Note 13 – Recent Accounting Pronouncements

Accounting Standards Update No. 2011-04, “Fair Value Measurement (ASC Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs,” was issued by the Financial Accounting Standards Board (the “FASB”) in May 2011. The update does not extend the use of fair value accounting, but provides guidance on how it should be applied where its use is already required or permitted by other standards within IFRS or U.S. GAAP. It supersedes most of the guidance in ASC Topic 820, although many of the changes are clarifications of existing guidance or wording changes to align with IFRS 13. Changes to current guidance include:

Clarification on using premiums and discounts in calculating fair value when level 2 or 3 inputs are used,

An expansion of disclosures about fair value measurements, and

The categorization by level of the fair value hierarchy for items that are not measured at fair value in the statement of financial position, but for which the fair value is required to be disclosed.

The amendments in the update must be applied prospectively. For public entities, the amendments are effective during interim and annual periods beginning after Dec. 15, 2011. Early application by public entities is not permitted. The required disclosures will be included in LCNB's financial statements beginning January 1, 2012.

Accounting Standards Update No. 2011-05, “Comprehensive Income (ASC Topic 220): Presentation of Comprehensive Income,” was issued by the FASB in June 2011. The update eliminates the option to present the components of other comprehensive income as part of the statement of shareholders' equity. Instead, a company is required to report comprehensive income in either a single continuous statement of comprehensive income which contains two sections, net income and other comprehensive income, or in two separate but consecutive statements. The amendments in the update are effective for public companies during the interim and annual periods beginning after Dec. 15, 2011 with early adoption permitted. LCNB's presentation of the Consolidated Statements of Comprehensive Income already complies with the requirements of the update.

Accounting Standards Update No. 2011-08, “Intangibles – Goodwill and Other (ASC Topic 350): Testing Goodwill for Impairment,” was issued by the FASB in September 2011. The update simplifies the goodwill impairment test by allowing companies an option to first assess qualitative factors to determine whether it is necessary to perform the two-step quantitative goodwill impairment test. Under that option, a company no longer will be required to calculate the fair value of a reporting unit unless the company determines, based on that qualitative assessment, that it is more likely than not that its fair value is less than its carrying amount. A company has the option to bypass the qualitative assessment for any reporting unit in any period and proceed directly to performing the first step of the two-step goodwill impairment test. The company may resume performing the qualitative assessment in any subsequent period. The guidance includes examples of the types of events and circumstances to consider in conducting the qualitative assessment. The update also eliminates the provision allowing a company to carry forward its detailed calculation of a reporting unit's fair value from a prior year. The amendments in the update will be effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. Early adoption is permitted. LCNB management does not anticipate that adoption of this update will have a material effect on its consolidated financial statements.

Accounting Standards Update No. 2011-09, “Compensation-Retirement Benefits-Multiemployer Plans (ASC Subtopic 715-80): Disclosures about an Employer's Participation in a Multiemployer Plan,” was issued by the FASB in September 2011. The update requires companies to provide enhanced disclosures relating to participation in multiemployer pension plans, including:

The amount of contributions made to each significant plan and to all plans in the aggregate,

An indication of whether the company's contributions represent more than 5% of total contributions to the plan,

An indication of which plans are subject to a funding improvement plan,

Information about the funded status of the plan, and

A description of the nature and effect of any changes affecting comparability between for each period in which an income statement is presented.

For public companies, the amendments in the update are effective for annual periods ending after December 15, 2011. The required disclosures will be included in LCNB's financial statements for the year ended December 31, 2011.