Mortgage Servicing Rights, Net

12 Months Ended

Dec. 31, 2024

Mortgage Servicing [Abstract]

Transfers and Servicing of Financial Assets [Text Block]

NOTE 7: MORTGAGE SERVICING RIGHTS, NET 

MSRs are recognized based on the fair value of the servicing rights on the date the corresponding mortgage loans are sold. 

An estimate of the Company’s MSRs is determined using assumptions that market participants would use in estimating

future net servicing income, including estimates of prepayment speeds, discount rate, default rates, cost to service, escrow

account earnings, contractual servicing fee income, ancillary income, and late fees. Subsequent to the date of transfer, the

Company has elected to measure its MSRs under the amortization method. Under the amortization method, MSRs are

amortized in proportion to, and over the period of, estimated net servicing income. Servicing fee income is recorded net of

related amortization expense and recognized in earnings as part of mortgage lending income. 

The Company has recorded MSRs related to loans sold without recourse to Fannie Mae. The Company generally sells

conforming, fixed-rate, closed-end, residential mortgages to Fannie Mae. MSRs are included in other assets on the

accompanying consolidated balance sheets.

The Company evaluates MSRs for impairment on a quarterly basis. Impairment is determined by stratifying MSRs into

groupings based on predominant risk characteristics, such as interest rate and loan type. If, by individual stratum, the

carrying amount of the MSRs exceeds fair value, a valuation allowance is established. The valuation allowance is adjusted

as the fair value changes. Changes in the valuation allowance are recognized in earnings as a component of mortgage

lending income.

The following table details the changes in amortized MSRs and the related valuation allowance for the years ended

December 31, 2024 and 2023.

Year ended December 31

(Dollars in thousands)

2024

2023

Beginning balance

$

992

1,151

Additions, net

79

38

Amortization expense

(179)

(197)

Ending balance

$

892

992

Valuation allowance included in MSRs, net:

Beginning of period

$

—

—

End of period

—

—

Fair value of amortized MSRs:

Beginning of period

$

2,382

2,369

End of period

2,204

2,382

Data and assumptions used in the fair value calculation related to MSRs at December 31, 2024 and 2023, respectively, are

presented below.

December 31

(Dollars in thousands)

2024

2023

Unpaid principal balance

$

205,915

216,648

Weighted average prepayment speed (CPR)

7.3

%

6.0

Discount rate (annual percentage)

10.0

%

10.5

Weighted average coupon interest rate

3.6

%

3.5

Weighted average remaining maturity (months)

242

245

Weighted average servicing fee (basis points)

25.0

25.0

At December 31, 2024, the weighted average amortization period for MSRs was

7.1

 years. Estimated amortization expense

for each of the next five years is presented below.

(Dollars in thousands)

December 31, 2024

2025

$

118

2026

104

2027

91

2028

80

2029

71