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Disclosures About Fair Value of Assets and Liabilities
 3 Months Ended
Mar. 31, 2025
Disclosures about Fair Value of Assets and Liabilities [Abstract]  
Disclosures about Fair Value of Assets and Liabilities
Note 10:
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 debt securities: Debt securities classified as available-for-sale, as discussed in Note 5, 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 security’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 March 31, 2025 and December 31, 2024 (dollars in thousands):
 
   
Fair Value
    
(Level 1)
    
(Level 2)
    
(Level 3)
  
March 31, 2025
                        
Collateral-dependent loans   $ 402     $ -     $ -     $ 402  
Asset retirement obligations
 
296    
-    
-    
296  
                                 
December 31, 2024
                                
Collateral-dependent loans
  
$
3,209
    
$
-
    
$
-
    
$
3,209
  
Asset retirement obligations 
    292       -       -       292  

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 Loans, Net of Allowance for Credit Losses
 
The estimated fair value of collateral-dependent loans is based on fair value, less estimated cost to sell. Collateral-dependent loans are classified within Level 3 of the fair value hierarchy.
 
The Company considers appraisal 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.

Asset retirement obligations

Asset retirement obligations related to the plugging and abandonment of oil and natural gas properties and are classified within the Level 3 of the fair value hierarchy.
 
The fair value of the asset retirement obligations is measured using expected future cash outflows discounted at the Company’s credit-adjusted risk-free interest rate. Fair value, to the extent possible, includes a market risk premium for unforeseeable circumstances. Inherent in the fair value calculation of the asset retirement obligations are numerous assumptions and judgments including the ultimate settlement amounts, inflation factors, credit adjusted discount rates, timing of settlement, and changes in the legal, regulatory, environmental, and political environments. To the extent future revisions to these assumptions impact the fair value of the existing asset retirement obligations liability, a corresponding adjustment is made to the oil and gas property balance.

Unobservable (Level 3) Inputs
 
The following table presents quantitative information about unobservable inputs used in recurring and nonrecurring Level 3 fair value measurements(dollars in thousands):
 
         Valuation     Unobservable
 
Fair Value
  
Technique
  
Inputs
March 31, 2025
              
Collateral-dependent loans
   $ 402   Estimated cash to be received pending liquidation of collateral   Estimated cost to sell
Asset retirement obligations     296   Expected present value   Plugging and abandonment expense
                   
December 31, 2024
                 
Collateral-dependent loans
  
$
3,209
  
Estimated cash to be received pending liquidation of collateral
  
Estimated cost to sell
Asset retirement obligations      292   Expected present value   Plugging and abandonment expense

The following table presents estimated fair values of the Company’s financial instruments not recorded at fair value at March 31, 2025 and December 31, 2024 (dollars in thousands):
  Carrying    
Fair Value Measurements
  
 
Amount
    
Level 1
    
Level 2
    
Level 3
    
Total
  
March 31, 2025
                              
                               
Financial Assets
                              
Cash and due from banks
  
$
240,570
    
$
240,570
    
$
-
    
$
-
    
$
240,570
  
Interest-bearing time
deposits in other banks
    
12,947
      
-
      
12,947
      
-
      
12,947
  
Loans, net
     1,405,649       -       1,421,371       402       1,421,773  
Loans held for sale
    2,068       -       2,068       -       2,068  
Nonmarketable equity securities
    
1,318
      
-
      
1,318
      
-
      
1,318
  
Interest receivable and other assets
     30,531       -       19,481       11,050       30,531  
 
                                        
Financial Liabilities
                                        
Deposits
  
$
1,551,290
    
$
-
    
$
1,550,781
    
$
-
    
$
1,550,781
  
Interest payable and other liabilities
    
8,959
      
-
      
8,244
      
715
      
8,959
  
                                         
December 31, 2024
                                        
                                         
Financial Assets
                                        
Cash and due from banks
  
$
234,196
    
$
234,196
    
$
-
    
$
-
    
$
234,196
  
Interest-bearing time
deposits in other banks
    
6,719
      
-
      
6,719
      
-
      
6,719
  
Loans, net
    
1,379,465
      
-
      
1,392,299
      
3,209
      
1,395,508
  
Nonmarketable equity securities
    
1,283
      
-
      
1,283
      
-
      
1,283
  
Interest receivable and other assets
   
30,731
      
-
      
18,585
      
12,146
      
30,731
  
 
                                        
Financial Liabilities
                                        
Deposits
  
$
1,515,471
    
$
-
    
$
1,515,023
    
$
-
    
$
1,515,023
  
Interest payable and other liabilities
   
11,047
      
-
      
10,145
      
902
      
11,047
  

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, Interest-Bearing Time Deposits in Other Banks, Nonmarketable Equity Securities, Interest Receivable and Other Assets and Interest Payable and Other Liabilities
 
The carrying amount approximates fair value.
Loans and Mortgage Loans Held for Sale
 
The Company determines fair value of loans by using exit market assumptions including factors such as liquidity, credit quality and risk of nonperformance. The fair value 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 March 31, 2025 and December 31, 2024.

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 the December 31, 2024 Form 10-K, 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 the December 31, 2024 Form 10-K, Note 1, Summary of Significant Accounting Policies--Specific to Production of Oil and Natural Gas Reserves Operations.