XML 27 R16.htm IDEA: XBRL DOCUMENT
v3.21.2

Servicing Assets | 9 Months Ended
--- | ---
Sep. 30, 2021
Servicing Assets |
Servicing Assets | (7) Servicing Assets The Corporation sells certain residential mortgage loans and the guaranteed portion of certain small business loans (“SBA loans”) to third parties and retains servicing rights and receives servicing fees. All such transfers are accounted for as sales. When the Corporation sells a residential mortgage loan, it does not retain any portion of that loan and its continuing involvement in such transfers is limited to certain servicing responsibilities. While the Corporation may retain a portion of certain sold SBA loans, its continuing involvement in the portion of the loan that was sold is limited to certain servicing responsibilities. When the contractual servicing fees on loans sold with servicing retained are expected to be more than adequate compensation to a servicer for performing the servicing, a capitalized servicing asset is recognized. The Corporation accounts for the transfers and servicing of financial assets in accordance with ASC 860, Accounting for Transfers and Servicing of Financial Assets and Extinguishment of Liabilities. Residential Mortgage Loan Servicing Rights ​ The mortgage servicing rights (“MSRs”) are amortized over the period of the estimated future net servicing life of the underlying assets. MSR’s are evaluated quarterly for impairment based upon the fair value of the rights as compared to their amortized cost. Impairment is recognized on the income statement to the extent the fair value is less than the capitalized amount of the MSR. The Corporation serviced $968.6 million and $506.0 million of residential mortgage loans as of September 30, 2021 and December 31, 2020, respectively. During the three and nine months ended September 30, 2021, the Corporation recognized servicing fee income of $562 thousand and $1.4 million, respectively, compared to $140 thousand and $247 thousand during the three and nine months ended September 30, 2020, respectively. ​ Changes in the MSR balance are summarized as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Three Months Ended September 30, | ​ | Nine Months Ended September 30,
(dollars in thousands) | ​ | 2021 |  | 2020 | ​ | 2021 |  | 2020
Balance at beginning of the period | ​ | $ | 8,942 | ​ | 1,294 | ​ | $ | 4,647 | ​ | 446
Servicing rights capitalized | ​ | ​ | 1,360 | ​ | 1,333 | ​ | ​ | 5,856 | ​ | 2,469
Amortization of servicing rights | ​ | ​ | (316) | ​ | (90) | ​ | ​ | (786) | ​ | (173)
Change in valuation allowance | ​ | ​ | 111 | ​ | 102 | ​ | ​ | 380 | ​ | (103)
Balance at end of the period | ​ | $ | 10,097 | ​ | 2,639 | ​ | $ | 10,097 | ​ | 2,639
​ Activity in the valuation allowance for MSR’s was as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Three Months Ended September 30, | ​ | Nine Months Ended September 30,
(dollars in thousands) | ​ | 2021 |  | 2020 | ​ | 2021 |  | 2020
Valuation allowance, beginning of period | ​ | $ | (166) | ​ | (303) | ​ | $ | (435) | ​ | (98)
Impairment | ​ | ​ | — | ​ | — | ​ | ​ | — | ​ | (103)
Recovery | ​ | ​ | 111 | ​ | 102 | ​ | ​ | 380 | ​ | —
Valuation allowance, end of period | ​ | $ | (55) | ​ | (201) | ​ | $ | (55) | ​ | (201)
​ The Corporation uses assumptions and estimates in determining the fair value of MSRs. These assumptions include prepayment speeds and discount rates. The assumptions used in the valuation were based on input from buyers, brokers and other qualified personnel, as well as market knowledge. At September 30, 2021, the key assumptions used to determine the fair value of the Corporation’s MSRs included a lifetime constant prepayment rate equal to 7.26% and a discount rate equal to 9.00%. At December 31, 2020, the key assumptions used to determine the fair value of the Corporation’s MSRs included a lifetime constant prepayment rate equal to 9.39% and a discount rate equal to 9.00%. The prepayment speed assumption has declined from December 31, 2020 to September 30, 2021 as interest rates have started to increase and the number of mortgage refinancings have started to decline, while the discount rate assumption is unchanged over this period as the underlying credit quality of the loans sold in each period is relatively unchanged. ​ At September 30, 2021 and December 31, 2020, the sensitivity of the current fair value of the residential mortgage servicing rights to immediate 10% and 20% favorable and unfavorable changes in key economic assumptions are included in the following table. ​
​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​
(dollars in thousands) | ​ | September 30, 2021 |  | December 31, 2020
Fair value of residential mortgage servicing rights | ​ | $ | 10,296 | ​ | $ | 4,647
​ | ​ | ​ | ​ | ​ | ​ | ​
Weighted average life (years) | ​ | ​ | 9.0 | ​ | ​ | 5.0
​ | ​ | ​ | ​ | ​ | ​ | ​
Prepayment speed | ​ | ​ | 7.26% | ​ | ​ | 9.39%
Impact on fair value: | ​ | ​ | ​ | ​ | ​ | ​
10% adverse change | ​ | $ | (358) | ​ | $ | (183)
20% adverse change | ​ | ​ | (695) | ​ | ​ | (354)
​ | ​ | ​ | ​ | ​ | ​ | ​
Discount rate | ​ | ​ | 9.00% | ​ | ​ | 9.00%
Impact on fair value: | ​ | ​ | ​ | ​ | ​ | ​
10% adverse change | ​ | $ | (397) | ​ | $ | (168)
20% adverse change | ​ | ​ | (768) | ​ | ​ | (329)
​ The sensitivity calculations above are hypothetical and should not be considered to be predictive of future performance. As indicated, changes in fair value based on adverse changes in assumptions generally cannot be extrapolated because the relationship of the change in assumption to the change in fair value may not be linear. Also, in this table, the effect of an adverse variation in a particular assumption on the fair value of the MSRs is calculated without changing any other assumption; while in reality, changes in one factor may result in changes in another (for example, increases in market interest rates may result in lower prepayments), which may magnify or counteract the effect of the change. ​ SBA Loan Servicing Rights ​ SBA loan servicing assets are amortized over the period of the estimated future net servicing life of the underlying assets. SBA loan servicing assets are evaluated quarterly for impairment based upon the fair value of the rights as compared to their amortized cost. Impairment is recognized on the income statement to the extent the fair value is less than the capitalized amount of the SBA loan servicing asset. The Corporation serviced $102.5 million and $55.9 million of SBA loans, as of September 30, 2021 and December 31, 2020, respectively. ​ Changes in the SBA loan servicing asset balance are summarized as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Three Months Ended September 30, | ​ | Nine Months Ended September 30,
(dollars in thousands) | ​ | 2021 |  | 2020 | ​ | 2021 |  | 2020
Balance at beginning of the period | ​ | $ | 1,385 | ​ | 632 | ​ | $ | 970 | ​ | 337
Servicing rights capitalized | ​ | ​ | 588 | ​ | 183 | ​ | ​ | 1,166 | ​ | 524
Amortization of servicing rights | ​ | ​ | (112) | ​ | (42) | ​ | ​ | (266) | ​ | (88)
Change in valuation allowance | ​ | ​ | (26) | ​ | 14 | ​ | ​ | (35) | ​ | 14
Balance at end of the period | ​ | $ | 1,835 | ​ | 787 | ​ | $ | 1,835 | ​ | 787
​ Activity in the valuation allowance for SBA loan servicing assets was as follows: ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Three Months Ended September 30, | ​ | Nine Months Ended September 30,
(dollars in thousands) | ​ | 2021 |  | 2020 | ​ | 2021 |  | 2020
Valuation allowance, beginning of period | ​ | $ | (48) | ​ | (26) | ​ | $ | (39) | ​ | (26)
Impairment | ​ | ​ | (26) | ​ | — | ​ | ​ | (35) | ​ | —
Recovery | ​ | ​ | — | ​ | 14 | ​ | ​ | — | ​ | 14
Valuation allowance, end of period | ​ | $ | (74) | ​ | (12) | ​ | $ | (74) | ​ | (12)
​ The Corporation uses assumptions and estimates in determining the fair value of SBA loan servicing rights. These assumptions include prepayment speeds, discount rates, and other assumptions. The assumptions used in the valuation were based on input from buyers, brokers and other qualified personnel, as well as market knowledge. At September 30, 2021, the key assumptions used to determine the fair value of the Corporation’s SBA loan servicing rights included a lifetime constant prepayment rate equal to 12.91%, and a discount rate equal to 7.47%. At December 31, 2020, the key assumptions used to determine the fair value of the Corporation’s SBA loan servicing rights included a lifetime constant prepayment rate equal to 12.73%, and a discount rate equal to 8.33%. ​ At September 30, 2021 and December 31, 2020, the sensitivity of the current fair value of the SBA loan servicing rights to immediate 10% and 20% favorable and unfavorable changes in key economic assumptions are included in the following table. ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
(dollars in thousands) | ​ | September 30, 2021 |  | December 31, 2020
Fair value of SBA loan servicing rights | ​ | $ | 1,954 | ​ | $ | 1,010 | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Weighted average life (years) | ​ | ​ | 3.8 | ​ | ​ | 3.7 | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Prepayment speed | ​ | ​ | 12.91% | ​ | ​ | 12.73% | ​
Impact on fair value: | ​ | ​ | ​ | ​ | ​ | ​ | ​
10% adverse change | ​ | $ | (77) | ​ | $ | (37) | ​
20% adverse change | ​ | ​ | (148) | ​ | ​ | (71) | ​
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
Discount rate | ​ | ​ | 7.47% | ​ | ​ | 8.33% | ​
Impact on fair value: | ​ | ​ | ​ | ​ | ​ | ​ | ​
10% adverse change | ​ | $ | (53) | ​ | $ | (25) | ​
20% adverse change | ​ | ​ | (103) | ​ | ​ | (49) | ​
​ The sensitivity calculations above are hypothetical and should not be considered to be predictive of future performance. As indicated, changes in fair value based on adverse changes in assumptions generally cannot be extrapolated because the relationship of the change in assumption to the change in fair value may not be linear. Also, in this table, the effect of an adverse variation in a particular assumption on the fair value of the SBA servicing rights is calculated without changing any other assumption; while in reality, changes in one factor may result in changes in another (for example, increases in market interest rates may result in lower prepayments), which may magnify or counteract the effect of the change.

X
- References No definition available. + Details
Name: | us-gaap_TransfersAndServicingAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- 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/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 860 -SubTopic 30 -Section 50 -Paragraph 1A -Subparagraph (c)(3) -URI http://asc.fasb.org/extlink&oid=109249958&loc=SL6224234-111729 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 860 -SubTopic 30 -Section 50 -Paragraph 1A -Subparagraph (b)(2) -URI http://asc.fasb.org/extlink&oid=109249958&loc=SL6224234-111729 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 860 -SubTopic 20 -Section 50 -Paragraph 3 -Subparagraph (b)(2)(ii) -URI http://asc.fasb.org/extlink&oid=121570589&loc=d3e107207-111719 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 860 -SubTopic 20 -Section 50 -Paragraph 3 -Subparagraph (cc) -URI http://asc.fasb.org/extlink&oid=121570589&loc=d3e107207-111719 Reference 5: http://www.xbrl.org/2009/role/commonPracticeRef -Publisher FASB -Name Accounting Standards Codification -Topic 860 -SubTopic 50 -Section 50 -Paragraph 2 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=116651436&loc=d3e122596-111746 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 860 -SubTopic 50 -Section 50 -Paragraph 3 -Subparagraph (a)(5) -URI http://asc.fasb.org/extlink&oid=116651436&loc=d3e122625-111746 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 860 -SubTopic 20 -Section 50 -Paragraph 4D -Subparagraph (c)(3) -URI http://asc.fasb.org/extlink&oid=121570589&loc=SL51823488-111719 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 860 -SubTopic 20 -Section 50 -Paragraph 3 -Subparagraph (b)(2)(i) -URI http://asc.fasb.org/extlink&oid=121570589&loc=d3e107207-111719 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 860 -SubTopic 50 -Section 50 -Paragraph 4 -Subparagraph (d) -URI http://asc.fasb.org/extlink&oid=116651436&loc=d3e122739-111746 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 860 -SubTopic 20 -Section 50 -Paragraph 3 -Subparagraph (c) -URI http://asc.fasb.org/extlink&oid=121570589&loc=d3e107207-111719 Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 860 -SubTopic 30 -Section 50 -Paragraph 7 -Subparagraph (c) -URI http://asc.fasb.org/extlink&oid=109249958&loc=SL34722452-111729 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 860 -SubTopic 50 -Section 50 -Paragraph 3 -Subparagraph (a)(4)(ii) -URI http://asc.fasb.org/extlink&oid=116651436&loc=d3e122625-111746 Reference 13: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 860 -SubTopic 20 -Section 50 -Paragraph 4 -Subparagraph (d) -URI http://asc.fasb.org/extlink&oid=121570589&loc=d3e107314-111719 Reference 14: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 860 -SubTopic 50 -Section 50 -Paragraph 3 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=116651436&loc=d3e122625-111746 Reference 15: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 860 -SubTopic 20 -Section 50 -Paragraph 4 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=121570589&loc=d3e107314-111719 Reference 16: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 860 -URI http://asc.fasb.org/topic&trid=2197590 Reference 17: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 860 -SubTopic 50 -Section 50 -Paragraph 4 -Subparagraph (a)(7) -URI http://asc.fasb.org/extlink&oid=116651436&loc=d3e122739-111746 Reference 18: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 860 -SubTopic 20 -Section 50 -Paragraph 4 -Subparagraph (a)(5)(ii) -URI http://asc.fasb.org/extlink&oid=121570589&loc=d3e107314-111719 Reference 19: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 860 -SubTopic 50 -Section 50 -Paragraph 2 -Subparagraph (d) -URI http://asc.fasb.org/extlink&oid=116651436&loc=d3e122596-111746 Reference 20: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 860 -SubTopic 50 -Section 50 -Paragraph 2 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=116651436&loc=d3e122596-111746 + Details
Name: | us-gaap_TransfersAndServicingOfFinancialAssetsTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration