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Note 4 - Mortgage Banking
12 Months Ended
Dec. 31, 2022
Notes to Financial Statements  
Mortgage Banking [Text Block]

Note 4 – Mortgage Banking

 

Activity in secondary market loans during the year was as follows:

 

(Dollars in thousands)

            
  

2022

  

2021

  

2020

 

Loans originated for resale, net of principal payments

 $71,829  $197,387  $326,286 

Proceeds from loan sales

  77,681   205,398   325,306 

Net gains on sales of loans held for sale

  2,343   6,776   11,313 

Loan servicing fees, net of amortization

  175   (163)  (129)

 

Net gains on sales of loans held for sale include capitalization of loan servicing rights. Loans serviced for others are not reported as assets in the accompanying consolidated balance sheets. The unpaid principal balances of these loans were $488.6 million and $481.9 million at December 31, 2022 and 2021, respectively. The Bank maintains custodial escrow balances in connection with these serviced loans; however, such escrows were immaterial at December 31, 2022 and 2021.

 

Activity for loan servicing rights (included in other assets) was as follows:

 

(Dollars in thousands)

            
  

2022

  

2021

  

2020

 

Balance, beginning of year

 $4,667  $3,967  $2,131 

Capitalized

  1,007   1,961   3,554 

Amortization

  (1,352)  (1,635)  (1,344)

Market valuation allowance change

  -   374   (374)

Balance, end of year

 $4,322  $4,667  $3,967 

 

The fair value of loan servicing rights was $5,855,000 and $5,521,000 as of December 31, 2022 and 2021, respectively. Valuation allowances of $0 were recorded at  December 31, 2022 and December 31, 2021, respectively. The fair value of the Bank’s servicing rights at  December 31, 2022 was determined using a discount rate of 8.00% and prepayment speeds ranging from 5.2% to 6.7%.  The fair value of the Bank’s servicing rights at  December 31, 2021 was determined using a discount rate of 8.00% and prepayment speeds ranging from 5% to 27%.