Investment Securities

3 Months Ended

Mar. 31, 2021

Investments, Debt and Equity Securities [Abstract]

The amortized cost and estimated fair value of equity and debt securities at March 31, 2021 and December 31, 2020 are summarized as follows (in thousands):


	Amortized Cost		Unrealized Gains	Unrealized Losses	Fair Value
March 31, 2021
Debt Securities, Available-for-Sale:
U.S. Treasury notes	$	16,186	108	78	16,216
U.S. Agency notes	75,912		597	1,372	75,137
Corporate bonds	1,900		7	14	1,893
U.S. Agency mortgage-backed securities	95,089		2,244	730	96,603
Municipal securities:
Non-taxable	12,263		202	32	12,433
Taxable	35,120		775	558	35,337
	$	236,470	3,933	2,784	237,619

Debt Securities, Held-to-Maturity:
Municipal securities:
Non-taxable	$	21,293	169	—	21,462
Taxable	3,402		6	42	3,366
	$	24,695	175	42	24,828

December 31, 2020
Debt Securities, Available-for-Sale:
U.S. Treasury notes	$	2,268	120	—	2,388
U.S. Agency notes	66,983		950	33	67,900
Corporate Bonds	1,200		—	21	1,179
U.S. Agency mortgage-backed securities	88,455		3,180	1	91,634
Municipal securities:
Non-taxable	12,651		282	—	12,933
Taxable	32,409		1,031	3	33,437
	$	203,966	5,563	58	209,471

Debt Securities, Held-to-Maturity:
Municipal securities:
Non-taxable	$	21,408	181	—	21,589
Taxable	3,402		6	37	3,371
	$	24,810	187	37	24,960

Information concerning debt securities with gross unrealized losses at March 31, 2021 and December 31, 2020, 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
March 31, 2021
Available-for-Sale:
U.S. Treasury notes	$	8,924	78	—	—
U.S. Agency notes	52,785		1,372	—	—
Corporate bonds	1,186		14	—	—
U.S. Agency mortgage-backed securities	41,801		730	—	—
Municipal securities:
Non-taxable	1,758		32	—	—
Taxable	18,537		558	—	—
	$	124,991	2,784	—	—

Held-to-Maturity:
Municipal securities:
Non-taxable	$	—	—	—	—
Taxable	3,108		42	—	—
	$	3,108	42	—	—

December 31, 2020
Available-for-Sale:
U.S. Treasury notes	$	—	—	—	—
U.S. Agency notes	10,674		33	—	—
Corporate Bonds	679		21	—	—
U.S. Agency mortgage-backed securities	290		1	—	—
Municipal securities:
Non-taxable	38		—	—	—
Taxable	3,063		3	—	—
	$	14,744	58	—	—

Held-to-Maturity:
Municipal securities:
Non-taxable	$	1	—	—
Taxable	3,113		37	—	—
	$	3,114	37	—	—

Management has determined that the unrealized losses at March 31, 2021 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 March 31, 2021 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	$	8,811	8,932	2,116	2,122
Due from one to five years	42,243		42,853	5,676	5,739
Due from five to ten years	89,298		88,238	2,055	2,089
Due after ten years	1,029		993	14,848	14,878
	141,381		141,016	24,695	24,828
U.S. Agency mortgage-backed securities	95,089		96,603	—	—
	$	236,470	237,619	24,695	24,828

Debt securities with a market value of $192,973,000 and $118,599,000 at March 31, 2021 and December 31, 2020, 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 months ended March 31, 2021 and 2020 was as follows (in thousands):


	Three Months Ended March 31,
		2021		2020
Proceeds from sales		$	—	8,786
Gross realized gains		—		221
Gross realized losses		—		—

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 March 31, 2021 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 March 31, 2021 and December 31, 2020 are summarized as follows (in thousands):


	March 31, 2021			December 31, 2020
	Amortized Cost		Fair Value	Amortized Cost	Fair Value
Mutual funds	$	1,399	1,385	1,395	1,402
Equity securities	778		1,121	778	987
Total equity securities with a readily determinable fair value	$	2,177	2,506	2,173	2,389

Certain information concerning changes in fair value of equity securities with a readily determinable fair value for the three months ended March 31, 2021 and 2020 is as follows (in thousands):


	Three Months Ended March 31,
		2021		2020
Net gains recognized		$	112	333
Less net realized gains on equity securities sold		—		559
Net unrealized gains (losses) recognized and still held at period end		$	112	(226)