Other Intangible Assets And Mortgage Servicing Rights

12 Months Ended

Dec. 31, 2011

Other Intangible Assets And Mortgage Servicing Rights

Other Intangible Assets And Mortgage Servicing Rights

Note 21:  OTHER INTANGIBLE ASSETS AND MORTGAGE SERVICING RIGHTS

At December 31, 2011, intangible assets consisted primarily of core deposit intangibles (CDI), which are amounts recorded in business combinations or deposit purchase transactions related to the value of transaction-related deposits and the value of the customer relationships associated with the deposits.  Prior to December 31, 2008, intangible assets also included goodwill, which represented the excess of the purchase price over the fair value of net assets acquired in several business combinations accounted for under the purchase method.

The Company amortizes CDI over their estimated useful life and reviews them at least annually for events or circumstances that could impact their recoverability.  The CDI assets shown in the table below represent the value ascribed to the long-term deposit relationships acquired in three separate bank acquisitions during 2007.  These intangible assets are being amortized using an accelerated method over estimated useful lives of eight years.  The CDI assets are not estimated to have a significant residual value.  Other intangible assets are amortized over their useful lives and are also reviewed for impairment.

The following table summarizes the changes in the Company’s other intangibles for the years ended December 31, 2009, 2010 and 2011 (in thousands):

		Core Deposit Intangibles			Other			Total
Balance, December 31, 2008	$	13,701		$	15		$	13,716
Amortization		(2,644	)		(2	)		(2,646	)
Balance, December 31, 2009		11,057			13			11,070
Amortization		(2,459	)		(2	)		(2,461	)
Balance, December 31, 2010		8,598			11			8,609
Amortization		(2,276	)		(2	)		(2,278	)
Balance, December 31, 2011	$	6,322		$	9		$	6,331

Estimated amortization expense in future years with respect to existing intangibles as of December 31, 2011 (in thousands):

Year Ended		Core Deposit Intangibles		Other		Total
December 31, 2012	$	2,092	$	2	$	2,094
December 31, 2013		1,908		2		1,910
December 31, 2014		1,724		2		1,726
December 31, 2015		597		2		599
Thereafter		--		2		2
Net carrying amount	$	6,321	$	10	$	6,331

Mortgage servicing rights are reported in other assets.  Mortgage servicing rights are initially reported at fair value and are amortized in proportion to, and over the period of, the estimated future net servicing income of the underlying financial assets.  Mortgage servicing rights are subsequently evaluated for impairment based upon the fair value of the rights compared to the amortized cost (remaining unamortized initial fair value).  If the fair value is less than the amortized cost, a valuation allowance is created through an impairment charge to servicing fee income.  However, if the fair value is greater than the amortized cost, the amount above the amortized cost is not recognized in the carrying value.  In 2011 and in 2010, the Company did not record an impairment charge.  In 2009, the Company recorded $800,000 in impairment charges against mortgage servicing rights.  Loans serviced for others totaled $773 million and $705 million at December 31, 2011 and 2010, respectively.  Custodial accounts maintained in connection with this servicing totaled $3.4 million and $5.6 million at December 31, 2011 and 2010, respectively.

An analysis of the mortgage servicing rights for the years ended December 31, 2011, 2010 and 2009 is presented below (in thousands):

	Years Ended December 31
		2011			2010			2009
Balance, beginning of the year	$	5,441		$	5,703		$	3,554
Amounts capitalized		1,928			1,736			5,009
Amortization (1)		(1,785	)		(1,998	)		(2,060	)
Valuation adjustments in the period		--			--			(800	)
Balance, end of the year	$	5,584		$	5,441		$	5,703

(1)Amortization of mortgage servicing rights is recorded as a reduction of loan servicing income and any

   unamortized balance is fully written off if the loan repays in full.