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Loans | 3 Months Ended
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Mar. 31, 2012
Loans [Abstract] |
Loans | Note 5 – Loans The composition of the loan portfolio, by class of loan, as of March 31, 2012 and December 31, 2011 was as follows:
| March 31, 2012 |  | December 31, 2011
| Loan balance | Accrued interest receivable | Recorded investment |  | Loan balance | Accrued interest receivable | Recorded investment
(In thousands) |  |  |  |  |  |  |
Commercial, financial and agricultural * | $752,392 | $3,439 | $755,831 |  | $743,797 | $3,121 | $746,918
Commercial real estate * | 1,088,348 | 3,795 | 1,092,143 |  | 1,108,574 | 4,235 | 1,112,809
Construction real estate: |  |  |  |  |  |  |
Vision/SE LLC commercial land and development * | 26,081 | 39 | 26,120 |  | 31,603 | 31 | 31,634
Remaining commercial | 148,922 | 425 | 149,347 |  | 156,053 | 394 | 156,447
Mortgage | 19,628 | 65 | 19,693 |  | 20,039 | 64 | 20,103
Installment | 9,184 | 44 | 9,228 |  | 9,851 | 61 | 9,912
Residential real estate |  |  |  |  |  |  |
Commercial | 392,552 | 1,120 | 393,672 |  | 395,824 | 1,105 | 396,929
Mortgage | 1,004,957 | 1,540 | 1,006,497 |  | 953,758 | 1,522 | 955,280
HELOC | 221,780 | 884 | 222,664 |  | 227,682 | 942 | 228,624
Installment | 48,410 | 217 | 48,627 |  | 51,354 | 236 | 51,590
Consumer | 610,180 | 2,580 | 612,760 |  | 616,505 | 2,930 | 619,435
Leases | 1,949 | 52 | 2,001 |  | 2,059 | 43 | 2,102
Total loans | $4,324,383 | $14,200 | $4,338,583 |  | $4,317,099 | $14,684 | $4,331,783
* Included within commercial, financial and agricultural loans, commercial real estate loans, and Vision/SE LLC commercial land and development loans is an immaterial amount of consumer loans that are not broken out by class. Credit Quality The following tables present the recorded investment in nonaccrual, accruing restructured, and loans past due 90 days or more and still accruing by class of loans as of March 31, 2012 and December 31, 2011:
| March 31, 2012
(In thousands) | Nonaccrual loans | Accruing restructured loans | Loans past due 90 days or more and accruing | Total nonperforming loans
Commercial, financial and agricultural | $36,164 | $4,100 | $12 | $40,276
Commercial real estate | 36,754 | 6,551 | - | 43,305
Construction real estate: |  |  |  |
SE LLC commercial land and development | 20,518 | - | - | 20,518
Remaining commercial | 14,724 | 17,949 | - | 32,673
Mortgage | 66 | - | - | 66
Installment | 182 | - | 16 | 198
Residential real estate: |  |  |  |
Commercial | 43,211 | 541 | - | 43,752
Mortgage | 26,374 | 5,421 | 1,523 | 33,318
HELOC | 2,043 | - | - | 2,043
Installment | 1,147 | 22 | 221 | 1,390
Consumer | 2,044 | - | 567 | 2,611
Leases | - | - | - | -
Total loans | $183,227 | $34,584 | $2,339 | $220,150
| December 31, 2011
(In thousands) | Nonaccrual loans | Accruing restructured loans | Loans past due 90 days or more and accruing | Total nonperforming loans
Commercial, financial and agricultural | $37,797 | $2,848 | $- | $40,645
Commercial real estate | 43,704 | 8,274 | - | 51,978
Construction real estate: |  |  |  |
Vision commercial land and development | 25,761 | - | - | 25,761
Remaining commercial | 14,021 | 11,891 | - | 25,912
Mortgage | 66 | - | - | 66
Installment | 30 | - | - | 30
Residential real estate: |  |  |  |
Commercial | 43,461 | 815 | - | 44,276
Mortgage | 25,201 | 4,757 | 2,610 | 32,568
HELOC | 1,412 | - | - | 1,412
Installment | 1,777 | 98 | 58 | 1,933
Consumer | 1,876 | - | 893 | 2,769
Leases | - | - | - | -
Total loans | $195,106 | $28,683 | $3,561 | $227,350
The following table provides additional information regarding those nonaccrual and accruing restructured loans that were individually evaluated for impairment and those collectively evaluated for impairment as of March 31, 2012 and December 31, 2011.
| March 31, 2012 |  | December 31, 2011
(In thousands) | Nonaccrual and accruing restructured loans | Loans individually evaluated for impairment | Loans collectively evaluated for impairment |  | Nonaccrual and accruing restructured loans | Loans individually evaluated for impairment | Loans collectively evaluated for impairment
Commercial, financial and agricultural | $40,264 | $40,241 | $23 |  | $40,645 | $40,621 | $24
Commercial real estate | 43,305 | 43,305 | - |  | 51,978 | 51,978 | -
Construction real estate: |  |  |  |  |  |  |
Vision/SE LLC commercial land and development | 20,518 | 19,433 | 1,085 |  | 25,761 | 24,328 | 1,433
Remaining commercial | 32,673 | 32,673 | - |  | 25,912 | 25,912 | -
Mortgage | 66 | - | 66 |  | 66 | - | 66
Installment | 182 | - | 182 |  | 30 | - | 30
Residential real estate: |  |  |  |  |  |  |
Commercial | 43,752 | 43,752 | - |  | 44,276 | 44,276 | -
Mortgage | 31,795 | - | 31,795 |  | 29,958 | - | 29,958
HELOC | 2,043 | - | 2,043 |  | 1,412 | - | 1,412
Installment | 1,169 | - | 1,169 |  | 1,875 | - | 1,875
Consumer | 2,044 | 20 | 2,024 |  | 1,876 | 20 | 1,856
Leases | - | - | - |  | - | - | -
Total loans | $217,811 | $179,424 | $38,387 |  | $223,789 | $187,135 | $36,654
All of the loans individually evaluated for impairment were evaluated using the fair value of the collateral or present value of expected future cash flows as the measurement method. The following table presents loans individually evaluated for impairment by class of loans as of March 31, 2012 and December 31, 2011.
| March 31, 2012 |  | December 31, 2011
| Unpaid principal balance | Recorded investment | Allowance for loan losses allocated |  | Unpaid principal balance | Recorded investment | Allowance for loan losses allocated
(in thousands) |  |  |
With no related allowance recorded |  |  |  |  |  |  |
Commercial, financial and agricultural | $33,769 | $26,956 | $- |  | $23,164 | $18,098 | $-
Commercial real estate | 55,974 | 35,236 | - |  | 58,242 | 41,506 | -
Construction real estate: |  |  |  |  |  |  |
Vision /SE LLC commercial land and development | 68,297 | 19,433 | - |  | 54,032 | 17,786 | -
Remaining commercial | 28,851 | 24,604 | - |  | 33,319 | 18,372 | -
Residential real estate: |  |  |  |  |  |  |
Commercial | 52,550 | 39,483 | - |  | 49,341 | 38,686 | -
Consumer | 20 | 20 | - |  | 20 | 20 | -
With an allowance recorded |  |  |  |  |  |  |
Commercial, financial and agricultural | 14,597 | 13,285 | 4,704 |  | 23,719 | 22,523 | 5,819
Commercial real estate | 9,831 | 8,069 | 1,506 |  | 12,183 | 10,472 | 4,431
Construction real estate: |  |  |  |  |  |  |
Vision/SE LLC commercial land and development | - | - | - |  | 20,775 | 6,542 | 1,540
Remaining commercial | 20,927 | 8,069 | 2,096 |  | 9,711 | 7,540 | 1,874
Residential real estate: |  |  |  |  |  |  |
Commercial | 5,642 | 4,269 | 1,199 |  | 6,402 | 5,590 | 2,271
Consumer | - | - | - |  | - | - | -
Total | $290,458 | $179,424 | $9,505 |  | $290,908 | $187,135 | $15,935
Management’s general practice is to proactively charge down loans individually evaluated for impairment to the fair value of the underlying collateral. At March 31, 2012 and December 31, 2011, there were $91.0 million and $83.7 million, respectively, of partial charge-offs on loans individually evaluated for impairment with no related allowance recorded and $17.3 million and $20.1 million, respectively, of partial charge-offs on loans individually evaluated for impairment that also had a specific reserve allocated. The allowance for loan losses included specific reserves related to loans individually evaluated for impairment at March 31, 2012 and December 31, 2011, of $9.5 million and $15.9 million, respectively, related to loans with a recorded investment of $33.7 million and $52.7 million. The following table presents the average recorded investment and interest income recognized on loans individually evaluated for impairment as of and for the three months ended March 31, 2012 and March 31, 2011:
| Three months ended March 31, 2012 | Three months ended March 31, 2011
(in thousands) | Recorded investment as of March 31, 2012 | Average recorded investment | Interest income recognized |  | Recorded investment as of March 31, 2011 | Average recorded investment | Interest income recognized
Commercial, financial and agricultural | $40,241 | $40,135 | $105 |  | $19,391 | $19,515 | $65 |
Commercial real estate | 43,305 | 48,214 | 207 |  | 53,259 | 55,076 | 70 |
Construction real estate: |  |  |  |  |  |  |  |
Vision/SE LLC commercial land and development | 19,433 | 21,974 | - |  | 82,060 | 84,272 | - |
Remaining commercial | 32,673 | 27,314 | 251 |  | 26,126 | 26,789 | 78 |
Residential real estate: |  |  |  |  |  |  |  |
Commercial | 43,752 | 43,276 | 40 |  | 58,123 | 59,465 | 139 |
Consumer | 20 | 20 | - |  | - | 22 | - |
Total | $179,424 | $180,933 | $603 |  | $238,959 | $245,139 | $352 |
The following tables present the aging of the recorded investment in past due loans as of March 31, 2012 and December 31, 2011 by class of loans.
| March 31, 2012 |
(in thousands) | Accruing loans past due 30-89 days | Past due nonaccrual loans and loans past due 90 days or more and accruing* | Total past due | Total current | Total recorded investment
Commercial, financial and agricultural | $3,935 | $28,225 | $32,160 | $723,671 | $755,831
Commercial real estate | 1,062 | 23,067 | 24,129 | 1,068,014 | 1,092,143
Construction real estate: |  |  |  |  |
SE LLC commercial land and development | 337 | 16,587 | 16,924 | 9,196 | 26,120
Remaining commercial | - | 7,702 | 7,702 | 141,645 | 149,347
Mortgage | 173 | - | 173 | 19,520 | 19,693
Installment | 61 | 75 | 136 | 9,092 | 9,228
Residential real estate: |  |  |  |  |
Commercial | 502 | 13,261 | 13,763 | 379,909 | 393,672
Mortgage | 13,174 | 18,840 | 32,014 | 974,483 | 1,006,497
HELOC | 331 | 297 | 628 | 222,036 | 222,664
Installment | 611 | 510 | 1,121 | 47,506 | 48,627
Consumer | 7,302 | 1,807 | 9,109 | 603,651 | 612,760
Leases | - | - | - | 2,001 | 2,001
Total loans | $27,488 | $110,371 | $137,859 | $4,200,724 | $4,338,583
* Includes $2.4 million of loans past due 90 days or more and accruing.
| December 31, 2011
(in thousands) | Accruing loans past due 30-89 days | Past due nonaccrual loans and loans past due 90 days or more and accruing* | Total past due | Total current | Total recorded investment
Commercial, financial and agricultural | $3,106 | $11,308 | $14,414 | $732,504 | $746,918
Commercial real estate | 2,632 | 21,798 | 24,430 | 1,088,379 | 1,112,809
Construction real estate: |  |  |  |  |
Vision commercial land and development | - | 19,235 | 19,235 | 12,399 | 31,634
Remaining commercial | 99 | 7,839 | 7,938 | 148,509 | 156,447
Mortgage | 76 | - | 76 | 20,027 | 20,103
Installment | 421 | 8 | 429 | 9,483 | 9,912
Residential real estate: |  |  |  |  |
Commercial | 1,545 | 10,097 | 11,642 | 385,287 | 396,929
Mortgage | 15,879 | 20,614 | 36,493 | 918,787 | 955,280
HELOC | 1,015 | 436 | 1,451 | 227,173 | 228,624
Installment | 1,549 | 1,136 | 2,685 | 48,905 | 51,590
Consumer | 11,195 | 2,192 | 13,387 | 606,048 | 619,435
Leases | - | - | - | 2,102 | 2,102
Total loans | $37,517 | $94,663 | $132,180 | $4,199,603 | $4,331,783
* Includes $3.6 million of loans past due 90 days or more and accruing. Credit Quality Indicators Management utilizes past due information as a credit quality indicator across the loan portfolio. The past due information is the primary credit quality indicator within the following classes of loans: (1) mortgage loans and installment loans in the construction real estate segment; (2) mortgage loans, HELOC and installment loans in the residential real estate segment; and (3) consumer loans. The primary credit indicator for commercial loans is based on an internal grading system that grades all commercial loans from 1 to 8. Credit grades are continuously monitored by the respective loan officer and adjustments are made when appropriate. A grade of 1 indicates little or no credit risk and a grade of 8 is considered a loss. Commercial loans with grades of 1 to 4 (pass-rated) are considered to be of acceptable credit risk. Commercial loans graded a 5 (special mention) are considered to be watch list credits and a higher loan loss reserve percentage is allocated to these loans. Loans classified as special mention have potential weaknesses that require management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date. Commercial loans graded 6 (substandard), also considered watch list credits, are considered to represent higher credit risk and, as a result, a higher loan loss reserve percentage is allocated to these loans. Loans classified as substandard are inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected. Commercial loans that are graded a 7 (doubtful) are shown as nonaccrual and Park generally charges these loans down to their fair value by taking a partial charge-off or recording a specific reserve. Loans classified as doubtful have all the weaknesses inherent in those classified as substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable. Any commercial loan graded an 8 (loss) is completely charged-off. The tables below present the recorded investment by loan grade at March 31, 2012 and December 31, 2011 for all commercial loans:
| March 31, 2012
(in thousands) | 5 Rated | 6 Rated | Impaired | Pass Rated | Recorded Investment
Commercial, financial and agricultural | $ 10,458 | $ 5,217 | $ 40,264 | $ 699,892 | $ 755,831
Commercial real estate | 30,257 | 10,798 | 43,305 | 1,007,783 | 1,092,143
Construction real estate: |  |  |  |  |
SE LLC commercial land and development | 2,801 | - | 20,518 | 2,801 | 26,120
Remaining commercial | 6,748 | 232 | 32,673 | 109,694 | 149,347
Residential real estate: |  |  |  |  |
Commercial | 16,793 | 1,469 | 43,752 | 331,658 | 393,672
Leases | - | - | - | 2,001 | 2,001
Total Commercial Loans | $ 67,057 | $ 17,716 | $ 180,512 | $ 2,153,829 | $ 2,419,114
| December 31, 2011
(in thousands) | 5 Rated | 6 Rated | Impaired | Pass Rated | Recorded Investment
Commercial, financial and agricultural | $ 11,785 | $ 7,628 | $ 40,645 | $ 686,860 | $ 746,918
Commercial real estate | 37,445 | 10,460 | 51,978 | 1,012,926 | 1,112,809
Construction real estate: |  |  |  |  |
Vision commercial land and development | 3,102 | - | 25,761 | 2,771 | 31,634
Remaining commercial | 6,982 | 8,311 | 25,912 | 115,242 | 156,447
Residential real estate: |  |  |  |  |
Commercial | 17,120 | 3,785 | 44,276 | 331,748 | 396,929
Leases | - | - | - | 2,102 | 2,102
Total Commercial Loans | $ 76,434 | $ 30,184 | $ 188,572 | $ 2,151,649 | $ 2,446,839
Troubled Debt Restructurings (TDRs) Management classifies loans as TDRs when a borrower is experiencing financial difficulties and Park has granted a concession. In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed of the probability that the borrower will be in payment default on any of its debt in the foreseeable future without the modification. This evaluation is performed under the Company’s internal underwriting policy. Management’s policy is to modify loans by extending the term or by granting a temporary or permanent contractual interest rate below the market rate, not by forgiving debt. Certain loans which were modified during the period ended March 31, 2012 did not meet the definition of a TDR as the modification was a delay in a payment that was considered to be insignificant. Management considers a forbearance period of up to three months or a delay in payment of up to 30 days to be insignificant. TDRs may be classified as accruing if the borrower has been current for a period of at least six months with respect to loan payments and management expects that the borrower will be able to continue to make payments in accordance with the terms of the restructured note. Management reviews all accruing TDRs quarterly to ensure payments continue to be made in accordance with the modified terms. At March 31, 2012 and December 31, 2011, there were $98.6 million and $100.4 million, respectively, of TDRs included in nonaccrual loan totals. As of March 31, 2012 and December 31, 2011, there were $34.6 million and $28.7 million, respectively, of TDRs included in accruing loan totals. At March 31, 2012 and December 31, 2011, $52.8 million and $79.9 million of the nonaccrual TDRs were current. Management will continue to review the restructured loans and may determine it appropriate to move certain of the loans back to accrual status in the future. At March 31, 2012 and December 31, 2011, Park had commitments to lend $5.1 million and $4.0 million, respectively, of additional funds to borrowers whose terms had been modified in a TDR. The specific reserve related to TDRs at March 31, 2012 and December 31, 2011 was $4.4 million and $9.1 million, respectively. Modifications made in 2011 and 2012 were largely the result of renewals, extending the maturity date of the loan, at terms consistent with the original note. These modifications were deemed to be TDRs primarily due to Park’s conclusion that the borrower would likely not have qualified for similar terms through another lender. Many of the modifications deemed to be TDRs were previously identified as impaired loans, and thus were also previously evaluated for impairment under ASC 310. Additional specific reserves of $252,000 were recorded during the period ending March 31, 2012 as a result of TDRs identified in the 2012 year. The terms of certain other loans were modified during the three month period ended March 31, 2012 that did not meet the definition of a TDR. Modified substandard commercial loans which did not meet the definition of a TDR had a total recorded investment as of March 31, 2012 of $3.6 million. The modification of these loans: (1) involved a modification of the terms of a loan to a borrower who was not experiencing financial difficulties, (2) resulted in a delay in a payment that was considered to be insignificant, or (3) resulted in Park obtaining additional collateral or guarantees that improved the likelihood of the ultimate collection of the loan such that the modification was deemed to be at market terms. Modified consumer loans which did not meet the definition of a TDR had a total recorded investment as of March 31, 2012 of $6.3 million. Many of these loans were modified as a lower cost option than a full refinancing to borrowers who were not experiencing financial difficulties. The following table details the number of contracts modified as TDRs during the three month period ended March 31, 2012 as well as the period end recorded investment of these contracts. The recorded investment pre- and post-modification is generally the same.
| Three months ended March 31, 2012 |  |
| Number of Contracts | Accruing | Nonaccrual |  | Total Recorded Investment |
(In thousands) |  |  |  |
Commercial, financial and agricultural | 5 | $ 1,289 |  | $ 750 | $ 2,039 |
Commercial real estate | 16 | 2,212 |  | 2,967 | 5,179 |
Construction real estate: |  |  |  |  |  |
SE LLC commercial land and development | 4 | - |  | 894 | 894 |
Remaining commercial | 9 | 8,641 |  | 1,565 | 10,206 |
Mortgage | - | - |  | - | - |
Installment | - | - |  | - | - |
Residential real estate: |  |  |  |  |  |
Commercial | 3 | - |  | 318 | 318 |
Mortgage | 9 | 111 |  | 1,170 | 1,281 |
HELOC | - | - |  | - | - |
Installment | - | - |  | - | - |
Consumer | 1 | - |  | 91 | 91 |
Leases | - | - |  |  | - |
Total loans | 47 | $ 12,253 | $7,755 | $ | $20,008 |
As of December 31, 2011, $6.2 million of those loans modified during the three month period ended March 31, 2012 were on nonaccrual status. The following table presents the recorded investment in financing receivables which were modified as troubled debt restructurings within the previous 12 months and for which there was a payment default during the three month period ended March 31, 2012. For this table, a loan is considered to be in default when it becomes 30 days contractually past due under the modified terms.
| Three months ended March 31, 2012
| Number of Contracts | Recorded Investment
(In thousands) |  |
Commercial, financial and agricultural | 15 | $8,469
Commercial real estate | 8 | 3,201
Construction real estate: |  |
SE LLC commercial land and development | 3 | 659
Remaining commercial | 8 | 4,155
Mortgage | - | -
Installment | - | -
Residential real estate: |  |
Commercial | 6 | 3,948
Mortgage | 5 | 684
HELOC | 1 | 48
Installment | - | -
Consumer | - | -
Leases | - | -
Total loans | 46 | $21,164
Of the $21.2 million in modified trouble debt restructurings which defaulted during the period ended March 31, 2012, $205,000 were accruing loans and $20.0 million were nonaccrual loans.

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