Loan Servicing

3 Months Ended

Mar. 31, 2011

Loan Servicing [Abstract]

Loan Servicing

Note 14 – Loan Servicing

Park serviced sold mortgage loans of $1.44 billion at March 31, 2011, compared to $1.47 billion at December 31, 2010 and $1.53 billion at March 31, 2010.  At March 31, 2011, $34.1 million of the sold mortgage loans were sold with recourse compared to $50.5 million at March 31, 2010.  Management closely monitors the delinquency rates on the mortgage loans sold with recourse.  At March 31, 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 March 31,
	2011			2010
Mortgage servicing rights:
Carrying amount, net, beginning of period	$	10,488			10,780
Additions		330			575
Amortization		(521	)		(496	)
Change in valuation allowance		68			-
Carrying amount, net, end of period	$	10,365		$	10,859
Valuation allowance:
Beginning of period	$	748		$	574
Change in valuation allowance		(68	)		-
End of period	$	680		$	574

Servicing fees included in other service income were $1.4 million for the three months ended March 31, 2011.  For the three months ended March 31, 2010, servicing fees included in other service income were $1.3 million.