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Loan Servicing

6 Months Ended

Jun. 30, 2015

Note 6. Loan Servicing

Mortgage loans serviced for others are not included in the accompanying consolidated balance sheets. The unpaid principal balances of these loans as of June 30, 2015 and December 31, 2014, were $322,992 and $332,075, respectively, and consist of one- to four-family residential real estate loans. These loans are serviced primarily for the Federal Home Loan Mortgage Corporation, Federal Home Loan Bank and Federal National Mortgage Association.

Custodial escrow balances maintained in connection with the foregoing loan servicing, and included in advances from borrowers for taxes and insurance, were $2,328 and $2,347 at June 30, 2015 and December 31, 2014, respectively.

Mortgage servicing rights are summarized as follows for the six months ended June 30, 2015 and 2014:

	June 30,			June 30,
	2015			2014

Balance at beginning of year, net	$	1,886		$	1,952
Mortgage servicing rights capitalized		162			107
Amortization expense		(177	)		(150	)
Valuation provision change		-			-
Balance at end of period, net	$	1,871		$	1,909

The estimated fair value of mortgage servicing rights was $2,666 and $2,578 at June 30, 2015 and December 31, 2014, respectively. At June 30, 2015 and December 31, 2014, the valuation allowance was $15 and $15, respectively.