SECONDARY MARKET MORTGAGE ACTIVITY

12 Months Ended

Dec. 31, 2011

Notes to Financial Statements [Abstract]

NOTE 6 - SECONDARY MARKET MORTGAGE ACTIVITY

Mortgage loans serviced for others are not included in the accompanying consolidated balance sheets. The unpaid principal balances of these loans were $293.3 million and $283.5 million at December 31, 2011 and 2010. Custodial escrow balances maintained in connection with serviced loans were $1.1 million and $1.0 million at year end 2011 and 2010. Information on loan servicing rights and the related valuation allowance, which are included in other assets, follows:

Loan servicing rights:	2011			2010			2009
				(in thousands)
Carrying amount at beginning of year	$	2,104		$	1,966		$	1,657
Originations		629			758			896
Amortization		(594	)		(620	)		(587	)
Carrying amount before valuation allowance	$	2,139		$	2,104		$	1,966

Valuation allowance:		2011			2010			2009
				(in thousands)
Beginning of year	$	22		$	46		$	46
Provisions/(recoveries)		86			(24	)		0
End of year		108			22			46

Carrying amount at end of year	$	2,031		$	2,082		$	1,920

Fair value at beginning of the year	$	2,390		$	2,136		$	2,148
Fair value at the end of the year	$	2,098		$	2,390		$	2,136

Fair value at year end 2011 was determined using weighted average discount rates 9.2%, a constant prepayment speed of 387 and a weighted average default rate of .39%. Fair value at year end 2010 was determined using weighted average discount rates 9.5%, a constant prepayment speed of 288 and a weighted average default rate of .32%.

The weighted average amortization period is 3.92 years at December 31, 2011.

- Definition

Provides the disclosures pertaining to 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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