Note 7 - Other Real Estate Owned

3 Months Ended

Mar. 31, 2014

Disclosure Text Block [Abstract]

Real Estate Owned [Text Block]

NOTE 7. OTHER REAL ESTATE OWNED

Other Real Estate Owned – Represents real estate which the Bank has taken control of in partial or full satisfaction of loans. At the time of foreclosure, OREO is recorded at the lower of cost or 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 ALLL. After 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 of OREO. Revenue and expenses from operations and subsequent adjustments to the carrying amount of the property are included in other noninterest expense in the Consolidated Statements of Operations. In some instances, the Bank may make loans to facilitate the sales of OREO. Management reviews all sales for which it is the lending institution for compliance with sales treatment under provisions established within ASC 360-20, Real Estate Sales. Any gains related to sales of OREO may be deferred until the buyer has a sufficient initial and continuing investment in the property.

At March 31, 2014, and December 31, 2013, the recorded investment in OREO was $623 thousand and $913 thousand, respectively. For the three months ended March 31, 2014, the Company did not have any additions or sales of OREO. During the three months ended March 31, 2014, further impairment was deemed necessary for an improved commercial land property in the amount of $290 thousand. The property was transferred to OREO in 2010 and was written down to its fair value in the first quarter of 2014 in anticipation of its pending sale. The March 31, 2014 OREO balance consists of three properties, of which two are secured with 1-4 family residential real estate in the amount of $163 thousand. The remaining property consists of improved commercial land in the amount of $460 thousand.