Mortgage Servicing Rights

12 Months Ended

Dec. 31, 2020

Transfers and Servicing [Abstract]

Mortgage Servicing Rights

NOTE 7 — Mortgage Servicing Rights

Loans serviced for others are not included in the balance sheets. The unpaid principal balance of mortgage loans serviced for others totaled $345.1 million at December 31, 2020, and $336.7 million at December 31, 2019.

The following is a summary of changes in the balance of mortgage servicing rights for the periods indicated below:

	As of December 31,
	2020			2019
Beginning balance	$	2,172		$	2,103
Additions		770			527
Amortization		(767	)		(458	)
Adjustments to valuation allowance		(369	)		—
Ending balances	$	1,806		$	2,172
Fair value at beginning of period	$	2,404		$	3,371
Fair value at end of period	$	1,806		$	2,404

The valuation allowance as of December 31, 2020 was $369. There was no valuation allowance as of December 31, 2019. The Company did not sell any mortgage servicing rights during the years ended December 31, 2020 and 2019.

The estimated fair value of mortgage servicing rights was determined using a valuation model that calculates the present value of expected future servicing and ancillary income, net of expected servicing costs. The model incorporates various assumptions such as discount rates, prepayment speeds, and ancillary income and servicing costs. As of December 31, 2020, the model used discount rates ranging from 10% to 13.5% and prepayment speeds ranging from 18% to 46%, respectively, both of which were based on market data from independent organizations. As of December 31, 2019, the model used discount rates of 10% to 14% and prepayment speeds ranging from 7% to 45%.

The following table shows the estimated future amortization of mortgage servicing rights for the next five years. The projections of amortization expense are based on existing asset balances as of as of December 31, 2020. The actual amortization expense the Company recognizes in any given period may be significantly different depending on changes in interest rates, market conditions, and regulatory requirements.

For the period ending December 31, 2021		382
2022		357
2023		334
2024		311
2025		285
Thereafter		137
Total	$	1,806