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Fair Values of Assets and Liabilities (Tables)

9 Months Ended

Sep. 30, 2024

Fair Value Disclosures [Abstract]

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

The following table summarizes financial assets and liabilities measured at fair value on a recurring basis as of September 30, 2024 and December 31, 2023, 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)
September 30, 2024
Securities available-for-sale:
U.S. Government-sponsored enterprises ("GSE") obligations		$	1,432			$	—			$	1,432			$	—
U.S. Government agency small business administration pools guaranteed by the SBA			13,862				—				13,862				—
Collateralized mortgage obligations issued by the FHLMC, FNMA and GNMA			15,263				—				15,263				—
Residential mortgage-backed GSE securities			39,774				—				39,774				—
Municipal bonds			54,577				—				54,577				—
Corporate debt			487				—				487				—
Corporate subordinated debt			7,609				—				7,609				—
Other assets:
Mortgage servicing rights			308				—				—				308
Derivatives			143				—				143				—
Other liabilities:
Derivatives			152				—				152				—


		Total				Level 1				Level 2				Level 3
		(Dollars in thousands)
December 31, 2023
Securities available-for-sale:
U.S. Government-sponsored enterprises ("GSE") obligations		$	1,398			$	—			$	1,398			$	—
U.S. Government agency small business administration pools guaranteed by the SBA			15,583				—				15,583				—
Collateralized mortgage obligations issued by the FHLMC, FNMA and GNMA			2,474				—				2,474				—
Residential mortgage-backed GSE securities			38,221				—				38,221				—
Municipal bonds			54,692				—				54,692				—
Corporate debt			492				—				492				—
Corporate subordinated debt			8,994				—				8,994				—
Other assets:
Mortgage servicing rights			339				—				—				339
Derivatives			90				—				90				—
Other liabilities:
Derivatives			848				—				848				—

Summary of Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis

For the nine months ended September 30, 2024 and 2023, 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, 2024		$	339
Included in net income (loss)			(31	)
Balance as of September 30, 2024		$	308
Total unrealized net gains (losses) included in net income related to assets still held as of September 30, 2024		$	—

Balance as of January 1, 2023		$	357
Included in net (loss) income			(7	)
Balance as of September 30, 2023		$	350
Total unrealized net gains (losses) included in net income related to assets still held as of September 30, 2023		$	—

(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 (loss).

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 September 30, 2024 and December 31, 2023, the significant unobservable inputs used in the fair value measurements were as follows:


		September 30, 2024
(Dollars in thousands)		Valuation Technique		Description		Range		Weighted Average (1)		Fair Value
Mortgage Servicing Rights		Discounted Cash Flow		Prepayment Rate		5.16% - 31.48%		7.58%		$	308
				Discount Rate		9.125% - 9.125%		9.13%
				Delinquency Rate		2.22% - 2.79%		2.32%
				Default Rate		0.14% - 0.14%		0.14%


		December 31, 2023
(Dollars in thousands)		Valuation Technique		Description		Range		Weighted Average (1)		Fair Value
Mortgage Servicing Rights		Discounted Cash Flow		Prepayment Rate		5.35% - 20.53%		6.85%		$	339
				Discount Rate		9.375% - 9.375%		9.38%
				Delinquency Rate		2.08% - 2.60%		2.17%
				Default Rate		0.12% - 0.14%		0.14%

(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 September 30, 2024 and December 31, 2023 are as follows:


(Dollars in thousands)		Carrying Amount				Fair Value				Level 1				Level 2				Level 3
September 30, 2024
Financial Assets:
Cash and due from banks		$	16,517			$	16,517			$	16,517			$	—			$	—
Federal Home Loan Bank stock			2,498				2,498				—				2,498				—
Bank-owned life insurance			4,749				4,749				—				4,749				—
Loans, net			434,546				397,800				—				—				397,800
Accrued interest receivable			2,351				2,351				2,351				—				—
Financial Liabilities:
Deposits		$	447,686			$	447,908			$	319,844			$	128,064			$	—
Advances from Federal Home Loan Bank			52,268				52,640				—				52,640				—
Advances from Federal Reserve Bank			20,000				20,005				—				20,005				—
Mortgagors’ tax escrow			1,996				1,996				—				1,996				—
Accrued interest payable			1,233				1,233				1,233				—				—
December 31, 2023
Financial Assets:
Cash and due from banks		$	6,069			$	6,069			$	6,069			$	—			$	—
Federal Home Loan Bank stock			2,986				2,986				—				2,986				—
Bank-owned life insurance			4,663				4,663				—				4,663				—
Loans, net			426,641				376,772				—				—				376,772
Accrued interest receivable			2,294				2,294				2,294				—				—
Financial Liabilities:
Deposits		$	404,798			$	403,489			$	313,503			$	89,986			$	—
Advances from Federal Home Loan Bank			73,007				73,162				—				73,162				—
Advances from Federal Reserve Bank			20,000				20,020				—				20,020				—
Mortgagors’ tax escrow			640				640				—				640				—
Accrued interest payable			380				380				380				—				—

Tabular disclosure of the fair value measurement of assets using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes during the period attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets) and gains or losses recognized in other comprehensive income (loss), and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs), by class of asset.

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