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NON CONSOLIDATED VARIABLE INTEREST ENTITIES AND SERVICING ASSETS (Tables)
 9 Months Ended
Sep. 30, 2021
Transfers and Servicing [Abstract]  
Changes in Servicing Assets [Table Text Block]

The changes in MSRs are shown below for the indicated periods:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarter Ended

 

Nine-Month Period Ended

 

 

 

September 30,

 

September 30,

 

(In thousands)

2021

 

2020

 

2021

 

2020

 

 

 

 

Balance at beginning of period

$

32,335

 

$

26,040

 

$

33,071

 

$

26,762

 

Purchase of servicing assets (1)

 

-

 

 

7,781

 

 

-

 

 

7,781

 

Capitalization of servicing assets

 

1,146

 

 

1,598

 

 

4,046

 

 

3,168

 

Amortization

 

(1,817)

 

 

(1,594)

 

 

(5,374)

 

 

(3,808)

 

Temporary impairment recoveries (charges), net

 

53

 

 

(163)

 

 

90

 

 

(206)

 

Other (2)

 

(32)

 

 

(318)

 

 

(148)

 

 

(353)

 

 

Balance at end of period

$

31,685

 

$

33,344

 

$

31,685

 

$

33,344

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Represents servicing assets acquired in the BSPR acquisition.

 

(2)

Amount represents adjustments related to the repurchase of loans serviced for others, including MSRs related to loans previously serviced for BSPR and eliminated as part of the acquisition in the third quarter of 2020.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
Changes in Impairment Allowance [Table Text Block]

Changes in the impairment allowance were as follows for the indicated periods:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarter Ended

 

Nine-Month Period Ended

 

 

 

September 30,

 

September 30,

 

 

 

2021

 

2020

 

2021

 

2020

 

(In thousands)

 

Balance at beginning of period

$

165

 

$

39

 

$

202

 

$

73

 

Temporary impairment charges

 

-

 

 

163

 

 

-

 

 

301

 

OTTI of servicing assets

 

-

 

 

-

 

 

-

 

 

(77)

 

Recoveries

 

(12)

 

 

-

 

 

(49)

 

 

(95)

 

 

Balance at end of period

$

153

 

$

202

 

$

153

 

$

202

 

 

 
Components of Net Servicing Income [Table Text Block]

The components of net servicing income, included as part of mortgage banking activities in the consolidated statements of income, are shown below for the indicated periods:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarter Ended

 

Nine-Month Period Ended

 

 

 

 

September 30,

 

September 30,

 

 

 

2021

 

2020

 

2021

 

2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(In thousands)

 

 

 

Servicing fees

$

3,213

 

$

2,460

 

$

9,146

 

$

6,463

 

 

Late charges and prepayment penalties

 

87

 

 

114

 

 

543

 

 

372

 

 

Adjustment for loans repurchased

 

(32)

 

 

(318)

 

 

(148)

 

 

(353)

 

 

 

Servicing income, gross

 

3,268

 

 

2,256

 

 

9,541

 

 

6,482

 

 

Amortization and impairment of servicing assets

 

(1,764)

 

 

(1,757)

 

 

(5,284)

 

 

(4,014)

 

 

 

Servicing income, net

$

1,504

 

$

499

 

$

4,257

 

$

2,468

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
Key Economic Assumptions Used in Determining Fair Value at Time of Sale of Loans [Table Text Block]

The Corporation’s MSRs are subject to prepayment and interest rate risks. Key economic assumptions used in determining the fair value at the time of sale of the related mortgages for the indicated periods ranged as follows:

 

 

 

 

 

 

 

Maximum

 

Minimum

Nine-Month Period Ended September 30, 2021:

 

 

 

 

 

Constant prepayment rate:

 

 

 

 

 

Government-guaranteed mortgage loans

6.4

%

 

6.3

%

Conventional conforming mortgage loans

6.8

%

 

6.6

%

Conventional non-conforming mortgage loans

8.6

%

 

8.2

%

Discount rate:

 

 

 

 

 

Government-guaranteed mortgage loans

12.0

%

 

12.0

%

Conventional conforming mortgage loans

10.0

%

 

10.0

%

Conventional non-conforming mortgage loans

13.7

%

 

13.6

%

 

 

 

 

 

 

Nine-Month Period Ended September 30, 2020:

 

 

 

 

 

Constant prepayment rate:

 

 

 

 

 

Government-guaranteed mortgage loans

6.4

%

 

6.2

%

Conventional conforming mortgage loans

7.2

%

 

6.9

%

Conventional non-conforming mortgage loans

9.2

%

 

8.6

%

Discount rate:

 

 

 

 

 

Government-guaranteed mortgage loans

12.0

%

 

12.0

%

Conventional conforming mortgage loans

10.0

%

 

10.0

%

Conventional non-conforming mortgage loans

14.3

%

 

13.8

%

 

 

 

 

 

 
Weighted-Averages of Key Economic Assumptions in Valuation Model [Table Text Block] The weighted-averages of the key economic assumptions that the Corporation used in its valuation model and the sensitivity of the current fair value to immediate 10% and 20% adverse changes in those assumptions for mortgage loans as of September 30, 2021 and December 31, 2020 were as follows:

 

September 30,

 

December 31,

(Dollars in thousands)

2021

 

2020

Carrying amount of servicing assets

$

31,685

 

 

$

33,071

 

Fair value

$

41,000

 

 

$

40,294

 

Weighted-average expected life (in years)

 

7.92

 

 

 

7.86

 

 

 

 

 

 

 

 

 

Constant prepayment rate (weighted-average annual rate)

 

6.61

%

 

 

6.73

%

Decrease in fair value due to 10% adverse change

$

1,015

 

 

$

1,006

 

Decrease in fair value due to 20% adverse change

$

1,986

 

 

$

1,970

 

 

 

 

 

 

 

 

 

Discount rate (weighted-average annual rate)

 

11.18

%

 

 

11.20

%

Decrease in fair value due to 10% adverse change

$

1,794

 

 

$

1,772

 

Decrease in fair value due to 20% adverse change

$

3,450

 

 

$

3,409