MORTGAGE BANKING ACTIVITIES |
9 Months Ended |
|---|---|
Sep. 30, 2021 | |
| Mortgage Banking Activities [Abstract] | |
| Mortgage Banking Activities |
NOTE 4 – MORTGAGE BANKING ACTIVITIES
The Company’s mortgage
used to manage residential loan pipeline price risk, utilization of
and residential mortgage servicing.
period March 1, 2020 to September 30, 2020 and CCB legacy residential
1, 2020.
Residential Mortgage Loan Production
The Company originates, markets, and services conventional and
conforming fixed rate residential mortgage loans are held for sale in the
residential mortgage loans may be held for investment.
market prices are the primary drivers of origination revenue.
Residential mortgage loan commitments are generally outstanding for 30
commitment
commitments are subject to both credit and price risk.
collateral requirements, which are generally accepted by the secondary
fluctuations and is partially managed through forward sales of residential
securities, or TBAs) or mandatory delivery commitments with investors.
The unpaid principal balance of residential mortgage loans held for sale,
mortgage loan commitments and forward contract sales and their related
September 30, 2021
December 31, 2020
Unpaid Principal
Unpaid Principal
(Dollars in Thousands)
Balance/Notional
Fair Value
Balance/Notional
Fair Value
Residential Mortgage Loans Held for Sale
$
74,491
$
77,036
$
109,831
$
114,039
Residential Mortgage Loan Commitments ("IRLCs")
(1)
87,062
1,717
147,494
4,825
Forward Sales Contracts
(2)
102,500
451
158,500
(907)
$
79,204
$
117,957
(1)
Recorded in other assets at fair value
(2)
Recorded in other assets and other liabilities at fair value
The Company had
no
30, 2021 and had $
0.6
Mortgage banking revenue was as follows:
Three Months Ended
Nine Months Ended
(Dollars in Thousands)
2021
2020
2021
2020
Net realized gains on sales of mortgage loans
$
12,132
$
21,423
$
40,089
$
39,410
Net change
(165)
1,499
(1,663)
3,329
Net change in the fair value of mortgage loan commitments (IRLCs)
(806)
691
(3,108)
3,833
Net change in the fair value of forward sales contracts
540
560
1,358
791
Pair-Offs on net settlement of forward sales contracts
(636)
(3,049)
2,199
(7,445)
Mortgage servicing rights additions
205
763
845
2,813
Net origination fees
1,013
1,096
2,905
2,902
Total mortgage banking
$
12,283
$
22,983
$
42,625
$
45,633
Residential Mortgage Servicing
The Company may retain the right to service residential mortgage loans
others is the primary driver of servicing revenue.
The following represents a summary of mortgage servicing rights.
(Dollars in Thousands)
September 30, 2021
December 31, 2020
Number of residential mortgage loans serviced for others
2,028
1,796
Outstanding principal balance of residential mortgage loans serviced
$
505,321
$
456,135
Weighted average
3.62%
3.64%
Remaining contractual term (in months)
316
321
Conforming conventional loans serviced by the Company are sold to FNMA on
generally the responsibility of FNMA and not the Company.
GNMA, whereby the Company is insured against loss by the Federal Housing
the Veterans
(
60
%), GNMA (
9
%), and private investor (
31
%).
remittance.
The Company had $
3.0
4.9
Company at September 30, 2021 and December 31, 2020, respectively.
liability has been recorded in other assets and other liabilities, respectively,
For the three month period ended September 30, 2021, the Company
no
t repurchase any delinquent residential loans currently in
GNMA pools.
2.2
defaulted mortgage loans with the intention to modify their terms and include
Activity in the capitalized mortgage servicing rights was as follows:
Three Months Ended September 30,
Nine Months Ended September 30,
(Dollars in Thousands)
2021
2020
2021
2020
Beginning balance
$
3,710
$
2,862
$
3,452
$
910
Additions due to loans sold with servicing retained
205
763
845
2,813
Deletions and amortization
(351)
(277)
(983)
(375)
Valuation
-
-
250
-
Ending balance
$
3,564
$
3,348
$
3,564
$
3,348
The Company did
no
t record any permanent impairment losses on mortgage servicing rights for the
September 30, 2021 and September 30, 2020.
The key unobservable inputs used in determining the fair value of the Company’s
September 30, 2021
December 31, 2020
Minimum
Maximum
Minimum
Maximum
Discount rates
11.00%
15.00%
11.00%
15.00%
Annual prepayment speeds
13.53%
23.82%
13.08%
23.64%
Cost of servicing (per loan)
$
90
$
110
$
90
$
110
Changes in residential mortgage interest rates directly affect
servicing rights.
estimated loan curtailment, anticipated defaults, and other relevant factors.
17.34
% at September 30, 2021 and
17.10
% at December 31, 2020.
Warehouse
The Company has the following warehouse lines of credit and master repurchase
September 30, 2021.
Amounts
(Dollars in Thousands)
Outstanding
$
25
October 2021
.
2.25%
, with a
floor rate of
3.50%
.
0.1
$
6,526
$
75
2.24%
3.00%
, with a floor rate of
3.25%
.
0.5
21,942
$
50
September 2021
.
2.75%
, with a floor rate of
3.25%
.
19,376
Total Warehouse
$
47,844
The Company does not intend to renew when the warehouse line expires.
In October 2021, the warehouse line was renewed through November 30,
Warehouse
for sale pledged as collateral under the above warehouse lines of credit and
contain covenants which include certain financial requirements, including maintenance
liquid assets, maximum debt to net worth ratio and positive net income,
compliance with all significant debt covenants
The Company has extended a $
50
51
% owned subsidiary entity.
transactions under this line of credit are eliminated in the Company’s
total short term borrowings noted on the Consolidated Statement of
September 30, 2021 was $
27.0
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