Note 8 - Other Real Estate Owned (OREO)

12 Months Ended

Dec. 31, 2017

Notes to Financial Statements

Real Estate Owned [Text Block]

NOTE

8.

OTHER REAL ESTATE OWNED

(OREO)

OREO represents real estate to which we have taken

legal title 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. Additional expenditures for improvements that increase the fair value of the property as it is prepared for sale are added to the property’s cost basis. Any write-downs based on the asset’s fair value at the date of acquisition are charged 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, 2017,

2016,

and

2015.

(Amounts in thousands)	Years Ended December 31,
OREO	2017			2016			2015
Balance at beginning of year	$	759		$	1,423		$	502
Additions		1,071			189			4,059
Dispositions		(1,743	)		(745	)		(3,138	)
Valuation adjustments		(52	)		(108	)		—
Total	$	35		$	759		$	1,423

For the year ended

December 31, 2017,

we transferred

seven

foreclosed properties in the amount of

$981

thousand to OREO and capitalized

$90

thousand in costs. During this period, we sold

eleven

properties with balances of

$1.7

million for a net gain of

$368

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

one

property totaling

$52

thousand. The

December 31, 2017

OREO balance consists of

one

1

-

4

family residential real estate property in the amount of

$35

thousand.