XML 25 R14.htm IDEA: XBRL DOCUMENT v3.21.2
Servicing Assets
 9 Months Ended
Sep. 30, 2021
Transfers And Servicing [Abstract]  
Servicing Assets

Note 6—Servicing Assets

Activity for servicing assets and the related changes in fair value for the three and nine months ended September 30, 2021 and 2020 was as follows:

 

 

 

Three Months Ended
September 30,

 

 

Nine Months Ended
September 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Beginning balance

 

$

24,683

 

 

$

18,351

 

 

$

22,042

 

 

$

19,471

 

Additions, net

 

 

1,564

 

 

 

1,794

 

 

 

5,703

 

 

 

4,449

 

Changes in fair value

 

 

(2,650

)

 

 

1,122

 

 

 

(4,148

)

 

 

(2,653

)

   Ending balance

 

$

23,597

 

 

$

21,267

 

 

$

23,597

 

 

$

21,267

 

 

Loans serviced for others are not included in the Consolidated Statements of Financial Condition. The unpaid principal balances of these loans serviced for others as of September 30, 2021 and December 31, 2020 were as follows:

 

 

 

September 30,

 

 

December 31,

 

 

 

2021

 

 

2020

 

Loan portfolios serviced for:

 

 

 

 

 

 

SBA guaranteed loans

 

$

1,471,367

 

 

$

1,395,713

 

USDA guaranteed loans

 

 

143,847

 

 

 

135,543

 

Total

 

$

1,615,214

 

 

$

1,531,256

 

 

Loan servicing revenue totaled $3.3 million and $2.9 million for each of the three months ended September 30, 2021 and 2020, respectively. Loan servicing revenue totaled $9.3 million and $8.7 million for each of the nine months ended September 30, 2021 and 2020, respectively. Loan servicing asset revaluation, which represents the changes in fair value of servicing assets, resulted in a downward valuation adjustment of $2.7 million and an upward valuation adjustment of $1.1 million for three months ended September 30, 2021 and 2020, respectively. Loan servicing asset revaluations resulted in downward valuation adjustments of $4.1 million and $2.7 million for the nine months ended September 30, 2021 and 2020, respectively.

The fair value of servicing rights is highly sensitive to changes in underlying assumptions. Changes in secondary market premiums and prepayment speed assumptions have the most significant impact on the fair value of servicing rights.

Generally, as interest rates rise on variable rate loans, loan prepayments increase due to an increase in refinance activity, which may result in a decrease in the fair value of servicing assets. Measurement of fair value is limited to the conditions existing and the assumptions used as of a particular point in time, and those assumptions may change over time. Refer to Note 15—Fair Value Measurement for further details.