Investment Securities

The amortized cost and estimated fair value of investment securities at September 30, 2017 and December 31, 2016 are summarized as follows (in thousands):



	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
September 30, 2017
Available-for-Sale:
U.S. Treasury notes	$	16,112	$	44	$	4	$	16,152
U.S. Agency notes	87,862		119		1,035		86,946
U.S. Agency mortgage-backed securities	71,541		70		890		70,721
Municipal securities:
Non-taxable	110,517		889		683		110,723
Taxable	22,398		259		35		22,622
Mutual funds	2,576		1		38		2,539
Trust preferred securities	49		1		—		50
Equity securities	574		80		3		651
	$	311,629	$	1,463	$	2,688	$	310,404

Held-to-Maturity:
Municipal securities:
Non-taxable	$	33,160	$	112	$	38	$	33,234
Taxable	3,700		—		129		3,571
	$	36,860	$	112	$	167	$	36,805

December 31, 2016
Available-for-Sale:
U.S. Treasury notes	$	28,180	$	41	$	76	$	28,145
U.S. Agency notes	87,098		150		1,848		85,400
U.S. Agency mortgage-backed securities	72,402		89		1,444		71,047
Municipal securities:
Non-taxable	114,064		574		1,623		113,015
Taxable	19,710		220		85		19,845
Mutual funds	2,527		—		45		2,482
Trust preferred securities	49		—		1		48
Equity securities	632		55		10		677
	$	324,662	$	1,129	$	5,132	$	320,659

Held-to-Maturity:
Municipal securities:
Non-taxable	$	31,015	$	56	$	352	$	30,719
Taxable	9,988		—		217		9,771
	$	41,003	$	56	$	569	$	40,490

Information concerning investment securities with gross unrealized losses at September 30, 2017 and December 31, 2016, 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, 2017
Available-for-Sale:
U.S. Treasury notes	$	1,297	$	4	$	—	$	—
U.S. Agency notes	67,239		779		8,736		256
U.S. Agency mortgage-backed securities	52,116		608		7,536		282
Municipal securities:
Non-taxable	28,502		407		8,006		276
Taxable	7,170		35		450		—
Mutual funds	—		—		1,517		38
Trust preferred securities	—		—		—		—
Equity securities	10		1		31		2
	$	156,334	$	1,834	$	26,276	$	854

Held-to-Maturity:
Municipal securities:
Non-taxable	$	962	1		3,483		37
Taxable	3,171		129		—		—
	$	4,133	$	130	$	3,483	$	37

December 31, 2016
Available-for-Sale:
U.S. Treasury notes	$	16,076	$	76	$	—	$	—
U.S. Agency notes	69,784		1,848		—		—
U.S. Agency mortgage-backed securities	64,564		1,310		3,518		134
Municipal securities:
Non-taxable	72,867		1,621		451		2
Taxable	9,721		82		450		3
Mutual funds	1,205		37		277		8
Trust preferred securities	49		1		—		—
Equity securities	201		10		—		—
	$	234,467	$	4,985	$	4,696	$	147

Held-to-Maturity:
Municipal securities:
Non-taxable	$	20,429	$	251	$	2,564	$	101
Taxable	8,030		217		—		—
	$	28,459	$	468	$	2,564	$	101

Management has determined that the unrealized losses at September 30, 2017 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 investment securities at September 30, 2017 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	$	10,477	$	10,500	$	6,171	$	6,196
Due from one to five years	109,760		110,262		4,065		4,050
Due from five to ten years	109,140		108,443		10,322		10,315
Due after ten years	7,512		7,238		16,302		16,244
	236,889		236,443		36,860		36,805
U.S. Agency mortgage-backed securities	71,541		70,721		—		—
Mutual funds	2,576		2,539		—		—
Trust preferred securities	49		50		—		—
Equity securities	574		651		—		—
	$	311,629	$	310,404	$	36,860	$	36,805

Investment securities with a market value of $170,890,000 and $149,990,000 at September 30, 2017 and December 31, 2016, respectively, were pledged to secure public deposits and for other purposes required or as permitted by law.

Certain information concerning the sale of investment securities available-for-sale for the three and nine months ended September 30, 2017 and 2016 was as follows (in thousands):



	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
Proceeds from sales	$	14,164	$	25,723	$	26,407	$	62,252
Gross realized gains	78		307		218		978
Gross realized losses	—		—		—		21

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