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Loan Servicing Rights

3 Months Ended

Mar. 31, 2021

LOAN SERVICING RIGHTSLoan servicing rights are included in other assets on the balance sheet. At March 31, 2021, loan servicing rights derived from mortgage loans sold with servicing retained totaled $28.1 million, compared to $26.7 million at December 31, 2020. Loans serviced for others are not reported as assets. The principal balance of mortgage loans serviced for others was $3.597 billion at March 31, 2021, compared to $3.613 billion at December 31, 2020. Custodial escrow balances maintained in connection with serviced loans were $32.9 million at March 31, 2021 and $16.2 million at December 31, 2020.

The following table summarizes the carrying values and activity related to loan servicing rights and the related valuation allowance:


	Three Months Ended March 31,
(dollars in thousands)	2021		2020
Balance at beginning of period	$	28,124	$	25,399
Additions	3,113		1,731
Amortization	(2,975)		(1,555)
Balance before valuation allowance at end of period	28,262		25,575
Valuation allowance:
Balance at beginning of period	(1,407)		(31)
(Additions)/recoveries	1,261		(1,412)
Balance at end of period	(146)		(1,443)
Loan servicing rights, net	$	28,116	$	24,132

At March 31, 2021, the fair value of servicing rights was $30.7 million, which was determined using a discount rate of 9% and a conditional prepayment rate of 11%. At December 31, 2020, the fair value of servicing rights was $26.8 million, which was determined using a discount rate of 9% and a conditional prepayment rate of 14%.