General (Policies)

9 Months Ended

Sep. 30, 2014

Reclassifications and Corrections

Certain amounts reported in prior years have been reclassified to conform to the current year’s presentation. These reclassifications had no effect on the Company’s results of operations, financial position, or cash flow.

Acquisitions and Divestitures

Acquisitions and Divestitures

On October 24, 2014, the Company completed the acquisition of seven branches from Bank of America, National Association. At acquisition, the seven branches had deposit totals of approximately $318 million. No loans were included in the purchase. The transaction was accounted for under the business combination method of accounting and accordingly, assets and liabilities acquired and consideration exchanged were recorded at estimated fair value on the acquisition date. The acquisition expands the Company’s presence by six branches in southwestern Virginia and one branch in central North Carolina.

On August 6, 2014, the Company entered into a Purchase and Assumption Agreement with CresCom Bank, Charleston, South Carolina, in which the Bank is selling thirteen branches to CresCom Bank. Ten of the branches are located in the southeastern, coastal region of North Carolina and three branches are located in South Carolina. At announcement, the thirteen branches had deposit totals of approximately $230 million and loan totals of approximately $59 million. The loans being sold are not subject to the Company’s loss share agreement with the Federal Deposit Insurance Corporation (“FDIC”) in connection with its purchase and assumption of Waccamaw Bank (“Waccamaw”). Subject to the satisfaction of customary closing conditions, the transaction is expected to close in the fourth quarter of 2014.

Earnings per Common Share

Earnings per Common Share

Basic earnings per common share is calculated by dividing net income available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted earnings per common share includes the dilutive effect of potential common stock that could be issued by the Company. In accordance with the treasury stock method of accounting, potential common stock could be issued for stock options, nonvested restricted stock awards, performance based stock awards, and convertible preferred stock. Diluted earnings per common share is calculated by dividing net income by the weighted average number of common shares outstanding for the period plus the number of dilutive potential common shares. The calculation of diluted earnings per common share excludes potential common shares that have an exercise price greater than the average market value of the Company’s common stock because the effect would be antidilutive.

The following table presents the calculation of basic and diluted earnings per common share for the periods indicated:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(Amounts in thousands, except share and per share data)	2014		2013		2014		2013
Net income	$	7,043	$	5,412	$	19,775	$	17,988
Dividends on preferred stock		228		261		683		772

Net income available to common shareholders	$	6,815	$	5,151	$	19,092	$	17,216

Weighted average number of common shares outstanding, basic		18,402,764		20,008,861		18,407,173		20,013,095
Dilutive effect of potential common shares from:
Stock options		17,375		19,877		18,027		17,640
Restricted stock		568		3,588		506		6,613
Convertible preferred stock		1,045,419		1,091,462		1,046,430		1,158,715

Weighted average number of common shares outstanding, diluted		19,466,126		21,123,788		19,472,136		21,196,063

Basic earnings per common share	$	0.37	$	0.26	$	1.04	$	0.86
Diluted earnings per common share		0.36		0.26		1.02		0.85
Antidilutive potential common shares:
Stock options		255,244		310,558		255,244		328,258
Restricted stock		—		76		—		26

Total potential antidilutive shares		255,244		310,634		255,244		328,284

The Company’s Series A Noncumulative Convertible Preferred Stock (“Series A Preferred Stock”) carries a 6% dividend rate. Each share of the Series A Preferred Stock is convertible into 69 shares of the Company’s common stock at any time. The Company may redeem the shares at face value and the shares mandatorily convert on May 20, 2016. The Series A Preferred Stock outstanding totaled 15,151 shares as of September 30, 2014, 15,251 shares as of December 31, 2013, and 15,471 shares as of September 30, 2013.

- Definition

Disclosure of accounting policy for computing basic and diluted earnings or loss per share for each class of common stock and participating security. Addresses all significant policy factors, including any antidilutive items that have been excluded from the computation and takes into account stock dividends, splits and reverse splits that occur after the balance sheet date of the latest reporting period but before the issuance of the financial statements.

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