Annual report pursuant to Section 13 and 15(d)

Servicing Assets

v3.22.0.1
Servicing Assets
 12 Months Ended
Dec. 31, 2021
Transfers And Servicing [Abstract]  
Servicing Assets

Note 4 — Servicing Assets

The changes in servicing assets for the years ended December 31, 2021 and 2020 were as follows:

 

 

 

As of December 31,

 

 

 

2021

 

 

2020

 

 

 

(in thousands)

 

Balance at beginning of period

 

$

6,212

 

 

$

6,956

 

Additions related to sale of SBA loans

 

 

3,160

 

 

 

1,517

 

Amortization

 

 

(2,292

)

 

 

(2,261

)

Balance at end of period

 

$

7,080

 

 

$

6,212

 

 

At December 31, 2021 and 2020, we serviced loans sold to unaffiliated parties in the amount of $473.5 million and $429.4 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 $4.6 million, $4.2 million and $4.4 million for the years ended December 31, 2021, 2020 and 2019, respectively. Net amortization expense of servicing assets and liabilities was $2.0 million, $2.0 million and $2.8 million for the years ended December 31, 2021, 2020 and 2019, 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 $8.1 million at year-end 2021. Fair value at year-end 2021 was determined using discount rates ranging from 10.4 percent to 16.7 percent and prepayment speeds ranging from 10.2 percent to 12.8 percent, depending on the stratification of the specific right. The fair value of servicing rights was $6.9 million at year-end 2020. Fair value at year-end 2020 was determined using discount rates ranging from 9.3 percent to 12.2 percent and prepayment speeds ranging from 11.8 percent to 19.1 percent, depending on the stratification of the specific right.