Investment Securities

6 Months Ended

Jun. 30, 2022

Investments, Debt and Equity Securities [Abstract]

The amortized cost and estimated fair value of equity and debt securities at June 30, 2022 and December 31, 2021 are summarized as follows (in thousands):


	Amortized Cost		Unrealized Gains	Unrealized Losses	Fair Value
June 30, 2022
Debt Securities, Available-for-Sale:
U.S. Treasury notes	$	85,052	1	6,413	78,640
U.S. Agency notes	89,246		—	8,480	80,766
Corporate bonds	6,700		—	651	6,049
U.S. Agency mortgage-backed securities	92,602		10	7,930	84,682
Municipal securities:
Non-taxable	9,259		12	317	8,954
Taxable	45,802		39	3,700	42,141
	$	328,661	62	27,491	301,232

Debt Securities, Held-to-Maturity:
Municipal securities:
Non-taxable	$	18,947	6	600	18,353
Taxable	3,569		—	387	3,182
	$	22,516	6	987	21,535

December 31, 2021
Debt Securities, Available-for-Sale:
U.S. Treasury notes	$	75,443	57	756	74,744
U.S. Agency notes	89,293		45	2,092	87,246
Corporate Bonds	5,200		70	118	5,152
U.S. Agency mortgage-backed securities	96,018		1,350	692	96,676
Municipal securities:
Non-taxable	8,959		125	18	9,066
Taxable	35,208		531	446	35,293
	$	310,121	2,178	4,122	308,177

Debt Securities, Held-to-Maturity:
Municipal securities:
Non-taxable	$	19,403	98	—	19,501
Taxable	3,569		21	4	3,586
	$	22,972	119	4	23,087

Information concerning debt securities with gross unrealized losses at June 30, 2022 and December 31, 2021, 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
June 30, 2022
Available-for-Sale:
U.S. Treasury notes	$	78,037	6,413	—	—
U.S. Agency notes	30,577		2,699	50,189	5,781
Corporate bonds	4,810		490	1,239	161
U.S. Agency mortgage-backed securities	64,639		4,869	19,270	3,061
Municipal securities:
Non-taxable	5,972		317	—	—
Taxable	33,553		2,475	7,307	1,225
	$	217,588	17,263	78,005	10,228

Held-to-Maturity:
Municipal securities:
Non-taxable	$	10,858	600	—	—
Taxable	3,182		387	—	—
	$	14,040	987	—	—

December 31, 2021
Available-for-Sale:
U.S. Treasury notes	$	66,891	756	—	—
U.S. Agency notes	58,648		1,257	20,289	835
Corporate Bonds	3,898		102	484	16
U.S. Agency mortgage-backed securities	49,813		692	—	—
Municipal securities:
Non-taxable	1,020		18	—	—
Taxable	18,434		322	3,535	124
	$	198,704	3,147	24,308	975

Held-to-Maturity:
Municipal securities:
Non-taxable	$	46	—	—	—
Taxable	271		4	—	—
	$	317	4	—	—

Management has determined that the unrealized losses at June 30, 2022 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.

Debt securities with a market value of $169,077,000 and $128,426,000 at June 30, 2022 and December 31, 2021, respectively, were pledged to secure public deposits and for other purposes required or as permitted by law.

Contractual maturities of debt securities at June 30, 2022 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	$	6,852	6,811	1,671	1,669
Due from one to five years	106,348		99,399	4,923	4,762
Due from five to ten years	122,129		109,700	2,888	2,690
Due after ten years	730		640	13,034	12,414
	236,059		216,550	22,516	21,535
U.S. Agency mortgage-backed securities	92,602		84,682	—	—
	$	328,661	301,232	22,516	21,535

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 June 30, 2022 on its investments in equity securities without a readily determinable fair value.

The cost and estimated fair value of equity securities with a readily determinable fair value at June 30, 2022 and December 31, 2021 are summarized as follows (in thousands):


	June 30, 2022			December 31, 2021
	Cost		Fair Value	Cost	Fair Value
Mutual funds	$	1,418	1,272	1,410	1,379
Equity securities	778		978	778	1,167
Total equity securities with a readily determinable fair value	$	2,196	2,250	2,188	2,546

Changes in the fair value of equity securities with a readily determinable fair value for the three and six months ended June 30, 2022 and 2021 were due solely to changes in unrealized gains and losses.