Loan Servicing Rights

12 Months Ended

Dec. 31, 2021

LOAN SERVICING RIGHTS

Loan servicing rights are included in other assets on the balance sheet. At December 31, 2021, loan servicing rights derived from mortgage loans sold with servicing retained totaled $30.0 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 $3.662 billion at December 31, 2021, compared to $3.613 billion at December 31, 2020. Custodial escrow balances maintained in connection with serviced loans were $18.2 million at December 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:


	Years Ended December 31,
(dollars in thousands)	2021		2020		2019
Balance at beginning of period	$	28,124	$	25,399	$	24,512
Additions	11,759		12,810		6,499
Amortization	(9,798)		(10,085)		(5,612)
Balance before valuation allowance at end of period	30,085		28,124		25,399
Valuation allowance:
Balance at beginning of period	(1,407)		(31)		(15)
(Additions)/recoveries	1,361		(1,376)		(16)
Balance at end of period	(46)		(1,407)		(31)
Loan servicing rights, net	$	30,039	$	26,717	$	25,368

At December 31, 2021, the fair value of servicing rights was $33.8 million, which was determined using a discount rate of 9% and a conditional prepayment rate of 10%. 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%.