Other Real Estate Owned and Repossessions

9 Months Ended

Sep. 30, 2019

Other Real Estate Owned and Repossessions

6.	OTHER REAL ESTATE OWNED AND REPOSSESSIONS

Other Real Estate Owned

Other real estate and certain other assets acquired in foreclosure are reported at the net realizable value of the property, less estimated costs to sell. The following tables summarize foreclosed property activity as of the nine months ended September 30, 2019 and 2018:

	September 30, 2019
	Bank			ALC			Total
	(Dollars in Thousands)
Beginning balance	$	1,401		$	104		$	1,505
Additions ⁽¹⁾		224			88			312
Sales proceeds		(443	)		(80	)		(523	)
Gross gains		37			2			39
Gross losses		(21	)		(26	)		(47	)
Net gains (losses)		16			(24	)		(8	)
Impairment		—			(38	)		(38	)
Ending balance	$	1,198		$	50		$	1,248

	September 30, 2018
	Bank			ALC			Total
	(Dollars in Thousands)
Beginning balance	$	3,527		$	265		$	3,792
Additions ⁽¹⁾		191			58			249
Sales proceeds		(2,453	)		(77	)		(2,530	)
Gross gains		267			8			275
Gross losses		(46	)		(54	)		(100	)
Net gains (losses)		221			(46	)		175
Impairment		(167	)		(30	)		(197	)
Ending balance	$	1,319		$	170		$	1,489

(1)

Additions to other real estate owned (“OREO”) include transfers from loans and capitalized improvements to existing OREO properties.

Valuation adjustments are recorded in other non-interest expense and are primarily post-foreclosure write-downs that are a result of continued declining property values based on updated appraisals or other indications of value, such as offers to purchase. Net realizable value less estimated costs to sell of foreclosed residential real estate held by the Company was $0.2 million and $0.5 million as of September 30, 2019 and 2018, respectively. In addition, the Company held $40 thousand of consumer mortgage loans collateralized by residential real estate that were in the process of foreclosure as of September 30, 2019, and did not hold any of these loans as of September 30, 2018.

Repossessions

In addition to the other real estate and other assets acquired in foreclosure, the Bank and ALC also acquire assets through the repossession of the underlying collateral of loans in default. Total repossessed assets as of September 30, 2019 and December 31, 2018 were $0.1 million and $0.2 million, respectively.