MORTGAGE SERVICING RIGHTS

3 Months Ended

Mar. 31, 2025

Goodwill and Intangible Assets Disclosure [Abstract]

Mortgage servicing rights--Mortgage loans serviced for others are not included in the accompanying consolidated balance sheets. The unpaid balances of these loans as of March 31, 2025 and December 31, 2024 were $475,763 and $479,578, respectively, and consisted of one to four family residential real estate loans. These loans are serviced primarily for the Federal Home Loan Mortgage Corporation, Federal Home Loan Bank and the Federal National Mortgage Association. Custodial escrow balances maintained in connection with the foregoing loan servicing, and included in deposits were $4,194 and $2,430 at March 31, 2025 and December 31, 2024, respectively.

Mortgage servicing rights activity for the three month periods ended March 31, 2025 and March 31, 2024, were as follows:


	As of and for the Three Months Ended		As of and for the Three Months Ended
	March 31, 2025		March 31, 2024
Mortgage servicing rights:
Mortgage servicing rights, beginning of period	$	3,663	$	3,865

Increase in mortgage servicing rights resulting from transfers of financial assets	60		57
Amortization during the period	(140)		(143)
Mortgage servicing rights, end of period	3,583		3,779
Valuation allowance:
Valuation allowance, beginning of period	—		—
Additions	—		(5)
Recoveries	—		—

Valuation allowance, end of period	—		(5)
Mortgage servicing rights, net	$	3,583	$	3,774
Fair value of mortgage servicing rights; end of period	$	5,090	$	5,442

The current period change in valuation allowance, if applicable, is included in non-interest expense as mortgage servicing rights expense, net on the consolidated statement of operations. Servicing fees totaled $300 and $311 for the three months ended March 31, 2025 and March 31, 2024, respectively. Servicing fees are included in loan servicing income on the consolidated statement of operations. Late fees and ancillary fees related to loan servicing are not material.

To estimate the fair value of the MSR asset, a valuation model is applied at the loan level to calculate the present value of the expected future cash flows. The valuation model incorporates various assumptions that would impact market participants’ estimations of future servicing income. Central to the valuation model is the discount rate. Fair value at March 31, 2025, was determined using discount rates ranging from 9.625% to 12.625%. Fair value at March 31, 2024, was determined using discount rates ranging from 9.75% to 12.75%. Other assumptions utilized in the valuation model include, but are not limited to, prepayment speed, servicing costs, delinquencies, costs of advances, foreclosure costs, ancillary income, and income earned on float and escrow.