Mortgage Servicing Rights

12 Months Ended

Dec. 31, 2015

NOTE 8: Mortgage Servicing Rights

The Company is servicing loans for the benefit of others totaling approximately $693,343,000 and $604,106,000 at December 31, 2015 and 2014, respectively. Servicing loans for others generally consists of collecting mortgage payments, maintaining escrow accounts, disbursing payments to investors and foreclosure processing.

Custodial escrow balances maintained in connection with the foregoing loan servicing, and included in demand deposits, were approximately $4,171,000 and $3,721,000 at December 31, 2015 and 2014, respectively.

The following table is a summary of activity in mortgage servicing rights and the valuation allowance.

	Year Ended			Six Months Ended			Year Ended
	December 31,			December 31,			June 30,
	2015			2014			2014
	(In Thousands)
Mortgage servicing rights:
Beginning balance	$	4,115		$	3,756		$	3,192
Mortgage servicing rights capitalized		1,652			687			1,194
Amortization of mortgage servicing rights		(799	)		(328	)		(630	)
Ending balance		4,968			4,115			3,756
Valuation allowance:
Beginning balance		-			-			-
Provision (credited) to operations					-			-
Ending balance		-			-			-
Mortgage servicing rights, net	$	4,968		$	4,115		$	3,756

The fair values of these rights were $6,452,000 and $5,168,000 at December 31, 2015 and 2014, respectively. The fair value of servicing rights was determined using discount rates ranging from 10.00% to 12.00%, prepayment speeds ranging from 105.00% to 369.00% PSA, depending on stratification of the specific loan. The fair value was also adjusted for the effect of potential past dues and foreclosures. Individual mortgage servicing rights values were capped at a maximum of 1.00% for private investors and at a maximum of 1.25% for agency investors.

- Definition

The entire disclosure for a transferor's continuing involvement in financial assets that it has transferred in a securitization or asset-backed financing arrangement, the nature of any restrictions on assets reported by an entity in its statement of financial position that relate to a transferred financial asset (including the carrying amounts of such assets), how servicing assets and servicing liabilities are reported, and (for securitization or asset-backed financing arrangements accounted for as sales) when a transferor has continuing involvement with the transferred financial assets and transfers of financial assets accounted for as secured borrowings, how the transfer of financial assets affects an entity's financial position, financial performance, and cash flows.

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