Mortgage Banking Activities

12 Months Ended

Dec. 31, 2013

Transfers and Servicing [Abstract]

Mortgage Servicing Rights (MSRs)

Mortgage banking activities

On February 1, 2011, the Federal National Mortgage Association (“FNMA”) renewed its servicing agreement, originally terminated in 2010, with the Bank as a result of the Bank's improved regulatory capital status following the Capital Raise (see Note 2). As of February 1, 2011, the Bank may either directly service loans that it originates or may sell originated loans “servicing released.” “Servicing released” means that whoever the Bank sells the loan to will service or arrange for servicing of the loan.

Net MSRs at December 31, 2013 and 2012 were $2.2 million and $1.3 million, respectively. Transactions in the Company’s MSRs for the years ended December 31, 2013 and 2012 were as follows (dollars in thousands).

	2013			2012
Balance at beginning of year	$	1,308		$	—
Additions	1,166			1,599
Amortization	(399		)	(134		)
Change in valuation allowance	157			(157		)
Balances at end of year	$	2,232		$	1,308

Mortgage banking income, net, consisted of the following for the periods shown (dollars in thousands):

	2013			2012			2011
Origination and processing fees	$	651		$	594		$	281
Gain on sales of mortgage loans, net	3,337			3,845			226
MSR valuation allowance	157			(157		)	—
Servicing fees	515			171			10
Amortization	(399		)	(134		)	(4		)
Mortgage banking income, net	$	4,261		$	4,319		$	513