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NON-CONSOLIDATED VARIABLE INTEREST ENTITIES AND SERVICING ASSETS (Tables) | 9 Months Ended
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Sep. 30, 2018
Transfers and Servicing [Abstract] |
Changes in Servicing Assets |
The changes in servicing assets are shown below: |  |  |  |  |  |  |  |  |  |  |  |
|  | Quarter Ended |  | Nine-Month Period Ended |
|  | September 30, |  | September 30, |
(In thousands) | 2018 |  | 2017 |  | 2018 |  | 2017 |
Balance at beginning of period | $ | 27,191 |  | $ | 26,502 |  | $ | 25,255 |  | $ | 26,244 |
Capitalization of servicing assets |  | 1,003 |  |  | 833 |  |  | 3,028 |  |  | 2,757 |
Amortization |  | (722) |  |  | (775) |  |  | (2,188) |  |  | (2,342) |
Adjustment to fair value |  | (65) |  |  | (690) |  |  | 1,265 |  |  | (1,047) |
Other (1) |  | 186 |  |  | 129 |  |  | 233 |  |  | 387 |
Balance at end of period | $ | 27,593 |  | $ | 25,999 |  | $ | 27,593 |  | $ | 25,999 |
(1) | Amount represents the adjustment to fair value related to the repurchase of loans serviced for others. |  |  |  |  |  |
Changes in Impairment Allowance |
Changes in the impairment allowance were as follows: |  |  |  |  |  |
| Quarter Ended |  | Nine-Month Period Ended |
| September 30, |  | September 30, |
| 2018 |  | 2017 |  | 2018 |  | 2017 |
(In thousands) |
Balance at beginning of period | $ | 56 |  | $ | 197 |  | $ | 1,451 |  | $ | 461 |
Temporary impairment charges |  | 65 |  |  | 690 |  |  | 102 |  |  | 1,047 |
OTTI of servicing assets |  | - |  |  | - |  |  | (65) |  |  | (621) |
Recoveries |  | - |  |  | - |  |  | (1,367) |  |  | - |
Balance at end of period | $ | 121 |  | $ | 887 |  | $ | 121 |  | $ | 887 |
Components of Net Servicing Income |
| The components of net servicing income are shown below: |  |  |  |  |  |
|  | Quarter Ended |  | Nine-Month Period Ended |
|  | September 30, |  | September 30, |
| 2018 |  | 2017 |  | 2018 |  | 2017 |
(In thousands) |
Servicing fees | $ | 2,084 |  | $ | 1,898 |  | $ | 6,262 |  | $ | 5,897 |
Late charges and prepayment penalties |  | 114 |  |  | 103 |  |  | 380 |  |  | 340 |
Adjustment for loans repurchased |  | 186 |  |  | 129 |  |  | 233 |  |  | 387 |
Other |  | (8) |  |  | - |  |  | (8) |  |  | (35) |
Servicing income, gross |  | 2,376 |  |  | 2,130 |  |  | 6,867 |  |  | 6,589 |
Amortization and impairment of servicing assets |  | (787) |  |  | (1,464) |  |  | (923) |  |  | (3,389) |
Servicing income, net | $ | 1,589 |  | $ | 666 |  | $ | 5,944 |  | $ | 3,200 |
Key Economic Assumptions Used in Determining Fair Value at Time of Sale of Loans |
The Corporation’s servicing assets are subject to prepayment and interest rate risks. Key economic assumptions used in determining the fair value at the time of sale of the related mortgages ranged as follows:
| Maximum |  | Minimum
Nine-Month Period Ended September 30, 2018: |  |  |  |  |
Constant prepayment rate: |  |  |  |  |
Government-guaranteed mortgage loans | 5.9 | % |  | 5.6 | %
Conventional conforming mortgage loans | 6.4 | % |  | 6.2 | %
Conventional non-conforming mortgage loans | 9.8 | % |  | 9.1 | %
Discount rate: |  |  |  |  |
Government-guaranteed mortgage loans | 12.0 | % |  | 12.0 | %
Conventional conforming mortgage loans | 10.0 | % |  | 10.0 | %
Conventional non-conforming mortgage loans | 14.3 | % |  | 14.3 | %
Nine-Month Period Ended September 30, 2017: |  |  |  |  |
Constant prepayment rate: |  |  |  |  |
Government-guaranteed mortgage loans | 6.2 | % |  | 6.0 | %
Conventional conforming mortgage loans | 6.7 | % |  | 6.3 | %
Conventional non-conforming mortgage loans | 9.5 | % |  | 9.1 | %
Discount rate: |  |  |  |  |
Government-guaranteed mortgage loans | 12.0 | % |  | 12.0 | %
Conventional conforming mortgage loans | 10.0 | % |  | 10.0 | %
Conventional non-conforming mortgage loans | 14.3 | % |  | 14.3 | %
Weighted-Averages of Key Economic Assumptions in Valuation Model | The weighted averages of the key economic assumptions that the Corporation used in its valuation model and the sensitivity of the current fair value to immediate 1 0% and 20% adverse changes in those as sumptions for mortgage loans as of September 30, 2018 were as follows:
| (Dollars in thousands)
Carrying amount of servicing assets | $ | 27,593 |
Fair value | $ | 32,304 |
Weighted-average expected life (in years) |  | 8.45 |
Constant prepayment rate (weighted-average annual rate) |  | 6.14% |
Decrease in fair value due to 10% adverse change | $ | 774 |
Decrease in fair value due to 20% adverse change | $ | 1,516 |
Discount rate (weighted-average annual rate) |  | 11.25% |
Decrease in fair value due to 10% adverse change | $ | 1,613 |
Decrease in fair value due to 20% adverse change | $ | 3,088 |

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- Definition Tabular disclosure of all information related to the key inputs and assumptions used in measuring the fair value of assets obtained or liabilities incurred, as the result of a sale of financial assets, relating to the transferor's continuing involvement, if any, at the time of securitization, asset-backed financing arrangement, or similar transfer (including at a minimum, but not limited to, and if applicable, quantitative information about discount rates, expected prepayments including the expected weighted-average life of prepayable financial assets, and anticipated credit losses, including expected static pool losses). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 860 -SubTopic 20 -Section 50 -Paragraph 3 -Subparagraph (c) -URI http://asc.fasb.org/extlink&oid=109247956&loc=d3e107207-111719 + Details
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- Definition Tabular disclosure of a sensitivity analysis or stress test showing the hypothetical effect on the fair value of the transferor's interests in transferred financial assets (including any servicing assets or servicing liabilities) of two or more unfavorable variations from the expected levels for each key assumption that is reported, independently determined from any change in another key assumption, and a description of the objectives, methodology, and limitations of the sensitivity analysis or stress test. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 860 -SubTopic 20 -Section 50 -Paragraph 4 -Subparagraph (c) -URI http://asc.fasb.org/extlink&oid=109247956&loc=d3e107314-111719 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 860 -SubTopic 20 -Section 50 -Paragraph 4 -Subparagraph (d) -URI http://asc.fasb.org/extlink&oid=109247956&loc=d3e107314-111719 + Details
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- Definition Tabular disclosure of the activity in the balance of servicing assets (including a description of where changes in fair value are reported in the statement of income for each period for which results of operations are presented), including but not limited to, the following: beginning and ending balances, additions (for instance, through purchases of servicing assets), disposals, changes in fair value during the period resulting from changes in inputs or assumptions used in the valuation model, other changes in fair value along with a description of those changes, and other changes that affect the balance along with a description of those changes. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 860 -SubTopic 50 -Section 50 -Paragraph 3 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=68078379&loc=d3e122625-111746 + Details
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- Definition Tabular disclosure of the activity by class in any valuation allowance for impairment of recognized servicing assets - including beginning and ending balances, aggregate additions charged and recoveries credited to operations, and aggregate write-downs charged against allowance. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 860 -SubTopic 50 -Section 50 -Paragraph 4 -Subparagraph (e) -URI http://asc.fasb.org/extlink&oid=68078379&loc=d3e122739-111746 + Details
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