LOANS HELD FOR SALE

9 Months Ended

Sep. 30, 2022

LOANS HELD FOR SALE

LOANS HELD FOR SALE

3. LOANS HELD FOR SALE

The following table provides the fair value and contractual principal balance outstanding of loans held for sale accounted for under the fair value option:

	September 30,		December 31,
	2022		2021
	(in thousands)
Loans held for sale, fair value	$	18,805	$	45,642
Loans held for sale, contractual principal outstanding		18,967		44,245
Fair value less unpaid principal balance	$	(162)	$	1,397

The Company has elected the fair value option for mortgage loans held for sale to better match changes in fair value of the loans with changes in the fair value of the forward sale commitment contracts used to economically hedge them. Changes in fair value of mortgage loans held for sale accounted for under the fair value option election amounted to a decrease of $1.6 million in the nine months ended September 30, 2022 to negative $162,000, compared to a decrease of $7.6 million in the nine months ended September 30, 2021. These amounts are offset in earnings by the changes in fair value of forward sale commitments. The changes in fair value are reported as a component of gain on sale of mortgage loans in the Unaudited Consolidated Statements of Income.

At September 30, 2022 and December 31, 2021, there were no loans held for sale that were greater than 90 days past due.