Investment Securities

9 Months Ended

Sep. 30, 2020

Investments, Debt and Equity Securities [Abstract]

The amortized cost and estimated fair value of equity and debt securities at September 30, 2020 and December 31, 2019 are summarized as follows (in thousands):


	Amortized Cost		Unrealized Gains	Unrealized Losses	Fair Value
September 30, 2020
Debt Securities, Available-for-Sale:
U.S. Treasury notes	$	2,269	130	—	2,399
U.S. Agency notes	28,328		940	—	29,268
Corporate bonds	700		—	15	685
U.S. Agency mortgage-backed securities	86,497		3,166	3	89,660

Municipal securities:
Non-taxable	12,823		272	12	13,083
Taxable	21,826		1,015	—	22,841
	$	152,443	5,523	30	157,936

Debt Securities, Held-to-Maturity:
Municipal securities:
Non-taxable	$	23,436	447	—	23,883
Taxable	3,505		1	112	3,394
	$	26,941	448	112	27,277

December 31, 2019
Debt Securities, Available-for-Sale:
U.S. Treasury notes	$	2,273	36	—	2,309
U.S. Agency notes	48,745		273	34	48,984
U.S. Agency mortgage-backed securities	83,977		672	243	84,406

Municipal securities:
Non-taxable	22,174		161	14	22,321
Taxable	19,746		269	35	19,980
	$	176,915	1,411	326	178,000

Debt Securities, Held-to-Maturity:
Municipal securities:
Non-taxable	$	24,300	343	5	24,638
Taxable	3,225		25	—	3,250
	$	27,525	368	5	27,888

Information concerning debt securities with gross unrealized losses at September 30, 2020 and December 31, 2019, 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
September 30, 2020
Available-for-Sale:


Corporate bonds	$	685	15	—	—
U.S. Agency mortgage-backed securities	1,047		3	—	—
Municipal securities:
Non-taxable	762		12	—	—

	$	2,494	30	—	—

Held-to-Maturity:
Municipal securities:
Non-taxable	$	1,915	—	—	—
Taxable	3,113		112	—	—
	$	5,028	112	—	—

December 31, 2019
Available-for-Sale:

U.S. Agency notes	$	3,586	11	11,939	23
U.S. Agency mortgage-backed securities	10,555		10	19,233	233
Municipal securities:
Non-taxable	2,631		2	1,257	12
Taxable	5,067		35	450	—
	$	21,839	58	32,879	268

Held-to-Maturity:
Municipal securities:
Non-taxable	$	54	—	2,660	5

	$	54	—	2,660	5

Management has determined that the unrealized losses at September 30, 2020 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 debt securities at September 30, 2020 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	$	10,287	10,327	2,220	2,227
Due from one to five years	33,261		34,293	7,223	7,268
Due from five to ten years	21,669		22,939	2,090	2,109
Due after ten years	729		717	15,408	15,673
	65,946		68,276	26,941	27,277
U.S. Agency mortgage-backed securities	86,497		89,660	—	—
	$	152,443	157,936	26,941	27,277

Debt securities with a market value of $135,819,000 and $123,009,000 at September 30, 2020 and December 31, 2019, respectively, were pledged to secure public deposits and for other purposes required or as permitted by law.

Certain information concerning the sale of debt securities, available-for-sale, for the three and nine months ended September 30, 2020 and 2019 was as follows (in thousands):


	Three Months Ended September 30,			Nine Months Ended September 30,
	2020		2019	2020	2019
Proceeds from sales	$	—	25,105	8,786	75,407
Gross realized gains	—		84	221	212
Gross realized losses	—		104	—	249

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

Equity securities with a readily determinable fair value are carried at fair value, with changes in fair value recognized in other operating income in the consolidated condensed statements of income. Equity securities without a readily determinable fair value are measured at cost minus impairment, if any, plus or minus any changes resulting from observable price changes in orderly transactions, as defined, for identical or similar investments of the same issuer. LCNB was not aware of any impairment or observable price change adjustments that needed to be made at September 30, 2020 on its investments in equity securities without a readily determinable fair value.

The amortized cost and estimated fair value of equity securities with a readily determinable fair value at September 30, 2020 and December 31, 2019 are summarized as follows (in thousands):


	September 30, 2020			December 31, 2019
	Amortized Cost		Fair Value	Amortized Cost	Fair Value
Mutual funds	$	1,390	1,393	1,371	1,345
Equity securities	778		820	741	967
Total equity securities with a readily determinable fair value	$	2,168	2,213	2,112	2,312

Certain information concerning changes in fair value of equity securities with a readily determinable fair value for the nine months ended September 30, 2020 and 2019 is as follows (in thousands):


	Three Months Ended September 30,			Nine Months Ended September 30,
	2020		2019	2020	2019
Net gains recognized	$	51	60	504	207
Less net realized gains on equity securities sold	99		23	658	17
Net unrealized gains (losses) recognized and still held at period end	$	(48)	37	(154)	190