Note 6. Mortgage Servicing Rights

Mortgage servicing rights (MSRs) are recorded at the lower of cost or market in "Other assets" on Pinnacle Financial's consolidated balance sheets and are amortized over the remaining life of the loans and written off when a mortgage loan prepays prior to maturity. The financial data included herein reflects the impact of the Mergers beginning on the respective acquisition dates and are subject to future refinements to thePinnacle Financial's purchase accounting adjustments. Mortgage servicing rights had the following carrying values as of September 30, 2015 (in thousands):

	2015
	Gross Carrying Amount			Accumulated Amortization				Net Carrying Amount
Mortgage servicing rights		$	9,038		$	(121	)		$	8,917

The following table provides a detail of changes in the mortgage servicing right from September 1, 2015, the closing date of the Magna Merger, to September 30, 2015:

	Residential			Commercial		Total
Beginning balance acquired in Magna Merger	$	8,819		$	154	$	8,973
Add: Originated MSRs		65			-		65
Less: Amortization		(121	)		-		(121	)
Ending balance	$	8,763		$	154	$	8,917

Income and expense associated with these MSRs, which includes servicing fees, late charges, guarantee fees and loan payoff interest, is recorded on a cash basis which approximates income as would be recorded on a U.S. GAAP basis. The following table summarizes the net servicing fee revenues for the three month period ended September 30, 2015 (in thousands).

	Residential		Commercial		Total
Gross servicing fees	$	237	$	45	$	282
Late charges and other ancillary revenue		45		-		45
Gross servicing revenue	$	282	$	45	$	327

Servicing asset amortization	$	121	$	-	$	121
Guaranty fees and loan pay-off interest		1		1		2
Other servicing expenses		28		-		28
Gross servicing expenses	$	150	$	1	$	151
Net servicing fee income	$	132	$	44	$	176