Note 11—Mortgage Servicing Rights

Carried at Fair Value:

The activity in MSRs carried at fair value is as follows:

	Quarter ended September 30,						Nine months ended September 30,
	2013			2012			2013			2012
	(in thousands)
Balance at beginning of period	$	23,070		$	23,449		$	19,798		$	25,698
Additions:
Servicing resulting from MSR purchases	1,116			—			5,124			—
Servicing resulting from loan sales	4,157			30			4,177			772
Sales	—			—			(550		)	—
Change in fair value:
Due to changes in valuation inputs or assumptions used in valuation model (1)	(635		)	(882		)	1,233			(1,218		)
Other changes in fair value (2)	(940		)	(1,357		)	(3,014		)	(4,012		)
Total change in fair value	(1,575		)	(2,239		)	(1,781		)	(5,230		)
Balance at end of period	$	26,768		$	21,240		$	26,768		$	21,240

(1) Principally reflects changes in discount rates and prepayment speed assumptions, primarily due to changes in interest rates.

(2) Represents changes due to realization of cash flows.

Carried at Lower of Amortized Cost or Fair Value:

The activity in MSRs carried at the lower of amortized cost or fair value is summarized below:

	Quarter ended September 30,						Nine months ended September 30,
	2013			2012			2013			2012
	(in thousands)
Amortized cost:
Balance at beginning of period	$	179,003		$	30,305		$	92,155		$	6,496
Additions:
Servicing resulting from loan sales	55,981			25,590			150,175			50,234
Amortization	(5,367		)	(1,127		)	(12,713		)	(1,962		)
Application of valuation allowance to write down MSRs with other-than-temporary impairment	—			—			—			—
Balance at end of period	229,617			54,768			229,617			54,768

Valuation allowance for impairment of MSRs:
Balance at beginning of period	(2,335		)	(854		)	(2,978		)	(70		)
Additions	(1,192		)	(1,000		)	(549		)	(1,784		)
Application of valuation allowance to write down MSRs with other-than-temporary impairment	—			—			—			—
Balance at end of period	(3,527		)	(1,854		)	(3,527		)	(1,854		)
MSRs, net	$	226,090		$	52,914		$	226,090		$	52,914
Estimated fair value of MSRs at end of period	$	239,326		$	53,419		$	239,326		$	53,419

The following table summarizes the Company’s estimate of future amortization of its existing MSRs. This projection was developed using the assumptions made by management in its September 30, 2013 valuation of MSRs. The assumptions underlying the following estimate will change as market conditions and portfolio composition and behavior change, causing both actual and projected amortization levels to change over time.

	Estimated MSR
12-month period ending September 30,	amortization
	(in thousands)
2014	$	22,633
2015	21,637
2016	20,658
2017	19,910
2018	18,859
Thereafter	125,920
Total	$	229,617

Servicing fees relating to MSRs are recorded in Net servicing income—Loan servicing fees—From non-affiliates on the consolidated statements of income; late charges, ancillary and other fees are recorded in Net servicing income—Loan servicing fees—Ancillary and other fees on the consolidated statements of income and are summarized below:

	Quarter ended September 30,				Nine months ended September 30,
	2013		2012		2013		2012
	(in thousands)
Contractual servicing fees	$	14,596	$	2,154	$	35,397	$	8,776
Late charges	527		209		1,336		682
Ancillary and other fees	140		72		374		194
	$	15,263	$	2,435	$	37,107	$	9,652