OTHER REAL ESTATE OWNED ("OREO")

3 Months Ended

Mar. 31, 2021

OTHER REAL ESTATE OWNED (“OREO”)

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


	Three Months Ended March 31,				Years Ended December 31,
(dollars in thousands)	2021		2020		2020
Balance at beginning of year	$	3,109	$	7,773	$	7,773
Additions of underlying property	—		—		1,240
Disposals of underlying property	(600)		(703)		(2,882)
Valuation allowance	(180)		(732)		(3,022)
Balance at end of period	$	2,329	$	6,338	$	3,109

During the three months ended March 31, 2021 and 2020, there were no OREO additions. During the three months ended March 31, 2021, the Company recognized net gains of $22,000 on the disposal of $0.6 million of residential lots. During the three months ended March 31, 2020, the Company disposed of a commercial lot with a carrying value of $0.7 million for proceeds of $0.7 million resulting in a loss of $3,000.

To adjust properties to current appraised values, additions to the valuation allowance were taken for the three months ended March 31, 2021 and 2020 and the year ended December 31, 2020.

Expenses applicable to OREO assets included the following.


	Three Months Ended March 31,
(dollars in thousands)	2021		2020

Valuation allowance	$	180	$	732
Losses (gains) on dispositions	(22)		3
Operating expenses	23		47
	$	181	$	782

There were no impaired loans secured by residential real estate for which formal foreclosure proceedings were in process as of March 31, 2021 and December 31, 2020.