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Mortgage Banking
 9 Months Ended
Sep. 30, 2016
Mortgage Banking [Abstract]  
Mortgage Banking [Text Block]
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,
 
 
 
2016
 
2015
 
2016
 
2015
 
 
 
(In Thousands)
 
Gain from sale of mortgage loans
 
$
1,683
 
$
1,197
 
$
4,103
 
$
3,728
 
Mortgage loans servicing revenue (expense):
 
 
 
 
 
 
 
 
 
 
 
 
 
Mortgage loans servicing revenue
 
 
885
 
 
866
 
 
2,638
 
 
2,593
 
Amortization of mortgage servicing rights
 
 
(536)
 
 
(407)
 
 
(1,281)
 
 
(1,264)
 
Mortgage servicing rights valuation adjustments
 
 
7
 
 
24
 
 
(118)
 
 
191
 
 
 
 
356
 
 
483
 
 
1,239
 
 
1,520
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net revenue from sale and servicing of mortgage loans
 
$
2,039
 
$
1,680
 
$
5,342
 
$
5,248
 
 
The unpaid principal balance of residential mortgage loans serviced for third parties was $1.37 billion at September 30, 2016 and $1.34 billion at December 31, 2015.
 
Activity for capitalized mortgage servicing rights and the related valuation allowance follows for the three and nine months ended September 30, 2016 and 2015:
 
 
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
 
 
2016
 
2015
 
2016
 
2015
 
 
 
(In Thousands)
 
Mortgage servicing assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at beginning of period
 
$
9,906
 
$
9,872
 
$
9,893
 
$
9,923
 
Loans sold, servicing retained
 
 
701
 
 
449
 
 
1,459
 
 
1,255
 
Amortization
 
 
(536)
 
 
(407)
 
 
(1,281)
 
 
(1,264)
 
Carrying value before valuation allowance at end of period
 
 
10,071
 
 
9,914
 
 
10,071
 
 
9,914
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Valuation allowance:
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at beginning of period
 
 
(770)
 
 
(744)
 
 
(645)
 
 
(911)
 
Impairment recovery (charges)
 
 
7
 
 
24
 
 
(118)
 
 
191
 
Balance at end of period
 
 
(763)
 
 
(720)
 
 
(763)
 
 
(720)
 
Net carrying value of MSRs at end of period
 
$
9,308
 
$
9,194
 
$
9,308
 
$
9,194
 
Fair value of MSRs at end of period
 
$
9,493
 
$
9,629
 
$
9,493
 
$
9,629
 
 
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 established an accrual for secondary market buy-back losses that resulted in a reversal of $131,000 for the first nine months of 2016. In the first nine months of 2015, the Company reversed $84,000. The reversals are mainly due to no actual losses being recorded in the first nine months of 2016 and 2015. There is approximately $83,000 and $226,000 accrued and included within other liabilities at September 30, 2016 and 2015, respectively, for potential secondary market buy-back losses.