Mortgage Servicing Rights

3 Months Ended

Mar. 31, 2013

Transfers and Servicing [Abstract]

Mortgage Servicing Rights

Mortgage Servicing Rights

The following table summarizes the changes in mortgage servicing rights (MSRs), which are included in other assets on the consolidated balance sheets:

	Three months ended March 31
	2013			2012
	(in thousands)
Amortized cost:
Balance at beginning of period	$	39,737		$	34,666
Originations of mortgage servicing rights	4,227			2,778
Amortization	(2,958		)	(2,185		)
Balance at end of period	$	41,006		$	35,259
Valuation allowance	$	(3,680	)	$	(1,550	)
Net MSRs at end of period	$	37,326		33,709

MSRs represent the economic value of existing contractual rights to service mortgage loans that have been sold. Accordingly, actual and expected prepayments of the underlying mortgage loans can impact the value of MSRs.

The Corporation estimates the fair value of its MSRs by discounting the estimated cash flows from servicing income, net of expense, over the expected life of the underlying loans at a discount rate commensurate with the risk associated with these assets. Expected life is based on the contractual terms of the loans, as adjusted for prepayment projections for mortgage-backed securities with rates and terms comparable to the loans underlying the MSRs. No adjustment to the valuation allowance was necessary as of March 31, 2013.