Quarterly report [Sections 13 or 15(d)]

Servicing Assets

v3.26.1
Servicing Assets
 3 Months Ended
Mar. 31, 2026
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 March 31,

 

 

 

2026

 

 

2025

 

 

 

(in thousands)

 

 

 

 

 

 

 

 

Balance at beginning of period

 

$

6,459

 

 

$

6,457

 

Addition related to sale of loans

 

 

687

 

 

 

657

 

Amortization

 

 

(611

)

 

 

(692

)

Balance at end of period

 

$

6,535

 

 

$

6,422

 

 

 

At March 31, 2026 and December 31, 2025, we serviced loans sold by the Bank to unaffiliated parties of $561.8 million and $615.9 million, respectively. These loans are maintained off-balance sheet and are not included in loans, net of allowance for credit losses on the consolidated balance sheets. At March 31, 2026 and December 31, 2025, all loans serviced were SBA loans, except for $57.9 million and $62.5 million, respectively, of residential mortgage loans.

The Company recorded servicing fee income of $1.4 million and $1.3 million for three months ended March 31, 2026 and 2025, respectively. Servicing fee income, net of amortization of servicing assets, is included in other operating income in the consolidated statements of income. Amortization expense was $0.6 million and $0.7 million for the three months ended March 31, 2026 and 2025, respectively.

The fair value of servicing rights was $8.8 million at March 31, 2026, which was determined using discount rates ranging from 7.4% to 20.9% and prepayment speeds ranging from 13.2% to 28.7%, depending on the stratification of the specific right. The fair value of servicing rights was $8.5 million at December 31, 2025, which was determined using discount rates ranging from 9.7% to 18.9% and prepayment speeds ranging from 20.2% to 28.0%, depending on the stratification of the specific right.