Servicing Assets

12 Months Ended

Dec. 31, 2022

Servicing Asset [Abstract]

Servicing Assets

Servicing Assets

The 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. Based on the results of the impairment test, there was no valuation allowance for impairment as of December 31, 2022 and 2021.

The following table presents an analysis of the changes in activity for loan servicing assets during the years ended December 31, 2022 and 2021:

	Year Ended December 31,
($ in thousands)	2022		2021
Beginning balance	$	12,720	$	7,360
Additions from loans sold with servicing retained	4,424		2,799
Additions from purchase of servicing rights	—		6,097
Amortized to expense	(4,385)		(3,536)
Ending balance	$	12,759	$	12,720

The fair value of the servicing assets was $16.8 million as of December 31, 2022, which was determined using discount rates ranging from 4.40% to 9.9% and prepayment speeds ranging from 13.1% to 13.8%, depending on the stratification of the specific assets.

The fair value of the servicing assets was $15.5 million as of December 31, 2021, which was determined using discount rates ranging from 3.75% to 10.0% and prepayment speeds ranging from 14.6% to 15.0% depending on the stratification of the specific assets.