Servicing Assets

6 Months Ended

Jun. 30, 2022

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 six months ended June 30, 2022 and 2021 was as follows:

	Three Months Ended June 30,					Six Months Ended June 30,
	2022			2021		2022			2021
Beginning balance	$	24,497		$	22,140	$	23,744		$	22,042
Additions, net		2,294			2,536		4,278			4,139
Changes in fair value		(4,636	)		7		(5,867	)		(1,498	)
Ending balance	$	22,155		$	24,683	$	22,155		$	24,683

Loans serviced for others are not included in the Condensed Consolidated Statements of Financial Condition. The unpaid principal balances of these loans serviced for others as of June 30, 2022 and December 31, 2021 were as follows:

	June 30,		December 31,
	2022		2021
Loan portfolios serviced for:
SBA guaranteed loans	$	1,524,199	$	1,510,375
USDA guaranteed loans		186,634		183,026
Total	$	1,710,833	$	1,693,401

Loan servicing revenue totaled $3.4 million and $3.2 million for the three months ended June 30, 2022 and 2021, respectively. Loan servicing revenue totaled $6.8 million and $6.0 million for the six months ended June 30, 2022 and 2021, respectively.

Loan servicing asset revaluation, which represents the changes in fair value of servicing assets, resulted in a downward valuation adjustment of $4.6 million and an upward adjustment of $7,000 for the three months ended June 30, 2022 and 2021, respectively. Loan servicing asset revaluation resulted in a downward valuation adjustment of $5.9 million and $1.5 million, for the six months ended June 30, 2022 and 2021, 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.