Mortgage Servicing Rights

6 Months Ended

Jun. 30, 2011

Mortgage Servicing Rights [Abstract]

Mortgage Servicing Rights

Note 5. Mortgage Servicing Rights

The Corporation has originated mortgage servicing rights which are included in other intangible assets on the consolidated balance sheets. Mortgage servicing rights are amortized in proportion to, and over the period of, estimated net servicing income on a basis similar to the interest method using an accelerated amortization method and are subject to periodic impairment testing. The aggregate fair value of these rights was $3.4 million and $2.9 million at June 30, 2011 and December 31, 2010. The fair value of mortgage servicing rights was determined using discount rates ranging from 3.50% to 7.32% for the six months ended June 30, 2011.

Changes in the mortgage servicing rights balance are summarized as follows:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2011			2010			2011			2010
	(Dollars in thousands)
Beginning of period	$	2,772		$	1,620		$	2,441		$	1,437
Servicing rights capitalized		236			258			688			508
Amortization of servicing rights		(112	)		(75	)		(189	)		(140	)
Changes in valuation		(18	)		(4	)		(62	)		(6	)
End of period	$	2,878		$	1,799		$	2,878		$	1,799
Mortgage loans serviced for others	$	355,356		$	216,760		$	355,356		$	216,760

Activity in the valuation allowance for mortgage servicing rights was as follows:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2011			2010			2011			2010
	(Dollars in thousands)
Valuation allowance, beginning of period	$	(245	)	$	(252	)	$	(201	)	$	(250	)
Additions		(18	)		(4	)		(62	)		(6	)
Reductions		—			—			—			—
Direct write-downs		—			—			—			—
Valuation allowance, end of period	$	(263	)	$	(256	)	$	(263	)	$	(256	)

The estimated amortization expense of mortgage servicing rights for each of the five succeeding fiscal years is as follows:

Year (Dollars in thousands)	Amount
2011	$	246
2012		433
2013		372
2014		322
2015		277
Thereafter		1,228