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MORTGAGE BANKING ACTIVITIES (Tables)

6 Months Ended

Jun. 30, 2013

Activity for Mortgage Loans Held for Sale

June 30, (in thousands)	2013			2012

Balance, January 1	$	10,614		$	4,392
Origination of mortgage loans held for sale	208,094			100,418
Proceeds from the sale of mortgage loans held for sale	(199,942		)	(104,439		)
Net gain on sale of mortgage loans held for sale	5,408			3,722

Balance, June 30	$	24,174		$	4,093

Components of Mortgage Banking Income

	Three Months Ended						Six Months Ended
	June 30,						June 30,
(in thousands)	2013			2012			2013			2012

Net gain realized on sale of mortgage loans held for sale	$	3,439		$	1,642		$	5,677		$	3,185
Net change in fair value recognized on loans held for sale	(247		)	(5		)	(113		)	52
Net change in fair value recognized on rate lock commitments	(1,521		)	579			(388		)	523
Net change in fair value recognized on forward contracts	453			(182		)	232			(38		)
Net gain recognized	2,124			2,034			5,408			3,722

Loan servicing income	546			599			1,092			1,235
Amortization of mortgage servicing rights	(650		)	(712		)	(1,358		)	(1,671		)
Change in mortgage servicing rights valuation allowance	160			42			312			31
Net servicing income recognized	56			(71		)	46			(405		)

Total Mortgage Banking income	$	2,180		$	1,963		$	5,454		$	3,317

Activity for capitalized mortgage servicing rights

June 30, (in thousands)	2013			2012

Balance, January 1	$	4,777		$	6,087
Additions	1,574			904
Amortized to expense	(1,358		)	(1,671		)
Change in valuation allowance	312			31

Balance, June 30	$	5,305		$	5,351

Valuation Allowance For Capitalized Mortgage Servicing Rights

June 30, (in thousands)	2013			2012

Balance, January 1	$	(345	)	$	(203	)
Additions	—			(11		)
Reductions credited to operations	312			42

Balance, June 30	$	(33	)	$	(172	)

Mortgage Servicing Rights

(dollars in thousands)	June 30, 2013		December 31, 2012

Fair value of mortgage servicing rights portfolio	$	6,861	$	5,446
Prepayment speed range	123% - 550%		112% - 550%
Discount rate	9%		9%
Weighted average default rate	1.50%		1.50%
Weighted average life in years	5.51		3.89

Schedule of notional amounts and fair values of mortgage banking derivatives

	June 30, 2013				December 31, 2012
(in thousands)	Notional Amount		Fair Value		Notional Amount		Fair Value

Included in Mortgage loans held for sale:
Mortgage loans held for sale	$	23,710	$	24,174	$	10,037	$	10,614

Included in other assets:
Rate lock loan commitments	$	70,447	$	446	$	48,308	$	833
Mandatory forward contracts	44,247		279		36,675		47

Total included in other assets	$	114,694	$	725	$	84,983	$	880

- Definition

Tabular disclosure of all information related to the key inputs and assumptions (including, at a minimum, but not limited to, and if applicable, quantitative information about discount rates, expected prepayments including the expected weighted-average life of prepayable financial assets, and anticipated credit losses) used in measuring the fair value of assets or liabilities that relate to the transferor's continuing involvement with transferred financial assets, as of the balance sheet date.

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- Definition

Tabular disclosure of the activity in the balance of servicing assets subsequently measured at amortized value (including a description of where changes in carrying 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 (through purchases of servicing assets and servicing assets that result from transfers of financial assets), disposals, amortization, application of valuation allowances, other-than-temporary impairments, and other changes that affect the balance along with a description of those changes.

+ References+ Details