| 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 June 30, 2026 and December 31, 2025, 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) |
|
June 30, 2026 |
|
|
|
Securities available-for-sale: |
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Government-sponsored enterprises obligations |
|
$ |
1,430 |
|
|
$ |
— |
|
|
$ |
1,430 |
|
|
$ |
— |
|
U.S Government agency small business administration
pools guaranteed by the SBA |
|
|
9,155 |
|
|
|
— |
|
|
|
9,155 |
|
|
|
— |
|
Collateralized mortgage obligations issued by
the FHLMC, FNMA and GNMA |
|
|
29,408 |
|
|
|
— |
|
|
|
29,408 |
|
|
|
— |
|
Residential mortgage-backed-securities |
|
|
58,027 |
|
|
|
— |
|
|
|
58,027 |
|
|
|
— |
|
Municipal bonds |
|
|
29,389 |
|
|
|
— |
|
|
|
29,389 |
|
|
|
— |
|
Corporate debt |
|
|
490 |
|
|
|
— |
|
|
|
490 |
|
|
|
— |
|
Corporate subordinated debt |
|
|
5,884 |
|
|
|
— |
|
|
|
5,884 |
|
|
|
— |
|
Other assets: |
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage servicing rights |
|
|
257 |
|
|
|
— |
|
|
|
— |
|
|
|
257 |
|
Derivatives |
|
|
42 |
|
|
|
— |
|
|
|
42 |
|
|
|
— |
|
Other Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives |
|
|
27 |
|
|
|
— |
|
|
|
27 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
|
(Dollars in thousands) |
|
December 31, 2025 |
|
|
|
Securities available-for-sale: |
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Government-sponsored enterprises obligations |
|
$ |
1,453 |
|
|
$ |
— |
|
|
$ |
1,453 |
|
|
$ |
— |
|
U.S Government agency small business administration
pools guaranteed by the SBA |
|
|
10,573 |
|
|
|
— |
|
|
|
10,573 |
|
|
|
— |
|
Collateralized mortgage obligations issued by
the FHLMC, FNMA and GNMA |
|
|
34,742 |
|
|
|
— |
|
|
|
34,742 |
|
|
|
— |
|
Residential mortgage-backed securities |
|
|
64,495 |
|
|
|
— |
|
|
|
64,495 |
|
|
|
— |
|
Municipal bonds |
|
|
29,269 |
|
|
|
— |
|
|
|
29,269 |
|
|
|
— |
|
Corporate debt |
|
|
6,177 |
|
|
|
— |
|
|
|
6,177 |
|
|
|
— |
|
Corporate subordinated debt |
|
|
5,697 |
|
|
|
— |
|
|
|
5,697 |
|
|
|
— |
|
Other assets: |
|
|
|
|
|
|
|
|
|
|
|
|
Mortgage servicing rights |
|
|
257 |
|
|
|
— |
|
|
|
— |
|
|
|
257 |
|
Derivatives |
|
|
54 |
|
|
|
— |
|
|
|
54 |
|
|
|
— |
|
Other liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives |
|
|
191 |
|
|
|
— |
|
|
|
191 |
|
|
|
— |
|
|
| Summary of Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis |
For the six months ended June 30, 2026 and 2025, 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, 2026 |
|
$ |
257 |
|
Included in net income (loss) |
|
|
— |
|
Balance as of June 30, 2026 |
|
$ |
257 |
|
Total unrealized net gains (losses)
included in net income (loss) related to
assets still held as of June 30, 2026 |
|
$ |
— |
|
|
|
|
|
Balance as of January 1, 2025 |
|
$ |
305 |
|
Included in net income (loss) |
|
|
(25 |
) |
Balance as of June 30, 2025 |
|
$ |
280 |
|
Total unrealized net gains (losses)
included in net income (loss) related to
assets still held as of June 30, 2025 |
|
$ |
— |
|
(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 (loss) 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 June 30, 2026 and December 31, 2025, the significant unobservable inputs used in the fair value measurements were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2026 |
|
(Dollars in thousands) |
|
Valuation Technique |
|
Description |
|
Range |
|
Weighted Average (1) |
|
Fair Value |
|
Mortgage Servicing Rights |
|
Discounted Cash Flow |
|
Prepayment Rate |
|
4.85% - 24.45% |
|
8.29% |
|
$ |
257 |
|
|
|
|
|
Discount Rate |
|
9.75% - 9.75% |
|
9.75% |
|
|
|
|
|
|
|
Delinquency Rate |
|
2.10% - 2.59% |
|
2.18% |
|
|
|
|
|
|
|
Default Rate |
|
0.22% - 0.32% |
|
0.24% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2025 |
|
(Dollars in thousands) |
|
Valuation Technique |
|
Description |
|
Range |
|
Weighted Average (1) |
|
Fair Value |
|
Mortgage Servicing Rights |
|
Discounted Cash Flow |
|
Prepayment Rate |
|
4.75% - 29.19% |
|
9.83% |
|
$ |
257 |
|
|
|
|
|
Discount Rate |
|
9.500% - 9.500% |
|
9.50% |
|
|
|
|
|
|
|
Delinquency Rate |
|
2.17% - 2.57% |
|
2.24% |
|
|
|
|
|
|
|
Default Rate |
|
0.16% - 0.20% |
|
0.17% |
|
|
|
(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 June 30, 2026 and December 31, 2025 are as follows:
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Dollars in thousands) |
|
Carrying
Amount |
|
|
Fair
Value |
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
June 30, 2026 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and due from banks |
|
$ |
5,496 |
|
|
$ |
5,496 |
|
|
$ |
5,496 |
|
|
$ |
— |
|
|
$ |
— |
|
Federal Home Loan Bank stock |
|
|
2,051 |
|
|
|
2,051 |
|
|
|
— |
|
|
|
2,051 |
|
|
|
— |
|
Bank-owned life insurance |
|
|
4,918 |
|
|
|
4,918 |
|
|
|
— |
|
|
|
4,918 |
|
|
|
— |
|
Loans, net |
|
|
418,436 |
|
|
|
389,323 |
|
|
|
— |
|
|
|
— |
|
|
|
389,323 |
|
Accrued interest receivable |
|
|
2,069 |
|
|
|
2,069 |
|
|
|
2,069 |
|
|
|
— |
|
|
|
— |
|
Financial Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits |
|
$ |
454,200 |
|
|
$ |
453,927 |
|
|
$ |
325,477 |
|
|
$ |
128,450 |
|
|
$ |
— |
|
Advances from Federal Home Loan Bank |
|
|
44,844 |
|
|
|
44,409 |
|
|
|
— |
|
|
|
44,409 |
|
|
|
— |
|
Mortgagors’ tax escrow |
|
|
574 |
|
|
|
574 |
|
|
|
— |
|
|
|
574 |
|
|
|
— |
|
Accrued interest payable |
|
|
291 |
|
|
|
291 |
|
|
|
291 |
|
|
|
— |
|
|
|
— |
|
December 31, 2025 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and due from banks |
|
$ |
13,414 |
|
|
$ |
13,414 |
|
|
$ |
13,414 |
|
|
$ |
— |
|
|
$ |
— |
|
Federal Home Loan Bank stock |
|
|
2,431 |
|
|
|
2,431 |
|
|
|
— |
|
|
|
2,431 |
|
|
|
— |
|
Bank-owned life insurance |
|
|
4,875 |
|
|
|
4,875 |
|
|
|
— |
|
|
|
4,875 |
|
|
|
— |
|
Loans, net |
|
|
416,047 |
|
|
|
387,121 |
|
|
|
— |
|
|
|
— |
|
|
|
387,121 |
|
Accrued interest receivable |
|
|
2,108 |
|
|
|
2,108 |
|
|
|
2,108 |
|
|
|
— |
|
|
|
— |
|
Financial Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits |
|
$ |
470,773 |
|
|
$ |
470,841 |
|
|
$ |
318,884 |
|
|
$ |
151,957 |
|
|
$ |
— |
|
Advances from Federal Home Loan Bank |
|
|
52,308 |
|
|
|
52,182 |
|
|
|
— |
|
|
|
52,182 |
|
|
|
— |
|
Mortgagors’ tax escrow |
|
|
811 |
|
|
|
811 |
|
|
|
— |
|
|
|
811 |
|
|
|
— |
|
Accrued interest payable |
|
|
484 |
|
|
|
484 |
|
|
|
484 |
|
|
|
— |
|
|
|
— |
|
|