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21) Mortgage Servicing Rights

12 Months Ended

Dec. 31, 2018

The Company reports MSRs pursuant to the accounting policy discussed in Note 1 of the Notes to Consolidated Financial Statements.

The following table presents the MSR activity for the periods presented.

	December 31
	2018	2017
Amortized cost:
Balance before valuation allowance at beginning of year	$ 21,376,937	$ 18,872,362
MSR additions resulting from loan sales	3,922,816	6,085,352
Amortization (1)	(5,282,931)	(3,580,777)
Application of valuation allowance to write down MSRs with other than temporary impairment	-	-
Balance before valuation allowance at year end	$ 20,016,822	$ 21,376,937

Valuation allowance for impairment of MSRs:
Balance at beginning of year	$ -	$ -
Additions	-	-
Application of valuation allowance to write down MSRs with other than temporary impairment	-	-
Balance at year end	$ -	$ -

Mortgage servicing rights, net	$ 20,016,822	$ 21,376,937

Estimated fair value of MSRs at year end	$ 28,885,316	$ 27,427,174

(1) Included in other expenses on the consolidated statements of earnings

The following table summarizes the Company’s estimate of future amortization of its existing MSRs carried at amortized cost. This projection was developed using the assumptions made by management in its December 31, 2018 valuation of MSRs. The assumptions underlying the following estimate will change as market conditions and portfolio composition and behavior change, causing both actual and projected amortization levels to change over time. Therefore, the following estimates will change in a manner and amount not presently determinable by management.

		Estimated MSR Amortization
2019		2,948,860
2020		2,457,300
2021		2,120,792
2022		1,816,710
2023		1,563,832
Thereafter		9,109,328
Total		$ 20,016,822

During the years ended December 31, 2018 and 2017, the Company collected the following contractual servicing fee income and late fee income as reported in other revenues on the consolidated statements of earnings:

	2018	2017
Contractual servicing fees	$ 7,561,226	$ 7,199,649
Late fees	319,244	284,550
Total	$ 7,880,470	$ 7,484,199

The following is a summary of the unpaid principal balances (“UPB”) of the servicing portfolio for the periods presented:

	Years Ended December 31
	2018	2017
Servicing UPB	2,941,231,563	2,924,868,843

The following key assumptions were used in determining MSR value:

	Prepayment Speeds	Average Life(Years)	Discount Rate
December 31, 2018	3.86%	6.33	9.51
December 31, 2017	3.67%	6.34	10.01