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Servicing Rights
 9 Months Ended
Sep. 30, 2020
Transfers and Servicing [Abstract]  
Servicing Rights Servicing Rights
Mortgage servicing rights
    The following table details the activity in the Company's mortgage servicing rights ("MSR") for the three and nine-month periods ended September 30, 2020 and 2019:
Three Months Ended September 30, Nine Months Ended September 30,
(In Thousands)2020201920202019
Balance, beginning of period$10,721 $10,836 $11,920 $10,821 
Additions for new MSR capitalized1,373 1,033 3,032 2,672 
Changes in fair value:
  Due to changes in model inputs of assumptions (1)
(699)(378)(2,291)(1,385)
  Other (2)
(806)(285)(2,072)(902)
Balance, end of period$10,589 $11,206 $10,589 $11,206 

(1) Principally reflects changes in discount rates and prepayment speed assumptions, which are primarily affected by changes in interest rates.
(2) Represents changes due to collection/realization of expected cash flows over time.

    The following table details information related to our serviced mortgage loan portfolio as of September 30, 2020 and December 31, 2019:
(In Thousands)September 30, 2020December 31, 2019
Balance of mortgage loans serviced for others$655,733 $659,048 
MSR as a percentage of serviced loans1.61 %1.81 %

    The Company recognized servicing fees of $671,000 and $616,000 during the three-month periods ending September 30, 2020 and 2019, respectively and $2.0 million and $1.8 million during the nine-month periods ending September 30, 2020 and 2019, respectively, which includes contractually specified servicing fees and ancillary fees as a component of other noninterest income in the Company's Consolidated Statements of Income.

    The following table outlines the weighted average key assumptions used in measuring the fair value of MSR as of September 30, 2020 and December 31, 2019:
September 30, 2020December 31, 2019
Constant prepayment rate14.31 %10.61 %
Discount rate7.75 %8.52 %
    Key economic assumptions and the sensitivity of the current fair value for MSR to immediate adverse changes in those assumptions at September 30, 2020 and December 31, 2019 were as follows:
(In Thousands)September 30, 2020December 31, 2019
Aggregate portfolio principal balance$655,733 $659,048 
Weighted average rate of note3.74 %3.90 %
September 30, 2020Base1.0% Adverse Rate Change2.0% Adverse Rate Change
Constant prepayment rate14.31 %42.34 %50.41 %
Discount rate7.75 %6.75 %5.75 %
Fair value MSR$10,589 $4,748 $3,808 
Percentage of MSR1.61 %0.72 %0.58 %
December 31, 2019
Constant prepayment rate10.61 %26.25 %28.39 %
Discount rate8.52 %7.52 %6.52 %
Fair value MSR$11,920 $7,005 $6,625 
Percentage of MSR1.81 %1.06 %1.01 %

    The above tables show the sensitivity to market rate changes for the par rate coupon for a conventional one-to-four family Alaska Housing Finance Corporation/FNMA/FHLMC serviced home loan. The above tables reference a 100 basis point and 200 basis point decrease in discount rates.

    These sensitivities are hypothetical and should be used with caution as the tables above demonstrate the Company’s methodology for estimating the fair value of MSR is highly sensitive to changes in key assumptions. For example, actual prepayment experience may differ and any difference may have a material effect on MSR fair value. Changes in fair value resulting from changes in assumptions generally cannot be extrapolated because the relationship of the change in the assumption to the change in fair value may not be linear. Also, in these tables, the effects of a variation in a particular assumption on the fair value of the MSR is calculated without changing any other assumption; in reality, changes in one factor may be associated with changes in another (for example, decreases in market interest rates may provide an incentive to refinance; however, this may also indicate a slowing economy and an increase in the unemployment rate, which reduces the number of borrowers who qualify for refinancing), which may magnify or counteract the sensitivities. Thus, any measurement of MSR fair value is limited by the conditions existing and assumptions made at a particular point in time. Those assumptions may not be appropriate if they are applied to a different point in time.

Commercial servicing rights

    The commercial servicing right asset ("CSR") has a carrying value $1.3 million and $1.2 million at September 30, 2020 and December 31, 2019, respectively, and is included in other assets and carried at fair value on the Company's Consolidated Balance Sheets. Total commercial loans serviced for others were $267.9 million and $252.9 million at September 30, 2020 and December 31, 2019, respectively. Key assumptions used in measuring the fair value of the CSR as of September 30, 2020 and December 31, 2019 include a constant prepayment rate of 12.25% and a discount rate of 11.70%.