Mortgage Servicing Rights

3 Months Ended

Mar. 31, 2012

Mortgage Servicing Rights [Abstract]

Mortgage Servicing Rights

Note 4. 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 $3.1 million and $2.8 million at March 31, 2012 and December 31, 2011, respectively. The fair value of mortgage servicing rights was determined using discount rates ranging from 3.5% to 7.3% at March 31, 2012 and December 31, 2011.

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

	Three Months Ended March 31,
(Dollars in thousands)	2012			2011
Beginning of period	$	2,739		$	2,441
Servicing rights capitalized		427			452
Amortization of servicing rights		(311	)		(77	)
Changes in valuation		212			(44	)
End of period	$	3,067		$	2,772
Mortgage loans serviced for others	$	448,139		$	339,357

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

	Three Months Ended March 31,
(Dollars in thousands)	2012			2011
Valuation allowance, beginning of period	$	(793	)	$	(201	)
Additions		—			(44	)
Reductions		212			—
Direct write-downs		—			—
Valuation allowance, end of period	$	(581	)	$	(245	)

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

Year         (Dollars in thousands)	Amount
2012	$	508
2013		571
2014		448
2015		348
2016		265
Thereafter		927