Loan Servicing

6 Months Ended

Jun. 30, 2023

Loan Servicing

Loan Servicing

NOTE 6 Loan Servicing

Loans serviced for others are not included in the accompanying consolidated balance sheets. The unpaid principal balances of loans serviced for others totaled $367.8 million and $357.2 million as of June 30, 2023 and December 31, 2022, respectively. Servicing loans for others generally consists of collecting mortgage payments, maintaining escrow accounts, disbursing payments to investors and collection and foreclosure processing. Loan servicing income is recorded on an accrual basis and includes servicing fees from investors and certain charges collected from borrowers, such as late payment fees, and is net of fair value adjustments to capitalized mortgage servicing rights.

The following table summarizes the Company’s activity related to servicing rights for the three and six months ended June 30, 2023 and 2022:

	Three months ended				Six months ended
	June 30,				June 30,
(dollars in thousands)	2023		2022		2023		2022
Balance, beginning of period	$	2,421	$	1,771	$	2,643	$	1,880
Additions		20		13		23		17
Amortization		(134)		(96)		(318)		(256)
Fair value adjustments		44		376		3		423
Balance, end of period	$	2,351	$	2,064	$	2,351	$	2,064

The following is a summary of key data and assumptions used in the valuation of servicing rights as of June 30, 2023 and December 31, 2022. Increases or decreases in any one of these assumptions would result in lower or higher fair value measurements.

	June 30,			December 31,
(dollars in thousands)	2023			2022
Fair value of servicing rights	$	2,351		$	2,643
Weighted-average remaining term, years		19.0			20.5
Prepayment speeds		6.1	%		6.9	%
Discount rate		11.0	%		10.5	%