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Mortgage Banking
 12 Months Ended
Dec. 31, 2016
Mortgage Banking [Abstract]  
Mortgage Banking

Note 4 – Mortgage Banking

 

Activity in secondary market loans during the year was as follows:

 

(Dollars in thousands)            
    2016     2015     2014  
Loans originated for resale, net of principal payments   $ 53,591     $ 47,498     $ 29,850  
Proceeds from loan sales     57,830       46,077       29,561  
Net gains on sales of loans held for sale     1,748       1,416       1,023  
Loan servicing fees, net of amortization     159       113       166  

 

Net gains on sales of loans held for sale include capitalization of loan servicing rights. Loans serviced for others are not reported as assets in the accompanying consolidated balance sheets. The unpaid principal balances of these loans were $103.6 million and $79.4 million at December 31, 2016 and 2015, respectively. The Bank maintains custodial escrow balances in connection with these serviced loans; however, such escrows were immaterial at December 31, 2016 and 2015.

 

Activity for loan servicing rights (included in other assets) was as follows:

 

(Dollars in thousands)                  
    2016     2015     2014  
Balance, beginning of year   $ 378     $ 489     $ 544  
Capitalized     491       49       73  
Amortization     (172 )     (160 )     (128 )
Balance, end of year   $ 698     $ 378     $ 489  

 

The fair value of loan servicing rights was $1,029,000 and $739,000 as of December 31, 2016 and 2015, respectively. Consequently, a valuation allowance was not necessary at year-end 2016 or 2015. The fair value of servicing rights at December 31, 2016 was determined using a discount rate of 5.82% and prepayment speeds ranging from 10% to 19%. The fair value of servicing rights at December 31, 2015 was determined using a discount rate of 6.37% and prepayment speeds ranging from 9% to 13%.