Other Real Estate Owned and Repossessed Assets

3 Months Ended

Mar. 31, 2021

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 three months ended March 31, 2021 and 2020:

	March 31, 2021			March 31, 2020
	(Dollars in Thousands)
Beginning balance	$	949		$	1,078
Additions ⁽¹⁾		—			18
Sales proceeds		—			(37	)
Gross gains		—			5
Gross losses		—			—
Net gains		—			5
Impairment		(7	)		(10	)
Ending balance	$	942		$	1,054

(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 $21 thousand and $0.1 million as of March 31, 2021 and 2020, 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 March 31, 2021 and held $0.1 million of these loans as of March 31, 2020.

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 three months ended March 31, 2021 and 2020:

	March 31, 2021			March 31, 2020
	(Dollars in Thousands)
Beginning balance	$	245		$	256
Transfers from loans		400			317
Sales proceeds		(262	)		(153	)
Gross gains		—			—
Gross losses		(45	)		(166	)
Net losses		(45	)		(166	)
Impairment		—			—
Ending balance	$	338		$	254

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