Mortgage Servicing Rights, Net

9 Months Ended

Sep. 30, 2023

Mortgage Servicing [Abstract]

Transfers and Servicing of Financial Assets [Text Block]

NOTE 6: MORTGAGE SERVICING RIGHTS, NET

Mortgage servicing rights (“MSRs”) are recognized based on the fair value of the servicing rights on the date the

corresponding mortgage loans are sold. An estimate of the fair value of the Company’s MSRs is determined using

assumptions that market participants would use in estimating future net servicing income, including estimates of

prepayment speeds, discount rates, default rates, costs to service, escrow account earnings, contractual servicing fee

income, ancillary income, and late fees. Subsequent to the date of transfer, the Company has elected to measure its MSRs

under the amortization method. Under the amortization method, MSRs are amortized in proportion to, and over the period

of, estimated net servicing income. 

The Company generally sells, without recourse, conforming, fixed-rate, closed-end, residential mortgages to Fannie Mae,

where the Company services the mortgages sold and records MSRs. MSRs are included in other assets on the

accompanying consolidated balance sheets.

The Company evaluates MSRs for impairment on a quarterly basis. Impairment is determined by stratifying MSRs into

groupings based on predominant risk characteristics, such as interest rate and loan type. If, by individual stratum, the

carrying amount of the MSRs exceeds fair value, a valuation allowance is established. The valuation allowance is adjusted

as the fair value changes. Changes in the valuation allowance are recognized in earnings as a component of mortgage

lending income. 

The following table details the changes in amortized MSRs and the related valuation allowance for the respective periods.

Quarter ended September 30,

Nine months ended September 30, 

(Dollars in thousands)

2023

2022

2023

2022

MSRs, net:

Beginning balance

$

1,050

$

1,259

$

1,151

$

1,309

Additions, net

7

13

16

110

Amortization expense

(46)

(64)

(156)

(211)

Ending balance

$

1,011

$

1,208

$

1,011

$

1,208

Valuation allowance included in MSRs, net:

Beginning of period

$

—

$

—

$

—

$

—

End of period

—

—

—

—

Fair value of amortized MSRs:

Beginning of period

$

2,312

$

2,547

$

2,369

$

1,908

End of period

2,351

2,478

2,351

2,478