Mortgage Servicing Rights

9 Months Ended

Sep. 30, 2013

Goodwill And Intangible Assets Disclosure [Abstract]

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 and an accelerated amortization method for loan payoffs. Mortgage servicing rights are subject to impairment testing on a quarterly basis. The aggregate fair value of these rights was $7.0 million and $4.2 million at September 30, 2013 and December 31, 2012, respectively. The fair value of mortgage servicing rights was determined using discount rates ranging from 5.1% to 10.0% at September 30, 2013 and 5.0% to 10.0% at December 31, 2012.

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


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
(Dollars in thousands)	2013			2012			2013			2012
Beginning of period	$	5,227		$	3,276		$	4,152		$	2,739
Servicing rights capitalized		544			741			2,183			1,777
Amortization of servicing rights		(287	)		(463	)		(1,099	)		(1,147	)
Changes in valuation allowance		—			(372	)		248			(187	)

End of period	$	5,484		$	3,182		$	5,484		$	3,182

Mortgage loans serviced for others	$	736,017		$	540,735		$	736,017		$	540,735

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


	Three Months Ended						Nine Months Ended
	September 30,						September 30,
(Dollars in thousands)	2013			2012			2013			2012
Valuation allowance, beginning of period	$	(249	)	$	(608	)	$	(497	)	$	(793	)
Additions		—			(372	)		—			(187	)
Reductions		—			—			248			—
Direct write-downs		—			—			—			—

Valuation allowance, end of period	$	(249	)	$	(980	)	$	(249	)	$	(980	)

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	$	218
2014		801
2015		700
2016		602
2017		510
Thereafter		2,653