Note 8. Other Real Estate Owned

3 Months Ended

Jun. 30, 2011

Real Estate Owned [Text Block]

8.    Other Real Estate Owned

Real estate acquired by foreclosure or by deed in lieu of foreclosure is held for sale and is initially recorded at the lesser of carrying value or fair value at the date of foreclosure less estimated selling expenses, establishing a new cost basis.  Subsequent to foreclosure, valuations are periodically performed and any excess of carrying value over fair value is recorded as a valuation allowance.  At the date of foreclosure any write down to fair value less estimated selling costs is charged to the allowance for loan losses.  Costs relating to the development and improvement of the property may be capitalized; holding period costs and subsequent changes to the valuation allowance are charged to expense.

A summary of the activity in OREO is as follows:

	Six Months Ended June 30, 2011			Year Ended December 31, 2010
Beginning Balance	$	5,407,205		$	4,681,481
Additions		7,542,207			8,667,614
Valuation Adjustments		-			-
Gain on Sale		460,034			1,375,932
Sales		(4,844,003	)		(9,317,822	)
Ending Balance	$	8,565,443		$	5,407,205