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 $1.310 billion and $1.301 billion at December 31, 2017 and 2016.

The aggregate fair value of capitalized mortgage servicing rights was approximately $12.8 million, $12.1 million, and $10.8 million at December 31, 2017, 2016 and 2015, compared to the carrying values of $11.6 million, $11.1 million and $8.9 million, respectively. The fair value of capitalized mortgage servicing rights was approximately $7.6 million on January 1, 2015. 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			December 31			December 31
	2017			2016			2015
Mortgage servicing rights
Balances, January 1	$	11,681		$	9,271		$	7,980
Servicing rights capitalized		2,109			3,426			2,974
Amortization of servicing rights		(1,601	)		(1,016	)		(1,683	)

Balances, December 31		12,189			11,681			9,271

Impairment allowance
Balances, January 1		(507	)		(397	)		(338	)
Additions		(85	)		(236	)		(130	)
Reductions		5			126			71

Balances, December 31		(587	)		(507	)		(397	)

Mortgage servicing rights, net	$	11,602		$	11,174		$	8,874

During 2017, 2016 and 2015, the Bank recorded additional impairment of approximately $80,000, $110,000 and $59,000, respectively.