Note 8 - Other Real Estate Owned

12 Months Ended

Dec. 31, 2016

Notes to Financial Statements

Real Estate Owned [Text Block]

NOTE

8.

OTHER REAL ESTATE OWNED

OREO represents real estate to which 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 plus costs for improvements that prepare the property for sale, 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 and net expenses incurred from OREO property are recorded in

noninterest expense

, in the

Consolidated

Statements of Income

.

The following table presents the changes in OREO for the years ended

December

31,

2016,

2015,

and

2014.

(Amounts in thousands)	Years Ended December 31,
OREO	2016			2015			2014
Balance at beginning of year	$	1,423		$	502		$	913
Additions to other real estate owned		147			4,059			688
Dispositions of other real estate owned		(745	)		(3,138	)		(809	)
Valuation adjustments in the period		(66	)		—			(290	)
Total	$	759		$	1,423		$	502

For the year ended

December

31,

2016,

we transferred

three

foreclosed properties in the amount of

$147

thousand to OREO. During this period, we sold

nine

properties with balances of

$745

thousand for a net loss of

$109

thousand. During this period, we recognized a write-down in OREO for

four

properties totaling

$108

thousand and capitalized

$42

thousand in costs. The

December

31,

2016

OREO balance consists of

two

1

-

4

family residential real estate properties in the amount of

$66

thousand,

two

nonfarm nonresidential properties in the amount of

$581

thousand and

one

undeveloped commercial property in the amount of

$112

thousand. The recorded investment in consumer mortgage loans collateralized by residential real estate property that are in the process of foreclosure is

$1.2

million.