Servicing Assets and Liabilities

9 Months Ended

Sep. 30, 2017

The changes in servicing assets and liabilities for the nine months ended September 30, 2017 and 2016 were as follows:



	2017			2016
	(in thousands)
Servicing assets:
Balance at beginning of period	$	10,564		$	11,744
Addition related to sale of SBA loans	1,949			1,452
Amortization	(2,415		)	(2,363		)
Reversal of allowance	330			—
Balance at end of period	$	10,428		$	10,833

Servicing liabilities:
Balance at beginning of period	$	3,143		$	4,784
Amortization	(706		)	(1,358		)
Reversal of allowance	(67		)	—
Balance at end of period	$	2,370		$	3,426

At September 30, 2017 and 2016, we serviced loans sold to unaffiliated parties in the amounts of $482.0 million and $485.1 million, respectively. These represented loans that have been sold for which the Bank continues to provide servicing. These loans are maintained off balance sheet and are not included in the loans receivable balance. All of the loans serviced were SBA loans.

The Company recorded servicing fee income of $1.2 million for each of the three-month periods ended September 30, 2017 and 2016, and $3.5 million and $3.6 million for the nine months ended September 30, 2017 and 2016, respectively. Servicing fee income, net of the amortization of servicing assets and liabilities, is included in other operating income in the consolidated statements of income. Net amortization expense was $624,000 and $598,000 for the three months ended September 30, 2017 and 2016, respectively, and $1.7 million and $1.0 million for the nine months ended September 30, 2017 and 2016, respectively.

- Definition

The entire disclosure for a transferor's continuing involvement in financial assets that it has transferred in a securitization or asset-backed financing arrangement, the nature of any restrictions on assets reported by an entity in its statement of financial position that relate to a transferred financial asset (including the carrying amounts of such assets), how servicing assets and servicing liabilities are reported, and (for securitization or asset-backed financing arrangements accounted for as sales) when a transferor has continuing involvement with the transferred financial assets and transfers of financial assets accounted for as secured borrowings, how the transfer of financial assets affects an entity's financial position, financial performance, and cash flows.

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