Fair Values of Assets and Liabilities (Tables)

3 Months Ended

Mar. 31, 2022

Disclosure Of Fair Values Of Assets And Liabilities [Abstract]

The following table summarizes financial assets and liabilities measured at fair value on a recurring basis as of March 31, 2022 and December 31, 2021, segregated by the level of the valuation inputs within the fair value hierarchy utilized to measure fair value:

	Total		Level 1		Level 2		Level 3
	(Dollars in thousands)
March 31, 2022
Securities available-for-sale:
U.S. Government-sponsored enterprises obligations	$	6,087	$	—	$	6,087	$	—
U.S Government agency small business administration pools guaranteed by the SBA		7,272		—		7,272		—
Collateralized mortgage obligations issued by the FHLMC, FNMA and GNMA		3,947		—		3,947		—
Residential mortgage-backed-securities		23,620		—		23,620		—
Municipal bonds		53,642		—		53,642		—
Corporate subordinated debt		3,922		—		3,922		—
Other assets:
Mortgage servicing rights		350		—		—		350
Derivatives		635		—		635		—

	Total		Level 1		Level 2		Level 3
	(Dollars in thousands)
December 31, 2021
Securities available-for-sale:
U.S. Government-sponsored enterprises obligations	$	5,971	$	—	$	5,971	$	—
U.S Government agency small business administration pools guaranteed by the SBA		5,045		—		5,045		—
Collateralized mortgage obligations issued by the FHLMC, FNMA and GNMA		3,332		—		3,332		—
Residential mortgage-backed-securities		23,332		—		23,332		—
Municipal bonds		50,613		—		50,613		—
Corporate subordinated debt		3,072		—		3,072		—
Other assets:
Mortgage servicing rights		322		—		—		322
Derivatives		200		—		200		—

Summary of Changes in Level 3 Assets and Liabilities Measured at Fair Value on a Recurring Basis

For the three months ended March 31, 2022 and 2021, the changes in Level 3 assets and liabilities measured at fair value on a recurring basis were as follows:

(Dollars in thousands)	Mortgage Servicing Rights⁽¹⁾
Balance as of January 1, 2022	$	322
Included in net income		28
Balance as of March 31, 2022	$	350
Total unrealized net gains (losses) included in net income related to assets still held as of March 31, 2022	$	—

Balance as of January 1, 2021	$	273
Included in net income		56
Balance as of March 31, 2021	$	329
Total unrealized net gains (losses) included in net income related to assets still held as of March 31, 2021	$	—

(1)

Realized and unrealized gains and losses related to mortgage servicing rights are reported as a component of loan servicing fee income in the Company’s consolidated statements of income.

Summary of Significant Unobservable Inputs used in Level 3 Assets Measured at Fair Value on Recurring Basis

For Level 3 assets measured at fair value on a recurring basis as of March 31, 2022 and December 31, 2021, the significant unobservable inputs used in the fair value measurements were as follows:

	March 31, 2022
(Dollars in thousands)	Valuation Technique	Description	Range	Weighted Average⁽¹⁾	Fair Value
Mortgage Servicing Rights	Discounted Cash Flow	Prepayment Rate	6.81% - 24.78%	10.10%	$	350
		Discount Rate	9.00% - 9.00%	9.00%
		Delinquency Rate	2.73% - 3.61%	2.88%
		Default Rate	0.08% - 0.14%	0.13%

	December 31, 2021
(Dollars in thousands)	Valuation Technique	Description	Range	Weighted Average⁽¹⁾	Fair Value
Mortgage Servicing Rights	Discounted Cash Flow	Prepayment Rate	6.63% - 25.56%	13.39%	$	322
		Discount Rate	9.00% - 9.00%	9.00%
		Delinquency Rate	2.82% - 3.63%	2.96%
		Default Rate	0.08% - 0.14%	0.13%

(1)

Unobservable inputs for mortgage servicing rights were weighted by loan amount.

Fair Value Measurements, Recurring and Nonrecurring

The estimated fair values, and related carrying or notional amounts, of the Company’s financial instruments at March 31, 2022 and December 31, 2021 are as follows:

(Dollars in thousands)	Carrying Amount		Fair Value		Level 1		Level 2		Level 3
March 31, 2022
Financial Assets:
Cash and due from banks	$	5,493	$	5,493	$	5,493	$	—	$	—
Interest-bearing time deposits with other banks		1,245		1,245		—		1,245		—
Federal Home Loan Bank stock		2,410		2,410		—		2,410		—
Bank-owned life insurance		4,481		4,481		—		4,481		—
Loans, net		376,181		361,941		—		—		361,941
Accrued interest receivable		1,568		1,568		1,568		—		—
Financial Liabilities:
Deposits	$	388,769	$	387,605	$	332,029	$	55,576	$	—
Advances from Federal Home Loan Bank		49,700		48,581		—		48,581		—
Mortgagors’ tax escrow		1,898		1,898		—		1,898		—
December 31, 2021
Financial Assets:
Cash and due from banks	$	6,638	$	6,638	$	6,638	$	—	$	—
Interest-bearing time deposits with other banks		1,245		1,245		—		1,245		—
Federal Home Loan Bank stock		1,688		1,688		—		1,688		—
Bank-owned life insurance		4,461		4,461		—		4,461		—
Loans, net		373,051		371,587		—		—		371,587
Accrued interest receivable		1,499		1,499		1,499		—		—
Financial Liabilities:
Deposits	$	393,243	$	393,145	$	334,917	$	58,228	$	—
Advances from Federal Home Loan Bank		29,462		29,063		—		29,063		—
Mortgagors’ tax escrow		652		652		—		652		—

- Definition

Tabular disclosure of financial instruments measured at fair value, including those classified in shareholders' equity measured on a recurring or nonrecurring basis. Disclosures include, but are not limited to, fair value measurements recorded and the reasons for the measurements, level within the fair value hierarchy in which the fair value measurements are categorized and transfers between levels 1 and 2. Nonrecurring fair value measurements are those that are required or permitted in the statement of financial position in particular circumstances.

+ References + Details