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Mortgage Servicing Rights | 9 Months Ended
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Sep. 30, 2019
Transfers and Servicing [Abstract] |
Mortgage Servicing Rights | Mortgage Servicing Rights (In Thousands) The Company retains the right to service certain mortgage loans that it sells to secondary market investors. These mortgage servicing rights (“MSRs”) are recognized as a separate asset on the date the corresponding mortgage loan is sold. MSRs are amortized in proportion to and over the period of estimated net servicing income. These servicing rights are carried at the lower of amortized cost or fair value. Fair value is determined using an income approach with various assumptions including expected cash flows, prepayment speeds, market discount rates, servicing costs, and other factors. Servicing rights are evaluated for impairment based upon the fair value of the rights as compared to carrying amount. Impairment is recognized through a valuation allowance, to the extent that unamortized cost exceeds fair value. If the Company later determines that all or a portion of the impairment no longer exists, a reduction of the valuation allowance may be recorded as an increase to income. Changes in valuation allowances related to servicing rights are reported in mortgage banking income on the income statement. The fair values of servicing rights are subject to significant fluctuations as a result of changes in estimated and actual prepayment speeds and default rates and losses. There were $3,132 of valuation adjustments on MSRs during the nine months ended September 30, 2019, primarily arising on account of the difference between actual prepayment speeds and the Company’s assumptions with respect to prepayment speeds, and no valuation adjustments recognized during the nine months ended September 30, 2018. Changes in the Company’s MSRs were as follows:
Balance at January 1, 2019 | $ | 48,230 |
Capitalization | 8,183 |
Amortization | (4,995 | )
Valuation adjustment | (3,132 | )
Balance at September 30, 2019 | $ | 48,286 |
Data and key economic assumptions related to the Company’s MSRs are as follows as of the dates presented:
| September 30, 2019 |  | December 31, 2018 |
Unpaid principal balance | $ | 4,761,925 |  |  | $ | 4,635,712 |  |
Weighted-average prepayment speed (CPR) | 12.12 | % |  | 7.95 | % |
Estimated impact of a 10% increase | $ | (2,280 | ) |  | $ | (1,264 | ) |
Estimated impact of a 20% increase | (4,380 | ) |  | (2,569 | ) |
Discount rate | 9.60 | % |  | 9.45 | % |
Estimated impact of a 10% increase | $ | (1,815 | ) |  | $ | (2,657 | ) |
Estimated impact of a 20% increase | (3,499 | ) |  | (5,103 | ) |
Weighted-average coupon interest rate | 4.07 | % |  | 4.04 | % |
Weighted-average servicing fee (basis points) | 28.36 |  |  | 27.47 |  |
Weighted-average remaining maturity (in years) | 6.08 |  | 8.03 |
The Company recorded servicing fees of $2,346 and $2,154 for the three months ended September 30, 2019 and 2018, respectively, which are included in “Mortgage banking income” in the Consolidated Statements of Income. The Company recorded servicing fees of $7,081 and $6,648 for the nine months ended September 30, 2019 and 2018, respectively.

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- Definition The entire disclosure for a transferor's continuing involvement in financial assets that it has transferred in a securitization or asset-backed financing arrangement, the nature of any restrictions on assets reported by an entity in its statement of financial position that relate to a transferred financial asset (including the carrying amounts of such assets), how servicing assets and servicing liabilities are reported, and (for securitization or asset-backed financing arrangements accounted for as sales) when a transferor has continuing involvement with the transferred financial assets and transfers of financial assets accounted for as secured borrowings, how the transfer of financial assets affects an entity's financial position, financial performance, and cash flows. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 860 -URI http://asc.fasb.org/topic&trid=2197590 + Details
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