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Mortgage Servicing Rights

9 Months Ended

Sep. 30, 2022

NOTE 6 – MORTGAGE SERVICING RIGHTS

Mortgage loans serviced for others are not included in the accompanying consolidated balance sheets. The unpaid principal balance of mortgage loans serviced for others approximated $1.36 billion at September 30, 2022 and $1.36 billion at December 31, 2021. Contractually specified servicing fees of $0.9 million and $2.6 million were included in mortgage loan servicing fees in the consolidated income statement for the three months and nine months ended September 30, 2022, respectively. Servicing fees of $0.9 million and $2.5 million were included in mortgage loan servicing fees for the three and nine months ended September 30, 2021, respectively.

The following table summarizes mortgage servicing rights capitalized and related amortization, along with activity in the related valuation allowance:

	Three Months Ended September 30,						Nine Months Ended September 30,
($ in thousands)	2022			2021			2022			2021

Balance at beginning of period	$	13,408		$	10,678		$	12,034		$	7,759
Mortgage servicing rights capitalized during the period		396			1,211			1,684			3,658
Mortgage servicing rights amortization during the period		(396	)		(943	)		(1,439	)		(3,078	)
Net change in valuation allowance		65			248			1,194			2,855
Balance at end of period	$	13,473		$	11,194		$	13,473		$	11,194

Valuation allowance:
Balance at beginning of period	$	327		$	2,285		$	1,456		$	4,892
Increase (decrease)		(65	)		(248	)		(1,194	)		(2,855	)
Balance at end of period	$	262		$	2,037		$	262		$	2,037

Fair value, beginning of period	$	15,135		$	11,067		$	12,629		$	7,759
Fair value, end of period	$	15,460		$	11,241		$	15,460		$	11,241