v3.26.1
Mortgage Servicing Rights
 6 Months Ended
Jun. 30, 2026
Intangible Asset, Goodwill and Other [Abstract]  
Mortgage Servicing Rights

7) Mortgage Servicing Rights

 

The Company initially records its MSRs at fair value. After being initially recorded at fair value, MSRs backed by mortgage loans are accounted for using the amortization method. Amortization expenses are included in other expenses on the condensed consolidated statements of earnings. MSR amortization is determined by amortizing the MSR balance in proportion to, and over the period of, the estimated future net servicing income of the underlying financial assets.

 

The Company periodically assesses MSRs for impairment. Impairment occurs when the current fair value of the MSR falls below the carrying value (carrying value is the amortized cost reduced by any related valuation allowance). If MSRs are impaired, the impairment is recognized in current-period earnings and the carrying value of the MSRs is adjusted through a valuation allowance.

 

The Company periodically reviews the various loan strata to determine whether the value of the MSRs in each stratum is impaired and likely to recover. If the Company deems recovery of the value to be unlikely in the foreseeable future, a write-down of the cost of the MSRs for that stratum to its estimated recoverable value is charged to the valuation allowance.

 

The following table presents the MSR activity:

 

  

As of

June 30, 2026

  

As of

December 31, 2025

 
Amortized cost:          
Balance before valuation allowance at beginning of year  $2,528,459   $2,939,878 
MSR additions resulting from loan sales (1)   152,234    151,056 
Amortization (2)   (233,588)   (562,475)
Sale of MSRs   -    - 
Application of valuation allowance to write down MSRswith other than temporary impairment   -    - 
Balance before valuation allowance at end of period  $2,447,105   $2,528,459 
           
Valuation allowance for impairment of MSRs:          
Balance at beginning of year  $-   $- 
Additions   -    - 
Application of valuation allowance to write down MSRs with other than temporary impairment   -    - 
Balance at end of period  $-   $- 
           
Mortgage servicing rights, net  $2,447,105   $2,528,459 
           
Estimated fair value of MSRs at end of period  $4,146,075   $4,035,635 

 

 

(1) Included in mortgage fee income on the condensed consolidated statements of earnings
(2) Included in other expenses on the condensed consolidated statements of earnings

 

 

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

June 30, 2026 (Unaudited)

 

7) Mortgage Servicing Rights (Continued)

 

The table below summarizes the Company’s estimate of future amortization of its existing MSRs carried at amortized cost. This projection was developed using the Company’s assumptions in its June 30, 2026, valuation of MSRs. The assumptions used in the following table are likely to change as market conditions, portfolio composition and borrower behavior change, causing both actual and projected amortization levels to change over time.

 

  

Estimated MSR

Amortization

 
2026   232,241 
2027   223,082 
2028   207,530 
2029   187,850 
2030   170,162 
Thereafter   1,426,240 
Total  $2,447,105 

 

The Company collected the following contractual service fee income and late fee income as reported in other revenues on the condensed consolidated statement of earnings.

 

   2026   2025   2026   2025 
  

Three Months Ended June 30,

  

Six Months Ended June 30,

 
   2026   2025   2026   2025 
Contractual service fees  $223,749   $222,900   $445,816   $455,001 
Late fees   17,375    12,231    34,681    31,848 
Total  $241,124   $235,131   $480,497   $486,849 

 

The following is a summary of the unpaid principal balances (“UPB”) of the servicing portfolio.

 

  

As of

June 30, 2026

  

As of

December 31, 2025

 
Servicing UPB  $357,613,906   $361,632,543 

 

The following key assumptions were used in determining MSR value:

 

  

Prepayment

Speeds

  

Average

Life

(Years)

  

Discount

Rate

 
June 30, 2026   11.75    7.88    11.68 
December 31, 2025   12.27    7.44    11.92 

 

 

SECURITY NATIONAL FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

June 30, 2026 (Unaudited)