Loan Servicing

12 Months Ended

Dec. 31, 2012

Loan Servicing

Loan Servicing

Note 6: Loan Servicing

The Company has recognized servicing rights for residential mortgage loans sold with servicing retained. Residential mortgage loans serviced for others are subject to credit, prepayment and interest rate risks.

Mortgage loans serviced for others are not included in the accompanying consolidated balance sheets. The unpaid principal balance of mortgage loans serviced for others was $29.1 million and $28.9 million at December 31, 2012 and 2011, respectively. Contractually specified servicing fees, late fees and ancillary fees of approximately $16,000 and $17,000 are included in loan servicing fees in the income statement at December 31, 2012 and 2011, respectively.

Custodial escrow balances maintained in connection with the foregoing loan servicing, and included in demand deposits, were approximately $281,000 and $595,000 at December 31, 2012 and 2011, respectively.

Comparable market values and a valuation model that calculates the present value of future cash flows were used to estimate fair value.

Activity in the balance of servicing assets was as follows at December 31, 2012 and 2011:

	2012		2011
	(In thousands)
Carrying amount, beginning of period	$	249	$	261
Additions
Servicing obligations that result from transfers of financial assets		61		31
Subtractions
Amortization		65		43
Carrying amount, end of period	$	245	$	249

The fair value of servicing rights subsequently measured using the amortization method was as follows:

Fair value, beginning of period	$	249	$	319
Fair value, end of period	$	304	$	249