Note 8 - Other Real Estate Owned

12 Months Ended

Dec. 31, 2015

Disclosure Text Block [Abstract]

Real Estate Owned [Text Block]

NOTE 8. OTHER REAL ESTATE OWNED

OREO represents real estate which to we have 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 of 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.

The following table presents the changes in OREO, net of valuation allowance, for the years ended December 31, 2015, 2014, and 2013.

(Amounts in thousands)	Years Ended December 31,
OREO	2015			2014			2013
Balance at beginning of year	$	502		$	913		$	3,061
Additions to other real estate owned		4,059			688			1,585
Dispositions of other real estate owned		(3,138	)		(809	)		(3,733	)
Valuation adjustments in the period		—			(290	)		—
Total	$	1,423		$	502		$	913

For the year ended December 31, 2015, we transferred 20 foreclosed properties in the amount of $4.1 million to OREO. During this period, we sold 15 properties with balances of $3.1 million for a net loss of $26 thousand. One of the properties transferred to OREO was land with a carrying value of $261 thousand previously held for construction of a new bank branch. The property was transferred to OREO at its fair value less expected selling costs resulting in a write-down of $91 thousand recorded in noninterest expense. The December 31, 2015 OREO balance consists of six 1-4 family residential real estate properties in the amount of $513 thousand, four nonfarm nonresidential properties in the amount of $740 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 $977 thousand.