Loan Servicing

12 Months Ended

Dec. 31, 2013

Note 11: Loan Servicing

Loans serviced for others are not included in the accompanying consolidated balance sheets. The risks inherent in mortgage servicing assets relate primarily to changes in prepayments that result from shifts in mortgage interest rates. The unpaid principal balances of mortgage and other loans serviced for others was $114.1 million as of December 31, 2013. The total of loans serviced for others as of December 31, 2012 was $113.6 million. That total included $17.6 million of Federal National Mortgage Association (FNMA) loans acquired from Dupont State Bank. No mortgage servicing rights were acquired with that portfolio of loans. Mortgage servicing rights are included in other assets in the balance sheets.

The following summarizes the activity pertaining to mortgage servicing rights measured using the amortization method, along with the aggregate activity in related valuation allowances:

	2013			2012
Mortgage servicing rights
Balances, January 1	$	679		$	667
Servicing rights capitalized		191			308
Amortization of servicing rights		(215	)		(296	)
Balance at end of year		655			679

Valuation allowances
Balance at beginning of year		-			26
Additions		-			-
Reductions		-			(26	)
Balances at end of year		-			-
Mortgage servicing assets, net	$	655		$	679

Fair value disclosures
Fair value as of the beginning of the period	$	704		$	848
Fair value as of the end of the period		894			704