NOTE 5 – LOAN SERVICING

The Company began servicing loans upon the acquisition of First National Bank’s servicing portfolio in June 2015. Mortgage loans serviced for others are not reported as assets. The principal balances of these loans at year-end are as follows:

Custodial escrow balances maintained in connection with serviced loans were $584 thousand at December 31, 2015.

Activity for mortgage servicing rights since the acquisition date of June 18, 2015 is as follows:

There was no valuation allowance required for mortgage servicing rights at December 31, 2015.