Annual report pursuant to Section 13 and 15(d)

Servicing Assets

v3.22.4
Servicing Assets
 12 Months Ended
Dec. 31, 2022
Transfers and Servicing [Abstract]  
Servicing Assets

Note 4 — Servicing Assets

The changes in servicing assets for the years ended December 31, 2022 and 2021 were as follows:

 

 

 

As of December 31,

 

 

 

2022

 

 

2021

 

 

 

(in thousands)

 

Balance at beginning of period

 

$

7,080

 

 

$

6,212

 

Additions related to sale of SBA loans

 

 

3,153

 

 

 

3,160

 

Amortization

 

 

(2,672

)

 

 

(2,292

)

Change in valuation allowance

 

 

(385

)

 

 

—

 

Balance at end of period

 

$

7,176

 

 

$

7,080

 

 

At December 31, 2022 and 2021, we serviced loans sold to unaffiliated parties in the amount of $523.6 million and $473.5 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 $4.9 million, $4.6 million and $4.2 million for the years ended December 31, 2022, 2021 and 2020, 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 $7.1 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. The fair value of servicing rights was $8.1 million at December 31, 2021. Fair value at December 31, 2021 was determined using discount rates ranging from 10.4% to 16.7% and prepayment speeds ranging from 10.2% to 12.8%, depending on the stratification of the specific servicing right.