Loan Servicing

9 Months Ended

Sep. 30, 2011

Loan Servicing [Abstract]

Loan Servicing

Note 14 – Loan Servicing

Park serviced sold mortgage loans of $1.41 billion at September 30, 2011, compared to $1.51 billion at September 30, 2010.  At September 30, 2011, $30.6 million of the sold mortgage loans were sold with recourse compared to $42.0 million at September 30, 2010.  Management closely monitors the delinquency rates on the mortgage loans sold with recourse.  At September 30, 2011, management determined that no liability was deemed necessary for these loans.

When Park sells mortgage loans with servicing rights retained, servicing rights are initially recorded at fair value.  Park selected the "amortization method" as permissible within GAAP, whereby the servicing rights capitalized are amortized in proportion to and over the period of estimated future servicing income of the underlying loan.  At the end of each reporting period, the carrying value of mortgage servicing rights ("MSRs") is assessed for impairment with a comparison to fair value.  MSRs are carried at the lower of their amortized cost or fair value.

Activity for MSRs and the related valuation allowance follows:

(in thousands)	Three months ended September 30, 2011			Nine months ended September 30, 2011
Mortgage servicing rights:
Carrying amount, net, beginning of period	$	10,259		$	10,488
Additions		431			1,070
Amortization		(621	)		(1,557	)
Changes in valuation inputs & assumptions		-			68
Carrying amount, net, end of period	$	10,069		$	10,069
Valuation allowance:
Beginning of period	$	680		$	748
Changes due to fair value adjustments		-			(68	)
End of period	$	680		$	680

Servicing fees included in other service income were $1.5 million and $4.3 million for the three and nine months ended September 30, 2011, respectively.  For the three and nine months ended September 30, 2010, servicing fees included in other service income were $1.7 million and $4.4 million, respectively.