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Fair Value Option
3 Months Ended
Mar. 31, 2012
Fair Value Option [Abstract]  
Fair Value Option

Note 10: Fair Value Option

The Company has elected to measure loans held for sale at fair value in accordance with ASC 825, Fair Value Option. This standard permits an entity to choose to measure many financial instruments and other items at fair value. An entity will report unrealized gains and losses on items for which the fair value option has been elected in earnings at each reporting date. Loans held for sale is made up entirely of mortgage loans held for immediate sale in the secondary market with servicing released. These loans are sold prior to origination at a contracted price to an outside investor on a best efforts basis and remain on the Company's balance sheet for a short period of time (typically 30 to 60 days). It is management's opinion given the short-term nature of these loans, that fair value provides a reasonable measure of the economic value of these assets. In addition, carrying such loans at fair value eliminates some measure of volatility created by the timing of sales proceeds from outside investors, which typically occur in the month following origination.

The difference between the aggregate fair value and the aggregate unpaid principal balance of loans held for sale was a gain of $1,000 at March 31, 2012. The net loss from fair value changes included in loans held for sale fee income was $33,000 for the three months ended March 31, 2012 and a net gain of $146,000 for the three months ended March 31, 2011. Interest income on loans held for sale is included in interest and fees on loans in the Company's condensed consolidated statement of operations. See Note 11 for additional disclosures regarding fair value of mortgage loans held for sale.