Other Real Estate Owned ("OREO")

9 Months Ended

Sep. 30, 2014

Other Real Estate Owned ("OREO") [Abstract]

Other Real Estate Owned ("OREO")

NOTE 9 - OTHER REAL ESTATE OWNED (“OREO”)

OREO assets are presented net of valuation allowances. The Company considers OREO as classified assets for regulatory and financial reporting. An analysis of OREO activity follows.

	Nine Months Ended September 30,		Year Ended December 31,
(dollars in thousands)	2014	2013	2013
Balance at beginning of year	$                  6,797	$                  6,891	$                  6,891
Additions of underlying property	1,590	1,391	1,853
Disposals of underlying property	(1,819)	(722)	(1,346)
Valuation allowance	(234)	(501)	(601)
Balance at end of period	$                  6,334	$                  7,059	$                  6,797

During the nine months ended September 30, 2014 additions to OREO consisted of three residential properties totaling $631,000, three residential lots totaling $319,000 and a commercial building valued at $640,000. Additions were offset by disposals of three residential properties totaling $813,000, two residential lots totaling $180,000, a commercial building of $640,000 and a commercial lot of $186,000. During the nine months ended September 30, 2014, the Bank recognized $60,000 in net gains on the sale of OREO with net proceeds of $1.9 million.

During the nine months ended September 30, 2013 additions to OREO consisted of two residential properties totaling $699,000 and six residential lots totaling $692,000. Additions were offset by disposals of two residential properties totaling $532,000 and two residential lots totaling $190,000. During the nine months ended September 30, 2013, the Bank recognized $215,000 in net gains on the sale of OREO with net proceeds of $713,000 and net losses of $10,000 and the recognition of $225,000 of previously deferred gain from the sale of an OREO property that the Bank financed during 2011 that did not initially qualify for full accrual sales treatment under ASC Topic 360-20-40 “Property Plant and Equipment – Derecognition.

Valuation allowances further reduced OREO carrying values $234,000 and $501,000 to current appraised values for the nine months ended September 30, 2014 and 2013, respectively. OREO carrying amounts reflect management’s estimate of the realizable value of these properties incorporating current appraised values, local real estate market conditions and related costs.

Expenses applicable to OREO assets include the following.

	Three Months Ended September 30,		Nine Months Ended September 30,
(dollars in thousands)	2014	2013	2014	2013
Valuation allowance	$                          -	$                     171	$                     234	$                     501
Operating expenses	37	41	98	105
	$                       37	$                     212	$                     332	$                     606