Note 5. Allowance for Loan and Lease Losses

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

	Three months ended						Nine months ended
	September 30,						September 30,
(In thousands)	2011			2010			2011			2010
Balance at the beginning of the period	$	19,614		$	22,763		$	21,129		$	30,331
Charge-offs		(2,400	)		(843	)		(9,474	)		(15,317	)
Recoveries		235			131			654			844
Provision		428			2,194			5,568			8,387
Balance at the end of the period	$	17,877		$	24,245		$	17,877		$	24,245

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

Allowance for Loan and Leases Losses and Loans Held for Investment

For the three months ended September 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	$	8,190		$	4,788		$	1,898		$	449	$	1,141		$	13	$	1,826		$	641		$	668	$	19,614
Charge-offs		-			(1,471	)		(114	)		-		(43	)		-		(326	)		(446	)		-		(2,400	)
Recoveries		108			120			5			-		1			-		1			-			-		235
Provision		(56	)		(655	)		536			103		66			9		38			249			138		428
Ending balance	$	8,242		$	2,782		$	2,325		$	552	$	1,165		$	22	$	1,539		$	444		$	806	$	17,877
Ending balance: related to loans individually evaluated for impairment	$	-		$	-		$	430		$	-	$	24		$	-	$	204		$	105		$	-	$	763
Ending balance: related to loans collectively evaluated for impairment	$	8,242		$	2,782		$	1,895		$	552	$	1,141		$	22	$	1,335		$	339		$	806	$	17,114
LHFI
Ending balance	$	181,308		$	55,448		$	57,148		$	11,998	$	27,529		$	1,247	$	35,758		$	53,513		$	-	$	423,949
Ending balance: individually evaluated for impairment	$	9,676		$	14,002		$	12,425		$	1,717	$	1,433		$	-	$	293		$	1,387		$	-	$	40,933
Ending balance: collectively evaluated for impairment	$	171,632		$	41,446		$	44,723		$	10,281	$	26,096		$	1,247	$	35,465		$	52,126		$	-	$	383,016

Allowance for Loan and Leases Losses and Loans Held for Investment
For the nine months ended September 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	)		(5,120	)		(666	)		(329	)		(550	)		-		(635	)		(489	)		-		(9,474	)
Recoveries		357			132			8			-			152			-		4			1			-		654
Provision		36			3,794			(814	)		229			457			10		500			552			804		5,568
Ending balance	$	8,242		$	2,782		$	2,325		$	552		$	1,165		$	22	$	1,539		$	444		$	806	$	17,877
Ending balance: related to loans individually evaluated for impairment	$	-		$	-		$	430		$	-		$	24		$	-	$	204		$	105		$	-	$	763
Ending balance: related to loans collectively evaluated for impairment	$	8,242		$	2,782		$	1,895		$	552		$	1,141		$	22	$	1,335		$	339		$	806	$	17,114
LHFI
Ending balance	$	181,308		$	55,448		$	57,148		$	11,998		$	27,529		$	1,247	$	35,758		$	53,513		$	-	$	423,949
Ending balance: individually evaluated for impairment	$	9,676		$	14,002		$	12,425		$	1,717		$	1,433		$	-	$	293		$	1,387		$	-	$	40,933
Ending balance: collectively evaluated for impairment	$	171,632		$	41,446		$	44,723		$	10,281		$	26,096		$	1,247	$	35,465		$	52,126		$	-	$	383,016

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 September 30, 2011 and December 31, 2010.

	For the nine months ended September 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	$	18,827	$	14,002	$	-	$	12,825	$	-
Real Estate-non-residential		10,060		9,676		-		6,385		25
Commercial & industrial		8,644		8,639		-		8,792		46
Residential real estate		695		649		-		1,071		-
Multi-family		1,888		1,717		-		1,776		-
Total:	$	40,114	$	34,683	$	-	$	30,849	$	71
With an allowance recorded:
Construction and land development	$	-	$	-	$	-	$	5,868	$	-
Real Estate-non-residential		-		-		-		3,435		-
Commercial & industrial		8,645		3,357		430		1,435		-
Residential real estate		994		759		24		950		-
Multi-family		-		-		-		319		-
Leasing		293		89		204		384		-
Tax certificates		4,764		1,282		105		1,718		-
Total:	$	14,696	$	5,487	$	763	$	14,109	$	-

	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	$	16,147	$	12,472	$	-	$	19,944	$	-
Land development		9,165		7,286		-		8,161		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	$	-	$	-	$	-	$	7,340	$	-
Land development		-		-		-		6,172		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