XML 61 R29.htm IDEA: XBRL DOCUMENT v2.4.0.6
OTHER INTANGIBLE ASSETS AND MORTGAGE SERVICING RIGHTS
 12 Months Ended
Dec. 31, 2012
Other Intangible Assets and Mortgage Servicing Rights [Abstract]  
OTHER INTANGIBLE ASSETS AND MORTGAGE SERVICING RIGHTS
 OTHER INTANGIBLE ASSETS AND MORTGAGE SERVICING RIGHTS

At December 31, 2012, intangible assets consisted primarily of 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.

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, 2010, 2011 and 2012 (in thousands):
 
Core Deposit
Intangibles
 
Other
 
Total
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

Amortization
(2,092
)
 
(9
)
 
(2,101
)
Balance, December 31, 2012
$
4,230

 
$
—

 
$
4,230



Estimated amortization expense in future years with respect to existing intangibles as of December 31, 2012 (in thousands):
Year Ended
Core Deposit
Intangibles
 
Other
 
Total
December 31, 2013
$
1,908

 
$
—

 
$
1,908

December 31, 2014
1,724

 
—

 
1,724

December 31, 2015
598

 
—

 
598

Net carrying amount
$
4,230

 
$
—

 
$
4,230



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 2012, the Company recorded $400,000 in impairment charges against mortgage servicing rights. In 2011 and in 2010, the Company did not record an impairment charge.  Loans serviced for others totaled $1.031 billion and $773 million at December 31, 2012 and 2011, respectively.  Custodial accounts maintained in connection with this servicing totaled $5.0 million and $3.4 million at December 31, 2012 and 2011, respectively.
 
An analysis of the mortgage servicing rights for the years ended December 31, 2012, 2011 and 2010 is presented below (in thousands):
 
Years Ended December 31
 
2012
 
2011
 
2010
Balance, beginning of the year
$
5,584

 
$
5,441

 
$
5,703

Amounts capitalized
3,662

 
1,928

 
1,736

Amortization (1)
(2,602
)
 
(1,785
)
 
(1,998
)
Valuation adjustments in the period
(400
)
 
—

 
—

Balance, end of the year
$
6,244

 
$
5,584

 
$
5,441


(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.