LOAN SERVICING ACTIVITIES

12 Months Ended

Dec. 31, 2025

5. LOAN SERVICING ACTIVITIES

The Bank services real estate and C&I loans for others having principal balances outstanding of approximately $465.8 million and $329.1 million at December 31, 2025 and 2024, respectively. Loans serviced for others are not reported as assets. Servicing loans for others generally consists of collecting loan payments, maintaining escrow accounts, disbursing payments to investors, paying taxes and insurance and processing foreclosures. In connection with loans serviced for others, the Bank held borrowers’ escrow balances of $1.4 million and $1.3 million at December 31, 2025 and 2024, respectively.

There are no restrictions on the Company’s consolidated assets or liabilities related to loans sold with servicing rights retained. Upon sale of these loans, the Company recorded an SRA in other assets, and has elected to account for the SRA under the "amortization method" prescribed under GAAP. The activity for SRAs for the periods indicated are as follows:


		Year Ended December 31,
(In thousands)		2025		2024		2023
Servicing rights assets:
Beginning of year		$	2,701	$	3,168	$	3,349
Additions			354		201		458
Amortized to expense			(585)		(668)		(639)
End of year			2,470		2,701		3,168

Valuation allowance:
Beginning of year			(282)		(237)		(201)
Additions expensed			(46)		(45)		(36)
End of year			(328)		(282)		(237)
Servicing rights assets, net		$	2,142	$	2,419	$	2,931

The fair value of SRAs was $2.8 million and $3.0 million, at December 31, 2025 and 2024, respectively. The fair value at December 31, 2025 was determined using discount rates ranging from 9.5% to 13.0%, prepayment speeds ranging from 6.2% to 12.5%, depending on the stratification of the specific servicing rights, and a weighted average default rate of 0.69%. The fair value at December 31, 2024 was determined using discount rates ranging from 10.0% to 13.9%, prepayment speeds ranging from 6.1% to 12.3%, depending on the stratification of the specific servicing rights, and a weighted average default rate of 0.62%.

- 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.

+ References

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+ Details

Dime Community Bancshares, Inc. /NY/ 10-K