page 70 Other assets – The Company has certain financial assets carried at fair value on a recurring basis, including interest rate  swap agreements. The carrying amount of interest rate swap agreements is based on information obtained from a third party  bank. This information is periodically tested by the Company and validated against other third party valuations. If needed,  other market participants may be utilized to determine the appropriate fair value. The Company classified these derivative  assets within Level 2 of the valuation hierarchy. These swaps qualify as derivatives, but are not designated as hedging  instruments. The Company had no derivative contracts to assist in managing interest rate sensitivity at December 31, 2011 or  2010.  Mortgage servicing rights, net, included in other assets on the accompanying consolidated balance sheets, are carried at  the lower of cost or estimated fair value and are subjected to nonrecurring fair value adjustments. MSRs do not trade in an  active market with readily observable prices. To determine the fair value of MSRs, the Company engages an independent  third party. The independent third party’s valuation model calculates the present value of estimated future net servicing  income using assumptions that market participants would use in estimating future net servicing income, including estimates  of prepayment speeds, discount rate, default rates, cost to service, escrow account earnings, contractual servicing fee income,  ancillary income, and late fees. Because the valuation of MSRs requires the use of significant unobservable inputs, all of the  Company’s MSRs are classified within Level 3 of the valuation hierarchy. Other liabilities – The Company has certain financial liabilities carried at fair value on a recurring basis, including  interest rate swap agreements. The carrying amount of interest rate swap agreements is based on information obtained from a  third party bank. This information is periodically tested by the Company and validated against other third party valuations. If  needed, other market participants may be utilized to determine the appropriate fair value. The Company classified these  derivative liabilities within Level 2 of the valuation hierarchy. These swaps qualify as derivatives, but are not designated as  hedging instruments. The Company had no derivative contracts to assist in managing interest rate sensitivity at December  31, 2011 or 2010. 