Quarterly report pursuant to Section 13 or 15(d)

Servicing Assets

v3.21.2
Servicing Assets
 9 Months Ended
Sep. 30, 2021
Transfers And Servicing [Abstract]  
Servicing Assets

Note 4 — Servicing Assets

The changes in servicing assets for the three months ended September 30, 2021 and 2020 were as follows:

 

 

 

Three Months Ended September 30,

 

 

 

2021

 

 

2020

 

 

 

(in thousands)

 

Servicing assets:

 

 

 

 

 

 

 

 

Balance at beginning of period

 

$

6,199

 

 

$

6,186

 

Addition related to sale of SBA loans

 

 

1,171

 

 

 

686

 

Amortization

 

 

(532

)

 

 

(524

)

Balance at end of period

 

$

6,838

 

 

$

6,348

 

The changes in servicing assets for the nine months ended September 30, 2021 and 2020 were as follows:

 

 

 

Nine Months Ended September 30,

 

 

 

2021

 

 

2020

 

 

 

(in thousands)

 

Servicing assets:

 

 

 

 

 

 

 

 

Balance at beginning of period

 

$

6,212

 

 

$

6,956

 

Addition related to sale of SBA loans

 

 

2,328

 

 

 

1,040

 

Amortization

 

 

(1,702

)

 

 

(1,648

)

Balance at end of period

 

$

6,838

 

 

$

6,348

 

 

At September 30, 2021 and December 31, 2020, we serviced loans sold to unaffiliated parties in the amounts of $459.8 million and $429.4 million, respectively. These represented loans that have been 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. All of the loans serviced were SBA loans.

The Company recorded servicing fee income of $1.1 million for each of the three months ended September 30, 2021 and 2020, and $3.4 million for each of the nine months ended September 30, 2021 and 2020. 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 $532,000 and $524,000 for the three months ended September 30, 2021 and 2020, respectively, and $1.7 million and $1.6 million for the nine months ended September 30, 2021 and 2020, respectively.

The fair value of servicing rights was $8.1 million at September 30, 2021. The fair value at September 30, 2021 was determined using discount rates ranging from 8.6 percent to 10.5 percent and prepayment speeds ranging from 11.0 percent to 17.4 percent, depending on the stratification of the specific right. The fair value of servicing rights was $6.9 million at December 31, 2020. The fair value at December 31, 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.