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Mortgage Servicing Rights
 6 Months Ended
Jun. 30, 2025
Transfers and Servicing of Financial Assets [Abstract]  
Mortgage Servicing Rights Mortgage Servicing Rights
The Company’s portfolio of residential mortgage loans serviced for third parties was $2.4 billion as of June 30, 2025 and $2.5 billion as of December 31, 2024. Substantially all of these loans were originated by the Company and sold to third parties on a non-recourse basis with servicing rights retained. These retained servicing rights are recorded as a servicing asset and are initially recorded at fair value (see Note 12 Fair Value of Assets and Liabilities for more information). Changes to the balance of mortgage servicing rights are recorded in noninterest income under Mortgage Banking in the Company’s unaudited consolidated statements of income.
The Company’s mortgage servicing activities include collecting principal, interest, and escrow payments from borrowers; making tax and insurance payments on behalf of borrowers; monitoring delinquencies and executing foreclosure proceedings; and accounting for and remitting principal and interest payments to investors. Servicing income, including late and ancillary fees, was $1.3 million and $1.4 million for the three months ended June 30, 2025 and 2024, respectively, and $2.6 million and $2.8 million for the six months ended June 30, 2025 and 2024, respectively. Servicing income is recorded in noninterest income under Mortgage Banking in the Company’s unaudited consolidated statements of income. The Company’s residential mortgage investor loan servicing portfolio is primarily comprised of fixed rate loans concentrated in Hawai‘i.
For the three and six months ended June 30, 2025 and 2024, the change in the carrying value of the Company’s mortgage servicing rights accounted for under the fair value measurement method was as follows:
Three Months Ended
June 30,		Six Months Ended
June 30,
(dollars in thousands)2025202420252024
Balance at Beginning of Period$628 $674 $647 $678 
Change in Fair Value Due to Payoffs(9)(6)(28)(10)
Balance at End of Period$619 $668 $619 $668 
For the three and six months ended June 30, 2025 and 2024, the change in the carrying value of the Company’s mortgage servicing rights accounted for under the amortization method was as follows:
Three Months Ended June 30,Six Months Ended June 30,
(dollars in thousands)2025202420252024
Balance at Beginning of Period$18,141 $19,748 $18,552 $20,201 
Servicing Rights that Resulted From Asset Transfers92 63 179 158 
Amortization(490)(525)(988)(1,073)
Balance at End of Period$17,743 $19,286 $17,743 $19,286 
Fair Value of Mortgage Servicing Rights Accounted for Under the Amortization Method
Beginning of Period$24,569 $25,649 $24,989 $26,173 
End of Period$24,218 $25,326 $24,218 $25,326 
The key data and assumptions used in estimating the fair value of the Company’s mortgage servicing rights as of June 30, 2025 and December 31, 2024, were as follows:
June 30, 2025December 31, 2024
Weighted-Average Constant Prepayment Rate 1
4.12 %4.00 %
Weighted-Average Life (in years)9.099.28
Weighted-Average Note Rate3.76 %3.74 %
Weighted-Average Discount Rate 2
9.55 %9.92 %
1Represents annualized loan prepayment rate assumption.
2Derived from multiple interest rate scenarios that incorporate a spread to a market yield curve and market volatilities.
A sensitivity analysis of the Company’s fair value of mortgage servicing rights to changes in certain key assumptions as of June 30, 2025 and December 31, 2024, is presented in the following table.
(dollars in thousands)June 30, 2025December 31, 2024
Constant Prepayment Rate
Decrease in fair value from 25 basis points (“bps”) adverse change$(300)$(306)
Decrease in fair value from 50 bps adverse change(593)(606)
Discount Rate
Decrease in fair value from 25 bps adverse change(275)(282)
Decrease in fair value from 50 bps adverse change(544)(558)
This analysis generally cannot be extrapolated because the relationship of a change in one key assumption to the change in the fair value of the Company’s mortgage servicing rights usually is not linear. Also, the effect of changing one key assumption without changing other assumptions is not realistic.