Fair Value of Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2012

Fair Value of Financial Instruments [Abstract]

Summary of valuation of LCNB's assets recorded at fair value by inputs level

The following table summarizes the valuation of LCNB's assets recorded at fair value by input levels as of June 30, 2012 and December 31, 2011 (in thousands):

				Fair Value Measurements at the End of the Reporting Period Using
		Fair Value Measurements		Quoted Prices in Active Markets for Identical Assets (Level 1)	Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)	Total Gains (Losses)
June 30, 2012
Recurring fair value measurements:
Investment securities available-for-sale:
U.S. Treasury notes		$	21,169	21,169	-	-
U.S. Agency notes			101,242	-	101,242	-
U.S. Agency mortgage-backed securities			58,297	-	58,297	-
Corporate securities			6,332	4,140	2,192	-
Municipal securities:
Non-taxable			73,233	-	73,233	-
Taxable			21,178	-	21,178	-
Mutual funds			2,153	-	1,153	1,000
Trust preferred securities			515	515	-	-
Equity securities			1,022	1,022	-	-
Total recurring fair value measurements		$	285,141	26,846	257,295	1,000

Nonrecurring fair value measurements:
Impaired loans		$	1,944	-	830	1,114	-
Other real estate owned and repossessed assets (a) (b)			2,123	-	2,123	-	(79)
Total nonrecurring fair value measurements		$	4,067	-	2,953	1,114	(79)

December 31, 2011
Recurring fair value measurement:
Investment securities available-for-sale:
U.S. Treasury notes		$	17,550	17,550	-	-
U.S. Agency notes			82,927	-	82,927	-
U.S. Agency mortgage-backed securities			52,287	-	52,287	-
Corporate securities			6,365	4,152	2,213	-
Municipal securities:
Non-taxable			69,703	-	69,703	-
Taxable			21,907	-	21,907	-
Mutual funds			2,125	-	1,125	1,000
Trust preferred securities			564	564	-	-
Equity securities			578	578	-	-
Total recurring fair value measurements		$	254,006	22,844	230,162	1,000

Nonrecurring fair value measurements:
Impaired loans		$	2,563	-	1,300	1,263	-
Other real estate owned and repossessed assets (c)			1,642	-	1,619	23	31
Total nonrecurring fair value measurements		$	4,205	-	2,919	1,286	31

(a)	Two other real estate owned properties with a total carrying amount of $1,619,000 were written down to their combined fair value of $1,543,000, resulting in an impairment charge of $76,000, which was included in other non-interest expense for the period.
(b)	Repossessed assets with a carrying value of $23,000 were sold for a combined total of $20,000, resulting in a net loss of $3,000, which was included in other non-interest expense for the period.
(c)	Repossessed assets with a carrying value of $117,000 were sold for a combined total of $148,000, resulting in a net gain of $31,000, which was included in other non-interest expense for the period.

Reconciliation of the beginning and ending balances of recurring fair value measurements that use significant unobservable inputs (level 3)

The following table is a reconciliation of the beginning and ending balances of recurring fair value measurements that use significant unobservable inputs (level 3) for the six months ended June 30, 2011 (in thousands):

		Mutual Funds

Beginning balance	$	1,053
Purchases		500
Dividends reinvested		17
Net change in unrealized gains (losses) included in other comprehensive income		11
Ending balance	$	1,581

Carrying amounts and estimated fair values of financial instruments

Carrying amounts and estimated fair values of financial instruments as of June 30, 2012 and December 31, 2011 are as follows (in thousands):

		June 30, 2012				December 31, 2011
	Carrying		Fair		Carrying		Fair
		Amount		Value	Amount		Value

FINANCIAL ASSETS:
Cash and cash equivalents	$	26,896		26,896		19,535	19,535
Investment securities:
Available-for-sale		285,141		285,141		254,006	254,006
Held-to-maturity		11,474		11,474		10,734	10,734
Federal Reserve Bank stock		949		949		940	940
Federal Home Loan Bank stock		2,091		2,091		2,091	2,091
Loans, net		458,629		______		458,331	470,846

FINANCIAL LIABILITIES:
Deposits		710,656		______		663,562	669,383
Short-term borrowings		13,142		13,142		21,596	21,596
Long-term debt		20,391		______		21,373	22,570

Summary of categorization by inputs level of LCNB's financial assets liabilities not recorded at fair value but for which fair value is disclosed [Table Text Block]

The following table summarizes the categorization by input level as of June 30, 2012 and December 31, 2011 of LCNB's financial assets and liabilities not recorded at fair value but for which fair value is disclosed (in thousands):

			Fair Value Measurements at the End of the Reporting Period Using
	Fair Value Measurements		Quoted Prices in Active Markets for Identical Assets (Level 1)	Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)
June 30, 2012
Assets:
Loans, net	$	______	-	______	-
Investment securities, non-taxable, held-to-maturity		11,474	-	-	11,474
Federal Reserve Bank stock		949	949	-	-
Federal Home Loan Bank stock		2,091	2,091	-	-

Liabilities:
Deposits		______	-	______	-
Long-term debt		______	-	______	-

December 31, 2011
Assets:
Loans, net	$	468,283	-	468,283	-
Investment securities, non-taxable, held-to-maturity		10,734	-	-	10,734
Federal Reserve Bank stock		940	940	-	-
Federal Home Loan Bank stock		2,091	2,091	-	-

Liabilities:
Deposits		669,383	-	669,383	-
Long-term debt		22,570	-	22,570	-

- Definition

Tabular disclosure related to assets and liabilities by class, including financial instruments measured at fair value that are classified in shareholders' equity, if any, that are measured at fair value on a recurring and/or nonrecurring basis in periods after initial recognition. Disclosures include, but are not limited to: (a) the fair value measurements recorded and the reasons for the measurements and (b) the level within the fair value hierarchy in which the fair value measurements are categorized in their entirety (levels 1, 2, 3) as well as transfers between levels 1 and 2.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 157

-Paragraph 6

-Footnote 4

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-Publisher FASB

-Name Accounting Standards Codification

-Topic 820

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-Subparagraph (a,b,bb)

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-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 157

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-Publisher FASB

-Name Accounting Standards Codification

-Topic 820

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-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 157

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+ Details

- Definition

Tabular disclosure of the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments, assets, and liabilities. Such certain disclosures about the financial instruments, assets, and liabilities include: (1) the fair value of the required items together with their carrying amounts (as appropriate) and (2) the methodology and assumptions used in developing such estimates of fair value.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 107

-Paragraph 14

-Subparagraph a

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

Reference 2: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 159

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-Subparagraph c(2), d, e, f

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-Publisher FASB

-Name Accounting Standards Codification

-Topic 825

-SubTopic 10

-Section 50

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-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

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-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 159

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-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 157

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-Subparagraph a, c(1), c(2), c(3), d

-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.

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-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 107

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+ Details

- Definition

Tabular disclosure of the fair value measurement of liabilities using significant unobservable inputs (Level 3), a reconciliation of the beginning and ending balances, separately presenting changes attributable to the following: (1) total gains or losses for the period (realized and unrealized), segregating those gains or losses included in earnings (or changes in net assets), and gains or losses recognized in other comprehensive income (loss) and a description of where those gains or losses included in earnings (or changes in net assets) are reported in the statement of income (or activities); (2) purchases, sales, issues, and settlements (each type disclosed separately); and (3) transfers in and transfers out of Level 3 (for example, transfers due to changes in the observability of significant inputs) by class of liability.

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