7. Other Real Estate Owned

6 Months Ended

Jun. 30, 2014

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	Six Months Ended	Six Months Ended
	June 30, 2014	June 30, 2013	June 30, 2014	June 30, 2013
Beginning balance	$433	$718	$433	$775
Additions, transfers from loans	-	-	-	-
Proceeds from sales	-	(65)	-	(92)
	433	653	433	683
Write-downs and net gains (losses) on sales	(13)	(126)	(13)	(156)
Ending Balance	$420	$527	$420	$527

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

(in 000's)	June 30, 2014	December 31, 2013
Commercial real estate	$191	$191
Residential real estate	229	242
Total	$420	$433

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

	Three Months Ended	Three Months Ended	Six Months Ended	Six Months Ended
(in 000's)	June 30, 2014	June 30, 2013	June 30, 2014	June 30, 2013
Insurance	$7	$4	$11	$10
Professional fees	-	-	-	-
Real estate taxes	4	5	11	11
Utilities	1	-	2	2
Other	-	2	-	2
Transfer-in write-up	-	-	-	-
Impairment charges (net)	13	113	13	143
Total	$25	$124	$37	$168