Mortgage Banking Activities (Tables)

3 Months Ended

Mar. 31, 2012

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 loan commitments and forward contract sales and their related fair values included in Mortgage loans held for sale in the Consolidated Balance Sheets were (in thousands):

	March 31, 2012				December 31, 2011					March 31, 2011
	Unpaid Principal Balance/ Notional		Fair Value		Unpaid Principal Balance/ Notional		Fair Value			Unpaid Principal Balance/ Notional		Fair Value

Residential mortgage loans held for sale	$	230,241	$	237,741	$	177,319	$	184,816		$	120,939	$	124,182
Residential mortgage loan commitments		302,303		8,907		189,770		6,597			158,946		3,495
Forward sales contracts		520,165		391		349,447		(3,288	)		262,977		(558	)
			$	247,039			$	188,125				$	127,119

No residential mortgage loans held for sale were 90 days or more past due or considered impaired as of March 31, 2012, December 31, 2011 or March 31, 2011. No credit losses were recognized on residential mortgage loans held for sale for the three months ended March 31, 2012 and 2011.

Mortgage banking revenue was as follows (in thousands):

	Three months ended
	March 31, 2012		March 31, 2011
Originating and marketing revenue:
Residential mortgages loan held for sale	$	17,092	$	13,336
Residential mortgage loan commitments		2,310		1,244
Forward sales contracts		3,679		(7,051	)
Total originating and marketing revenue		23,081		7,529
Servicing revenue		9,997		9,827
Total mortgage banking revenue	$	33,078	$	17,356

Summary of Mortgage Servicing Rights

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

	March 31, 2012			Dec. 31, 2011			March 31, 2011
Number of residential mortgage loans serviced for others		95,944			95,841			96,256
Outstanding principal balance of residential mortgage loans serviced for others	$	11,378,806		$	11,300,986		$	11,202,626
Weighted average interest rate		5.09	%		5.19	%		5.40	%
Remaining term (in months)		289			290			294

Activity in Capitalized Mortgage Servicing Rights

Activity in capitalized mortgage servicing rights during the three months ended March 31, 2012 is as follows (in thousands):

	Purchased			Originated			Total
Balance at December 31, 2011	$	18,903		$	67,880		$	86,783
Additions, net		–			8,372			8,372
Change in fair value due to loan runoff		(1,010	)		(3,134	)		(4,144	)
Change in fair value due to market changes		3,311			3,816			7,127
Balance at March 31, 2012	$	21,204		$	76,934		$	98,138

Activity in capitalized mortgage servicing rights during the three months ended March 31, 2011 is as follows (in thousands):

	Purchased			Originated			Total
Balance at December 31, 2010	$	37,900		$	77,823		$	115,723
Additions, net		–			4,969			4,969
Change in fair value due to loan runoff		(1,333	)		(2,143	)		(3,476	)
Change in fair value due to market changes		1,776			1,353			3,129
Balance at March 31, 2011	$	38,343		$	82,002		$	120,345

Changes in the fair value of mortgage servicing rights are included in Other operating expense in the Consolidated Statements of Earnings. Changes in fair value due to loan runoff are included in Mortgage banking costs. Changes in fair value due to market changes are reported separately. Changes in fair value due to market changes during the period relate to assets held at the reporting date.

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:

	March 31, 2012			December 31, 2011			March 31, 2011
Discount rate – risk-free rate plus a market premium		10.33	%		10.34	%		10.36	%
Prepayment rate – based upon loan interest rate, original term and loan type		10.01% - 45.98	%		10.88% - 49.68	%		6.69% - 39.69	%
Loan servicing costs – annually per loan based upon loan type	$	55 - $105		$	55 - $105		$	55 - $105
Escrow earnings rate – indexed to rates paid on deposit accounts with comparable average life		1.28	%		1.21	%		2.43	%

Stratification of Loan Servicing Portfolio

Stratification of the mortgage loan servicing portfolio, outstanding principal of loans serviced for others and weighted average prepayment rate by interest rate at March 31, 2012 follows (in thousands):

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

Fair value	$	27,456		$	50,561		$	16,586		$	3,535		$	98,138
Outstanding principal of loans serviced for others	$	2,760,780		$	4,977,754		$	2,602,343		$	1,037,929		$	11,378,806
Weighted average prepayment rate1		10.01	%		12.54	%		29.20	%		45.98	%		18.79	%

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 March 31, 2012 (in thousands):

			Past Due
	Current		30 to 59 Days		60 to 89 Days		90 Days or More		Total
FHLMC	$	5,147,454	$	40,600	$	13,421	$	49,144	$	5,250,619
FNMA		1,730,185		19,654		5,789		22,987		1,778,615
GNMA		3,687,899		109,478		24,522		25,117		3,847,016
Other		479,161		8,553		3,131		11,711		502,556
Total	$	11,044,699	$	178,285	$	46,863	$	108,959	$	11,378,806

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 March 31,
	2012			2011
Beginning balance	$	18,683		$	16,667
Provision for recourse losses		1,672			794
Loans charged off, net		(1,704	)		(974	)
Ending balance	$	18,651		$	16,487

- 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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