Other Real Estate Owned

6 Months Ended

Jun. 30, 2011

Other Real Estate Owned [Abstract]

OTHER REAL ESTATE OWNED

NOTE 6. OTHER REAL ESTATE OWNED

OREO represents real estate which the Company has taken control of in partial or full satisfaction of loans. At the time of foreclosure, OREO is recorded at the fair value less costs to sell, which becomes the property’s new basis. Any write-downs based on the asset’s fair value at the date of acquisition are charged to the allowance for loan losses.

Subsequent to foreclosure, management periodically performs valuations such that the real estate is carried at the lower of its new cost basis or fair value, net of estimated costs to sell. Subsequent valuation adjustments are recognized within net loss on OREO. Revenue and expenses from operations and subsequent adjustments to the carrying amount of the property are included in noninterest expense in the Consolidated Statements of Income.

At June 30, 2011 and December 31, 2010, the recorded investment in OREO was $1.8 million and $2.3 million, respectively. For the six months ended June 30, 2011 the Company transferred foreclosed property from eleven loans in the amount of $2.5 million to OREO and adjusted the balances through charges to the allowance for loan losses in the amount of $803 thousand relating to the transferred foreclosed property. During the six months ended June 30, 2011, the Company sold seventeen properties with balances of $2.5 million for a net loss of $365 thousand, and recorded $557 thousand in write downs of existing OREO in other noninterest expense. The June 30, 2011 OREO balance consists of nine properties, of which eight are secured with 1-4 family residential real estate in the amount of $618.4 thousand. The remaining property consists of improved commercial land in the amount of $1.2 million.