Annual report pursuant to Section 13 and 15(d)

SBA Servicing Asset

v3.20.4
SBA Servicing Asset
12 Months Ended
Dec. 31, 2020
Transfers And Servicing Of Financial Assets [Abstract]  
SBA Servicing Asset

NOTE 9. SBA SERVICING ASSET

SBA servicing assets are recognized separately when rights are acquired through the sale of SBA guaranteed portion. These servicing rights are initially measured at fair value at the date of sale and included in the gain on sale. Updated fair values are obtained from an independent third party on a quarterly basis and adjustments are presented in SBA loan servicing fees on the consolidated statements of income. To determine the fair value of SBA Servicing Rights, the Company uses market prices for comparable servicing contracts, when available, or alternatively, uses a valuation model that calculates the present value of estimated future net servicing income.

The risks inherent in the SBA servicing asset relate primarily to changes in prepayments that result from shifts in interest rates. The following summarizes the activity pertaining to SBA servicing rights, which are in the consolidated balance sheets, for the years ended December 31, 2020 and 2019:

 

 

 

December 31,

 

 

 

2020

 

 

2019

 

 

 

(Dollars in thousands)

 

Beginning balance

 

$

3,355

 

 

$

3,965

 

Origination of servicing assets

 

 

370

 

 

 

935

 

Change in fair value

 

 

 

 

 

 

 

 

Due to run-off

 

 

(545

)

 

 

(876

)

Due to market changes

 

 

(227

)

 

 

(669

)

Ending balance

 

$

2,953

 

 

$

3,355