Quarterly report pursuant to Section 13 or 15(d)

Servicing Assets

v3.21.2
Servicing Assets
 6 Months Ended
Jun. 30, 2021
Transfers And Servicing [Abstract]  
Servicing Assets

Note 4 — Servicing Assets

The changes in servicing assets for the three months ended June 30, 2021 and 2020 were as follows:

 

 

 

Three Months Ended June 30,

 

 

 

2021

 

 

2020

 

 

 

(in thousands)

 

Servicing assets:

 

 

 

 

 

 

 

 

Balance at beginning of period

 

$

6,150

 

 

$

6,727

 

Addition related to sale of SBA loans

 

 

707

 

 

 

—

 

Amortization

 

 

(658

)

 

 

(540

)

Balance at end of period

 

$

6,199

 

 

$

6,187

 

The changes in servicing assets for the six months ended June 30, 2021 and 2020 were as follows:

 

 

 

Six Months Ended June 30,

 

 

 

2021

 

 

2020

 

 

 

(in thousands)

 

Servicing assets:

 

 

 

 

 

 

 

 

Balance at beginning of period

 

$

6,212

 

 

$

6,956

 

Addition related to sale of SBA loans

 

 

1,157

 

 

 

354

 

Amortization

 

 

(1,170

)

 

 

(1,123

)

Balance at end of period

 

$

6,199

 

 

$

6,187

 

 

At June 30, 2021 and December 31, 2020, we serviced loans sold to unaffiliated parties in the amounts of $432.8 million and $429.4 million, respectively. These represented 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 serviced were SBA loans.

The Company recorded servicing fee income of $1.1 million and $1.2 million for the three months ended June 30, 2021 and 2020, respectively. The Company recorded servicing fee income of $2.3 million and $2.3 million for each of the six months ended June 30, 2021 and 2020. Servicing fee income, net of the amortization of servicing assets, is included in other operating income in the consolidated statements of income. Amortization expense was $658,000 and $540,000 for the three months ended June 30, 2021 and 2020, respectively, and $1.2 million and $1.1 million for the six months ended June 30, 2021 and 2020, respectively.

The fair value of servicing rights was $7.9 million at June 30, 2021. Fair value at June 30, 2021 was determined using discount rates ranging from 6.9 percent to 8.4 percent and prepayment speeds ranging from 11.2 percent to 18.1 percent, depending on the stratification of the specific right. The fair value of servicing rights was $6.9 million at December 31, 2020. Fair value at December 31, 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.