Mortgage Servicing Rights

Loans serviced for Freddie Mac are not included in the accompanying consolidated balance sheets. The principal amounts of those loans at September 30, 2013, 2012 and 2011 were $325,726,000, $304,872,000 and $298,924,000, respectively.

The following is an analysis of the changes in MSRs for the years ended September 30, 2013, 2012 and 2011 (dollars in thousands):



	2013			2012			2011
Balance, beginning of year	$	2,011		$	2,108		$	1,929
Additions	728			698			455
Amortization	(948		)	(805		)	(681		)
Valuation allowance	—			(216		)	(434		)
Recovery of valuation allowance	475			226			839

Balance, end of year	$	2,266		$	2,011		$	2,108

At September 30, 2013, 2012 and 2011, the estimated fair value of MSRs totaled $3,129,000, $2,011,000 and $2,108,000, respectively. The MSRs' fair values for 2013, 2012 and 2011 were estimated using discounted cash flow analyses with average discount rates of 10.04%, 10.07% and 10.11%, respectively, and average prepayment speed factors of 177, 330 and

324, respectively. At September 30, 2013 there was no valuation allowance on MSR's. At September 30, 2012 and 2011, there were valuation allowances on MSR's of $475,000 and $485,000, respectively.