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LOAN SERVICING
 12 Months Ended
Dec. 31, 2024
Transfers and Servicing [Abstract]  
LOAN SERVICING LOAN SERVICING
Mortgage Loan Servicing
We retain the servicing rights on certain mortgage loans sold. The unpaid principal balance of mortgage loans serviced for others is listed below:
TABLE 7.1
December 3120242023
(in millions)
Mortgage loans sold with servicing retained$6,429 $5,729 
The following table summarizes activity relating to mortgage loans sold with servicing retained:
TABLE 7.2
Year Ended December 31202420232022
(in millions)
Mortgage loans sold with servicing retained$1,280 $980 $1,056 
Pre-tax net gains (losses) resulting from above loan sales (1)
21 3 (12)
Mortgage servicing fees (1)
15 14 13 
(1) Recorded in mortgage banking operations on the Consolidated Statements of Income.
Following is a summary of activity relating to MSRs:
TABLE 7.3
Year Ended December 31202420232022
(in millions)
Balance at beginning of period$59.5 $52.8 $44.4 
Additions16.6 11.3 13.0 
Payoffs and curtailments(3.4)(2.2)(4.4)
Impairment (charge) / recovery0.1 (0.2)2.5 
Amortization / other(2.3)(2.2)(2.7)
Balance at end of period$70.5 $59.5 $52.8 
Fair value, beginning of period$71.8 $68.6 $46.0 
Fair value, end of period86.3 71.8 68.6 
We had a $0.1 million valuation allowance for MSRs as of December 31, 2024 and $0.2 million as of December 31, 2023.
The fair value of MSRs is highly sensitive to changes in assumptions and is determined by estimating the present value of the asset’s future cash flows utilizing market-based prepayment rates, discount rates and other assumptions validated through comparison to trade information, industry surveys and the use of independent third-party valuations. Changes in prepayment
speed assumptions have the most significant impact on the fair value of MSRs. Generally, as interest rates decline, mortgage loan prepayments accelerate due to increased refinance activity, which results in a decrease in the fair value of MSRs and as interest rates increase, mortgage loan prepayments decline, which results in an increase in the fair value of MSRs. Measurement of fair value is limited to the conditions existing and the assumptions utilized as of a particular point in time, and those assumptions may not be appropriate if they are applied at a different point in time.
Following is a summary of the sensitivity of the fair value of MSRs to changes in key assumptions:
TABLE 7.4
December 3120242023
(dollars in millions)
Weighted average life (months)9692
Constant prepayment rate (annualized)7.6 %7.9 %
Discount rate10.3 %10.2 %
Effect on fair value due to change in interest rates:
+2.00%$6 $7 
+1.00%5 5 
+0.50%3 3 
+0.25%2 2 
-0.25%(2)(2)
-0.50%(5)(4)
-1.00%(11)(8)
-2.00%(20)(21)
-3.00%(34)(42)
The sensitivity calculations above are hypothetical and should not be considered to be predictive of future performance. Changes in fair value based on adverse changes in assumptions generally cannot be extrapolated because the relationship of the changes in assumptions to fair value may not be linear. Also, in this table, the effects of an adverse variation in a particular assumption on the fair value of MSRs is calculated without changing any other assumptions, while in reality, changes in one factor may result in changing another, which may magnify or contract the effect of the change.