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Mortgage Servicing Rights
 6 Months Ended
Jun. 30, 2018
Transfers And Servicing Of Financial Assets [Abstract]  
Mortgage servicing rights

Note (6)—Mortgage servicing rights:

Changes in the Company’s mortgage servicing rights were as follows for the three and six months ended June 30, 2018 and 2017:

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

 

2018

 

 

 

2017

 

 

 

2018

 

 

 

2017

 

Carrying value prior to policy change

 

$

93,160

 

 

$

47,593

 

 

$

76,107

 

 

$

32,070

 

Fair value impact of change in accounting policy

 

 

—

 

 

 

—

 

 

 

—

 

 

 

1,011

 

Carrying value at beginning of period

 

 

93,160

 

 

 

47,593

 

 

 

76,107

 

 

 

33,081

 

Capitalization

 

 

16,304

 

 

 

14,646

 

 

 

29,814

 

 

 

29,659

 

Sales

 

 

—

 

 

 

(11,935

)

 

 

—

 

 

 

(11,935

)

Change in fair value:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Due to pay-offs/pay-downs

 

 

(2,207

)

 

 

(532

)

 

 

(5,267

)

 

 

(797

)

Due to change in valuation inputs or assumptions

 

 

2,192

 

 

 

(1,308

)

 

 

8,795

 

 

 

(1,544

)

Carrying value at end of period

 

$

109,449

 

 

$

48,464

 

 

$

109,449

 

 

$

48,464

 

 

 

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 three and six months ended June 30, 2018 and 2017, respectively:

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended

June 30,

 

 

 

 

2018

 

 

 

2017

 

 

 

2018

 

 

 

2017

 

Servicing income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Servicing income

 

$

5,604

 

 

$

2,747

 

 

$

10,397

 

 

$

5,495

 

Change in fair value of mortgage servicing rights

 

 

(15

)

 

 

(1,840

)

 

 

3,528

 

 

 

(2,341

)

Change in fair value of mortgage servicing rights hedging

    instruments

 

 

(1,763

)

 

 

—

 

 

 

(7,019

)

 

 

—

 

Gross servicing income

 

 

3,826

 

 

 

907

 

 

 

6,906

 

 

 

3,154

 

Servicing expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

     Loss on sale of mortgage servicing rights

 

 

—

 

 

 

249

 

 

 

—

 

 

 

249

 

     Direct servicing expenses

 

 

2,078

 

 

 

1,204

 

 

 

3,873

 

 

 

2,138

 

Gross servicing expense

 

 

2,078

 

 

 

1,453

 

 

 

3,873

 

 

 

2,387

 

Net servicing income

 

$

1,748

 

 

$

(546

)

 

$

3,033

 

 

$

767

 

Data and key economic assumptions related to the Company’s mortgage servicing rights as of June 30, 2018 and December 31, 2017 are as follows:

 

 

 

June 30,

 

 

December 31,

 

 

 

 

2018

 

 

 

2017

 

Unpaid principal balance

 

$

8,483,445

 

 

$

6,529,431

 

Weighted-average prepayment speed (CPR)

 

 

7.63

%

 

 

8.90

%

Estimated impact on fair value of a 10% increase

 

 

(3,588

)

 

 

(3,026

)

Estimated impact on fair value of a 20% increase

 

 

(6,921

)

 

 

(5,855

)

Discount rate

 

 

10.23

%

 

 

9.75

%

Estimated impact on fair value of a 100 bp increase

 

 

(4,578

)

 

 

(3,052

)

Estimated impact on fair value of a 200 bp increase

 

 

(8,813

)

 

 

(5,867

)

Weighted-average coupon interest rate

 

 

4.06

%

 

 

3.94

%

Weighted-average servicing fee (basis points)

 

 

28

 

 

 

28

 

Weighted-average remaining maturity (in months)

 

 

331

 

 

 

335

 

 

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 second quarter of 2018, the Company entered into a letter of intent for the sale of certain mortgage servicing rights on $3,217,580 of serviced mortgage loans, of which the Company will continue to subservice until they can be transferred to the purchaser. The transaction is expected to close during the third quarter of 2018 and the Company does not expect there to be a significant gain or loss related to this transaction. During the three months ended June 30, 2017, the Company sold $11,935 of mortgage servicing rights on $1,085,465 of serviced mortgage loans. As of June 30, 2018 and December 31, 2017, there were no loans being serviced that related to the sale of mortgage servicing rights.