LOANS AND ALLOWANCE FOR LOAN LOSSES

The following table summarizes the Company's loans by type.



	June 30, 2013			December 31, 2012
Commercial:
Commercial real estate	$	652,021		$	392,955
Commercial and industrial	222,101			98,701
Construction and development	125,968			72,566
Consumer:
Residential real estate	185,534			125,277
Construction and development	33,390			6,203
Home equity	95,764			63,486
Other consumer	9,913			4,325
Gross loans	1,324,691			763,513
Less:
Deferred loan fees	(710		)	(97		)
Allowance for loan losses	(6,425		)	(3,998		)
Net loans	$	1,317,556		$	759,418

As of June 30, 2013 and December 31, 2012, loans with a recorded investment of $275,114 and $237,560, respectively, were pledged to secure borrowings or available lines of credit with correspondent banks.

Purchased Credit-Impaired Loans

Loans for which it is probable at acquisition that all contractually required payments will not be collected are considered purchased credit-impaired ("PCI") loans. The following table relates to PCI loans acquired in the ECB merger and summarizes the contractually required payments, which includes principal and interest, expected cash flows to be collected, and the fair value of acquired PCI loans at the ECB merger date.



	April 1, 2013

Contractually required payments	$	61,811
Nonaccretable difference	(11,433		)
Cash flows expected to be collected at acquisition	50,378
Accretable yield	(4,252		)
Fair value of PCI loans at acquisition	$	46,126

The following table summarizes changes in accretable yield, or income expected to be collected, related to all of the Company's PCI loans for the periods presented.



	Successor Company						Successor Company						Predecessor Company
	Three Months Ended June 30, 2013			Three Months Ended June 30, 2012			Six Months Ended June 30, 2013			Period from February 1 to June 30, 2012			Period from January 1 to January 31, 2012

Balance, beginning of period	$	25,444		$	24,480		$	27,632		$	28,144		$	29,645
Loans purchased	4,252			—			4,252			—			—
Accretion of income	(3,887		)	(3,961		)	(7,336		)	(6,492		)	(1,389		)
Reclassifications from nonaccretable difference	884			6,996			2,646			6,996			—
Other, net	(595		)	573			(1,096		)	(560		)	(112		)
Balance, end of period	$	26,098		$	28,088		$	26,098		$	28,088		$	28,144

Purchased Non-impaired Loans

Purchased non-impaired loans are also recorded at fair value at acquisition, and the related fair value discount or premium is recognized as an adjustment to yield over the remaining life of each loan. The following table relates to purchased non-impaired loans acquired in the ECB merger and provides the contractually required payments, fair value, and estimate of contractual cash flows not expected to be collected at the ECB merger date.



	April 1, 2013

Contractually required payments	$	499,963

Fair value of acquired loans at acquisition	$	406,928

Contractual cash flows not expected to be collected	$	10,098

Allowance for Loan Losses

The following tables summarize the activity in the allowance for loan losses for the periods presented.



	Successor Company
	Commercial Real Estate			Commercial and Industrial			Commercial Construction			Residential Real Estate			Consumer Construction			Home Equity			Other Consumer			Total
Three months ended June 30, 2013:
Beginning balance	$	2,584		$	831		$	1,005		$	959		$	17		$	114		$	17		$	5,527
Charge-offs	—			(18		)	(57		)	(231		)	—			(210		)	(135		)	(651		)
Recoveries	4			—			38			9			—			3			3			57
Provision for loan losses	481			542			13			115			17			179			145			1,492
Ending balance	$	3,069		$	1,355		$	999		$	852		$	34		$	86		$	30		$	6,425

Six months ended June 30, 2013:
Beginning balance	$	1,524		$	798		$	597		$	940		$	18		$	85		$	36		$	3,998
Charge-offs	(14		)	(77		)	(117		)	(424		)	—			(302		)	(218		)	(1,152		)
Recoveries	18			8			47			62			—			5			7			147
Provision for loan losses	1,541			626			472			274			16			298			205			3,432
Ending balance	$	3,069		$	1,355		$	999		$	852		$	34		$	86		$	30		$	6,425

Three months ended June 30, 2012:
Beginning balance	$	341		$	409		$	144		$	304		$	28		$	356		$	25		$	1,607
Charge-offs	—			(103		)	(46		)	(61		)	(11		)	(458		)	(16		)	(695		)
Recoveries	—			5			—			75			5			—			—			85
Provision for loan losses	580			274			278			438			6			458			12			2,046
Ending balance	$	921		$	585		$	376		$	756		$	28		$	356		$	21		$	3,043

2012 Successor Period:
Beginning balance	$	505		$	218		$	305		$	154		$	28		$	51		$	15		$	1,276
Charge-offs	—			(118		)	(305		)	(72		)	(11		)	(718		)	(24		)	(1,248		)
Recoveries	—			5			15			75			5			—			—			100
Provision for loan losses	416			480			361			599			6			1,023			30			2,915
Ending balance	$	921		$	585		$	376		$	756		$	28		$	356		$	21		$	3,043



	Predecessor Company
	Commercial Real Estate		Residential Real Estate		Construction			Commercial		Consumer		Total
2012 Predecessor Period:
Beginning balance	$	663	$	601	$	534		$	324	$	9	$	2,131
Charge-offs	—		—		(1		)	—		—		(1		)
Recoveries	—		—		—			2		—		2
Provision for loan losses	48		26		98			21		2		195
Ending balance	$	711	$	627	$	631		$	347	$	11	$	2,327

The following tables summarize the ending allowance for loans losses and the recorded investment in loans by portfolio segment and impairment method.



	June 30, 2013
	Commercial Real Estate		Commercial and Industrial		Commercial Construction		Residential Real Estate		Consumer Construction		Home Equity		Other Consumer		Total
Allowance for loan losses:
Ending balance:
Individually evaluated for impairment	$	21	$	—	$	51	$	—	$	—	$	9	$	—	$	81
Collectively evaluated for impairment	1,769		1,355		543		454		34		77		26		4,258
Purchased credit-impaired	1,279		—		405		398		—		—		4		2,086
Total	$	3,069	$	1,355	$	999	$	852	$	34	$	86	$	30	$	6,425

Loans:
Ending balance:
Individually evaluated for impairment	$	2,889	$	21	$	1,822	$	1,243	$	—	$	1,854	$	108	$	7,937
Collectively evaluated for impairment	529,241		209,397		85,934		154,567		30,822		92,478		9,326		1,111,765
Purchased credit-impaired	119,891		12,683		38,212		29,724		2,568		1,432		479		204,989
Total	$	652,021	$	222,101	$	125,968	$	185,534	$	33,390	$	95,764	$	9,913	$	1,324,691



	December 31, 2012
	Commercial Real Estate		Commercial and Industrial		Commercial Construction		Residential Real Estate		Consumer Construction		Home Equity		Other Consumer		Total
Allowance for loan losses:
Ending balance:
Individually evaluated for impairment	$	14	$	—	$	8	$	9	$	—	$	14	$	1	$	46
Collectively evaluated for impairment	1,067		798		322		379		18		71		19		2,674
Purchased credit-impaired	443		—		267		552		—		—		16		1,278
Total	$	1,524	$	798	$	597	$	940	$	18	$	85	$	36	$	3,998

Loans:
Ending balance:
Individually evaluated for impairment	$	1,697	$	—	$	415	$	1,452	$	—	$	1,342	$	224	$	5,130
Collectively evaluated for impairment	266,001		85,356		31,741		100,794		5,392		62,101		3,891		555,276
Purchased credit-impaired	125,257		13,345		40,410		23,031		811		43		210		203,107
Total	$	392,955	$	98,701	$	72,566	$	125,277	$	6,203	$	63,486	$	4,325	$	763,513

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as: current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors. The Company analyzes loans individually by classifying the loans as to credit risk. The Company uses the following general definitions for risk ratings:


•	Pass. These loans range from superior quality with minimal credit risk to loans requiring heightened management attention but that are still an acceptable risk and continue to perform as contracted.


•	Special Mention. Loans classified as special mention have a potential weakness that deserves management's close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution's credit position at some future date.

•

Substandard. Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.


•	Doubtful. Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

The following tables summarize the risk category of loans by class of loans.



	Pass		Special Mention		Substandard		Doubtful		Total
June 30, 2013
Non-Acquired Loans
Commercial:
Real estate	$	231,740	$	5,463	$	2,027	$	—	$	239,230
Commercial and industrial	115,986		3,043		2,128		—		121,157
Construction and development	48,683		298		684		—		49,665
Consumer:
Residential real estate	61,723		1,588		480		—		63,791
Construction and development	3,006		76		—		—		3,082
Home equity	15,444		52		114		—		15,610
Other consumer	1,917		18		29		—		1,964
Total	$	478,499	$	10,538	$	5,462	$	—	$	494,499

Acquired Loans
Commercial:
Real estate	$	345,203	$	41,350	$	26,238	$	—	$	412,791
Commercial and industrial	95,591		3,467		1,840		46		100,944
Construction and development	43,139		24,288		7,659		1,217		76,303
Consumer:
Residential real estate	98,192		13,118		10,382		51		121,743
Construction and development	27,786		846		1,676		—		30,308
Home equity	74,069		2,891		3,194		—		80,154
Other consumer	7,300		439		210		—		7,949
Total	$	691,280	$	86,399	$	51,199	$	1,314	$	830,192



	Pass		Special Mention		Substandard		Doubtful		Total
December 31, 2012
Non-Acquired Loans
Commercial:
Real estate	$	135,144	$	285	$	514	$	—	$	135,943
Commercial and industrial	70,334		1,223		216		—		71,773
Construction and development	17,673		—		626		—		18,299
Consumer:
Residential real estate	46,608		336		406		—		47,350
Construction and development	1,182		77		—		—		1,259
Home equity	10,676		52		115		—		10,843
Other consumer	1,525		7		—		—		1,532
Total	$	283,142	$	1,980	$	1,877	$	—	$	286,999

Acquired Loans
Commercial:
Real estate	$	200,494	$	41,426	$	15,092	$	—	$	257,012
Commercial and industrial	24,461		1,201		1,266		—		26,928
Construction and development	26,117		20,976		6,791		383		54,267
Consumer:
Residential real estate	63,620		7,240		7,029		38		77,927
Construction and development	3,941		549		454		—		4,944
Home equity	48,579		1,989		2,075		—		52,643
Other consumer	2,422		138		233		—		2,793
Total	$	369,634	$	73,519	$	32,940	$	421	$	476,514

The following tables summarize the past due status of the loan portfolio (excluding PCI loans) based on contractual terms.



	30-89 Days Past Due		90 Days or Greater Past Due		Total Past Due		Current		Total Loans
June 30, 2013
Non-Acquired Loans
Commercial:
Real estate	$	—	$	759	$	759	$	238,471	$	239,230
Commercial and industrial	885		65		950		120,207		121,157
Construction and development	—		505		505		49,160		49,665
Consumer:
Residential real estate	—		400		400		63,391		63,791
Construction and development	76		—		76		3,006		3,082
Home equity	—		114		114		15,496		15,610
Other consumer	1		24		25		1,939		1,964
Total	$	962	$	1,867	$	2,829	$	491,670	$	494,499

Acquired Loans
Commercial:
Real estate	$	1,861	$	708	$	2,569	$	290,331	$	292,900
Commercial and industrial	479		67		546		87,715		88,261
Construction and development	1,295		553		1,848		36,243		38,091
Consumer:
Residential real estate	1,130		536		1,666		90,353		92,019
Construction and development	381		89		470		27,270		27,740
Home equity	1,640		1,065		2,705		76,017		78,722
Other consumer	134		117		251		7,219		7,470
Total	$	6,920	$	3,135	$	10,055	$	615,148	$	625,203



	30-89 Days Past Due		90 Days or Greater Past Due		Total Past Due		Current		Total Loans
December 31, 2012
Non-Acquired Loans
Commercial:
Real estate	$	1,454	$	208	$	1,662	$	134,281	$	135,943
Commercial and industrial	616		30		646		71,127		71,773
Construction and development	—		74		74		18,225		18,299
Consumer:
Residential real estate	653		406		1,059		46,291		47,350
Construction and development	—		—		—		1,259		1,259
Home equity	—		115		115		10,728		10,843
Other Consumer	90		—		90		1,442		1,532
Total	$	2,813	$	833	$	3,646	$	283,353	$	286,999

Acquired Loans
Commercial:
Real estate	$	744	$	1,249	$	1,993	$	129,762	$	131,755
Commercial and industrial	262		—		262		13,321		13,583
Construction and development	326		156		482		13,375		13,857
Consumer:
Residential real estate	942		669		1,611		53,285		54,896
Construction and development	83		70		153		3,980		4,133
Home equity	1,200		597		1,797		50,803		52,600
Other Consumer	114		223		337		2,246		2,583
Total	$	3,671	$	2,964	$	6,635	$	266,772	$	273,407

The following table summarizes the recorded investment of loans on nonaccrual status and loans greater than 90 days past due and accruing (excluding PCI loans) by class.



	June 30, 2013				December 31, 2012
	Nonaccrual		Loans Greater Than 90 Days Past Due and Still Accruing		Nonaccrual		Loans Greater Than 90 Days Past Due and Still Accruing
Non-Acquired Loans
Commercial:
Commercial real estate	$	530	$	228	$	514	$	—
Commercial and industrial	33		48		44		—
Construction and development	505		—		74		—
Consumer:
Residential real estate	480		—		510		—
Home equity	114		—		115		—
Other consumer	29		—		—		—
Total	$	1,691	$	276	$	1,257	$	—

Acquired Loans
Commercial:
Commercial real estate	$	1,830	$	228	$	1,249	$	—
Commercial and industrial	67		78		20		—
Construction and development	1,253		—		409		—
Consumer:
Residential real estate	1,110		—		1,332		—
Construction and development	124		—		70		—
Home equity	1,777		—		1,435		—
Other consumer	117		—		223		—
Total	$	6,278	$	306	$	4,738	$	—

The following table provides information on impaired loans, which excludes PCI loans and loans evaluated collectively as a homogeneous group.



	Recorded Investment With a Recorded Allowance		Recorded Investment With no Recorded Allowance		Total		Related Allowance		Unpaid Principal Balance
June 30, 2013
Non-Acquired Loans
Commercial:
Commercial real estate	$	295	$	193	$	488	$	21	$	502
Construction and development	505		—		505		51		505
Consumer:
Residential real estate	—		480		480		—		547
Construction and development	—		—		—		—		—
Home equity	114		—		114		9		114
Other consumer	—		—		—		—		—
Total	914		673		1,587		81		1,668
Acquired Loans
Commercial:
Commercial real estate	—		2,401		2,401		—		2,401
Commercial and industrial	—		21		21		—		21
Construction and development	—		1,317		1,317		—		1,342
Consumer:
Residential real estate	—		763		763		—		822
Construction and development	—		—		—		—		—
Home equity	—		1,740		1,740		—		2,766
Other consumer	—		108		108		—		224
Total	—		6,350		6,350		—		7,576
Total impaired loans	$	914	$	7,023	$	7,937	$	81	$	9,244

December 31, 2012
Non-Acquired Loans
Commercial:
Commercial real estate	$	208	$	306	$	514	$	14	$	519
Commercial and industrial	—		—		—		—		—
Construction and development	40		—		40		8		70
Consumer:
Residential real estate	406		—		406		6		449
Construction and development	—		—		—		—		—
Home equity	115		—		115		14		115
Other consumer	—		—		—		—		—
Total	769		306		1,075		42		1,153
Acquired Loans
Commercial:
Commercial real estate	—		1,183		1,183		—		1,183
Commercial and industrial	—		—		—		—		—
Construction and development	—		375		375		—		558
Consumer:
Residential real estate	350		696		1,046		3		1,156
Construction and development	—		—		—		—		—
Home equity	38		1,189		1,227		—		2,057
Other consumer	224		—		224		1		224
Total	612		3,443		4,055		4		5,178
Total impaired loans	$	1,381	$	3,749	$	5,130	$	46	$	6,331

No interest income was recorded on impaired loans during the period in which they were impaired for the three and six months ended June 30, 2013, three months ended June 30, 2012, or during the 2012 Successor and 2012 Predecessor Periods.

There were no new restructured loans during the three or six months ended June 30, 2013.