Mortgage Servicing Rights

3 Months Ended

Mar. 31, 2021

Transfers and Servicing [Abstract]

Mortgage Servicing Rights

NOTE 5 – MORTGAGE SERVICING RIGHTS

Loans serviced for others are not included in the balance sheets. The unpaid principal balance of mortgage loans serviced for others was $342.6 million and $345.1 million as of March 31, 2021 and December 31, 2020, respectively.

A summary of activity in the Company’s mortgage servicing rights is presented below:

	Three Months Ended March 31, 2021			Three Months Ended March 31, 2020
	(in thousands)
Mortgage servicing rights beginning balance	$	1,806		$	2,172
Additions		203			99
Amortization		(231	)		(118	)
Adjustments to valuation allowance		369			(217	)
Mortgage servicing rights ending balance	$	2,147		$	1,936
Fair value at beginning of period	$	1,806		$	2,404
Fair value at end of period	$	2,153		$	1,958

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 March 31, 2021, the model used discount rates ranging from 10% to 13.5%, and prepayment speeds ranging from 14.6% to 44.7%, respectively, both of which were based on market data from independent organizations.

The following table summarizes the estimated future amortization expense for mortgage servicing rights for the periods indicated. The projections of amortization expense are based on existing asset balances as of March 31, 2021. The actual amortization expense the Company recognizes in any given period may vary significantly depending on changes in interest rates, market conditions and regulatory requirements.

Estimated future amortization as of March 31, 2021:	(in thousands)
2021	$	454
2022		425
2023		397
2024		369
2025		338
Thereafter		164
Total	$	2,147