Mortgage Banking Activities

6 Months Ended

Jun. 30, 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 June 30, 2012, and December 31, 2011.

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

	Six Months Ended June 30, 2012			Six Months Ended June 30, 2011
	(Dollars in thousands)
Balance, beginning of year	$	6,375		$	6,400
Originations		1,167			1,036
Amortized to expense		(1,282	)		(1,002	)
Balance, end of period		6,260			6,434
Less valuation allowance		(1,344	)		(58	)
Net balance	$	4,916		$	6,376

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

	Six Months Ended June 30, 2012			Six Months Ended June 30, 2011
	(Dollars in thousands)
Balance, beginning of year	$	(1,785	)	$	(285	)
Impairment charges		(507	)		—
Recoveries		948			227
Balance, end of period	$	(1,344	)	$	(58	)

Fair value of mortgage servicing rights as of June 30, 2012 was approximately $6.2 million and at December 31, 2011 was approximately $5.9 million.

Key economic assumptions in measuring the value of mortgage servicing rights at June 30, 2012 and December 31, 2011 were as follows:

	June  30, 2012			December 31, 2011
Weighted average prepayment rate		444 PSA			475 PSA
Weighted average life (in years)		3.82			3.70
Weighted average discount rate		8	%		8	%