5. Mortgage Servicing Rights

Mortgage servicing activities include collecting principal, interest, tax, and insurance payments from borrowers while accounting for and remitting payments to investors, taxing authorities, and insurance companies. The Company also monitors delinquencies and administers foreclosure proceedings.

Mortgage loan servicing income is recorded in noninterest income as a part of other service charges and fees and amortization of the servicing assets is recorded in noninterest income as part of other income. The unpaid principal amount of consumer loans serviced for others was $2.9 billion and $2.3 billion as of March 31, 2018 and December 31, 2017, respectively. Servicing fees include contractually specified fees, late charges, and ancillary fees, and were $1.7 million for both the three months ended March 31, 2018 and 2017.

Amortization of mortgage servicing rights (“MSRs”) was $1.0 million for both the three months ended March 31, 2018 and 2017. The estimated future amortization expense for MSRs over the next five years is as follows:


	Estimated
(dollars in thousands)	Amortization
Under one year	$	2,593
One to two years		2,296
Two to three years		2,034
Three to four years		1,799
Four to five years		1,591

The details of the Company’s MSRs are presented below:


	March 31,		December 31,
(dollars in thousands)	2018		2017
Gross carrying amount	$	63,022	$	56,571
Less: accumulated amortization		44,363		43,375
Net carrying value	$	18,659	$	13,196

The following table presents changes in amortized MSRs for the three months ended March 31, 2018 and 2017:


	Three Months Ended March 31,
(dollars in thousands)	2018		2017
Balance at beginning of period	$	13,196	$	16,809
Originations		7		3
Purchases		6,444		—
Amortization		(988)		(1,012)
Balance at end of period	$	18,659	$	15,800
Fair value of amortized MSRs at beginning of period	$	21,697	$	25,160
Fair value of amortized MSRs at end of period	$	29,048	$	24,495

MSRs are evaluated for impairment if events and circumstances indicate a possible impairment. No impairment of MSRs was recorded for the three months ended March 31, 2018 and 2017.

The quantitative assumptions used in determining the lower of cost or fair value of the Company’s MSRs as of March 31, 2018 and December 31, 2017 were as follows:


	March 31, 2018							December 31, 2017
						Weighted							Weighted
	Range					Average		Range					Average
Conditional prepayment rate	7.76	%	-	18.94	%	8.12	%	8.53	%	-	19.63	%	9.04	%
Life in years (of the MSR)	3.40		-	8.01		7.35		3.29		-	7.15		6.76
Weighted-average coupon rate	3.96	%	-	6.77	%	4.02	%	3.97	%	-	6.79	%	4.04	%
Discount rate	10.50	%	-	10.50	%	10.50	%	10.50	%	-	10.52	%	10.50	%

The sensitivities surrounding MSRs are expected to have an immaterial impact on fair value.