BORROWINGS

12 Months Ended

Dec. 31, 2011

Debt Disclosure [Abstract]

Debt Disclosure [Text Block]

NOTE I - BORROWINGS

The following tables summarize short-term and long-term borrowings at December 31, 2011 and 2010:

	Successor		Predecessor
	Company		Company
	2011		2010
Short-term borrowings:
Federal Reserve Bank discount window	$	-	$	-
Federal Home Loan Bank advances maturing within one year		-		7,000,000
Total short-term borrowings	$	-	$	7,000,000
Long-term debt:
Federal Home Loan Bank advances maturing beyond one year	$	-	$	142,000,000
Junior subordinated debentures		5,437,000		8,248,000
Subordinated term loan		6,778,901		7,500,000
Total long-term debt	$	12,215,901	$	157,748,000

Short-term Borrowings

We may purchase federal funds through unsecured federal funds lines of credit totaling $20.0 million at December 31, 2011. 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. We had no outstanding balance on the lines of credit at December 31, 2011 or 2010.

We 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 collateral value of $11.1 million. Depending on the type of loan collateral, we may borrow between 60% and 65% of the collateral value pledged. We had no outstanding borrowings at the discount window at December 31, 2011 or 2010.

Federal Home Loan Bank Advances

We have a $274.5 million credit line available with the Federal Home Loan Bank of Atlanta (“FHLB”) for advances. These advances are secured by a blanket floating lien on qualifying commercial real estate, first mortgage loans and pledged investment securities with a market value of $187.8 million.

At December 31, 2011 and 2010, we had the following outstanding FHLB advances :

					Successor		Predecessor
	Contractual				Company		Company
Maturity	Interest Rate			Rate Type	2011		2010
January 12, 2011		1.75	%	Fixed	$			7,000,000
February 10, 2012		1.68	%	Fixed		-		5,000,000
October 29, 2012		0.92	%	Fixed		-		8,000,000
February 11, 2013		2.29	%	Fixed		-		5,000,000
April 22, 2013		2.55	%	Fixed		-		6,000,000
November 7, 2013		2.48	%	Fixed		-		10,000,000
March 21, 2014		2.76	%	Fixed		-		5,000,000
August 21, 2014		2.90	%	Fixed		-		5,000,000
October 21, 2014		2.91	%	Fixed		-		9,000,000
February 2, 2015		3.39	%	Fixed		-		5,000,000
April 13, 2015		2.98	%	Fixed		-		7,000,000
June 9, 2015		2.56	%	Fixed		-		5,000,000
August 3, 2015		3.46	%	Fixed		-		5,000,000
February 2, 2016		3.49	%	Fixed		-		15,000,000
November 2, 2016		3.57	%	Fixed		-		10,000,000
February 2, 2017		3.75	%	Fixed		-		5,000,000
May 2, 2017		3.65	%	Fixed		-		5,000,000
August 2, 2017		3.84	%	Fixed		-		5,000,000
October 30, 2017		2.98	%	Fixed		-		5,000,000
January 28, 2019		3.90	%	Fixed		-		12,000,000
March 25, 2019		4.26	%	Fixed		-		10,000,000
Totals					$	-	$	149,000,000

Following the Piedmont Investment, we prepaid all outstanding FHLB advances in an effort to de-leverage the balance sheet and reduce our dependance on wholesale funding. Therefore, we had no outstanding FHLB advances at December 31, 2011.

Junior Subordinated Debentures

In August 2003, $8.0 million in trust preferred securities were issued through Crescent Financial Capital Trust I (the “Trust”). The Trust invested the total proceeds from the sale of its trust preferred securities (“TRUPs”) in junior subordinated deferrable interest debentures issued by us. We fully and unconditionally guarantee the TRUPs. Our 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 now redeemable, subject to approval by the Federal Reserve, on a quarterly basis. We adjusted these junior subordinated debentures to estimated fair value in purchase accounting with the Piedmont Investment, and at December 31, 2011, their carrying value was $5,437,000.

The TRUPs pay cumulative cash distributions quarterly at an annual contract rate, reset quarterly, equal to three-month LIBOR plus 3.10%. 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 junior subordinated debentures 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. The regularly scheduled interest payments will continue to accrue for payment in the future and be reported as expense on our consolidated financial statements. The Company plans to resume the payment of interest on the TRUPs as soon as possible.

Subordinated Term Loan

On September 26, 2008, the Bank entered into an unsecured subordinated term loan agreement in the amount of $7.5 million. 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%. 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. We adjusted the subordinated term loan to estimated fair value in purchase accounting with the Piedmont Investment, and at December 31, 2011, its carrying value was $6,778,901.

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), in incremental amounts not less than $500,000, by giving five business days notice prior to prepayment. We do not have the right to prepay all or any portion of the loan prior to 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.