Mortgage loans serviced for others are not reported as assets. The following table provides information on the principal balances of mortgage loans serviced for others, as of the dates indicated:

 Schedule of Participating Mortgage Loans

Custodial escrow balances maintained in connection with mortgage loans serviced for others were $7.2 million and $6.0 million at June 30, 2026 and December 31, 2025, respectively. Custodial escrow balances are included in the deposit balances on the balance sheet. Gross service fee income related to such loans was $396,000 and $404,000 for the three months ended June 30, 2026 and 2025, respectively, and is included in fees and service charges in the consolidated statements of earnings. Gross service fee income related to such loans was $794,000 and $819,000 for the six months ended June 30, 2026 and 2025, respectively, and is included in fees and service charges in the consolidated statements of earnings.

Mortgage servicing rights activity for the periods indicated was as follows for the periods indicated:

 Schedule of Servicing Asset at Amortized Cost

The fair value of mortgage servicing rights was $9.3 million and $8.6 million at June 30, 2026 and December 31, 2025, respectively. Fair value at June 30, 2026 was determined using a discount rate of 9.00%, prepayment speeds ranging from 5.50% to 26.19%, depending on the stratification of the specific mortgage servicing right, and a weighted average default rate of 1.80%. Fair value at December 31, 2025 was determined using a discount rate of 9.00%, prepayment speeds ranging from 0.00% to 26.29%, depending on the stratification of the specific mortgage servicing right, and a weighted average default rate of 1.67%.

The Company had a mortgage repurchase reserve of $122,000 and $118,000 at June 30, 2026 and December 31, 2025, respectively, which represented the Company’s best estimate at those dates of probable losses that the Company will incur related to the repurchase of one-to-four family residential real estate loans previously sold or to reimburse investors for credit losses incurred on loans previously sold where a breach of the contractual representations and warranties occurred. The Company charged $9,000 of losses against the reserve but did not make any provisions to the reserve during the three months ended June 30, 2026. During the six months ended June 30, 2026, the Company charged $38,000 of losses against the reserve and recorded a $41,000 provision. The Company charged $74,000 of losses against the reserve during the three months ended June 30, 2025. During the six months ended June 30, 2025, the Company charged $81,000 of losses against the reserve and recorded a $65,000 provision. As of June 30, 2026, the Company had no outstanding mortgage repurchase requests.