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Mortgage servicing rights, Net

9 Months Ended

Sep. 30, 2011

Mortgageservicingabstract [Abstract]

Schedule Of Servicing Assets At Fair Value Text Block

NOTE 7: MORTGAGE SERVICING RIGHTS, NET

Mortgage servicing rights (“MSRs”) are recognized based on the fair value of the servicing rights on the date the corresponding mortgage loans are sold. An estimate of the Company's MSRs is determined using assumptions that market participants would use in estimating future net servicing income, including estimates of prepayment speeds, discount rate, default rates, cost to service, escrow account earnings, contractual servicing fee income, ancillary income, and late fees. Subsequent to the date of transfer, the Company has elected to measure its MSRs under the amortization method. Under the amortization method, MSRs are amortized in proportion to, and over the period of, estimated net servicing income.

The Company has recorded MSRs related to loans sold without recourse to Fannie Mae. The Company generally sells conforming, fixed-rate, closed-end, residential mortgages to Fannie Mae. MSRs are included in other assets on the accompanying Consolidated Balance Sheets.

The change in amortized MSRs and the related valuation allowance for the quarters and nine months ended September 30, 2011 and 2010 are presented below.

		Quarter ended September 30,				Nine months ended September 30,
(Dollars in thousands)		2011		2010		2011		2010
Beginning balance	$	1,239	$	877	$	1,189	$	834
Additions, net		79		149		231		260
Amortization expense		(61)		(44)		(163)		(112)
Change in valuation allowance		(20)		—		(20)		—
Ending balance	$	1,237	$	982	$	1,237	$	982

Fair value of amortized MSRs:
Beginning of period	$	1,422	$	1,023	$	1,335	$	978
End of period		1,237		1,024		1,237		1,024

The Company periodically evaluates mortgage servicing rights for impairment. Impairment is determined by stratifying MSRs into groupings based on predominant risk characteristics, such as interest rate and loan type. If, by individual stratum, the carrying amount of the MSRs exceeds fair value, a valuation reserve is established. At September 30, 2011, the Company recorded a valuation allowance of $20,000 and at December 31, 2010 there was no valuation allowance recorded for MSRs.

- Definition

Tabular disclosure of the activity in the balance of servicing assets (including a description of where changes in fair value are reported in the statement of income for each period for which results of operations are presented), including but not limited to, the following: beginning and ending balances, additions (for instance, through purchases of servicing assets), disposals, changes in fair value during the period resulting from changes in inputs or assumptions used in the valuation model, other changes in fair value along with a description of those changes, and other changes that affect the balance along with a description of those changes.

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