Quarterly report pursuant to Section 13 or 15(d)

Servicing Assets

v3.22.2.2
Servicing Assets
 9 Months Ended
Sep. 30, 2022
Transfers And Servicing [Abstract]  
Servicing Assets

Note 4 — Servicing Assets

The changes in servicing assets for the three and nine months ended September 30, 2022 and 2021 were as follows:

 

 

 

Three Months Ended September 30,

 

 

 

2022

 

 

2021

 

 

 

(in thousands)

 

 

 

 

 

 

 

 

Balance at beginning of period

 

$

7,354

 

 

$

6,199

 

Addition related to sale of SBA loans

 

 

828

 

 

 

1,171

 

Amortization

 

 

(758

)

 

 

(532

)

Balance at end of period

 

$

7,424

 

 

$

6,838

 

 

 

 

 

Nine Months Ended September 30,

 

 

 

2022

 

 

2021

 

 

 

(in thousands)

 

 

 

 

 

 

 

 

Balance at beginning of period

 

$

7,080

 

 

$

6,212

 

Addition related to sale of SBA loans

 

 

2,377

 

 

 

2,328

 

Amortization

 

 

(2,033

)

 

 

(1,702

)

Balance at end of period

 

$

7,424

 

 

$

6,838

 

 

At September 30, 2022 and December 31, 2021, we serviced loans sold to unaffiliated parties of $505.2 million and $473.5 million, respectively. These represented loans that were 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 $1.3 million and $1.1 million for the three months ended September 30, 2022 and 2021, respectively, and $3.7 million and $3.4 million for the nine months ended September 30, 2022 and 2021, respectively. 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 $758,000 and $532,000 for the three months ended September 30, 2022 and 2021, respectively, and $2.0 million and $1.7 million for the nine months ended September 30, 2022 and 2021, respectively.

The fair value of servicing rights was $7.7 million at September 30, 2022. The fair value at September 30, 2022 was determined using discount rates ranging from 15.6 percent to 18.3 percent and prepayment speeds ranging from 11.0 percent to 17.0 percent, depending on the stratification of the specific right. The fair value of servicing rights was $8.1 million at December 31, 2021. The fair value at December 31, 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.