Mortgage Servicing Rights

12 Months Ended

Jun. 30, 2012

Mortgage Servicing Rights

NOTE 7: Mortgage Servicing Rights

The Company is servicing loans for the benefit of others totaling approximately $355,020,000 and $343,750,000 at June 30, 2012 and 2011, respectively.  Servicing loans for others generally consists of collecting mortgage payments, maintaining escrow accounts, disbursing payments to investors, and foreclosure processing.

Custodial escrow balances maintained in connection with the foregoing loan servicing, and included in demand deposits, were approximately $3,943,000 and $2,569,000 at June 30, 2012 and 2011, respectively.

The following is a summary of activity in mortgage servicing rights and the valuation allowance:

	Years Ended June 30,
	2012			2011
(Dollars in Thousands)
Mortgage servicing rights
Balance at beginning of period	$	2,142		$	2,337
Mortgage servicing rights capitalized		705			963
Amortization of mortgage servicing rights		(629	)		(1,158	)
Balance at end of period		2,218			2,142
Valuation allowance
Balance at beginning of period		-			-
Provision (credited) to operations		-			-
Balance at end of period		-			-
Net mortgage servicing rights	$	2,218		$	2,142

The fair values of these rights were $2,424,000 and $2,871,000 at June 30, 2012 and June 30, 2011, respectively.  The fair value of servicing rights was determined using discount rates ranging from 9.00% to 20.00%, prepayment speeds ranging from 220% to 420% PSA, depending on stratification of the specific right.  The fair value was also adjusted for the affect of potential past dues and foreclosures.