Mortgage Banking Activities (Tables)

6 Months Ended

Jun. 30, 2011

Mortgage Banking Activities [Abstract]

Component of Residential Mortgage Loans Held For Sale

The unpaid principal balance of residential mortgage loans held for sale, notional amounts of derivative contracts related to residential mortgage loans commitments and forward contract sales and their related fair values included in Mortgage loans held for sale on the Consolidated Balance Sheets were (in thousands):

	June 30, 2011					December 31, 2010				June 30, 2010
	Unpaid Principal Balance/ Notional		Fair Value			Unpaid Principal Balance/ Notional		Fair Value		Unpaid Principal Balance/ Notional		Fair Value

Residential mortgage loans held for sale	$	162,579	$	167,300		$	253,778	$	254,669	$	227,574	$	229,493
Residential mortgage loan commitments		156,209		2,793			138,870		2,251		189,029		5,538
Forward sales contracts		302,526		(484	)		396,422		6,493		407,457		(7,457	)
			$	169,609				$	263,413			$	227,574

Servicing fee income and late charges on loans serviced for others is included Mortgage banking revenue along with revenue from originating and marketing residential mortgage loans, including gains (losses) on residential mortgage loans held for sale and changes in fair value of derivative contracts not designated as hedging instruments related to residential mortgage loan commitments and forward sales contracts, as follows (in thousands):

	Three months ended						Six months ended
	June 30, 2011			June 30, 2010			June 30, 2011			June 30, 2010
Originating and marketing revenue:
Residential mortgage loan held for sale	$	10,037		$	13,528		$	23,373		$	21,326
Residential mortgage loan commitments		(702	)		3,072			542			5,043
Forward sales contracts		74			(7,836	)		(6,977	)		(11,083	)
Total originating and marketing revenue		9,409			8,764			16,938			15,286
Servicing revenue		9,947			9,571			19,774			17,920
Total mortgage banking revenue	$	19,356		$	18,335		$	36,712		$	33,206

Summary of Mortgage Servicing Rights

The following represents a summary of mortgage servicing rights (Dollars in thousands):

	June 30, 2011			December 31, 2010			June 30, 2010
Number of residential mortgage loans serviced		96,578			96,443			96,152
Outstanding principal balance of residential mortgage loans serviced for others	$	11,283,442		$	11,194,582		$	10,991,572
Weighted average interest rate		5.36	%		5.44	%		5.63	%
Remaining term (in months)		291			292			296

Activity in Capitalized Mortgage Servicing Rights

Activity in capitalized mortgage servicing rights during the three months ended June 30, 2011 is as follows (in thousands):

	Purchased			Originated			Total
Balance at March 31, 2011	$	38,343		$	82,002		$	120,345
Additions, net		–			5,798			5,798
Change in fair value due to loan runoff		(1,218	)		(2,240	)		(3,458	)
Change in fair value due to market changes		(4,259	)		(9,234	)		(13,493	)
Balance at June 30, 2011	$	32,866		$	76,326		$	109,192

Activity in capitalized mortgage servicing rights during the six months ended June 30, 2011 is as follows (in thousands):

	Purchased			Originated			Total
Balance at December 31, 2010	$	37,900		$	77,823		$	115,723
Additions, net		–			10,767			10,767
Change in fair value due to loan runoff		(2,551	)		(4,383	)		(6,934	)
Change in fair value due to market changes		(2,483	)		(7,881	)		(10,364	)
Balance at June 30, 2011	$	32,866		$	76,326		$	109,192

Activity in capitalized mortgage servicing rights during the three months ended June 30, 2010 is as follows (in thousands):

	Purchased			Originated			Total
Balance at March 31, 2010	$	51,919		$	67,147		$	119,066
Additions, net		–			5,161			5,161
Change in fair value due to loan runoff		(1,313	)		(4,514	)		(5,827	)
Change in fair value due to market changes		(13,160	)		(6,298	)		(19,458	)
Balance at June 30, 2010	$	37,446		$	61,496		$	98,942

Activity in capitalized mortgage servicing rights during the six months ended June 30, 2010 is as follows (in thousands):

	Purchased			Originated			Total
Balance at December 31, 2009	$	7,828		$	65,996		$	73,824
Additions, net		31,892			10,362			42,254
Change in fair value due to loan runoff		(2,641	)		(8,969	)		(11,610	)
Gain on purchase of mortgage servicing rights		11,832			–			11,832
Change in fair value due to market changes		(11,465	)		(5,893	)		(17,358	)
Balance at June 30, 2010	$	37,446		$	61,496		$	98,942

Significant assumptions considered significant unobservable inputs used to determine fair value are:

	June 30, 2011			December 31, 2010			June 30, 2010
Discount rate – risk-free rate plus a market premium		10.36	%		10.36	%		10.38	%
Prepayment rate – based upon loan interest rate, original term and loan type		10.26% - 38.37	%		6.53% - 23.03	%		8.3% - 34.5	%
Loan servicing costs – annually per loan based upon loan type	$	55 - $105		$	35 - $60		$	35 - $60
Escrow earnings rate – indexed to rates paid on deposit accounts with comparable average life		2.02	%		2.21	%		1.34	%

Stratification of Loan Servicing Portfolio

Stratification of the mortgage loan servicing portfolio and outstanding principal of loans serviced by interest rate at June 30, 2011 follows (in thousands):

	< 4.50%				4.50% - 5.49	%		5.50% - 6.49	%	> 6.49%			Total

Fair value	$	10,120		$	62,499		$	31,015		$	5,558		$	109,192
Outstanding principal of loans serviced1	$	1,144,667		$	5,496,830		$	3,339,781		$	1,302,164		$	11,283,442
Weighted average prepayment rate2		11.16	%		10.26	%		17.27	%		38.37	%		15.67	%

1	Excludes outstanding principal of $833 million for loans serviced for affiliates

2	Annual prepayment estimates based upon loan interest rate, original term and loan type

Aging Status of Mortgage Loans Serviced For Others

The aging status of our mortgage loans service for others by investor at June 30, 2011 follows (in thousands):

			Past Due
	Current		30 to 59 Days		60 to 89 Days		90 Days or More		Total
FHLMC	$	5,469,151	$	47,973	$	15,238	$	62,673	$	5,595,035
FNMA		1,333,645		23,490		5,728		26,039		1,388,902
GNMA		3,541,114		127,350		33,900		120,756		3,823,120
Other		447,872		9,991		3,077		15,445		476,385
Total	$	10,791,782	$	208,804	$	57,943	$	224,913	$	11,283,442

Activity in Allowance for Losses On Loans Sold With Recourse

The activity in the allowance for losses on loans sold with recourse included in Other liabilities in the Consolidated Balance Sheets is summarized as follows (in thousands):

	Three Months ended June 30,						Six Months ended June 30,
	2011			2010			2011			2010
Beginning balance	$	16,487		$	13,781		$	16,667		$	13,781
Provision for recourse losses		2,532			1,568			3,326			2,867
Loans charged off, net		(1,479	)		(1,568	)		(2,453	)		(2,867	)
Ending balance	$	17,540		$	13,781		$	17,540		$	13,781

- Definition

Tabular disclosure of the activity in the balance of servicing assets (including a description of where changes in fair value are reported in the statement of income for each period for which results of operations are presented), including but not limited to, the following: beginning and ending balances, additions (for instance, through purchases of servicing assets), disposals, changes in fair value during the period resulting from changes in inputs or assumptions used in the valuation model, other changes in fair value along with a description of those changes, and other changes that affect the balance along with a description of those changes.

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