Annual report [Section 13 and 15(d), not S-K Item 405]

Servicing Assets

v3.25.0.1
Servicing Assets
 12 Months Ended
Dec. 31, 2024
Transfers and Servicing [Abstract]  
Servicing Assets

Note 4 — Servicing Assets

The changes in servicing assets for the years ended December 31, 2024 and 2023 were as follows:

 

 

 

As of December 31,

 

 

 

2024

 

 

2023

 

 

 

(in thousands)

 

Balance at beginning of period

 

$

7,070

 

 

$

7,176

 

Additions related to sale of loans

 

 

2,136

 

 

 

1,965

 

Amortization

 

 

(2,749

)

 

 

(2,456

)

Change in valuation allowance

 

 

—

 

 

 

385

 

Balance at end of period

 

$

6,457

 

 

$

7,070

 

 

At December 31, 2024 and 2023, we serviced loans sold to unaffiliated, non-government sponsored entity parties in the amount of $560.1 million and $539.6 million, respectively. These loans are maintained off-balance sheet and are not included in the loans receivable balance. At December 31, 2024, all of the loans serviced were SBA loans, except for $37.0 million of residential mortgage loans. At December 31, 2023, all of the loans serviced were SBA loans.

The Company recorded servicing fee income of $5.4 million, $5.2 million and $4.9 million for the years ended December 31, 2024, 2023 and 2022, respectively. Servicing fee income, net of amortization of servicing assets and liabilities, is included in other operating income in the consolidated statements of income. Amortization expense was $2.7 million, $2.5 million, and $2.7 million for the years ended December 31, 2024, 2023, and 2022, respectively.

The fair value of servicing rights was $7.9 million at December 31, 2024. Fair value at December 31, 2024 was determined using discount rates ranging from 10.81% to 27.26% and prepayment speeds ranging from 21.20% to 15.44%, depending on the stratification of the specific servicing right. The fair value of servicing rights was $7.7 million at December 31, 2023. Fair value at December 31, 2023 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 servicing right.