NOTE 5 – FORECLOSED ASSETS

Foreclosed assets at year-end were as follows:


		2013		2012		2011
Commercial	$	-	$	-	$	-
Commercial real estate		1,636		1,525		3,509
Subtotal		1,636		1,525		3,509
Valuation Allowance		-		-		(1,139)
Total	$	1,636	$	1,525	$	2,370

Activity in the valuation allowance was as follows:


		2013		2012		2011
Beginning of the year	$	-	$	1,139	$	-
Additions charged to expense		-		962		1,139
Direct write downs		-		(2,101)		-
End of year	$	-	$	-	$	1,139

Expenses related to foreclosed assets include:


		2013		2012		2011
Net loss (gain) on sales	$	(28)	$	(338)	$	(7)
Provision for unrealized losses		-		962		1,139
Operating expenses, net of rental income		73		28		55
	$	45	$	652	$	1,187

Foreclosed assets at December 31, 2013 related to one multi-family property, while foreclosed assets at December 31, 2012 included one single-family property and one multi-family property. During December, 2013 there were additional units related to the one multi-family transferred into REO at fair value; which was lower than the principal balance outstanding at the time of transfer. This transfer and adjustment to fair value establishes a new cost basis.