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Mortgage Servicing Rights, Net
 6 Months Ended
Jun. 30, 2013
Mortgage Servicing [Abstract]  
Transfers and Servicing of Financial Assets [Text Block]

NOTE 6: 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 Company periodically evaluates MSRs 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 allowance is established. The valuation allowance is adjusted as the fair value changes. Changes in the valuation allowance are recognized in earnings as a component of mortgage lending income.

 

The change in amortized MSRs and the related valuation allowance for the quarters and six months ended June 30, 2013 and 2012 are presented below.

 

  Quarters ended June 30,  Six months ended June 30,
(Dollars in thousands) 2013  2012  2013  2012
MSRs, net:           
Beginning balance$1,728 $1,260 $1,526 $1,245
Additions, net 218  198  478  366
Amortization expense (102)  (93)  (226)  (183)
Change in valuation allowance 135  (46)  201  (109)
Ending balance$1,979 $1,319 $1,979 $1,319
            
Valuation allowance included in MSRs, net:           
Beginning of period$ 320 $ 180 $ 386 $ 117
End of period  185   226   185   226
            
Fair value of amortized MSRs:           
Beginning of period$1,994 $1,260 $1,526 $1,245
End of period 2,453  1,319  2,453  1,319