Note 8. Other Real Estate Owned

3 Months Ended

Sep. 30, 2011

8. Other Real Estate Owned

Real estate acquired by foreclosure or by deed in lieu of foreclosure is held for sale and is initially recorded at the lesser of carrying value or fair value at the date of foreclosure less estimated selling expenses, establishing a new cost basis. Subsequent to foreclosure, valuations are periodically performed and any excess of carrying value over fair value is recorded as a valuation allowance. At the date of foreclosure any write down to fair value less estimated selling costs is charged to the allowance for loan losses. Costs relating to the development and improvement of the property may be capitalized; holding period costs and subsequent changes to the valuation allowance are charged to expense.

A summary of the activity in OREO is as follows:

	Nine Months Ended September 30, 2011				Year Ended December 31, 2010
Beginning Balance	$	5,407,205		$	4,681,481
Additions		9,591,043			8,667,614
Valuation Adjustments		-			-
Gain on Sale		614,372			1,375,932
Sales		(6,973,004	)		(9,317,822	)
Ending Balance	$	8,639,616		$	5,407,205

- Definition

The entire disclosure for real estate owned (as defined). Generally, the largest component of real estate owned by lenders is assets taken in settlement of troubled loans through surrender or foreclosure. Real estate investments, real estate loans that qualify as investments in real estate, and premises that are no longer used in operations may also be included in real estate owned.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef

-Publisher SEC

-Name Regulation S-X (SX)

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Reference 5: http://www.xbrl.org/2003/role/presentationRef

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Reference 6: http://www.xbrl.org/2003/role/presentationRef

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-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 7: http://www.xbrl.org/2003/role/presentationRef

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+ Details

TRI CITY BANKSHARES CORP 10-Q