Foreclosed Properties and Repossessed Assets

3 Months Ended

Jun. 30, 2011

Foreclosed Properties and Repossessed Assets [Abstract]

Foreclosed Properties and Repossessed Assets

Note 7 – Foreclosed Properties and Repossessed Assets

Real estate acquired by foreclosure, real estate acquired by deed in lieu of foreclosure and other repossessed assets are held for sale and are initially recorded at fair value less estimated selling expenses at the date of foreclosure. At the date of foreclosure, any write down to fair value less estimated selling costs is charged to the allowance for loan losses. Any increases in fair value over the net carrying value of the loans are recorded as recoveries to the allowance for loan losses to the extent of previous charge-offs, with any excess, which is infrequent, recognized as a gain. Subsequent to foreclosure, valuations are periodically performed and a valuation allowance is established and charged to expense if fair value less estimated selling costs exceeds the carrying value. Costs relating to the development and improvement of the property may be capitalized; holding period costs and subsequent changes to the valuation allowance are charged to expense.

A summary of the activity in foreclosed properties and repossessed assets is as follows (in thousands):

	For the three months ended
	June 30,
	2011			2010
Balance at beginning of period	$	90,707		$	55,436
Additions		23,252			10,231
Capitalized improvements		—			—
Valuations/write-offs		(279	)		(3,051	)
Sales		(24,189	)		(13,203	)
Balance at end of period	$	89,491		$	49,413

The amounts above are net of a valuation allowance of $20.9 million and $20.0 million at June 30, 2011 and March 31, 2011, respectively, recognized during the holding period for declines in fair value subsequent to the foreclosure or acceptance of deed in lieu of foreclosure.

During the three months ended June 30, 2011, net expense from REO operations was $7.6 million, consisting of $279,000 of valuation adjustments and write offs, $1.2 million of net gain on sales, $1.1 million of foreclosure cost expense and $7.4 million of net expenses from operations. During the three months ended June 30, 2010, net expense from REO operations was $5.6 million, consisting of $3.1 million of valuations and write offs, $1.2 million of net gain on sales, $2.0 million of foreclosure cost expense and $1.7 million of net expenses from operations.