Note 7 - Intangible Assets and Loan Servicing

Loans serviced for others are not included in the accompanying consolidated balance sheets. The unpaid principal balances of mortgage loans serviced for others were $77,170,000 and $78,380,000 at December 31, 2017 and 2016, respectively.

The following table reflects the activity of mortgage servicing rights for the periods indicated:

Year ended December 31,	2017			2016			2015
Balance at beginning of year	$	498		$	504		$	504
Mortgage servicing rights capitalized		67			69			79
Mortgage servicing rights amortized		(83	)		(79	)		(87	)
Fair market value adjustments		1			4			8
Balance at end of year	$	483		$	498		$	504

The balance of these mortgage servicing rights are included in other assets at December 31, 2017 and 2016 and the fair value of these rights was $585,000 and $579,000, respectively. The fair value of servicing rights was determined using discount rates ranging from 13% to 15 % for 2017 and 14% to 16% for 2016.

The annual estimated amortization expense of intangible assets for each of the five succeeding fiscal years is as follows:

2018	$	80
2019		69
2020		58
2021		50
2022		42

On November 26, 2014, QNB transferred its former internet domain name to a third party and recorded a gain of $1,000,000, as disclosed in a Form 8-K filing dated December 2, 2014. As a result of the purchase of an additional domain name, QNB recorded the purchase price of $8,000 as an intangible asset in other assets in 2014. This asset has no amortization expense as it has an indefinite life.