Mortgage Servicing Rights

12 Months Ended

Dec. 31, 2016

Disclosures Pertaining to Servicing Assets and Servicing Liabilities [Abstract]

Mortgage Servicing Rights (“MSRs”)

Following is a summary of the changes in the carrying value of MSRs, accounted for at fair value, for the years ended December 31, 2016, 2015 and 2014:



	December 31,			December 31,			December 31,
(Dollars in thousands)	2016			2015			2014
Balance at beginning of year	$	9,092		$	8,435		$	8,946
Additions from loans sold with servicing retained	13,091			1,759			213
Additions from acquisitions	—			—			704
Estimate of changes in fair value due to:
Payoffs and paydowns	(2,325		)	(1,315		)	(976		)
Changes in valuation inputs or assumptions	(755		)	213			(452		)
Fair value at end of year	$	19,103		$	9,092		$	8,435
Unpaid principal balance of mortgage loans serviced for others	$	1,784,760		$	939,819		$	877,899

The Company recognizes MSR assets upon the sale of residential real estate loans when it retains the obligation to service the loans and the servicing fee is more than adequate compensation. Additionally, in 2014, the Company recognized MSRs related to certain agricultural and farmland-related loans purchased from an unaffiliated bank. The initial recognition of MSR assets from loans sold with servicing retained and subsequent changes in fair value of all MSRs are recognized in mortgage banking revenue. MSRs are subject to changes in value from actual and expected prepayment of the underlying loans. The Company does not specifically hedge the value of its MSRs.

Fair values are determined by using a discounted cash flow model that incorporates the objective characteristics of the portfolio as well as subjective valuation parameters that purchasers of servicing would apply to such portfolios sold into the secondary market. The subjective factors include loan prepayment speeds, discount rates, servicing costs and other economic factors. On at least an annual basis, the Company corroborates its calculated MSR fair value by comparing such value to a separately calculated fair value provided by a third party.

- Definition

The entire disclosure for a transferor's continuing involvement in financial assets that it has transferred in a securitization or asset-backed financing arrangement, the nature of any restrictions on assets reported by an entity in its statement of financial position that relate to a transferred financial asset (including the carrying amounts of such assets), how servicing assets and servicing liabilities are reported, and (for securitization or asset-backed financing arrangements accounted for as sales) when a transferor has continuing involvement with the transferred financial assets and transfers of financial assets accounted for as secured borrowings, how the transfer of financial assets affects an entity's financial position, financial performance, and cash flows.

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