7.	ALLOWANCE FOR LOAN AND LEASE LOSSES

Changes in the Allowance were as follows:

	Year Ended December 31,
	2011			2010			2009
	(Dollars in thousands)

Balance, beginning of year	$	192,854		$	205,279		$	119,878
Provision (credit) for loan and lease losses		(40,690	)		159,548			348,801
		152,164			364,827			468,679

Charge-offs		(41,543	)		(199,962	)		(265,708	)
Recoveries		11,472			27,989			2,308
Net charge-offs		(30,071	)		(171,973	)		(263,400	)

Balance, end of year	$	122,093		$	192,854		$	205,279

In accordance with GAAP, loans held for sale and other real estate assets are not included in our assessment of the Allowance.

The following table presents by class, the activity in the Allowance for the periods indicated:

	Commercial,			Real estate
	financial &						Mortgage -			Mortgage -
	agricultural			Construction			residential			commercial			Consumer			Leases			Unallocated			Total
	(Dollars in thousands)
Year Ended December 31, 2011
Beginning balance	$	13,426		$	76,556		$	31,830		$	64,308		$	3,155		$	1,579		$	2,000		$	192,854
Provision (credit) for loan
and lease losses		(6,720	)		(23,073	)		3,569			(15,664	)		214			(1,016	)		2,000			(40,690	)
		6,706			53,483			35,399			48,644			3,369			563			4,000			152,164
Charge-offs		(2,401	)		(31,371	)		(4,347	)		(1,298	)		(2,116	)		(10	)		-			(41,543	)
Recoveries		1,805			6,518			1,684			383			1,082			-			-			11,472
Net charge-offs		(596	)		(24,853	)		(2,663	)		(915	)		(1,034	)		(10	)		-			(30,071	)
Ending balance	$	6,110		$	28,630		$	32,736		$	47,729		$	2,335		$	553		$	4,000		$	122,093

Year Ended December 31, 2010
Beginning balance	$	11,026		$	114,256		$	23,930		$	44,308		$	4,555		$	1,079		$	6,125		$	205,279
Provision (credit) for loan
and lease losses		7,529			75,227			27,926			51,977			583			431			(4,125	)		159,548
		18,555			189,483			51,856			96,285			5,138			1,510			2,000			364,827
Charge-offs		(7,550	)		(126,829	)		(21,042	)		(41,280	)		(3,242	)		(19	)		-			(199,962	)
Recoveries		2,421			13,902			1,016			9,303			1,259			88			-			27,989
Net charge-offs		(5,129	)		(112,927	)		(20,026	)		(31,977	)		(1,983	)		69			-			(171,973	)
Ending balance	$	13,426		$	76,556		$	31,830		$	64,308		$	3,155		$	1,579		$	2,000		$	192,854

Changes in the allowance for loan and lease losses for impaired loans (included in the above amounts) were as follows:

	Year Ended December 31,
	2011			2010			2009
	(Dollars in thousands)

Balance, beginning of year	$	19,525		$	38,353		$	19,185
Provision for loan and lease losses		333			18,249			32,633
Other changes		(19,086	)		(37,077	)		(13,465	)
Balance, end of year	$	772		$	19,525		$	38,353

The amounts included in other changes above represent net charge-offs and net transfers of allocated allowances for loans and leases that were not classified as impaired for the entire year. At December 31, 2011 and 2010, all impaired loans were measured based on the fair value of the underlying collateral for collateral-dependent loans or at the loan's observable market price.

In determining the amount of our Allowance, we rely on an analysis of our loan portfolio, our experience and our evaluation of general economic conditions, as well as the requirements of the Bank MOU and other regulatory input. If our assumptions prove to be incorrect, our current Allowance may not be sufficient to cover future loan losses and we may experience significant increases to our Provision.