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 and six months ended June 30, 2011 and June 30, 2010 is summarized below.


	Three months ended June 30, 2011
	Commercial, financial and agricultural		Commercial real estate		Construction real estate			Residential real estate		Consumer		Leases		Total
(In thousands)

Allowance for credit losses:
Beginning balance	$	11,791	$	25,220	$	71,835		$	32,415	$	7,265	$	4	$	148,530
Charge-offs		5,330		6,565		23,679			4,789		1,942		-		42,305
Recoveries		327		22		117			390		577		-		1,433
Net Charge-offs		5,003		6,543		23,562			4,399		1,365		-		40,872
Provision		9,921		4,630		(8,160	)		4,281		1,844		-		12,516
Ending balance	$	16,709	$	23,307	$	40,113		$	32,297	$	7,744	$	4	$	120,174


	Six months ended June 30, 2011
	Commercial, financial and agricultural		Commercial real estate		Construction real estate			Residential real estate		Consumer		Leases			Total
(In thousands)

Allowance for credit losses:
Beginning balance	$	11,555	$	24,369	$	70,462		$	30,259	$	6,925	$	5		$	143,575
Charge-offs		7,171		8,350		27,099			7,276		3,915		-			53,811
Recoveries		896		824		213			891		967		3			3,794
Net Charge-offs		6,275		7,526		26,886			6,385		2,948		(3	)		50,017
Provision		11,429		6,464		(3,463	)		8,423		3,767		(4	)		26,616
Ending balance	$	16,709	$	23,307	$	40,113		$	32,297	$	7,744	$	4		$	120,174

The activity in the allowance for loan losses for the three and six months ended June 30, 2010 is summarized as follows:


(In thousands)	Three months ended June 30, 2010		Six months ended June 30, 2010
Allowance for credit losses

Beginning balance:	$	119,674	$	116,717
Charge-offs		13,273		28,851
Recoveries		1,025		3,010
Net Charge-offs		12,248		25,841
Provision		13,250		29,800
Ending balance	$	120,676	$	120,676

The composition of the allowance for loan losses at June 30, 2011 and December 31, 2010 was as follows:


	June 30, 2011
	Commercial, financial and agricultural			Commercial real estate			Construction real estate			Residential real estate			Consumer			Leases			Total
(In thousands)
Allowance for loan losses:
Ending allowance balance attributed to loans:
Individually evaluated for impairment		7,367		$	10,050		$	20,205		$	5,152		$	23		$	-		$	42,797
Collectively evaluated for impairment		9,342			13,257			19,908			27,145			7,721			4			77,377
Total ending allowance balance	$	16,709		$	23,307		$	40,113		$	32,297		$	7,744		$	4		$	120,174

Loan Balance:
Loans individually evaluated for impairment	$	24,008		$	47,243		$	80,532		$	48,594		$	23		$	-		$	200,400
Loans collectively evaluated for impairment		731,785			1,210,049			249,800			1,664,974			651,227			2,278			4,510,113
Total ending loan balance	$	755,793		$	1,257,292		$	330,332		$	1,713,568		$	651,250		$	2,278		$	4,710,513

Allowance for loan losses as a percentage of loan balance:
Loans individually evaluated for impairment		30.69	%		21.27	%		25.09	%		10.60	%		-			-			21.36	%
Loans collectively evaluated for impairment		1.28	%		1.10	%		7.97	%		1.63	%		1.19	%		0.18	%		1.72	%
Total ending loan balance		2.21	%		1.85	%		12.14	%		1.88	%		1.19	%		0.18	%		2.55	%

Recorded Investment:
Loans individually evaluated for impairment	$	24,008		$	47,243		$	80,532		$	48,594		$	23		$	-		$	200,400
Loans collectively evaluated for impairment		734,411			1,214,824			250,631			1,669,284			654,165			2,312			4,525,627
Total ending loan balance	$	758,419		$	1,262,067		$	331,163		$	1,717,878		$	654,188		$	2,312		$	4,726,027


	December 31, 2010
(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 June 30, 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 June 30, 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).