Note 6 — Loans and Allowance for Loan Losses

The following is a summary of non-acquired loans:

	March 31,			December 31,			March 31,
(Dollars in thousands)	2013			2012			2012
Non-acquired loans:
Commercial non-owner occupied real estate:
Construction and land development	$	273,488		$	273,420		$	294,865
Commercial non-owner occupied	298,707			290,071			284,044
Total commercial non-owner occupied real estate	572,195			563,491			578,909
Consumer real estate:
Consumer owner occupied	443,134			434,503			407,697
Home equity loans	249,356			255,284			258,054
Total consumer real estate	692,490			689,787			665,751
Commercial owner occupied real estate	796,139			784,152			744,441
Commercial and industrial	291,308			279,763			216,083
Other income producing property	131,776			133,713			130,177
Consumer	93,997			86,934			85,350
Other loans	26,393			33,163			16,603
Total non-acquired loans	2,604,298			2,571,003			2,437,314
Less allowance for loan losses	(41,669		)	(44,378		)	(47,607		)
Non-acquired loans, net	$	2,562,629		$	2,526,625		$	2,389,707

In accordance with FASB ASC Topic 310-30, the Company aggregated acquired loans that have common risk characteristics into pools of loan categories as described in the table below. The majority of the acquired loans are accounted for in accordance with FASB ASC Topic 310-30.

The Company’s acquired loan portfolio is comprised of the following balances net of related discount:

				Loans
	Loans Impaired			Not Impaired
(Dollars in thousands)	at Acquisition			at Acquisition			Total
March 31, 2013:
FASB ASC Topic 310-30 acquired loans:
Covered loans:
Commercial loans greater than or equal to $1 million-CBT	$	19,433		$	28,677		$	48,110
Commercial real estate	17,648			35,324			52,972
Commercial real estate—construction and development	11,690			15,967			27,657
Residential real estate	37,091			60,681			97,772
Consumer	776			3,069			3,845
Commercial and industrial	7,682			14,296			21,978
Single pay	4,560			172			4,732
Total covered loans	$	98,880		$	158,186		$	257,066
Non-covered loans:
Commercial real estate	49,391			244,875			294,266
Commercial real estate—construction and development	27,431			54,971			82,402
Residential real estate	39,027			199,231			238,258
Consumer	1,416			7,907			9,323
Commercial and industrial	2,884			40,822			43,706
Total non-covered loans	120,149			547,806			667,955
Total FASB ASC Topic 310-30 acquired loans	219,029			705,992			925,021
Total FASB ASC Topic 310-20 acquired loans (non-covered)	—			70,234			70,234
Total acquired loans	219,029			776,226			995,255
Less allowance for loan losses	(26,302		)	(4,975		)	(31,277		)
Acquired loans, net	$	192,727		$	771,251		$	963,978

December 31, 2012:
FASB ASC Topic 310-30 acquired loans:
Covered loans:
Commercial loans greater than or equal to $1 million-CBT	$	19,483		$	30,201		$	49,684
Commercial real estate	22,946			40,016			62,962
Commercial real estate—construction and development	15,107			17,468			32,575
Residential real estate	39,050			65,761			104,811
Consumer	948			3,376			4,324
Commercial and industrial	8,281			15,319			23,600
Single pay	4,599			173			4,772
Total covered loans	$	110,414		$	172,314		$	282,728
Non-covered loans:
Commercial real estate	53,259			256,703			309,962
Commercial real estate—construction and development	32,975			64,901			97,876
Residential real estate	40,585			209,731			250,316
Consumer	1,672			9,689			11,361
Commercial and industrial	3,064			46,220			49,284
Total non-covered loans	131,555			587,244			718,799
Total FASB ASC Topic 310-30 acquired loans	241,969			759,558			1,001,527
Total FASB ASC Topic 310-20 acquired loans (non-covered)	—			73,215			73,215
Total acquired loans	241,969			832,773			1,074,742
Less allowance for loan losses	(24,988		)	(7,144		)	(32,132		)
Acquired loans, net	$	216,981		$	825,629		$	1,042,610

(Dollars in thousands)	Loans Impaired at Acquisition			Loans Not Impaired at Acquisition			Total
March 31, 2012:
FASB ASC Topic 310-30 acquired loans:
Covered loans:
Commercial loans greater than or equal to $1 million-CBT	$	21,956		$	34,360		$	56,316
Commercial real estate	35,202			64,632			99,834
Commercial real estate—construction and development	24,513			19,743			44,256
Residential real estate	50,816			77,394			128,210
Consumer	2,057			4,088			6,145
Commercial and industrial	8,570			14,320			22,890
Single pay	5,226			174			5,400
Total covered loans	$	148,340		$	214,711		$	363,051
Non-covered loans:
Commercial real estate	353			610			963
Commercial real estate—construction and development	22			61			83
Residential real estate	342			637			979
Consumer	2,170			268			2,438
Commercial and industrial	75			1,555			1,630
Total non-covered loans	2,962			3,131			6,093
Total FASB ASC Topic 310-30 acquired loans	151,302			217,842			369,144
Less allowance for loan losses	(25,712		)	(8,643		)	(34,355		)
Acquired loans, net	$	125,590		$	209,199		$	334,789

Contractual loan payments receivable, estimates of amounts not expected to be collected, other fair value adjustments and the resulting fair values of FASB ASC Topic 310-30 acquired loans impaired and non-impaired at the acquisition date for Savannah (December 13, 2012) are as follows:

	December 13, 2012
	FASB ASC Topic 310-30 Loans
(Dollars in thousands)	Loans Impaired at Acquisition			Loans Not Impaired at Acquisition			Total
Contractual principal and interest	$	155,582		$	483,293		$	638,875
Non-accretable difference	(37,492		)	(9,460		)	(46,952		)
Cash flows expected to be collected	118,090			473,833			591,923
Accretable yield	(8,615		)	(51,466		)	(60,081		)
Carrying value	$	109,475		$	422,367		$	531,842

The table above excludes $69.5 million ($74.9 million in contractual principal less a $5.4 million fair value adjustment) in acquired loans at fair value as of the acquisition date that will be accounted for under FASB ASC Topic 310-20. These loans are primarily commercial and consumer lines of credit for which the entire discount will be accreted into interest income.

Contractual loan payments receivable, estimates of amounts not expected to be collected, other fair value adjustments and the resulting fair values of acquired loans impaired and non-impaired at the acquisition date for Peoples (April 24, 2012) are as follows:

	April 24, 2012
	FASB ASC Topic 310-30 Loans
(Dollars in thousands)	Loans Impaired at Acquisition			Loans Not Impaired at Acquisition			Total
Contractual principal and interest	$	56,940		$	250,023		$	306,963
Non-accretable difference	(21,237		)	(16,560		)	(37,797		)
Cash flows expected to be collected	35,703			233,463			269,166
Accretable yield	(4,968		)	(29,953		)	(34,921		)
Carrying value	$	30,735		$	203,510		$	234,245

Contractual loan payments receivable, estimates of amounts not expected to be collected, other fair value adjustments and the resulting carrying values of acquired loans (impaired and non-impaired) as of March 31, 2013, December 31, 2012, and March 31, 2012 are as follows:

	FASB ASC Topic 310-30 Loans
(Dollars in thousands)	Loans Impaired at Acquisition			Loans Not Impaired at Acquisition			Total
March 31, 2013:
Contractual principal and interest	$	336,815		$	846,617		$	1,183,432
Non-accretable difference	(68,127		)	(40,763		)	(108,890		)
Cash flows expected to be collected	268,688			805,854			1,074,542
Accretable yield	(49,659		)	(99,862		)	(149,521		)
Carrying value	$	219,029		$	705,992		$	925,021
Allowance for acquired loan losses	$	(26,302	)	$	(4,975	)	$	(31,277	)

December 31, 2012:
Contractual principal and interest	$	376,894		$	926,153		$	1,303,047
Non-accretable difference	(86,514		)	(54,157		)	(140,671		)
Cash flows expected to be collected	290,380			871,996			1,162,376
Accretable yield	(48,411		)	(112,438		)	(160,849		)
Carrying value	$	241,969		$	759,558		$	1,001,527
Allowance for acquired loan losses	$	(24,988	)	$	(7,144	)	$	(32,132	)

March 31, 2012:
Contractual principal and interest	$	282,499		$	329,796		$	612,295
Non-accretable difference	(100,477		)	(56,524		)	(157,001		)
Cash flows expected to be collected	182,022			273,272			455,294
Accretable yield	(30,720		)	(55,430		)	(86,150		)
Carrying value	$	151,302		$	217,842		$	369,144
Allowance for acquired loan losses	$	(25,712	)	$	(8,643	)	$	(34,355	)

The table above excludes $70.2 million ($75.2 million in contractual principal less a $4.9 million discount) in acquired loans at carrying value as of March 31, 2013 accounted for under FASB ASC Topic 310-20. The table above excludes $73.2 million ($78.5 million in contractual principal less a $5.3 million discount) in acquired loans at carrying value as of December 31, 2012 accounted for under FASB ASC Topic 310-20.

Income on acquired loans that are not impaired at the acquisition date is recognized in the same manner as loans impaired at the acquisition date. A portion of the fair value discount on acquired non-impaired loans has been ascribed as an accretable yield that is accreted into interest income over the estimated remaining life of the loans. The remaining nonaccretable difference represents cash flows not expected to be collected.

The unpaid principal balance for acquired loans was $1.2 billion, $1.3 billion, and $540.4 million at March 31, 2013, December 31, 2012 and March 31, 2012, respectively.

The following are changes in the carrying value of acquired loans during the three months ended March 31, 2013 and 2012:

	FASB ASC Topic 310-30 Loans
(Dollars in thousands)	Loans Impaired at Acquisition			Loans Not Impaired at Acquisition			Total
Balance, December 31, 2012	$	216,981		$	752,414		$	969,395
Net reductions for payments, foreclosures, and accretion	(22,940		)	(53,566		)	(76,506		)
Change in the allowance for loan losses on acquired loans	(1,314		)	2,169			855
Balance, March 31, 2013, net of allowance for loan losses on acquired loans	$	192,727		$	701,017		$	893,744

Balance, December 31, 2011	$	146,955		$	223,626		$	370,581
Net reductions for payments, foreclosures, and accretion	(19,528		)	(13,529		)	(33,057		)
Change in the allowance for loan losses on acquired loans	(1,837		)	(898		)	(2,735		)
Balance, March 30, 2012, net of allowance for loan losses on acquired loans	$	125,590		$	209,199		$	334,789

The following are changes in the carrying amount of accretable difference for acquired impaired and non-impaired loans for the three months ended March 31, 2013 and 2012:

	Three Months Ended March 31,
(Dollars in thousands)	2013			2012
Beginning at beginning of period	$	160,849		$	94,600
Interest income	(21,712		)	(9,110		)
Reclass of nonaccretable difference due to improvement in expected cash flows	13,812			8,270
Other changes, net	(3,428		)	(7,610		)
Balance at end of period	$	149,521		$	86,150

On December 13, 2006, the FDIC, Federal Reserve, OCC, and other regulatory agencies collectively revised the banking agencies’ 1993 policy statement on the allowance for loan and lease losses to ensure consistency with generally accepted accounting principles in the United States and more recent supervisory guidance. Our loan loss policy adheres to the interagency guidance.

The allowance for loan losses is based upon estimates made by management. We maintain an allowance for loan losses at a level that we believe is appropriate to cover estimated credit losses on individually evaluated loans that are determined to be impaired as well as estimated credit losses inherent in the remainder of our loan portfolio. Arriving at the allowance involves a high degree of management judgment and results in a range of estimated losses. We regularly evaluate the adequacy of the allowance through our internal risk rating system, outside credit review, and regulatory agency examinations to assess the quality of the loan portfolio and identify problem loans. The evaluation process also includes our analysis of current economic conditions, composition of the loan portfolio, past due and nonaccrual loans, concentrations of credit, lending policies and procedures, and historical loan loss experience. While management uses available information to recognize losses on loans, future additions to the allowance may be necessary based on, among other factors, changes in economic conditions in our markets. In addition, regulatory agencies, as an integral part of their examination process, periodically review our allowances for losses on loans. These agencies may require management to recognize additions to the allowances based on their judgments about information available to them at the time of their examination. Because of these and other factors, it is possible that the allowances for losses on loans may change. The provision for loan losses is charged to expense in an amount necessary to maintain the allowance at an appropriate level.

The allowance for loan losses on non-acquired loans consists of general and specific reserves. The general reserves are determined by applying loss percentages to the portfolio that are based on historical loss experience for each class of loans and management’s evaluation and “risk grading” of the loan portfolio. Additionally, the general economic and business conditions affecting key lending areas, credit quality trends, collateral values, loan volumes and concentrations, seasoning of the loan portfolio, the findings of internal and external credit reviews and results from external bank regulatory examinations are included in this evaluation. Currently, these adjustments are applied to the non-acquired loan portfolio when estimating the level of reserve required. The specific reserves are determined on a loan-by-loan basis based on management’s evaluation of our exposure for each credit, given the current payment status of the loan and the value of any underlying collateral. These are loans classified by management as doubtful or substandard. For such loans that are also classified as impaired, an allowance is established when the discounted cash flows (or collateral value or observable market price) of the impaired loan is lower than the carrying value of that loan. Generally, the need for specific reserve is evaluated on impaired loans greater than $250,000, and once a specific reserve is established for a loan, a charge off of that amount occurs in the quarter subsequent to the establishment of the specific reserve. Loans that are determined to be impaired are provided a specific reserve, if necessary, and are excluded from the calculation of the general reserves.

In determining the acquisition date fair value of purchased loans, and in subsequent accounting, SCBT generally aggregates purchased loans into pools of loans with common risk characteristics. Expected cash flows at the acquisition date in excess of the fair value of loans are recorded as interest income over the life of the loans using a level yield method if the timing and amount of the future cash flows of the pool is reasonably estimable. Subsequent to the acquisition date, increases in cash flows over those expected at the acquisition date are reclassified from the non-accretable difference to accretable yield and recognized as interest income prospectively. Decreases in expected cash flows after the acquisition date are recognized by recording an allowance for loan losses. Management analyzes the acquired loan pools using various assessments of risk to determine an expected loss. The expected loss is derived based upon a loss given default based upon the collateral type and/or detailed review by loan officers of loans greater than $500,000 and the probability of default that is determined based upon historical data at the loan level. Trends are reviewed in terms of accrual status, past due status, and weighted-average grade of the loans within each of the accounting pools. In addition, the relationship between the change in the unpaid principal balance and change in the mark is assessed to correlate the directional consistency of the expected loss for each pool. Offsetting the impact of the provision established for acquired loans covered under FDIC loss share agreements, the receivable from the FDIC is adjusted to reflect the indemnified portion of the post-acquisition exposure with a corresponding credit to the provision for loan losses. (For further discussion of the Company’s allowance for loan losses on acquired loans, see “Business Combinations and method of Accounting for Loans Acquired” in our Annual Report on Form 10-K for the year ended December 31, 2012.)

An aggregated analysis of the changes in allowance for loan losses is as follows:

(Dollars in thousands)	Non-acquired Loans			Acquired Loans			Total
Three months ended March 31, 2013:
Balance at beginning of period	$	44,378		$	32,132		$	76,510
Loans charged-off	(4,607		)	—			(4,607		)
Recoveries of loans previously charged off	1,045			—			1,045
Net charge-offs	(3,562		)	—			(3,562		)
Provision for loan losses	853			(855		)	(2		)
Benefit attributable to FDIC loss share agreements	—			1,062			1,062
Total provision for loan losses charged to operations	853			207			1,060
Provision for loan losses recorded through the FDIC loss share receivable	—			(1,062		)	(1,062		)
Balance at end of period	$	41,669		$	31,277		$	72,946

Three months ended March 31, 2012:
Balance at beginning of period	$	49,367		$	31,620		$	80,987
Loans charged-off	(5,698		)	—			(5,698		)
Recoveries of loans previously charged off	1,640			—			1,640
Net charge-offs	(4,058		)	—			(4,058		)
Provision for loan losses	2,298			2,735			5,033
Benefit attributable to FDIC loss share agreements	—			(2,310		)	(2,310		)
Total provision for loan losses charged to operations	2,298			425			2,723
Provision for loan losses recorded through the FDIC loss share receivable	—			2,310			2,310
Balance at end of period	$	47,607		$	34,355		$	81,962

The following tables present a disaggregated analysis of activity in the allowance for loan losses and loan balances for non-acquired loans:

(Dollars in thousands)	Construction & Land Development			Commercial Non-owner Occupied			Commercial Owner Occupied			Consumer Owner Occupied			Home Equity			Commercial & Industrial			Other Income Producing Property			Consumer			Other Loans			Total
Three months ended March 31, 2013:
Allowance for loan losses:
Balance, December 31, 2012	$	10,836		$	4,921		$	8,743		$	6,568		$	3,626		$	4,939		$	3,747		$	781		$	217		$	44,378
Charge-offs	(2,197		)	—			(695		)	(150		)	(197		)	(324		)	(339		)	(705		)	—			(4,607		)
Recoveries	258			254			10			89			72			99			9			254			—			1,045
Provision	339			96			150			16			35			71			42			104			—			853
Balance, March 31, 2013	$	9,236		$	5,271		$	8,208		$	6,523		$	3,536		$	4,785		$	3,459		$	434		$	217		$	41,669

Loans individually evaluated for impairment	$	1,027		$	2,059		$	623		$	200		$	—		$	84		$	809		$	—		$	—		$	4,802
Loans collectively evaluated for impairment	$	8,209		$	3,212		$	7,585		$	6,323		$	3,536		$	4,701		$	2,650		$	434		$	217		$	36,867

Loans:
Loans individually evaluated for impairment	$	12,057		$	4,861		$	17,629		$	1,177		$	—		$	1,934		$	4,040		$	—		$	—		$	41,698
Loans collectively evaluated for impairment	261,431			293,846			778,510			441,957			249,356			289,374			127,736			93,997			26,393			2,562,600

Total non-acquired loans	$	273,488		$	298,707		$	796,139		$	443,134		$	249,356		$	291,308		$	131,776		$	93,997		$	26,393		$	2,604,298

Three months ended March 31, 2012:
Allowance for loan losses:
Balance, December 31, 2011	$	12,373		$	6,109		$	10,356		$	7,453		$	4,269		$	3,901		$	3,636		$	1,145		$	125		$	49,367
Charge-offs	(1,010		)	(1,002		)	(1,495		)	(446		)	(500		)	(330		)	(455		)	(409		)	(51		)	(5,698		)
Recoveries	780			16			1			12			181			110			273			256			11			1,640
Provision	455			539			409			548			83			69			63			83			49			2,298
Balance, March 31, 2012	$	12,598		$	5,662		$	9,271		$	7,567		$	4,033		$	3,750		$	3,517		$	1,075		$	134		$	47,607

Loans individually evaluated for impairment	$	2,052		$	528		$	294		$	644		$	—		$	—		$	322		$	—		$	—		$	3,840
Loans collectively evaluated for impairment	$	10,546		$	5,134		$	8,977		$	6,923		$	4,033		$	3,750		$	3,195		$	1,075		$	134		$	43,767

Loans:
Loans individually evaluated for impairment	$	22,641		$	8,017		$	16,895		$	4,004		$	—		$	884		$	4,686		$	—		$	—		$	57,127
Loans collectively evaluated for impairment	272,224			276,027			727,546			403,693			258,054			215,199			125,491			85,350			16,603			2,380,187

Total non-acquired loans	$	294,865		$	284,044		$	744,441		$	407,697		$	258,054		$	216,083		$	130,177		$	85,350		$	16,603		$	2,437,314

The following tables present a disaggregated analysis of activity in the allowance for loan losses and loan balances for acquired loans:

(Dollars in thousands)	Commercial Loans Greater Than or Equal to $1 Million-CBT			Commercial Real Estate			Commercial Real Estate- Construction and Development			Residential Real Estate			Consumer			Commercial and Industrial			Single Pay			FASB ASC Topic 310-20 Loans		Total
Three months ended March 31, 2013:
Allowance for loan losses:
Balance, December 31, 2012	$	15,408		$	1,517		$	1,628		$	4,616		$	96		$	4,305		$	4,562		$	—	$	32,132
Charge-offs	—			—			—			—			—			—			—			—		—
Recoveries	—			—			—			—			—			—			—			—		—
Provision for loan losses before benefit attributable to FDIC loss share agreements	(452		)	(675		)	856			(55		)	(7		)	(522		)	—			—		(855		)
Benefit attributable to FDIC loss share agreements	429			526			(686		)	290			7			496			—			—		1,062
Total provision for loan losses charged to operations	(23		)	(149		)	170			235			—			(26		)	—			—		207
Provision for loan losses recorded through the FDIC loss share receivable	(429		)	(526		)	686			(290		)	(7		)	(496		)	—			—		(1,062		)
Balance, March 31, 2013	$	14,956		$	842		$	2,484		$	4,561		$	89		$	3,783		$	4,562		$	—	$	31,277
Loans individually evaluated for impairment	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—	$	—
Loans collectively evaluated for impairment	$	14,956		$	842		$	2,484		$	4,561		$	89		$	3,783		$	4,562		$	—	$	31,277

Loans:*
Loans individually evaluated for impairment	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—	$	—
Loans collectively evaluated for impairment	48,110			347,238			110,059			336,030			13,168			65,684			4,732			70,234		995,255
Total acquired loans	$	48,110		$	347,238		$	110,059		$	336,030		$	13,168		$	65,684		$	4,732		$	70,234	$	995,255

Three months ended March 31, 2012:
Allowance for loan losses:
Balance, December 31, 2011	$	16,706		$	1,318		$	—		$	5,471		$	—		$	4,564		$	3,561		$	—	$	31,620
Charge-offs	—			—			—			—			—			—			—			—		—
Recoveries	—			—			—			—			—			—			—			—		—
Provision for loan losses before benefit attributable to FDIC loss share agreements	145			73			2,057			(1,136		)	10			19			1,567			—		2,735
Benefit attributable to FDIC loss share agreements	(138		)	(69		)	(1,666		)	1,079			(9		)	(18		)	(1,489		)	—		(2,310		)
Total provision for loan losses charged to operations	7			4			391			(57		)	1			1			78			—		425
Provision for loan losses recorded through the FDIC loss share receivable	138			69			1,666			(1,079		)	9			18			1,489			—		2,310
Balance, March 31, 2012	$	16,851		$	1,391		$	2,057		$	4,335		$	10		$	4,583		$	5,128		$	—	$	34,355
Loans individually evaluated for impairment	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—	$	—
Loans collectively evaluated for impairment	$	16,851		$	1,391		$	2,057		$	4,335		$	10		$	4,583		$	5,128		$	—	$	34,355

Loans:*
Loans individually evaluated for impairment	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—	$	—
Loans collectively evaluated for impairment	56,316			100,797			44,339			129,189			8,583			24,520			5,400			—		369,144
Total acquired loans	$	56,316		$	100,797		$	44,339		$	129,189		$	8,583		$	24,520		$	5,400		$	—	$	369,144

*—The carrying value of FASB ASC Topic 310-30 acquired loans includes a non-accretable difference which is primarily associated with the assessment of credit quality of acquired loans.

As part of the on-going monitoring of the credit quality of the Company’s loan portfolio, management tracks certain credit quality indicators including trends related to (i) the level of classified loans, (ii) net charge-offs, (iii) non-performing loans (see details below) and (iv) the general economic conditions of the markets that we serve.

The Company utilizes a risk grading matrix to assign a risk grade to each of its loans. A description of the general characteristics of the risk grades is as follows:

· Pass—These loans range from minimal credit risk to average however still acceptable credit risk.

· Special mention—A special mention loan has potential weaknesses that deserve management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or the institution’s credit position at some future date.

· Substandard—A substandard loan is inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified must have a well-defined weakness, or weaknesses, that may jeopardize the liquidation of the debt. A substandard loan is characterized by the distinct possibility that the Bank will sustain some loss if the deficiencies are not corrected.

· Doubtful—A doubtful loan has all of the weaknesses inherent in one classified as substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of the currently existing facts, conditions and values, highly questionable and improbable.

The following table presents the credit risk profile by risk grade of commercial loans for non-acquired loans:

	Construction & Development						Commercial Non-owner Occupied						Commercial Owner Occupied
(Dollars in thousands)	March 31, 2013		December 31, 2012		March 31, 2012		March 31, 2013		December 31, 2012		March 31, 2012		March 31, 2013		December 31, 2012		March 31, 2012
Pass	$	221,162	$	215,793	$	219,893	$	242,738	$	232,714	$	223,277	$	735,463	$	716,578	$	666,023
Special mention	29,006		31,670		33,009		36,901		38,473		39,576		28,262		31,800		33,166
Substandard	23,320		25,957		41,963		19,068		18,884		21,191		32,414		35,774		45,252
Doubtful	—		—		—		—		—		—		—		—		—
	$	273,488	$	273,420	$	294,865	$	298,707	$	290,071	$	284,044	$	796,139	$	784,152	$	744,441

	Commercial & Industrial						Other Income Producing Property						Commercial Total
	March 31, 2013		December 31, 2012		March 31, 2012		March 31, 2013		December 31, 2012		March 31, 2012		March 31, 2013		December 31, 2012		March 31, 2012
Pass	$	270,759	$	265,148	$	199,147	$	112,843	$	114,809	$	110,120	$	1,582,965	$	1,545,042	$	1,418,460
Special mention	11,400		8,626		10,964		9,596		9,324		9,151		115,165		119,893		125,866
Substandard	9,149		5,989		5,972		9,337		9,580		10,906		93,288		96,184		125,284
Doubtful	—		—		—		—		—		—		—		—		—
	$	291,308	$	279,763	$	216,083	$	131,776	$	133,713	$	130,177	$	1,791,418	$	1,761,119	$	1,669,610

The following table presents the credit risk profile by risk grade of consumer loans for non-acquired loans:

	Consumer Owner Occupied						Home Equity						Consumer
(Dollars in thousands)	March 31, 2013		December 31, 2012		March 31, 2012		March 31, 2013		December 31, 2012		March 31, 2012		March 31, 2013		December 31, 2012		March 31, 2012
Pass	$	397,998	$	388,822	$	359,701	$	235,428	$	241,184	$	240,251	$	92,698	$	85,517	$	84,223
Special mention	23,410		24,515		24,079		8,150		7,837		11,357		869		897		703
Substandard	21,148		21,166		23,917		5,754		6,239		6,446		430		519		424
Doubtful	578		—		—		24		24		—		—		1		—
	$	443,134	$	434,503	$	407,697	$	249,356	$	255,284	$	258,054	$	93,997	$	86,934	$	85,350

	Other						Consumer Total
	March 31, 2013		December 31, 2012		March 31, 2012		March 31, 2013		December 31, 2012		March 31, 2012
Pass	$	26,393	$	33,163	$	16,603	$	752,517	$	748,686	$	700,778
Special mention	—		—		—		32,429		33,249		36,139
Substandard	—		—		—		27,332		27,924		30,787
Doubtful	—		—		—		602		25		—
	$	26,393	$	33,163	$	16,603	$	812,880	$	809,884	$	767,704

The following table presents the credit risk profile by risk grade of total non-acquired loans:

	Total Non-acquired Loans
(Dollars in thousands)	March 31, 2013		December 31, 2012		March 31, 2012
Pass	$	2,335,482	$	2,293,728	$	2,119,238
Special mention	147,594		153,142		162,005
Substandard	120,620		124,108		156,071
Doubtful	602		25		—
	$	2,604,298	$	2,571,003	$	2,437,314

At March 31, 2013, the aggregate amount of non-acquired substandard and doubtful loans totaled $121.2 million. When these loans are combined with non-acquired OREO of $19.7 million, our non-acquired classified assets (as defined by the state of South Carolina and the FDIC, our primary federal regulators) were $140.9 million. At December 31, 2012, the amounts were $124.1 million, $19.1 million, and $143.2 million, respectively. At March 31, 2012, the amounts were $156.1 million, $21.4 million, and $177.5 million, respectively.

The following table presents the credit risk profile by risk grade of covered acquired loans, net of the related discount (this table should be read in conjunction with the allowance for acquired loan losses table found on page 21):

	Commercial Loans Greater Than or Equal to $1 million-CBT						Commercial Real Estate						Commercial Real Estate— Construction and Development
(Dollars in thousands)	March 31, 2013		December 31, 2012		March 31, 2012		March 31, 2013		December 31, 2012		March 31, 2012		March 31, 2013		December 31, 2012		March 31, 2012
Pass	$	14,505	$	14,355	$	15,947	$	21,208	$	22,687	$	31,213	$	7,042	$	7,134	$	9,168
Special mention	3,476		3,470		4,665		10,078		10,609		21,412		2,702		3,474		7,079
Substandard	30,129		31,859		35,704		21,539		29,501		46,774		17,168		21,154		25,331
Doubtful	—		—		—		147		165		435		745		813		2,678
	$	48,110	$	49,684	$	56,316	$	52,972	$	62,962	$	99,834	$	27,657	$	32,575	$	44,256

	Residential Real Estate						Consumer						Commercial & Industrial
	March 31, 2013		December 31, 2012		March 31, 2012		March 31, 2013		December 31, 2012		March 31, 2012		March 31, 2013		December 31, 2012		March 31, 2012
Pass	$	37,403	$	41,907	$	48,349	$	1,912	$	2,215	$	2,797	$	7,710	$	8,073	$	6,552
Special mention	18,984		20,915		25,117		536		574		764		3,816		3,744		4,529
Substandard	40,990		41,963		51,572		1,397		1,534		2,317		10,422		11,753		11,242
Doubtful	395		26		3,172		—		1		267		30		30		567
	$	97,772	$	104,811	$	128,210	$	3,845	$	4,324	$	6,145	$	21,978	$	23,600	$	22,890

	Single Pay
	March 31, 2013		December 31, 2012		March 31, 2012
Pass	$	60	$	57	$	730
Special mention	51		52		56
Substandard	4,621		4,663		4,614
Doubtful	—		—		—
	$	4,732	$	4,772	$	5,400

The following table presents the credit risk profile by risk grade of non-covered acquired loans, net of the related discount (this table should be read in conjunction with the allowance for acquired loan losses table found on page 21):

	Commercial Real Estate						Commercial Real Estate— Construction and Development						Residential Real Estate
(Dollars in thousands)	March 31, 2013		December 31, 2012		March 31, 2012		March 31, 2013		December 31, 2012		March 31, 2012		March 31, 2013		December 31, 2012		March 31, 2012
Pass	$	162,681	$	274,721	$	923	$	30,563	$	80,008	$	79	$	147,347	$	213,069	$	766
Special mention	51,828		11,670		40		16,293		4,268		—		32,752		17,324		—
Substandard	79,757		23,571		—		35,398		13,600		4		58,074		19,923		213
Doubtful	—		—		—		148		—		—		85		—		—
	$	294,266	$	309,962	$	963	$	82,402	$	97,876	$	83	$	238,258	$	250,316	$	979

	Consumer						Commercial & Industrial						FASB ASC Topic 310-20 Loans
	March 31, 2013		December 31, 2012		March 31, 2012		March 31, 2013		December 31, 2012		March 31, 2012		March 31, 2013		December 31, 2012		March 31, 2012
Pass	$	8,302	$	10,712	$	1,920	$	32,419	$	45,973	$	1,027	$	52,840	$	71,174	$	—
Special mention	398		209		160		6,940		1,549		515		10,877		574		—
Substandard	623		440		358		4,347		1,762		88		6,517		1,467		—
Doubtful	—		—		—		—		—		—		—		—		—
	$	9,323	$	11,361	$	2,438	$	43,706	$	49,284	$	1,630	$	70,234	$	73,215	$	—

The risk grading of acquired loans is determined utilizing a loan’s contractual balance, while the amount recorded in the financial statements and reflected above is the carrying value. In an FDIC-assisted acquisition, covered acquired loans are initially recorded at their fair value, including a credit discount due to the high concentration of substandard and doubtful loans. In addition to the credit discount and the allowance for loan losses on covered acquired loans, the Company’s risk of loss is mitigated by the FDIC loss share arrangement.

The following table presents an aging analysis of past due loans, segregated by class for non-acquired loans:

(Dollars in thousands)	30-59 Days Past Due		60-89 Days Past Due		90+ Days Past Due		Total Past Due		Current		Total Loans
March 31, 2013
Commercial real estate:
Construction and land development	$	121	$	176	$	7,609	$	7,906	$	265,582	$	273,488
Commercial non-owner occupied	699		85		4,236		5,020		293,687		298,707
Commercial owner occupied	2,138		1,482		7,708		11,328		784,811		796,139
Consumer real estate:
Consumer owner occupied	1,631		516		3,425		5,572		437,562		443,134
Home equity loans	1,035		66		354		1,455		247,901		249,356
Commercial and industrial	302		970		703		1,975		289,333		291,308
Other income producing property	907		9		2,351		3,267		128,509		131,776
Consumer	384		12		66		462		93,535		93,997
Other loans	56		22		24		102		26,291		26,393
	$	7,273	$	3,338	$	26,476	$	37,087	$	2,567,211	$	2,604,298

December 31, 2012
Commercial real estate:
Construction and land development	$	812	$	701	$	10,435	$	11,948	$	261,472	$	273,420
Commercial non-owner occupied	1,013		572		3,605		5,190		284,881		290,071
Commercial owner occupied	1,141		40		9,827		11,008		773,144		784,152
Consumer real estate:
Consumer owner occupied	1,433		241		4,045		5,719		428,784		434,503
Home equity loans	735		170		395		1,300		253,984		255,284
Commercial and industrial	1,187		513		549		2,249		277,514		279,763
Other income producing property	322		278		3,253		3,853		129,860		133,713
Consumer	364		151		112		627		86,307		86,934
Other loans	49		41		36		126		33,037		33,163
	$	7,056	$	2,707	$	32,257	$	42,020	$	2,528,983	$	2,571,003

March 31, 2012
Commercial real estate:
Construction and land development	$	2,192	$	866	$	17,237	$	20,295	$	274,570	$	294,865
Commercial non-owner occupied	166		359		5,615		6,140		277,904		284,044
Commercial owner occupied	1,126		403		13,730		15,259		729,182		744,441
Consumer real estate:
Consumer owner occupied	1,850		178		4,838		6,866		400,831		407,697
Home equity loans	485		392		644		1,521		256,533		258,054
Commercial and industrial	235		88		957		1,280		214,803		216,083
Other income producing property	636		236		3,910		4,782		125,395		130,177
Consumer	299		59		81		439		84,911		85,350
Other loans	50		52		69		171		16,432		16,603
	$	7,039	$	2,633	$	47,081	$	56,753	$	2,380,561	$	2,437,314

The following table presents an aging analysis of past due loans, segregated by class for acquired loans:

(Dollars in thousands)	30-59 Days Past Due		60-89 Days Past Due		90+ Days Past Due		Total Past Due		Current		Total Loans
March 31, 2013
Covered loans:
Commercial loans greater than or equal to $1 million-CBT	$	—	$	—	$	22,667	$	22,667	$	25,443	$	48,110
Commercial real estate	2,675		737		7,089		10,501		42,471		52,972
Commercial real estate—construction and development	2,927		371		7,842		11,140		16,517		27,657
Residential real estate	2,831		878		9,254		12,963		84,809		97,772
Consumer	78		137		648		863		2,982		3,845
Commercial and industrial	280		515		3,987		4,782		17,196		21,978
Single pay	51		—		4,123		4,174		558		4,732
	8,842		2,638		55,610		67,090		189,976		257,066
Non-covered loans:
Commercial real estate	4,427		1,236		7,779		13,442		280,824		294,266
Commercial real estate—construction and development	4,779		1,025		5,533		11,337		71,065		82,402
Residential real estate	1,627		4,590		9,813		16,030		222,228		238,258
Consumer	84		39		23		146		9,177		9,323
Commercial and industrial	126		553		404		1,083		42,623		43,706
FASB ASC Topic 310-20 loans	453		741		400		1,594		68,640		70,234
	11,496		8,184		23,952		43,632		694,557		738,189
	$	20,338	$	10,822	$	79,562	$	110,722	$	884,533	$	995,255
December 31, 2012
Covered loans:
Commercial loans greater than or equal to $1 million-CBT	$	922	$	993	$	22,471	$	24,386	$	25,298	$	49,684
Commercial real estate	3,154		1,536		12,162		16,852		46,110		62,962
Commercial real estate—construction and development	1,381		220		11,615		13,216		19,359		32,575
Residential real estate	2,502		2,636		12,328		17,466		87,345		104,811
Consumer	67		19		687		773		3,551		4,324
Commercial and industrial	739		190		4,870		5,799		17,801		23,600
Single pay	1		3,256		62		3,319		1,453		4,772
	8,766		8,850		64,195		81,811		200,917		282,728
Non-covered loans:
Commercial real estate	2,712		770		5,326		8,808		301,154		309,962
Commercial real estate—construction and development	1,595		1,353		7,103		10,051		87,825		97,876
Residential real estate	5,109		2,193		5,987		13,289		237,027		250,316
Consumer	114		57		49		220		11,141		11,361
Commercial and industrial	529		97		277		903		48,381		49,284
FASB ASC Topic 310-20 loans	388		111		148		647		72,568		73,215
	10,447		4,581		18,890		33,918		758,096		792,014
	$	19,213	$	13,431	$	83,085	$	115,729	$	959,013	$	1,074,742
March 31, 2012
Covered loans:
Commercial loans greater than or equal to $1 million-CBT	$	2,507	$	1,639	$	23,743	$	27,889	$	28,427	$	56,316
Commercial real estate	882		382		19,893		21,157		78,677		99,834
Commercial real estate—construction and development	945		412		16,030		17,387		26,869		44,256
Residential real estate	3,961		1,535		13,427		18,923		109,287		128,210
Consumer	105		250		936		1,291		4,854		6,145
Commercial and industrial	554		355		5,057		5,966		16,924		22,890
Single pay	—		—		3,669		3,669		1,731		5,400
	8,954		4,573		82,755		96,282		266,769		363,051
Non-covered loans:
Commercial real estate	—		—		—		—		963		963
Commercial real estate—construction and development	—		—		—		—		83		83
Residential real estate	166		—		—		166		813		979
Consumer	63		30		76		169		2,269		2,438
Commercial and industrial	2		—		10		12		1,618		1,630
	231		30		86		347		5,746		6,093
	$	9,185	$	4,603	$	82,841	$	96,629	$	272,515	$	369,144

The following is a summary of information pertaining to impaired non-acquired loans:

(Dollars in thousands)	Unpaid Contractual Principal Balance		Recorded Investment With No Allowance		Gross Recorded Investment With Allowance		Total Recorded Investment		Related Allowance
March 31, 2013
Commercial real estate:
Construction and land development	$	22,813	$	8,327	$	3,730	$	12,057	$	1,027
Commercial non-owner occupied	7,832		2,675		2,186		4,861		2,059
Commercial owner occupied	21,450		13,138		4,491		17,629		623

Consumer real estate:
Consumer owner occupied	1,238		—		1,177		1,177		200
Home equity loans	—		—		—		—		—

Commercial and industrial	3,105		1,596		338		1,934		84
Other income producing property	4,700		1,308		2,732		4,040		809
Consumer	—		—		—		—		—
Other loans	—		—		—		—		—
Total impaired loans	$	61,138	$	27,044	$	14,654	$	41,698	$	4,802

December 31, 2012
Commercial real estate:
Construction and land development	$	21,350	$	8,659	$	4,890	$	13,549	$	1,573
Commercial non-owner occupied	7,564		3,148		2,196		5,344		411
Commercial owner occupied	23,566		15,698		4,514		20,212		648

Consumer real estate:
Consumer owner occupied	2,040		—		1,954		1,954		213
Home equity loans	—		—		—		—		—

Commercial and industrial	2,595		464		1,319		1,783		1,030
Other income producing property	4,656		1,382		3,011		4,393		1,004
Consumer	—		—		—		—		—
Other loans	—		—		—		—		—
Total impaired loans	$	61,771	$	29,351	$	17,884	$	47,235	$	4,879

March 31, 2012
Commercial real estate:
Construction and land development	$	29,648	$	17,166	$	5,819	$	22,985	$	2,044
Commercial non-owner occupied	10,637		5,731		2,086		7,817		528
Commercial owner occupied	20,841		12,308		4,442		16,750		275

Consumer real estate:
Consumer owner occupied	4,315		882		3,122		4,004		644
Home equity loans	—		—		—		—		—

Commercial and industrial	1,035		884		—		884		—
Other income producing property	5,784		2,290		2,397		4,687		349
Consumer	—		—		—		—		—
Other loans	—		—		—		—		—
Total impaired loans	$	72,260	$	39,261	$	17,866	$	57,127	$	3,840

Acquired loans are accounted for in pools as shown on page 21 rather than being individually evaluated for impairment; therefore, the table above only pertains to non-acquired loans.

The following summarizes the average investment in non-acquired impaired loans and interest income recognized on non-acquired impaired loans:

	Three Months Ended March 31, 2013				Three Months Ended March 31, 2012
(Dollars in thousands)	Average Investment in Impaired Loans		Interest Income Recognized		Average Investment in Impaired Loans		Interest Income Recognized
Commercial real estate:
Construction and land development	$	12,790	$	18	$	24,009	$	17
Commercial non-owner occupied	5,168		1		10,362		—
Commercial owner occupied	18,038		48		17,888		44

Consumer real estate:
Consumer owner occupied	1,941		5		2,974		22
Home equity loans	—		—		—		—

Commercial and industrial	1,438		—		1,526		—
Other income producing property	4,237		8		3,514		13
Consumer	—		—		—		—
Other loans	—		—		—		—
Total Impaired Loans	$	43,612	$	80	$	60,273	$	96

The following is a summary of information pertaining to non-acquired nonaccrual loans by class, including restructured loans:

(Dollars in thousands)	March 31, 2013		December 31, 2012		March 31, 2012
Commercial non-owner occupied real estate:
Construction and land development	$	10,218	$	11,961	$	19,811
Commercial non-owner occupied	4,363		4,780		6,986
Total commercial non-owner occupied real estate	14,581		16,741		26,797
Consumer real estate:
Consumer owner occupied	8,200		8,025		7,316
Home equity loans	1,520		1,835		1,156
Total consumer real estate	9,720		9,860		8,472
Commercial owner occupied real estate	11,351		14,146		14,622
Commercial and industrial	2,133		2,152		1,561
Other income producing property	5,058		5,405		6,070
Consumer	102		83		214
Other loans	—		—		—
Restructured loans	13,636		13,151		12,121
Total loans on nonaccrual status	$	56,581	$	61,538	$	69,857

In the course of resolving delinquent loans, the Bank may choose to restructure the contractual terms of certain loans. Any loans that are modified are reviewed by the Bank to determine if a troubled debt restructuring (“TDR” or “restructured loan”) has occurred. A TDR is a modification in which the Bank grants a concession to a borrower that it would not otherwise consider due to economic or legal reasons related to a borrower’s financial difficulties. The concessions granted on TDRs generally include terms to reduce the interest rate, extend the term of the debt obligation, or modify the payment structure on the debt obligation.

The Bank designates loan modifications as TDRs when it grants a concession to the borrower that it would not otherwise consider due to the borrower experiencing financial difficulty (ASC Topic 310.40). Loans on nonaccrual status at the date of modification are initially classified as nonaccrual TDRs. Loans on accruing status at the date of concession are initially classified as accruing TDRs if the note is reasonably assured of repayment and performance is expected in accordance with its modified terms. Such loans may be designated as nonaccrual loans subsequent to the concession date if reasonable doubt exists as to the collection of interest or principal under the restructuring agreement. Nonaccrual TDRs are returned to accruing status when there is economic substance to the restructuring, there is documented credit evaluation of the borrower’s financial condition, the remaining balance is reasonably assured of repayment in accordance with its modified terms, and the borrower has demonstrated sustained repayment performance in accordance with the modified terms for a reasonable period of time (generally a minimum of six months).

The following table presents non-acquired loans designated as TDRs segregated by class and type of concession that were restructured during the three months ended March 31, 2013 and 2012:

	Three Months Ended March 31, 2013					Three Months Ended March 31, 2012
(Dollars in thousands)	Number of loans	Pre-Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment		Number of loans	Pre- Modification Outstanding Recorded Investment		Post-Modification Outstanding Recorded Investment
Interest rate modification
Construction and land development	—	$	—	$	—	1	$	165	$	164
Commercial owner occupied	—	—		—		1	443		443
Consumer owner occupied	1	124		124		1	1,151		1,148
Total interest rate modifications	1	$	124	$	124	3	$	1,759	$	1,755

Term modification
Construction and land development	—	—		—		1	230		230
Commercial and industrial	1	696		338		—	—		—
Total term modifications	1	$	696	$	338	1	$	230	$	230

	2	$	820	$	462	4	$	1,989	$	1,985

At March 31, 2013, December 31, 2012, and March 31, 2012, the balance of accruing TDRs was $5.0 million, $6.3 million, and $6.1 million, respectively.

The following table presents the changes in status of non-acquired loans restructured within the previous 12 months as of March 31, 2013 by type of concession:

	Paying Under Restructured Terms			Converted to Nonaccrual			Foreclosures and Defaults
(Dollars in thousands)	Number of Loans	Recorded Investment		Number of Loans	Recorded Investment		Number of Loans	Recorded Investment
Interest rate modification	4	$	1,514	—	$	—	—	$	—
Term modification	4	5,388		—	—		—	—
	8	$	6,902	—	$	—	—	$	—

The amount of specific reserve associated with non-acquired restructured loans was $1.2 million at March 31, 2013, none of which was related to the restructured loans that had subsequently defaulted. The Company had no remaining availability under commitments to lend additional funds on these restructured loans at March 31, 2013.