Note 4 - Originated Mortgage Servicing Rights

3 Months Ended

Sep. 30, 2011

Originated Mortgage Servicing Rights [Text Block]

NOTE 4 -- ORIGINATED MORTGAGE SERVICING RIGHTS

             Mortgage servicing rights, which are included in other assets on the Condensed Consolidated Balance Sheets, are accounted for on an individual loan-by-loan basis.  Accordingly, amortization is recorded in proportion to the amount of principal payment received on loans serviced.  The mortgage servicing rights are subject to periodic impairment testing.  Changes in the carrying value of capitalized mortgage servicing rights are summarized as follows:

(in thousands)
Balance, January 1, 2011	$	3,385
Servicing rights capitalized		413
Amortization of servicing rights		(369	)
Valuation adjustment		(817	)
Balance, September 30, 2011	$	2,612

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

(in thousands)
Balance, January 1, 2011	$	295
Additions		817
Reductions		-
Balance, September 30, 2011	$	1,112

The following table shows the future estimated amortization expense for mortgage servicing rights based on existing balances as of September 30, 2011.  The Corporation’s actual amortization expense in any given period may be significantly different from the estimated amounts displayed, depending on the amount of additional mortgage servicing rights, changes in mortgage interest rates, estimated prepayment speeds and market conditions.

Estimated Amortization Expense:

	Amount (in thousands)
For the three months ended December 31, 2011	$	73
For the year ending December 31, 2012		274
For the year ending December 31, 2013		257
For the year ending December 31, 2014		241
For the year ending December 31, 2015		226
For the year ending December 31, 2016		212
Thereafter		1,329

The Corporation services loans for others with unpaid principal balances at September 30, 2011 and December 31, 2010 of approximately $400.4 million and $395.0 million, respectively.