Mortgage Servicing Rights

6 Months Ended

Jun. 30, 2012

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 $3.3 million and $2.8 million at June 30, 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 June 30, 2012 and December 31, 2011.

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

	Three Months Ended June 30,						Six Months Ended June 30,
(Dollars in thousands)	2012			2011			2012			2011
Beginning of period	$	3,067		$	2,772		$	2,739		$	2,441
Servicing rights capitalized		609			236			1,036			688
Amortization of servicing rights		(373	)		(112	)		(684	)		(189	)
Changes in valuation		(27	)		(18	)		185			(62	)
End of period	$	3,276		$	2,878		$	3,276		$	2,878
Mortgage loans serviced for others	$	491,536		$	355,356		$	491,536		$	355,356

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

	Three Months Ended June 30,						Six Months Ended June 30,
(Dollars in thousands)	2012			2011			2012			2011
Valuation allowance, beginning of period	$	(581	)	$	(245	)	$	(793	)	$	(201	)
Additions		(27	)		(18	)		—			(62	)
Reductions		—			—			185			—
Direct write-downs		—			—			—			—
Valuation allowance, end of period	$	(608	)	$	(263	)	$	(608	)	$	(263	)

The estimated amortization expense of mortgage servicing rights for the remainder of 2012 and the succeeding fiscal years is as follows:

Year (Dollars in thousands)	Amount
Remainder of 2012	$	375
2013		649
2014		505
2015		387
2016		294
Thereafter		1,066