credit Quality [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance allocated to loans,Acquired loans -purchase credit impaired	0	0
Acquired loans -purchase credit impaired,Total Loans	4,408	1,841
Real Estate - Non-farm, Non-residential | Non-owner Occupied
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance allocated to loans, Individually evaluated for impairment	718	1,262
Allowance allocated to loans, Collectively evaluated for impairment	450	646
Allowance allocated to loans, total	1,168	1,908	2,628	1,770
Individually evaluated for impairment, Total Loans	11,006	9,816
Collectively evaluated for impairment, Total Loans	86,620	91,539
Total Loans	99,287	104,827
Real Estate - Non-farm, Non-residential | Non-owner Occupied | Receivables Acquired with Deteriorated Credit Quality [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance allocated to loans,Acquired loans -purchase credit impaired	0	0
Acquired loans -purchase credit impaired,Total Loans	1,661	3,472
Other
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance allocated to loans, Individually evaluated for impairment	0	0
Allowance allocated to loans, Collectively evaluated for impairment	665	524
Allowance allocated to loans, total	665	524	$ 869	$ 538
Individually evaluated for impairment, Total Loans	4	6
Collectively evaluated for impairment, Total Loans	22,125	20,175
Total Loans	22,129	20,181
Other | Receivables Acquired with Deteriorated Credit Quality [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Allowance allocated to loans,Acquired loans -purchase credit impaired	0	0
Acquired loans -purchase credit impaired,Total Loans	$ 0	$ 0

XML

Estimated Fair Value and Carrying Value (Detail) - Fair Value by Asset Class [Domain] - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Assets:
Cash and short-term investments	$ 14,416	$ 14,024
Interest bearing deposits with banks	6,467	5,272	[1]
Securities available for sale	227,932	214,011
Securities held to maturity	30,671	32,163	[1]
Restricted securities	8,118	7,533	[1]
Loans, net	828,423	807,548
Bank owned life insurance	24,786	24,463	[1]
Accrued interest receivable	3,990	4,013
Total	1,144,803	1,109,027
Liabilities:
Noninterest-bearing demand deposits	178,844	162,328
Interest-bearing deposits	778,378	776,926	[1]
Short-term borrowings	103,094	91,703
Junior subordinated debt	10,310	10,310	[1]
Senior subordinated debt	19,140	0	[1]
Accrued interest payable	530	316
Total	1,090,296	1,041,583
Portion at Fair Value Measurement [Member]
Assets:
Cash and short-term investments	14,416	14,024
Interest bearing deposits with banks	6,467	5,272
Securities available for sale	227,932	214,011
Securities held to maturity	31,542	33,367
Restricted securities	8,118	7,533
Loans, net	831,604	812,429
Bank owned life insurance	24,786	24,463
Accrued interest receivable	3,990	4,013
Total	1,148,855	1,115,112
Liabilities:
Noninterest-bearing demand deposits	178,844	162,328
Interest-bearing deposits	729,618	721,240
Short-term borrowings	103,094	91,703
Junior subordinated debt	10,310	10,310
Senior subordinated debt	19,359
Accrued interest payable	530	316
Total	1,041,755	985,897
Quoted Prices in Active Markets for Identical Assets (Level 1)
Assets:
Cash and short-term investments		14,024
Interest bearing deposits with banks		5,272
Securities available for sale		0
Securities held to maturity		0
Restricted securities		0
Loans, net		0
Bank owned life insurance		0
Accrued interest receivable		0
Total		19,296
Liabilities:
Noninterest-bearing demand deposits		162,328
Interest-bearing deposits		0
Short-term borrowings		91,703
Junior subordinated debt		0
Accrued interest payable		0
Total		254,031
Quoted Prices in Active Markets for Identical Assets (Level 1) | Portion at Fair Value Measurement [Member]
Assets:
Cash and short-term investments	14,416
Interest bearing deposits with banks	6,467
Securities available for sale	0
Securities held to maturity	0
Restricted securities	0
Loans, net	0
Bank owned life insurance	0
Accrued interest receivable	0
Total	20,883
Liabilities:
Noninterest-bearing demand deposits	178,844
Interest-bearing deposits	0
Short-term borrowings	103,094
Junior subordinated debt	0
Senior subordinated debt	0
Accrued interest payable	0
Total	281,938
Significant Other Observable Inputs (Level 2)
Assets:
Total		283,387
Significant Other Observable Inputs (Level 2) | Portion at Fair Value Measurement [Member]
Assets:
Cash and short-term investments	0	0
Interest bearing deposits with banks	0	0
Securities available for sale	227,932	214,011
Securities held to maturity	31,542	33,367
Restricted securities	8,118	7,533
Loans, net	0	0
Bank owned life insurance	24,786	24,463
Accrued interest receivable	3,990	4,013
Total	296,368
Liabilities:
Noninterest-bearing demand deposits	0	0
Interest-bearing deposits	729,618	721,240
Short-term borrowings	0	0
Junior subordinated debt	10,310	10,310
Senior subordinated debt	19,359
Accrued interest payable	530	316
Total	759,817	731,866
Significant Unobservable Inputs (Level 3) | Portion at Fair Value Measurement [Member]
Assets:
Cash and short-term investments	0	0
Interest bearing deposits with banks	0	0
Securities available for sale	0	0
Securities held to maturity	0	0
Restricted securities	0	0
Loans, net	831,604	812,429
Bank owned life insurance	0	0
Accrued interest receivable	0	0
Total	831,604	812,429
Liabilities:
Noninterest-bearing demand deposits	0	0
Interest-bearing deposits	0	0
Short-term borrowings	0	0
Junior subordinated debt	0	0
Senior subordinated debt	0
Accrued interest payable	0	0
Total	$ 0	$ 0

[1] Derived from audited consolidated financial statements.

XML

Investment Securities - Additional Information (Detail)	1 Months Ended	3 Months Ended				6 Months Ended
	Sep. 22, 2014 USD ($)	Jun. 30, 2015 USD ($)	Jun. 30, 2014 USD ($)	Dec. 31, 2013 USD ($)	Jun. 30, 2010 USD ($)	Jun. 30, 2015 USD ($)	Jun. 30, 2014 USD ($)	Dec. 31, 2014 USD ($)	Dec. 09, 2014 USD ($)
Investment Securities [Line Items]
Impairment charge					$ 77,000
Reducing book value of investment					$ 0
Proceeds from sales of securities						$ 19,970,000	$ 20,527,000
Net realized gains on sale of securities		$ 26,000	$ 109,000			51,000	489,000
Proceeds from maturities, calls and paydowns of securities available for sale						12,537,000	9,053,000
Pledged securities, aggregate book value		50,600,000				50,600,000		$ 86,900,000
Pledged securities, aggregate fair value		51,300,000				51,300,000		87,100,000
Fair value of temporarily impaired debt securities		182,518,000				182,518,000		143,855,000
Investment in Federal Home Loan Bank of Atlanta stock		5,100,000				5,100,000		4,500,000
Estimated fair value of securties									$ 82,000
Available-for-sale Securities, Amortized Cost Basis, Total				$ 35,500,000
Available-for-sale Securities, Debt Securities				34,500,000
Available-for-sale Securities, Gross Unrealized Gain (Loss), Total				$ 994,000
Available For Sale Securities Continuous Unrealized Loss Position Less Than Twelve Months Fair Value		94,927,000				94,927,000		12,604,000
Available For Sale Securities Continuous Unrealized Loss Position Twelve Months Or Longer Fair Value		$ 87,591,000				87,591,000		$ 131,251,000
Proceeds from Maturities, Prepayments and Calls of Held-to-maturity Securities						$ 1,351,000	$ 1,248,000
Gain (Loss) on Sale of Investments	$ 2,000
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions, Less than One Year		90				90
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions, Greater than or Equal to One Year		64				64
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions		154				154

XML

Stock Based Compensation Plans (Tables)

6 Months Ended

Jun. 30, 2015

Stock Option Activity and Related Information

A summary of the Company’s stock option activity and related information is as follows:

					Remaining		Aggregate
	Options		Weighted Average		Contractual Life		Intrinsic Value
	Outstanding		Exercise Price		(in years)		(in thousands)
Stock options outstanding at January 1, 2015		110,487	$	18.76
Forfeited		(7,600)		18.65
Stock options outstanding at June 30, 2015		102,887	$	18.77		1.56	$	-
Stock options exercisable at June 30, 2015		102,887	$	18.77		1.56	$	-

* Intrinsic value is the amount by which the fair value of the underlying common stock exceeds the exercise price of a stock option on exercise date.

Stock Options Outstanding and Exercisable

The table below summarizes information concerning stock options outstanding and exercisable at June 30, 2015:

Stock Options Outstanding and Exercisable
Exercise		Number		Weighted Average
Price		Outstanding		Remaing Term
$	20.57		26,862	0.00 years*
$	21.16		31,525	1.25 years
$	19.25		23,500	2.25 years
$	12.36		21,000	3.25 years
$	18.77		102,887	1.56 years

*These options expire on July 1, 2015.

Nonvested Shares in Relation to Restricted Stock Awards and Changes

A summary of the status of the Company’s nonvested shares in relation to the Company’s restricted stock awards as of June 30, 2015, and changes during the six months ended June 30, 2015, is presented below; the weighted average price is the weighted average fair value at the date of grant:

			Weighted-Average
	Shares		Price
Nonvested as of January 1, 2015		104,142	$	5.85
Granted		45,000		6.28
Vested		(11,050)		4.64
Nonvested as of June 30, 2015		138,092	$	6.09

XML

Allocation of Preferred Stock Discount and Warrant (Detail) - Class Of Stock [Domain] - USD ($) $ / shares in Units, $ in Thousands	Jun. 30, 2015	Jan. 09, 2009
Warrant Value
Series A Preferred Stock		$ 24,000,000
Price	$ 9.374	$ 9.63
Warrant - shares		373,832
Value per warrant		$ 2.54
Fair value of warrant		$ 949,533

XML

Components of net periodic pension benefit plan (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Components of net periodic pension cost (benefit)
Interest cost	$ 101	$ 111	$ 202	$ 223
Expected return on plan assets	(179)	(186)	(357)	(372)
Amortization of prior service cost	3	2	5	4
Recognized net actuarial loss	27	0	54	0
Net settlement loss	53	0	53	0
Net periodic pension cost (benefit)	$ 5	$ (73)	$ (43)	$ (145)

XML

PCI Loan Portfolio Related To VCB Acquisition (Detail) $ in Thousands	Nov. 14, 2014 USD ($)
Contractual principal and interest at acquisition	$ 9,977
Nonaccretable difference	937
Accretable yield	1,185
PCI loans at acquisition, at estimated fair value	$ 7,855

XML

Assets Measured at Fair Value on Non-Recurring Basis (Detail) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Fair Value, Assets and Liabilities Measured on Nonrecurring Basis [Line Items]
Assets measured at fair value on a non-recurring basis	$ 1,144,803	$ 1,109,027
Fair Value on Non-Recurring Basis | Impaired Loans
Fair Value, Assets and Liabilities Measured on Nonrecurring Basis [Line Items]
Assets measured at fair value on a non-recurring basis	14,338	17,852
Fair Value on Non-Recurring Basis | Other Real Estate Owned
Fair Value, Assets and Liabilities Measured on Nonrecurring Basis [Line Items]
Assets measured at fair value on a non-recurring basis	1,344	1,838
Quoted Prices in Active Markets for Identical Assets (Level 1)
Fair Value, Assets and Liabilities Measured on Nonrecurring Basis [Line Items]
Assets measured at fair value on a non-recurring basis		19,296
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair Value on Non-Recurring Basis | Impaired Loans
Fair Value, Assets and Liabilities Measured on Nonrecurring Basis [Line Items]
Assets measured at fair value on a non-recurring basis	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair Value on Non-Recurring Basis | Other Real Estate Owned
Fair Value, Assets and Liabilities Measured on Nonrecurring Basis [Line Items]
Assets measured at fair value on a non-recurring basis	0	0
Significant Other Observable Inputs (Level 2)
Fair Value, Assets and Liabilities Measured on Nonrecurring Basis [Line Items]
Assets measured at fair value on a non-recurring basis		283,387
Significant Other Observable Inputs (Level 2) | Fair Value on Non-Recurring Basis | Impaired Loans
Fair Value, Assets and Liabilities Measured on Nonrecurring Basis [Line Items]
Assets measured at fair value on a non-recurring basis	0	0
Significant Other Observable Inputs (Level 2) | Fair Value on Non-Recurring Basis | Other Real Estate Owned
Fair Value, Assets and Liabilities Measured on Nonrecurring Basis [Line Items]
Assets measured at fair value on a non-recurring basis	0	0
Significant Unobservable Inputs (Level 3) | Impaired Loans
Fair Value, Assets and Liabilities Measured on Nonrecurring Basis [Line Items]
Assets measured at fair value on a non-recurring basis		17,852
Significant Unobservable Inputs (Level 3) | Other Real Estate Owned
Fair Value, Assets and Liabilities Measured on Nonrecurring Basis [Line Items]
Assets measured at fair value on a non-recurring basis		1,838
Significant Unobservable Inputs (Level 3) | Fair Value on Non-Recurring Basis | Impaired Loans
Fair Value, Assets and Liabilities Measured on Nonrecurring Basis [Line Items]
Assets measured at fair value on a non-recurring basis	14,338	17,852
Significant Unobservable Inputs (Level 3) | Fair Value on Non-Recurring Basis | Other Real Estate Owned
Fair Value, Assets and Liabilities Measured on Nonrecurring Basis [Line Items]
Assets measured at fair value on a non-recurring basis	$ 1,344	$ 1,838

XML

Gains on the sale securities and amortization of unrealized losses (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Accumulated Other Comprehensive Income (Loss) [Line Items]
Gains on sale of available for sale securities	$ 26	$ 109	$ 51	$ 489
Less: tax effect	(8)	(37)	(17)	(166)
Net gains on the sale of available for sale securities	18	72	34	323
Amortization of unrealized losses on securities transferred from available for sale to held to maturity	(57)	(78)	(97)	(121)
Less: tax effect	19	26	33	41
Net amortization of unrealized losses on securities transferred from available for sale to held to maturity	$ (38)	$ (52)	$ (64)	$ (80)

XML

Preferred Stock and Warrant - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Thousands			1 Months Ended	6 Months Ended
	May. 13, 2015	Jan. 09, 2009	Jun. 15, 2015	Jun. 30, 2015	Jun. 30, 2014	Dec. 31, 2014	Aug. 15, 2014	Oct. 21, 2013	Jun. 12, 2013
Preferred Securities And Warrants [Line Items]
Preferred stock, shares issued								24,000
Cumulative dividend payment condition		The Series A Preferred Stock paid a cumulative dividend at a rate of 5% for the first five years, and effective January 9, 2014, paid a rate of 9%.
Percentage of cumulative dividend rate		12.00%
Warrant to purchase up to shares		373,832
Fair value of warrant		$ 949,533
Average volatility used to calculate fair value of warrants		7 years
Years of treasure strip rate used calculate fair value of warrants		7 years
Exercisable period for warrants		10 years
NPV of preferred stock, Fair Value		$ 24,000
Present value of preferred stock constant effective yield rate		6.40%
Preferred Stock Par Or Stated Value Per Share				$ 2		$ 2
Class of Warrant or Right, Exercise Price of Warrants or Rights		$ 9.63		$ 9.374
Warrants to Purchase Shares of Common Stock				384,041.19
Payments for Repurchase of Warrants	$ 115			$ 115	$ 0
Payments for Repurchase of Preferred Stock and Preference Stock				$ 14,000	$ 0
Series A Preferred Stock [Member]
Preferred Securities And Warrants [Line Items]
Preferred stock, shares issued		24,000
Percentage of cumulative dividend rate		12.00%
NPV of preferred stock, Fair Value		$ 14,400
Accumulated dividend on preferred stock							$ 5,500
Preferred Stock Par Or Stated Value Per Share		$ 1,000
Payments for Repurchase of Preferred Stock and Preference Stock			$ 9,000
Series B Preferred Stock [Member]
Preferred Securities And Warrants [Line Items]
Preferred Stock Shares Outstanding									5,240,192
Preferred Stock, Liquidation Preference, Value									$ 23,800
Preferred Stock, Liquidation Preference Per Share									$ 4.55

XML

Quantitative Information About Level Three Fair Value Measurements (Detail) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Asset measured at fair value	$ 1,144,803	$ 1,109,027
Significant Unobservable Inputs (Level 3) | Impaired Loans
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Asset measured at fair value		17,852
Significant Unobservable Inputs (Level 3) | Other Real Estate Owned
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Asset measured at fair value		1,838
Discounted Appraised Value | Significant Unobservable Inputs (Level 3) | Impaired Loans | Selling Cost
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Asset measured at fair value	14,338	17,852
Discounted Appraised Value | Significant Unobservable Inputs (Level 3) | Other Real Estate Owned | Selling Cost
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Asset measured at fair value	$ 1,344	$ 1,838
Minimum | Significant Unobservable Inputs (Level 3) | Impaired Loans | Selling Cost
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Range	0.00%
Minimum | Significant Unobservable Inputs (Level 3) | Impaired Loans | Discount for Lack of Marketability and Age of Appraisal
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Range	0.00%	0.00%
Minimum | Significant Unobservable Inputs (Level 3) | Other Real Estate Owned | Selling Cost
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Range	10.00%
Minimum | Significant Unobservable Inputs (Level 3) | Other Real Estate Owned | Discount for Lack of Marketability and Age of Appraisal
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Range	0.00%	0.00%
Minimum | Discounted Appraised Value | Significant Unobservable Inputs (Level 3) | Impaired Loans | Selling Cost
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Range		0.00%
Minimum | Discounted Appraised Value | Significant Unobservable Inputs (Level 3) | Other Real Estate Owned | Selling Cost
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Range		10.00%
Maximum | Significant Unobservable Inputs (Level 3) | Impaired Loans | Selling Cost
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Range	24.00%
Maximum | Significant Unobservable Inputs (Level 3) | Impaired Loans | Discount for Lack of Marketability and Age of Appraisal
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Range	25.00%	35.00%
Maximum | Significant Unobservable Inputs (Level 3) | Other Real Estate Owned | Discount for Lack of Marketability and Age of Appraisal
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Range	34.00%	22.00%
Maximum | Discounted Appraised Value | Significant Unobservable Inputs (Level 3) | Impaired Loans | Selling Cost
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Range		30.00%
Average | Significant Unobservable Inputs (Level 3) | Impaired Loans | Selling Cost
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Range	12.00%
Average | Significant Unobservable Inputs (Level 3) | Impaired Loans | Discount for Lack of Marketability and Age of Appraisal
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Range	9.00%	13.00%
Average | Significant Unobservable Inputs (Level 3) | Other Real Estate Owned | Selling Cost
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Range	10.00%
Average | Significant Unobservable Inputs (Level 3) | Other Real Estate Owned | Discount for Lack of Marketability and Age of Appraisal
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Range	29.00%	2.00%
Average | Discounted Appraised Value | Significant Unobservable Inputs (Level 3) | Impaired Loans | Selling Cost
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Range		9.00%
Average | Discounted Appraised Value | Significant Unobservable Inputs (Level 3) | Other Real Estate Owned | Selling Cost
Fair Value Inputs, Assets, Quantitative Information [Line Items]
Range		10.00%

XML

Nonvested Shares in Relation to Restricted Stock Awards and Changes (Detail) - 6 months ended Jun. 30, 2015 - $ / shares	Total
Shares
Nonvested as of January 1, 2015	104,142
Granted	45,000
Vested	(11,050)
Nonvested as of June 30, 2015	138,092
Weighted-Average Price
Nonvested as of January 1, 2015	$ 5.85
Granted	6.28
Vested	4.64
Nonvested as of June 30, 2015	$ 6.09

XML

Accumulated Other Comprehensive Loss

6 Months Ended

Jun. 30, 2015

Accumulated Other Comprehensive Income Loss Note

Note 16. Accumulated Other Comprehensive Loss

The changes in accumulated other comprehensive loss for the six months ended June 30, 2015 and 2014 are summarized as follows:

					Accumulated
	Unrealized		Adjustments		Other
	Securities		Related to		Comprehensive
(dollars in thousands)	Gains (Losses)		Pension Plan		Loss
Balance at December 31, 2014	$	(1,954)	$	(2,112)	$	(4,066)
Other comprehensive (loss) before reclassification and amortization		(597)		-		(597)
Reclassification adjustment for gains included in net income		(34)		-		(34)
Net amortization of unrealized losses on securities transferred from available for sale to held to maturity		64		-		64
Net current period other comprehensive (loss)		(567)		-		(567)
Balance at June 30, 2015	$	(2,521)	$	(2,112)	$	(4,633)
Balance at December 31, 2013	$	(8,396)	$	(472)	$	(8,868)
Other comprehensive income before reclassification and amortization		4,364		-		4,364
Reclassification adjustment for gains included in net income		(323)		-		(323)
Net amortization of unrealized losses on securities transferred from available for sale to held to maturity		80		-		80
Net current period other comprehensive income		4,121		-		4,121
Balance at June 30, 2014	$	(4,275)	$	(472)	$	(4,747)

Reclassifications of gains on securities available for sale are reported in the consolidated statements of income as “Gain on sale of available for sale securities, net” with the corresponding income tax effect being reflected as a component of income tax expense. Amortization of unrealized losses on securities transferred from available for sale to held to maturity is included in interest income on investments (taxable or non-taxable, as appropriate) in the Company’s consolidated statements of income.

During the three and six months ended June 30, 2015 and 2014, the Company reported gains on the sale of available for sale securities and amortization of unrealized losses on securities transferred from available for sale to held to maturity as shown in the following table:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
(dollars in thousands)	2015		2014		2015		2014
Gains on sale of available for sale securities	$	26	$	109	$	51	$	489
Less: tax effect		(8)		(37)		(17)		(166)
Net gains on the sale of available for sale securities	$	18	$	72	$	34	$	323
Amortization of unrealized losses on securities transferred from available for sale to held to maturity	$	(57)	$	(78)	$	(97)	$	(121)
Less: tax effect		19		26		33		41
Net amortization of unrealized losses on securities transferred from available for sale to held to maturity	$	(38)	$	(52)	$	(64)	$	(80)

XML

Outstanding Principal Balance and Carrying Amount (Detail) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Loans and Leases Receivable,Acquired Loans -Total	$ 828,423	$ 807,548	[1]
Receivables Acquired with Deteriorated Credit Quality [Member]
Financing Receivable, Acquired Loans -Purchased Credit Impaired	8,312	7,822
Virginia Company Bank [Member]
Loans and Leases Receivable,Acquired Loans -Purchased Performing	65,007	87,686
Loans and Leases Receivable,Acquired Loans -Total	73,319	95,508
Virginia Company Bank [Member] | Receivables Acquired with Deteriorated Credit Quality [Member]
Financing Receivable, Acquired Loans -Purchased Credit Impaired	8,312	7,822
Consumer Loan [Member] | Receivables Acquired with Deteriorated Credit Quality [Member]
Financing Receivable, Acquired Loans -Purchased Credit Impaired	0	0
Consumer Loan [Member] | Virginia Company Bank [Member]
Loans and Leases Receivable,Acquired Loans -Purchased Performing	435	1,462
Loans and Leases Receivable,Acquired Loans -Total	435	1,462
Consumer Loan [Member] | Virginia Company Bank [Member] | Receivables Acquired with Deteriorated Credit Quality [Member]
Financing Receivable, Acquired Loans -Purchased Credit Impaired	0	0
Commercial Industrial And Agricultural [Member] | Receivables Acquired with Deteriorated Credit Quality [Member]
Financing Receivable, Acquired Loans -Purchased Credit Impaired	577	1,023
Commercial Industrial And Agricultural [Member] | Virginia Company Bank [Member]
Loans and Leases Receivable,Acquired Loans -Purchased Performing	7,051	15,673
Loans and Leases Receivable,Acquired Loans -Total	7,628	16,696
Commercial Industrial And Agricultural [Member] | Virginia Company Bank [Member] | Receivables Acquired with Deteriorated Credit Quality [Member]
Financing Receivable, Acquired Loans -Purchased Credit Impaired	577	1,023
Real Estate One To Four Family Residential [Member] | Receivables Acquired with Deteriorated Credit Quality [Member]
Financing Receivable, Acquired Loans -Purchased Credit Impaired	1,380	1,407
Real Estate One To Four Family Residential [Member] | Virginia Company Bank [Member]
Loans and Leases Receivable,Acquired Loans -Purchased Performing	18,608	18,333
Loans and Leases Receivable,Acquired Loans -Total	19,988	19,740
Real Estate One To Four Family Residential [Member] | Virginia Company Bank [Member] | Receivables Acquired with Deteriorated Credit Quality [Member]
Financing Receivable, Acquired Loans -Purchased Credit Impaired	1,380	1,407
Real Estate One To Four Family Residential [Member] | Closed End First And Seconds [Member] | Receivables Acquired with Deteriorated Credit Quality [Member]
Financing Receivable, Acquired Loans -Purchased Credit Impaired	1,347	1,374
Real Estate One To Four Family Residential [Member] | Closed End First And Seconds [Member] | Virginia Company Bank [Member]
Loans and Leases Receivable,Acquired Loans -Purchased Performing	7,758	6,475
Loans and Leases Receivable,Acquired Loans -Total	9,105	7,849
Real Estate One To Four Family Residential [Member] | Closed End First And Seconds [Member] | Virginia Company Bank [Member] | Receivables Acquired with Deteriorated Credit Quality [Member]
Financing Receivable, Acquired Loans -Purchased Credit Impaired	1,347	1,374
Real Estate One To Four Family Residential [Member] | Home Equity Lines [Member] | Virginia Company Bank [Member]
Loans and Leases Receivable,Acquired Loans -Purchased Performing	10,850	11,858
Loans and Leases Receivable,Acquired Loans -Total	10,883	11,891
Real Estate One To Four Family Residential [Member] | Home Equity Lines [Member] | Virginia Company Bank [Member] | Receivables Acquired with Deteriorated Credit Quality [Member]
Financing Receivable, Acquired Loans -Purchased Credit Impaired	33	33
Real Estate Multifamily Residential [Member] | Receivables Acquired with Deteriorated Credit Quality [Member]
Financing Receivable, Acquired Loans -Purchased Credit Impaired	0	0
Real Estate Multifamily Residential [Member] | Virginia Company Bank [Member]
Loans and Leases Receivable,Acquired Loans -Purchased Performing	3,790	3,539
Loans and Leases Receivable,Acquired Loans -Total	3,790	3,539
Real Estate Multifamily Residential [Member] | Virginia Company Bank [Member] | Receivables Acquired with Deteriorated Credit Quality [Member]
Financing Receivable, Acquired Loans -Purchased Credit Impaired	0	0
Real Estate Construction [Member] | Receivables Acquired with Deteriorated Credit Quality [Member]
Financing Receivable, Acquired Loans -Purchased Credit Impaired	286	79
Real Estate Construction [Member] | Virginia Company Bank [Member]
Loans and Leases Receivable,Acquired Loans -Purchased Performing	3,820	6,880
Loans and Leases Receivable,Acquired Loans -Total	4,106	6,959
Real Estate Construction [Member] | Virginia Company Bank [Member] | Receivables Acquired with Deteriorated Credit Quality [Member]
Financing Receivable, Acquired Loans -Purchased Credit Impaired	286	79
Real Estate Construction [Member] | One To Four Family Residential [Member] | Receivables Acquired with Deteriorated Credit Quality [Member]
Financing Receivable, Acquired Loans -Purchased Credit Impaired	0	0
Real Estate Construction [Member] | One To Four Family Residential [Member] | Virginia Company Bank [Member]
Loans and Leases Receivable,Acquired Loans -Purchased Performing	1,945	3,206
Loans and Leases Receivable,Acquired Loans -Total	1,945	3,206
Real Estate Construction [Member] | One To Four Family Residential [Member] | Virginia Company Bank [Member] | Receivables Acquired with Deteriorated Credit Quality [Member]
Financing Receivable, Acquired Loans -Purchased Credit Impaired	0	0
Real Estate Construction [Member] | Other Construction Land Development And Other Land [Member] | Receivables Acquired with Deteriorated Credit Quality [Member]
Financing Receivable, Acquired Loans -Purchased Credit Impaired	286	79
Real Estate Construction [Member] | Other Construction Land Development And Other Land [Member] | Virginia Company Bank [Member]
Loans and Leases Receivable,Acquired Loans -Purchased Performing	1,875	3,674
Loans and Leases Receivable,Acquired Loans -Total	2,161	3,753
Real Estate Construction [Member] | Other Construction Land Development And Other Land [Member] | Virginia Company Bank [Member] | Receivables Acquired with Deteriorated Credit Quality [Member]
Financing Receivable, Acquired Loans -Purchased Credit Impaired	286	79
Real Estate And Farmland [Member] | Receivables Acquired with Deteriorated Credit Quality [Member]
Financing Receivable, Acquired Loans -Purchased Credit Impaired	0	0
Real Estate And Farmland [Member] | Virginia Company Bank [Member]
Loans and Leases Receivable,Acquired Loans -Purchased Performing	0	0
Loans and Leases Receivable,Acquired Loans -Total	0	0
Real Estate And Farmland [Member] | Virginia Company Bank [Member] | Receivables Acquired with Deteriorated Credit Quality [Member]
Financing Receivable, Acquired Loans -Purchased Credit Impaired	0	0
Real Estate Non Farm And Non Residential [Member] | Receivables Acquired with Deteriorated Credit Quality [Member]
Financing Receivable, Acquired Loans -Purchased Credit Impaired	6,069	5,313
Real Estate Non Farm And Non Residential [Member] | Virginia Company Bank [Member]
Loans and Leases Receivable,Acquired Loans -Purchased Performing	30,458	41,799
Loans and Leases Receivable,Acquired Loans -Total	36,527	47,112
Real Estate Non Farm And Non Residential [Member] | Virginia Company Bank [Member] | Receivables Acquired with Deteriorated Credit Quality [Member]
Financing Receivable, Acquired Loans -Purchased Credit Impaired	6,069	5,313
Real Estate Non Farm And Non Residential [Member] | Non Owner Occupied [Member] | Receivables Acquired with Deteriorated Credit Quality [Member]
Financing Receivable, Acquired Loans -Purchased Credit Impaired	1,661	3,472
Real Estate Non Farm And Non Residential [Member] | Non Owner Occupied [Member] | Virginia Company Bank [Member]
Loans and Leases Receivable,Acquired Loans -Purchased Performing	12,460	20,762
Loans and Leases Receivable,Acquired Loans -Total	14,121	24,234
Real Estate Non Farm And Non Residential [Member] | Non Owner Occupied [Member] | Virginia Company Bank [Member] | Receivables Acquired with Deteriorated Credit Quality [Member]
Financing Receivable, Acquired Loans -Purchased Credit Impaired	1,661	3,472
Real Estate Non Farm And Non Residential [Member] | Owner Occupied [Member] | Receivables Acquired with Deteriorated Credit Quality [Member]
Financing Receivable, Acquired Loans -Purchased Credit Impaired	4,408	1,841
Real Estate Non Farm And Non Residential [Member] | Owner Occupied [Member] | Virginia Company Bank [Member]
Loans and Leases Receivable,Acquired Loans -Purchased Performing	17,998	21,037
Loans and Leases Receivable,Acquired Loans -Total	22,406	22,878
Real Estate Non Farm And Non Residential [Member] | Owner Occupied [Member] | Virginia Company Bank [Member] | Receivables Acquired with Deteriorated Credit Quality [Member]
Financing Receivable, Acquired Loans -Purchased Credit Impaired	4,408	1,841
Other Loan [Member] | Receivables Acquired with Deteriorated Credit Quality [Member]
Financing Receivable, Acquired Loans -Purchased Credit Impaired	0	0
Other Loan [Member] | Virginia Company Bank [Member]
Loans and Leases Receivable,Acquired Loans -Purchased Performing	845	0
Loans and Leases Receivable,Acquired Loans -Total	845	0
Other Loan [Member] | Virginia Company Bank [Member] | Receivables Acquired with Deteriorated Credit Quality [Member]
Financing Receivable, Acquired Loans -Purchased Credit Impaired	$ 0	$ 0

[1] Derived from audited consolidated financial statements.

XML

Business Combinations - Additional Information (Detail) $ / shares in Units, $ in Thousands	1 Months Ended	3 Months Ended	6 Months Ended
	Nov. 14, 2014 USD ($) $ / shares	Jun. 30, 2015 USD ($)	Jun. 30, 2015 USD ($)	Dec. 31, 2014 USD ($)	[1]
Payments to Acquire Businesses, Gross			$ 6,688
Goodwill		$ 17,085	17,085	$ 17,085
Business Combination, Acquisition Related Costs		$ 168	$ 224
VCB [Member]
Goodwill	$ 1,100
VCB [Member] | Common Stock [Member]
Business Acquisition, Share Price | $ / shares	$ 6.25
Payments to Acquire Businesses, Gross	$ 2,400
Business Acquisition, Equity Interest Issued or Issuable, Value Assigned	$ 6,700
Share Price | $ / shares	$ 6.27
Business Acquisition Common Stock Exchange Rate	0.9259
Series A Preferred Stock [Member] | VCB [Member]
Business Acquisition, Equity Interest Issued or Issuable, Value Assigned	$ 4,300

[1] Derived from audited consolidated financial statements.

XML

Financial Assets Measured at Fair Value on Recurring Basis (Detail) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Assets and Liabilities At Fair Value On Recurring Basis [Line Items]
Total securities available for sale	$ 227,932	$ 214,011	[1]
Fair Value on Recurring Basis
Assets and Liabilities At Fair Value On Recurring Basis [Line Items]
Total securities available for sale	227,932	214,011
Fair Value on Recurring Basis | Obligations of U.S. Government agencies
Assets and Liabilities At Fair Value On Recurring Basis [Line Items]
Total securities available for sale	13,081	14,569
Fair Value on Recurring Basis | SBA Pool securities
Assets and Liabilities At Fair Value On Recurring Basis [Line Items]
Total securities available for sale	71,007	74,799
Fair Value on Recurring Basis | Agency residential mortgage-backed securities
Assets and Liabilities At Fair Value On Recurring Basis [Line Items]
Total securities available for sale	19,400	28,629
Fair Value on Recurring Basis | Agency commercial mortgage-backed securities
Assets and Liabilities At Fair Value On Recurring Basis [Line Items]
Total securities available for sale	6,487
Fair Value on Recurring Basis | Agency CMO securities
Assets and Liabilities At Fair Value On Recurring Basis [Line Items]
Total securities available for sale	53,154	39,215
Fair Value on Recurring Basis | Non agency CMO securities
Assets and Liabilities At Fair Value On Recurring Basis [Line Items]
Total securities available for sale	704	828
Fair Value on Recurring Basis | State and political subdivisions
Assets and Liabilities At Fair Value On Recurring Basis [Line Items]
Total securities available for sale	64,090	55,926
Fair Value on Recurring Basis | FNMA and FHLMC preferred stock
Assets and Liabilities At Fair Value On Recurring Basis [Line Items]
Total securities available for sale	9	45
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair Value on Recurring Basis
Assets and Liabilities At Fair Value On Recurring Basis [Line Items]
Total securities available for sale	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair Value on Recurring Basis | Obligations of U.S. Government agencies
Assets and Liabilities At Fair Value On Recurring Basis [Line Items]
Total securities available for sale	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair Value on Recurring Basis | SBA Pool securities
Assets and Liabilities At Fair Value On Recurring Basis [Line Items]
Total securities available for sale	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair Value on Recurring Basis | Agency residential mortgage-backed securities
Assets and Liabilities At Fair Value On Recurring Basis [Line Items]
Total securities available for sale	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair Value on Recurring Basis | Agency commercial mortgage-backed securities
Assets and Liabilities At Fair Value On Recurring Basis [Line Items]
Total securities available for sale	0
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair Value on Recurring Basis | Agency CMO securities
Assets and Liabilities At Fair Value On Recurring Basis [Line Items]
Total securities available for sale	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair Value on Recurring Basis | Non agency CMO securities
Assets and Liabilities At Fair Value On Recurring Basis [Line Items]
Total securities available for sale	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair Value on Recurring Basis | State and political subdivisions
Assets and Liabilities At Fair Value On Recurring Basis [Line Items]
Total securities available for sale	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) | Fair Value on Recurring Basis | FNMA and FHLMC preferred stock
Assets and Liabilities At Fair Value On Recurring Basis [Line Items]
Total securities available for sale	0	0
Significant Other Observable Inputs (Level 2) | Fair Value on Recurring Basis
Assets and Liabilities At Fair Value On Recurring Basis [Line Items]
Total securities available for sale	227,932	214,011
Significant Other Observable Inputs (Level 2) | Fair Value on Recurring Basis | Obligations of U.S. Government agencies
Assets and Liabilities At Fair Value On Recurring Basis [Line Items]
Total securities available for sale	13,081	14,569
Significant Other Observable Inputs (Level 2) | Fair Value on Recurring Basis | SBA Pool securities
Assets and Liabilities At Fair Value On Recurring Basis [Line Items]
Total securities available for sale	71,007	74,799
Significant Other Observable Inputs (Level 2) | Fair Value on Recurring Basis | Agency residential mortgage-backed securities
Assets and Liabilities At Fair Value On Recurring Basis [Line Items]
Total securities available for sale	19,400	28,629
Significant Other Observable Inputs (Level 2) | Fair Value on Recurring Basis | Agency commercial mortgage-backed securities
Assets and Liabilities At Fair Value On Recurring Basis [Line Items]
Total securities available for sale	6,487
Significant Other Observable Inputs (Level 2) | Fair Value on Recurring Basis | Agency CMO securities
Assets and Liabilities At Fair Value On Recurring Basis [Line Items]
Total securities available for sale	53,154	39,215
Significant Other Observable Inputs (Level 2) | Fair Value on Recurring Basis | Non agency CMO securities
Assets and Liabilities At Fair Value On Recurring Basis [Line Items]
Total securities available for sale	704	828
Significant Other Observable Inputs (Level 2) | Fair Value on Recurring Basis | State and political subdivisions
Assets and Liabilities At Fair Value On Recurring Basis [Line Items]
Total securities available for sale	64,090	55,926
Significant Other Observable Inputs (Level 2) | Fair Value on Recurring Basis | FNMA and FHLMC preferred stock
Assets and Liabilities At Fair Value On Recurring Basis [Line Items]
Total securities available for sale	9	45
Significant UnObservable Inputs (Level 3) | Fair Value on Recurring Basis
Assets and Liabilities At Fair Value On Recurring Basis [Line Items]
Total securities available for sale	0	0
Significant UnObservable Inputs (Level 3) | Fair Value on Recurring Basis | Obligations of U.S. Government agencies
Assets and Liabilities At Fair Value On Recurring Basis [Line Items]
Total securities available for sale	0	0
Significant UnObservable Inputs (Level 3) | Fair Value on Recurring Basis | SBA Pool securities
Assets and Liabilities At Fair Value On Recurring Basis [Line Items]
Total securities available for sale	0	0
Significant UnObservable Inputs (Level 3) | Fair Value on Recurring Basis | Agency residential mortgage-backed securities
Assets and Liabilities At Fair Value On Recurring Basis [Line Items]
Total securities available for sale	0	0
Significant UnObservable Inputs (Level 3) | Fair Value on Recurring Basis | Agency commercial mortgage-backed securities
Assets and Liabilities At Fair Value On Recurring Basis [Line Items]
Total securities available for sale	0
Significant UnObservable Inputs (Level 3) | Fair Value on Recurring Basis | Agency CMO securities
Assets and Liabilities At Fair Value On Recurring Basis [Line Items]
Total securities available for sale	0	0
Significant UnObservable Inputs (Level 3) | Fair Value on Recurring Basis | Non agency CMO securities
Assets and Liabilities At Fair Value On Recurring Basis [Line Items]
Total securities available for sale	0	0
Significant UnObservable Inputs (Level 3) | Fair Value on Recurring Basis | State and political subdivisions
Assets and Liabilities At Fair Value On Recurring Basis [Line Items]
Total securities available for sale	0	0
Significant UnObservable Inputs (Level 3) | Fair Value on Recurring Basis | FNMA and FHLMC preferred stock
Assets and Liabilities At Fair Value On Recurring Basis [Line Items]
Total securities available for sale	$ 0	$ 0

[1] Derived from audited consolidated financial statements.

XML

Capital Requirements (Tables)

6 Months Ended

Jun. 30, 2015

Actual Capital Amounts and Ratios

The capital ratios of the Company and the Bank as of June 30, 2015 and December 31, 2014, presented with related minimum regulatory guidelines, is as follows:

							Minimum To Be
As of June 30, 2015							Well-Capitalized
				Minimum			Under Prompt
				Capital			Corrective Action
	Actual Capital			Requirements			Provisions
CET1 to risk weighted assets:
Company		9.59	%		4.50	%		N/A
Bank		12.53	%		4.50	%		6.50	%
Tier 1 capital to risk weighted assets:
Company		12.58	%		6.00	%		N/A
Bank		12.53	%		6.00	%		8.00	%
Total capital to risk weighted assets:
Company		16.12	%		8.00	%		N/A
Bank		13.78	%		8.00	%		10.00	%
Tier 1 capital to average assets:
Company		9.44	%		4.00	%		N/A
Bank		9.39	%		4.00	%		5.00	%

							Minimum to be
As of December 31, 2014							Well-Capitalized
				Minimum			Under Prompt
				Capital			Corrective Action
	Actual Capital			Requirements			Provisions
Tier 1 capital to risk weighted assets:
Company		14.06	%		4.00	%		N/A
Bank		12.28	%		4.00	%		6.00	%
Total capital to risk weighted assets:
Company		15.31	%		8.00	%		N/A
Bank		13.53	%		8.00	%		10.00	%
Tier 1 capital to average assets:
Company		10.76	%		4.00	%		N/A
Bank		9.40	%		4.00	%		5.00	%

XML

Commercial Loans by Credit Quality Indicator (Detail) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Financing Receivable, Recorded Investment [Line Items]
Total commercial loans	$ 450,059	$ 437,608
Pass
Financing Receivable, Recorded Investment [Line Items]
Total commercial loans	389,853	376,930
Special Mention
Financing Receivable, Recorded Investment [Line Items]
Total commercial loans	16,833	20,980
Substandard
Financing Receivable, Recorded Investment [Line Items]
Total commercial loans	7,706	6,133
Doubtful
Financing Receivable, Recorded Investment [Line Items]
Total commercial loans	230	0
Impaired
Financing Receivable, Recorded Investment [Line Items]
Total commercial loans	28,505	27,150
Acquired loans - purchase credit impaired
Financing Receivable, Recorded Investment [Line Items]
Total commercial loans	6,932	6,415
Commercial, industrial and agricultural
Financing Receivable, Recorded Investment [Line Items]
Total commercial loans	85,845	85,119
Commercial, industrial and agricultural | Pass
Financing Receivable, Recorded Investment [Line Items]
Total commercial loans	80,879	79,191
Commercial, industrial and agricultural | Special Mention
Financing Receivable, Recorded Investment [Line Items]
Total commercial loans	3,269	2,779
Commercial, industrial and agricultural | Substandard
Financing Receivable, Recorded Investment [Line Items]
Total commercial loans	553	675
Commercial, industrial and agricultural | Doubtful
Financing Receivable, Recorded Investment [Line Items]
Total commercial loans	230	0
Commercial, industrial and agricultural | Impaired
Financing Receivable, Recorded Investment [Line Items]
Total commercial loans	337	1,451
Commercial, industrial and agricultural | Acquired loans - purchase credit impaired
Financing Receivable, Recorded Investment [Line Items]
Total commercial loans	577	1,023
Real estate - multifamily residential
Financing Receivable, Recorded Investment [Line Items]
Total commercial loans	29,802	25,157
Real estate - multifamily residential | Pass
Financing Receivable, Recorded Investment [Line Items]
Total commercial loans	29,802	25,157
Real estate - multifamily residential | Special Mention
Financing Receivable, Recorded Investment [Line Items]
Total commercial loans	0	0
Real estate - multifamily residential | Substandard
Financing Receivable, Recorded Investment [Line Items]
Total commercial loans	0	0
Real estate - multifamily residential | Doubtful
Financing Receivable, Recorded Investment [Line Items]
Total commercial loans	0	0
Real estate - multifamily residential | Impaired
Financing Receivable, Recorded Investment [Line Items]
Total commercial loans	0	0
Real estate - multifamily residential | Acquired loans - purchase credit impaired
Financing Receivable, Recorded Investment [Line Items]
Total commercial loans	0	0
Real Estate - Construction
Financing Receivable, Recorded Investment [Line Items]
Total commercial loans	55,711	55,289
Real Estate - Construction | One To Four Family Residential
Financing Receivable, Recorded Investment [Line Items]
Total commercial loans	19,091	19,698
Real Estate - Construction | Other construction, land development and other land
Financing Receivable, Recorded Investment [Line Items]
Total commercial loans	36,620	35,591
Real Estate - Construction | Pass
Financing Receivable, Recorded Investment [Line Items]
Total commercial loans	46,127	45,894
Real Estate - Construction | Pass | One To Four Family Residential
Financing Receivable, Recorded Investment [Line Items]
Total commercial loans	18,623	18,978
Real Estate - Construction | Pass | Other construction, land development and other land
Financing Receivable, Recorded Investment [Line Items]
Total commercial loans	27,504	26,916
Real Estate - Construction | Special Mention
Financing Receivable, Recorded Investment [Line Items]
Total commercial loans	1,873	2,091
Real Estate - Construction | Special Mention | One To Four Family Residential
Financing Receivable, Recorded Investment [Line Items]
Total commercial loans	87	300
Real Estate - Construction | Special Mention | Other construction, land development and other land
Financing Receivable, Recorded Investment [Line Items]
Total commercial loans	1,786	1,791
Real Estate - Construction | Substandard
Financing Receivable, Recorded Investment [Line Items]
Total commercial loans	1,531	1,388
Real Estate - Construction | Substandard | One To Four Family Residential
Financing Receivable, Recorded Investment [Line Items]
Total commercial loans	121	244
Real Estate - Construction | Substandard | Other construction, land development and other land
Financing Receivable, Recorded Investment [Line Items]
Total commercial loans	1,410	1,144
Real Estate - Construction | Doubtful
Financing Receivable, Recorded Investment [Line Items]
Total commercial loans	0	0
Real Estate - Construction | Doubtful | One To Four Family Residential
Financing Receivable, Recorded Investment [Line Items]
Total commercial loans	0	0
Real Estate - Construction | Doubtful | Other construction, land development and other land
Financing Receivable, Recorded Investment [Line Items]
Total commercial loans	0	0
Real Estate - Construction | Impaired
Financing Receivable, Recorded Investment [Line Items]
Total commercial loans	5,894	5,837
Real Estate - Construction | Impaired | One To Four Family Residential
Financing Receivable, Recorded Investment [Line Items]
Total commercial loans	260	176
Real Estate - Construction | Impaired | Other construction, land development and other land
Financing Receivable, Recorded Investment [Line Items]
Total commercial loans	5,634	5,661
Real Estate - Construction | Acquired loans - purchase credit impaired
Financing Receivable, Recorded Investment [Line Items]
Total commercial loans	286	79
Real Estate - Construction | Acquired loans - purchase credit impaired | One To Four Family Residential
Financing Receivable, Recorded Investment [Line Items]
Total commercial loans	0	0
Real Estate - Construction | Acquired loans - purchase credit impaired | Other construction, land development and other land
Financing Receivable, Recorded Investment [Line Items]
Total commercial loans	286	79
Real estate - farmland
Financing Receivable, Recorded Investment [Line Items]
Total commercial loans	10,553	9,471
Real estate - farmland | Pass
Financing Receivable, Recorded Investment [Line Items]
Total commercial loans	9,496	9,471
Real estate - farmland | Special Mention
Financing Receivable, Recorded Investment [Line Items]
Total commercial loans	875	0
Real estate - farmland | Substandard
Financing Receivable, Recorded Investment [Line Items]
Total commercial loans	182	0
Real estate - farmland | Doubtful
Financing Receivable, Recorded Investment [Line Items]
Total commercial loans	0	0
Real estate - farmland | Impaired
Financing Receivable, Recorded Investment [Line Items]
Total commercial loans	0	0
Real estate - farmland | Acquired loans - purchase credit impaired
Financing Receivable, Recorded Investment [Line Items]
Total commercial loans	0	0
Real Estate - Non-farm, Non-residential
Financing Receivable, Recorded Investment [Line Items]
Total commercial loans	268,148	262,572
Real Estate - Non-farm, Non-residential | Owner Occupied
Financing Receivable, Recorded Investment [Line Items]
Total commercial loans	168,861	157,745
Real Estate - Non-farm, Non-residential | Non-owner Occupied
Financing Receivable, Recorded Investment [Line Items]
Total commercial loans	99,287	104,827
Real Estate - Non-farm, Non-residential | Pass
Financing Receivable, Recorded Investment [Line Items]
Total commercial loans	223,549	217,217
Real Estate - Non-farm, Non-residential | Pass | Owner Occupied
Financing Receivable, Recorded Investment [Line Items]
Total commercial loans	141,218	132,266
Real Estate - Non-farm, Non-residential | Pass | Non-owner Occupied
Financing Receivable, Recorded Investment [Line Items]
Total commercial loans	82,331	84,951
Real Estate - Non-farm, Non-residential | Special Mention
Financing Receivable, Recorded Investment [Line Items]
Total commercial loans	10,816	16,110
Real Estate - Non-farm, Non-residential | Special Mention | Owner Occupied
Financing Receivable, Recorded Investment [Line Items]
Total commercial loans	8,012	11,339
Real Estate - Non-farm, Non-residential | Special Mention | Non-owner Occupied
Financing Receivable, Recorded Investment [Line Items]
Total commercial loans	2,804	4,771
Real Estate - Non-farm, Non-residential | Substandard
Financing Receivable, Recorded Investment [Line Items]
Total commercial loans	5,440	4,070
Real Estate - Non-farm, Non-residential | Substandard | Owner Occupied
Financing Receivable, Recorded Investment [Line Items]
Total commercial loans	3,955	2,253
Real Estate - Non-farm, Non-residential | Substandard | Non-owner Occupied
Financing Receivable, Recorded Investment [Line Items]
Total commercial loans	1,485	1,817
Real Estate - Non-farm, Non-residential | Doubtful
Financing Receivable, Recorded Investment [Line Items]
Total commercial loans	0	0
Real Estate - Non-farm, Non-residential | Doubtful | Owner Occupied
Financing Receivable, Recorded Investment [Line Items]
Total commercial loans	0	0
Real Estate - Non-farm, Non-residential | Doubtful | Non-owner Occupied
Financing Receivable, Recorded Investment [Line Items]
Total commercial loans	0	0
Real Estate - Non-farm, Non-residential | Impaired
Financing Receivable, Recorded Investment [Line Items]
Total commercial loans	22,274	19,862
Real Estate - Non-farm, Non-residential | Impaired | Owner Occupied
Financing Receivable, Recorded Investment [Line Items]
Total commercial loans	11,268	10,046
Real Estate - Non-farm, Non-residential | Impaired | Non-owner Occupied
Financing Receivable, Recorded Investment [Line Items]
Total commercial loans	11,006	9,816
Real Estate - Non-farm, Non-residential | Acquired loans - purchase credit impaired
Financing Receivable, Recorded Investment [Line Items]
Total commercial loans	6,069	5,313
Real Estate - Non-farm, Non-residential | Acquired loans - purchase credit impaired | Owner Occupied
Financing Receivable, Recorded Investment [Line Items]
Total commercial loans	4,408	1,841
Real Estate - Non-farm, Non-residential | Acquired loans - purchase credit impaired | Non-owner Occupied
Financing Receivable, Recorded Investment [Line Items]
Total commercial loans	$ 1,661	$ 3,472

XML

Weighted Average Number of Common Shares used in Computing Earnings Per Common Share and Effect on Potential Dilutive Common Stock (Detail) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Basic Net Income Per Common Share
Net income available to common shareholders	$ 1,341	$ 1,114	$ 2,730	$ 2,592
Less: Net income allocated to participating securities, Series B Preferred Stock	385	341	784	794
Net income allocated to common shareholders	$ 956	$ 773	$ 1,946	$ 1,798
Weighted average common shares outstanding for basic net income per common share	13,023,550	11,862,367	13,004,595	11,862,367
Basic net income per common share	$ 0.07	$ 0.06	$ 0.15	$ 0.15
Diluted Net Income Per Common Share
Net income available to common shareholders	$ 1,341	$ 1,114	$ 2,730	$ 2,592
Weighted average common shares outstanding for basic net income per common share	13,023,550	11,862,367	13,004,595	11,862,367
Effect of dilutive securities, stock options	0	0	0	0
Effect of dilutive securities, Series B Preferred Stock	5,240,192	5,240,192	5,240,192	5,240,192
Weighted average common shares outstanding for diluted net income per common share	18,263,742	17,102,559	18,244,787	17,102,559
Diluted net income per common share	$ 0.07	$ 0.06	$ 0.15	$ 0.15

XML

Loan Portfolio - Additional Information (Detail) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2015	Dec. 31, 2014
Loans [Line Items]
Troubled debt restructurings in nonaccrual loans	$ 2,300	$ 3,400
Deferred Finance Costs, Net	1,500	1,400
Certain Loans Acquired in Transfer Accounted for as Debt Securities, Outstanding Balance	9,300	8,800
Certain Loans Acquired in Transfer Accounted for as Debt Securities, Carrying Amount, Net	8,300	$ 7,800
Foreclosed Real Estate Expense	$ 514

XML

Composition of Loan Portfolio (Detail) - Entity [Domain] - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014		Jun. 30, 2014	Dec. 31, 2013
Composition of Loan Portfolio [Line Items]
Total loans	$ 840,710	$ 820,569
Total loans Percent	100.00%	100.00%
Less allowance for loan losses	$ (12,287)	$ (13,021)		$ (14,618)	$ (14,767)
Loans, net	828,423	807,548	[1]
Commercial, industrial and agricultural
Composition of Loan Portfolio [Line Items]
Total loans	$ 85,845	$ 85,119
Total loans Percent	10.21%	10.37%
Less allowance for loan losses	$ (1,619)	$ (1,168)		(1,196)	(1,787)
Real estate - one to four family residential
Composition of Loan Portfolio [Line Items]
Total loans	$ 354,079	$ 346,861
Total loans Percent	42.11%	42.28%
Less allowance for loan losses	$ (3,712)	$ (3,562)		(4,423)	(4,501)
Real estate - one to four family residential | Closed end first and seconds
Composition of Loan Portfolio [Line Items]
Total loans	$ 243,072	$ 236,761
Total loans Percent	28.91%	28.86%
Less allowance for loan losses	$ (1,699)	$ (1,884)		(2,578)	(2,859)
Real estate - one to four family residential | Home equity lines
Composition of Loan Portfolio [Line Items]
Total loans	$ 111,007	$ 110,100
Total loans Percent	13.20%	13.42%
Less allowance for loan losses	$ (2,013)	$ (1,678)		(1,845)	(1,642)
Real estate - multifamily residential
Composition of Loan Portfolio [Line Items]
Total loans	$ 29,802	$ 25,157
Total loans Percent	3.54%	3.07%
Less allowance for loan losses	$ (102)	$ (89)		(108)	(79)
real estate - construction
Composition of Loan Portfolio [Line Items]
Total loans	$ 55,711	$ 55,289
Total loans Percent	6.63%	6.74%
Less allowance for loan losses	$ (2,847)	$ (2,905)		(2,793)	(2,353)
real estate - construction | One To Four Family Residential
Composition of Loan Portfolio [Line Items]
Total loans	$ 19,091	$ 19,698
Total loans Percent	2.27%	2.40%
Less allowance for loan losses	$ (257)	$ (235)		(301)	(364)
real estate - construction | Other construction, land development and other land
Composition of Loan Portfolio [Line Items]
Total loans	$ 36,620	$ 35,591
Total loans Percent	4.36%	4.34%
Less allowance for loan losses	$ (2,590)	$ (2,670)		(2,492)	(1,989)
Real estate - farmland
Composition of Loan Portfolio [Line Items]
Total loans	$ 10,553	$ 9,471
Total loans Percent	1.26%	1.15%
Less allowance for loan losses	$ (79)	$ (144)		(127)	(116)
Real Estate - Non-farm, Non-residential
Composition of Loan Portfolio [Line Items]
Total loans	$ 268,148	$ 262,572
Total loans Percent	31.90%	31.99%
Less allowance for loan losses	$ (3,006)	$ (4,324)		(4,747)	(5,006)
Real Estate - Non-farm, Non-residential | Owner Occupied
Composition of Loan Portfolio [Line Items]
Total loans	$ 168,861	$ 157,745
Total loans Percent	20.09%	19.22%
Less allowance for loan losses	$ (1,838)	$ (2,416)		(2,119)	(3,236)
Real Estate - Non-farm, Non-residential | Non-owner occupied
Composition of Loan Portfolio [Line Items]
Total loans	$ 99,287	$ 104,827
Total loans Percent	11.81%	12.77%
Less allowance for loan losses	$ (1,168)	$ (1,908)		(2,628)	(1,770)
Consumer
Composition of Loan Portfolio [Line Items]
Total loans	$ 14,443	$ 15,919
Total loans Percent	1.72%	1.94%
Other
Composition of Loan Portfolio [Line Items]
Total loans	$ 22,129	$ 20,181
Total loans Percent	2.63%	2.46%
Less allowance for loan losses	$ (665)	$ (524)		$ (869)	$ (538)

[1] Derived from audited consolidated financial statements.

XML

Consolidated Statements of Cash Flows - Equity Component [Domain] - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Operating Activities:
Net income	$ 3,116	$ 3,651
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses	0	250
Depreciation and amortization	1,250	1,048
Stock based compensation	114	39
Amortization of debt issuance costs	15	0
Net accretion of certain acquisition related fair value adjustments	(402)	0
Net amortization of premiums and accretion of discounts on investment securities, net	1,506	1,626
(Gain) on sale of securities available for sale transactions, net	(51)	(489)
Loss (gain) on sale of bank premises and equipment	27	(5)
Loss on sale of other real estate owned	26	15
Impairment losses on other real estate owned	5	11
Loss on LLC investments	145	23
Earnings on life insurance policies	(323)	(274)
Net change in:
Accrued interest receivable	23	131
Other assets	(1,942)	(1,294)
Accrued interest payable	214	(983)
Other liabilities	1,756	1,108
Net cash provided by operating activities	5,479	4,857
Investing Activities:
Purchase of securities available for sale	(48,580)	(17,000)
Purchase of securities held to maturity	(22)	0
Purchase of restricted securities	(4,347)	(5,228)
Purchases of bank premises and equipment	(2,727)	(1,127)
Improvements to other real estate owned	(1)	0
Net change in loans	(21,363)	(41,484)
Proceeds from:
Maturities, calls, and paydowns of securities available for sale	12,537	9,053
Maturities, calls, and paydowns of securities held to maturity	1,351	1,248
Sale of securities available for sale	19,970	20,527
Sale of restricted securities	3,762	3,547
Sale of bank premises and equipment	255	5
Sale of other real estate owned	1,548	462
Net cash used in investing activities	(37,617)	(29,997)
Financing Activities, Net change in:
Demand, interest-bearing demand and savings deposits	33,650	(13,723)
Time deposits	(15,747)	787
Federal funds purchased and repurchase agreements	(6,396)	473
Short-term borrowings	17,787	34,820
Senior subordinated debt	20,000	0
Debt issuance costs	(875)	0
Repurchase of preferred stock	(14,000)	0
Repurchase of common stock	(1)	0
Repurchase of warrants	(115)	0
Dividends paid - preferred, Series A	(547)	0
Dividends paid - preferred, Series B	(105)	0
Dividends paid - common	(260)	0
Net cash provided by financing activities	33,391	22,357
Net increase (decrease) in cash and cash equivalents	1,253	(2,783)
Cash and cash equivalents, December 31	19,630	19,346
Cash and cash equivalents, June 30	20,883	16,563
Supplemental disclosure:
Interest paid	2,306	3,205
Supplemental disclosure of noncash investing and financing activities:
Unrealized (losses) gains on securities available for sale	(956)	6,123
Loans transferred to other real estate owned	$ (1,084)	$ (289)

XML

Deferred Income Taxes - Additional Information (Detail) - USD ($) $ in Millions	Jun. 30, 2015	Dec. 31, 2014
Deferred Tax Assets, Net, Total	$ 16.9	$ 17.5

XML

Amortized Cost and Estimated Fair Value with Gross Unrealized Gains and Losses of Securities (Detail) - USD ($) $ in Thousands		6 Months Ended	12 Months Ended
		Jun. 30, 2015	Dec. 31, 2014
Available for Sale:
Amortized Cost		$ 231,125	$ 216,247
Gross Unrealized Gains		794	1,139
Gross Unrealized Losses		3,987	3,375
Estimated Fair Value		227,932	214,011	[1]
Held to Maturity:
Amortized cost		31,298	32,887
Unrealized Losses Recorded in AOCI	[2]	627	724
Carrying Value		30,671	32,163	[1]
Gross Unrealized Gains		874	1,222
Gross Unrealized Losses		3	18
Estimated Fair Value		31,542	33,367
Agency residential mortgage-backed securities
Available for Sale:
Amortized Cost		19,731	28,740
Gross Unrealized Gains		53	208
Gross Unrealized Losses		384	319
Estimated Fair Value		19,400	28,629
Agency commercial mortgage-backed securities
Available for Sale:
Amortized Cost		6,574
Gross Unrealized Gains		0
Gross Unrealized Losses		87
Estimated Fair Value		6,487
Obligations of U.S. Government agencies
Available for Sale:
Amortized Cost		13,491	14,991
Gross Unrealized Gains		0	0
Gross Unrealized Losses		410	422
Estimated Fair Value		13,081	14,569
SBA Pool securities
Available for Sale:
Amortized Cost		71,966	76,469
Gross Unrealized Gains		114	70
Gross Unrealized Losses		1,073	1,740
Estimated Fair Value		71,007	74,799
Agency CMO securities
Available for Sale:
Amortized Cost		53,589	39,343
Gross Unrealized Gains		285	302
Gross Unrealized Losses		720	430
Estimated Fair Value		53,154	39,215
Held to Maturity:
Amortized cost		11,814	12,073
Unrealized Losses Recorded in AOCI	[2]	71	80
Carrying Value		11,743	11,993
Gross Unrealized Gains		338	294
Gross Unrealized Losses		0	0
Estimated Fair Value		12,081	12,287
Non agency CMO securities
Available for Sale:
Amortized Cost		670	820
Gross Unrealized Gains		34	11
Gross Unrealized Losses		0	3
Estimated Fair Value		704	828
State and political subdivisions
Available for Sale:
Amortized Cost		65,102	55,877
Gross Unrealized Gains		301	510
Gross Unrealized Losses		1,313	461
Estimated Fair Value		64,090	55,926
Held to Maturity:
Amortized cost		19,484	20,814
Unrealized Losses Recorded in AOCI	[2]	556	644
Carrying Value		18,928	20,170
Gross Unrealized Gains		536	928
Gross Unrealized Losses		3	18
Estimated Fair Value		19,461	21,080
FNMA and FHLMC preferred stock
Available for Sale:
Amortized Cost		2	7
Gross Unrealized Gains		7	38
Gross Unrealized Losses		0	0
Estimated Fair Value		$ 9	$ 45

[1] Derived from audited consolidated financial statements.

[2] Represents the unrealized holding gain or loss at the date of transfer from available for sale to held to maturity, net of any accretion.

XML

Loan Portfolio (Tables)

6 Months Ended

Jun. 30, 2015

Composition of Loan Portfolio

The following table sets forth the composition of the Company’s loan portfolio in dollar amounts and as a percentage of the Company’s total gross loans at the dates indicated:

	June 30, 2015					December 31, 2014
(dollars in thousands)	Amount		Percent			Amount		Percent
Commercial, industrial and agricultural	$	85,845		10.21	%	$	85,119		10.37	%
Real estate - one to four family residential:
Closed end first and seconds		243,072		28.91	%		236,761		28.86	%
Home equity lines		111,007		13.20	%		110,100		13.42	%
Total real estate - one to four family residential		354,079		42.11	%		346,861		42.28	%
Real estate - multifamily residential		29,802		3.54	%		25,157		3.07	%
Real estate - construction:
One to four family residential		19,091		2.27	%		19,698		2.40	%
Other construction, land development and other land		36,620		4.36	%		35,591		4.34	%
Total real estate - construction		55,711		6.63	%		55,289		6.74	%
Real estate - farmland		10,553		1.26	%		9,471		1.15	%
Real estate - non-farm, non-residential:
Owner occupied		168,861		20.09	%		157,745		19.22	%
Non-owner occupied		99,287		11.81	%		104,827		12.77	%
Total real estate - non-farm, non-residential		268,148		31.90	%		262,572		31.99	%
Consumer		14,443		1.72	%		15,919		1.94	%
Other		22,129		2.63	%		20,181		2.46	%
Total loans		840,710		100.00	%		820,569		100.00	%
Less allowance for loan losses		(12,287)					(13,021)
Loans, net	$	828,423				$	807,548

Aging of Recorded Investment in Past Due Loans

The following table presents the aging of the recorded investment in past due loans as of June 30, 2015 by class of loans:

	30-59 Days		60-89 Days		Over 90 Days				Total		Total
(dollars in thousands)	Past Due		Past Due		Past Due		Total Past Due		Current*		Loans
Commercial, industrial and agricultural	$	206	$	14	$	383	$	603	$	85,242	$	85,845
Real estate - one to four family residential:
Closed end first and seconds		6,038		1,662		3,359		11,059		232,013		243,072
Home equity lines		234		104		250		588		110,419		111,007
Total real estate - one to four family residential		6,272		1,766		3,609		11,647		342,432		354,079
Real estate - multifamily residential		-		-		-		-		29,802		29,802
Real estate - construction:
One to four family residential		80		-		189		269		18,822		19,091
Other construction, land development and other land		-		-		1		1		36,619		36,620
Total real estate - construction		80		-		190		270		55,441		55,711
Real estate - farmland		273		280		-		553		10,000		10,553
Real estate - non-farm, non-residential:
Owner occupied		172		1,686		568		2,426		166,435		168,861
Non-owner occupied		215		-		676		891		98,396		99,287
Total real estate - non-farm, non-residential		387		1,686		1,244		3,317		264,831		268,148
Consumer		8		26		4		38		14,405		14,443
Other		-		-		-		-		22,129		22,129
Total loans	$	7,226	$	3,772	$	5,430	$	16,428	$	824,282	$	840,710

* For purposes of this table only, the "Total Current" column includes loans that are 1-29 days past due.

The following table presents the aging of the recorded investment in past due loans as of December 31, 2014 by class of loans:

	30-59 Days		60-89 Days		Over 90 Days				Total		Total
(dollars in thousands)	Past Due		Past Due		Past Due		Total Past Due		Current*		Loans
Commercial, industrial and agricultural	$	278	$	6	$	373	$	657	$	84,462	$	85,119
Real estate - one to four family residential:
Closed end first and seconds		5,515		1,123		1,247		7,885		228,876		236,761
Home equity lines		366		-		360		726		109,374		110,100
Total real estate - one to four family residential		5,881		1,123		1,607		8,611		338,250		346,861
Real estate - multifamily residential		-		-		-		-		25,157		25,157
Real estate - construction:
One to four family residential		150		-		221		371		19,327		19,698
Other construction, land development and other land		5		-		-		5		35,586		35,591
Total real estate - construction		155		-		221		376		54,913		55,289
Real estate - farmland		-		-		590		590		8,881		9,471
Real estate - non-farm, non-residential:
Owner occupied		1,873		158		1,738		3,769		153,976		157,745
Non-owner occupied		-		-		-		-		104,827		104,827
Total real estate - non-farm, non-residential		1,873		158		1,738		3,769		258,803		262,572
Consumer		157		32		-		189		15,730		15,919
Other		-		-		-		-		20,181		20,181
Total loans	$	8,344	$	1,319	$	4,529	$	14,192	$	806,377	$	820,569

* For purposes of this table only, the "Total Current" column includes loans that are 1-29 days past due.

Nonaccural Loans, Loans Past Due Ninety Days and Accruing Interest, and Restructured Loans

The following table presents nonaccrual loans, loans past due 90 days and accruing interest, and troubled debt restructurings (accruing) at the dates indicated:

	June 30,		December 31,
(dollars in thousands)	2015		2014
Nonaccrual loans	$	7,263	$	6,622
Loans past due 90 days and accruing interest		240		53
Troubled debt restructurings (accruing)		14,843		15,223

Schedule of Loans Acquired Pursuant To Acquisition

Outstanding principal balance and the carrying amount of loans acquired pursuant to the Company’s acquisition of VCB (or “Acquired Loans”) that were recorded at fair value at the acquisition date and are included in the consolidated balance sheet at June 30, 2015 and December 31, 2014 were as follows:

	June 30, 2015						December 31, 2014
	Acquired						Acquired
	Loans -		Acquired				Loans -		Acquired
	Purchased		Loans -		Acquired		Purchased		Loans -		Acquired
	Credit		Purchased		Loans -		Credit		Purchased		Loans -
(dollars in thousands)	Impaired		Performing		Total		Impaired		Performing		Total
Commercial, industrial and agricultural	$	577	$	7,051	$	7,628	$	1,023	$	15,673	$	16,696
Real estate - one to four family residential:
Closed end first and seconds		1,347		7,758		9,105		1,374		6,475		7,849
Home equity lines		33		10,850		10,883		33		11,858		11,891
Total real estate - one to four family residential		1,380		18,608		19,988		1,407		18,333		19,740
Real estate - multifamily residential		-		3,790		3,790		-		3,539		3,539
Real estate - construction:
One to four family residential		-		1,945		1,945		-		3,206		3,206
Other construction, land development and other land		286		1,875		2,161		79		3,674		3,753
Total real estate - construction		286		3,820		4,106		79		6,880		6,959
Real estate - farmland		-		-		-		-		-		-
Real estate - non-farm, non-residential:
Owner occupied		4,408		17,998		22,406		1,841		21,037		22,878
Non-owner occupied		1,661		12,460		14,121		3,472		20,762		24,234
Total real estate - non-farm, non-residential		6,069		30,458		36,527		5,313		41,799		47,112
Consumer		-		435		435		-		1,462		1,462
Other		-		845		845		-		-		-
Total loans	$	8,312	$	65,007	$	73,319	$	7,822	$	87,686	$	95,508

Recorded Investment in Nonaccrual Loans and Loans Past Due Ninety Days and Accruing Interest by Class

The following table presents the recorded investment in nonaccrual loans and loans past due 90 days and accruing interest by class at June 30, 2015 and December 31, 2014:

					Over 90 Days Past
	Nonaccrual				Due and Accruing
	June 30,		December 31,		June 30,		December 31,
(dollars in thousands)	2015		2014		2015		2014
Commercial, industrial and agricultural	$	383	$	334	$	-	$	53
Real estate - one to four family residential:
Closed end first and seconds		4,996		3,364		240		-
Home equity lines		425		564		-		-
Total real estate - one to four family residential		5,421		3,928		240		-
Real estate - construction:
One to four family residential		189		221		-		-
Other construction, land development and other land		1		-		-		-
Total real estate - construction		190		221		-		-
Real estate - farmland		-		590		-		-
Real estate - non-farm, non-residential:
Owner occupied		568		1,521		-		-
Non-owner occupied		677		-		-		-
Total real estate - non-farm, non-residential		1,245		1,521		-		-
Consumer		24		28		-		-
Total loans	$	7,263	$	6,622	$	240	$	53

Commercial Loans by Credit Quality Indicator

The following table presents commercial loans by credit quality indicator at June 30, 2015:

											Acquired
											Loans -
											Purchased
			Special								Credit
(dollars in thousands)	Pass		Mention		Substandard		Doubtful		Impaired		Impaired		Total
Commercial, industrial and agricultural	$	80,879	$	3,269	$	553	$	230	$	337	$	577	$	85,845
Real estate - multifamily residential		29,802		-		-		-		-		-		29,802
Real estate - construction:
One to four family residential		18,623		87		121		-		260		-		19,091
Other construction, land development and other land		27,504		1,786		1,410		-		5,634		286		36,620
Total real estate - construction		46,127		1,873		1,531		-		5,894		286		55,711
Real estate - farmland		9,496		875		182		-		-		-		10,553
Real estate - non-farm, non-residential:
Owner occupied		141,218		8,012		3,955		-		11,268		4,408		168,861
Non-owner occupied		82,331		2,804		1,485		-		11,006		1,661		99,287
Total real estate - non-farm, non-residential		223,549		10,816		5,440		-		22,274		6,069		268,148
Total commercial loans	$	389,853	$	16,833	$	7,706	$	230	$	28,505	$	6,932	$	450,059

The following table presents commercial loans by credit quality indicator at December 31, 2014:

											Acquired
											Loans -
											Purchased
			Special								Credit
(dollars in thousands)	Pass		Mention		Substandard		Doubtful		Impaired		Impaired		Total
Commercial, industrial and agricultural	$	79,191	$	2,779	$	675	$	-	$	1,451	$	1,023	$	85,119
Real estate - multifamily residential		25,157		-		-		-		-		-		25,157
Real estate - construction:
One to four family residential		18,978		300		244		-		176		-		19,698
Other construction, land development and other land		26,916		1,791		1,144		-		5,661		79		35,591
Total real estate - construction		45,894		2,091		1,388		-		5,837		79		55,289
Real estate - farmland		9,471		-		-		-		-		-		9,471
Real estate - non-farm, non-residential:
Owner occupied		132,266		11,339		2,253		-		10,046		1,841		157,745
Non-owner occupied		84,951		4,771		1,817		-		9,816		3,472		104,827
Total real estate - non-farm, non-residential		217,217		16,110		4,070		-		19,862		5,313		262,572
Total commercial loans	$	376,930	$	20,980	$	6,133	$	-	$	27,150	$	6,415	$	437,608

Consumer Loans, Including One to Four Family Residential First and Seconds and Home Equity Lines, by Payment Activity

The following table presents consumer loans, including one to four family residential first and seconds and home equity lines, by payment activity at June 30, 2015:

(dollars in thousands)	Performing		Nonperforming		Total
Real estate - one to four family residential:
Closed end first and seconds	$	232,426	$	10,646	$	243,072
Home equity lines		110,132		875		111,007
Total real estate - one to four family residential		342,558		11,521		354,079
Consumer		14,091		352		14,443
Other		22,125		4		22,129
Total consumer loans	$	378,774	$	11,877	$	390,651

The following table presents consumer loans, including one to four family residential first and seconds and home equity lines, by payment activity at December 31, 2014:

(dollars in thousands)	Performing		Nonperforming		Total
Real estate - one to four family residential:
Closed end first and seconds	$	226,801	$	9,960	$	236,761
Home equity lines		109,565		535		110,100
Total real estate - one to four family residential		336,366		10,495		346,861
Consumer		15,548		371		15,919
Other		20,175		6		20,181
Total consumer loans	$	372,089	$	10,872	$	382,961

Rollforward of Allowance for Loan Losses

The following table presents a rollforward of the Company’s allowance for loan losses for the six months ended June 30, 2015:

	Beginning Balance								Ending Balance
(dollars in thousands)	January 1, 2015		Charge-offs		Recoveries		Provision		June 30, 2015
Commercial, industrial and agricultural	$	1,168	$	(80)	$	21	$	510	$	1,619
Real estate - one to four family residential:
Closed end first and seconds		1,884		(332)		13		134		1,699
Home equity lines		1,678		(137)		5		467		2,013
Total real estate - one to four family residential		3,562		(469)		18		601		3,712
Real estate - multifamily residential		89		-		-		13		102
Real estate - construction:
One to four family residential		235		(102)		1		123		257
Other construction, land development and other land		2,670		-		-		(80)		2,590
Total real estate - construction		2,905		(102)		1		43		2,847
Real estate - farmland		144		-		-		(65)		79
Real estate - non-farm, non-residential:
Owner occupied		2,416		(139)		1		(440)		1,838
Non-owner occupied		1,908		-		-		(740)		1,168
Total real estate - non-farm, non-residential		4,324		(139)		1		(1,180)		3,006
Consumer		305		(7)		34		(75)		257
Other		524		(24)		12		153		665
Total	$	13,021	$	(821)	$	87	$	-	$	12,287

The following table presents a rollforward of the Company’s allowance for loan losses for the six months ended June 30, 2014:

	Beginning Balance								Ending Balance
(dollars in thousands)	January 1, 2014		Charge-offs		Recoveries		Provision		June 30, 2014
Commercial, industrial and agricultural	$	1,787	$	(290)	$	30	$	(331)	$	1,196
Real estate - one to four family residential:
Closed end first and seconds		2,859		(304)		211		(188)		2,578
Home equity lines		1,642		(54)		13		244		1,845
Total real estate - one to four family residential		4,501		(358)		224		56		4,423
Real estate - multifamily residential		79		-		-		29		108
Real estate - construction:
One to four family residential		364		-		6		(69)		301
Other construction, land development and other land		1,989		-		2		501		2,492
Total real estate - construction		2,353		-		8		432		2,793
Real estate - farmland		116		-		-		11		127
Real estate - non-farm, non-residential:
Owner occupied		3,236		-		27		(1,144)		2,119
Non-owner occupied		1,770		-		3		855		2,628
Total real estate - non-farm, non-residential		5,006		-		30		(289)		4,747
Consumer		387		(86)		55		(1)		355
Other		538		(26)		14		343		869
Total	$	14,767	$	(760)	$	361	$	250	$	14,618

Allowance for Loan Losses and Recorded Investment in Loans by Portfolio Class Based on Impairment

The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio class based on impairment method as of June 30, 2015:

	Allowance allocated to loans:								Total Loans:
					Acquired								Acquired
					loans -						Collectively		loans -
	Individually		Collectively		purchased				Individually		evaluated		purchased
	evaluated for		evaluated for		credit				evaluated for		for		credit
(dollars in thousands)	impairment		impairment		impaired		Total		impairment		impairment		impaired		Total
Commercial, industrial and agricultural	$	309	$	1,310	$	-	$	1,619	$	337	$	84,931	$	577	$	85,845
Real estate - one to four family residential:
Closed end first and seconds		592		1,107		-		1,699		8,192		233,533		1,347		243,072
Home equity lines		265		1,748		-		2,013		625		110,349		33		111,007
Total real estate - one to four family residential		857		2,855		-		3,712		8,817		343,882		1,380		354,079
Real estate - multifamily residential		-		102		-		102		-		29,802		-		29,802
Real estate - construction:
One to four family residential		73		184		-		257		260		18,831		-		19,091
Other construction, land development and other land		1,604		986		-		2,590		5,634		30,700		286		36,620
Total real estate - construction		1,677		1,170		-		2,847		5,894		49,531		286		55,711
Real estate - farmland		-		79		-		79		-		10,553		-		10,553
Real estate - non-farm, non-residential:
Owner occupied		911		927		-		1,838		11,268		153,185		4,408		168,861
Non-owner occupied		718		450		-		1,168		11,006		86,620		1,661		99,287
Total real estate - non-farm, non-residential		1,629		1,377		-		3,006		22,274		239,805		6,069		268,148
Consumer		89		168		-		257		348		14,095		-		14,443
Other		-		665		-		665		4		22,125		-		22,129
Total	$	4,561	$	7,726	$	-	$	12,287	$	37,674	$	794,724	$	8,312	$	840,710

The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio class based on impairment method as of December 31, 2014:

	Allowance allocated to loans:								Total Loans:
					Acquired								Acquired
					loans -						Collectively		loans -
	Individually		Collectively		purchased				Individually		evaluated		purchased
	evaluated for		evaluated for		credit				evaluated for		for		credit
(dollars in thousands)	impairment		impairment		impaired		Total		impairment		impairment		impaired		Total
Commercial, industrial and agricultural	$	-	$	1,168	$	-	$	1,168	$	1,451	$	82,645	$	1,023	$	85,119
Real estate - one to four family residential:
Closed end first and seconds		1,006		878		-		1,884		8,713		226,674		1,374		236,761
Home equity lines		-		1,678		-		1,678		175		109,892		33		110,100
Total real estate - one to four family residential		1,006		2,556		-		3,562		8,888		336,566		1,407		346,861
Real estate - multifamily residential		-		89		-		89		-		25,157		-		25,157
Real estate - construction:
One to four family residential		78		157		-		235		176		19,522		-		19,698
Other construction, land development and other land		1,632		1,038		-		2,670		5,661		29,851		79		35,591
Total real estate - construction		1,710		1,195		-		2,905		5,837		49,373		79		55,289
Real estate - farmland		-		144		-		144		-		9,471		-		9,471
Real estate - non-farm, non-residential:
Owner occupied		1,240		1,176		-		2,416		10,046		145,858		1,841		157,745
Non-owner occupied		1,262		646		-		1,908		9,816		91,539		3,472		104,827
Total real estate - non-farm, non-residential		2,502		1,822		-		4,324		19,862		237,397		5,313		262,572
Consumer		106		199		-		305		371		15,548		-		15,919
Other		-		524		-		524		6		20,175		-		20,181
Total	$	5,324	$	7,697	$	-	$	13,021	$	36,415	$	776,332	$	7,822	$	820,569

Impairment by Class of Loans

The following table presents loans individually evaluated for impairment by class of loans as of June 30, 2015:

			Unpaid		Recorded		Recorded				Average		Interest
	Recorded		Principal		Investment With		Investment With		Related		Recorded		Income
(dollars in thousands)	Investment		Balance		No Allowance		Allowance		Allowance		Investment		Recognized
Commercial, industrial and agricultural	$	337	$	337	$	-	$	337	$	309	$	931	$	11
Real estate - one to four family residential:
Closed end first and seconds		8,192		8,755		3,481		4,711		592		8,517		199
Home equity lines		625		625		175		450		265		432		9
Total real estate - one to four family residential		8,817		9,380		3,656		5,161		857		8,949		208
Real estate - construction:
One to four family residential		260		362		89		171		73		246		4
Other construction, land development and other land		5,634		5,634		1		5,633		1,604		5,638		133
Total real estate - construction		5,894		5,996		90		5,804		1,677		5,884		137
Real estate - non-farm, non-residential:
Owner occupied		11,268		11,620		8,367		2,901		911		10,399		290
Non-owner occupied		11,006		11,006		6,642		4,364		718		10,918		262
Total real estate - non-farm, non-residential		22,274		22,626		15,009		7,265		1,629		21,317		552
Consumer		348		358		16		332		89		360		9
Other		4		4		4		-		-		5		-
Total loans*	$	37,674	$	38,701	$	18,775	$	18,899	$	4,561	$	37,446	$	917

* PCI loans are excluded from this table.

The following table presents loans individually evaluated for impairment by class of loans as of December 31, 2014:

			Unpaid		Recorded		Recorded				Average		Interest
	Recorded		Principal		Investment With		Investment With		Related		Recorded		Income
(dollars in thousands)	Investment		Balance		No Allowance		Allowance		Allowance		Investment		Recognized
Commercial, industrial and agricultural	$	1,451	$	1,451	$	1,451	$	-	$	-	$	2,010	$	128
Real estate - one to four family residential:
Closed end first and seconds		8,713		8,813		3,611		5,102		1,006		9,800		474
Home equity lines		175		175		175		-		-		289		-
Total real estate - one to four family residential		8,888		8,988		3,786		5,102		1,006		10,089		474
Real estate - construction:
One to four family residential		176		176		-		176		78		312		7
Other construction, land development and other land		5,661		5,661		-		5,661		1,632		5,399		256
Total real estate - construction		5,837		5,837		-		5,837		1,710		5,711		263
Real estate - non-farm, non-residential:
Owner occupied		10,046		10,146		3,734		6,312		1,240		12,056		534
Non-owner occupied		9,816		9,816		4,262		5,554		1,262		9,356		456
Total real estate - non-farm, non-residential		19,862		19,962		7,996		11,866		2,502		21,412		990
Consumer		371		371		-		371		106		420		21
Other		6		6		6		-		-		328		-
Total loans*	$	36,415	$	36,615	$	13,239	$	23,176	$	5,324	$	39,970	$	1,876

* PCI loans are excluded from this table.

Accounting For Certain Loans And Debt Securities Acquired In Transfer

The following table presents a summary of the changes in the accretable yield of the PCI loan portfolio for the periods indicated:

	Three months ended		Six months ended
	June 30, 2015		June 30, 2015
(dollars in thousands)	Accretable Yield		Accretable Yield
Balance at beginning of period	$	1,029	$	1,131
Accretion		(104)		(206)
Reclassification of nonaccretable difference due to improvement in expected cash flows		-		-
Other changes, net		-		-
Balance at end of period	$	925	$	925

Loans Modified as Troubled Debt Restructurings

The following tables present, by loan class, information related to loans modified as TDRs during the three and six months ended June 30, 2015 and 2014:

	Three Months Ended June 30, 2015						Three Months Ended June 30, 2014
(dollars in thousands)	Number of Loans		Pre- Modification Recorded Balance		Post- Modification Recorded Balance*		Number of Loans		Pre- Modification Recorded Balance		Post- Modification Recorded Balance*
Real estate - one to four family residential:
Closed end first and seconds		-	$	-	$	-		3	$	512	$	513
Consumer		-		-		-		2		385		385
Total		-	$	-	$	-		5	$	897	$	898

*The period end balances are inclusive of all partial paydowns and charge-offs since the modification date. Loans modified as TDRs that were fully paid down, charged-off, or foreclosed upon by period end are not reported.

	Six Months Ended June 30, 2015						Six Months Ended June 30, 2014
(dollars in thousands)	Number of Loans		Pre- Modification Recorded Balance		Post- Modification Recorded Balance*		Number of Loans		Pre- Modification Recorded Balance		Post- Modification Recorded Balance*
Real estate - one to four family residential:
Closed end first and seconds		-	$	-	$	-		3	$	512	$	513
Consumer		-		-		-		2		385		385
Total		-	$	-	$	-		5	$	897	$	898

* The period end balances are inclusive of all partial paydowns and charge-offs since the modification date. Loans modified as TDRs that were fully paid down, charged-off, or foreclosed upon by period end are not reported.

Loans Modified as Troubled Debt Restructurings that Subsequently Defaulted

The following tables present, by loan class, information related to the loans modified as TDRs that subsequently defaulted (i.e., 90 days or more past due following a modification) during the three and six months ended June 30, 2015 and 2014 and were modified as TDRs within the 12 months prior to default:

	Three Months Ended				Three Months Ended
	June 30, 2015				June 30, 2014
	Number of		Recorded		Number of		Recorded
(dollars in thousands)	Loans		Balance		Loans		Balance
Real estate - one to four family residential:
Closed end first and seconds		1	$	68		-	$	-
Total		1	$	68		-	$	-

	Six Months Ended				Six Months Ended
	June 30, 2015				June 30, 2014
	Number		Recorded		Number		Recorded
(dollars in thousands)	of Loans		Balance		of Loans		Balance
Real estate - one to four family residential:
Closed end first and seconds		1	$	68		-	$	-
Total		1	$	68		-	$	-

VCB

Schedule Of Credit Impaired Loans

Loans acquired from VCB that constituted PCI loans were recorded by the Company at fair value on the date of acquisition as follows:

	November 14,
(dollars in thousands)	2014
Contractual principal and interest at acquisition	$	9,977
Nonaccretable difference		937
Accretable yield		1,185
PCI loans at acquisition, at estimated fair value	$	7,855

XML

Investment Securities (Tables)

6 Months Ended

Jun. 30, 2015

Amortized Cost and Estimated Fair Value with Gross Unrealized Gains and Losses of Securities

The amortized cost and estimated fair value, with gross unrealized gains and losses, of securities at June 30, 2015 and December 31, 2014 were as follows:

(dollars in thousands)	June 30, 2015
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
Available for Sale:
Obligations of U.S. Government agencies	$	13,491	$	-	$	410	$	13,081
SBA Pool securities		71,966		114		1,073		71,007
Agency residential mortgage-backed securities		19,731		53		384		19,400
Agency commercial mortgage-backed securities		6,574		-		87		6,487
Agency CMO securities		53,589		285		720		53,154
Non agency CMO securities		670		34		-		704
State and political subdivisions		65,102		301		1,313		64,090
FNMA and FHLMC preferred stock		2		7		-		9
Total	$	231,125	$	794	$	3,987	$	227,932

(dollars in thousands)	December 31, 2014
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
Available for Sale:
Obligations of U.S. Government agencies	$	14,991	$	-	$	422	$	14,569
SBA Pool securities		76,469		70		1,740		74,799
Agency residential mortgage-backed securities		28,740		208		319		28,629
Agency CMO securities		39,343		302		430		39,215
Non agency CMO securities		820		11		3		828
State and political subdivisions		55,877		510		461		55,926
FNMA and FHLMC preferred stock		7		38		-		45
Total	$	216,247	$	1,139	$	3,375	$	214,011

(dollars in thousands)	June 30, 2015
			Unrealized
			Losses				Gross		Gross
	Amortized		Recorded		Carrying		Unrealized		Unrealized		Fair
	Cost		in AOCI*		Value		Gains		Losses		Value
Held to Maturity:
Agency CMO securities	$	11,814	$	71	$	11,743	$	338	$	-	$	12,081
State and political subdivisions		19,484		556		18,928		536		3		19,461
Total	$	31,298	$	627	$	30,671	$	874	$	3	$	31,542

*Represents the unrealized holding gain or loss at the date of transfer from available for sale to held to maturity, net of any accretion.

(dollars in thousands)	December 31, 2014
			Unrealized
			Losses				Gross		Gross
	Amortized		Recorded		Carrying		Unrealized		Unrealized		Fair
	Cost		in AOCI*		Value		Gains		Losses		Value
Held to Maturity:
Agency CMO securities	$	12,073	$	80	$	11,993	$	294	$	-	$	12,287
State and political subdivisions		20,814		644		20,170		928		18		21,080
Total	$	32,887	$	724	$	32,163	$	1,222	$	18	$	33,367

*Represents the unrealized holding gain or loss at the date of transfer from available for sale to held to maturity, net of any accretion.

Amortized Cost and Estimated Fair Values of Securities by Earlier of Contractual Maturity or Expected Maturity

The amortized cost, carrying value and estimated fair values of securities at June 30, 2015, by the earlier of contractual maturity or expected maturity, are shown below. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations without penalties.

(dollars in thousands)	June 30, 2015
	Amortized		Fair
	Cost		Value
Available for Sale:
Due in one year or less	$	2,378	$	2,327
Due after one year through five years		82,927		82,425
Due after five years through ten years		136,796		134,357
Due after ten years		9,024		8,823
Total	$	231,125	$	227,932

(dollars in thousands)	June 30, 2015
	Carrying		Fair
	Value		Value
Held to Maturity:
Due in one year or less	$	-	$	-
Due after one year through five years		21,379		22,005
Due after five years through ten years		8,545		8,791
Due after ten years		747		746
Total	$	30,671	$	31,542

Securities in Unrealized Loss Position by Duration of Period of Unrealized Loss

Securities in an unrealized loss position at June 30, 2015, by duration of the period of the unrealized loss, are shown below:

	June 30, 2015
(dollars in thousands)	Less than 12 months				12 months or more				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
Description of Securities	Value		Loss		Value		Loss		Value		Loss
Obligations of U.S. Government agencies	$	4,385	$	110	$	8,696	$	300	$	13,081	$	410
SBA Pool securities		9,137		48		50,950		1,025		60,087		1,073
Agency residential mortgage-backed securities		7,619		111		9,967		273		17,586		384
Agency commercial mortgage-backed securities		6,487		87		-		-		6,487		87
Agency CMO securities		25,483		418		8,720		302		34,203		720
State and political subdivisions		41,816		960		9,258		356		51,074		1,316
Total	$	94,927	$	1,734	$	87,591	$	2,256	$	182,518	$	3,990

Securities in an unrealized loss position at December 31, 2014, by duration of the period of the unrealized loss, are shown below.

	December 31, 2014
(dollars in thousands)	Less than 12 months				12 months or more				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
Description of Securities	Value		Loss		Value		Loss		Value		Loss
Obligations of U.S. Government agencies	$	-	$	-	$	14,587	$	422	$	14,587	$	422
SBA Pool securities		3,520		73		63,290		1,667		66,810		1,740
Agency residential mortgage-backed securities		-		-		15,343		319		15,343		319
Agency CMO securities		5,140		34		16,478		396		21,618		430
Non agency CMO securities		281		3		44		-		325		3
State and political subdivisions		3,663		36		21,509		443		25,172		479
Total	$	12,604	$	146	$	131,251	$	3,247	$	143,855	$	3,393

XML

Impairment by Class of Loans (Detail) - USD ($) $ in Thousands		6 Months Ended	12 Months Ended
		Jun. 30, 2015	Dec. 31, 2014
Financing Receivable, Impaired [Line Items]
Recorded Investment	[1]	$ 37,674	$ 36,415
Unpaid Principal Balance	[1]	38,701	36,615
Recorded Investment With No Allowance	[1]	18,775	13,239
Recorded Investment With Allowance	[1]	18,899	23,176
Related Allowance	[1]	4,561	5,324
Average Recorded Investment	[1]	37,446	39,970
Interest Income Recognized	[1]	917	1,876
Consumer Loan
Financing Receivable, Impaired [Line Items]
Recorded Investment		348	371
Unpaid Principal Balance		358	371
Recorded Investment With No Allowance		16	0
Recorded Investment With Allowance		332	371
Related Allowance		89	106
Average Recorded Investment		360	420
Interest Income Recognized		9	21
Commercial, industrial and agricultural
Financing Receivable, Impaired [Line Items]
Recorded Investment		337	1,451
Unpaid Principal Balance		337	1,451
Recorded Investment With No Allowance		0	1,451
Recorded Investment With Allowance		337	0
Related Allowance		309	0
Average Recorded Investment		931	2,010
Interest Income Recognized		11	128
Real estate - one to four family residential
Financing Receivable, Impaired [Line Items]
Recorded Investment		8,817	8,888
Unpaid Principal Balance		9,380	8,988
Recorded Investment With No Allowance		3,656	3,786
Recorded Investment With Allowance		5,161	5,102
Related Allowance		857	1,006
Average Recorded Investment		8,949	10,089
Interest Income Recognized		208	474
Real estate - one to four family residential | Closed end first and seconds
Financing Receivable, Impaired [Line Items]
Recorded Investment		8,192	8,713
Unpaid Principal Balance		8,755	8,813
Recorded Investment With No Allowance		3,481	3,611
Recorded Investment With Allowance		4,711	5,102
Related Allowance		592	1,006
Average Recorded Investment		8,517	9,800
Interest Income Recognized		199	474
Real estate - one to four family residential | Home Equity Line of Credit
Financing Receivable, Impaired [Line Items]
Recorded Investment		625	175
Unpaid Principal Balance		625	175
Recorded Investment With No Allowance		175	175
Recorded Investment With Allowance		450	0
Related Allowance		265	0
Average Recorded Investment		432	289
Interest Income Recognized		9	0
Real Estate - Construction
Financing Receivable, Impaired [Line Items]
Recorded Investment		5,894	5,837
Unpaid Principal Balance		5,996	5,837
Recorded Investment With No Allowance		90	0
Recorded Investment With Allowance		5,804	5,837
Related Allowance		1,677	1,710
Average Recorded Investment		5,884	5,711
Interest Income Recognized		137	263
Real Estate - Construction | One To Four Family Residential
Financing Receivable, Impaired [Line Items]
Recorded Investment		260	176
Unpaid Principal Balance		362	176
Recorded Investment With No Allowance		89	0
Recorded Investment With Allowance		171	176
Related Allowance		73	78
Average Recorded Investment		246	312
Interest Income Recognized		4	7
Real Estate - Construction | Other construction, land development and other land
Financing Receivable, Impaired [Line Items]
Recorded Investment		5,634	5,661
Unpaid Principal Balance		5,634	5,661
Recorded Investment With No Allowance		1	0
Recorded Investment With Allowance		5,633	5,661
Related Allowance		1,604	1,632
Average Recorded Investment		5,638	5,399
Interest Income Recognized		133	256
Real Estate - Non-farm, Non-residential
Financing Receivable, Impaired [Line Items]
Recorded Investment		22,274	19,862
Unpaid Principal Balance		22,626	19,962
Recorded Investment With No Allowance		15,009	7,996
Recorded Investment With Allowance		7,265	11,866
Related Allowance		1,629	2,502
Average Recorded Investment		21,317	21,412
Interest Income Recognized		552	990
Real Estate - Non-farm, Non-residential | Owner Occupied
Financing Receivable, Impaired [Line Items]
Recorded Investment		11,268	10,046
Unpaid Principal Balance		11,620	10,146
Recorded Investment With No Allowance		8,367	3,734
Recorded Investment With Allowance		2,901	6,312
Related Allowance		911	1,240
Average Recorded Investment		10,399	12,056
Interest Income Recognized		290	534
Real Estate - Non-farm, Non-residential | Non-owner Occupied
Financing Receivable, Impaired [Line Items]
Recorded Investment		11,006	9,816
Unpaid Principal Balance		11,006	9,816
Recorded Investment With No Allowance		6,642	4,262
Recorded Investment With Allowance		4,364	5,554
Related Allowance		718	1,262
Average Recorded Investment		10,918	9,356
Interest Income Recognized		262	456
Other
Financing Receivable, Impaired [Line Items]
Recorded Investment		4	6
Unpaid Principal Balance		4	6
Recorded Investment With No Allowance		4	6
Recorded Investment With Allowance		0	0
Related Allowance		0	0
Average Recorded Investment		5	328
Interest Income Recognized		$ 0	$ 0

[1] PCI loans are excluded from this table.

XML

Amortized Cost and Estimated Fair Values of Securities by Earlier of Contractual Maturity or Expected Maturity (Detail) $ in Thousands	Jun. 30, 2015 USD ($)
Available for Sale:
Amortized Cost, Due in one year or less	$ 2,378
Amortized Cost, Due after one year through five years	82,927
Amortized Cost, Due after five years through ten years	136,796
Amortized Cost, Due after ten years	9,024
Amortized Cost, Total	231,125
Estimated Fair Value, Due in one year or less	2,327
Estimated Fair Value, Due after one year through five years	82,425
Estimated Fair Value, Due after five years through ten years	134,357
Estimated Fair Value, Due after ten years	8,823
Estimated Fair Value, Total	227,932
Held to Maturity:
Carrying Value, Due in one year or less	0
Carrying Value, Due after one year through five years	21,379
Carrying Value, Due after five years through ten years	8,545
Carrying Value, Due after ten years	747
Carrying Value, Total	30,671
Estimated Fair Value, Due in one year or less	0
Estimated Fair Value, Due after one year through five years	22,005
Estimated Fair Value, Due after five years through ten years	8,791
Estimated Fair Value, Due after ten years	746
Estimated Fair Value, Total	$ 31,542

XML

Bank Premises and Equipment (Tables)

6 Months Ended

Jun. 30, 2015

Bank Premises and Equipment

Bank premises and equipment are summarized as follows:

	June 30,		December 31,
(dollars in thousands)	2015		2014
Land and improvements	$	6,699	$	6,929
Buildings and leasehold improvements		27,254		28,001
Furniture, fixtures and equipment		21,078		21,719
Construction in progress		2,658		553
		57,689		57,202
Less accumulated depreciation		(29,061)		(29,769)
Net balance	$	28,628	$	27,433

XML

Borrowings (Tables)

6 Months Ended

Jun. 30, 2015

Federal Funds Purchased and Repurchase Agreements

The tables below present selected information on federal funds purchased and repurchase agreements during the six months ended June 30, 2015 and the year ended December 31, 2014:

Federal funds purchased	June 30,			December 31,
(dollars in thousands)	2015			2014
Balance outstanding at period end	$	-		$	-
Maximum balance at any month end during the period	$	2,440		$	2,000
Average balance for the period	$	85		$	174
Weighted average rate for the period		0.71	%		0.78	%
Weighted average rate at period end		0.00	%		0.00	%

Repurchase agreements	June 30,			December 31,
(dollars in thousands)	2015			2014
Balance outstanding at period end	$	8,489		$	14,885
Maximum balance at any month end during the period	$	12,392		$	14,885
Average balance for the period	$	9,969		$	4,523
Weighted average rate for the period		0.62	%		0.59	%
Weighted average rate at period end		0.61	%		0.60	%

Short Term Borrowings

The table below presents selected information on short-term borrowings during the six months ended June 30, 2015 and the year ended December 31, 2014:

Short-term borrowings	June 30,			December 31,
(dollars in thousands)	2015			2014
Balance outstanding at period end	$	94,605		$	76,818
Maximum balance at any month end during the period	$	94,605		$	82,930
Average balance for the period	$	77,453		$	72,565
Weighted average rate for the period		0.21	%		0.21	%
Weighted average rate at period end		0.21	%		0.22	%

XML

Consolidated Statements of Shareholders' Equity (Parenthetical)	6 Months Ended
	Jun. 30, 2015 $ / shares
Common Stock, Dividends, Per Share, Cash Paid	$ 0.02

XML

Net Income Per Common Share (Tables)

6 Months Ended

Jun. 30, 2015

Weighted Average Number of Common Shares used in Computing Earnings Per Common Share and Effect on Potential Dilutive Common Stock

The following tables show the computation of basic and diluted net income per common share for the periods presented. 

	Three Months Ended
	June 30, 2015		June 30, 2014
(dollars in thousands, except share and per share amounts)
Basic Net Income Per Common Share
Net income available to common shareholders	$	1,341	$	1,114
Less: Net income allocated to participating securities, Series B Preferred Stock		385		341
Net income allocated to common shareholders	$	956	$	773
Weighted average common shares outstanding for basic net income per common share		13,023,550		11,862,367
Basic net income per common share	$	0.07	$	0.06
Diluted Net Income Per Common Share
Net income available to common shareholders	$	1,341	$	1,114
Weighted average common shares outstanding for basic net income per common share		13,023,550		11,862,367
Effect of dilutive securities, stock options		-		-
Effect of dilutive securities, Series B Preferred Stock		5,240,192		5,240,192
Weighted average common shares outstanding for diluted net income per common share		18,263,742		17,102,559
Diluted net income per common share	$	0.07	$	0.06

	Six Months Ended
	June 30, 2015		June 30, 2014
(dollars in thousands, except share and per share amounts)
Basic Net Income Per Common Share
Net income available to common shareholders	$	2,730	$	2,592
Less: Net income allocated to participating securities, Series B Preferred Stock		784		794
Net income allocated to common shareholders	$	1,946	$	1,798
Weighted average common shares outstanding for basic net income per common share		13,004,595		11,862,367
Basic net income per common share	$	0.15	$	0.15
Diluted Net Income Per Common Share
Net income available to common shareholders	$	2,730	$	2,592
Weighted average common shares outstanding for basic net income per common share		13,004,595		11,862,367
Effect of dilutive securities, stock options		-		-
Effect of dilutive securities, Series B Preferred Stock		5,240,192		5,240,192
Weighted average common shares outstanding for diluted net income per common share		18,244,787		17,102,559
Diluted net income per common share	$	0.15	$	0.15

XML

Actual Capital Amounts and Ratios (Detail)	Jun. 30, 2015	Dec. 31, 2014
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items]
Total capital to risk weighted assets, Actual Capital	16.12%	15.31%
Total capital to risk weighted assets, Minimum Capital Requirements	8.00%	8.00%
Tier 1 capital to risk weighted assets, Actual Capital	12.58%	14.06%
Tier 1 capital to risk weighted assets, minimum capital requirements ratio	6.00%	4.00%
Tier 1 capital to average assets, Actual Capital	9.44%	10.76%
Tier 1 capital to average assets, Minimum Capital Requirements	4.00%	4.00%
Common Equity Tier 1
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items]
Tier 1 capital to risk weighted assets, Actual Capital	9.59%
Tier 1 capital to risk weighted assets, minimum capital requirements ratio	4.50%
Bank
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items]
Total capital to risk weighted assets, Actual Capital	13.78%	13.53%
Total capital to risk weighted assets, Minimum Capital Requirements	8.00%	8.00%
Total capital to risk weighted assets, Minimum To Be Well-Capitalized Under Prompt Corrective Action Provision	10.00%	10.00%
Tier 1 capital to risk weighted assets, Actual Capital	12.53%	12.28%
Tier 1 capital to risk weighted assets, minimum capital requirements ratio	6.00%	4.00%
Tier 1 capital to risk weighted assets, Minimum To be Well-Capitalized Under Prompt Corrective Action Provisions	8.00%	6.00%
Tier 1 capital to average assets, Actual Capital	9.39%	9.40%
Tier 1 capital to average assets, Minimum Capital Requirements	4.00%	4.00%
Tier 1 capital to average assets, Minimum To Be Well Capitalized Under Prompt Corrective Action Provision	5.00%	5.00%
Bank | Common Equity Tier 1
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items]
Tier 1 capital to risk weighted assets, Actual Capital	12.53%
Tier 1 capital to risk weighted assets, minimum capital requirements ratio	4.50%
Tier 1 capital to risk weighted assets, Minimum To be Well-Capitalized Under Prompt Corrective Action Provisions	6.50%

XML

Fair Values of the assets Acquired and Liabilities Assumed and the Resulting Goodwill (Detail) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2015	Dec. 31, 2014	[1]	Nov. 14, 2014
Consideration paid:
Cash	$ 6,688
EVBS common stock	6,676
Total consideration paid	13,364
Identifiable assets acquired:
Cash and due from banks	1,377
Interest bearing deposits with banks	249
Securities available for sale, at fair value	11,277
Restricted securities, at cost	557
Loans	101,469
Deferred income taxes	3,513
Bank premises and equipment	5,976
Accrued interest receivable	344
Other real estate owned	103
Core deposit intangible	1,010
Bank owned life insurance	2,742
Other assets	243
Total identifiable assets acquired	128,860
Identifiable liabilities assumed:
Noninterest-bearing demand accounts	18,797
Interest-bearing deposits	85,642
Federal funds purchased and repurchase agreements	3,119
Federal Home Loan Bank advances	8,650
Accrued interest payable	30
Other liabilities	373
Total identifiable liabilities assumed	116,611
Net identifiable assets assumed	12,249
Goodwill resulting from acquisition	17,085	$ 17,085
Fair Value Adjustments
Identifiable assets acquired:
Cash and due from banks	0
Interest bearing deposits with banks	0
Securities available for sale, at fair value	0
Restricted securities, at cost	0
Loans	(2,322)
Deferred income taxes	3,513
Bank premises and equipment	(1,044)
Accrued interest receivable	0
Other real estate owned	(108)
Core deposit intangible	1,010
Bank owned life insurance	0
Other assets	0
Total identifiable assets acquired	1,049
Identifiable liabilities assumed:
Noninterest-bearing demand accounts	0
Interest-bearing deposits	(149)
Federal funds purchased and repurchase agreements	0
Federal Home Loan Bank advances	0
Accrued interest payable	0
Other liabilities	0
Total identifiable liabilities assumed	(149)
Net identifiable assets assumed	1,198
VCB
Identifiable assets acquired:
Cash and due from banks	1,377
Interest bearing deposits with banks	249
Securities available for sale, at fair value	11,277
Restricted securities, at cost	557
Loans	103,791
Deferred income taxes	0
Bank premises and equipment	7,020
Accrued interest receivable	344
Other real estate owned	211
Core deposit intangible	0
Bank owned life insurance	2,742
Other assets	243
Total identifiable assets acquired	127,811
Identifiable liabilities assumed:
Noninterest-bearing demand accounts	18,797
Interest-bearing deposits	85,791
Federal funds purchased and repurchase agreements	3,119
Federal Home Loan Bank advances	8,650
Accrued interest payable	30
Other liabilities	373
Total identifiable liabilities assumed	116,760
Net identifiable assets assumed	$ 11,051
Goodwill resulting from acquisition				$ 1,100

[1] Derived from audited consolidated financial statements.

XML

Consumer Loans, including One to Four Family Residential First and Seconds and Home Equity Lines, by Payment Activity (Detail) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Consumer Loans Credit Quality Information And Allowances And Liabilities For Losses On Consumer Loans [Line Items]
Total Consumer loans	$ 390,651	$ 382,961
Real estate - one to four family residential
Consumer Loans Credit Quality Information And Allowances And Liabilities For Losses On Consumer Loans [Line Items]
Total Consumer loans	354,079	346,861
Real estate - one to four family residential | Closed end first and seconds
Consumer Loans Credit Quality Information And Allowances And Liabilities For Losses On Consumer Loans [Line Items]
Total Consumer loans	243,072	236,761
Real estate - one to four family residential | Home Equity Line of Credit
Consumer Loans Credit Quality Information And Allowances And Liabilities For Losses On Consumer Loans [Line Items]
Total Consumer loans	111,007	110,100
Consumer Loan
Consumer Loans Credit Quality Information And Allowances And Liabilities For Losses On Consumer Loans [Line Items]
Total Consumer loans	14,443	15,919
Other
Consumer Loans Credit Quality Information And Allowances And Liabilities For Losses On Consumer Loans [Line Items]
Total Consumer loans	22,129	20,181
Performing
Consumer Loans Credit Quality Information And Allowances And Liabilities For Losses On Consumer Loans [Line Items]
Total Consumer loans	378,774	372,089
Performing | Real estate - one to four family residential
Consumer Loans Credit Quality Information And Allowances And Liabilities For Losses On Consumer Loans [Line Items]
Total Consumer loans	342,558	336,366
Performing | Real estate - one to four family residential | Closed end first and seconds
Consumer Loans Credit Quality Information And Allowances And Liabilities For Losses On Consumer Loans [Line Items]
Total Consumer loans	232,426	226,801
Performing | Real estate - one to four family residential | Home Equity Line of Credit
Consumer Loans Credit Quality Information And Allowances And Liabilities For Losses On Consumer Loans [Line Items]
Total Consumer loans	110,132	109,565
Performing | Consumer Loan
Consumer Loans Credit Quality Information And Allowances And Liabilities For Losses On Consumer Loans [Line Items]
Total Consumer loans	14,091	15,548
Performing | Other
Consumer Loans Credit Quality Information And Allowances And Liabilities For Losses On Consumer Loans [Line Items]
Total Consumer loans	22,125	20,175
NonPerforming
Consumer Loans Credit Quality Information And Allowances And Liabilities For Losses On Consumer Loans [Line Items]
Total Consumer loans	11,877	10,872
NonPerforming | Real estate - one to four family residential
Consumer Loans Credit Quality Information And Allowances And Liabilities For Losses On Consumer Loans [Line Items]
Total Consumer loans	11,521	10,495
NonPerforming | Real estate - one to four family residential | Closed end first and seconds
Consumer Loans Credit Quality Information And Allowances And Liabilities For Losses On Consumer Loans [Line Items]
Total Consumer loans	10,646	9,960
NonPerforming | Real estate - one to four family residential | Home Equity Line of Credit
Consumer Loans Credit Quality Information And Allowances And Liabilities For Losses On Consumer Loans [Line Items]
Total Consumer loans	875	535
NonPerforming | Consumer Loan
Consumer Loans Credit Quality Information And Allowances And Liabilities For Losses On Consumer Loans [Line Items]
Total Consumer loans	352	371
NonPerforming | Other
Consumer Loans Credit Quality Information And Allowances And Liabilities For Losses On Consumer Loans [Line Items]
Total Consumer loans	$ 4	$ 6

XML

Stock Based Compensation Plans - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Thousands		1 Months Ended				3 Months Ended		6 Months Ended
	Oct. 15, 2014	Mar. 19, 2015	Nov. 20, 2014	Nov. 18, 2013	Jun. 29, 2012	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014	Dec. 31, 2013	Dec. 31, 2012	Apr. 19, 2007	Apr. 17, 2003	Sep. 21, 2000
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock compensation expense						$ 63	$ 19	$ 114	$ 39
Unrecognized compensation expense related to restricted stock awards						$ 615		$ 615
2000 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of common stock														400,000
2003 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of common stock													400,000
2007 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of common stock												400,000
Number of common stock available to be granted						225,642		225,642
Restricted stock granted under 2007 plan	42,500	45,000	3,242	38,000	34,000
Restricted stock awarded per share	$ 6.10	$ 6.28	$ 6.17
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights			All of these shares are subject to time vesting over a two year period, and generally vest fifty percent (50%) on the first and second anniversaries of the grant date	All of these shares are subject to time vesting over a five year period, and generally vest forty percent (40%) on the second anniversary of the grant date and twenty percent (20%) on each of the third, fourth and fifth anniversaries of the grant date	All of these shares are subject to time vesting over a five year period, and generally vest forty percent (40%) on the second anniversary of the grant date and twenty percent (20%) on each of the third, fourth and fifth anniversaries of the grant date
2012 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted stock awarded per share											$ 3.72
2013 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted stock awarded per share										$ 6.70

XML

Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014	[1]
Assets:
Cash and due from banks	$ 14,416	$ 14,024
Interest bearing deposits with banks	6,467	5,272
Federal funds sold	0	334
Securities available for sale, at fair value	227,932	214,011
Securities held to maturity, at carrying value (fair value of $31,542 and $33,367, respectively)	30,671	32,163
Restricted securities, at cost	8,118	7,533
Loans, net of allowance for loan losses of $12,287 and $13,021, respectively	828,423	807,548
Deferred income taxes, net	16,937	17,529
Bank premises and equipment, net	28,628	27,433
Accrued interest receivable	3,990	4,013
Other real estate owned, net of valuation allowance of $3 and $76, respectively	1,344	1,838
Goodwill	17,085	17,085
Bank owned life insurance	24,786	24,463
Other assets	10,394	8,726
Total assets	1,219,191	1,181,972
Liabilities
Noninterest-bearing demand accounts	178,844	162,328
Interest-bearing deposits	778,378	776,926
Total deposits	957,222	939,254
Federal funds purchased and repurchase agreements	8,489	14,885
Short-term borrowings	94,605	76,818
Junior subordinated debt	10,310	10,310
Senior subordinated debt	19,140	0
Accrued interest payable	530	316
Other liabilities	6,986	6,115
Total liabilities	1,097,282	1,047,698
Shareholders' Equity
Common stock, $2 par value per share, authorized 50,000,000 shares, issued and outstanding 13,023,550 and 12,978,934 including 138,092 and 104,142 nonvested shares in 2015 and 2014, respectively	25,771	25,750
Surplus	48,797	47,339
Retained earnings	41,494	39,290
Warrant	0	1,481
Accumulated other comprehensive loss, net	(4,633)	(4,066)
Total shareholders' equity	121,909	134,274
Total liabilities and shareholders' equity	1,219,191	1,181,972
Series A fixed rate cumulative perpetual preferred
Shareholders' Equity
Preferred stock value	0	14,000
Series B - non-voting mandatorily convertible non-cumulative preferred
Shareholders' Equity
Preferred stock value	$ 10,480	$ 10,480

[1] Derived from audited consolidated financial statements.

XML

Securities in Unrealized Loss Position by Duration of Period of Unrealized Loss (Detail) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2015	Dec. 31, 2014
Schedule of Available-for-sale Securities [Line Items]
Less than 12 months, Fair Value	$ 94,927	$ 12,604
Less than 12 months, Unrealized Loss	1,734	146
12 months or more, Fair Value	87,591	131,251
12 months or more, Unrealized Loss	2,256	3,247
Total, Fair Value	182,518	143,855
Total, Unrealized Loss	3,990	3,393
Agency residential mortgage-backed securities
Schedule of Available-for-sale Securities [Line Items]
Less than 12 months, Fair Value	7,619	0
Less than 12 months, Unrealized Loss	111	0
12 months or more, Fair Value	9,967	15,343
12 months or more, Unrealized Loss	273	319
Total, Fair Value	17,586	15,343
Total, Unrealized Loss	384	319
Agency commercial mortgage-backed securities
Schedule of Available-for-sale Securities [Line Items]
Less than 12 months, Fair Value	6,487
Less than 12 months, Unrealized Loss	87
12 months or more, Fair Value	0
12 months or more, Unrealized Loss	0
Total, Fair Value	6,487
Total, Unrealized Loss	87
Obligations of U.S. Government agencies
Schedule of Available-for-sale Securities [Line Items]
Less than 12 months, Fair Value	4,385	0
Less than 12 months, Unrealized Loss	110	0
12 months or more, Fair Value	8,696	14,587
12 months or more, Unrealized Loss	300	422
Total, Fair Value	13,081	14,587
Total, Unrealized Loss	410	422
SBA Pool securities
Schedule of Available-for-sale Securities [Line Items]
Less than 12 months, Fair Value	9,137	3,520
Less than 12 months, Unrealized Loss	48	73
12 months or more, Fair Value	50,950	63,290
12 months or more, Unrealized Loss	1,025	1,667
Total, Fair Value	60,087	66,810
Total, Unrealized Loss	1,073	1,740
Agency CMO securities
Schedule of Available-for-sale Securities [Line Items]
Less than 12 months, Fair Value	25,483	5,140
Less than 12 months, Unrealized Loss	418	34
12 months or more, Fair Value	8,720	16,478
12 months or more, Unrealized Loss	302	396
Total, Fair Value	34,203	21,618
Total, Unrealized Loss	720	430
Non agency CMO securities
Schedule of Available-for-sale Securities [Line Items]
Less than 12 months, Fair Value		281
Less than 12 months, Unrealized Loss		3
12 months or more, Fair Value		44
12 months or more, Unrealized Loss		0
Total, Fair Value		325
Total, Unrealized Loss		3
State and political subdivisions
Schedule of Available-for-sale Securities [Line Items]
Less than 12 months, Fair Value	41,816	3,663
Less than 12 months, Unrealized Loss	960	36
12 months or more, Fair Value	9,258	21,509
12 months or more, Unrealized Loss	356	443
Total, Fair Value	51,074	25,172
Total, Unrealized Loss	$ 1,316	$ 479

XML

Consolidated Statements of Comprehensive (Loss) Income (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Unrealized securities (losses) gains arising during period, tax	$ (1,066)	$ 893	$ (308)	$ 2,248
Amortization of unrealized losses on securities transferred from available for sale to held to maturity, tax	19	26	33	41
Reclassification adjustment for securities gains included in net income (loss), tax	$ 8	$ 37	$ 17	$ 166

XML

Loans Modified as Troubled Debt Restructurings (Detail) $ in Thousands		3 Months Ended		6 Months Ended
		Jun. 30, 2015 USD ($)	Jun. 30, 2014 USD ($)	Jun. 30, 2015 USD ($)	Jun. 30, 2014 USD ($)
Financing Receivable, Modifications [Line Items]
Number of Loans		0	5	0	5
Pre-Modification Recorded Balance		$ 0	$ 897	$ 0	$ 897
Post-Modification Recorded Balance	[1]	$ 0	$ 898	$ 0	$ 898
Consumer
Financing Receivable, Modifications [Line Items]
Number of Loans		0	2	0	2
Pre-Modification Recorded Balance		$ 0	$ 385	$ 0	$ 385
Post-Modification Recorded Balance	[1]	$ 0	$ 385	$ 0	$ 385
Real estate - one to four family residential | Closed end first and seconds
Financing Receivable, Modifications [Line Items]
Number of Loans		0	3	0	3
Pre-Modification Recorded Balance		$ 0	$ 512	$ 0	$ 512
Post-Modification Recorded Balance	[1]	$ 0	$ 513	$ 0	$ 513

[1] The period end balances are inclusive of all partial paydowns and charge-offs since the modification date. Loans modified as TDRs that were fully paid down, charged-off, or foreclosed upon by period end are not reported.

XML

Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2015

Financial Assets Measured at Fair Value on Recurring Basis

The following table summarizes financial assets measured at fair value on a recurring basis as of June 30, 2015 and December 31, 2014, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:

Assets Measured at Fair Value on a Recurring Basis at June 30, 2015 Using
	Quoted Prices in		Significant Other		Significant
	Active Markets for		Observable		Unobservable		Balance at
	Identical Assets		Inputs		Inputs		June 30,
(dollars in thousands)	(Level 1)		(Level 2)		(Level 3)		2015
Assets
Securities available for sale
Obligations of U.S. Government agencies	$	-	$	13,081	$	-	$	13,081
SBA Pool securities		-		71,007		-		71,007
Agency residential mortgage-backed securities		-		19,400		-		19,400
Agency commercial mortgage-backed securities		-		6,487		-		6,487
Agency CMO securities		-		53,154		-		53,154
Non agency CMO securities		-		704		-		704
State and political subdivisions		-		64,090		-		64,090
FNMA and FHLMC preferred stock		-		9		-		9
Total securities available for sale	$	-	$	227,932	$	-	$	227,932

Assets Measured at Fair Value on a Recurring Basis at December 31, 2014 Using
	Quoted Prices in		Significant Other		Significant
	Active Markets for		Observable		Unobservable		Balance at
	Identical Assets		Inputs		Inputs		December 31,
(dollars in thousands)	(Level 1)		(Level 2)		(Level 3)		2014
Assets
Securities available for sale
Obligations of U.S. Government agencies	$	-	$	14,569	$	-	$	14,569
SBA Pool securities		-		74,799		-		74,799
Agency residential mortgage-backed securities		-		28,629		-		28,629
Agency CMO securities		-		39,215		-		39,215
Non agency CMO securities		-		828		-		828
State and political subdivisions		-		55,926		-		55,926
FNMA and FHLMC preferred stock		-		45		-		45
Total securities available for sale	$	-	$	214,011	$	-	$	214,011

Assets Measured at Fair Value on Non-Recurring Basis

The following table summarizes assets measured at fair value on a non-recurring basis as of June 30, 2015 and December 31, 2014, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:

Assets Measured at Fair Value on a Non-Recurring Basis at June 30, 2015 Using
	Quoted Prices in		Significant Other		Significant
	Active Markets for		Observable		Unobservable		Balance at
	Identical Assets		Inputs		Inputs		June 30,
	(Level 1)		(Level 2)		(Level 3)		2015
	(dollars in thousands)
Assets
Impaired loans	$	-	$	-	$	14,338	$	14,338
Other real estate owned	$	-	$	-	$	1,344	$	1,344

Assets Measured at Fair Value on a Non-Recurring Basis at December 31, 2014 Using
	Quoted Prices in		Significant Other		Significant
	Active Markets for		Observable		Unobservable		Balance at
	Identical Assets		Inputs		Inputs		December 31,
	(Level 1)		(Level 2)		(Level 3)		2014
	(dollars in thousands)
Assets
Impaired loans	$	-	$	-	$	17,852	$	17,852
Other real estate owned	$	-	$	-	$	1,838	$	1,838

Quantitative Information about Level Three Fair Value Measurements

The following table displays quantitative information about Level 3 Fair Value Measurements as of June 30, 2015 and December 31, 2014:

Quantitative information about Level 3 Fair Value Measurements at June 30, 2015
(dollars in thousands)	Fair Value		Valuation Technique(s)	Unobservable Input	Range (Weighted Average)
Assets
Impaired loans	$	14,338	Discounted appraised value	Selling cost	0% - 24% (12%)
				Discount for lack of marketability and age of appraisal	0% - 25% (9%)
Other real estate owned	$	1,344	Discounted appraised value	Selling cost	10% (10%)
				Discount for lack of marketability and age of appraisal	0% -34% (29%)

Quantitative information about Level 3 Fair Value Measurements at December 31, 2014
(dollars in thousands)	Fair Value		Valuation Technique(s)	Unobservable Input	Range (Weighted Average)
Assets
Impaired loans	$	17,852	Discounted appraised value	Selling cost	0% - 30% (9%)
				Discount for lack of marketability and age of appraisal	0% - 35% (13%)
Other real estate owned	$	1,838	Discounted appraised value	Selling cost	10% (10%)
				Discount for lack of marketability and age of appraisal	0% - 22% (2%)

Estimated Fair Value and Carrying Value

The estimated fair value and the carrying value of the Company’s recorded financial instruments are as follows:

			Fair Value Measurements at June 30, 2015 Using
			Quoted Prices in		Significant Other		Significant
			Active Markets for		Observable		Unobservable		Balance at
			Identical Assets		Inputs		Inputs		June 30,
(dollars in thousands)	Carrying Amount		(Level 1)		(Level 2)		(Level 3)		2015
Assets:
Cash and short-term investments	$	14,416	$	14,416	$	-	$	-	$	14,416
Interest bearing deposits with banks		6,467		6,467		-		-		6,467
Securities available for sale		227,932		-		227,932		-		227,932
Securities held to maturity		30,671		-		31,542		-		31,542
Restricted securities		8,118		-		8,118		-		8,118
Loans, net		828,423		-		-		831,604		831,604
Bank owned life insurance		24,786		-		24,786		-		24,786
Accrued interest receivable		3,990		-		3,990		-		3,990
Total	$	1,144,803	$	20,883	$	296,368	$	831,604	$	1,148,855
Liabilities:
Noninterest-bearing demand deposits	$	178,844	$	178,844	$	-	$	-	$	178,844
Interest-bearing deposits		778,378		-		729,618		-		729,618
Short-term borrowings		103,094		103,094		-		-		103,094
Junior subordinated debt		10,310		-		10,310		-		10,310
Senior subordinated debt		19,140		-		19,359		-		19,359
Accrued interest payable		530		-		530		-		530
Total	$	1,090,296	$	281,938	$	759,817	$	-	$	1,041,755

			Fair Value Measurements at December 31, 2014 Using
			Quoted Prices in		Significant Other		Significant
			Active Markets for		Observable		Unobservable		Balance at
			Identical Assets		Inputs		Inputs		December 31,
(dollars in thousands)	Carrying Amount		(Level 1)		(Level 2)		(Level 3)		2014
Assets:
Cash and short-term investments	$	14,024	$	14,024	$	-	$	-	$	14,024
Interest bearing deposits with banks		5,272		5,272		-		-		5,272
Securities available for sale		214,011		-		214,011		-		214,011
Securities held to maturity		32,163		-		33,367		-		33,367
Restricted securities		7,533		-		7,533		-		7,533
Loans, net		807,548		-		-		812,429		812,429
Bank owned life insurance		24,463		-		24,463		-		24,463
Accrued interest receivable		4,013		-		4,013		-		4,013
Total	$	1,109,027	$	19,296	$	283,387	$	812,429	$	1,115,112
Liabilities:
Noninterest-bearing demand deposits	$	162,328	$	162,328	$	-	$	-	$	162,328
Interest-bearing deposits		776,926		-		721,240		-		721,240
Short-term borrowings		91,703		91,703		-		-		91,703
Junior subordinated debt		10,310		-		10,310		-		10,310
Accrued interest payable		316		-		316		-		316
Total	$	1,041,583	$	254,031	$	731,866	$	-	$	985,897

XML

Federal Funds Purchased and Repurchase Agreements (Detail) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2015	Dec. 31, 2014
Line of Credit Facility [Line Items]
Balance outstanding at period end	$ 94,605	$ 76,818	[1]
Maximum balance at any month end during the period	94,605	82,930
Average balance for the period	$ 77,453	$ 72,565
Weighted average rate for the period	0.21%	0.21%
Weighted average rate at period end	0.21%	0.22%
Federal Funds Purchased
Line of Credit Facility [Line Items]
Balance outstanding at period end	$ 0	$ 0
Maximum balance at any month end during the period	2,440	2,000
Average balance for the period	$ 85	$ 174
Weighted average rate for the period	0.71%	0.78%
Weighted average rate at period end	0.00%	0.00%
Repurchase Agreements
Line of Credit Facility [Line Items]
Balance outstanding at period end	$ 8,489	$ 14,885
Maximum balance at any month end during the period	12,392	14,885
Average balance for the period	$ 9,969	$ 4,523
Weighted average rate for the period	0.62%	0.59%
Weighted average rate at period end	0.61%	0.60%

[1] Derived from audited consolidated financial statements.

XML

Junior and Senior Subordinated Debt

6 Months Ended

Jun. 30, 2015

Junior and Senior Subordinated Debt

Note 13. Junior and Senior Subordinated Debt

On September 17, 2003, $10 million of trust preferred securities were placed through EVB Statutory Trust I in a pooled underwriting totaling approximately $650 million. The trust issuer has invested the total proceeds from the sale of the trust preferred securities in Floating Rate Junior Subordinated Deferrable Interest Debentures (“Junior Subordinated Debt”) issued by the Parent. The trust preferred securities pay cumulative cash distributions quarterly at a variable rate per annum, reset quarterly, equal to the 3-month LIBOR plus 2.95%. As of June 30, 2015 and December 31, 2014, the interest rate was 3.23% and 3.21%, respectively. The dividends paid to holders of the trust preferred securities, which are recorded as interest expense, are deductible for income tax purposes. The trust preferred securities have a mandatory redemption date of September 17, 2033, and became subject to varying call provisions beginning September 17, 2008. The Parent has fully and unconditionally guaranteed the trust preferred securities through the combined operation of the Junior Subordinated Debt and other related documents. The Parent’s obligation under the guarantee is unsecured and subordinate to senior and subordinated indebtedness of the Parent.

The trust preferred securities may be included in Tier 1 capital for regulatory capital adequacy determination purposes up to 25% of Tier 1 capital after its inclusion. At June 30, 2015 and December 31, 2014, all of the trust preferred securities qualified as Tier 1 capital.

Subject to certain exceptions and limitations, the Company is permitted to elect from time to time to defer regularly scheduled interest payments on its outstanding Junior Subordinated Debt relating to its trust preferred securities. If the Company defers interest payments on the Junior Subordinated Debt for more than 20 consecutive quarters, the Company would be in default under the governing agreements for such notes and the amount due under such agreements would be immediately due and payable.

From June 2011 to March 2014, the Company deferred its regularly scheduled interest payments on its outstanding Junior Subordinated Debt relating to its trust preferred securities due to prohibitions on such payments under provisions of regulatory agreements with the Company’s and the Bank’s federal and state banking regulators. On June 17, 2014, the Company paid all current and deferred interest on these outstanding Junior Subordinated Debt, and the Company has not deferred any subsequent interest payments through June 30, 2015.

On April 22, 2015, the Company entered in a Senior Subordinated Note Purchase Agreement with certain institutional accredited investors pursuant to which the Company sold $20.0 million in aggregate principal amount of its 6.50% Fixed-to-Floating Rate Subordinated Notes due 2025 ("Senior Subordinated Debt") to the investors at a price equal to 100% of the aggregate principal amount of the Senior Subordinated Debt. The Senior Subordinated Debt bears interest at an annual rate of 6.50%, payable semi-annually in arrears on May 1 and November 1 of each year ending on May 1, 2020. From and including May 1, 2020 to, but excluding, the maturity date, the Senior Subordinated Debt will bear interest at an annual rate, reset quarterly, equal to LIBOR determined on the determination date of the applicable interest period plus 502 basis points, payable quarterly in arrears on February 1, May 1, August 1 and November 1 of each year, beginning on August 1, 2020 The Company may, at its option, redeem, in whole or in part, the Senior Subordinated Debt as early as May 1, 2020, and any partial redemption would be made pro rata among all of the holders. At June 30, 2015, all of the Senior Subordinated Debt qualified as Tier 2 capital. At June 30, 2015, the remaining unamortized debt issuance costs related to the Senior Subordinated Debt totaled $860 thousand.

XML

Preferred Stock and Warrant (Tables)

6 Months Ended

Jun. 30, 2015

Allocation of Preferred Stock Discount and Warrant

Allocation of the Series A Preferred Stock discount and the warrant as of January 9, 2009 is provided in the tables below:

	2009
Warrant Value
Series A Preferred Stock	$	24,000,000
Price	$	9.63
Warrant - shares		373,832
Value per warrant	$	2.54
Fair value of warrant	$	949,533

Net Present Value of Preferred Stock

NPV of Series A Preferred Stock
@ 12% discount rate			(dollars in thousands)
				Relative		Relative
	Fair Value			Value %		Value
$24 million 1/09/2009
NPV of Series A Preferred Stock (12% discount rate)	$	14,446		93.8	%	$	22,519
Fair value of warrant		950		6.2	%		1,481
	$	15,396		100.0	%	$	24,000

XML

Low Income Housing Tax Credits

6 Months Ended

Jun. 30, 2015

Low Income Housing Tax Credits Disclosure

Note 15. Low Income Housing Tax Credits

The Company has invested in four separate housing equity funds at June 30, 2015. The general purpose of these funds is to encourage and assist participants in investing in low-income residential rental properties located in the Commonwealth of Virginia, develop and implement strategies to maintain projects as low-income housing, deliver Federal Low Income Housing Credits to investors, allocate tax losses and other possible tax benefits to investors, and to preserve and protect project assets. The investments in these funds were recorded as other assets on the consolidated balance sheets and were $3.0 million and $2.2 million at June 30, 2015 and December 31, 2014, respectively. These investments and related tax benefits have expected terms through 2032, with the majority maturing by 2027. Tax credits and other tax benefits recognized related to these investments during the six months ended June 30, 2015 and 2014 were $238 thousand and $191 thousand, respectively. Total projected tax credits to be received for 2015 are $366 thousand, which is based on the most recent quarterly estimates received from the funds. Additional capital calls expected for the funds totaled $1.0 million and $35 thousand at June 30, 2015 and December 31, 2014, respectively, and are included in other liabilities on the consolidated balance sheets.

XML

Net Income Per Common Share - Additional Information (Detail) - shares		6 Months Ended
	Jun. 12, 2013	Jun. 30, 2015	Jun. 30, 2014
Earnings Per Share Disclosure [Line Items]
Shares of common stock excluded from the computation of diluted earnings(loss)per common share		102,887	145,437
Series B Non-Voting Mandatorily Convertible Non-Cumulative Preferred
Earnings Per Share Disclosure [Line Items]
Issuance of shares under private placement	5,240,192

XML

Consolidated Statements of Shareholders' Equity - USD ($) $ in Thousands	Total		Common Stock	Surplus	Retained Earnings	Accumulated Other Comprehensive (Loss) Income	Series A Preferred Stock [Member]	[1]	Series B Preferred Stock [Member]
Balance at Dec. 31, 2013	$ 132,949		$ 23,578	$ 42,697	$ 39,581	$ (8,868)	$ 25,481		$ 10,480
Net income	3,651				3,651
Other comprehensive (loss)	4,121					4,121
Stock based compensation	39			39
Restricted common stock vested	0		30	(30)	0	0	0		0
Balance at Jun. 30, 2014	140,760		23,608	42,706	43,232	(4,747)	25,481		10,480
Balance at Dec. 31, 2014	134,274	[2]	25,750	47,339	39,290	(4,066)	15,481		10,480
Net income	3,116				3,116
Other comprehensive (loss)	(567)					(567)
Cash dividends - preferred, Series A	(547)				(547)
Cash dividends - preferred, Series B	(105)				(105)
Cash dividends - common ($0.02 per share)	(260)				(260)
Repurchase of preferred stock	(14,000)						(14,000)
Repurchase of common stock	(1)		(1)
Repurchase of warrants	(115)			1,366			(1,481)
Stock based compensation	114			114
Restricted common stock vested	0		22	(22)	0	0	0		0
Balance at Jun. 30, 2015	$ 121,909		$ 25,771	$ 48,797	$ 41,494	$ (4,633)	$ 0		$ 10,480

[1] For the purposes of this table, Preferred Stock Series A includes the effect of the warrant (prior to its repurchase by the Company during the second quarter of 2015) issued in connection with the sale of the Series A Preferred Stock and the discount on such preferred stock.

[2] Derived from audited consolidated financial statements.

XML

Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Securities held to maturity, Fair Value	$ 31,542	$ 33,367
Loans, allowance for loan losses	12,287	13,021
Other real estate owned, valuation allowance	$ 3	$ 76
Preferred stock, par value	$ 2	$ 2
Preferred stock, shares authorized	10,000,000	10,000,000
Common stock, par value	$ 2	$ 2
Common stock, shares authorized	50,000,000	50,000,000
Common stock, shares issued	13,023,550	12,978,934
Common stock, shares outstanding	13,023,550	12,978,934
Nonvested shares	138,092	104,142
Series A fixed rate cumulative perpetual preferred
Preferred stock, par value	$ 1,000	$ 1,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	14,000	14,000
Series B - non-voting mandatorily convertible non-cumulative preferred
Preferred stock, shares outstanding	5,240,192	5,240,192

XML

Net Income Per Common Share

6 Months Ended

Jun. 30, 2015

Net Income Per Common Share

Note 8. Net Income Per Common Share

The Company applies the two-class method of computing basic and diluted net income per common share.  Under the two-class method, net income per common share is determined for each class of common stock and participating security according to dividends declared and participation rights in undistributed earnings. Based on FASB guidance, the Company considers its Series B Preferred Stock (defined below) to be a participating security. FASB guidance requires that all outstanding unvested share-based payment awards that contain rights to nonforfeitable dividends participate in undistributed earnings with common shareholders.  Accordingly, the weighted average number of shares of the Company’s common stock used in the calculation of basic and diluted net income per common share includes unvested shares of the Company’s common stock outstanding.

The following tables show the computation of basic and diluted net income per common share for the periods presented. 

	Three Months Ended
	June 30, 2015		June 30, 2014
(dollars in thousands, except share and per share amounts)
Basic Net Income Per Common Share
Net income available to common shareholders	$	1,341	$	1,114
Less: Net income allocated to participating securities, Series B Preferred Stock		385		341
Net income allocated to common shareholders	$	956	$	773
Weighted average common shares outstanding for basic net income per common share		13,023,550		11,862,367
Basic net income per common share	$	0.07	$	0.06
Diluted Net Income Per Common Share
Net income available to common shareholders	$	1,341	$	1,114
Weighted average common shares outstanding for basic net income per common share		13,023,550		11,862,367
Effect of dilutive securities, stock options		-		-
Effect of dilutive securities, Series B Preferred Stock		5,240,192		5,240,192
Weighted average common shares outstanding for diluted net income per common share		18,263,742		17,102,559
Diluted net income per common share	$	0.07	$	0.06

	Six Months Ended
	June 30, 2015		June 30, 2014
(dollars in thousands, except share and per share amounts)
Basic Net Income Per Common Share
Net income available to common shareholders	$	2,730	$	2,592
Less: Net income allocated to participating securities, Series B Preferred Stock		784		794
Net income allocated to common shareholders	$	1,946	$	1,798
Weighted average common shares outstanding for basic net income per common share		13,004,595		11,862,367
Basic net income per common share	$	0.15	$	0.15
Diluted Net Income Per Common Share
Net income available to common shareholders	$	2,730	$	2,592
Weighted average common shares outstanding for basic net income per common share		13,004,595		11,862,367
Effect of dilutive securities, stock options		-		-
Effect of dilutive securities, Series B Preferred Stock		5,240,192		5,240,192
Weighted average common shares outstanding for diluted net income per common share		18,244,787		17,102,559
Diluted net income per common share	$	0.15	$	0.15

At June 30, 2015 and 2014, options to acquire 102,887 and 145,437 shares of common stock, respectively, were not included in computing diluted net income per common share because their effects were anti-dilutive.

On June 12, 2013, the Company issued 5,240,192 shares of non-voting mandatorily convertible non-cumulative preferred stock, Series B (the “Series B Preferred Stock”) through private placements to certain investors. Each share of Series B Preferred Stock can, under certain limited circumstances as set forth in the Company’s articles of incorporation, be converted into one share of the Company’s common stock, and is therefore reflected in the dilutive weighted average common shares outstanding. For more information related to the conversion rights on these preferred shares, see Note 12 – Preferred Stock and Warrant.

Additionally, the impact of warrants to acquire shares of the Company’s common stock that were issued to the U.S. Department of the Treasury (“Treasury”) in connection with the Company’s participation in the Capital Purchase Program is not included, as the warrants were anti-dilutive. As previously disclosed, these warrants were repurchased by the Company during May 2015. For additional information on preferred stock warrants see Note 12 – Preferred Stock and Warrant.

The Company identified and corrected an immaterial error affecting the calculation of basic net income per common share for certain periods prior to the second quarter of 2015. Previously, the Company did not consider the Series B Preferred Stock as a participating security when calculating basic net income per common share. The Company will correct basic net income per common share for historical periods as such measures are disclosed in future public reports, filings and statements. This immaterial error had no impact on previously reported diluted net income per common share for any historical periods.

XML

Document And Entity Information - shares	6 Months Ended
	Jun. 30, 2015	Aug. 12, 2015
Document Information [Line Items]
Entity Registrant Name	EASTERN VIRGINIA BANKSHARES INC
Entity Central Index Key	0001047170
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Trading Symbol	EVBS
Entity Common Stock, Shares Outstanding		13,029,550
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2015
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2015

XML

Stock Based Compensation Plans

6 Months Ended

Jun. 30, 2015

Stock Based Compensation Plans

Note 9. Stock Based Compensation Plans

On September 21, 2000, the Company adopted the Eastern Virginia Bankshares, Inc. 2000 Stock Option Plan (the “2000 Plan”) to provide a means for selected key employees and directors to increase their personal financial interest in the Company, thereby stimulating their efforts and strengthening their desire to remain with the Company. Under the 2000 Plan, up to 400,000 shares of Company common stock could be granted in the form of stock options. On April 17, 2003, the shareholders approved the Eastern Virginia Bankshares, Inc. 2003 Stock Incentive Plan, amending and restating the 2000 Plan (the “2003 Plan”) still authorizing the issuance of up to 400,000 shares of common stock under the plan, but expanding the award types available under the plan to include stock options, stock appreciation rights, common stock, restricted stock and phantom stock. Under the terms of the 2003 Plan, after April 17, 2013 no additional awards may be granted under the 2003 Plan. Any awards previously granted under the 2003 Plan that were outstanding as of April 17, 2013 remain outstanding and will vest in accordance with their regular terms.

On April 19, 2007, the Company’s shareholders approved the Eastern Virginia Bankshares, Inc. 2007 Equity Compensation Plan (the “2007 Plan”) to enhance the Company’s ability to recruit and retain officers, directors, employees, consultants and advisors with ability and initiative and to encourage such persons to have a greater financial interest in the Company. The 2007 Plan authorizes the Company to issue up to 400,000 additional shares of common stock pursuant to grants of stock options, stock appreciation rights, common stock, restricted stock, performance shares, incentive awards and stock units. There were 225,642 shares still available to be granted as awards under the 2007 Plan as of June 30, 2015.

Accounting standards require companies to recognize the cost of employee services received in exchange for awards of equity instruments, such as stock options, based on the fair value of those awards at the date of grant.

Accounting standards also require that new awards to employees eligible for accelerated vesting at retirement prior to the awards becoming fully vested be recognized as compensation cost over the period through the date that the employee first becomes eligible to retire and is no longer required to provide service to earn the award.

Stock option compensation expense is the estimated fair value of options granted, amortized on a straight-line basis over the requisite service period for each stock option award. There were no stock options granted or exercised in the six months ended June 30, 2015 and 2014. There was no remaining unrecognized compensation expense related to stock options.

A summary of the Company’s stock option activity and related information is as follows:

					Remaining		Aggregate
	Options		Weighted Average		Contractual Life		Intrinsic Value
	Outstanding		Exercise Price		(in years)		(in thousands)
Stock options outstanding at January 1, 2015		110,487	$	18.76
Forfeited		(7,600)		18.65
Stock options outstanding at June 30, 2015		102,887	$	18.77		1.56	$	-
Stock options exercisable at June 30, 2015		102,887	$	18.77		1.56	$	-

* Intrinsic value is the amount by which the fair value of the underlying common stock exceeds the exercise price of a stock option on exercise date.

The table below summarizes information concerning stock options outstanding and exercisable at June 30, 2015:

Stock Options Outstanding and Exercisable
Exercise		Number		Weighted Average
Price		Outstanding		Remaing Term
$	20.57		26,862	0.00 years*
$	21.16		31,525	1.25 years
$	19.25		23,500	2.25 years
$	12.36		21,000	3.25 years
$	18.77		102,887	1.56 years

*These options expire on July 1, 2015.

On March 19, 2015, the Company granted 45,000 shares of restricted stock under the 2007 Plan to its executive officers. Fifty percent (50%) of the shares are subject to time vesting in five equal annual installments beginning on March 31, 2016.  The remaining fifty percent (50%) of the shares are subject to performance vesting and will vest on March 31, 2018 to the extent certain financial performance requirements for fiscal year 2017 are met. On October 15, 2014, the Company granted 42,500 shares of restricted stock under the 2007 Plan to its executive officers.  Fifty percent (50%) of the shares are subject to time vesting in five equal annual installments beginning on March 31, 2015.  The remaining fifty percent (50%) of the shares are subject to performance vesting and will vest on March 31, 2017 to the extent certain financial performance requirements for fiscal year 2016 are met. On November 20, 2014, the Company granted 3,242 shares of restricted stock under the 2007 Plan to one of its executive officers.  All of these shares are subject to time vesting over a two year period, and generally vest fifty percent (50%) on the first and second anniversaries of the grant date. On November 18, 2013, the Company granted 38,000 shares of restricted stock under the 2007 Plan to its executive officers in the form of Troubled Asset Relief Program (“TARP”) compliant restricted stock awards. All of these shares are subject to time vesting over a five year period, and generally vest forty percent (40%) on the second anniversary of the grant date and twenty percent (20%) on each of the third, fourth and fifth anniversaries of the grant date. On June 29, 2012, the Company granted 34,000 shares of restricted stock under the 2007 Plan to its executive officers in the form of TARP compliant restricted stock awards. All of these shares are subject to time vesting over a five year period, and generally vest forty percent (40%) on the second anniversary of the grant date and twenty percent (20%) on each of the third, fourth and fifth anniversaries of the grant date.

For the three and six months ended June 30, 2015 and 2014, restricted stock compensation expense was $63 thousand and $114 thousand, respectively, compared to restricted stock compensation expense of $19 thousand and $39 thousand, respectively, and was included in salaries and employee benefits expense in the consolidated statements of income. Restricted stock compensation expense is accounted for using the fair market value of the Company’s common stock on the date the restricted shares were awarded, which was $6.28 per share for the March 19, 2015 awards, $6.10 per share for the October 15, 2014 awards, $6.17 per share for the November 20, 2014 award, $6.70 per share for the 2013 awards and $3.72 per share for the 2012 awards.

A summary of the status of the Company’s nonvested shares in relation to the Company’s restricted stock awards as of June 30, 2015, and changes during the six months ended June 30, 2015, is presented below; the weighted average price is the weighted average fair value at the date of grant:

			Weighted-Average
	Shares		Price
Nonvested as of January 1, 2015		104,142	$	5.85
Granted		45,000		6.28
Vested		(11,050)		4.64
Nonvested as of June 30, 2015		138,092	$	6.09

At June 30, 2015, there was $615 thousand of total unrecognized compensation expense related to restricted stock awards. This unearned compensation is being amortized over the remaining vesting period for the time and performance based shares.

XML

Net Present Value of Preferred Stock (Detail) - Jan. 09, 2009 - USD ($) $ in Thousands	Total
Preferred Securities And Warrants [Line Items]
NPV of preferred stock, Fair Value	$ 24,000
Fair value of warrant	949,533
NPV of preferred stock, fair value	$ 15,396
Fair value of warrant, relative value percent	6.20%
Net present value of preferred stock, relative value percentage	100.00%
Fair value of warrant, relative Value	$ 1,481
Series A
Preferred Securities And Warrants [Line Items]
NPV of preferred stock, Fair Value	$ 14,446
NPV of preferred stock, discount rate, relative value percent	93.80%
NPV of preferred stock, discount rate, relative Value	$ 22,519

XML

Consolidated Statements of Income - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Interest and Dividend Income
Interest and fees on loans	$ 10,382	$ 8,562	$ 20,573	$ 17,112
Interest on investments:
Taxable interest income	1,185	1,338	2,387	2,845
Tax exempt interest income	268	204	528	417
Dividends	96	89	204	191
Interest on deposits with banks	4	4	8	8
Total interest and dividend income	11,935	10,197	23,700	20,573
Interest Expense
Deposits	934	978	1,985	1,965
Federal funds purchased and repurchase agreements	13	5	31	10
Short-term borrowings	37	36	79	71
Junior subordinated debt	81	88	161	176
Senior subordinated debt	264	0	264	0
Total interest expense	1,329	1,107	2,520	2,222
Net interest income	10,606	9,090	21,180	18,351
Provision for Loan Losses	0	0	0	250
Net interest income after provision for loan losses	10,606	9,090	21,180	18,101
Noninterest Income
Service charges and fees on deposit accounts	673	837	1,336	1,659
Debit/credit card fees	442	378	805	687
Gain on sale of available for sale securities, net	26	109	51	489
(Loss) on sale of bank premises and equipment	(30)	0	(27)	5
Other operating income	421	315	886	691
Total noninterest income	1,532	1,639	3,051	3,531
Noninterest Expenses
Salaries and employee benefits	5,523	4,748	11,113	9,334
Occupancy and equipment expenses	1,392	1,267	2,913	2,586
Telephone	210	211	407	422
FDIC expense	254	305	426	637
Consultant fees	546	279	951	622
Collection, repossession and other real estate owned	126	89	215	156
Marketing and advertising	347	270	668	437
(Gain) loss on sale of other real estate owned	(6)	28	26	15
Impairment losses on other real estate owned	0	6	5	11
Other operating expenses	1,807	1,316	3,442	2,477
Total noninterest expenses	10,199	8,519	20,166	16,697
Income before income taxes	1,939	2,210	4,065	4,935
Income Tax Expense	432	555	949	1,284
Net Income	1,507	1,655	3,116	3,651
Effective dividend on Series A Preferred Stock	166	541	386	1,059
Net income available to common shareholders	$ 1,341	$ 1,114	$ 2,730	$ 2,592
Net income per common share: basic	$ 0.07	$ 0.06	$ 0.15	$ 0.15
Net income per common share: diluted	$ 0.07	$ 0.06	$ 0.15	$ 0.15

XML

Investment Securities

6 Months Ended

Jun. 30, 2015

Investment Securities

Note 3. Investment Securities

The amortized cost and estimated fair value, with gross unrealized gains and losses, of securities at June 30, 2015 and December 31, 2014 were as follows:

(dollars in thousands)	June 30, 2015
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
Available for Sale:
Obligations of U.S. Government agencies	$	13,491	$	-	$	410	$	13,081
SBA Pool securities		71,966		114		1,073		71,007
Agency residential mortgage-backed securities		19,731		53		384		19,400
Agency commercial mortgage-backed securities		6,574		-		87		6,487
Agency CMO securities		53,589		285		720		53,154
Non agency CMO securities		670		34		-		704
State and political subdivisions		65,102		301		1,313		64,090
FNMA and FHLMC preferred stock		2		7		-		9
Total	$	231,125	$	794	$	3,987	$	227,932

(dollars in thousands)	December 31, 2014
			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
	Cost		Gains		Losses		Value
Available for Sale:
Obligations of U.S. Government agencies	$	14,991	$	-	$	422	$	14,569
SBA Pool securities		76,469		70		1,740		74,799
Agency residential mortgage-backed securities		28,740		208		319		28,629
Agency CMO securities		39,343		302		430		39,215
Non agency CMO securities		820		11		3		828
State and political subdivisions		55,877		510		461		55,926
FNMA and FHLMC preferred stock		7		38		-		45
Total	$	216,247	$	1,139	$	3,375	$	214,011

(dollars in thousands)	June 30, 2015
			Unrealized
			Losses				Gross		Gross
	Amortized		Recorded		Carrying		Unrealized		Unrealized		Fair
	Cost		in AOCI*		Value		Gains		Losses		Value
Held to Maturity:
Agency CMO securities	$	11,814	$	71	$	11,743	$	338	$	-	$	12,081
State and political subdivisions		19,484		556		18,928		536		3		19,461
Total	$	31,298	$	627	$	30,671	$	874	$	3	$	31,542

*Represents the unrealized holding gain or loss at the date of transfer from available for sale to held to maturity, net of any accretion.

(dollars in thousands)	December 31, 2014
			Unrealized
			Losses				Gross		Gross
	Amortized		Recorded		Carrying		Unrealized		Unrealized		Fair
	Cost		in AOCI*		Value		Gains		Losses		Value
Held to Maturity:
Agency CMO securities	$	12,073	$	80	$	11,993	$	294	$	-	$	12,287
State and political subdivisions		20,814		644		20,170		928		18		21,080
Total	$	32,887	$	724	$	32,163	$	1,222	$	18	$	33,367

*Represents the unrealized holding gain or loss at the date of transfer from available for sale to held to maturity, net of any accretion.

There are no securities classified as “Trading” at June 30, 2015 or December 31, 2014. During the fourth quarter of 2013, the Company transferred securities with an amortized cost of $35.5 million, previously designated as “Available for Sale”, to “Held to Maturity” classification. The fair value of those securities as of the date of the transfer was $34.5 million, reflecting a gross unrealized loss of $994 thousand. The gross unrealized loss net of tax at the time of transfer remained in Accumulated Other Comprehensive (Loss) and is being accreted over the remaining life of the securities as an adjustment to interest income. At June 30, 2015, the Company’s mortgage-backed securities consisted of commercial and residential mortgage-backed securities. The Company’s mortgage-backed securities are all backed by an Agency of the U.S. government and rated Aaa and AA+ by Moody and S&P, respectively, with no subprime issues.

The Company’s pooled trust preferred securities included one senior issue of Preferred Term Securities XXVII which remained current on all payments and on which the Company took an impairment charge in the third quarter of 2009 to reduce the Company’s book value to the market value at September 30, 2009. On December 9, 2014 the Company sold this security resulting in a gain on sale of $82 thousand and the Company reversed the related impairment reserve. During the second quarter of 2010, the Company recognized an impairment charge in the amount of $77 thousand on the Company’s investment in Preferred Term Securities XXIII mezzanine tranche, thus reducing the book value of this investment to $0. On September 22, 2014 the Company sold this security resulting in a gain on sale of $2 thousand and the Company reversed the related impairment reserve. The decision to recognize the other-than-temporary impairment had been based upon an analysis of the market value of the discounted cash flow for the security as provided by Moody’s at June 30, 2010, which indicated that the Company was unlikely to recover any of its remaining investment in these securities.

The amortized cost, carrying value and estimated fair values of securities at June 30, 2015, by the earlier of contractual maturity or expected maturity, are shown below. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations without penalties.

(dollars in thousands)	June 30, 2015
	Amortized		Fair
	Cost		Value
Available for Sale:
Due in one year or less	$	2,378	$	2,327
Due after one year through five years		82,927		82,425
Due after five years through ten years		136,796		134,357
Due after ten years		9,024		8,823
Total	$	231,125	$	227,932

(dollars in thousands)	June 30, 2015
	Carrying		Fair
	Value		Value
Held to Maturity:
Due in one year or less	$	-	$	-
Due after one year through five years		21,379		22,005
Due after five years through ten years		8,545		8,791
Due after ten years		747		746
Total	$	30,671	$	31,542

Proceeds from the sales of securities available for sale for the six months ended June 30, 2015 and 2014 were $20.0 million and $20.5 million, respectively. Net realized gains on the sales of securities available for sale for the six months ended June 30, 2015 and 2014 were $51 thousand and $489 thousand, respectively. Proceeds from maturities, calls and paydowns of securities available for sale for the six months ended June 30, 2015 and 2014 were $12.5 million and $9.1 million, respectively. Proceeds from maturities, calls and paydowns of securities held to maturity for the six months ended June 30, 2015 and 2014 were $1.4 million and $1.2 million, respectively.

The Company pledges securities to secure public deposits, balances with the Federal Reserve Bank of Richmond (the “Reserve Bank”) and repurchase agreements. Securities with an aggregate book value of $50.6 million and an aggregate fair value of $51.3 million were pledged at June 30, 2015. Securities with an aggregate book value of $86.9 million and an aggregate fair value of $87.1 million were pledged at December 31, 2014.

Securities in an unrealized loss position at June 30, 2015, by duration of the period of the unrealized loss, are shown below:

	June 30, 2015
(dollars in thousands)	Less than 12 months				12 months or more				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
Description of Securities	Value		Loss		Value		Loss		Value		Loss
Obligations of U.S. Government agencies	$	4,385	$	110	$	8,696	$	300	$	13,081	$	410
SBA Pool securities		9,137		48		50,950		1,025		60,087		1,073
Agency residential mortgage-backed securities		7,619		111		9,967		273		17,586		384
Agency commercial mortgage-backed securities		6,487		87		-		-		6,487		87
Agency CMO securities		25,483		418		8,720		302		34,203		720
State and political subdivisions		41,816		960		9,258		356		51,074		1,316
Total	$	94,927	$	1,734	$	87,591	$	2,256	$	182,518	$	3,990

The Company reviews the investment securities portfolio on a quarterly basis to monitor its exposure to other-than-temporary impairment that may result due to adverse economic conditions and associated credit deterioration. A determination as to whether a security’s decline in market value is other-than-temporary takes into consideration numerous factors and the relative significance of any single factor can vary by security. Some factors the Company may consider in the other-than-temporary impairment analysis include the length of time the security has been in an unrealized loss position, changes in security ratings, financial condition of the issuer, as well as security and industry specific economic conditions. In addition, the Company may also evaluate payment structure, whether there are defaulted payments or expected defaults, prepayment speeds, and the value of any underlying collateral. For certain securities in unrealized loss positions, the Company will enlist independent third-party firms to prepare cash flow analyses to compare the present value of cash flows expected to be collected from the security with the amortized cost basis of the security.

Based on the Company’s evaluation, management does not believe any unrealized losses at June 30, 2015, represent an other-than-temporary impairment as these unrealized losses are primarily attributable to current financial market conditions for these types of investments, particularly changes in interest rates, which rose during 2013 causing bond prices to decline, and are not attributable to credit deterioration. During 2014 and the first three months of 2015, interest rates had fallen, specifically in the middle and long-end of the yield curve, which had caused bond prices to rise and thereby reduced the amount of unrealized losses. However, during the second quarter of 2015, interest rates generally increased which caused bond prices to decline, which in turn increased the amount of unrealized losses at the end of that quarter. At June 30, 2015, there were 154 debt securities with fair values totaling $182.5 million considered temporarily impaired. Of these debt securities, 90 with fair values totaling $94.9 million were in an unrealized loss position of less than 12 months and 64 with fair values totaling $87.6 million were in an unrealized loss position of 12 months or more. Because the Company intends to hold these investments in debt securities until recovery of the amortized cost basis and it is more likely than not that the Company will not be required to sell these investments before a recovery of unrealized losses, the Company does not consider these investments to be other-than-temporarily impaired at June 30, 2015 and no impairment has been recognized. At June 30, 2015, there were no equity securities in an unrealized loss position.

Securities in an unrealized loss position at December 31, 2014, by duration of the period of the unrealized loss, are shown below.

	December 31, 2014
(dollars in thousands)	Less than 12 months				12 months or more				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
Description of Securities	Value		Loss		Value		Loss		Value		Loss
Obligations of U.S. Government agencies	$	-	$	-	$	14,587	$	422	$	14,587	$	422
SBA Pool securities		3,520		73		63,290		1,667		66,810		1,740
Agency residential mortgage-backed securities		-		-		15,343		319		15,343		319
Agency CMO securities		5,140		34		16,478		396		21,618		430
Non agency CMO securities		281		3		44		-		325		3
State and political subdivisions		3,663		36		21,509		443		25,172		479
Total	$	12,604	$	146	$	131,251	$	3,247	$	143,855	$	3,393

The Company’s investment in Federal Home Loan Bank of Atlanta (“FHLB”) stock totaled $5.1 million and $4.5 million at June 30, 2015 and December 31, 2014, respectively. FHLB stock is generally viewed as a long-term investment and as a restricted investment security, which is carried at cost, because there is no market for the stock other than the FHLBs or member institutions. Therefore, when evaluating FHLB stock for impairment, its value is based on the ultimate recoverability of the par value rather than by recognizing temporary declines in value. Because the FHLB generated positive net income for each quarterly period beginning July 1, 2014, and ending June 30, 2015, the Company does not consider this investment to be other-than-temporarily impaired at June 30, 2015 and no impairment has been recognized. FHLB stock is included in a separate line item on the consolidated balance sheets (Restricted securities, at cost) and is not part of the Company’s investment securities portfolio. The Company’s restricted securities also include investments in the Reserve Bank and Community Bankers Bank, which are carried at cost.

XML

Business Combinations

6 Months Ended

Jun. 30, 2015

Business Combinations

Note 2. Business Combinations

On November 14, 2014, the Company completed its acquisition of VCB. Pursuant to the Agreement and Plan of Reorganization dated May 29, 2014, VCB's common shareholders received for each share of VCB common stock they owned either (i) cash at a rate of $6.25 per share of VCB common stock, or approximately $2.4 million in the aggregate, or (ii) the Company’s common stock at a rate of 0.9259 shares of the Company’s common stock per share of VCB common stock, which totaled approximately $6.7 million based on the Company’s closing common stock price on November 14, 2014 of $6.27 per share. In addition, the Company purchased VCB’s Series A Preferred Stock for $4.3 million. VCB was established in 2005 and was headquartered in Newport News, Virginia. VCB operated three branches, one each in Newport News, Hampton and Williamsburg, Virginia.

The Company accounted for the acquisition using the acquisition method of accounting in accordance with FASB ASC 805, “Business Combinations.” Under the acquisition method of accounting, the assets and liabilities of VCB were recorded at their respective acquisition date fair values. Determining the fair value of assets and liabilities, particularly related to the loan portfolio, is a complicated process involving significant judgment regarding methods and assumptions used to calculate the estimated fair values. The fair values are preliminary and subject to refinement for up to one year after the acquisition date as additional information relative to the acquisition date fair values becomes available. The Company recognized goodwill of $1.1 million in connection with the acquisition, none of which is deductible for income tax purposes.

The following table details the total consideration paid by the Company on November 14, 2014 in connection with the acquisition of VCB, the fair values of the assets acquired and liabilities assumed, and the resulting goodwill.

					As Recorded
	As Recorded		Fair Value		by the
(dollars in thousands)	by VCB		Adjustments		Company
Consideration paid:
Cash					$	6,688
EVBS common stock						6,676
Total consideration paid					$	13,364
Identifiable assets acquired:
Cash and due from banks	$	1,377	$	-	$	1,377
Interest bearing deposits with banks		249		-		249
Securities available for sale, at fair value		11,277		-		11,277
Restricted securities, at cost		557		-		557
Loans		103,791		(2,322)		101,469
Deferred income taxes		-		3,513		3,513
Bank premises and equipment		7,020		(1,044)		5,976
Accrued interest receivable		344		-		344
Other real estate owned		211		(108)		103
Core deposit intangible		-		1,010		1,010
Bank owned life insurance		2,742		-		2,742
Other assets		243		-		243
Total identifiable assets acquired		127,811		1,049		128,860
Identifiable liabilities assumed:
Noninterest-bearing demand accounts		18,797		-		18,797
Interest-bearing deposits		85,791		(149)		85,642
Federal funds purchased and repurchase agreements		3,119		-		3,119
Federal Home Loan Bank advances		8,650		-		8,650
Accrued interest payable		30		-		30
Other liabilities		373		-		373
Total identifiable liabilities assumed		116,760		(149)		116,611
Net identifiable assets acquired	$	11,051	$	1,198	$	12,249
Goodwill resulting from acquisition					$	1,115

The following table illustrates the unaudited pro forma revenue and net income of the combined entities had the acquisition taken place on January 1, 2014. The unaudited combined pro forma revenue and net income combines the historical results of VCB with the Company's consolidated statements of income for the periods listed below and, while certain adjustments were made for the estimated effect of certain fair value adjustments and other acquisition-related activity, they are not indicative of what would have occurred had the acquisition actually taken place on January 1, 2014. Acquisition related expenses of $168 thousand and $224 thousand were included in the Company's actual consolidated statements of income for the three and six months ended June 30, 2015, respectively, but were excluded from the unaudited pro forma information listed below. Additionally, the Company expects to achieve further operational cost savings and other efficiencies as a result of the acquisition which are not reflected in the unaudited pro forma amounts below:

	Unaudited		Unaudited		Unaudited		Unaudited
	Pro Forma		Pro Forma		Pro Forma		Pro Forma
	Three Months Ended		Three Months Ended		Six Months Ended		Six Months Ended
	June 30,		June 30,		June 30,		June 30,
(dollars in thousands)	2015		2014		2015		2014
Net interest income	$	10,606	$	10,066	$	21,180	$	20,554
Net income		1,675		1,232		3,340		2,804

XML

Capital Requirements

6 Months Ended

Jun. 30, 2015

Regulatory Matters

Note 14. Capital Requirements

The Company and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s and the Bank’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the Bank must meet specific capital guidelines that involve quantitative measures of their assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components (such as interest rate risk), risk weightings and other factors. Prompt corrective action provisions are not applicable to bank holding companies.

In July 2013, the federal bank regulatory agencies adopted rules to implement the Basel III capital framework and a revised framework for calculating risk-weighted assets (the “Basel III Capital Rules”). The Basel III Capital Rules were effective for the Company and the Bank on January 1, 2015 (subject to a phase-in period for certain portions of the new rules). For a summary of these final rules, see Part I, Item 1 “Business” under the heading “Regulation and Supervision – Capital Requirements” included in the 2014 Form 10-K.

As of June 30, 2015, the most recent notification from the Reserve Bank categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized, an institution must maintain minimum total risk-based, common equity Tier 1 (“CET1”) risk-based, Tier 1 risk-based, and Tier 1 leverage ratios as set forth in the following tables. There are no conditions or events since the notification that management believes have changed the Bank’s category. The capital ratios of the Company and the Bank as of June 30, 2015 and December 31, 2014, presented with related minimum regulatory guidelines, is as follows:

							Minimum To Be
As of June 30, 2015							Well-Capitalized
				Minimum			Under Prompt
				Capital			Corrective Action
	Actual Capital			Requirements			Provisions
CET1 to risk weighted assets:
Company		9.59	%		4.50	%		N/A
Bank		12.53	%		4.50	%		6.50	%
Tier 1 capital to risk weighted assets:
Company		12.58	%		6.00	%		N/A
Bank		12.53	%		6.00	%		8.00	%
Total capital to risk weighted assets:
Company		16.12	%		8.00	%		N/A
Bank		13.78	%		8.00	%		10.00	%
Tier 1 capital to average assets:
Company		9.44	%		4.00	%		N/A
Bank		9.39	%		4.00	%		5.00	%

							Minimum to be
As of December 31, 2014							Well-Capitalized
				Minimum			Under Prompt
				Capital			Corrective Action
	Actual Capital			Requirements			Provisions
Tier 1 capital to risk weighted assets:
Company		14.06	%		4.00	%		N/A
Bank		12.28	%		4.00	%		6.00	%
Total capital to risk weighted assets:
Company		15.31	%		8.00	%		N/A
Bank		13.53	%		8.00	%		10.00	%
Tier 1 capital to average assets:
Company		10.76	%		4.00	%		N/A
Bank		9.40	%		4.00	%		5.00	%

XML

Employee Benefit Plan - Pension

6 Months Ended

Jun. 30, 2015

Employee Benefit Plan - Pension

Note 10. Employee Benefit Plan – Pension

The Company has historically maintained a defined benefit pension plan covering substantially all of the Company’s employees. The plan was amended January 28, 2008 to freeze the plan with no additional contributions for a majority of participants. Employees age 55 or greater or with 10 years of credited service were grandfathered in the plan. No additional participants have been added to the plan. The plan was again amended February 28, 2011 to freeze the plan with no additional contributions for grandfathered participants. Benefits for all participants have remained frozen in the plan since such action was taken. Effective January 1, 2012, the plan was amended and restated as a cash balance plan. Under a cash balance plan, participant benefits are stated as an account balance. An opening account balance was established for each participant based on the lump sum value of his or her accrued benefit as of December 31, 2011 in the original defined benefit pension plan. Each participants’ account will be credited with an “interest” credit each year. The interest rate for each year is determined as the average annual interest rate on the 2 year U.S. Treasury securities for the month of December preceding the plan year. Components of net periodic pension benefit related to the Company’s pension plan were as follows for the periods indicated:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
(dollars in thousands)	2015		2014		2015		2014
Components of net periodic pension cost (benefit)
Interest cost	$	101	$	111	$	202	$	223
Expected return on plan assets		(179)		(186)		(357)		(372)
Amortization of prior service cost		3		2		5		4
Recognized net actuarial loss		27		-		54		-
Net settlement loss		53		-		53		-
Net periodic pension cost (benefit)	$	5	$	(73)	$	(43)	$	(145)

The Company made no contributions to the pension plan during 2014. The Company has not determined at this time how much, if any, contributions to the plan will be made for the year ending December 31, 2015.

XML

Low Income Housing Tax Credits - Additional Information (Detail) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Dec. 31, 2014
Income Tax Credits and Adjustments	$ 238	$ 191
Tax Credit Carryforward, Amount	366
Other Assets [Member]
Investments	3,000		$ 2,200
Other Liabilities [Member]
Investments	$ 1,000		$ 35

XML

Bank Premises and Equipment

6 Months Ended

Jun. 30, 2015

Bank Premises and Equipment

Note 6. Bank Premises and Equipment

Bank premises and equipment are summarized as follows:

	June 30,		December 31,
(dollars in thousands)	2015		2014
Land and improvements	$	6,699	$	6,929
Buildings and leasehold improvements		27,254		28,001
Furniture, fixtures and equipment		21,078		21,719
Construction in progress		2,658		553
		57,689		57,202
Less accumulated depreciation		(29,061)		(29,769)
Net balance	$	28,628	$	27,433

Depreciation and amortization of bank premises and equipment for the six months ended June 30, 2015 and 2014 amounted to $1.3 million and $1.0 million, respectively.

XML

Loans Modified as Troubled Debt Restructurings that Subsequently Defaulted (Detail) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015 USD ($)	Jun. 30, 2014 USD ($)	Jun. 30, 2015 USD ($)	Jun. 30, 2014 USD ($)
Financing Receivable, Allowance for Credit Losses [Line Items]
Number of Loans	1	0	1	0
Recorded Balance	$ 68	$ 0	$ 68	$ 0
Real estate - one to four family residential | Closed end first and seconds
Financing Receivable, Allowance for Credit Losses [Line Items]
Number of Loans	1	0	1	0
Recorded Balance	$ 68	$ 0	$ 68	$ 0

XML

Loan Portfolio

6 Months Ended

Jun. 30, 2015

Loan Portfolio

Note 4. Loan Portfolio

The following table sets forth the composition of the Company’s loan portfolio in dollar amounts and as a percentage of the Company’s total gross loans at the dates indicated:

	June 30, 2015					December 31, 2014
(dollars in thousands)	Amount		Percent			Amount		Percent
Commercial, industrial and agricultural	$	85,845		10.21	%	$	85,119		10.37	%
Real estate - one to four family residential:
Closed end first and seconds		243,072		28.91	%		236,761		28.86	%
Home equity lines		111,007		13.20	%		110,100		13.42	%
Total real estate - one to four family residential		354,079		42.11	%		346,861		42.28	%
Real estate - multifamily residential		29,802		3.54	%		25,157		3.07	%
Real estate - construction:
One to four family residential		19,091		2.27	%		19,698		2.40	%
Other construction, land development and other land		36,620		4.36	%		35,591		4.34	%
Total real estate - construction		55,711		6.63	%		55,289		6.74	%
Real estate - farmland		10,553		1.26	%		9,471		1.15	%
Real estate - non-farm, non-residential:
Owner occupied		168,861		20.09	%		157,745		19.22	%
Non-owner occupied		99,287		11.81	%		104,827		12.77	%
Total real estate - non-farm, non-residential		268,148		31.90	%		262,572		31.99	%
Consumer		14,443		1.72	%		15,919		1.94	%
Other		22,129		2.63	%		20,181		2.46	%
Total loans		840,710		100.00	%		820,569		100.00	%
Less allowance for loan losses		(12,287)					(13,021)
Loans, net	$	828,423				$	807,548

Deferred costs, net are included in the table above and totaled $1.5 million and $1.4 million for June 30, 2015 and December 31, 2014, respectively.

The following table presents the aging of the recorded investment in past due loans as of June 30, 2015 by class of loans:

	30-59 Days		60-89 Days		Over 90 Days				Total		Total
(dollars in thousands)	Past Due		Past Due		Past Due		Total Past Due		Current*		Loans
Commercial, industrial and agricultural	$	206	$	14	$	383	$	603	$	85,242	$	85,845
Real estate - one to four family residential:
Closed end first and seconds		6,038		1,662		3,359		11,059		232,013		243,072
Home equity lines		234		104		250		588		110,419		111,007
Total real estate - one to four family residential		6,272		1,766		3,609		11,647		342,432		354,079
Real estate - multifamily residential		-		-		-		-		29,802		29,802
Real estate - construction:
One to four family residential		80		-		189		269		18,822		19,091
Other construction, land development and other land		-		-		1		1		36,619		36,620
Total real estate - construction		80		-		190		270		55,441		55,711
Real estate - farmland		273		280		-		553		10,000		10,553
Real estate - non-farm, non-residential:
Owner occupied		172		1,686		568		2,426		166,435		168,861
Non-owner occupied		215		-		676		891		98,396		99,287
Total real estate - non-farm, non-residential		387		1,686		1,244		3,317		264,831		268,148
Consumer		8		26		4		38		14,405		14,443
Other		-		-		-		-		22,129		22,129
Total loans	$	7,226	$	3,772	$	5,430	$	16,428	$	824,282	$	840,710

* For purposes of this table only, the "Total Current" column includes loans that are 1-29 days past due.

The following table presents the aging of the recorded investment in past due loans as of December 31, 2014 by class of loans:

	30-59 Days		60-89 Days		Over 90 Days				Total		Total
(dollars in thousands)	Past Due		Past Due		Past Due		Total Past Due		Current*		Loans
Commercial, industrial and agricultural	$	278	$	6	$	373	$	657	$	84,462	$	85,119
Real estate - one to four family residential:
Closed end first and seconds		5,515		1,123		1,247		7,885		228,876		236,761
Home equity lines		366		-		360		726		109,374		110,100
Total real estate - one to four family residential		5,881		1,123		1,607		8,611		338,250		346,861
Real estate - multifamily residential		-		-		-		-		25,157		25,157
Real estate - construction:
One to four family residential		150		-		221		371		19,327		19,698
Other construction, land development and other land		5		-		-		5		35,586		35,591
Total real estate - construction		155		-		221		376		54,913		55,289
Real estate - farmland		-		-		590		590		8,881		9,471
Real estate - non-farm, non-residential:
Owner occupied		1,873		158		1,738		3,769		153,976		157,745
Non-owner occupied		-		-		-		-		104,827		104,827
Total real estate - non-farm, non-residential		1,873		158		1,738		3,769		258,803		262,572
Consumer		157		32		-		189		15,730		15,919
Other		-		-		-		-		20,181		20,181
Total loans	$	8,344	$	1,319	$	4,529	$	14,192	$	806,377	$	820,569

* For purposes of this table only, the "Total Current" column includes loans that are 1-29 days past due.

The following table presents nonaccrual loans, loans past due 90 days and accruing interest, and troubled debt restructurings (accruing) at the dates indicated:

	June 30,		December 31,
(dollars in thousands)	2015		2014
Nonaccrual loans	$	7,263	$	6,622
Loans past due 90 days and accruing interest		240		53
Troubled debt restructurings (accruing)		14,843		15,223

At June 30, 2015 and December 31, 2014, there were approximately $2.3 million and $3.4 million, respectively, in troubled debt restructurings (“TDRs”) included in nonaccrual loans.

The past due status of a loan is based on the contractual due date of the most delinquent payment due. Loans, including impaired loans, are generally classified as nonaccrual if they are past due as to maturity or payment of principal or interest for a period of more than 90 days, unless such loans are well-secured and in the process of collection. Loans greater than 90 days past due may remain on an accrual status if management determines it has adequate collateral to cover the principal and interest. If a loan or a portion of a loan is adversely classified, or is partially charged off, the loan is generally classified as nonaccrual. Additionally, whenever management becomes aware of facts or circumstances that may adversely impact the collectability of principal or interest on loans, it is management’s practice to place such loans on a nonaccrual status immediately, rather than delaying such action until the loans become 90 days past due.

When a loan is placed on nonaccrual status, previously accrued and uncollected interest is reversed, and the amortization of related deferred loan fees or costs is suspended. While a loan is classified as nonaccrual and the future collectability of the recorded loan balance is doubtful, collections of interest and principal are generally applied as a reduction to principal outstanding. When the future collectability of the recorded loan balance is expected, interest income may be recognized on a cash basis. In the case where a nonaccrual loan has been partially charged off, recognition of interest on a cash basis is limited to that which would have been recognized on the recorded loan balance at the contractual interest rate. Cash interest receipts in excess of that amount are recorded as recoveries to the allowance for loan losses until prior charge-offs have been fully recovered. These policies are applied consistently across our loan portfolio.

A loan (including a TDR) may be returned to accrual status if the borrower has demonstrated a sustained period of repayment performance (typically six months) in accordance with the contractual terms of the loan and there is reasonable assurance the borrower will continue to make payments as agreed.

Outstanding principal balance and the carrying amount of loans acquired pursuant to the Company’s acquisition of VCB (or “Acquired Loans”) that were recorded at fair value at the acquisition date and are included in the consolidated balance sheet at June 30, 2015 and December 31, 2014 were as follows:

	June 30, 2015						December 31, 2014
	Acquired						Acquired
	Loans -		Acquired				Loans -		Acquired
	Purchased		Loans -		Acquired		Purchased		Loans -		Acquired
	Credit		Purchased		Loans -		Credit		Purchased		Loans -
(dollars in thousands)	Impaired		Performing		Total		Impaired		Performing		Total
Commercial, industrial and agricultural	$	577	$	7,051	$	7,628	$	1,023	$	15,673	$	16,696
Real estate - one to four family residential:
Closed end first and seconds		1,347		7,758		9,105		1,374		6,475		7,849
Home equity lines		33		10,850		10,883		33		11,858		11,891
Total real estate - one to four family residential		1,380		18,608		19,988		1,407		18,333		19,740
Real estate - multifamily residential		-		3,790		3,790		-		3,539		3,539
Real estate - construction:
One to four family residential		-		1,945		1,945		-		3,206		3,206
Other construction, land development and other land		286		1,875		2,161		79		3,674		3,753
Total real estate - construction		286		3,820		4,106		79		6,880		6,959
Real estate - farmland		-		-		-		-		-		-
Real estate - non-farm, non-residential:
Owner occupied		4,408		17,998		22,406		1,841		21,037		22,878
Non-owner occupied		1,661		12,460		14,121		3,472		20,762		24,234
Total real estate - non-farm, non-residential		6,069		30,458		36,527		5,313		41,799		47,112
Consumer		-		435		435		-		1,462		1,462
Other		-		845		845		-		-		-
Total loans	$	8,312	$	65,007	$	73,319	$	7,822	$	87,686	$	95,508

The following table presents the recorded investment in nonaccrual loans and loans past due 90 days and accruing interest by class at June 30, 2015 and December 31, 2014:

					Over 90 Days Past
	Nonaccrual				Due and Accruing
	June 30,		December 31,		June 30,		December 31,
(dollars in thousands)	2015		2014		2015		2014
Commercial, industrial and agricultural	$	383	$	334	$	-	$	53
Real estate - one to four family residential:
Closed end first and seconds		4,996		3,364		240		-
Home equity lines		425		564		-		-
Total real estate - one to four family residential		5,421		3,928		240		-
Real estate - construction:
One to four family residential		189		221		-		-
Other construction, land development and other land		1		-		-		-
Total real estate - construction		190		221		-		-
Real estate - farmland		-		590		-		-
Real estate - non-farm, non-residential:
Owner occupied		568		1,521		-		-
Non-owner occupied		677		-		-		-
Total real estate - non-farm, non-residential		1,245		1,521		-		-
Consumer		24		28		-		-
Total loans	$	7,263	$	6,622	$	240	$	53

The Company uses a risk grading system for real estate (including multifamily residential, construction, farmland and non-farm, non-residential) and commercial loans. Loans are graded on a scale from 1 to 9. Non-impaired real estate and commercial loans are assigned an allowance factor which increases with the severity of risk grading. A general description of the characteristics of the risk grades is as follows:

Pass Grades

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

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

· Risk Grade 3 loans are satisfactory loans with strong borrowers and secondary sources of repayment;

· Risk Grade 4 loans are satisfactory loans with borrowers not as strong as risk grade 3 loans but may exhibit a higher degree of financial risk based on the type of business supporting the loan; and

· Risk Grade 5 loans are 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.

Special Mention

· Risk Grade 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.

Classified Grades

· Risk Grade 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 Grade 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 Grade 9 loans are loss loans which are considered uncollectable and of such little value that their continuance as a bank asset is not warranted.

The Company uses a past due grading system for consumer loans, including one to four family residential first and seconds and home equity lines. The past due status of a loan is based on the contractual due date of the most delinquent payment due. The past due grading of consumer loans is based on the following categories: current, 1-29 days past due, 30-59 days past due, 60-89 days past due and over 90 days past due. The consumer loans are segregated between performing and nonperforming loans. Performing loans are those that have made timely payments in accordance with the terms of the loan agreement and are not past due 90 days or more. Nonperforming loans are those that do not accrue interest, or are greater than 90 days past due and accruing interest. Non-impaired consumer loans are assigned an allowance factor which increases with the severity of past due status. This 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 loan portfolio.

The allocation methodology applied by the Company includes management’s ongoing review and grading of the loan portfolio into criticized loan categories (defined as specific loans warranting either specific allocation, or a classified status of substandard, doubtful or loss). The allocation methodology focuses on evaluation of several factors, including but not limited to: evaluation of facts and issues related to specific loans, management’s ongoing review and grading of the loan portfolio, consideration of migration analysis tracking movement of loans through past due classifications and delinquency experience on each portfolio category, trends in past due and nonaccrual loans, the level of classified loans, the risk characteristics of the various classifications of loans, changes in the size and character of the loan portfolio, concentrations of loans to specific borrowers or industries, existing economic conditions, the fair value of underlying collateral, and other qualitative and quantitative factors which could affect potential credit losses. Because each of the criteria used is subject to change, the allocation of the allowance for loan losses is made for analytical purposes and is not necessarily indicative of the trend of future loan losses in any particular loan category. The total allowance is available to absorb losses from any segment of the portfolio. In determining the allowance for loan losses, the Company considers its portfolio segments and loan classes to be the same.

The following table presents commercial loans by credit quality indicator at June 30, 2015:

											Acquired
											Loans -
											Purchased
			Special								Credit
(dollars in thousands)	Pass		Mention		Substandard		Doubtful		Impaired		Impaired		Total
Commercial, industrial and agricultural	$	80,879	$	3,269	$	553	$	230	$	337	$	577	$	85,845
Real estate - multifamily residential		29,802		-		-		-		-		-		29,802
Real estate - construction:
One to four family residential		18,623		87		121		-		260		-		19,091
Other construction, land development and other land		27,504		1,786		1,410		-		5,634		286		36,620
Total real estate - construction		46,127		1,873		1,531		-		5,894		286		55,711
Real estate - farmland		9,496		875		182		-		-		-		10,553
Real estate - non-farm, non-residential:
Owner occupied		141,218		8,012		3,955		-		11,268		4,408		168,861
Non-owner occupied		82,331		2,804		1,485		-		11,006		1,661		99,287
Total real estate - non-farm, non-residential		223,549		10,816		5,440		-		22,274		6,069		268,148
Total commercial loans	$	389,853	$	16,833	$	7,706	$	230	$	28,505	$	6,932	$	450,059

The following table presents commercial loans by credit quality indicator at December 31, 2014:

											Acquired
											Loans -
											Purchased
			Special								Credit
(dollars in thousands)	Pass		Mention		Substandard		Doubtful		Impaired		Impaired		Total
Commercial, industrial and agricultural	$	79,191	$	2,779	$	675	$	-	$	1,451	$	1,023	$	85,119
Real estate - multifamily residential		25,157		-		-		-		-		-		25,157
Real estate - construction:
One to four family residential		18,978		300		244		-		176		-		19,698
Other construction, land development and other land		26,916		1,791		1,144		-		5,661		79		35,591
Total real estate - construction		45,894		2,091		1,388		-		5,837		79		55,289
Real estate - farmland		9,471		-		-		-		-		-		9,471
Real estate - non-farm, non-residential:
Owner occupied		132,266		11,339		2,253		-		10,046		1,841		157,745
Non-owner occupied		84,951		4,771		1,817		-		9,816		3,472		104,827
Total real estate - non-farm, non-residential		217,217		16,110		4,070		-		19,862		5,313		262,572
Total commercial loans	$	376,930	$	20,980	$	6,133	$	-	$	27,150	$	6,415	$	437,608

At June 30, 2015 and December 31, 2014, the Company did not have any loans classified as Loss.

The following table presents consumer loans, including one to four family residential first and seconds and home equity lines, by payment activity at June 30, 2015:

(dollars in thousands)	Performing		Nonperforming		Total
Real estate - one to four family residential:
Closed end first and seconds	$	232,426	$	10,646	$	243,072
Home equity lines		110,132		875		111,007
Total real estate - one to four family residential		342,558		11,521		354,079
Consumer		14,091		352		14,443
Other		22,125		4		22,129
Total consumer loans	$	378,774	$	11,877	$	390,651

The following table presents consumer loans, including one to four family residential first and seconds and home equity lines, by payment activity at December 31, 2014:

(dollars in thousands)	Performing		Nonperforming		Total
Real estate - one to four family residential:
Closed end first and seconds	$	226,801	$	9,960	$	236,761
Home equity lines		109,565		535		110,100
Total real estate - one to four family residential		336,366		10,495		346,861
Consumer		15,548		371		15,919
Other		20,175		6		20,181
Total consumer loans	$	372,089	$	10,872	$	382,961

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. The Company measures impaired loans based on the present value of expected future cash flows discounted at the effective interest rate of the loan or, as a practical expedient, at the loan’s observable market price or the fair value of the collateral if the loan is collateral dependent. The Company maintains a valuation allowance to the extent that the measure of the impaired loan is less than the recorded investment. TDRs are considered impaired loans. TDRs occur when we agree to modify the original terms of a loan by granting a concession due to the deterioration in the financial condition of the borrower. These concessions can be temporary and are made in an attempt to avoid foreclosure and with the intent to restore the loan to a performing status once sufficient payment history can be demonstrated. These concessions could include, without limitation, rate reductions to below market rates, payment deferrals, forbearance, and, in some cases, forgiveness of principal or interest.

At the time of a TDR, the loan is placed on nonaccrual status. A loan (including a TDR) may be returned to accrual status if the borrower has demonstrated a sustained period of repayment performance (typically six months) in accordance with the contractual terms of the loan and there is reasonable assurance the borrower will continue to make payments as agreed.

The following table presents a rollforward of the Company’s allowance for loan losses for the six months ended June 30, 2015:

	Beginning Balance								Ending Balance
(dollars in thousands)	January 1, 2015		Charge-offs		Recoveries		Provision		June 30, 2015
Commercial, industrial and agricultural	$	1,168	$	(80)	$	21	$	510	$	1,619
Real estate - one to four family residential:
Closed end first and seconds		1,884		(332)		13		134		1,699
Home equity lines		1,678		(137)		5		467		2,013
Total real estate - one to four family residential		3,562		(469)		18		601		3,712
Real estate - multifamily residential		89		-		-		13		102
Real estate - construction:
One to four family residential		235		(102)		1		123		257
Other construction, land development and other land		2,670		-		-		(80)		2,590
Total real estate - construction		2,905		(102)		1		43		2,847
Real estate - farmland		144		-		-		(65)		79
Real estate - non-farm, non-residential:
Owner occupied		2,416		(139)		1		(440)		1,838
Non-owner occupied		1,908		-		-		(740)		1,168
Total real estate - non-farm, non-residential		4,324		(139)		1		(1,180)		3,006
Consumer		305		(7)		34		(75)		257
Other		524		(24)		12		153		665
Total	$	13,021	$	(821)	$	87	$	-	$	12,287

The following table presents a rollforward of the Company’s allowance for loan losses for the six months ended June 30, 2014:

	Beginning Balance								Ending Balance
(dollars in thousands)	January 1, 2014		Charge-offs		Recoveries		Provision		June 30, 2014
Commercial, industrial and agricultural	$	1,787	$	(290)	$	30	$	(331)	$	1,196
Real estate - one to four family residential:
Closed end first and seconds		2,859		(304)		211		(188)		2,578
Home equity lines		1,642		(54)		13		244		1,845
Total real estate - one to four family residential		4,501		(358)		224		56		4,423
Real estate - multifamily residential		79		-		-		29		108
Real estate - construction:
One to four family residential		364		-		6		(69)		301
Other construction, land development and other land		1,989		-		2		501		2,492
Total real estate - construction		2,353		-		8		432		2,793
Real estate - farmland		116		-		-		11		127
Real estate - non-farm, non-residential:
Owner occupied		3,236		-		27		(1,144)		2,119
Non-owner occupied		1,770		-		3		855		2,628
Total real estate - non-farm, non-residential		5,006		-		30		(289)		4,747
Consumer		387		(86)		55		(1)		355
Other		538		(26)		14		343		869
Total	$	14,767	$	(760)	$	361	$	250	$	14,618

The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio class based on impairment method as of June 30, 2015:

	Allowance allocated to loans:								Total Loans:
					Acquired								Acquired
					loans -						Collectively		loans -
	Individually		Collectively		purchased				Individually		evaluated		purchased
	evaluated for		evaluated for		credit				evaluated for		for		credit
(dollars in thousands)	impairment		impairment		impaired		Total		impairment		impairment		impaired		Total
Commercial, industrial and agricultural	$	309	$	1,310	$	-	$	1,619	$	337	$	84,931	$	577	$	85,845
Real estate - one to four family residential:
Closed end first and seconds		592		1,107		-		1,699		8,192		233,533		1,347		243,072
Home equity lines		265		1,748		-		2,013		625		110,349		33		111,007
Total real estate - one to four family residential		857		2,855		-		3,712		8,817		343,882		1,380		354,079
Real estate - multifamily residential		-		102		-		102		-		29,802		-		29,802
Real estate - construction:
One to four family residential		73		184		-		257		260		18,831		-		19,091
Other construction, land development and other land		1,604		986		-		2,590		5,634		30,700		286		36,620
Total real estate - construction		1,677		1,170		-		2,847		5,894		49,531		286		55,711
Real estate - farmland		-		79		-		79		-		10,553		-		10,553
Real estate - non-farm, non-residential:
Owner occupied		911		927		-		1,838		11,268		153,185		4,408		168,861
Non-owner occupied		718		450		-		1,168		11,006		86,620		1,661		99,287
Total real estate - non-farm, non-residential		1,629		1,377		-		3,006		22,274		239,805		6,069		268,148
Consumer		89		168		-		257		348		14,095		-		14,443
Other		-		665		-		665		4		22,125		-		22,129
Total	$	4,561	$	7,726	$	-	$	12,287	$	37,674	$	794,724	$	8,312	$	840,710

The following table presents the balance in the allowance for loan losses and the recorded investment in loans by portfolio class based on impairment method as of December 31, 2014:

	Allowance allocated to loans:								Total Loans:
					Acquired								Acquired
					loans -						Collectively		loans -
	Individually		Collectively		purchased				Individually		evaluated		purchased
	evaluated for		evaluated for		credit				evaluated for		for		credit
(dollars in thousands)	impairment		impairment		impaired		Total		impairment		impairment		impaired		Total
Commercial, industrial and agricultural	$	-	$	1,168	$	-	$	1,168	$	1,451	$	82,645	$	1,023	$	85,119
Real estate - one to four family residential:
Closed end first and seconds		1,006		878		-		1,884		8,713		226,674		1,374		236,761
Home equity lines		-		1,678		-		1,678		175		109,892		33		110,100
Total real estate - one to four family residential		1,006		2,556		-		3,562		8,888		336,566		1,407		346,861
Real estate - multifamily residential		-		89		-		89		-		25,157		-		25,157
Real estate - construction:
One to four family residential		78		157		-		235		176		19,522		-		19,698
Other construction, land development and other land		1,632		1,038		-		2,670		5,661		29,851		79		35,591
Total real estate - construction		1,710		1,195		-		2,905		5,837		49,373		79		55,289
Real estate - farmland		-		144		-		144		-		9,471		-		9,471
Real estate - non-farm, non-residential:
Owner occupied		1,240		1,176		-		2,416		10,046		145,858		1,841		157,745
Non-owner occupied		1,262		646		-		1,908		9,816		91,539		3,472		104,827
Total real estate - non-farm, non-residential		2,502		1,822		-		4,324		19,862		237,397		5,313		262,572
Consumer		106		199		-		305		371		15,548		-		15,919
Other		-		524		-		524		6		20,175		-		20,181
Total	$	5,324	$	7,697	$	-	$	13,021	$	36,415	$	776,332	$	7,822	$	820,569

The following table presents loans individually evaluated for impairment by class of loans as of June 30, 2015:

			Unpaid		Recorded		Recorded				Average		Interest
	Recorded		Principal		Investment With		Investment With		Related		Recorded		Income
(dollars in thousands)	Investment		Balance		No Allowance		Allowance		Allowance		Investment		Recognized
Commercial, industrial and agricultural	$	337	$	337	$	-	$	337	$	309	$	931	$	11
Real estate - one to four family residential:
Closed end first and seconds		8,192		8,755		3,481		4,711		592		8,517		199
Home equity lines		625		625		175		450		265		432		9
Total real estate - one to four family residential		8,817		9,380		3,656		5,161		857		8,949		208
Real estate - construction:
One to four family residential		260		362		89		171		73		246		4
Other construction, land development and other land		5,634		5,634		1		5,633		1,604		5,638		133
Total real estate - construction		5,894		5,996		90		5,804		1,677		5,884		137
Real estate - non-farm, non-residential:
Owner occupied		11,268		11,620		8,367		2,901		911		10,399		290
Non-owner occupied		11,006		11,006		6,642		4,364		718		10,918		262
Total real estate - non-farm, non-residential		22,274		22,626		15,009		7,265		1,629		21,317		552
Consumer		348		358		16		332		89		360		9
Other		4		4		4		-		-		5		-
Total loans*	$	37,674	$	38,701	$	18,775	$	18,899	$	4,561	$	37,446	$	917

* PCI loans are excluded from this table.

The following table presents loans individually evaluated for impairment by class of loans as of December 31, 2014:

			Unpaid		Recorded		Recorded				Average		Interest
	Recorded		Principal		Investment With		Investment With		Related		Recorded		Income
(dollars in thousands)	Investment		Balance		No Allowance		Allowance		Allowance		Investment		Recognized
Commercial, industrial and agricultural	$	1,451	$	1,451	$	1,451	$	-	$	-	$	2,010	$	128
Real estate - one to four family residential:
Closed end first and seconds		8,713		8,813		3,611		5,102		1,006		9,800		474
Home equity lines		175		175		175		-		-		289		-
Total real estate - one to four family residential		8,888		8,988		3,786		5,102		1,006		10,089		474
Real estate - construction:
One to four family residential		176		176		-		176		78		312		7
Other construction, land development and other land		5,661		5,661		-		5,661		1,632		5,399		256
Total real estate - construction		5,837		5,837		-		5,837		1,710		5,711		263
Real estate - non-farm, non-residential:
Owner occupied		10,046		10,146		3,734		6,312		1,240		12,056		534
Non-owner occupied		9,816		9,816		4,262		5,554		1,262		9,356		456
Total real estate - non-farm, non-residential		19,862		19,962		7,996		11,866		2,502		21,412		990
Consumer		371		371		-		371		106		420		21
Other		6		6		6		-		-		328		-
Total loans*	$	36,415	$	36,615	$	13,239	$	23,176	$	5,324	$	39,970	$	1,876

* PCI loans are excluded from this table.

Determining the fair value of purchased credit-impaired (“PCI”) loans at November 14, 2014 required the Company to estimate cash flows expected to result from those loans and to discount those cash flows at appropriate rates of interest. For such loans, the excess of the cash flows expected at acquisition over the estimated fair value is recognized as interest income over the remaining lives of the loans and is called the accretable yield. The difference between contractually required payments at acquisition and the cash flows expected to be collected at acquisition is the nonaccretable difference and is not recorded. In accordance with U.S. GAAP, the Company did not “carry over” any allowances for loan losses that were reserved for the VCB loan portfolio prior to the Company’s acquisition of VCB. PCI loans had unpaid principal balances of $9.3 million and $8.8 million and recorded carrying values of $8.3 million and $7.8 million at June 30, 2015 and December 31, 2014, respectively.

Loans acquired from VCB that constituted PCI loans were recorded by the Company at fair value on the date of acquisition as follows:

	November 14,
(dollars in thousands)	2014
Contractual principal and interest at acquisition	$	9,977
Nonaccretable difference		937
Accretable yield		1,185
PCI loans at acquisition, at estimated fair value	$	7,855

The following table presents a summary of the changes in the accretable yield of the PCI loan portfolio for the periods indicated:

	Three months ended		Six months ended
	June 30, 2015		June 30, 2015
(dollars in thousands)	Accretable Yield		Accretable Yield
Balance at beginning of period	$	1,029	$	1,131
Accretion		(104)		(206)
Reclassification of nonaccretable difference due to improvement in expected cash flows		-		-
Other changes, net		-		-
Balance at end of period	$	925	$	925

The following tables present, by loan class, information related to loans modified as TDRs during the three and six months ended June 30, 2015 and 2014:

	Three Months Ended June 30, 2015						Three Months Ended June 30, 2014
(dollars in thousands)	Number of Loans		Pre- Modification Recorded Balance		Post- Modification Recorded Balance*		Number of Loans		Pre- Modification Recorded Balance		Post- Modification Recorded Balance*
Real estate - one to four family residential:
Closed end first and seconds		-	$	-	$	-		3	$	512	$	513
Consumer		-		-		-		2		385		385
Total		-	$	-	$	-		5	$	897	$	898

*The period end balances are inclusive of all partial paydowns and charge-offs since the modification date. Loans modified as TDRs that were fully paid down, charged-off, or foreclosed upon by period end are not reported.

	Six Months Ended June 30, 2015						Six Months Ended June 30, 2014
(dollars in thousands)	Number of Loans		Pre- Modification Recorded Balance		Post- Modification Recorded Balance*		Number of Loans		Pre- Modification Recorded Balance		Post- Modification Recorded Balance*
Real estate - one to four family residential:
Closed end first and seconds		-	$	-	$	-		3	$	512	$	513
Consumer		-		-		-		2		385		385
Total		-	$	-	$	-		5	$	897	$	898

* The period end balances are inclusive of all partial paydowns and charge-offs since the modification date. Loans modified as TDRs that were fully paid down, charged-off, or foreclosed upon by period end are not reported.

The following tables present, by loan class, information related to the loans modified as TDRs that subsequently defaulted (i.e., 90 days or more past due following a modification) during the three and six months ended June 30, 2015 and 2014 and were modified as TDRs within the 12 months prior to default:

	Three Months Ended				Three Months Ended
	June 30, 2015				June 30, 2014
	Number of		Recorded		Number of		Recorded
(dollars in thousands)	Loans		Balance		Loans		Balance
Real estate - one to four family residential:
Closed end first and seconds		1	$	68		-	$	-
Total		1	$	68		-	$	-

	Six Months Ended				Six Months Ended
	June 30, 2015				June 30, 2014
	Number		Recorded		Number		Recorded
(dollars in thousands)	of Loans		Balance		of Loans		Balance
Real estate - one to four family residential:
Closed end first and seconds		1	$	68		-	$	-
Total		1	$	68		-	$	-

At June 30, 2015, there were no foreclosed residential real estate properties included in other real estate owned. However, at June 30, 2015, there were $514 thousand in residential real estate loans in the process of foreclosure.

XML

Deferred Income Taxes

6 Months Ended

Jun. 30, 2015

Deferred Income Taxes

Note 5. Deferred Income Taxes

As of June 30, 2015 and December 31, 2014, the Company had recorded net deferred income tax assets of approximately $16.9 million and $17.5 million, respectively. The realization of deferred income tax assets is assessed quarterly and a valuation allowance is recorded if it is “more likely than not” that all or a portion of the deferred tax asset will not be realized. “More likely than not” is defined as greater than a 50% chance. Management considers all available evidence, both positive and negative, to determine whether, based on the weight of that evidence, a valuation allowance is needed.  Management’s assessment is primarily dependent on historical taxable income and projections of future taxable income, which are directly related to the Company’s core earnings capacity and its prospects to generate core earnings in the future.  Projections of core earnings and taxable income are inherently subject to uncertainty and estimates that may change given the uncertain economic outlook, banking industry conditions and other factors. Further, management has considered future reversals of existing taxable temporary differences and limited, prudent and feasible tax-planning strategies, such as changes in investment security income (tax-exempt to taxable), additional sales of loans and sales of branches/buildings with an appreciated asset value over the tax basis. Based upon an analysis of available evidence, management has determined that it is “more likely than not” that the Company’s deferred income tax assets as of June 30, 2015 will be fully realized and therefore no valuation allowance to the Company’s deferred income tax assets was recorded. However, the Company can give no assurance that in the future its deferred income tax assets will not be impaired because such determination is based on projections of future earnings and the possible effect of certain transactions which are subject to uncertainty and based on estimates that may change due to changing economic conditions and other factors.  Due to the uncertainty of estimates and projections, it is possible that the Company will be required to record adjustments to the valuation allowance in future reporting periods.

The Company’s ability to realize its deferred income tax assets may be limited if the Company experiences an ownership change as defined by Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”). For additional information see Part I, Item 1A. “Risk Factors” included in the 2014 Form 10-K.

XML

Borrowings

6 Months Ended

Jun. 30, 2015

Borrowings

Note 7. Borrowings

Federal funds purchased and repurchase agreements. The Company has unsecured lines of credit with SunTrust Bank, Community Bankers Bank and Pacific Coast Bankers Bank for the purchase of federal funds in the amount of $20.0 million, $15.0 million and $5.0 million, respectively. These lines of credit have a variable rate based on the lending bank’s daily federal funds sold rate and are due on demand. Repurchase agreements are secured transactions and generally mature the day following the day sold. Customer repurchases are standard transactions that involve a Bank customer instead of a wholesale bank or broker. The Company offers this product as an accommodation to larger retail and commercial customers that request safety for their funds beyond the Federal Deposit Insurance Corporation (“FDIC”) deposit insurance limits. The Company does not use or have any open repurchase agreements with broker-dealers.

The tables below present selected information on federal funds purchased and repurchase agreements during the six months ended June 30, 2015 and the year ended December 31, 2014:

Federal funds purchased	June 30,			December 31,
(dollars in thousands)	2015			2014
Balance outstanding at period end	$	-		$	-
Maximum balance at any month end during the period	$	2,440		$	2,000
Average balance for the period	$	85		$	174
Weighted average rate for the period		0.71	%		0.78	%
Weighted average rate at period end		0.00	%		0.00	%

Repurchase agreements	June 30,			December 31,
(dollars in thousands)	2015			2014
Balance outstanding at period end	$	8,489		$	14,885
Maximum balance at any month end during the period	$	12,392		$	14,885
Average balance for the period	$	9,969		$	4,523
Weighted average rate for the period		0.62	%		0.59	%
Weighted average rate at period end		0.61	%		0.60	%

Short-term borrowings. Short-term borrowings consist of advances from the FHLB, which are secured by a blanket floating lien on all qualifying closed-end and revolving open-end loans that are secured by 1-4 family residential properties. Short-term advances from the FHLB at June 30, 2015 consisted of $3.1 million using a daily rate credit, which was due on demand, and $91.5 million in fixed rate one month advances. Short-term advances from the FHLB at December 31, 2014 consisted of $16.4 million using a daily rate credit, which was due on demand, and $60.4 million in fixed rate one month advances.

The table below presents selected information on short-term borrowings during the six months ended June 30, 2015 and the year ended December 31, 2014:

Short-term borrowings	June 30,			December 31,
(dollars in thousands)	2015			2014
Balance outstanding at period end	$	94,605		$	76,818
Maximum balance at any month end during the period	$	94,605		$	82,930
Average balance for the period	$	77,453		$	72,565
Weighted average rate for the period		0.21	%		0.21	%
Weighted average rate at period end		0.21	%		0.22	%

Long-term borrowings. From time to time, the Company may obtain long-term borrowings from the FHLB, which consist of advances from the FHLB that are secured by a blanket floating lien on all qualifying closed-end and revolving open-end loans that are secured by 1-4 family residential properties. At June 30, 2015 and December 31, 2014, the Company had no long-term FHLB advances outstanding.

The Company’s line of credit with the FHLB can equal up to 30% of the Company’s gross assets or approximately $365.9 million at June 30, 2015. This line of credit totaled $225.3 million with approximately $117.6 million available at June 30, 2015. As of June 30, 2015 and December 31, 2014, loans with a carrying value of $304.5 million are pledged to the FHLB as collateral for borrowings. Additional loans are available that can be pledged as collateral for future borrowings from the FHLB above the current lendable collateral value. Short-term borrowings outstanding under the FHLB line of credit were $94.6 million and $76.8 million as of June 30, 2015 and December 31, 2014, respectively.

XML

Bank Premises and Equipment - Additional Information (Detail) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Property, Plant and Equipment [Line Items]
Depreciation and amortization	$ 1,250	$ 1,048

XML

Accumulated Other Comprehensive Loss (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015		Jun. 30, 2014
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning Balance			$ (4,066)	[1]	$ (8,868)
Other comprehensive income (loss) before reclassification and amortization			(597)		4,364
Reclassification adjustment for gains included in net income	$ (18)	$ (72)	(34)		(323)
Net amortization of unrealized losses on securities transferred from available for sale to held to maturity			64		80
Net current period other comprehensive income (loss)	(2,050)	1,712	(567)		4,121
Ending Balance	(4,633)	(4,747)	(4,633)		(4,747)
Unrealized Securities Gains (Losses)
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning Balance			(1,954)		(8,396)
Other comprehensive income (loss) before reclassification and amortization			(597)		4,364
Reclassification adjustment for gains included in net income			(34)		(323)
Net amortization of unrealized losses on securities transferred from available for sale to held to maturity			64		80
Net current period other comprehensive income (loss)			(567)		4,121
Ending Balance	(2,521)	(4,275)	(2,521)		(4,275)
Adjustments Related to Pension Plan
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning Balance			(2,112)		(472)
Other comprehensive income (loss) before reclassification and amortization			0		0
Reclassification adjustment for gains included in net income			0		0
Net amortization of unrealized losses on securities transferred from available for sale to held to maturity			0		0
Net current period other comprehensive income (loss)			0		0
Ending Balance	$ (2,112)	$ (472)	$ (2,112)		$ (472)

[1] Derived from audited consolidated financial statements.

XML

Borrowings - Additional Information (Detail) - USD ($) $ in Millions	Jun. 30, 2015	Dec. 31, 2014
Debt Instrument [Line Items]
Percentage of FHLB line of credit to asset	30.00%
Line of credit with FHLB, equal to 25% of assets	$ 365.9
Line of credit available	117.6
Loans, carrying value	304.5	$ 304.5
Short-term and long-term borrowings outstanding under FHLB line of credit	94.6	76.8
Federal Home Loan Bank Advances
Debt Instrument [Line Items]
Line of credit, maximum	225.3
Sun Trust Bank
Debt Instrument [Line Items]
Line of credit, maximum	20.0
Community Bankers Bank
Debt Instrument [Line Items]
Line of credit, maximum	15.0
Pacific Coast Bankers Bank
Debt Instrument [Line Items]
Line of credit, maximum	5.0
Daily Rate [Member]
Debt Instrument [Line Items]
Long-term advances from the FHLB	3.1
Short-term and long-term borrowings outstanding under FHLB line of credit		16.4
Fixed Rate [Member]
Debt Instrument [Line Items]
Long-term advances from the FHLB	$ 91.5
Short-term and long-term borrowings outstanding under FHLB line of credit		$ 60.4

XML

Bank Premises and Equipment (Detail) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Property, Plant and Equipment [Line Items]
Land and improvements	$ 6,699	$ 6,929
Buildings and leasehold improvements	27,254	28,001
Furniture, fixtures and equipment	21,078	21,719
Construction in progress	2,658	553
Bank premises and equipment, Gross	57,689	57,202
Less accumulated depreciation	(29,061)	(29,769)
Net balance	$ 28,628	$ 27,433	[1]

[1] Derived from audited consolidated financial statements.

XML

Employee Benefit Plan - Pension (Tables)

6 Months Ended

Jun. 30, 2015

Components of net periodic pension benefit plan

Components of net periodic pension benefit related to the Company’s pension plan were as follows for the periods indicated:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
(dollars in thousands)	2015		2014		2015		2014
Components of net periodic pension cost (benefit)
Interest cost	$	101	$	111	$	202	$	223
Expected return on plan assets		(179)		(186)		(357)		(372)
Amortization of prior service cost		3		2		5		4
Recognized net actuarial loss		27		-		54		-
Net settlement loss		53		-		53		-
Net periodic pension cost (benefit)	$	5	$	(73)	$	(43)	$	(145)

XML

Recorded Investment in Nonaccrual Loans and Loans Past Due Ninety Days and Accruing Interest by Class (Detail) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Financing Receivable Recorded Investment Nonaccrual Status [Line Items]
Nonaccrual loans	$ 7,263	$ 6,622
Over 90 Days Past Due and Accruing Loans	240	53
Commercial, industrial and agricultural
Financing Receivable Recorded Investment Nonaccrual Status [Line Items]
Nonaccrual loans	383	334
Over 90 Days Past Due and Accruing Loans	0	53
Real estate - one to four family residential
Financing Receivable Recorded Investment Nonaccrual Status [Line Items]
Nonaccrual loans	5,421	3,928
Over 90 Days Past Due and Accruing Loans	240	0
Real estate - one to four family residential | Closed end first and seconds
Financing Receivable Recorded Investment Nonaccrual Status [Line Items]
Nonaccrual loans	4,996	3,364
Over 90 Days Past Due and Accruing Loans	240	0
Real estate - one to four family residential | Home Equity Line of Credit
Financing Receivable Recorded Investment Nonaccrual Status [Line Items]
Nonaccrual loans	425	564
Over 90 Days Past Due and Accruing Loans	0	0
Real Estate - Construction
Financing Receivable Recorded Investment Nonaccrual Status [Line Items]
Nonaccrual loans	190	221
Over 90 Days Past Due and Accruing Loans	0	0
Real Estate - Construction | One To Four Family Residential
Financing Receivable Recorded Investment Nonaccrual Status [Line Items]
Nonaccrual loans	189	221
Over 90 Days Past Due and Accruing Loans	0	0
Real Estate - Construction | Other construction, land development and other land
Financing Receivable Recorded Investment Nonaccrual Status [Line Items]
Nonaccrual loans	1	0
Over 90 Days Past Due and Accruing Loans	0	0
Real estate - farmland
Financing Receivable Recorded Investment Nonaccrual Status [Line Items]
Nonaccrual loans	0	590
Over 90 Days Past Due and Accruing Loans	0	0
Real Estate - Non-farm, Non-residential
Financing Receivable Recorded Investment Nonaccrual Status [Line Items]
Nonaccrual loans	1,245	1,521
Over 90 Days Past Due and Accruing Loans	0	0
Real Estate - Non-farm, Non-residential | Owner Occupied
Financing Receivable Recorded Investment Nonaccrual Status [Line Items]
Nonaccrual loans	568	1,521
Over 90 Days Past Due and Accruing Loans	0	0
Real Estate - Non-farm, Non-residential | Non-owner Occupied
Financing Receivable Recorded Investment Nonaccrual Status [Line Items]
Nonaccrual loans	677	0
Over 90 Days Past Due and Accruing Loans	0	0
Consumer Loan
Financing Receivable Recorded Investment Nonaccrual Status [Line Items]
Nonaccrual loans	24	28
Over 90 Days Past Due and Accruing Loans	$ 0	$ 0

XML

Preferred Stock and Warrant

6 Months Ended

Jun. 30, 2015

Preferred Stock and Warrant

Note 12. Preferred Stock and Warrant

On January 9, 2009, the Company signed a definitive agreement with the Treasury under the Emergency Economic Stabilization Act of 2008 to participate in the Treasury’s Capital Purchase Program. Pursuant to this agreement, the Company sold 24,000 shares of its Series A fixed rate cumulative perpetual preferred stock, liquidation value $1,000 per share (the “Series A Preferred Stock”), to the Treasury for an aggregate purchase price of $24 million. The Series A Preferred Stock paid a cumulative dividend at a rate of 5% for the first five years, and effective January 9, 2014, paid a rate of 9%. As part of its purchase of the Series A Preferred Stock, the Treasury was also issued a warrant (the “Warrant”) to purchase, on its initial terms, up to 373,832 shares of the Company’s common stock at an initial exercise price of $9.63 per share. If not exercised, the Warrant expires after ten years. On October 21, 2013, the Treasury sold all 24,000 shares of Series A Preferred Stock that were held by Treasury to private investors. Capital stock transactions by the Company subsequent to the Warrant’s issuance adjusted the Warrant’s exercise price per share to $9.374 and increased the number of shares that may be acquired upon exercise to 384,041.19 shares.

On May 13, 2015, the Company repurchased from the Treasury the Warrant for an aggregate repurchase price of $115 thousand, based on the fair value of the Warrant as agreed upon by the Company and the Treasury. Following the repurchase of the Warrant, the Treasury has no remaining equity investment in the Company. Additionally, on June 15, 2015, the Company redeemed the remaining $9.0 million of its Series A Preferred Stock.

Accounting for the issuance of the Series A Preferred Stock included entries to the equity portion of the Company’s consolidated balance sheet to recognize the Series A Preferred Stock at the full amount of the issuance, the warrant and discount on the Series A Preferred Stock at values calculated by discounting the future cash flows by a prevailing interest rate that a similar security would receive in the current market environment. At the time of issuance, that discount rate was determined to be 12%. The fair value of the warrant of $950 thousand was calculated using the Black-Scholes model with inputs of 7 year volatility, average rate of quarterly dividends, 7 year Treasury strip rate and the exercise price of $9.63 per share exercisable for up to 10 years. The present value of the Series A Preferred Stock using a 12% discount rate was $14.4 million. The Series A Preferred Stock discount determined by the allocation of discount to the warrant was accreted quarterly over a 5 year period on a constant effective yield method at a rate of approximately 6.4%. Allocation of the Series A Preferred Stock discount and the warrant as of January 9, 2009 is provided in the tables below:

	2009
Warrant Value
Series A Preferred Stock	$	24,000,000
Price	$	9.63
Warrant - shares		373,832
Value per warrant	$	2.54
Fair value of warrant	$	949,533

NPV of Series A Preferred Stock
@ 12% discount rate			(dollars in thousands)
				Relative		Relative
	Fair Value			Value %		Value
$24 million 1/09/2009
NPV of Series A Preferred Stock (12% discount rate)	$	14,446		93.8	%	$	22,519
Fair value of warrant		950		6.2	%		1,481
	$	15,396		100.0	%	$	24,000

From February 2011 to May 2014, the Company deferred its regularly scheduled dividend payments on its Series A Preferred Stock. Deferral of dividends on the Series A Preferred Stock did not constitute an event of default.  Dividends on the Series A Preferred Stock were, however, cumulative, and the Company had accumulated the dividends in accordance with the terms of the Series A Preferred Stock and U.S. GAAP and reflected the accumulated dividends as a portion of the effective dividend on Series A Preferred Stock on the consolidated statements of income.  On August 15, 2014, the Company paid $5.5 million of current and all deferred but accumulated dividends on its Series A Preferred Stock.

In connection with its private placements, on June 12, 2013, the Company issued 5,240,192 shares of its Series B Preferred Stock for a gross purchase price of $23.8 million, or $4.55 per share. The Series B Preferred Stock has no maturity date. The holders of Series B Preferred Stock are entitled to receive dividends if, as and when declared by the Company’s Board of Directors, in an identical form of consideration and at the same time, as those dividends or distributions that would have been payable on the number of whole shares of the Company’s common stock that such shares of Series B Preferred Stock would be convertible into upon satisfaction of certain conditions. The Company will not pay any dividends with respect to its common stock unless an equivalent dividend also is paid to the holders of Series B Preferred Stock. The Series B Preferred Stock ranks junior with regard to dividends to any class or series of capital stock of the Company the terms of which expressly provide that such class or series will rank senior to the common stock or the Series B Preferred Stock as to dividend rights and/or as to rights on liquidation, dissolution or winding up of the Company.

XML

Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2015

Principles of Consolidation

Principles of Consolidation

The accompanying unaudited consolidated financial statements of Eastern Virginia Bankshares, Inc. (the “Parent”) and its subsidiaries, EVB Statutory Trust I (the “Trust”), and EVB (the “Bank”) and its subsidiaries, are in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q adopted by the Securities and Exchange Commission (“SEC”). Accordingly, these financial statements do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. Operating results for the three and six months ended June 30, 2015 are not necessarily indicative of the results that may be expected for the year ending December 31, 2015. These interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014 (the “2014 Form 10-K”).

The accompanying unaudited consolidated financial statements include the accounts of the Parent, the Bank and its subsidiaries, collectively referred to as the “Company.” All significant intercompany balances and transactions have been eliminated in consolidation. In addition, the Parent owns the Trust which is an unconsolidated subsidiary. The subordinated debt owed to the Trust is reported as a liability of the Parent.

Nature of Operations

Nature of Operations

Eastern Virginia Bankshares, Inc. is a bank holding company headquartered in Tappahannock, Virginia that was organized and chartered under the laws of the Commonwealth of Virginia on September 5, 1997 and commenced operations on December 29, 1997. The Company conducts its primary operations through its wholly-owned bank subsidiary, EVB. Two of EVB’s three predecessor banks, Bank of Northumberland, Inc. and Southside Bank, were established in 1910. The third bank, Hanover Bank, was established as a de novo bank in 2000. In April 2006, these three banks were merged and the surviving bank was re-branded as EVB. Additionally, the Parent acquired Virginia Company Bank (“VCB”) (see Note 2 – Business Combinations) on November 14, 2014 and merged VCB with and into the Bank, with the Bank surviving, thus adding three additional branches to the Bank located in Newport News, Williamsburg, and Hampton, respectively. The Bank provides a full range of banking and related financial services to individuals and businesses through its network of retail branches. With twenty-four retail branches, the Bank serves diverse markets that primarily are in the counties of Essex, Gloucester, Hanover, Henrico, King and Queen, King William, Lancaster, Middlesex, New Kent, Northumberland, Southampton, Surry, Sussex and the cities of Colonial Heights, Hampton, Newport News, Richmond, and Williamsburg. The Bank also operates a loan production office in Chesterfield County, Virginia, that the Bank opened during the second quarter of 2014. The Bank operates under a state bank charter and as such is subject to regulation by the Virginia State Corporation Commission Bureau of Financial Institutions (the “Bureau”) and the Board of Governors of the Federal Reserve System (the “Federal Reserve”).

The Bank owns EVB Financial Services, Inc., which in turn has a 100% ownership interest in EVB Investments, Inc. EVB Investments, Inc. is a full-service brokerage firm offering a comprehensive range of investment services. On May 15, 2014, the Bank acquired a 4.9% ownership interest in Southern Trust Mortgage, LLC. Pursuant to an independent contractor agreement with Southern Trust Mortgage, LLC, the Company advises and consults with Southern Trust Mortgage, LLC and facilitates the marketing and brand recognition of their mortgage business. In addition, the Company provides Southern Trust Mortgage, LLC with offices at four retail branches in the Company’s market area and access to office equipment at these locations during normal business hours. For its services, the Company receives fixed monthly compensation from Southern Trust Mortgage, LLC in the amount of $3 thousand, which is adjustable on a quarterly basis.

The Bank had a 75% ownership interest in EVB Title, LLC, which primarily sold title insurance to the mortgage loan customers of the Bank and EVB Mortgage, LLC. Effective January 2014, the Bank ceased operations of EVB Title, LLC due to low volume and profitability. On October 1, 2014, the Bank acquired a 6.0% ownership interest in Bankers Title, LLC. Bankers Title, LLC is a multi-bank owned title agency providing a full range of title insurance settlement and related financial services. The Bank has a 2.33% ownership in Bankers Insurance, LLC, which primarily sells insurance products to customers of the Bank, and other financial institutions that have an equity interest in the agency. The Bank also has a 100% ownership interest in Dunston Hall LLC, POS LLC, Tartan Holdings LLC and ECU-RE LLC which were formed to hold the title to real estate acquired by the Bank upon foreclosure on property of real estate secured loans. The financial position and operating results of all of these subsidiaries are not significant to the Company as a whole and are not considered principal activities of the Company at this time. The Company’s common stock trades on the NASDAQ Global Select Market under the symbol “EVBS.”

Basis of Presentation

Basis of Presentation

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan losses, impairment of loans, impairment of securities, the valuation of other real estate owned, the projected benefit obligation under the defined benefit pension plan, the valuation of deferred taxes, goodwill impairment and fair value of financial instruments. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, which are necessary for a fair presentation of the results of operations in these interim financial statements, have been made. Certain prior year amounts have been reclassified to conform to the 2015 presentation. These reclassifications have no effect on previously reported net income.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In January 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-01, “Investments—Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Qualified Affordable Housing Projects (a consensus of the FASB Emerging Issues Task Force).” The amendments in this ASU permit reporting entities to make an accounting policy election to account for their investments in qualified affordable housing projects using the proportional amortization method if certain conditions are met. Under the proportional amortization method, an entity amortizes the initial cost of the investment in proportion to the tax credits and other tax benefits received and recognizes the net investment performance in the income statement as a component of income tax expense (benefit). The amendments in this ASU should be applied retrospectively to all periods presented. A reporting entity that uses the effective yield method to account for its investments in qualified affordable housing projects before the date of adoption may continue to apply the effective yield method for those preexisting investments. The amendments in this ASU are effective for public business entities for annual periods and interim reporting periods within those annual periods, beginning after December 15, 2014. Early adoption is permitted. The adoption of the new guidance did not have a material impact on our consolidated financial statements.

In January 2014, the FASB issued ASU 2014-04, “Receivables—Troubled Debt Restructurings by Creditors (Subtopic 310-40): Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure (a consensus of the FASB Emerging Issues Task Force).” The amendments in this ASU clarify that an in substance repossession or foreclosure occurs, and a creditor is considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan, upon either (1) the creditor obtaining legal title to the residential real estate property upon completion of a foreclosure or (2) the borrower conveying all interest in the residential real estate property to the creditor to satisfy that loan through completion of a deed in lieu of foreclosure or through a similar legal agreement. Additionally, the amendments require interim and annual disclosure of both (1) the amount of foreclosed residential real estate property held by the creditor and (2) the recorded investment in consumer mortgage loans collateralized by residential real estate property that are in the process of foreclosure according to local requirements of the applicable jurisdiction. The amendments in this ASU are effective for public business entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2014. The adoption of the new guidance did not have a material impact on our consolidated financial statements.

In June 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606).” This ASU applies to any entity using U.S. GAAP that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards. The guidance supersedes the revenue recognition requirements in “Revenue Recognition (Topic 605),” most industry-specific guidance, and some cost guidance included in “Revenue Recognition—Construction-Type and Production-Type Contracts (Subtopic 605-35).” The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To be in alignment with the core principle, an entity must apply a five step process including: identification of the contract(s) with a customer, identification of performance obligations in the contract(s), determination of the transaction price, allocation of the transaction price to the performance obligations, and recognition of revenue when (or as) the entity satisfies a performance obligation. Additionally, the existing requirements for the recognition of a gain or loss on the transfer of nonfinancial assets that are not in a contract with a customer have also been amended to be consistent with the guidance on recognition and measurement. The amendments in this ASU were scheduled to be effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Early adoption is not permitted. In April 2015, the FASB voted in favor of a one year deferral of the effective date of this amendment. An exposure draft is expected with a thirty day comment period. The Company is currently assessing the impact that ASU 2014-09 will have on its consolidated financial statements.

In June 2014, the FASB issued ASU 2014-11, “Transfers and Servicing (Topic 860): Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures.” This ASU aligns the accounting for repurchase-to-maturity transactions and repurchase agreements executed as a repurchase financing with the accounting for other typical repurchase agreements. The new guidance eliminates sale accounting for repurchase-to-maturity transactions and supersedes the guidance under which a transfer of a financial asset and a contemporaneous repurchase financing could be accounted for on a combined basis as a forward agreement. The amendments in the ASU also require a new disclosure for transactions economically similar to repurchase agreements in which the transferor retains substantially all of the exposure to the economic return on the transferred financial assets throughout the term of the transaction. Additional disclosures will be required for the nature of collateral pledged in repurchase agreements and similar transactions accounted for as secured borrowings. The amendments in this ASU are effective for the first interim or annual period beginning after December 15, 2014. However, the disclosure for transactions accounted for as secured borrowings is required to be presented for annual periods beginning after December 15, 2014, and interim periods beginning after March 15, 2015. Early adoption is not permitted. The adoption of the new guidance did not have a material impact on our consolidated financial statements.

In June 2014, the FASB issued ASU 2014-12, “Compensation – Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period.” The new guidance applies to reporting entities that grant employees share-based payments in which the terms of the award allow a performance target to be achieved after the requisite service period. The amendments in the ASU require that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. Existing guidance in “Compensation – Stock Compensation (Topic 718)” should be applied to account for these types of awards. The amendments in this ASU are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. Early adoption is permitted, and reporting entities may choose to apply the amendments in the ASU either on a prospective or retrospective basis. The Company is currently assessing the impact that ASU 2014-12 will have on its consolidated financial statements.

In August 2014, the FASB issued ASU 2014-14, “Receivables – Troubled Debt Restructurings by Creditors (Subtopic 310-40): Classification of Certain Government-Guaranteed Mortgage Loans upon Foreclosure.” The amendments in this ASU apply to creditors that hold government-guaranteed mortgage loans and are intended to eliminate the diversity in practice related to the classification of these guaranteed loans upon foreclosure. The new guidance stipulates that a mortgage loan be derecognized and a separate other receivable be recognized upon foreclosure if (1) the mortgage loan has a government guarantee that is not separable from the mortgage loan prior to foreclosure, (2) at the time of foreclosure, the creditor has the intent to convey the real estate property to the guarantor and make a claim on the guarantee, and the creditor has the ability to recover under that claim and (3) at the time of foreclosure, any amount of the claim that is determined on the basis of the fair value of the real estate is fixed. Upon foreclosure, the other receivable should be measured on the amount of the loan balance (principal and interest) expected to be recovered from the guarantor. The amendments in this ASU are effective for annual periods and interim periods within those annual periods beginning after December 15, 2014. Entities may adopt the amendments on a prospective basis or modified retrospective basis as of the beginning of the annual period of adoption; however, the entity must apply the same method of transition as elected under ASU 2014-04. Early adoption is permitted provided the entity has already adopted ASU 2014-04. The adoption of the new guidance did not have a material impact on our consolidated financial statements.

In August 2014, the FASB issued ASU 2014-15, “Presentation of Financial Statements – Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern.” This update is intended to provide guidance about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. Management is required under the new guidance to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date the financial statements are issued when preparing financial statements for each interim and annual reporting period. If conditions or events are identified, the ASU specifies the process that must be followed by management and also clarifies the timing and content of going concern footnote disclosures in order to reduce diversity in practice. The amendments in this ASU are effective for annual periods and interim periods within those annual periods beginning after December 15, 2016. Early adoption is permitted. The Company does not expect the adoption of ASU 2014-15 to have a material impact on its consolidated financial statements. 

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

In February 2015, the FASB issued ASU No. 2015-02, “Consolidation (Topic 810): Amendments to the Consolidation Analysis.” The amendments in this ASU are intended to improve targeted areas of consolidation guidance for legal entities such as limited partnerships, limited liability corporations, and securitization structures (collateralized debt obligations, collateralized loan obligations, and mortgage-backed security transactions). In addition to reducing the number of consolidation models from four to two, the new standard simplifies the FASB Accounting Standards Codification (“ASC”) and improves current U.S. GAAP by placing more emphasis on risk of loss when determining a controlling financial interest, reducing the frequency of the application of related-party guidance when determining a controlling financial interest in a variable interest entity (“VIE”), and changing consolidation conclusions for public and private companies in several industries that typically make use of limited partnerships or VIEs. The amendments in this ASU are effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted, including adoption in an interim period. ASU 2015-02 may be applied retrospectively in previously issued financial statements for one or more years with a cumulative-effect adjustment to retained earnings as of the beginning of the first year restated. The Company does not expect the adoption of ASU 2015-02 to have a material impact on its consolidated financial statements.

In April 2015, the FASB issued ASU No. 2015-03, “Interest – Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs.” The amendments in this ASU are intended to simplify the presentation of debt issuance costs. These amendments require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this ASU. The amendments in this ASU are effective for public business entities for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. Early adoption is permitted for financial statements that have not been previously issued, and as such, the Company adopted ASU 2015-03 in the second quarter of 2015. The adoption of the new guidance did not have a material impact on the Company’s  consolidated financial statements.

In April 2015, the FASB issued ASU No. 2015-05, “Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement.” The amendments in this ASU provide guidance to customers regarding cloud computing arrangements that include a software license. If a cloud computing arrangement includes a software license, then the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. The amendments do not change the accounting for a customer’s accounting for service contracts. As a result of the amendments, all software licenses within the scope of Subtopic 350-40 will be accounted for consistent with other licenses of intangible assets. The amendments in this ASU are effective for public business entities for annual periods, including interim periods within those annual periods, beginning after December 15, 2015. Early adoption is permitted. An entity can elect to adopt the amendments either: (1) prospectively to all arrangements entered into or materially modified after the effective date; or (2) retrospectively. The Company is currently assessing the impact that ASU 2015-05 will have on its consolidated financial statements.

In May 2015, the FASB issued ASU No. 2015-08, “Business Combinations (Topic 805): Pushdown Accounting – Amendments to SEC Paragraphs Pursuant to Staff Accounting Bulletin No. 115.” The amendments in ASU 2015-08 amend various SEC paragraphs pursuant to the issuance of Staff Accounting Bulletin No. 115, Topic 5: Miscellaneous Accounting, regarding various pushdown accounting issues, and did not have a material impact on our consolidated financial statements.

XML

Nonaccrual Loans, Loans Past due Ninety Days and Accruing Interest, and troubled debt restructurings (accruing) (Detail) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Financing Receivable Recorded Investment Nonaccrual Status [Line Items]
Nonaccrual loans	$ 7,263	$ 6,622
Loans past due 90 days and accruing interest	240	53
Troubled debt restructurings (accruing)	$ 14,843	$ 15,223

XML

Operational Cost Savings and Other Efficiencies (Detail) - Unaudited - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Net interest income	$ 10,606	$ 10,066	$ 21,180	$ 20,554
Net income	$ 1,675	$ 1,232	$ 3,340	$ 2,804

XML

Consolidated Statements of Comprehensive (Loss) Income - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Net income	$ 1,507	$ 1,655	$ 3,116	$ 3,651
Other comprehensive (loss) income, net of tax:
Unrealized securities (losses) gains arising during period	(2,070)	1,732	(597)	4,364
Amortization of unrealized losses on securities transferred from available for sale to held to maturity	38	52	64	80
Less: reclassification adjustment for securities gains included in net income	(18)	(72)	(34)	(323)
Other comprehensive (loss) income	(2,050)	1,712	(567)	4,121
Comprehensive (loss) income	$ (543)	$ 3,367	$ 2,549	$ 7,772

XML

Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2015

Summary of Significant Accounting Policies

Note 1. Summary of Significant Accounting Policies

Principles of Consolidation

The accompanying unaudited consolidated financial statements of Eastern Virginia Bankshares, Inc. (the “Parent”) and its subsidiaries, EVB Statutory Trust I (the “Trust”), and EVB (the “Bank”) and its subsidiaries, are in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the instructions to Form 10-Q adopted by the Securities and Exchange Commission (“SEC”). Accordingly, these financial statements do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. Operating results for the three and six months ended June 30, 2015 are not necessarily indicative of the results that may be expected for the year ending December 31, 2015. These interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014 (the “2014 Form 10-K”).

The accompanying unaudited consolidated financial statements include the accounts of the Parent, the Bank and its subsidiaries, collectively referred to as the “Company.” All significant intercompany balances and transactions have been eliminated in consolidation. In addition, the Parent owns the Trust which is an unconsolidated subsidiary. The subordinated debt owed to the Trust is reported as a liability of the Parent.

Nature of Operations

Eastern Virginia Bankshares, Inc. is a bank holding company headquartered in Tappahannock, Virginia that was organized and chartered under the laws of the Commonwealth of Virginia on September 5, 1997 and commenced operations on December 29, 1997. The Company conducts its primary operations through its wholly-owned bank subsidiary, EVB. Two of EVB’s three predecessor banks, Bank of Northumberland, Inc. and Southside Bank, were established in 1910. The third bank, Hanover Bank, was established as a de novo bank in 2000. In April 2006, these three banks were merged and the surviving bank was re-branded as EVB. Additionally, the Parent acquired Virginia Company Bank (“VCB”) (see Note 2 – Business Combinations) on November 14, 2014 and merged VCB with and into the Bank, with the Bank surviving, thus adding three additional branches to the Bank located in Newport News, Williamsburg, and Hampton, respectively. The Bank provides a full range of banking and related financial services to individuals and businesses through its network of retail branches. With twenty-four retail branches, the Bank serves diverse markets that primarily are in the counties of Essex, Gloucester, Hanover, Henrico, King and Queen, King William, Lancaster, Middlesex, New Kent, Northumberland, Southampton, Surry, Sussex and the cities of Colonial Heights, Hampton, Newport News, Richmond, and Williamsburg. The Bank also operates a loan production office in Chesterfield County, Virginia, that the Bank opened during the second quarter of 2014. The Bank operates under a state bank charter and as such is subject to regulation by the Virginia State Corporation Commission Bureau of Financial Institutions (the “Bureau”) and the Board of Governors of the Federal Reserve System (the “Federal Reserve”).

The Bank owns EVB Financial Services, Inc., which in turn has a 100% ownership interest in EVB Investments, Inc. EVB Investments, Inc. is a full-service brokerage firm offering a comprehensive range of investment services. On May 15, 2014, the Bank acquired a 4.9% ownership interest in Southern Trust Mortgage, LLC. Pursuant to an independent contractor agreement with Southern Trust Mortgage, LLC, the Company advises and consults with Southern Trust Mortgage, LLC and facilitates the marketing and brand recognition of their mortgage business. In addition, the Company provides Southern Trust Mortgage, LLC with offices at four retail branches in the Company’s market area and access to office equipment at these locations during normal business hours. For its services, the Company receives fixed monthly compensation from Southern Trust Mortgage, LLC in the amount of $3 thousand, which is adjustable on a quarterly basis.

The Bank had a 75% ownership interest in EVB Title, LLC, which primarily sold title insurance to the mortgage loan customers of the Bank and EVB Mortgage, LLC. Effective January 2014, the Bank ceased operations of EVB Title, LLC due to low volume and profitability. On October 1, 2014, the Bank acquired a 6.0% ownership interest in Bankers Title, LLC. Bankers Title, LLC is a multi-bank owned title agency providing a full range of title insurance settlement and related financial services. The Bank has a 2.33% ownership in Bankers Insurance, LLC, which primarily sells insurance products to customers of the Bank, and other financial institutions that have an equity interest in the agency. The Bank also has a 100% ownership interest in Dunston Hall LLC, POS LLC, Tartan Holdings LLC and ECU-RE LLC which were formed to hold the title to real estate acquired by the Bank upon foreclosure on property of real estate secured loans. The financial position and operating results of all of these subsidiaries are not significant to the Company as a whole and are not considered principal activities of the Company at this time. The Company’s common stock trades on the NASDAQ Global Select Market under the symbol “EVBS.”

Basis of Presentation

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan losses, impairment of loans, impairment of securities, the valuation of other real estate owned, the projected benefit obligation under the defined benefit pension plan, the valuation of deferred taxes, goodwill impairment and fair value of financial instruments. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, which are necessary for a fair presentation of the results of operations in these interim financial statements, have been made. Certain prior year amounts have been reclassified to conform to the 2015 presentation. These reclassifications have no effect on previously reported net income.

Recent Accounting Pronouncements

In January 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-01, “Investments—Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Qualified Affordable Housing Projects (a consensus of the FASB Emerging Issues Task Force).” The amendments in this ASU permit reporting entities to make an accounting policy election to account for their investments in qualified affordable housing projects using the proportional amortization method if certain conditions are met. Under the proportional amortization method, an entity amortizes the initial cost of the investment in proportion to the tax credits and other tax benefits received and recognizes the net investment performance in the income statement as a component of income tax expense (benefit). The amendments in this ASU should be applied retrospectively to all periods presented. A reporting entity that uses the effective yield method to account for its investments in qualified affordable housing projects before the date of adoption may continue to apply the effective yield method for those preexisting investments. The amendments in this ASU are effective for public business entities for annual periods and interim reporting periods within those annual periods, beginning after December 15, 2014. Early adoption is permitted. The adoption of the new guidance did not have a material impact on our consolidated financial statements.

In January 2014, the FASB issued ASU 2014-04, “Receivables—Troubled Debt Restructurings by Creditors (Subtopic 310-40): Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure (a consensus of the FASB Emerging Issues Task Force).” The amendments in this ASU clarify that an in substance repossession or foreclosure occurs, and a creditor is considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan, upon either (1) the creditor obtaining legal title to the residential real estate property upon completion of a foreclosure or (2) the borrower conveying all interest in the residential real estate property to the creditor to satisfy that loan through completion of a deed in lieu of foreclosure or through a similar legal agreement. Additionally, the amendments require interim and annual disclosure of both (1) the amount of foreclosed residential real estate property held by the creditor and (2) the recorded investment in consumer mortgage loans collateralized by residential real estate property that are in the process of foreclosure according to local requirements of the applicable jurisdiction. The amendments in this ASU are effective for public business entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2014. The adoption of the new guidance did not have a material impact on our consolidated financial statements.

In June 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606).” This ASU applies to any entity using U.S. GAAP that either enters into contracts with customers to transfer goods or services or enters into contracts for the transfer of nonfinancial assets unless those contracts are within the scope of other standards. The guidance supersedes the revenue recognition requirements in “Revenue Recognition (Topic 605),” most industry-specific guidance, and some cost guidance included in “Revenue Recognition—Construction-Type and Production-Type Contracts (Subtopic 605-35).” The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To be in alignment with the core principle, an entity must apply a five step process including: identification of the contract(s) with a customer, identification of performance obligations in the contract(s), determination of the transaction price, allocation of the transaction price to the performance obligations, and recognition of revenue when (or as) the entity satisfies a performance obligation. Additionally, the existing requirements for the recognition of a gain or loss on the transfer of nonfinancial assets that are not in a contract with a customer have also been amended to be consistent with the guidance on recognition and measurement. The amendments in this ASU were scheduled to be effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Early adoption is not permitted. In April 2015, the FASB voted in favor of a one year deferral of the effective date of this amendment. An exposure draft is expected with a thirty day comment period. The Company is currently assessing the impact that ASU 2014-09 will have on its consolidated financial statements.

In June 2014, the FASB issued ASU 2014-11, “Transfers and Servicing (Topic 860): Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures.” This ASU aligns the accounting for repurchase-to-maturity transactions and repurchase agreements executed as a repurchase financing with the accounting for other typical repurchase agreements. The new guidance eliminates sale accounting for repurchase-to-maturity transactions and supersedes the guidance under which a transfer of a financial asset and a contemporaneous repurchase financing could be accounted for on a combined basis as a forward agreement. The amendments in the ASU also require a new disclosure for transactions economically similar to repurchase agreements in which the transferor retains substantially all of the exposure to the economic return on the transferred financial assets throughout the term of the transaction. Additional disclosures will be required for the nature of collateral pledged in repurchase agreements and similar transactions accounted for as secured borrowings. The amendments in this ASU are effective for the first interim or annual period beginning after December 15, 2014. However, the disclosure for transactions accounted for as secured borrowings is required to be presented for annual periods beginning after December 15, 2014, and interim periods beginning after March 15, 2015. Early adoption is not permitted. The adoption of the new guidance did not have a material impact on our consolidated financial statements.

In June 2014, the FASB issued ASU 2014-12, “Compensation – Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period.” The new guidance applies to reporting entities that grant employees share-based payments in which the terms of the award allow a performance target to be achieved after the requisite service period. The amendments in the ASU require that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. Existing guidance in “Compensation – Stock Compensation (Topic 718)” should be applied to account for these types of awards. The amendments in this ASU are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. Early adoption is permitted, and reporting entities may choose to apply the amendments in the ASU either on a prospective or retrospective basis. The Company is currently assessing the impact that ASU 2014-12 will have on its consolidated financial statements.

In August 2014, the FASB issued ASU 2014-14, “Receivables – Troubled Debt Restructurings by Creditors (Subtopic 310-40): Classification of Certain Government-Guaranteed Mortgage Loans upon Foreclosure.” The amendments in this ASU apply to creditors that hold government-guaranteed mortgage loans and are intended to eliminate the diversity in practice related to the classification of these guaranteed loans upon foreclosure. The new guidance stipulates that a mortgage loan be derecognized and a separate other receivable be recognized upon foreclosure if (1) the mortgage loan has a government guarantee that is not separable from the mortgage loan prior to foreclosure, (2) at the time of foreclosure, the creditor has the intent to convey the real estate property to the guarantor and make a claim on the guarantee, and the creditor has the ability to recover under that claim and (3) at the time of foreclosure, any amount of the claim that is determined on the basis of the fair value of the real estate is fixed. Upon foreclosure, the other receivable should be measured on the amount of the loan balance (principal and interest) expected to be recovered from the guarantor. The amendments in this ASU are effective for annual periods and interim periods within those annual periods beginning after December 15, 2014. Entities may adopt the amendments on a prospective basis or modified retrospective basis as of the beginning of the annual period of adoption; however, the entity must apply the same method of transition as elected under ASU 2014-04. Early adoption is permitted provided the entity has already adopted ASU 2014-04. The adoption of the new guidance did not have a material impact on our consolidated financial statements.

In August 2014, the FASB issued ASU 2014-15, “Presentation of Financial Statements – Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern.” This update is intended to provide guidance about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. Management is required under the new guidance to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date the financial statements are issued when preparing financial statements for each interim and annual reporting period. If conditions or events are identified, the ASU specifies the process that must be followed by management and also clarifies the timing and content of going concern footnote disclosures in order to reduce diversity in practice. The amendments in this ASU are effective for annual periods and interim periods within those annual periods beginning after December 15, 2016. Early adoption is permitted. The Company does not expect the adoption of ASU 2014-15 to have a material impact on its consolidated financial statements. 

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

In February 2015, the FASB issued ASU No. 2015-02, “Consolidation (Topic 810): Amendments to the Consolidation Analysis.” The amendments in this ASU are intended to improve targeted areas of consolidation guidance for legal entities such as limited partnerships, limited liability corporations, and securitization structures (collateralized debt obligations, collateralized loan obligations, and mortgage-backed security transactions). In addition to reducing the number of consolidation models from four to two, the new standard simplifies the FASB Accounting Standards Codification (“ASC”) and improves current U.S. GAAP by placing more emphasis on risk of loss when determining a controlling financial interest, reducing the frequency of the application of related-party guidance when determining a controlling financial interest in a variable interest entity (“VIE”), and changing consolidation conclusions for public and private companies in several industries that typically make use of limited partnerships or VIEs. The amendments in this ASU are effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted, including adoption in an interim period. ASU 2015-02 may be applied retrospectively in previously issued financial statements for one or more years with a cumulative-effect adjustment to retained earnings as of the beginning of the first year restated. The Company does not expect the adoption of ASU 2015-02 to have a material impact on its consolidated financial statements.

In April 2015, the FASB issued ASU No. 2015-03, “Interest – Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs.” The amendments in this ASU are intended to simplify the presentation of debt issuance costs. These amendments require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this ASU. The amendments in this ASU are effective for public business entities for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. Early adoption is permitted for financial statements that have not been previously issued, and as such, the Company adopted ASU 2015-03 in the second quarter of 2015. The adoption of the new guidance did not have a material impact on the Company’s  consolidated financial statements.

In April 2015, the FASB issued ASU No. 2015-05, “Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement.” The amendments in this ASU provide guidance to customers regarding cloud computing arrangements that include a software license. If a cloud computing arrangement includes a software license, then the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. The amendments do not change the accounting for a customer’s accounting for service contracts. As a result of the amendments, all software licenses within the scope of Subtopic 350-40 will be accounted for consistent with other licenses of intangible assets. The amendments in this ASU are effective for public business entities for annual periods, including interim periods within those annual periods, beginning after December 15, 2015. Early adoption is permitted. An entity can elect to adopt the amendments either: (1) prospectively to all arrangements entered into or materially modified after the effective date; or (2) retrospectively. The Company is currently assessing the impact that ASU 2015-05 will have on its consolidated financial statements.

In May 2015, the FASB issued ASU No. 2015-08, “Business Combinations (Topic 805): Pushdown Accounting – Amendments to SEC Paragraphs Pursuant to Staff Accounting Bulletin No. 115.” The amendments in ASU 2015-08 amend various SEC paragraphs pursuant to the issuance of Staff Accounting Bulletin No. 115, Topic 5: Miscellaneous Accounting, regarding various pushdown accounting issues, and did not have a material impact on our consolidated financial statements.

XML

Summary of the Changes in the Accretable Yield of the PCI Loan Portfolio (Detail) - Jun. 30, 2015 - USD ($) $ in Thousands	Total	Total
Balance at beginning of period	$ 1,029	$ 1,131
Accretion	(104)	(206)
Reclassification of nonaccretable difference due to improvement in expected cash flows	0	0
Other changes, net	0	0
Balance at end of period	$ 925	$ 925

XML

Junior and Senior Subordinated Debt - Additional Information (Detail) - USD ($) $ in Thousands	1 Months Ended	3 Months Ended	6 Months Ended		12 Months Ended
	Apr. 22, 2015	Jun. 30, 2015	Jun. 30, 2015	Jun. 30, 2014	Dec. 31, 2014		Sep. 17, 2003
Debt Instrument [Line Items]
Trust preferred securities							$ 10,000
Trust I capital in a pooled underwriting totaled							$ 650,000
Tier 1 capital for regulatory capital adequacy determination purposes		25.00%	25.00%
Number of days defers interest payments			more than 20 consecutive quarters
Debt Instrument, Basis Spread on Variable Rate		3.23%			3.21%
Debt Instrument, Description of Variable Rate Basis			3-month LIBOR plus 2.95%
Preferred Stock, Redemption Date			Sep. 17, 2033
Senior Notes		$ 19,140	$ 19,140		$ 0	[1]
Payments of Debt Issuance Costs			875	$ 0
Senior Subordinated Notes [Member]
Debt Instrument [Line Items]
Debt Instrument, Description of Variable Rate Basis	502 basis points
Senior Notes	$ 20,000
Debt Instrument, Interest Rate Terms	6.50% Fixed-to-Floating Rate Subordinated Notes
Debt Instrument, Maturity Date, Description	due 2025 ("Senior Subordinated Debt") to the investors at a price equal to 100% of the aggregate principal amount
Payments of Debt Issuance Costs			$ 860
Debt Instrument, Interest Rate, Stated Percentage	6.50%

[1] Derived from audited consolidated financial statements.

XML

Stock Option Activity and Related Information (Detail) - Jun. 30, 2015 - USD ($) $ / shares in Units, $ in Thousands	Total
Options Outstanding
Stock options outstanding, beginning balance	110,487
Stock options Outstanding, Forfeited	(7,600)
Stock options outstanding, ending balance	102,887
Stock options exercisable, Ending balance	102,887
Weighted Average Exercise Price
Stock options outstanding, Weighted Average Exercise Price, beginning balance	$ 18.76
Stock options outstanding, Weighted Average Exercisable Price, Forfeited	18.65
Stock options outstanding, Weighted Average Exercise Price, ending balance	18.77
Stock options exercisable, Weighted Average Exercise Price	$ 18.77
Remaining Contractual Life
Stock options outstanding, Remaining Contractual Life (in years)	1 year 6 months 22 days
Stock options exercisable, Remaining Contractual Life (in years)	1 year 6 months 22 days
Aggregate Intrinsic Value
Stock options outstanding, Aggregated Intrinsic Value	$ 0
Stock options exercisable, Aggregate Intrinsic Value	$ 0

XML

Business Combinations (Tables)

6 Months Ended

Jun. 30, 2015

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed

The following table details the total consideration paid by the Company on November 14, 2014 in connection with the acquisition of VCB, the fair values of the assets acquired and liabilities assumed, and the resulting goodwill.

					As Recorded
	As Recorded		Fair Value		by the
(dollars in thousands)	by VCB		Adjustments		Company
Consideration paid:
Cash					$	6,688
EVBS common stock						6,676
Total consideration paid					$	13,364
Identifiable assets acquired:
Cash and due from banks	$	1,377	$	-	$	1,377
Interest bearing deposits with banks		249		-		249
Securities available for sale, at fair value		11,277		-		11,277
Restricted securities, at cost		557		-		557
Loans		103,791		(2,322)		101,469
Deferred income taxes		-		3,513		3,513
Bank premises and equipment		7,020		(1,044)		5,976
Accrued interest receivable		344		-		344
Other real estate owned		211		(108)		103
Core deposit intangible		-		1,010		1,010
Bank owned life insurance		2,742		-		2,742
Other assets		243		-		243
Total identifiable assets acquired		127,811		1,049		128,860
Identifiable liabilities assumed:
Noninterest-bearing demand accounts		18,797		-		18,797
Interest-bearing deposits		85,791		(149)		85,642
Federal funds purchased and repurchase agreements		3,119		-		3,119
Federal Home Loan Bank advances		8,650		-		8,650
Accrued interest payable		30		-		30
Other liabilities		373		-		373
Total identifiable liabilities assumed		116,760		(149)		116,611
Net identifiable assets acquired	$	11,051	$	1,198	$	12,249
Goodwill resulting from acquisition					$	1,115

Business Acquisition, Pro Forma Information

Additionally, the Company expects to achieve further operational cost savings and other efficiencies as a result of the acquisition which are not reflected in the unaudited pro forma amounts below:

	Unaudited		Unaudited		Unaudited		Unaudited
	Pro Forma		Pro Forma		Pro Forma		Pro Forma
	Three Months Ended		Three Months Ended		Six Months Ended		Six Months Ended
	June 30,		June 30,		June 30,		June 30,
(dollars in thousands)	2015		2014		2015		2014
Net interest income	$	10,606	$	10,066	$	21,180	$	20,554
Net income		1,675		1,232		3,340		2,804

XML

Employee Benefit Plan - Pension - Additional Information (Detail)	6 Months Ended
	Jun. 30, 2015
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
Defined benefit plan, credited service period	10 years
Defined benefit plan number of years for calculating average annual interest rate	2 years

XML

Label	Element	Value
Net Income Loss	us-gaap_NetIncomeLoss	$ 1,507
Net Income Loss	us-gaap_NetIncomeLoss	1,655
Gains Losses On Sales Of Other Real Estate	us-gaap_GainsLossesOnSalesOfOtherRealEstate	(28)
Gains Losses On Sales Of Other Real Estate	us-gaap_GainsLossesOnSalesOfOtherRealEstate	6
Gains Losses On Sales Of Assets	us-gaap_GainsLossesOnSalesOfAssets	(30)
Gains Losses On Sales Of Assets	us-gaap_GainsLossesOnSalesOfAssets	0
Impairment Of Real Estate	us-gaap_ImpairmentOfRealEstate	0
Impairment Of Real Estate	us-gaap_ImpairmentOfRealEstate	$ 6

XML

Accumulated Other Comprehensive Loss (Tables)

6 Months Ended

Jun. 30, 2015

Accumulated Other Comprehensive Income (Loss)

The changes in accumulated other comprehensive loss for the six months ended June 30, 2015 and 2014 are summarized as follows:

					Accumulated
	Unrealized		Adjustments		Other
	Securities		Related to		Comprehensive
(dollars in thousands)	Gains (Losses)		Pension Plan		Loss
Balance at December 31, 2014	$	(1,954)	$	(2,112)	$	(4,066)
Other comprehensive (loss) before reclassification and amortization		(597)		-		(597)
Reclassification adjustment for gains included in net income		(34)		-		(34)
Net amortization of unrealized losses on securities transferred from available for sale to held to maturity		64		-		64
Net current period other comprehensive (loss)		(567)		-		(567)
Balance at June 30, 2015	$	(2,521)	$	(2,112)	$	(4,633)
Balance at December 31, 2013	$	(8,396)	$	(472)	$	(8,868)
Other comprehensive income before reclassification and amortization		4,364		-		4,364
Reclassification adjustment for gains included in net income		(323)		-		(323)
Net amortization of unrealized losses on securities transferred from available for sale to held to maturity		80		-		80
Net current period other comprehensive income		4,121		-		4,121
Balance at June 30, 2014	$	(4,275)	$	(472)	$	(4,747)

Available for sale securities and amortization of unrealized losses on securities

During the three and six months ended June 30, 2015 and 2014, the Company reported gains on the sale of available for sale securities and amortization of unrealized losses on securities transferred from available for sale to held to maturity as shown in the following table:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
(dollars in thousands)	2015		2014		2015		2014
Gains on sale of available for sale securities	$	26	$	109	$	51	$	489
Less: tax effect		(8)		(37)		(17)		(166)
Net gains on the sale of available for sale securities	$	18	$	72	$	34	$	323
Amortization of unrealized losses on securities transferred from available for sale to held to maturity	$	(57)	$	(78)	$	(97)	$	(121)
Less: tax effect		19		26		33		41
Net amortization of unrealized losses on securities transferred from available for sale to held to maturity	$	(38)	$	(52)	$	(64)	$	(80)

XML

Fair Value Measurements

6 Months Ended

Jun. 30, 2015

Fair Value Measurements

Note 11. Fair Value Measurements

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. U.S. GAAP requires that valuation techniques maximize the use of observable inputs and minimize the use of unobservable inputs. U.S. GAAP also establishes a fair value hierarchy which prioritizes the valuation inputs into three broad levels. Based on the underlying inputs, each fair value measurement in its entirety is reported in one of the three levels. These levels are:

· Level 1 – Valuation is based upon quoted prices (unadjusted) for identical instruments traded in active markets.

· Level 2 – Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

· Level 3 – Valuation is determined using model-based techniques with significant assumptions not observable in the market.

U.S. GAAP allows an entity the irrevocable option to elect fair value (the fair value option) for the initial and subsequent measurement for certain financial assets and liabilities on a contract-by-contract basis. The Company has not made any fair value option elections as of June 30, 2015.

Following is a description of the valuation methodologies used for instruments measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy.

Assets Measured at Fair Value on a Recurring Basis

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. Third party vendors compile prices from various sources and may determine the fair value of identical or similar securities by using pricing models that consider observable market data (Level 2). In certain cases where there is limited activity or less transparency around inputs to the valuation, securities are classified within Level 3 of the valuation hierarchy. Currently, all of the Company’s available for sale securities are considered to be Level 2 securities.

The following table summarizes financial assets measured at fair value on a recurring basis as of June 30, 2015 and December 31, 2014, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:

Assets Measured at Fair Value on a Recurring Basis at June 30, 2015 Using
	Quoted Prices in		Significant Other		Significant
	Active Markets for		Observable		Unobservable		Balance at
	Identical Assets		Inputs		Inputs		June 30,
(dollars in thousands)	(Level 1)		(Level 2)		(Level 3)		2015
Assets
Securities available for sale
Obligations of U.S. Government agencies	$	-	$	13,081	$	-	$	13,081
SBA Pool securities		-		71,007		-		71,007
Agency residential mortgage-backed securities		-		19,400		-		19,400
Agency commercial mortgage-backed securities		-		6,487		-		6,487
Agency CMO securities		-		53,154		-		53,154
Non agency CMO securities		-		704		-		704
State and political subdivisions		-		64,090		-		64,090
FNMA and FHLMC preferred stock		-		9		-		9
Total securities available for sale	$	-	$	227,932	$	-	$	227,932

Assets Measured at Fair Value on a Recurring Basis at December 31, 2014 Using
	Quoted Prices in		Significant Other		Significant
	Active Markets for		Observable		Unobservable		Balance at
	Identical Assets		Inputs		Inputs		December 31,
(dollars in thousands)	(Level 1)		(Level 2)		(Level 3)		2014
Assets
Securities available for sale
Obligations of U.S. Government agencies	$	-	$	14,569	$	-	$	14,569
SBA Pool securities		-		74,799		-		74,799
Agency residential mortgage-backed securities		-		28,629		-		28,629
Agency CMO securities		-		39,215		-		39,215
Non agency CMO securities		-		828		-		828
State and political subdivisions		-		55,926		-		55,926
FNMA and FHLMC preferred stock		-		45		-		45
Total securities available for sale	$	-	$	214,011	$	-	$	214,011

Assets Measured at Fair Value on a Non-Recurring Basis

Certain assets are measured at fair value on a non-recurring basis in accordance with U.S. GAAP. These adjustments to fair value usually result from the application of fair value accounting or impairment write-downs of individual assets.

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 agreement will not be collected when due. 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 collateral is real estate. The value of real estate collateral is determined utilizing an income or market valuation approach based on an appraisal conducted by an independent, licensed appraiser outside of the Company using observable market data (Level 2). However, if the collateral value is significantly adjusted due to differences in the comparable properties, or is discounted by the Company because of marketability, then the fair value is considered Level 3.

The value of business equipment is based upon an outside appraisal if deemed significant, or the net book value on the applicable business’ financial statements if not considered significant. 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 non-recurring 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. Other real estate owned (“OREO”) is measured at fair value less cost to sell, based on an appraisal conducted by an independent, licensed appraiser outside of the Company using observable market data (Level 2). If the collateral value is significantly adjusted due to differences in the comparable properties, or is discounted by the Company because of marketability, then the fair value is considered Level 3. OREO is measured at fair value on a non-recurring basis. Any initial fair value adjustment is charged against the allowance for loan losses. Subsequent fair value adjustments are recorded in the period incurred and included in other noninterest expense on the consolidated statements of income.

The following table summarizes assets measured at fair value on a non-recurring basis as of June 30, 2015 and December 31, 2014, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:

Assets Measured at Fair Value on a Non-Recurring Basis at June 30, 2015 Using
	Quoted Prices in		Significant Other		Significant
	Active Markets for		Observable		Unobservable		Balance at
	Identical Assets		Inputs		Inputs		June 30,
	(Level 1)		(Level 2)		(Level 3)		2015
	(dollars in thousands)
Assets
Impaired loans	$	-	$	-	$	14,338	$	14,338
Other real estate owned	$	-	$	-	$	1,344	$	1,344

Assets Measured at Fair Value on a Non-Recurring Basis at December 31, 2014 Using
	Quoted Prices in		Significant Other		Significant
	Active Markets for		Observable		Unobservable		Balance at
	Identical Assets		Inputs		Inputs		December 31,
	(Level 1)		(Level 2)		(Level 3)		2014
	(dollars in thousands)
Assets
Impaired loans	$	-	$	-	$	17,852	$	17,852
Other real estate owned	$	-	$	-	$	1,838	$	1,838

The following table displays quantitative information about Level 3 Fair Value Measurements as of June 30, 2015 and December 31, 2014:

Quantitative information about Level 3 Fair Value Measurements at June 30, 2015
(dollars in thousands)	Fair Value		Valuation Technique(s)	Unobservable Input	Range (Weighted Average)
Assets
Impaired loans	$	14,338	Discounted appraised value	Selling cost	0% - 24% (12%)
				Discount for lack of marketability and age of appraisal	0% - 25% (9%)
Other real estate owned	$	1,344	Discounted appraised value	Selling cost	10% (10%)
				Discount for lack of marketability and age of appraisal	0% -34% (29%)

Quantitative information about Level 3 Fair Value Measurements at December 31, 2014
(dollars in thousands)	Fair Value		Valuation Technique(s)	Unobservable Input	Range (Weighted Average)
Assets
Impaired loans	$	17,852	Discounted appraised value	Selling cost	0% - 30% (9%)
				Discount for lack of marketability and age of appraisal	0% - 35% (13%)
Other real estate owned	$	1,838	Discounted appraised value	Selling cost	10% (10%)
				Discount for lack of marketability and age of appraisal	0% - 22% (2%)

Fair Value of Financial Instruments

U.S. GAAP requires disclosure of the fair value of financial assets and financial liabilities, including those financial assets and financial liabilities that are not measured and reported at fair value on a recurring basis or non-recurring basis. The methodologies and assumptions for estimating the fair value of financial assets and financial liabilities that are measured at fair value on a recurring or non-recurring basis are discussed above. The methodologies and assumptions for other financial assets and financial liabilities are discussed below:

Cash and Short-Term Investments. For those short-term instruments, the carrying amount is a reasonable estimate of fair value.

Investment Securities. For securities and marketable equity securities held for investment purposes, fair values are based on quoted market prices or dealer quotes. For other securities held as investments, fair value equals quoted market price, if available. If a quoted market price is not available, fair value is estimated using quoted prices for similar securities. All securities prices are provided by independent third party vendors. 

Restricted Securities. The carrying amount approximates fair value based on the redemption provisions of the correspondent banks.

Loans. The fair value of performing loans is estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar remaining maturities. This calculation ignores loan fees and certain factors affecting the interest rates charged on various loans such as the borrower’s creditworthiness and compensating balances and dissimilar types of real estate held as collateral. The fair value of impaired loans is measured as described within the Impaired Loans section of this note. 

Bank Owned Life Insurance. Bank owned life insurance represents insurance policies on officers of the Company. The cash values of the policies are estimated using information provided by insurance carriers. The policies are carried at their cash surrender value, which approximates fair value.

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 fixed maturity certificates of deposit is estimated using market rates for deposits of similar remaining maturities.

Short-Term Borrowings. The carrying amounts of federal funds purchased and other short-term borrowings maturing within 90 days approximate their fair values. Fair values of other short-term borrowings are estimated using discounted cash flow analyses based on the current incremental borrowing rates for similar types of borrowing arrangements.

Long-Term Borrowings. The fair values of the Company’s long-term borrowings are estimated using discounted cash flow analyses based on the Company’s current incremental borrowing rates for similar types of borrowing arrangements.

Accrued Interest Receivable and Accrued Interest Payable. The carrying amounts of accrued interest approximate fair value.

Off-Balance Sheet Financial Instruments. The fair value of commitments to extend credit is estimated using the fees currently charged to enter similar agreements, taking into account the remaining terms of the agreements and the present credit worthiness 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 standby letters of credit is based on fees currently charged for similar agreements or on the estimated cost to terminate them or otherwise settle the obligations with the counterparties at the reporting date. The fair value of guarantees of credit card accounts previously sold is based on the estimated cost to settle the obligations with the counterparty at the reporting date. At June 30, 2015 and December 31, 2014, the fair value of loan commitments, standby letters of credit and credit card guarantees are not significant and are not included in the table below.

The estimated fair value and the carrying value of the Company’s recorded financial instruments are as follows:

			Fair Value Measurements at June 30, 2015 Using
			Quoted Prices in		Significant Other		Significant
			Active Markets for		Observable		Unobservable		Balance at
			Identical Assets		Inputs		Inputs		June 30,
(dollars in thousands)	Carrying Amount		(Level 1)		(Level 2)		(Level 3)		2015
Assets:
Cash and short-term investments	$	14,416	$	14,416	$	-	$	-	$	14,416
Interest bearing deposits with banks		6,467		6,467		-		-		6,467
Securities available for sale		227,932		-		227,932		-		227,932
Securities held to maturity		30,671		-		31,542		-		31,542
Restricted securities		8,118		-		8,118		-		8,118
Loans, net		828,423		-		-		831,604		831,604
Bank owned life insurance		24,786		-		24,786		-		24,786
Accrued interest receivable		3,990		-		3,990		-		3,990
Total	$	1,144,803	$	20,883	$	296,368	$	831,604	$	1,148,855
Liabilities:
Noninterest-bearing demand deposits	$	178,844	$	178,844	$	-	$	-	$	178,844
Interest-bearing deposits		778,378		-		729,618		-		729,618
Short-term borrowings		103,094		103,094		-		-		103,094
Junior subordinated debt		10,310		-		10,310		-		10,310
Senior subordinated debt		19,140		-		19,359		-		19,359
Accrued interest payable		530		-		530		-		530
Total	$	1,090,296	$	281,938	$	759,817	$	-	$	1,041,755

			Fair Value Measurements at December 31, 2014 Using
			Quoted Prices in		Significant Other		Significant
			Active Markets for		Observable		Unobservable		Balance at
			Identical Assets		Inputs		Inputs		December 31,
(dollars in thousands)	Carrying Amount		(Level 1)		(Level 2)		(Level 3)		2014
Assets:
Cash and short-term investments	$	14,024	$	14,024	$	-	$	-	$	14,024
Interest bearing deposits with banks		5,272		5,272		-		-		5,272
Securities available for sale		214,011		-		214,011		-		214,011
Securities held to maturity		32,163		-		33,367		-		33,367
Restricted securities		7,533		-		7,533		-		7,533
Loans, net		807,548		-		-		812,429		812,429
Bank owned life insurance		24,463		-		24,463		-		24,463
Accrued interest receivable		4,013		-		4,013		-		4,013
Total	$	1,109,027	$	19,296	$	283,387	$	812,429	$	1,115,112
Liabilities:
Noninterest-bearing demand deposits	$	162,328	$	162,328	$	-	$	-	$	162,328
Interest-bearing deposits		776,926		-		721,240		-		721,240
Short-term borrowings		91,703		91,703		-		-		91,703
Junior subordinated debt		10,310		-		10,310		-		10,310
Accrued interest payable		316		-		316		-		316
Total	$	1,041,583	$	254,031	$	731,866	$	-	$	985,897

The Company assumes interest rate risk (the risk that general interest rate levels will change) as a result of the Company’s 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. The Company 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. 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. The Company 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.