Mortgage Banking Activities (Tables)

9 Months Ended

Sep. 30, 2010

Mortgage Banking Activities [Abstract]

Components of Residential Mortgage Loans Held For Sale

The unpaid principal balance of residential mortgage loans held for sale, notional amounts of derivative contracts related to residential mortgage loans commitments and forward contract sales and their related fair values included in Mortgage loans held for sale on the Consolidated Balance Sheets were (in thousands):

	September 30, 2011					December 31, 2010				September 30, 2010
	Unpaid Principal Balance/ Notional		Fair Value			Unpaid Principal Balance/ Notional		Fair Value		Unpaid Principal Balance/ Notional		Fair Value

Residential mortgage loans held for sale	$	239,439	$	250,527		$	253,778	$	254,669	$	316,893	$	310,588
Residential mortgage loan commitments		313,574		11,176			138,870		2,251		325,562		8,722
Forward sales contracts		541,764		(5,306	)		396,422		6,493		630,846		(2,417	)
			$	256,397				$	263,413			$	316,893

Servicing fee income and late charges on loans serviced for others is included Mortgage banking revenue along with revenue from originating and marketing residential mortgage loans, including gains (losses) on residential mortgage loans held for sale and changes in fair value of derivative contracts not designated as hedging instruments related to residential mortgage loan commitments and forward sales contracts, as follows (in thousands):

	Three months ended					Nine months ended
	Sept. 30, 2011			Sept. 30, 2010		Sept. 30, 2011			Sept. 30, 2010
Originating and marketing revenue:
Residential mortgages loan held for sale	$	16,142		$	10,846	$	39,515		$	32,172
Residential mortgage loan commitments		8,383			3,183		8,925			8,226
Forward sales contracts		(4,822	)		5,040		(11,799	)		(6,043	)
Total originating and marketing revenue		19,703			19,069		36,641			34,355
Servicing revenue		9,790			10,167		29,564			28,087
Total mortgage banking revenue	$	29,493		$	29,236	$	66,205		$	62,442

Summary of Mortgage Servicing Rights

The following represents a summary of mortgage servicing rights (Dollars in thousands):

	Sept. 30, 2011			Dec. 31, 2010			Sept. 30, 2010
Number of residential mortgage loans serviced for others		95,831			96,443			99,986
Outstanding principal balance of residential mortgage loans serviced for others	$	11,249,503		$	11,194,582		$	11,190,802
Weighted average interest rate		5.29	%		5.44	%		5.55	%
Remaining term (in months)		286			292			290

Activity in Capitalized Mortgage Servicing Rights

Activity in capitalized mortgage servicing rights during the three months ended September 30, 2011 is as follows (in thousands):

	Purchased			Originated			Total
Balance at June 30, 2011	$	32,866		$	76,326		$	109,192
Additions, net		–			7,199			7,199
Change in fair value due to loan runoff		(1,034	)		(2,587	)		(3,621	)
Change in fair value due to market changes		(10,395	)		(14,427	)		(24,822	)
Balance at September 30, 2011	$	21,437		$	66,511		$	87,948

Activity in capitalized mortgage servicing rights during the nine months ended September 30, 2011 is as follows (in thousands):

	Purchased			Originated			Total
Balance at December 31, 2010	$	37,900		$	77,823		$	115,723
Additions, net		–			17,966			17,966
Change in fair value due to loan runoff		(3,585	)		(6,970	)		(10,555	)
Change in fair value due to market changes		(12,878	)		(22,308	)		(35,186	)
Balance at September 30, 2011	$	21,437		$	66,511		$	87,948

Activity in capitalized mortgage servicing rights during the three months ended September 30, 2010 is as follows (in thousands):

	Purchased			Originated			Total
Balance at June 30, 2010	$	37,446		$	61,496		$	98,942
Additions, net		–			7,716			7,716
Change in fair value due to loan runoff		(2,062	)		(2,339	)		(4,401	)
Change in fair value due to market changes		(4,022	)		(11,902	)		(15,924	)
Balance at September 30, 2010	$	31,362		$	54,971		$	86,333

Activity in capitalized mortgage servicing rights during the nine months ended September 30, 2010 is as follows (in thousands):

	Purchased			Originated			Total
Balance at December 31, 2009	$	7,828		$	65,996		$	73,824
Additions, net		31,892			18,078			49,970
Change in fair value due to loan runoff		(4,703	)		(11,308	)		(16,011	)
Gain on purchase of mortgage servicing rights		11,832			–			11,832
Change in fair value due to market changes		(15,487	)		(17,795	)		(33,282	)
Balance at September 30, 2010	$	31,362		$	54,971		$	86,333

There is no active market for trading in mortgage servicing rights after origination. Fair value is determined by discounting the projected net cash flows. Significant assumptions considered significant unobservable inputs used to determine fair value are:

	September 30, 2011			December 31, 2010			September 30, 2010
Discount rate – risk-free rate plus a market premium		10.34	%		10.36	%		10.4	%
Prepayment rate – based upon loan interest rate, original term and loan type		11.33% - 47.70	%		6.53% - 23.03	%		5.2% - 56.0	%
Loan servicing costs – annually per loan based upon loan type	$	55 - $105		$	35 - $60		$	35 - $60
Escrow earnings rate – indexed to rates paid on deposit accounts with comparable average life		1.26	%		2.21	%		1.51	%

Stratification of Loan Servicing Portfolio

Stratification of the mortgage loan servicing portfolio and outstanding principal of loans serviced for others by interest rate at September 30, 2011 follows (in thousands):

	< 4.50%				4.50% - 5.49	%		5.50% - 6.49	%	> 6.49%			Total

Fair value	$	13,444		$	55,105		$	15,508		$	3,891		$	87,948
Outstanding principal of loans serviced for others	$	1,503,755		$	5,464,857		$	3,079,400		$	1,201,491		$	11,249,503
Weighted average prepayment rate1		11.33	%		13.38	%		35.64	%		47.70	%		22.87	%

1	Annual prepayment estimates based upon loan interest rate, original term and loan type

Aging Status of Mortgage Loans Serviced For Others

The aging status of our mortgage loans serviced for others by investor at September 30, 2011 follows (in thousands):

			Past Due
	Current		30 to 59 Days		60 to 89 Days		90 Days or More		Total
FHLMC	$	5,431,756	$	46,728	$	16,152	$	20,600	$	5,515,236
FNMA		1,405,631		23,053		6,972		8,996		1,444,652
GNMA		3,584,314		122,544		36,305		21,616		3,764,779
Other		506,560		9,076		3,163		6,037		524,836
Total	$	10,928,261	$	201,401	$	62,592	$	57,249	$	11,249,503

Activity in Allowance for Losses On Loans Sold With Recourse

The activity in the allowance for losses on loans sold with recourse included in Other liabilities in the Consolidated Balance Sheets is summarized as follows (in thousands):

	Three Months ended September 30,						Nine Months ended September 30,
	2011			2010			2011			2010
Beginning balance	$	17,540		$	13,781		$	16,667		$	13,781
Provision for recourse losses		3,246			2,551			6,572			5,418
Loans charged off, net		(2,264	)		(830	)		(4,717	)		(3,697	)
Ending balance	$	18,522		$	15,502		$	18,522		$	15,502

- Definition

Tabular disclosure of the activity in the balance of servicing assets (including a description of where changes in fair value are reported in the statement of income for each period for which results of operations are presented), including but not limited to, the following: beginning and ending balances, additions (for instance, through purchases of servicing assets), disposals, changes in fair value during the period resulting from changes in inputs or assumptions used in the valuation model, other changes in fair value along with a description of those changes, and other changes that affect the balance along with a description of those changes.

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