NOTE 12 – LOAN SERVICING RIGHTS

At June 30, 2018, loan servicing rights derived from loans sold with servicing retained totaled $24.3 million, compared to $24.7 million at December 31, 2017. Loans serviced for others are not reported as assets. The principal balance of loans serviced for others was $3.306 billion at June 30, 2018, compared to $3.321 billion at December 31, 2017. Approximately 99.7% of the loans serviced for others at June 30, 2018 were residential mortgage loans. Custodial escrow balances maintained in connection with serviced loans were $37.8 million at June 30, 2018 and $8.9 million at December 31, 2017.

The following table summarizes the carrying values and activity related to loan servicing rights and the related valuation allowance for the six months ended June 30, 2018 and 2017:


	Six Months Ended June 30,
(dollars in thousands)	2018			2017
Balance at beginning of period	$	24,690		$	25,629
Additions		1,951			1,976
Amortization		(2,323	)		(2,507	)

Balance before valuation allowance at end of period		24,318			25,098

Valuation allowance:
Balance at beginning of period		(29	)		(68	)
(Additions)/recoveries		14			(7	)

Balance at end of period		(15	)		(75	)

Loan servicing rights, net	$	24,303		$	25,023

At June 30, 2018, the fair value of servicing rights was $27.0 million, which was determined using a discount rate of 13% and a weighted average prepayment speed of 115% PSA. At December 31, 2017, the fair value of servicing rights was $25.8 million, which was determined using a discount rate of 13% and a weighted average prepayment speed of 140% PSA.