Note 7 - Other Real Estate Owned

3 Months Ended

Mar. 31, 2015

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 fair value less costs to sell, which becomes the property’s new cost basis. Any write-down based on the asset’s fair value at the date of acquisition are charged or credited to the ALLL. Any write-up in the fair value of the asset at the date of acquisition is reported as noninterest income unless there has been a prior charge off, in which case a recovery is credited to the ALLL. After foreclosure, management periodically performs valuations and the property is carried at the lower of the cost or fair value less expected selling costs.

Subsequent valuation adjustments are recognized under the line item Write down of other real estate owned in the Consolidated Statements of Operations. Revenue and expenses incurred from OREO property are recorded in noninterest income or noninterest expense, in the Consolidated Statements of Operations, respectively.

At March 31, 2015, and December 31, 2014, the recorded investment in OREO was $1.5 million and $502 thousand, respectively. For the three months ended March 31, 2015, the Company transferred foreclosed property from eight loans in the amount of $2.7 million to OREO. During the three months ended March 31, 2015 the Company sold two properties with a balance of $1.7 million for a net gain of $15 thousand. The March 31, 2015 OREO balance consists of 12 properties, of which five properties are secured with 1-4 family residential real estate in the amount of $370 thousand and seven are nonfarm nonresidential properties in the amount of $1.1 million. The recorded investment in consumer mortgage loans collateralized by residential real estate property that are in the process of foreclosure is $1.7 million.