Transfers of Financial Assets

12 Months Ended

Dec. 31, 2017

The Company sells financial assets in the normal course of business, primarily residential mortgage loans sold to government-sponsored enterprises through established programs and securitizations. The gain or loss on residential mortgage loans sold and the fair value adjustment to loans held for sale are included as mortgage banking activities in the accompanying Consolidated Statements of Income.

The Company may be required to repurchase a loan in the event of certain breaches of the representations and warranties, or in the event of default of the borrower within 90 days of sale, as provided for in the sale agreements. A reserve for loan repurchases provides for estimated losses pertaining to the potential repurchase of loans associated with the Company's mortgage banking activities. The reserve reflects management’s evaluation of the identity of counterparty, the vintage of the loans sold, the amount of open repurchase requests, specific loss estimates for each open request, the current level of loan losses in similar vintages held in the residential loan portfolio, and estimated recoveries on the underlying collateral. The reserve also reflects management’s expectation of losses from repurchase requests for which the Company has not yet been notified, as the performance of loans sold and the quality of the servicing provided by the acquirer may also impact the reserve. The provision recorded at the time of the loan sale is netted from the gain or loss recorded in mortgage banking activities, while any incremental provision, post loan sale, is recorded in other non-interest expense in the accompanying Consolidated Statements of Income.

The following table provides a summary of activity in the reserve for loan repurchases:



	Years ended December 31,
(In thousands)	2017			2016			2015
Beginning balance	$	790		$	1,192		$	1,059
Provision (benefit) charged to expense	100			(303		)	133
Repurchased loans and settlements charged off	(18		)	(99		)	—
Ending balance	$	872		$	790		$	1,192

The following table provides information for mortgage banking activities:



	Years ended December 31,
(In thousands)	2017		2016			2015
Residential mortgage loans held for sale:
Proceeds from sale	$	335,656	$	438,925		$	452,590
Loans sold with servicing rights retained	304,788		399,318			416,277

Net gain on sale	6,211		11,629			7,795
Ancillary fees	2,629		3,532			—
Fair value option adjustment	1,097		(526		)	—

The Company has retained servicing rights on residential mortgage loans totaling $2.6 billion at both December 31, 2017 and 2016.

The following table presents the changes in carrying value for mortgage servicing assets:



	Years ended December 31,
(In thousands)	2017			2016			2015
Beginning balance	$	24,466		$	20,698		$	19,379
Additions	9,249			11,312			8,027
Amortization	(8,576		)	(7,544		)	(6,708		)
Ending balance	$	25,139		$	24,466		$	20,698

Loan servicing fees, net of mortgage servicing rights amortization, were $0.8 million, $1.1 million, and $1.5 million, for the years ended December 31, 2017, 2016, and 2015, respectively, and are included as a component of loan related fees in the accompanying Consolidated Statements of Income.

See Note 16: Fair Value Measurements for additional fair value information on loans held for sale and mortgage servicing assets.

Additionally, loans not originated for sale were sold approximately at carrying value, except as noted, for cash proceeds of $7.4 million for certain residential loans and for cash proceeds of $7.2 million for certain commercial loans for the year ended December 31, 2017; for cash proceeds of $26.5 million, resulting in a gain of $2.1 million, for certain commercial loans and for cash proceeds of $7.6 million for certain residential loans for the year ended December 31, 2016; and for cash proceeds of $0.7 million for certain commercial loans and for cash proceeds of $32.9 million for certain consumer loans for the year ended December 31, 2015.