Mortgage servicing assets are recorded when loans are sold to third parties and the servicing of those loans is retained by the Bank. The Company has the following classes of mortgage servicing assets, which result from sales and securitizations; single-family loans, multifamily loans and SBA loans. Mortgage servicing assets are subject to interest rate risk and may become impaired when interest rates fall and borrowers refinance or prepay their mortgage loans. Mortgage servicing assets are included in other assets.

Income from servicing loans is reported as ancillary loan fee income, a component of noninterest income in the Company's consolidated statements of income, and the amortization of mortgage servicing assets is reported as a reduction to ancillary loan fee income. Late fees and charges collected on delinquent loans are recorded as a component of loans receivable interest income in the consolidated statements of income.

Information regarding the Company's mortgage servicing assets ("MSAs") for the years ended December 31, 2011 and 2010 is as follows:

	Year ended December 31,

	2011			2010
	(In thousands)
MSAs balance, beginning of year	$	13,574		$	16,001
Additions		50			309
Amortization		(2,431	)		(2,736	)

MSAs before valuation allowance, end of year		11,193			13,574
Valuation allowance		(4,310	)		(3,383	)

MSAs, end of year	$	6,883		$	10,191

Fair value, beginning of year	$	14,509		$	16,284
Fair value, end of year	$	11,252		$	14,509
Valuation allowance, beginning of year	$	(3,383	)	$	(2,575	)
Impairment		(927	)		(808	)

Valuation allowance, end of year	$	(4,310	)	$	(3,383	)

Key Assumptions:
Weighted average discount		12.34	%		12.43	%
Weighted average prepayment speed assumption		11.72	%		8.17	%

Estimated future amortization of mortgage servicing assets for the succeeding five years and thereafter is as follows:

	Total

	(In thousands)
Estimate for the year ending December 31,
2012	$	1,491
2013		1,158
2014		902
2015		704
2016		551
Thereafter		2,077

Total	$	6,883

The following table shows the hypothetical effect on the fair value of our mortgage servicing assets using various unfavorable variations of the expected levels of certain key assumptions used in the valuations as of December 31, 2011 and 2010. These sensitivities are hypothetical and are presented for illustration purposes only. As the amounts indicate, changes in fair value based on variations in assumptions generally cannot be extrapolated because the relationship of the change in assumption to the change in fair value may not be linear. Also, in this table, the effect of a variation in a particular assumption on the fair value of the interest that continues to be held by the transferor is calculated without changing any of the other assumptions. In reality, changes in one factor may result in changes in another factor which might magnify or counteract the sensitivities.

	December 31,

	2011			2010
	(Dollars in thousands)
Balance sheet net carrying value	$	6,883		$	10,191
CPR assumption		11.72	%		8.17	%
Impact on fair value of 10% adverse change of prepayment speed	$	(131	)	$	(118	)
Impact on fair value of 20% adverse change of prepayment speed	$	(256	)	$	(232	)
Discount rate assumption		12.34	%		12.43	%
Impact on fair value of 10% adverse change of discount rate	$	(165	)	$	(264	)
Impact on fair value of 20% adverse change of discount rate	$	(319	)	$	(511	)