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NON-CONSOLIDATED VARIABLE INTEREST ENTITIES AND SERVICING ASSETS (Tables)

9 Months Ended

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 10% and 20% adverse changes in those assumptions 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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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

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-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

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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.

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-SubTopic 20
-Section 50
-Paragraph 4
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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.

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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.

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