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Loan Servicing
 6 Months Ended
Jun. 30, 2023
Transfers and Servicing [Abstract]  
Loan Servicing
4.
Loan Servicing

Loans serviced for others are not included in the accompanying consolidated balance sheets. The unpaid principal balances of such loans were $34.8 million and $36.0 million at June 30, 2023 and December 31, 2022, respectively. Substantially all of these loans were originated by the Bank and sold to third parties on a non-recourse basis with servicing rights retained. These retained servicing rights are recorded as a servicing asset and are initially recorded at fair value (see Note 15, Fair Value of Assets and Liabilities, for more information). Changes to the balance of mortgage servicing rights are recorded in loan servicing fee income in the Company’s consolidated statements of (loss) income.

The Company’s mortgage servicing activities include: collecting principal, interest and escrow payments from borrowers; making tax and insurance payments on behalf of borrowers; monitoring delinquencies and executing foreclosure proceedings; and accounting for and remitting principal and interest payments to investors. Loan servicing income, including late and ancillary fees, was $23,000 and $37,000 for the three months ended June 30, 2023 and 2022, respectively, and $38,000 and $89,000 for the six months ended June 30, 2023 and 2022, respectively. The Company's residential mortgage investor loan servicing portfolio is primarily comprised of fixed rate loans concentrated in the Company’s market areas.

The following summarizes activity in mortgage servicing rights for the three and six months ended June 30, 2023 and 2022:

 

(Dollars in thousands)

 

2023

 

 

2022

 

Balance, March 31,

 

$

349

 

 

$

350

 

Additions

 

 

—

 

 

 

—

 

Payoffs

 

 

—

 

 

 

(2

)

Change in fair value due to change in assumptions

 

 

1

 

 

 

16

 

Balance, June 30,

 

 

350

 

 

 

364

 

 

 

 

 

 

 

 

Balance, January 1,

 

 

357

 

 

 

322

 

Additions

 

 

—

 

 

 

5

 

Payoffs

 

 

(3

)

 

 

(18

)

Change in fair value due to change in assumptions

 

 

(4

)

 

 

55

 

Balance, June 30,

 

$

350

 

 

$

364