Note 5. Allowance for Loan and Lease Losses

Changes in the allowance for loan and lease losses (“ALLL”) were as follows:

	Three months ended						Six months ended
	June 30,						June 30,
(In thousands)	2011			2010			2011			2010
Balance at the beginning of the period	$	23,048		$	28,661		$	21,129		$	30,331
Charge-offs		(6,897	)		(10,823	)		(7,074	)		(14,474	)
Recoveries		407			635			419			713
Provision		3,056			4,290			5,140			6,193

Balance at the end of the period	$	19,614		$	22,763		$	19,614		$	22,763

The following tables present the detail of the ALLL and the loan portfolio disaggregated by loan portfolio segment for the three and six months ended June 30, 2011 and the year ended December 31, 2010.

Allowance for Loan and Leases Losses and Loans Held for Investment

For the three months ended June 30, 2011

(In thousands)	Commercial real estate			Construction and land development			Commercial			Multi-family			Residential			Consumer			Leasing			Tax certificates			Unallocated			Total
Allowance for Loan and Leases Losses
Beginning balance	$	9,324		$	5,485		$	3,584		$	648		$	1,084		$	16		$	1,692		$	490		$	725		$	23,048
Charge-offs		(1,685	)		(3,649	)		(552	)		(329	)		(507	)		-			(133	)		(42	)		-			(6,897	)
Recoveries		240			12			2			-			150			-			3			-			-			407
Provision		311			2,940			(1,136	)		130			414			(3	)		264			193			(57	)		3,056
Ending balance	$	8,190		$	4,788		$	1,898		$	449		$	1,141		$	13		$	1,826		$	641		$	668		$	19,614
Ending balance: related to loans individually evaluated for impairment	$	-		$	1,458		$	-		$	-		$	22		$	-		$	314		$	328		$	-		$	2,122
Ending balance: related to loans collectively evaluated for impairment	$	8,190		$	3,330		$	1,898		$	449		$	1,119		$	13		$	1,512		$	313		$	668		$	17,492
LHFI
Ending balance	$	180,103		$	66,313		$	56,282		$	9,880		$	27,631		$	745		$	37,598		$	60,009		$	-		$	438,561
Ending balance: individually evaluated for impairment	$	9,676		$	16,375		$	13,458		$	1,776		$	1,395		$	-		$	408		$	1,709		$	-		$	44,797
Ending balance: collectively evaluated for impairment	$	170,427		$	49,938		$	42,824		$	8,104		$	26,236		$	745		$	37,190		$	58,300		$	-		$	393,764

Allowance for Loan and Leases Losses and Loans Held for Investment

For the six months ended June 30, 2011

(In thousands)	Commercial real estate			Construction and land development			Commercial			Multi-family			Residential			Consumer		Leasing			Tax certificates			Unallocated		Total
Allowance for Loan and Leases Losses
Beginning balance	$	9,534		$	3,976		$	3,797		$	652		$	1,106		$	12	$	1,670		$	380		$	2	$	21,129
Charge-offs		(1,685	)		(3,649	)		(552	)		(329	)		(507	)		-		(309	)		(43	)		-		(7,074	)
Recoveries		249			12			3			-			151			-		3			1			-		419
Provision		92			4,449			(1,350	)		126			391			1		462			303			666		5,140
Ending balance	$	8,190		$	4,788		$	1,898		$	449		$	1,141		$	13	$	1,826		$	641		$	668	$	19,614
Ending balance: related to loans individually evaluated for impairment	$	-		$	1,458		$	-		$	-		$	22		$	-	$	314		$	328		$	-	$	2,122
Ending balance: related to loans collectively evaluated for impairment	$	8,190		$	3,330		$	1,898		$	449		$	1,119		$	13	$	1,512		$	313		$	668	$	17,492
LHFI
Ending balance	$	180,103		$	66,313		$	56,282		$	9,880		$	27,631		$	745	$	37,598		$	60,009		$	-	$	438,561
Ending balance: individually evaluated for impairment	$	9,676		$	16,375		$	13,458		$	1,776		$	1,395		$	-	$	408		$	1,709		$	-	$	44,797
Ending balance: collectively evaluated for impairment	$	170,427		$	49,938		$	42,824		$	8,104		$	26,236		$	745	$	37,190		$	58,300		$	-	$	393,764

Allowance for Loan and Leases Losses and Loans Held for Investment

For the year ended December 31, 2010

(In thousands)	Commercial real estate			Construction and land development			Commercial			Multi-family			Residential			Consumer			Leasing			Tax certificates			Unallocated			Total
Allowance for Loan and Leases Losses
Beginning balance	$	10,039		$	7,895		$	6,542		$	-		$	3,762		$	25		$	1,757		$	290		$	21		$	30,331
Charge-offs		(7,352	)		(13,413	)		(5,930	)		(787	)		(3,211	)		-			(972	)		(49	)		-			(31,714	)
Recoveries		684			116			81			18			313			37			51			-			-			1,300
Provision		6,796			9,508			3,223			1,421			285			(47	)		834			139			(19	)		22,140
Reduction due to Royal Asian sale		(633	)		(130	)		(119	)		-			(43	)		(3	)		-			-			-			(928	)
Ending balance	$	9,534		$	3,976		$	3,797		$	652		$	1,106		$	12		$	1,670		$	380		$	2		$	21,129
Ending balance: related to loans individually evaluated for impairment	$	1,363		$	-		$	-		$	245		$	74		$	-		$	194		$	31		$	-		$	1,907
Ending balance: related to loans collectively evaluated for impairment	$	8,171		$	3,976		$	3,797		$	407		$	1,032		$	12		$	1,476		$	349		$	2		$	19,222
LHFI
Ending balance	$	194,203		$	79,638		$	74,027		$	10,277		$	29,299		$	793		$	38,725		$	70,443		$	-		$	497,405
Ending balance: individually evaluated for impairment	$	10,060		$	19,758		$	5,858		$	2,453		$	2,159		$	-		$	335		$	1,802		$	-		$	42,425
Ending balance: collectively evaluated for impairment	$	184,143		$	59,880		$	68,169		$	7,824		$	27,140		$	793		$	38,390		$	68,641		$	-		$	454,980

The following tables detail the loans that were evaluated for impairment by loan segment at June 30, 2011 and December 31, 2010.

	For the six months ended June 30, 2011
(In thousands)	Unpaid principal balance		Carrying value		Related allowance		Average recorded investment		Interest income recognized
With no related allowance recorded:
Construction and land development	$	14,688	$	9,529	$	-	$	14,175	$	-
Real Estate-non-residential		10,060		9,676		-		4,974		-
Commercial & industrial		18,373		13,458		-		7,662		-
Residential real estate		694		649		-		1,252		-
Multi-family		1,919		1,776		-		1,788		-
Total:	$	45,734	$	35,088	$	-	$	29,851	$	-
With an allowance recorded:
Construction and land development	$	6,847	$	5,389	$	1,458	$	6,179	$	-
Real Estate-non-residential		-		-		-		4,907		-
Commercial & industrial		-		-		-		1,446		-
Residential real estate		1,030		723		22		1,014		-
Multi-family		-		-		-		456		-
Leasing		408		94		314		369		-
Tax certificates		4,757		1,381		328		1,766		-
Total:	$	13,042	$	7,587	$	2,122	$	16,137	$	-

	For the year ended December 31, 2010
(In thousands)	Unpaid principal balance		Carrying value		Related allowance		Average recorded investment		Interest income recognized
With no related allowance recorded:
Construction and land development	$	25,312	$	19,758	$	-	$	28,105	$	202
Real Estate-non-residential		4,511		4,255		-		13,650		42
Commercial & industrial		10,217		5,858		-		5,236		2
Residential real estate		1,172		1,119		-		3,243		76
Multi-family		1,935		1,815		-		458		-
Tax certificates		-		-		-		996		-
Total:	$	43,147	$	32,805	$	-	$	51,688	$	322
With an allowance recorded:
Construction and land development	$	-	$	-	$	-	$	13,512	$	13
Real Estate-non-residential		5,805		4,442		1,363		5,057		-
Commercial & industrial		-		-		-		1,782		-
Residential real estate		1,239		966		74		1,153		-
Multi-family		638		393		245		3,469		-
Leasing		335		141		194		538		-
Tax certificates		4,850		1,771		31		1,026		-
Total:	$	12,867	$	7,713	$	1,907	$	26,537	$	13