Servicing Assets

3 Months Ended

Mar. 31, 2016

Loans serviced for others are not included in the accompanying balance sheet. The unpaid principal balances of loans serviced for others were $2.05 billion and $1.94 billion at March 31, 2016 and December 31, 2015, respectively.

The following summarizes the activity pertaining to servicing rights:



	Three Months Ended March 31,
	2016			2015
Balance at beginning of period	$	44,230		$	34,999
Additions, net	3,715			3,336
Fair value changes:
Due to changes in valuation inputs or assumptions	821			1,406
Decay due to increases in principal paydowns or runoff	(1,389		)	(1,284		)
Balance at end of period	$	47,377		$	38,457

The fair value of servicing rights was determined using discount rates ranging from 8.40% to 12.60% on March 31, 2016, and 7.30% to 12.00% on March 31, 2015. The fair value of servicing rights was determined using prepayment speeds ranging from 3.90% to 9.90% on March 31, 2016 and 1.80% to 9.60% on March 31, 2015, depending on the stratification of the specific right. Changes to fair value are reported in loan servicing revenue and revaluation within the consolidated statements of income.

The fair value of servicing rights is highly sensitive to changes in underlying assumptions. Changes in prepayment speed assumptions have the most significant impact on the fair value of servicing rights. Generally, as interest rates rise on variable rate loans, loan prepayments increase due to an increase in refinance activity, which results in a decrease in the fair value of servicing assets. Measurement of fair value is limited to the conditions existing and the assumptions used as of a particular point in time, and those assumptions may not be appropriate if they are applied at a different time.

- 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.

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