Loan Servicing

12 Months Ended

Dec. 31, 2021

Transfers And Servicing [Abstract]

Loan Servicing

7. Loan Servicing

Loans serviced for others are not included in the accompanying consolidated balance sheets.  The unpaid principal balances of such loans were $40.6 million and $45.8 million at December 31, 2021 and 2020, respectively. Substantially all of these loans were originated by the Bank and sold to third parties on a non-recourse basis with servicing rights retained.  These retained servicing rights are recorded as a servicing asset and are initially recorded at fair value (see Note 19 Fair Value of Assets and Liabilities for more information). Changes to the balance of mortgage servicing rights are recorded in loan servicing fee income (loss) in the Company’s consolidated statements of income.

The Bank’s mortgage servicing activities include: collecting principal, interest and escrow payments from borrowers; making tax and insurance payments on behalf of borrowers; monitoring delinquencies and executing foreclosure proceedings; and accounting for and remitting principal and interest payments to investors.  Loan servicing fee income (loss), including late and ancillary fees, was $163,000 and $(3,000) for the years ended December 31, 2021 and 2020, respectively. Servicing fee income is recorded in loan servicing fee income (loss) in the Company’s consolidated statements of income.  The Bank’s residential mortgage investor loan servicing portfolio is primarily comprised of fixed rate loans concentrated in the Bank’s market areas.

The following summarizes activity in mortgage servicing rights for the years ended December 31, 2021 and 2020.

(Dollars in thousands)	2021			2020
Balance, beginning of year	$	273		$	397
Additions		61			113
Payoffs		(60	)		(92	)
Change in fair value due to change in assumptions		48			(145	)
Balance, end of year	$	322		$	273