NOTE 5 – FORECLOSED ASSETS

Foreclosed assets at year-end were as follows:


	2014		2013		2012
Commercial	$	-	$	-	$	-
Commercial real estate		1,636		1,636		1,525
Subtotal		1,636		1,636		1,525
Valuation Allowance		-		-		-
Total	$	1,636	$	1,636	$	1,525

Activity in the valuation allowance was as follows:


	2014		2013		2012
Beginning of the year	$	-	$	-	$	1,139
Additions charged to expense		-		-		962
Direct write downs		-		-		(2,101)
End of year	$	-	$	-	$	-

Expenses related to foreclosed assets include:


	2014		2013		2012
Net loss (gain) on sales	$	-	$	(28)	$	(338)
Provision for unrealized losses		-		-		962
Operating expenses, net of rental income		328		73		28
	$	328	$	45	$	652

Foreclosed assets at December 31, 2014 and December 31, 2013 was related to 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. Foreclosed asset expense increased during 2014 related to light rehabilitation and maintenance expenses incurred to increased occupancy levels, and certain increased operating costs.