Quarterly report pursuant to Section 13 or 15(d)

Servicing Assets

v3.24.3
Servicing Assets
 9 Months Ended
Sep. 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 September 30,

 

 

 

2024

 

 

2023

 

 

 

(in thousands)

 

 

 

 

 

 

 

 

Balance at beginning of period

 

$

6,836

 

 

$

7,352

 

Addition related to sale of loans

 

 

461

 

 

 

396

 

Amortization

 

 

(614

)

 

 

(592

)

Balance at end of period

 

$

6,683

 

 

$

7,156

 

 

 

 

Nine Months Ended September 30,

 

 

 

2024

 

 

2023

 

 

 

(in thousands)

 

 

 

 

 

 

 

 

Balance at beginning of period

 

$

7,070

 

 

$

7,176

 

Addition related to sale of loans

 

 

1,593

 

 

 

1,410

 

Amortization

 

 

(1,980

)

 

 

(1,815

)

Change in valuation allowance

 

 

—

 

 

 

385

 

Balance at end of period

 

$

6,683

 

 

$

7,156

 

 

 

At September 30, 2024 and December 31, 2023, we serviced loans sold to unaffiliated parties of $535.6 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 September 30, 2024, all of the loans serviced were SBA loans, except for $20.9 million of residential mortgage loans.

The Company recorded servicing fee income of $1.3 million and $1.3 million for the three months ended September 30, 2024 and 2023, respectively and $4.0 million and $3.9 million for the nine months ended September 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 $0.6 million for both the three months ended September 30, 2024 and 2023, and $2.0 million and $1.8 million for the nine months ended September 30, 2024 and 2023, respectively.

The fair value of servicing rights was $8.0 million at September 30, 2024 and was determined using discount rates ranging from 10.6% to 28.8% and prepayment speeds ranging from 11.3% to 21.7%, 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.