Servicing Assets

9 Months Ended

Sep. 30, 2021

Servicing Asset [Abstract]

Servicing Assets

Servicing AssetsThe Company recognizes the right to service SBA loans for others as servicing assets when the servicing income the Company receives is more than adequate compensation. Servicing assets are accounted for using the amortization method. Under this method, the Company amortizes the servicing assets over the period of the economic life of the assets arising from estimated net servicing revenue. The Company periodically stratifies its servicing assets into groupings based on risk characteristics and assesses each group for impairment based on fair value. The Servicing assets totaled $12.4 million at September 30, 2021 and $7.4 million at December 31, 2020.

Based on the results of the impairment test, there were no valuation allowance for impairment as of both September 30, 2021 and December 31, 2020. The following table presents an analysis of the changes in activity for loan servicing assets during the three and nine months ended September 30, 2021 and 2020 is as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
($ in thousands)	2021		2020		2021		2020
Beginning balance	$	12,903	$	6,972	$	7,360	$	7,024
Additions from loans sold with servicing retained	533		585		1,380		1,354
Additions from purchase of servicing rights	—		—		6,097		—
Amortized to expense	(1,047)		(335)		(2,448)		(1,156)
Ending balance	$	12,389	$	7,222	$	12,389	$	7,222

The fair value of the servicing assets was $15.1 million at September 30, 2021, which was determined using discount rates ranging from 3.8% to 10.0% and prepayment speeds ranging from 14.3% to 14.7%, depending on the stratification of the specific assets.

The fair value of the servicing assets was $8.8 million at September 30, 2020, which was determined using discount rates ranging from 5.4% to 11.9% and prepayment speeds ranging from 14.5% to 14.9%, depending on the stratification of the specific assets.