Provision for Loan LossesThe provision for loan losses was $17.3 million for the year ended December 31, 2011, a decrease of $16.1 million, from $33.4 million for the year ended December 31, 2010. The provision decreased between the periods primarily because fewer loan losses were recognized due to fewer write downs on non-performing real estate loans in 2011 when compared to 2010. The provision also decreased because of the $132 million decrease in the loan portfolio between the periods. Total non-performing assets were $50.6 million at December 31, 2011, a decrease of $33.9 million, or 40.0%, from $84.5 million at December 31, 2010. Non-performing loans decreased $34.1 million and foreclosed and repossessed assets increased $0.2 million during 2011. The non-performing loan and foreclosed and repossessed asset activity for 2011 was as follows:
(Dollars in thousands)
|Non-performing loans||Foreclosed and repossessed asset activity|
|December 31, 2010||$||68,074||December 31, 2010||$||16,395|
|Classified as non-performing||28,615||Transferred from non-performing loans||8,593|
|Charge offs||(39,303||)||Other foreclosures/repossessions||138|
|Principal payments received||(9,552||)||Real estate sold||(5,444||)|
|Classified as accruing||(5,248||)||Net gain on sale of assets||407|
|Transferred to real estate owned||(8,593||)||Write downs||(3,473||)|
|December 31, 2011||$||33,993||December 31, 2011||$||16,616|
A reconciliation of the allowance for loan losses for 2011 and 2010 is summarized as follows:
|Balance at January 1,||$||42,828||$||23,811|
|Commercial real estate||(23,012||)||(7,094||)|
|Single family mortgage||(508||)||(254||)|
|Balance at December 31,||$||23,888||$||42,828|
Charge offs increased and the allocated allowance decreased in 2011 when compared to 2010 due primarily to two factors. The first factor was the modification of our charge off policy in the fourth quarter of 2011 relating to non-performing loans secured by real estate, as described above, which required the charge off of previously established specific valuation allowances (SVAs) and the second factor was that in certain instances the borrower’s financial condition had deteriorated to the point that a charge off of the loan balance was warranted.
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