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Mortgage Servicing Rights
 12 Months Ended
Dec. 31, 2017
Transfers And Servicing Of Financial Assets [Abstract]  
Mortgage servicing rights

Note (9)—Mortgage servicing rights:

Changes in the Company’s mortgage servicing rights were as follows for years ended December 31, 2017, 2016 and 2015:

 

 

 

Year Ended December 31,

 

 

 

 

2017

 

 

 

2016

 

 

 

2015

 

Carrying value prior to policy change

 

$

32,070

 

 

$

29,711

 

 

$

6,032

 

Fair value impact of change in accounting policy (See

   Note 1)

 

 

1,011

 

 

 

—

 

 

 

—

 

Carrying value at beginning of period

 

 

33,081

 

 

 

29,711

 

 

 

6,032

 

Capitalization

 

 

58,984

 

 

 

46,070

 

 

 

26,474

 

Amortization

 

 

—

 

 

 

(8,321

)

 

 

(2,601

)

Sales

 

 

(11,686

)

 

 

(34,118

)

 

 

—

 

(Loss) gain on sale

 

 

(249

)

 

 

3,406

 

 

 

—

 

Impairment

 

 

—

 

 

 

(4,678

)

 

 

(194

)

Change in fair value:

 

 

 

 

 

 

 

 

 

 

 

 

Due to pay-offs/pay-downs

 

 

(3,104

)

 

 

—

 

 

 

—

 

Due to change in valuation inputs or assumptions

 

 

(919

)

 

 

—

 

 

 

—

 

Carrying value at December 31

 

$

76,107

 

 

$

32,070

 

 

$

29,711

 

 

 

The following table summarizes servicing income and expense included in mortgage banking income and other noninterest expense within the Mortgage Segment operating results, respectively, for the years ended December 31, 2017, 2016 and 2015, respectively:

 

 

 

Year Ended December 31,

 

 

 

 

2017

 

 

 

2016

 

 

 

2015

 

Servicing income:

 

 

 

 

 

 

 

 

 

 

 

 

Servicing income

 

$

13,168

 

 

$

12,063

 

 

$

3,614

 

Change in fair value of mortgage servicing rights

 

 

(4,023

)

 

 

—

 

 

 

 

 

Change in fair value of derivative hedging instruments

 

 

599

 

 

 

—

 

 

 

—

 

Total servicing income

 

 

9,744

 

 

 

12,063

 

 

 

3,614

 

Servicing expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Servicing asset amortization

 

 

—

 

 

 

8,321

 

 

 

2,601

 

Servicing asset impairment

 

 

—

 

 

 

4,678

 

 

 

194

 

Loss on sale of mortgage servicing rights and related hedges and

    transaction costs on sale

 

 

249

 

 

 

4,447

 

 

 

—

 

Other servicing expenses

 

 

4,896

 

 

 

2,325

 

 

 

633

 

Total servicing expenses

 

 

5,145

 

 

 

19,771

 

 

 

3,428

 

Net servicing income (loss)

 

$

4,599

 

 

$

(7,708

)

 

$

186

 

Data and key economic assumptions related to the Company’s mortgage servicing rights as of December 31, 2017 and 2016 are as follows:

 

 

 

As of December 31,

 

 

 

 

2017

 

 

 

2016

 

Unpaid principal balance

 

$

6,529,431

 

 

$

2,833,958

 

Weighted-average prepayment speed (CPR)

 

 

8.90

%

 

 

8.40

%

Estimated impact on fair value of a 10% increase

 

 

(3,026

)

 

 

(1,256

)

Estimated impact on fair value of a 20% increase

 

 

(5,855

)

 

 

(2,434

)

Discount rate

 

 

9.75

%

 

 

9.54

%

Estimated impact on fair value of a 100 bp increase

 

 

(3,052

)

 

 

(1,394

)

Estimated impact on fair value of a 200 bp increase

 

 

(5,867

)

 

 

(2,679

)

Weighted-average coupon interest rate

 

 

3.94

%

 

 

3.59

%

Weighted-average servicing fee (basis points)

 

 

28

 

 

 

27

 

Weighted-average remaining maturity (in months)

 

 

335

 

 

 

328

 

 

 

From time to time, the Company enters agreements to sell certain tranches of mortgage servicing rights. Upon consummation of the sale, the Company continues to subservice the underlying mortgage loans until they can be transferred to the purchaser. During the years ended December 31, 2017 and 2016, the Company sold $11,686 and $34,118 of mortgage servicing rights on $1,086,465 and $3,370,395 of serviced mortgage loans, respectively. As of December 31, 2017 and 2016, there were $0 and $3,332,903, respectively, of loans being serviced that related to bulk sale of mortgage servicing rights.

During the second quarter of 2017, the Company began hedging the mortgage servicing rights portfolio with various derivative instruments to offset changes in the fair value of the related mortgage servicing rights. As of December 31, 2017, the MSR asset was fully hedged with respect to changes in the underlying interest rates (see Note 18).