SERVICING RIGHTS

12 Months Ended

Dec. 31, 2013

Mortgage Banking Activities. At December 31, 2013 and 2012, the Company serviced mortgage loans for others totaling $1.33 billion and $1.27 billion, respectively. Borrowers’ escrow balances held by the Company on such loans were $7.9 million at December 31, 2013 and 2012. Changes in mortgage servicing rights for the years ended December 31, 2013 and 2012 were as follows:



	2013			2012
	(dollars expressed in thousands)
Balance, beginning of year	$	9,152		9,077
Originated mortgage servicing rights	3,623			4,887
Change in fair value resulting from changes in valuation inputs or assumptions used in valuation model ⁽¹⁾	3,671			(2,089	)
Other changes in fair value ⁽²⁾	(2,235		)	(2,723	)
Balance, end of year	$	14,211		9,152


(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 December 31, 2013 and 2012, the Company serviced SBA loans for others totaling $139.1 million and $159.6 million, respectively. Changes in SBA servicing rights for the years ended December 31, 2013 and 2012 were as follows:



	2013			2012
	(dollars expressed in thousands)
Balance, beginning of year	$	5,640		6,303
Originated SBA servicing rights	—			—
Change in fair value resulting from changes in valuation inputs or assumptions used in valuation model ⁽¹⁾	(244		)	434
Other changes in fair value ⁽²⁾	(753		)	(1,097	)
Balance, end of year	$	4,643		5,640


(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.

- Definition

The entire disclosure for a transferor's continuing involvement in financial assets that it has transferred in a securitization or asset-backed financing arrangement, the nature of any restrictions on assets reported by an entity in its statement of financial position that relate to a transferred financial asset (including the carrying amounts of such assets), how servicing assets and servicing liabilities are reported, and (for securitization or asset-backed financing arrangements accounted for as sales) when a transferor has continuing involvement with the transferred financial assets and transfers of financial assets accounted for as secured borrowings, how the transfer of financial assets affects an entity's financial position, financial performance, and cash flows.

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