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 six months ended June 30, 2026 and 2025:


	June 30, 2026			June 30, 2025
	(Dollars in Thousands)
Beginning balance	$	256		$	1,509
Additions (1)		—			—
Sales proceeds		—			(186	)
Gross gains		—			35
Gross losses		—			—
Net gains		—			35
Impairment		(81	)		(60	)
Ending balance	$	175		$	1,298

(1)

Additions to other real estate owned (“OREO”) may include transfers from loans, transfers from closed branches, 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 zero as of both June 30, 2026 and 2025. In addition, the Company held $0.4 million in consumer mortgage loans collateralized by residential real estate that were in the process of foreclosure as of June 30, 2026. The Company did not hold any consumer mortgage loans collateralized by residential real estate that were in the process of foreclosure as of June 30, 2025.

The Company also acquires assets through the repossession of the underlying collateral of loans in default. As of both June 30, 2026 and 2025, total repossessed assets were $0.5 million. Repossessed assets are included in other assets in the Company's consolidated balance sheets.