7. Other Real Estate Owned

9 Months Ended

Sep. 30, 2013

Notes

7. Other Real Estate Owned

7. Other Real Estate Owned

Other real estate owned (“OREO”) consists of properties acquired as a result of deed in-lieu-of foreclosure and foreclosures. Properties or other assets are classified as OREO and are reported at the lower of carrying value or fair value, less estimated costs to sell. Costs relating to the development or improvement of assets are capitalized, and costs relating to holding the property are charged to expense.

Activity in other real estate owned for the periods was as follows:

(in 000's)	Three Months Ended	Three Months Ended	Nine Months Ended	Nine Months Ended
	September 30, 2013	September 30, 2012	September 30, 2013	September 30, 2012
Beginning balance	$527	$1,333	775	1,284
Additions, transfers from loans	-	-	-	75
Proceeds from sales	(48)	(28)	(140)	(23)
	479	1,305	635	1,336
Write-downs and net gains (losses) on sales	3	(128)	(153)	(159)
Ending Balance	$482	$1,177	482	1,177

The following schedule reflects the components of other real estate owned:

(in 000's)	September 30, 2013	December 31, 2012
Commercial real estate	$206	$206
Residential real estate	276	569
Total	$482	$775

The following table details the components of net expense of other real estate owned:

	Three Months Ended	Three Months Ended	Nine Months Ended	Nine Months Ended
(in 000's)	September 30, 2013	September 30, 2012	September 30, 2013	September 30, 2012
Insurance	$3	$5	$13	$22
Professional fees	-	-	-	3
Real estate taxes	6	11	17	47
Utilities	1	3	3	20
Other	7	-	-	3
Transfer-in write-up	-	1	8	(43)
Impairment charges (net)	-	127	144	153
Total	$17	$147	$185	$205