Mortgage Servicing Rights

12 Months Ended

Dec. 31, 2019

Loans serviced for FHLB, Fannie Mae, and Freddie Mac are not included in the accompanying consolidated balance sheets. The unpaid principal balances of serviced loans, primarily mortgage loans, were $159.7 million and $175.5 million at December 31, 2019 and 2018, respectively.

Mortgage servicing rights for the periods shown are as follows:



	For the Year Ended December 31,
	2019			2018
	(In thousands)
Balance at beginning of period	$	1,044		$	1,095
Additions	75			208
Amortization	(251		)	(256		)
Valuation allowance	3			(3		)

Balance at end of period	$	871		$	1,044

There was no valuation allowance for mortgage servicing rights for year ended December 31, 2019 and an allowance of $3,000 for the year ended December 31, 2018.

The key economic assumptions used in determining the fair value of mortgage servicing rights for the periods shown are as follows:



	For the Year Ended December 31,
	2019		2018

Constant prepayment rate	11.2	%	15.4	%
Weighted-average life (years)	6.3		5.5
Yield to maturity discount	9.4	%	10.5	%

The fair values of mortgage servicing rights are approximately $1.5 million and $1.5 million at December 31, 2019 and 2018, respectively.

The following represents servicing and late fees earned in connection with mortgage servicing rights and is included in the accompanying consolidated financial statements as a component of noninterest income for the periods shown:



	For the Year Ended December 31,
	2019		2018
	(In thousands)
Servicing fees	$	424	$	454
Late fees	15		15