Mortgage Servicing Rights

6 Months Ended

Jun. 30, 2024

Transfers and Servicing [Abstract]

Mortgage Servicing Rights

NOTE 5 – MORTGAGE SERVICING RIGHTS

Loans serviced for others are not included in the Company’s consolidated balance sheets. The unpaid principal balance of mortgage loans serviced for others was $273.1 million and $282.2 million as of June 30, 2024 and December 31, 2023, respectively.

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

	Three Months Ended June 30, 2024			Three Months Ended June 30, 2023			Six Months Ended June 30, 2024			Six Months Ended June 30, 2023
	(in thousands)						(in thousands)
Mortgage servicing rights beginning balance	$	1,690		$	1,824		$	1,720		$	1,860
Additions		23			8			30			17
Amortization		(49	)		(55	)		(86	)		(100	)
Mortgage servicing rights ending balance	$	1,664		$	1,777		$	1,664		$	1,777
Fair value at beginning of period	$	3,240		$	3,488		$	3,269		$	3,376
Fair value at end of period	$	3,237		$	3,317		$	3,237		$	3,317

There was no valuation allowance as of June 30, 2024 or December 31, 2023. The Company did not sell any mortgage servicing rights during the three and six months ended June 30, 2024 or June 30, 2023.

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 June 30, 2024, the model used discount rates ranging from 10.2% to 13.0%, and prepayment speeds ranging from 6.7% to 30.0%, both of which were based on market data from independent organizations. As of June 30, 2023 the model used discount rates ranging from 10.0% to 13.0%, and prepayment speeds ranging from 6.9% to 34.5%.

The following table summarizes the estimated future amortization expense for mortgage servicing rights for the annual periods indicated. The projections of amortization expense are based on existing asset balances as of June 30, 2024. 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 June 30, 2024:	(in thousands)
2024	$	98
2025		192
2026		175
2027		155
2028		133
Thereafter		911
Total	$	1,664