Other Real Estate Owned

6 Months Ended

Jun. 30, 2013

Other Real Estate Owned

Other Real Estate Owned

Note 7. Other Real Estate Owned

The following table provides a summary of OREO activity for the three months ended June 30, 2013 and 2012:

	For the three months ended June 30, 2013									For the three months ended June 30, 2012
(in thousands)	Non-Covered OREO			Covered OREO			Total			Non-Covered OREO			Covered OREO			Total
Balance, beginning of period	$	19,786		$	43,751		$	63,537		$	29,074		$	78,456		$	107,530
Additions	341			4,612			4,953			10,476			22,960			33,436
Sales	(390		)	(4,378		)	(4,768		)	(1,540		)	(14,332		)	(15,872		)
Valuation adjustments	(61		)	(2,184		)	(2,245		)	(3,343		)	(4,250		)	(7,593		)
Balance, end of period	$	19,676		$	41,801		$	61,477		$	34,667		$	82,834		$	117,501

The following table provides a summary of OREO activity for the six months ended June 30, 2013 and 2012:

	For the six months ended June 30, 2013									For the six months ended June 30, 2012
(in thousands)	Non-Covered OREO			Covered OREO			Total			Non-Covered OREO			Covered OREO			Total
Balance, beginning of period	$	21,027		$	58,276		$	79,303		$	30,790		$	98,550		$	129,340
Additions	723			13,906			14,629			12,693			29,035			41,728
Sales	(1,781		)	(25,162		)	(26,943		)	(4,417		)	(32,693		)	(37,110		)
Valuation adjustments	(293		)	(5,219		)	(5,512		)	(4,399		)	(12,058		)	(16,457		)
Balance, end of period	$	19,676		$	41,801		$	61,477		$	34,667		$	82,834		$	117,501

At June 30, 2013, OREO was $61.5 million and included $41.8 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 June 30, 2013 and December 31, 2012 is net of valuation allowances of $28.7 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.