NOTE 14 — MORTGAGE BANKING AND LOAN SERVICING

Net revenues from mortgage banking activity consisted of the following:


	Years Ended December 31
	2015		2014		2013
Gain from sale of mortgage loans and interest rate locks	$	5,528	$	4,730	$	3,956
Mortgage loan servicing revenue (expense):
Mortgage loan servicing revenue		3,940		3,053		3,565
Amortization of mortgage servicing rights		(1,313)		(1,004)		(1,472)
Mortgage servicing rights valuation adjustments		200		(25)		750
Net servicing revenue		2,827		2,024		2,843
Net revenue from mortgage banking activity	$	8,355	$	6,754	$	6,799

Loans serviced for others are not included in the accompanying consolidated balance sheets. Loan servicing fee income was $2,415, $2,065, and $2,038 for 2015, 2014, and 2013. The unpaid principal balances of loans serviced for others totaled $924,836 and $879,664 at December 31, 2015 and 2014. Custodial escrow balances maintained in connection with serviced loans were $12,766 and $6,107 at year end 2015 and 2014. Mortgage servicing rights are included in other assets on the consolidated balance sheets. The weighted average amortization period is 6.65 years. The fair value of capitalized mortgage servicing assets is based on comparable market values and expected cash flows, with impairment assessed based on portfolio characteristics including product type and interest rates. The carrying value of capitalized mortgage servicing rights was $6,120 and $5,708 at year end 2015 and 2014. Fair value at year‑end 2015 was determined using a discount rate of 10%, and prepayment speeds ranging from 105% to 369%, depending on the stratification of the specific right. Fair value at year‑end 2014 was determined using a discount rate of 10%, and prepayment speeds ranging from 95% to 388%, depending on the stratification of the specific right. The notional amount of interest rate lock commitments to make 1‑4 family residential mortgage loans intended to be sold on the secondary market totaled $30.0 million and $34.1 million at December 31, 2015 and 2014, respectively. The estimated fair value of these commitments totaled $700 and $975 at December 31, 2015 and 2014, respectively, and is included in other assets on the consolidated balance sheet.


	2015		2014		2013
Mortgage servicing assets
Balances, January 1	$	5,708	$	5,155	$	4,350
Servicing assets capitalized		1,525		988		1,527
Servicing rights acquired		—		594		—
Amortization of servicing assets		(1,313)		(1,004)		(1,472)
Change in valuation allowance		200		(25)		750
Balance, December 31	$	6,120	$	5,708	$	5,155
Valuation allowance:
Balances, January 1	$	400	$	375	$	1,125
Additions expensed		25		75		—
Reductions credited to operations		(225)		(50)		(750)
Balance, December 31	$	200	$	400	$	375