Note 5 – 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 "Item 8 - Financial Statements and Supplementary Data" of Part II of Park's 2010 Form 10-K/A.

The activity in the allowance for loan losses for the three months ended March 31, 2011 and March 31, 2010 is summarized below.

	Three months ended March 31, 2011 (Restated)
(In thousands)	Commercial, financial and agricultural		Commercial real estate		Construction real estate		Residential real estate		Consumer		Leases			Total

Allowance for credit losses:
Beginning balance:	$	11,555	$	24,369	$	70,462	$	30,259	$	6,925	$	5		$	143,575
Charge-offs		1,841		1,785		3,420		2,487		1,973		-			11,506
Recoveries		569		802		96		501		390		3			2,361
Net Charge-offs		1,272		983		3,324		1,986		1,583		(3	)		9,145
Provision		1,508		1,834		4,697		4,142		1,923		(4	)		14,100
Ending balance:	$	11,791	$	25,220	$	71,835	$	32,415	$	7,265	$	4		$	148,530

The activity in the allowance for loan losses for the three months ended March 31, 2010 is summarized as follows:

(In thousands)	March 31, 2010
Allowance for credit losses:
Beginning balance:	$	116,717
Charge-offs		15,578
Recoveries		1,985
Net Charge-offs		13,593
Provision		16,550
Ending balance:	$	119,674

The composition of the allowance for loan losses at March 31, 2011 and December 31, 2010 was as follows:

	March 31, 2011 (Restated)
(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	$	2,980		$	12,406		$	46,548		$	7,024		$	-		$	-		$	68,958
Collectively evaluated for impairment		8,811			12,814			25,287			25,391			7,265			4			79,572
Total ending allowance balance	$	11,791		$	25,220		$	71,835		$	32,415		$	7,265		$	4		$	148,530

Loan Balance:
Loans individually evaluated for impairment	$	19,391		$	53,259		$	108,186		$	58,123		$	-		$	-		$	238,959
Loans collectively evaluated for impairment		708,602			1,201,377			281,147			1,661,931			656,618			2,341			4,512,016
Total ending loan balance	$	727,993		$	1,254,636		$	389,333		$	1,720,054		$	656,618		$	2,341		$	4,750,975

Allowance for loan losses as a percentage of loan balance:
Loans individually evaluated for impairment		15.37	%		23.29	%		43.03	%		12.08	%		-			-			28.86	%
Loans collectively evaluated for impairment		1.24	%		1.07	%		8.99	%		1.53	%		1.11	%		0.17	%		1.76	%
Total ending loan balance		1.62	%		2.01	%		18.45	%		1.88	%		1.11	%		0.17	%		3.13	%

Recorded Investment:
Loans individually evaluated for impairment	$	19,391		$	53,259		$	108,186		$	58,123		$	-		$	-		$	238,959
Loans collectively evaluated for impairment		711,569			1,206,333			282,211			1,667,513			659,505			2,385			4,529,516
Total ending loan balance	$	730,960		$	1,259,592		$	390,397		$	1,725,636		$	659,505		$	2,385		$	4,768,475

December 31, 2010 (Restated)
(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	$	3,028		$	12,652		$	45,312		$	5,912		$	-		$	-		$	66,904
Collectively evaluated for impairment		8,527			11,717			25,150			24,347			6,925			5			76,671
Total ending allowance balance	$	11,555		$	24,369		$	70,462		$	30,259		$	6,925		$	5		$	143,575

Loan Balance:
Loans individually evaluated for impairment	$	19,205		$	57,930		$	113,571		$	60,227		$	-		$	-		$	250,933
Loans collectively evaluated for impairment		718,697			1,168,686			292,909			1,631,982			666,871			2,607			4,481,752
Total ending loan balance	$	737,902		$	1,226,616		$	406,480		$	1,692,209		$	666,871		$	2,607		$	4,732,685

Allowance for loan losses as a percentage of loan balance:
Loans individually evaluated for impairment		15.77	%		21.84	%		39.90	%		9.82	%		-			-			26.66	%
Loans collectively evaluated for impairment		1.19	%		1.00	%		8.59	%		1.49	%		1.04	%		0.19	%		1.71	%
Total ending loan balance		1.57	%		1.99	%		17.33	%		1.79	%		1.04	%		0.19	%		3.03	%

Recorded Investment:
Loans individually evaluated for impairment	$	19,205		$	57,930		$	113,571		$	60,227		$	-		$	-		$	250,933
Loans collectively evaluated for impairment		721,583			1,173,490			293,962			1,637,443			670,116			2,663			4,499,257
Total ending loan balance	$	740,788		$	1,231,420		$	407,533		$	1,697,670		$	670,116		$	2,663		$	4,750,190

Loans collectively evaluated for impairment above include all performing loans at March 31, 2011 and December 31, 2010, 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, 2011 and December 31, 2010, which are evaluated for impairment in accordance with GAAP (see Note 1 of the Notes to Consolidated Financial Statements included in "Item 8 - Financial Statements and Supplementary Data" of Part II of Park's 2010 Form 10-K/A).