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Note 5 - Mortgage Loan Servicing | 12 Months Ended
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Dec. 31, 2021
Notes to Financial Statements |
Mortgage Loan Servicing [Text Block] | NOTE 5 – MORTGAGE LOAN SERVICING Mortgage loans serviced for others are not reported as assets in the Consolidated Balance Sheets. The year-end aggregate unpaid principal balances of mortgage loans serviced for others were as follows:
|  | 2021 |  |  | 2020 |
Mortgage loan portfolios serviced for: |  |  |  |  |  |  |  |
Federal Home Loan Mortgage Corporation |  | $ | 1,320,550,000 |  |  | $ | 1,030,211,000 |
Federal Home Loan Bank |  |  | 23,505,000 |  |  |  | 8,717,000 |
Total mortgage loans serviced for others |  | $ | 1,344,055,000 |  |  | $ | 1,038,928,000 |
Custodial escrow balances, which are reported as deposits on the Consolidated Balance Sheets, maintained in connection with serviced loans were $12.1 million and $11.8 million as of December 31, 2021 and December 31, 2020, respectively. Activity for capitalized mortgage loan servicing rights during 2021 and 2020 was as follows:
|  | 2021 |  |  | 2020 |
Balance at beginning of year |  | $ | 8,189,000 |  |  | $ | 4,652,000 |
Additions |  |  | 7,711,000 |  |  |  | 6,467,000 |
Amortized to expense |  |  | (3,652,000 | ) |  |  | (2,930,000 | )
Balance at end of year |  | $ | 12,248,000 |  |  | $ | 8,189,000 |
We determined that no valuation allowance was necessary as of December 31, 2021 or December 31, 2020. The estimated fair value of mortgage servicing rights was $15.4 million and $10.0 million as of December 31, 2021 and December 31, 2020, respectively. The fair value of mortgage servicing rights is estimated using a valuation model that calculates the present value of estimated future net servicing cash flows, taking into consideration expected mortgage loan prepayment rates, discount rates, servicing costs and other economic factors, which are determined based on current market conditions. During 2021, fair value was determined using a discount rate of 8.0%, a weighted average constant prepayment rate of 7.4%, depending on the stratification of the specific right, and a weighted average delinquency rate of 0.25%. During 2020, fair value was determined using a discount rate of 7.75%, a weighted average constant prepayment rate of 14.0%, depending on the stratification of the specific right, and a weighted average delinquency rate of 0.40%. The weighted average amortization period was 8.5 years and 6.1 years as of December 31, 2021 and December 31, 2020, respectively. Forecasted amortization as of December 31, 2021 is as follows:
2022 |  | $ | 1,186,000 |
2023 |  |  | 992,000 |
2024 |  |  | 814,000 |
2025 |  |  | 654,000 |
2026 |  |  | 516,000 |
Thereafter |  |  | 8,086,000 |

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