Other Real Estate Owned

9 Months Ended

Sep. 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 September 30, 2013 and 2012:

	For the three months ended September 30, 2013									For the three months ended September 30, 2012
(in thousands)	Non-Covered OREO			Covered OREO			Total			Non-Covered OREO			Covered OREO			Total
Balance, beginning of period	$	19,676		$	41,801		$	61,477		$	34,667		$	82,834		$	117,501
Additions	—			4,008			4,008			1,485			14,989			16,474
Sales	(771		)	(14,435		)	(15,206		)	(8,364		)	(9,938		)	(18,302		)
Valuation adjustments	—			(1,556		)	(1,556		)	(733		)	(4,267		)	(5,000		)
Balance, end of period	$	18,905		$	29,818		$	48,723		$	27,055		$	83,618		$	110,673

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

	For the nine months ended September 30, 2013									For the nine months ended September 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			17,914			18,637			14,177			44,025			58,202
Sales	(2,552		)	(39,597		)	(42,149		)	(12,781		)	(42,632		)	(55,413		)
Valuation adjustments	(293		)	(6,775		)	(7,068		)	(5,131		)	(16,325		)	(21,456		)
Balance, end of period	$	18,905		$	29,818		$	48,723		$	27,055		$	83,618		$	110,673

At September 30, 2013, OREO was $48.7 million and included $29.8 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 September 30, 2013 and December 31, 2012 is net of valuation allowances of $20.0 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.