Annual report pursuant to Section 13 and 15(d)

Servicing Assets

v3.20.4
Servicing Assets
 12 Months Ended
Dec. 31, 2020
Transfers And Servicing [Abstract]  
Servicing Assets

Note 4 — Servicing Assets

The changes in servicing assets for the years ended December 31, 2020 and 2019 were as follows:

 

 

 

As of December 31,

 

 

 

2020

 

 

2019

 

 

 

(in thousands)

 

Balance at beginning of period

 

$

6,956

 

 

$

8,520

 

Addition related to sale of SBA loans

 

 

1,517

 

 

 

1,699

 

Amortization

 

 

(2,261

)

 

 

(3,263

)

Balance at end of period

 

$

6,212

 

 

$

6,956

 

 

At December 31, 2020 and 2019, we serviced the loans sold to unaffiliated parties in the amount of $429.4 million and $422.3 million, respectively. These represent loans that have been sold for which the Bank continues to provide servicing. 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 $4.2 million, $4.4 million and $4.7 million for the years ended December 31, 2020, 2019 and 2018, respectively. Net amortization expense was $2.0 million, $2.8 million and $2.6 million for the years ended December 31, 2020, 2019 and 2018, 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 $6.9 million at year-end 2020. Fair value at year-end 2020 was determined using discount rates ranging from 9.3 percent to 12.2 percent and prepayment speeds ranging from 11.8 percent to 19.1 percent, depending on the stratification of the specific right.