10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For The Quarterly Period Ended September 30, 2014

OR

[  ] TRANSITION REPORT PURSANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For The Transition Period From ____________To_____________.

Commission File number 0-11733

CITY HOLDING COMPANY

(Exact name of registrant as specified in its charter)

West Virginia	55-0619957
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
25 Gatewater Road
Charleston, West Virginia	25313
(Address of principal executive offices)	(Zip Code)

(304) 769-1100

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant has (1) 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 definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer [   ]	Accelerated filer [X]
Non-accelerated filer [   ]	Smaller reporting company [   ]

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

Yes [   ] No [X]

1

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practical date.

Common stock, $2.50 Par Value – 15,217,692 shares as of November 4, 2014.

2

FORWARD-LOOKING STATEMENTS

All statements other than statements of historical fact included in this Quarterly Report on Form 10-Q, including statements in Management’s Discussion and Analysis of Financial Condition and Result of Operations are, or may be deemed to be, forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such information involves risks and uncertainties that could result in the Company’s actual results differing from those projected in the forward-looking statements. Important factors that could cause actual results to differ materially from those discussed in such forward-looking statements include, but are not limited to:  (1) the Company may incur additional loan loss provision due to negative credit quality trends in the future that may lead to a deterioration of asset quality; (2) the Company may incur increased charge-offs in the future; (3)  the Company could have adverse legal actions of a material nature; (4) the Company may face competitive loss of customers; (5) the Company may be unable to manage its expense levels; (6) the Company may have difficulty retaining key employees; (7) changes in the interest rate environment may have results on the Company’s operations materially different from those anticipated by the Company’s market risk management functions; (8) changes in general economic conditions and increased competition could adversely affect the Company’s operating results; (9) changes in other regulations and government policies affecting bank holding companies and their subsidiaries, including changes in monetary policies, could negatively impact the Company’s operating results; (10) the Company may experience difficulties growing loan and deposit balances; (11) the current economic environment poses significant challenges for us and could adversely affect the Company's financial condition and results of operations; (12) deterioration in the financial condition of the U.S. banking system may impact the valuations of investments the Company has made in securities of other financial institutions resulting in either actual losses or other than temporary impairments on such investments; and (13) the effects of the Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act") and the regulations promulgated and to be promulgated thereunder, which may subject the Company and its subsidiaries to a variety of new and more stringent legal and regulatory requirements which adversely affect their respective businesses. Forward-looking statements made herein reflect management’s expectations as of the date such statements are made. Such information is provided to assist stockholders and potential investors in understanding current and anticipated financial operations of the Company and is included pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances that arise after the date such statements are made.

3

City Holding Company and Subsidiaries

PART I	Financial Information	Pages
Item 1.	Financial Statements (Unaudited).	5
	Consolidated Balance Sheets	5
	Consolidated Statements of Income	7
	Consolidated Statements of Comprehensive Income	9
	Consolidated Statements of Changes in Shareholders’ Equity	10
	Consolidated Statements of Cash Flows	11
	Notes to Consolidated Financial Statements	12
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	41
Item 3.	Quantitative and Qualitative Disclosures about Market Risk.	57
Item 4.	Controls and Procedures.	57
PART II	Other Information
Item 1.	Legal Proceedings.	58
Item 1A.	Risk Factors.	58
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	58
Item 3.	Defaults Upon Senior Securities.	58
Item 4.	Mine Safety Disclosures.	58
Item 5.	Other Information.	58
Item 6.	Exhibits.	58
Signatures		58

4

Part I - Financial Information

Item 1 - Financial Statements

Consolidated Balance Sheets

City Holding Company and Subsidiaries

(in thousands)

Assets	September 30, 2014			December 31, 2013
	(Unaudited)
Cash and due from banks	$	79,836		$	75,999
Interest-bearing deposits in depository institutions	11,656			9,877
Cash and Cash Equivalents	91,492			85,876
Investment securities available for sale, at fair value	250,481			352,660
Investment securities held-to-maturity, at amortized cost (approximate fair value at September 30, 2014 and December 31, 2013, - $95,343 and $5,335, respectively)	93,089			4,117
Other securities	14,234			13,343
Total Investment Securities	357,804			370,120
Gross loans	2,630,742			2,606,197
Allowance for loan losses	(20,487		)	(20,575		)
Net Loans	2,610,255			2,585,622
Bank owned life insurance	94,338			92,047
Premises and equipment, net	78,999			82,548
Accrued interest receivable	7,751			6,866
Net deferred tax asset	36,654			42,165
Goodwill and other intangible assets	74,434			75,142
Other assets	33,580			27,852
Total Assets	$	3,385,307		$	3,368,238
Liabilities
Deposits:
Noninterest-bearing	$	498,491		$	493,228
Interest-bearing:
Demand deposits	620,880			601,527
Savings deposits	640,009			612,772
Time deposits	1,034,015			1,077,606
Total Deposits	2,793,395			2,785,133
Short-term borrowings:
Customer repurchase agreements	146,115			137,798
Long-term debt	16,495			16,495
Other liabilities	37,629			41,189
Total Liabilities	2,993,634			2,980,615
Shareholders’ Equity
Preferred stock, par value $25 per share: 500,000 shares authorized; none issued	—			—
Common stock, par value $2.50 per share: 50,000,000 shares authorized; 18,499,282 shares issued at September 30, 2014 and December 31, 2013, less 3,152,647 and 2,748,922 shares in treasury, respectively	46,249			46,249

5

Capital surplus	107,062			107,596
Retained earnings	353,721			333,970
Cost of common stock in treasury	(112,438		)	(95,202		)
Accumulated other comprehensive income (loss):
Unrealized loss on securities available-for-sale	(41		)	(2,110		)
Underfunded pension liability	(2,880		)	(2,880		)
Total Accumulated Other Comprehensive Loss	(2,921		)	(4,990		)
Total Shareholders’ Equity	391,673			387,623
Total Liabilities and Shareholders’ Equity	$	3,385,307		$	3,368,238

See notes to consolidated financial statements.

6

Consolidated Statements of Income(Unaudited)

City Holding Company and Subsidiaries

(in thousands, except earnings per share data)

Interest Income	Three months ended September 30,					Nine months ended September 30,
	2014		2013			2014		2013
Interest and fees on loans	$	29,292	$	32,983		$	87,647	$	94,693
Interest and dividends on investment securities:
Taxable	2,864		2,392			8,797		7,774
Tax-exempt	282		299			840		935
Interest on federal funds sold	—		—			—		22
Total Interest Income	32,438		35,674			97,284		103,424
Interest Expense
Interest on deposits	2,730		3,068			8,220		9,490
Interest on short-term borrowings	86		82			246		232
Interest on long-term debt	152		154			453		464
Total Interest Expense	2,968		3,304			8,919		10,186
Net Interest Income	29,470		32,370			88,365		93,238
Provision for loan losses	1,872		1,154			3,670		4,903
Net Interest Income After Provision for Loan Losses	27,598		31,216			84,695		88,335
Non-interest Income
Gains on sale of investment securities	71		—			972		93
Service charges	6,934		7,169			19,833		20,601
Bankcard revenue	3,796		3,468			11,319		10,117
Insurance commissions	1,396		1,365			4,740		4,563
Trust and investment management fee income	1,103		939			3,251		2,893
Bank owned  life insurance	771		805			2,292		2,416
Other income	538		734			1,646		2,376
Total Non-interest Income	14,609		14,480			44,053		43,059
Non-interest Expense
Salaries and employee benefits	13,144		12,930			39,260		38,519
Occupancy and equipment	2,531		2,409			7,541		7,381
Depreciation	1,542		1,437			4,553		4,289
FDIC insurance expense	432		500			1,199		1,352
Advertising	799		712			2,548		2,266
Bankcard expenses	843		680			2,482		2,173
Postage, delivery, and statement mailings	557		541			1,662		1,698
Office supplies	405		416			1,235		1,320
Legal and professional fees	476		591			1,497		1,561
Telecommunications	510		721			1,354		1,631
Repossessed asset losses, net of expenses	31		896			552		718
Merger related costs	—		(150		)	—		5,455
Other expenses	3,055		2,982			8,123		9,664
Total Non-interest Expense	24,325		24,665			72,006		78,027
Income Before Income Taxes	17,882		21,031			56,742		53,367
Income tax expense	6,010		7,056			18,310		18,398

7

Net Income Available to Common Shareholders	$	11,872	$	13,975	$	38,432	$	34,969
Total comprehensive income	$	11,460	$	13,342	$	40,501	$	30,217
Average common shares outstanding	15,363		15,608		15,509		15,545
Effect of dilutive securities:
Employee stock awards and warrant outstanding	82		182		85		168
Shares for diluted earnings per share	15,445		15,790		15,594		15,713
Basic earnings per common share	$	0.76	$	0.89	$	2.45	$	2.23
Diluted earnings per common share	$	0.76	$	0.88	$	2.44	$	2.21
Dividends declared per common share	$	0.40	$	0.37	$	1.20	$	1.11

See notes to consolidated financial statements.

8

Consolidated Statements of Comprehensive Income(Unaudited)

City Holding Company and Subsidiaries

(in thousands)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2014			2013			2014			2013
Net income	$	11,872		$	13,975		$	38,432		$	34,969
Unrealized gains (losses) on available-for-sale securities arising during the period	(582		)	(1,004		)	4,252			(7,438		)
Reclassification adjustment for gains	(71		)	—			(972		)	(93		)
Other comprehensive income (loss) before income taxes	(653		)	(1,004		)	3,280			(7,531		)
Tax effect	241			371			(1,211		)	2,779
Other comprehensive income (loss), net of tax	(412		)	(633		)	2,069			(4,752		)
Comprehensive income, net of tax	$	11,460		$	13,342		$	40,501		$	30,217

See notes to consolidated financial statements.

9

Consolidated Statements of Changes in Shareholders’ Equity(Unaudited)

City Holding Company and Subsidiaries

Nine Months EndedSeptember 30, 2014 and 2013

(in thousands)

	Common Stock		Capital Surplus			Retained Earnings			Treasury Stock			Accumulated Other Comprehensive Income (Loss)			Total Shareholders’ Equity
Balance at December 31, 2012	$	46,249	$	103,524		$	309,270		$	(124,347	)	(1,422		)	$	333,274
Net income						34,969									34,969
Other comprehensive loss												(4,752		)	(4,752		)
Acquisition of Community Financial Corporation			4,236						24,272						28,508
Cash dividends declared ($1.11 per share)						(17,686		)							(17,686		)
Stock-based compensation expense, net			(315		)				1,278						963
Exercise of 107,140 stock options			(170		)				2,936						2,766
Balance at September 30, 2013	$	46,249	$	107,275		$	326,553		$	(95,861	)	$	(6,174	)	$	378,042

	Common Stock	Capital Surplus			Retained Earnings			Treasury Stock		Accumulated Other Comprehensive Income (Loss)			Total Shareholders’ Equity
Balance at December 31, 2013	46,249	$	107,596		$	333,970		(95,202	)	$	(4,990	)	$	387,623
Net income					38,432								38,432
Other comprehensive income										2,069			2,069
Cash dividends declared ($1.20 per share)					(18,681		)						(18,681		)
Stock-based compensation expense, net		(262		)				1,472					1,210
Exercise of 19,000 stock options		(272		)				825					553
Purchase of 456,856 treasury shares								(19,533	)				(19,533		)
Balance at September 30, 2014	46,249	$	107,062		$	353,721		(112,438	)	$	(2,921	)	$	391,673

See notes to consolidated financial statements.

10

Consolidated Statements of Cash Flows(Unaudited)

City Holding Company and Subsidiaries

(in thousands)

	Nine months ended September 30,
	2014			2013
Net income	$	38,432		$	34,969
Adjustments to reconcile net income to net cash provided by operating activities:
Accretion and amortization	(3,889		)	(7,885		)
Provision for loan losses	3,670			4,903
Depreciation of premises and equipment	4,553			4,289
Deferred income tax expense	3,921			4,945
Net periodic employee benefit cost	393			586
Realized investment securities gains	(972		)	(93		)
Stock-compensation expense	1,210			963
Increase in value of bank-owned life insurance	(2,291		)	(2,413		)
Loans originated for sale	(4,911		)	(20,895		)
Proceeds from the sale of loans originated for sale	5,075			25,816
Gain on sale of loans	(131		)	(553		)
Change in accrued interest receivable	(885		)	(22		)
Change in other assets	(5,829		)	20,734
Change in other liabilities	(3,763		)	(6,922		)
Net Cash Provided by Operating Activities	34,583			58,422
Proceeds from sales of securities available-for-sale	1,821			18,398
Proceeds from maturities and calls of securities available-for-sale	37,071			78,671
Proceeds from maturities and calls of securities held-to-maturity	4,124			9,504
Purchases of securities available-for-sale	(17,058		)	(42,295		)
Purchases of securities held-to-maturity	(10,226		)	—
Net increase in loans	(23,454		)	(39,643		)
Purchases of premises and equipment	(1,085		)	(4,663		)
Acquisition of Community Financial Corporation, net of cash acquired of $8,888	—			(21,852		)
Net Cash Used in Investing Activities	(8,807		)	(1,880		)
Net increase in noninterest-bearing deposits	5,263			25,440
Net increase (decrease) in interest-bearing deposits	3,597			(9,360		)
Net increase in short-term borrowings	8,317			36,297
Purchases of treasury stock	(19,533		)	—
Proceeds from exercise of stock options, net of tax benefit	553			2,766
Dividends paid	(18,357		)	(17,058		)
Net Cash (Used in) Provided by Financing Activities	(20,160		)	38,085
Increase in Cash and Cash Equivalents	5,616			94,627
Cash and cash equivalents at beginning of period	85,876			84,994
Cash and Cash Equivalents at End of Period	$	91,492		$	179,621

See notes to consolidated financial statements.

11

Notes to Consolidated Financial Statements (Unaudited)

September 30, 2014

Note A –Background and Basis of Presentation

City Holding Company is a financial holding company headquartered in Charleston, West Virginia and conducts its principal activities through its wholly-owned subsidiary, City National Bank of West Virginia ("City National"). City National operates a network of 82 branch offices primarily along the I-64 corridor from Grayson, Kentucky through Lexington, Virginia; and along the I-81 corridor through the Shenandoah Valley from Staunton, Virginia to Martinsburg, West Virginia. City's branch network includes 57 offices in West Virginia, 14 offices in Virginia, 8 offices in Kentucky and 3 offices in Ohio. City National provides credit, deposit, investment advisory and insurance products and services to a broad geographical area that includes many rural and small community markets in addition to larger cities such as Charleston (WV), Huntington (WV), Winchester (VA), Staunton (VA), Virginia Beach (VA), Ashland (KY) and Martinsburg (WV). In addition to its branch network, the bank's delivery channels include ATMs, mobile banking, on-line banking, debit cards, cash management tools and telephone banking systems.

The accompanying consolidated financial statements, which are unaudited, include all of the accounts of the City Holding Company and its wholly-owned subsidiaries (collectively, “the Company”). All material intercompany transactions have been eliminated. The consolidated financial statements include all adjustments that, in the opinion of management, are necessary for a fair presentation of the results of operations and financial condition for each of the periods presented. Such adjustments are of a normal recurring nature. The results of operations for nine months endedSeptember 30, 2014 are not necessarily indicative of the results of operations that can be expected for the year ending December 31, 2014. The Company’s accounting and reporting policies conform with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Such policies require management to make estimates and develop assumptions that affect the amounts reported in the consolidated financial statements and related footnotes. Actual results could differ from management’s estimates.

The consolidated balance sheet as of December 31, 2013 has been derived from audited financial statements included in the Company’s 2013 Annual Report to Shareholders.  Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with U.S. generally accepted accounting principles have been omitted.  These financial statements should be read in conjunction with the financial statements and notes thereto included in the 2013 Annual Report of the Company.

Certain amounts in the financial statements have been reclassified.  Such reclassifications had no impact on shareholders’ equity or net income for any period.

Note B - Recent Accounting Pronouncements

In January 2014, the FASB issued ASU No. 2014-01, "Investments - Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Qualified Affordable Housing Projects." This ASU permits 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). For those investments in qualified affordable housing projects not accounted for using the proportional amortization method, the investment should be accounted for as an equity method investment or a cost method investment. The ASU also requires reporting entities to disclose information that enable users of its financial statements to understand the nature of its investments in qualified affordable housing projects, and the effect of the measurement of its investments in qualified affordable housing projects and the related tax credits on its financial position and results of operations. This ASU will become effective for the Company on January 1, 2015. The adoption of ASU 2014-01 is not expected to have a material impact on the Company's financial statements.

In January 2014, the FASB issued ASU No. 2014-04, "Receivables - Troubled Debt Restructurings by Creditors (Subtopic 310-40): Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure." This ASU clarifies 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 similar legal agreement. Additionally, the amendments require interim and annual disclosures 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

12

requirements of the applicable jurisdiction. This ASU will become effective for the Company on January 1, 2015. The adoption of ASU 2014-04 is not expected to have a material impact on the Company's financial statements.

In April 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No 2014-08, "Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity" This ASU changes the requirements for reporting discontinued operations. A disposal of a component or a group of components of an entity is required to be reported in discontinued operations if the disposal represents a strategic shift that has (or will have) a major effect on an entity’s operations when certain criteria are met. Additional disclosures are also required for disposals that meet the criteria to be reported in discontinued operations. This ASU will become effective for the Company on January 1, 2015. The adoption of ASU 2014-08 is not expected to have a material impact on the Company's financial statements.

In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No 2014-09, "Revenue from Contracts with Customers (Topic 606)". 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. The core principle will be achieved using a five step process. This ASU will become effective for the Company on January 1, 2016. The adoption of ASU 2014-09 is not expected to have a material impact on the Company's financial statements.

In June 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No 2014-11, "Transfers and Servicing (Topic 860): Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures". The amendments in this update require two accounting changes. First, the amendments in this update change the accounting for repurchase-to-maturity transactions to secured borrowing accounting. Second, for repurchase financing arrangements, the amendments require separate accounting for a transfer of a financial asset executed contemporaneously with a repurchase agreement with the same counter-party, which will result in secured borrowing accounting for the repurchase agreement. This update also requires certain disclosures for these types of transactions. This ASU will become effective for the Company on January 1, 2015. The adoption of ASU 2014-11 is not expected to have a material impact on the Company's financial statements.

In June 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No 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 amendments in this update require that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. Performance targets should not be reflected in estimating the grant date fair value of the award, but compensation cost should be recognized in the period for which the requisite service has already been rendered. This ASU will become effective for the Company on January 1, 2016, with early adoption permitted. The adoption of ASU 2014-12 is not expected to have a material impact on the Company's financial statements.

In August 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No 2014-14, "Receivables - Troubled Debt Restructurings by Creditors (Subtopic 310-40): Classification of Certain Government-Guaranteed Mortgage Loans upon Foreclosure". The amendments in this update require that a mortgage loan be derecognized and that a separate other receivable be recognized upon foreclosure if certain conditions are met. This ASU will become effective for the Company on January 1, 2015. The adoption of ASU 2014-14 is not expected to have a material impact on the Company's financial statements.

Note C –Investments

The amortized cost and estimated fair values of the Company's securities are shown in the following table (in thousands):

13

	September 30, 2014								December 31, 2013
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Securities available-for-sale:
U.S. Treasuries and U.S.
government agencies	$	1,923	$	20	$	—	$	1,943	$	2,317	$	48	$	—	$	2,365
Obligations of states and
political subdivisions	41,096		729		13		41,812		41,027		627		106		41,548
Mortgage-backed securities:
U.S. government agencies	183,470		2,950		3,123		183,297		282,653		2,765		7,310		278,108
Private label	1,767		11		—		1,778		2,184		16		3		2,197
Trust preferred
securities	10,164		300		1,648		8,816		12,943		2,113		1,900		13,156
Corporate securities	7,802		203		375		7,630		9,788		183		843		9,128
Total Debt Securities	246,222		4,213		5,159		245,276		350,912		5,752		10,162		346,502
Marketable equity  securities	2,447		1,250		—		3,697		3,334		1,339		—		4,673
Investment funds	1,525		—		17		1,508		1,525		—		40		1,485
Total Securities
Available-for-Sale	$	250,194	$	5,463	$	5,176	$	250,481	$	355,771	$	7,091	$	10,202	$	352,660

	September 30, 2014								December 31, 2013
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Securities held-to-maturity
Mortgage-backed securities
US government agencies	$	89,193	$	1,443	$	—	$	90,636	$	—	$	—	$	—	$	—
Trust preferred securities	3,896		811		—		4,707		4,117		1,218		—		5,335
Total Securities
Held-to-Maturity	$	93,089	$	2,254	$	—	$	95,343	$	4,117	$	1,218	$	—	$	5,335
Other investment securities:
Non-marketable equity securities	$	14,234	$	—	$	—	$	14,234	$	13,343	$	—	$	—	$	13,343
Total Other Investment
Securities	$	14,234	$	—	$	—	$	14,234	$	13,343	$	—	$	—	$	13,343

Securities with limited marketability, such as stock in the Federal Reserve Bank or the Federal Home Loan Bank, are carried at cost and are reported as non-marketable equity securities in the table above.

Certain investment securities owned by the Company were in an unrealized loss position (i.e., amortized cost basis exceeded the estimated fair value of the securities).  The following table shows the gross unrealized losses and fair value of the Company’s investments aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position (in thousands):

14

	September 30, 2014
	Less Than Twelve Months				Twelve Months or Greater				Total
	Estimated Fair Value		Unrealized Loss		Estimated Fair Value		Unrealized Loss		Estimated Fair Value		Unrealized Loss
Securities available-for-sale:
Obligations of states and political subdivisions	$	1,641	$	3	$	445	$	10	$	2,086	$	13
Mortgage-backed securities:
U.S. Government agencies	22,774		341		80,798		2,782		103,572		3,123
Trust preferred securities	368		144		4,805		1,504		5,173		1,648
Corporate securities	—		—		4,363		375		4,363		375
Investment funds	—		—		1,483		17		1,483		17
Total	$	24,783	$	488	$	91,894	$	4,688	$	116,677	$	5,176

	December 31, 2013
	Less Than Twelve Months				Twelve Months or Greater				Total
	Estimated Fair Value		Unrealized Loss		Estimated Fair Value		Unrealized Loss		Estimated Fair Value		Unrealized Loss
Securities available-for-sale:
Obligations of states and political subdivisions	$	5,600	$	87	$	243	$	19	$	5,843	$	106
Mortgage-backed securities:
U.S. Government agencies	195,661		7,113		5,040		197		200,701		7,310
Private label	1,491		3		—		—		1,491		3
Trust preferred securities	—		—		4,400		1,900		4,400		1,900
Corporate securities	5,881		843		—		—		5,881		843
Investment funds	$	1,460	$	40	$	—	$	—	1,460		40
Total	$	210,093	$	8,086	$	9,683	$	2,116	$	219,776	$	10,202

Marketable equity securities consist of investments made by the Company in equity positions of various regional community bank holding companies, with ownership positions ranging from nominal to a 4% ownership position in First National Corporation (FXNC).

During the nine months ended September 30, 2014 and 2013, the Company had no credit-related net investment impairment losses. Also, for the year ended December 31, 2013, the Company had no credit-related net investment impairment losses.

Declines in the fair value of held-to-maturity and available-for-sale securities below their cost that are deemed to be other-than-temporary would be reflected in earnings as realized losses.  In estimating other-than-temporary impairment losses, management considers, among other things (i) the length of time and the extent to which the fair value has been less than cost, (ii) the financial condition, capital strength, and near-term (12 months) prospects of the issuer, including any specific events which may influence the operations of the issuer such as changes in technology that may impair the earnings potential of the investment or the discontinuance of a segment of the business that may affect the future earnings potential; (iii) the historical volatility in the market value of the investment and/or the liquidity or illiquidity of the investment; (iv) adverse conditions specifically related to the security, an industry, or a geographic area; or (v) the intent to sell the investment security and if it’s more likely than not that the Company will not have to sell the security before recovery of its cost basis.  In addition, management also employs a continuous monitoring process in regards to its marketable equity securities, specifically its portfolio of regional community bank holding company stocks.  Although the regional community bank holding company stocks that are owned by the Company are publicly traded, the trading activity for these stocks is minimal, with trading volumes of less than 0.2% of each respective company being traded on a daily basis.  As part of management’s review process for these securities, management reviews the financial condition of each respective regional community bank for any indications of financial weakness.

Management has the ability and intent to hold the securities classified as held to maturity until they mature, at which time the Company will receive full value for the securities.  Furthermore, as of September 30, 2014, management does not intend to sell an impaired security and it is not more than likely that it will be required to sell the security before the recovery of its amortized cost basis.  The unrealized losses on debt securities are primarily the result of interest rate changes, credit spread widening on agency-issued mortgage related securities, general financial market uncertainty and market volatility.  These conditions will not prohibit the Company from receiving its contractual principal and interest payments on its debt securities.  The fair value is expected to recover as the securities approach their maturity date or repricing date.   As of September 30, 2014, management believes the

15

unrealized losses detailed in the table above are temporary and no impairment loss has been recognized in the Company’s consolidated income statement.  Should the impairment of any of these securities become other-than-temporary, the cost basis of the investment will be reduced and the resulting loss recognized in net income in the period of the other-than-temporary impairment is identified, while any noncredit loss will be recognized in other comprehensive income.

At September 30, 2014, the book value of the Company’s five pooled trust preferred securities totaled $2.5 million with an estimated fair value of $1.4 million.  All of these securities are mezzanine tranches.  Pooled trust preferred securities represent beneficial interests in securitized financial assets that the Company analyzes within the scope of ASC 320, “Investments-Debt and Equity Securities” and are evaluated quarterly for other-than-temporary-impairment (“OTTI”).  Management performs an analysis of OTTI utilizing its internal methodology as described below to estimate expected cash flows to be received in the future.  The Company reviews each of its pooled trust preferred securities to determine if an OTTI charge would be recognized in current earnings in accordance with ASC 320, “Investments-Debt and Equity Securities”.  There is a risk that collateral deterioration could cause the Company to recognize additional OTTI charges in earnings in the future.

When evaluating pooled trust preferred securities for OTTI, the Company determines a credit related portion and a noncredit related portion.  The credit related portion is recognized in earnings and represents the difference between the present value of expected future cash flows and the amortized cost basis of the security.  The noncredit related portion is recognized in other comprehensive income, and represents the difference between the book value and the fair value of the security less the amount of the credit related impairment.  The determination of whether it is probable that an adverse change in estimated cash flows has occurred is evaluated by comparing estimated cash flows to those previously projected as further described below.  The Company considers this process to be its primary evidence when determining whether credit related OTTI exists.  The results of these analyses are significantly affected by other variables such as the estimate of future cash flows, credit worthiness of the underlying issuers and determination of the likelihood of defaults of the underlying collateral.

The Company utilizes a third party model to compute the present value of expected cash flows which considers the structure and term of each of the five respective pooled trust preferred securities and the financial condition of the underlying issuers.  Specifically, the third party model details interest rates, principal balances of note classes and underlying issuers, the timing and amount of interest and principal payments of the underlying issuers, and the allocation of the payments to the note classes. The current estimate of expected cash flows is based on the most recent trustee reports and any other relevant market information including announcements of interest payment deferrals or defaults of underlying trust preferred securities. For issuing banks that have defaulted, management generally assumes no recovery. For issuing banks that have deferred its interest payments, management excludes the collateral balance associated with these banks and assumes no recoveries of such collateral balance in the future unless otherwise noted. The exclusion of such issuing banks in a current deferral position is based on such bank experiencing a certain level of financial difficulty that raises doubt about its ability to satisfy its contractual debt obligation, and accordingly, the Company excludes the associated collateral balance from its estimate of expected cash flows. Other assumptions used in the estimate of expected cash flows include expected future default rates and prepayments. Specifically, the model assumes annual prepayments of 1.0% with 100% at maturity and assumes 150 basis points of additional annual defaults from banks that are currently not in default or deferral.  In addition, the model assumes no recoveries except for one trust preferred security which assumes that one of the banks currently deferring will cure such positions.  Management compares the present value of expected cash flows to those previously projected to determine if an adverse change in cash flows has occurred. If an adverse change in cash flows has occurred, management determines the credit loss to be recognized in the current period and the portion related to noncredit factors to be recognized in other comprehensive income.

The following table presents a progression of the credit loss component of OTTI on debt and equity securities recognized in earnings during the nine months ended September 30, 2014 and for the year ended December 31, 2013 (in thousands).  The credit loss component represents the difference between the present value of expected future cash flows and the amortized cost basis of the security.  The credit component of OTTI recognized in earnings during a period is presented in two parts based upon whether the credit impairment in the current period is the first time the security was credit impaired (initial credit impairment) or if there is additional credit impairment on a security that was credit impaired in previous periods.

16

	Debt Securities		Equity Securities			Total
Balance at January 1, 2013	$	21,186	$	4,813		$	25,999
Additions:
Initial credit impairment	—		—			—
Additional credit impairment	—		—			—
Deductions:
Sold	—		(115		)	(115		)
Balance at December 31, 2013	21,186		4,698			25,884
Additions:
Initial credit impairment	—		—			—
Additional credit impairment	—		—			—
Deductions:
Sold	—		(2,251		)	(2,251		)
Balance at September 30, 2014	$	21,186	$	2,447		$	23,633

The following table presents additional information about the Company’s trust preferred securities with a credit rating of below investment grade as of September 30, 2014 (dollars in thousands):

Deal Name	Type	Class	Original Cost		Amortized Cost		Fair Value		Difference (1)		Lowest Credit Rating	# of issuers currently performing	Actual deferrals/defaults (as a % of original dollar)		Expected deferrals/defaults (as a % of remaining performing collateral)			Excess Subordination as a Percentage of Current Performing Collateral (4)
	Pooled trust preferred securities:
	Other-than-temporarily impaired
	Available for Sale:
P1	Pooled	Mezz	$	698	$	75	$	353	278		Caa1	6	19.5	%	20.0	%	(2)	65.7	%
P2	Pooled	Mezz	2,535		—		—		—		Ca	4	22.3	%	—	%	(2)	—	%
P3	Pooled	Mezz	2,962		1,419		636		(783	)	Caa3	17	22.6	%	8.2	%	(2)	43.5	%
P4	Pooled	Mezz	4,060		400		119		(281	)	Ca	9	19.2	%	7.1	%	(3)	26.9	%
P5	Pooled	Mezz	5,877		512		368		(144	)	Ca	7	19.8	%	20.0	%	(2)	62.7	%
	Held to Maturity:
P6	Pooled	Mezz	1,351		43		707		664		Caa1	6	19.5	%	20.0	%	(2)	65.7	%
P7	Pooled	Mezz	3,367		—		—		—		Ca	4	22.3	%	—	%	(2)	—	%
	Single issuer trust preferred securities
	Available for sale:
S5	Single		261		235		249		14		NR	1	—	%	—	%
	Held to Maturity:
S9	Single		4,000		4,000		4,000		—		NR	1	—	%	—	%

(1) The differences noted consist of unrealized gains (losses) recorded at September 30, 2014 and noncredit other-than-temporary impairment losses recorded subsequent to April 1, 2009 that have not been reclassified as credit losses.

(2) Performing collateral is defined as total collateral minus all collateral that has been called, is currently deferring, or currently in default. This model for this security assumes that all collateral that is currently deferring will default with a zero recovery rate. The underlying issuers can cure, thus this bond could recover at a higher percentage upon default than zero.

(3) Performing collateral is defined as total collateral minus all collateral that has been called, is currently deferring, or currently in default.  The model for this security assumes that one of the banks that is currently deferring will cure.  If additional underlying issuers cure, this bond could recover at a higher percentage.

(4) Excess subordination is defined as the additional defaults/deferrals necessary in the next reporting period to deplete the entire credit enhancement (excess interest and over-collateralization) beneath our tranche within each pool to the point that would cause a "break in yield." This amount assumes that all currently performing collateral continues to perform. A break in yield means that our security would not be expected to receive all the contractual cash flows (principal and interest) by maturity. The "percent of current performing collateral" is the ratio of the "excess subordination amount" to current performing collateral—a higher percent means there is more excess subordination to absorb additional defaults/deferrals, and the better our security is protected from loss.

The amortized cost and estimated fair value of debt securities at September 30, 2014, by contractual maturity, are shown in the following table (in thousands).  Expected maturities will differ from contractual maturities because the issuers of the securities

17

may have the right to prepay obligations without prepayment penalties.  Mortgage-backed securities have been allocated to their respective maturity groupings based on their contractual maturity.

	Amortized Cost		Estimated Fair Value
Securities Available-for-Sale
Due in one year or less	$	8,246	$	8,289
Due after one year through five years	19,515		20,162
Due after five years through ten years	27,059		27,672
Due after ten years	191,402		189,153
	$	246,222	$	245,276
Securities Held-to-Maturity
Due in one year or less	$	—
Due after one year through five years	—
Due after five years through ten years	—
Due after ten years	93,089		95,343
	$	93,089	$	95,343

Gross gains and gross losses realized by the Company from investment security transactions are summarized in the table below (in thousands). The specific identification method is used to determine the cost basis of securities sold.

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2014		2013		2014		2013
Gross realized gains	$	71	$	—	$	972	$	93
Gross realized losses	—		—		—		—
Net investment security gains	$	71	$	—	$	972	$	93

The carrying value of securities pledged to secure public deposits and for other purposes as required or permitted by law approximated $272 million and $278 million at September 30, 2014 and December 31, 2013, respectively.

Statement of Cash Flows - Investing Activities - Supplemental Information

During the second quarter, the Company transferred certain securities from available-for-sale to held-to-maturity. The non-cash transfers of securities into the held-to-maturity categories from available-for-sale were made at fair value on the date of the transfer. The securities had an aggregate fair value of $83.4 million, with an aggregate net unrealized loss of $0.1 million on the date of transfer. The net unamortized, unrealized loss on the transferred securities included in accumulated other comprehensive income in the accompanying balance sheet as of September 30, 2014 totaled $0.1 million. This amount will be amortized out of accumulated other comprehensive income over the remaining life of the underlying securities as an adjustment of the yield on those securities.

18

Note D –Loans

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

	September 30, 2014			December 31, 2013
Residential real estate	$	1,274,062		$	1,204,450
Home equity – junior liens	146,965			146,090
Commercial and industrial	130,462			148,302
Commercial real estate	1,034,593			1,057,048
Consumer	41,042			46,402
DDA overdrafts	3,618			3,905
Gross loans	2,630,742			2,606,197
Allowance for loan losses	(20,487		)	(20,575		)
Net loans	$	2,610,255		$	2,585,622

Construction loans of $22.4 million and $17.3 million are included within residential real estate loans at September 30, 2014 and December 31, 2013, respectively.  Construction loans of $24.9 million and $24.0 million are included within commercial real estate loans at September 30, 2014 and December 31, 2013, respectively.  The Company’s commercial and residential real estate construction loans are primarily secured by real estate within the Company’s principal markets.  These loans were originated under the Company’s loan policy, which is focused on the risk characteristics of the loan portfolio, including construction loans.  Adequate consideration has been given to these loans in establishing the Company’s allowance for loan losses.

The following table details the loans acquired in conjunction with the Virginia Savings Bancorp, Inc. ("Virginia Savings") and Community Financial Corporation ("Community") acquisitions (in thousands):

	Virginia
	Savings		Community		Total
September 30, 2014
Outstanding loan balance	$	42,039	$	238,245	$	280,284
Credit-impaired loans:
Carrying value	2,987		15,518		18,505
Contractual principal and interest	3,481		24,147		27,628
December 31, 2013
Outstanding loan balance	$	48,833	$	279,890	$	328,723
Credit-impaired loans:
Carrying value	3,182		26,330		29,512
Contractual principal and interest	3,932		38,566		42,498

19

Changes in the accretable yield of the credit-impaired loans for the nine months ended September 30, 2014 is as follows (in thousands):

	Virginia Savings						Community						Total
				Carrying						Carrying						Carrying
	Accretable			Amount			Accretable			Amount			Accretable			Amount
	Yield			of Loans			Yield			of Loans			Yield			of Loans
Balance at the beginning of the period	$	698		$	3,182		$	10,389		$	26,330		$	11,087		$	29,512
Accretion	(213		)	213			(1,931		)	2,130			(2,144		)	2,343
Net reclassifications to accretable yield from
non-accretable yield	149			—			3,205			—			3,354			—
Payments received, net	—			(408		)	—			(12,942		)	—			(13,350		)
Disposals	(146		)	—			(1,583		)	—			(1,729		)	—
Balance at the end of period	$	488		$	2,987		$	10,080		$	15,518		$	10,568		$	18,505

Increases in expected cash flow subsequent to the acquisition are recognized first as a reduction of any previous impairment, then prospectively through adjustment of the yield on the loans or pools over its remaining life, while decreases in expected cash flows are recognized as impairment through a provision for loan loss and an increase in the allowance for purchased credit-impaired loans.

Note E – Allowance For Loan Losses

Management systematically monitors the loan portfolio and the adequacy of the allowance for loan losses on a quarterly basis to provide for probable losses inherent in the portfolio.  Management assesses the risk in each loan type based on historical trends, the general economic environment of its local markets, individual loan performance and other relevant factors.

Individual credits are selected throughout the year for detailed loan reviews, which are utilized by management to assess the risk in the portfolio and the adequacy of the allowance.  Due to the nature of commercial lending, evaluation of the adequacy of the allowance as it relates to these loan types is often based more upon specific credit reviews, with consideration given to the potential impairment of certain credits and historical loss rates, adjusted for economic conditions and other inherent risk factors.

The following table summarizes the activity in the allowance for loan loss, by portfolio segment, for the nine months ended September 30, 2014 and 2013 (in thousands).  The following table also presents the balance in the allowance for loan loss disaggregated on the basis of the Company’s impairment measurement method and the related recorded investment in loans, by portfolio segment, as of September 30, 2014 and December 31, 2013 (in thousands).

20

	Commercial &		Commercial		Residential						DDA
	Industrial		Real Estate		Real Estate		Home equity		Consumer		Overdrafts		Total
Nine months ended September 30, 2014
Allowance for loan loss
Beginning balance	$	1,139	$	10,775	$	6,057	$	1,672	$	77	$	855	$	20,575
Charge-offs	330		1,665		1,348		288		171		1,052		4,854
Recoveries	85		94		91		—		172		654		1,096
Provision	564		402		2,159		107		10		293		3,535
Provision for acquired loans	135		—		—		—		—		—		135
Ending balance	$	1,593	$	9,606	$	6,959	$	1,491	$	88	$	750	$	20,487
Nine months ended September 30, 2013
Allowance for loan loss
Beginning balance	$	498	$	10,440	$	5,229	$	1,699	$	81	$	862	$	18,809
Charge-offs	772		803		1,598		278		326		1,102		4,879
Recoveries	51		669		137		—		242		674		1,773
Provision	1,460		201		2,481		268		79		414		4,903
Ending balance	$	1,237	$	10,507	$	6,249	$	1,689	$	76	$	848	$	20,606
As of September 30, 2014
Allowance for loan loss
Evaluated for impairment:
Individually	$	—	$	247	$	—	$	—	$	—	$	—	$	247
Collectively	1,551		8,705		6,923		1,491		88		750		19,508
Acquired with deteriorated
credit quality	42		654		36		—		—		—		732
Total	$	1,593	$	9,606	$	6,959	$	1,491	$	88	$	750	$	20,487
Loans
Evaluated for impairment:
Individually	$	—	$	6,115	$	451	$	297	$	—	$	—	$	6,863
Collectively	128,726		1,014,641		1,273,230		144,241		40,918		3,618		2,605,374
Acquired with deteriorated
credit quality	1,736		13,837		381		2,427		124		—		18,505
Total	$	130,462	$	1,034,593	$	1,274,062	$	146,965	$	41,042	$	3,618	$	2,630,742
As of December 31, 2013
Allowance for loan loss
Evaluated for impairment:
Individually	$	—	$	880	$	—	$	—	$	—	$	—	$	880
Collectively	827		9,615		6,054		1,672		77		855		19,100
Acquired with deteriorated
credit quality	312		280		3		—		—		—		595
Total	$	1,139	$	10,775	$	6,057	$	1,672	$	77	$	855	$	20,575
Loans
Evaluated for impairment:
Individually	$	—	$	11,837	$	459	$	298	$	—	$	—	$	12,594
Collectively	146,318		1,020,657		1,201,894		145,025		46,292		3,905		2,564,091
Acquired with deteriorated
credit quality	1,984		24,554		2,097		767		110		—		29,512
Total	$	148,302	$	1,057,048	$	1,204,450	$	146,090	$	46,402	$	3,905	$	2,606,197

21

Credit Quality Indicators

All commercial loans within the portfolio are subject to internal risk grading.  All non-commercial loans are evaluated based on payment history.  The Company’s internal risk ratings for commercial loans are:  Pass, Special Mention, Substandard and Doubtful.  Each internal risk rating is defined in the loan policy using the following criteria:  balance sheet yields, ratios and leverage, cash flow spread and coverage, prior history, capability of management, market position/industry, potential impact of changing economic, legal, regulatory or environmental conditions, purpose, structure, collateral support, and guarantor support.  Risk grades are generally assigned by the primary lending officer and are periodically evaluated by the Company’s internal loan review process.  Based on an individual loan’s risk grade, estimated loss percentages are applied to the outstanding balance of the loan to determine the amount of probable loss.

The Company categorizes loans into risk categories based on relevant information regarding the customer’s debt service ability, capacity, overall collateral position along with other economic trends, and historical payment performance.  The risk grades for each credit are updated when the Company receives current financial information, the loan is reviewed by the Company’s internal loan review/credit administration departments, or the loan becomes delinquent or impaired.  The risk grades are updated a minimum of annually for loans rated exceptional, good, acceptable, or pass/watch.  Loans rated special mention, substandard or doubtful are reviewed at least quarterly.  The Company uses the following definitions for its risk ratings:

Risk Rating	Description
Pass ratings:
(a) Exceptional	Loans classified as exceptional are secured with liquid collateral conforming to the internal loan policy.  Loans rated within this category pose minimal risk of loss to the bank.
(b) Good	Loans classified as good have similar characteristics that include a strong balance sheet, satisfactory debt service coverage ratios, strong management and/or guarantors, and little exposure to economic cycles. Loans in this category generally have a low chance of loss to the bank.
(c) Acceptable	Loans classified as acceptable have acceptable liquidity levels, adequate debt service coverage ratios, experienced management, and have average exposure to economic cycles.  Loans within this category generally have a low risk of loss to the bank.
(d) Pass/watch	Loans classified as pass/watch have erratic levels of leverage and/or liquidity, cash flow is volatile and the borrower is subject to moderate economic risk.  A borrower in this category poses a low to moderate risk of loss to the bank.
Special mention	Loans classified as special mention have a potential weakness(es) that deserves management’s close attention.  The potential weakness could result in deterioration of the loan repayment or the bank’s credit position at some future date.  A loan rated in this category poses a moderate loss risk to the bank.
Substandard	Loans classified as substandard reflect a customer with a well defined weakness that jeopardizes the liquidation of the debt.  Loans in this category have the possibility that the bank will sustain some loss if the deficiencies are not corrected and the bank’s collateral value is weakened by the financial deterioration of the borrower.
Doubtful	Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristics that make collection of the full contract amount highly improbable.  Loans rated in this category are most likely to cause the bank to have a loss due to a collateral shortfall or a negative capital position.

22

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

	Commercial and industrial		Commercial real estate		Total
September 30, 2014
Pass	$	116,498	$	967,581	$	1,084,079
Special mention	654		19,134		19,788
Substandard	12,900		47,443		60,343
Doubtful	410		435		845
Total	$	130,462	$	1,034,593	$	1,165,055
December 31, 2013
Pass	$	141,818	$	974,368	$	1,116,186
Special mention	648		20,072		20,720
Substandard	5,416		62,139		67,555
Doubtful	420		469		889
Total	$	148,302	$	1,057,048	$	1,205,350

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

	Performing		Non-Performing		Total
September 30, 2014
Residential real estate	$	1,271,767	$	2,295	$	1,274,062
Home equity - junior lien	146,689		276		146,965
Consumer	41,001		41		41,042
DDA overdrafts	3,617		1		3,618
Total	$	1,463,074	$	2,613	$	1,465,687
December 31, 2013
Residential real estate	$	1,201,631	$	2,819	$	1,204,450
Home equity - junior lien	145,812		278		146,090
Consumer	46,353		49		46,402
DDA overdrafts	3,900		5		3,905
Total	$	1,397,696	$	3,151	$	1,400,847

Aging Analysis of Accruing and Non-Accruing Loans

Interest income on loans is accrued and credited to operations based upon the principal amount outstanding, using methods that generally result in level rates of return.  Loan origination fees, and certain direct costs, are deferred and amortized as an adjustment to the yield over the term of the loan.  The accrual of interest generally is discontinued when a loan becomes 90 days past due as to principal or interest for all loan types.  However, any loan may be placed on non-accrual if the Company receives information that indicates a borrower is unable to meet the contractual terms of their respective loan agreement.  Other indicators considered for placing a loan on non-accrual status include the borrower’s involvement in bankruptcies, foreclosures, repossessions, litigation and any other situation resulting in doubt as to whether full collection of contractual principal and interest is attainable.  When interest accruals are discontinued, unpaid interest recognized in income in the current year is reversed, and interest accrued in prior years is charged to the allowance for loan losses.  Management may elect to continue the accrual of interest when the net realizable value of collateral exceeds the principal balance and related accrued interest, and the loan is in the process of collection.

Generally for all loan classes, interest income during the period the loan is non-performing is recorded on a cash basis after recovery of principal is reasonably assured.  Cash payments received on nonperforming loans are typically applied directly against the outstanding principal balance until the loan is fully repaid.  Generally, loans are restored to accrual status when the obligation is brought current, has performed in accordance with the contractual terms for a reasonable period of time, and the ultimate collectability of the total contractual principal and interest is no longer in doubt.

23

Generally, all loan types are considered past due when the contractual terms of a loan are not met and the borrower is 30 days or more past due on a payment.  Furthermore, residential and home equity loans are generally subject to charge-off when the loan becomes 120 days past due, depending on the estimated fair value of the collateral less cost to dispose, versus the outstanding loan balance.  Commercial loans are generally charged off when the loan becomes 120 days past due.  Open-end consumer loans are generally charged off when the loan becomes 180 days past due.

A loan acquired and accounted for under ASC Topic 310-30 is reported as an accruing loan and a performing asset provided that the loan is performing in accordance with the initial expectations. The loan would be considered non-performing if the loan's performance deteriorates below the initial expectations.

The following table presents an aging analysis of the Company’s accruing and non-accruing loans, by class, as of September 30, 2014 and December 31, 2013 (in thousands):

	Originated Loans
	September 30, 2014
	Accruing
	Current		30-59 days		60-89 days		Over 90 days		Purchased-Credit Impaired		Non-accrual		Total
Residential real estate	$	1,176,782	$	4,428	$	683	$	164	$	—	$	2,131	$	1,184,188
Home equity - junior lien	143,460		590		25		136		—		127		144,338
Commercial and industrial	114,963		188		—		—		—		90		115,241
Commercial real estate	859,813		938		—		—		—		9,270		870,021
Consumer	32,994		46		12		—		—		—		33,052
DDA overdrafts	3,025		590		2		1		—		—		3,618
Total	$	2,331,037	$	6,780	$	722	$	301	$	—	$	11,618	$	2,350,458
	Acquired Loans
	September 30, 2014
	Accruing
	Current		30-59 days		60-89 days		Over 90 days		Purchased-Credit Impaired		Non-accrual		Total
Residential real estate	$	89,373	$	406	$	95	$	—	$	—	$	—	$	89,874
Home equity - junior lien	2,612		2		—		13		—		—		2,627
Commercial and industrial	13,572		3		8		86		—		1,552		15,221
Commercial real estate	157,412		1,477		85		393		1,016		4,189		164,572
Consumer	7,802		145		2		16		—		25		7,990
DDA overdrafts	—		—		—		—		—		—		—
Total	$	270,771	$	2,033	$	190	$	508	$	1,016	$	5,766	$	280,284
	Total Loans
	September 30, 2014
	Accruing
	Current		30-59 days		60-89 days		Over 90 days		Purchased-Credit Impaired		Non-accrual		Total
Residential real estate	$	1,266,155	$	4,834	$	778	$	164	$	—	$	2,131	$	1,274,062
Home equity - junior lien	146,072		592		25		149		—		127		146,965
Commercial and industrial	128,535		191		8		86		—		1,642		130,462
Commercial real estate	1,017,225		2,415		85		393		1,016		13,459		1,034,593
Consumer	40,796		191		14		16		—		25		41,042
DDA overdrafts	3,025		590		2		1		—		—		3,618
Total	$	2,601,808	$	8,813	$	912	$	809	$	1,016	$	17,384	$	2,630,742

24

	Originated Loans
	December 31, 2013
	Accruing
	Current		30-59 days		60-89 days		Over 90 days		Purchased-Credit Impaired		Non-accrual		Total
Residential real estate	$	1,096,911	$	4,123	$	495	$	231	$	—	$	1,905	$	1,103,665
Home equity - junior lien	141,967		880		—		42		—		236		143,125
Commercial and industrial	128,015		—		—		—		—		79		128,094
Commercial real estate	852,090		668		—		—		—		13,097		865,855
Consumer	32,647		172		7		4		—		—		32,830
DDA overdrafts	3,511		374		15		5		—		—		3,905
Total	$	2,255,141	$	6,217	$	517	$	282	$	—	$	15,317	$	2,277,474
	Acquired Loans
	December 31, 2013
	Accruing
	Current		30-59 days		60-89 days		Over 90 days		Purchased-Credit Impaired		Non-accrual		Total
Residential real estate	$	99,089	$	842	$	172	$	—	$	—	$	682	$	100,785
Home equity - junior lien	2,965		—		—		—		—		—		2,965
Commercial and industrial	18,253		—		80		—		—		1,875		20,208
Commercial real estate	176,018		2,772		273		109		7,534		4,487		191,193
Consumer	12,876		622		29		45		—		—		13,572
DDA overdrafts	—		—		—		—		—		—		—
Total	$	309,201	$	4,236	$	554	$	154	$	7,534	$	7,044	$	328,723
	Total Loans
	December 31, 2013
	Accruing
	Current		30-59 days		60-89 days		Over 90 days		Purchased-Credit Impaired		Non-accrual		Total
Residential real estate	$	1,196,000	$	4,965	$	667	$	231	$	—	$	2,587	$	1,204,450
Home equity - junior lien	144,932		880		—		42		—		236		146,090
Commercial and industrial	146,268		—		80		—		—		1,954		148,302
Commercial real estate	1,028,108		3,440		273		109		7,534		17,584		1,057,048
Consumer	45,523		794		36		49		—		—		46,402
DDA overdrafts	3,511		374		15		5		—		—		3,905
Total	$	2,564,342	$	10,453	$	1,071	$	436	$	7,534	$	22,361	$	2,606,197

25

The following table presents the Company’s impaired loans, by class, as of September 30, 2014 and December 31, 2013 (in thousands). The difference between the unpaid principal balance and the recorded investment generally reflects amounts that have been previously charged-off.

	September 30, 2014						December 31, 2013
			Unpaid						Unpaid
	Recorded		Principal		Related		Recorded		Principal		Related
	Investment		Balance		Allowance		Investment		Balance		Allowance
With no related allowance recorded:
Residential real estate	$	451	$	451	$	—	$	459	$	459	$	—
Home equity - junior liens	297		297		—		298		298		—
Commercial and industrial	—		—		—		—		—		—
Commercial real estate	4,718		4,718		—		8,421		8,361		—
Consumer	—		—		—		—		—		—
DDA overdrafts	—		—		—		—		—		—
Total	$	5,466	$	5,466	$	—	$	9,178	$	9,118	$	—
With an allowance recorded
Residential real estate	$	—	$	—	$	—	$	—	$	—	$	—
Home equity - junior liens	—		—		—		—		—		—
Commercial and industrial	—		—		—		—		—		—
Commercial real estate	1,397		1,397		247		3,416		3,416		880
Consumer	—		—		—		—		—		—
DDA overdrafts	—		—		—		—		—		—
Total	$	1,397	$	1,397	$	247	$	3,416	$	3,416	$	880

     The following table presents information related to the average recorded investment and interest income recognized on the Company’s impaired loans, by class (in thousands):

	For the nine months ended
	September 30, 2014				September 30, 2013
	Average		Interest		Average		Interest
	Recorded		Income		Recorded		Income
	Investment		Recognized		Investment		Recognized
With no related allowance recorded:
Residential real estate	$	453	$	—	$	464	$	—
Home equity - junior liens	297		—		297		—
Commercial and industrial	—		—		—		—
Commercial real estate	7,329		4		9,200		24
Consumer	—		—		—		—
DDA overdrafts	—		—		—		—
Total	$	8,079	$	4	$	9,961	$	24
With an allowance recorded
Residential real estate	$	—	$	—	$	—	$	—
Home equity - junior liens	—		—		—		—
Commercial and industrial	—		—		—		—
Commercial real estate	1,837		30		3,277		—
Consumer	—		—		—		—
DDA overdrafts	—		—		—		—
Total	$	1,837	$	30	$	3,277	$	—

26

     Approximately $0.3 million and $0.4 million of interest income would have been recognized during the nine months ended September 30, 2014 and 2013, if such loans had been current in accordance with their original terms.  There were no commitments to provide additional funds on non-accrual, impaired or other potential problem loans at September 30, 2014.

Loan Modifications

The Company’s policy on loan modifications typically does not allow for modifications that would be considered a concession from the Company.  However, when there is a modification, the Company evaluates each modification to determine if the modification constitutes a troubled debt restructuring (“TDR”) in accordance with ASU 2011-2, whereby a modification of a loan would be considered a TDR when both of the following conditions are met: (1) a borrower is experiencing financial difficulty and (2) the modification constitutes a concession.  When determining whether the borrower is experiencing financial difficulties, the Company reviews whether the debtor is currently in payment default on any of its debt or whether it is probable that the debtor would be in payment default in the foreseeable future without the modification.  Other indicators of financial difficulty include whether the debtor has declared or is in the process of declaring bankruptcy, the debtor’s ability to continue as a going concern, or the debtor’s projected cash flow to service its debt (including principal and interest) in accordance with the contractual terms for the foreseeable future, without a modification.

Regulatory guidance requires loans to be accounted for as collateral-dependent loans when borrowers have filed Chapter 7 bankruptcy, the debt has been discharged by the bankruptcy court and the borrower has not reaffirmed the debt. The filing of bankruptcy is deemed to be evidence that the borrower is in financial difficulty and the discharge of the debt by the bankruptcy court is deemed to be a concession granted to the borrower.

The following tables set forth the Company’s TDRs (in thousands):

	September 30, 2014						December 31, 2013
			Non-						Non-
	Accruing		Accruing		Total		Accruing		Accruing		Total
Commercial and industrial	$	77	$	—	$	77	$	88	$	—	$	88
Commercial real estate	2,269		—		2,269		1,783		—		1,783
Residential real estate	17,833		207		18,040		18,651		1,693		20,344
Home equity	2,821		—		2,821		2,859		14		2,873
Consumer	—		—		—		—		—		—
	$	23,000	$	207	$	23,207	$	23,381	$	1,707	$	25,088

	New TDRs					New TDRs
	For the nine months ended					For the nine months ended
	September 30, 2014					September 30, 2013
		Pre		Post			Pre		Post
		Modification		Modification			Modification		Modification
		Outstanding		Outstanding			Outstanding		Outstanding
	Number of	Recorded		Recorded		Number of	Recorded		Recorded
	Contracts	Investment		Investment		Contracts	Investment		Investment
Commercial and industrial	—	$	—	$	—	1	$	91	$	91
Commercial real estate	1	432		432		3	1,567		1,567
Residential real estate	26	2,049		2,049		30	2,808		2,808
Home equity	8	203		203		12	323		323
Consumer	—	—		—		—	—		—
	35	$	2,684	$	2,684	46	$	4,789	$	4,789

27

Note F – Long-Term Debt

The components of long-term debt are summarized below (in thousands):

	September 30, 2014		December 31, 2013
Junior subordinated debentures owed to City Holding Capital Trust III, due 2038, interest at a rate of 3.73% and 3.74%, respectively	$	16,495	$	16,495

The Company formed a statutory business trust, City Holding Capital Trust III (“Capital Trust III”), under the laws of Delaware.  Capital Trust III was created for the exclusive purpose of (i) issuing trust-preferred capital securities (“Capital Securities”), which represent preferred undivided beneficial interests in the assets of the trust, (ii) using the proceeds from the sale of the Capital Securities to acquire junior subordinated debentures (“Debentures”) issued by the Company, and (iii) engaging in only those activities necessary or incidental thereto.  The trust is considered a variable interest entity for which the Company is not the primary beneficiary.  Accordingly, the accounts of the trusts are not included in the Company’s consolidated financial statements.

Distributions on the Debentures are cumulative and will be payable quarterly at an interest rate of 3.50% over the three month LIBOR rate, reset quarterly.  Interest payments are due in March, June, September and December.  The Debentures are redeemable prior to maturity at the option of the Company (i) in whole or at any time or in part from time-to-time, or (ii) in whole, but not in part, at any time within 90 days following the occurrence and during the continuation of certain pre-defined events.

Payments of distributions on the Capital Securities and payments on redemption of the Capital Securities are guaranteed by the Company.  The Company also entered into an agreement as to expenses and liabilities with the trust pursuant to which it agreed, on a subordinated basis, to pay any cost, expenses or liabilities of the trust other than those arising under the trust preferred securities.  The obligations of the Company under the junior subordinated debentures, the related indentures, the trust agreement establishing the trust, the guarantees and the agreements as to expenses and liabilities, in the aggregate, constitute a full and unconditional guarantee by the Company of the trust’s obligations under the trust preferred securities.  The Capital Securities issued by the statutory business trusts qualify as Tier 1 capital for the Company under current Federal Reserve Board guidelines.

Note G – Derivative Instruments

As of September 30, 2014 and December 31, 2013, the Company has derivative financial instruments not included in hedge relationships.  These derivatives consist of interest rate swaps used for interest rate management purposes and derivatives executed with commercial banking customers to facilitate their interest rate management strategies.

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

Fair Value:	September 30, 2014		December 31, 2013
Other Assets	$	8,063	$	3,538
Other Liabilities	8,063		3,538

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

	Three months ended September 30,						Nine months ended September 30,
	2014			2013			2014			2013
Change in Fair Value:
Other income - derivative asset	$	(373	)	$	(86	)	$	4,233		$	(7,876	)
Other income - derivative liability	373			86			(4,233		)	7,876

Certain financial instruments, including derivatives, may be eligible for offset in the consolidated balance sheet and/or subject to master netting arrangements. The Company's derivative transactions with financial institution counterparties are generally executed under International Swaps and Derivative Association ("ISDA") master agreements which include "right of setoff" provisions. In such cases there is generally a legally enforceable right to offset recognized amounts and there may be an intention to settle such amounts on a net basis. Nonetheless, the Company does not generally offset financial instruments for

28

financial reporting purposes. Information about financial instruments that are eligible for offset in the consolidated balance sheet as of September 30, 2014 is presented in the following tables (in thousands):

Gross Amounts

Not Offset in the Statement

of Financial Position

Total

of Gross

Amounts

Not Offset in

the Statement

of Financial

Position

Netting

Including

Gross

Net Amounts

Adjustment

Applicable

Amounts

of Assets

per

Netting

Gross

Offset in the

presented in

Applicable

Agreement

Amounts of

Statement of

the Statement

Master

Fair Value

and Fair

Recognized

Financial

of Financial

Netting

of Financial

Value of

Description

Assets

Position

Position

Arrangements

Collateral

Collateral

Net Amount

(a)

(b)

(c)=(a)-(b)

(d)

(c)-(d)

Derivative assets:

Interest rate swap agreements

$

8,063

$

—

$

8,063

$

—

$

8,063

$

8,063

$

—

Gross Amounts

Not Offset in the Statement

of Financial Position

Total

of Gross

Amounts

Not Offset in

the Statement

of Financial

Position

Netting

Including

Gross

Net Amounts

Adjustment

Applicable

Amounts

of Liabilities

per

Netting

Gross

Offset in the

presented in

Applicable

Agreement

Amounts of

Statement of

the Statement

Master

Fair Value

and Fair

Recognized

Financial

of Financial

Netting

of Financial

Value of

Description

Liabilities

Position

Position

Arrangements

Collateral

Collateral

Net Amount

(a)

(b)

(c)=(a)-(b)

(d)

(c)-(d)

Derivative liabilities:

Interest rate swap agreements

$

8,383

$

—

$

8,383

$

—

$

11,862

$

11,862

$

—

29

Note H – Employee Benefit Plans

Pursuant to the terms of the City Holding Company 2003 Incentive Plan and the City Holding Company 2013 Incentive Plan (the "2003 Plan” and "2013 Plan", respectively), the Compensation Committee of the Board of Directors, or its delegate, may, from time-to-time, grant stock options, stock appreciation rights (“SARs”), or stock awards to employees, directors and individuals who provide service to the Company (collectively, "Plan Participants").  The 2003 Plan expired in April of 2013 and the 2013 Plan was approved by the shareholders in April 2013. A maximum of 750,000 shares of the Company’s common stock may be issued upon the exercise of stock options, SARs and stock awards.  These limitations may be adjusted in the event of a change in the number of outstanding shares of common stock by reason of a stock dividend, stock split or other similar event.  Specific terms of options and SARs awarded, including vesting periods, exercise prices (stock price at date of grant) and expiration dates are determined at the date of grant and are evidenced by agreements between the Company and the awardee.  The exercise price of the option grants equals the market price of the Company’s stock on the date of grant.  All incentive stock options and SARs will be exercisable up to 10 years from the date granted and all options and SARs are exercisable for the period specified in the individual agreement. As of September 30, 2014, under the 2003 Plan and 2013 Plan, 411,601 stock options had been awarded and 230,109 restricted stock awards had been awarded, respectively.

Each award from the 2003 Plan and 2013 Plan is evidenced by an award agreement that specifies the option price, the duration of the option, the number of shares to which the option pertains, and such other provisions as the Compensation Committee, or its delegate, determines.  The option price for each grant is equal to the fair market value of a share of the Company’s common stock on the date of the grant.  Options granted expire at such time as the Compensation Committee, or its delegate, determines at the date of the grant and in no event does the exercise period exceed a maximum of ten years.  Upon a change-in-control of the Company, as defined in the 2003 Plan and 2013 Plan, all outstanding options and awards shall immediately vest.

Stock Options

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

	Nine months ended September 30,
	2014				2013
	Options		Weighted-Average Exercise Price		Options		Weighted-Average Exercise Price
Outstanding at January 1	173,601		$	35.26	289,544		$	34.38
Granted	13,953		44.43		15,475		37.74
Exercised	(19,000	)	29.13		(107,140	)	33.36
Forfeited	—		—		(2,250	)	34.73
Outstanding at September 30	168,554		$	36.71	195,629		$	35.19

Additional information regarding stock options outstanding and exercisable at September 30, 2014, is provided in the following table:

Ranges of Exercise Prices	No. of Options Outstanding	Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value (in thousands)		No. of Options Currently Exercisable	Weighted-Average Exercise Price of Options Currently Exercisable		Weighted-Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value of Options Currently Exercisable (in thousands)
$26.62 - $33.90	40,250	$	30.83	3.9	$	575	19,332	$	30.46	2.5	$	283
$35.09 - $44.43	128,304	38.55		5.1	843		66,000	39.15		2.4	394
	168,554				$	1,418	85,332				$	677

Proceeds from stock option exercises were $0.6 million and $2.9 million during the nine months ended September 30, 2014 and 2013, respectively. Shares issued in connection with stock option exercises are issued from available treasury shares. If no treasury shares are available, new shares would be issued from available authorized shares. During the nine months ended September 30, 2014 and 2013 all shares issued in connection with stock option exercises and restricted stock awards were issued from available treasury stock.

30

The total intrinsic value of stock options exercised was $0.3 million and $0.6 million during the nine months ended September 30, 2014 and 2013, respectively.

Stock-based compensation expense was approximately $0.1 million and $0.2 million for the nine months ended September 30, 2014 and 2013, respectively.  Unrecognized stock-based compensation expense related to stock options approximated $0.5 million at September 30, 2014. At such date, the weighted-average period over which this unrecognized expense was expected to be recognized was 1.5 years.

The fair value of the options is estimated at the date of grant using a Black-Scholes option-pricing model.   The following weighted average assumptions were used to estimate the fair value of options granted:

	Nine months ended September 30,
	2014		2013
Risk-free interest rate	2.42	%	1.88	%
Expected dividend yield	3.60	%	3.70	%
Volatility factor	48.75	%	41.35	%
Expected life of option	8.0 years		8.0 years

Restricted Shares

The Company records compensation expense with respect to restricted shares in an amount equal to the fair value of the common stock covered by each award on the date of grant. The restricted shares awarded become fully vested after various periods of continued employment from the respective dates of grant. The Company is entitled to an income tax deduction in an amount equal to the taxable income reported by the holders of the restricted shares when the restrictions are released and the shares are issued. Compensation is being charged to expense over the respective vesting periods.

Restricted shares are forfeited if officers and employees terminate prior to the lapsing of restrictions. The Company records forfeitures of restricted stock as treasury share repurchases and any compensation cost previously recognized is reversed in the period of forfeiture.  Recipients of restricted shares do not pay any cash consideration to the Company for the shares, have the right to vote all shares subject to such grant and receive all dividends with respect to such shares, whether or not the shares have vested.  Stock-based compensation expense related to restricted shares was approximately $0.8 million and $0.6 million for the nine months ended September 30, 2014 and 2013, respectively.  Unrecognized stock-based compensation expense related to non-vested restricted shares was $3.2 million at September 30, 2014. At September 30, 2014, this unrecognized expense is expected to be recognized over 3.6 years based on the weighted average-life of the restricted shares.

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

	Nine months ended September 30,
	2014				2013
	Restricted Awards		Average Market Price at Grant		Restricted Awards		Average Market Price at Grant
Outstanding at January 1	142,469				116,711
Granted	27,162		$	39.72	35,083		$	38.07
Forfeited/Vested	(6,200	)			(9,325	)
Outstanding at September 30	163,431				142,469

Benefit Plans

The Company provides retirement benefits to its employees through the City Holding Company 401(k) Plan and Trust (“the 401(k) Plan”), which is intended to be compliant with Employee Retirement Income Security Act (ERISA) section 404(c). The Company’s total expense associated with the retirement benefit plan approximated $0.6 million for both the nine months ended September 30, 2014 and 2013.

The Company maintains two frozen defined benefit pension plans (“the Defined Benefit Plans”), which were inherited from the Company's acquisition of the plan sponsors (Horizon Bancorp, Inc. and Community Financial Corporation). The Company made contributions of approximately $0.3 million and $0.5 million to the Defined Benefit Plans during the nine months ended September 30, 2014 and 2013, respectively.

31

The following table presents the components of the net periodic pension cost of the Defined Benefit Plans (in thousands):

	Three months ended September 30,						Nine months ended September 30,
	2014			2013			2014			2013
Components of net periodic cost:
Interest cost	$	209		$	217		$	634		$	549
Expected return on plan assets	(252		)	(276		)	(779		)	(695		)
Net amortization and deferral	150			267			538			732
Net Periodic Pension Cost	$	107		$	208		$	393		$	586

Note I – Commitments and Contingencies

The Company is a party to certain financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers.  The Company has entered into agreements with its customers to extend credit or provide a conditional commitment to provide payment on drafts presented in accordance with the terms of the underlying credit documents. The Company also provides overdraft protection to certain demand deposit customers that represent an unfunded commitment.  Overdraft protection commitments, which are included with other commitments below, are uncollateralized and are paid at the Company’s discretion.  Conditional commitments generally include standby and commercial letters of credit. Standby letters of credit represent an obligation of the Company to a designated third party contingent upon the failure of a customer of the Company to perform under the terms of the underlying contract between the customer and the third party. Commercial letters of credit are issued specifically to facilitate trade or commerce. Under the terms of a commercial letter of credit, drafts will be drawn when the underlying transaction is consummated, as intended, between the customer and a third party. The funded portion of these financial instruments is reflected in the Company’s balance sheet, while the unfunded portion of these commitments is not reflected in the balance sheet.  The table below presents a summary of the contractual obligations of the Company resulting from significant commitments (in thousands):

	September 30, 2014		December 31, 2013
Commitments to extend credit:
Home equity lines	$	174,115	$	174,417
Commercial real estate	33,970		42,209
Other commitments	173,694		201,065
Standby letters of credit	14,271		14,122
Commercial letters of credit	1,972		1,555

Loan commitments and standby and commercial letters of credit have credit risks essentially the same as that involved in extending loans to customers and are subject to the Company’s standard credit policies. Collateral is obtained based on management’s credit assessment of the customer. Management does not anticipate any material losses as a result of these commitments.

The Company is engaged in various legal actions that it deems to be in the ordinary course of business. As these legal actions are resolved, the Company could realize positive and/or negative impact to its financial performance in the period in which these legal actions are ultimately decided. There can be no assurance that current actions will have immaterial results, either positive or negative, or that no material actions may be presented in the future.

32

Note J – Accumulated Other Comprehensive Loss

The activity in accumulated other comprehensive loss for the nine months ended September 30, 2014 and 2013 is presented in the tables below (in thousands). All amounts are shown net of tax, which is calculated using a combined Federal and state income tax rate approximating 37%.

	Accumulated Other Comprehensive Loss
				Unrealized
				Gains (Losses) on
	Defined Benefit			Securities
	Pension Plans			Available-for-Sale			Total
Balance at December 31, 2012	$	(4,995	)	$	3,573		$	(1,422	)
Other comprehensive income before reclassifications	—			(4,693		)	(4,693		)
Amounts reclassified from other comprehensive loss	—			(59		)	(59		)
	—			(4,752		)	(4,752		)
Balance at September 30, 2013	$	(4,995	)	$	(1,179	)	$	(6,174	)
Balance at December 31, 2013	$	(2,880	)	$	(2,110	)	$	(4,990	)
Other comprehensive income before reclassifications	—			2,683			2,683
Amounts reclassified from other comprehensive loss	—			(614		)	(614		)
	—			2,069			2,069
Balance at September 30, 2014	$	(2,880	)	$	(41	)	$	(2,921	)

	Amount reclassified from Other Comprehensive Loss
	Three months ended					Nine months ended						Affected line item
	September 30,					September 30,						in the Statements
	2014			2013		2014			2013			of Income
Securities available-for-sale:
Net securities gains reclassified into earnings	$	(71	)	$	—	$	(972	)	$	(93	)	Security gains (losses)
Related income tax expense	26			—		358			34			Income tax expense
Net effect on accumulated other comprehensive loss	$	(45	)	$	—	$	(614	)	$	(59	)

33

Note K – Earnings per Share

The following table sets forth the computation of basic and diluted earnings per share (in thousands, except per share data):

	Three months ended September 30,				Nine months ended September 30,
	2014		2013		2014		2013
Distributed earnings allocated to common stock	$	6,073	$	5,767	$	18,220	$	17,302
Undistributed earnings allocated to common stock	5,673		8,081		19,809		17,349
Net earnings allocated to common shareholders	$	11,746	$	13,848	$	38,029	$	34,651
Average shares outstanding	15,363		15,608		15,509		15,545
Effect of dilutive securities:
Warrant outstanding	62		62		62		60
Employee stock awards	20		120		23		108
Shares for diluted earnings per share	15,445		15,790		15,594		15,713
Basic earnings per share	$	0.76	$	0.89	$	2.45	$	2.23
Diluted earnings per share	$	0.76	$	0.88	$	2.44	$	2.21

Options to purchase approximately 13,953 shares of common stock at an exercise price of $44.43 per share were outstanding during the third quarter of 2014 but were not included in the computation of diluted earnings per share because the options’ exercise price was greater than the average market price of the common shares and therefore, the effect would have been anti-dilutive.  During the third quarter of 2013, there were no anti-dilutive options outstanding.

Note L – Fair Value Measurements

Fair value of an asset or liability is the price that would be received to sell that asset or paid to transfer that liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.  ASC Topic 820 establishes a fair value hierarchy for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows:

Level 1: Quoted prices (unadjusted) or identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2: Significant other observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, and other inputs that are observable or can be corroborated by observable market data.

Level 3: Significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

The Company bases fair value of assets and liabilities on quoted market prices, prices for similar assets or liabilities, quoted prices in markets that are not active, and other inputs that are observable or can be corroborated by observable market data.  If such information is not available, fair value is based upon internally developed models that primarily use, as inputs, observable market-based parameters.  Valuation adjustments may be made to ensure that financial instruments are recorded at fair value.  These adjustments may include amounts to reflect counterparty credit quality and the Company’s creditworthiness, among other things, as well as unobservable parameters.  Any such valuation adjustments are applied consistently over time.  The Company’s valuation methodologies may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values.  While management believes the company’s valuation methodologies are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine fair value of certain financial instruments could result in a different estimate of fair value at the reporting date.  Furthermore, the reported fair value amounts have not been comprehensively revalued since the presentation dates, and therefore, estimates of fair value after the balance sheet date may differ significantly from the amount presented herein.  A more detailed description of the valuation methodologies used

34

for assets and liabilities measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below.

Financial Assets and Liabilities

The Company used the following methods and significant assumptions to estimate fair value for financial assets and liabilities measured on a recurring basis.

Securities Available for Sale.  Securities available for sale are reported at fair value utilizing Level 1, Level 2, and Level 3 inputs.  The fair value of securities available for sale is determined by utilizing a market approach by obtaining quoted prices on nationally recognized securities exchanges (other than forced or distressed transactions) that occur in sufficient volume or matrix pricing, which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities.  If such measurements are unavailable, the security is classified as Level 3.  Significant judgment is required to make this determination.

The Company utilizes a third party pricing service provider to value its Level 1 and Level 2 investment securities.  Annually, the Company obtains an independent auditor’s report from its third party pricing service provider regarding its controls over investment securities.  Although no control deficiencies were noted, the report did contain caveats and disclaimers regarding the pricing information, such as the Company should review fair values for reasonableness.  On a quarterly basis, the Company selects a sample of its debt securities and reprices those securities with a third party that is independent of the primary pricing service provider to verify the reasonableness of the fair values. In addition, the Company selects a sample of securities and reviews the underlying support from the primary pricing service provider.

The Company has determined that its pooled trust preferred securities should be priced using Level 3 inputs in accordance with ASC Topic 820 and guidance issued by the SEC.  The Company has determined that there are few observable transactions and market quotations available for pooled trust preferred securities and they are not reliable for purposes of determining fair value at September 30, 2014.  Due to these circumstances, the Company has elected to utilize an income valuation approach produced by a third party pricing source.  This third party model utilizes deferral and default probabilities for the underlying issuers, estimated prepayment rates and assumes no future recoveries of any defaults or deferrals.  The Company then compares the values provided by the third party model with other external sources.  At such time as there are observable transactions or quoted prices that are associated with an orderly and active market for pooled trust preferred securities, the Company will incorporate such market values in its estimate of fair values for these securities.

Derivatives.Derivatives are reported at fair value utilizing Level 2 inputs.  The Company utilizes a market approach by obtaining dealer quotations to value its customer interest rate swaps.  The Company’s derivatives are included within its Other Assets and Other Liabilities in the accompanying consolidated balance sheets. Derivative assets are typically secured through securities with financial counterparties or cross collateralization with a borrowing customer. Derivative liabilities are typically secured through the Company pledging securities to financial counterparties or, in the case of a borrowing customer, by the right of setoff. The Company considers such factors such as the likelihood of default by itself and its counterparties, right of setoff, and remaining maturities in determining the appropriate fair value adjustments. All derivative counterparties approved by the Company's Asset and Liability Committee ("ALCO") are regularly reviewed, and appropriate business action is taken to adjust the exposure to certain counterparties, if necessary. Counterparty exposure is evaluated by netting positions that are subject to master netting agreements, as well as considering the amount of marketable collateral securing the position. This approach used to estimate impacted exposures to counterparties is also used by the Company to estimate its own credit risk in derivative liability positions. To date, no material losses have been incurred due to a counterparty's inability to pay any undercollateralized position. There was no significant change in the value of derivative assets and liabilities attributed to credit risk during the three and nine months ended September 30, 2014.

The Company may be required, from time to time, to measure certain financial assets and financial liabilities at fair value on a nonrecurring basis.  Financial assets measured at fair value on a nonrecurring basis include impaired loans reported at the fair value of the underlying collateral if repayment is expected solely from the collateral.  Collateral values are estimated using Level 2 inputs based on observable market data for real estate collateral or Level 3 inputs for non-real estate collateral.  The following table presents assets and liabilities measured at fair value (in thousands):

35

	Total		Level 1		Level 2		Level 3		Total Gains (Losses)
September 30, 2014
Recurring fair value measurements
Financial Assets
U.S. Government agencies	$	1,943	$	—	$	1,943	$	—
Obligations of states and political subdivisions	41,812		—		41,812		—
Mortgage-backed securities:
U.S. Government agencies	183,297		—		183,297		—
Private label	1,778		—		1,778		—
Trust preferred securities	8,816		—		7,090		1,726
Corporate securities	7,630		—		7,630		—
Marketable equity securities	3,697		3,697		—		—
Investment funds	1,508		1,508		—		—
Derivative assets	8,063		—		8,063		—
Financial Liabilities
Derivative liabilities	8,063		—		8,063		—
Nonrecurring fair value measurements
Impaired loans	$	6,617	$	—	$	—	$	6,617	$	(142	)
Other real estate owned	9,161		—		—		9,161		(379		)
December 31, 2013
Recurring fair value measurements
Financial Assets
U.S. Government agencies	$	2,365	$	—	$	2,365	$	—
Obligations of states and political subdivisions	41,548		—		41,548		—
Mortgage-backed securities:
U.S. Government agencies	278,108		—		278,108		—
Private label	2,197		—		2,197		—
Trust preferred securities	13,156		—		9,269		3,887
Corporate securities	9,128		—		9,128		—
Marketable equity securities	4,673		4,673		—		—
Investment funds	1,485		1,485		—		—
Derivative assets	3,538		—		3,538		—
Financial Liabilities
Derivative liabilities	3,538		—		3,538		—
Nonrecurring fair value measurements
Impaired loans	$	11,714	$	—	$	—	$	11,714	$	(880	)
Other real estate owned	$	8,470	$	—	$	—	$	8,470	$	(1,108	)

The table below presents a reconcilement of the Company’s financial assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3), which consist solely of trust preferred securities (in thousands):

	Nine months ended September 30,
	2014			2013
Beginning balance	$	3,887		$	2,385
Impairment losses on investment securities	—			—
Included in other comprehensive income	(2,161		)	2,176
Dispositions	—			(1,776		)
Transfers into Level 3	—			—
Ending Balance	$	1,726		$	2,785

36

The Company utilizes a third party model to compute the present value of expected cash flows which considers the structure and term of each of the five respective pooled trust preferred securities and the financial condition of the underlying issuers.  Specifically, the third party model details interest rates, principal balances of note classes and underlying issuers, the timing and amount of interest and principal payments of the underlying issuers, and the allocation of the payments to the note classes. The current estimate of expected cash flows is based on the most recent trustee reports and any other relevant market information including announcements of interest payment deferrals or defaults of underlying trust preferred securities. For issuing banks that have defaulted, management generally assumes no recovery. For issuing banks that have deferred its interest payments, management excludes the collateral balance associated with these banks and assumes no recoveries of such collateral balance in the future. The exclusion of such issuing banks in a current deferral position is based on such bank experiencing a certain level of financial difficulty that raises doubt about its ability to satisfy its contractual debt obligation, and accordingly, the Company excludes the associated collateral balance from its estimate of expected cash flows. Other assumptions used in the estimate of expected cash flows include expected future default rates and prepayments. Specifically, the model assumes annual prepayments of 1.0% with 100% at maturity and assumes 150 basis points of additional annual defaults from banks that are currently not in default or deferral.  In addition, the model assumes no recoveries except for one trust preferred security which assumes that one of the banks currently deferring or in default will cure such positions.

The table below presents a reconcilement of the Company's financial assets and liabilities measured at fair value on a nonrecurring basis using significant unobservable inputs (Level 3), which solely relates to impaired loans that were remeasured and reported at fair value through a specific valuation allowance allocation of the allowance for loan losses based upon the fair value of the underlying collateral (in thousands).  The fair value of impaired loans is estimated using one of several methods, including collateral value, liquidation value and discounted cash flows.  The significant unobservable inputs used in the fair value measurement of collateral for collateral-dependent impaired loans primarily relate to discounts applied to the customers’ reported amount of collateral.  The amount of collateral discount depends upon the marketability of the underlying collateral.  During the nine months ended September 30, 2014 and 2013, collateral discounts ranged from 20% to 30%. During the nine months ended September 30, 2014 and 2013, the Company had no Level 2 financial assets and liabilities that were measured on a nonrecurring basis.

	Nine months ended September 30,
	2014			2013
Beginning balance	$	11,714		$	10,679
Loans classified as impaired during the period	—			3,052
Specific valuation allowance allocations	—			(750		)
	—			2,302
(Additional) reduction in specific valuation allowance allocations	633			(130		)
Paydowns, payoffs, other activity	(5,730		)	(891		)
Ending balance	$	6,617		$	11,960

Non-Financial Assets and Liabilities

The Company has no non-financial assets or liabilities measured at fair value on a recurring basis.  Certain non-financial assets measured at fair value on a non-recurring basis include other real estate owned (“OREO”), which is measured at the lower of cost or fair value, and goodwill and other intangible assets, which are measured at fair value for impairment assessments.

The table below presents OREO that was remeasured and reported at fair value based on significant unobservable inputs (Level 3) (in thousands):

37

	Nine months ended September 30,
	2014			2013
Beginning balance	$	8,470		$	8,162
OREO remeasured at initial recognition:
Carrying value of foreclosed assets prior to remeasurement	4,225			4,387
Charge-offs recognized in the allowance for loan losses	—			(1,565		)
Fair value	4,225			2,822
OREO remeasured subsequent to initial recognition
Carrying value of foreclosed assets prior to remeasurement	480			2,832
Fair value	101			1,774
Write-downs included in other non-interest expense	(379		)	(1,058		)
Acquired	—			3,492
Disposed	(3,155		)	(5,900		)
Ending balance	$	9,161		$	7,518

ASC Topic 825“Financial Instruments” as amended, requires disclosure of fair value information about financial instruments, whether or not recognized in the balance sheet, for which it is practicable to estimate that value.  In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques.  Those techniques are significantly affected by the assumptions used, including discount rate and estimate of future cash flows.  In that regard, the derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases, could not be realized in immediate settlement of the instrument.  ASC Topic 825 excludes certain financial instruments and all nonfinancial instruments from its disclosure requirements.  Accordingly, the aggregate fair value amounts presented do not represent the underlying value of the Company. The following methods and assumptions were used in estimating fair value for financial instruments:

Cash and cash equivalents: Due to their short-term nature, the carrying amounts reported in the consolidated balance sheets approximate fair value.

Securities:  The fair value of securities, both available-for-sale and held-to-maturity, are generally based on quoted market prices or matrix pricing, which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities.

Net loans:  The fair value of the loan portfolio is estimated by discounting the expected future cash flows using the current interest rates at which similar loans would be made to borrowers for the same remaining maturities. Loans were first segregated by type such as commercial, real estate and consumer, and were then further segmented into fixed, adjustable and variable rate categories. Expected future cash flows were projected based on contractual cash flows, adjusted for estimated prepayments.

Deposits:  The fair values of demand deposits (i.e., interest and noninterest-bearing deposits, regular savings and other money market demand accounts) are, by definition, equal to their carrying values. The fair values of time deposits were estimated using discounted cash flow analyses. The discount rates used were based on rates currently offered for deposits with similar remaining maturities. The fair values of the time deposit liabilities do not take into consideration the value of the Company’s long-term relationships with depositors, which may have significant value.

Short-term debt: Securities sold under agreements to repurchase represent borrowings with original maturities of less than 90 days. The carrying amount of borrowings under purchase agreements approximate their fair value.

Long-term debt: The fair value of long-term borrowings is estimated using discounted cash flow analyses based on the Company’s current incremental borrowing rates for similar types of borrowing arrangements and market conditions of similar debt instruments.

38

Commitments and letters of credit: The fair values of commitments are estimated based on fees currently charged to enter into similar agreements, taking into consideration the remaining terms of the agreements and the counterparties’ credit standing.  The fair value of letters of credit is based on fees currently charged for similar agreements or on the estimated cost to terminate them or otherwise settle the obligations with the counterparties at the reporting date.  The amounts of fees currently charged on commitments and letters of credit are deemed insignificant, and therefore, the estimated fair values and carrying values have not been reflected in the table below.

The following table represents the estimates of fair value of financial instruments (in thousands). This table excludes financial instruments for which the carrying amount approximates fair value. For short-term financial assets such as cash and cash equivalents, the carrying amount is a reasonable estimate of fair value due to the relatively short time between the origination of the instrument and its expected realization. For financial liabilities such as noninterest-bearing demand, interest-bearing demand and savings deposits, the carrying amount is a reasonable estimate of fair value due to these products having no stated maturity.

	Carrying Amount		Fair Value		Level 1		Level 2		Level 3
September 30, 2014
Assets:
Cash and cash equivalents	$	91,492	$	91,492	$	91,492	$	—	$	—
Securities available-for-sale	250,481		250,481		5,205		243,550		1,726
Securities held-to-maturity	93,089		95,343		—		95,343		—
Other securities	14,234		14,234		—		14,234		—
Net loans	2,610,255		2,630,012		—		—		2,630,012
Accrued interest receivable	7,751		7,751		7,751		—		—
Derivative assets	8,063		8,063		—		8,063		—
Liabilities:
Deposits	2,793,395		2,799,502		1,759,380		1,040,122		—
Short-term debt	146,115		146,116		—		146,116		—
Long-term debt	16,495		16,464		—		16,464		—
Derivative liabilities	8,063		8,063		—		8,063		—
December 31, 2013
Assets:
Cash and cash equivalents	85,876		85,876		85,876		—		—
Securities available-for-sale	352,660		352,660		6,158		342,615		3,887
Securities held-to-maturity	4,117		5,335		—		5,335		—
Other securities	13,343		13,343		—		13,343		—
Net loans	2,585,622		2,609,524		—		—		2,609,524
Accrued interest receivable	6,866		6,866		6,866		—		—
Derivative assets	3,538		3,538		—		3,538		—
Liabilities:
Deposits	2,785,133		2,793,620		1,707,527		1,086,093		—
Short-term debt	137,798		137,801		—		137,801		—
Long-term debt	16,495		16,495		—		16,495		—
Derivative liabilities	3,538		3,538		—		3,538		—

39

Note M – Merger Related Costs

During the nine months endedSeptember 30, 2013, the Company incurred $5.5 million of merger-related costs in connection with the acquisition of Community on January 10, 2013. These costs were primarily for severance ($2.5 million), professional fees ($1.4 million) and data processing costs ($1.1 million). No merger related costs were incurred during the nine months ended September 30, 2014.

40

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

Critical Accounting Policies

The accounting policies of the Company conform with U.S. generally accepted accounting principles and require management to make estimates and develop assumptions that affect the amounts reported in the financial statements and related footnotes. These estimates and assumptions are based on information available to management as of the date of the financial statements. Actual results could differ significantly from management’s estimates. As this information changes, management’s estimates and assumptions used to prepare the Company’s financial statements and related disclosures may also change. The most significant accounting policies followed by the Company are presented in Note One to the audited financial statements included in the Company’s 2013 Annual Report to Shareholders. The information included in this Quarterly Report on Form 10-Q, including the Consolidated Financial Statements, Notes to Consolidated Financial Statements, and Management’s Discussion and Analysis of Financial Condition and Results of Operations, should be read in conjunction with the financial statements and notes thereto included in the 2013 Annual Report of the Company.  Based on the valuation techniques used and the sensitivity of financial statement amounts to the methods, assumptions, and estimates underlying those amounts, management has identified the determination of the allowance for loan losses, income taxes, other-than-temporary impairment on investment securities and purchased credit-impaired loans to be the accounting areas that require the most subjective or complex judgments and, as such, could be most subject to revision as new information becomes available.

The section Allowance and Provision for Loan Losses provides management’s analysis of the Company’s allowance for loan losses and related provision. The allowance for loan losses is maintained at a level that represents management’s best estimate of probable losses in the loan portfolio. Management’s determination of the adequacy of the allowance for loan losses is based upon an evaluation of individual credits in the loan portfolio, historical loan loss experience, current economic conditions, and other relevant factors. This determination is inherently subjective as it requires material estimates including the amounts and timing of future cash flows expected to be received on impaired loans that may be susceptible to significant change. The allowance for loan losses related to loans considered to be impaired is generally evaluated based on the discounted cash flows using the impaired loan’s initial effective interest rate or the fair value of the collateral for certain collateral dependent loans.

The Company is subject to federal and state income taxes in the jurisdictions in which it conducts business.  In computing the provision for income taxes, management must make judgments regarding interpretation of laws in those jurisdictions.  Because the application of tax laws and regulations for many types of transactions is susceptible to varying interpretations, amounts reported in the financial statements could be changed at a later date upon final determinations by taxing authorities.  On a quarterly basis, the Company estimates its annual effective tax rate for the year and uses that rate to provide for income taxes on a year-to-date basis.  The amount of unrecognized tax benefits could change over the next twelve months as a result of various factors.  However, management cannot currently estimate the range of possible change.  The Company is currently open to audit under the statute of limitations by the Internal Revenue Service for the years ended December 31, 2011 through 2013. The Company and its subsidiaries state income tax returns are open to audit under the statute of limitations for the years ended December 31, 2010 through 2012.

On a quarterly basis, the Company performs a review of investment securities to determine if any unrealized losses are other-than-temporarily impaired.  Management considers the following, amongst other things, in its determination of the nature of the unrealized losses, (i) the length of time and the extent to which the fair value has been less than cost, (ii) the financial condition, capital strength, and near-term (12 months) prospects of the issuer, including any specific events which may influence the operations of the issuer such as changes in technology that may impair the earnings potential of the investment or the discontinuance of a segment of the business that may affect the future earnings potential; (iii) the historical volatility in the market value of the investment and/or the liquidity or illiquidity of the investment; (iv) adverse conditions specifically related to the security, an industry, or a geographic area; or (v) the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value.  The Company continues to actively monitor the market value of these investments along with the financial strength of the issuers behind these securities, as well as its entire investment portfolio.  Based on the market information available, the Company believes that the recent declines in market value are temporary and that the Company does not have the intent to sell any of the securities classified as available for sale and believes it is more likely than not that the Company will not have to sell any such securities before recovery of costs.  The Company cannot guarantee that such securities will recover and if additional information becomes available in the future to suggest that the losses are other than temporary, the Company may need to record impairment charges in future periods.  No impairment charges were recognized during the three and nine months ended September 30, 2014 as a result of this review.  The Company continues to actively monitor the market values of these investments along with the financial strength of the issuers behind these securities, as well as our entire investment portfolio.

41

The Company values purchased credit-impaired loans at fair value in accordance with ASC Topic 310-30. In determining the estimated fair value, management considers several factors, such as estimated future credit losses, estimated prepayments, remaining lives of the acquired loans, estimated value of the underlying collateral and the net present value of the cash flows expected to be received. For these loans, the expected cash flows that exceed the fair value of the loan represent the accretable yield, which is recognized as interest income on a level-yield basis over the expected cash flow periods of the loans. The non-accretable difference represents the difference between the contractually required principal and interest payments and the cash flows expected to be collected based upon management's estimation. Subsequent decreases in the expected cash flows will require the Company to evaluate the need for additions to the Company's allowance for loan losses. Subsequent increases in the expected cash flows will result in a reversal of the provision for loan losses to the extent of prior charges with a corresponding adjustment to the accretable yield, which will result in the recognition of additional interest income over the remaining lives of the loans.

Financial Summary

Nine months ended September 30, 2014 vs. 2013

The Company reported consolidated net income of $38.4 million, or $2.44 per diluted common share, for the nine months ended September 30, 2014, compared to $35.0 million, or $2.21 per diluted common share, for the nine months ended September 30, 2013. Return on average assets (“ROA”) was 1.51% and return on average equity (“ROE”) was 12.9% for the nine months ended September 30, 2014 compared to 1.38% and 12.6%, respectively, for the nine months ended September 30, 2013.

The Company’s net interest income for the first nine months of 2014 decreased $4.9 million compared to the first nine months of 2013 (see Net Interest Income). The Company recorded a provision for loan losses of $3.7 million for the nine months ended September 30, 2014 compared to $4.9 million for the nine months ended September 30, 2013 (see Allowance and Provision for Loan Losses).  As further discussed under the caption Non-Interest Income and Non-Interest Expense, non-interest income increased $1.0 million.  Non-interest expenses for the nine months ended September 30, 2014 decreased $6.0 million from the nine months ended September 30, 2013.

Three months ended September 30, 2014 vs. 2013

The Company reported consolidated net income of $11.9 million, or $0.76 per diluted common share, for the three months ended September 30, 2014, compared to $14.0 million, or $0.88 per diluted common share, for the three months ended September 30, 2013. Return on average assets (“ROA”) was 1.40% and return on average equity (“ROE”) was 11.9% for the three months ended September 30, 2014 compared to 1.65% and 14.8%, respectively, for the third quarter of 2013.

The Company’s net interest income for the third quarter of 2014 decreased $2.9 million compared to the third quarter of 2013 (see Net Interest Income). The Company recorded a provision for loan losses of $1.9 million for the third quarter of 2014 compared to $1.2 million for the third quarter of 2013 (see Allowance and Provision for Loan Losses).  As further discussed under the caption Non-Interest Income and Non-Interest Expense, non-interest income increased $0.1 million from the three months ended September 30, 2013.  Non-interest expenses for the three months ended September 30, 2014 decreased $0.3 million from the three months ended September 30, 2013.

Net Interest Income

Nine months ended September 30, 2014 vs. 2013

The Company’s tax equivalent net interest income decreased $4.9 million, or 5.3%, from $93.7 million for the nine months ended September 30, 2013 to $88.8 million for the nine months ended September 30, 2014. The Company’s reported net interest margin decreased from 4.33% for the nine months ended September 30, 2013 to 4.02% for the nine months ended September 30, 2014. This is primarily due to the expected decrease in accretion related to the acquisitions of Virginia Savings and Community Bank. Accretion was $10.7 million for the nine months ended September 30, 2013 and $5.5 million for the nine months ended September 30, 2014. Excluding the favorable impact of the accretion from the fair value adjustments, the net interest margin for the nine months ended September 30, 2014 and 2013 would have been 3.77% and 3.84%, respectively.

Three months ended September 30, 2014 vs. 2013

The Company’s tax equivalent net interest income decreased $2.9 million, or 8.9%, from $32.5 million for the third quarter of 2013 to $29.6 million for the third quarter of 2014. The Company’s reported net interest margin decreased from 4.47% for the quarter ended September 30, 2013 to 3.95% for the quarter ended September 30, 2014. This is primarily due to the expected

42

decrease in accretion related to the acquisitions of Virginia Savings and Community Bank. Accretion was $5.0 million for the third quarter of 2013 and $1.8 million for the third quarter of 2014. Excluding the favorable impact of the accretion from the fair value adjustments, the net interest margin for the three months ended September 30, 2014 and 2013 would have been 3.71% and 3.78%, respectively.

The following schedule presents the actual and estimated future accretion related to the fair value adjustments on net interest income as a result of the Company's acquisitions (in thousands). The amounts in the table below require management to make significant assumptions based on estimated future default, prepayment and discount rates. Actual performance could be significantly different from that assumed, which could result in actual results being materially different than those estimated below.

	Virginia Savings				Community
Year Ended	Loan Accretion		Certificates of Deposit		Loan Accretion		Certificates of Deposit		Total
2013	$	3,512	$	542	$	9,907	$	682	$	14,643
1Q 2014	299		131		1,628		93		2,151
2Q 2014	284		135		1,023		52		1,494
3Q 2014	315		135		1,334		52		1,836
Total through nine months ended September 30, 2014	898		401		3,985		197		5,481
4Q 2014 (estimated)	174		135		598		52		959
2015 (estimated)	441		518		1,998		160		3,117
2016 (estimated)	266		497		1,449		48		2,260

43

Table One

Average Balance Sheets and Net Interest Income

(In thousands)

Assets	Nine months ended September 30,
	2014							2013
	Average Balance			Interest		Yield/ Rate		Average Balance			Interest		Yield/ Rate
Loan portfolio(1):
Residential real estate(2)	$	1,371,620		$	41,587	4.05	%	$	1,294,671		$	41,215	4.26	%
Commercial, financial, and agriculture(2)	1,153,133			41,166		4.77		1,145,286			46,755		5.46
Installment loans to individuals(2),(3)	53,508			3,264		8.16		65,557			4,755		9.70
Previously securitized loans(4)	—			1,630		***		—			1,968		***
Total loans	2,578,261			87,647		4.55		2,505,514			94,693		5.05
Securities:
Taxable	342,349			8,797		3.44		329,918			7,774		3.15
Tax-exempt(5)	27,685			1,292		6.24		31,378			1,437		6.12
Total securities	370,034			10,089		3.65		361,296			9,211		3.41
Deposits in depository institutions	8,955			—		—		8,090			—		—
Total interest-earning assets	2,957,250			97,736		4.42		2,892,350			103,926		4.80
Cash and due from banks	127,229							159,942
Bank premises and equipment	81,038							81,976
Other assets	246,655							257,384
Less: allowance for loan losses	(21,195		)					(20,030		)
Total assets	$	3,390,977						$	3,371,622
Liabilities
Interest-bearing demand deposits	$	612,720		$	479	0.10	%	$	606,076		$	537	0.12	%
Savings deposits	628,996			597		0.13		596,895			645		0.14
Time deposits(2)	1,052,625			7,144		0.91		1,109,895			8,308		1.00
Short-term borrowings	128,230			246		0.26		121,677			232		0.25
Long-term debt	16,495			453		3.67		16,495			464		3.76
Total interest-bearing liabilities	2,439,066			8,919		0.49		2,451,038			10,186		0.56
Noninterest-bearing demand deposits	522,341							512,993
Other liabilities	32,526							38,698
Stockholders’ equity	397,044							368,893
Total liabilities and stockholders’ equity	$	3,390,977						$	3,371,622
Net interest income				$	88,817						$	93,740
Net yield on earning assets						4.02	%						4.33	%

44

(1)	For purposes of this table, non-accruing loans have been included in average balances and loan fees, which are immaterial, have been included in interest income.
(2)	Included in the above table are the following amounts for the accretion of the fair value adjustments related to the acquisitions of Virginia Savings and Community:
		Nine months ended September 30, 2014
		Virginia Savings		Community		Total
	Residential real estate	$	361	$	363	$	724
	Commercial, financial and agriculture	424		3,149		3,573
	Installment loans to individuals	113		473		586
	Time deposits	401		197		598
		$	1,299	$	4,182	$	5,481
		Nine months ended September 30, 2013
		Virginia Savings		Community		Total
	Residential real estate	$	816	$	507	$	1,323
	Commercial, financial and agriculture	2,023		5,401		7,424
	Installment loans to individuals	112		956		1,068
	Time deposits	421		508		929
		$	3,372	$	7,372	$	10,744
(3)	Includes the Company’s consumer and DDA overdrafts loan categories.
(4)	Effective January 1, 2012, there is no carrying value of the Company’s previously securitized loans.
(5)	Computed on a fully federal tax-equivalent basis assuming a tax rate of approximately 35%.

45

Table Two

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

(In thousands)

	Nine months ended September 30, 2014 vs. 2013
Interest-earning assets:	Increase (Decrease) Due to Change In:
	Volume			Rate			Net
Loan portfolio
Residential real estate	$	2,450		$	(2,078	)	$	372
Commercial, financial, and agriculture	320			(5,909		)	(5,589		)
Installment loans to individual	(874		)	(617		)	(1,491		)
Previously securitized loans	—			(338		)	(338		)
Total loans	1,896			(8,942		)	(7,046		)
Securities:
Taxable	293			730			1,023
Tax-exempt(1)	(169		)	24			(145		)
Total securities	124			754			878
Federal funds sold	(22		)	—			(22		)
Total interest-earning assets	$	1,998		$	(8,188	)	$	(6,190	)
Interest-bearing liabilities:
Interest-bearing demand deposits	$	6		$	(64	)	$	(58	)
Savings deposits	35			(83		)	(48		)
Time deposits	(429		)	(735		)	(1,164		)
Short-term borrowings	12			2			14
Long-term debt	—			(11		)	(11		)
Total interest-bearing liabilities	$	(376	)	$	(891	)	$	(1,267	)
Net Interest Income	$	2,374		$	(7,297	)	$	(4,923	)

(1) Fully federal taxable equivalent using a tax rate of approximately 35%.

46

Table Three

Average Balance Sheets and Net Interest Income

(In thousands)

Assets	Three months ended September 30,
	2014							2013
	Average Balance			Interest		Yield/ Rate		Average Balance			Interest		Yield/ Rate
Loan portfolio(1):
Residential real estate(2)	$	1,397,306		$	14,146	4.02	%	$	1,315,848		$	13,931	4.20	%
Commercial, financial, and agriculture(2)	1,148,997			13,671		4.72		1,157,285			16,910		5.80
Installment loans to individuals(2),(3)	53,839			988		7.28		63,409			1,538		9.62
Previously securitized loans(4)	—			487		***		—			604		***
Total loans	2,600,142			29,292		4.47		2,536,542			32,983		5.16
Securities:
Taxable	335,760			2,864		3.38		312,786			2,392		3.03
Tax-exempt(5)	28,199			434		6.11		29,396			460		6.21
Total securities	363,959			3,298		3.60		342,182			2,852		3.31
Deposits in depository institutions	8,924			—		—		7,798			—		—
Federal funds sold	—			—		—		—			—		—
Total interest-earning assets	2,973,025			32,590		4.35		2,886,522			35,835		4.93
Cash and due from banks	107,550							191,116
Bank premises and equipment	79,865							82,708
Other assets	246,357							251,353
Less: allowance for loan losses	(20,893		)					(20,519		)
Total assets	$	3,385,904						$	3,391,180
Liabilities
Interest-bearing demand deposits	$	615,830		$	138	0.09	%	$	603,592		$	179	0.12	%
Savings deposits	633,690			192		0.12		602,827			216		0.14
Time deposits(2)	1,036,370			2,400		0.92		1,106,352			2,673		0.96
Short-term borrowings	132,484			86		0.26		127,263			82		0.26
Long-term debt	16,495			152		3.66		16,495			154		3.70
Total interest-bearing liabilities	2,434,869			2,968		0.48		2,456,529			3,304		0.53
Noninterest-bearing demand deposits	522,083							521,114
Other liabilities	30,188							35,854
Stockholders’ equity	398,764							377,683
Total liabilities and stockholders’ equity	$	3,385,904						$	3,391,180
Net interest income				$	29,622						$	32,531
Net yield on earning assets						3.95	%						4.47	%

47

(1)	For purposes of this table, non-accruing loans have been included in average balances and loan fees, which are immaterial, have been included in interest income.
(2)	Included in the above table are the following amounts for the accretion of the fair value adjustments related to the acquisitions of Virginia Savings and Community:
		Three months ended September 30, 2014
		Virginia Savings		Community		Total
	Residential real estate	$	103	$	105	$	208
	Commercial, financial and agriculture	169		1,110		1,279
	Installment loans to individuals	43		119		162
	Time deposits	135		52		187
		$	450	$	1,386	$	1,836
		Three months ended September 30, 2013
		Virginia Savings		Community		Total
	Residential real estate	$	297	$	264	$	561
	Commercial, financial and agriculture	303		3,478		3,781
	Installment loans to individuals	32		377		409
	Time deposits	121		174		295
		$	753	$	4,293	$	5,046
(3)	Includes the Company’s consumer and DDA overdrafts loan categories.
(4)	Effective January 1, 2012, there is no carrying value of the Company’s previously securitized loans.
(5)	Computed on a fully federal tax-equivalent basis assuming a tax rate of approximately 35%.

48

Table Four

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

(In thousands)

	Three months ended September 30, 2014 vs. 2013
Interest-earning assets:	Increase (Decrease) Due to Change In:
	Volume			Rate			Net
Loan portfolio
Residential real estate	$	862		$	(647	)	$	215
Commercial, financial, and agriculture	(121		)	(3,118		)	(3,239		)
Installment loans to individuals	(232		)	(318		)	(550		)
Previously securitized loans	—			(117		)	(117		)
Total loans	509			(4,200		)	(3,691		)
Securities:
Taxable	176			296			472
Tax-exempt(1)	(19		)	(7		)	(26		)
Total securities	157			289			446
Total interest-earning assets	$	666		$	(3,911	)	$	(3,245	)
Interest-bearing liabilities:
Interest-bearing demand deposits	$	4		$	(45	)	$	(41	)
Savings deposits	11			(35		)	(24		)
Time deposits	(169		)	(104		)	(273		)
Short-term borrowings	3			1			4
Long-term debt	—			(2		)	(2		)
Total interest-bearing liabilities	$	(151	)	$	(185	)	$	(336	)
Net Interest Income	$	817		$	(3,726	)	$	(2,909	)

(1) Fully federal taxable equivalent using a tax rate of approximately 35%.

Loans

The composition of the Company’s loan portfolio as of the dates indicated follows:

Table Five

Loan Portfolio

(In thousands)

	September 30, 2014		December 31, 2013		September 30, 2013
Residential real estate	$	1,274,062	$	1,204,450	$	1,186,000
Home equity – junior liens	146,965		146,090		143,728
Commercial and industrial	130,462		148,302		135,483
Commercial real estate	1,034,593		1,057,048		1,037,980
Consumer	41,042		46,402		50,757
DDA overdrafts	3,618		3,905		4,508
Total loans	$	2,630,742	$	2,606,197	$	2,558,456

Loan balances increased $24.5 million from December 31, 2013 to September 30, 2014. Residential real estate loans increased $69.6 million, or 5.8%, from December 31, 2013 to September 30, 2014.   Residential real estate loans primarily consist of: (i) single-family 3 and 5 year adjustable rate mortgages with terms that amortize the loans over periods from 15-30 years and (ii) home equity loans secured by first liens.  The Company’s mortgage products do not include sub-prime, interest only, or option adjustable rate mortgage products.  The Company’s home equity loans are underwritten differently than 1-4 family residential

49

mortgages with typically less documentation but lower loan-to-value ratios.  Home equity loans consist of lines of credit, short-term fixed amortizing loans and non-purchase adjustable rate loans.  At September 30, 2014, $22.4 million of the residential real estate loans were for properties under construction.

Junior lien home equity loans increased $0.9 million during the first nine months of 2014.  Junior lien home equity loans consist of lines of credit, short-term fixed amortizing loans, and non-purchase adjustable rate loans with second or lower lien positions.

Commercial real estate loans decreased $22.5 million, or 2.1%, from December 31, 2013 to September 30, 2014.  At September 30, 2014, $24.9 million of the commercial real estate loans were for commercial properties under construction.  Commercial and industrial loans (“C&I”) decreased $17.8 million from December 31, 2013 to September 30, 2014.   During the year ended September 30, 2014, a variety of factors have led to the decline in commercial real estate and C&I loans - a $14 million participation loan was repurchased by the lead bank (a large community bank); a $9 million loan from an acquisition that was classified as substandard was repaid in full; a financially weak $9 million loan was refinanced by a smaller competitor that provided the borrower a cash out option; a more competitive lending environment; and various lines of credit experienced balance reductions.

Consumer loans decreased $5.4 million during the first nine months of 2014.  The consumer loan portfolio primarily consists of new and used automobile loans, personal loans secured by cash and cash equivalents, unsecured revolving credit products, and other similar types of credit facilities. The Company strategically decided to reduce consumer loans due to the acquisition of an indirect portfolio of loans associated with Community. These loans have higher loss percentages compared to the Company's historical consumer portfolio.

Allowance and Provision for Loan Losses

Management systematically monitors the loan portfolio and the adequacy of the allowance for loan losses (“ALLL”) on a quarterly basis to provide for probable losses inherent in the portfolio. Management assesses the risk in each loan type based on historical trends, the general economic environment of its local markets, individual loan performance, and other relevant factors. Individual credits are selected throughout the year for detailed loan reviews, which are utilized by management to assess the risk in the portfolio and the adequacy of the allowance. Due to the nature of commercial lending, evaluation of the adequacy of the allowance as it relates to these loan types is often based more upon specific credit review, with consideration given to the potential impairment of certain credits and historical loss rates, adjusted for general economic conditions and other inherent risk factors. Conversely, due to the homogeneous nature of the real estate and installment portfolios, the portions of the allowance allocated to those portfolios are primarily based on prior loss history of each portfolio, adjusted for general economic conditions and other inherent risk factors.

In evaluating the adequacy of the ALLL, management considers both quantitative and qualitative factors. Quantitative factors include actual repayment characteristics and loan performance, cash flow analyses, and estimated fair values of underlying collateral. Qualitative factors generally include overall trends within the portfolio, composition of the portfolio, changes in pricing or underwriting, seasoning of the portfolio, and general economic conditions.

The allowance not specifically allocated to individual credits is generally determined by analyzing potential exposure and other qualitative factors that could negatively impact the adequacy of the allowance.  Loans not individually evaluated for impairment are grouped by pools with similar risk characteristics and the related historical loss rates are adjusted to reflect current inherent risk factors, such as unemployment, overall economic conditions, concentrations of credit, loan growth, classified and impaired loan trends, staffing, adherence to lending policies, and loss trends.

Determination of the ALLL is subjective in nature and requires management to periodically reassess the validity of its assumptions. Differences between actual losses and estimated losses are assessed such that management can timely modify its evaluation model to ensure that adequate provision has been made for risk in the total loan portfolio.

As a result of the Company’s quarterly analysis of the adequacy of the ALLL, the Company recorded a provision for loan losses of $3.7 million in the first nine months of 2014 and $4.9 million in the first nine months of 2013.  The provision for loan losses recorded in 2014 reflects the modest growth in the loan portfolio, changes in the quality of the portfolio and general improvement in the Company's historical loss rates used to compute the allowance not specifically allocated to individual credits. Additionally, the improvement in non-performing assets also contributed to a lower provision for loan losses during 2014. Changes in the amount of the provision and related allowance are based on the Company’s detailed systematic methodology and are directionally consistent with changes in the composition and quality of the Company’s loan portfolio.  The Company believes its

50

methodology for determining its ALLL adequately provides for probable losses inherent in the loan portfolio and produces a provision and allowance for loan losses that is directionally consistent with changes in asset quality and loss experience.

The Company had net charge-offs of $3.8 million and $3.1 million for the first nine months of 2014 and 2013, respectively.  Net charge-offs in the first nine months of 2014 consisted primarily of net charge-offs on commercial real estate loans of $1.6 million, residential real estate loans of $1.3 million and DDA overdrafts of $0.4 million.  

The Company’s ratio of non-performing assets to total loans and other real estate owned decreased from 1.20% at December 31, 2013 to 1.04% at September 30, 2014.  Excluded from this ratio are purchased credit-impaired loans in which the Company estimated cash flows and estimated a credit mark. These loans are considered performing loans provided that the loan is performing in accordance with the estimated expectations. Such loans would be considered non-performing loans if the loan's performance deteriorates below the initial expectations. The Company’s ratio of non-performing assets to total loans and other real estate owned is less than half of the 2.52% non-performing asset ratio reported by the Company’s peer group (bank holding companies with total assets between $1 and $5 billion), as of the most recently reported quarter ended June 30, 2014.

The ALLL at September 30, 2014 was $20.5 million compared to $20.6 million at December 31, 2013.  Below is a summary of the changes in the components of the ALLL from December 31, 2013 to September 30, 2014.

The allowance allocated to the commercial real estate loan portfolio (see Table Nine) decreased $1.2 million, or 10.85%, from $10.8 million at December 31, 2013 to $9.6 million at September 30, 2014. This decrease was mainly attributable to lower loan balances due to a more competitive lending environment coupled with an improvement in historical loss rates.

The allowance related to the commercial and industrial loan portfolio increased $0.5 million from $1.1 million at December 31, 2013 to $1.6 million at September 30, 2014 (see Table Nine). This decrease is due to higher substandard loan balances within the portfolio, which were partially offset by an improvement in historical loss rates .

The allowance allocated to the residential real estate portfolio (see Table Nine) increased $0.9 million from $6.1 million at December 31, 2013 to $7.0 million at September 30, 2014. This increase was due to growth in the portfolio.

The allowance allocated to the home equity loan portfolio (see Table Nine) decreased from $1.7 million at December 31, 2013 to $1.5 million at September 30, 2014.

The allowance allocated to the consumer loan portfolio (see Table Nine) remained flat at $0.1 million at September 30, 2014.

The allowance allocated to overdraft deposit accounts (see Table Nine) decreased modestly from $0.9 million at December 31, 2013 to $0.8 million at September 30, 2014.

Based on the Company’s analysis of the adequacy of the allowance for loan losses and in consideration of the known factors utilized in computing the allowance, management believes that the allowance for loan losses as of September 30, 2014, is adequate to provide for probable losses inherent in the Company’s loan portfolio. Future provisions for loan losses will be dependent upon trends in loan balances including the composition of the loan portfolio, changes in loan quality and loss experience trends, and recoveries of previously charged-off loans, among other factors.

51

Table Six

Analysis of the Allowance for Loan Losses

(In thousands)

	Nine months ended September 30,						Year ended December 31,
	2014			2013			2013
Balance at beginning of period	$	20,575		$	18,809		$	18,809
Charge-offs:
Commercial and industrial	330			772			1,040
Commercial real estate	1,665			803			2,187
Residential real estate	1,348			1,598			2,181
Home equity	288			278			295
Consumer	171			326			454
DDA overdrafts	1,052			1,102			1,483
Total charge-offs	4,854			4,879			7,640
Recoveries:
Commercial and industrial	85			51			84
Commercial real estate	94			669			785
Residential real estate	91			137			234
Home equity	—			—			—
Consumer	172			242			327
DDA overdrafts	654			674			1,128
Total recoveries	1,096			1,773			2,558
Net charge-offs	3,758			3,106			5,082
Provision for acquired loans	135			90			597
Provision for loan losses	3,535			4,813			6,251
Balance at end of period	$	20,487		$	20,606		$	20,575
As a Percent of Average Total Loans:
Net charge-offs (annualized)	0.19		%	0.17		%	0.20		%
Provision for loan losses (annualized)	0.19		%	0.26		%	0.27		%
As a Percent of Non-Performing Loans:
Allowance for loan losses	112.61		%	93.86		%	90.25		%

Table Seven

Non-Accrual, Past-Due and Restructured Loans

(In thousands)

	As of September 30,				December 31,
	2014		2013		2013
Non-accrual loans	$	17,384	$	21,535	$	22,361
Accruing loans past due 90 days or more	809		418		436
Total non-performing loans	18,193		21,953		22,797

The average recorded investment in impaired loans during the nine months ended September 30, 2014 and 2013 was $9.9 million and $13.2 million, respectively.  The Company recognized less than $0.1 million of interest income received in cash on non-accrual and impaired loans for the nine months ended September 30,2014. There was no interest income received in cash on non-accrual and impaired loans for the three months ended September 30, 2013.  Approximately $0.3 million and

52

$0.4 million of interest income would have been recognized during the nine months ended September 30, 2014 and September 30, 2013, respectively, if such loans had been current in accordance with their original terms.  There were no commitments to provide additional funds on non-accrual, impaired, or other potential problem loans at September 30, 2014.  

Interest on loans is accrued and credited to operations based upon the principal amount outstanding.  The accrual of interest income is generally discontinued when a loan becomes 90 days past due as to principal or interest unless the loan is well collateralized and in the process of collection.  When interest accruals are discontinued, interest credited to income in the current year that is unpaid and deemed uncollectible is charged to operations.  Prior-year interest accruals that are unpaid and deemed uncollectible are charged to the allowance for loan losses, provided that such amounts were specifically reserved.

Table Eight

Impaired Loans

(In thousands)

	As of September 30,				As of December 31,
	2014		2013		2013
Impaired loans with a valuation allowance	$	1,397	$	3,507	$	3,416
Impaired loans with no valuation allowance	5,466		9,333		9,178
Total impaired loans	$	6,863	$	12,840	$	12,594
Allowance for loan losses allocated to impaired loans	$	247	$	880	$	880

Table Nine

Allocation of the Allowance for Loan Losses

(In thousands)

	As of September 30,				As of December 31,
	2014		2013		2013
Commercial and industrial	$	1,593	$	1,237	$	1,139
Commercial real estate	9,606		10,507		10,775
Residential real estate	6,959		6,249		6,057
Home equity	1,491		1,689		1,672
Consumer	88		76		77
DDA overdrafts	750		848		855
Allowance for Loan Losses	$	20,487	$	20,606	$	20,575

Non-Interest Income and Non-Interest Expense

Nine months ended September 30, 2014 vs. 2013

(In thousands)

	Nine months ended September 30,
	2014		2013		$ Change			% Change
Gains on sale of investment securities	$	1.0	$	0.1	$	0.9		900.0	%
Non-interest income, excluding gains on sale of investment securities	43.1		43.0		0.1			0.2	%
Non-interest expense	72.0		78.0		(6.0		)	(7.7	)%

Non-Interest Income:During 2014, the Company realized investment gains of $1.0 million from the sale of certain equity positions related to community banks and bank holding companies. Excluding investment security gains, non-interest income increased $0.1 million to $43.1 million compared to the first nine months of 2013.

53

Non-Interest Expense:During 2013, the Company completed its acquisition of Community and recognized $5.5 million of acquisition and integration expenses. Excluding these expenses, non-interest expenses decreased $0.6 million, from $72.6 million in the first nine months of 2013 to $72.0 million in the first nine months of 2014. This decrease was largely attributable to a decline in other expenses of $1.5 million due to a decrease in non-income based taxes as a result of the recognition of previously unrecognized tax position resulting from the close of the statute of limitations for a previous tax year. This favorable difference was discrete to the first quarter of 2014. This decrease was partially offset by an increase in salaries and employee benefits of $0.7 million.

Income Tax Expense:The Company’s effective income tax rate for the nine months ended September 30, 2014 was 32.3% compared to 34.4% for the year ended December 31, 2013, and 34.5% for the nine months ended September 30, 2013.  During the nine months ended September 30, 2014, the Company reduced income tax expense due to the recognition of previously unrecognized tax position resulting from the close of the statute of limitations for a previous tax year. Exclusive of this discrete item recognized in the nine months ended September 30, 2014, the Company’s tax rate from operations was 33.6%.

In the preparation of income tax returns, tax positions are taken based on interpretations of Federal and state income tax laws, for which the outcome of such positions may not be certain. The Company periodically reviews and evaluates the status of uncertain tax positions and may establish tax reserves for tax benefits that may not be realized. The amount of any such reserves are based on the standards for determining such reserves as set forth in current accounting guidance and the Company's estimate the amounts that may ultimately be due or owed (including interest). These estimates may change from time to time based on the Company's evaluation of developments subsequent to the filing of the income tax return, such as tax authority audits, court decisions, other tax law interpretations, or the closing of the statute of limitations. During the first quarter of 2014, the Company recognized $1.3 million of unrecognized tax benefits due to the expiration of the statute of limitations on certain items. The Company may release another $1.5 million over the next 12 months from its unrecognized tax benefit balance due to the expiration of the applicable statute of limitations, although there can be no assurances that this will occur.

Three months ended September 30, 2014 vs. 2013

(In thousands)

	Three months ended September 30,
	2014		2013		$ Change			% Change
Gains on sale of investment securities	$	0.1	$	—	$	0.1		-
Non-interest income, excluding gains on sale of investment securities	14.5		14.5		—			—	%
Non-interest expense	24.3		24.7		(0.4		)	(1.6	)%

Non-Interest Income:During the third quarter of 2014, the Company realized investment gains of $0.1 million from the sale of certain equity positions related to community banks and bank holding companies. Excluding investment security gains, non-interest income remained flat at $14.5 million compared to the third quarter of 2013.

Non-Interest Expense:Non-interest expenses decreased $0.4 million, from $24.7 million in the third quarter of 2013 to $24.3 million in the third quarter of 2014. This decrease was primarily related to a decrease in repossessed assets losses of $0.9 million. These expenses were partially offset by an increase in salaries and expenses of $0.2 million.

Income Tax Expense:The Company’s effective income tax rate for the three months ended September 30, 2014 was 33.6% compared to 34.4% for the year ended December 31, 2013, and 33.6% for the three months ended September 30, 2013.  The effective rate is based upon the Company's expected tax rate for the year ending December 31, 2014.

Risk Management

Market risk is the risk of loss due to adverse changes in current and future cash flows, fair values, earnings or capital due to adverse movements in interest rates and other factors, including foreign exchange rates and commodity prices. Because the Company has no significant foreign exchange activities and holds no commodities, interest rate risk represents the primary risk factor affecting the Company’s balance sheet and net interest margin. Significant changes in interest rates by the Federal Reserve could result in similar changes in LIBOR interest rates, prime rates, and other benchmark interest rates that could affect the estimated fair value of the Company’s investment securities portfolio, interest paid on the Company’s short-term and long-term borrowings, interest earned on the Company’s loan portfolio and interest paid on its deposit accounts.

54

The Company’s Asset and Liability Committee (“ALCO”) has been delegated the responsibility of managing the Company’s interest-sensitive balance sheet accounts to maximize earnings while managing interest rate risk. ALCO, comprised of various members of executive and senior management, is also responsible for establishing policies to monitor and limit the Company’s exposure to interest rate risk and to manage the Company’s liquidity position. ALCO satisfies its responsibilities through monthly meetings during which product pricing issues, liquidity measures, and interest sensitivity positions are monitored.

In order to measure and manage its interest rate risk, the Company uses an asset/liability management and simulation software model to periodically update the interest sensitivity position of the Company’s balance sheet. The model is also used to perform analyses that measure the impact on net interest income and capital as a result of various changes in the interest rate environment. Such analyses quantify the effects of various interest rate scenarios on projected net interest income.

The Company’s policy objective is to avoid negative fluctuations in net income or the economic value of equity of more than 15% within a 12-month period, assuming an immediate parallel increase or decrease of 400 basis points. The Company measures the long-term risk associated with sustained increases and decreases in rates through analysis of the impact to changes in rates on the economic value of equity.  Due to the current Federal Funds target rate of 25 basis points, the Company has chosen not to reflect a decrease of 25 basis points from current rates in its analysis.

The following table summarizes the sensitivity of the Company’s net income to various interest rate scenarios. The results of the sensitivity analyses presented below differ from the results used internally by ALCO in that, in the analyses below, interest rates are assumed to have an immediate and sustained parallel shock. The Company recognizes that rates are volatile, but rarely move with immediate and parallel effects. Internally, the Company considers a variety of interest rate scenarios that are deemed to be possible while considering the level of risk it is willing to assume in “worst-case” scenarios such as shown by the following:

Immediate Basis Point Change in Interest Rates	Implied Federal Funds Rate Associated with Change in Interest Rates		Estimated Increase (Decrease) in Net Income Over 12 Months		Estimated Increase (Decrease) in Economic Value of Equity
September 30, 2014
+400	4.25	%	+3.1	%	(3.2	)%
+300	3.25		+4.8		+0.8
+200	2.25		+4.4		+3.1
+100	1.25		+1.3		+1.7
December 31, 2013
+400	4.25	%	+3.3	%	(6.4	)%
+300	3.25		+4.3		(2.0	)
+200	2.25		+3.3		+0.6
+100	1.25		+0.6		+0.4

These estimates are highly dependent upon assumptions made by management, including, but not limited to, assumptions regarding the manner in which interest-bearing demand deposit and saving deposit accounts reprice in different interest rate scenarios, changes in the composition of deposit balances, pricing behavior of competitors, prepayments of loans and deposits under alternative rate environments, and new business volumes and pricing. As a result, there can be no assurance that the estimates above will be achieved in the event that interest rates increase during 2014 and beyond.  The estimates above do not necessarily imply that the Company will experience increases in net income if market interest rates rise.  The table above indicates how the Company’s net income and the economic value of equity behave relative to an increase or decrease in rates compared to what would otherwise occur if rates remain stable.

Based upon the estimates above, the Company believes that its net income is positively correlated with increasing rates as compared to the level of net income the Company would expect if interest rates remain flat.

Liquidity

The Company evaluates the adequacy of liquidity at both the City Holding Company ("Parent Company") level and at the banking subsidiary level. At the Parent Company level, the principal source of cash is dividends from its banking subsidiary, City National Bank ("City National"). Dividends paid by City National to the Parent Company are subject to certain legal and regulatory limitations. Generally, any dividends in amounts that exceed the earnings retained by City National in the current year

55

plus retained net profits for the preceding two years must be approved by regulatory authorities. At September 30, 2014, City National could pay dividends up to $21.4 million plus net profits for the remainder of 2014, as defined by statute, up to the dividend declaration date without prior regulatory permission.

The Parent Company used cash obtained from the dividends received primarily to: (1) pay common dividends to shareholders, (2) remit interest payments on the Company’s junior subordinated debentures, and (3) fund repurchase of the Company’s common shares.

Over the next 12 months, the Parent Company has an obligation to remit interest payments approximating $0.6 million on the Debentures held by City Holding Capital Trust III. Interest payments on the debentures can be deferred for up to five years under certain circumstances and dividends to shareholders can, if necessary, be suspended. The Parent Company anticipates continuing the payment of dividends on its common stock, which are expected to approximate $24.6 million on an annualized basis over the next 12 months based on common shareholders of record at September 30, 2014.    In addition to these anticipated cash needs, the Parent Company has operating expenses and other contractual obligations, which are estimated to require $1.5 million of additional cash over the next 12 months. As of September 30, 2014, the Parent Company reported a cash balance of $8.9 million and management believes that the Parent Company’s available cash balance, together with cash dividends from City National will be adequate to satisfy its funding and cash needs over the next twelve months.

Excluding the interest and dividend payments discussed above, the Parent Company has no significant commitments or obligations in years after 2014 other than the repayment of its $16.5 million obligation under the debentures held by City Holding Capital Trust III. However, this obligation does not mature until June 2038, or earlier at the option of the Parent Company. It is expected that the Parent Company will be able to obtain the necessary cash, either through dividends obtained from City National or the issuance of other debt, to fully repay the debentures at their maturity.

City National manages its liquidity position in an effort to effectively and economically satisfy the funding needs of its customers and to accommodate the scheduled repayment of borrowings. Funds are available to City National from a number of sources, including depository relationships, sales and maturities within the investment securities portfolio, and borrowings from the FHLB and other financial institutions. As of September 30, 2014, City National’s assets are significantly funded by deposits and capital. Additionally, City National maintains borrowing facilities with the FHLB and other financial institutions that are accessed as necessary to fund operations and to provide contingency funding mechanisms. As of September 30, 2014, City National has the capacity to borrow an additional $1.5 billion from the FHLB and other financial institutions under existing borrowing facilities. City National maintains a contingency funding plan, incorporating these borrowing facilities, to address liquidity needs in the event of an institution-specific or systemic financial industry crisis. Also, although it has no current intention to do so, City National could liquidate its unpledged securities, if necessary, to provide an additional funding source.  City National also segregates certain mortgage loans, mortgage-backed securities, and other investment securities in a separate subsidiary so that it can separately monitor the asset quality of these primarily mortgage-related assets, which could be used to raise cash through securitization transactions or obtain additional equity or debt financing if necessary.

The Company manages its asset and liability mix to balance its desire to maximize net interest income against its desire to minimize risks associated with capitalization, interest rate volatility, and liquidity. With respect to liquidity, the Company has chosen a conservative posture and believes that its liquidity position is strong. The Company’s net loan to asset ratio is 77.1% as of September 30, 2014 and deposit balances fund 82.5% of total assets. The Company has obligations to extend credit, but these obligations are primarily associated with existing home equity loans that have predictable borrowing patterns across the portfolio. The Company has investment security balances with carrying values that totaled $357.8 million at September 30, 2014, and that greatly exceeded the Company’s non-deposit sources of borrowing which totaled $162.6 million.  Further, the Company’s deposit mix has a very high proportion of transaction and savings accounts that fund 52.0% of the Company’s total assets.

As illustrated in the Consolidated Statements of Cash Flows, the Company generated $34.6 million of cash from operating activities during the first nine months of 2014, primarily from interest income received on loans and investments, net of interest expense paid on deposits and borrowings.  The Company used $8.8 million of cash in investing activities during the first nine months of 2014 primarily from the purchases of available-for-sale and held-to-maturity securities and the repayment of loans. The Company used $20.2 million of cash in financing activities during the first nine months of 2014, principally a result of purchases of treasury stock of $19.5 million, as well as cash dividends paid to the Company’s common stockholders of $18.4 million.

56

Capital Resources

During the first nine months of 2014, Shareholders’ Equity increased $4.1 million, or 1.0%, from $387.6 million at December 31, 2013 to $391.7 million at September 30, 2014.  This increase was primarily due to net income of $38.4 million, partially offset by dividends declared of $18.7 million and purchases of the Company's stock pursuant to its stock repurchase program of $19.5 million.

Regulatory guidelines require the Company to maintain a minimum total capital to risk-adjusted assets ratio of 8.0%, with at least one-half of capital consisting of tangible common stockholders’ equity and a minimum Tier I leverage ratio of 4.0%. Similarly, City National is also required to maintain minimum capital levels as set forth by various regulatory agencies. Under capital adequacy guidelines, City National is required to maintain minimum total capital, Tier I capital, and leverage ratios of 8.0%, 4.0%, and 4.0%, respectively. To be classified as “well capitalized,” City National must maintain total capital, Tier I capital, and leverage ratios of 10.0%, 6.0%, and 5.0%, respectively.

The Company’s regulatory capital ratios for both City Holding and City National as illustrated in the following table:

City Holding:	Minimum		Well- Capitalized		Actual
					September 30, 2014		December 31, 2013
Total	8.0	%	10.0	%	14.2	%	13.8	%
Tier I Risk-based	4.0		6.0		13.4		13.0
Tier I Leverage	4.0		5.0		10.1		9.8
City National:
Total	8.0	%	10.0	%	13.4	%	12.2	%
Tier I Risk-based	4.0		6.0		12.6		11.4
Tier I Leverage	4.0		5.0		9.5		8.6

As of September 30, 2014, management believes that City Holding Company, and its banking subsidiary, City National, were “well capitalized.”  City Holding is subject to regulatory capital requirements administered by the Federal Reserve, while City National is subject to regulatory capital requirements administered by the Office of the Comptroller of the Currency (“OCC”) and the Federal Deposit Insurance Corporation (“FDIC”).  Regulatory agencies can initiate certain mandatory actions if either City Holding or City National fails to meet the minimum capital requirements, as shown above.  As of September 30, 2014, management believes that City Holding and City National meet all capital adequacy requirements.

In July 2013, the Federal Reserve published the final rules that establish a new comprehensive capital framework for banking organizations, commonly referred to as Basel III. These final rules substantially revise the risk-based capital requirements applicable to bank holding companies and depository institutions. The final rule is effective January 1, 2015 for smaller, non-complex banking organizations with full implementation by January 1, 2019.

Item 3 - Quantitative and Qualitative Disclosure About Market Risk

The information called for by this item is provided under the caption “Risk Management” under Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Item 4 - Controls and Procedures

Pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934, the Company carried out an evaluation, with the participation of the Company’smanagement, including the Company’sChief Executive Officer and Chief Financial Officer, of the effectiveness of the Company’s disclosure controls and procedures (as defined under Rule 13a-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this report. Based upon that evaluation, the Company’sChief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective in timely alerting them to material information relating to the Company required to be included in the Company’speriodic SEC filings.  There has been no change in the Company’s internal control over financial reporting during the quarter ended September 30, 2014 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

57

Part II - OTHER INFORMATION

Item 1. Legal Proceedings

The Company is engaged in various legal actions that it deems to be in the ordinary course of business. As these legal actions are resolved, the Company could realize positive and/or negative impact to its financial performance in the period in which these legal actions are ultimately decided. There can be no assurance that current actions will have immaterial results, either positive or negative, or that no material actions may be presented in the future.

Item 1A. Risk Factors

There have been no material changes to the factors disclosed in Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2013.

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

The following table sets forth information regarding the Company's common stock repurchases transacted during the quarter:

				Total Number	Maximum Number
				of Shares Purchased	of Shares that May
				as Part of Publicly	Yet Be Purchased
	Total Number of	Average Price		Announced Plans	Under the Plans
Period	Shares Purchased	Paid per Share		or Programs (a)	or Programs
July 1 - July 31, 2014	98,506	$	43.26	98,506	161,331
August 1 - August 31, 2014	103,637	$	41.87	103,637	57,694
September 1 - September 30, 2014	60,062	$	42.78	60,062	977,708
(a) In July 2011, the Company announced that the Board of Directors had authorized the Company to buy back up to 1,000,000 shares of its common stock, in open market transactions at prices that are accretive to continuing shareholders. On September 24, 2014 the Company announced that the Board of Directors rescinded the share repurchase program approved in July 2011 and announced that it had authorized the Company to buy back up to 1,000,000 shares of its common stock, in open market transactions at prices that are accretive to continuing shareholders. No timetable was placed on the duration of this repurchase program.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

None.

Item 5. Other Information.

None.

Item 6. Exhibits

		(a) Exhibits
		31(a)	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Charles R. Hageboeck
		31(b)	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for David L. Bumgarner
		32(a)	Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for Charles R. Hageboeck
		32(b)	Certification pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for David L. Bumgarner
		101.INS	XBRL Instance Document*
		101.SCH	XBRL Taxonomy Extension Schema*
		101.CAL	XBRL Taxonomy Extension Calculation Linkbase*
		101.DEF	XBRL Taxonomy Extension Definition Linkbase*
		101.LAB	XBRL Taxonomy Extension Label Linkbase*
		101.PRE	XBRL Taxonomy Extension Presentation Linkbase*
·	Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities Exchange Act of 1934 and otherwise are not subject to liability.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

City Holding Company

(Registrant)

/s/ Charles R. Hageboeck

Charles R. Hageboeck

President and Chief Executive Officer

(Principal Executive Officer)

/s/ David L. Bumgarner

David L. Bumgarner

Senior Vice President, Chief Financial Officer and Principal Accounting Officer

(Principal Financial Officer)

Date: November 5, 2014

58

EX-31.A

Exhibit 31(a)

CERTIFICATION

I, Charles R. Hageboeck, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q for the quarter ended September 30, 2014 of City Holding Company;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or such persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(a) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: November 5, 2014

/s/ Charles R. Hageboeck

Charles R. Hageboeck

President and Chief Executive Officer

EX-31.B

Exhibit 31(b)

CERTIFICATION

I, David L. Bumgarner, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q for the quarter ended September 30, 2014 of City Holding Company;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or such persons performing the equivalent functions)

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(a) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: November 5, 2014

/s/ David L. Bumgarner

David L. Bumgarner

Senior Vice President and Chief Financial Officer

EX-32.A

Exhibit 32(a)

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of City Holding Company (the “Company”) for the period ending September 30, 2014 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Charles R. Hageboeck, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Charles R. Hageboeck

Charles R. Hageboeck

President and Chief Executive Officer

Date: November 5, 2014

This certification is being furnished as required by Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended (the“Exchange Act”), and Section 1350 of Chapter 63 of Title 18 of the United States Code, and shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that Section. This certification shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act.

EX-32.B

Exhibit 32(b)

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of City Holding Company (the “Company”) for the period ending September 30, 2014 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, David L. Bumgarner, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2)  the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ David L. Bumgarner

David L. Bumgarner

Senior Vice President and Chief Financial Officer

Date: November 5, 2014

This certification is being furnished as required by Rule 13a-14(b) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Section 1350 of Chapter 63 of Title 18 of the United States Code, and shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that Section. This certification shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act.

XML

Investments (Additional Information Of Trust Preferred Securities With Credit Rating Below Investment Grade) (Details) (USD $)	9 Months Ended			12 Months Ended
	Sep. 30, 2014		Sep. 30, 2013	Dec. 31, 2013
Schedule of Investments [Line Items]
Available-for-sale Securities, Amortized Cost	$ 250,194,000			$ 355,771,000
Securities held-to-maturity, Amortized Cost	93,089,000			4,117,000
Investment securities available for sale, at fair value	250,481,000			352,660,000
Securities held-to-maturity, Estimated Fair Value	95,343,000			5,335,000
Model assumption, recovery rate	0.00%
Credit-related net investment impairment losses	0		0	0
P4 [Member]
Schedule of Investments [Line Items]
Model assumption, number of banks deferring will cure	1
Marketable Equity Securities [Member] | P1 [Member]
Schedule of Investments [Line Items]
Type	Pooled
Class	Mezz
Original Cost	698,000
Available-for-sale Securities, Amortized Cost	75,000
Investment securities available for sale, at fair value	353,000
Difference (1)	278,000	[1]
Lowest Credit Rating	Caa1
Number of issuers currently performing	6
Actual deferrals/defaults (as a % of original dollar)	19.50%
Expected deferrals/defaults (as a % of remaining performing collateral)	20.00%	[2]
Excess Subordination as a Percentage of Current Performing Collateral (4)	65.70%	[3]
Marketable Equity Securities [Member] | P2 [Member]
Schedule of Investments [Line Items]
Type	Pooled
Class	Mezz
Original Cost	2,535,000
Available-for-sale Securities, Amortized Cost	0
Investment securities available for sale, at fair value	0
Difference (1)	0	[1]
Lowest Credit Rating	Ca
Number of issuers currently performing	4
Actual deferrals/defaults (as a % of original dollar)	22.30%
Expected deferrals/defaults (as a % of remaining performing collateral)	0.00%	[2]
Excess Subordination as a Percentage of Current Performing Collateral (4)	0.00%	[3]
Marketable Equity Securities [Member] | P3 [Member]
Schedule of Investments [Line Items]
Type	Pooled
Class	Mezz
Original Cost	2,962,000
Available-for-sale Securities, Amortized Cost	1,419,000
Investment securities available for sale, at fair value	636,000
Difference (1)	(783,000)	[1]
Lowest Credit Rating	Caa3
Number of issuers currently performing	17
Actual deferrals/defaults (as a % of original dollar)	22.60%
Expected deferrals/defaults (as a % of remaining performing collateral)	8.20%	[2]
Excess Subordination as a Percentage of Current Performing Collateral (4)	43.50%	[3]
Marketable Equity Securities [Member] | P4 [Member]
Schedule of Investments [Line Items]
Type	Pooled
Class	Mezz
Original Cost	4,060,000
Available-for-sale Securities, Amortized Cost	400,000
Investment securities available for sale, at fair value	119,000
Difference (1)	(281,000)	[1]
Lowest Credit Rating	Ca
Number of issuers currently performing	9
Actual deferrals/defaults (as a % of original dollar)	19.20%
Expected deferrals/defaults (as a % of remaining performing collateral)	7.10%	[4]
Excess Subordination as a Percentage of Current Performing Collateral (4)	26.90%	[3]
Marketable Equity Securities [Member] | P5 [Member]
Schedule of Investments [Line Items]
Type	Pooled
Class	Mezz
Original Cost	5,877,000
Available-for-sale Securities, Amortized Cost	512,000
Investment securities available for sale, at fair value	368,000
Difference (1)	(144,000)	[1]
Lowest Credit Rating	Ca
Number of issuers currently performing	7
Actual deferrals/defaults (as a % of original dollar)	19.80%
Expected deferrals/defaults (as a % of remaining performing collateral)	20.00%	[2]
Excess Subordination as a Percentage of Current Performing Collateral (4)	62.70%	[3]
Marketable Equity Securities [Member] | S5 [Member]
Schedule of Investments [Line Items]
Type	Single
Original Cost	261,000
Available-for-sale Securities, Amortized Cost	235,000
Investment securities available for sale, at fair value	249,000
Difference (1)	14,000	[1]
Lowest Credit Rating	NR
Number of issuers currently performing	1
Actual deferrals/defaults (as a % of original dollar)	0.00%
Expected deferrals/defaults (as a % of remaining performing collateral)	0.00%
Held-to-maturity Securities [Member] | P6 [Member]
Schedule of Investments [Line Items]
Type	Pooled
Class	Mezz
Original Cost	1,351,000
Securities held-to-maturity, Amortized Cost	43,000
Securities held-to-maturity, Estimated Fair Value	707,000
Difference (1)	664,000	[1]
Lowest Credit Rating	Caa1
Number of issuers currently performing	6
Actual deferrals/defaults (as a % of original dollar)	19.50%
Expected deferrals/defaults (as a % of remaining performing collateral)	20.00%	[2]
Excess Subordination as a Percentage of Current Performing Collateral (4)	65.70%	[3]
Held-to-maturity Securities [Member] | P7 [Member]
Schedule of Investments [Line Items]
Type	Pooled
Class	Mezz
Original Cost	3,367,000
Securities held-to-maturity, Amortized Cost	0
Securities held-to-maturity, Estimated Fair Value	0
Difference (1)	0	[1]
Lowest Credit Rating	Ca
Number of issuers currently performing	4
Actual deferrals/defaults (as a % of original dollar)	22.30%
Expected deferrals/defaults (as a % of remaining performing collateral)	0.00%	[2]
Excess Subordination as a Percentage of Current Performing Collateral (4)	0.00%	[3]
Held-to-maturity Securities [Member] | S9 [Member]
Schedule of Investments [Line Items]
Type	Single
Original Cost	4,000,000
Securities held-to-maturity, Amortized Cost	4,000,000
Securities held-to-maturity, Estimated Fair Value	4,000,000
Difference (1)	$ 0	[1]
Lowest Credit Rating	NR
Number of issuers currently performing	1
Actual deferrals/defaults (as a % of original dollar)	0.00%
Expected deferrals/defaults (as a % of remaining performing collateral)	0.00%

[1] The differences noted consist of unrealized gains (losses) recorded at September 30, 2014 and noncredit other-than-temporary impairment losses recorded subsequent to April 1, 2009 that have not been reclassified as credit losses.

[2] Performing collateral is defined as total collateral minus all collateral that has been called, is currently deferring, or currently in default. This model for this security assumes that all collateral that is currently deferring will default with a zero recovery rate. The underlying issuers can cure, thus this bond could recover at a higher percentage upon default than zero.

[3] Excess subordination is defined as the additional defaults/deferrals necessary in the next reporting period to deplete the entire credit enhancement (excess interest and over-collateralization) beneath our tranche within each pool to the point that would cause a "break in yield." This amount assumes that all currently performing collateral continues to perform. A break in yield means that our security would not be expected to receive all the contractual cash flows (principal and interest) by maturity. The "percent of current performing collateral" is the ratio of the "excess subordination amount" to current performing collateral—a higher percent means there is more excess subordination to absorb additional defaults/deferrals, and the better our security is protected from loss.

[4] Performing collateral is defined as total collateral minus all collateral that has been called, is currently deferring, or currently in default. The model for this security assumes that one of the banks that is currently deferring will cure. If additional underlying issuers cure, this bond could recover at a higher percentage.

XML

Long-Term Debt (Components Of Long-Term Debt) (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended		12 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Dec. 31, 2013
Long-term Debt, Unclassified [Abstract]
Long-term debt	$ 16,495		$ 16,495
Junior subordinated debentures, interest rate	3.73%		3.74%
Junior subordinated debentures, due date	Dec. 31, 2038		Dec. 31, 2038
Percent over three month LIBOR Rate	3.50%		3.50%
Junior subordinated debenture, Threshold in days	90 days	90 days

XML

Allowance For Loan Losses (Schedule Of Credit Quality Indicators) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Financing Receivable, Recorded Investment [Line Items]
Total	$ 2,630,742	$ 2,606,197
Commercial, Industrial, And Commercial Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	1,165,055	1,205,350
Commercial And Industrial [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	130,462	148,302
Commercial Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	1,034,593	1,057,048
Pass [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	1,084,079	1,116,186
Pass [Member] | Commercial And Industrial [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	116,498	141,818
Pass [Member] | Commercial Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	967,581	974,368
Special Mention [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	19,788	20,720
Special Mention [Member] | Commercial And Industrial [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	654	648
Special Mention [Member] | Commercial Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	19,134	20,072
Substandard [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	60,343	67,555
Substandard [Member] | Commercial And Industrial [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	12,900	5,416
Substandard [Member] | Commercial Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	47,443	62,139
Doubtful [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	845	889
Doubtful [Member] | Commercial And Industrial [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	410	420
Doubtful [Member] | Commercial Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	$ 435	$ 469

XML

Fair Value Measurements (Schedule Of Assets And Liabilities Measured At Fair Value On A Recurring And Nonrecurring Basis) (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended																																																																										9 Months Ended	12 Months Ended							9 Months Ended	12 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014 Obligations Of States And Political Subdivisions [Member]	Dec. 31, 2013 Obligations Of States And Political Subdivisions [Member]	Sep. 30, 2014 Obligations Of States And Political Subdivisions [Member] Level 1 [Member]	Dec. 31, 2013 Obligations Of States And Political Subdivisions [Member] Level 1 [Member]	Sep. 30, 2014 Obligations Of States And Political Subdivisions [Member] Level 2 [Member]	Dec. 31, 2013 Obligations Of States And Political Subdivisions [Member] Level 2 [Member]	Sep. 30, 2014 Obligations Of States And Political Subdivisions [Member] Level 3 [Member]	Dec. 31, 2013 Obligations Of States And Political Subdivisions [Member] Level 3 [Member]	Sep. 30, 2014 U.S. Government Agencies [Member]	Dec. 31, 2013 U.S. Government Agencies [Member]	Sep. 30, 2014 U.S. Government Agencies [Member] Level 1 [Member]	Dec. 31, 2013 U.S. Government Agencies [Member] Level 1 [Member]	Sep. 30, 2014 U.S. Government Agencies [Member] Level 2 [Member]	Dec. 31, 2013 U.S. Government Agencies [Member] Level 2 [Member]	Sep. 30, 2014 U.S. Government Agencies [Member] Level 3 [Member]	Dec. 31, 2013 U.S. Government Agencies [Member] Level 3 [Member]	Sep. 30, 2014 U.S. Government Agencies Mortgage-backed Securities [Member]	Dec. 31, 2013 U.S. Government Agencies Mortgage-backed Securities [Member]	Sep. 30, 2014 U.S. Government Agencies Mortgage-backed Securities [Member] Level 1 [Member]	Dec. 31, 2013 U.S. Government Agencies Mortgage-backed Securities [Member] Level 1 [Member]	Sep. 30, 2014 U.S. Government Agencies Mortgage-backed Securities [Member] Level 2 [Member]	Dec. 31, 2013 U.S. Government Agencies Mortgage-backed Securities [Member] Level 2 [Member]	Sep. 30, 2014 U.S. Government Agencies Mortgage-backed Securities [Member] Level 3 [Member]	Dec. 31, 2013 U.S. Government Agencies Mortgage-backed Securities [Member] Level 3 [Member]	Sep. 30, 2014 Private Label [Member]	Dec. 31, 2013 Private Label [Member]	Sep. 30, 2014 Private Label [Member] Level 1 [Member]	Dec. 31, 2013 Private Label [Member] Level 1 [Member]	Sep. 30, 2014 Private Label [Member] Level 2 [Member]	Dec. 31, 2013 Private Label [Member] Level 2 [Member]	Sep. 30, 2014 Private Label [Member] Level 3 [Member]	Dec. 31, 2013 Private Label [Member] Level 3 [Member]	Sep. 30, 2014 Trust Preferred Securities [Member]	Dec. 31, 2013 Trust Preferred Securities [Member]	Sep. 30, 2014 Trust Preferred Securities [Member] Level 1 [Member]	Dec. 31, 2013 Trust Preferred Securities [Member] Level 1 [Member]	Sep. 30, 2014 Trust Preferred Securities [Member] Level 2 [Member]	Dec. 31, 2013 Trust Preferred Securities [Member] Level 2 [Member]	Sep. 30, 2014 Trust Preferred Securities [Member] Level 3 [Member]	Dec. 31, 2013 Trust Preferred Securities [Member] Level 3 [Member]	Sep. 30, 2014 Corporate Securities [Member]	Dec. 31, 2013 Corporate Securities [Member]	Sep. 30, 2014 Corporate Securities [Member] Level 1 [Member]	Dec. 31, 2013 Corporate Securities [Member] Level 1 [Member]	Sep. 30, 2014 Corporate Securities [Member] Level 2 [Member]	Dec. 31, 2013 Corporate Securities [Member] Level 2 [Member]	Sep. 30, 2014 Corporate Securities [Member] Level 3 [Member]	Dec. 31, 2013 Corporate Securities [Member] Level 3 [Member]	Sep. 30, 2014 Marketable Equity Securities [Member]	Dec. 31, 2013 Marketable Equity Securities [Member]	Sep. 30, 2014 Marketable Equity Securities [Member] Level 1 [Member]	Dec. 31, 2013 Marketable Equity Securities [Member] Level 1 [Member]	Sep. 30, 2014 Marketable Equity Securities [Member] Level 2 [Member]	Dec. 31, 2013 Marketable Equity Securities [Member] Level 2 [Member]	Sep. 30, 2014 Marketable Equity Securities [Member] Level 3 [Member]	Dec. 31, 2013 Marketable Equity Securities [Member] Level 3 [Member]	Sep. 30, 2014 Investment Funds [Member]	Dec. 31, 2013 Investment Funds [Member]	Sep. 30, 2014 Investment Funds [Member] Level 1 [Member]	Dec. 31, 2013 Investment Funds [Member] Level 1 [Member]	Sep. 30, 2014 Investment Funds [Member] Level 2 [Member]	Dec. 31, 2013 Investment Funds [Member] Level 2 [Member]	Sep. 30, 2014 Investment Funds [Member] Level 3 [Member]	Dec. 31, 2013 Investment Funds [Member] Level 3 [Member]	Sep. 30, 2014 Derivative Assets [Member]	Dec. 31, 2013 Derivative Assets [Member]	Sep. 30, 2014 Derivative Assets [Member] Level 1 [Member]	Dec. 31, 2013 Derivative Assets [Member] Level 1 [Member]	Sep. 30, 2014 Derivative Assets [Member] Level 2 [Member]	Dec. 31, 2013 Derivative Assets [Member] Level 2 [Member]	Sep. 30, 2014 Derivative Assets [Member] Level 3 [Member]	Dec. 31, 2013 Derivative Assets [Member] Level 3 [Member]	Sep. 30, 2014 Impaired Loans [Member]	Dec. 31, 2013 Impaired Loans [Member]	Sep. 30, 2014 Impaired Loans [Member] Level 1 [Member]	Dec. 31, 2013 Impaired Loans [Member] Level 1 [Member]	Sep. 30, 2014 Impaired Loans [Member] Level 2 [Member]	Dec. 31, 2013 Impaired Loans [Member] Level 2 [Member]	Sep. 30, 2014 Impaired Loans [Member] Level 3 [Member]	Dec. 31, 2013 Impaired Loans [Member] Level 3 [Member]	Sep. 30, 2014 Other Real Estate Owned [Member]	Dec. 31, 2013 Other Real Estate Owned [Member]	Sep. 30, 2014 Other Real Estate Owned [Member] Level 1 [Member]	Dec. 31, 2013 Other Real Estate Owned [Member] Level 1 [Member]	Sep. 30, 2014 Other Real Estate Owned [Member] Level 2 [Member]	Dec. 31, 2013 Other Real Estate Owned [Member] Level 2 [Member]	Sep. 30, 2014 Other Real Estate Owned [Member] Level 3 [Member]	Dec. 31, 2013 Other Real Estate Owned [Member] Level 3 [Member]	Sep. 30, 2014 Derivative Liabilities [Member]	Dec. 31, 2013 Derivative Liabilities [Member]	Sep. 30, 2014 Derivative Liabilities [Member] Level 1 [Member]	Dec. 31, 2013 Derivative Liabilities [Member] Level 1 [Member]	Sep. 30, 2014 Derivative Liabilities [Member] Level 2 [Member]	Dec. 31, 2013 Derivative Liabilities [Member] Level 2 [Member]	Sep. 30, 2014 Derivative Liabilities [Member] Level 3 [Member]	Dec. 31, 2013 Derivative Liabilities [Member] Level 3 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Financial Assets, Recurring			$ 41,812	$ 41,548	$ 0	$ 0	$ 41,812	$ 41,548	$ 0	$ 0	$ 1,943	$ 2,365	$ 0	$ 0	$ 1,943	$ 2,365	$ 0	$ 0	$ 183,297	$ 278,108	$ 0	$ 0	$ 183,297	$ 278,108	$ 0	$ 0	$ 1,778	$ 2,197	$ 0	$ 0	$ 1,778	$ 2,197	$ 0	$ 0	$ 8,816	$ 13,156	$ 0	$ 0	$ 7,090	$ 9,269	$ 1,726	$ 3,887	$ 7,630	$ 9,128	$ 0	$ 0	$ 7,630	$ 9,128	$ 0	$ 0	$ 3,697	$ 4,673	$ 3,697	$ 4,673	$ 0	$ 0	$ 0	$ 0	$ 1,508	$ 1,485	$ 1,508	$ 1,485	$ 0	$ 0	$ 0	$ 0	$ 8,063	$ 3,538	$ 0	$ 0	$ 8,063	$ 3,538	$ 0	$ 0
Financial Liabilities, Recurring																																																																																											8,063	3,538	0	0	8,063	3,538	0	0
Financial Assets, Nonrecurring																																																																											6,617	11,714	0	0	0	0	6,617	11,714	9,161	8,470	0	0	0	0	9,161	8,470
Allowance For Loan Losses On Impaired Loans During The Period	0	750																																																																									(142)	(880)
Write-downs included in other non-interest expense																																																																																			$ (379)	$ (1,108)

XML

Derivative Instruments (Fair Value Of Derivative Instruments) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Other Assets [Member]
Derivatives, Fair Value [Line Items]
Fair Value	$ 8,063	$ 3,538
Other Liabilities [Member]
Derivatives, Fair Value [Line Items]
Fair Value	$ 8,063	$ 3,538

XML

Allowance For Loan Losses (Narrative) (Details) (USD $) In Millions, unless otherwise specified	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Receivables [Abstract]
Loans and Leases Receivable, Impaired, Interest Lost on Nonaccrual Loans	$ 0.3	$ 0.4

XML

Background and Basis Of Presentation Background and Basis of Presentation (Details) (City National [Member])	Sep. 30, 2014 store
Entity Location [Line Items]
Number of Stores	82
WEST VIRGINIA
Entity Location [Line Items]
Number of Stores	57
VIRGINIA
Entity Location [Line Items]
Number of Stores	14
KENTUCKY
Entity Location [Line Items]
Number of Stores	8
OHIO
Entity Location [Line Items]
Number of Stores	3

XML

Fair Value Measurements (Schedule Of OREO Measured And Reported At Fair Value) (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Other Real Estate [Roll Forward]
Beginning balance	$ 8,470	$ 8,162
Acquired	0	3,492
Disposed	(3,155)	(5,900)
Ending balance	9,161	7,518
OREO Remeasured At Initial Recognition [Member]
Other Real Estate [Roll Forward]
Carrying value of foreclosed assets prior to remeasurement	4,225	4,387
Charge-offs recognized in the allowance for loan losses	0	(1,565)
Fair value	4,225	2,822
OREO Remeasured Subsequent To Initial Recognition [Member]
Other Real Estate [Roll Forward]
Carrying value of foreclosed assets prior to remeasurement	480	2,832
Fair value	101	1,774
Write-downs included in other non-interest expense	$ (379)	$ (1,058)

XML

Derivative Instruments (Derivative Assets Offset in The Consolidated Balance Sheets) (Details) (Interest Rate Swap [Member], USD $) In Thousands, unless otherwise specified	Sep. 30, 2014
Interest Rate Swap [Member]
Offsetting Assets [Line Items]
Gross amounts of recognized assets	$ 8,063
Net Amounts of Assets presented in the Statement of Financial Position	8,063
Fair Value of collateral	8,063
Total Gross amounts not offset in the statement of financial position including applicable netting agreement and fair value of collateral	8,063
Net Amount	$ 0

XML

Fair Value Measurements (Schedule Of Reconciliation Of Investment Securities Available For Sale Measured At Fair Value On A Recurring Basis Level 3 Assets) (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Beginning balance	$ 3,887	$ 2,385
Impairment losses on investment securities	0	0
Included in other comprehensive income	(2,161)	2,176
Dispositions	0	(1,776)
Transfers into Level 3	0	0
Ending Balance	$ 1,726	$ 2,785

XML

Allowance For Loan Losses (Tables)

9 Months Ended

Sep. 30, 2014

Receivables [Abstract]

Schedule Of Allowance For Loan Loss By Portfolio Segment

The following table summarizes the activity in the allowance for loan loss, by portfolio segment, for the nine months ended September 30, 2014 and 2013 (in thousands).  The following table also presents the balance in the allowance for loan loss disaggregated on the basis of the Company’s impairment measurement method and the related recorded investment in loans, by portfolio segment, as of September 30, 2014 and December 31, 2013 (in thousands).

	Commercial &		Commercial		Residential						DDA
	Industrial		Real Estate		Real Estate		Home equity		Consumer		Overdrafts		Total
Nine months ended September 30, 2014
Allowance for loan loss
Beginning balance	$	1,139	$	10,775	$	6,057	$	1,672	$	77	$	855	$	20,575
Charge-offs	330		1,665		1,348		288		171		1,052		4,854
Recoveries	85		94		91		—		172		654		1,096
Provision	564		402		2,159		107		10		293		3,535
Provision for acquired loans	135		—		—		—		—		—		135
Ending balance	$	1,593	$	9,606	$	6,959	$	1,491	$	88	$	750	$	20,487
Nine months ended September 30, 2013
Allowance for loan loss
Beginning balance	$	498	$	10,440	$	5,229	$	1,699	$	81	$	862	$	18,809
Charge-offs	772		803		1,598		278		326		1,102		4,879
Recoveries	51		669		137		—		242		674		1,773
Provision	1,460		201		2,481		268		79		414		4,903
Ending balance	$	1,237	$	10,507	$	6,249	$	1,689	$	76	$	848	$	20,606
As of September 30, 2014
Allowance for loan loss
Evaluated for impairment:
Individually	$	—	$	247	$	—	$	—	$	—	$	—	$	247
Collectively	1,551		8,705		6,923		1,491		88		750		19,508
Acquired with deteriorated
credit quality	42		654		36		—		—		—		732
Total	$	1,593	$	9,606	$	6,959	$	1,491	$	88	$	750	$	20,487
Loans
Evaluated for impairment:
Individually	$	—	$	6,115	$	451	$	297	$	—	$	—	$	6,863
Collectively	128,726		1,014,641		1,273,230		144,241		40,918		3,618		2,605,374
Acquired with deteriorated
credit quality	1,736		13,837		381		2,427		124		—		18,505
Total	$	130,462	$	1,034,593	$	1,274,062	$	146,965	$	41,042	$	3,618	$	2,630,742
As of December 31, 2013
Allowance for loan loss
Evaluated for impairment:
Individually	$	—	$	880	$	—	$	—	$	—	$	—	$	880
Collectively	827		9,615		6,054		1,672		77		855		19,100
Acquired with deteriorated
credit quality	312		280		3		—		—		—		595
Total	$	1,139	$	10,775	$	6,057	$	1,672	$	77	$	855	$	20,575
Loans
Evaluated for impairment:
Individually	$	—	$	11,837	$	459	$	298	$	—	$	—	$	12,594
Collectively	146,318		1,020,657		1,201,894		145,025		46,292		3,905		2,564,091
Acquired with deteriorated
credit quality	1,984		24,554		2,097		767		110		—		29,512
Total	$	148,302	$	1,057,048	$	1,204,450	$	146,090	$	46,402	$	3,905	$	2,606,197

Schedule Of Credit Quality Indicators

The Company uses the following definitions for its risk ratings:

Risk Rating	Description
Pass ratings:
(a) Exceptional	Loans classified as exceptional are secured with liquid collateral conforming to the internal loan policy.  Loans rated within this category pose minimal risk of loss to the bank.
(b) Good	Loans classified as good have similar characteristics that include a strong balance sheet, satisfactory debt service coverage ratios, strong management and/or guarantors, and little exposure to economic cycles. Loans in this category generally have a low chance of loss to the bank.
(c) Acceptable	Loans classified as acceptable have acceptable liquidity levels, adequate debt service coverage ratios, experienced management, and have average exposure to economic cycles.  Loans within this category generally have a low risk of loss to the bank.
(d) Pass/watch	Loans classified as pass/watch have erratic levels of leverage and/or liquidity, cash flow is volatile and the borrower is subject to moderate economic risk.  A borrower in this category poses a low to moderate risk of loss to the bank.
Special mention	Loans classified as special mention have a potential weakness(es) that deserves management’s close attention.  The potential weakness could result in deterioration of the loan repayment or the bank’s credit position at some future date.  A loan rated in this category poses a moderate loss risk to the bank.
Substandard	Loans classified as substandard reflect a customer with a well defined weakness that jeopardizes the liquidation of the debt.  Loans in this category have the possibility that the bank will sustain some loss if the deficiencies are not corrected and the bank’s collateral value is weakened by the financial deterioration of the borrower.
Doubtful	Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristics that make collection of the full contract amount highly improbable.  Loans rated in this category are most likely to cause the bank to have a loss due to a collateral shortfall or a negative capital position.

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

	Commercial and industrial		Commercial real estate		Total
September 30, 2014
Pass	$	116,498	$	967,581	$	1,084,079
Special mention	654		19,134		19,788
Substandard	12,900		47,443		60,343
Doubtful	410		435		845
Total	$	130,462	$	1,034,593	$	1,165,055
December 31, 2013
Pass	$	141,818	$	974,368	$	1,116,186
Special mention	648		20,072		20,720
Substandard	5,416		62,139		67,555
Doubtful	420		469		889
Total	$	148,302	$	1,057,048	$	1,205,350

Schedule Of Noncommercial Loans By Payment Performance

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

	Performing		Non-Performing		Total
September 30, 2014
Residential real estate	$	1,271,767	$	2,295	$	1,274,062
Home equity - junior lien	146,689		276		146,965
Consumer	41,001		41		41,042
DDA overdrafts	3,617		1		3,618
Total	$	1,463,074	$	2,613	$	1,465,687
December 31, 2013
Residential real estate	$	1,201,631	$	2,819	$	1,204,450
Home equity - junior lien	145,812		278		146,090
Consumer	46,353		49		46,402
DDA overdrafts	3,900		5		3,905
Total	$	1,397,696	$	3,151	$	1,400,847

Schedule Of Aging Analysis Of Accruing And Non-Accruing Loans

The following table presents an aging analysis of the Company’s accruing and non-accruing loans, by class, as of September 30, 2014 and December 31, 2013 (in thousands):

	Originated Loans
	September 30, 2014
	Accruing
	Current		30-59 days		60-89 days		Over 90 days		Purchased-Credit Impaired		Non-accrual		Total
Residential real estate	$	1,176,782	$	4,428	$	683	$	164	$	—	$	2,131	$	1,184,188
Home equity - junior lien	143,460		590		25		136		—		127		144,338
Commercial and industrial	114,963		188		—		—		—		90		115,241
Commercial real estate	859,813		938		—		—		—		9,270		870,021
Consumer	32,994		46		12		—		—		—		33,052
DDA overdrafts	3,025		590		2		1		—		—		3,618
Total	$	2,331,037	$	6,780	$	722	$	301	$	—	$	11,618	$	2,350,458
	Acquired Loans
	September 30, 2014
	Accruing
	Current		30-59 days		60-89 days		Over 90 days		Purchased-Credit Impaired		Non-accrual		Total
Residential real estate	$	89,373	$	406	$	95	$	—	$	—	$	—	$	89,874
Home equity - junior lien	2,612		2		—		13		—		—		2,627
Commercial and industrial	13,572		3		8		86		—		1,552		15,221
Commercial real estate	157,412		1,477		85		393		1,016		4,189		164,572
Consumer	7,802		145		2		16		—		25		7,990
DDA overdrafts	—		—		—		—		—		—		—
Total	$	270,771	$	2,033	$	190	$	508	$	1,016	$	5,766	$	280,284
	Total Loans
	September 30, 2014
	Accruing
	Current		30-59 days		60-89 days		Over 90 days		Purchased-Credit Impaired		Non-accrual		Total
Residential real estate	$	1,266,155	$	4,834	$	778	$	164	$	—	$	2,131	$	1,274,062
Home equity - junior lien	146,072		592		25		149		—		127		146,965
Commercial and industrial	128,535		191		8		86		—		1,642		130,462
Commercial real estate	1,017,225		2,415		85		393		1,016		13,459		1,034,593
Consumer	40,796		191		14		16		—		25		41,042
DDA overdrafts	3,025		590		2		1		—		—		3,618
Total	$	2,601,808	$	8,813	$	912	$	809	$	1,016	$	17,384	$	2,630,742

	Originated Loans
	December 31, 2013
	Accruing
	Current		30-59 days		60-89 days		Over 90 days		Purchased-Credit Impaired		Non-accrual		Total
Residential real estate	$	1,096,911	$	4,123	$	495	$	231	$	—	$	1,905	$	1,103,665
Home equity - junior lien	141,967		880		—		42		—		236		143,125
Commercial and industrial	128,015		—		—		—		—		79		128,094
Commercial real estate	852,090		668		—		—		—		13,097		865,855
Consumer	32,647		172		7		4		—		—		32,830
DDA overdrafts	3,511		374		15		5		—		—		3,905
Total	$	2,255,141	$	6,217	$	517	$	282	$	—	$	15,317	$	2,277,474
	Acquired Loans
	December 31, 2013
	Accruing
	Current		30-59 days		60-89 days		Over 90 days		Purchased-Credit Impaired		Non-accrual		Total
Residential real estate	$	99,089	$	842	$	172	$	—	$	—	$	682	$	100,785
Home equity - junior lien	2,965		—		—		—		—		—		2,965
Commercial and industrial	18,253		—		80		—		—		1,875		20,208
Commercial real estate	176,018		2,772		273		109		7,534		4,487		191,193
Consumer	12,876		622		29		45		—		—		13,572
DDA overdrafts	—		—		—		—		—		—		—
Total	$	309,201	$	4,236	$	554	$	154	$	7,534	$	7,044	$	328,723
	Total Loans
	December 31, 2013
	Accruing
	Current		30-59 days		60-89 days		Over 90 days		Purchased-Credit Impaired		Non-accrual		Total
Residential real estate	$	1,196,000	$	4,965	$	667	$	231	$	—	$	2,587	$	1,204,450
Home equity - junior lien	144,932		880		—		42		—		236		146,090
Commercial and industrial	146,268		—		80		—		—		1,954		148,302
Commercial real estate	1,028,108		3,440		273		109		7,534		17,584		1,057,048
Consumer	45,523		794		36		49		—		—		46,402
DDA overdrafts	3,511		374		15		5		—		—		3,905
Total	$	2,564,342	$	10,453	$	1,071	$	436	$	7,534	$	22,361	$	2,606,197

Schedule Of Impaired Loans

The following table presents the Company’s impaired loans, by class, as of September 30, 2014 and December 31, 2013 (in thousands). The difference between the unpaid principal balance and the recorded investment generally reflects amounts that have been previously charged-off.

	September 30, 2014						December 31, 2013
			Unpaid						Unpaid
	Recorded		Principal		Related		Recorded		Principal		Related
	Investment		Balance		Allowance		Investment		Balance		Allowance
With no related allowance recorded:
Residential real estate	$	451	$	451	$	—	$	459	$	459	$	—
Home equity - junior liens	297		297		—		298		298		—
Commercial and industrial	—		—		—		—		—		—
Commercial real estate	4,718		4,718		—		8,421		8,361		—
Consumer	—		—		—		—		—		—
DDA overdrafts	—		—		—		—		—		—
Total	$	5,466	$	5,466	$	—	$	9,178	$	9,118	$	—
With an allowance recorded
Residential real estate	$	—	$	—	$	—	$	—	$	—	$	—
Home equity - junior liens	—		—		—		—		—		—
Commercial and industrial	—		—		—		—		—		—
Commercial real estate	1,397		1,397		247		3,416		3,416		880
Consumer	—		—		—		—		—		—
DDA overdrafts	—		—		—		—		—		—
Total	$	1,397	$	1,397	$	247	$	3,416	$	3,416	$	880

Schedule Of Information Related To Average Recorded Investment And Interest Income Recognized On Impaired Loans

The following table presents information related to the average recorded investment and interest income recognized on the Company’s impaired loans, by class (in thousands):

	For the nine months ended
	September 30, 2014				September 30, 2013
	Average		Interest		Average		Interest
	Recorded		Income		Recorded		Income
	Investment		Recognized		Investment		Recognized
With no related allowance recorded:
Residential real estate	$	453	$	—	$	464	$	—
Home equity - junior liens	297		—		297		—
Commercial and industrial	—		—		—		—
Commercial real estate	7,329		4		9,200		24
Consumer	—		—		—		—
DDA overdrafts	—		—		—		—
Total	$	8,079	$	4	$	9,961	$	24
With an allowance recorded
Residential real estate	$	—	$	—	$	—	$	—
Home equity - junior liens	—		—		—		—
Commercial and industrial	—		—		—		—
Commercial real estate	1,837		30		3,277		—
Consumer	—		—		—		—
DDA overdrafts	—		—		—		—
Total	$	1,837	$	30	$	3,277	$	—

Schedule Of Troubled Debt Restructurings

The following tables set forth the Company’s TDRs (in thousands):

	September 30, 2014						December 31, 2013
			Non-						Non-
	Accruing		Accruing		Total		Accruing		Accruing		Total
Commercial and industrial	$	77	$	—	$	77	$	88	$	—	$	88
Commercial real estate	2,269		—		2,269		1,783		—		1,783
Residential real estate	17,833		207		18,040		18,651		1,693		20,344
Home equity	2,821		—		2,821		2,859		14		2,873
Consumer	—		—		—		—		—		—
	$	23,000	$	207	$	23,207	$	23,381	$	1,707	$	25,088

	New TDRs					New TDRs
	For the nine months ended					For the nine months ended
	September 30, 2014					September 30, 2013
		Pre		Post			Pre		Post
		Modification		Modification			Modification		Modification
		Outstanding		Outstanding			Outstanding		Outstanding
	Number of	Recorded		Recorded		Number of	Recorded		Recorded
	Contracts	Investment		Investment		Contracts	Investment		Investment
Commercial and industrial	—	$	—	$	—	1	$	91	$	91
Commercial real estate	1	432		432		3	1,567		1,567
Residential real estate	26	2,049		2,049		30	2,808		2,808
Home equity	8	203		203		12	323		323
Consumer	—	—		—		—	—		—
	35	$	2,684	$	2,684	46	$	4,789	$	4,789

XML

Allowance For Loan Losses (Schedule Of Aging Analysis Of Accruing And Non-Accruing Loans) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	$ 2,601,808	$ 2,564,342
30 - 59 days past due	8,813	10,453
60 - 89 days past due	912	1,071
Over 90 days past due	809	436
Financing Receivable, Acquired with Deteriorated Credit Quality, Recorded Investment, Past Due	1,016	7,534
Non-accrual	17,384	22,361
Total	2,630,742	2,606,197
Residential Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	1,266,155	1,196,000
30 - 59 days past due	4,834	4,965
60 - 89 days past due	778	667
Over 90 days past due	164	231
Non-accrual	2,131	2,587
Total	1,274,062	1,204,450
Home equity - junior lien [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	146,072	144,932
30 - 59 days past due	592	880
60 - 89 days past due	25	0
Over 90 days past due	149	42
Non-accrual	127	236
Total	146,965	146,090
Commercial And Industrial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	128,535	146,268
30 - 59 days past due	191	0
60 - 89 days past due	8	80
Over 90 days past due	86	0
Financing Receivable, Acquired with Deteriorated Credit Quality, Recorded Investment, Past Due	0	0
Non-accrual	1,642	1,954
Total	130,462	148,302
Commercial Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	1,017,225	1,028,108
30 - 59 days past due	2,415	3,440
60 - 89 days past due	85	273
Over 90 days past due	393	109
Financing Receivable, Acquired with Deteriorated Credit Quality, Recorded Investment, Past Due	1,016	7,534
Non-accrual	13,459	17,584
Total	1,034,593	1,057,048
Consumer Loan [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	40,796	45,523
30 - 59 days past due	191	794
60 - 89 days past due	14	36
Over 90 days past due	16	49
Non-accrual	25	0
Total	41,042	46,402
Demand Deposit Account Overdrafts [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	3,025	3,511
30 - 59 days past due	590	374
60 - 89 days past due	2	15
Over 90 days past due	1	5
Non-accrual	0	0
Total	3,618	3,905
Noncommercial Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total	1,465,687	1,400,847
Originated Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	2,331,037	2,255,141
30 - 59 days past due	6,780	6,217
60 - 89 days past due	722	517
Over 90 days past due	301	282
Non-accrual	11,618	15,317
Total	2,350,458	2,277,474
Originated Loans [Member] | Residential Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	1,176,782	1,096,911
30 - 59 days past due	4,428	4,123
60 - 89 days past due	683	495
Over 90 days past due	164	231
Non-accrual	2,131	1,905
Total	1,184,188	1,103,665
Originated Loans [Member] | Home equity - junior lien [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	143,460	141,967
30 - 59 days past due	590	880
60 - 89 days past due	25	0
Over 90 days past due	136	42
Non-accrual	127	236
Total	144,338	143,125
Originated Loans [Member] | Commercial And Industrial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	114,963	128,015
30 - 59 days past due	188	0
60 - 89 days past due	0	0
Over 90 days past due	0	0
Non-accrual	90	79
Total	115,241	128,094
Originated Loans [Member] | Commercial Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	859,813	852,090
30 - 59 days past due	938	668
60 - 89 days past due	0	0
Over 90 days past due	0	0
Non-accrual	9,270	13,097
Total	870,021	865,855
Originated Loans [Member] | Consumer Loan [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	32,994	32,647
30 - 59 days past due	46	172
60 - 89 days past due	12	7
Over 90 days past due	0	4
Non-accrual	0	0
Total	33,052	32,830
Originated Loans [Member] | Demand Deposit Account Overdrafts [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	3,025	3,511
30 - 59 days past due	590	374
60 - 89 days past due	2	15
Over 90 days past due	1	5
Non-accrual	0	0
Total	3,618	3,905
Acquired Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	270,771	309,201
30 - 59 days past due	2,033	4,236
60 - 89 days past due	190	554
Over 90 days past due	508	154
Financing Receivable, Acquired with Deteriorated Credit Quality, Recorded Investment, Past Due	1,016	7,534
Non-accrual	5,766	7,044
Total	280,284	328,723
Acquired Loans [Member] | Residential Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	89,373	99,089
30 - 59 days past due	406	842
60 - 89 days past due	95	172
Over 90 days past due	0	0
Non-accrual	0	682
Total	89,874	100,785
Acquired Loans [Member] | Home equity - junior lien [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	2,612	2,965
30 - 59 days past due	2	0
60 - 89 days past due	0	0
Over 90 days past due	13	0
Non-accrual	0	0
Total	2,627	2,965
Acquired Loans [Member] | Commercial And Industrial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	13,572	18,253
30 - 59 days past due	3	0
60 - 89 days past due	8	80
Over 90 days past due	86	0
Financing Receivable, Acquired with Deteriorated Credit Quality, Recorded Investment, Past Due	0	0
Non-accrual	1,552	1,875
Total	15,221	20,208
Acquired Loans [Member] | Commercial Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	157,412	176,018
30 - 59 days past due	1,477	2,772
60 - 89 days past due	85	273
Over 90 days past due	393	109
Financing Receivable, Acquired with Deteriorated Credit Quality, Recorded Investment, Past Due	1,016	7,534
Non-accrual	4,189	4,487
Total	164,572	191,193
Acquired Loans [Member] | Consumer Loan [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	7,802	12,876
30 - 59 days past due	145	622
60 - 89 days past due	2	29
Over 90 days past due	16	45
Non-accrual	25	0
Total	7,990	13,572
Acquired Loans [Member] | Demand Deposit Account Overdrafts [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Current	0	0
30 - 59 days past due	0	0
60 - 89 days past due	0	0
Over 90 days past due	0	0
Non-accrual	0	0
Total	0	0
Performing [Member] | Residential Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total	1,271,767	1,201,631
Performing [Member] | Home equity - junior lien [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total	146,689	145,812
Performing [Member] | Demand Deposit Account Overdrafts [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total	3,617	3,900
Performing [Member] | Noncommercial Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total	1,463,074	1,397,696
Nonperforming [Member] | Residential Real Estate [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total	2,295	2,819
Nonperforming [Member] | Home equity - junior lien [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total	276	278
Nonperforming [Member] | Demand Deposit Account Overdrafts [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total	1	5
Nonperforming [Member] | Noncommercial Loans [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Total	$ 2,613	$ 3,151

XML

Loans (Narrative) (Details) (USD $) In Millions, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Residential Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Construction loans	$ 22.4	$ 17.3
Commercial Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Construction loans	$ 24.9	$ 24.0

XML

Merger Related Costs (Details) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Business Acquisition [Line Items]
Business Combination, Integration Related Costs			$ 0	$ 5,500,000
Legal and professional fees	476,000	591,000	1,497,000	1,561,000
Community Financial Corporation [Member]
Business Acquisition [Line Items]
Severance Costs				2,500,000
Legal and professional fees				1,400,000
Information Technology and Data Processing				$ 1,100,000

XML

Investments (Gross Unrealized Losses And Fair Value Of Investments) (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended	12 Months Ended
	Sep. 30, 2014	Dec. 31, 2013
Schedule of Investments [Line Items]
Securities available-for-sale, Less Than Twelve Months, Estimated Fair Value	$ 24,783	$ 210,093
Securities available-for-sale, Less Than Twelve Months, Unrealized Loss	488	8,086
Securities available-for-sale, Twelve Months or Greater, Estimated Fair Value	91,894	9,683
Securities available-for-sale, Twelve Months or Greater, Unrealized Loss	4,688	2,116
Securities available-for-sale, Total, Estimated Fair Value	116,677	219,776
Securities available-for-sale, Total, Unrealized Loss	5,176	10,202
Obligations Of States And Political Subdivisions [Member]
Schedule of Investments [Line Items]
Securities available-for-sale, Less Than Twelve Months, Estimated Fair Value	1,641	5,600
Securities available-for-sale, Less Than Twelve Months, Unrealized Loss	3	87
Securities available-for-sale, Twelve Months or Greater, Estimated Fair Value	445	243
Securities available-for-sale, Twelve Months or Greater, Unrealized Loss	10	19
Securities available-for-sale, Total, Estimated Fair Value	2,086	5,843
Securities available-for-sale, Total, Unrealized Loss	13	106
U.S. Government Agencies Mortgage-backed Securities [Member]
Schedule of Investments [Line Items]
Securities available-for-sale, Less Than Twelve Months, Estimated Fair Value	22,774	195,661
Securities available-for-sale, Less Than Twelve Months, Unrealized Loss	341	7,113
Securities available-for-sale, Twelve Months or Greater, Estimated Fair Value	80,798	5,040
Securities available-for-sale, Twelve Months or Greater, Unrealized Loss	2,782	197
Securities available-for-sale, Total, Estimated Fair Value	103,572	200,701
Securities available-for-sale, Total, Unrealized Loss	3,123	7,310
Private Label [Member]
Schedule of Investments [Line Items]
Securities available-for-sale, Less Than Twelve Months, Estimated Fair Value		1,491
Securities available-for-sale, Less Than Twelve Months, Unrealized Loss		3
Securities available-for-sale, Twelve Months or Greater, Estimated Fair Value		0
Securities available-for-sale, Twelve Months or Greater, Unrealized Loss		0
Securities available-for-sale, Total, Estimated Fair Value		1,491
Securities available-for-sale, Total, Unrealized Loss		3
Corporate Securities [Member]
Schedule of Investments [Line Items]
Securities available-for-sale, Less Than Twelve Months, Estimated Fair Value	0	5,881
Securities available-for-sale, Less Than Twelve Months, Unrealized Loss	0	843
Securities available-for-sale, Twelve Months or Greater, Estimated Fair Value	4,363	0
Securities available-for-sale, Twelve Months or Greater, Unrealized Loss	375	0
Securities available-for-sale, Total, Estimated Fair Value	4,363	5,881
Securities available-for-sale, Total, Unrealized Loss	375	843
Investment Funds [Member]
Schedule of Investments [Line Items]
Securities available-for-sale, Less Than Twelve Months, Estimated Fair Value	0	1,460
Securities available-for-sale, Less Than Twelve Months, Unrealized Loss	0	40
Securities available-for-sale, Twelve Months or Greater, Estimated Fair Value	1,483	0
Securities available-for-sale, Twelve Months or Greater, Unrealized Loss	17	0
Securities available-for-sale, Total, Estimated Fair Value	1,483	1,460
Securities available-for-sale, Total, Unrealized Loss	17	40
Trust Preferred Securities [Member]
Schedule of Investments [Line Items]
Securities available-for-sale, Less Than Twelve Months, Estimated Fair Value	368	0
Securities available-for-sale, Less Than Twelve Months, Unrealized Loss	144	0
Securities available-for-sale, Twelve Months or Greater, Estimated Fair Value	4,805	4,400
Securities available-for-sale, Twelve Months or Greater, Unrealized Loss	1,504	1,900
Securities available-for-sale, Total, Estimated Fair Value	5,173	4,400
Securities available-for-sale, Total, Unrealized Loss	$ 1,648	$ 1,900

XML

Allowance For Loan Losses (Schedule Of Information Related To Average Recorded Investment And Interest Income Recognized On Impaired Loans) (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Financing Receivable, Impaired [Line Items]
With no related allowance recorded, Average recorded investment	$ 8,079	$ 9,961
With no related allowance recorded, Interest income recognized	4	24
With an allowance recorded, Average recorded investment	1,837	3,277
With an allowance recorded, Interest income recognized	30	0
Residential Real Estate [Member]
Financing Receivable, Impaired [Line Items]
With no related allowance recorded, Average recorded investment	453	464
With no related allowance recorded, Interest income recognized	0	0
With an allowance recorded, Average recorded investment	0	0
With an allowance recorded, Interest income recognized	0	0
Home equity - junior lien [Member]
Financing Receivable, Impaired [Line Items]
With no related allowance recorded, Average recorded investment	297	297
With no related allowance recorded, Interest income recognized	0	0
With an allowance recorded, Average recorded investment	0	0
With an allowance recorded, Interest income recognized	0	0
Commercial And Industrial [Member]
Financing Receivable, Impaired [Line Items]
With no related allowance recorded, Average recorded investment	0	0
With no related allowance recorded, Interest income recognized	0	0
With an allowance recorded, Average recorded investment	0	0
With an allowance recorded, Interest income recognized	0	0
Commercial Real Estate [Member]
Financing Receivable, Impaired [Line Items]
With no related allowance recorded, Average recorded investment	7,329	9,200
With no related allowance recorded, Interest income recognized	4	24
With an allowance recorded, Average recorded investment	1,837	3,277
With an allowance recorded, Interest income recognized	30	0
Consumer Loan [Member]
Financing Receivable, Impaired [Line Items]
With no related allowance recorded, Average recorded investment	0	0
With no related allowance recorded, Interest income recognized	0	0
With an allowance recorded, Average recorded investment	0	0
With an allowance recorded, Interest income recognized	0	0
Demand Deposit Account Overdrafts [Member]
Financing Receivable, Impaired [Line Items]
With no related allowance recorded, Average recorded investment	0	0
With no related allowance recorded, Interest income recognized	0	0
With an allowance recorded, Average recorded investment	0	0
With an allowance recorded, Interest income recognized	$ 0	$ 0

XML

Accumulated Other Comprehensive Loss - Schedule Of Amounts Reclassified Out of Accumulated Other Comprehensive Income (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Reclassifications Out Of Accumulated Other Comprehensive Income [Line Items]
Related income tax expense	$ (6,010)	$ (7,056)	$ (18,310)	$ (18,398)
Other comprehensive income (loss), net of tax	(412)	(633)	2,069	(4,752)
Accumulated Net Unrealized Investment Gain (Loss) [Member] | Reclassification Out Of Accumulated Other Comprehensive Income [Member]
Reclassifications Out Of Accumulated Other Comprehensive Income [Line Items]
Net securities gains reclassified into earnings	(71)	0	(972)	(93)
Related income tax expense	26	0	358	34
Other comprehensive income (loss), net of tax	$ (45)	$ 0	$ (614)	$ (59)

XML

Employee Benefit Plans (Stock Options Outstanding And Exercisable) (Details) (USD $) In Thousands, except Share data, unless otherwise specified	9 Months Ended
	Sep. 30, 2014
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
No. of Options Outstanding (in shares)	168,554
Aggregate Intrinsic Value (in thousands)	$ 1,418
No. of Options Currently Exercisable (in shares)	85,332
Aggregate Intrinsic Value of Options Currently Exercisable (in thousands)	677
Ranges Of Exercise Prices Twenty Six Point Six Two To Thirty Three Point Nine Zero [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
No. of Options Outstanding (in shares)	40,250
Weighted-Average Exercise Price (in dollars per share)	$ 30.83
Weighted-Average Remaining Contractual Life (Years)	3 years 10 months 24 days
Aggregate Intrinsic Value (in thousands)	575
No. of Options Currently Exercisable (in shares)	19,332
Weighted-Average Exercise Price of Options Currently Exercisable (in dollars per share)	$ 30.46
Weighted-Average Remaining Contractual Life (Years)	2 years 6 months
Aggregate Intrinsic Value of Options Currently Exercisable (in thousands)	283
Ranges Of Exercise Prices Twenty Six Point Six Two To Thirty Three Point Nine Zero [Member] | Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Ranges Of Exercise Prices (in dollars per share)	$ 26.62
Ranges Of Exercise Prices Twenty Six Point Six Two To Thirty Three Point Nine Zero [Member] | Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Ranges Of Exercise Prices (in dollars per share)	$ 33.90
Ranges Of Exercise Prices Thirty Five Point Zero Nine To Forty Four Point Forty Three [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
No. of Options Outstanding (in shares)	128,304
Weighted-Average Exercise Price (in dollars per share)	$ 38.55
Weighted-Average Remaining Contractual Life (Years)	5 years 1 month 6 days
Aggregate Intrinsic Value (in thousands)	843
No. of Options Currently Exercisable (in shares)	66,000
Weighted-Average Exercise Price of Options Currently Exercisable (in dollars per share)	$ 39.15
Weighted-Average Remaining Contractual Life (Years)	2 years 4 months 24 days
Aggregate Intrinsic Value of Options Currently Exercisable (in thousands)	$ 394
Ranges Of Exercise Prices Thirty Five Point Zero Nine To Forty Four Point Forty Three [Member] | Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Ranges Of Exercise Prices (in dollars per share)	$ 35.09
Ranges Of Exercise Prices Thirty Five Point Zero Nine To Forty Four Point Forty Three [Member] | Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Ranges Of Exercise Prices (in dollars per share)	$ 44.43

XML

Allowance For Loan Losses (Schedule Of Allowance For Loan Loss By Portfolio Segment) (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Dec. 31, 2013
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Allowance for loan loss, Beginning balance	$ 20,575	$ 18,809
Allowance for loan loss, Charge-offs	4,854	4,879
Allowance for loan loss, Recoveries	1,096	1,773
Allowance for loan loss, Provision	3,535	4,903
Allowance for loan loss, Provision for acquired loans	135
Allowance for loan loss, Ending balance	20,487	20,606
Allowance for loan loss, Evaluated for impairment, Individually	247		880
Allowance for loan loss, Evaluated for impairment, Collectively	19,508		19,100
Allowance for loan loss, Acquired with deteriorated credit quality	732		595
Allowance for loan loss, Total	20,487		20,575
Loans, Evaluated for impairment, Individually	6,863		12,594
Loans, Evaluated for impairment, Collectively	2,605,374		2,564,091
Loans, Acquired with deteriorated credit quality	18,505		29,512
Total	2,630,742		2,606,197
Commercial And Industrial [Member]
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Allowance for loan loss, Beginning balance	1,139	498
Allowance for loan loss, Charge-offs	330	772
Allowance for loan loss, Recoveries	85	51
Allowance for loan loss, Provision	564	1,460
Allowance for loan loss, Provision for acquired loans	135
Allowance for loan loss, Ending balance	1,593	1,237
Allowance for loan loss, Evaluated for impairment, Individually	0		0
Allowance for loan loss, Evaluated for impairment, Collectively	1,551		827
Allowance for loan loss, Acquired with deteriorated credit quality	42		312
Allowance for loan loss, Total	1,593		1,139
Loans, Evaluated for impairment, Individually	0		0
Loans, Evaluated for impairment, Collectively	128,726		146,318
Loans, Acquired with deteriorated credit quality	1,736		1,984
Total	130,462		148,302
Commercial Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Allowance for loan loss, Beginning balance	10,775	10,440
Allowance for loan loss, Charge-offs	1,665	803
Allowance for loan loss, Recoveries	94	669
Allowance for loan loss, Provision	402	201
Allowance for loan loss, Provision for acquired loans	0
Allowance for loan loss, Ending balance	9,606	10,507
Allowance for loan loss, Evaluated for impairment, Individually	247		880
Allowance for loan loss, Evaluated for impairment, Collectively	8,705		9,615
Allowance for loan loss, Acquired with deteriorated credit quality	654		280
Allowance for loan loss, Total	9,606		10,775
Loans, Evaluated for impairment, Individually	6,115		11,837
Loans, Evaluated for impairment, Collectively	1,014,641		1,020,657
Loans, Acquired with deteriorated credit quality	13,837		24,554
Total	1,034,593		1,057,048
Residential Real Estate [Member]
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Allowance for loan loss, Beginning balance	6,057	5,229
Allowance for loan loss, Charge-offs	1,348	1,598
Allowance for loan loss, Recoveries	91	137
Allowance for loan loss, Provision	2,159	2,481
Allowance for loan loss, Provision for acquired loans	0
Allowance for loan loss, Ending balance	6,959	6,249
Allowance for loan loss, Evaluated for impairment, Individually	0		0
Allowance for loan loss, Evaluated for impairment, Collectively	6,923		6,054
Allowance for loan loss, Acquired with deteriorated credit quality	36		3
Allowance for loan loss, Total	6,959		6,057
Loans, Evaluated for impairment, Individually	451		459
Loans, Evaluated for impairment, Collectively	1,273,230		1,201,894
Loans, Acquired with deteriorated credit quality	381		2,097
Total	1,274,062		1,204,450
Home equity - junior liens (including lines of credit) [Member]
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Allowance for loan loss, Beginning balance	1,672	1,699
Allowance for loan loss, Charge-offs	288	278
Allowance for loan loss, Recoveries	0	0
Allowance for loan loss, Provision	107	268
Allowance for loan loss, Provision for acquired loans	0
Allowance for loan loss, Ending balance	1,491	1,689
Allowance for loan loss, Evaluated for impairment, Individually	0		0
Allowance for loan loss, Evaluated for impairment, Collectively	1,491		1,672
Allowance for loan loss, Acquired with deteriorated credit quality	0		0
Allowance for loan loss, Total	1,491		1,672
Loans, Evaluated for impairment, Individually	297		298
Loans, Evaluated for impairment, Collectively	144,241		145,025
Loans, Acquired with deteriorated credit quality	2,427		767
Total	146,965		146,090
Consumer [Member]
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Allowance for loan loss, Beginning balance	77	81
Allowance for loan loss, Charge-offs	171	326
Allowance for loan loss, Recoveries	172	242
Allowance for loan loss, Provision	10	79
Allowance for loan loss, Provision for acquired loans	0
Allowance for loan loss, Ending balance	88	76
Allowance for loan loss, Evaluated for impairment, Individually	0		0
Allowance for loan loss, Evaluated for impairment, Collectively	88		77
Allowance for loan loss, Acquired with deteriorated credit quality	0		0
Allowance for loan loss, Total	88		77
Loans, Evaluated for impairment, Individually	0		0
Loans, Evaluated for impairment, Collectively	40,918		46,292
Loans, Acquired with deteriorated credit quality	124		110
Total	41,042		46,402
Demand Deposit Account Overdrafts [Member]
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Allowance for loan loss, Beginning balance	855	862
Allowance for loan loss, Charge-offs	1,052	1,102
Allowance for loan loss, Recoveries	654	674
Allowance for loan loss, Provision	293	414
Allowance for loan loss, Provision for acquired loans	0
Allowance for loan loss, Ending balance	750	848
Allowance for loan loss, Evaluated for impairment, Individually	0		0
Allowance for loan loss, Evaluated for impairment, Collectively	750		855
Allowance for loan loss, Acquired with deteriorated credit quality	0		0
Allowance for loan loss, Total	750		855
Loans, Evaluated for impairment, Individually	0		0
Loans, Evaluated for impairment, Collectively	3,618		3,905
Loans, Acquired with deteriorated credit quality	0		0
Total	$ 3,618		$ 3,905

XML

Consolidated Statements Of Cash Flows (Parenthetical) (Community Financial Corporation [Member], USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2013
Community Financial Corporation [Member]
Cash acquired from acquisition	$ 8,888

XML

Employee Benefit Plans (Weighted Average Assumptions Estimate The Fair Value Of Options Granted) (Details)	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Share-based Compensation [Abstract]
Risk-free interest rate	2.42%	1.88%
Expected dividend yield	3.60%	3.70%
Volatility factor	48.75%	41.35%
Expected life of option	8 years	8 years

XML

Loans (Summary Of Major Classifications For Loans) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Accounts, Notes, Loans and Financing Receivable [Line Items]
Gross loans	$ 2,630,742	$ 2,606,197
Allowance for loan losses	(20,487)	(20,575)
Net loans	2,610,255	2,585,622
Residential Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Gross loans	1,274,062	1,204,450
Allowance for loan losses	(6,959)	(6,057)
Home equity - junior liens (including lines of credit) [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Gross loans	146,965	146,090
Allowance for loan losses	(1,491)	(1,672)
Commercial And Industrial [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Gross loans	130,462	148,302
Allowance for loan losses	(1,593)	(1,139)
Commercial Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Gross loans	1,034,593	1,057,048
Allowance for loan losses	(9,606)	(10,775)
Consumer Loan [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Gross loans	41,042	46,402
Demand Deposit Account Overdrafts [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Gross loans	3,618	3,905
Allowance for loan losses	$ (750)	$ (855)

XML

Commitments And Contingencies (Tables)

9 Months Ended

Sep. 30, 2014

Commitments and Contingencies Disclosure [Abstract]

Schedule Of Contractual Obligations From Significant Commitments

The table below presents a summary of the contractual obligations of the Company resulting from significant commitments (in thousands):

	September 30, 2014		December 31, 2013
Commitments to extend credit:
Home equity lines	$	174,115	$	174,417
Commercial real estate	33,970		42,209
Other commitments	173,694		201,065
Standby letters of credit	14,271		14,122
Commercial letters of credit	1,972		1,555

XML

Employee Benefit Plans (Tables)

9 Months Ended

Sep. 30, 2014

Share-based Compensation [Abstract]

Summary Of Stock Option Activity

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

	Nine months ended September 30,
	2014				2013
	Options		Weighted-Average Exercise Price		Options		Weighted-Average Exercise Price
Outstanding at January 1	173,601		$	35.26	289,544		$	34.38
Granted	13,953		44.43		15,475		37.74
Exercised	(19,000	)	29.13		(107,140	)	33.36
Forfeited	—		—		(2,250	)	34.73
Outstanding at September 30	168,554		$	36.71	195,629		$	35.19

Stock Options Outstanding And Exercisable

Additional information regarding stock options outstanding and exercisable at September 30, 2014, is provided in the following table:

Ranges of Exercise Prices	No. of Options Outstanding	Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value (in thousands)		No. of Options Currently Exercisable	Weighted-Average Exercise Price of Options Currently Exercisable		Weighted-Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value of Options Currently Exercisable (in thousands)
$26.62 - $33.90	40,250	$	30.83	3.9	$	575	19,332	$	30.46	2.5	$	283
$35.09 - $44.43	128,304	38.55		5.1	843		66,000	39.15		2.4	394
	168,554				$	1,418	85,332				$	677

Weighted Average Assumptions Estimate The Fair Value Of Options Granted

 The following weighted average assumptions were used to estimate the fair value of options granted:

	Nine months ended September 30,
	2014		2013
Risk-free interest rate	2.42	%	1.88	%
Expected dividend yield	3.60	%	3.70	%
Volatility factor	48.75	%	41.35	%
Expected life of option	8.0 years		8.0 years

Restricted Shares Activity And Related Information

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

	Nine months ended September 30,
	2014				2013
	Restricted Awards		Average Market Price at Grant		Restricted Awards		Average Market Price at Grant
Outstanding at January 1	142,469				116,711
Granted	27,162		$	39.72	35,083		$	38.07
Forfeited/Vested	(6,200	)			(9,325	)
Outstanding at September 30	163,431				142,469

Net Periodic Pension Cost Of The Defined Benefit Plan

The following table presents the components of the net periodic pension cost of the Defined Benefit Plans (in thousands):

	Three months ended September 30,						Nine months ended September 30,
	2014			2013			2014			2013
Components of net periodic cost:
Interest cost	$	209		$	217		$	634		$	549
Expected return on plan assets	(252		)	(276		)	(779		)	(695		)
Net amortization and deferral	150			267			538			732
Net Periodic Pension Cost	$	107		$	208		$	393		$	586

XML

Derivative Instruments (Change In Fair Value Of Derivative Instruments) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Other Income Derivative Asset [Member]
Derivatives, Fair Value [Line Items]
Change in Fair Value	$ (373)	$ (86)	$ 4,233	$ (7,876)
Other Income Derivative Liability [Member]
Derivatives, Fair Value [Line Items]
Change in Fair Value	$ 373	$ 86	$ (4,233)	$ 7,876

XML

Loans (Composition Of Loans Acquired At Acquisition) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Financing Receivable, Impaired [Line Items]
Outstanding loan balance	$ 2,630,742	$ 2,606,197
Virginia Savings Bank [Member]
Financing Receivable, Impaired [Line Items]
Outstanding loan balance	42,039	48,833
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Carrying Amount, Net	2,987	3,182
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Outstanding Balance	3,481	3,932
Community Bank [Member]
Financing Receivable, Impaired [Line Items]
Outstanding loan balance	238,245	279,890
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Carrying Amount, Net	15,518	26,330
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Outstanding Balance	24,147	38,566
Virginia Savings Bank And Community Financial [Member]
Financing Receivable, Impaired [Line Items]
Outstanding loan balance	280,284	328,723
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Carrying Amount, Net	18,505	29,512
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Outstanding Balance	$ 27,628	$ 42,498

XML

Accumulated Other Comprehensive Loss (Tables)

9 Months Ended

Sep. 30, 2014

Equity [Abstract]

Schedule of Changes In Each Component of Accumulated Other Comprehensive Income

The activity in accumulated other comprehensive loss for the nine months ended September 30, 2014 and 2013 is presented in the tables below (in thousands). All amounts are shown net of tax, which is calculated using a combined Federal and state income tax rate approximating 37%.

	Accumulated Other Comprehensive Loss
				Unrealized
				Gains (Losses) on
	Defined Benefit			Securities
	Pension Plans			Available-for-Sale			Total
Balance at December 31, 2012	$	(4,995	)	$	3,573		$	(1,422	)
Other comprehensive income before reclassifications	—			(4,693		)	(4,693		)
Amounts reclassified from other comprehensive loss	—			(59		)	(59		)
	—			(4,752		)	(4,752		)
Balance at September 30, 2013	$	(4,995	)	$	(1,179	)	$	(6,174	)
Balance at December 31, 2013	$	(2,880	)	$	(2,110	)	$	(4,990	)
Other comprehensive income before reclassifications	—			2,683			2,683
Amounts reclassified from other comprehensive loss	—			(614		)	(614		)
	—			2,069			2,069
Balance at September 30, 2014	$	(2,880	)	$	(41	)	$	(2,921	)

Schedule of Amounts Reclassified Out Of Accumulated Other Comprehensive Income

	Amount reclassified from Other Comprehensive Loss
	Three months ended					Nine months ended						Affected line item
	September 30,					September 30,						in the Statements
	2014			2013		2014			2013			of Income
Securities available-for-sale:
Net securities gains reclassified into earnings	$	(71	)	$	—	$	(972	)	$	(93	)	Security gains (losses)
Related income tax expense	26			—		358			34			Income tax expense
Net effect on accumulated other comprehensive loss	$	(45	)	$	—	$	(614	)	$	(59	)

XML

Earnings Per Share (Tables)

9 Months Ended

Sep. 30, 2014

Earnings Per Share [Abstract]

Schedule Of Computation Of Basic And Diluted Earnings Per Share

The following table sets forth the computation of basic and diluted earnings per share (in thousands, except per share data):

	Three months ended September 30,				Nine months ended September 30,
	2014		2013		2014		2013
Distributed earnings allocated to common stock	$	6,073	$	5,767	$	18,220	$	17,302
Undistributed earnings allocated to common stock	5,673		8,081		19,809		17,349
Net earnings allocated to common shareholders	$	11,746	$	13,848	$	38,029	$	34,651
Average shares outstanding	15,363		15,608		15,509		15,545
Effect of dilutive securities:
Warrant outstanding	62		62		62		60
Employee stock awards	20		120		23		108
Shares for diluted earnings per share	15,445		15,790		15,594		15,713
Basic earnings per share	$	0.76	$	0.89	$	2.45	$	2.23
Diluted earnings per share	$	0.76	$	0.88	$	2.44	$	2.21

XML

Consolidated Statements Of Cash Flows (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Operating Activities
Net income	$ 38,432	$ 34,969
Adjustments to reconcile net income to net cash provided by operating activities:
Accretion and amortization	(3,889)	(7,885)
Provision for loan losses	3,670	4,903
Depreciation of premises and equipment	4,553	4,289
Deferred income tax expense	3,921	4,945
Net periodic employee benefit cost	393	586
Realized investment securities gains	(972)	(93)
Stock-compensation expense	1,210	963
Increase in value of bank-owned life insurance	(2,291)	(2,413)
Loans originated for sale	(4,911)	(20,895)
Proceeds from the sale of loans originated for sale	5,075	25,816
Gain on sale of loans	(131)	(553)
Change in accrued interest receivable	(885)	(22)
Change in other assets	(5,829)	20,734
Change in other liabilities	(3,763)	(6,922)
Net Cash Provided by Operating Activities	34,583	58,422
Investing Activities
Proceeds from sales of securities available-for-sale	1,821	18,398
Proceeds from maturities and calls of securities available-for-sale	37,071	78,671
Proceeds from maturities and calls of securities held-to-maturity	4,124	9,504
Purchases of securities available-for-sale	(17,058)	(42,295)
Purchases of securities held-to-maturity	(10,226)	0
Net increase in loans	(23,454)	(39,643)
Purchases of premises and equipment	(1,085)	(4,663)
Acquisition of Community Financial Corporation, net of cash acquired of $8,888	0	(21,852)
Net Cash Used in Investing Activities	(8,807)	(1,880)
Financing Activities
Net increase in noninterest-bearing deposits	5,263	25,440
Net increase (decrease) in interest-bearing deposits	3,597	(9,360)
Net increase in short-term borrowings	8,317	36,297
Purchases of treasury stock	(19,533)	0
Proceeds from exercise of stock options, net of tax benefit	553	2,766
Dividends paid	(18,357)	(17,058)
Net Cash (Used in) Provided by Financing Activities	(20,160)	38,085
Increase in Cash and Cash Equivalents	5,616	94,627
Cash and cash equivalents at beginning of period	85,876	84,994
Cash and Cash Equivalents at End of Period	$ 91,492	$ 179,621

XML

Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2014

Fair Value Disclosures [Abstract]

Schedule Of Assets And Liabilities Measured At Fair Value On A Recurring And Nonrecurring Basis

The following table presents assets and liabilities measured at fair value (in thousands):

	Total		Level 1		Level 2		Level 3		Total Gains (Losses)
September 30, 2014
Recurring fair value measurements
Financial Assets
U.S. Government agencies	$	1,943	$	—	$	1,943	$	—
Obligations of states and political subdivisions	41,812		—		41,812		—
Mortgage-backed securities:
U.S. Government agencies	183,297		—		183,297		—
Private label	1,778		—		1,778		—
Trust preferred securities	8,816		—		7,090		1,726
Corporate securities	7,630		—		7,630		—
Marketable equity securities	3,697		3,697		—		—
Investment funds	1,508		1,508		—		—
Derivative assets	8,063		—		8,063		—
Financial Liabilities
Derivative liabilities	8,063		—		8,063		—
Nonrecurring fair value measurements
Impaired loans	$	6,617	$	—	$	—	$	6,617	$	(142	)
Other real estate owned	9,161		—		—		9,161		(379		)
December 31, 2013
Recurring fair value measurements
Financial Assets
U.S. Government agencies	$	2,365	$	—	$	2,365	$	—
Obligations of states and political subdivisions	41,548		—		41,548		—
Mortgage-backed securities:
U.S. Government agencies	278,108		—		278,108		—
Private label	2,197		—		2,197		—
Trust preferred securities	13,156		—		9,269		3,887
Corporate securities	9,128		—		9,128		—
Marketable equity securities	4,673		4,673		—		—
Investment funds	1,485		1,485		—		—
Derivative assets	3,538		—		3,538		—
Financial Liabilities
Derivative liabilities	3,538		—		3,538		—
Nonrecurring fair value measurements
Impaired loans	$	11,714	$	—	$	—	$	11,714	$	(880	)
Other real estate owned	$	8,470	$	—	$	—	$	8,470	$	(1,108	)

Schedule Of Reconciliation Of Investment Securities Available For Sale Measured At Fair Value On A Recurring Basis Level 3 Assets

The table below presents a reconcilement of the Company’s financial assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3), which consist solely of trust preferred securities (in thousands):

	Nine months ended September 30,
	2014			2013
Beginning balance	$	3,887		$	2,385
Impairment losses on investment securities	—			—
Included in other comprehensive income	(2,161		)	2,176
Dispositions	—			(1,776		)
Transfers into Level 3	—			—
Ending Balance	$	1,726		$	2,785

Schedule Of Level 3 Financial Assets And Liabilities Measured On A Non-Recurring Basis

The table below presents a reconcilement of the Company's financial assets and liabilities measured at fair value on a nonrecurring basis using significant unobservable inputs (Level 3), which solely relates to impaired loans that were remeasured and reported at fair value through a specific valuation allowance allocation of the allowance for loan losses based upon the fair value of the underlying collateral (in thousands).  The fair value of impaired loans is estimated using one of several methods, including collateral value, liquidation value and discounted cash flows.  The significant unobservable inputs used in the fair value measurement of collateral for collateral-dependent impaired loans primarily relate to discounts applied to the customers’ reported amount of collateral.  The amount of collateral discount depends upon the marketability of the underlying collateral.  During the nine months ended September 30, 2014 and 2013, collateral discounts ranged from 20% to 30%. During the nine months ended September 30, 2014 and 2013, the Company had no Level 2 financial assets and liabilities that were measured on a nonrecurring basis.

	Nine months ended September 30,
	2014			2013
Beginning balance	$	11,714		$	10,679
Loans classified as impaired during the period	—			3,052
Specific valuation allowance allocations	—			(750		)
	—			2,302
(Additional) reduction in specific valuation allowance allocations	633			(130		)
Paydowns, payoffs, other activity	(5,730		)	(891		)
Ending balance	$	6,617		$	11,960

Schedule Of Level 3 Non-Financial Assets and Liabilities Measured On a Non-Recurring Basis

The table below presents OREO that was remeasured and reported at fair value based on significant unobservable inputs (Level 3) (in thousands):

	Nine months ended September 30,
	2014			2013
Beginning balance	$	8,470		$	8,162
OREO remeasured at initial recognition:
Carrying value of foreclosed assets prior to remeasurement	4,225			4,387
Charge-offs recognized in the allowance for loan losses	—			(1,565		)
Fair value	4,225			2,822
OREO remeasured subsequent to initial recognition
Carrying value of foreclosed assets prior to remeasurement	480			2,832
Fair value	101			1,774
Write-downs included in other non-interest expense	(379		)	(1,058		)
Acquired	—			3,492
Disposed	(3,155		)	(5,900		)
Ending balance	$	9,161		$	7,518

Schedule Of Estimates Of Fair Value Of Financial Instruments

The following table represents the estimates of fair value of financial instruments (in thousands). This table excludes financial instruments for which the carrying amount approximates fair value. For short-term financial assets such as cash and cash equivalents, the carrying amount is a reasonable estimate of fair value due to the relatively short time between the origination of the instrument and its expected realization. For financial liabilities such as noninterest-bearing demand, interest-bearing demand and savings deposits, the carrying amount is a reasonable estimate of fair value due to these products having no stated maturity.

	Carrying Amount		Fair Value		Level 1		Level 2		Level 3
September 30, 2014
Assets:
Cash and cash equivalents	$	91,492	$	91,492	$	91,492	$	—	$	—
Securities available-for-sale	250,481		250,481		5,205		243,550		1,726
Securities held-to-maturity	93,089		95,343		—		95,343		—
Other securities	14,234		14,234		—		14,234		—
Net loans	2,610,255		2,630,012		—		—		2,630,012
Accrued interest receivable	7,751		7,751		7,751		—		—
Derivative assets	8,063		8,063		—		8,063		—
Liabilities:
Deposits	2,793,395		2,799,502		1,759,380		1,040,122		—
Short-term debt	146,115		146,116		—		146,116		—
Long-term debt	16,495		16,464		—		16,464		—
Derivative liabilities	8,063		8,063		—		8,063		—
December 31, 2013
Assets:
Cash and cash equivalents	85,876		85,876		85,876		—		—
Securities available-for-sale	352,660		352,660		6,158		342,615		3,887
Securities held-to-maturity	4,117		5,335		—		5,335		—
Other securities	13,343		13,343		—		13,343		—
Net loans	2,585,622		2,609,524		—		—		2,609,524
Accrued interest receivable	6,866		6,866		6,866		—		—
Derivative assets	3,538		3,538		—		3,538		—
Liabilities:
Deposits	2,785,133		2,793,620		1,707,527		1,086,093		—
Short-term debt	137,798		137,801		—		137,801		—
Long-term debt	16,495		16,495		—		16,495		—
Derivative liabilities	3,538		3,538		—		3,538		—

XML

Investments (Amortized Cost And Estimated Fair Value Of Debt Securities By Contractual Maturity) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Investments [Abstract]
Securities Available-for-Sale, Due in one year or less, Cost	$ 8,246
Securities Available-for-Sale, Due after one year through five years, Cost	19,515
Securities Available-for-Sale, Due after five years through ten years, Cost	27,059
Securities Available-for-Sale, Due after ten years, Cost	191,402
Securities Available-for-Sale, Cost, Total	246,222
Securities Available-for-Sale, Due in one year or less, Estimated Fair Value	8,289
Securities Available-for-Sale, Due after one year through five years, Estimated Fair Value	20,162
Securities Available-for-Sale, Due after five years through ten years, Estimated Fair Value	27,672
Securities Available-for-Sale, Due after ten years, Estimated Fair Value	189,153
Securities Available-for-Sale, Estimated Fair Value, Total	245,276
Securities Held-to-Maturity, Due after ten years, Cost	93,089
Securities held-to-maturity, Amortized Cost	93,089	4,117
Securities Held-to-Maturity, Due after ten years, Estimated Fair Value	95,343
Securities held-to-maturity, Estimated Fair Value	$ 95,343	$ 5,335

XML

Allowance For Loan Losses (Schedule Of Troubled Debt Restructurings) (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2014 contract	Sep. 30, 2013 contract	Dec. 31, 2013
Financing Receivable, Modifications [Line Items]
Accruing	$ 23,000		$ 23,381
Non-Accruing	207		1,707
Total	23,207		25,088
Financing Receivable, Modifications, Number of Contracts	35	46
Financing Receivable, Modifications, Pre-Modification Recorded Investment	2,684	4,789
Financing Receivable, Modifications, Post-Modification Recorded Investment	2,684	4,789
Commercial And Industrial [Member]
Financing Receivable, Modifications [Line Items]
Accruing	77		88
Non-Accruing	0		0
Total	77		88
Financing Receivable, Modifications, Number of Contracts	0	1
Financing Receivable, Modifications, Pre-Modification Recorded Investment	0	91
Financing Receivable, Modifications, Post-Modification Recorded Investment	0	91
Commercial Real Estate [Member]
Financing Receivable, Modifications [Line Items]
Accruing	2,269		1,783
Non-Accruing	0		0
Total	2,269		1,783
Financing Receivable, Modifications, Number of Contracts	1	3
Financing Receivable, Modifications, Pre-Modification Recorded Investment	432	1,567
Financing Receivable, Modifications, Post-Modification Recorded Investment	432	1,567
Residential Real Estate [Member]
Financing Receivable, Modifications [Line Items]
Accruing	17,833		18,651
Non-Accruing	207		1,693
Total	18,040		20,344
Financing Receivable, Modifications, Number of Contracts	26	30
Financing Receivable, Modifications, Pre-Modification Recorded Investment	2,049	2,808
Financing Receivable, Modifications, Post-Modification Recorded Investment	2,049	2,808
Home equity - junior lien [Member]
Financing Receivable, Modifications [Line Items]
Accruing	2,821		2,859
Non-Accruing	0		14
Total	2,821		2,873
Financing Receivable, Modifications, Number of Contracts	8	12
Financing Receivable, Modifications, Pre-Modification Recorded Investment	203	323
Financing Receivable, Modifications, Post-Modification Recorded Investment	203	323
Consumer Loan [Member]
Financing Receivable, Modifications [Line Items]
Accruing	0		0
Non-Accruing	0		0
Total	0		0
Financing Receivable, Modifications, Number of Contracts	0	0
Financing Receivable, Modifications, Pre-Modification Recorded Investment	0	0
Financing Receivable, Modifications, Post-Modification Recorded Investment	$ 0	$ 0

XML

Fair Value Measurements (Schedule Of Level 2 Financial Assets And Liabilities Measured On A Recurring Basis) (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Fair Value Measurement On Nonrecurring Basis Asset And Liabilities Value [Roll Forward]
Beginning balance	$ 11,714	$ 10,679
Loans classified as impaired during the period	0	3,052
Specific valuation allowance allocations	0	(750)
Fair Value	0	2,302
(Additional) reduction in specific valuation allowance allocations	633	(130)
Paydowns, payoffs, other activity	(5,730)	(891)
Ending balance	$ 6,617	$ 11,960

XML

Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Assets
Cash and due from banks	$ 79,836	$ 75,999
Interest-bearing deposits in depository institutions	11,656	9,877
Cash and Cash Equivalents	91,492	85,876
Investment securities available for sale, at fair value	250,481	352,660
Investment securities held-to-maturity, at amortized cost (approximate fair value at September 30, 2014 and December 31, 2013, - $95,343 and $5,335, respectively)	93,089	4,117
Other securities	14,234	13,343
Total Investment Securities	357,804	370,120
Gross loans	2,630,742	2,606,197
Allowance for loan losses	(20,487)	(20,575)
Net Loans	2,610,255	2,585,622
Bank owned life insurance	94,338	92,047
Premises and equipment, net	78,999	82,548
Accrued interest receivable	7,751	6,866
Net deferred tax asset	36,654	42,165
Goodwill and other intangible assets	74,434	75,142
Other assets	33,580	27,852
Total Assets	3,385,307	3,368,238
Liabilities
Noninterest-bearing	498,491	493,228
Interest-bearing:
Demand deposits	620,880	601,527
Savings deposits	640,009	612,772
Time deposits	1,034,015	1,077,606
Total Deposits	2,793,395	2,785,133
Short-term borrowings:
Customer repurchase agreements	146,115	137,798
Long-term debt	16,495	16,495
Other liabilities	37,629	41,189
Total Liabilities	2,993,634	2,980,615
Shareholders’ Equity
Preferred stock, par value $25 per share: 500,000 shares authorized; none issued	0	0
Common stock, par value $2.50 per share: 50,000,000 shares authorized; 18,499,282 shares issued at September 30, 2014 and December 31, 2013, less 3,152,647 and 2,748,922 shares in treasury, respectively	46,249	46,249
Capital surplus	107,062	107,596
Retained earnings	353,721	333,970
Cost of common stock in treasury	(112,438)	(95,202)
Accumulated other comprehensive income (loss):
Unrealized loss on securities available-for-sale	(41)	(2,110)
Underfunded pension liability	(2,880)	(2,880)
Total Accumulated Other Comprehensive Loss	(2,921)	(4,990)
Total Shareholders’ Equity	391,673	387,623
Total Liabilities and Shareholders’ Equity	$ 3,385,307	$ 3,368,238

XML

Loans (Activity For The Accretable Yield) (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2014
Virginia Savings Bank [Member]
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Accretable Yield Movement Schedule [Roll Forward]
Balance at the beginning of the period	$ 698
Accretion	(213)
Net reclassifications to accretable yield from non-accretable yield	149
Disposals	(146)
Balance at the end of period	488
Certain Loans Acquired In Transfer Not Accounted For As Debt Securities, Carrying Amount Net [Roll Forward]
Balance at the beginning of the period	3,182
Accretion	213
Payments received, net	(408)
Disposals	0
Balance at the end of period	2,987
Community Bank [Member]
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Accretable Yield Movement Schedule [Roll Forward]
Balance at the beginning of the period	10,389
Accretion	(1,931)
Net reclassifications to accretable yield from non-accretable yield	3,205
Disposals	(1,583)
Balance at the end of period	10,080
Certain Loans Acquired In Transfer Not Accounted For As Debt Securities, Carrying Amount Net [Roll Forward]
Balance at the beginning of the period	26,330
Accretion	2,130
Payments received, net	(12,942)
Balance at the end of period	15,518
Virginia Savings Bank and Community Bank [Member]
Certain Loans Acquired in Transfer Not Accounted for as Debt Securities, Accretable Yield Movement Schedule [Roll Forward]
Balance at the beginning of the period	11,087
Accretion	(2,144)
Net reclassifications to accretable yield from non-accretable yield	3,354
Disposals	(1,729)
Balance at the end of period	10,568
Certain Loans Acquired In Transfer Not Accounted For As Debt Securities, Carrying Amount Net [Roll Forward]
Balance at the beginning of the period	29,512
Accretion	2,343
Payments received, net	(13,350)
Disposals	0
Balance at the end of period	$ 18,505

XML

Consolidated Statements Of Changes In Shareholders' Equity (USD $) In Thousands, unless otherwise specified	Total	Common Stock [Member]	Capital Surplus[Member]	Retained Earnings [Member]	Treasury Stock [Member]	Accumulated Other Comprehensive Income (Loss) [Member]
Beginning Balance at Dec. 31, 2012	$ 333,274	$ 46,249	$ 103,524	$ 309,270	$ (124,347)	$ (1,422)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	34,969			34,969
Other comprehensive income (loss)	(4,752)					(4,752)
Acquisition of Community Financial Corporation	28,508		4,236		24,272
Cash dividends declared	(17,686)			(17,686)
Stock Issued During Period, Value, Share-based Compensation, Net of Forfeitures	963		(315)		1,278
Exercise of stock options	2,766		(170)		2,936
Ending balance at Sep. 30, 2013	378,042	46,249	107,275	326,553	(95,861)	(6,174)
Beginning Balance at Dec. 31, 2013	387,623	46,249	107,596	333,970	(95,202)	(4,990)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	38,432			38,432
Other comprehensive income (loss)	2,069					2,069
Cash dividends declared	(18,681)			(18,681)
Stock Issued During Period, Value, Share-based Compensation, Net of Forfeitures	1,210		(262)		1,472
Exercise of stock options	553		(272)		825
Purchase of treasury shares	(19,533)				(19,533)
Ending balance at Sep. 30, 2014	$ 391,673	$ 46,249	$ 107,062	$ 353,721	$ (112,438)	$ (2,921)

XML

Employee Benefit Plans (Narrative) (Details) (USD $)	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Proceeds from exercise of stock options	$ 600,000	$ 2,900,000
Total intrinsic value of stock options exercised	300,000	600,000
Stock-based compensation expense related to restricted shares	800,000	600,000
Total expense associated with the retirement benefit plan	600,000	600,000
Contributions made by company	300,000	500,000
Stock Appreciation Rights (SARs) [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Incentive stock options and SARs exercisable period	10 years
Employee Stock Option [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Incentive stock options and SARs exercisable period	10 years
Stock options awarded	411,601
Stock-based compensation expense	100,000	200,000
Unrecognized stock-based compensation expense	500,000
Weighted-average period, unrecognized expense expected to be recognized	1 year 6 months
Restricted Stock [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock options awarded	230,109
Unrecognized stock-based compensation expense	$ 3,200,000
Weighted-average period, unrecognized expense expected to be recognized	3 years 7 months 6 days
Maximum [Member]
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Common stock issued upon the exercise of stock options, SARs and stock awards	750,000

XML

Investments (Aggregate Carrying And Approximate Market Values Of Available-For-Sale Securities) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Schedule of Available-for-sale Securities [Line Items]
Securities available-for-sale, Amortized Cost	$ 250,194	$ 355,771
Available-for-sale, Accumulated Gross Unrealized Gain, before tax	5,463	7,091
Available-for-sale, Gross Unrealized Loss, before tax	5,176	10,202
Securities available-for-sale	250,481	352,660
U.S Treasuries and U.S. Government Agencies [Member]
Schedule of Available-for-sale Securities [Line Items]
Securities available-for-sale, Amortized Cost	1,923	2,317
Available-for-sale, Accumulated Gross Unrealized Gain, before tax	20	48
Available-for-sale, Gross Unrealized Loss, before tax	0	0
Securities available-for-sale	1,943	2,365
Obligations Of States And Political Subdivisions [Member]
Schedule of Available-for-sale Securities [Line Items]
Securities available-for-sale, Amortized Cost	41,096	41,027
Available-for-sale, Accumulated Gross Unrealized Gain, before tax	729	627
Available-for-sale, Gross Unrealized Loss, before tax	13	106
Securities available-for-sale	41,812	41,548
U.S. Government Agencies Mortgage-backed Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Securities available-for-sale, Amortized Cost	183,470	282,653
Available-for-sale, Accumulated Gross Unrealized Gain, before tax	2,950	2,765
Available-for-sale, Gross Unrealized Loss, before tax	3,123	7,310
Securities available-for-sale	183,297	278,108
Private Label [Member]
Schedule of Available-for-sale Securities [Line Items]
Securities available-for-sale, Amortized Cost	1,767	2,184
Available-for-sale, Accumulated Gross Unrealized Gain, before tax	11	16
Available-for-sale, Gross Unrealized Loss, before tax	0	3
Securities available-for-sale	1,778	2,197
Trust Preferred Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Securities available-for-sale, Amortized Cost	10,164	12,943
Available-for-sale, Accumulated Gross Unrealized Gain, before tax	300	2,113
Available-for-sale, Gross Unrealized Loss, before tax	1,648	1,900
Securities available-for-sale	8,816	13,156
Corporate Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Securities available-for-sale, Amortized Cost	7,802	9,788
Available-for-sale, Accumulated Gross Unrealized Gain, before tax	203	183
Available-for-sale, Gross Unrealized Loss, before tax	375	843
Securities available-for-sale	7,630	9,128
Debt Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Securities available-for-sale, Amortized Cost	246,222	350,912
Available-for-sale, Accumulated Gross Unrealized Gain, before tax	4,213	5,752
Available-for-sale, Gross Unrealized Loss, before tax	5,159	10,162
Securities available-for-sale	245,276	346,502
Marketable Equity Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Securities available-for-sale, Amortized Cost	2,447	3,334
Available-for-sale, Accumulated Gross Unrealized Gain, before tax	1,250	1,339
Available-for-sale, Gross Unrealized Loss, before tax	0	0
Securities available-for-sale	3,697	4,673
Investment Funds [Member]
Schedule of Available-for-sale Securities [Line Items]
Securities available-for-sale, Amortized Cost	1,525	1,525
Available-for-sale, Accumulated Gross Unrealized Gain, before tax	0	0
Available-for-sale, Gross Unrealized Loss, before tax	17	40
Securities available-for-sale	$ 1,508	$ 1,485

XML

Commitments And Contingencies (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Standby Letters Of Credit [Member]
Commitments And Contingencies [Line Items]
Contractual obligations	$ 14,271	$ 14,122
Commercial Letters Of Credit [Member]
Commitments And Contingencies [Line Items]
Contractual obligations	1,972	1,555
Home equity - junior liens (including lines of credit) [Member] | Commitments To Extend Credit [Member]
Commitments And Contingencies [Line Items]
Contractual obligations	174,115	174,417
Commercial Real Estate [Member] | Commitments To Extend Credit [Member]
Commitments And Contingencies [Line Items]
Contractual obligations	33,970	42,209
Other Commitments [Member] | Commitments To Extend Credit [Member]
Commitments And Contingencies [Line Items]
Contractual obligations	$ 173,694	$ 201,065

XML

Merger Related Costs Merger Related Costs

9 Months Ended

Sep. 30, 2014

Merger Related Costs [Abstract]

Merger Related Costs

Merger Related Costs

During the nine months endedSeptember 30, 2013, the Company incurred $5.5 million of merger-related costs in connection with the acquisition of Community on January 10, 2013. These costs were primarily for severance ($2.5 million), professional fees ($1.4 million) and data processing costs ($1.1 million). No merger related costs were incurred during the nine months ended September 30, 2014.

XML

Investments (Aggregate Carrying And Approximate Market Values Of Held-To-Maturity Securities) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Schedule of Held-to-maturity Securities [Line Items]
Securities held-to-maturity, Amortized Cost	$ 93,089	$ 4,117
Held-to-Maturity, Gross Unrealized Gain, before tax	2,254	1,218
Held-to-Maturity, Unrealized Loss, before tax	0	0
Securities held-to-maturity, Estimated Fair Value	95,343	5,335
U.S. Government Agencies Mortgage-backed Securities [Member]
Schedule of Held-to-maturity Securities [Line Items]
Securities held-to-maturity, Amortized Cost	89,193	0
Held-to-Maturity, Gross Unrealized Gain, before tax	1,443	0
Held-to-Maturity, Unrealized Loss, before tax	0	0
Securities held-to-maturity, Estimated Fair Value	90,636	0
Trust Preferred Securities [Member]
Schedule of Held-to-maturity Securities [Line Items]
Securities held-to-maturity, Amortized Cost	3,896	4,117
Held-to-Maturity, Gross Unrealized Gain, before tax	811	1,218
Held-to-Maturity, Unrealized Loss, before tax	0	0
Securities held-to-maturity, Estimated Fair Value	4,707	5,335
Non-Marketable Equity Securities [Member]
Schedule of Held-to-maturity Securities [Line Items]
Securities held-to-maturity, Amortized Cost	14,234	13,343
Held-to-Maturity, Gross Unrealized Gain, before tax	0	0
Held-to-Maturity, Unrealized Loss, before tax	0	0
Securities held-to-maturity, Estimated Fair Value	$ 14,234	$ 13,343

XML

Loans (Tables)

9 Months Ended

Sep. 30, 2014

Loans Receivable, Net [Abstract]

Summary Of Major Classifications For Loans

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

	September 30, 2014			December 31, 2013
Residential real estate	$	1,274,062		$	1,204,450
Home equity – junior liens	146,965			146,090
Commercial and industrial	130,462			148,302
Commercial real estate	1,034,593			1,057,048
Consumer	41,042			46,402
DDA overdrafts	3,618			3,905
Gross loans	2,630,742			2,606,197
Allowance for loan losses	(20,487		)	(20,575		)
Net loans	$	2,610,255		$	2,585,622

Composition Of Loans Acquired At Acquisition

The following table details the loans acquired in conjunction with the Virginia Savings Bancorp, Inc. ("Virginia Savings") and Community Financial Corporation ("Community") acquisitions (in thousands):

	Virginia
	Savings		Community		Total
September 30, 2014
Outstanding loan balance	$	42,039	$	238,245	$	280,284
Credit-impaired loans:
Carrying value	2,987		15,518		18,505
Contractual principal and interest	3,481		24,147		27,628
December 31, 2013
Outstanding loan balance	$	48,833	$	279,890	$	328,723
Credit-impaired loans:
Carrying value	3,182		26,330		29,512
Contractual principal and interest	3,932		38,566		42,498

Activity For The Accretable Yield

Changes in the accretable yield of the credit-impaired loans for the nine months ended September 30, 2014 is as follows (in thousands):

	Virginia Savings						Community						Total
				Carrying						Carrying						Carrying
	Accretable			Amount			Accretable			Amount			Accretable			Amount
	Yield			of Loans			Yield			of Loans			Yield			of Loans
Balance at the beginning of the period	$	698		$	3,182		$	10,389		$	26,330		$	11,087		$	29,512
Accretion	(213		)	213			(1,931		)	2,130			(2,144		)	2,343
Net reclassifications to accretable yield from
non-accretable yield	149			—			3,205			—			3,354			—
Payments received, net	—			(408		)	—			(12,942		)	—			(13,350		)
Disposals	(146		)	—			(1,583		)	—			(1,729		)	—
Balance at the end of period	$	488		$	2,987		$	10,080		$	15,518		$	10,568		$	18,505

XML

Earnings Per Share (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Earnings Per Share [Abstract]
Distributed earnings allocated to common stock	$ 6,073	$ 5,767	$ 18,220	$ 17,302
Undistributed Earnings, Diluted	5,673	8,081	19,809	17,349
Net Income (Loss) Available to Common Stockholders, Diluted	$ 11,746	$ 13,848	$ 38,029	$ 34,651
Average shares outstanding (in shares)	15,363,000	15,608,000	15,509,000	15,545,000
Incremental Common Shares Attributable to Dilutive Effect of Call Options and Warrants	62,000	62,000	62,000	60,000
Incremental Common Shares Attributable to Dilutive Effect of Share-based Payment Arrangements	20,000	120,000	23,000	108,000
Shares for diluted earnings per share (in shares)	15,445,000	15,790,000	15,594,000	15,713,000
Basic earnings per share (in dollars per share)	$ 0.76	$ 0.89	$ 2.45	$ 2.23
Diluted earnings per share (in dollars per share)	$ 0.76	$ 0.88	$ 2.44	$ 2.21
Options to purchase shares of common stock, anti-dilutive (in shares)	13,953	0
Common stock exercise price, lower limit (in dollars per share)	$ 44.43

XML

Consolidated Statements Of Changes In Shareholders' Equity (Parenthetical) (USD $)	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Statement of Stockholders' Equity [Abstract]
Cash dividends declared (in dollars per share)	$ 1.2	$ 1.11
Exercise of stock options (in shares)	19,000	107,140
Purchase of treasury shares (in shares)	456,856	0

XML

Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Statement of Financial Position [Abstract]
Securities held-to-maturity, Estimated Fair Value	$ 95,343	$ 5,335
Preferred stock, par value (in dollars per share)	$ 25	$ 25
Preferred stock, shares authorized (in shares)	500,000	500,000
Preferred stock, shares issued (in shares)	0	0
Common stock, par value (in dollars per share)	$ 2.50	$ 2.50
Common stock, shares authorized (in shares)	50,000,000	50,000,000
Common stock, shares issued (in shares)	18,499,282	18,499,282
Common stock, treasury shares (in shares)	3,152,647	2,748,922

XML

Employee Benefit Plans

9 Months Ended

Sep. 30, 2014

Share-based Compensation [Abstract]

Employee Benefit Plans

Employee Benefit Plans

Pursuant to the terms of the City Holding Company 2003 Incentive Plan and the City Holding Company 2013 Incentive Plan (the "2003 Plan” and "2013 Plan", respectively), the Compensation Committee of the Board of Directors, or its delegate, may, from time-to-time, grant stock options, stock appreciation rights (“SARs”), or stock awards to employees, directors and individuals who provide service to the Company (collectively, "Plan Participants").  The 2003 Plan expired in April of 2013 and the 2013 Plan was approved by the shareholders in April 2013. A maximum of 750,000 shares of the Company’s common stock may be issued upon the exercise of stock options, SARs and stock awards.  These limitations may be adjusted in the event of a change in the number of outstanding shares of common stock by reason of a stock dividend, stock split or other similar event.  Specific terms of options and SARs awarded, including vesting periods, exercise prices (stock price at date of grant) and expiration dates are determined at the date of grant and are evidenced by agreements between the Company and the awardee.  The exercise price of the option grants equals the market price of the Company’s stock on the date of grant.  All incentive stock options and SARs will be exercisable up to 10 years from the date granted and all options and SARs are exercisable for the period specified in the individual agreement. As of September 30, 2014, under the 2003 Plan and 2013 Plan, 411,601 stock options had been awarded and 230,109 restricted stock awards had been awarded, respectively.

Each award from the 2003 Plan and 2013 Plan is evidenced by an award agreement that specifies the option price, the duration of the option, the number of shares to which the option pertains, and such other provisions as the Compensation Committee, or its delegate, determines.  The option price for each grant is equal to the fair market value of a share of the Company’s common stock on the date of the grant.  Options granted expire at such time as the Compensation Committee, or its delegate, determines at the date of the grant and in no event does the exercise period exceed a maximum of ten years.  Upon a change-in-control of the Company, as defined in the 2003 Plan and 2013 Plan, all outstanding options and awards shall immediately vest.

Stock Options

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

	Nine months ended September 30,
	2014				2013
	Options		Weighted-Average Exercise Price		Options		Weighted-Average Exercise Price
Outstanding at January 1	173,601		$	35.26	289,544		$	34.38
Granted	13,953		44.43		15,475		37.74
Exercised	(19,000	)	29.13		(107,140	)	33.36
Forfeited	—		—		(2,250	)	34.73
Outstanding at September 30	168,554		$	36.71	195,629		$	35.19

Additional information regarding stock options outstanding and exercisable at September 30, 2014, is provided in the following table:

Ranges of Exercise Prices	No. of Options Outstanding	Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value (in thousands)		No. of Options Currently Exercisable	Weighted-Average Exercise Price of Options Currently Exercisable		Weighted-Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value of Options Currently Exercisable (in thousands)
$26.62 - $33.90	40,250	$	30.83	3.9	$	575	19,332	$	30.46	2.5	$	283
$35.09 - $44.43	128,304	38.55		5.1	843		66,000	39.15		2.4	394
	168,554				$	1,418	85,332				$	677

Proceeds from stock option exercises were $0.6 million and $2.9 million during the nine months ended September 30, 2014 and 2013, respectively. Shares issued in connection with stock option exercises are issued from available treasury shares. If no treasury shares are available, new shares would be issued from available authorized shares. During the nine months ended September 30, 2014 and 2013 all shares issued in connection with stock option exercises and restricted stock awards were issued from available treasury stock.

The total intrinsic value of stock options exercised was $0.3 million and $0.6 million during the nine months ended September 30, 2014 and 2013, respectively.

Stock-based compensation expense was approximately $0.1 million and $0.2 million for the nine months ended September 30, 2014 and 2013, respectively.  Unrecognized stock-based compensation expense related to stock options approximated $0.5 million at September 30, 2014. At such date, the weighted-average period over which this unrecognized expense was expected to be recognized was 1.5 years.

The fair value of the options is estimated at the date of grant using a Black-Scholes option-pricing model.   The following weighted average assumptions were used to estimate the fair value of options granted:

	Nine months ended September 30,
	2014		2013
Risk-free interest rate	2.42	%	1.88	%
Expected dividend yield	3.60	%	3.70	%
Volatility factor	48.75	%	41.35	%
Expected life of option	8.0 years		8.0 years

Restricted Shares

The Company records compensation expense with respect to restricted shares in an amount equal to the fair value of the common stock covered by each award on the date of grant. The restricted shares awarded become fully vested after various periods of continued employment from the respective dates of grant. The Company is entitled to an income tax deduction in an amount equal to the taxable income reported by the holders of the restricted shares when the restrictions are released and the shares are issued. Compensation is being charged to expense over the respective vesting periods.

Restricted shares are forfeited if officers and employees terminate prior to the lapsing of restrictions. The Company records forfeitures of restricted stock as treasury share repurchases and any compensation cost previously recognized is reversed in the period of forfeiture.  Recipients of restricted shares do not pay any cash consideration to the Company for the shares, have the right to vote all shares subject to such grant and receive all dividends with respect to such shares, whether or not the shares have vested.  Stock-based compensation expense related to restricted shares was approximately $0.8 million and $0.6 million for the nine months ended September 30, 2014 and 2013, respectively.  Unrecognized stock-based compensation expense related to non-vested restricted shares was $3.2 million at September 30, 2014. At September 30, 2014, this unrecognized expense is expected to be recognized over 3.6 years based on the weighted average-life of the restricted shares.

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

	Nine months ended September 30,
	2014				2013
	Restricted Awards		Average Market Price at Grant		Restricted Awards		Average Market Price at Grant
Outstanding at January 1	142,469				116,711
Granted	27,162		$	39.72	35,083		$	38.07
Forfeited/Vested	(6,200	)			(9,325	)
Outstanding at September 30	163,431				142,469

Benefit Plans

The Company provides retirement benefits to its employees through the City Holding Company 401(k) Plan and Trust (“the 401(k) Plan”), which is intended to be compliant with Employee Retirement Income Security Act (ERISA) section 404(c). The Company’s total expense associated with the retirement benefit plan approximated $0.6 million for both the nine months ended September 30, 2014 and 2013.

The Company maintains two frozen defined benefit pension plans (“the Defined Benefit Plans”), which were inherited from the Company's acquisition of the plan sponsors (Horizon Bancorp, Inc. and Community Financial Corporation). The Company made contributions of approximately $0.3 million and $0.5 million to the Defined Benefit Plans during the nine months ended September 30, 2014 and 2013, respectively.

The following table presents the components of the net periodic pension cost of the Defined Benefit Plans (in thousands):

	Three months ended September 30,						Nine months ended September 30,
	2014			2013			2014			2013
Components of net periodic cost:
Interest cost	$	209		$	217		$	634		$	549
Expected return on plan assets	(252		)	(276		)	(779		)	(695		)
Net amortization and deferral	150			267			538			732
Net Periodic Pension Cost	$	107		$	208		$	393		$	586

XML

Document And Entity Information	9 Months Ended
	Sep. 30, 2014	Nov. 04, 2014
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2014
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2014
Entity Registrant Name	CITY HOLDING CO
Entity Central Index Key	0000726854
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		15,217,692
Trading Symbol	chco

XML

Commitments And Contingencies

9 Months Ended

Sep. 30, 2014

Commitments and Contingencies Disclosure [Abstract]

Commitments And Contingencies

Commitments and Contingencies

The Company is a party to certain financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers.  The Company has entered into agreements with its customers to extend credit or provide a conditional commitment to provide payment on drafts presented in accordance with the terms of the underlying credit documents. The Company also provides overdraft protection to certain demand deposit customers that represent an unfunded commitment.  Overdraft protection commitments, which are included with other commitments below, are uncollateralized and are paid at the Company’s discretion.  Conditional commitments generally include standby and commercial letters of credit. Standby letters of credit represent an obligation of the Company to a designated third party contingent upon the failure of a customer of the Company to perform under the terms of the underlying contract between the customer and the third party. Commercial letters of credit are issued specifically to facilitate trade or commerce. Under the terms of a commercial letter of credit, drafts will be drawn when the underlying transaction is consummated, as intended, between the customer and a third party. The funded portion of these financial instruments is reflected in the Company’s balance sheet, while the unfunded portion of these commitments is not reflected in the balance sheet.  The table below presents a summary of the contractual obligations of the Company resulting from significant commitments (in thousands):

	September 30, 2014		December 31, 2013
Commitments to extend credit:
Home equity lines	$	174,115	$	174,417
Commercial real estate	33,970		42,209
Other commitments	173,694		201,065
Standby letters of credit	14,271		14,122
Commercial letters of credit	1,972		1,555

Loan commitments and standby and commercial letters of credit have credit risks essentially the same as that involved in extending loans to customers and are subject to the Company’s standard credit policies. Collateral is obtained based on management’s credit assessment of the customer. Management does not anticipate any material losses as a result of these commitments.

The Company is engaged in various legal actions that it deems to be in the ordinary course of business. As these legal actions are resolved, the Company could realize positive and/or negative impact to its financial performance in the period in which these legal actions are ultimately decided. There can be no assurance that current actions will have immaterial results, either positive or negative, or that no material actions may be presented in the future.

XML

Consolidated Statements Of Income (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Interest Income
Interest and fees on loans	$ 29,292	$ 32,983	$ 87,647	$ 94,693
Interest and dividends on investment securities:
Taxable	2,864	2,392	8,797	7,774
Tax-exempt	282	299	840	935
Interest on federal funds sold	0	0	0	22
Total Interest Income	32,438	35,674	97,284	103,424
Interest Expense
Interest on deposits	2,730	3,068	8,220	9,490
Interest on short-term borrowings	86	82	246	232
Interest on long-term debt	152	154	453	464
Total Interest Expense	2,968	3,304	8,919	10,186
Net Interest Income	29,470	32,370	88,365	93,238
Provision for loan losses	1,872	1,154	3,670	4,903
Net Interest Income After Provision for Loan Losses	27,598	31,216	84,695	88,335
Non-interest Income
Gains on sale of investment securities	71	0	972	93
Service charges	6,934	7,169	19,833	20,601
Bankcard revenue	3,796	3,468	11,319	10,117
Insurance commissions	1,396	1,365	4,740	4,563
Trust and investment management fee income	1,103	939	3,251	2,893
Bank owned life insurance	771	805	2,292	2,416
Other income	538	734	1,646	2,376
Total Non-interest Income	14,609	14,480	44,053	43,059
Non-interest Expense
Salaries and employee benefits	13,144	12,930	39,260	38,519
Occupancy and equipment	2,531	2,409	7,541	7,381
Depreciation	1,542	1,437	4,553	4,289
FDIC insurance expense	432	500	1,199	1,352
Advertising	799	712	2,548	2,266
Bankcard expenses	843	680	2,482	2,173
Postage, delivery, and statement mailings	557	541	1,662	1,698
Office supplies	405	416	1,235	1,320
Legal and professional fees	476	591	1,497	1,561
Telecommunications	510	721	1,354	1,631
Repossessed asset losses, net of expenses	31	896	552	718
Merger related costs	0	(150)	0	5,455
Other expenses	3,055	2,982	8,123	9,664
Total Non-interest Expense	24,325	24,665	72,006	78,027
Income Before Income Taxes	17,882	21,031	56,742	53,367
Income tax expense	6,010	7,056	18,310	18,398
Net Income Available to Common Shareholders	11,872	13,975	38,432	34,969
Total comprehensive income	$ 11,460	$ 13,342	$ 40,501	$ 30,217
Average common shares outstanding (in shares)	15,363	15,608	15,509	15,545
Effect of dilutive securities, employee stock awards and warrants outstanding (in shares)	82	182	85	168
Effect of dilutive securities:
Shares for diluted earnings per share (in shares)	15,445	15,790	15,594	15,713
Basic earnings per common share (in dollars per share)	$ 0.76	$ 0.89	$ 2.45	$ 2.23
Diluted earnings per common share (in dollars per share)	$ 0.76	$ 0.88	$ 2.44	$ 2.21
Dividends declared per common share (in dollars per share)	$ 0.40	$ 0.37	$ 1.20	$ 1.11

XML

Investments

9 Months Ended

Sep. 30, 2014

Investments [Abstract]

Investments

Investments

The amortized cost and estimated fair values of the Company's securities are shown in the following table (in thousands):

	September 30, 2014								December 31, 2013
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Securities available-for-sale:
U.S. Treasuries and U.S.
government agencies	$	1,923	$	20	$	—	$	1,943	$	2,317	$	48	$	—	$	2,365
Obligations of states and
political subdivisions	41,096		729		13		41,812		41,027		627		106		41,548
Mortgage-backed securities:
U.S. government agencies	183,470		2,950		3,123		183,297		282,653		2,765		7,310		278,108
Private label	1,767		11		—		1,778		2,184		16		3		2,197
Trust preferred
securities	10,164		300		1,648		8,816		12,943		2,113		1,900		13,156
Corporate securities	7,802		203		375		7,630		9,788		183		843		9,128
Total Debt Securities	246,222		4,213		5,159		245,276		350,912		5,752		10,162		346,502
Marketable equity  securities	2,447		1,250		—		3,697		3,334		1,339		—		4,673
Investment funds	1,525		—		17		1,508		1,525		—		40		1,485
Total Securities
Available-for-Sale	$	250,194	$	5,463	$	5,176	$	250,481	$	355,771	$	7,091	$	10,202	$	352,660

	September 30, 2014								December 31, 2013
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Securities held-to-maturity
Mortgage-backed securities
US government agencies	$	89,193	$	1,443	$	—	$	90,636	$	—	$	—	$	—	$	—
Trust preferred securities	3,896		811		—		4,707		4,117		1,218		—		5,335
Total Securities
Held-to-Maturity	$	93,089	$	2,254	$	—	$	95,343	$	4,117	$	1,218	$	—	$	5,335
Other investment securities:
Non-marketable equity securities	$	14,234	$	—	$	—	$	14,234	$	13,343	$	—	$	—	$	13,343
Total Other Investment
Securities	$	14,234	$	—	$	—	$	14,234	$	13,343	$	—	$	—	$	13,343

Securities with limited marketability, such as stock in the Federal Reserve Bank or the Federal Home Loan Bank, are carried at cost and are reported as non-marketable equity securities in the table above.

Certain investment securities owned by the Company were in an unrealized loss position (i.e., amortized cost basis exceeded the estimated fair value of the securities).  The following table shows the gross unrealized losses and fair value of the Company’s investments aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position (in thousands):

	September 30, 2014
	Less Than Twelve Months				Twelve Months or Greater				Total
	Estimated Fair Value		Unrealized Loss		Estimated Fair Value		Unrealized Loss		Estimated Fair Value		Unrealized Loss
Securities available-for-sale:
Obligations of states and political subdivisions	$	1,641	$	3	$	445	$	10	$	2,086	$	13
Mortgage-backed securities:
U.S. Government agencies	22,774		341		80,798		2,782		103,572		3,123
Trust preferred securities	368		144		4,805		1,504		5,173		1,648
Corporate securities	—		—		4,363		375		4,363		375
Investment funds	—		—		1,483		17		1,483		17
Total	$	24,783	$	488	$	91,894	$	4,688	$	116,677	$	5,176

	December 31, 2013
	Less Than Twelve Months				Twelve Months or Greater				Total
	Estimated Fair Value		Unrealized Loss		Estimated Fair Value		Unrealized Loss		Estimated Fair Value		Unrealized Loss
Securities available-for-sale:
Obligations of states and political subdivisions	$	5,600	$	87	$	243	$	19	$	5,843	$	106
Mortgage-backed securities:
U.S. Government agencies	195,661		7,113		5,040		197		200,701		7,310
Private label	1,491		3		—		—		1,491		3
Trust preferred securities	—		—		4,400		1,900		4,400		1,900
Corporate securities	5,881		843		—		—		5,881		843
Investment funds	$	1,460	$	40	$	—	$	—	1,460		40
Total	$	210,093	$	8,086	$	9,683	$	2,116	$	219,776	$	10,202

Marketable equity securities consist of investments made by the Company in equity positions of various regional community bank holding companies, with ownership positions ranging from nominal to a 4% ownership position in First National Corporation (FXNC).

During the nine months ended September 30, 2014 and 2013, the Company had no credit-related net investment impairment losses. Also, for the year ended December 31, 2013, the Company had no credit-related net investment impairment losses.

Declines in the fair value of held-to-maturity and available-for-sale securities below their cost that are deemed to be other-than-temporary would be reflected in earnings as realized losses.  In estimating other-than-temporary impairment losses, management considers, among other things (i) the length of time and the extent to which the fair value has been less than cost, (ii) the financial condition, capital strength, and near-term (12 months) prospects of the issuer, including any specific events which may influence the operations of the issuer such as changes in technology that may impair the earnings potential of the investment or the discontinuance of a segment of the business that may affect the future earnings potential; (iii) the historical volatility in the market value of the investment and/or the liquidity or illiquidity of the investment; (iv) adverse conditions specifically related to the security, an industry, or a geographic area; or (v) the intent to sell the investment security and if it’s more likely than not that the Company will not have to sell the security before recovery of its cost basis.  In addition, management also employs a continuous monitoring process in regards to its marketable equity securities, specifically its portfolio of regional community bank holding company stocks.  Although the regional community bank holding company stocks that are owned by the Company are publicly traded, the trading activity for these stocks is minimal, with trading volumes of less than 0.2% of each respective company being traded on a daily basis.  As part of management’s review process for these securities, management reviews the financial condition of each respective regional community bank for any indications of financial weakness.

Management has the ability and intent to hold the securities classified as held to maturity until they mature, at which time the Company will receive full value for the securities.  Furthermore, as of September 30, 2014, management does not intend to sell an impaired security and it is not more than likely that it will be required to sell the security before the recovery of its amortized cost basis.  The unrealized losses on debt securities are primarily the result of interest rate changes, credit spread widening on agency-issued mortgage related securities, general financial market uncertainty and market volatility.  These conditions will not prohibit the Company from receiving its contractual principal and interest payments on its debt securities.  The fair value is expected to recover as the securities approach their maturity date or repricing date.   As of September 30, 2014, management believes the unrealized losses detailed in the table above are temporary and no impairment loss has been recognized in the Company’s consolidated income statement.  Should the impairment of any of these securities become other-than-temporary, the cost basis of the investment will be reduced and the resulting loss recognized in net income in the period of the other-than-temporary impairment is identified, while any noncredit loss will be recognized in other comprehensive income.

At September 30, 2014, the book value of the Company’s five pooled trust preferred securities totaled $2.5 million with an estimated fair value of $1.4 million.  All of these securities are mezzanine tranches.  Pooled trust preferred securities represent beneficial interests in securitized financial assets that the Company analyzes within the scope of ASC 320, “Investments-Debt and Equity Securities” and are evaluated quarterly for other-than-temporary-impairment (“OTTI”).  Management performs an analysis of OTTI utilizing its internal methodology as described below to estimate expected cash flows to be received in the future.  The Company reviews each of its pooled trust preferred securities to determine if an OTTI charge would be recognized in current earnings in accordance with ASC 320, “Investments-Debt and Equity Securities”.  There is a risk that collateral deterioration could cause the Company to recognize additional OTTI charges in earnings in the future.

When evaluating pooled trust preferred securities for OTTI, the Company determines a credit related portion and a noncredit related portion.  The credit related portion is recognized in earnings and represents the difference between the present value of expected future cash flows and the amortized cost basis of the security.  The noncredit related portion is recognized in other comprehensive income, and represents the difference between the book value and the fair value of the security less the amount of the credit related impairment.  The determination of whether it is probable that an adverse change in estimated cash flows has occurred is evaluated by comparing estimated cash flows to those previously projected as further described below.  The Company considers this process to be its primary evidence when determining whether credit related OTTI exists.  The results of these analyses are significantly affected by other variables such as the estimate of future cash flows, credit worthiness of the underlying issuers and determination of the likelihood of defaults of the underlying collateral.

The Company utilizes a third party model to compute the present value of expected cash flows which considers the structure and term of each of the five respective pooled trust preferred securities and the financial condition of the underlying issuers.  Specifically, the third party model details interest rates, principal balances of note classes and underlying issuers, the timing and amount of interest and principal payments of the underlying issuers, and the allocation of the payments to the note classes. The current estimate of expected cash flows is based on the most recent trustee reports and any other relevant market information including announcements of interest payment deferrals or defaults of underlying trust preferred securities. For issuing banks that have defaulted, management generally assumes no recovery. For issuing banks that have deferred its interest payments, management excludes the collateral balance associated with these banks and assumes no recoveries of such collateral balance in the future unless otherwise noted. The exclusion of such issuing banks in a current deferral position is based on such bank experiencing a certain level of financial difficulty that raises doubt about its ability to satisfy its contractual debt obligation, and accordingly, the Company excludes the associated collateral balance from its estimate of expected cash flows. Other assumptions used in the estimate of expected cash flows include expected future default rates and prepayments. Specifically, the model assumes annual prepayments of 1.0% with 100% at maturity and assumes 150 basis points of additional annual defaults from banks that are currently not in default or deferral.  In addition, the model assumes no recoveries except for one trust preferred security which assumes that one of the banks currently deferring will cure such positions.  Management compares the present value of expected cash flows to those previously projected to determine if an adverse change in cash flows has occurred. If an adverse change in cash flows has occurred, management determines the credit loss to be recognized in the current period and the portion related to noncredit factors to be recognized in other comprehensive income.

The following table presents a progression of the credit loss component of OTTI on debt and equity securities recognized in earnings during the nine months ended September 30, 2014 and for the year ended December 31, 2013 (in thousands).  The credit loss component represents the difference between the present value of expected future cash flows and the amortized cost basis of the security.  The credit component of OTTI recognized in earnings during a period is presented in two parts based upon whether the credit impairment in the current period is the first time the security was credit impaired (initial credit impairment) or if there is additional credit impairment on a security that was credit impaired in previous periods.

	Debt Securities		Equity Securities			Total
Balance at January 1, 2013	$	21,186	$	4,813		$	25,999
Additions:
Initial credit impairment	—		—			—
Additional credit impairment	—		—			—
Deductions:
Sold	—		(115		)	(115		)
Balance at December 31, 2013	21,186		4,698			25,884
Additions:
Initial credit impairment	—		—			—
Additional credit impairment	—		—			—
Deductions:
Sold	—		(2,251		)	(2,251		)
Balance at September 30, 2014	$	21,186	$	2,447		$	23,633

The following table presents additional information about the Company’s trust preferred securities with a credit rating of below investment grade as of September 30, 2014 (dollars in thousands):

Deal Name	Type	Class	Original Cost		Amortized Cost		Fair Value		Difference (1)		Lowest Credit Rating	# of issuers currently performing	Actual deferrals/defaults (as a % of original dollar)		Expected deferrals/defaults (as a % of remaining performing collateral)			Excess Subordination as a Percentage of Current Performing Collateral (4)
	Pooled trust preferred securities:
	Other-than-temporarily impaired
	Available for Sale:
P1	Pooled	Mezz	$	698	$	75	$	353	278		Caa1	6	19.5	%	20.0	%	(2)	65.7	%
P2	Pooled	Mezz	2,535		—		—		—		Ca	4	22.3	%	—	%	(2)	—	%
P3	Pooled	Mezz	2,962		1,419		636		(783	)	Caa3	17	22.6	%	8.2	%	(2)	43.5	%
P4	Pooled	Mezz	4,060		400		119		(281	)	Ca	9	19.2	%	7.1	%	(3)	26.9	%
P5	Pooled	Mezz	5,877		512		368		(144	)	Ca	7	19.8	%	20.0	%	(2)	62.7	%
	Held to Maturity:
P6	Pooled	Mezz	1,351		43		707		664		Caa1	6	19.5	%	20.0	%	(2)	65.7	%
P7	Pooled	Mezz	3,367		—		—		—		Ca	4	22.3	%	—	%	(2)	—	%
	Single issuer trust preferred securities
	Available for sale:
S5	Single		261		235		249		14		NR	1	—	%	—	%
	Held to Maturity:
S9	Single		4,000		4,000		4,000		—		NR	1	—	%	—	%

(1) The differences noted consist of unrealized gains (losses) recorded at September 30, 2014 and noncredit other-than-temporary impairment losses recorded subsequent to April 1, 2009 that have not been reclassified as credit losses.

(2) Performing collateral is defined as total collateral minus all collateral that has been called, is currently deferring, or currently in default. This model for this security assumes that all collateral that is currently deferring will default with a zero recovery rate. The underlying issuers can cure, thus this bond could recover at a higher percentage upon default than zero.

(3) Performing collateral is defined as total collateral minus all collateral that has been called, is currently deferring, or currently in default.  The model for this security assumes that one of the banks that is currently deferring will cure.  If additional underlying issuers cure, this bond could recover at a higher percentage.

(4) Excess subordination is defined as the additional defaults/deferrals necessary in the next reporting period to deplete the entire credit enhancement (excess interest and over-collateralization) beneath our tranche within each pool to the point that would cause a "break in yield." This amount assumes that all currently performing collateral continues to perform. A break in yield means that our security would not be expected to receive all the contractual cash flows (principal and interest) by maturity. The "percent of current performing collateral" is the ratio of the "excess subordination amount" to current performing collateral—a higher percent means there is more excess subordination to absorb additional defaults/deferrals, and the better our security is protected from loss.

The amortized cost and estimated fair value of debt securities at September 30, 2014, by contractual maturity, are shown in the following table (in thousands).  Expected maturities will differ from contractual maturities because the issuers of the securities may have the right to prepay obligations without prepayment penalties.  Mortgage-backed securities have been allocated to their respective maturity groupings based on their contractual maturity.

	Amortized Cost		Estimated Fair Value
Securities Available-for-Sale
Due in one year or less	$	8,246	$	8,289
Due after one year through five years	19,515		20,162
Due after five years through ten years	27,059		27,672
Due after ten years	191,402		189,153
	$	246,222	$	245,276
Securities Held-to-Maturity
Due in one year or less	$	—
Due after one year through five years	—
Due after five years through ten years	—
Due after ten years	93,089		95,343
	$	93,089	$	95,343

Gross gains and gross losses realized by the Company from investment security transactions are summarized in the table below (in thousands). The specific identification method is used to determine the cost basis of securities sold.

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2014		2013		2014		2013
Gross realized gains	$	71	$	—	$	972	$	93
Gross realized losses	—		—		—		—
Net investment security gains	$	71	$	—	$	972	$	93

The carrying value of securities pledged to secure public deposits and for other purposes as required or permitted by law approximated $272 million and $278 million at September 30, 2014 and December 31, 2013, respectively.

Statement of Cash Flows - Investing Activities - Supplemental Information

During the second quarter, the Company transferred certain securities from available-for-sale to held-to-maturity. The non-cash transfers of securities into the held-to-maturity categories from available-for-sale were made at fair value on the date of the transfer. The securities had an aggregate fair value of $83.4 million, with an aggregate net unrealized loss of $0.1 million on the date of transfer. The net unamortized, unrealized loss on the transferred securities included in accumulated other comprehensive income in the accompanying balance sheet as of September 30, 2014 totaled $0.1 million. This amount will be amortized out of accumulated other comprehensive income over the remaining life of the underlying securities as an adjustment of the yield on those securities.

XML

Recent Accounting Pronouncements

9 Months Ended

Sep. 30, 2014

New Accounting Pronouncements and Changes in Accounting Principles [Abstract]

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In January 2014, the FASB issued ASU No. 2014-01, "Investments - Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Qualified Affordable Housing Projects." This ASU permits 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). For those investments in qualified affordable housing projects not accounted for using the proportional amortization method, the investment should be accounted for as an equity method investment or a cost method investment. The ASU also requires reporting entities to disclose information that enable users of its financial statements to understand the nature of its investments in qualified affordable housing projects, and the effect of the measurement of its investments in qualified affordable housing projects and the related tax credits on its financial position and results of operations. This ASU will become effective for the Company on January 1, 2015. The adoption of ASU 2014-01 is not expected to have a material impact on the Company's financial statements.

In January 2014, the FASB issued ASU No. 2014-04, "Receivables - Troubled Debt Restructurings by Creditors (Subtopic 310-40): Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure." This ASU clarifies 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 similar legal agreement. Additionally, the amendments require interim and annual disclosures 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. This ASU will become effective for the Company on January 1, 2015. The adoption of ASU 2014-04 is not expected to have a material impact on the Company's financial statements.

In April 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No 2014-08, "Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360): Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity" This ASU changes the requirements for reporting discontinued operations. A disposal of a component or a group of components of an entity is required to be reported in discontinued operations if the disposal represents a strategic shift that has (or will have) a major effect on an entity’s operations when certain criteria are met. Additional disclosures are also required for disposals that meet the criteria to be reported in discontinued operations. This ASU will become effective for the Company on January 1, 2015. The adoption of ASU 2014-08 is not expected to have a material impact on the Company's financial statements.

In May 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No 2014-09, "Revenue from Contracts with Customers (Topic 606)". 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. The core principle will be achieved using a five step process. This ASU will become effective for the Company on January 1, 2016. The adoption of ASU 2014-09 is not expected to have a material impact on the Company's financial statements.

In June 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No 2014-11, "Transfers and Servicing (Topic 860): Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures". The amendments in this update require two accounting changes. First, the amendments in this update change the accounting for repurchase-to-maturity transactions to secured borrowing accounting. Second, for repurchase financing arrangements, the amendments require separate accounting for a transfer of a financial asset executed contemporaneously with a repurchase agreement with the same counter-party, which will result in secured borrowing accounting for the repurchase agreement. This update also requires certain disclosures for these types of transactions. This ASU will become effective for the Company on January 1, 2015. The adoption of ASU 2014-11 is not expected to have a material impact on the Company's financial statements.

In June 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No 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 amendments in this update require that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. Performance targets should not be reflected in estimating the grant date fair value of the award, but compensation cost should be recognized in the period for which the requisite service has already been rendered. This ASU will become effective for the Company on January 1, 2016, with early adoption permitted. The adoption of ASU 2014-12 is not expected to have a material impact on the Company's financial statements.

In August 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No 2014-14, "Receivables - Troubled Debt Restructurings by Creditors (Subtopic 310-40): Classification of Certain Government-Guaranteed Mortgage Loans upon Foreclosure". The amendments in this update require that a mortgage loan be derecognized and that a separate other receivable be recognized upon foreclosure if certain conditions are met. This ASU will become effective for the Company on January 1, 2015. The adoption of ASU 2014-14 is not expected to have a material impact on the Company's financial statements.

XML

Investments (Tables)

9 Months Ended

Sep. 30, 2014

Investments [Abstract]

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

The amortized cost and estimated fair values of the Company's securities are shown in the following table (in thousands):

	September 30, 2014								December 31, 2013
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Securities available-for-sale:
U.S. Treasuries and U.S.
government agencies	$	1,923	$	20	$	—	$	1,943	$	2,317	$	48	$	—	$	2,365
Obligations of states and
political subdivisions	41,096		729		13		41,812		41,027		627		106		41,548
Mortgage-backed securities:
U.S. government agencies	183,470		2,950		3,123		183,297		282,653		2,765		7,310		278,108
Private label	1,767		11		—		1,778		2,184		16		3		2,197
Trust preferred
securities	10,164		300		1,648		8,816		12,943		2,113		1,900		13,156
Corporate securities	7,802		203		375		7,630		9,788		183		843		9,128
Total Debt Securities	246,222		4,213		5,159		245,276		350,912		5,752		10,162		346,502
Marketable equity  securities	2,447		1,250		—		3,697		3,334		1,339		—		4,673
Investment funds	1,525		—		17		1,508		1,525		—		40		1,485
Total Securities
Available-for-Sale	$	250,194	$	5,463	$	5,176	$	250,481	$	355,771	$	7,091	$	10,202	$	352,660

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

	September 30, 2014								December 31, 2013
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Securities held-to-maturity
Mortgage-backed securities
US government agencies	$	89,193	$	1,443	$	—	$	90,636	$	—	$	—	$	—	$	—
Trust preferred securities	3,896		811		—		4,707		4,117		1,218		—		5,335
Total Securities
Held-to-Maturity	$	93,089	$	2,254	$	—	$	95,343	$	4,117	$	1,218	$	—	$	5,335
Other investment securities:
Non-marketable equity securities	$	14,234	$	—	$	—	$	14,234	$	13,343	$	—	$	—	$	13,343
Total Other Investment
Securities	$	14,234	$	—	$	—	$	14,234	$	13,343	$	—	$	—	$	13,343

Gross Unrealized Losses And Fair Value Of Investments

The following table shows the gross unrealized losses and fair value of the Company’s investments aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position (in thousands):

	September 30, 2014
	Less Than Twelve Months				Twelve Months or Greater				Total
	Estimated Fair Value		Unrealized Loss		Estimated Fair Value		Unrealized Loss		Estimated Fair Value		Unrealized Loss
Securities available-for-sale:
Obligations of states and political subdivisions	$	1,641	$	3	$	445	$	10	$	2,086	$	13
Mortgage-backed securities:
U.S. Government agencies	22,774		341		80,798		2,782		103,572		3,123
Trust preferred securities	368		144		4,805		1,504		5,173		1,648
Corporate securities	—		—		4,363		375		4,363		375
Investment funds	—		—		1,483		17		1,483		17
Total	$	24,783	$	488	$	91,894	$	4,688	$	116,677	$	5,176

	December 31, 2013
	Less Than Twelve Months				Twelve Months or Greater				Total
	Estimated Fair Value		Unrealized Loss		Estimated Fair Value		Unrealized Loss		Estimated Fair Value		Unrealized Loss
Securities available-for-sale:
Obligations of states and political subdivisions	$	5,600	$	87	$	243	$	19	$	5,843	$	106
Mortgage-backed securities:
U.S. Government agencies	195,661		7,113		5,040		197		200,701		7,310
Private label	1,491		3		—		—		1,491		3
Trust preferred securities	—		—		4,400		1,900		4,400		1,900
Corporate securities	5,881		843		—		—		5,881		843
Investment funds	$	1,460	$	40	$	—	$	—	1,460		40
Total	$	210,093	$	8,086	$	9,683	$	2,116	$	219,776	$	10,202

Credit Loss Component Of OTTI On Debt Securities Recognized In Earnings

The following table presents a progression of the credit loss component of OTTI on debt and equity securities recognized in earnings during the nine months ended September 30, 2014 and for the year ended December 31, 2013 (in thousands).  The credit loss component represents the difference between the present value of expected future cash flows and the amortized cost basis of the security.  The credit component of OTTI recognized in earnings during a period is presented in two parts based upon whether the credit impairment in the current period is the first time the security was credit impaired (initial credit impairment) or if there is additional credit impairment on a security that was credit impaired in previous periods.

	Debt Securities		Equity Securities			Total
Balance at January 1, 2013	$	21,186	$	4,813		$	25,999
Additions:
Initial credit impairment	—		—			—
Additional credit impairment	—		—			—
Deductions:
Sold	—		(115		)	(115		)
Balance at December 31, 2013	21,186		4,698			25,884
Additions:
Initial credit impairment	—		—			—
Additional credit impairment	—		—			—
Deductions:
Sold	—		(2,251		)	(2,251		)
Balance at September 30, 2014	$	21,186	$	2,447		$	23,633

Additional Information Of Trust Preferred Securities With Credit Rating Below Investment Grade

The following table presents additional information about the Company’s trust preferred securities with a credit rating of below investment grade as of September 30, 2014 (dollars in thousands):

Deal Name	Type	Class	Original Cost		Amortized Cost		Fair Value		Difference (1)		Lowest Credit Rating	# of issuers currently performing	Actual deferrals/defaults (as a % of original dollar)		Expected deferrals/defaults (as a % of remaining performing collateral)			Excess Subordination as a Percentage of Current Performing Collateral (4)
	Pooled trust preferred securities:
	Other-than-temporarily impaired
	Available for Sale:
P1	Pooled	Mezz	$	698	$	75	$	353	278		Caa1	6	19.5	%	20.0	%	(2)	65.7	%
P2	Pooled	Mezz	2,535		—		—		—		Ca	4	22.3	%	—	%	(2)	—	%
P3	Pooled	Mezz	2,962		1,419		636		(783	)	Caa3	17	22.6	%	8.2	%	(2)	43.5	%
P4	Pooled	Mezz	4,060		400		119		(281	)	Ca	9	19.2	%	7.1	%	(3)	26.9	%
P5	Pooled	Mezz	5,877		512		368		(144	)	Ca	7	19.8	%	20.0	%	(2)	62.7	%
	Held to Maturity:
P6	Pooled	Mezz	1,351		43		707		664		Caa1	6	19.5	%	20.0	%	(2)	65.7	%
P7	Pooled	Mezz	3,367		—		—		—		Ca	4	22.3	%	—	%	(2)	—	%
	Single issuer trust preferred securities
	Available for sale:
S5	Single		261		235		249		14		NR	1	—	%	—	%
	Held to Maturity:
S9	Single		4,000		4,000		4,000		—		NR	1	—	%	—	%

(1) The differences noted consist of unrealized gains (losses) recorded at September 30, 2014 and noncredit other-than-temporary impairment losses recorded subsequent to April 1, 2009 that have not been reclassified as credit losses.

(2) Performing collateral is defined as total collateral minus all collateral that has been called, is currently deferring, or currently in default. This model for this security assumes that all collateral that is currently deferring will default with a zero recovery rate. The underlying issuers can cure, thus this bond could recover at a higher percentage upon default than zero.

(3) Performing collateral is defined as total collateral minus all collateral that has been called, is currently deferring, or currently in default.  The model for this security assumes that one of the banks that is currently deferring will cure.  If additional underlying issuers cure, this bond could recover at a higher percentage.

(4) Excess subordination is defined as the additional defaults/deferrals necessary in the next reporting period to deplete the entire credit enhancement (excess interest and over-collateralization) beneath our tranche within each pool to the point that would cause a "break in yield." This amount assumes that all currently performing collateral continues to perform. A break in yield means that our security would not be expected to receive all the contractual cash flows (principal and interest) by maturity. The "percent of current performing collateral" is the ratio of the "excess subordination amount" to current performing collateral—a higher percent means there is more excess subordination to absorb additional defaults/deferrals, and the better our security is protected from loss.

Amortized Cost And Estimated Fair Value Of Debt Securities By Contractual Maturity

The amortized cost and estimated fair value of debt securities at September 30, 2014, by contractual maturity, are shown in the following table (in thousands).  Expected maturities will differ from contractual maturities because the issuers of the securities may have the right to prepay obligations without prepayment penalties.  Mortgage-backed securities have been allocated to their respective maturity groupings based on their contractual maturity.

	Amortized Cost		Estimated Fair Value
Securities Available-for-Sale
Due in one year or less	$	8,246	$	8,289
Due after one year through five years	19,515		20,162
Due after five years through ten years	27,059		27,672
Due after ten years	191,402		189,153
	$	246,222	$	245,276
Securities Held-to-Maturity
Due in one year or less	$	—
Due after one year through five years	—
Due after five years through ten years	—
Due after ten years	93,089		95,343
	$	93,089	$	95,343

Gross Gains And Losses Realized

Gross gains and gross losses realized by the Company from investment security transactions are summarized in the table below (in thousands). The specific identification method is used to determine the cost basis of securities sold.

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2014		2013		2014		2013
Gross realized gains	$	71	$	—	$	972	$	93
Gross realized losses	—		—		—		—
Net investment security gains	$	71	$	—	$	972	$	93

XML

Accumulated Other Comprehensive Loss

9 Months Ended

Sep. 30, 2014

Equity [Abstract]

Accumulated Other Comprehensive Loss

Accumulated Other Comprehensive Loss

The activity in accumulated other comprehensive loss for the nine months ended September 30, 2014 and 2013 is presented in the tables below (in thousands). All amounts are shown net of tax, which is calculated using a combined Federal and state income tax rate approximating 37%.

	Accumulated Other Comprehensive Loss
				Unrealized
				Gains (Losses) on
	Defined Benefit			Securities
	Pension Plans			Available-for-Sale			Total
Balance at December 31, 2012	$	(4,995	)	$	3,573		$	(1,422	)
Other comprehensive income before reclassifications	—			(4,693		)	(4,693		)
Amounts reclassified from other comprehensive loss	—			(59		)	(59		)
	—			(4,752		)	(4,752		)
Balance at September 30, 2013	$	(4,995	)	$	(1,179	)	$	(6,174	)
Balance at December 31, 2013	$	(2,880	)	$	(2,110	)	$	(4,990	)
Other comprehensive income before reclassifications	—			2,683			2,683
Amounts reclassified from other comprehensive loss	—			(614		)	(614		)
	—			2,069			2,069
Balance at September 30, 2014	$	(2,880	)	$	(41	)	$	(2,921	)

	Amount reclassified from Other Comprehensive Loss
	Three months ended					Nine months ended						Affected line item
	September 30,					September 30,						in the Statements
	2014			2013		2014			2013			of Income
Securities available-for-sale:
Net securities gains reclassified into earnings	$	(71	)	$	—	$	(972	)	$	(93	)	Security gains (losses)
Related income tax expense	26			—		358			34			Income tax expense
Net effect on accumulated other comprehensive loss	$	(45	)	$	—	$	(614	)	$	(59	)

XML

Long-Term Debt

9 Months Ended

Sep. 30, 2014

Long-term Debt, Unclassified [Abstract]

Long-Term Debt

Long-Term Debt

The components of long-term debt are summarized below (in thousands):

	September 30, 2014		December 31, 2013
Junior subordinated debentures owed to City Holding Capital Trust III, due 2038, interest at a rate of 3.73% and 3.74%, respectively	$	16,495	$	16,495

The Company formed a statutory business trust, City Holding Capital Trust III (“Capital Trust III”), under the laws of Delaware.  Capital Trust III was created for the exclusive purpose of (i) issuing trust-preferred capital securities (“Capital Securities”), which represent preferred undivided beneficial interests in the assets of the trust, (ii) using the proceeds from the sale of the Capital Securities to acquire junior subordinated debentures (“Debentures”) issued by the Company, and (iii) engaging in only those activities necessary or incidental thereto.  The trust is considered a variable interest entity for which the Company is not the primary beneficiary.  Accordingly, the accounts of the trusts are not included in the Company’s consolidated financial statements.

Distributions on the Debentures are cumulative and will be payable quarterly at an interest rate of 3.50% over the three month LIBOR rate, reset quarterly.  Interest payments are due in March, June, September and December.  The Debentures are redeemable prior to maturity at the option of the Company (i) in whole or at any time or in part from time-to-time, or (ii) in whole, but not in part, at any time within 90 days following the occurrence and during the continuation of certain pre-defined events.

Payments of distributions on the Capital Securities and payments on redemption of the Capital Securities are guaranteed by the Company.  The Company also entered into an agreement as to expenses and liabilities with the trust pursuant to which it agreed, on a subordinated basis, to pay any cost, expenses or liabilities of the trust other than those arising under the trust preferred securities.  The obligations of the Company under the junior subordinated debentures, the related indentures, the trust agreement establishing the trust, the guarantees and the agreements as to expenses and liabilities, in the aggregate, constitute a full and unconditional guarantee by the Company of the trust’s obligations under the trust preferred securities.  The Capital Securities issued by the statutory business trusts qualify as Tier 1 capital for the Company under current Federal Reserve Board guidelines.

XML

Employee Benefit Plans (Summary Of Stock Option Activity) (Details) (USD $)	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Options Outstanding, beginning balance	173,601	289,544
Options, Granted	13,953	15,475
Options, Exercised	(19,000)	(107,140)
Options, Forfeited	0	(2,250)
Options Outstanding, ending balance	168,554	195,629
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Roll Forward]
Weighted-Average Exercise Price, Outstanding, beginning balance	$ 35.26	$ 34.38
Weighted-Average Exercise Price, Granted	$ 44.43	$ 37.74
Weighted-Average Exercise Price, Exercised	$ 29.13	$ 33.36
Weighted-Average Exercise Price, Forfeited	$ 0.00	$ 34.73
Weighted-Average Exercise Price, Outstanding, ending balance	$ 36.71	$ 35.19

XML

Loans

9 Months Ended

Sep. 30, 2014

Loans Receivable, Net [Abstract]

Loans

Loans

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

	September 30, 2014			December 31, 2013
Residential real estate	$	1,274,062		$	1,204,450
Home equity – junior liens	146,965			146,090
Commercial and industrial	130,462			148,302
Commercial real estate	1,034,593			1,057,048
Consumer	41,042			46,402
DDA overdrafts	3,618			3,905
Gross loans	2,630,742			2,606,197
Allowance for loan losses	(20,487		)	(20,575		)
Net loans	$	2,610,255		$	2,585,622

Construction loans of $22.4 million and $17.3 million are included within residential real estate loans at September 30, 2014 and December 31, 2013, respectively.  Construction loans of $24.9 million and $24.0 million are included within commercial real estate loans at September 30, 2014 and December 31, 2013, respectively.  The Company’s commercial and residential real estate construction loans are primarily secured by real estate within the Company’s principal markets.  These loans were originated under the Company’s loan policy, which is focused on the risk characteristics of the loan portfolio, including construction loans.  Adequate consideration has been given to these loans in establishing the Company’s allowance for loan losses.

The following table details the loans acquired in conjunction with the Virginia Savings Bancorp, Inc. ("Virginia Savings") and Community Financial Corporation ("Community") acquisitions (in thousands):

	Virginia
	Savings		Community		Total
September 30, 2014
Outstanding loan balance	$	42,039	$	238,245	$	280,284
Credit-impaired loans:
Carrying value	2,987		15,518		18,505
Contractual principal and interest	3,481		24,147		27,628
December 31, 2013
Outstanding loan balance	$	48,833	$	279,890	$	328,723
Credit-impaired loans:
Carrying value	3,182		26,330		29,512
Contractual principal and interest	3,932		38,566		42,498

Changes in the accretable yield of the credit-impaired loans for the nine months ended September 30, 2014 is as follows (in thousands):

	Virginia Savings						Community						Total
				Carrying						Carrying						Carrying
	Accretable			Amount			Accretable			Amount			Accretable			Amount
	Yield			of Loans			Yield			of Loans			Yield			of Loans
Balance at the beginning of the period	$	698		$	3,182		$	10,389		$	26,330		$	11,087		$	29,512
Accretion	(213		)	213			(1,931		)	2,130			(2,144		)	2,343
Net reclassifications to accretable yield from
non-accretable yield	149			—			3,205			—			3,354			—
Payments received, net	—			(408		)	—			(12,942		)	—			(13,350		)
Disposals	(146		)	—			(1,583		)	—			(1,729		)	—
Balance at the end of period	$	488		$	2,987		$	10,080		$	15,518		$	10,568		$	18,505

Increases in expected cash flow subsequent to the acquisition are recognized first as a reduction of any previous impairment, then prospectively through adjustment of the yield on the loans or pools over its remaining life, while decreases in expected cash flows are recognized as impairment through a provision for loan loss and an increase in the allowance for purchased credit-impaired loans.

XML

Allowance For Loan Losses

9 Months Ended

Sep. 30, 2014

Receivables [Abstract]

Allowance For Loan Losses

Allowance For Loan Losses

Management systematically monitors the loan portfolio and the adequacy of the allowance for loan losses on a quarterly basis to provide for probable losses inherent in the portfolio.  Management assesses the risk in each loan type based on historical trends, the general economic environment of its local markets, individual loan performance and other relevant factors.

Individual credits are selected throughout the year for detailed loan reviews, which are utilized by management to assess the risk in the portfolio and the adequacy of the allowance.  Due to the nature of commercial lending, evaluation of the adequacy of the allowance as it relates to these loan types is often based more upon specific credit reviews, with consideration given to the potential impairment of certain credits and historical loss rates, adjusted for economic conditions and other inherent risk factors.

The following table summarizes the activity in the allowance for loan loss, by portfolio segment, for the nine months ended September 30, 2014 and 2013 (in thousands).  The following table also presents the balance in the allowance for loan loss disaggregated on the basis of the Company’s impairment measurement method and the related recorded investment in loans, by portfolio segment, as of September 30, 2014 and December 31, 2013 (in thousands).

	Commercial &		Commercial		Residential						DDA
	Industrial		Real Estate		Real Estate		Home equity		Consumer		Overdrafts		Total
Nine months ended September 30, 2014
Allowance for loan loss
Beginning balance	$	1,139	$	10,775	$	6,057	$	1,672	$	77	$	855	$	20,575
Charge-offs	330		1,665		1,348		288		171		1,052		4,854
Recoveries	85		94		91		—		172		654		1,096
Provision	564		402		2,159		107		10		293		3,535
Provision for acquired loans	135		—		—		—		—		—		135
Ending balance	$	1,593	$	9,606	$	6,959	$	1,491	$	88	$	750	$	20,487
Nine months ended September 30, 2013
Allowance for loan loss
Beginning balance	$	498	$	10,440	$	5,229	$	1,699	$	81	$	862	$	18,809
Charge-offs	772		803		1,598		278		326		1,102		4,879
Recoveries	51		669		137		—		242		674		1,773
Provision	1,460		201		2,481		268		79		414		4,903
Ending balance	$	1,237	$	10,507	$	6,249	$	1,689	$	76	$	848	$	20,606
As of September 30, 2014
Allowance for loan loss
Evaluated for impairment:
Individually	$	—	$	247	$	—	$	—	$	—	$	—	$	247
Collectively	1,551		8,705		6,923		1,491		88		750		19,508
Acquired with deteriorated
credit quality	42		654		36		—		—		—		732
Total	$	1,593	$	9,606	$	6,959	$	1,491	$	88	$	750	$	20,487
Loans
Evaluated for impairment:
Individually	$	—	$	6,115	$	451	$	297	$	—	$	—	$	6,863
Collectively	128,726		1,014,641		1,273,230		144,241		40,918		3,618		2,605,374
Acquired with deteriorated
credit quality	1,736		13,837		381		2,427		124		—		18,505
Total	$	130,462	$	1,034,593	$	1,274,062	$	146,965	$	41,042	$	3,618	$	2,630,742
As of December 31, 2013
Allowance for loan loss
Evaluated for impairment:
Individually	$	—	$	880	$	—	$	—	$	—	$	—	$	880
Collectively	827		9,615		6,054		1,672		77		855		19,100
Acquired with deteriorated
credit quality	312		280		3		—		—		—		595
Total	$	1,139	$	10,775	$	6,057	$	1,672	$	77	$	855	$	20,575
Loans
Evaluated for impairment:
Individually	$	—	$	11,837	$	459	$	298	$	—	$	—	$	12,594
Collectively	146,318		1,020,657		1,201,894		145,025		46,292		3,905		2,564,091
Acquired with deteriorated
credit quality	1,984		24,554		2,097		767		110		—		29,512
Total	$	148,302	$	1,057,048	$	1,204,450	$	146,090	$	46,402	$	3,905	$	2,606,197

Credit Quality Indicators

All commercial loans within the portfolio are subject to internal risk grading.  All non-commercial loans are evaluated based on payment history.  The Company’s internal risk ratings for commercial loans are:  Pass, Special Mention, Substandard and Doubtful.  Each internal risk rating is defined in the loan policy using the following criteria:  balance sheet yields, ratios and leverage, cash flow spread and coverage, prior history, capability of management, market position/industry, potential impact of changing economic, legal, regulatory or environmental conditions, purpose, structure, collateral support, and guarantor support.  Risk grades are generally assigned by the primary lending officer and are periodically evaluated by the Company’s internal loan review process.  Based on an individual loan’s risk grade, estimated loss percentages are applied to the outstanding balance of the loan to determine the amount of probable loss.

The Company categorizes loans into risk categories based on relevant information regarding the customer’s debt service ability, capacity, overall collateral position along with other economic trends, and historical payment performance.  The risk grades for each credit are updated when the Company receives current financial information, the loan is reviewed by the Company’s internal loan review/credit administration departments, or the loan becomes delinquent or impaired.  The risk grades are updated a minimum of annually for loans rated exceptional, good, acceptable, or pass/watch.  Loans rated special mention, substandard or doubtful are reviewed at least quarterly.  The Company uses the following definitions for its risk ratings:

Risk Rating	Description
Pass ratings:
(a) Exceptional	Loans classified as exceptional are secured with liquid collateral conforming to the internal loan policy.  Loans rated within this category pose minimal risk of loss to the bank.
(b) Good	Loans classified as good have similar characteristics that include a strong balance sheet, satisfactory debt service coverage ratios, strong management and/or guarantors, and little exposure to economic cycles. Loans in this category generally have a low chance of loss to the bank.
(c) Acceptable	Loans classified as acceptable have acceptable liquidity levels, adequate debt service coverage ratios, experienced management, and have average exposure to economic cycles.  Loans within this category generally have a low risk of loss to the bank.
(d) Pass/watch	Loans classified as pass/watch have erratic levels of leverage and/or liquidity, cash flow is volatile and the borrower is subject to moderate economic risk.  A borrower in this category poses a low to moderate risk of loss to the bank.
Special mention	Loans classified as special mention have a potential weakness(es) that deserves management’s close attention.  The potential weakness could result in deterioration of the loan repayment or the bank’s credit position at some future date.  A loan rated in this category poses a moderate loss risk to the bank.
Substandard	Loans classified as substandard reflect a customer with a well defined weakness that jeopardizes the liquidation of the debt.  Loans in this category have the possibility that the bank will sustain some loss if the deficiencies are not corrected and the bank’s collateral value is weakened by the financial deterioration of the borrower.
Doubtful	Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristics that make collection of the full contract amount highly improbable.  Loans rated in this category are most likely to cause the bank to have a loss due to a collateral shortfall or a negative capital position.

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

	Commercial and industrial		Commercial real estate		Total
September 30, 2014
Pass	$	116,498	$	967,581	$	1,084,079
Special mention	654		19,134		19,788
Substandard	12,900		47,443		60,343
Doubtful	410		435		845
Total	$	130,462	$	1,034,593	$	1,165,055
December 31, 2013
Pass	$	141,818	$	974,368	$	1,116,186
Special mention	648		20,072		20,720
Substandard	5,416		62,139		67,555
Doubtful	420		469		889
Total	$	148,302	$	1,057,048	$	1,205,350

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

	Performing		Non-Performing		Total
September 30, 2014
Residential real estate	$	1,271,767	$	2,295	$	1,274,062
Home equity - junior lien	146,689		276		146,965
Consumer	41,001		41		41,042
DDA overdrafts	3,617		1		3,618
Total	$	1,463,074	$	2,613	$	1,465,687
December 31, 2013
Residential real estate	$	1,201,631	$	2,819	$	1,204,450
Home equity - junior lien	145,812		278		146,090
Consumer	46,353		49		46,402
DDA overdrafts	3,900		5		3,905
Total	$	1,397,696	$	3,151	$	1,400,847

Aging Analysis of Accruing and Non-Accruing Loans

Interest income on loans is accrued and credited to operations based upon the principal amount outstanding, using methods that generally result in level rates of return.  Loan origination fees, and certain direct costs, are deferred and amortized as an adjustment to the yield over the term of the loan.  The accrual of interest generally is discontinued when a loan becomes 90 days past due as to principal or interest for all loan types.  However, any loan may be placed on non-accrual if the Company receives information that indicates a borrower is unable to meet the contractual terms of their respective loan agreement.  Other indicators considered for placing a loan on non-accrual status include the borrower’s involvement in bankruptcies, foreclosures, repossessions, litigation and any other situation resulting in doubt as to whether full collection of contractual principal and interest is attainable.  When interest accruals are discontinued, unpaid interest recognized in income in the current year is reversed, and interest accrued in prior years is charged to the allowance for loan losses.  Management may elect to continue the accrual of interest when the net realizable value of collateral exceeds the principal balance and related accrued interest, and the loan is in the process of collection.

Generally for all loan classes, interest income during the period the loan is non-performing is recorded on a cash basis after recovery of principal is reasonably assured.  Cash payments received on nonperforming loans are typically applied directly against the outstanding principal balance until the loan is fully repaid.  Generally, loans are restored to accrual status when the obligation is brought current, has performed in accordance with the contractual terms for a reasonable period of time, and the ultimate collectability of the total contractual principal and interest is no longer in doubt.

Generally, all loan types are considered past due when the contractual terms of a loan are not met and the borrower is 30 days or more past due on a payment.  Furthermore, residential and home equity loans are generally subject to charge-off when the loan becomes 120 days past due, depending on the estimated fair value of the collateral less cost to dispose, versus the outstanding loan balance.  Commercial loans are generally charged off when the loan becomes 120 days past due.  Open-end consumer loans are generally charged off when the loan becomes 180 days past due.

A loan acquired and accounted for under ASC Topic 310-30 is reported as an accruing loan and a performing asset provided that the loan is performing in accordance with the initial expectations. The loan would be considered non-performing if the loan's performance deteriorates below the initial expectations.

The following table presents an aging analysis of the Company’s accruing and non-accruing loans, by class, as of September 30, 2014 and December 31, 2013 (in thousands):

	Originated Loans
	September 30, 2014
	Accruing
	Current		30-59 days		60-89 days		Over 90 days		Purchased-Credit Impaired		Non-accrual		Total
Residential real estate	$	1,176,782	$	4,428	$	683	$	164	$	—	$	2,131	$	1,184,188
Home equity - junior lien	143,460		590		25		136		—		127		144,338
Commercial and industrial	114,963		188		—		—		—		90		115,241
Commercial real estate	859,813		938		—		—		—		9,270		870,021
Consumer	32,994		46		12		—		—		—		33,052
DDA overdrafts	3,025		590		2		1		—		—		3,618
Total	$	2,331,037	$	6,780	$	722	$	301	$	—	$	11,618	$	2,350,458
	Acquired Loans
	September 30, 2014
	Accruing
	Current		30-59 days		60-89 days		Over 90 days		Purchased-Credit Impaired		Non-accrual		Total
Residential real estate	$	89,373	$	406	$	95	$	—	$	—	$	—	$	89,874
Home equity - junior lien	2,612		2		—		13		—		—		2,627
Commercial and industrial	13,572		3		8		86		—		1,552		15,221
Commercial real estate	157,412		1,477		85		393		1,016		4,189		164,572
Consumer	7,802		145		2		16		—		25		7,990
DDA overdrafts	—		—		—		—		—		—		—
Total	$	270,771	$	2,033	$	190	$	508	$	1,016	$	5,766	$	280,284
	Total Loans
	September 30, 2014
	Accruing
	Current		30-59 days		60-89 days		Over 90 days		Purchased-Credit Impaired		Non-accrual		Total
Residential real estate	$	1,266,155	$	4,834	$	778	$	164	$	—	$	2,131	$	1,274,062
Home equity - junior lien	146,072		592		25		149		—		127		146,965
Commercial and industrial	128,535		191		8		86		—		1,642		130,462
Commercial real estate	1,017,225		2,415		85		393		1,016		13,459		1,034,593
Consumer	40,796		191		14		16		—		25		41,042
DDA overdrafts	3,025		590		2		1		—		—		3,618
Total	$	2,601,808	$	8,813	$	912	$	809	$	1,016	$	17,384	$	2,630,742

	Originated Loans
	December 31, 2013
	Accruing
	Current		30-59 days		60-89 days		Over 90 days		Purchased-Credit Impaired		Non-accrual		Total
Residential real estate	$	1,096,911	$	4,123	$	495	$	231	$	—	$	1,905	$	1,103,665
Home equity - junior lien	141,967		880		—		42		—		236		143,125
Commercial and industrial	128,015		—		—		—		—		79		128,094
Commercial real estate	852,090		668		—		—		—		13,097		865,855
Consumer	32,647		172		7		4		—		—		32,830
DDA overdrafts	3,511		374		15		5		—		—		3,905
Total	$	2,255,141	$	6,217	$	517	$	282	$	—	$	15,317	$	2,277,474
	Acquired Loans
	December 31, 2013
	Accruing
	Current		30-59 days		60-89 days		Over 90 days		Purchased-Credit Impaired		Non-accrual		Total
Residential real estate	$	99,089	$	842	$	172	$	—	$	—	$	682	$	100,785
Home equity - junior lien	2,965		—		—		—		—		—		2,965
Commercial and industrial	18,253		—		80		—		—		1,875		20,208
Commercial real estate	176,018		2,772		273		109		7,534		4,487		191,193
Consumer	12,876		622		29		45		—		—		13,572
DDA overdrafts	—		—		—		—		—		—		—
Total	$	309,201	$	4,236	$	554	$	154	$	7,534	$	7,044	$	328,723
	Total Loans
	December 31, 2013
	Accruing
	Current		30-59 days		60-89 days		Over 90 days		Purchased-Credit Impaired		Non-accrual		Total
Residential real estate	$	1,196,000	$	4,965	$	667	$	231	$	—	$	2,587	$	1,204,450
Home equity - junior lien	144,932		880		—		42		—		236		146,090
Commercial and industrial	146,268		—		80		—		—		1,954		148,302
Commercial real estate	1,028,108		3,440		273		109		7,534		17,584		1,057,048
Consumer	45,523		794		36		49		—		—		46,402
DDA overdrafts	3,511		374		15		5		—		—		3,905
Total	$	2,564,342	$	10,453	$	1,071	$	436	$	7,534	$	22,361	$	2,606,197

The following table presents the Company’s impaired loans, by class, as of September 30, 2014 and December 31, 2013 (in thousands). The difference between the unpaid principal balance and the recorded investment generally reflects amounts that have been previously charged-off.

	September 30, 2014						December 31, 2013
			Unpaid						Unpaid
	Recorded		Principal		Related		Recorded		Principal		Related
	Investment		Balance		Allowance		Investment		Balance		Allowance
With no related allowance recorded:
Residential real estate	$	451	$	451	$	—	$	459	$	459	$	—
Home equity - junior liens	297		297		—		298		298		—
Commercial and industrial	—		—		—		—		—		—
Commercial real estate	4,718		4,718		—		8,421		8,361		—
Consumer	—		—		—		—		—		—
DDA overdrafts	—		—		—		—		—		—
Total	$	5,466	$	5,466	$	—	$	9,178	$	9,118	$	—
With an allowance recorded
Residential real estate	$	—	$	—	$	—	$	—	$	—	$	—
Home equity - junior liens	—		—		—		—		—		—
Commercial and industrial	—		—		—		—		—		—
Commercial real estate	1,397		1,397		247		3,416		3,416		880
Consumer	—		—		—		—		—		—
DDA overdrafts	—		—		—		—		—		—
Total	$	1,397	$	1,397	$	247	$	3,416	$	3,416	$	880

     The following table presents information related to the average recorded investment and interest income recognized on the Company’s impaired loans, by class (in thousands):

	For the nine months ended
	September 30, 2014				September 30, 2013
	Average		Interest		Average		Interest
	Recorded		Income		Recorded		Income
	Investment		Recognized		Investment		Recognized
With no related allowance recorded:
Residential real estate	$	453	$	—	$	464	$	—
Home equity - junior liens	297		—		297		—
Commercial and industrial	—		—		—		—
Commercial real estate	7,329		4		9,200		24
Consumer	—		—		—		—
DDA overdrafts	—		—		—		—
Total	$	8,079	$	4	$	9,961	$	24
With an allowance recorded
Residential real estate	$	—	$	—	$	—	$	—
Home equity - junior liens	—		—		—		—
Commercial and industrial	—		—		—		—
Commercial real estate	1,837		30		3,277		—
Consumer	—		—		—		—
DDA overdrafts	—		—		—		—
Total	$	1,837	$	30	$	3,277	$	—

     Approximately $0.3 million and $0.4 million of interest income would have been recognized during the nine months ended September 30, 2014 and 2013, if such loans had been current in accordance with their original terms.  There were no commitments to provide additional funds on non-accrual, impaired or other potential problem loans at September 30, 2014.

Loan Modifications

The Company’s policy on loan modifications typically does not allow for modifications that would be considered a concession from the Company.  However, when there is a modification, the Company evaluates each modification to determine if the modification constitutes a troubled debt restructuring (“TDR”) in accordance with ASU 2011-2, whereby a modification of a loan would be considered a TDR when both of the following conditions are met: (1) a borrower is experiencing financial difficulty and (2) the modification constitutes a concession.  When determining whether the borrower is experiencing financial difficulties, the Company reviews whether the debtor is currently in payment default on any of its debt or whether it is probable that the debtor would be in payment default in the foreseeable future without the modification.  Other indicators of financial difficulty include whether the debtor has declared or is in the process of declaring bankruptcy, the debtor’s ability to continue as a going concern, or the debtor’s projected cash flow to service its debt (including principal and interest) in accordance with the contractual terms for the foreseeable future, without a modification.

Regulatory guidance requires loans to be accounted for as collateral-dependent loans when borrowers have filed Chapter 7 bankruptcy, the debt has been discharged by the bankruptcy court and the borrower has not reaffirmed the debt. The filing of bankruptcy is deemed to be evidence that the borrower is in financial difficulty and the discharge of the debt by the bankruptcy court is deemed to be a concession granted to the borrower.

The following tables set forth the Company’s TDRs (in thousands):

	September 30, 2014						December 31, 2013
			Non-						Non-
	Accruing		Accruing		Total		Accruing		Accruing		Total
Commercial and industrial	$	77	$	—	$	77	$	88	$	—	$	88
Commercial real estate	2,269		—		2,269		1,783		—		1,783
Residential real estate	17,833		207		18,040		18,651		1,693		20,344
Home equity	2,821		—		2,821		2,859		14		2,873
Consumer	—		—		—		—		—		—
	$	23,000	$	207	$	23,207	$	23,381	$	1,707	$	25,088

	New TDRs					New TDRs
	For the nine months ended					For the nine months ended
	September 30, 2014					September 30, 2013
		Pre		Post			Pre		Post
		Modification		Modification			Modification		Modification
		Outstanding		Outstanding			Outstanding		Outstanding
	Number of	Recorded		Recorded		Number of	Recorded		Recorded
	Contracts	Investment		Investment		Contracts	Investment		Investment
Commercial and industrial	—	$	—	$	—	1	$	91	$	91
Commercial real estate	1	432		432		3	1,567		1,567
Residential real estate	26	2,049		2,049		30	2,808		2,808
Home equity	8	203		203		12	323		323
Consumer	—	—		—		—	—		—
	35	$	2,684	$	2,684	46	$	4,789	$	4,789

XML

Derivative Instruments

9 Months Ended

Sep. 30, 2014

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments

Derivative Instruments

As of September 30, 2014 and December 31, 2013, the Company has derivative financial instruments not included in hedge relationships.  These derivatives consist of interest rate swaps used for interest rate management purposes and derivatives executed with commercial banking customers to facilitate their interest rate management strategies.

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

Fair Value:	September 30, 2014		December 31, 2013
Other Assets	$	8,063	$	3,538
Other Liabilities	8,063		3,538

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

	Three months ended September 30,						Nine months ended September 30,
	2014			2013			2014			2013
Change in Fair Value:
Other income - derivative asset	$	(373	)	$	(86	)	$	4,233		$	(7,876	)
Other income - derivative liability	373			86			(4,233		)	7,876

Certain financial instruments, including derivatives, may be eligible for offset in the consolidated balance sheet and/or subject to master netting arrangements. The Company's derivative transactions with financial institution counterparties are generally executed under International Swaps and Derivative Association ("ISDA") master agreements which include "right of setoff" provisions. In such cases there is generally a legally enforceable right to offset recognized amounts and there may be an intention to settle such amounts on a net basis. Nonetheless, the Company does not generally offset financial instruments for financial reporting purposes. Information about financial instruments that are eligible for offset in the consolidated balance sheet as of September 30, 2014 is presented in the following tables (in thousands):

Gross Amounts

Not Offset in the Statement

of Financial Position

Total

of Gross

Amounts

Not Offset in

the Statement

of Financial

Position

Netting

Including

Gross

Net Amounts

Adjustment

Applicable

Amounts

of Assets

per

Netting

Gross

Offset in the

presented in

Applicable

Agreement

Amounts of

Statement of

the Statement

Master

Fair Value

and Fair

Recognized

Financial

of Financial

Netting

of Financial

Value of

Description

Assets

Position

Position

Arrangements

Collateral

Collateral

Net Amount

(a)

(b)

(c)=(a)-(b)

(d)

(c)-(d)

Derivative assets:

Interest rate swap agreements

$

8,063

$

—

$

8,063

$

—

$

8,063

$

8,063

$

—

Gross Amounts

Not Offset in the Statement

of Financial Position

Total

of Gross

Amounts

Not Offset in

the Statement

of Financial

Position

Netting

Including

Gross

Net Amounts

Adjustment

Applicable

Amounts

of Liabilities

per

Netting

Gross

Offset in the

presented in

Applicable

Agreement

Amounts of

Statement of

the Statement

Master

Fair Value

and Fair

Recognized

Financial

of Financial

Netting

of Financial

Value of

Description

Liabilities

Position

Position

Arrangements

Collateral

Collateral

Net Amount

(a)

(b)

(c)=(a)-(b)

(d)

(c)-(d)

Derivative liabilities:

Interest rate swap agreements

$

8,383

$

—

$

8,383

$

—

$

11,862

$

11,862

$

—

XML

Employee Benefit Plans (Net Periodic Pension Cost Of The Defined Benefit Plan) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Components of net periodic cost:
Interest cost	$ 209	$ 217	$ 634	$ 549
Expected return on plan assets	(252)	(276)	(779)	(695)
Net amortization and deferral	150	267	538	732
Net Periodic Pension Cost	$ 107	$ 208	$ 393	$ 586

XML

Accumulated Other Comprehensive Loss - Schedule of Changes In Each Component of Accumulated Other Comprehensive Income (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Equity [Abstract]
Combined Federal and state income tax rate	37.00%	37.00%
Accumulated Other Comprehensive Income (Loss), Pension and Other Postretirement Benefit Plans, Net of Tax [Roll Forward]
Defined Benefit Pension Plans, Beginning Balance	$ (2,880)	$ (4,995)
Defined Benefit Pension Plans, Ending Balance	(2,880)	(4,995)
Accumulated Other Comprehensive Income (Loss), Available-for-sale Securities Adjustment, Net of Tax [Roll Forward]
Unrealized Gains (Losses) on Securities Available-for-Sale, Beginning Balance	(2,110)	3,573
Unrealized Gains (Losses) on Securities Available-for-Sale Securities, Other comprehensive income before reclassifications	2,683	(4,693)
Unrealized Gains (Losses) on Securities Available-for-Sale, Amounts reclassified from other comprehensive loss	(614)	(59)
Unrealized Gain (Losses) on Securities Available-for-Sale Total	2,069	(4,752)
Unrealized Gains (Losses) on Securities Available-for-Sale, Ending Balance	(41)	(1,179)
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Total, Beginning Balance	(4,990)	(1,422)
Total, Other comprehensive income before reclassifications	2,683	(4,693)
Total, Accumulated other comprehensive loss	2,069	(4,752)
Total, Ending Balance	$ (2,921)	$ (6,174)

XML

Employee Benefit Plans (Restricted Shares Activity And Related Information) (Details) (USD $)	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Restricted Awards
Beginning Balance	142,469	116,711
Granted	27,162	35,083
Forfeited/Vested	(6,200)	(9,325)
Ending Balance	163,431	142,469
Average Market Price at Grant, Granted	$ 39.72	$ 38.07

XML

Investments (Narrative) (Details) (USD $)	9 Months Ended		12 Months Ended
	Sep. 30, 2014 security	Sep. 30, 2013	Dec. 31, 2013
Schedule of Investments [Line Items]
Credit-related net investment impairment losses	$ 0	$ 0	$ 0
Regional community bank stocks, percent of average trading volumes (less than 0.1%)	0.20%
Number Of Pooled Trust Preferred Securities	5
Pooled trust preferred securities, book value	2,500,000
Pooled trust preferred securities, estimated fair value	1,400,000
Annual prepayment rate	1.00%		1.00%
Annual prepayments maturity	100.00%		100.00%
Additional basis points	1.50%		1.50%
Carrying value of securities pledged	272,000,000		278,000,000
Held-to-maturity Securities, Transferred Security, at Carrying Value	83,400,000
Held-to-maturity Securities, Transferred Security, Unrealized Gain (Loss)	$ 100,000
Maximum [Member]
Schedule of Investments [Line Items]
Equity ownership positions in the community bank holding companies	4.00%

XML

Allowance For Loan Losses (Schedule Of Impaired Loans) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Financing Receivable, Impaired [Line Items]
With no related allowance recorded, Recorded investment	$ 5,466	$ 9,178
With no related allowance recorded, Unpaid principal balance	5,466	9,118
With an allowance recorded, Recorded investment	1,397	3,416
With an allowance recorded, Unpaid principal balance	1,397	3,416
Related allowance	247	880
Residential Real Estate [Member]
Financing Receivable, Impaired [Line Items]
With no related allowance recorded, Recorded investment	451	459
With no related allowance recorded, Unpaid principal balance	451	459
With an allowance recorded, Recorded investment	0	0
With an allowance recorded, Unpaid principal balance	0	0
Related allowance	0	0
Home equity - junior lien [Member]
Financing Receivable, Impaired [Line Items]
With no related allowance recorded, Recorded investment	297	298
With no related allowance recorded, Unpaid principal balance	297	298
With an allowance recorded, Recorded investment	0	0
With an allowance recorded, Unpaid principal balance	0	0
Related allowance	0	0
Commercial And Industrial [Member]
Financing Receivable, Impaired [Line Items]
With no related allowance recorded, Recorded investment	0	0
With no related allowance recorded, Unpaid principal balance	0	0
With an allowance recorded, Recorded investment	0	0
With an allowance recorded, Unpaid principal balance	0	0
Related allowance	0	0
Commercial Real Estate [Member]
Financing Receivable, Impaired [Line Items]
With no related allowance recorded, Recorded investment	4,718	8,421
With no related allowance recorded, Unpaid principal balance	4,718	8,361
With an allowance recorded, Recorded investment	1,397	3,416
With an allowance recorded, Unpaid principal balance	1,397	3,416
Related allowance	247	880
Consumer Loan [Member]
Financing Receivable, Impaired [Line Items]
With no related allowance recorded, Recorded investment	0	0
With no related allowance recorded, Unpaid principal balance	0	0
With an allowance recorded, Recorded investment	0	0
With an allowance recorded, Unpaid principal balance	0	0
Related allowance	0	0
Demand Deposit Account Overdrafts [Member]
Financing Receivable, Impaired [Line Items]
With no related allowance recorded, Recorded investment	0	0
With no related allowance recorded, Unpaid principal balance	0	0
With an allowance recorded, Recorded investment	0	0
With an allowance recorded, Unpaid principal balance	0	0
Related allowance	$ 0	$ 0

XML

Fair Value Measurements

9 Months Ended

Sep. 30, 2014

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

Fair value of an asset or liability is the price that would be received to sell that asset or paid to transfer that liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.  ASC Topic 820 establishes a fair value hierarchy for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows:

Level 1: Quoted prices (unadjusted) or identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2: Significant other observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, and other inputs that are observable or can be corroborated by observable market data.

Level 3: Significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

The Company bases fair value of assets and liabilities on quoted market prices, prices for similar assets or liabilities, quoted prices in markets that are not active, and other inputs that are observable or can be corroborated by observable market data.  If such information is not available, fair value is based upon internally developed models that primarily use, as inputs, observable market-based parameters.  Valuation adjustments may be made to ensure that financial instruments are recorded at fair value.  These adjustments may include amounts to reflect counterparty credit quality and the Company’s creditworthiness, among other things, as well as unobservable parameters.  Any such valuation adjustments are applied consistently over time.  The Company’s valuation methodologies may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values.  While management believes the company’s valuation methodologies are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine fair value of certain financial instruments could result in a different estimate of fair value at the reporting date.  Furthermore, the reported fair value amounts have not been comprehensively revalued since the presentation dates, and therefore, estimates of fair value after the balance sheet date may differ significantly from the amount presented herein.  A more detailed description of the valuation methodologies used for assets and liabilities measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below.

Financial Assets and Liabilities

The Company used the following methods and significant assumptions to estimate fair value for financial assets and liabilities measured on a recurring basis.

Securities Available for Sale.  Securities available for sale are reported at fair value utilizing Level 1, Level 2, and Level 3 inputs.  The fair value of securities available for sale is determined by utilizing a market approach by obtaining quoted prices on nationally recognized securities exchanges (other than forced or distressed transactions) that occur in sufficient volume or matrix pricing, which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities.  If such measurements are unavailable, the security is classified as Level 3.  Significant judgment is required to make this determination.

The Company utilizes a third party pricing service provider to value its Level 1 and Level 2 investment securities.  Annually, the Company obtains an independent auditor’s report from its third party pricing service provider regarding its controls over investment securities.  Although no control deficiencies were noted, the report did contain caveats and disclaimers regarding the pricing information, such as the Company should review fair values for reasonableness.  On a quarterly basis, the Company selects a sample of its debt securities and reprices those securities with a third party that is independent of the primary pricing service provider to verify the reasonableness of the fair values. In addition, the Company selects a sample of securities and reviews the underlying support from the primary pricing service provider.

The Company has determined that its pooled trust preferred securities should be priced using Level 3 inputs in accordance with ASC Topic 820 and guidance issued by the SEC.  The Company has determined that there are few observable transactions and market quotations available for pooled trust preferred securities and they are not reliable for purposes of determining fair value at September 30, 2014.  Due to these circumstances, the Company has elected to utilize an income valuation approach produced by a third party pricing source.  This third party model utilizes deferral and default probabilities for the underlying issuers, estimated prepayment rates and assumes no future recoveries of any defaults or deferrals.  The Company then compares the values provided by the third party model with other external sources.  At such time as there are observable transactions or quoted prices that are associated with an orderly and active market for pooled trust preferred securities, the Company will incorporate such market values in its estimate of fair values for these securities.

Derivatives.Derivatives are reported at fair value utilizing Level 2 inputs.  The Company utilizes a market approach by obtaining dealer quotations to value its customer interest rate swaps.  The Company’s derivatives are included within its Other Assets and Other Liabilities in the accompanying consolidated balance sheets. Derivative assets are typically secured through securities with financial counterparties or cross collateralization with a borrowing customer. Derivative liabilities are typically secured through the Company pledging securities to financial counterparties or, in the case of a borrowing customer, by the right of setoff. The Company considers such factors such as the likelihood of default by itself and its counterparties, right of setoff, and remaining maturities in determining the appropriate fair value adjustments. All derivative counterparties approved by the Company's Asset and Liability Committee ("ALCO") are regularly reviewed, and appropriate business action is taken to adjust the exposure to certain counterparties, if necessary. Counterparty exposure is evaluated by netting positions that are subject to master netting agreements, as well as considering the amount of marketable collateral securing the position. This approach used to estimate impacted exposures to counterparties is also used by the Company to estimate its own credit risk in derivative liability positions. To date, no material losses have been incurred due to a counterparty's inability to pay any undercollateralized position. There was no significant change in the value of derivative assets and liabilities attributed to credit risk during the three and nine months ended September 30, 2014.

The Company may be required, from time to time, to measure certain financial assets and financial liabilities at fair value on a nonrecurring basis.  Financial assets measured at fair value on a nonrecurring basis include impaired loans reported at the fair value of the underlying collateral if repayment is expected solely from the collateral.  Collateral values are estimated using Level 2 inputs based on observable market data for real estate collateral or Level 3 inputs for non-real estate collateral.  The following table presents assets and liabilities measured at fair value (in thousands):

	Total		Level 1		Level 2		Level 3		Total Gains (Losses)
September 30, 2014
Recurring fair value measurements
Financial Assets
U.S. Government agencies	$	1,943	$	—	$	1,943	$	—
Obligations of states and political subdivisions	41,812		—		41,812		—
Mortgage-backed securities:
U.S. Government agencies	183,297		—		183,297		—
Private label	1,778		—		1,778		—
Trust preferred securities	8,816		—		7,090		1,726
Corporate securities	7,630		—		7,630		—
Marketable equity securities	3,697		3,697		—		—
Investment funds	1,508		1,508		—		—
Derivative assets	8,063		—		8,063		—
Financial Liabilities
Derivative liabilities	8,063		—		8,063		—
Nonrecurring fair value measurements
Impaired loans	$	6,617	$	—	$	—	$	6,617	$	(142	)
Other real estate owned	9,161		—		—		9,161		(379		)
December 31, 2013
Recurring fair value measurements
Financial Assets
U.S. Government agencies	$	2,365	$	—	$	2,365	$	—
Obligations of states and political subdivisions	41,548		—		41,548		—
Mortgage-backed securities:
U.S. Government agencies	278,108		—		278,108		—
Private label	2,197		—		2,197		—
Trust preferred securities	13,156		—		9,269		3,887
Corporate securities	9,128		—		9,128		—
Marketable equity securities	4,673		4,673		—		—
Investment funds	1,485		1,485		—		—
Derivative assets	3,538		—		3,538		—
Financial Liabilities
Derivative liabilities	3,538		—		3,538		—
Nonrecurring fair value measurements
Impaired loans	$	11,714	$	—	$	—	$	11,714	$	(880	)
Other real estate owned	$	8,470	$	—	$	—	$	8,470	$	(1,108	)

The table below presents a reconcilement of the Company’s financial assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3), which consist solely of trust preferred securities (in thousands):

	Nine months ended September 30,
	2014			2013
Beginning balance	$	3,887		$	2,385
Impairment losses on investment securities	—			—
Included in other comprehensive income	(2,161		)	2,176
Dispositions	—			(1,776		)
Transfers into Level 3	—			—
Ending Balance	$	1,726		$	2,785

The Company utilizes a third party model to compute the present value of expected cash flows which considers the structure and term of each of the five respective pooled trust preferred securities and the financial condition of the underlying issuers.  Specifically, the third party model details interest rates, principal balances of note classes and underlying issuers, the timing and amount of interest and principal payments of the underlying issuers, and the allocation of the payments to the note classes. The current estimate of expected cash flows is based on the most recent trustee reports and any other relevant market information including announcements of interest payment deferrals or defaults of underlying trust preferred securities. For issuing banks that have defaulted, management generally assumes no recovery. For issuing banks that have deferred its interest payments, management excludes the collateral balance associated with these banks and assumes no recoveries of such collateral balance in the future. The exclusion of such issuing banks in a current deferral position is based on such bank experiencing a certain level of financial difficulty that raises doubt about its ability to satisfy its contractual debt obligation, and accordingly, the Company excludes the associated collateral balance from its estimate of expected cash flows. Other assumptions used in the estimate of expected cash flows include expected future default rates and prepayments. Specifically, the model assumes annual prepayments of 1.0% with 100% at maturity and assumes 150 basis points of additional annual defaults from banks that are currently not in default or deferral.  In addition, the model assumes no recoveries except for one trust preferred security which assumes that one of the banks currently deferring or in default will cure such positions.

The table below presents a reconcilement of the Company's financial assets and liabilities measured at fair value on a nonrecurring basis using significant unobservable inputs (Level 3), which solely relates to impaired loans that were remeasured and reported at fair value through a specific valuation allowance allocation of the allowance for loan losses based upon the fair value of the underlying collateral (in thousands).  The fair value of impaired loans is estimated using one of several methods, including collateral value, liquidation value and discounted cash flows.  The significant unobservable inputs used in the fair value measurement of collateral for collateral-dependent impaired loans primarily relate to discounts applied to the customers’ reported amount of collateral.  The amount of collateral discount depends upon the marketability of the underlying collateral.  During the nine months ended September 30, 2014 and 2013, collateral discounts ranged from 20% to 30%. During the nine months ended September 30, 2014 and 2013, the Company had no Level 2 financial assets and liabilities that were measured on a nonrecurring basis.

	Nine months ended September 30,
	2014			2013
Beginning balance	$	11,714		$	10,679
Loans classified as impaired during the period	—			3,052
Specific valuation allowance allocations	—			(750		)
	—			2,302
(Additional) reduction in specific valuation allowance allocations	633			(130		)
Paydowns, payoffs, other activity	(5,730		)	(891		)
Ending balance	$	6,617		$	11,960

Non-Financial Assets and Liabilities

The Company has no non-financial assets or liabilities measured at fair value on a recurring basis.  Certain non-financial assets measured at fair value on a non-recurring basis include other real estate owned (“OREO”), which is measured at the lower of cost or fair value, and goodwill and other intangible assets, which are measured at fair value for impairment assessments.

The table below presents OREO that was remeasured and reported at fair value based on significant unobservable inputs (Level 3) (in thousands):

	Nine months ended September 30,
	2014			2013
Beginning balance	$	8,470		$	8,162
OREO remeasured at initial recognition:
Carrying value of foreclosed assets prior to remeasurement	4,225			4,387
Charge-offs recognized in the allowance for loan losses	—			(1,565		)
Fair value	4,225			2,822
OREO remeasured subsequent to initial recognition
Carrying value of foreclosed assets prior to remeasurement	480			2,832
Fair value	101			1,774
Write-downs included in other non-interest expense	(379		)	(1,058		)
Acquired	—			3,492
Disposed	(3,155		)	(5,900		)
Ending balance	$	9,161		$	7,518

ASC Topic 825“Financial Instruments” as amended, requires disclosure of fair value information about financial instruments, whether or not recognized in the balance sheet, for which it is practicable to estimate that value.  In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques.  Those techniques are significantly affected by the assumptions used, including discount rate and estimate of future cash flows.  In that regard, the derived fair value estimates cannot be substantiated by comparison to independent markets and, in many cases, could not be realized in immediate settlement of the instrument.  ASC Topic 825 excludes certain financial instruments and all nonfinancial instruments from its disclosure requirements.  Accordingly, the aggregate fair value amounts presented do not represent the underlying value of the Company. The following methods and assumptions were used in estimating fair value for financial instruments:

Cash and cash equivalents: Due to their short-term nature, the carrying amounts reported in the consolidated balance sheets approximate fair value.

Securities:  The fair value of securities, both available-for-sale and held-to-maturity, are generally based on quoted market prices or matrix pricing, which is a mathematical technique used widely in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities.

Net loans:  The fair value of the loan portfolio is estimated by discounting the expected future cash flows using the current interest rates at which similar loans would be made to borrowers for the same remaining maturities. Loans were first segregated by type such as commercial, real estate and consumer, and were then further segmented into fixed, adjustable and variable rate categories. Expected future cash flows were projected based on contractual cash flows, adjusted for estimated prepayments.

Deposits:  The fair values of demand deposits (i.e., interest and noninterest-bearing deposits, regular savings and other money market demand accounts) are, by definition, equal to their carrying values. The fair values of time deposits were estimated using discounted cash flow analyses. The discount rates used were based on rates currently offered for deposits with similar remaining maturities. The fair values of the time deposit liabilities do not take into consideration the value of the Company’s long-term relationships with depositors, which may have significant value.

Short-term debt: Securities sold under agreements to repurchase represent borrowings with original maturities of less than 90 days. The carrying amount of borrowings under purchase agreements approximate their fair value.

Long-term debt: The fair value of long-term borrowings is estimated using discounted cash flow analyses based on the Company’s current incremental borrowing rates for similar types of borrowing arrangements and market conditions of similar debt instruments.

Commitments and letters of credit: The fair values of commitments are estimated based on fees currently charged to enter into similar agreements, taking into consideration the remaining terms of the agreements and the counterparties’ credit standing.  The fair value of letters of credit is based on fees currently charged for similar agreements or on the estimated cost to terminate them or otherwise settle the obligations with the counterparties at the reporting date.  The amounts of fees currently charged on commitments and letters of credit are deemed insignificant, and therefore, the estimated fair values and carrying values have not been reflected in the table below.

The following table represents the estimates of fair value of financial instruments (in thousands). This table excludes financial instruments for which the carrying amount approximates fair value. For short-term financial assets such as cash and cash equivalents, the carrying amount is a reasonable estimate of fair value due to the relatively short time between the origination of the instrument and its expected realization. For financial liabilities such as noninterest-bearing demand, interest-bearing demand and savings deposits, the carrying amount is a reasonable estimate of fair value due to these products having no stated maturity.

	Carrying Amount		Fair Value		Level 1		Level 2		Level 3
September 30, 2014
Assets:
Cash and cash equivalents	$	91,492	$	91,492	$	91,492	$	—	$	—
Securities available-for-sale	250,481		250,481		5,205		243,550		1,726
Securities held-to-maturity	93,089		95,343		—		95,343		—
Other securities	14,234		14,234		—		14,234		—
Net loans	2,610,255		2,630,012		—		—		2,630,012
Accrued interest receivable	7,751		7,751		7,751		—		—
Derivative assets	8,063		8,063		—		8,063		—
Liabilities:
Deposits	2,793,395		2,799,502		1,759,380		1,040,122		—
Short-term debt	146,115		146,116		—		146,116		—
Long-term debt	16,495		16,464		—		16,464		—
Derivative liabilities	8,063		8,063		—		8,063		—
December 31, 2013
Assets:
Cash and cash equivalents	85,876		85,876		85,876		—		—
Securities available-for-sale	352,660		352,660		6,158		342,615		3,887
Securities held-to-maturity	4,117		5,335		—		5,335		—
Other securities	13,343		13,343		—		13,343		—
Net loans	2,585,622		2,609,524		—		—		2,609,524
Accrued interest receivable	6,866		6,866		6,866		—		—
Derivative assets	3,538		3,538		—		3,538		—
Liabilities:
Deposits	2,785,133		2,793,620		1,707,527		1,086,093		—
Short-term debt	137,798		137,801		—		137,801		—
Long-term debt	16,495		16,495		—		16,495		—
Derivative liabilities	3,538		3,538		—		3,538		—

XML

Long-Term Debt (Tables)

9 Months Ended

Sep. 30, 2014

Long-term Debt, Unclassified [Abstract]

Long-Term Debt

The components of long-term debt are summarized below (in thousands):

	September 30, 2014		December 31, 2013
Junior subordinated debentures owed to City Holding Capital Trust III, due 2038, interest at a rate of 3.73% and 3.74%, respectively	$	16,495	$	16,495

XML

Allowance For Loan Losses (Schedule Of Non-Commercial Loans By Payment Performance) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Financing Receivable, Recorded Investment [Line Items]
Total	$ 2,630,742	$ 2,606,197
Residential Real Estate [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	1,274,062	1,204,450
Residential Real Estate [Member] | Performing [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	1,271,767	1,201,631
Residential Real Estate [Member] | Nonperforming [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	2,295	2,819
Home equity - junior lien [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	146,965	146,090
Home equity - junior lien [Member] | Performing [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	146,689	145,812
Home equity - junior lien [Member] | Nonperforming [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	276	278
Consumer [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	41,042	46,402
Consumer [Member] | Performing [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	41,001	46,353
Consumer [Member] | Nonperforming [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	41	49
Demand Deposit Account Overdrafts [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	3,618	3,905
Demand Deposit Account Overdrafts [Member] | Performing [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	3,617	3,900
Demand Deposit Account Overdrafts [Member] | Nonperforming [Member]
Financing Receivable, Recorded Investment [Line Items]
Total	$ 1	$ 5

XML

Investments (Gross Gains And Losses Realized) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Investments [Abstract]
Gross realized gains	$ 71	$ 0	$ 972	$ 93
Gross realized losses	0	0	0
Net investment security gains	$ 71	$ 0	$ 972	$ 93

XML

Consolidated Statements of Comprehensive Income (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Net income	$ 11,872	$ 13,975	$ 38,432	$ 34,969
Unrealized gains (losses) on available-for-sale securities arising during the period	(582)	(1,004)	4,252	(7,438)
Reclassification adjustment for gains	(71)	0	(972)	(93)
Other comprehensive income (loss) before income taxes	(653)	(1,004)	3,280	(7,531)
Tax effect	241	371	(1,211)	2,779
Other comprehensive income (loss), net of tax	(412)	(633)	2,069	(4,752)
Comprehensive income, net of tax	$ 11,460	$ 13,342	$ 40,501	$ 30,217

XML

Background and Basis Of Presentation

9 Months Ended

Sep. 30, 2014

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Background and Basis Of Presentation

Background and Basis of Presentation

City Holding Company is a financial holding company headquartered in Charleston, West Virginia and conducts its principal activities through its wholly-owned subsidiary, City National Bank of West Virginia ("City National"). City National operates a network of 82 branch offices primarily along the I-64 corridor from Grayson, Kentucky through Lexington, Virginia; and along the I-81 corridor through the Shenandoah Valley from Staunton, Virginia to Martinsburg, West Virginia. City's branch network includes 57 offices in West Virginia, 14 offices in Virginia, 8 offices in Kentucky and 3 offices in Ohio. City National provides credit, deposit, investment advisory and insurance products and services to a broad geographical area that includes many rural and small community markets in addition to larger cities such as Charleston (WV), Huntington (WV), Winchester (VA), Staunton (VA), Virginia Beach (VA), Ashland (KY) and Martinsburg (WV). In addition to its branch network, the bank's delivery channels include ATMs, mobile banking, on-line banking, debit cards, cash management tools and telephone banking systems.

The accompanying consolidated financial statements, which are unaudited, include all of the accounts of the City Holding Company and its wholly-owned subsidiaries (collectively, “the Company”). All material intercompany transactions have been eliminated. The consolidated financial statements include all adjustments that, in the opinion of management, are necessary for a fair presentation of the results of operations and financial condition for each of the periods presented. Such adjustments are of a normal recurring nature. The results of operations for nine months endedSeptember 30, 2014 are not necessarily indicative of the results of operations that can be expected for the year ending December 31, 2014. The Company’s accounting and reporting policies conform with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Such policies require management to make estimates and develop assumptions that affect the amounts reported in the consolidated financial statements and related footnotes. Actual results could differ from management’s estimates.

The consolidated balance sheet as of December 31, 2013 has been derived from audited financial statements included in the Company’s 2013 Annual Report to Shareholders.  Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with U.S. generally accepted accounting principles have been omitted.  These financial statements should be read in conjunction with the financial statements and notes thereto included in the 2013 Annual Report of the Company.

Certain amounts in the financial statements have been reclassified.  Such reclassifications had no impact on shareholders’ equity or net income for any period.

XML

Derivative Instruments (Derivative Liabilities Offset in The consolidated Balance Sheets) (Details) (Interest Rate Swap [Member], USD $) In Thousands, unless otherwise specified	Sep. 30, 2014
Interest Rate Swap [Member]
Offsetting Liabilities [Line Items]
Gross Amounts of Recognized Liabilities	$ 8,383
Derivative liabilities	8,383
Fair Value of collateral	11,862
Total Gross amounts not offset in the statement of financial position including applicable netting agreement and fair value of collateral	11,862
Net Amount	$ 0

XML

Fair Value Measurements (Narrative) (Details)	9 Months Ended	12 Months Ended	9 Months Ended
	Sep. 30, 2014	Dec. 31, 2013	Sep. 30, 2014 Maximum [Member]	Sep. 30, 2013 Maximum [Member]	Sep. 30, 2014 Minimum [Member]	Sep. 30, 2013 Minimum [Member]
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair Value Inputs, Prepayment Rate	1.00%	1.00%
Annual prepayments maturity	100.00%	100.00%
Additional basis points	1.50%	1.50%
Collateral discount			30.00%	30.00%	20.00%	20.00%

XML

Derivative Instruments (Tables)

9 Months Ended

Sep. 30, 2014

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Fair Value Of Derivative Instruments

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

Fair Value:	September 30, 2014		December 31, 2013
Other Assets	$	8,063	$	3,538
Other Liabilities	8,063		3,538

Change In Fair Value Of Derivative Instruments

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

	Three months ended September 30,						Nine months ended September 30,
	2014			2013			2014			2013
Change in Fair Value:
Other income - derivative asset	$	(373	)	$	(86	)	$	4,233		$	(7,876	)
Other income - derivative liability	373			86			(4,233		)	7,876

Derivative Assets Offset in The Consolidated Balance Sheets

Information about financial instruments that are eligible for offset in the consolidated balance sheet as of September 30, 2014 is presented in the following tables (in thousands):

Gross Amounts

Not Offset in the Statement

of Financial Position

Total

of Gross

Amounts

Not Offset in

the Statement

of Financial

Position

Netting

Including

Gross

Net Amounts

Adjustment

Applicable

Amounts

of Assets

per

Netting

Gross

Offset in the

presented in

Applicable

Agreement

Amounts of

Statement of

the Statement

Master

Fair Value

and Fair

Recognized

Financial

of Financial

Netting

of Financial

Value of

Description

Assets

Position

Position

Arrangements

Collateral

Collateral

Net Amount

(a)

(b)

(c)=(a)-(b)

(d)

(c)-(d)

Derivative assets:

Interest rate swap agreements

$

8,063

$

—

$

8,063

$

—

$

8,063

$

8,063

$

—

Derivative Liabilities Offset in The Consolidated Balance Sheets

Gross Amounts

Not Offset in the Statement

of Financial Position

Total

of Gross

Amounts

Not Offset in

the Statement

of Financial

Position

Netting

Including

Gross

Net Amounts

Adjustment

Applicable

Amounts

of Liabilities

per

Netting

Gross

Offset in the

presented in

Applicable

Agreement

Amounts of

Statement of

the Statement

Master

Fair Value

and Fair

Recognized

Financial

of Financial

Netting

of Financial

Value of

Description

Liabilities

Position

Position

Arrangements

Collateral

Collateral

Net Amount

(a)

(b)

(c)=(a)-(b)

(d)

(c)-(d)

Derivative liabilities:

Interest rate swap agreements

$

8,383

$

—

$

8,383

$

—

$

11,862

$

11,862

$

—

XML

Fair Value Measurements (Schedule Of Estimates Of Fair Value Of Financial Instruments) (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Assets:
Securities available-for-sale	$ 250,481	$ 352,660
Securities held-to-maturity	93,089	4,117
Other securities	14,234	13,343
Accrued interest receivable	7,751	6,866
Liabilities:
Deposits	1,034,015	1,077,606
Carrying Amount [Member]
Assets:
Cash and cash equivalents	91,492	85,876
Securities available-for-sale	250,481	352,660
Securities held-to-maturity	93,089	4,117
Other securities	14,234	13,343
Net loans	2,610,255	2,585,622
Accrued interest receivable	7,751	6,866
Derivative assets	8,063	3,538
Liabilities:
Deposits	2,793,395	2,785,133
Short-term debt	146,115	137,798
Long-term debt	16,495	16,495
Derivative liabilities	8,063	3,538
Fair Value [Member]
Assets:
Cash and cash equivalents	91,492	85,876
Securities available-for-sale	250,481	352,660
Securities held-to-maturity	95,343	5,335
Other securities	14,234	13,343
Net loans	2,630,012	2,609,524
Accrued interest receivable	7,751	6,866
Derivative assets	8,063	3,538
Liabilities:
Deposits	2,799,502	2,793,620
Short-term debt	146,116	137,801
Long-term debt	16,464	16,495
Derivative liabilities	8,063	3,538
Level 1 [Member]
Assets:
Cash and cash equivalents	91,492	85,876
Securities available-for-sale	5,205	6,158
Securities held-to-maturity	0	0
Other securities	0	0
Net loans	0	0
Accrued interest receivable	7,751	6,866
Derivative assets	0	0
Liabilities:
Deposits	1,759,380	1,707,527
Short-term debt	0	0
Long-term debt	0	0
Derivative liabilities	0	0
Level 2 [Member]
Assets:
Cash and cash equivalents	0	0
Securities available-for-sale	243,550	342,615
Securities held-to-maturity	95,343	5,335
Other securities	14,234	13,343
Net loans	0	0
Accrued interest receivable	0	0
Derivative assets	8,063	3,538
Liabilities:
Deposits	1,040,122	1,086,093
Short-term debt	146,116	137,801
Long-term debt	16,464	16,495
Derivative liabilities	8,063	3,538
Level 3 [Member]
Assets:
Cash and cash equivalents	0	0
Securities available-for-sale	1,726	3,887
Securities held-to-maturity	0	0
Other securities	0	0
Net loans	2,630,012	2,609,524
Accrued interest receivable	0	0
Derivative assets	0	0
Liabilities:
Deposits	0	0
Short-term debt	0	0
Long-term debt	0	0
Derivative liabilities	$ 0	$ 0

XML

Investments (Credit Loss Component Of OTTI On Debt Securities Recognized In Earnings) (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended	12 Months Ended
	Sep. 30, 2014	Dec. 31, 2013
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Roll Forward]
Beginning Balance	$ 25,884	$ 25,999
Additions:
Initial credit impairment	0	0
Additional credit impairment	0	0
Deductions:
Sold	(2,251)	(115)
Ending Balance	23,633	25,884
Debt Securities [Member]
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Roll Forward]
Beginning Balance	21,186	21,186
Additions:
Initial credit impairment	0	0
Additional credit impairment	0	0
Deductions:
Sold	0	0
Ending Balance	21,186	21,186
Equity Securities [Member]
Other than Temporary Impairment, Credit Losses Recognized in Earnings [Roll Forward]
Beginning Balance	4,698	4,813
Additions:
Initial credit impairment	0	0
Additional credit impairment	0	0
Deductions:
Sold	(2,251)	(115)
Ending Balance	$ 2,447	$ 4,698

XML

Earnings Per Share

9 Months Ended

Sep. 30, 2014

Earnings Per Share [Abstract]

Earnings Per Share

Earnings per Share

The following table sets forth the computation of basic and diluted earnings per share (in thousands, except per share data):

	Three months ended September 30,				Nine months ended September 30,
	2014		2013		2014		2013
Distributed earnings allocated to common stock	$	6,073	$	5,767	$	18,220	$	17,302
Undistributed earnings allocated to common stock	5,673		8,081		19,809		17,349
Net earnings allocated to common shareholders	$	11,746	$	13,848	$	38,029	$	34,651
Average shares outstanding	15,363		15,608		15,509		15,545
Effect of dilutive securities:
Warrant outstanding	62		62		62		60
Employee stock awards	20		120		23		108
Shares for diluted earnings per share	15,445		15,790		15,594		15,713
Basic earnings per share	$	0.76	$	0.89	$	2.45	$	2.23
Diluted earnings per share	$	0.76	$	0.88	$	2.44	$	2.21

Options to purchase approximately 13,953 shares of common stock at an exercise price of $44.43 per share were outstanding during the third quarter of 2014 but were not included in the computation of diluted earnings per share because the options’ exercise price was greater than the average market price of the common shares and therefore, the effect would have been anti-dilutive.  During the third quarter of 2013, there were no anti-dilutive options outstanding.