Mortgage Servicing Rights

3 Months Ended

Mar. 31, 2014

(In Thousands)

The Company retains the right to service certain mortgage loans that it sells to secondary market investors. These mortgage servicing rights, included in “Other assets” on the Consolidated Balance Sheets, are recognized as a separate asset on the date the corresponding mortgage loan is sold. Mortgage servicing rights are amortized in proportion to and over the period of estimated net servicing income. These servicing rights are carried at the lower of amortized cost or fair value. Fair value is determined using an income approach with various assumptions including expected cash flows, prepayment speeds, market discount rates, servicing costs, and other factors. Mortgage servicing rights were carried at amortized cost at March 31, 2014 and December 31, 2013.

Impairment losses on mortgage servicing rights are recognized to the extent by which the unamortized cost exceeds fair value. No impairment losses on mortgage servicing rights were recognized in earnings for the three months ended March 31, 2014 and 2013.

Changes in the Company’s mortgage servicing rights were as follows:



Balance at January 1, 2014	$	8,994
Capitalization	798
Amortization	(278		)

Balance at March 31, 2014	$	9,514

Data and key economic assumptions related to the Company’s mortgage servicing rights as of March 31, 2014 are as follows:



Unpaid principal balance	$	950,600

Weighted-average prepayment speed (CPR)	4.41		%
Estimated impact of a 10% increase	$	(768	)
Estimated impact of a 20% increase	(1,031		)

Discount rate	11.26		%
Estimated impact of a 10% increase	$	(826	)
Estimated impact of a 20% increase	(1,139		)

Weighted-average coupon interest rate	3.71		%
Weighted-average servicing fee (basis points)	25.09
Weighted-average remaining maturity (in years)	24.17

- Definition

The entire disclosure for a transferor's continuing involvement in financial assets that it has transferred in a securitization or asset-backed financing arrangement, the nature of any restrictions on assets reported by an entity in its statement of financial position that relate to a transferred financial asset (including the carrying amounts of such assets), how servicing assets and servicing liabilities are reported, and (for securitization or asset-backed financing arrangements accounted for as sales) when a transferor has continuing involvement with the transferred financial assets and transfers of financial assets accounted for as secured borrowings, how the transfer of financial assets affects an entity's financial position, financial performance, and cash flows.

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