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Mortgage Servicing Rights | 12 Months Ended
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Dec. 31, 2021
Transfers and Servicing [Abstract] |
Mortgage Servicing Rights |
NOTE 7 – MORTGAGE SERVICING RIGHTS
The following table summarizes the changes in MSRs, which are included in other assets on the consolidated balance sheets, with adjustments to the fair value included in mortgage banking income on the consolidated statements of income:
| 2021 |  | 2020 |  | 2019
| (in thousands)
Amortized cost: |  |  |  |  |
Balance at beginning of period | $ | 38,745 |  |  | $ | 39,267 |  |  | $ | 38,573 |
Originations of MSRs | 9,216 |  |  | 12,173 |  |  | 7,546 |
Amortization | (11,968) |  |  | (12,695) |  |  | (6,852) |
Balance at end of period | $ | 35,993 |  |  | $ | 38,745 |  |  | $ | 39,267 |
Valuation allowance: |  |  |  |  |
Balance at beginning of period | $ | (10,500) |  |  | $ | — |  |  | $ | — |
Reduction (addition) to valuation allowance | 9,900 |  |  | (10,500) |  |  | — |
Balance at end of period | $ | (600) |  |  | $ | (10,500) |  |  | $ | — |
Net MSRs at end of period | $ | 35,393 |  |  | $ | 28,245 |  |  | $ | 39,267 |
Estimated fair value of MSRs at end of period | $ | 35,393 |  |  | $ | 28,245 |  |  | $ | 45,193 |
MSRs represent the economic value of existing contractual rights to service mortgage loans that have been sold. The total portfolio of mortgage loans serviced by the Corporation for unrelated third parties was $4.3 billion and $4.7 billion as of December 31, 2021 and 2020, respectively. Actual and expected prepayments of the underlying mortgage loans can impact the value of MSRs. The Corporation accounts for MSRs at the lower of amortized cost or fair value. The fair value of MSRs is estimated by discounting the estimated cash flows from servicing income, net of expense, over the expected life of the underlying loans at a discount rate commensurate with the risk associated with these assets. Expected life is based on the contractual terms of the loans, as adjusted for prepayment projections. The fair values of MSRs were $35.4 million and $28.2 million as of December 31, 2021 and 2020, respectively. Based on its fair value analysis as of December 31, 2021, the Corporation determined that a $0.6 million valuation allowance was required for the year ended December 31, 2021. The valuation allowance was $10,500 and $0 at December 31, 2020 and 2019, respectively. Total servicing income, recognized as an increase to mortgage banking income in the consolidated statements of income, was $11.2 million, $11.9 million and $12.0 million as of December 31, 2021, 2020 and 2019, respectively. Total MSR amortization expense, recognized as a reduction to mortgage banking income in the consolidated statements of income, was $12.0 million, $12.7 million and $6.9 million in 2021, 2020 and 2019, respectively. Estimated future MSR amortization expense, based on balances as of December 31, 2021, and the estimated remaining lives of the underlying loans, follows (in thousands):
Year |
2022 | $ | 6,104 |
2023 | 5,665 |
2024 | 5,186 |
2025 | 4,663 |
2026 | 4,095 |
Thereafter | 10,280 |
Total estimated amortization expense | $ | 35,993 |

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- Definition The entire disclosure for a transferor's continuing involvement in financial assets that it has transferred in a securitization or asset-backed financing arrangement, the nature of any restrictions on assets reported by an entity in its statement of financial position that relate to a transferred financial asset (including the carrying amounts of such assets), how servicing assets and servicing liabilities are reported, and (for securitization or asset-backed financing arrangements accounted for as sales) when a transferor has continuing involvement with the transferred financial assets and transfers of financial assets accounted for as secured borrowings, how the transfer of financial assets affects an entity's financial position, financial performance, and cash flows. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 860 -SubTopic 30 -Section 50 -Paragraph 1A -Subparagraph (c)(3) -URI 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