Loan Servicing

3 Months Ended

Mar. 31, 2022

Transfers And Servicing [Abstract]

Loan Servicing

4. Loan Servicing

Loans serviced for others are not included in the accompanying consolidated balance sheets. The unpaid principal balances of such loans were $38.4 million and $40.6 million at March 31, 2022 and December 31, 2021, 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 14, Fair Value of Assets and Liabilities, for more information). Changes to the balance of mortgage servicing rights are recorded in loan servicing fee income 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, including late and ancillary fees, was $52,000 and $83,000 for the three months ended March 31, 2022 and 2021, respectively. Servicing fee income is recorded in loan servicing fee income in the Company’s consolidated statements of income. The Bank’s residential mortgage investor loan servicing portfolio is primarily comprised of fixed rate loans secured by properties located in the Bank’s market area.

The following summarizes activity in mortgage servicing rights for the three months ended March 31, 2022 and 2021:

(Dollars in thousands)	2022			2021
Balance, December 31,	$	322		$	273
Additions		5			13
Payoffs		(16	)		(14	)
Change in fair value due to change in assumptions		39			57
Balance, March 31,	$	350		$	329