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LOAN SERVICING RIGHTS
 12 Months Ended
Dec. 31, 2022
Transfers and Servicing [Abstract]  
LOAN SERVICING RIGHTS LOAN SERVICING RIGHTS
The Company sells certain residential mortgage loans and SBA loans to third parties. All such transfers are accounted for as sales and the continuing involvement in the loans sold is limited to certain servicing responsibilities. The Company has also acquired portfolios of residential mortgage, SBA and indirect automobile loans serviced for others. Loan servicing rights are initially recorded at fair value and subsequently recorded at the lower of cost or fair value and are amortized over the remaining service life of the loans, with consideration given to prepayment assumptions. Loan servicing rights are recorded in other assets on the consolidated balance sheets.

The carrying value of the loan servicing rights assets is shown in the table below:
(dollars in thousands)December 31, 2022December 31, 2021
Loan Servicing Rights
Residential mortgage$147,014 $206,944 
SBA3,443 5,556 
Total loan servicing rights$150,457 $212,500 
Residential Mortgage Loans

The Company sells certain first-lien residential mortgage loans to third party investors, primarily Federal National Mortgage Association (“FNMA”), Government National Mortgage Association (“GNMA”), and Federal Home Loan Mortgage Corporation (“FHLMC”). The Company retains the related mortgage servicing rights (“MSRs”) and receives servicing fees on certain of these loans. The net gain on loan sales, MSRs amortization and recoveries/impairment, and ongoing servicing fees on the portfolio of loans serviced for others are recorded in the consolidated statements of income as part of mortgage banking activity.

During the years ended December 31, 2022, 2021 and 2020, the Company recorded servicing fee income of $69.1 million, $51.4 million and $31.1 million, respectively. Servicing fee income includes servicing fees, late fees and ancillary fees earned for each period.

The table below is an analysis of the activity in the Company’s MSRs and impairment:
Years Ended December 31,
(dollars in thousands)202220212020
Residential mortgage servicing rights
Beginning carrying value, net$206,944 $130,630 $94,902 
Additions64,020 93,229 98,182 
Amortization(24,995)(30,540)(23,151)
(Impairment)/recoveries21,824 13,625 (39,303)
Disposals(120,779)— — 
Ending carrying value, net$147,014 $206,944 $130,630 
Years Ended December 31,
(dollars in thousands)202220212020
Residential mortgage servicing impairment
Beginning balance$25,782 $39,407 $104 
Additions— 1,398 39,303 
Recoveries(21,824)(15,023)— 
Reduction due to disposal(3,958)— — 
Ending balance$— $25,782 $39,407 
The key metrics and the sensitivity of the residential mortgage servicing rights fair value to adverse changes in model inputs and/or assumptions are summarized below:
(dollars in thousands)December 31, 2022December 31, 2021
Residential mortgage servicing rights
Unpaid principal balance of loans serviced for others$10,046,052 $16,786,442 
Composition of residential loans serviced for others:
FHLMC16.80 %21.88 %
FNMA50.09 %60.26 %
GNMA33.11 %17.86 %
Total100.00 %100.00 %
Weighted average term (months)353341
Weighted average age (months)2220
Modeled prepayment speed8.22 %12.96 %
Decline in fair value due to a 10% adverse change(5,800)(8,368)
Decline in fair value due to a 20% adverse change(11,184)(16,157)
Weighted average discount rate10.00 %8.77 %
Decline in fair value due to a 10% adverse change(6,413)(6,984)
Decline in fair value due to a 20% adverse change(12,330)(13,504)

SBA Loans

All sales of SBA loans, consisting of the guaranteed portion, are executed on a servicing retained basis. These loans, which are partially guaranteed by the SBA, are generally secured by business property such as real estate, inventory, equipment and accounts receivable. The net gain on SBA loan sales, amortization and impairment/recoveries of servicing rights, and ongoing servicing fees are recorded in the consolidated statements of income as part of other noninterest income.

During the years ended December 31, 2022, 2021 and 2020, the Company recorded servicing fee income of $3.6 million, $4.0 million and $4.4 million, respectively. Servicing fee income includes servicing fees, late fees and ancillary fees earned for each period.

The table below is an analysis of the activity in the Company’s SBA loan servicing rights and impairment:
Years Ended December 31,
(dollars in thousands)202220212020
SBA servicing rights
Beginning carrying value, net$5,556 $5,839 $7,886 
Additions889 954 1,571 
Purchase accounting adjustment— — (1,214)
Amortization(3,002)(2,142)(1,640)
(Impairment)/recovery— 905 (764)
Ending carrying value, net$3,443 $5,556 $5,839 
Years Ended December 31,
(dollars in thousands)202220212020
SBA servicing impairment
Beginning balance$— $905 $141 
Additions— — 1,645 
Recoveries— (905)(881)
Ending balance$— $— $905 
The key metrics and the sensitivity of the SBA servicing rights fair value to adverse changes in model inputs and/or assumptions are summarized below:
(dollars in thousands)December 31, 2022December 31, 2021
SBA servicing rights
Unpaid principal balance of loans serviced for others$326,418 $410,167 
Weighted average life (in years)3.693.65
Modeled prepayment speed18.24 %17.68 %
Decline in fair value due to a 10% adverse change(177)(291)
Decline in fair value due to a 20% adverse change(340)(557)
Weighted average discount rate19.57 %11.92 %
Decline in fair value due to a 100 basis point adverse change(83)(144)
Decline in fair value due to a 200 basis point adverse change(163)(282)

Indirect Automobile Loans

The Company acquired a portfolio of indirect automobile loans serviced for others. These loans, or portions of loans, were sold on a servicing retained basis. Amortization and impairment/recoveries of servicing rights, and ongoing servicing fees are recorded in the consolidated statements of income as part of other noninterest income. The Company is not actively originating or selling indirect automobile loans. The table below is an analysis of the activity in the Company’s indirect automobile servicing rights:
Years Ended December 31,
(dollars in thousands)202220212020
Indirect automobile servicing rights
Beginning carrying value, net$— $73 $247 
Addition due to acquisition— — — 
Amortization— (73)(174)
Impairment— — — 
Ending carrying value, net$— $— $73 

During the years ended December 31, 2022, 2021 and 2020, the Company recorded servicing fee income of $243,000, $616,000 and $1.7 million, respectively. Servicing fee income includes servicing fees, late fees and ancillary fees earned for each period.