Other Real Estate Owned and Repossessed Assets

9 Months Ended

Sep. 30, 2020

Other Real Estate Owned and Repossessed Assets

5.	OTHER REAL ESTATE OWNED AND REPOSSESSED ASSETS

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 table summarizes foreclosed property activity as of the nine months ended September 30, 2020 and 2019:

	September 30, 2020			September 30, 2019
	(Dollars in Thousands)
Beginning balance	$	1,078		$	1,505
Additions ⁽¹⁾		293			312
Sales proceeds		(370	)		(523	)
Gross gains		38			39
Gross losses		(44	)		(47	)
Net losses		(6	)		(8	)
Impairment		(10	)		(38	)
Ending balance	$	985		$	1,248

(1)

Additions to other real estate owned (“OREO”) include transfers from loans, other assets 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 $0.1 million and $0.2 million as of September 30, 2020 and 2019, respectively. In addition, the Company did not hold any consumer mortgage loans collateralized by residential real estate that were in the process of foreclosure as of September 30, 2020 and held $40 thousand of these loans as of September 30, 2019.

Repossessed Assets

In addition to the other real estate and other assets acquired in foreclosure, the Company also acquires assets through the repossession of the underlying collateral of loans in default. The following table summarizes repossessed asset activity as of the nine months ended September 30, 2020 and 2019:

	September 30, 2020			September 30, 2019
	(Dollars in Thousands)
Beginning balance	$	256		$	229
Transfers from loans		746			736
Sales proceeds		(446	)		(477	)
Gross gains		—			2
Gross losses		(401	)		(370	)
Net losses		(401	)		(368	)
Impairment		—			—
Ending balance	$	155		$	120

Repossessed assets are included in Other Assets in the Company’s condensed consolidated balance sheet.