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Mortgage Loan Servicing

3 Months Ended

Mar. 31, 2025

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, as of the dates indicated:

(Dollars in thousands)	March 31,		December 31,
	2025		2024
FHLMC	$	617,683	$	626,379
FHLB		27,056		27,418
Total	$	644,739	$	653,797

Custodial escrow balances maintained in connection with mortgage loans serviced for others were $10.2 million and $5.6 million at March 31, 2025 and December 31, 2024, respectively. Custodial escrow balances are included in the deposit balances on the balance sheet. Gross service fee income related to such loans was $415,000 and $436,000 for the three months ended March 31, 2025 and 2024, respectively, and is included in fees and service charges in the consolidated statements of earnings.

Mortgage servicing rights activity for the periods indicated was as follows:

	2025			2024
	Three months ended
(Dollars in thousands)	March 31,
	2025			2024
Mortgage servicing rights:
Balance at beginning of period	$	3,061		$	3,158
Additions		71			61
Amortization		(87	)		(242	)
Balance at end of period	$	3,045		$	2,977

The fair value of mortgage servicing rights was $9.1 million and $9.6 million at March 31, 2025 and December 31, 2024, respectively. Fair value at March 31, 2025 was determined using discount rate of 10.00%; prepayment speeds ranging from 6.00% to 29.01%, depending on the stratification of the specific mortgage servicing right; and a weighted average default rate of 1.90%. Fair value at December 31, 2024 was determined using discount rates at 10.00%; prepayment speeds ranging from 6.00% to 25.44%, depending on the stratification of the specific mortgage servicing right; and a weighted average default rate of 1.87%.

The Company had a mortgage repurchase reserve of $189,000 at March 31, 2025 and $131,000 at December 31, 2024, which represented the Company’s best estimate at those dates 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 $7,000 of losses against the reserve and a $65,000 provision to the reserve during the three months ended March 31, 2025. The Company charged $84,000 of losses against the reserve during the three months ended March 31, 2024. As of March 31, 2025, the Company had one outstanding mortgage repurchase request.