Other Real Estate Owned

6 Months Ended

Jun. 30, 2015

Other Real Estate Owned.

Other Real Estate Owned

Note 6. Other Real Estate Owned

The following table provides a summary of OREO activity for the three months ended June 30, 2015 and 2014:

	For the three months ended June 30, 2015								For the three months ended June 30, 2014
(in thousands)	Non-Covered OREO		Covered OREO			Total			Non-Covered OREO			Covered OREO			Total
Balance, beginning of period	$	5,957	$	11,552		$	17,509		$	9,412		$	24,855		$	34,267
Additions	—		2,830			2,830			110			1,987			2,097
Sales	—		(2,994		)	(2,994		)	(5,253		)	(7,964		)	(13,217		)
Valuation adjustments	—		(77		)	(77		)	—			(934		)	(934		)
Balance, end of period	$	5,957	$	11,311		$	17,268		$	4,269		$	17,944		$	22,213

The following table provides a summary of OREO activity for the six months ended June 30, 2015 and 2014:

	For the six months ended June 30, 2015									For the six months ended June 30, 2014
(in thousands)	Non-Covered OREO			Covered OREO			Total			Non-Covered OREO			Covered OREO			Total
Balance, beginning of period	$	10,736		$	12,760		$	23,496		$	12,611		$	25,481		$	38,092
Additions	—			3,915			3,915			111			4,020			4,131
Sales	(4,779		)	(3,625		)	(8,404		)	(8,439		)	(10,468		)	(18,907		)
Valuation adjustments	—			(1,739		)	(1,739		)	(14		)	(1,089		)	(1,103		)
Balance, end of period	$	5,957		$	11,311		$	17,268		$	4,269		$	17,944		$	22,213

At June 30, 2015, OREO was $17.3 million and included $11.3 million of covered OREO. At December 31, 2014, OREO was $23.5 million and included $12.8 million of covered OREO. The balance of OREO at June 30, 2015 and December 31, 2014 is net of valuation allowances of $3.3 million and $7.4 million, respectively. At June 30, 2015, the Company’s recorded investment in residential mortgage loans, excluding covered loans, for which foreclosure proceedings had been initiated totaled $7.2 million.

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 and income shared with the FDIC is recorded in FDIC loss sharing income (expense), net in the noninterest income section of the consolidated statements of income.