Mortgage Banking Activities

12 Months Ended

Dec. 31, 2011

Mortgage Banking Activities [Abstract]

MORTGAGE BANKING ACTIVITIES

7. MORTGAGE BANKING ACTIVITIES

Mortgage loans serviced for others, which are not reported in United Community’s assets, totaled $1.1 billion at December 31, 2011 and 2010.

Activity for capitalized mortgage servicing rights, included in other assets, was as follows:

		September 30,			September 30,			September 30,
	2011			2010			2009
	(Dollars in thousands)
Balance, beginning of year	$	6,400		$	6,228		$	5,562
Originations		2,204			2,621			3,220
Amortized to expense		(2,229	)		(2,449	)		(2,554	)
Balance, end of year		6,375			6,400			6,228
Less valuation allowance		(1,785	)		(285	)		(423	)
Net balance	$	4,590		$	6,115		$	5,805

Fair value of mortgage servicing rights was $5.6 million, $8.2 million and $8.0 million at December 31, 2011, 2010, and 2009, respectively.

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

		September 30,			September 30,			September 30,
	2011			2010			2009
	(Dollars in thousands)
Balance, beginning of year	$	(285	)	$	(423	)	$	(2,233	)
Impairment charges		(1,727	)		(1,279	)		—
Recoveries		227			1,417			1,810
Balance, end of year	$	(1,785	)	$	(285	)	$	(423	)

Key economic assumptions used in measuring the value of mortgage servicing rights at December 31, 2011 and 2010 were as follows:

		September 30,			September 30,
	2011			2010
Weighted average prepayment rate		475 PSA			332 PSA
Weighted average life (in years)		3.70			3.71
Weighted average discount rate		8	%		8	%

Estimated amortization expense for each of the next five years is as follows:

		September 30,
	(Dollars in thousands)
2012	$	1,465
2013		1,263
2014		1,150
2015		1,029
2016		805

Amounts held in custodial accounts for investors amounted to $16.4 million and $13.2 million at December 31, 2011 and 2010, respectively.