FORECLOSURED REAL ESTATE AND REPOSSESSED ASSETS

9 Months Ended

Jun. 30, 2020

FORECLOSURED REAL ESTATE AND REPOSSESSED ASSETS

FORECLOSED REAL ESTATE AND REPOSSESSED ASSETS

The following table provides an analysis of changes in foreclosed real estate and repossessed assets:


	Nine Months Ended June 30,
(Dollars in Thousands)	2020		2019
Balance, beginning of period	$	29,494	$	31,638
Additions	5,983		105
Reductions:
Write-downs	568		339
Net proceeds from sale	23,086		1,905
Gain (loss) on sale	(5,039)		15
Total reductions	28,693		2,229
Balance, ending of period	$	6,784	$	29,514

At June 30, 2020 and September 30, 2019, the Company had established a valuation allowance of $0.5 million and $0.1 million for repossessed assets, respectively. As of June 30, 2020 and September 30, 2019, the Company had no loans or leases in the process of foreclosure.

During the nine months ended June 30, 2020, the Company sold $28.1 million of other real estate owned ("OREO"), which consisted of assets related to a Community Bank agriculture real estate customer. The sale occurred via public auction and consisted of 30-plus parcels of land. The sale of 30-plus parcels closed in the fiscal 2020 first quarter. The Company applied Subtopic ASC 610-20, Gains and Losses from the Derecognition of Nonfinancial Assets to record the sale. The following table is a summary of the sale transaction, as reflected in the Company's financial statements:


(Dollars in Thousands)	June 30, 2020
Purchase price	$	23,083
Carrying value of OREO	28,122
Loss on sale	(5,039)
Deferred income recognized	1,096
Net impact	$	(3,943)

The Company recognized a $5.0 million loss from the sale of foreclosed property during the nine months ended June 30, 2020, which is included in the "Gain (loss) on sale of other" line on the Consolidated Statements of Operations. The Company also recognized $1.1 million in deferred rental income and $0.2 million in OREO expenses related to these foreclosed properties during the nine months ended June 30, 2020.