Investment Securities

The amortized cost and estimated fair value of investment securities at June 30, 2017 and December 31, 2016 are summarized as follows (in thousands):



	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
June 30, 2017
Available-for-Sale:
U.S. Treasury notes	$	21,135	$	77	$	3	$	21,209
U.S. Agency notes	96,921		161		1,134		95,948
U.S. Agency mortgage-backed securities	74,949		73		1,061		73,961
Municipal securities:
Non-taxable	111,651		902		758		111,795
Taxable	22,420		246		63		22,603
Mutual funds	2,546		—		39		2,507
Trust preferred securities	49		1		—		50
Equity securities	632		88		5		715
	$	330,303	$	1,548	$	3,063	$	328,788

Held-to-Maturity:
Municipal securities:
Non-taxable	$	33,282	$	95	$	122	$	33,255
Taxable	5,155		—		124		5,031
	$	38,437	$	95	$	246	$	38,286

December 31, 2016
Available-for-Sale:
U.S. Treasury notes	$	28,180	$	41	$	76	$	28,145
U.S. Agency notes	87,098		150		1,848		85,400
U.S. Agency mortgage-backed securities	72,402		89		1,444		71,047
Municipal securities:
Non-taxable	114,064		574		1,623		113,015
Taxable	19,710		220		85		19,845
Mutual funds	2,527		—		45		2,482
Trust preferred securities	49		—		1		48
Equity securities	632		55		10		677
	$	324,662	$	1,129	$	5,132	$	320,659

Held-to-Maturity:
Municipal securities:
Non-taxable	$	31,015	$	56	$	352	$	30,719
Taxable	9,988		—		217		9,771
	$	41,003	$	56	$	569	$	40,490

Information concerning investment securities with gross unrealized losses at June 30, 2017 and December 31, 2016, aggregated by length of time that individual securities have been in a continuous loss position, is as follows (dollars in thousands):



	Less than Twelve Months				Twelve Months or Greater
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
June 30, 2017
Available-for-Sale:
U.S. Treasury notes	$	1,300	$	3	$	—	$	—
U.S. Agency notes	78,483		1,134		—		—
U.S. Agency mortgage-backed securities	58,733		939		3,271		122
Municipal securities:
Non-taxable	39,578		758		—		—
Taxable	10,833		62		450		1
Mutual funds	1,225		30		282		9
Trust preferred securities	—		—		—		—
Equity securities	24		1		29		4
	$	190,176	$	2,927	$	4,032	$	136

Held-to-Maturity:
Municipal securities:
Non-taxable	$	19,188	78		2,622		44
Taxable	3,176		124		—		—
	$	22,364	$	202	$	2,622	$	44

December 31, 2016
Available-for-Sale:
U.S. Treasury notes	$	16,076	$	76	$	—	$	—
U.S. Agency notes	69,784		1,848		—		—
U.S. Agency mortgage-backed securities	64,564		1,310		3,518		134
Municipal securities:
Non-taxable	72,867		1,621		451		2
Taxable	9,721		82		450		3
Mutual funds	1,205		37		277		8
Trust preferred securities	49		1		—		—
Equity securities	201		10		—		—
	$	234,467	$	4,985	$	4,696	$	147

Held-to-Maturity:
Municipal securities:
Non-taxable	$	20,429	$	251	$	2,564	$	101
Taxable	8,030		217		—		—
	$	28,459	$	468	$	2,564	$	101

Management has determined that the unrealized losses at June 30, 2017 are primarily due to fluctuations in market interest rates and do not reflect credit quality deterioration of the securities. Because LCNB does not have the intent to sell the investments and it is more likely than not that LCNB will not be required to sell the investments before recovery of their amortized cost bases, which may be at maturity, LCNB does not consider these investments to be other-than-temporarily impaired.

Contractual maturities of investment securities at June 30, 2017 were as follows (in thousands). Actual maturities may differ from contractual maturities when issuers have the right to call or prepay obligations.



	Available-for-Sale				Held-to-Maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due within one year	$	12,940	$	12,981	$	6,191	$	6,221
Due from one to five years	110,596		111,142		4,082		4,064
Due from five to ten years	121,060		120,190		10,322		10,266
Due after ten years	7,531		7,242		17,842		17,735
	252,127		251,555		38,437		38,286
U.S. Agency mortgage-backed securities	74,949		73,961		—		—
Mutual funds	2,546		2,507		—		—
Trust preferred securities	49		50		—		—
Equity securities	632		715		—		—
	$	330,303	$	328,788	$	38,437	$	38,286

Investment securities with a market value of $195,610,000 and $149,990,000 at June 30, 2017 and December 31, 2016, respectively, were pledged to secure public deposits and for other purposes required or as permitted by law.

Certain information concerning the sale of investment securities available-for-sale for the three and six months ended June 30, 2017 and 2016 was as follows (in thousands):



	Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
Proceeds from sales	$	12,243	$	16,100	$	12,243	$	36,529
Gross realized gains	140		300		140		671
Gross realized losses	—		21		—		21

Realized gains or losses from the sale of securities are computed using the specific identification method.