Loans, net of unearned income, totaled $11.1 billion at September 30, 2011 compared to $5.0 billion at December 31, 2010. The increase reflects the addition of loans from the Whitney acquisition. Covered loans totaled $721.8 million at September 30, 2011 compared to $809.2 million at December 31, 2010. Covered loans refer to loans acquired in the Peoples First FDIC-assisted transaction that are subject to loss-sharing agreements with the FDIC.

Changes in the carrying amount of acquired impaired loans and accretable yield are presented in the following table:


	September 30, 2011												September 30, 2010
	Covered						Non-covered						Covered						Non-covered
	Carrying Amount of Loans *			Net Accretable Discount			Carrying Amount of Loans *			Net Accretable Discount			Carrying Amount of Loans *			Net Accretable Discount			Carrying Amount of Loans *		Net Accretable Discount
Nine Months Ended
(In thousands)
Balance at beginning of period	$	809,459		$	107,638		$	—		$	—		$	950,430		$	315,782		$	—	$	—
Additions		—			—			536,833			94,733			—			—			—		—
Payments received, net		(127,648	)		—			(80,320	)		—			(150,420	)		—			—		—
Accretion		40,312			(40,312	)		13,558			(13,558	)		42,027			(42,027	)		—		—

Balance at end of period	$	722,123		$	67,326		$	470,071		$	81,175		$	842,037		$	273,755		$	—	$	—

*	Excludes covered credit card loans and loans held for sale

The carrying value of acquired impaired loans accounted for using the cost recovery method was $34.1 million at September 30, 2011, and $45.3 million at December 31, 2010. Each of these loans is on nonaccrual status. Acquired impaired loans that have an accretable difference are not included in nonperforming balances even though the customer may be contractually past due. These loans will accrete interest income over the remaining life of the loan. The Company also recorded a $33.4 million allowance for additional expected losses that have arisen since the acquisition of covered loans with a corresponding increase for 95% coverage in our FDIC loss share receivable. This resulted in a net provision for loan loss of $1.7 million during the nine months ended September 30, 2011.

The unpaid principal balance for acquired impaired loans was $1.7 billion and $1.2 billion at September 30, 2011 and December 31, 2010, respectively.

It is the policy of Hancock to promptly charge off commercial, construction, and real estate loans and lease financings, or portions of these loans and leases, when available information reasonably confirms that they are uncollectible. Prior to recognizing a loss, asset value is established by determining the value of the collateral securing the loan, and the borrower's and the guarantor's ability and willingness to pay. Consumer loans are generally charged down to the fair value of the collateral less cost to sell when 120 days past due. Loans deemed uncollectible are charged off against the allowance account with subsequent recoveries added back to the allowance when collected.

The following table sets forth, for the periods ended, allowance for loan losses, amounts charged-off and recoveries of loans previously charged-off:


				Residential			Indirect			Direct			Finance
	Commercial			mortgages			consumer			consumer			Company			Total
(In thousands)	September 30, 2011
Allowance for loan losses:
Beginning balance	$	56,859		$	4,626		$	2,918		$	9,322		$	8,272		$	81,997
Charge-offs		(25,597	)		(1,774	)		(1,496	)		(4,498	)		(3,236	)		(36,601	)
Recoveries		9,863			1,044			727			1,255			831			13,720
Net Provision for loan losses (a)		18,841			5,286			372			1,218			1,503			27,220
Increase (decrease) in indemnification asset (a)		19,583			—			—			12,194			—			31,777

Ending balance	$	79,549		$	9,182		$	2,521		$	19,491		$	7,370		$	118,113

Ending balance:
Individually evaluated for impairment	$	5,959		$	641		$	—		$	—		$	—		$	6,600
Collectively evaluated for impairment		73,590			8,541			2,521			19,491			7,370			111,513
Covered loans with deteriorated credit quality		20,911			—			—			12,836			—			33,747
Loans:
Ending balance:	$	8,075,247		$	1,451,506		$	286,968		$	1,192,431		$	96,117		$	11,102,269
Individually evaluated for impairment		44,317			5,199			—			—			—			49,516
Collectively evaluated for impairment		7,728,970			1,184,061			286,968			1,034,806			96,117			10,330,922
Covered loans		301,960			262,246			—			157,625			—			721,831
Acquired loans (b)		4,653,996			776,993			—			416,729			—			5,847,718

(a)

The provision for loan losses is shown "net" after coverage provided by FDIC loss share agreements on covered loans. This results in an increase in the indemnification asset, which is the difference between the provision for loan losses on covered loans of ($1,671), and the impairment $33,448 on those covered loans.

(b)	Acquired loans are recorded at fair value with no allowance brought forward in accordance with acquisition accounting.


				Residential			Indirect			Direct			Finance
	Commercial			mortgages			consumer			consumer			Company			Total
(In thousands)	September 30, 2010
Allowance for loan losses:
Beginning balance	$	42,484		$	4,782		$	3,826		$	7,145		$	7,813		$	66,050
Charge-offs		(32,687	)		(3,211	)		(2,474	)		(3,876	)		(4,396	)		(46,644	)
Recoveries		2,772			360			848			1,024			714			5,718
Net Provision for loan losses		41,426			3,603			1,189			3,921			4,462			54,601

Ending balance	$	53,995		$	5,534		$	3,389		$	8,214		$	8,593		$	79,725

Ending balance:
Individually evaluated for impairment	$	9,136		$	1,091		$	—		$	—		$	—		$	10,227
Collectively evaluated for impairment		44,859			4,443			3,389			8,214			8,593			69,498
Covered loans with deteriorated credit quality		—			—			—			—			—			—
Loans:
Ending balance:	$	3,068,415		$	693,862		$	322,501		$	721,513		$	101,406		$	4,907,697
Individually evaluated for impairment		65,519			5,643			—			—			—			71,162
Collectively evaluated for impairment		2,616,209			364,946			322,501			597,522			101,406			4,002,584
Covered loans		386,687			323,273			—			123,991			—			833,951

In some instances, loans are placed on nonaccrual status. All accrued but uncollected interest related to the loans are deducted from income in the period the loans are assigned a nonaccrual status. For such period as a loan is in nonaccrual status, any cash receipts are applied first to principal, second to expenses incurred to cause payment to be made and lastly to the recovery of any reversed interest income and interest that would be due and owing subsequent to the loan being placed on nonaccrual status for all classes of financing receivables. Covered and acquired loans accounted for in accordance with ASC 310-30 are considered to be performing due to the application of the accretion method. These loans are excluded from the table due to their performing status. Certain covered loans accounted for using the cost recovery method or in accordance with ASC 310-20 are disclosed as non-accrual loans below. A reserve is recorded when estimated losses are in excess of the net purchase accounting marks. Loans under ASC 310-20 have accretable interest income over the life based on contractual payments receivable. The following table shows the composition of non-accrual loans by portfolio segment:

Included in nonaccrual loans is $4.4 million in restructured commercial loans. Total troubled debt restructurings as of September 30, 2011 were $14.0 million and $12.6 million at December 31, 2010. Loan restructurings occur when a borrower is experiencing, or is expected to experience, financial difficulties in the near-term and a modification that would otherwise not be considered is granted to the borrower. The concessions involve paying interest only for a period of 6 to 12 months. Hancock does not typically lower the interest rate or forgive principal or interest as part of the loan modification. There have been no commitments to lend additional funds to any borrowers whose loans have been restructured. Troubled debt restructurings can involve loans remaining on nonaccrual, moving to nonaccrual, or continuing to accrue, depending on the individual facts and circumstances of the borrower. The evaluation of the borrower's financial condition and prospects include consideration of the borrower's sustained historical repayment performance for a reasonable period prior to the date on which the loan is returned to accrual status. A sustained period of repayment performance generally would be a minimum of six months and would involve payments of cash or cash equivalents. If the terms of a troubled debt restructuring are violated, the loan is considered in default.

The table below details the troubled debt restructurings that occurred during the period by portfolio segment (in thousands):

In accordance with accounting guidance, acquired impaired loans that have been restructured are considered to be performing due to the application of the accretion method. These loans are excluded from the table.

A reserve analysis is completed on all loans that have been determined to be troubled debt restructurings by Management. All troubled debt restructurings are rated substandard and are considered impaired in calculating the allowance for loan losses.

The Company's investments in impaired loans at September 30, 2011 and December 31, 2010 were $83.6 million and $107.7 million, respectively. The amount of interest that would have been recognized on nonaccrual loans for the three and nine months ended September 30, 2011 was approximately $1.5 million and $3.8 million, respectively. Interest recovered on nonaccrual loans that were recorded in net income for the three and nine months ended September 30, 2011 was $0.2 million and $0.9 million, respectively.

The following table presents impaired loans disaggregated by class at September 30, 2011 and December 31, 2010:

Accruing loans 90 days past due as a percent of loans was 0.01% and 0.03% at September 30, 2011 and December 31, 2010, respectively. Covered and acquired loans accounted for in accordance with ASC 310-30 are considered to be performing due to the application of the accretion method. These loans are excluded from the table due to their performing status. Certain covered loans accounted for using the cost recovery method or acquired loans accounted for in accordance with ASC 310-20 are disclosed as non-current loans below. The following table presents the age analysis of past due loans at September 30, 2011 and December 31, 2010:

The following table presents the credit quality indicators of the Company's various classes of loans at September 30, 2011 and December 31, 2010:


	September 30, 2011
	Direct consumer- originated		Direct consumer - acquired		Direct consumer - covered		Total direct consumer		Indirect consumer		Finance company
	(In thousands)
Performing	$	615,512	$	415,668	$	157,625	$	1,188,805	$	286,968	$	94,521
Nonperforming		2,565		1,061		—		3,626		—		1,596

Total	$	618,077	$	416,729	$	157,625	$	1,192,431	$	286,968	$	96,117


	December 31, 2010
	Direct consumer - originated		Direct consumer - covered		Total direct consumer		Indirect consumer		Finance company
	(In thousands)
Performing	$	593,085	$	141,145	$	734,230	$	309,454	$	99,235
Nonperforming		4,862		170		5,032		—		1,759

Total	$	597,947	$	141,315	$	739,262	$	309,454	$	100,994

All loans are reviewed periodically over the course of the year. Lending officers are primarily responsible for ongoing monitoring and the assignment of risk ratings to individual loans based on established guidelines. An independent credit review function assesses the accuracy of officer ratings and the timeliness of rating changes and performs reviews of the underwriting processes.

The Company held $64.5 million and $21.9 million in loans held for sale at September 30, 2011 and December 31, 2010, respectively, carried at lower of cost or fair value. Of the $64.5 million, $22.4 million are problem commercial loans held for sale. The remainder of $42.1 million is mortgage loans held for sale. Gain on the sale of mortgage loans totaled $0.05 million and $1.0 million for the nine months ended September 30, 2011 and 2010, respectively. Mortgage loans held for sale are originated on a best-efforts basis, whereby a commitment by a third party to purchase the loan has been received concurrent with the Banks' commitment to the borrower to originate the loan.