Note 10 – Loan Servicing

Loans serviced for others are not included in the accompanying consolidated balance sheets. The unpaid principal balances of loans serviced for others totaled approximately $1.3 billion and $1.2 billion at December 31, 2016 and 2015.

The aggregate fair value of capitalized mortgage servicing rights was approximately $12.1 million, $10.8 million, and $10.5 million at December 31, 2016, 2015 and 2014, compared to the carrying values of $11.1 million, $8.9 million and $7.6 million, respectively. The fair value of capitalized mortgage servicing rights was approximately $7.0 million on January 1, 2014. Comparable market values and a valuation model that calculates the present value of future cash flows were used to estimate fair value. For purposes of measuring impairment, risk characteristics including product type, investor type and interest rates, were used to stratify the originated mortgage servicing rights.


	December 31 2016			December 31 2015			December 31 2014
Mortgage servicing rights
Balances, January 1	$	9,271		$	7,980		$	7,428
Servicing rights capitalized		3,426			2,974			2,280
Amortization of servicing rights		(1,016	)		(1,683	)		(1,728	)

Balances, December 31		11,681			9,271			7,980

Impairment allowance
Balances, January 1		(397	)		(338	)		(389	)
Additions		(236	)		(130	)		(95	)
Reductions		126			71			146

Balances, December 31		(507	)		(397	)		(338	)

Mortgage servicing rights, net	$	11,174		$	8,874		$	7,642

During 2016, 2015 and 2014, the Bank recorded recovery and additional (impairment) of approximately $(110,000), $(59,000) and $51,000, respectively.