LOANS AND ALLOWANCE FOR LOAN LOSSES

3 Months Ended

Mar. 31, 2012

Receivables [Abstract]

Loans, Notes, Trade and Other Receivables Disclosure [Text Block]

NOTE 4–LOANS AND ALLOWANCE FOR LOAN LOSSES

The following table summarizes the composition of the loan portfolio at March 31, 2012 and December 31, 2011:

	March 31,			December 31,
	2012			2011
	(dollars expressed in thousands)
Commercial, financial and agricultural	$	686,597		725,130
Real estate construction and development		228,206		249,987
Real estate mortgage:
One-to-four-family residential		895,347		902,438
Multi-family residential		123,071		127,356
Commercial real estate		1,155,758		1,225,538
Consumer and installment		19,984		23,333
Loans held for sale		48,074		31,111
Net deferred loan fees		(912	)	(942	)
Loans, net of net deferred loan fees	$	3,156,125		3,283,951

Aging of Loans. The following table presents the aging of loans by loan classification at March 31, 2012 and December 31, 2011:

								Recorded
								Investment
	30-59		60-89	90 Days and	Total Past			> 90 Days
	Days		Days	Over	Due	Current	Total Loans	Accruing
	(dollars expressed in thousands)
March 31, 2012:
Commercial, financial and
agricultural	$	1,858	331	41,006	43,195	643,402	686,597	76
Real estate construction and
development		2,531	164	56,973	59,668	168,538	228,206	—
One-to-four-family residential:
Bank portfolio		2,661	1,133	13,228	17,022	140,135	157,157	331
Mortgage Division portfolio		5,833	2,469	16,249	24,551	348,167	372,718	—
Home equity		4,167	618	8,359	13,144	352,328	365,472	327
Multi-family residential		105	—	5,595	5,700	117,371	123,071	—
Commercial real estate		4,681	2,971	44,606	52,258	1,103,500	1,155,758	314
Consumer and installment		185	53	154	392	18,680	19,072	—
Loans held for sale		—	—	—	—	48,074	48,074	—
Total	$	22,021	7,739	186,170	215,930	2,940,195	3,156,125	1,048
December 31, 2011:
Commercial, financial and
agricultural	$	1,602	2,085	56,435	60,122	665,008	725,130	1,095
Real estate construction and
development		170	3,033	71,244	74,447	175,540	249,987	—
One-to-four-family residential:
Bank portfolio		4,506	2,577	15,052	22,135	143,443	165,578	362
Mortgage Division portfolio		5,994	1,571	16,778	24,343	342,572	366,915	—
Home equity		3,990	2,151	7,796	13,937	356,008	369,945	856
Multi-family residential		—	118	7,975	8,093	119,263	127,356	—
Commercial real estate		3,888	7,092	47,689	58,669	1,166,869	1,225,538	427
Consumer and installment		396	192	26	614	21,777	22,391	4
Loans held for sale		—	—	—	—	31,111	31,111	—
Total	$	20,546	18,819	222,995	262,360	3,021,591	3,283,951	2,744

Under the Company’s loan policy, loans are placed on nonaccrual status once principal or interest payments become 90 days past due. However, individual loan officers may submit written requests for approval to continue the accrual of interest on loans that become 90 days past due. These requests may be submitted for approval consistent with the authority levels provided in the Company’s credit approval policies, and they are only granted if an expected near term future event, such as a pending renewal or expected payoff, exists at the time the loan becomes 90 days past due. If the expected near term future event does not occur as anticipated, the loan is then placed on nonaccrual status. At March 31, 2012 and December 31, 2011, the Company had $1.0 million and $2.7 million, respectively, of loans past due 90 days or more and still accruing interest.

Credit Quality Indicators. The Company’s credit management policies and procedures focus on identifying, measuring and controlling credit exposure. These procedures employ a lender-initiated system of rating credits, which is ratified in the loan approval process and subsequently tested in internal credit reviews, external audits and regulatory bank examinations. The system requires the rating of all loans at the time they are originated or acquired, except for homogeneous categories of loans, such as residential real estate mortgage loans and consumer loans. These homogeneous loans are assigned an initial rating based on the Company’s experience with each type of loan. The Company adjusts the ratings of the homogeneous loans based on payment experience subsequent to their origination.

The Company includes adversely rated credits, including loans requiring close monitoring that would not normally be considered classified credits by the Company’s regulators, on its monthly loan watch list. Loans may be added to the Company’s watch list for reasons that are temporary and correctable, such as the absence of current financial statements of the borrower or a deficiency in loan documentation. Loans may also be added to the Company’s watch list whenever any adverse circumstance is detected which might affect the borrower’s ability to comply with the contractual terms of the loan. The delinquency of a scheduled loan payment, deterioration in the borrower’s financial condition identified in a review of periodic financial statements, a decrease in the value of the collateral securing the loan, or a change in the economic environment within which the borrower operates could initiate the addition of a loan to the Company’s watch list. Loans on the Company’s watch list require periodic detailed loan status reports prepared by the responsible officer which are discussed in formal meetings with credit review and credit administration staff members. Upgrades and downgrades of loan risk ratings may be initiated by the responsible loan officer. However, upgrades of risk ratings associated with significant credit relationships and/or problem credit relationships may only be made with the concurrence of appropriate regional or senior regional credit officers.

Under the Company’s risk rating system, special mention loans are those loans that do not currently expose the Company to sufficient risk to warrant classification as substandard, troubled debt restructuring (TDR) or nonaccrual, but possess weaknesses that deserve management’s close attention. Substandard loans include those loans characterized by the distinct possibility that the Company will sustain some loss if the deficiencies are not corrected. A loan is classified as a TDR when a borrower is experiencing financial difficulties that lead to the restructuring of a loan, and the Company grants concessions to the borrower in the restructuring that it would not otherwise consider. Loans classified as TDRs which are accruing interest are classified as performing TDRs. Loans classified as TDRs which are not accruing interest are classified as nonperforming TDRs and included with all other nonaccrual loans for presentation purposes. Loans classified as nonaccrual have all the weaknesses inherent in those loans classified as substandard with the added characteristic that the weaknesses present make collection or liquidation in full, on the basis of the currently existing facts, conditions and values, highly questionable and improbable. Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be pass-rated loans.

The following table presents the credit exposure of the commercial loan portfolio by internally assigned credit grade as of March 31, 2012 and December 31, 2011:

			Real Estate
			Construction
	Commercial		and		Commercial
	and Industrial		Development	Multi-family	Real Estate	Total
	(dollars expressed in thousands)
March 31, 2012:
Pass	$	589,755	55,655	66,723	928,129	1,640,262
Special mention		24,374	11,192	18,411	112,188	166,165
Substandard		27,081	92,374	29,198	41,700	190,353
Performing troubled debt restructuring		4,457	12,012	3,144	29,449	49,062
Nonaccrual		40,930	56,973	5,595	44,292	147,790
	$	686,597	228,206	123,071	1,155,758	2,193,632
December 31, 2011:
Pass	$	606,933	57,594	68,748	973,553	1,706,828
Special mention		25,742	11,977	18,678	119,478	175,875
Substandard		32,851	97,158	28,789	60,876	219,674
Performing troubled debt restructuring		4,264	12,014	3,166	24,369	43,813
Nonaccrual		55,340	71,244	7,975	47,262	181,821
	$	725,130	249,987	127,356	1,225,538	2,328,011

The following table presents the credit exposure of the one-to-four-family residential mortgage Bank portfolio and home equity portfolio by internally assigned credit grade as of March 31, 2012 and December 31, 2011:

	Bank		Home
	Portfolio		Equity	Total
	(dollars expressed in thousands)
March 31, 2012:
Pass	$	125,622	353,763	479,385
Special mention		12,560	427	12,987
Substandard		6,078	3,250	9,328
Nonaccrual		12,897	8,032	20,929
	$	157,157	365,472	522,629
December 31, 2011:
Pass	$	131,973	358,801	490,774
Special mention		12,797	954	13,751
Substandard		6,118	3,250	9,368
Nonaccrual		14,690	6,940	21,630
	$	165,578	369,945	535,523

The following table presents the credit exposure of the one-to-four-family residential Mortgage Division portfolio and consumer and installment portfolio by payment activity as of March 31, 2012 and December 31, 2011:

	Mortgage		Consumer
	Division		and
	Portfolio		Installment	Total
	(dollars expressed in thousands)
March 31, 2012:
Pass	$	268,154	18,918	287,072
Substandard		5,846	—	5,846
Performing troubled debt restructuring		82,469	—	82,469
Nonaccrual		16,249	154	16,403
	$	372,718	19,072	391,790
December 31, 2011:
Pass	$	263,079	22,369	285,448
Substandard		4,429	—	4,429
Performing troubled debt restructuring		82,629	—	82,629
Nonaccrual		16,778	22	16,800
	$	366,915	22,391	389,306

Impaired Loans. Loans deemed to be impaired include performing TDRs and nonaccrual loans. Impaired loans with outstanding balances equal to or greater than $500,000 are evaluated individually for impairment. For these loans, the Company measures the level of impairment based on the present value of the estimated projected cash flows or the estimated value of the collateral. If the current valuation is lower than the current book balance of the loan, the negative difference is evaluated for possible charge-off. In instances where management determines that a charge-off is not appropriate, a specific reserve is established for the individual loan in question. This specific reserve is included as a part of the overall allowance for loan losses.

The following tables present the recorded investment, unpaid principal balance, related allowance for loan losses, average recorded investment and interest income recognized while on impaired status for impaired loans without a related allowance for loan losses and for impaired loans with a related allowance for loan losses by loan classification at March 31, 2012 and December 31, 2011:

			Unpaid	Related	Average	Interest
	Recorded		Principal	Allowance for	Recorded	Income
	Investment		Balance	Loan Losses	Investment	Recognized
	(dollars expressed in thousands)
March 31, 2012:
With No Related Allowance Recorded:
Commercial, financial and agricultural	$	20,572	53,408	—	23,794	61
Real estate construction and development		52,500	107,519	—	57,932	139
Real estate mortgage:
Bank portfolio		4,800	6,653	—	5,134	—
Mortgage Division portfolio		8,025	18,988	—	8,053	—
Home equity portfolio		195	199	—	182	—
Multi-family residential		8,054	10,472	—	9,161	44
Commercial real estate		50,479	62,583	—	49,757	347
Consumer and installment		—	—	—	—	—
		144,625	259,822	—	154,013	591
With A Related Allowance Recorded:
Commercial, financial and agricultural		24,815	42,123	2,326	28,702	—
Real estate construction and development		16,485	32,726	3,540	18,190	30
Real estate mortgage:
Bank portfolio		8,097	9,514	466	8,660	—
Mortgage Division portfolio		90,693	99,748	11,521	91,010	532
Home equity portfolio		7,837	8,758	1,606	7,304	—
Multi-family residential		685	722	297	779	—
Commercial real estate		23,262	31,659	5,106	22,929	52
Consumer and installment		154	154	9	88	—
		172,028	225,404	24,871	177,662	614
Total:
Commercial, financial and agricultural		45,387	95,531	2,326	52,496	61
Real estate construction and development		68,985	140,245	3,540	76,122	169
Real estate mortgage:
Bank portfolio		12,897	16,167	466	13,794	—
Mortgage Division portfolio		98,718	118,736	11,521	99,063	532
Home equity portfolio		8,032	8,957	1,606	7,486	—
Multi-family residential		8,739	11,194	297	9,940	44
Commercial real estate		73,741	94,242	5,106	72,686	399
Consumer and installment		154	154	9	88	—
	$	316,653	485,226	24,871	331,675	1,205

			Unpaid	Related	Average	Interest
	Recorded		Principal	Allowance for	Recorded	Income
	Investment		Balance	Loan Losses	Investment	Recognized
	(dollars expressed in thousands)
December 31, 2011:
With No Related Allowance Recorded:
Commercial, financial and agricultural	$	20,494	53,140	—	25,294	336
Real estate construction and development		62,524	113,412	—	80,230	72
Real estate mortgage:
Bank portfolio		3,274	5,030	—	3,291	—
Mortgage Division portfolio		10,250	22,541	—	11,352	—
Home equity portfolio		196	198	—	210	—
Multi-family residential		7,961	8,378	—	8,358	92
Commercial real estate		45,452	61,766	—	59,613	435
Consumer and installment		1	1	—	2	—
		150,152	264,466	—	188,350	935
With A Related Allowance Recorded:
Commercial, financial and agricultural		39,110	64,867	5,475	48,270	—
Real estate construction and development		20,734	39,832	3,432	26,605	183
Real estate mortgage:
Bank portfolio		11,416	12,926	796	11,473	—
Mortgage Division portfolio		89,157	98,118	15,324	98,739	2,306
Home equity portfolio		6,744	7,657	1,388	7,212	—
Multi-family residential		3,180	5,281	335	3,339	—
Commercial real estate		26,179	34,073	3,875	34,335	168
Consumer and installment		21	21	4	60	—
		196,541	262,775	30,629	230,033	2,657
Total:
Commercial, financial and agricultural		59,604	118,007	5,475	73,564	336
Real estate construction and development		83,258	153,244	3,432	106,835	255
Real estate mortgage:
Bank portfolio		14,690	17,956	796	14,764	—
Mortgage Division portfolio		99,407	120,659	15,324	110,091	2,306
Home equity portfolio		6,940	7,855	1,388	7,422	—
Multi-family residential		11,141	13,659	335	11,697	92
Commercial real estate		71,631	95,839	3,875	93,948	603
Consumer and installment		22	22	4	62	—
	$	346,693	527,241	30,629	418,383	3,592

Recorded investment represents the Company’s investment in its impaired loans reduced by cumulative charge-offs recorded against the allowance for loan losses on these same loans. At March 31, 2012 and December 31, 2011, the Company had recorded charge-offs of $168.6 million and $180.5 million, respectively, on its impaired loans, representing the difference between the unpaid principal balance and the recorded investment reflected in the tables above. The unpaid principal balance represents the principal amount contractually owed to the Company by the borrowers on the impaired loans.

Troubled Debt Restructurings. In the ordinary course of business, the Company modifies loan terms across loan types, including both consumer and commercial loans, for a variety of reasons. Modifications to consumer loans may include, but are not limited to, changes in interest rate, maturity, amortization and financial covenants. In the original underwriting, loan terms are established that represent the then current and projected financial condition of the borrower. Over any period of time, modifications to these loan terms may be required due to changes in the original underwriting assumptions. These changes may include the financial requirements of the borrower as well as underwriting standards. If the modified terms are consistent with competitive market conditions and representative of terms the borrower could otherwise obtain in the open market, the modified loan is not categorized as a TDR.

Loan modifications are generally performed at the request of the individual borrower and may include reduction in interest rates, changes in payments and maturity date extensions. Although the Company does not have formal, standardized loan modification programs for its commercial or consumer loan portfolios, it participates in the U.S. Treasury’s Home Affordable Modification Program (HAMP). HAMP gives qualifying homeowners an opportunity to refinance into more affordable monthly payments, with the U.S. Treasury compensating the Company for a portion of the reduction in monthly amounts due from borrowers participating in this program. At March 31, 2012 and December 31, 2011, the Company had $76.4 million and $75.9 million, respectively, of modified loans in the HAMP program.

For a loan modification to be classified as a TDR, all of the following conditions must be present: (1) the borrower is experiencing financial difficulty, (2) the Company makes a concession to the original contractual loan terms and (3) the Company would not consider the concessions but for economic or legal reasons related to the borrower’s financial difficulty. Modifications of loan terms to borrowers experiencing financial difficulty are made in an attempt to protect as much of the investment in the loan as possible. These modifications are generally made to either prevent a loan from becoming nonaccrual or to return a nonaccrual loan to performing status based on the expectations that the borrower can adequately perform in accordance with the modified terms.

The determination of whether a modification should be classified as a TDR requires significant judgment after taking into consideration all facts and circumstances surrounding the transaction. No single characteristic or factor, taken alone, is determinative of whether a modification should be classified as a TDR. The fact that a single characteristic is present is not considered sufficient to overcome the preponderance of contrary evidence. Assuming all of the TDR criteria are met, the Company considers one or more of the following concessions to the loan terms to represent a TDR: (1) a reduction of the stated interest rate, (2) an extension of the maturity date or dates at a stated interest rate lower than the current market rate for a new loan with similar terms or (3) forgiveness of principal or accrued interest

Loans renegotiated at a rate equal to or greater than that of a new loan with comparable risk at the time the contract is modified are excluded from TDR classification in the calendar years subsequent to the renegotiation if the loan is in compliance with the modified terms for at least six months.

The Company does not accrue interest on any TDRs unless it believes collection of all principal and interest under the modified terms is reasonably assured. Generally, six months of consecutive payment performance by the borrower under the restructured terms is required before a TDR is returned to accrual status. However, the period could vary depending upon the individual facts and circumstances of the loan. TDRs accruing interest are classified as performing TDRs. The following table presents the categories of performing TDRs as of March 31, 2012 and December 31, 2011:

	March 31,		December 31,
	2012		2011
	(dollars expressed in thousands)
Performing Troubled Debt Restructurings:
Commercial, financial and agricultural	$	4,457	4,264
Real estate construction and development		12,012	12,014
Real estate mortgage:
One-to-four-family residential		82,469	82,629
Multi-family residential		3,144	3,166
Commercial real estate		29,449	24,369
Total performing troubled debt restructurings	$	131,531	126,442

The Company does not accrue interest on TDRs which have been modified for a period less than six months or are not in compliance with the modified terms. These loans are considered nonperforming TDRs and are included with other nonaccrual loans for classification purposes. The following table presents the categories of loans considered nonperforming TDRs as of March 31, 2012 and December 31, 2011:

	March 31,		December 31,
	2012		2011
	(dollars expressed in thousands)
Nonperforming Troubled Debt Restructurings:
Commercial, financial and agricultural	$	1,127	1,344
Real estate construction and development		25,194	25,603
Real estate mortgage:
One-to-four-family residential		6,249	6,205
Commercial real estate		6,606	7,605
Total nonperforming troubled debt restructurings	$	39,176	40,757

Both performing and nonperforming TDRs are considered to be impaired loans. When an individual loan is determined to be a TDR, the amount of impairment is based upon the present value of expected future cash flows discounted at the loan’s effective interest rate or the fair value of the underlying collateral less applicable selling costs. The impairment amount is either charged off as a reduction to the allowance for loan losses or provided for as a specific reserve within the allowance for loan losses. The allowance for loan losses allocated to TDRs was $10.8 million and $12.8 million at March 31, 2012 and December 31, 2011, respectively.

The following table presents loans classified as TDRs that were modified during the three months ended March 31, 2012 and 2011:

	Three Months Ended March 31, 2012					Three Months Ended March 31, 2011
		Pre-		Post-			Pre-		Post-
		Modification		Modification			Modification		Modification
	Number	Outstanding		Outstanding		Number	Outstanding		Outstanding
	of	Recorded		Recorded		of	Recorded		Recorded
	Contracts	Investment		Investment		Contracts	Investment		Investment
	(dollars expressed in thousands)
Loan Modifications as Troubled Debt
Restructurings:
Commercial, financial and agricultural	—	$	—	$	—	1	$	1,305	$	1,305
Real estate construction and development	2		803		390	—		—		—
Real estate mortgage:
One-to-four-family residential	14		2,604		2,561	45		7,019		6,494
Multi-family residential	—		—		—	—		—		—
Commercial real estate	1		5,018		5,018	—		—		—

The following table presents TDRs that defaulted within 12 months of modification during the three months ended March 31, 2012 and 2011:

	Three Months Ended			Three Months Ended
	March 31, 2012			March 31, 2011
	Number of	Recorded		Number of	Recorded
	Contracts	Investment		Contracts	Investment
	(dollars expressed in thousands)
Troubled Debt Restructurings That Subsequently Defaulted:
Real estate mortgage:
One-to-four-family residential	12	$	2,307	10	$	2,737

Upon default of a TDR, which is considered to be 90 days or more past due under the modified terms, impairment is measured based on the fair value of the underlying collateral less applicable selling costs. The impairment amount is either charged off as a reduction to the allowance for loan losses or provided for as a specific reserve within the allowance for loan losses.

Allowance for Loan Losses. Changes in the allowance for loan losses for the three months ended March 31, 2012 and 2011 were as follows:

	Three Months Ended
	March 31,
	2012			2011
	(dollars expressed in thousands)
Balance, beginning of period	$	137,710		201,033
Loans charged-off		(16,453	)	(36,905	)
Recoveries of loans previously charged-off		7,091		9,845
Net loans charged-off		(9,362	)	(27,060	)
Provision for loan losses		2,000		10,000
Balance, end of period	$	130,348		183,973

The following table represents a summary of changes in the allowance for loan losses by portfolio segment for the three months ended March 31, 2012 and 2011:

				Real Estate
	Commercial			Construction		One-to-		Multi-				Consumer
	and			and		Four-Family		Family		Commercial		and
	Industrial			Development		Residential		Residential		Real Estate		Installment		Total
	(dollars expressed in thousands)
Three Months Ended March 31, 2012:
Allowance for loan losses:
Beginning balance	$	27,243		24,868		50,864		4,851		29,448		436		137,710
Charge-offs		(5,081	)	(3,084	)	(3,928	)	(932	)	(3,353	)	(75	)	(16,453	)
Recoveries		3,058		733		1,252		11		1,988		49		7,091
Provision (benefit) for loan losses		(438	)	2,001		(1,518	)	749		1,190		16		2,000
Ending balance	$	24,782		24,518		46,670		4,679		29,273		426		130,348
Three Months Ended March 31, 2011:
Allowance for loan losses:
Beginning balance	$	28,000		58,439		60,762		5,158		47,880		794		201,033
Charge-offs		(5,554	)	(10,314	)	(9,725	)	—		(11,094	)	(218	)	(36,905	)
Recoveries		2,890		3,870		1,282		—		1,719		84		9,845
Provision (benefit) for loan losses		1,235		339		3,410		3,362		1,618		36		10,000
Ending balance	$	26,571		52,334		55,729		8,520		40,123		696		183,973

The following table represents a summary of the impairment method used by loan category at March 31, 2012 and December 31, 2011:

			Real Estate
	Commercial		Construction	One-to-	Multi-		Consumer
	and		and	Four-Family	Family	Commercial	and
	Industrial		Development	Residential	Residential	Real Estate	Installment	Total
	(dollars expressed in thousands)
March 31, 2012:
Allowance for loan losses:
Ending balance: impaired loans
individually evaluated for impairment	$	789	1,199	3,404	—	2,603	—	7,995
Ending balance: impaired loans
collectively evaluated for impairment	$	1,537	2,341	10,189	297	2,503	9	16,876
Ending balance: all other loans collectively
evaluated for impairment	$	22,456	20,978	33,077	4,382	24,167	417	105,477
Financing receivables:
Ending balance	$	686,597	228,206	895,347	123,071	1,155,758	19,072	3,108,051
Ending balance: impaired loans
individually evaluated for
impairment	$	28,248	62,956	15,969	8,739	66,561	—	182,473
Ending balance: impaired loans
collectively evaluated for
impairment	$	17,139	6,029	103,678	—	7,180	154	134,180
Ending balance: all other loans
collectively evaluated for
impairment	$	641,210	159,221	775,700	114,332	1,082,017	18,918	2,791,398
December 31, 2011:
Allowance for loan losses:
Ending balance: impaired loans
individually evaluated for impairment	$	4,276	1,752	3,170	110	2,430	—	11,738
Ending balance: impaired loans
collectively evaluated for impairment	$	1,199	1,680	14,338	225	1,445	4	18,891
Ending balance: all other loans collectively
evaluated for impairment	$	21,768	21,436	33,356	4,516	25,573	432	107,081
Financing receivables:
Ending balance	$	725,130	249,987	902,438	127,356	1,225,538	22,391	3,252,840
Ending balance: impaired loans
individually evaluated for
impairment	$	40,527	76,475	16,836	11,141	64,190	—	209,169
Ending balance: impaired loans
collectively evaluated for
impairment	$	19,077	6,783	104,201	—	7,441	22	137,524
Ending balance: all other loans
collectively evaluated for
impairment	$	665,526	166,729	781,401	116,215	1,153,907	22,369	2,906,147