MORTGAGE LOAN SERVICING

3 Months Ended

Mar. 31, 2024

MORTGAGE LOAN SERVICING

MORTGAGE LOAN SERVICING

5. MORTGAGE LOAN SERVICING

The Company sells residential mortgages to government-sponsored enterprises and other parties. The Company retains no beneficial interests in these loans, but it may retain the servicing rights of the loans sold. Mortgage loans serviced

for others are not included in the accompanying unaudited interim Consolidated Balance Sheets. The risks inherent in MSRs relate primarily to changes in prepayments that generally result from shifts in mortgage interest rates. The unpaid principal balance of mortgage loans serviced for others was $3.52 billion and $3.56 billion as of March 31, 2024 and December 31, 2023, respectively.

The Company accounts for MSRs at fair value. The Company obtains and reviews valuations from an independent third party to determine the fair value of MSRs. Key assumptions used in the estimation of fair value include prepayment speeds, discount rates, and default rates. At March 31, 2024 and December 31, 2023, the following weighted average assumptions were used in the calculation of fair value of MSRs:

	March 31,		December 31,
	2024		2023
Prepayment speed	7.50	%	7.60	%
Discount rate	9.94		9.81
Default rate	1.88		2.27

The following summarizes changes to MSRs for the three months ended March 31, 2024 and 2023:

	Three Months Ended March 31,
	2024		2023
	(in thousands)
Balance, beginning of period	$	46,111	$	48,138
Additions		211		634
Changes in fair value due to:
Reductions from loans paid off during the period		(353)		(371)
Changes in valuation inputs or assumptions		628		(1,321)
Balance, end of period	$	46,597	$	47,080

Contractually specified servicing fees, net of subservicing expense, included in other mortgage banking income amounted to $2.0 million for the three months ended March 31, 2024 and $2.0 million for the three months ended March 31, 2023.