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Transfers of Financial Assets
 9 Months Ended
Sep. 30, 2019
Transfers and Servicing [Abstract]  
Transfers of Financial Assets Transfers of Financial Assets
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. Residential mortgage origination fees, adjustments for changes in fair value, any gain or loss from initial measurement on loans held for sale, and the gain or loss on loans sold are included as mortgage banking activities in the consolidated income statement.
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 loan repurchase requests received by the Company for which management evaluates the identity of the 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 loan repurchase requests for which the Company has not yet been notified. 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 consolidated income statement.
The following table provides a summary of activity in the reserve for loan repurchases:
 
Three months ended September 30,
 
Nine months ended September 30,
(In thousands)
2019
 
2018
 
2019
 
2018
Beginning balance
$
684

 
$
674

 
$
674

 
$
872

Provision (benefit) charged to expense
19

 
18

 
1,839

 
(172
)
Repurchased loans and settlements charged off
(7
)
 
(10
)
 
(1,817
)
 
(18
)
Ending balance
$
696

 
$
682

 
$
696

 
$
682


The increase to the provision and corresponding charge-off during the nine months ended September 30, 2019 was related to a discrete legal settlement in connection with previously sold loans.
The following table provides information for mortgage banking activities:
 
Three months ended September 30,
 
Nine months ended September 30,
(In thousands)
2019
 
2018
 
2019
 
2018
Residential mortgage loans held for sale:
 
 
 
 
 
 
 
Proceeds from sale
$
66,236

 
$
57,042

 
$
129,700

 
$
147,105

Loans sold with servicing rights retained
60,493

 
51,104

 
117,306

 
130,740

 
 
 
 
 
 
 
 
Net gain on sale
1,652

 
1,051

 
2,510

 
2,732

Ancillary fees
470

 
463

 
1,051

 
1,275

Fair value option adjustment
11

 
(209
)
 
268

 
(323
)

Additionally, certain loans not originated for sale were sold at approximately carrying value, consisting of residential loans for cash proceeds of $4.0 million and commercial loans for cash proceeds of $16.6 million resulting in a gain of approximately $615 thousand for the nine months ended September 30, 2019, and commercial loans for cash proceeds of $674 thousand for the nine months ended September 30, 2018.
The Company services residential mortgage loans totaling $2.4 billion at September 30, 2019 and $2.5 billion at December 31, 2018.
The following table presents the changes in carrying value for mortgage servicing assets:
 
Three months ended September 30,
 
Nine months ended September 30,
(In thousands)
2019
 
2018
 
2019
 
2018
Beginning balance
$
18,712

 
$
23,341

 
$
21,215

 
$
25,139

Additions
966

 
1,428

 
2,219

 
3,878

Amortization
(1,801
)
 
(2,125
)
 
(5,557
)
 
(6,373
)
Ending balance
$
17,877

 
$
22,644

 
$
17,877

 
$
22,644


Mortgage servicing assets are recorded at fair value upon transfer, and thereafter are carried at the lower of cost or fair value. Loan servicing fees, net of mortgage servicing rights amortization, were $0.5 million and $0.3 million for the three months ended September 30, 2019 and 2018, respectively, and $1.4 million and $0.9 million for the nine months ended September 30, 2019 and 2018, respectively, and are included as a component of loan related fees in the consolidated income statement. See Note 14: Fair Value Measurements for additional fair value information on mortgage servicing assets and loans held for sale.