Investment Securities

3 Months Ended

Mar. 31, 2024

Investments, Debt and Equity Securities [Abstract]

INVESTMENT SECURITIES

The amortized cost and estimated fair value of debt securities at March 31, 2024 and December 31, 2023 are summarized as follows (in thousands):


	Amortized Cost		Unrealized Gains		Unrealized Losses	Fair Value
March 31, 2024
Debt Securities, Available-for-Sale:
U.S. Treasury notes	$	74,308	—		6,502	67,806
U.S. Agency notes	88,929		—		8,339	80,590
Corporate bonds	7,450		—		824	6,626
U.S. Agency mortgage-backed securities	79,727		6		9,940	69,793
Municipal securities:
Non-taxable	4,638		—		235	4,403
Taxable	37,354		—		3,786	33,568
	$	292,406	6		29,626	262,786

Debt Securities, Held-to-Maturity:
Municipal securities:
Non-taxable	$	13,468	2		853	12,617
Taxable	3,283		—		389	2,894
	$	16,751	2		1,242	15,511

December 31, 2023
Debt Securities, Available-for-Sale:
U.S. Treasury notes	$	74,404	—		6,202	68,202
U.S. Agency notes	88,978		—		8,077	80,901
Corporate Bonds	7,450		—		916	6,534
U.S. Agency mortgage-backed securities	81,634		2		8,846	72,790
Municipal securities:
Non-taxable	7,416		—		245	7,171
Taxable	44,923		1		3,921	41,003
	$	304,805	$	3	28,207	276,601

Debt Securities, Held-to-Maturity:
Municipal securities:
Non-taxable	$	13,580	4		872	12,712
Taxable	3,283		—		316	2,967
	$	16,863	4		1,188	15,679

The Company estimated the expected credit losses at March 31, 2024 and December 31, 2023 to be immaterial based on the composition of the securities portfolio.

Information concerning debt securities with gross unrealized losses at March 31, 2024 and December 31, 2023, aggregated by length of time that individual securities have been in a continuous loss position, is as follows (in thousands):


	Less than Twelve Months			Twelve Months or Greater
	Fair Value		Unrealized Losses	Fair Value	Unrealized Losses
March 31, 2024
Available-for-Sale:
U.S. Treasury notes	$	1,489	7	66,317	6,495
U.S. Agency notes	—		—	80,590	8,339
Corporate bonds	729		21	5,897	803
U.S. Agency mortgage-backed securities	—		—	69,301	9,940
Municipal securities:
Non-taxable	—		—	4,403	235
Taxable	—		—	33,447	3,786
	$	2,218	28	259,955	29,598

Held-to-Maturity:
Municipal securities:
Non-taxable	$	—	—	11,900	853
Taxable	—		—	2,894	389
	$	—	—	14,794	1,242

December 31, 2023
Available-for-Sale:
U.S. Treasury notes	$	—	—	68,202	6,202
U.S. Agency notes	—		—	80,901	8,077
Corporate Bonds	734		16	5,800	900
U.S. Agency mortgage-backed securities	—		—	72,287	8,846
Municipal securities:
Non-taxable	1,540		10	5,631	235
Taxable	—		—	40,392	3,921
	$	2,274	26	273,213	28,181

Held-to-Maturity:
Municipal securities:
Non-taxable	$	6,012	476	5,975	396
Taxable	—		—	2,966	316
	$	6,012	476	8,941	712

At March 31, 2024, LCNB’s securities portfolio consisted of 168 securities, 161 of which were in an unrealized loss position. At December 31, 2023, LCNB's securities portfolio consisted of 207 securities, 176 of which were in an unrealized loss position. After considering the issuers of the securities, LCNB management determined that that the unrealized losses were due to changing interest rate environments. As LCNB had no intent at March 31, 2024 to sell its debt securities before recovery of their cost basis and as it was more likely than not that it will not be required to sell its debt securities before recovery of the cost basis, no unrealized losses were deemed to represent credit losses.

Debt securities with a market value of $172.4 million and $124.4 million at March 31, 2024 and December 31, 2023, respectively, were pledged to secure public deposits and for other purposes required or as permitted by law.

Excluding holdings in U.S. Treasury securities and U.S. Government Agencies, there were no investments in securities of any issuer that exceeded 10% of LCNB's consolidated shareholders' equity at March 31, 2024.

Contractual maturities of debt securities at March 31, 2024 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	$	15,909	15,531	1,469	1,449
Due from one to five years	163,735		148,059	1,319	1,281
Due from five to ten years	33,035		29,403	2,849	2,699
Due after ten years	—		—	11,114	10,082
	212,679		192,993	16,751	15,511
U.S. Agency mortgage-backed securities	79,727		69,793	—	—
	$	292,406	262,786	16,751	15,511

Certain information concerning the sale of debt securities available-for-sale for the three months ended March 31, 2024 and 2023 was as follows (in thousands):


	Three Months Ended March 31,
		2024		2023
Proceeds from sales		$	9,615	—
Gross realized gains		—		—
Gross realized losses		214		—

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, 2024 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, 2024 and December 31, 2023 are summarized as follows (in thousands):


	March 31, 2024			December 31, 2023
	Amortized Cost		Fair Value	Amortized Cost	Fair Value
Mutual Funds	$	1,423	1,236	1,415	1,240
Equity Securities	10		98	10	96
Total equity securities with a readily determinable fair value	$	1,433	1,334	1,425	1,336

Certain information concerning changes in the fair value of equity securities with a readily determinable fair value for the three and three months ended March 31, 2024 and 2023 were as follows (in thousands):


	Three Months Ended March 31,
		2024		2023
Net losses recognized during the period on equity securities		$	(10)	(31)
Less net losses recognized during the period on equity securities sold during the period		—		(61)
Net unrealized gains (losses) recognized during the reporting period on equity securities still held at period end		$	(10)	30