Note 10 – Loan Servicing

Loans serviced for others are not included in the accompanying consolidated balance sheets. The unpaid principal balances of loans serviced for others totaled approximately $1,035.5 million and $943.1 million at December 31, 2014 and 2013.

The aggregate fair value of capitalized mortgage servicing rights was approximately $10.5 million, $9.9 million, and $6.6 million at December 31, 2014, 2013 and 2012, compared to the carrying values of $7.6 million, $7.0 million and $5.1 million, respectively. Comparable market values and a valuation model that calculates the present value of future cash flows were used to estimate fair value. For purposes of measuring impairment, risk characteristics including product type, investor type and interest rates, were used to stratify the originated mortgage servicing rights.


	December 31			December 31			December 31
	2014			2013			2012
Mortgage servicing rights
Balances, January 1	$	7,428		$	6,169		$	5,049
Servicing rights capitalized		2,280			2,535			2,439
Amortization of servicing rights		(1,728	)		(1,276	)		(1,319	)

Balances, December 31		7,980			7,428			6,169

Impairment allowance
Balances, January 1		(389	)		(1,024	)		(856	)
Additions		(95	)		(54	)		(762	)
Reductions		146			689			594

Balances, December 31		(338	)		(389	)		(1,024	)

Mortgage servicing rights, net	$	7,642		$	7,039		$	5,145

During 2014, 2013 and 2012, the Bank recorded recovery and additional (impairment) of approximately $51,000, $635,000 and $(168,000).