Note 8. Other Real Estate Owned

6 Months Ended

Jun. 30, 2012

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 ALL.  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, 2012			Year Ended December 31, 2011
Beginning Balance	$	7,350,678		$	5,407,205
Additions		4,189,631			10,256,043
Valuation Adjustments		-			-
Sales		(3,990,597	)		(8,312,570	)
Ending Balance	$	7,549,712		$	7,350,678