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 $2.8 billion and $2.3 billion as of June 30, 2018 and December 31, 2017, respectively. Servicing fees include contractually specified fees, late charges, and ancillary fees, and were $1.9 million and $1.7 million for the three months ended June 30, 2018 and 2017, respectively, and $3.6 million and $3.4 million for the six months ended June 30, 2018 and 2017, respectively.

Amortization of mortgage servicing rights (“MSRs”) was $1.0 million and $0.9 million for the three months ended June 30, 2018 and 2017, respectively, and $2.0 million and $1.9 million for the six months ended June 30, 2018 and 2017, respectively. The estimated future amortization expenses for MSRs over the next five years are as follows:


	Estimated
(dollars in thousands)	Amortization
Under one year	$	2,469
One to two years		2,183
Two to three years		1,932
Three to four years		1,707
Four to five years		1,508

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


	June 30,		December 31,
(dollars in thousands)	2018		2017
Gross carrying amount	$	63,043	$	56,571
Less: accumulated amortization		45,383		43,375
Net carrying value	$	17,660	$	13,196

The following table presents changes in amortized MSRs for the three and six months ended June 30, 2018 and 2017:


	Three Months Ended June 30,				Six Months Ended June 30,
(dollars in thousands)	2018		2017		2018		2017
Balance at beginning of period	$	18,659	$	15,800	$	13,196	$	16,809
Originations		21		1		28		4
Purchases		—		—		6,444		—
Amortization		(1,020)		(924)		(2,008)		(1,936)
Balance at end of period	$	17,660	$	14,877	$	17,660	$	14,877
Fair value of amortized MSRs at beginning of period	$	29,048	$	24,495	$	21,697	$	25,160
Fair value of amortized MSRs at end of period	$	28,344	$	23,263	$	28,344	$	23,263

MSRs are evaluated for impairment if events and circumstances indicate a possible impairment. No impairment of MSRs was recorded for the six months ended June 30, 2018 and 2017.

The quantitative assumptions used in determining the lower of cost or fair value of the Company’s MSRs as of June 30, 2018 and December 31, 2017 were as follows:


	June 30, 2018							December 31, 2017
						Weighted							Weighted
	Range					Average		Range					Average
Conditional prepayment rate	7.72	%	-	20.28	%	8.13	%	8.53	%	-	19.63	%	9.04	%
Life in years (of the MSR)	3.26		-	7.98		7.31		3.29		-	7.15		6.76
Weighted-average coupon rate	3.96	%	-	6.75	%	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.