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Allowance For Loan Losses | 6 Months Ended
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Jun. 30, 2011
Allowance For Loan Losses |
Allowance For Loan Losses | Note 5 – Allowance for Loan Losses The allowance for loan losses is that amount management believes is adequate to absorb probable incurred credit losses in the loan portfolio based on management's evaluation of various factors including overall growth in the loan portfolio, an analysis of individual loans, prior and current loss experience, and current economic conditions. A provision for loan losses is charged to operations based on management's periodic evaluation of these and other pertinent factors as discussed within Note 1 of Park's 2010 Annual Report. The activity in the allowance for loan losses for the three and six months ended June 30, 2011 and June 30, 2010 is summarized. As noted below, management included a reallocation of the beginning allowance for credit losses balance, which primarily impacted the commercial loan segments of the loan portfolio. At December 31, 2010, management's allowance calculation was performed in the aggregate for all commercial loans and then allocated across each segment of the commercial loan portfolio on a pro rata basis. During the first quarter of 2011, management determined that it would be more appropriate to perform the allowance calculation at the segment level and has provided an adjusted beginning balance for the allowance for credit losses in the six months ended June 30, 2011 table below.
|  | Three months ended June 30, 2011 |
|  | Commercial, financial and agricultural |  |  | Commercial real estate |  |  | Construction real estate |  |  | Residential real estate |  |  | Consumer |  |  | Leases |  |  | Total |
(In thousands) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Allowance for credit losses |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance: |  | $ | 11,791 |  |  | $ | 22,574 |  |  | $ | 53,672 |  |  | $ | 31,553 |  |  | $ | 7,265 |  |  | $ | 4 |  |  | $ | 126,859 |
Charge-offs |  |  | 5,030 |  |  |  | 6,565 |  |  |  | 23,679 |  |  |  | 4,789 |  |  |  | 1,942 |  |  |  | - |  |  |  | 42,005 |
Recoveries |  |  | 327 |  |  |  | 22 |  |  |  | 117 |  |  |  | 390 |  |  |  | 577 |  |  |  | - |  |  |  | 1,433 |
Net Charge-offs |  |  | 4,703 |  |  |  | 6,543 |  |  |  | 23,562 |  |  |  | 4,399 |  |  |  | 1,365 |  |  |  | - |  |  |  | 40,572 |
Provision |  |  | 5,519 |  |  |  | 6,439 |  |  |  | 5,170 |  |  |  | 4,951 |  |  |  | 1,821 |  |  |  | - |  |  |  | 23,900 |
Ending balance |  | $ | 12,607 |  |  | $ | 22,470 |  |  | $ | 35,280 |  |  | $ | 32,105 |  |  | $ | 7,721 |  |  | $ | 4 |  |  | $ | 110,187 |
|  | Six months ended June 30, 2011 |
|  | Commercial, financial and agricultural |  |  | Commercial real estate |  |  | Construction real estate |  |  | Residential real estate |  |  | Consumer |  |  | Leases |  |  | Total |
(In thousands) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Allowance for credit losses |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance: |  | $ | 13,584 |  |  | $ | 28,515 |  |  | $ | 46,194 |  |  | $ | 25,845 |  |  | $ | 7,228 |  |  | $ | 31 |  |  | $ | 121,397 |
Reallocation of allowance |  |  | (1,888 | ) |  |  | (6,604 | ) |  |  | 5,759 |  |  |  | 2,948 |  |  |  | (189 | ) |  |  | (26 | ) |  |  | - |
Adjusted beginning balance: |  |  | 11,696 |  |  |  | 21,911 |  |  |  | 51,953 |  |  |  | 28,793 |  |  |  | 7,039 |  |  |  | 5 |  |  |  | 121,397 |
Charge-offs |  |  | 5,764 |  |  |  | 8,350 |  |  |  | 27,099 |  |  |  | 7,276 |  |  |  | 3,915 |  |  |  | - |  |  |  | 52,404 |
Recoveries |  |  | 896 |  |  |  | 824 |  |  |  | 213 |  |  |  | 891 |  |  |  | 967 |  |  |  | 3 |  |  |  | 3,794 |
Net Charge-offs |  |  | 4,868 |  |  |  | 7,526 |  |  |  | 26,886 |  |  |  | 6,385 |  |  |  | 2,948 |  |  |  | (3 | ) |  |  | 48,610 |
Provision |  |  | 5,779 |  |  |  | 8,085 |  |  |  | 10,213 |  |  |  | 9,697 |  |  |  | 3,630 |  |  |  | (4 | ) |  |  | 37,400 |
Ending balance |  | $ | 12,607 |  |  | $ | 22,470 |  |  | $ | 35,280 |  |  | $ | 32,105 |  |  | $ | 7,721 |  |  | $ | 4 |  |  | $ | 110,187 |
The activity in the allowance for loan losses for the three and six months ended June 30, 2010 is summarized as follows:
(In thousands) |  | Three months ended June 30, 2010 |  |  | Six months ended June 30, 2010 |
Allowance for credit losses |  |  |  |  |  |
Beginning balance: |  | $ | 119,674 |  |  | $ | 116,717 |
Charge-offs |  |  | 13,273 |  |  |  | 28,851 |
Recoveries |  |  | 1,025 |  |  |  | 3,010 |
Net Charge-offs |  |  | 12,248 |  |  |  | 25,841 |
Provision |  |  | 13,250 |  |  |  | 29,800 |
Ending balance |  | $ | 120,676 |  |  | $ | 120,676 |
The composition of the allowance for loan losses at June 30, 2011 and December 31, 2010 was as follows:
|  | June 30, 2011 |
|  | Commercial, financial and agricultural |  |  | Commercial real estate |  |  | Construction real estate |  |  | Residential real estate |  |  | Consumer |  |  | Leases |  |  | Total |
(In thousands) |  |  |
Allowance for loan losses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Ending allowance balance attributed to loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Individually evaluated for impairment |  | $ | 3,265 |  |  | $ | 9,213 |  |  | $ | 15,372 |  |  | $ | 4,960 |  |  | $ | - |  |  | $ | - |  |  | $ | 32,810 |
Collectively evaluated for impairment |  |  | 9,342 |  |  |  | 13,257 |  |  |  | 19,908 |  |  |  | 27,145 |  |  |  | 7,721 |  |  |  | 4 |  |  |  | 77,377 |
Total ending allowance balance |  | $ | 12,607 |  |  | $ | 22,470 |  |  | $ | 35,280 |  |  | $ | 32,105 |  |  | $ | 7,721 |  |  | $ | 4 |  |  | $ | 110,187 |
Loan Balance: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Loans individually evaluated for impairment |  | $ | 24,008 |  |  | $ | 47,243 |  |  | $ | 80,532 |  |  | $ | 48,594 |  |  | $ | 23 |  |  | $ | - |  |  | $ | 200,400 |
Loans collectively evaluated for impairment |  |  | 731,785 |  |  |  | 1,210,049 |  |  |  | 249,800 |  |  |  | 1,664,974 |  |  |  | 651,227 |  |  |  | 2,278 |  |  |  | 4,510,113 |
Total ending loan balance |  | $ | 755,793 |  |  | $ | 1,257,292 |  |  | $ | 330,332 |  |  | $ | 1,713,568 |  |  | $ | 651,250 |  |  | $ | 2,278 |  |  | $ | 4,710,513 |
Allowance for loan losses as a percentage of loan balance: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Loans individually evaluated for impairment |  |  | 13.60 | % |  |  | 19.50 | % |  |  | 19.09 | % |  |  | 10.21 | % |  |  | - |  |  |  | - |  |  |  | 16.37 | %
Loans collectively evaluated for impairment |  |  | 1.28 | % |  |  | 1.10 | % |  |  | 7.97 | % |  |  | 1.63 | % |  |  | 1.19 | % |  |  | 0.18 | % |  |  | 1.72 | %
Total ending loan balance |  |  | 1.67 | % |  |  | 1.79 | % |  |  | 10.68 | % |  |  | 1.87 | % |  |  | 1.19 | % |  |  | 0.18 | % |  |  | 2.34 | %
Recorded Investment: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Loans individually evaluated for impairment |  | $ | 24,008 |  |  | $ | 47,243 |  |  | $ | 80,532 |  |  | $ | 48,594 |  |  | $ | 23 |  |  | $ | - |  |  | $ | 200,400 |
Loans collectively evaluated for impairment |  |  | 734,411 |  |  |  | 1,214,824 |  |  |  | 250,631 |  |  |  | 1,669,284 |  |  |  | 654,165 |  |  |  | 2,312 |  |  |  | 4,525,627 |
Total ending loan balance |  | $ | 758,419 |  |  | $ | 1,262,067 |  |  | $ | 331,163 |  |  | $ | 1,717,878 |  |  | $ | 654,188 |  |  | $ | 2,312 |  |  | $ | 4,726,027 |
|  | December 31, 2010 |
|  | Commercial, financial and agricultural |  |  | Commercial real estate |  |  | Construction real estate |  |  | Residential real estate |  |  | Consumer |  |  | Leases |  |  | Total |
(In thousands) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Allowance for loan losses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Ending allowance balance attributed to loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Individually evaluated for impairment |  | $ | 3,028 |  |  | $ | 10,001 |  |  | $ | 26,387 |  |  | $ | 4,043 |  |  | $ | - |  |  | $ | - |  |  | $ | 43,459 |
Collectively evaluated for impairment |  |  | 10,556 |  |  |  | 18,514 |  |  |  | 19,807 |  |  |  | 21,802 |  |  |  | 7,228 |  |  |  | 31 |  |  |  | 77,938 |
Total ending allowance balance |  | $ | 13,584 |  |  | $ | 28,515 |  |  | $ | 46,194 |  |  | $ | 25,845 |  |  | $ | 7,228 |  |  | $ | 31 |  |  | $ | 121,397 |
Reallocated allowance for loan losses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Ending allowance balance attributed to loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Individually evaluated for impairment |  | $ | 3,028 |  |  | $ | 10,001 |  |  | $ | 26,387 |  |  | $ | 4,043 |  |  | $ | - |  |  | $ | - |  |  | $ | 43,459 |
Collectively evaluated for impairment |  |  | 8,668 |  |  |  | 11,910 |  |  |  | 25,566 |  |  |  | 24,750 |  |  |  | 7,039 |  |  |  | 5 |  |  |  | 77,938 |
Total ending allowance balance |  | $ | 11,696 |  |  | $ | 21,911 |  |  | $ | 51,953 |  |  | $ | 28,793 |  |  | $ | 7,039 |  |  | $ | 5 |  |  | $ | 121,397 |
Loan Balance: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Loans individually evaluated for impairment |  | $ | 19,205 |  |  | $ | 57,930 |  |  | $ | 113,571 |  |  | $ | 60,227 |  |  | $ | - |  |  | $ | - |  |  | $ | 250,933 |
Loans collectively evaluated for impairment |  |  | 718,697 |  |  |  | 1,168,686 |  |  |  | 292,909 |  |  |  | 1,631,982 |  |  |  | 666,871 |  |  |  | 2,607 |  |  |  | 4,481,752 |
Total ending loan balance |  | $ | 737,902 |  |  | $ | 1,226,616 |  |  | $ | 406,480 |  |  | $ | 1,692,209 |  |  | $ | 666,871 |  |  | $ | 2,607 |  |  | $ | 4,732,685 |
Reallocated allowance for loan losses as a percentage of loan balance: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Loans individually evaluated for impairment |  |  | 15.77 | % |  |  | 17.26 | % |  |  | 23.23 | % |  |  | 6.71 | % |  |  | - |  |  |  | - |  |  |  | 17.32 | %
Loans collectively evaluated for impairment |  |  | 1.21 | % |  |  | 1.02 | % |  |  | 8.73 | % |  |  | 1.52 | % |  |  | 1.06 | % |  |  | 0.19 | % |  |  | 1.74 | %
Total ending loan balance |  |  | 1.59 | % |  |  | 1.79 | % |  |  | 12.78 | % |  |  | 1.70 | % |  |  | 1.06 | % |  |  | 0.19 | % |  |  | 2.57 | %
Recorded Investment: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Loans individually evaluated for impairment |  | $ | 19,205 |  |  | $ | 57,930 |  |  | $ | 113,571 |  |  | $ | 60,227 |  |  | $ | - |  |  | $ | - |  |  | $ | 250,933 |
Loans collectively evaluated for impairment |  |  | 721,583 |  |  |  | 1,173,490 |  |  |  | 293,962 |  |  |  | 1,637,443 |  |  |  | 670,116 |  |  |  | 2,663 |  |  |  | 4,499,257 |
Total ending loan balance |  | $ | 740,788 |  |  | $ | 1,231,420 |  |  | $ | 407,533 |  |  | $ | 1,697,670 |  |  | $ | 670,116 |  |  | $ | 2,663 |  |  | $ | 4,750,190 |
Loans collectively evaluated for impairment above include all performing loans at June 30, 2011 and December 31, 2010, as well as nonperforming loans internally classified as consumer loans. Nonperforming consumer loans are not typically individually evaluated for impairment, but receive a portion of the statistical allocation of the allowance for loan losses. Loans individually evaluated for impairment include all impaired loans internally classified as commercial loans at June 30, 2011 and December 31, 2010, which are evaluated for impairment in accordance with GAAP (see Note 1 of Park's 2010 Annual Report).

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