FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables)

12 Months Ended

Dec. 31, 2016

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 December 31 (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)
December 31, 2016
Recurring fair value measurements:
Investment securities available-for-sale:
U.S. Treasury notes		$	28,145	28,145	—	—
U.S. Agency notes		85,400		—	85,400	—
U.S. Agency mortgage-backed securities		71,047		—	71,047	—
Certificates of deposit with other banks		—		—	—	—
Municipal securities:
Non-taxable		113,015		—	113,015	—
Taxable		19,845		—	19,845	—
Mutual funds		1,000		—	1,000	—
Mutual funds measured at net asset value (a)		1,482
Trust preferred securities		48		48	—	—
Equity securities		677		677	—	—
Total recurring fair value measurements		$	320,659	28,870	290,307	—

Nonrecurring fair value measurements:
Impaired loans		$	5,340	—	—	5,340

December 31, 2015
Recurring fair value measurement:
Investment securities available-for-sale:
U.S. Treasury notes		$	72,846	72,846	—	—
U.S. Agency notes		139,889		—	139,889	—
U.S. Agency mortgage-backed securities		29,378		—	29,378	—
Certificates of deposit with other banks		249		—	249	—
Municipal securities:
Non-taxable		105,479		—	105,479	—
Taxable		26,941		—	26,941	—
Mutual funds		1,018		18	1,000	—
Mutual funds measured at net asset value (a)		1,448
Trust preferred securities		50		50	—	—
Equity securities		680		680	—	—
Total recurring fair value measurements		$	377,978	73,594	302,936	—

Nonrecurring fair value measurements:
Impaired loans		$	4,722	—	—	4,722
Other real estate owned and repossessed assets		846		—	—	846
Total nonrecurring fair value measurements		$	5,568	—	—	5,568

(a)	In accordance with Subtopic 820-10, certain investments that are measured at fair value using the net asset value per share practical expedient have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented in the Consolidated Balance Sheets.

Fair Value, Assets and Liabilities Measured on Nonrecurring Basis, Valuation Techniques

The following table presents quantitative information about unobservable inputs used in nonrecurring Level 3 fair value measurements at December 31, 2016 and 2015 (dollars in thousands):



					Range
	Fair Value		Valuation Technique	Unobservable Inputs	High		Low		Weighted Average
2016
Impaired loans	$	5,340	Estimated sales price	Adjustments for comparable properties, discounts to reflect current market conditions	Not applicable
			Discounted cash flows	Discount rate	8.25	%	4.50	%	5.56	%

2015
Impaired loans	$	4,722	Estimated sales price	Adjustments for comparable properties, discounts to reflect current market conditions	Not applicable
			Discounted cash flows	Discount rate	11.00%		4.00%		5.27%
Other real estate owned	846		Estimated sales price	Adjustments for comparable properties, discounts to reflect current market conditions

Carrying Amounts and Estimated Fair Values of Financial Instruments

Carrying amounts and estimated fair values of financial instruments as of December 31 were as follows (in thousands):



				Fair Value Measurements at the End of the Reporting Period Using
	Carrying Amount		Fair Value	Quoted Prices in Active Markets for Identical Assets (Level 1)	Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)
2016
FINANCIAL ASSETS:
Cash and cash equivalents	$	18,865	18,865	18,865	—	—
Investment securities, held-to-maturity	41,003		40,490	—	—	40,490
Federal Reserve Bank stock	2,732		2,732	2,732	—	—
Federal Home Loan Bank stock	3,638		3,638	3,638	—	—
Loans, net	816,228		799,791	—	—	799,791
Accrued interest receivable	3,559		3,559	—	3,559	—

FINANCIAL LIABILITIES:
Deposits	1,110,905		1,113,187	896,147	217,040	—
Short-term borrowings	42,040		42,040	42,040	—	—
Long-term debt	598		614	—	614	—
Accrued interest payable	307		307	—	307	—

2015
FINANCIAL ASSETS:
Cash and cash equivalents	$	14,987	14,987	14,987	—	—
Investment securities, held-to-maturity	22,633		22,630	—	—	22,630
Federal Reserve Bank stock	2,732		2,732	2,732	—	—
Federal Home Loan Bank stock	3,638		3,638	3,638	—	—
Loans, net	767,809		761,388	—	—	761,388
Accrued interest receivable	3,380		3,380	—	3,380	—

FINANCIAL LIABILITIES:
Deposits	1,087,160		1,087,914	869,940	217,974	—
Short-term borrowings	37,387		37,387	37,387	—	—
Long-term debt	5,947		6,290	—	6,290	—
Accrued interest payable	345		345	—	345	—

- Definition

Tabular disclosure of financial instruments measured at fair value, including those classified in shareholders' equity measured on a recurring or nonrecurring basis. Disclosures include, but are not limited to, fair value measurements recorded and the reasons for the measurements, level within the fair value hierarchy in which the fair value measurements are categorized and transfers between levels 1 and 2. Nonrecurring fair value measurements are those that are required or permitted in the statement of financial position in particular circumstances.

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