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SBA Loan Servicing Activities

12 Months Ended

Dec. 31, 2021

SBA LOAN SERVICING ACTIVITIES

At December 31, 2021 and December 31, 2020, the principal balance of SBA loans, excluding PPP loans, retained by the Company was $300,415 and $253,330, respectively, of which $171,548 and $110,196 represented the guaranteed portion of the loans. Loans serviced for others are not included in the accompanying Consolidated Balance Sheets. The unpaid principal balances of SBA loans serviced for others requiring recognition of a servicing asset were $459,670 and $524,910 at December 31, 2021 and December 31, 2020, respectively.

Activity for SBA loan servicing rights for the year ended December 31, 2021 and 2020 follows:


	Year Ended
	December 31, 2021		December 31, 2020
Beginning of period	$	8,160	$	11,280
Additions	1,229		530
Amortization	(2,982)		(3,650)
End of period	$	6,407	$	8,160

The fair value of SBA loan servicing rights was $8,050 and $9,709 at December 31, 2021 and December 31, 2020, respectively. Fair value was determined using a weighted average discount rate of 12.13% and a weighted average prepayment speed of 10.37% at December 31, 2021. Fair value was determined using a weighted average discount rate of

11.75% and a weighted average prepayment speed of 10.34% at December 31, 2020. The SBA loan servicing rights are amortized over the life of a loan on a loan-by-loan basis.

The following table presents the components of net gain (loss) on sale of SBA loans, excluding sale of PPP loans, for the years ended December 31, 2021 and December 31, 2020:


	Year Ended
	December 31, 2021		December 31, 2020
Gain on sale of guaranteed SBA loans	$	3,435	$	2,087
Loss on sale of unguaranteed SBA loans	(406)		(70)
Costs recognized on sale of SBA loans	(51)		(895)
Fair value of servicing rights created	1,229		530
Gain on sale of SBA loans, net	$	4,207	$	1,652

The Company also sold PPP loans, servicing released, for a net gain of $13,817 for the year ended December 31, 2021.

- 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

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+ Details