Note 5 - Mortgage Servicing Rights

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Transfers and Servicing of Financial Assets [Text Block]

NOTE 5: Mortg age Servicing Rights

The Company is servicing mortgage loans for the benefit of others which are

not

included in the consolidated statements of financial condition, have unpaid principal balances of

$1,169,869,000

and

$964,967,000

at

December 31, 2019

and

2018,

respectively. Servicing loans for others generally consists of collecting mortgage payments, maintaining escrow accounts, disbursing payments to investors and foreclosure processing. Mortgage loan servicing fees were

$2,620,000

and

$2,295,000

for the years ended

December 31, 2019

and

2018,

respectively. These fees, net of amortization, are included in mortgage banking which is a component of noninterest income on the consolidated statement of income.

Custodial balances maintained in connection with the foregoing loan servicing, and included in noninterest checking deposits, were

$8,402,000

and

$5,618,000

at

December 31, 2019

and

2018,

respectively.

The following table is a summary of activity in mortgage servicing rights:

	Years Ended
	December 31,
	2019			2018
	(In Thousands)
Mortgage servicing rights:
Beginning balance	$	7,100		$	6,578
Mortgage servicing rights capitalized		3,276			1,725
Amortization of mortgage servicing rights		(1,637	)		(1,203	)
Ending balance	$	8,739		$	7,100

There were

no

valuation allowances during

December 31, 2019

and

2018.

The fair values of these rights were

$9,835,000

and

$8,700,000

at

December 31, 2019

and

2018,

respectively. The fair value of servicing rights was determined at loan level, depending on the interest rate and term of the specific loan, using the following valuation assumptions:

	December 31,
	2019			2018
Key assumptions:
Discount rate		12%			12%
Prepayment speed range	110	-	246%	83	-	226%
Weighted average prepayment speed		171%			119%