OTHER REAL ESTATE OWNED

12 Months Ended

Dec. 31, 2012

OTHER REAL ESTATE OWNED [Abstract]

OTHER REAL ESTATE OWNED

NOTE 6 – OTHER REAL ESTATE OWNED

OREO declined $7.6 million from $21.0 million at December 31, 2011 to $13.4 million at December 31, 2012.  Set forth below is a table which details the changes in OREO from December 31, 2011 to December 31, 2012.

	For the year ended December 31, 2012
(In thousands)	First Quarter			Second Quarter			Third Quarter			Fourth Quarter
Beginning balance	$	21,016		$	24,304		$	23,727		$	22,080
Net proceeds from sales		(4,536	)		(928	)		(922	)		(5,628	)
Net (loss) gain on sales		(138	)		255			228			18
Assets acquired on non-accrual loans		8,015			1,092			1,411			293
Impairment charge		(53	)		(996	)		(2,364	)		(3,328	)
Ending balance	$	24,304		$	23,727		$	22,080		$	13,435

At December 31, 2012, OREO is comprised of $7.1 million in land, $3.7 million in commercial real estate, $2.1 million in tax liens, and single family homes with a fair value of $527,000.  During the fourth quarter the Company sold a multi-family property and a commercial real estate property.  The Company received net proceeds of $4.2 million and recorded a combined loss of $376,000 as a result of these sales.  The Company also sold two condominiums related to the construction project in Minneapolis, Minnesota described below. The Company received its pro rata share of net proceeds in the amount of $38,000 and recorded a gain of $16,000.  In addition to the sales mentioned above the Company sold 22 properties acquired through the tax lien portfolio. The Company received proceeds of $1.3 million and recorded net gains of $378,000 as a result of these sales. During the fourth quarter of 2012, based on annual updated appraisals and agreements of sale, the Company recorded impairment charges of $3.1 million on six land properties, $77,000 on a commercial real estate property, and $169,000 related to properties acquired through the tax lien portfolio.  In addition the Company acquired collateral related to the tax lien portfolio and transferred $293,000 to OREO.

During the third quarter of 2012, the Company sold collateral related to residential real estate and construction loans.  The Company received net proceeds of $35,000 and recorded a loss of $2,000 as a result of these sales.   In addition to the sales mentioned above the Company sold eleven properties acquired through the tax lien portfolio.  The Company received proceeds of $887,000 and recorded net gains of $230,000 as a result of these sales.  During the third quarter of 2012, based on annual updated appraisals the Company recorded impairment charges of $2.3 million on properties related to land development and $58,000 on commercial real estate collateral.  The Company also recorded impairment charges of $54,000 related to properties acquired through the tax lien portfolio.  In addition the Company acquired collateral related to the tax lien portfolio and transferred $1.4 million to OREO.

During the second quarter of 2012, the Company sold collateral related to residential real estate and construction loans.  The Company received net proceeds of $433,000 and recorded a gain of $133,000 as a result of these sales. In addition to the sales mentioned above the Company sold seven properties acquired through the tax lien portfolio.  The Company received proceeds of $495,000 and recorded gains of $122,000 as a result of these sales.  During the second quarter of 2012, the Company recorded impairment charges of $321,000 and $121,000 on collateral related to multi-family and land loans, respectively, based on expected net sales proceeds and $554,000 related to properties acquired through the tax lien portfolio.  In addition the Company acquired collateral related to the tax lien portfolio and transferred $1.1 million to OREO.

During the first quarter of 2012, the Company foreclosed on and sold collateral related to one commercial real estate loan.  The Company received net proceeds of $4.1 million and recorded a gain of $36,000. Additionally the Company sold eight single family homes related to three loans.  The Company received net proceeds of $104,000 and recorded a small net gain of $3,000.  As a result of these sales the Company recorded an impairment charge of $44,000 on the remaining collateral for two of these loans.  In addition to the sales mentioned above, the Company sold ten properties acquired through the tax lien portfolio.  The Company received proceeds of $332,000 and recorded a net loss of $177,000 as a result of these sales. During the first quarter of 2012, the collateral for a completed hotel and condominium construction project in Minneapolis, Minnesota, in which the Company is a participant, was foreclosed on by the lead lender.  The Company transferred the fair value of $3.2 million to OREO which represents the Company's participation rate of approximately 7.5%. The Company had previously recorded total charge-offs of $1.5 million to the allowance for loan and lease losses during the period the participation loan was non-accrual.  In addition the Company acquired collateral related to the tax lien portfolio and transferred $793,000 to OREO. The Company recorded impairment charges of $9,000 related to properties acquired through the tax lien portfolio.