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MORTGAGE BANKING AND LOAN SERVICING
 12 Months Ended
Dec. 31, 2013
MORTGAGE BANKING AND LOAN SERVICING  
MORTGAGE BANKING AND LOAN SERVICING

NOTE 14 — MORTGAGE BANKING AND LOAN SERVICING

       Net revenues from mortgage banking activity consisted of the following:

 
   Years Ended December 31  
 
   2013
   2012
   2011
  
   

Gain from sale of mortgage loans and interest rate locks

   $ 3,956   $ 9,126   $ 3,534  

Mortgage loan servicing revenue (expense):

                    

Mortgage loan servicing revenue

     3,565     3,441     3,360  

Amortization of mortgage servicing rights

     (1,472 )   (1,964 )   (1,388 )

Mortgage servicing rights valuation adjustments

     750     (676 )   45  
       
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Net servicing revenue

     2,843     801     2,017  
       
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Net revenue from mortgage banking activity

   $ 6,799   $ 9,927   $ 5,551  
       
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
       

       Loans serviced for others are not included in the accompanying consolidated balance sheets. Loan servicing fee income was $2,038, $1,864, and $2,104 for 2013, 2012, and 2011. The unpaid principal balances of loans serviced for others totaled $785,794 and $758,074 at December 31, 2013 and 2012. Custodial escrow balances maintained in connection with serviced loans were $6,234 and $8,296 at year end 2013 and 2012. The weighted average amortization period is 6.4 years. Mortgage servicing rights are included in other assets on the consolidated balance sheets. The fair value of capitalized mortgage servicing assets is based on comparable market values and expected cash flows, with impairment assessed based on portfolio characteristics including product type and interest rates. The carrying value of capitalized mortgage servicing rights was $5,155 and $4,350 at year end 2013 and 2012. Fair value at year-end 2013 was determined using a discount rate of 10%, and prepayment speeds ranging from 105% to 368%, depending on the stratification of the specific right. Fair value at year-end 2012 was determined using a discount rate of 10%, and prepayment speeds ranging from 112% to 505%, depending on the stratification of the specific right. The notional amount of interest rate lock commitments to make 1-4 family residential mortgage loans intended to be sold on the secondary market totaled $20.7 million and $66.7 million at December 31, 2013 and 2012, respectively. The estimated fair value of these commitments totaled $525 and $2,200 at December 31, 2013 and 2012, respectively, and is included in other assets on the consolidated balance sheet.

 
   2013
   2012
   2011
  
   

Mortgage servicing assets

                    

Balances, January 1

   $ 4,350   $ 5,412   $ 5,498  

Servicing assets capitalized

     1,527     1,578     1,257  

Amortization of servicing assets

     (1,472 )   (1,964 )   (1,388 )

Change in valuation allowance

     750     (676 )   45  
       
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Balance, December 31

   $ 5,155   $ 4,350   $ 5,412  
       
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
       

Valuation allowance:

                    

Balances, January 1

   $ 1,125   $ 449   $ 494  

Additions expensed

     —     676     300  

Reductions credited to operations

     (750 )   —     (345 )
       
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

Balance, December 31

   $ 375   $ 1,125   $ 449  
       
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​