XML 26 R15.htm IDEA: XBRL DOCUMENT  v2.3.0.11
Servicing Assets - SBA Loans
 6 Months Ended
Jun. 30, 2011
Servicing Assets - SBA Loans  
Servicing Assets - SBA Loans

(8)  Servicing Assets — SBA Loans

 

The Company recognizes servicing assets through the sale of originated SBA loans when the rights to service those loans are retained. Servicing rights resulting from the sale of loans are initially recognized at fair value at the date of transfer. The Company subsequently measures the carrying value of the servicing assets by using the amortization method, which amortizes the servicing assets in proportion to and over the period of estimated net servicing income, and evaluates servicing assets for impairment based on fair value at each reporting date. The Company evaluates the possible impairment of servicing assets based on the difference between the carrying amount and current fair value of the servicing assets. Impairment is charged to servicing fees in the period recognized.

 

Changes in the Company’s amortized servicing assets are as follows:

 

 

 

Three Months Ended

 

Six Months Ended

 

 

 

June 30,

 

June 30,

 

 

 

2011

 

2010

 

2011

 

2010

 

 

 

(Dollars in thousands)

 

Beginning Balance

 

$

1,082

 

$

960

 

$

954

 

$

1,115

 

Servicing Assets capitalized

 

124

 

40

 

301

 

40

 

Servicing Assets amortized

 

(54

)

(51

)

(103

)

(206

)

Ending Balance

 

$

1,152

 

$

949

 

$

1,152

 

$

949

 

 

 

 

 

 

 

 

 

 

 

Reserve for impairment of servicing assets:

 

 

 

 

 

 

 

 

 

Beginning Balance

 

$

(143

)

$

(71

)

$

(118

)

$

(59

)

Impairments

 

(44

)

(3

)

(75

)

(15

)

Recoveries

 

2

 

1

 

8

 

1

 

Ending Balance

 

$

(185

)

$

(73

)

$

(185

)

$

(73

)

 

 

 

 

 

 

 

 

 

 

Ending Balance (net of reserve)

 

$

967

 

$

876

 

$

967

 

$

876

 

 

 

 

 

 

 

 

 

 

 

Fair value of amortized servicing assets:

 

 

 

 

 

 

 

 

 

Beginning balance

 

$

1,019

 

$

985

 

$

921

 

$

1,162

 

Ending balance

 

$

1,019

 

$

971

 

$

1,019

 

$

971

 

 

The Company relies primarily on a discounted cash flow model to estimate the fair value of its servicing assets. This model calculates estimated fair value of the servicing assets using significant assumptions including a discount rate of 20.5% and prepayment speeds of 14.0% to 15.0% (depending on certain characteristics of the related loans). These assumptions are subject to change based on management’s judgments and estimates of changes in future cash flows, among other things.