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Servicing Rights
 12 Months Ended
Sep. 30, 2019
Transfers and Servicing [Abstract]  
Servicing Rights

The Company services one- to four-family mortgage loans for Freddie Mac and also provides servicing for secondary market purchasers of the guaranteed portion of SBA loans; such loans are not included in the accompanying consolidated balance sheets.  The principal amount of loans serviced for Freddie Mac at September 30, 2019, 2018 and 2017 was $386,357,000, $370,928,000 and $358,173,000, respectively.  The guaranteed principal amount of SBA loans serviced for others at September 30, 2019, 2018 and 2017 was $12,765,000, $754,000 and $697,000, respectively.

The following is an analysis of the changes in Freddie Mac servicing rights for the years ended September 30, 2019, 2018 and 2017 (dollars in thousands):
 
2019

 
2018

 
2017

Balance, beginning of year
$
2,022

 
$
1,823

 
$
1,570

Additions
747

 
687

 
739

Amortization
(563
)
 
(488
)
 
(486
)
Balance, end of year
$
2,206

 
$
2,022

 
$
1,823



At September 30, 2019, 2018 and 2017, the estimated fair value of Freddie Mac servicing rights totaled $3,694,000, $4,171,000 and $3,556,000, respectively.  The Freddie Mac servicing rights' fair values at September 30, 2019, 2018 and 2017 were estimated using discounted cash flow analyses with average discount rates of 9.00%, 8.99% and 9.52%, respectively, and average conditional prepayment rates of 11.31%, 8.10% and 9.90%, respectively. At September 30, 2019, 2018 and 2017, there were no valuation allowances on the Freddie Mac servicing rights.

The following is an analysis of the changes in SBA servicing rights for the years ended September 30, 2019, 2018 and 2017 (dollars in thousands):
 
2019

 
2018

 
2017

Balance, beginning of year
$
6

 
$
2

 
$
3

Additions due to South Sound Acquisition
281

 
—

 
—

Other additions
2

 
7

 
—

Amortization
(83
)
 
(3
)
 
(1
)
Valuation allowance
(4
)
 
—

 
—

Balance, end of year
$
202

 
$
6

 
$
2



At September 30, 2019, the estimated fair value of SBA servicing rights totaled $202,000.  The SBA servicing rights' fair values at September 30, 2019 were estimated using discounted cash flow analyses with average discount rates of 15.00% and average conditional prepayment rates of 16.13%. At September 30, 2019 there was a $4,000 valuation allowance on SBA servicing rights. At September 30, 2018 and 2017 the SBA servicing rights were insignificant.