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Loan Servicing

9 Months Ended

Sep. 30, 2021

NOTE 6 Loan Servicing

Loans serviced for others are not included in the accompanying consolidated balance sheets. The unpaid principal balances of loans serviced for others totaled $401.4 million and $445.5 million as of September 30, 2021 and December 31, 2020, respectively. Servicing loans for others generally consists of collecting mortgage payments, maintaining escrow accounts, disbursing payments to investors and collection and foreclosure processing. Loan servicing income is recorded on an accrual basis and includes servicing fees from investors and certain charges collected from borrowers, such as late payment fees, and is net of fair value adjustments to capitalized mortgage servicing rights.

The following table summarizes the Company’s activity related to servicing rights for the three and nine months ended September 30, 2021 and 2020:


	Three months ended				Nine months ended
	September 30,				September 30,
(dollars in thousands)	2021		2020		2021		2020
Balance, beginning of period	$	1,964	$	2,891	$	1,987	$	3,845
Additions		84		42		195		154
Amortization		(195)		(296)		(580)		(692)
(Impairment)/Recovery		(77)		(58)		174		(728)
Balance, end of period	$	1,776	$	2,579	$	1,776	$	2,579

The following is a summary of key data and assumptions used in the valuation of servicing rights as of September 30, 2021 and December 31, 2020. Increases or decreases in any one of these assumptions would result in lower or higher fair value measurements.


	September 30,			December 31,
(dollars in thousands)	2021			2020
Fair value of servicing rights	$	1,776		$	1,987
Weighted-average remaining term, years		20.4			20.1
Prepayment speeds		15.4	%		17.7	%
Discount rate		9.3	%		9.0	%