Other Real Estate Owned

6 Months Ended

Jun. 30, 2016

Banking and Thrift [Abstract]

Other Real Estate Owned

NOTE 10 – OTHER REAL ESTATE OWNED

The following table presents activity in other real estate owned for the six months ended June 30, 2016 and 2015:

	Other Real Estate			Other Real Estate
(dollars in thousands)	Owned (1)			Owned, Covered
Six Months Ended June 30, 2016
Balance at January 1, 2016	$	7,594		$	4,904
Additions (2)		20,251			2,093
Sales		(7,060	)		(1,454	)
(Impairment)/recovery of value		(202	)		(1,872	)
Reclassification due to termination of the loss share agreements, effective June 22, 2016		3,671			(3,671	)
Balance at June 30, 2016	$	24,254		$	—
Six Months Ended June 30, 2015
Balance at January 1, 2015	$	7,241		$	9,121
Additions		4,579			429
Sales		(2,153	)		(4,580	)
(Impairment)/recovery of value		(279	)		(217	)
Balance at June 30, 2015	$	9,388		$	4,753

(1) Includes repossessed personal property of $0.2 million at June 30, 2016 and $0.3 million at June 30, 2015.

(2) Includes other real estate owned of $18.2 million acquired from Anchor in May 2016.

At June 30, 2016, foreclosed residential real estate property included in the table above totaled $1.0 million. At June 30, 2016, consumer mortgage loans collateralized by residential real property that were in the process of foreclosure totaled $4.0 million.

Old National entered into an agreement with the FDIC on June 22, 2016 to terminate its loss share agreements. As a result of the termination of the loss share agreements, the remaining other real estate owned that was covered by the loss share arrangements were reclassified to noncovered other real estate owned effective June 22, 2016.

Prior to the termination of the loss share agreements, covered OREO expenses and valuation write-downs were recorded in the noninterest expense section of the consolidated statements of income. Under the loss sharing agreements, the FDIC reimbursed us for 80% of expenses and valuation write-downs related to covered assets up to $275.0 million, losses in excess of $275.0 million up to $467.2 million at 0%, and 80% of losses in excess of $467.2 million. The reimbursable portion of these expenses was recorded in the FDIC indemnification asset. Changes in the FDIC indemnification asset were recorded in the noninterest income section of the consolidated statements of income. As a result of the termination of the loss share agreements, all future gains and losses associated with covered assets will be recognized entirely by Old National since the FDIC will no longer be sharing in these gains and losses.