MORTGAGE SERVICING

12 Months Ended

Dec. 31, 2011

NOTE 8 – MORTGAGE SERVICING

Mortgage loans serviced for others are not reported as assets. The principal balances of these loans at year end are as follows:

			2011		2010
Mortgage loan portfolios serviced for:
	FNMA	$	188,332	$	166,327
	Private		21,583		16,844
	FHLBI		8,800		-
Balance at end of period		$	218,715	$	183,171

Custodial escrow balances maintained in connection with serviced loans were $876 and $725 at December 31, 2011 and 2010, respectively.

The following table includes activity for mortgage servicing rights:

			2011		2010		2009
	Balance at beginning of period	$	1,624	$	1,459	$	1,070
	Plus additions		742		692		723
	Fair value adjustments		(911)		(527)		(334)
	Balance at end of period	$	1,455	$	1,624	$	1,459

Mortgage servicing rights are carried at fair value at December 31, 2011 and 2010. Fair value at December 31, 2011, was determined using discount rates ranging from 10.5% to 15.0%, prepayment speeds ranging from 6.77% to 31.62%, depending on the stratification of the specific right, and a weighted average default rate of 0.35%. Fair value at December 31, 2010, was determined using discount rates ranging from 10.6% to 16.0%, prepayment speeds ranging from 6.39% to 23.08%, depending on the stratification of the specific right, and a weighted average default rate of 0.39%.

NATIONAL BANK OF INDIANAPOLIS CORP 10-K