MORTGAGE SERVICING RIGHTS

9 Months Ended

Sep. 30, 2026

Intangible Asset, Goodwill and Other [Abstract]

6. MORTGAGE SERVICING RIGHTS

Mortgage loans serviced for others are not reported on the Company's consolidated balance sheets. The following table presents mortgage loans serviced for others by investor:


(Dollars in thousands)	September 30, 2026		December 31, 2025
Mortgage loan portfolio serviced for:
Federal National Mortgage Association	$	710,192	$	741,186
Federal Home Loan Mortgage Corporation	400,280		429,933
Federal Home Loan Bank	280		303
Total loans serviced for others	$	1,110,752	$	1,171,422

The following tables present changes in the carrying value and the fair value of mortgage servicing rights for the periods presented:


	Three Months Ended				Nine Months Ended
(Dollars in thousands)	September 30, 2026		September 30, 2025		September 30, 2026		September 30, 2025
Beginning balance	$	8,364	$	8,436	$	8,672	$	8,473
Additions	70		233		240		593
Amortization	(222)		(210)		(700)		(607)
Ending balance	$	8,212	$	8,459	$	8,212	$	8,459


Fair value, beginning balance	$	11,467	$	11,897	$	11,301	$	12,387
Fair value, ending balance	$	12,241	$	11,454	$	12,241	$	11,454

The Company measures its mortgage servicing rights ("MSRs") using the amortization method, amortizing MSRs proportionally over the period of expected net servicing income. New MSRs and amortization are reported within mortgage banking income, while ancillary income is recorded in other operating income. MSRs are recognized when loans are sold with servicing retained and pooled by similar characteristics.

MSRs are initially recorded at fair value at the time of loan sale and thereafter carried at the lower of amortized cost or fair value and are evaluated for impairment at each reporting date. The Company estimates fair value using discounted cash flow models that incorporate expected servicing cash flows, prepayment assumptions, discount rates, servicing income and servicing costs. Changes in prepayment speeds, which are influenced by interest rates, home prices, and borrower behavior, can have a significant impact on MSR fair values. Generally, declining interest rates increase prepayment activity and reduce MSR value, while rising rates decrease prepayment activity and may increase MSR values. These assumptions are subjective and require management judgment and are updated periodically to reflect changes in market conditions, loan characteristics, and expected borrower behavior. MSRs are classified as Level 3 assets within the fair value hierarchy because the valuation relies on significant unobservable inputs.

Fair value estimates and underlying assumptions are reviewed periodically and, where available, compared with observable market data and third-party valuations.

The following table presents the key assumptions used in estimating the fair value of MSRs as of the dates presented:


	September 30, 2026		December 31, 2025


Weighted average discount rate	9.5	%	9.5	%
Weighted average prepayment speed assumption	9.6		12.3

The Company evaluates MSRs for impairment at each reporting date. Impairment exists when the carrying amount of the MSRs exceeds their estimated fair value. Any impairment is recognized through a valuation allowance, with subsequent recoveries recognized to the extent of previously recorded impairment. The Company recorded no impairment related to its MSRs as of September 30, 2026.