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Mortgage Servicing Rights ("MSRs")
 9 Months Ended
Sep. 30, 2019
Disclosures Pertaining to Servicing Assets and Servicing Liabilities [Abstract]  
Mortgage Servicing Rights (MSRs) Mortgage Servicing Rights (“MSRs”)

The following is a summary of the changes in the carrying value of MSRs, accounted for at fair value, for the periods indicated:
 
 
Three Months Ended
 
Nine Months Ended
 
 
September 30,
 
September 30,
 
September 30,
 
September 30,
(In thousands)
 
2019
 
2018
 
2019
 
2018
Balance at beginning of the period
 
$
72,850

 
$
63,194

 
$
75,183

 
$
33,676

Additions from loans sold with servicing retained
 
14,029

 
11,340

 
30,411

 
23,388

Additions from acquisitions
 
—

 
—

 
407

 
13,806

Estimate of changes in fair value due to:
 
 
 
 
 
 
 
 
Payoffs and paydowns
 
(7,236
)
 
(1,081
)
 
(13,309
)
 
(3,647
)
Changes in valuation inputs or assumptions
 
(4,058
)
 
1,077

 
(17,107
)
 
7,307

Fair value at end of the period
 
$
75,585

 
$
74,530

 
$
75,585

 
$
74,530

Unpaid principal balance of mortgage loans serviced for others
 
$
7,901,045

 
$
5,904,300

 
 
 
 

The Company recognizes MSR assets upon the sale of residential real estate loans to external third parties when it retains the obligation to service the loans and the servicing fee is more than adequate compensation. 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. Starting in 2019, the Company periodically purchased options for the right to purchase securities not currently held within the banks' investment portfolios. These option transactions are designed primarily to economically hedge a portion of the potential negative fair value adjustments related to MSRs. The Company did not specifically hedge the value of its MSRs during the third quarter of 2018. For more information regarding the hedges in 2019, see Note 15 - Derivative Financial Instruments in Item 1 of this report.

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. The Company uses a third party to assist in the valuation of MSRs.