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SERVICING RIGHTS
 3 Months Ended
Mar. 31, 2016
Transfers and Servicing [Abstract]  
SERVICING RIGHTS
SERVICING RIGHTS
The Company retains MSRs from certain of its sales of residential mortgage loans. MSRs on residential mortgage loans are reported at fair value. Income earned by the Company on its MSRs is derived primarily from contractually specified mortgage servicing fees and late fees, net of curtailment costs and third party subservicing costs. The Company retains servicing rights in connection with its SBA loan operations, which are measured using the amortization method.
Loss from servicing rights was $5.3 million and $442 thousand for the three months ended March 31, 2016 and 2015, respectively. The Company recognized losses on the fair value and runoff of servicing rights of $10.2 million and $2.5 million for the three months ended March 31, 2016 and 2015, respectively. These decreases were partially offset by increases in servicing fees. The Company recognized servicing fees of $4.9 million and $2.0 million for the three months ended March 31, 2016 and 2015, respectively. The decrease in fair value of servicing rights was due to generally lower interest rates and the increase in servicing fees was due to the increase in unpaid principal balance of loans sold with servicing retained. These amounts are reported in Loan Servicing Income on the Consolidated Statements of Operations. The following table presents a composition of servicing rights as of the dates indicated:
 
March 31,
2016
 
December 31,
2015
 
(In thousands)
Mortgage servicing rights, at fair value
$
48,370

 
$
49,939

SBA servicing rights, at cost
1,036

 
788

Total
$
49,406

 
$
50,727


Mortgage loans sold with servicing retained are not reported as assets and are subserviced by a third party vendor. The unpaid principal balance of these loans at March 31, 2016 and December 31, 2015 was $5.44 billion and $4.77 billion, respectively. Custodial escrow balances maintained in connection with serviced loans were $18.9 million and $21.1 million at March 31, 2016 and December 31, 2015, respectively.
Mortgage Servicing Rights
The following table presents the key characteristics, inputs and economic assumptions used to estimate the fair value of the MSRs as of the dates indicated:
 
March 31,
2016
 
December 31,
2015
 
($ in thousands)
Fair value of retained MSRs
$
48,370

 
$
49,939

Discount rate
9.82
%
 
9.75
%
Constant prepayment rate
14.43
%
 
11.81
%
Weighted-average life
5.55 years

 
6.48 years


The following table presents activity in the MSRs for the periods indicated:
 
Three Months Ended
 
March 31,
 
2016
 
2015
 
(In thousands)
Balance at beginning of period
$
49,939

 
$
19,082

Additions
8,582

 
10,192

Changes in fair value resulting from valuation inputs or assumptions
(8,201
)
 
(528
)
Sales of servicing rights
(3
)
 
(5,862
)
Other
(1,947
)
 
(1,719
)
Balance at end of period
$
48,370

 
$
21,165


SBA Servicing Rights
The Company used a discount rate of 7.50 percent to calculate the present value of cash flows and an estimated prepayment speed based on prepayment data available. Discount rates and prepayment speeds are reviewed quarterly and adjusted as appropriate. The following table presents activity in the SBA servicing rights for the periods indicated:
 
Three Months Ended
 
March 31,
 
2016
 
2015
 
(In thousands)
Balance at beginning of period
$
788

 
$
484

Additions
293

 
195

Amortization, including prepayments
(45
)
 
(15
)
Impairment
—

 
—

Balance at end of period
$
1,036

 
$
664