FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables)

12 Months Ended

Dec. 31, 2019

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)
2019
Recurring fair value measurements:
Equity securities with a readily determinable fair value:
Equity securities	$	967	967	—	—
Mutual funds	45		45	—	—
Mutual funds measured at net asset value	1,300		1,300	—	—

Debt securities available-for-sale:
U.S. Treasury notes	2,309		2,309	—	—
U.S. Agency notes	48,984		—	48,984	—
U.S. Agency mortgage-backed securities	84,406		—	84,406	—
Municipal securities:
Non-taxable	22,321		—	22,321	—
Taxable	19,980		—	19,980	—
Total recurring fair value measurements	$	180,312	4,621	175,691	—

Nonrecurring fair value measurements:
Impaired loans	$	2,840	—	—	2,840
Other real estate owned and repossessed assets	197		—	—	197
Total nonrecurring fair value measurements	$	3,037	—	—	3,037

2018
Recurring fair value measurement:
Equity securities with a readily determinable fair value:
Trust preferred securities	—		—	—	—
Equity securities	519		519	—	—
Mutual funds	39		39	—	—
Mutual funds measured at net asset value	1,520		1,520	—	—

Debt securities available-for-sale:
U.S. Treasury notes	$	2,235	2,235	—	—
U.S. Agency notes	78,340		—	78,340	—
U.S. Agency mortgage-backed securities	55,610		—	55,610	—
Municipal securities:
Non-taxable	84,714		—	84,714	—
Taxable	17,522		—	17,522	—
Total recurring fair value measurements	$	240,499	4,313	236,186	—

Nonrecurring fair value measurements:
Impaired loans	$	1,039	—	—	1,039
Other real estate owned and repossessed assets	244		—	—	244
Total nonrecurring fair value measurements	$	1,283	—	—	1,283

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, 2019 and 2018 (dollars in thousands):



					Range
	Fair Value		Valuation Technique	Unobservable Inputs	High		Low		Weighted Average
2019
Impaired loans	$	1,931	Estimated sales price	Adjustments for comparable properties, discounts to reflect current market conditions	Not applicable
	909		Discounted cash flows	Discount rate	8.25	%	4.50	%	6.83	%
Other real estate owned	197		Estimated sales price	Adjustments for comparable properties, discounts to reflect current market conditions	Not applicable

2018
Impaired loans	$	45	Estimated sales price	Adjustments for comparable properties, discounts to reflect current market conditions	Not applicable
	994		Discounted cash flows	Discount rate	8.25	%	4.50	%	6.86	%
Other real estate owned	244		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)
2019
FINANCIAL ASSETS:
Cash and cash equivalents	$	20,765	20,765	20,765	—	—
Debt securities, held-to-maturity	27,525		27,888	—	—	27,888
Federal Reserve Bank stock	4,652		4,652	4,652	—	—
Federal Home Loan Bank stock	5,203		5,203	5,203	—	—
Loans, net	1,239,406		1,252,156	—	—	1,252,156
Accrued interest receivable	—		3,911	—	3,911	—

FINANCIAL LIABILITIES:
Deposits	1,348,280		1,352,061	1,024,162	327,899	—
Long-term debt	40,994		41,487	—	41,487	—
Accrued interest payable	—		705	—	705	—

2018
FINANCIAL ASSETS:
Cash and cash equivalents	$	20,040	20,040	20,040	—	—
Debt securities, held-to-maturity	29,721		29,024	—	—	29,024
Federal Reserve Bank stock	4,653		4,653	4,653	—	—
Federal Home Loan Bank stock	4,845		4,845	4,845	—	—
Loans, net	1,194,577		1,183,041	—	—	1,183,041
Accrued interest receivable	4,317		4,317	—	4,317	—

FINANCIAL LIABILITIES:
Deposits	1,300,919		1,301,298	1,004,057	297,241	—
Short-term borrowings	56,230		56,230	56,230	—	—
Long-term debt	47,032		48,255	—	48,255	—
Accrued interest payable	690		690	—	690	—

- 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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