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Mortgage Servicing Rights
9 Months Ended
Sep. 30, 2011
Transfers and Servicing [Abstract] 
Mortgage Servicing Rights
Mortgage Servicing Rights
The following table summarizes the changes in mortgage servicing rights (MSRs), which are included in other assets on the consolidated balance sheets:
 
Three Months Ended
September 30
 
Nine Months Ended
September 30
 
2011
 
2010
 
2011
 
2010
 
(in thousands)
Amortized cost:
 
 
 
 
 
 
 
Balance at beginning of period
$
32,809

 
$
25,327

 
$
30,700

 
$
23,498

Originations of mortgage servicing rights
2,213

 
3,197

 
6,881

 
6,870

Amortization expense
(1,343
)
 
(998
)
 
(3,902
)
 
(2,842
)
Balance at end of period
$
33,679

 
$
27,526

 
$
33,679

 
$
27,526

Valuation allowance:
 
 
 
 
 
 
 
Balance at beginning of period
$
(1,550
)
 
$
(1,000
)
 
$
(1,550
)
 
$
(1,000
)
Additions
—

 
(550
)
 
—

 
(550
)
Balance at end of period
$
(1,550
)
 
$
(1,550
)
 
$
(1,550
)
 
$
(1,550
)
 
 
 
 
 
 
 
 
Net MSRs at end of period
$
32,129

 
$
25,976

 
$
32,129

 
$
25,976


MSRs represent the economic value of existing contractual rights to service mortgage loans that have been sold. Accordingly, actual and expected prepayments of the underlying mortgage loans can impact the value of MSRs.
The Corporation estimates the fair value of its MSRs by discounting the estimated cash flows from servicing income, net of expense, over the expected life of the underlying loans at a discount rate commensurate with the risk associated with these assets. Expected life is based on the contractual terms of the loans, as adjusted for prepayment projections for mortgage-backed securities with rates and terms comparable to the loans underlying the MSRs.
The Corporation determined that the estimated fair value of MSRs was equal to their book value, net of the valuation allowance, at September 30, 2011. Therefore, no adjustment to the valuation allowance was necessary as of September 30, 2011.