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Allowance For Loan Losses
 3 Months Ended
Mar. 31, 2015
Loans and Leases Receivable, Allowance [Abstract]  
Allowance For Loan Losses
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 the Notes to Consolidated Financial Statements included in Park’s 2014 Annual Report.

Management updates historical losses annually in the fourth quarter, or more frequently as deemed appropriate. With the inclusion of 2013 net charge-off information, management concluded that it was no longer appropriate to calculate the historical loss average with an even allocation across the five-year period. Rather than apply a 20% allocation to each year in the calculation of the historical annualized loss factor, management determined that it was appropriate to more heavily weight those years with higher losses in the historical loss calculation, given the continued uncertainty in the current economic environment. Specifically, rather than applying equal percentages to each year in the historical loss calculation, management applied more weight to the 2009-2011 periods compared to the 2012 and 2013 periods.

With the inclusion of 2014 net charge-off information in the fourth quarter of 2014, management extended the historical loss period to six years. Due to the same factors that management considered in 2013, management applied more weight to 2009 through 2011 periods compared to the 2012 through 2014 periods.

The activity in the allowance for loan losses for the three months ended March 31, 2015 and March 31, 2014 is summarized below.
 
 
Three Months Ended
March 31, 2015
(In thousands)
Commercial,
financial and
agricultural
 
Commercial
real estate
 
Construction
real estate
 
Residential
real estate
 
Consumer
 
Leases
 
Total
Allowance for loan losses:
 

 
 

 
 

 
 

 
 

 
 

 
 

Beginning balance
$
10,719

 
$
8,808

 
$
8,652

 
$
14,772

 
$
11,401

 
$
—

 
$
54,352

Charge-offs
352

 
130

 
—

 
422

 
2,514

 
—

 
3,418

Recoveries
291

 
674

 
285

 
924

 
666

 
2

 
2,842

Net charge-offs/(recoveries)
61

 
(544
)
 
(285
)
 
(502
)
 
1,848

 
(2
)
 
576

Provision/(recovery)
703

 
(56
)
 
(182
)
 
(762
)
 
1,931

 
(2
)
 
1,632

Ending balance
$
11,361

 
$
9,296

 
$
8,755

 
$
14,512

 
$
11,484

 
$
—

 
$
55,408

 
 
Three Months Ended
March 31, 2014
(In thousands)
Commercial,
financial and
agricultural
 
Commercial
real estate
 
Construction
real estate
 
Residential
real estate
 
Consumer
 
Leases
 
Total
Allowance for loan losses:
 

 
 

 
 

 
 

 
 

 
 

 
 

Beginning balance
$
14,218

 
$
15,899

 
$
6,855

 
$
14,251

 
$
8,245

 
$
—

 
$
59,468

Charge-offs
639

 
794

 
8

 
591

 
1,795

 
—

 
3,827

Recoveries
247

 
1,558

 
794

 
1,227

 
3,014

 
1

 
6,841

Net charge-offs/(recoveries)
392

 
(764
)
 
(786
)
 
(636
)
 
(1,219
)
 
(1
)
 
(3,014
)
Provision/(recovery)
(64
)
 
(909
)
 
480

 
(680
)
 
(1,051
)
 
(1
)
 
(2,225
)
Ending balance
$
13,762

 
$
15,754

 
$
8,121

 
$
14,207

 
$
8,413

 
$
—

 
$
60,257


Loans collectively evaluated for impairment in the following tables include all performing loans at March 31, 2015 and December 31, 2014, 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 March 31, 2015 and December 31, 2014, which are evaluated for impairment in accordance with U.S. GAAP (see Note 1 of the Notes to Consolidated Financial Statements included in Park’s 2014 Annual Report).



The composition of the allowance for loan losses at March 31, 2015 and December 31, 2014 was as follows:
 
 
March 31, 2015
(In thousands)
Commercial,
financial and
agricultural
 
Commercial
real estate
 
Construction
real estate
 
Residential
real estate
 
Consumer
 
Leases
 
Total
Allowance for loan losses:
 

 
 

 
 

 
 

 
 

 
 

 
 

Ending allowance balance attributed to loans:
 

 
 

 
 

 
 

 
 

 
 

 
 

Individually evaluated for impairment
$
1,839

 
$
645

 
$
2,157

 
$
423

 
$
—

 
$
—

 
$
5,064

Collectively evaluated for impairment
9,522

 
8,651

 
6,598

 
14,089

 
11,484

 
—

 
50,344

Total ending allowance balance
$
11,361

 
$
9,296

 
$
8,755

 
$
14,512

 
$
11,484

 
$
—

 
$
55,408

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loan balance:
 

 
 

 
 

 
 

 
 

 
 

 
 

Loans individually evaluated for impairment
$
20,570

 
$
16,892

 
$
7,802

 
$
25,197

 
$
—

 
$
—

 
$
70,461

Loans collectively evaluated for impairment
823,763

 
1,054,373

 
141,973

 
1,824,208

 
912,854

 
3,198

 
4,760,369

Total ending loan balance
$
844,333

 
$
1,071,265

 
$
149,775

 
$
1,849,405

 
$
912,854

 
$
3,198

 
$
4,830,830

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Allowance for loan losses as a percentage of loan balance:
 

 
 

 
 

 
 

 
 

 
 

 
 

Loans individually evaluated for impairment
8.94
%
 
3.82
%
 
27.65
%
 
1.68
%
 
—
%
 
—
%
 
7.19
%
Loans collectively evaluated for impairment
1.16
%
 
0.82
%
 
4.65
%
 
0.77
%
 
1.26
%
 
—
%
 
1.06
%
Total
1.35
%
 
0.87
%
 
5.85
%
 
0.78
%
 
1.26
%
 
—
%
 
1.15
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Recorded investment:
 

 
 

 
 

 
 

 
 

 
 

 
 

Loans individually evaluated for impairment
$
20,571

 
$
16,900

 
$
7,802

 
$
25,219

 
$
—

 
$
—

 
$
70,492

Loans collectively evaluated for impairment
827,027

 
1,057,894

 
142,374

 
1,827,796

 
915,671

 
3,242

 
4,774,004

Total ending recorded investment
$
847,598

 
$
1,074,794

 
$
150,176

 
$
1,853,015

 
$
915,671

 
$
3,242

 
$
4,844,496

 
 
 
December 31, 2014
(In thousands)
 
Commercial,
financial and
agricultural
 
Commercial
real estate
 
Construction
real estate
 
Residential
real estate
 
Consumer
 
Leases
 
Total
Allowance for loan losses:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Ending allowance balance attributed to loans:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Individually evaluated for impairment
 
$
981

 
$
262

 
$
1,812

 
$
605

 
$
—

 
$
—

 
$
3,660

Collectively evaluated for impairment
 
9,738

 
8,546

 
6,840

 
14,167

 
11,401

 
—

 
50,692

Total ending allowance balance
 
$
10,719

 
$
8,808

 
$
8,652

 
$
14,772

 
$
11,401

 
$
—

 
$
54,352

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loan balance:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Loans individually evaluated for impairment
 
$
19,103

 
$
21,978

 
$
7,690

 
$
24,905

 
$
—

 
$
—

 
$
73,676

Loans collectively evaluated for impairment
 
837,432

 
1,047,659

 
148,114

 
1,826,470

 
893,160

 
3,171

 
4,756,006

Total ending loan balance
 
$
856,535

 
$
1,069,637

 
$
155,804

 
$
1,851,375

 
$
893,160

 
$
3,171

 
$
4,829,682

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Allowance for loan losses as a percentage of loan balance:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Loans individually evaluated for impairment
 
5.14
%
 
1.19
%
 
23.56
%
 
2.43
%
 
—
%
 
—
%
 
4.97
%
Loans collectively evaluated for impairment
 
1.16
%
 
0.82
%
 
4.62
%
 
0.78
%
 
1.28
%
 
—
%
 
1.07
%
Total
 
1.25
%
 
0.82
%
 
5.55
%
 
0.80
%
 
1.28
%
 
—
%
 
1.13
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Recorded investment:
 
 

 
 

 
 

 
 

 
 

 
 

 
 

Loans individually evaluated for impairment
 
$
19,106

 
$
21,989

 
$
7,687

 
$
24,930

 
$
—

 
$
—

 
$
73,712

Loans collectively evaluated for impairment
 
840,647

 
1,051,194

 
148,512

 
1,829,931

 
896,127

 
3,188

 
4,769,599

Total ending recorded investment
 
$
859,753

 
$
1,073,183

 
$
156,199

 
$
1,854,861

 
$
896,127

 
$
3,188

 
$
4,843,311