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Loan Servicing
 12 Months Ended
Dec. 31, 2011
Loan Servicing [Abstract]  
LOAN SERVICING

NOTE 7 - LOAN SERVICING

Mortgage loans serviced for others are not reported as assets. The principal balances of these loans at year-end were as follows:

 

                 
    2011     2010  

Mortgage loans serviced for Freddie Mac

   $ 13,086     $ 15,633  
   

 

 

    

 

 

  

Custodial escrow balances maintained in connection with serviced loans were $219 and $242 at year-end 2011 and 2010.

Activity for mortgage servicing rights and the related valuation allowance follows:

 

                         
    2011     2010     2009  

Servicing rights, net of valuation allowance:

                        

Beginning of year

   $ 57     $ 88     $ 112  

Additions

     —         1       5  

Amortized to expense

     (23 )      (31 )      (33 ) 

Change in valuation allowance

     3       (1 )      4  
   

 

 

    

 

 

    

 

 

  

End of year

     37       57       88  
   

 

 

    

 

 

    

 

 

  

Valuation allowance:

                        

Beginning of year

   $ 5     $ 4     $ 8  

Additions expensed

     —         1       —    

Reductions credited to operations

     (3 )      —         (4 ) 
   

 

 

    

 

 

    

 

 

  

End of year

   $ 2     $ 5     $ 4  
   

 

 

    

 

 

    

 

 

  

The fair value of capitalized mortgage servicing rights was $66 and $86 at year-end 2011 and 2010, respectively. Fair value at year-end 2011 was determined using a 9% discount rate and prepayments speeds ranging from 18.4% to 34.5% depending on the stratification of the specific right. Fair value at year-end 2010 was determined using a 9% discount rate and prepayments speeds ranging from 13.1% to 42.0% depending on the stratification of the specific right.

The weighted average amortization period is 3.0 years.