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Mortgage Loan Servicing
 9 Months Ended
Sep. 30, 2025
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, as of the dates indicated:

 

(Dollars in thousands)  September 30,   December 31, 
   2025   2024 
FHLMC  $600,206   $626,379 
FHLB   28,808    27,418 
Total  $629,014   $653,797 

 

Custodial escrow balances maintained in connection with mortgage loans serviced for others were $10.7 million and $5.6 million at September 30, 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 $403,000 and $425,000 for the three months ended September 30, 2025 and 2024, respectively, and is included in fees and service charges in the consolidated statements of earnings. Gross service fee income related to such loans was $1.2 million and $1.3 million for the nine months ended September 30, 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 for the periods indicated:

 

(Dollars in thousands)            
   Three months ended   Nine months ended 
(Dollars in thousands)  September 30,   September 30, 
   2025   2024   2025   2024 
Mortgage servicing rights:                    
Balance at beginning of period  $3,082   $2,997   $3,061   $3,158 
Additions   133    129    328    295 
Amortization   (95)   (85)   (269)   (412)
Balance at end of period  $3,120   $3,041   $3,120   $3,041 

 

The fair value of mortgage servicing rights was $8.7 million and $9.6 million at September 30, 2025 and December 31, 2024, respectively. Fair value at September 30, 2025 was determined using discount rate ranging from 8.77% to 9.00%; prepayment speeds ranging from 5.50% to 27.52%, depending on the stratification of the specific mortgage servicing right; and a weighted average default rate of 1.66%. 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 $115,000 at September 30, 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 did not incur any losses charged against the reserve or make any provisions to the reserve during the three months ended September 30, 2025. During the nine months ended September 30, 2025, the Company charged $81,000 of losses against the reserve and recorded a $65,000 provision. The Company charged $17,000 of losses against the reserve during the three months ended September 30, 2024 and $19,000 of losses against the reserve during the nine months ended September 30, 2024. As of September 30, 2025, the Company had no outstanding mortgage repurchase requests.