Mortgage Operations

12 Months Ended

Dec. 31, 2015

(5)	Mortgage Operations

Mortgage servicing rights are initially measured at fair value and amortized in proportion to, and over the period of, estimated net servicing revenues. The Company assesses capitalized mortgage servicing rights for impairment based upon the fair value of those rights at each reporting date. For purposes of measuring impairment, the rights are stratified based upon the product type, term and interest rates. Fair value is determined by discounting estimated net future cash flows from mortgage servicing activities using discount rates that approximate current market rates and estimated prepayment rates, among other assumptions. The amount of impairment recognized, if any, is the amount by which the capitalized mortgage servicing rights for a stratum exceeds their fair value. Impairment, if any, is recognized through a valuation allowance for each individual stratum. Changes in the carrying amount of mortgage servicing rights through impairment charges or recoveries in fair value are reported in earnings as other non-interest income.

The Company had $351 and $491 of mortgage loans held-for-sale at December 31, 2015 and December 31, 2014, respectively. At December 31, 2015 and December 31, 2014, the Company serviced real estate mortgage loans for others totaling $237,224 and $238,974, respectively.

The following table summarizes the activity related to the Company's mortgage servicing rights assets for the years ended December 31, 2015, December 31, 2014 and December 31, 2013. Mortgage servicing rights are included in Interest Receivable and Other Assets on the consolidated balance sheets.

	December 31, 2014		Additions		Reductions			December 31, 2015
Mortgage servicing rights	$	1,862	$	361	$	(361	)	$	1,862
Valuation allowance		—		—		—			—
Mortgage servicing rights, net of valuation allowance	$	1,862	$	361	$	(361	)	$	1,862

	December 31, 2013		Additions		Reductions			December 31, 2014
Mortgage servicing rights	$	1,968	$	244	$	(350	)	$	1,862
Valuation allowance		—		—		—			—
Mortgage servicing rights, net of valuation allowance	$	1,968	$	244	$	(350	)	$	1,862

	December 31, 2012			Additions		Reductions			December 31, 2013
Mortgage servicing rights	$	1,760		$	625	$	(417	)	$	1,968
Valuation allowance		(536	)		—		536			—
Mortgage servicing rights, net of valuation allowance	$	1,224		$	625	$	119		$	1,968

The Company received contractually specified servicing fees of $598, $606, and $617 for the years ended December 31, 2015, 2014, and 2013, respectively. Contractually specified servicing fees are included in Other Income on the consolidated statements of income.

- 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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