MORTGAGE SERVICING RIGHTS

3 Months Ended

Jun. 30, 2012

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MORTGAGE SERVICING RIGHTS

NOTE 4 - MORTGAGE SERVICING RIGHTS

Loans serviced for others are not included in the Consolidated Balance Sheets. The balance of loans serviced for others and the fair value of mortgage servicing rights are as follows:

June 30, (in thousands)	2012	2011
Residential mortgage loans serviced for others	$     132,770	$     101,584
Fair value of mortgage servicing rights	887	760

Changes in mortgage servicing rights are as follows:

	Three months		Six months
Periods ended June 30, (in thousands)	2012	2011	2012	2011
Loan Servicing Rights
Balance, beginning of period	$        875	$        701	$        772	$        683
Originated	128	29	308	105
Amortization (1)	(86)	(56)	(164)	(114)
Balance, end of period	917	674	916	674
Valuation Allowance
Balance, beginning of period	(114)	(8)	(22)	(10)
(Increase) decrease in impairment reserve (1)	(10)	(17)	(101)	(15)
Balance, end of period	(124)	(25)	(123)	(25)
Loan servicing rights, net	$        793	$        649	$        793	$        649

⁽¹⁾ Amortization expense and changes in the impairment reserve are recorded in loan servicing fee income.