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Transfers of Financial Assets and Mortgage Servicing Rights
6 Months Ended
Jun. 30, 2013
Transfers and Servicing [Abstract]  
Transfers of Financial Assets and Mortgage Servicing Rights
Transfers of Financial Assets and Mortgage Servicing Rights
Transfers of Financial Assets
The Company sells financial assets in the normal course of business, the majority of which are residential mortgage loan sales primarily to government-sponsored enterprises through established programs, commercial loan sales through participation agreements, and other individual or portfolio loan and securities sales. In accordance with the accounting guidance for asset transfers, the Company considers any ongoing involvement with transferred assets in determining whether the assets can be derecognized from the balance sheet. For loans sold under participation agreements, the Company also considers the terms of the loan participation agreement and whether they meet the definition of a participating interest and thus qualify for derecognition. With the exception of servicing and certain performance-based guarantees, the Company’s continuing involvement with financial assets sold is minimal and generally limited to market customary representation and warranty clauses. See a further discussion of the representation and warranties in Note 18 - Commitments and Contingencies.
The Company sold residential loans totaling $217.0 million and $444.4 million for the three and six months ended June 30, 2013, respectively, and $165.3 million and $298.9 million for the three and six months ended June 30, 2012, respectively. Servicing rights were retained on $210.1 million and $430.3 million and on $160.0 million and $291.4 million of the residential loans sold for the three and six months ended June 30, 2013 and 2012, respectively. In addition, the Company sold commercial loans totaling $3.0 million and $13.0 million for the three and six months ended June 30, 2013, respectively, and $3.7 million for both the three and six months ended June 30, 2012.
The net gain on the sale of residential loans of $6.5 million and $13.2 million and $3.6 million and $8.0 million for the three and six months ended June 30, 2013 and 2012, respectively, and commercial loan sale losses of $651 thousand and $315 thousand for the three and six months ended June 30, 2013, respectively, and gains of $15 thousand and $33 thousand for the three and six months ended June 30, 2012, respectively, are included as mortgage banking activities in the accompanying Condensed Consolidated Statements of Income.
Mortgage Servicing Rights
When the Company sells financial assets, it may retain servicing rights and/or other interests in the financial assets. The gain or loss on sale depends on the previous carrying amount of the transferred financial assets and the consideration received and any liabilities incurred in exchange for the transferred assets. Upon transfer, any servicing assets and other interests held by the Company are initially recognized at fair value. See a further discussion of fair value in Note 14 - Fair Value Measurements.
The Company serviced consumer loans for others totaling $2.2 billion at June 30, 2013 and $2.1 billion at December 31, 2012. Loan servicing fees, net of mortgage servicing right amortization, was $0.7 million and $2.1 million and $0.5 million and $1.2 million for the three and six months ended June 30, 2013 and 2012, respectively, and is included as a component of loan related fees in the accompanying Condensed Consolidated Statements of Income.