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Note 5 - Foreclosed Assets

3 Months Ended

Mar. 31, 2022

NOTE 5 - FORECLOSED ASSETS

Real estate that is acquired through foreclosure or a deed in lieu of foreclosure is classified as other real estate owned ("OREO") until it is sold. When real estate is acquired through foreclosure or by deed in lieu of foreclosure, it is recorded at its fair value, less the estimated costs of disposal. If the fair value of the property is less than the loan balance, the difference is charged against the allowance for loan losses.

Assets are classified as foreclosed when physical possession of the collateral is taken regardless of whether foreclosure proceedings have taken place. Other foreclosed assets received in satisfaction of borrowers debt are initially recorded at fair value of the asset less estimated costs to sell.

	*March 31, 2022*							*December 31, 2021*
	*Balance*		*Valuation Allowance*			*Net Balance*		*Balance*		*Valuation Allowance*			*Net Balance*

Foreclosed assets - Nonresidential real estate OREO	$	274	$	—		$	274	$	—	$	—		$	—
Other foreclosed assets		913		(219	)		694		952		(227	)		725
	$	1,187	$	(219	)	$	968	$	952	$	(227	)	$	725

The following represents the roll forward of foreclosed assets:

	*For the Three Months Ended*
	*March 31,*
	*2022*			*2021*
Beginning balance	$	725		$	157
New foreclosed assets		274			4,473
Valuation reductions from sales		8			—
Sales		(39	)		—
Ending balance	$	968		$	4,630

Activity in the valuation allowance is as follows:

	*For the Three Months Ended*
	*March 31,*
	*2022*			*2021*
Beginning balance	$	227		$	—
Reductions from sales		(8	)		—
Ending balance	$	219		$	—

The recorded investment of consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings were in process was $73,000 at March 31, 2022 and December 31, 2021. At March 31, 2022, other foreclosed assets consisted of non real estate collateral repossessed related to a previously classified Chicago area commercial loan. At March 31, 2022, the balance of OREO includes no foreclosed residential real estate properties recorded as a result of obtaining physical possession of the property without title.