Other Real Estate Owned and Property Acquired in Settlement of Loans

3 Months Ended

Mar. 31, 2013

Other Real Estate Owned and Property Acquired in Settlement of Loans

Other Real Estate Owned and Personal Property Acquired in Settlement of Loans

Other Real Estate Owned ("OREO") consists of real estate acquired through foreclosure or deed in lieu thereof. The property is classified as held for sale. The property is initially carried at fair value based on recent appraisals, less estimated costs to sell. Declines in the fair value of properties included in other real estate below carrying value are recognized by a charge to income.

Total OREO and personal property acquired in settlement of loans decreased $16.6 million during the first three months of 2013 from $63.1 million at December 31, 2012, to $46.5 million at March 31, 2013. This represents 40% of total nonperforming assets. At December 31, 2012, OREO and personal property acquired in settlement of loans represented 44% of total nonperforming assets.

The following table summarizes OREO and personal property acquired in settlement of loans at the periods indicated:



(dollars in thousands)	March 31, 2013		December 31, 2012
Real estate acquired in settlement of loans	$	46,307	$	62,796
Personal property acquired in settlement of loans	230		335
Total property acquired in settlement of loans	$	46,537	$	63,131

The following tables summarize the changes in real estate acquired in settlement of loans at the periods indicated:



	For Three Months Ended
(dollars in thousands)	March 31, 2013			March 31, 2012
Real estate acquired in settlement of loans, beginning of period	$	62,796		$	110,009
Plus: New real estate acquired in settlement of loans	3,969			8,935
Less: Sales of real estate acquired in settlement of loans	(20,239		)	(10,874		)
Less: Write-downs and net loss on sales charged to expense	(219		)	(3,877		)
Real estate acquired in settlement of loans, end of period	$	46,307		$	104,193

At March 31, 2013, 25 assets with a net carrying amount of $7.3 million were under contract for sale. Estimated losses on these sales have been recognized in the Consolidated Statements of Operations in the first three months of 2013.

- Definition

The entire disclosure for real estate owned (as defined). Generally, the largest component of real estate owned by lenders is assets taken in settlement of troubled loans through surrender or foreclosure. Real estate investments, real estate loans that qualify as investments in real estate, and premises that are no longer used in operations may also be included in real estate owned.

+ References

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