v3.25.4
Loan Servicing
12 Months Ended
Dec. 31, 2025
Receivables [Abstract]  
Loan Servicing Loan Servicing
Mortgage loans sold to and serviced for others are not included in the accompanying statements of financial condition. The unpaid principal balances of these loans as of December 31 of the years indicated are summarized as follows:
(dollars in thousands)20252024
Mortgage loans sold to Federal Home Loan Mortgage Corporation without recourse$1,018 $1,134 
Mortgage loans sold to Federal National Mortgage Association without recourse27,412 32,238 
Mortgage loans sold to Federal Home Loan Bank without recourse108 124 
Total, end of period$28,538 $33,496 
The Company no longer retains servicing rights for mortgage loans sold.
Custodial and escrow account balances maintained in connection with the foregoing loan servicing arrangements were $1,068,000 and $1,102,000 as of December 31, 2025 and 2024, respectively.
During the years ended December 31, 2025 and 2024, the Company sold $3,795,000 and $1,302,000, respectively, of SBA guaranteed portion of loans originated and retained the servicing rights. The portion of SBA loans serviced for others are not included in the Consolidated Statements of Financial Condition. The unpaid principal balance of SBA loans serviced for others was $53,231,000 and $59,633,000 at December 31, 2025 and December 31, 2024, respectively.
SBA servicing assets are recognized separately when material servicing rights are acquired through the sale of the SBA guarantees. These servicing rights are initially measured at fair value at the date of sale and included in the gain on sale of loans recorded in the Consolidated Statements of Income. The servicing assets are amortized over the estimated net servicing life of the loans. Changes in the carrying value of servicing assets are recorded in service fees and charges on the Consolidated Statements of Income. Activity related to servicing assets for SBA loans and selected other related information for the years ended December 31, 2025, 2024 and 2023 is summarized as follows.
(dollars in thousands)202520242023
Balance, beginning of period$103 $124 $— 
Recognition of SBA servicing asset
— — 132 
Amortization(20)(21)(8)
Balance, end of period83 103 124 
Fair value, end of period$126 $132 $130 
Additional information related to SBA servicing assets
Weighted average prepayment rate
11.90 %11.70 %11.60 %
Weighted average term (years)
6.286.506.67
Weighted average discount rate
12.75 %13.50 %14.50 %
The fair value adjustments to servicing rights are mainly due to market-based assumptions associated with discounted cash flows, loan prepayment speeds, and changes in interest rates. A significant change in prepayments of the loans in the servicing portfolio could result in significant changes in the valuation adjustments, thus creating potential volatility in the carrying amount of the servicing rights.