NOTE

– MORTGAGE LOAN SERVICING

Mortgage loans serviced for others are

not

reported as assets in the Consolidated Balance Sheets. The year-end aggregate unpaid principal balances of mortgage loans serviced for others were as follows:

	2019		2018

Mortgage loan portfolios serviced for:
Federal Home Loan Mortgage Corporation	$	711,643,000	$	599,262,000
Federal Home Loan Bank		15,317,000		16,333,000
Total mortgage loans serviced for others	$	726,960,000	$	615,595,000

Custodial escrow balances, which are reported as deposits on the Consolidated Balance Sheets, maintained in connection with serviced loans were

$6.4

million and

$4.1

million as of

December 31, 2019

and

December 31, 2018,

respectively.

Activity for capitalized mortgage loan servicing rights during

2019

and

2018

was as follows:

	2019			2018

Balance at beginning of year	$	4,436,000		$	5,106,000
Additions		1,962,000			842,000
Amortized to expense		(1,746,000	)		(1,512,000	)

Balance at end of year	$	4,652,000		$	4,436,000

We determined that

valuation allowance was necessary as of

December 31, 2019

December 31, 2018.

The estimated fair value of mortgage servicing rights was

$7.4

million and

$8.4

million as of

December 31, 2019

and

December 31, 2018,

respectively. The fair value of mortgage servicing rights is estimated using a valuation model that calculates the present value of estimated future net servicing cash flows, taking into consideration expected mortgage loan prepayment rates, discount rates, servicing costs and other economic factors, which are determined based on current market conditions. During

2019,

fair value was determined using a discount rate of

10.0%,

a weighted average constant prepayment rate of

15.3%,

depending on the stratification of the specific right, and a weighted average delinquency rate of

0.32%.

During

2018,

fair value was determined using a discount rate of

10.0%,

a weighted average constant prepayment rate of

9.3%,

depending on the stratification of the specific right, and a weighted average delinquency rate of

0.32%.

The weighted average amortization period was

5.3

years and

7.3

years as of

December 31, 2019

and

December 31, 2018,

respectively. Estimated amortization as of

December 31, 2019

is as follows:

2020	$	1,099,000
2021		925,000
2022		759,000
2023		604,000
2024		467,000
Thereafter		798,000