Mortgage Banking

9 Months Ended

Sep. 30, 2022

9. Mortgage Banking

Net revenues from the sales and servicing of mortgage loans consisted of the following:


	Three Months Ended September 30,						Nine Months Ended September 30,
	2022			2021			2022			2021
	(In Thousands)
Mortgage banking gain, net	$	3,363		$	5,353		$	7,072		$	13,663
Mortgage loans servicing revenue (expense):
Mortgage loans servicing revenue		1,861			1,861			5,602			5,666
Amortization of mortgage servicing rights		(1,350	)		(1,822	)		(4,128	)		(6,119	)
Mortgage servicing rights valuation adjustments		96			783			1,624			5,655
		607			822			3,098			5,202

Net revenue from sale and servicing of mortgage loans	$	3,970		$	6,175		$	10,170		$	18,865

The unpaid principal balance of residential mortgage loans serviced for third parties was $2.94 billion at both September 30, 2022 and December 31, 2021.

Activity for capitalized mortgage servicing rights and the related valuation allowance follows for the three and nine months ended September 30, 2022 and 2021:


	Three Months Ended September 30,						Nine Months Ended September 30,
	2022			2021			2022			2021
	(In Thousands)
Mortgage servicing assets:
Balance at beginning of period	$	21,873		$	21,682		$	22,244		$	21,666
Loans sold, servicing retained		1,392			2,103			3,799			6,416
Amortization		(1,350	)		(1,822	)		(4,128	)		(6,119	)
Carrying value before valuation allowance at end of period		21,915			21,963			21,915			21,963

Valuation allowance:
Balance at beginning of period		(1,180	)		(3,641	)		(2,707	)		(8,513	)
Impairment recovery (charges)		97			783			1,624			5,655
Balance at end of period		(1,083	)		(2,858	)		(1,083	)		(2,858	)
Net carrying value of MSRs at end of period	$	20,832		$	19,105		$	20,832		$	19,105
Fair value of MSRs at end of period	$	27,633		$	20,189		$	27,633		$	20,189

Amortization of mortgage servicing rights is computed based on payments and payoffs of the related mortgage loans serviced. Estimates of future amortization expense are not easily estimable.

The Company had no accrual for secondary market buy-back activity at September 30, 2022 or December 31, 2021 based on management’s estimate of potential losses from this activity. There was no expense or credit recognized in the three and nine months ended September 30, 2022. The company recognized a credit of $0 and $43,000 in the three and nine months ended September 31, 2021.