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TRANSFERS AND SERVICING OF FINANCIAL ASSETS
 3 Months Ended
Mar. 31, 2025
Transfers and Servicing [Abstract]  
TRANSFERS AND SERVICING OF FINANCIAL ASSETS TRANSFERS AND SERVICING OF FINANCIAL ASSETS
The Company has originated loans that are serviced for others, including loans partially guaranteed by the SBA, some of which have been sold in the secondary market, as well as CRE loans and C&I loans participated with various other financial institutions and special purpose vehicle (“SPV”) participations for the Main Street loans. Loans sold and serviced for others are accounted for as sales and are therefore not included in the accompanying consolidated balance sheets. Loans serviced for others totaled $145.5 million and $138.0 million at March 31, 2025 and December 31, 2024, respectively. This includes SBA loans serviced for others of $38.9 million and $33.2 million at March 31, 2025, and December 31, 2024, for which there was a related servicing asset of $452 thousand and $344 thousand, respectively.
Consideration for each SBA loan sale includes the cash received and a related servicing asset. The Company receives servicing fees ranging from 0.25% to 1.00% for the services provided over the life of the loan. The servicing asset is based on the estimated fair value of these future cash flows to be collected. The risks inherent in SBA servicing assets primarily relates to accelerated prepayment of loans in excess of what was originally modeled driven by changes in interest rates and a reduction in the estimated future cash flows.
The servicing asset activity includes additions from loan sales with servicing retained, and reductions from amortization as the serviced loans are repaid and servicing fees are earned. The SBA servicing asset is reported in accrued interest receivable and other assets in the consolidated balance sheets.
A summary of changes in the SBA servicing asset for the three months ended March 31, 2025 and 2024 follows:
Three Months Ended
March 31,
(dollars in thousands)20252024
Balance, beginning of period$344 $546 
Additions164 109 
Amortization (1)
(56)(31)
Balance, end of period$452 $624 
(1) Amortization included accelerated amortization of $29 thousand and $10 thousand for the three months ended March 31, 2025 and 2024, respectively.
SBA 7(a) loans sold during the three months ended March 31, 2025 totaled $9.0 million resulting in total gains on sale of SBA loans of $577 thousand. SBA 7(a) loans sold during the three months ended March 31, 2024 totaled $6.3 million resulting in total gains on sale of SBA loans of $415 thousand.
The fair value of the servicing asset approximated the carrying value at March 31, 2025 and December 31, 2024. The significant assumptions used in the valuation of the SBA servicing asset at March 31, 2025 and December 31, 2024 included:
(dollars in thousands)March 31,
2025		December 31,
2024
Discount rate:
Range
5.8% – 21.0%
5.8% – 23.3%
Weighted average12.7%14.3%
Prepayment speed:
Range
13.5% – 38.4%
12.9% – 40.2%
Weighted average19.6%20.5%
The following table presents the components of net servicing fees, included in servicing and related income on loans, net in the consolidated statements of operations, for the three months ended March 31, 2025 and 2024:
Three Months Ended
March 31,
(dollars in thousands)20252024
Contractually specified fees$90 $92 
Amortization(56)(31)
Net servicing fees
$34 $61