Annual report pursuant to Section 13 and 15(d)

Servicing Assets

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Servicing Assets
 12 Months Ended
Dec. 31, 2023
Transfers and Servicing [Abstract]  
Servicing Assets

Note 4 — Servicing Assets

The changes in servicing assets for the years ended December 31, 2023 and 2022 were as follows:

 

 

 

As of December 31,

 

 

 

2023

 

 

2022

 

 

 

(in thousands)

 

Balance at beginning of period

 

$

7,176

 

 

$

7,080

 

Additions related to sale of SBA loans

 

 

1,965

 

 

 

3,153

 

Amortization

 

 

(2,456

)

 

 

(2,672

)

Change in valuation allowance

 

 

385

 

 

 

(385

)

Balance at end of period

 

$

7,070

 

 

$

7,176

 

 

At December 31, 2023 and 2022, we serviced loans sold to unaffiliated parties in the amount of $539.6 million and $523.6 million, respectively. These loans are maintained off-balance sheet and are not included in the loans receivable balance. All of the loans being serviced were SBA loans.

The Company recorded servicing fee income of $5.2 million, $4.9 million and $4.6 million for the years ended December 31, 2023, 2022 and 2021, respectively. Servicing fee income, net of amortization of servicing assets and liabilities, is included in other operating income in the consolidated statements of income.

The fair value of servicing rights was $7.7 million at December 31, 2023. Fair value at December 31, 2023 was determined using discount rates ranging from 14.4% to 24.7% and prepayment speeds ranging from 12.2% to 19.7%, depending on the stratification of the specific servicing right. The fair value of servicing rights was $7.1 million at December 31, 2022. Fair value at December 31, 2022 was determined using discount rates ranging from 21.9% to 25.3% and prepayment speeds ranging from 10.8% to 16.7%, depending on the stratification of the specific servicing right.