Mortgage Banking Activities

3 Months Ended

Mar. 31, 2012

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 March 31, 2012, and December 31, 2011.

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

	Three Months Ended March 31, 2012			Three Months Ended March 31, 2011
	(Dollars in thousands)
Balance, beginning of year	$	6,375		$	6,400
Originations		531			433
Amortized to expense		(641	)		(529	)
Balance, end of period		6,265			6,304
Less valuation allowance		(837	)		(144	)
Net balance	$	5,428		$	6,160

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

	Three Months Ended March 31, 2012			Three Months Ended March 31, 2011
	(Dollars in thousands)
Balance, beginning of year	$	(1,785	)	$	(285	)
Impairment charges		—			—
Recoveries		948			141
Balance, end of period	$	(837	)	$	(144	)

Fair value of mortgage servicing rights as of March 31, 2012 was approximately $7.1 million and at December 31, 2011 was approximately $5.9 million.

Key economic assumptions in measuring the value of mortgage servicing rights at March 31, 2012 and December 31, 2011 were as follows:

	March 31, 2012	December 31, 2011
Weighted average prepayment rate	370 PSA	475 PSA
Weighted average life (in years)	3.74	3.70
Weighted average discount rate	8%	8%