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 residential real estate loans serviced for others was $2.6 billion and $2.7 billion as of March 31, 2019 and December 31, 2018, respectively. Servicing fees include contractually specified fees, late charges, and ancillary fees, and were $1.6 million and $1.7 million for the three months ended March 31, 2019 and 2018, respectively.

Amortization of mortgage servicing rights (“MSRs”) was $0.8 million and $1.0 million for the three months ended March 31, 2019 and 2018, respectively. The estimated future amortization expenses for MSRs over the next five years are as follows:


	Estimated
(dollars in thousands)	Amortization
Under one year	$	2,236
One to two years		1,968
Two to three years		1,733
Three to four years		1,523
Four to five years		1,339

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


	March 31,		December 31,
(dollars in thousands)	2019		2018
Gross carrying amount	$	63,350	$	63,342
Less: accumulated amortization		47,951		47,187
Net carrying value	$	15,399	$	16,155

The following table presents changes in amortized MSRs for the three months ended March 31, 2019 and 2018:


	Three Months Ended March 31,
(dollars in thousands)	2019		2018
Balance at beginning of period	$	16,155	$	13,196
Originations		8		7
Purchases		—		6,444
Amortization		(764)		(988)
Balance at end of period	$	15,399	$	18,659
Fair value of amortized MSRs at beginning of period	$	27,662	$	21,697
Fair value of amortized MSRs at end of period	$	26,383	$	29,048

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, 2019 and 2018.

The quantitative assumptions used in determining the lower of cost or fair value of the Company’s MSRs as of March 31, 2019 and December 31, 2018 were as follows:


	March 31, 2019							December 31, 2018
						Weighted							Weighted
	Range					Average		Range					Average
Conditional prepayment rate	8.00	%	-	20.28	%	8.47	%	7.86	%	-	19.26	%	8.31	%
Life in years (of the MSR)	3.18		-	7.56		7.08		3.43		-	7.68		7.19
Weighted-average coupon rate	3.97	%	-	6.67	%	4.02	%	3.97	%	-	6.70	%	4.02	%
Discount rate	10.00	%	-	10.01	%	10.00	%	10.00	%	-	10.02	%	10.00	%

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