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NON-CONSOLIDATED VARIABLE INTEREST ENTITIES AND SERVICING ASSETS (Tables)

3 Months Ended

Mar. 31, 2015

The following table shows summarized unaudited income statement information of CPG/GS for the quarters ended March 31, 2015 and 2014:

	Quarter Ended
	March 31,		March 31,
	2015		2014
	(In thousands)
Revenues, including net realized gains on sale of
investments in loans and OREO	$	588	$	751
Gross profit (loss)	$	(8,240)	$	(1,508)
Net loss	$	(7,751)	$	(2,447)

Changes in Servicing Assets

The changes in servicing assets are shown below:

		Quarter ended
		March 31,		March 31,
		2015		2014
			(In thousands)
Balance at beginning of period		$	22,838	$	21,987
Capitalization of servicing assets			1,073		1,052
Amortization			(856)		(783)
Adjustment to fair value			(38)		(219)
Other (1)			(44)		(11)
Balance at end of period		$	22,973	$	22,026

(1)	Amount represents the adjustment to fair value related to the repurchase of loans serviced for others.

Changes in Impairment Allowance

Changes in the impairment allowance were as follows:

	Quarter ended
	March 31,		March 31,
	2015		2014
		(In thousands)
Balance at beginning of period	$	55	$	212
Temporary impairment charges		58		219
Recoveries		(20)		-
Balance at end of period	$	93	$	431

Components of Net Servicing Income

	The components of net servicing income are shown below:

		Quarter ended
		March 31,		March 31,
		2015		2014
			(In thousands)
Servicing fees		$	1,764	$	1,671
Late charges and prepayment penalties			190		164
Adjustment for loans repurchased			(44)		(11)
Other (1)			(89)		(358)
Servicing income, gross			1,821		1,466
Amortization and impairment of servicing assets			(894)		(1,002)
Servicing income, net		$	927	$	464

(1)	Mainly consisted of compensatory fees imposed by GSEs and losses related to representations and warranties.

Weighted-Averages of Key Economic Assumptions in Valuation Model

	(Dollars in thousands)
Carrying amount of servicing assets	$	22,973
Fair value	$	25,195
Weighted-average expected life (in years)		8.47

Constant prepayment rate (weighted-average annual rate)		10.25%
Decrease in fair value due to 10% adverse change	$	948
Decrease in fair value due to 20% adverse change	$	1,838

Discount rate (weighted-average annual rate)		10.62%
Decrease in fair value due to 10% adverse change	$	1,050
Decrease in fair value due to 20% adverse change	$	2,020

- Definition

Tabular disclosure of the significant judgments and assumptions made in determining whether a variable interest (as defined) held by the entity requires the variable interest entity (VIE) (as defined) to be consolidated and (or) disclose information about its involvement with the VIE, individually or in aggregate (as applicable); the nature of restrictions, if any, on the consolidated VIE's assets and on the settlement of its liabilities reported by an entity in its statement of financial position, including the carrying amounts of such assets and liabilities; the nature of, and changes in, the risks associated with involvement in the VIE; how involvement with the VIE affects the entity's financial position, financial performance, and cash flows; the lack of recourse if creditors (or beneficial interest holders) of the consolidated VIE have no recourse to the general credit of the primary beneficiary (if applicable); the terms of arrangements, giving consideration to both explicit arrangements and implicit variable interests, if any, that could require the entity to provide financial support to the VIE, including events or circumstances that could expose the entity to a loss; the methodology used by the entity for determining whether or not it is the primary beneficiary of the variable interest entity; the significant factors considered and judgments made in determining that the power to direct the activities of a VIE that most significantly impact the VIE's economic performance are shared (as defined); the carrying amounts and classification of assets and liabilities of the VIE included in the statement of financial position; the entity's maximum exposure to loss, if any, as a result of its involvement with the VIE, including how the maximum exposure is determined and significant sources of the entity's exposure to the VIE; a comparison of the carrying amounts of the assets and liabilities and the entity's maximum exposure to loss; information about any liquidity arrangements, guarantees, and (or) other commitments by third parties that may affect the fair value or risk of the entity's variable interest in the VIE; whether or not the entity has provided financial support or other support (explicitly or implicitly) to the VIE that it was not previously contractually required to provide or whether the entity intends to provide that support, including the type and amount of the support and the primary reasons for providing the support; and supplemental information the entity determines necessary to provide.

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