Note 6 – Foreclosed Assets

A summary of the activity in the balance of foreclosed assets follows ($ in thousands):


	Nine months ended September 30, 2015									Nine months ended September 30, 2014
	Noncovered			Covered			Total			Noncovered			Covered			Total
Beginning balance, net	$	4,449		$	445		$	4,894		$	5,588		$	674		$	6,262
Additions/transfers from loans		5,154			(445	)		4,709			4,936			—			4,936
Dispositions/sales		(3,971	)		—			(3,971	)		(5,823	)		(142	)		(5,965	)
Valuation adjustments		(347	)		—			(347	)		(125	)		(12	)		(137	)

Ending balance, net	$	5,285			—		$	5,285		$	4,576		$	520		$	5,096

Ending valuation allowance	$	(519	)		—		$	(519	)	$	(169	)	$	(12	)	$	(181	)

Ending number of foreclosed assets		28			—			28			23			2			25

Proceeds from sale of foreclosed assets	$	4,753			—		$	4,753		$	7,650		$	168		$	7,818

Gain on sale of foreclosed assets	$	782			—		$	782		$	1,827		$	26		$	1,853

As of September 30, 2015, $2,490,000 of foreclosed residential real estate properties are included in foreclosed assets, all of which the Company has obtained physical possession. During the three months ended June 30, 2015, $445,000 of covered foreclosed assets were transferred to noncovered foreclosed assets as the indemnification portion of the agreement covering those foreclosed asset expired during May 2015. Included in the sales of foreclosed assets during the nine months ended September 30, 2015 is the sale of one foreclosed asset during the three months ended June 30, 2015 with a cost basis of $813,000. The Company provided loans to the buyer of this foreclosed asset such that, in accordance with generally accepted accounting principles, the Company deferred the entire gain of $397,000 related to this foreclosed asset sale, of which $395,000 remains deferred as of September 30, 2015. This deferred gain will be recognized over time in proportion to the reduction in principal balance of the related loans until the buyer has reduced the outstanding principal balance of the loans to a level specified by generally accepted accounting principles at which time the remaining unrecognized gain may be recognized.