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Servicing Assets

12 Months Ended

Dec. 31, 2018

Transfers and Servicing [Abstract]

Servicing Assets

SERVICING ASSETS

Servicing assets are recognized when SBA and residential mortgage loans are sold with servicing retained with the income statement effect recorded in gains on sales of loans. Servicing assets are initially recorded at fair value based on the present value of the contractually specified servicing fee, net of servicing costs, over the estimated life of the loan, using a discount rate. The Company’s servicing costs approximates the industry average servicing costs of 40 basis points. All classes of servicing assets are subsequently measured using the amortization method which requires servicing rights to be amortized into noninterest income in proportion to, and over the period of, the estimated future net servicing income of the underlying loans.

Management periodically evaluates servicing assets for impairment based upon the fair value of the rights as compared to the carrying amount. Impairment is determined by stratifying rights into groupings based on loan type. Impairment is recognized through a valuation allowance for an individual grouping, to the extent that fair value is less than the carrying amount.

The changes in net servicing assets for the year ended December 31, 2018 and 2017 were as follows:

	Year Ended December 31,
	2018				2017
	(Dollars in thousands)
Balance at beginning of period	$	24,710			$	26,457
Additions through originations of servicing assets	6,157				5,492
Amortization	(7,735		)		(7,239		)
Balance at end of period	$	23,132			$	24,710

Total servicing assets at December 31, 2018 totaled $23.1 million and was comprised of $18.7 million in SBA servicing assets and $4.4 million in mortgage related servicing assets. At December 31, 2017, servicing assets totaled $24.7 million, comprised of $22.2 million in SBA servicing assets and $2.5 million in mortgage related servicing assets.

The Company utilizes the discounted cash flow method to calculate the initial excess servicing assets. The inputs used in determining the fair value of the servicing assets at December 31, 2018 and December 31, 2017 are presented below.

		December 31, 2018				December 31, 2017
		Range				Range
SBA Servicing Assets:
Weighted-average discount rate		10.42% ~ 11.52%				10.13% ~ 11.13%
Constant prepayment rate		9.51% ~ 11.09%				7.50% ~ 12.50%
Mortgage Servicing Assets:
Weighted-average discount rate		10.13% ~ 10.38%				9.50% ~ 9.66%
Constant prepayment rate		6.51% ~ 7.69%				7.71% ~ 9.13%

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- References

No definition available.

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- Definition

The entire disclosure for a transferor's continuing involvement in financial assets that it has transferred in a securitization or asset-backed financing arrangement, the nature of any restrictions on assets reported by an entity in its statement of financial position that relate to a transferred financial asset (including the carrying amounts of such assets), how servicing assets and servicing liabilities are reported, and (for securitization or asset-backed financing arrangements accounted for as sales) when a transferor has continuing involvement with the transferred financial assets and transfers of financial assets accounted for as secured borrowings, how the transfer of financial assets affects an entity's financial position, financial performance, and cash flows.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 860
-URI http://asc.fasb.org/topic&trid=2197590

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