The composition of the loan portfolio, by class of loan, as of March 31, 2012 and December 31, 2011 was as follows:


	March 31, 2012			December 31, 2011
	Loan balance	Accrued interest receivable	Recorded investment	Loan balance	Accrued interest receivable	Recorded investment
(In thousands)
Commercial, financial and agricultural *	$752,392	$3,439	$755,831	$743,797	$3,121	$746,918
Commercial real estate *	1,088,348	3,795	1,092,143	1,108,574	4,235	1,112,809
Construction real estate:
Vision/SE LLC commercial land and development *	26,081	39	26,120	31,603	31	31,634
Remaining commercial	148,922	425	149,347	156,053	394	156,447
Mortgage	19,628	65	19,693	20,039	64	20,103
Installment	9,184	44	9,228	9,851	61	9,912
Residential real estate
Commercial	392,552	1,120	393,672	395,824	1,105	396,929
Mortgage	1,004,957	1,540	1,006,497	953,758	1,522	955,280
HELOC	221,780	884	222,664	227,682	942	228,624
Installment	48,410	217	48,627	51,354	236	51,590
Consumer	610,180	2,580	612,760	616,505	2,930	619,435
Leases	1,949	52	2,001	2,059	43	2,102
Total loans	$4,324,383	$14,200	$4,338,583	$4,317,099	$14,684	$4,331,783

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

Credit Quality

The following tables present the recorded investment in nonaccrual, accruing restructured, and loans past due 90 days or more and still accruing by class of loans as of March 31, 2012 and December 31, 2011:


	March 31, 2012
(In thousands)	Nonaccrual loans	Accruing restructured loans	Loans past due 90 days or more and accruing	Total nonperforming loans
Commercial, financial and agricultural	$36,164	$4,100	$12	$40,276
Commercial real estate	36,754	6,551	-	43,305
Construction real estate:
SE LLC commercial land and development	20,518	-	-	20,518
Remaining commercial	14,724	17,949	-	32,673
Mortgage	66	-	-	66
Installment	182	-	16	198
Residential real estate:
Commercial	43,211	541	-	43,752
Mortgage	26,374	5,421	1,523	33,318
HELOC	2,043	-	-	2,043
Installment	1,147	22	221	1,390
Consumer	2,044	-	567	2,611
Leases	-	-	-	-
Total loans	$183,227	$34,584	$2,339	$220,150


	December 31, 2011
(In thousands)	Nonaccrual loans	Accruing restructured loans	Loans past due 90 days or more and accruing	Total nonperforming loans
Commercial, financial and agricultural	$37,797	$2,848	$-	$40,645
Commercial real estate	43,704	8,274	-	51,978
Construction real estate:
Vision commercial land and development	25,761	-	-	25,761
Remaining commercial	14,021	11,891	-	25,912
Mortgage	66	-	-	66
Installment	30	-	-	30
Residential real estate:
Commercial	43,461	815	-	44,276
Mortgage	25,201	4,757	2,610	32,568
HELOC	1,412	-	-	1,412
Installment	1,777	98	58	1,933
Consumer	1,876	-	893	2,769
Leases	-	-	-	-
Total loans	$195,106	$28,683	$3,561	$227,350

The following table provides additional information regarding those nonaccrual and accruing restructured loans that were individually evaluated for impairment and those collectively evaluated for impairment as of March 31, 2012 and December 31, 2011.


	March 31, 2012			December 31, 2011
(In thousands)	Nonaccrual and accruing restructured loans	Loans individually evaluated for impairment	Loans collectively evaluated for impairment	Nonaccrual and accruing restructured loans	Loans individually evaluated for impairment	Loans collectively evaluated for impairment
Commercial, financial and agricultural	$40,264	$40,241	$23	$40,645	$40,621	$24
Commercial real estate	43,305	43,305	-	51,978	51,978	-
Construction real estate:
Vision/SE LLC commercial land and development	20,518	19,433	1,085	25,761	24,328	1,433
Remaining commercial	32,673	32,673	-	25,912	25,912	-
Mortgage	66	-	66	66	-	66
Installment	182	-	182	30	-	30
Residential real estate:
Commercial	43,752	43,752	-	44,276	44,276	-
Mortgage	31,795	-	31,795	29,958	-	29,958
HELOC	2,043	-	2,043	1,412	-	1,412
Installment	1,169	-	1,169	1,875	-	1,875
Consumer	2,044	20	2,024	1,876	20	1,856
Leases	-	-	-	-	-	-
Total loans	$217,811	$179,424	$38,387	$223,789	$187,135	$36,654

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 table presents loans individually evaluated for impairment by class of loans as of March 31, 2012 and December 31, 2011.


	March 31, 2012			December 31, 2011
	Unpaid principal balance	Recorded investment	Allowance for loan losses allocated	Unpaid principal balance	Recorded investment	Allowance for loan losses allocated
(in thousands)
With no related allowance recorded
Commercial, financial and agricultural	$33,769	$26,956	$-	$23,164	$18,098	$-
Commercial real estate	55,974	35,236	-	58,242	41,506	-
Construction real estate:
Vision /SE LLC commercial land and development	68,297	19,433	-	54,032	17,786	-
Remaining commercial	28,851	24,604	-	33,319	18,372	-
Residential real estate:
Commercial	52,550	39,483	-	49,341	38,686	-
Consumer	20	20	-	20	20	-

With an allowance recorded
Commercial, financial and agricultural	14,597	13,285	4,704	23,719	22,523	5,819
Commercial real estate	9,831	8,069	1,506	12,183	10,472	4,431
Construction real estate:
Vision/SE LLC commercial land and development	-	-	-	20,775	6,542	1,540
Remaining commercial	20,927	8,069	2,096	9,711	7,540	1,874
Residential real estate:
Commercial	5,642	4,269	1,199	6,402	5,590	2,271
Consumer	-	-	-	-	-	-

Total	$290,458	$179,424	$9,505	$290,908	$187,135	$15,935

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, 2012 and December 31, 2011, there were $91.0 million and $83.7 million, respectively, of partial charge-offs on loans individually evaluated for impairment with no related allowance recorded and $17.3 million and $20.1 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, 2012 and December 31, 2011, of $9.5 million and $15.9 million, respectively, related to loans with a recorded investment of $33.7 million and $52.7 million.

The following table presents the average recorded investment and interest income recognized on loans individually evaluated for impairment as of and for the three months ended March 31, 2012 and March 31, 2011:


	Three months ended March 31, 2012			Three months ended March 31, 2011
(in thousands)	Recorded investment as of March 31, 2012	Average recorded investment	Interest income recognized		Recorded investment as of March 31, 2011	Average recorded investment		Interest income recognized

Commercial, financial and agricultural	$40,241	$40,135	$105		$19,391	$19,515	$65
Commercial real estate	43,305	48,214	207		53,259	55,076	70
Construction real estate:
Vision/SE LLC commercial land and development	19,433	21,974	-		82,060	84,272	-
Remaining commercial	32,673	27,314	251		26,126	26,789	78
Residential real estate:
Commercial	43,752	43,276	40		58,123	59,465	139
Consumer	20	20	-		-	22	-

Total	$179,424	$180,933	$603		$238,959	$245,139	$352

The following tables present the aging of the recorded investment in past due loans as of March 31, 2012 and December 31, 2011 by class of loans.


	March 31, 2012
(in thousands)	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

Commercial, financial and agricultural	$3,935	$28,225		$32,160		$723,671		$755,831
Commercial real estate	1,062	23,067		24,129		1,068,014		1,092,143
Construction real estate:
SE LLC commercial land and development	337	16,587		16,924		9,196		26,120
Remaining commercial	-	7,702		7,702		141,645		149,347
Mortgage	173	-		173		19,520		19,693
Installment	61	75		136		9,092		9,228
Residential real estate:
Commercial	502	13,261		13,763		379,909		393,672
Mortgage	13,174	18,840		32,014		974,483		1,006,497
HELOC	331	297		628		222,036		222,664
Installment	611	510		1,121		47,506		48,627
Consumer	7,302	1,807		9,109		603,651		612,760
Leases	-	-	-		2,001		2,001
Total loans	$27,488	$110,371	$137,859		$4,200,724		$4,338,583

* Includes $2.4 million of loans past due 90 days or more and accruing.


	December 31, 2011
(in thousands)	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

Commercial, financial and agricultural	$3,106	$11,308	$14,414	$732,504	$746,918
Commercial real estate	2,632	21,798	24,430	1,088,379	1,112,809
Construction real estate:
Vision commercial land and development	-	19,235	19,235	12,399	31,634
Remaining commercial	99	7,839	7,938	148,509	156,447
Mortgage	76	-	76	20,027	20,103
Installment	421	8	429	9,483	9,912
Residential real estate:
Commercial	1,545	10,097	11,642	385,287	396,929
Mortgage	15,879	20,614	36,493	918,787	955,280
HELOC	1,015	436	1,451	227,173	228,624
Installment	1,549	1,136	2,685	48,905	51,590
Consumer	11,195	2,192	13,387	606,048	619,435
Leases	-	-	-	2,102	2,102
Total loans	$37,517	$94,663	$132,180	$4,199,603	$4,331,783

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

Credit Quality Indicators

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) consumer loans. 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 require management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan 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 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 nonaccrual 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, 2012 and December 31, 2011 for all commercial loans:


	March 31, 2012
(in thousands)	5 Rated	6 Rated	Impaired	Pass Rated	Recorded Investment
Commercial, financial and agricultural	$ 10,458	$ 5,217	$ 40,264	$ 699,892	$ 755,831

Commercial real estate	30,257	10,798	43,305	1,007,783	1,092,143

Construction real estate:
SE LLC commercial land and development	2,801	-	20,518	2,801	26,120
Remaining commercial	6,748	232	32,673	109,694	149,347

Residential real estate:
Commercial	16,793	1,469	43,752	331,658	393,672

Leases	-	-	-	2,001	2,001

Total Commercial Loans	$ 67,057	$ 17,716	$ 180,512	$ 2,153,829	$ 2,419,114


	December 31, 2011
(in thousands)	5 Rated	6 Rated	Impaired	Pass Rated	Recorded Investment
Commercial, financial and agricultural	$ 11,785	$ 7,628	$ 40,645	$ 686,860	$ 746,918
Commercial real estate	37,445	10,460	51,978	1,012,926	1,112,809

Construction real estate:
Vision commercial land and development	3,102	-	25,761	2,771	31,634
Remaining commercial	6,982	8,311	25,912	115,242	156,447

Residential real estate:
Commercial	17,120	3,785	44,276	331,748	396,929
Leases	-	-	-	2,102	2,102

Total Commercial Loans	$ 76,434	$ 30,184	$ 188,572	$ 2,151,649	$ 2,446,839

Troubled Debt Restructurings (TDRs)

Management classifies loans as TDRs when a borrower is experiencing financial difficulties and Park has granted a concession. In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed of the probability that the borrower will be in payment default on any of its debt in the foreseeable future without the modification. This evaluation is performed under the Company’s internal underwriting policy. Management’s policy is to modify loans by extending the term or by granting a temporary or permanent contractual interest rate below the market rate, not by forgiving debt. Certain loans which were modified during the period ended March 31, 2012 did not meet the definition of a TDR as the modification was a delay in a payment that was considered to be insignificant. Management considers a forbearance period of up to three months or a delay in payment of up to 30 days to be insignificant. TDRs may be classified as accruing if the borrower has been current for a period of at least six months with respect to loan payments and management expects that the borrower will be able to continue to make payments in accordance with the terms of the restructured note. Management reviews all accruing TDRs quarterly to ensure payments continue to be made in accordance with the modified terms.

At March 31, 2012 and December 31, 2011, there were $98.6 million and $100.4 million, respectively, of TDRs included in nonaccrual loan totals. As of March 31, 2012 and December 31, 2011, there were $34.6 million and $28.7 million, respectively, of TDRs included in accruing loan totals. At March 31, 2012 and December 31, 2011, $52.8 million and $79.9 million of the nonaccrual TDRs were current. Management will continue to review the restructured loans and may determine it appropriate to move certain of the loans back to accrual status in the future. At March 31, 2012 and December 31, 2011, Park had commitments to lend $5.1 million and $4.0 million, respectively, of additional funds to borrowers whose terms had been modified in a TDR.

The specific reserve related to TDRs at March 31, 2012 and December 31, 2011 was $4.4 million and $9.1 million, respectively. Modifications made in 2011 and 2012 were largely the result of renewals, extending the maturity date of the loan, at terms consistent with the original note. These modifications were deemed to be TDRs primarily due to Park’s conclusion that the borrower would likely not have qualified for similar terms through another lender. Many of the modifications deemed to be TDRs were previously identified as impaired loans, and thus were also previously evaluated for impairment under ASC 310. Additional specific reserves of $252,000 were recorded during the period ending March 31, 2012 as a result of TDRs identified in the 2012 year.

The terms of certain other loans were modified during the three month period ended March 31, 2012 that did not meet the definition of a TDR. Modified substandard commercial loans which did not meet the definition of a TDR had a total recorded investment as of March 31, 2012 of $3.6 million. The modification of these loans: (1) involved a modification of the terms of a loan to a borrower who was not experiencing financial difficulties, (2) resulted in a delay in a payment that was considered to be insignificant, or (3) resulted in Park obtaining additional collateral or guarantees that improved the likelihood of the ultimate collection of the loan such that the modification was deemed to be at market terms. Modified consumer loans which did not meet the definition of a TDR had a total recorded investment as of March 31, 2012 of $6.3 million. Many of these loans were modified as a lower cost option than a full refinancing to borrowers who were not experiencing financial difficulties.

The following table details the number of contracts modified as TDRs during the three month period ended March 31, 2012 as well as the period end recorded investment of these contracts. The recorded investment pre- and post-modification is generally the same.


	Three months ended March 31, 2012
	Number of Contracts	Accruing	Nonaccrual				Total Recorded Investment
(In thousands)
Commercial, financial and agricultural	5	$ 1,289		$ 750		$ 2,039
Commercial real estate	16	2,212		2,967		5,179
Construction real estate:
SE LLC commercial land and development	4	-		894		894
Remaining commercial	9	8,641		1,565		10,206
Mortgage	-	-		-		-
Installment	-	-		-		-
Residential real estate:
Commercial	3	-		318		318
Mortgage	9	111		1,170		1,281
HELOC	-	-		-		-
Installment	-	-		-		-
Consumer	1	-		91		91
Leases	-	-			-
Total loans	47	$ 12,253	$7,755			$		$20,008

As of December 31, 2011, $6.2 million of those loans modified during the three month period ended March 31, 2012 were on nonaccrual status.

The following table presents the recorded investment in financing receivables which were modified as troubled debt restructurings within the previous 12 months and for which there was a payment default during the three month period ended March 31, 2012. For this table, a loan is considered to be in default when it becomes 30 days contractually past due under the modified terms.


	Three months ended March 31, 2012
	Number of Contracts	Recorded Investment
(In thousands)
Commercial, financial and agricultural	15	$8,469
Commercial real estate	8	3,201
Construction real estate:
SE LLC commercial land and development	3	659
Remaining commercial	8	4,155
Mortgage	-	-
Installment	-	-
Residential real estate:
Commercial	6	3,948
Mortgage	5	684
HELOC	1	48
Installment	-	-
Consumer	-	-
Leases	-	-
Total loans	46	$21,164

Of the $21.2 million in modified trouble debt restructurings which defaulted during the period ended March 31, 2012, $205,000 were accruing loans and $20.0 million were nonaccrual loans.