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Loan Servicing

12 Months Ended

Dec. 31, 2023

Note 7: Loan Servicing

Mortgage and SBA loans serviced for others are not included in the accompanying consolidated balance sheets and include multi-family, single-family and SBA loans sold in the secondary market. The risks inherent in servicing assets relate primarily to changes in prepayments that result from shifts in interest rates. Call protection is in place on certain multi-family loans to deter from prepayments on a 10-year sliding scale. The Company’s total servicing portfolio, primarily managed in the Multi-family Mortgage Banking segment, had an unpaid principal balance of $26.0 billion and $21.9 billion as of December 31, 2023 and 2022, respectively. Included in the December 31, 2023 and 2022 amounts, respectively, were unpaid principal balances of loans serviced for others of $15.3 billion and $13.1 billion, an unpaid principal balance of loans sub-serviced for others of $2.1 billion and $1.9 billion, and other servicing balances of $721.1 million and $663.1 million. The Company also manages $7.9 billion and $6.2 billion of loans for customers that have loans on the balance sheet at December 31, 2023 and 2022, respectively. The servicing portfolio is primarily Ginnie Mae, Fannie Mae, and Freddie Mac loans and is a significant source of our noninterest income and deposits.

The following summarizes the activity in servicing rights measured using the fair value method for the years ended December 31, 2023, 2022, and 2021:


	For the Year Ended
	December 31,
	2023		2022		2021

		(In thousands)
Balance, beginning of period	$	146,248	$	110,348	$	82,604
Additions
Purchased servicing		513		—		2,057
Originated servicing		14,755		27,124		30,421
Subtractions
Paydowns		(7,621)		(10,985)		(16,691)
Sold servicing		—		—		(438)
Changes in fair value due to changes in valuation inputs or assumptions used in the valuation model		4,562		19,761		12,395
Balance, end of period	$	158,457	$	146,248	$	110,348

Contractually specified servicing fees for retained, purchased and sub-serviced loans were $29.3 million, $21.4 million, and $20.7 million for the years ended December 31, 2023, 2022, and 2021, respectively.

In connection with certain loan servicing and sub-servicing agreements, the Company is to reconcile the payments received monthly on these loans, for principal and interest, taxes, insurance, and replacement reserves. The funds are required to be maintained in separate trust accounts and not commingled with the Company’s general operating funds. At December 31, 2023 and 2022, the Company held restricted escrow funds for these loans at the Bank or other financial institution, amounting to $1.3 billion and $777.7 million, respectively.