XML 26 R13.htm IDEA: XBRL DOCUMENT

Note 4 - Mortgage Banking

12 Months Ended

Dec. 31, 2020

Note 4 – Mortgage Banking

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

(Dollars in thousands)
	2020			2019		2018
Loans originated for resale, net of principal payments	$	326,286		$	63,920	$	33,555
Proceeds from loan sales		325,306			62,763		34,872
Net gains on sales of loans held for sale		11,313			1,951		1,003
Loan servicing fees, net of amortization		(129	)		82		91

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 $404.2 million and $242.0 million at December 31, 2020 and 2019, respectively. The Bank maintain custodial escrow balances in connection with these serviced loans; however, such escrows were immaterial at December 31, 2020 and 2019.

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

(Dollars in thousands)
	2020			2019			2018
Balance, beginning of year	$	2,131		$	1,049		$	908
Capitalized		3,554			822			441
Amortization		(1,344	)		(453	)		(300	)
Market valuation allowance change		(374	)		-			-
Acquired from merger with County Bank Corp.		-			713			-
Balance, end of year	$	3,967		$	2,131		$	1,049

The fair value of loan servicing rights was $3,967,000 and $2,304,000 as of December 31, 2020 and 2019, respectively. Valuation allowances of $373,000 and $0 were recorded at December 31, 2020 and December 31, 2019, respectively. The fair value of the Bank’s servicing rights at December 31, 2020 was determined using a discount rate of 7.75% and prepayment speeds ranging from 7% to 26%. The fair value of the Bank’s servicing rights at December 31, 2019 was determined using a discount rate of 5.51% and prepayment speeds ranging from 11% to 18%. The fair value of Lakestone’s servicing rights at December 31, 2019 was determined using a discount rate of 8.65% and prepayment speeds ranging from 11% to 13%.