XML 22 R15.htm IDEA: XBRL DOCUMENT v3.24.3
Servicing
 9 Months Ended
Sep. 30, 2024
Transfers and Servicing [Abstract]  
Servicing

NOTE 5 SERVICING

Loans serviced for others are not included in the accompanying Company's consolidated balance sheets. The unpaid principal balances of 1-4 family real estate loans serviced for others were $366.0, $368.2 and $367.8 million at September 30, 2024 and 2023 and at December 31, 2023, respectively. Unpaid principal balances of agricultural real estate loans serviced for others were $140.3, $137.1 and $135.8 million at September 30, 2024 and 2023 and at December 31, 2023, respectively.

The balance of capitalized servicing rights included in assets at September 30, 2024 and December 31, 2023 for 1-4 family real estate loans, was $3.5 million for both periods. Agricultural real estate loan servicing rights, established in 2023, were $2.2 million and $2.2 million at September 30, 2024 and December 31, 2023, respectively. The capitalized addition of servicing rights is included in loan servicing income on the Company's consolidated statement of income.

The fair value of the capitalized servicing rights for 1-4 family real estate loans as of September 30, 2024 and 2023 was $5.2 million and $5.3 million, respectively, and at December 31, 2023 was $5.5 million. Capitalized servicing rights for agricultural real estate loans had a fair value of $2.7 million and $2.3 million as of September 30, 2024 and 2023, respectively, and was $2.2 million at December 31, 2023. The valuations were completed by stratifying the loans into like groups based on loan type and term. Impairment was measured by estimating the fair value of each stratum, taking into consideration an estimated level of prepayment based upon current market conditions. An average constant prepayment rate for 1-4 family real estate loans of 7.2% and 6.5% were utilized at September 30, 2024 and 2023, respectively, and 6.3% at December 31, 2023. Agricultural real estate loans utilize an average constant prepayment rate based on the Bank's last twelve months of data. The average constant prepayment rate was 0.156% and 1.209% for fixed rate agricultural real estate loans at September 30, 2024 and 2023, respectively, compared to 0.894% at December 31, 2023. At September 30, 2024, two 1-4 family real estate strata, which included 87 of the total 3,695 loans, were slightly below the carrying value using a discount yield of 5.27% which resulted in the need to establish a $2 thousand valuation allowance. At September 30, 2024, the carrying value of twelve agricultural real estate strata, which included 33 of the total 613 loans, using an approximate discount rate of 8.51% were lower than fair value requiring a $47 thousand valuation allowance to be established.

 

 

(In Thousands)

 

 

(In Thousands)

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

September 30, 2024

 

 

September 30, 2023

 

 

September 30, 2024

 

 

September 30, 2023

 

Beginning Balance

$

5,511

 

 

$

5,637

 

 

$

5,655

 

 

$

3,549

 

Capitalized Additions

 

359

 

 

 

158

 

 

 

570

 

 

 

2,567

 

Amortization

 

(177

)

 

 

(105

)

 

 

(532

)

 

 

(426

)

Ending Balance, September 30,

 

5,693

 

 

 

5,690

 

 

 

5,693

 

 

 

5,690

 

Valuation Allowance

 

(49

)

 

 

(3

)

 

 

(49

)

 

 

(3

)

Servicing Rights net, September 30,

$

5,644

 

 

$

5,687

 

 

$

5,644

 

 

$

5,687