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Supervision News Flash

March 2019

OREO Holding Period Limits

people at a table

When it is time to divest of real estate, it is not always easy to locate a buyer for every parcel in a timely manner and for the price the bank believes is fair. Some locations are more attractive and may move more quickly while other properties may have some specialized uses, which may require a specific buyer. Additionally, economic market conditions can have a major impact on the ability to divest of other real estate owned (OREO). Liquidating OREO may take an extended period. We have had several questions come in recently on this very topic. Given that some properties will likely take less time to liquidate than other properties, we thought it was a good time for a reminder about OREO holding periods. The holding period may be different depending on which legal entity in your organization is holding the property. In either situation, work with your Federal Reserve and state regulatory contacts if you would like to discuss a specific situation or to request an extension.

How long can Bank Holding Companies (BHC) hold OREO?

The Federal Reserve regulation for bank holding companies holding OREO is 12 CFR 225.140. This regulation allows both BHCs and their bank subsidiaries to acquire assets in satisfaction of a debt previously contracted. The section allows BHCs to hold OREO for two years, which may be extended annually up to five years. BHCs are required to report on their progress in divesting of these properties annually. If the property cannot be divested in a safe and sound manner, the BHC may request an additional five-year extension from the responsible Reserve Bank. If your holding company has OREO approaching any of the thresholds discussed above, work with your Reserve Bank analyst or Central Point of Contact to ask for extensions related to BHCs. 

How long can state-chartered institutions hold OREO?

For state-chartered institutions, the answer varies depending on the state’s regulations. Section 2200.1 of the Federal Reserve Commercial Bank Examination Manual states “State laws dictate the terms and conditions under which state-chartered banks may acquire and hold OREO.” All regulators stress that institutions should divest of OREO assets as soon as prudent and reasonable, taking into account market conditions. Further, it is prudent for bank management to maintain current documentation on disposal strategies and carrying values of the assets. For your convenience, we have outlined the state requirements for the Fifth District below.



Statutory Holding Period Limit


Maryland Code, Financial Institutions § 5-503(c)(3) – Title 5, Subtitle 5, Section 503(c)(3)

Banks may hold OREO eight years and may be permitted an additional two years subject to conditions established by the Commissioner. After expiration of the applicable period, property must be sold or carrying value brought to a value the Commissioner approves.

North Carolina

North Carolina General Statutes – Regulation of Banks § 53C-5-2 (i)

Banks must divest of OREO within five years of acquisition, unless the NC Commissioner of Banks approves an extension.

South Carolina

South Carolina Code of Laws § 34-3-210(3) – Title 34, Chapter 3, Article 3, Section 210 (3)

There is no time restriction.


Code of Virginia § 6.2-872 – Title 6.2

There is no time restriction.

West Virginia

West Virginia Code § 31A-4-13(e) – Chapter 31A, Article 4, Section 13(e)

Banks must divest of OREO at the earliest practicable time within 10 years of the date acquired, unless the WV Commissioner of Banking approves an extension.

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