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Mortgage Loan Servicing
 3 Months Ended
Mar. 31, 2021
Mortgage Loan Servicing  
Mortgage Loan Servicing

5. Mortgage Loan Servicing

 

Mortgage loans serviced for others are not reported as assets. The following table provides information on the principal balances of mortgage loans serviced for others:

 

(Dollars in thousands)  March 31,   December 31, 
   2021   2020 
FHLMC  $662,995   $639,875 
FHLB   24,865    28,157 
Total  $687,860   $668,032 

 

Custodial escrow balances maintained in connection with serviced loans were $10.0 million and $5.8 million at March 31, 2021 and December 31, 2020, respectively. Gross service fee income related to such loans was $431,000 and $357,000 for the three months ended March 31, 2021 and 2020, respectively, and is included in fees and service charges in the consolidated statements of earnings.

  

Activity for mortgage servicing rights was as follows:

 

   Three months ended 
(Dollars in thousands)  March 31, 
   2021   2020 
Mortgage servicing rights:          
Balance at beginning of period  $3,726   $2,446 
Additions   639    212 
Amortization   (399)   (230)
Balance at end of period  $3,966   $2,428 

 

The fair value of mortgage servicing rights was $6.0 million and $4.4 million at March 31, 2021 and December 31, 2020, respectively. Fair value at March 31, 2021 was determined using discount rates ranging from 8.65% to 12.00%; prepayment speeds ranging from 6.00% to 27.55%, depending on the stratification of the specific mortgage servicing right; and a weighted average default rate of 1.35%. Fair value at December 31, 2020 was determined using discount rates ranging from 8.78% to 12.00%; prepayment speeds ranging from 7.10% to 29.61%, depending on the stratification of the specific mortgage servicing right; and a weighted average default rate of 1.36%.

 

The Company had a mortgage repurchase reserve of $226,000 at March 31, 2021 and $235,000 at December 31, 2020, which represents the Company’s best estimate of probable losses that the Company will incur related to the repurchase of one-to-four family residential real estate loans previously sold or to reimburse investors for credit losses incurred on loans previously sold where a breach of the contractual representations and warranties occurred. The Company charged a $9,000 loss against the reserve during the first three months of 2021. The Company did not incur any losses charged against the reserve or make any provisions to the reserve during the first three months of 2020. As of March 31, 2021, the Company did not have any outstanding mortgage repurchase requests.