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LOAN SERVICING RIGHTS
 12 Months Ended
Dec. 31, 2024
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, 2024December 31, 2023
Loan Servicing Rights
Residential mortgage$112,514 $171,915 
SBA2,926 2,737 
Total loan servicing rights$115,440 $174,652 
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, 2024, 2023 and 2022, the Company recorded servicing fee income of $60.4 million, $61.8 million and $70.0 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 MSRs and impairment:
Years Ended December 31,
(dollars in thousands)202420232022
Residential mortgage servicing rights
Beginning carrying value, net$171,915 $147,014 $206,944 
Additions34,986 44,305 64,020 
Amortization(17,501)(19,404)(24,995)
(Impairment)/recoveries— — 21,824 
Disposals(76,886)— (120,779)
Ending carrying value, net$112,514 $171,915 $147,014 
Years Ended December 31,
(dollars in thousands)202420232022
Residential mortgage servicing impairment
Beginning balance$— $— $25,782 
Recoveries— — (21,824)
Reduction due to disposal— — (3,958)
Ending balance$— $— $— 

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, 2024December 31, 2023
Residential mortgage servicing rights
Unpaid principal balance of loans serviced for others$8,856,724 $12,454,454 
Composition of residential loans serviced for others:
FHLMC24.51 %17.54 %
FNMA68.42 %50.51 %
GNMA7.07 %31.95 %
Total100.00 %100.00 %
Weighted average term (months)353355
Weighted average age (months)3327
Modeled prepayment speed7.37 %8.56 %
Decline in fair value due to a 10% adverse change(2,474)(4,492)
Decline in fair value due to a 20% adverse change(5,227)(9,444)
Weighted average discount rate10.79 %10.98 %
Decline in fair value due to a 10% adverse change(3,283)(5,110)
Decline in fair value due to a 20% adverse change(7,379)(11,181)
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, 2024, 2023 and 2022, the Company recorded servicing fee income of $2.2 million, $2.8 million and $3.6 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)202420232022
SBA servicing rights
Beginning carrying value, net$2,737 $3,443 $5,556 
Additions1,400 392 889 
Amortization(1,211)(1,098)(3,002)
Ending carrying value, net$2,926 $2,737 $3,443 

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, 2024December 31, 2023
SBA servicing rights
Unpaid principal balance of loans serviced for others$235,793 $271,164 
Weighted average life (in years)3.183.31
Modeled prepayment speed18.95 %20.83 %
Decline in fair value due to a 10% adverse change(192)(171)
Decline in fair value due to a 20% adverse change(366)(327)
Weighted average discount rate11.27 %14.70 %
Decline in fair value due to a 100 basis point adverse change(97)(69)
Decline in fair value due to a 200 basis point adverse change(190)(135)

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.