BORROWINGS

The following tables summarize short-term borrowings and long-term debt as of December 31, 2012 and 2011:



	Successor Company		Predecessor Company
	2012		2011
Short-term borrowings:
Federal Reserve Bank discount window	$	—	$	—
FHLB advances maturing within one year	7,500		—
Total short-term borrowings	$	7,500	$	—

Long-term debt:
FHLB advances maturing beyond one year	$	7,500	$	12,000
Trust preferred securities / junior subordinated debentures	5,497		5,437
Subordinated term loan	6,867		6,779
Total long-term debt	$	19,864	$	24,216

Short-Term Borrowings

The Company may purchase federal funds through unsecured federal funds lines of credit with various correspondent banks, which totaled $75,000 as of December 31, 2012. These lines are intended for short-term borrowings and are subject to restrictions limiting the frequency and terms of advances. These lines of credit are payable on demand and bear interest based upon the daily federal funds rate. The Company had no outstanding balances on the lines of credit as of December 31, 2012 or 2011.

The Company may borrow funds through the Federal Reserve Bank’s discount window. These borrowings are secured by a blanket floating lien on qualifying construction, land acquisition and development loans, commercial and industrial loans and consumer loans with a total collateral value of $6,761. Depending on the type of loan collateral, the Company may borrow between 60 and 65 percent of the collateral value pledged. The Company had no outstanding borrowings at the discount window as of December 31, 2012 or 2011.

FHLB Advances

The Company had a $238,050 credit line available with the FHLB for advances as of December 31, 2012. These advances are secured by a blanket floating lien on qualifying commercial real estate, first mortgage loans and pledged investment securities with a total book value of $230,798 as of December 31, 2012.

As of December 31, 2012 and 2011, the Company had the following outstanding FHLB advances:



	Contractual Rate			Successor Company		Predecessor Company
Maturity	Contractual Rate		Rate Type	2012		2011

March 14, 2013	0.78	%	Fixed	$	1,500	$	1,500
October 11, 2013	0.33	%	Fixed	3,000		—
October 15, 2013	0.89	%	Fixed	2,000		2,000
November 4, 2013	0.83	%	Fixed	1,000		1,000
August 4, 2014	1.11	%	Fixed	1,500		1,500
October 28, 2014	0.91	%	Fixed	2,000		2,000
December 16, 2014	0.87	%	Fixed	4,000		4,000
Totals				$	15,000	$	12,000

Trust Preferred Securities

In August 2003, $8,000 in trust preferred securities ("TRUPs") were issued through the Trust. The Trust invested the total proceeds from the sale of its TRUPs in junior subordinated deferrable interest debentures issued by Crescent Financial, which fully and unconditionally guarantees the TRUPs. Its obligation under the guarantee is unsecured and subordinate to senior and subordinated indebtedness. These TRUPs qualify as Tier 1 capital for regulatory capital purposes, subject to certain limitations. The TRUPs mature on October 7, 2033 and are currently redeemable, subject to approval by the Federal Reserve, on a quarterly basis. These TRUPs were adjusted to fair value in connection with Piedmont's acquisition of Crescent Financial, and as of December 31, 2012 and 2011, their carrying value was $5,497 and $5,437, respectively.

The TRUPs pay cumulative cash distributions quarterly at an annual contract rate, reset quarterly, equal to three-month LIBOR plus 3.10 percent. The dividends paid to holders of the TRUPs, which are recorded as interest expense, are deductible for income tax purposes. The Company elected to defer interest payments on its TRUPs beginning with the payment due April 7, 2011. Under the terms of the indenture governing the junior subordinated debentures, the Company may defer payments of interest for up to 20 consecutive quarterly periods without default or penalty. In the second quarter of 2012, the Company received approval from the Federal Reserve Bank of Richmond to resume interest payments on its TRUPs and paid all accrued deferred interest plus current interest on the quarterly payment date of July 7, 2012.

Subordinated Term Loan

In September 2008, the Bank entered into an unsecured subordinated term loan agreement in the amount of $7,500. The agreement requires the Bank to make quarterly payments of interest at an annual contract rate, reset quarterly, equal to three-month LIBOR plus 4.00 percent. The subordinated term loan qualifies as Tier 2 capital for regulatory capital purposes, subject to a phase out of the capital qualification five years prior to maturity. The subordinated term loan was adjusted to fair value in connection with Piedmont's acquisition of Crescent Financial, and as of December 31, 2012 and 2011, the carrying value was $6,867 and $6,779, respectively.

The subordinated term loan agreement matures on October 18, 2018 and can be prepaid, subject to the approval of the FDIC and other Governmental Authorities (if applicable), beginning on October 1, 2013 unless the loan ceases to be deemed Tier 2 capital for regulatory capital purposes. Should the loan cease to be considered Tier 2 capital for regulatory capital purposes, the debt can either be structured as senior debt of the Bank or be repaid.