SECONDARY MARKET MORTGAGE ACTIVITY

12 Months Ended

Dec. 31, 2012

Secondary Market Mortgage Activity [Abstract]

SECONDARY MARKET MORTGAGE ACTIVITY

NOTE 6 - SECONDARY MARKET MORTGAGE ACTIVITY

Mortgage loans serviced for others are not included in the accompanying consolidated balance sheets. The unpaid principal balances of these loans were $309.6 million and $293.3 million at December 31, 2012 and 2011. Custodial escrow balances maintained in connection with serviced loans were $1.2 million and $1.1 million at year end 2012 and 2011. Information on loan servicing rights and the related valuation allowance, which are included in other assets, follows:

	2012			2011			2010
	(in thousands)
Loan servicing rights:
Carrying amount at beginning of year	$	2,139		$	2,104		$	1,966
Originations		790			629			758
Amortization		(728	)		(594	)		(620	)
Carrying amount before valuation allowance	$	2,201		$	2,139		$	2,104

	2012			2011		2010
	(in thousands)
Valuation allowance:
Loan servicing rights:
Beginning of year	$	108		$	22	$	46
Provisions/(recoveries)		(66	)		86		(24	)
End of year		42			108		22
Carrying amount at end of year	$	2,159		$	2,031	$	2,082
Fair value at beginning of the year	$	2,098		$	2,390	$	2,136
Fair value at the end of the year	$	2,184		$	2,098	$	2,390

Fair value at year end 2012 was determined using weighted average discount rate of 9.2%, a constant prepayment speed of 392 and a weighted average default rate of 0.44 %. Fair value at year end 2011 was determined using weighted average discount rate of 9.2%, a constant prepayment speed of 387 and a weighted average default rate of 0.39%.

The weighted average amortization period is 3.92 years at December 31, 2012.