SBA AND USDA LOAN SERVICING

6 Months Ended

Jun. 30, 2026

NOTE 5 – SBA AND USDA LOAN SERVICING

The Company sells the guaranteed portion of certain SBA and USDA loans it originates and continues to service the sold portion of the loan. The portion of the loans sold are not included in the financial statements of the Company. As of June 30, 2026 and December 31, 2025, the unpaid principal balances of serviced loans totaled $682.2 million and $685.5 million, respectively.

Activity for SBA and USDA loan servicing rights are as follows:


		For the Three Months Ended June 30,						For the Six Months Ended June 30,
(Dollars in thousands)		2026			2025			2026			2025
Beginning of period		$	11,267		$	7,167		$	10,601		$	7,274
Change in fair value			(87)			(344)			579			(451)
End of period, fair value		$	11,180		$	6,823		$	11,180		$	6,823

Fair value at June 30, 2026 and December 31, 2025 was determined using discount rates ranging from 4.93% to 9.88% and 5.75% to 11.09%, respectively, and prepayment speeds ranging from 6.82% to 20.53% and 6.42% to 21.78%, respectively, depending on the stratification of the specific right. Average default rates are based on the industry average for the applicable NAICS/SIC code.

Comparable market values and a valuation model that calculates the present value of future cash flows were used to estimate fair value. For purposes of fair value measurement, risk characteristics including product type and interest rate, were used to stratify the originated loan servicing rights.