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LOANS:
 12 Months Ended
Dec. 31, 2011
LOANS:  
LOANS:

 

5.    LOANS:

 

Loans are summarized as follows:

 

 

 

December 31,

 

(Dollar amounts in thousands) 

 

2011

 

2010

 

Commercial

 

$

1,099,324

 

$

896,107

 

Residential

 

505,600

 

437,576

 

Consumer

 

289,717

 

307,403

 

Total gross loans

 

1,894,641

 

1,641,086

 

Less: unearned income

 

(962

)

(940

)

Allowance for loan losses

 

(19,241

)

(22,336

)

TOTAL

 

$

1,874,438

 

$

1,617,810

 

 

Loans in the above summary include loans totaling $35.0 million that are subject to the FDIC loss share arrangement (“covered loans”) discussed in footnote 6.

 

The Corporation periodically sells residential mortgage loans it originates based on the overall loan demand of the Corporation and the outstanding balances in the residential mortgage portfolio. At December 31, 2011 and 2010, loans held for sale included $4.1 million and $3.4 million, respectively, and are included in the totals above.

 

In the normal course of business, the Corporation’s subsidiary banks make loans to directors and executive officers and to their associates. In 2011, the aggregate dollar amount of these loans to directors and executive officers who held office amounted to $37.4 million at the beginning of the year. During 2011, advances of $32.0 million, repayments of $10.8 million and decreases of $0.1 million resulting from changes in personnel were made with respect to related party loans for an aggregate dollar amount outstanding of $58.5 million at December 31, 2011.

 

Loans serviced for others, which are not reported as assets, total $450.1 million and $469.3 million at year-end 2011 and 2010. Custodial escrow balances maintained in connection with serviced loans were $1.89 million and $1.93 million at year-end 2011 and 2010.

 

Activity for capitalized mortgage servicing rights (included in other assets) was as follows:

 

 

 

December 31,

 

(Dollar amounts in thousands) 

 

2011

 

2010

 

2009

 

Servicing rights:

 

 

 

 

 

 

 

Beginning of year

 

$

2,080

 

$

2,034

 

$

1,604

 

Additions*

 

1,035

 

810

 

1,294

 

Amortized to expense

 

(686

)

(764

)

(864

)

End of year

 

$

2,429

 

$

2,080

 

$

2,034

 

 

*   In 2011 $520 thousand is from the acquisition of Freestar Bank

 

Third party valuations are conducted periodically for mortgage servicing rights. Based on these valuations, fair values were approximately $3.9 million and $3.4 million at year end 2011 and 2010. There was no valuation allowance in 2011 or 2010.

 

Fair value for 2011 was determined using a discount rate of 9%, prepayment speeds ranging from 160% to 700%, depending on the stratification of the specific right. Fair value at year end 2010 was determined using a discount rate of 9%, prepayment speeds ranging from 213% to 700%, depending on the stratification of the specific right. Mortgage servicing rights are amortized over 8 years, the expected life of the sold loans.