Loan Servicing Rights

12 Months Ended

Dec. 31, 2024

LOAN SERVICING RIGHTS

Loan servicing rights are included in other assets on the balance sheet. At December 31, 2024, loan servicing rights derived from mortgage loans sold with servicing retained totaled $40.9 million, compared to $35.8 million at December 31, 2023. Loans serviced for others are not reported as assets. The principal balance of mortgage loans serviced for others totaled $4.6 billion at December 31, 2024 and $4.3 billion at December 31, 2023. Custodial escrow balances maintained in connection with serviced loans totaled $29.8 million at December 31, 2024 and $27.0 million at December 31, 2023.

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)	2024		2023		2022
Balance at beginning of period	$	35,789	$	37,267	$	30,085
Additions (1)	10,829		3,657		13,080
Amortization	(5,646)		(5,135)		(5,898)
Balance before valuation allowance at end of period	40,972		35,789		37,267
Valuation allowance:
Balance at beginning of period	—		—		(46)
(Additions)/recoveries	(36)		—		46
Balance at end of period	(36)		—		—
Loan servicing rights, net	$	40,936	$	35,789	$	37,267

(1)Additions in 2024 included loan servicing rights of $2.7 million acquired in the CapStar transaction on April 1, 2024. Additions in 2022 included loan servicing rights of $7.7 million acquired in the First Midwest merger on February 15, 2022.

At December 31, 2024, the fair value of servicing rights was $55.7 million, which was determined using a discount rate of 10% and a conditional prepayment rate of 8%. At December 31, 2023, the fair value of servicing rights was $47.1 million, which was determined using a discount rate of 9% and a conditional prepayment rate of 10%.