8. OTHER REAL ESTATE OWNED AND OTHER REPOSSESSED ASSETS

Real estate owned and other repossessed assets at September 30, 2011 and December 31, 2010 were as follows:


	September 30,			December 31,
	2011			2010
	(Dollars in thousands)

Real estate owned and other repossessed assets	$	46,668		$	47,668
Valuation allowance		(8,352	)		(7,332	)

End of period	$	38,316		$	40,336

Activity in the valuation allowance related to real estate owned was as follows:


	September 30,			December 31,
	2011			2010
	(Dollars in thousands)
Beginning of year	$	7,332		$	7,867
Additions charged to expense		4,040			4,572
Direct write-downs		(3,020	)		(5,107	)

End of period	$	8,352		$	7,332

Expenses related to foreclosed and repossessed assets include:


	For the three months ended September 30,
	2011		2010
	(Dollars in thousands)
Net loss on sales	$	395	$	407
Provision for unrealized losses, net		2,232		866
Operating expenses, net of rental income		361		1,027

Total expenses	$	2,988	$	2,300


	For the nine months ended September 30,
	2011		2010
	(Dollars in thousands)
Net loss on sales	$	941	$	1,282
Provision for unrealized losses, net		4,040		3,230
Operating expenses, net of rental income		2,125		2,658

Total expenses	$	7,106	$	7,170