Mortgage Servicing Rights

12 Months Ended

Dec. 31, 2021

Transfers and Servicing [Abstract]

Mortgage Servicing Rights

NOTE 6 — Mortgage Servicing Rights

Loans serviced for others are not included in the consolidated balance sheets. The unpaid principal balance of mortgage loans serviced for others totaled $332.9 million at December 31, 2021, and $345.1 million at December 31, 2020.

The following is a summary of changes in the balance of mortgage servicing rights for the periods indicated below: 

	As of December 31,
	2021			2020
Mortgage servicing rights beginning balance	$	1,806		$	2,172
Additions		553			770
Amortization		(692	)		(767	)
Decrease (increase) in valuation allowance		369			(369	)
Mortgage servicing rights ending balance	$	2,036		$	1,806
Fair value at beginning of period	$	1,806		$	2,404
Fair value at end of period	$	2,477		$	1,806

There was no valuation allowance as of December 31, 2021. The valuation allowance as of December 31, 2020 was $369. The Company did not sell any mortgage servicing rights during the years ended December 31, 2021 and 2020.

The estimated fair value of mortgage servicing rights was determined using a valuation model that calculates the present value of expected future servicing and ancillary income, net of expected servicing costs. The model incorporates various assumptions such as discount rates, prepayment speeds, and ancillary income and servicing costs. As of December 31, 2021, the model used discount rates ranging from 10% to 13.5% and prepayment speeds ranging from 11.3% to 37%, respectively, both of which were based on market data from independent organizations. As of December 31, 2020, the model used discount rates of 10% to 13.5% and prepayment speeds ranging from 18% to 46%.

The following table shows the estimated future amortization of mortgage servicing rights for the next five years. The projections of amortization expense are based on existing asset balances as of as of December 31, 2021. The actual amortization expense the Company recognizes in any given period may be significantly different depending on changes in interest rates, market conditions, and regulatory requirements. 

Estimated future amortization as of December 31, 2021:
2022	$	419
2023		282
2024		217
2025		181
2026		152
Thereafter		785
Total	$	2,036