Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2013

Fair Value Measurements [Abstract]

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 March 31, 2013 and December 31, 2012 (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)		Total Gains (Losses)
March 31, 2013
Recurring fair value measurements:
Investment securities available-for-sale:
U.S. Treasury notes	$	19,693		19,693		-		-		-
U.S. Agency notes		101,499		-		101,499		-		-
U.S. Agency mortgage-backed securities		54,156		-		54,156		-		-
Certificates of deposit with other banks		1,509		-		1,509		-
Municipal securities:
Non-taxable		78,744		-		78,744		-		-
Taxable		17,592		-		17,592		-		-
Mutual funds		2,223		1,223		1,000		-		-
Trust preferred securities		148		148		-		-		-
Equity securities		1,995		1,995		-		-		-
Total recurring fair value measurements	$	277,559		23,059		254,500		-		-
Nonrecurring fair value measurements:
Impaired loans	$	4,589		-		707		3,882		-
Other real estate owned and repossessed     assets (a)		1,687		-		1,687		-		230
Total nonrecurring fair value measurements	$	6,276		-		2,394		3,882		230
December 31, 2012
Recurring fair value measurement:
Investment securities available-for-sale:
U.S. Treasury notes	$	18,686		18,686		-		-		-
U.S. Agency notes		90,606		-		90,606		-		-
U.S. Agency mortgage-backed securities		52,541		-		52,541		-		-
Corporate securities		3,067		3,067		-		-		-
Municipal securities:
Non-taxable		73,882		-		73,882		-		-
Taxable		15,841		-		15,841		-		-
Mutual funds		2,168		1,168		1,000		-		-
Trust preferred securities		245		245		-		-		-
Equity securities		1,470		1,470		-		-		-
Total recurring fair value measurements	$	258,506		24,636		233,870		-		-
Nonrecurring fair value measurements:
Impaired loans	$	4,276		-		161		4,115		-
Other real estate owned and repossessed     assets (b)		2,189		-		2,189		-		(295	)
Total nonrecurring fair value measurements	$	6,465		-		2,350		4,115		(295	)
(a)    Two other real estate owned properties with a total carrying amount of $173,000 were written down to their combined fair value of $156,000, resulting in an impairment charge of $17,000. Four other real estate owned properties with a total carrying amount of $612,000 were sold for a combined total of $857,000, resulting in a net gain of $245,000. A repossessed asset with a carrying value of $6,000 was sold for $8,000, resulting in a net gain of $2,000. The write-downs, losses, and gains were included in other non-interest expense for the period.
(b)    Eight other real estate owned properties with a total carrying amount of $1,809,000 were written down to their combined fair value of $1,525,000, resulting in an impairment charge of $284,000. Another property was sold at a loss of $8,000. Repossessed assets with a carrying value of $23,000 were sold for a combined total of $20,000, resulting in a net loss of $3,000. The write-downs and losses were included in other non-interest expense for the period.

Carrying Amounts and Estimated Fair Values of Financial Instruments

Carrying amounts and estimated fair values of financial instruments as of March 31, 2013 and December 31, 2012 are as follows (in thousands):

	March 31, 2013				December 31, 2012
	Carrying		Fair		Carrying		Fair
	Amount		Value		Amount		Value
FINANCIAL ASSETS:
Cash and cash equivalents	$	28,313		28,313		13,475		13,475
Investment securities:
Available-for-sale		277,559		277,559		258,506		258,506
Held-to-maturity		22,831		22,831		15,424		15,424
Federal Reserve Bank stock		1,106		1,106		949		949
Federal Home Loan Bank stock		2,854		2,854		2,091		2,091
Loans, net		546,263		554,993		450,346		453,060
FINANCIAL LIABILITIES:
Deposits		820,870		825,318		671,471		675,964
Short-term borrowings		11,609		11,609		13,756		13,756
Long-term debt		13,128		14,066		13,705		14,724

Summary of Categorization by Inputs Level of LCNB's Financial Assets and Liabilities Not Recorded at Fair Value but for Which Fair Value is Disclosed

The following table summarizes the categorization by input level as of March 31, 2013 and December 31, 2012 of LCNB's financial assets and liabilities not recorded at fair value but for which fair value is disclosed (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)
March 31, 2013
Assets:
Loans, net	$	550,404		-		550,404		-
Investment securities, non-taxable,     held-to-maturity		22,831		-		-		22,831
Federal Reserve Bank stock		1,106		1,106		-		-
Federal Home Loan Bank stock		2,854		2,854		-		-
Liabilities:
Deposits		825,318		-		825,318		-
Long-term debt		14,066		-		14,066		-
December 31, 2012
Assets:
Loans, net	$	448,784		-		448,784		-
Investment securities, non-taxable,     held-to-maturity		15,424		-		-		15,424
Federal Reserve Bank stock		949		949		-		-
Federal Home Loan Bank stock		2,091		2,091		-		-
Liabilities:
Deposits		675,964		-		675,964		-
Long-term debt		14,724		-		14,724		-