Loans are summarized as follows:



	December 31,
(Dollar amounts in thousands)	2015			2014
Commercial	$	1,043,980		$	1,044,522
Residential	444,447			469,172
Consumer	272,896			266,656
Total gross loans	1,761,323			1,780,350
Deferred (fees) costs	2,485			1,078
Allowance for loan losses	(19,946		)	(18,839		)
TOTAL	$	1,743,862		$	1,762,589

Loans in the above summary include loans totaling $6.5 million and $7.3 million at December 31, 2015 and 2014 that are subject to the FDIC loss share arrangement (“covered loans”) discussed in footnote 6.

The Corporation periodically sells residential mortgage loans it originates based on the overall loan demand of the Corporation and the outstanding balances in the residential mortgage portfolio. At December 31, 2015 and 2014, loans held for sale included $5.9 million and $3.0 million, respectively, and are included in the totals above.

In the normal course of business, the Corporation’s subsidiary banks make loans to directors and executive officers and to their associates. In 2015, the aggregate dollar amount of these loans to directors and executive officers who held office amounted to $40.6 million at the beginning of the year. During 2015, advances of $17.8 million, repayments of $7.7 million were made with respect to related party loans for an aggregate dollar amount outstanding of $50.6 million at December 31, 2015.

Loans serviced for others, which are not reported as assets, total $511.4 million and $521.7 million at year-end 2015 and 2014. Custodial escrow balances maintained in connection with serviced loans were $2.80 million and $2.59 million at year-end 2015 and 2014.

Activity for capitalized mortgage servicing rights (included in other assets) was as follows:



	December 31,
(Dollar amounts in thousands)	2015			2014			2013
Servicing rights:
Beginning of year	$	1,863		$	2,065		$	2,225
Additions	531			414			588
Amortized to expense	(648		)	(616		)	(748		)
End of year	$	1,746		$	1,863		$	2,065

Third party valuations are conducted periodically for mortgage servicing rights. Based on these valuations, fair values were approximately $3.1 million and $2.9 million at year end 2015 and 2014. There was no valuation allowance in 2015 or 2014.

Fair value for 2015 was determined using a discount rate of 10%, prepayment speeds ranging from 105% to 385%, depending on the stratification of the specific right. Fair value at year end 2014 was determined using a discount rate of 10%, prepayment speeds ranging from 112% to 403%, depending on the stratification of the specific right. Mortgage servicing rights are amortized over 8 years, the expected life of the sold loans.