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

9 Months Ended

Sep. 30, 2016

Changes in Servicing Assets

The changes in servicing assets are shown below:
		Quarter Ended				Nine-Month Period Ended
		September 30,				September 30,
(In thousands)		2016		2015		2016		2015
Balance at beginning of period		$	25,044	$	23,519	$	24,282	$	22,838
Capitalization of servicing assets			1,420		1,242		3,878		3,789
Amortization			(817)		(758)		(2,424)		(2,409)
Adjustment to fair value			(263)		(23)		(387)		(170)
Other (1)			91		(20)		126		(88)
Balance at end of period		$	25,475	$	23,960	$	25,475	$	23,960
(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				Nine-Month Period Ended
	September 30,				September 30,
(In thousands)	2016		2015		2016		2015
Balance at beginning of period	$	260	$	202	$	136	$	55
Temporary impairment charges		266		41		460		227
Recoveries		(3)		(18)		(73)		(57)
Balance at end of period	$	523	$	225	$	523	$	225

Components of Net Servicing Income

	The components of net servicing income are shown below:
		Quarter Ended				Nine-Month Period Ended
		September 30,				September 30,
(In thousands)		2016		2015		2016		2015
Servicing fees		$	1,930	$	1,796	$	5,657	$	5,340
Late charges and prepayment penalties			200		179		505		546
Adjustment for loans repurchased			91		(20)		126		(88)
Other (1)			-		(22)		(1)		(125)
Servicing income, gross			2,221		1,933		6,287		5,673
Amortization and impairment of servicing assets			(1,080)		(781)		(2,811)		(2,579)
Servicing income, net		$	1,141	$	1,152	$	3,476	$	3,094
(1)	Mainly consisted of compensatory fees imposed by GSEs.

Key Economic Assumptions Used in Determining Fair Value at Time of Sale of Loans

The Corporation’s servicing assets are subject to prepayment and interest rate risks. Key economic assumptions used in determining the fair value at the time of sale of the related mortgages ranged as follows:
	Maximum		Minimum
Nine-Month Period Ended September 30, 2016:
Constant prepayment rate:
Government-guaranteed mortgage loans	7.6	%	6.1	%
Conventional conforming mortgage loans	8.0	%	6.5	%
Conventional non-conforming mortgage loans	14.1	%	10.6	%
Discount rate:
Government-guaranteed mortgage loans	12.0	%	11.5	%
Conventional conforming mortgage loans	10.0	%	9.5	%
Conventional non-conforming mortgage loans	14.3	%	13.8	%
Nine-Month Period Ended September 30, 2015:
Constant prepayment rate:
Government-guaranteed mortgage loans	9.2	%	7.9	%
Conventional conforming mortgage loans	9.0	%	7.9	%
Conventional non-conforming mortgage loans	14.4	%	12.9	%
Discount rate:
Government-guaranteed mortgage loans	11.5	%	11.5	%
Conventional conforming mortgage loans	9.5	%	9.5	%
Conventional non-conforming mortgage loans	13.8	%	13.8	%

Weighted-Averages of Key Economic Assumptions in Valuation Model

	(Dollars in thousands)
Carrying amount of servicing assets	$	25,475
Fair value	$	27,937
Weighted-average expected life (in years)		8.42
Constant prepayment rate (weighted-average annual rate)		6.34%
Decrease in fair value due to 10% adverse change	$	734
Decrease in fair value due to 20% adverse change	$	1,435
Discount rate (weighted-average annual rate)		11.18%
Decrease in fair value due to 10% adverse change	$	1,311
Decrease in fair value due to 20% adverse change	$	2,515