Quarterly report [Sections 13 or 15(d)]

Servicing Assets

v3.26.3
Servicing Assets
 9 Months Ended
Sep. 30, 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 September 30,

 

 

 

2026

 

 

2025

 

 

 

(in thousands)

 

Balance at beginning of period

 

$

6,419

 

 

$

6,420

 

Addition related to sale of loans

 

 

856

 

 

 

565

 

Amortization

 

 

(582

)

 

 

(501

)

Balance at end of period

 

$

6,693

 

 

$

6,484

 

 

 

 

Nine Months Ended September 30,

 

 

 

2026

 

 

2025

 

 

 

(in thousands)

 

Balance at beginning of period

 

$

6,459

 

 

$

6,457

 

Addition related to sale of loans

 

 

1,968

 

 

 

1,900

 

Amortization

 

 

(1,734

)

 

 

(1,873

)

Balance at end of period

 

$

6,693

 

 

$

6,484

 

 

 

At September 30, 2026 and December 31, 2025, we serviced loans sold by the Bank to unaffiliated parties of $611.5 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 September 30, 2026 and December 31, 2025, all loans serviced were SBA loans, except for $35.8 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 the three months ended September 30, 2026 and 2025, respectively and $2.8 million and $2.4 million for the nine months ended September 30, 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 $0.5 million for the three months ended September 30, 2026 and 2025, respectively and $1.7 million and $1.9 million for the nine months ended September 30, 2026 and 2025, respectively.

The fair value of servicing rights was $9.4 million at September 30, 2026, which was determined using discount rates ranging from 11.0% to 20.5% and prepayment speeds ranging from 14.0% to 29.4%, 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.