Mortgage Banking Derivatives

12 Months Ended

Dec. 31, 2022

Mortgage Banking Derivatives.

Mortgage Banking Derivatives

Mortgage Banking Derivatives

Note 16: Mortgage Banking Derivatives

Commitments to fund certain mortgage loans (interest rate locks) to be sold into the secondary market and forward commitments for the future delivery of mortgage loans to third party investors are considered derivatives.  It is the Company’s practice to sell mortgage-backed securities (“MBS”) contracts for the future delivery to economically hedge the effect of changes in interest rates resulting from its commitments to fund the loans.  These contracts are also derivatives and collectively with the forward commitments for the future delivery of mortgage loans are considered forward contracts.  These mortgage banking derivatives, which are not designated in hedge relationships using the accepted accounting for derivative instruments and hedging activities at December 31, were as follows:

	2022		2021
Forward contracts:
Notional amount	$	2,750	$	20,000
Fair value		20		17
Rate lock commitments:
Notional amount	$	2,548	$	14,414
Fair value		56		491

Fair values were estimated based on changes in mortgage interest rates from the date of the commitments.  The Company sold $76.6 million in loans to investors receiving proceeds of $81.8 million and resulting in a gain on sale of $2.0 million for the year ended December 31, 2022.  Sales to investors included $62.4 million, or 76.5% to FNMA and $7.9 million, or 9.7%, to FHLMC for the year ended December 31, 2022.  No other individual investor was sold more than 10% of the total loans sold.