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LOAN SERVICING RIGHTS
 12 Months Ended
Dec. 31, 2023
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 and SBA 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, 2023December 31, 2022
Loan Servicing Rights
Residential mortgage$171,915 $147,014 
SBA2,737 3,443 
Total loan servicing rights$174,652 $150,457 
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, 2023, 2022 and 2021, the Company recorded servicing fee income of $61.8 million, $70.0 million and $51.4 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 MSRs and impairment:
Years Ended December 31,
(dollars in thousands)202320222021
Residential mortgage servicing rights
Beginning carrying value, net$147,014 $206,944 $130,630 
Additions44,305 64,020 93,229 
Amortization(19,404)(24,995)(30,540)
(Impairment)/recoveries— 21,824 13,625 
Disposals— (120,779)— 
Ending carrying value, net$171,915 $147,014 $206,944 
Years Ended December 31,
(dollars in thousands)202320222021
Residential mortgage servicing impairment
Beginning balance$— $25,782 $39,407 
Additions— — 1,398 
Recoveries— (21,824)(15,023)
Reduction due to disposal— (3,958)— 
Ending balance$— $— $25,782 

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, 2023December 31, 2022
Residential mortgage servicing rights
Unpaid principal balance of loans serviced for others$12,454,454 $10,046,052 
Composition of residential loans serviced for others:
FHLMC17.54 %16.80 %
FNMA50.51 %50.09 %
GNMA31.95 %33.11 %
Total100.00 %100.00 %
Weighted average term (months)355353
Weighted average age (months)2722
Modeled prepayment speed8.56 %8.22 %
Decline in fair value due to a 10% adverse change(4,492)(5,800)
Decline in fair value due to a 20% adverse change(9,444)(11,184)
Weighted average discount rate10.98 %10.00 %
Decline in fair value due to a 10% adverse change(5,110)(6,413)
Decline in fair value due to a 20% adverse change(11,181)(12,330)
The sensitivity calculations above are hypothetical and should not be considered to be predictive of future performance. As indicated, changes in fair value based on adverse changes in model inputs and/or assumptions generally cannot be extrapolated because the relationship of a change in input or assumption to the change in fair value may not be linear. In addition, the effect of an adverse variation in a particular input or assumption on the value of the residential mortgage servicing rights is calculated without changing any other input or assumption. In reality, a change in another factor may magnify or counteract the effect of the change in the first.

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, 2023, 2022 and 2021, the Company recorded servicing fee income of $2.8 million, $3.6 million and $4.0 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)202320222021
SBA servicing rights
Beginning carrying value, net$3,443 $5,556 $5,839 
Additions392 889 954 
Amortization(1,098)(3,002)(2,142)
(Impairment)/recovery— — 905 
Ending carrying value, net$2,737 $3,443 $5,556 
Years Ended December 31,
(dollars in thousands)202320222021
SBA servicing impairment
Beginning balance$— $— $905 
Additions— — — 
Recoveries— — (905)
Ending balance$— $— $— 

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, 2023December 31, 2022
SBA servicing rights
Unpaid principal balance of loans serviced for others$271,164 $326,418 
Weighted average life (in years)3.313.69
Modeled prepayment speed20.83 %18.24 %
Decline in fair value due to a 10% adverse change(171)(177)
Decline in fair value due to a 20% adverse change(327)(340)
Weighted average discount rate14.70 %19.57 %
Decline in fair value due to a 100 basis point adverse change(69)(83)
Decline in fair value due to a 200 basis point adverse change(135)(163)

The sensitivity calculations above are hypothetical and should not be considered to be predictive of future performance. As indicated, changes in fair value based on adverse changes in model inputs and/or assumptions generally cannot be extrapolated because the relationship of a change in input or assumption to the change in fair value may not be linear. In addition, the effect of an adverse variation in a particular input or assumption on the value of the SBA servicing rights is calculated without
changing any other input or assumption. In reality, a change in another factor may magnify or counteract the effect of the change in the first.