Company: SFBC
Filing Date: 2025-03-18
Form Type: 10-K
Source: 0001541119-25-000009
Chunk: 177

Company: Sound Financial Bancorp, Inc.
Filing Date: 2025-03-18
Form: 10-K
Item: Item 8
Chunk 177
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374 $— Agency mortgage-backed securities2,416 — 2,416 — MSRs4,769 — — 4,769  Fair Value at December 31, 2023DescriptionTotalLevel 1Level 2Level 3Municipal bonds$5,528 $— $5,528 $— Agency mortgage-backed securities2,759 — 2,759 — MSRs4,632 — — 4,632 

97

The following table provides a description of the valuation technique, unobservable input, and qualitative information about the unobservable inputs for the Company's assets and liabilities classified as Level 3 and measured at fair value on a recurring basis at December 31, 2024:FinancialInstrument ValuationTechnique Unobservable Input(s) Range(Weighted Average)MSRs Discounted cash flow Prepayment speed assumption 125%-556% (125%)    Discount rate 10.0%The following table provides a description of the valuation technique, unobservable input, and qualitative information about the unobservable inputs for the Company's assets and liabilities classified as Level 3 and measured at fair value on a recurring basis at December 31, 2023:FinancialInstrument ValuationTechnique Unobservable Input(s) Range(Weighted Average)MSRs Discounted cash flow Prepayment speed assumption 109%-208% (129%)    Discount rate 10.5%-14.5% (12.5%)Generally, any significant increases in the constant prepayment rate and discount rate utilized in the fair value measurement of the MSRs will result in a negative fair value adjustment (and decrease in the fair value measurement). Conversely, a decrease in the constant prepayment rate and discount rate will result in a positive fair value adjustment (and increase in the fair value measurement). An increase in the weighted average life assumptions will result in a decrease in the constant prepayment rate and conversely, a decrease in the weighted average life will result in an increase of the constant prepayment rate. As a result of the difficulty in observing certain significant valuation inputs affecting our “Level 3” fair value assets, we are required to make judgments regarding these items’ fair values. There were no assets or liabilities (excluding MSRs) measured at fair value using significant unobservable inputs (Level 3) on a recurring basis during the years ended December 31, 2024