Note 6 — Loans and Allowance for Loan Losses

The following is a summary of non-acquired loans:

	September 30,			December 31,			September 30,
(Dollars in thousands)	2013			2012			2012
Non-acquired loans:
Commercial non-owner occupied real estate:
Construction and land development	$	288,199		$	273,420		$	273,606
Commercial non-owner occupied	282,678			290,071			278,935
Total commercial non-owner occupied real estate	570,877			563,491			552,541
Consumer real estate:
Consumer owner occupied	498,734			434,503			430,825
Home equity loans	255,291			255,284			255,677
Total consumer real estate	754,025			689,787			686,502
Commercial owner occupied real estate	814,259			784,152			787,623
Commercial and industrial	301,845			279,763			245,285
Other income producing property	140,024			133,713			131,832
Consumer	116,312			86,934			86,729
Other loans	43,900			33,163			26,840
Total non-acquired loans	2,741,242			2,571,003			2,517,352
Less allowance for loan losses	(36,145		)	(44,378		)	(46,439		)
Non-acquired loans, net	$	2,705,097		$	2,526,625		$	2,470,913

The following is a summary of total acquired loans:

	September 30,			December 31,			September 30,
(Dollars in thousands)	2013			2012			2012
FASB ASC Topic 310-20 acquired loans	$	1,665,333		$	73,215		$	—
FASB ASC Topic 310-30 acquired loans	1,347,770			1,001,527			520,991
Total acquired loans	3,013,103			1,074,742			520,991
Less allowance for loan losses	(31,141		)	(32,132		)	(31,138		)
Acquired loans, net	$	2,981,962		$	1,042,610		$	489,853

The unpaid principal balance for acquired loans was $3.3 billion, $1.3 billion, and $744.4 million at September 30, 2013, December 31, 2012 and September 30, 2012, respectively.

The following is a summary of acquired loans accounted for under FASB ASC Topic 310-20 (identified as performing at the time of acquisition):

	September 30,		December 31,		September 30,
(Dollars in thousands)	2013		2012		2012
FASB ASC Topic 310-20 acquired loans:
Commercial non-owner occupied real estate:
Construction and land development	$	55,259	$	839	$	—
Commercial non-owner occupied	65,181		2,877		—
Total commercial non-owner occupied real estate	120,440		3,716		—
Consumer real estate:
Consumer owner occupied	769,086		—		—
Home equity loans	274,893		36,139		—
Total consumer real estate	1,043,979		36,139		—
Commercial owner occupied real estate	83,133		12,141		—
Commercial and industrial	64,069		17,531		—
Other income producing property	78,344		3,688		—
Consumer	275,368		—		—
Total FASB ASC Topic 310-20 acquired loans	$	1,665,333	$	73,215	$	—

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 following is a summary of acquired loans accounted for under FASB ASC Topic 310-30 (identified as credit-impaired at the time of acquisition), net of related discount:

	September 30,			December 31,			September 30,
(Dollars in thousands)	2013			2012			2012
FASB ASC Topic 310-30 acquired loans:
Commercial loans greater than or equal to $1 million-CBT	$	37,894		$	49,684		$	53,301
Commercial real estate	477,968			372,924			151,444
Commercial real estate—construction and development	132,176			130,451			58,317
Residential real estate	505,127			355,127			205,441
Consumer	108,420			15,685			10,125
Commercial and industrial	81,734			72,884			37,499
Single pay	4,451			4,772			4,864
Total FASB ASC Topic 310-30 acquired loans	1,347,770			1,001,527			520,991
Less allowance for loan losses	(31,141		)	(32,132		)	(31,138		)
FASB ASC Topic 310-30 acquired loans, net	$	1,316,629		$	969,395		$	489,853

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 First Financial (July 26, 2013) are as follows:

	July 26, 2013
				Loans
	Loans Impaired			Not Impaired
(Dollars in thousands)	at Acquisition			at Acquisition			Total
Contractual principal and interest	$	713,236		$	238,760		$	951,996
Non-accretable difference	(131,320		)	(25,532		)	(156,852		)
Cash flows expected to be collected	581,916			213,228			795,144
Accretable yield	(159,546		)	(43,647		)	(203,193		)
Carrying value	$	422,370		$	169,581		$	591,951

The table above excludes $1.67 billion ($1.71 billion in contractual principal less a $40.6 million fair value adjustment) in acquired loans at fair value that were identified as either performing with no discount related to credit or as revolving lines of credit (commercial or consumer) as of the acquisition date and will be accounted for under FASB ASC Topic 310-20.

	December 13, 2012
	FASB ASC Topic 310-30 Loans
				Loans
	Loans Impaired			Not Impaired
(Dollars in thousands)	at Acquisition			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 that were identified as revolving lines of credit (commercial or consumer) as of the acquisition date and will be accounted for under FASB ASC Topic 310-20.

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
				Loans
	Loans Impaired			Not Impaired
(Dollars in thousands)	at Acquisition			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 FASB ASC Topic 310-30 acquired loans as of September 30, 2013, December 31, 2012, and September 30, 2012 are as follows:

	September 30,			December 31,			September 30,
(Dollars in thousands)	2013			2012			2012
Contractual principal and interest	$	1,942,403		$	1,303,047		$	742,092
Non-accretable difference	(262,313		)	(140,671		)	(113,755		)
Cash flows expected to be collected	1,680,090			1,162,376			628,337
Accretable yield	(332,320		)	(160,849		)	(107,346		)
Carrying value	$	1,347,770		$	1,001,527		$	520,991
Allowance for acquired loan losses	$	(31,141	)	$	(32,132	)	$	(31,138	)

Income on acquired FASB ASC Topic 310-30 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 following are changes in the carrying value of FASB ASC Topic 310-30 acquired loans:

	Nine Months Ended September 30,
(Dollars in thousands)	2013			2012
Balance at beginning of period	$	969,395		$	370,581
Fair value of acquired loans	591,951			234,245
Net reductions for payments, foreclosures, and accretion	(243,726		)	(115,455		)
Change in the allowance for loan losses on acquired loans	(991		)	482
Balance at end of period, net of allowance for loan losses on acquired loans	$	1,316,629		$	489,853

The following are changes in the carrying amount of accretable difference for acquired impaired and non-impaired loans for the nine months ended September 30, 2013 and 2012:

	Nine Months Ended September 30,
(Dollars in thousands)	2013			2012
Balance at beginning of period	$	160,849		$	94,600
Addition from the Peoples acquisition	—			34,921
Addition from the First Financial acquisition	203,194			—
Interest income	(70,697		)	(36,156		)
Reclass of nonaccretable difference due to improvement in expected cash flows	48,244			26,399
Other changes, net	(9,270		)	(12,418		)
Balance at end of period	$	332,320		$	107,346

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.

With the FFCH acquisition, the Company segregated the loan portfolio into performing loans and purchased credit impaired loans. The performing loans and revolving type loans are accounted for under FASB ASC 310-20, with each loan being accounted for individually. The allowance for loan losses on these loans will be measured and recorded consistent with non-acquired loans. The purchased credit impaired loans will follow the description in the next paragraph.

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 $25,000 and the probability of default that is determined based upon historical data at the loan level. The Company changed the threshold of loans reviewed from $500,000 during the second quarter to more accurately derive the expected loss in pools where there are few, if any, loans greater than $500,000. 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:

	Non-acquired
(Dollars in thousands)	Loans			Acquired Loans			Total
Three months ended September 30, 2013:
Balance at beginning of period	$	38,625		$	31,597		$	70,222
Loans charged-off	(4,293		)	—			(4,293		)
Recoveries of loans previously charged off	1,248			—			1,248
Net charge-offs	(3,045		)	—			(3,045		)
Provision for loan losses	565			(456		)	109
Benefit attributable to FDIC loss share agreements	—			550			550
Total provision for loan losses charged to operations	565			94			659
Provision for loan losses recorded through the FDIC loss share receivable	—			(550		)	(550		)
Balance at end of period	$	36,145		$	31,141		$	67,286

Three months ended September 30, 2012:
Balance at beginning of period	$	47,269		$	35,813		$	83,082
Loans charged-off	(5,940		)	—			(5,940		)
Recoveries of loans previously charged off	610			—			610
Net charge-offs	(5,330		)	—			(5,330		)
Provision for loan losses	4,500			(4,675		)	(175		)
Benefit attributable to FDIC loss share agreements	—			4,219			4,219
Total provision for loan losses charged to operations	4,500			(456		)	4,044
Provision for loan losses recorded through the FDIC loss share receivable	—			(4,219		)	(4,219		)
Balance at end of period	$	46,439		$	31,138		$	77,577

	Non-acquired
(Dollars in thousands)	Loans			Acquired Loans			Total
Nine months ended September 30, 2013:
Balance at beginning of period	$	44,378		$	32,132		$	76,510
Loans charged-off	(12,121		)	—			(12,121		)
Recoveries of loans previously charged off	2,870			—			2,870
Net charge-offs	(9,251		)	—			(9,251		)
Provision for loan losses	1,018			(991		)	27
Benefit attributable to FDIC loss share agreements	—			1,871			1,871
Total provision for loan losses charged to operations	1,018			880			1,898
Provision for loan losses recorded through the FDIC loss share receivable	—			(1,871		)	(1,871		)
Balance at end of period	$	36,145		$	31,141		$	67,286

Nine months ended September 30, 2012:
Balance at beginning of period	$	49,367		$	31,620		$	80,987
Loans charged-off	(17,193		)	—			(17,193		)
Recoveries of loans previously charged off	3,075			—			3,075
Net charge-offs	(14,118		)	—			(14,118		)
Provision for loan losses	11,190			(482		)	10,708
Benefit attributable to FDIC loss share agreements	—			700			700
Total provision for loan losses charged to operations	11,190			218			11,408
Provision for loan losses recorded through the FDIC loss share receivable	—			(700		)	(700		)
Balance at end of period	$	46,439		$	31,138		$	77,577

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

	Construction			Commercial			Commercial			Consumer									Other Income
	& Land			Non-owner			Owner			Owner			Home			Commercial			Producing						Other
(Dollars in thousands)	Development			Occupied			Occupied			Occupied			Equity			& Industrial			Property			Consumer			Loans			Total
Three months ended September 30, 2013:
Allowance for loan losses:
Balance, June 30, 2013	$	8,431		$	4,866		$	7,984		$	6,438		$	2,974		$	4,039		$	3,260		$	426		$	207		$	38,625
Charge-offs	(1,244		)	(652		)	(219		)	(888		)	(206		)	(154		)	(179		)	(751		)	—			(4,293		)
Recoveries	650			18			1			104			75			187			12			201			—			1,248
Provision	(108		)	(462		)	(53		)	448			91			(301		)	(58		)	955			53			565
Balance, September 30, 2013	$	7,729		$	3,770		$	7,713		$	6,102		$	2,934		$	3,771		$	3,035		$	831		$	260		$	36,145

Loans individually evaluated for impairment	$	558		$	—		$	19		$	21		$	—		$	—		$	703		$	—		$	—		$	1,301
Loans collectively evaluated for impairment	$	7,171		$	3,770		$	7,694		$	6,081		$	2,934		$	3,771		$	2,332		$	831		$	260		$	34,844

Loans:
Loans individually evaluated for impairment	$	8,201		$	2,804		$	14,683		$	575		$	—		$	707		$	2,614		$	—		$	—		$	29,584
Loans collectively evaluated for impairment	279,998			279,874			799,576			498,159			255,291			301,138			137,410			116,312			43,900			2,711,658

Total non-acquired loans	$	288,199		$	282,678		$	814,259		$	498,734		$	255,291		$	301,845		$	140,024		$	116,312		$	43,900		$	2,741,242

Three months ended September 30, 2012:
Allowance for loan losses:
Balance, June 30, 2012	$	12,267		$	5,432		$	9,476		$	7,617		$	3,992		$	3,765		$	3,410		$	1,064		$	246		$	47,269
Charge-offs	(3,441		)	(504		)	(334		)	(545		)	(203		)	(270		)	(84		)	(523		)	(36		)	(5,940		)
Recoveries	187			126			—			24			54			19			52			148			—			610
Provision	2,480			556			393			681			—			260			23			105			2			4,500
Balance, September 30, 2012	$	11,493		$	5,610		$	9,535		$	7,777		$	3,843		$	3,774		$	3,401		$	794		$	212		$	46,439

Loans individually evaluated for impairment	$	1,151		$	676		$	402		$	218		$	—		$	—		$	125		$	—		$	—		$	2,572
Loans collectively evaluated for impairment	$	10,340		$	4,935		$	9,134		$	7,559		$	3,843		$	3,774		$	3,276		$	794		$	212		$	43,867

Loans:
Loans individually evaluated for impairment	$	12,680		$	7,121		$	18,377		$	2,613		$	—		$	474		$	2,778		$	—		$	—		$	44,043
Loans collectively evaluated for impairment	260,926			271,814			769,246			428,212			255,677			244,811			129,054			86,729			26,840			2,473,309

Total non-acquired loans	$	273,606		$	278,935		$	787,623		$	430,825		$	255,677		$	245,285		$	131,832		$	86,729		$	26,840		$	2,517,352

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

	Construction			Commercial			Commercial			Consumer									Other Income
	& Land			Non-owner			Owner			Owner			Home			Commercial			Producing						Other
(Dollars in thousands)	Development			Occupied			Occupied			Occupied			Equity			& Industrial			Property			Consumer			Loans			Total

Nine months ended September 30, 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	(4,457		)	(652		)	(1,622		)	(1,276		)	(868		)	(781		)	(652		)	(1,813		)	—			(12,121		)
Recoveries	1,043			345			16			234			174			324			123			611			—			2,870
Provision	307			(844		)	576			576			2			(711		)	(183		)	1,252			43			1,018
Balance, September 30, 2013	$	7,729		$	3,770		$	7,713		$	6,102		$	2,934		$	3,771		$	3,035		$	831		$	260		$	36,145

Nine months ended September 30, 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	(7,073		)	(1,877		)	(2,009		)	(1,850		)	(1,251		)	(705		)	(824		)	(1,454		)	(150		)	(17,193		)
Recoveries	1,213			222			2			44			460			201			347			575			11			3,075
Provision	4,980			1,156			1,186			2,130			365			377			242			528			226			11,190
Balance, September 30, 2012	$	11,493		$	5,610		$	9,535		$	7,777		$	3,843		$	3,774		$	3,401		$	794		$	212		$	46,439

As of September 30, 2013 and 2012, the Company has not recorded any allowance for loan losses for loans acquired and accounted for under FASB ASC Topic 310-20.

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

	Commercial						Commercial
	Loans Greater						Real Estate-
	Than or Equal			Commercial			Construction and			Residential						Commercial
(Dollars in thousands)	to $1 Million-CBT			Real Estate			Development			Real Estate			Consumer			and Industrial			Single Pay			Total
Three months ended September 30, 2013:
Allowance for loan losses:
Balance, June 30, 2013	$	13,428		$	821		$	4,392		$	5,150		$	474		$	2,953		$	4,379		$	31,597
Charge-offs	—			—			—			—			—			—			—			—
Recoveries	—			—			—			—			—			—			—			—
Provision for loan losses before benefit attributable to FDIC loss share agreements	(1,283		)	330			(39		)	488			(2		)	(55		)	105			(456		)
Benefit attributable to FDIC loss share agreements	1,220			(264		)	31			(392		)	1			53			(99		)	550
Total provision for loan losses charged to operations	(63		)	66			(8		)	96			(1		)	(2		)	6			94
Provision for loan losses recorded through the FDIC loss share receivable	(1,220		)	264			(31		)	392			(1		)	(53		)	99			(550		)
Balance, September 30, 2013	$	12,145		$	1,151		$	4,353		$	5,638		$	472		$	2,898		$	4,484		$	31,141
Loans individually evaluated for impairment	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—
Loans collectively evaluated for impairment	$	12,145		$	1,151		$	4,353		$	5,638		$	472		$	2,898		$	4,484		$	31,141

Loans:*
Loans individually evaluated for impairment	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—
Loans collectively evaluated for impairment	37,894			477,968			132,176			505,127			108,420			81,734			4,451			1,347,770
Total acquired loans	$	37,894		$	477,968		$	132,176		$	505,127		$	108,420		$	81,734		$	4,451		$	1,347,770

Three months ended September 30, 2012:
Allowance for loan losses:
Balance, June 30, 2012	$	16,871		$	1,812		$	3,238		$	4,415		$	73		$	4,749		$	4,655		$	35,813
Charge-offs	—			—			—			—			—			—			—			—
Recoveries	—			—			—			—			—			—			—			—
Provision for loan losses before benefit attributable to FDIC loss share agreements	(1,059		)	(1,365		)	(1,744		)	41			16			(478		)	(86		)	(4,675		)
Benefit attributable to FDIC loss share agreements	1,006			1,296			1,415			(39		)	(14		)	473			82			4,219
Total provision for loan losses charged to operations	(53		)	(69		)	(329		)	2			2			(5		)	(4		)	(456		)
Provision for loan losses recorded through the FDIC loss share receivable	(1,006		)	(1,296		)	(1,415		)	39			14			(473		)	(82		)	(4,219		)
Balance, September 30, 2012	$	15,812		$	447		$	1,494		$	4,456		$	89		$	4,271		$	4,569		$	31,138
Loans individually evaluated for impairment	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—
Loans collectively evaluated for impairment	$	15,812		$	447		$	1,494		$	4,456		$	89		$	4,271		$	4,569		$	31,138

Loans:*
Loans individually evaluated for impairment	$	—		$	—		$	—		$	—		$	—		$	—		$	—		$	—
Loans collectively evaluated for impairment	53,301			151,444			58,317			205,441			10,125			37,499			4,864			520,991
Total acquired loans	$	53,301		$	151,444		$	58,317		$	205,441		$	10,125		$	37,499		$	4,864		$	520,991

*—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.

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

	Commercial						Commercial
	Loans Greater						Real Estate-
	Than or Equal			Commercial			Construction and			Residential						Commercial
(Dollars in thousands)	to $1 Million-CBT			Real Estate			Development			Real Estate			Consumer			and Industrial			Single Pay			Total

Nine months ended September 30, 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	(3,263		)	(366		)	2,725			1,019			379			(1,407		)	(78		)	(991		)
Benefit attributable to FDIC loss share agreements	3,100			240			(2,067		)	(494		)	(320		)	1,337			75			1,871
Total provision for loan losses charged to operations	(163		)	(126		)	658			525			59			(70		)	(3		)	880
Provision for loan losses recorded through the FDIC loss share receivable	(3,100		)	(240		)	2,067			494			320			(1,337		)	(75		)	(1,871		)
Balance, September 30, 2013	$	12,145		$	1,151		$	4,353		$	5,635		$	475		$	2,898		$	4,484		$	31,141

Nine months ended September 30, 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	(894		)	(871		)	1,494			(1,015		)	89			(293		)	1,008			(482		)
Benefit attributable to FDIC loss share agreements	814			819			(1,268		)	1,091			(71		)	271			(956		)	700
Total provision for loan losses charged to operations	(80		)	(52		)	226			76			18			(22		)	52			218
Provision for loan losses recorded through the FDIC loss share receivable	(814		)	(819		)	1,268			(1,091		)	71			(271		)	956			(700		)
Balance, September 30, 2012	$	15,812		$	447		$	1,494		$	4,456		$	89		$	4,271		$	4,569		$	31,138

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
	September 30,		December 31,		September 30,		September 30,		December 31,		September 30,		September 30,		December 31,		September 30,
(Dollars in thousands)	2013		2012		2012		2013		2012		2012		2013		2012		2012
Pass	$	244,321	$	215,793	$	216,801	$	238,940	$	232,714	$	223,235	$	764,267	$	716,578	$	716,283
Special mention	24,775		31,670		29,894		35,052		38,473		34,470		23,871		31,800		29,565
Substandard	19,103		25,957		26,867		8,686		18,884		21,230		26,121		35,774		41,740
Doubtful	—		—		44		—		—		—		—		—		35
	$	288,199	$	273,420	$	273,606	$	282,678	$	290,071	$	278,935	$	814,259	$	784,152	$	787,623

	Commercial & Industrial						Other Income Producing Property						Commercial Total
	September 30,		December 31,		September 30,		September 30,		December 31,		September 30,		September 30,		December 31,		September 30,
	2013		2012		2012		2013		2012		2012		2013		2012		2012
Pass	$	288,945	$	265,148	$	230,317	$	121,565	$	114,809	$	114,409	$	1,658,038	$	1,545,042	$	1,501,045
Special mention	9,734		8,626		8,996		9,282		9,324		8,755		102,714		119,893		111,680
Substandard	3,135		5,989		5,972		9,177		9,580		8,668		66,222		96,184		104,477
Doubtful	31		—		—		—		—		—		31		—		79
	$	301,845	$	279,763	$	245,285	$	140,024	$	133,713	$	131,832	$	1,827,005	$	1,761,119	$	1,717,281

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

	Consumer Owner Occupied						Home Equity						Consumer
	September 30,		December 31,		September 30,		September 30,		December 31,		September 30,		September 30,		December 31,		September 30,
(Dollars in thousands)	2013		2012		2012		2013		2012		2012		2013		2012		2012
Pass	$	454,368	$	388,822	$	383,152	$	241,624	$	241,184	$	241,278	$	115,163	$	85,517	$	85,488
Special mention	21,444		24,515		23,556		8,218		7,837		8,420		849		897		799
Substandard	22,922		21,166		24,117		5,426		6,239		5,955		300		519		442
Doubtful	—		—		—		23		24		24		—		1		—
	$	498,734	$	434,503	$	430,825	$	255,291	$	255,284	$	255,677	$	116,312	$	86,934	$	86,729

	Other						Consumer Total
	September 30,		December 31,		September 30,		September 30,		December 31,		September 30,
	2013		2012		2012		2013		2012		2012
Pass	$	43,900	$	33,163	$	26,840	$	855,055	$	748,686	$	736,758
Special mention	—		—		—		30,511		33,249		32,775
Substandard	—		—		—		28,648		27,924		30,514
Doubtful	—		—		—		23		25		24
	$	43,900	$	33,163	$	26,840	$	914,237	$	809,884	$	800,071

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

	Total Non-acquired Loans
	September 30,		December 31,		September 30,
(Dollars in thousands)	2013		2012		2012
Pass	$	2,513,093	$	2,293,728	$	2,237,803
Special mention	133,225		153,142		144,455
Substandard	94,870		124,108		134,991
Doubtful	54		25		103
	$	2,741,242	$	2,571,003	$	2,517,352

At September 30, 2013, the aggregate amount of non-acquired substandard and doubtful loans totaled $94.9 million. When these loans are combined with non-acquired OREO of $16.6 million, our non-acquired classified assets (as defined by the state of South Carolina and the FDIC, our primary regulators) were $111.5 million. At December 31, 2012, the amounts were $124.1 million, $19.1 million, and $143.2 million, respectively. At September 30, 2012, the amounts were $135.1 million, $22.4 million, and $157.5 million, respectively.

The following table presents the credit risk profile by risk grade of commercial loans for FASB ASC Topic 310-20 acquired loans (identified as performing at the time of acquisition):

	Construction & Development						Commercial Non-owner Occupied						Commercial Owner Occupied
	September 30,		December 31,		September 30,		September 30,		December 31,		September 30,		September 30,		December 31,		September 30,
(Dollars in thousands)	2013		2012		2012		2013		2012		2012		2013		2012		2012
Pass	$	54,863	$	796	$	—	$	63,362	$	2,877	$	—	$	81,973	$	11,977	$	—
Special mention	—		—		—		1,332		—		—		325		164		—
Substandard	396		43		—		487		—		—		835		—		—
Doubtful	—		—		—		—		—		—		—		—		—
	$	55,259	$	839	$	—	$	65,181	$	2,877	$	—	$	83,133	$	12,141	$	—

	Commercial & Industrial						Other Income Producing Property
	September 30,		December 31,		September 30,		September 30,		December 31,		September 30,
	2013		2012		2012		2013		2012		2012
Pass	$	61,025	$	17,515	$	—	$	75,624	$	3,352	$	—
Special mention	2,280		—		—		1,869		244		—
Substandard	764		16		—		851		92		—
Doubtful	—		—		—		—		—		—
	$	64,069	$	17,531	$	—	$	78,344	$	3,688	$	—

The following table presents the credit risk profile by risk grade of consumer loans for FASB ASC Topic 310-20 acquired loans (identified as performing at the time of acquisition):

	Consumer Owner Occupied						Home Equity						Consumer
	September 30,		December 31,		September 30,		September 30,		December 31,		September 30,		September 30,		December 31,		September 30,
(Dollars in thousands)	2013		2012		2012		2013		2012		2012		2013		2012		2012
Pass	$	767,359	$	—	$	—	$	257,630	$	34,656	$	—	$	275,188	$	—	$	—
Special mention	425		—		—		6,517		167		—		106		—		—
Substandard	1,302		—		—		10,746		1,316		—		75		—		—
Doubtful	—		—		—		—		—		—		—		—		—
	$	769,086	$	—	$	—	$	274,893	$	36,139	$	—	$	275,369	$	—	$	—

The following table presents the credit risk profile by risk grade of FASB ASC Topic 310-30 acquired loans (identified as credit-impaired at the time of acquisition), net of the related discount (this table should be read in conjunction with the allowance for acquired loan losses table found on page 22):

	Commercial Loans Greater Than or Equal to $1 million-CBT						Commercial Real Estate						Commercial Real Estate— Construction and Development
	September 30,		December 31,		September 30,		September 30,		December 31,		September 30,		September 30,		December 31,		September 30,
(Dollars in thousands)	2013		2012		2012		2013		2012		2012		2013		2012		2012
Pass	$	15,417	$	14,355	$	15,854	$	220,307	$	297,408	$	24,992	$	41,801	$	87,142	$	21,351
Special mention	2,635		3,470		3,462		69,406		22,279		12,505		19,711		7,742		7,081
Substandard	19,842		31,859		33,985		188,255		53,072		37,095		70,664		34,754		28,391
Doubtful	—		—		—		—		165		165		—		813		1,494
	$	37,894	$	49,684	$	53,301	$	477,968	$	372,924	$	74,757	$	132,176	$	130,451	$	58,317

	Residential Real Estate						Consumer						Commercial & Industrial
	September 30,		December 31,		September 30,		September 30,		December 31,		September 30,		September 30,		December 31,		September 30,
	2013		2012		2012		2013		2012		2012		2013		2012		2012
Pass	$	208,135	$	254,976	$	127,274	$	8,639	$	12,927	$	7,136	$	41,320	$	54,046	$	17,044
Special mention	93,623		38,239		27,322		40,038		783		959		4,285		5,293		5,281
Substandard	203,267		61,886		50,412		59,743		1,974		1,997		36,129		13,515		15,119
Doubtful	102		26		433		—		1		33		—		30		55
	$	505,127	$	355,127	$	205,441	$	108,420	$	15,685	$	10,125	$	81,734	$	72,884	$	37,499

	Single Pay
	September 30,		December 31,		September 30,
	2013		2012		2012
Pass	$	46	$	57	$	1,881
Special mention	—		52		52
Substandard	4,405		4,663		2,931
Doubtful	—		—		—
	$	4,451	$	4,772	$	4,864

The risk grading of FASB ASC Topic 310-30 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:

							Total
	30-59 Days		60-89 Days		90+ Days		Past				Total
(Dollars in thousands)	Past Due		Past Due		Past Due		Due		Current		Loans
September 30, 2013
Commercial real estate:
Construction and land development	$	2,239	$	2,181	$	4,834	$	9,254	$	278,945	$	288,199
Commercial non-owner occupied	1,658		15		2,493		4,166		278,512		282,678
Commercial owner occupied	1,009		334		5,924		7,267		806,992		814,259
Consumer real estate:
Consumer owner occupied	2,806		1,449		2,755		7,010		491,724		498,734
Home equity loans	767		168		503		1,438		253,853		255,291
Commercial and industrial	139		103		672		914		300,931		301,845
Other income producing property	818		218		2,395		3,431		136,593		140,024
Consumer	300		201		61		562		115,750		116,312
Other loans	53		24		32		109		43,791		43,900
	$	9,789	$	4,693	$	19,669	$	34,151	$	2,707,091	$	2,741,242

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

September 30, 2012
Commercial real estate:
Construction and land development	$	1,751	$	902	$	10,789	$	13,442	$	260,164	$	273,606
Commercial non-owner occupied	343		1,364		4,253		5,960		272,975		278,935
Commercial owner occupied	3,195		2,703		7,137		13,035		774,588		787,623
Consumer real estate:
Consumer owner occupied	1,731		501		5,007		7,239		423,586		430,825
Home equity loans	982		416		597		1,995		253,682		255,677
Commercial and industrial	425		280		384		1,089		244,196		245,285
Other income producing property	441		58		3,746		4,245		127,587		131,832
Consumer	722		161		56		939		85,790		86,729
Other loans	80		35		47		162		26,678		26,840
	$	9,670	$	6,420	$	32,016	$	48,106	$	2,469,246	$	2,517,352

The following table presents an aging analysis of past due loans, segregated by class for FASB ASC Topic 310-20 acquired loans (identified as performing at the time of acquisition):

							Total
	30-59 Days		60-89 Days		90+ Days		Past				Total
(Dollars in thousands)	Past Due		Past Due		Past Due		Due		Current		Loans
September 30, 2013
Commercial real estate:
Construction and land development	$	—	$	78	$	409	$	487	$	54,772	$	55,259
Commercial non-owner occupied	17		—		—		17		65,164		65,181
Commercial owner occupied	1,250		—		62		1,312		81,821		83,133
Consumer real estate:
Consumer owner occupied	26		714		—		740		768,346		769,086
Home equity loans	1,262		483		309		2,054		272,839		274,893
Commercial and industrial	381		—		147		528		63,541		64,069
Other income producing property	414		—		—		414		77,930		78,344
Consumer	231		92		78		401		274,967		275,368
	$	3,581	$	1,367	$	1,005	$	5,953	$	1,659,380	$	1,665,333

December 31, 2012
Commercial real estate:
Construction and land development	$	—	$	—	$	43	$	43	$	796	$	839
Commercial non-owner occupied	—		—		—		—		2,877		2,877
Commercial owner occupied	—		—		—		—		12,141		12,141
Consumer real estate:
Consumer owner occupied	—		—		—		—		—		—
Home equity loans	242		111		105		458		35,681		36,139
Commercial and industrial	11		—		—		11		17,520		17,531
Other income producing property	135		—		—		135		3,553		3,688
Consumer	—		—		—		—		—		—
Other loans	—		—		—		—		—		—
	$	388	$	111	$	148	$	647	$	72,568	$	73,215

September 30, 2012
Commercial real estate:
Construction and land development	$	—	$	—	$	—	$	—	$	—	$	—
Commercial non-owner occupied	—		—		—		—		—		—
Commercial owner occupied	—		—		—		—		—		—
Consumer real estate:
Consumer owner occupied	—		—		—		—		—		—
Home equity loans	—		—		—		—		—		—
Commercial and industrial	—		—		—		—		—		—
Other income producing property	—		—		—		—		—		—
Consumer	—		—		—		—		—		—
Other loans	—		—		—		—		—		—
	$	—	$	—	$	—	$	—	$	—	$	—

The following table presents an aging analysis of past due loans, segregated by class for FASB ASC Topic 310-30 acquired loans (identified as credit-impaired at the time of acquisition):

							Total
	30-59 Days		60-89 Days		90+ Days		Past				Total
(Dollars in thousands)	Past Due		Past Due		Past Due		Due		Current		Loans
September 30, 2013
Commercial loans greater than or equal to $1 million-CBT	$	—	$	787	$	13,210	$	13,997	$	23,897	$	37,894
Commercial real estate	11,992		2,552		29,451		43,995		433,973		477,968
Commercial real estate—construction and development	2,625		678		19,011		22,314		109,862		132,176
Residential real estate	11,002		4,081		27,703		42,786		462,341		505,127
Consumer	1,754		478		2,036		4,268		104,152		108,420
Commercial and industrial	1,460		954		4,981		7,395		74,339		81,734
Single pay	—		18		22		40		4,411		4,451
	$	28,833	$	9,548	$	96,414	$	134,795	$	1,212,975	$	1,347,770
December 31, 2012
Commercial loans greater than or equal to $1 million-CBT	$	922	$	993	$	22,471	$	24,386	$	25,298	$	49,684
Commercial real estate	5,866		2,306		17,488		25,660		347,264		372,924
Commercial real estate—construction and development	2,976		1,573		18,718		23,267		107,184		130,451
Residential real estate	7,611		4,829		18,315		30,755		324,372		355,127
Consumer	181		76		736		993		14,692		15,685
Commercial and industrial	1,268		287		5,147		6,702		66,182		72,884
Single pay	1		3,256		62		3,319		1,453		4,772
	$	18,825	$	13,320	$	82,937	$	115,082	$	886,445	$	1,001,527
September 30, 2012
Commercial loans greater than or equal to $1 million-CBT	$	3,174	$	—	$	21,638	$	24,812	$	28,489	$	53,301
Commercial real estate	4,290		487		15,846		20,623		130,821		151,444
Commercial real estate—construction and development	2,824		919		14,227		17,970		40,347		58,317
Residential real estate	4,097		1,131		13,337		18,565		186,876		205,441
Consumer	173		100		836		1,109		9,016		10,125
Commercial and industrial	755		478		5,132		6,365		31,134		37,499
Single pay	1		3		270		274		4,590		4,864
	$	15,314	$	3,118	$	71,286	$	89,718	$	431,273	$	520,991

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

					Gross
	Unpaid		Recorded		Recorded
	Contractual		Investment		Investment		Total
	Principal		With No		With		Recorded		Related
(Dollars in thousands)	Balance		Allowance		Allowance		Investment		Allowance
September 30, 2013
Commercial real estate:
Construction and land development	$	15,447	$	4,986	$	3,215	$	8,201	$	558
Commercial non-owner occupied	4,543		1,269		1,535		2,804		—
Commercial owner occupied	17,826		12,166		2,517		14,683		19

Consumer real estate:
Consumer owner occupied	625		—		575		575		21
Home equity loans	—		—		—		—		—

Commercial and industrial	954		707		—		707		—
Other income producing property	3,073		253		2,361		2,614		703
Consumer	—		—		—		—		—
Other loans	—		—		—		—		—
Total impaired loans	$	42,468	$	19,381	$	10,203	$	29,584	$	1,301

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

September 30, 2012
Commercial real estate:
Construction and land development	$	22,233	$	9,479	$	3,201	$	12,680	$	1,151
Commercial non-owner occupied	11,354		4,095		3,026		7,121		676
Commercial owner occupied	23,148		13,021		5,356		18,377		402

Consumer real estate:
Consumer owner occupied	2,774		1,418		1,195		2,613		218
Home equity loans	—		—		—		—		—

Commercial and industrial	550		474		—		474		—
Other income producing property	3,529		1,668		1,110		2,778		125
Consumer	—		—		—		—		—
Other loans	—		—		—		—		—
Total impaired loans	$	63,588	$	30,155	$	13,888	$	44,043	$	2,572

FASB ASC Topic 310-30 acquired loans are accounted for in pools as shown on page 22 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				Three Months Ended
	September 30, 2013				September 30, 2012
	Average				Average
	Investment in		Interest Income		Investment in		Interest Income
(Dollars in thousands)	Impaired Loans		Recognized		Impaired Loans		Recognized
Commercial real estate:
Construction and land development	$	9,028	$	42	$	15,644	$	12
Commercial non-owner occupied	3,779		—		5,766		54
Commercial owner occupied	16,004		33		16,397		154

Consumer real estate:
Consumer owner occupied	1,066		—		2,640		12
Home equity loans	—		—		—		—

Commercial and industrial	1,253		—		477		1
Other income producing property	2,993		14		2,820		4
Consumer	—		—		—		—
Other loans	—		—		—		—
Total Impaired Loans	$	34,123	$	89	$	43,744	$	237

	Nine Months Ended				Nine Months Ended
	September 30, 2013				September 30, 2012
	Average				Average
	Investment in		Interest Income		Investment in		Interest Income
(Dollars in thousands)	Impaired Loans		Recognized		Impaired Loans		Recognized

Commercial real estate:
Construction and land development	$	11,151	$	69	$	18,785	$	63
Commercial non-owner occupied	4,325		1		8,006		69
Commercial owner occupied	15,791		94		16,683		262

Consumer real estate:
Consumer owner occupied	1,093		7		2,530		54
Home equity loans	—		—		—		—

Commercial and industrial	1,329		—		1,065		1
Other income producing property	3,856		22		3,451		21
Consumer	—		—		—		—
Other loans	—		—		—		—
Total Impaired Loans	$	37,545	$	193	$	50,520	$	470

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

	September 30,		December 31,		September 30,
(Dollars in thousands)	2013		2012		2012
Commercial non-owner occupied real estate:
Construction and land development	$	8,058	$	11,961	$	12,717
Commercial non-owner occupied	2,804		4,780		5,526
Total commercial non-owner occupied real estate	10,862		16,741		18,243
Consumer real estate:
Consumer owner occupied	10,579		8,025		9,929
Home equity loans	1,255		1,835		518
Total consumer real estate	11,834		9,860		10,447
Commercial owner occupied real estate	10,184		14,146		11,554
Commercial and industrial	987		2,152		1,349
Other income producing property	4,701		5,405		4,481
Consumer	63		83		221
Other loans	—		—		—
Restructured loans	10,837		13,151		12,882
Total loans on nonaccrual status	$	49,468	$	61,538	$	59,177

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 and nine months ended September 30, 2013 and 2012:

	Three Months Ended September 30, 2013					Three Months Ended September 30, 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	—	$	—	$	—	—	$	—	$	—
Commercial owner occupied	—	—		—		2	4,659		4,607
Consumer owner occupied	—	—		—		—	—		—
Other income producing property	—	—		—		—	—		—
Total interest rate modifications	—	$	—	$	—	2	$	4,659	$	4,607

Term modification
Construction and land development	—	—		—		—	—		—
Commercial owner occupied	—	—		—		—	—		—
Consumer owner occupied	—	—		—		—	—		—
Commercial and industrial	—	—		—		—	—		—
Total term modifications	—	$	—	$	—	—	$	—	$	—

	—	—		$	—	2	$	4,659	$	4,607

	Nine Months Ended September 30, 2013					Nine Months Ended September 30, 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	$	159
Commercial non-owner occupied	1	247		247		—	—		—
Commercial owner occupied	1	750		750		3	5,102		5,047
Consumer owner occupied	1	124		122		—	—		—
Total interest rate modifications	3	$	1,121	$	1,119	4	$	5,267	$	5,206

Term modification
Construction and land development	—	—		—		1	230		223
Commercial owner occupied	—	—		—		—	—		—
Consumer owner occupied	—	—		—		—	—		—
Commercial and industrial	1	696		134
Total term modifications	1	$	696	$	134	1	$	230	$	223

	4	$	1,817	$	1,253	5	$	5,497	$	5,429

At September 30, 2013, December 31, 2012, and September 30, 2012, the balance of accruing TDRs was $4.2 million, $6.3 million, and $6.3 million, respectively.

The following table presents the changes in status of non-acquired loans restructured within the previous 12 months as of September 30, 2013 by type of concession:

	Paying Under
	Restructured Terms			Converted to Nonaccrual			Foreclosures and Defaults
	Number	Recorded		Number	Recorded		Number	Recorded
(Dollars in thousands)	of Loans	Investment		of Loans	Investment		of Loans	Investment
Interest rate modification	5	$	1,799	—	$	—	—	$	—
Term modification	3	1,401		—	—		—	—
	8	$	3,200	—	$	—	—	$	—

The amount of specific reserve associated with non-acquired restructured loans was $534,000 at September 30, 2013, none of which was related to the restructured loans that had subsequently defaulted. The Company had $13,000 remaining availability under commitments to lend additional funds on these restructured loans at September 30, 2013.