Note 6 - Mortgage Loan Servicing

12 Months Ended

Dec. 31, 2014

Mortgage Loan Servicing [Abstract]

Mortgage Loan Servicing [Text Block]

NOTE 6 – MORTGAGE LOAN SERVICING

Mortgage loans serviced for others are not reported as assets in the Consolidated Balance Sheets. The mortgage loan servicing portfolio was acquired in the merger with Firstbank. The year-end aggregate unpaid principal balances of mortgage loans serviced for others were as follows:

	2014
Mortgage loan portfolios serviced for:
Federal Home Loan Mortgage Corporation	$	589,118,000
Federal Home Loan Bank		1,702,000
Total mortgage loans serviced for others	$	590,820,000

Custodial escrow balances maintained in connection with serviced loans were $2.8 million as of December 31, 2014.

Activity for capitalized mortgage loan servicing rights, included in other assets in the Consolidated Balance Sheets, during 2014 was as follows:

	2014
Balance at January 1, 2014	$	0
Firstbank merger		7,389,000
Additions		575,000
Amortized to expense		(1,252,000	)
Balance at December 31, 2014	$	6,712,000

We determined that no valuation allowance was necessary as of December 31, 2014. The estimated fair value of mortgage servicing rights was $7.3 million as of December 31, 2014. The fair value of mortgage servicing rights is estimated using a valuation model that calculates the present value of estimated future net servicing cash flows, taking into consideration expected mortgage loan prepayment rates, discount rates, servicing costs and other economic factors, which are determined based on current market conditions. Fair value was determined using a discount rate of 7.05%, a weighted average constant prepayment rate of 12.6%, depending on the stratification of the specific right, and a weighted average delinquency rate of 1.01%.

The weighted average amortization period is 3.7 years as of December 31, 2014. Estimated amortization is as follows:

2015	$	1,560,000
2016		1,256,000
2017		1,023,000
2018		857,000
2019		722,000
Thereafter		1,294,000