Note 7 - Other Real Estate Owned

9 Months Ended

Sep. 30, 2015

Disclosure Text Block [Abstract]

Real Estate Owned [Text Block]

NOTE 7. OTHER REAL ESTATE OWNED

OREO represents real estate to which the Bank has taken control in partial or full satisfaction of loans and properties originally acquired for branch expansion but no longer intended to be used for that purpose. OREO is recorded at fair value less costs to sell, which becomes the property’s new cost basis. Any write-downs based on the asset’s fair value at the date of acquisition are charged 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. Thereafter, 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. Net expenses incurred from OREO property are recorded in noninterest expense, in the Consolidated Statements of Operations.

At September 30, 2015, and December 31, 2014, the recorded investment in OREO was $1.5 million and $502 thousand, respectively. For the nine months ended September 30, 2015, the Company transferred 17 foreclosed properties in the amount of $3.9 million to OREO. During the nine months ended September 30, 2015, the Company sold 12 properties with a balance of $2.9 million for a net loss of $4 thousand. The September 30, 2015 OREO balance consists of four 1-4 family residential real estate properties in the amount of $361 thousand, six nonfarm nonresidential properties in the amount of $993 thousand and one undeveloped commercial property in the amount of $170 thousand. The recorded investment in consumer mortgage loans collateralized by residential real estate property that are in the process of foreclosure is $1.1 million.