Company: SFBC
Filing Date: 2025-11-12
Form Type: 10-Q
Source: 0001541119-25-000041
Chunk: 101

Company: Sound Financial Bancorp, Inc.
Filing Date: 2025-11-12
Form: 10-Q
Item: Item 8
Chunk 101
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295,822 296,575 — 296,575 — Borrowings25,000 25,000 — 25,000 — Subordinated notes11,759 12,653 — 12,653 — 

22

The following tables present the balance of assets measured at fair value on a recurring basis as of the dates indicated (in thousands):  Fair Value at September 30, 2025DescriptionTotalLevel 1Level 2Level 3Municipal bonds$5,383 $— $5,383 $— Agency mortgage-backed securities2,254 — 2,254 — Mortgage servicing rights4,305 — — 4,305  Fair Value at December 31, 2024DescriptionTotalLevel 1Level 2Level 3Municipal bonds$5,374 $— $5,374 $— Agency mortgage-backed securities2,416 — 2,416 — Mortgage servicing rights4,769 — — 4,769 The following tables provide 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 as of the dates indicated: September 30, 2025Financial InstrumentValuation TechniqueUnobservable Input(s)Range(Weighted-Average)Mortgage Servicing RightsDiscounted cash flowPrepayment speed assumption125%-380% (125%)Discount rate9.0%-13.5% (10%)December 31, 2024Financial InstrumentValuation TechniqueUnobservable Input(s)Range(Weighted-Average)Mortgage Servicing RightsDiscounted cash flowPrepayment speed assumption125%-556% (125%)Discount rate (10%)Generally, any significant increases in the prepayment speed assumption 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 significant decrease in the prepayment speed assumption 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 prepayment speed assumption and conversely, a decrease in the weighted average life assumptions will result in an increase in the prepayment speed assumption. As a result of the