(6) Mortgage Servicing Rights

We own rights to service mortgage loans for investors with aggregate unpaid principal balances of $1.50 billion at December 31, 2013 and $1.44 billion at December 31, 2012, which are not reflected in the accompanying consolidated statements of financial condition. As described in Note 1, we outsource our residential mortgage loan servicing to a third party under a sub-servicing agreement.

The estimated fair value of our MSR was $12.8 million at December 31, 2013 and $6.9 million at December 31, 2012. The fair value of MSR is highly sensitive to changes in assumptions. See Note 17 for a description of the assumptions used to estimate the fair value of MSR.

MSR activity is summarized as follows:

	For the Year Ended December 31,
(In Thousands)	2013			2012			2011
Carrying amount before valuation allowance at beginning of year	$	15,143		$	15,401		$	16,321
Additions – servicing obligations that result from transfers of financial assets	3,681			3,651			2,330
Amortization	(3,229		)	(3,909		)	(3,250		)
Carrying amount before valuation allowance at end of year	15,595			15,143			15,401
Valuation allowance at beginning of year	(8,196		)	(7,265		)	(7,117		)
Recovery of (provision for) valuation allowance	5,401			(931		)	(148		)
Valuation allowance at end of year	(2,795		)	(8,196		)	(7,265		)
Net carrying amount at end of year	$	12,800		$	6,947		$	8,136

Mortgage banking income, net, is summarized as follows:

	For the Year Ended December 31,
(In Thousands)	2013			2012			2011
Loan servicing fees	$	4,189		$	4,070		$	4,095
Net gain on sales of loans	6,880			7,590			3,716
Amortization of MSR	(3,229		)	(3,909		)	(3,250		)
Recovery of (provision for) valuation allowance on MSR	5,401			(931		)	(148		)
Total mortgage banking income, net	$	13,241		$	6,820		$	4,413

At December 31, 2013, estimated future MSR amortization through 2018 was as follows: $2.4 million for 2014, $2.1 million for 2015, $1.8 million for 2016, $1.5 million for 2017 and $1.3 million for 2018. Actual results will vary depending upon the level of repayments on the loans currently serviced.