2. Discontinued Operations

The results of operations of a component of an entity that has been disposed of shall be reported in discontinued operations if both the operations and cash flows of the component have been, or will be, eliminated from ongoing operations of the entity as a result of the disposal transaction and the entity will not have any significant continuing involvement in the operations of the component after the disposal transaction.

All operations at Dover have been discontinued. Dover, acquired by FNB United in 2003, originated, underwrote and closed mortgage loans for sale into the secondary market. It maintained a retail origination network based in Charlotte, North Carolina, which originated loans for properties located in North Carolina. Dover also engaged in the wholesale mortgage origination business and conducted retail mortgage origination business outside of North Carolina. Operations outside of the State of North Carolina were discontinued in February 2011. On March 17, 2011, Dover discontinued all of its remaining operations.

In determining whether Dover met the conditions for a discontinued operation, the Company considered the relevant accounting guidance and concluded that the conditions were met during the first quarter 2011. The Company determined that Dover has discontinued operating activities and, as such, the assets and liabilities of Dover are presented as discontinued assets and discontinued liabilities and the results of operations directly related to Dover's activity will be presented as discontinued operations for all periods. As a result, the Consolidated Balance Sheets and Statements of Operations for all periods reflect retrospective application of Dover's classification as a discontinued operation.

Assets and liabilities of discontinued operations at the dates indicated were as follows:


(dollars in thousands)	June 30, 2011		December 31, 2010
Assets
Loans held for sale	$	549	$	37,079
Premises and equipment, net		31		169
Other real estate owned		—		168
Other assets		14		1,673

Assets of discontinued operations	$	594	$	39,089

Liabilities
Other liabilities	$	1,202	$	1,901

Liabilities of discontinued operations	$	1,202	$	1,901

Losses from discontinued operations, net of tax, for the three and six months ended June 30, 2011 and 2010 were as follows:


(dollars in thousands)	For the Three Months Period Ending June 30,						For the Six Months Period Ending June 30,
(dollars in thousands)	2011			2010			2011			2010
Interest Income
Interest and fees on loans	$	13		$	110		$	56		$	413

Total interest income		13			110			56			413

Interest Expense
Other borrowed funds		—			—			—			—

Total interest expense		—			—			—			—

Net Interest Income before Provision for Loan Losses		13			110			56			413
Provision for loan losses		—			193			—			193

Net Interest Income/(Loss) after Provision for Loan Losses		13			(83	)		56			220

Noninterest Income
Mortgage loan (loss)/income		(113	)		692			(165	)		1,621
Other service charges, commissions and fees, net		(2	)		(16	)		(11	)		(15	)
Other income		—			1			10			2

Total noninterest (loss)/income		(115	)		677			(166	)		1,608

Noninterest Expense
Personnel expense		490			1,083			1,443			2,205
Net occupancy expense		142			63			211			123
Furniture, equipment and data processing expense		94			70			171			144
Professional fees		80			38			177			118
Stationery, printing and supplies		3			8			8			18
Advertising and marketing		(6	)		28			28			63
Other real estate owned expense		45			—			166			—
Provision for recourse loans		1,146			27			3,324			142
Other expense		106			(232	)		257			(460	)

Total noninterest expense		2,100			1,085			5,785			2,353

Loss before income taxes		(2,202	)		(491	)		(5,895	)		(525	)
Income tax benefit		(213	)		(193	)		(213	)		(206	)

Net Loss from Discontinued Operations, net of tax	$	(1,989	)	$	(298	)	$	(5,682	)	$	(319	)

As a result of the decision to discontinue operations at Dover, the Company reduced its employees from 68 positions at December 31, 2010 to one position as of June 30, 2011. Dover has one full-time equivalent employee remaining at June 30, 2011, who will continue to be employed by Dover as long as needed to assist Dover in completing any remaining business transactions. Dover concluded substantially all of its remaining business at June 30, 2011.

All financial information in the consolidated financial statements and notes to the consolidated financial statements reflects continuing operations, unless otherwise noted.