XML 22 R8.htm IDEA: XBRL DOCUMENT v3.25.0.1
Mortgage Banking Activities Mortgage Banking Activities
 12 Months Ended
Dec. 31, 2024
Mortgage Banking [Abstract]  
Mortgage Banking Activities [Text Block] Mortgage Banking Activities
Residential Mortgage Loan Production

The Company originates, markets, and services conventional and government-sponsored residential mortgage loans. Generally, conforming fixed rate residential mortgage loans are held for sale in the secondary market and non-conforming and adjustable-rate residential mortgage loans are held for investment. The volume of mortgage loans originated for sale and secondary market prices are the primary drivers of originating and marketing revenue.

Residential mortgage loan commitments are generally outstanding for 60 to 90 days which represents the typical period from commitment to originate a residential mortgage loan to when the closed loan is sold to an investor. Residential mortgage loan commitments are subject to both credit and interest rate risk. Credit risk is managed through underwriting policies and procedures, including collateral requirements, which are generally accepted by the secondary loan markets. Exposure to interest rate fluctuations is partially managed through forward sales of residential mortgage-backed securities and forward sales contracts. These latter contracts set the price for loans that will be delivered in the next 60 to 90 days.
The unpaid principal balance of residential mortgage loans held for sale, notional amounts of derivative contracts related to residential mortgage loan commitments, and forward contract sales with their related fair values included in Mortgage loans held for sale on the Consolidated Balance Sheets were (in thousands):
 December 31, 2024December 31, 2023
 Unpaid Principal Balance/
Notional		Fair ValueUnpaid Principal Balance/
Notional		Fair Value
Residential mortgage loans held for sale$77,080 $75,969 $56,922 $56,457 
Residential mortgage loan commitments36,590 1,119 34,783 1,379 
Forward sales contracts82,000 473 75,448 (901)
  $77,561  $56,935 

No residential mortgage loans held for sale were 90 days or more past due or considered impaired as of December 31, 2024 or December 31, 2023. No credit losses were recognized on residential mortgage loans held for sale for the years ended December 31, 2024, 2023 and 2022.

Mortgage banking revenue was as follows (in thousands):
 Year Ended
 202420232022
Production revenue:  
Net realized gain (loss) on sales of mortgage loans$8,271 $(5,021)$7,416 
Net change in unrealized gain (loss) on mortgage loans held for sale(646)538 (4,468)
Net change in the fair value of mortgage loan commitments(260)325 (5,113)
Net change in the fair value of forward sales contracts1,374 (1,181)327 
Total mortgage production revenue8,739 (5,339)(1,838)
Servicing revenue65,368 61,037 51,203 
Total mortgage banking revenue$74,107 $55,698 $49,365 

Mortgage production revenue includes gain (loss) on residential mortgage loans held for sale, changes in the fair value of derivative contracts not designated as hedging instruments related to residential mortgage loan commitments, and forward sales contracts. Servicing revenue includes servicing fee income and late charges on loans serviced for others.

Residential Mortgage Servicing

The Company generally retains the right to service residential mortgage loans sold and may purchase mortgage servicing rights. The unpaid principal balance of loans serviced for others is the primary driver of servicing revenue.

The following represents a summary of mortgage servicing rights (dollars in thousands):
December 31,
 202420232022
Number of residential mortgage loans serviced for others125,728 115,967 110,541 
Outstanding principal balance of residential mortgage loans serviced for others$22,269,513 $20,382,192 $18,863,201 
Weighted average interest rate3.73 %3.64 %3.59 %
Remaining contractual term (in months)276280283
Activity in capitalized mortgage servicing rights during the three years ended December 31, 2024 is as follows (in thousands):
Balance, December 31, 2021$163,198 
Additions18,215 
Acquisitions47,675 
Change in fair value due to principal payments(31,741)
Change in fair value due to market assumption changes80,261 
Balance, December 31, 2022277,608 
Additions12,142 
Acquisitions34,593 
Change in fair value due to principal payments(27,344)
Change in fair value due to market assumption changes(3,115)
Balance, December 31, 2023293,884 
Additions14,976 
Acquisitions41,655 
Change in fair value due to principal payments(30,807)
Change in fair value due to market assumption changes18,437 
Balance, December 31, 2024$338,145 

Changes in the fair value of mortgage servicing rights due to market changes are included in Other operating revenue in the Consolidated Statements of Earnings. Changes in fair value due to loan runoff are included in Mortgage banking costs. 

Mortgage servicing rights are not traded in active markets. Fair value is determined by discounting the projected net cash flows. Significant assumptions used to determine fair value considered to be significant unobservable inputs were as follows:
December 31,
 20242023
Discount rate – risk-free rate plus a market premium9.60%9.72%
Prepayment rate - based upon loan interest rate, original term, and loan type7.09%7.34%
Loan servicing costs – annually per loan based upon loan type:
Performing loans
$73 - $94
$69 - $94
Delinquent loans
$150 - $500
$150 - $500
Loans in foreclosure
$875 - $6,000
$875 - $8,000
Primary/secondary mortgage rate spread
115 bps105 bps
Escrow earnings rate – indexed to rates paid on deposit accounts with a comparable average life4.44%3.90%
Delinquency rate
2.19%2.06%

Changes in primary residential mortgage interest rates directly affect the prepayment speeds used in valuing our mortgage servicing rights. A separate third-party model is used to estimate prepayment speeds based on interest rates, housing turnover rates, estimated loan curtailment, anticipated defaults, and other relevant factors. The prepayment model is updated periodically for changes in market conditions and adjusted to better correlate with actual performance of BOK Financial’s servicing portfolio.