Mortgage Servicing Rights

6 Months Ended

Jun. 30, 2014

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 $7.2 million at June 30, 2014 and December 31, 2013, respectively. The fair value of mortgage servicing rights was determined using discount rates ranging from 5.0% to 10.0% at both June 30, 2014 and December 31, 2013.

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


	Three Months Ended June 30,						Six Months Ended June 30,
(Dollars in thousands)	2014			2013			2014			2013
Beginning of period	$	5,406		$	4,723		$	5,519		$	4,152
Servicing rights capitalized		236			871			359			1,639
Amortization of servicing rights		(264	)		(381	)		(507	)		(812	)
Changes in valuation allowance		—			14			7			248

End of period	$	5,378		$	5,227		$	5,378		$	5,227

Mortgage loans serviced for others	$	761,413		$	705,999		$	761,413		$	705,999

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)	2014			2013			2014			2013
Valuation allowance, beginning of period	$	(243	)	$	(263	)	$	(250	)	$	(497	)
Additions		—			—			—			—
Reductions		—			14			7			248
Direct write-downs		—			—			—			—

Valuation allowance, end of period	$	(243	)	$	(249	)	$	(243	)	$	(249	)

The estimated amortization expense of mortgage servicing rights for the remainder of 2014 and the succeeding fiscal years is as follows:


Year	(Dollars in thousands)	Amount
Remainder of 2014		$	433
2015			792
2016			679
2017			576
2018			482
Thereafter			2,416