RESTATEMENT OF CONSOLIDATED FINANCIAL STATEMENTS

Background of the Restatement

In January 2012, while converting to a new system designed to address the complex accounting requirements of acquired loans under Accounting Standards Codification ("ASC") Topic 310-30, “Loans and Debt Securities Acquired with Deteriorated Credit Quality”, the Company discovered an error in its process used to record income on these loans. ASC 310-30 is utilized to account for the loans acquired by the Company under loss sharing agreements with the Federal Deposit Insurance Corporation (the “FDIC”). Under ASC 310-30, these acquired loans are initially recorded at fair value (as determined by the present value of expected future cash flows) with no valuation allowance. The difference between the undiscounted cash flows expected at acquisition and the investment in the loans, or the "accretable yield", is recognized as interest income on a level-yield method over the life of the loans. In accounting for income from the acquired loans, the Company recorded both the accretable yield and contractually required interest payments. The Company should not have recognized the contractually required interest payments. As a result, both interest income and the carrying value of the acquired loans were overstated. This affected income reported on the loans acquired in FDIC assisted transactions since December 2009.

Adjustments

In addition to the adjustments relating to the acquired loan contractual interest described above, the Company has corrected other errors that had been previously identified but not corrected because they were not material, individually or in the aggregate, to the consolidated financial results. These items included changes in accrual estimates and financial statement reclassifications.

The following table presents the impact of the Restatement on the Company's previously issued audited Consolidated Statement of Operations and Consolidated Statement of Cash Flows for the year ended December 31, 2010 and its Consolidated Balance Sheet at December 31, 2010.



	At or for the Year ended December 31, 2010
(in thousands, except per share data)	As Previously Reported			Restatement Adjustments			Other Adjustments			As Restated
Consolidated Statement of Operations
Interest income:
Interest and fees on loans	$	114,041		$	(5,141	)	$	(500	)	$	108,400
Total interest income	122,035			(5,141		)	(500		)	116,394
Total interest expenses	32,411			—			—			32,411
Net interest income	89,624			(5,141		)	(500		)	83,983
Provision for loan losses	33,735			—			—			33,735
Net interest income after provision for loan losses	55,889			(5,141		)	(500		)	50,248
Noninterest income:
Wealth Management revenue	6,414			—			—			6,414
Miscellaneous income	1,763			—			—			1,763
Total noninterest income	18,360			—			—			18,360
Noninterest expense:
Employee compensation and benefits	28,513			(196		)	—			28,317
Other	12,128			—			(500		)	11,628
Total noninterest expense	62,908			(196		)	(500		)	62,212
Income before income tax	11,341			(4,945		)	—			6,396
Income tax expense (benefit)	2,221			(1,313		)	(85		)	823
Net income (loss)	9,120			(3,632		)	85			5,573
Net income (loss) available to common shareholders	6,653			(3,632		)	85			3,106

Basic earnings (loss) per share	$	0.45		$	(0.24	)	$	—		$	0.21
Diluted earnings (loss) per share	0.45			(0.24		)	—			0.21

Consolidated Balance Sheet
Portfolio loans covered under FDIC loss share at fair value	$	126,711		$	(5,141	)	$	—		$	121,570
Portfolio loans, net	1,850,303			(5,141		)	—			1,845,162
FDIC loss share receivable	88,292			—			(500		)	87,792
Total assets	2,805,840			(5,141		)	(500		)	2,800,199
Other liabilities	11,569			(1,594		)	(500		)	9,475
Total liabilities	2,622,492			(1,594		)	(500		)	2,620,398
Retained earnings	19,322			(3,547		)	—			15,775
Total shareholders' equity	183,348			(3,632		)	85			179,801
Total liabilities and shareholders' equity	2,805,840			(5,141		)	(500		)	2,800,199

Consolidated Statement of Cash Flows
Net income (loss)	$	9,120		$	(3,632	)	$	85		$	5,573
Net accretion of loan discount and indemnification asset	(10,793		)	5,141			—			(5,652		)
Other, net	3,213			(1,594		)	—			1,619

The following tables present the impact of the Restatement on the unaudited quarterly financial information for each quarter in 2011.



	For the Three months ended
	March 31, 2011
(in thousands, except per share data)	As Previously Reported		Restatement Adjustments			Other Adjustments			As Restated
Consolidated Statement of Operations
Interest income:
Interest and fees on loans	$	31,661	$	(4,030	)	$	—		$	27,631
Total interest income	34,563		(4,030		)	—			30,533
Total interest expenses	7,825		—			—			7,825
Net interest income	26,738		(4,030		)	—			22,708
Provision for loan losses	3,600		—			—			3,600
Net interest income after provision for loan losses	23,138		(4,030		)	—			19,108
Total Noninterest income	4,963		—			—			4,963
Noninterest expense:
Other	3,000		—			500			3,500
Total noninterest expense	17,465		—			500			17,965
Income before income tax	10,636		(4,030		)	(500		)	6,106
Income tax expense	3,557		(1,316		)	(247		)	1,994
Net income	7,079		(2,714		)	(253		)	4,112
Net income available to common shareholders	6,453		(2,714		)	(253		)	3,486
Net income available to common shareholders and assumed conversions	6,824		(3,085		)	(253		)	3,486

Basic earnings per share	$	0.43	$	(0.18	)	$	(0.02	)	$	0.23
Diluted earnings per share	0.42		(0.18		)	(0.01		)	0.23



	For the Three months ended
	June 30, 2011
(in thousands, except per share data)	As Previously Reported		Restatement Adjustments			Other Adjustments			As Restated
Consolidated Statement of Operations
Interest income:
Interest and fees on loans	$	36,420	$	(3,163	)	$	1,694		$	34,951
Total interest income	40,028		(3,163		)	1,694			38,559
Total interest expenses	7,555		—			—			7,555
Net interest income	32,473		(3,163		)	1,694			31,004
Provision for loan losses	4,575		—			—			4,575
Net interest income after provision for loan losses	27,898		(3,163		)	1,694			26,429
Noninterest income:
Miscellaneous income	351		—			(908		)	(557		)
Total noninterest income	5,126		—			(908		)	4,218
Noninterest expense:
Other	3,195		—			—			3,195
Total noninterest expense	18,024		—			—			18,024
Income before income tax	15,000		(3,163		)	786			12,623
Income tax expense	5,118		(1,090		)	322			4,350
Net income	9,882		(2,073		)	464			8,273
Net income available to common shareholders	9,252		(2,073		)	464			7,643
Net income available to common shareholders and assumed conversions	9,623		(2,073		)	464			8,014

Basic earnings per share	$	0.54	$	(0.12	)	$	0.03		$	0.45
Diluted earnings per share	0.52		(0.11		)	0.02			0.43



	For the Three months ended
	September 30, 2011
(in thousands, except per share data)	As Previously Reported		Restatement Adjustments			Other Adjustments			As Restated
Consolidated Statement of Operations
Interest income:
Interest and fees on loans	$	36,748	$	(4,522	)	$	(1,243	)	$	30,983
Total interest income	40,050		(4,522		)	(1,243		)	34,285
Total interest expenses	7,658		—			(142		)	7,516
Net interest income	32,392		(4,522		)	(1,101		)	26,769
Provision for loan losses	5,557		2,515			—			8,072
Net interest income after provision for loan losses	26,835		(7,037		)	(1,101		)	18,697
Noninterest income:
Miscellaneous income	281		1,287			877			2,445
Total noninterest income	6,562		1,287			877			8,726
Noninterest expense:
Total noninterest expense	18,302		—			—			18,302
Income before income tax	15,095		(5,750		)	(224		)	9,121
Income tax expense	5,394		(2,073		)	(32		)	3,289
Net income	9,701		(3,677		)	(192		)	5,832
Net income available to common shareholders	9,069		(3,677		)	(192		)	5,200
Net income available to common shareholders and assumed conversions	9,440		(3,677		)	(192		)	5,571

Basic earnings per share	$	0.51	$	(0.21	)	$	(0.01	)	$	0.29
Diluted earnings per share	0.49		(0.19		)	(0.01		)	0.29