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Mortgage Servicing Rights (Tables)
 9 Months Ended
Sep. 30, 2015
Mortgage Servicing Rights [Abstract]  
Mortgage servicing rights

Our portfolio of residential mortgage loans serviced for third parties was $2.10 billion and $1.95 billion as of September 30, 2015 and December 31, 2014, respectively.  These loans were originated by BancShares and sold to third parties on a non-recourse basis with servicing rights retained.  These retained servicing rights are recorded as a servicing asset on the Consolidated Balance Sheets and are initially recorded at fair value.

The activity of the servicing asset for the three and nine months ended September 30, 2015 and 2014 is presented in the following table:
 
Three months ended September 30
 
Nine months ended September 30
(Dollars in thousands)
2015
 
2014
 
2015
 
2014
Beginning balance
$
18,162

 
$
—

 
$
16,688

 
$
16

Servicing rights originated
1,857

 
—

 
4,446

 
—

Amortization
(695
)
 
—

 
(2,657
)
 
(164
)
Servicing rights acquired in the 1st Financial merger
—

 
—

 
—

 
148

Valuation allowance reversal
3

 
—

 
850

 
—

Ending balance
$
19,327

 
$
—

 
$
19,327

 
$
—
Mortgage servicing rights valuation allowance
The following table presents the activity in the servicing asset valuation allowance for the three and nine months ended September 30, 2015 and 2014:
 
Three months ended September 30
 
Nine months ended September 30
(Dollars in thousands)
2015
 
2014
 
2015
 
2014
Beginning balance
$
3

 
$
—

 
$
850

 
$
—

Valuation allowance reversal
(3
)
 
—

 
(850
)
 
—

Ending balance
$
—

 
$
—

 
$
—

 
$
—
Mortgage servicing rights economic assumptions
Valuation of mortgage servicing rights is performed using a pooling methodology. Similar loans are pooled together and evaluated on a discounted earnings basis to determine the present value of future earnings. Key economic assumptions used to value mortgage servicing rights as of September 30, 2015 and December 31, 2014 were as follows:
 
September 30, 2015
 
December 31, 2014
Discount rate - conventional fixed loans
7.05
%
 
7.20
%
Discount rate - all loans excluding conventional fixed loans
9.05
%
 
9.20
%
Weighted average constant prepayment rate
10.41
%
 
14.25
%
Weighted average cost to service a loan
$
56.61

 
$
56.02