Other Real Estate Owned

12 Months Ended

Dec. 31, 2013

Other Real Estate Owned.

Other Real Estate Owned

Note 8. Other Real Estate Owned

        The following table provides a summary of OREO activity for 2013 and 2012:

	2013									2012
(in thousands)	Non-Covered OREO			Covered OREO			Total			Non-Covered OREO			Covered OREO			Total
Balance, beginning of year	$	21,027		$	58,276		$	79,303		$	30,790		$	98,550		$	129,340
Additions		3,283			22,993			26,276			14,177			50,377			64,554
Sales		(10,280	)		(48,773	)		(59,053	)		(17,147	)		(70,211	)		(87,358	)
Valuation adjustments		(1,419	)		(7,015	)		(8,434	)		(6,793	)		(20,440	)		(27,233	)
Balance, end of year	$	12,611		$	25,481		$	38,092		$	21,027		$	58,276		$	79,303

        At December 31, 2013, OREO was $38.1 million and included $25.5 million of covered OREO. At December 31, 2012, OREO was $79.3 million and included $58.3 million of covered OREO. The balance of OREO at December 31, 2013 and 2012 is net of valuation allowances of $17.4 million and $33.6 million, respectively.

        Covered OREO expenses and valuation write-downs are recorded in the noninterest expense section of the consolidated statements of income and gains or losses on sale of covered OREO are recognized in the noninterest income section. Under the loss sharing agreements, 80 percent of eligible covered OREO expenses, valuation write-downs, and losses on sales are reimbursable to the Company from the FDIC and 80 percent of covered gains on sales are payable to the FDIC. The portion of these expenses that is reimbursable or income that is payable is recorded in FDIC loss sharing income (expense), net in the noninterest income section of the consolidated statements of income.