XML 26 R15.htm IDEA: XBRL DOCUMENT

Mortgage Loan Servicing

9 Months Ended

Sep. 30, 2023

6. 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)	September 30,		December 31,
	2023		2022
FHLMC	$	672,397	$	685,859
FHLB		27,788		27,285
Total	$	700,185	$	713,144

Custodial escrow balances maintained in connection with serviced loans were $10.1 million and $5.3 million at September 30, 2023 and December 31, 2022, respectively. Custodial escrow balances are included in the deposit balances on the balance sheet. Gross service fee income related to such loans was $450,000 and $456,000 for the three months ended September 30, 2023 and 2022, respectively, and is included in fees and service charges in the consolidated statements of earnings. Gross service fee income related to such loans was $1.3 and $1.4 million for the nine months ended September 30, 2023 and 2022, respectively.

Activity for mortgage servicing rights was as follows:

	2023			2022			2023			2022
	Three months ended						Nine months ended
(Dollars in thousands)	September 30,						September 30,
	2023			2022			2023			2022
Mortgage servicing rights:
Balance at beginning of period	$	3,514		$	4,025		$	3,813		$	4,193
Additions		130			253			370			704
Amortization		(276	)		(298	)		(815	)		(917	)
Balance at end of period	$	3,368		$	3,980		$	3,368		$	3,980

The fair value of mortgage servicing rights was $10.8 million and $10.3 million at September 30, 2023 and December 31, 2022, respectively. Fair value at September 30, 2023 was determined using discount rate of 9.50%; prepayment speeds ranging from 6.00% to 17.05%, depending on the stratification of the specific mortgage servicing right; and a weighted average default rate of 1.61%. Fair value at December 31, 2022 was determined using discount rates at 9.50%; prepayment speeds ranging from 6.00% to 21.34%, depending on the stratification of the specific mortgage servicing right; and a weighted average default rate of 1.47%.

The Company had a mortgage repurchase reserve of $170,000 at September 30, 2023 and $225,000 at December 31, 2022, 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 $84,000 loss against the reserve during the three months ended September 30, 2023 and losses of $105,000 against the reserve during the nine months ended September 30, 2023. The Company charged a $1,000 loss against the reserve during the first three and nine months ended September 30, 2022. The Company recorded a $50,000 provision to the mortgage repurchase reserve during the three and nine months ended September 30, 2023. As of September 30, 2023, the Company had no outstanding mortgage repurchase requests.