Loan Servicing Rights

12 Months Ended

Dec. 31, 2023

Transfers and Servicing [Abstract]

Loan Servicing Rights

LOAN SERVICING RIGHTS

Loan servicing rights are included in other assets on the balance sheet. At December 31, 2023, loan servicing rights derived from mortgage loans sold with servicing retained totaled $35.8 million, compared to $37.3 million at December 31, 2022. Loans serviced for others are not reported as assets. The principal balance of mortgage loans serviced for others totaled $4.3 billion at both December 31, 2023 and December 31, 2022. Custodial escrow balances maintained in connection with serviced loans totaled $27.0 million at both December 31, 2023 and December 31, 2022.

The following table summarizes the carrying values and activity related to loan servicing rights and the related valuation allowance:

	Years Ended December 31,
(dollars in thousands)	2023		2022		2021
Balance at beginning of period	$	37,267	$	30,085	$	28,124
Additions (1)	3,657		13,080		11,759
Amortization	(5,135)		(5,898)		(9,798)
Balance before valuation allowance at end of period	35,789		37,267		30,085
Valuation allowance:
Balance at beginning of period	—		(46)		(1,407)
(Additions)/recoveries	—		46		1,361
Balance at end of period	—		—		(46)
Loan servicing rights, net	$	35,789	$	37,267	$	30,039

(1)Additions in 2022 included loan servicing rights of $7.7 million acquired in the First Midwest merger on February 15, 2022.

At December 31, 2023, the fair value of servicing rights was $47.1 million, which was determined using a discount rate of 9% and a conditional prepayment rate of 10%. At December 31, 2022, the fair value of servicing rights was $48.4 million, which was determined using a discount rate of 9% and a conditional prepayment rate of 9%.