XML 25 R14.htm IDEA: XBRL DOCUMENT v3.25.3
MORTGAGE SERVICING RIGHTS
 9 Months Ended
Sep. 30, 2025
Goodwill and Intangible Assets Disclosure [Abstract]  
MORTGAGE SERVICING RIGHTS
6. MORTGAGE SERVICING RIGHTS

Mortgage loans serviced for others are not reported on the Company's consolidated balance sheets. The following table presents mortgage loans serviced for others by investor, which totaled $1.16 billion and $1.18 billion as of September 30, 2025 and December 31, 2024, respectively.

(dollars in thousands)September 30, 2025December 31, 2024
Mortgage loan portfolio serviced for:
Federal National Mortgage Association$720,975 $720,070 
Federal Home Loan Mortgage Corporation437,283 457,228 
Federal Home Loan Bank352 444 
Total loans serviced for others$1,158,610 $1,177,742 

The following tables present changes in mortgage servicing rights for the periods presented:

(dollars in thousands)
Balance at June 30, 2025$8,436 
Additions233 
Amortization(210)
Balance at September 30, 2025$8,459 
Balance at June 30, 2024$8,636 
Additions90 
Amortization(213)
Balance at September 30, 2024$8,513 

(dollars in thousands)
Balance at December 31, 2024$8,473 
Additions593 
Amortization(607)
Balance at September 30, 2025$8,459 
Balance at December 31, 2023$8,696 
Additions400 
Amortization(583)
Balance at September 30, 2024$8,513 

The Company measures its mortgage servicing rights ("MSRs") using the amortization method, amortizing MSRs proportionally over the period of expected net servicing income. New MSRs and amortization are reported within mortgage banking income, while ancillary income is recorded in other operating income. MSRs are recognized when loans are sold with servicing retained and pooled by similar characteristics.

MSRs are initially recorded at fair value determined by a discounted cash flow model prepared by a third-party service provider using market-based assumptions at origination. Subsequent impairment assessments are performed at each reporting period and use current market assumptions. Key assumptions include mortgage prepayment speeds, discount rates, servicing income, and costs. These inputs are subjective and require management judgment. Changes in assumptions are made to reflect evolving market trends and loan product types.

MSRs are classified as Level 3 assets in the fair value hierarchy due to significant unobservable inputs. The Company’s valuation techniques rely on discounted cash flow models reflecting expected cash flows, prepayment behavior, and cost structures. Changes in prepayment speeds driven by interest rates, home prices, and borrower behavior can materially impact
MSR fair values. Lower interest rates generally increase prepayments, reducing MSR value, while higher rates decrease prepayments and potentially increase MSR value.

Fair value measurements and related assumptions are reviewed periodically and validated against market data and third-party valuations.

The following table presents the fair market value and key assumptions used in determining the fair market value of MSR as of the dates presented:

(dollars in thousands)September 30, 2025December 31, 2024
Fair market value, beginning of year$12,387 $12,185 
Fair market value, end of period11,454 12,387 
Weighted average discount rate9.5 %9.5 %
Weighted average prepayment speed assumption11.8 10.2 

The Company performs an impairment assessment of its MSR whenever events or changes in circumstance indicate that the carrying value of the MSR may not be recoverable. The Company noted no impairment or triggering events related to its MSR as of September 30, 2025.