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Disclosures about Fair Value of Assets and Liabilities
 12 Months Ended
Dec. 31, 2023
Disclosures about Fair Value of Assets and Liabilities [Abstract]  
Disclosures about Fair Value of Assets and Liabilities
Note 16:
Disclosures about Fair Value of Assets and Liabilities
 
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.  Fair value measurements must maximize the use of observable inputs and minimize the use of unobservable inputs.  There is a hierarchy of three levels of inputs that may be used to measure fair value:
 

 Level 1
Quoted prices in active markets for identical assets or liabilities
 

 Level 2
Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities
 

 Level 3
Unobservable inputs supported by little or no market activity and significant to the fair value of the assets or liabilities
 
Recurring Measurements
 
Assets and liabilities measured at fair value on a recurring basis include the following:

Available-for-sale securities: Debt securities classified as available-for-sale are reported at fair value utilizing Level 2 inputs. For those debt securities classified as Level 2, the Company obtains fair value measurements from an independent pricing service. The fair value measurements consider observable data that may include dealer quotes, market spreads, cash flows, the U. S. Treasury yield curve, live trading levels, trade execution data for similar securities, market consensus prepayments speeds, credit information and the bond’s terms and conditions, among other things.
 
Nonrecurring Measurements
 
The following table presents the fair value measurement of assets measured at fair value on a nonrecurring basis and the level within the fair value hierarchy in which the fair value measurements fall at December 31, 2023 and December 31, 2022 (dollars in thousands):
 
 
Fair Value
  
(Level 1)
  
(Level 2)
  
(Level 3)
  
December 31, 2023
                
Impaired loans (collateral- dependent)
  
$
16,370
    
$
-
    
$
-
    
$
16,370
  
Asset retirement obligations
    361       -       -       361  
                                 
December 31, 2022
                                
Impaired loans (collateral- dependent)
  
$
6,553
    
$
-
    
$
-
    
$
6,553
  
 
Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a nonrecurring basis and recognized in the accompanying consolidated balance sheets, as well as the general classification of such assets pursuant to the valuation hierarchy.  For assets classified within Level 3 of the fair value hierarchy, the process used to develop the reported fair value is described below.

Collateral-Dependent Impaired Loans, Net of Allowance for Loan Losses
 
The estimated fair value of collateral-dependent impaired loans is based on fair value, less estimated cost to sell.  Collateral-dependent impaired loans are classified within Level 3 of the fair value hierarchy.
 
The Company considers evaluation analysis as the starting point for determining fair value and then considers other factors and events in the environment that may affect the fair value.  Values of the collateral underlying collateral-dependent loans are obtained when the loan is determined to be collateral-dependent and subsequently as deemed necessary by executive management and loan administration.  Values are reviewed for accuracy and consistency by executive management and loan administration.  The ultimate collateral values are reduced by discounts to consider lack of marketability and estimated cost to sell if repayment or satisfaction of the loan is dependent on the sale of the collateral.
 
Unobservable (Level 3) Inputs
 
The following table presents quantitative information about unobservable inputs used in recurring and nonrecurring Level 3 fair value measurements.

    
Fair Value
  
 Valuation
Technique
  
 Unobservable
Inputs
  
Weighted-
Average
  
December 31, 2023
      
 
  
 
      
Collateral-dependent impaired loans
 
$
16,370
  
Estimated cash to be received pending resolution
of bankruptcy proceedings
  
Estimated cost to sell
    
0
%
Asset retirement obligaions
    361   Expected present value
  Plugging and abandonment expense
     0 %
         
 
  
 
        
December 31, 2022
        
 
  
 
        
Collateral-dependent impaired loans
  
$
6,553
  
Appraisals from comparable assets
  
Estimated cost to sell
     20 %


The following table presents estimated fair values of the Company’s financial instruments not recorded at fair value at December 31, 2023 and December 31, 2022 (dollars in thousands):

   
Carrying
    
Fair Value Measurements
  
   
Amount
    
Level 1
    
Level 2
    
Level 3
    
Total
  
December 31, 2023
                              
                               
Financial Assets
                              
Cash and due from banks
  
$
181,042
    
$
181,042
    
$
-
    
$
-
    
$
181,042
  
Interest-bearing time deposits in other banks
    
17,679
      
-
      
17,679
      
-
      
17,679
  
Loans, net of allowance
    
1,341,148
      
-
      
1,321,413
      
16,370
      
1,337,783
  
Loans held for sale
    
718
      
-
      
718
      
-
      
718
  
Nonmarketable equity securities
    
1,283
      
-
      
1,283
      
-
      
1,283
  
Interest receivable and other assets
    
35,878
      
-
      
19,211
      
16,667
      
35,878
  
 
                                        
Financial Liabilities
                                        
Deposits
  
$
1,591,391
    
$
-
    
$
1,590,295
    
$
-
    
$
1,590,295
  
Interest payable and other liabilities
    
9,647
      
-
      
8,335
      
1,312
      
9,647
  
                                         
December 31, 2022
                                        
                                         
Financial Assets
                                        
Cash and due from banks
  
$
109,115
    
$
109,115
    
$
-
    
$
-
    
$
109,115
  
Interest-bearing time deposits in other banks
    
5,474
      
-
      
5,474
      
-
      
5,474
  
Loans, net of allowance
    
1,255,722
      
-
      
1,245,825
      
6,553
      
1,252,378
  
Nonmarketable equity securities
    
1,209
      
-
      
1,209
      
-
      
1,209
  
Interest receivable
    
8,124
      
-
      
8,124
      
-
      
8,124
  
                                         
Financial Liabilities
                                        
Deposits
  
$
1,431,400
    
$
-
    
$
1,429,565
    
$
-
    
$
1,429,565
  
Interest payable
    
339
      
-
      
339
      
-
      
339
  

The following methods were used to estimate the fair value of all other financial instruments recognized in the accompanying consolidated balance sheets at amounts other than fair value:

Cash and Due from Banks, Federal Funds Sold, Interest-Bearing Time Deposits in Other Banks, Nonmarketable Equity Securities, Interest Receivable and Interest Payable
 
The carrying amount approximates fair value.

Loans and Mortgage Loans Held for Sale
 
The fair value of loans is estimated by discounting the future cash flows using the market rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities. Loans with similar characteristics were aggregated for purposes of the calculations.

Deposits
 
Deposits include demand deposits, savings accounts, NOW accounts and certain money market deposits. The carrying amount approximates fair value. The fair value of fixed-maturity time deposits is estimated using a discounted cash flow calculation that applies the rates currently offered for deposits of similar remaining maturities.

Commitments to Extend Credit, Lines of Credit and Standby Letters of Credit
 
The fair values of unfunded commitments are estimated using the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the present creditworthiness of the counterparties. The fair values of standby letters of credit and lines of credit are based on fees currently charged for similar agreements or on the estimated cost to terminate or otherwise settle the obligations with the counterparties at the reporting date. The estimated fair values of the Company’s commitments to extend credit, lines of credit and standby letters of credit were not material at December 31, 2023 or December 31, 2022.

Interest Receivable and Other Assets
 
Interest receivable and other assets include prepaid expenses, right-of-use lease assets, interest receivable on loans, deferred tax assets, and oil and gas related assets. For prepaid expense, right-of-use lease assets, deferred tax assets, and interest receivable on loans the carrying amount approximates fair value. For the determination of fair value of oil and gas assets, see discussion in Note 1, Summary of Significant Accounting Policies--Specific to Production of Oil and Natural Gas Reserves Operations.

Interest Payable and Other Liabilities

Interest payable and other liabilities include unfunded commitment liabilities, lease liabilities, interest payable on deposits,dividends payable, other accrued liabilities, and oil and gas related liabilities. For unfunded commitment liabilities, lease liabilities, interest payable on deposits, dividends payable, and other accrued liabilities carrying amount approximates fair value.For the determination of fair value of oil and gas liabilities, see discussion in Note 1, Summary of Significant Accounting Policies--Specific to Production of Oil and Natural Gas Reserves Operations.