Mortgage Servicing Rights

3 Months Ended

Mar. 31, 2013

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 impairment testing on a quarterly basis. The aggregate fair value of these rights was $5.0 million and $4.2 million at March 31, 2013 and December 31, 2012, respectively. The fair value of mortgage servicing rights was determined using discount rates ranging from 5.0% to 10.0% at March 31, 2013 and December 31, 2012.

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

	Three Months Ended March 31,
(Dollars in thousands)	2013			2012
Beginning of period	$	4,152		$	2,739
Servicing rights capitalized		768			427
Amortization of servicing rights		(431	)		(311	)
Changes in valuation allowance		234			212
End of period	$	4,723		$	3,067
Mortgage loans serviced for others	$	648,621		$	448,139

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

	Three Months Ended March  31,
(Dollars in thousands)	2013			2012
Valuation allowance, beginning of period	$	(497	)	$	(793	)
Additions		—			—
Reductions		234			212
Direct write-downs		—			—
Valuation allowance, end of period	$	(263	)	$	(581	)

The estimated amortization expense of mortgage servicing rights for the remainder of 2013 and the succeeding fiscal years is as follows:

Year	(Dollars in thousands)	Amount
Remainder of 2013		$	687
2014			793
2015			647
2016			525
2017			415
Thereafter			1,656