Note 4 – Loans

The composition of the loan portfolio, by class of loan, as of March 31, 2011 and December 31, 2010 was as follows:

	March 31, 2011						December 31, 2010
	Loan Balance		Accrued Interest Receivable		Recorded Investment		Loan Balance		Accrued Interest Receivable		Recorded Investment
(In thousands)
Commercial, financial and agricultural *	$	727,993	$	2,967	$	730,960	$	737,902	$	2,886	$	740,788
Commercial real estate *		1,254,636		4,956		1,259,592		1,226,616		4,804		1,231,420
Construction real estate:
Vision commercial land and development *		161,140		290		161,430		171,334		282		171,616
Remaining commercial		191,770		637		192,407		195,693		622		196,315
Mortgage		21,685		74		21,759		26,326		95		26,421
Installment		14,738		63		14,801		13,127		54		13,181
Residential real estate
Commercial		463,308		1,445		464,753		464,903		1,403		466,306
Mortgage		944,309		2,955		947,264		906,648		2,789		909,437
HELOC		256,329		959		257,288		260,463		1,014		261,477
Installment		56,108		223		56,331		60,195		255		60,450
Consumer		656,618		2,887		659,505		666,871		3,245		670,116
Leases		2,341		44		2,385		2,607		56		2,663
Total loans	$	4,750,975	$	17,500	$	4,768,475	$	4,732,685	$	17,505	$	4,750,190

* Included within commercial, financial and agricultural loans, commercial real estate loans, and Vision commercial land and development loans are an immaterial amount of consumer loans that are not broken out by class.

The following tables present the recorded investment in nonaccrual, restructured, and loans past due 90 days or more and still accruing by class of loans as of March 31, 2011 and December 31, 2010:

	March 31, 2011
(In thousands)	Nonaccrual Loans		Restructured loans		Loans past due 90 days or more and accruing		Total nonperforming loans
Commercial, financial and agricultural	$	19,464	$	-	$	-	$	19,464
Commercial real estate		53,259		-		-		53,259
Construction real estate:
Vision commercial land and development		82,799		-		-		82,799
Remaining commercial		26,126		-		-		26,126
Mortgage		61		-		-		61
Installment		413		-		-		413
Residential real estate
Commercial		58,123		-		-		58,123
Mortgage		32,927		260		1,526		34,713
HELOC		1,944		-		-		1,944
Installment		1,581		-		86		1,667
Consumer		2,122		-		665		2,787
Leases		-		-		-		-
Total loans	$	278,819	$	260	$	2,277	$	281,356

	December 31, 2010
(In thousands)	Nonaccrual Loans		Restructured loans		Loans past due 90 days or more and accruing		Total nonperforming loans
Commercial, financial and agricultural	$	19,276	$	-	$	-	$	19,276
Commercial real estate		57,941		-		20		57,961
Construction real estate:
Vision commercial land and development		87,424		-		-		87,424
Remaining commercial		27,080		-		-		27,080
Mortgage		354		-		-		354
Installment		417		-		13		430
Residential real estate
Commercial		60,227		-		-		60,227
Mortgage		32,479		-		2,175		34,654
HELOC		964		-		149		1,113
Installment		1,195		-		277		1,472
Consumer		1,911		-		1,059		2,970
Leases		-		-		-		-
Total loans	$	289,268	$	-	$	3,693	$	292,961

The following table provides additional information regarding those nonaccrual loans that are individually evaluated for impairment and those collectively evaluated for impairment as of March 31, 2011 and December 31, 2010.

	March 31, 2011
(In thousands)	Nonaccrual Loans		Loans individually evaluated for impairment		Loans collectively evaluated for impairment
Commercial, financial and agricultural	$	19,464	$	19,391	$	73
Commercial real estate		53,259		53,259		-
Construction real estate:
Vision commercial land and development		82,799		82,060		739
Remaining commercial		26,126		26,126		-
Mortgage		61		-		61
Installment		413		-		413
Residential real estate:
Commercial		58,123		58,123		-
Mortgage		32,927		-		32,927
HELOC		1,944		-		1,944
Installment		1,581		-		1,581
Consumer		2,122		-		2,122
Leases		-		-		-
Total loans	$	278,819	$	238,959	$	39,860

	December 31, 2010
(In thousands)	Nonaccrual Loans		Loans individually evaluated for impairment		Loans collectively evaluated for impairment
Commercial, financial and agricultural	$	19,276	$	19,205	$	71
Commercial real estate		57,941		57,930		11
Construction real estate:
Vision commercial land and development		87,424		86,491		933
Remaining commercial		27,080		27,080		—
Mortgage		354		—		354
Installment		417		—		417
Residential real estate:
Commercial		60,227		60,227		—
Mortgage		32,479		—		32,479
HELOC		964		—		964
Installment		1,195		—		1,195
Consumer		1,911		—		1,911
Leases		-		—		—
Total loans	$	289,268	$	250,933	$	38,335

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 tables present loans individually evaluated for impairment by class of loans as of March 31, 2011 and December 31, 2010.

	March 31, 2011 (Restated)
(in thousands)	Unpaid principal balance		Recorded investment		Allowance for loan losses allocated

With no related allowance recorded
Commercial, financial and agricultural	$	7,226	$	6,819	$	-
Commercial real estate		22,379		17,168		-
Construction real estate:
Vision commercial land and development		8,626		6,326		-
Remaining commercial		13,010		12,143		-
Residential real estate:
Commercial		37,945		37,070		-

With an allowance recorded
Commercial, financial and agricultural		14,197		12,572		2,980
Commercial real estate		39,068		36,091		12,406
Construction real estate:
Vision commercial land and development		103,972		75,734		41,162
Remaining commercial		22,481		13,983		5,386
Residential real estate:
Commercial		25,451		21,053		7,024

Total	$	294,355	$	238,959	$	68,958

	December 31, 2011 (Restated)
(in thousands)	Unpaid principal balance		Recorded investment		Allowance for loan losses allocated

With no related allowance recorded
Commercial, financial and agricultural	$	9,347	$	8,891	$	-
Commercial real estate		21,526		17,170		-
Construction real estate:
Vision commercial land and development		11,206		7,847		-
Remaining commercial		12,305		11,743		-
Residential real estate:
Commercial		46,344		43,031		-

With an allowance recorded
Commercial, financial and agricultural		11,801		10,314		3,028
Commercial real estate		44,789		40,760		12,652
Construction real estate:
Vision commercial land and development		103,937		78,644		39,887
Remaining commercial		23,563		15,337		5,425
Residential real estate:
Commercial		19,716		17,196		5,912

Total	$	304,534	$	250,933	$	66,904

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, 2011 and December 31, 2010, there were $9.7 million and $12.0 million, respectively, of partial charge-offs on loans individually evaluated for impairment with no related allowance recorded and $45.7 million and $41.6 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, 2011 and December 31, 2010, of $69.0 million and $66.9 million, respectively, related to loans with a recorded investment of $159.4 million and $162.3 million.

The following table presents the average recorded investment and interest income recognized on loans individually evaluated for impairment for the three months ended March 31, 2011:

			Three months ended March 31, 2011
	Recorded investment as of March 31, 2011		Average recorded investment		Interest income recognized
(in thousands)
Commercial, financial and agricultural	$	19,391	$	19,515	$	65
Commercial real estate		53,259		55,076		70
Construction real estate:
Vision commercial land and development		82,060		84,272		-
Remaining commercial		26,126		26,789		78
Residential real estate:
Commercial		58,123		59,465		139
Consumer		-		22		-

Total	$	238,959	$	245,139	$	352

The following tables present the aging of the recorded investment in past due loans as of March 31, 2011 and December 31, 2010 by class of loans.

	March 31, 2011
	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
(In thousands)
Commercial, financial and agricultural	$	4,573	$	14,185	$	18,758	$	712,202	$	730,960
Commercial real estate		7,187		49,324		56,511		1,203,081		1,259,592
Construction real estate:
Vision commercial land and development		4,077		72,679		76,756		84,674		161,430
Remaining commercial		47		18,312		18,359		174,048		192,407
Mortgage		47		61		108		21,651		21,759
Installment		354		386		740		14,061		14,801
Residential real estate
Commercial		3,814		25,576		29,390		435,363		464,753
Mortgage		15,076		22,782		37,858		909,406		947,264
HELOC		551		1,101		1,652		255,636		257,288
Installment		1,014		972		1,986		54,345		56,331
Consumer		7,489		2,117		9,606		649,899		659,505
Leases		5		-		5		2,380		2,385
Total loans	$	44,234	$	207,495	$	251,729	$	4,516,746	$	4,768,475

* Includes $2.2 million of loans past due 90 days or more and accruing.

	December 31, 2010
	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
(In thousands)
Commercial, financial and agricultural	$	2,247	$	15,622	$	17,869	$	722,919	$	740,788
Commercial real estate		9,521		53,269		62,790		1,168,630		1,231,420
Construction real estate:
Vision commercial land and development		2,406		65,130		67,536		104,080		171,616
Remaining commercial		141		19,687		19,828		176,487		196,315
Mortgage		479		148		627		25,794		26,421
Installment		235		399		634		12,547		13,181
Residential real estate
Commercial		3,281		26,845		30,126		436,180		466,306
Mortgage		17,460		24,422		41,882		867,555		909,437
HELOC		1,396		667		2,063		259,414		261,477
Installment		1,018		892		1,910		58,540		60,450
Consumer		11,204		2,465		13,669		656,447		670,116
Leases		5		-		5		2,658		2,663
Total loans	$	49,393	$	209,546	$	258,939	$	4,491,251	$	4,750,190

* Includes $3.6 million of loans past due 90 days or more and accruing.

Management's policy is to initially place all renegotiated loans (troubled debt restructurings) on nonaccrual status. At March 31, 2011 and December 31, 2010, there were $81.1 million and $80.7 million, respectively, of troubled debt restructurings included in nonaccrual loan totals. Many of these troubled debt restructurings are performing under the renegotiated terms. At March 31, 2011 and December 31, 2010, $42.3 million and $50.3 million of the total troubled debt restructurings were included within current loans above. Management will continue to review the renegotiated loans and may determine it appropriate to move certain of the loans back to accrual status in the future. At March 31, 2011 and December 31, 2010, Park had commitments to lend $289,000 and $434,000, respectively, of additional funds to borrowers whose terms had been modified in a troubled debt restructuring.

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) throughout the consumer loan segment. 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 deserve management's close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loans 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 loans 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 nonperforming 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, 2011 and December 31, 2010 for all commercial loans.

	March 31, 2011
(in thousands)	5 Rated		6 Rated		Nonaccrual		Pass Rated		Recorded Investment
Commercial, financial and agricultural:	$	23,616	$	11,122	$	19,464	$	676,758	$	730,960

Commercial real estate:		72,684		23,943		53,259		1,109,706		1,259,592

Construction real estate:
Vision commercial land and development		13,394		7,399		82,799		57,838		161,430
Remaining commercial		15,147		39,159		26,126		111,975		192,407

Residential real estate:
Commercial		27,311		17,948		58,123		361,371		464,753

Leases		-		-		-		2,385		2,385

Total Commercial Loans	$	152,152	$	99,571	$	239,771	$	2,320,033	$	2,811,527

	December 31, 2010
(in thousands)	5 Rated		6 Rated		Nonaccrual		Pass Rated		Recorded Investment
Commercial, financial and agricultural:	$	26,322	$	11,447	$	19,276	$	683,743	$	740,788

Commercial real estate:		57,394		26,992		57,941		1,089,093		1,231,420

Construction real estate:
Vision commercial land and development		10,220		7,941		87,424		66,031		171,616
Remaining commercial		14,021		39,062		27,080		116,152		196,315

Residential real estate:
Commercial		29,206		18,117		60,227		358,756		466,306

Leases		-		-		-		2,663		2,663

Total Commercial Loans	$	137,163	$	103,559	$	251,948	$	2,316,438	$	2,809,108