XML 58 R14.htm IDEA: XBRL DOCUMENT v3.26.1
Mortgage Banking Activities
 12 Months Ended
Dec. 31, 2025
Transfers and Servicing [Abstract]  
Mortgage Banking Activities Mortgage Banking Activities
The Company originates mortgage loans and sells those loans to the FHLMC, FNMA, GNMA, and private investors. Typically, these loans are sold with servicing retained by the Bank. Loans sold with servicing retained in 2025 and 2024 aggregated $413.3 million and $255.0 million, respectively. Loans serviced for investors aggregated $4.59 billion and $4.70 billion at December 31, 2025 and 2024, respectively.
Included in mortgage banking revenues in the accompanying consolidated statements of income for 2025 and 2024 are the following:
December 31,
20252024
(dollars in thousands)
Gains on sale of mortgage loans$27,121 $26,090 
Fees on real estate loans sold1,907 3,279 
(Losses) gains on interest rate lock commitments (IRLC) and associated hedging¹(1,003)589 
Servicing fees11,546 12,122 
Mortgage banking revenues$39,571 42,080 
1 For more information on this item, see "Note 1, Summary of Significant Accounting Policies—Derivative Financial Instruments," to our consolidated financial statements.
Included in gains on sales of mortgage loans during 2025 and 2024 are capitalized mortgage servicing rights aggregating $5.0 million and $2.9 million, respectively.
The following assumptions were used in determining the fair value of the capitalized mortgage servicing rights:
December 31,
20252024
Discount rate9.16%9.31%
Prepayment speed7.10%7.00%
Delinquency rate0.86%0.79%
A summary of the mortgage servicing rights is as follows:
December 31,
20252024
(dollars in thousands)
Balance at beginning of year$30,423 $33,876 
Capitalized mortgage servicing rights5,039 2,866 
Amortization(6,071)(6,319)
Change in valuation allowance- - 
Balance at end of year$29,391 $30,423 
Servicing asset values are sensitive to interest rates and loan prepayment behavior. A decline in market interest rates generally increases borrower prepayments, which can reduce the expected future cash flows and the fair value of servicing assets. If necessary, a valuation allowance would be added, through a charge to earnings, to the extent the amortized cost exceeds the estimated fair value. The valuation allowance at each of December 31, 2025 and 2024 was $0.
The Company evaluates its mortgage servicing rights for impairment on a monthly basis. The classes for evaluation are based on the risk characteristics of the underlying loans, including but not limited to, loan structure, loan term, and interest rate profile. There were no changes to the predominant risk characteristics or the resulting stratification of mortgage servicing rights during the periods presented.
The following table shows the estimated future amortization expense based on existing asset balances and the interest rate environment as of December 31, 2025 (in thousands). The Company’s actual amortization expense in any given period may be different from the estimated amounts depending upon the addition of new intangible assets, changes in mortgage interest rates, prepayment speeds, and other market conditions.
2026$3,845 
20273,443 
20283,094 
20292,765 
Thereafter16,243