Quarterly report pursuant to Section 13 or 15(d)

Servicing Assets

v3.24.2.u1
Servicing Assets
 6 Months Ended
Jun. 30, 2024
Transfers and Servicing [Abstract]  
Servicing Assets

Note 4 — Servicing Assets

The activity in servicing assets was as follows for the periods indicated:

 

 

 

Three Months Ended June 30,

 

 

 

2024

 

 

2023

 

 

 

(in thousands)

 

 

 

 

 

 

 

 

Balance at beginning of period

 

$

6,890

 

 

$

7,542

 

Addition related to sale of SBA loans

 

 

482

 

 

 

399

 

Addition related to sale of residential loans

 

 

136

 

 

 

—

 

Amortization

 

 

(672

)

 

 

(589

)

Change in valuation allowance

 

 

—

 

 

 

—

 

Balance at end of period

 

$

6,836

 

 

$

7,352

 

 

 

 

Six Months Ended June 30,

 

 

 

2024

 

 

2023

 

 

 

(in thousands)

 

 

 

 

 

 

 

 

Balance at beginning of period

 

$

7,070

 

 

$

7,176

 

Addition related to sale of SBA loans

 

 

996

 

 

 

1,014

 

Addition related to sale of residential loans

 

 

136

 

 

 

—

 

Amortization

 

 

(1,366

)

 

 

(1,223

)

Change in valuation allowance

 

 

—

 

 

 

385

 

Balance at end of period

 

$

6,836

 

 

$

7,352

 

 

 

At June 30, 2024 and December 31, 2023, we serviced loans sold to unaffiliated parties of $536.1 million and $539.6 million, respectively. These represented loans that were 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. At June 30, 2024, all of the loans serviced were SBA loans, except for $19.5 million of residential mortgage loans.

The Company recorded servicing fee income of $1.4 million and $1.3 million for the three months ended June 30, 2024 and 2023, respectively and $2.7 million and $2.6 million for the six months ended June 30, 2024 and 2023, respectively. 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 $0.7 million and $0.6 million for the three months ended June 30, 2024 and 2023, respectively, and $1.4 million and $1.2 million for the six months ended June 30, 2024 and 2023, respectively.

The fair value of servicing rights was $8.1 million at June 30, 2024 and was determined using discount rates ranging from 10.1% to 25.5% and prepayment speeds ranging from 11.4% to 21.4%, depending on the stratification of the specific right. The fair value of servicing rights was $7.7 million at December 31, 2023 and 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 right.