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Mortgage Servicing Rights
12 Months Ended
Dec. 31, 2020
Transfers and Servicing [Abstract]  
Mortgage Servicing Rights
NOTE 7 – MORTGAGE SERVICING RIGHTS
The following table summarizes the changes in MSRs, which are included in other assets on the consolidated balance sheets, with adjustments to the fair value included in mortgage banking income on the consolidated statements of income:
202020192018
 (in thousands)
Amortized cost:
Balance at beginning of period$39,267 $38,573 $37,663 
Originations of MSRs12,173 7,546 6,756 
Amortization(12,695)(6,852)(5,846)
Balance at end of period$38,745 $39,267 $38,573 
Valuation allowance:
Balance at beginning of period$ $— $— 
Additions to valuation allowance(10,500)— — 
Balance at end of period$(10,500)$— $— 
Net MSRs at end of period$28,245 $39,267 $38,573 
Estimated fair value of MSRs at end of period$28,245 $45,193 $50,200 

MSRs represent the economic value of existing contractual rights to service mortgage loans that have been sold. The total portfolio of mortgage loans serviced by the Corporation for unrelated third parties was $4.7 billion and $4.9 billion as of December 31, 2020 and 2019, respectively. Actual and expected prepayments of the underlying mortgage loans can impact the value of MSRs. The Corporation accounts for MSRs at the lower of amortized cost or fair value.

The fair value of MSRs is estimated by discounting the estimated cash flows from servicing income, net of expense, over the expected life of the underlying loans at a discount rate commensurate with the risk associated with these assets. Expected life is based on the contractual terms of the loans, as adjusted for prepayment projections. The fair values of MSRs were $28.2 million and $45.2 million as of December 31, 2020 and 2019, respectively. Based on its fair value analysis as of December 31, 2020, the Corporation determined that a $10.5 million increase to the valuation allowance was required for the year ended December 31, 2020. The increase to the valuation allowance was recorded as a reduction to mortgage banking income on the consolidated statements of income for the year ended December 31, 2020. There were no valuation allowances for the years ended December 31, 2019 and 2018.

Total servicing income, recognized as an increase to mortgage banking income in the consolidated statements of income, was $11.9 million, $12.0 million and $11.8 million in 2020, 2019 and 2018, respectively, excluding the increase in the valuation allowance recorded in 2020.
Total MSR amortization expense, recognized as a reduction to mortgage banking income in the consolidated statements of income, was $12.7 million, $6.9 million and $5.8 million in 2020, 2019 and 2018, respectively. Estimated future MSR amortization expense, based on balances as of December 31, 2020, and the estimated remaining lives of the underlying loans, follows (in thousands):
Year 
2021$6,550 
20226,091 
20235,586 
20245,034 
20254,429 
Beyond 202511,055 
Total estimated amortization expense$38,745