NOTE 6 – SERVICING RIGHTS

Mortgage Banking Activities. At June 30, 2011 and December 31, 2010, First Bank serviced mortgage loans for others totaling $1.29 billion and $1.27 billion, respectively. Changes in mortgage servicing rights for the three and six months ended June 30, 2011 and 2010 were as follows:

	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2011			2010		2011		2010
	(dollars expressed in thousands)
Balance, beginning of period	$	12,890		12,704		12,150		12,130
Originated mortgage servicing rights		495		663		1,613		1,459
Change in fair value resulting from changes in valuation inputs or
assumptions used in valuation model (1)		(1,274	)	(1,297	)	(1,075	)	(1,022	)
Other changes in fair value (2)		(372	)	(627	)	(949	)	(1,124	)
Balance, end of period	$	11,739		11,443		11,739		11,443

____________________

(1)		The change in fair value resulting from changes in valuation inputs or assumptions used in valuation model primarily reflects the change in discount rates and prepayment speed assumptions, primarily due to changes in interest rates.
(2)		Other changes in fair value reflect changes due to the collection/realization of expected cash flows over time.

Other Servicing Activities. At June 30, 2011 and December 31, 2010, First Bank serviced United States Small Business Administration (SBA) loans for others totaling $188.0 million and $200.4 million, respectively. Changes in SBA servicing rights for the three and six months ended June 30, 2011 and 2010 were as follows:

	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2011			2010		2011		2010
	(dollars expressed in thousands)
Balance, beginning of period	$	7,321		7,972		7,432		8,478
Originated SBA servicing rights		—		42		—		63
Change in fair value resulting from changes in valuation inputs or
assumptions used in valuation model (1)		(1	)	318		226		424
Other changes in fair value (2)		(233	)	(509	)	(571	)	(1,142	)
Balance, end of period	$	7,087		7,823		7,087		7,823

____________________

(1)		The change in fair value resulting from changes in valuation inputs or assumptions used in valuation model primarily reflects the change in discount rates and prepayment speed assumptions, primarily due to changes in interest rates.
(2)		Other changes in fair value reflect changes due to the collection/realization of expected cash flows over time.