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Mortgage Banking
 9 Months Ended
Sep. 30, 2019
Mortgage Banking  
Mortgage Banking

9. Mortgage Banking

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

September 30, 

 

September 30, 

 

    

2019

    

2018

    

2019

    

2018

 

 

(In Thousands)

Gain from sale of mortgage loans

 

$

2,596

 

$

1,280

 

$

5,672

 

$

3,744

Mortgage loans servicing revenue (expense):

 

 

 

 

 

 

 

 

 

 

 

 

Mortgage loans servicing revenue

 

 

960

 

 

929

 

 

2,842

 

 

2,806

Amortization of mortgage servicing rights

 

 

(579)

 

 

(340)

 

 

(1,256)

 

 

(1,009)

Mortgage servicing rights valuation adjustments

 

 

(155)

 

 

 8

 

 

(458)

 

 

91

 

 

 

226

 

 

597

 

 

1,128

 

 

1,888

 

 

 

 

 

 

 

 

 

 

 

 

 

Net revenue from sale and servicing of mortgage loans

 

$

2,822

 

$

1,877

 

$

6,800

 

$

5,632

 

The unpaid principal balance of residential mortgage loans serviced for third parties was $1.44 billion at September 30, 2019 and $1.41 billion at December 31, 2018.

Activity for capitalized mortgage servicing rights and the related valuation allowance follows for the three and nine months ended September 30, 2019 and 2018:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

September 30, 

 

September 30, 

 

    

2019

    

2018

    

2019

    

2018

 

 

(In Thousands)

Mortgage servicing assets:

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

$

10,458

 

$

10,297

 

$

10,419

 

$

10,240

Loans sold, servicing retained

 

 

738

 

 

438

 

 

1,454

 

 

1,164

Amortization

 

 

(579)

 

 

(340)

 

 

(1,256)

 

 

(1,009)

Carrying value before valuation allowance at end of period

 

 

10,617

 

 

10,395

 

 

10,617

 

 

10,395

 

 

 

 

 

 

 

 

 

 

 

 

 

Valuation allowance:

 

 

 

 

 

 

 

 

 

 

 

 

Balance at beginning of period

 

 

(603)

 

 

(349)

 

 

(300)

 

 

(432)

Impairment recovery (charges)

 

 

(155)

 

 

 8

 

 

(458)

 

 

91

Balance at end of period

 

 

(758)

 

 

(341)

 

 

(758)

 

 

(341)

Net carrying value of MSRs at end of period

 

$

9,859

 

$

10,054

 

$

9,859

 

$

10,054

Fair value of MSRs at end of period

 

$

9,859

 

$

10,558

 

$

9,859

 

$

10,558

 

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 has established an accrual for secondary market buy-back activity. A liability of $43,000 was accrued at both September 30, 2019, and December 31, 2018, respectively. There was no expense or credit recognized related to the accrual in the three or nine months ended September 30, 2019 or 2018.