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Note 4 - Loans

12 Months Ended

Dec. 31, 2024

Loans, Notes, Trade and Other Receivables Disclosure [Text Block]

NOTE 4 - LOANS

Major classifications of loans at December 31 were as follows (in thousands):

	2024		2023
Commercial and industrial	$	118,611		120,541
Commercial, secured by real estate:
Owner occupied		210,327		206,705
Non-owner occupied		508,531		501,108
Farmland		37,860		37,367
Multi-family		264,260		240,033
Construction		91,154		120,431
Residential real estate:
Secured by senior liens on 1-4 family dwellings		392,513		402,026
Secured by junior liens on 1-4 family dwellings		21,522		19,999
Home equity line-of-credit loans		43,064		38,579
Consumer		20,498		25,600
Agricultural		13,293		11,000
Other loans, including deposit overdrafts		179		82
		1,721,812		1,723,471
Less allowance for credit losses		12,001		10,525
Loans-net	$	1,709,811		1,712,946

Loans in the above table are shown net of deferred origination fees and costs. Deferred origination fees, net of related costs, were $796,000 and $181,000 at December 31, 2024 and 2023, respectively.

Non-accrual loans by class of receivable at December 31 were as follows (dollars in thousands):

	2024				2023
	Non-accrual Loans				Non-accrual Loans
	with no Allowance		Total		with no Allowance		Total
	for Credit Losses		Non-accrual Loans		for Credit Losses		Non-accrual Loans
Commercial and industrial	$	—		1,375		—		—
Commercial, secured by real estate
Owner occupied		—		—		—		—
Non-owner occupied		—		2,642		—		—
Farmland		16		16		51		51
Multi-family		—		—		—		—
Construction		—		—		—		—
Residential real estate
Secured by senior liens on 1-4 family dwellings		73		467		29		29
Secured by junior liens on 1-4 family dwellings		—		—		—		—
Home equity line-of-credit loans		—		—		—		—
Consumer		28		28		—		—
Agricultural		—		—		—		—
Total non-accrual loans	$	117		4,528		80		80

Nonaccrual loans totaled $391,000 as of December 31, 2022.

Interest income recognized on nonaccrual loans totaled $234,000 and $26,000 during the twelve months ended December 31, 2024 and 2023, respectively. Accrued interest reversed and charged against interest income for these loans totaled approximately $48,000 and $7,000 during the twelve months ended December 31, 2024 and 2023, respectively.

The ratio of non-accrual loans to total loans outstanding at December 31, 2024 and 2023 was 0.26% and 0.00%, respectively.

ALLOWANCE FOR CREDIT LOSSES

The ACL is an estimate of the expected credit losses on financial assets measured at amortized cost, which is measured using relevant information about past events, including historical credit loss experience on financial assets with similar risk characteristics, current conditions, and reasonable and supportable forecasts that affect the collectability of the remaining cash flows over the contractual term of the financial assets. A provision for credit losses is charged to operations based on management’s periodic evaluation of these and other pertinent factors as discussed within Note 1 – Basis of Presentation - Adoption of New Accounting Pronouncements included in this Form 10-K.

During the first quarter of 2023, the Company adopted ASU 2016-13, including the CECL methodology for estimating the ACL. This standard was adopted using a modified retrospective approach on January 1, 2023. See Note 1 - Basis of Presentation - Adoption of New Accounting Pronouncements for a summary of the impact adoption of ASU 2016-13 had on LCNB's ACL, retained earnings, and deferred taxes.

QUANTITATIVE CONSIDERATIONS

The ACL is primarily calculated utilizing a DCF model. Key inputs and assumptions used in this model are discussed below:

•

Forecast model - For each portfolio segment, an LDA was performed in order to identify appropriate loss drivers and create a regression model for use in forecasting cash flows. The LDA utilized peer FFIEC Call Report data for all pools and was last updated for the September 30, 2024 ACL calculation based on relevant information available at March 31, 2024.

•

Probability of default – PD is the probability that an asset will be in default within a given time frame. The Company has defined default as when a charge-off has occurred, a loan goes to non-accrual status, a loan is greater than 90 days past due, or financial difficulty modification status change. The forecast model is utilized to estimate PDs.

•

Loss given default – LGD is the percentage of the asset not expected to be collected upon default. The LGD is derived from company specific and peer loss data.

•

Prepayments and curtailments – Prepayments and curtailments are calculated based on the Company’s own data. This analysis is updated when materially relevant.

•

Forecast and reversion – At December 31, 2024, the Company utilized a four-quarter reasonable and supportable forecast period with a six-quarter straight line reversion to the long-term historical average and will continue to do so until there is a substantial change in the reliability of the Moody’s forecast provided or significant economic events. Although the CECL committee views the reversion period as more variable than the forecast period, the CECL committee believes that a six quarter reversion is an appropriate blend considering the varying spread of the economic forecasts. The forecasted increase in unemployment remained within a reasonable range of the historical average, indicating the need for a shorter reversion, while the CRE price index remained significantly negative which would indicate the need for a long reversion to get back to the positive average index. Extending the forecast and shortening the reversion periods from previous quarters has differing effects on pools based on the economic indicators used and the relation of the selected forecast range to the historical average. For example, the historical average for the Company's unemployment indicator is higher than the forecasted range utilized as of December 31, 2024. The extended forecast and reversion period ultimately decreases the reserve associated with the unemployment factor when compared to the historical average. The historical average for the CRE Price Index is higher than the significantly negative forecasted range utilized as of December 31, 2024. On the contrary, the extended forecast and reversion period ultimately increases the reserve associated with the CRE Price Index when compared to the historical average.

•

Economic forecast – the Company utilizes a third party to provide economic forecasts under various scenarios, which are assessed against economic indicators and management’s observations in the market. As of December 31, 2024, the Company selected a forecast which forecasts unemployment between 4.93% and 5.55%, the change in Coincident Economic Activity between -0.22% and 0.80%, the change in Commercial Real Estate Price Indexes between -6.95% and -2.07%, and the change in the Home Price Index between -2.51% and 2.91% during the forecast periods. Management believes that the resulting quantitative reserve appropriately balances economic indicators with identified risks. As of September 30, 2024, the Company selected a forecast which forecasts unemployment between 4.86% and 5.48%, the change in Coincident Economic Activity between -0.37% and 0.83%, the change in Commercial Real Estate Price Indexes between -6.52% and -0.68%, and the change in the Home Price Index between -4.12% and 2.98%. The historical averages for LCNB’s economic indicators are unemployment – 5.75%, change in Coincident Economic Activity – 1.97%, change in Commercial Real Estate Price Indexes – 4.61%, and change in Home Price Index – 2.75%

QUALITATIVE CONSIDERATIONS

In addition to the quantitative model, management considers the need for qualitative adjustment for risks not considered in the DCF. Factors that are considered by management in determining loan collectability and the appropriate level of the ACL are listed below:

•

Actual and expected changes in international, national, regional, and local economic and business conditions and developments in which the Company operates that affect the collectability of financial assets;

•

The effect of other external factors such as the regulatory, legal and technological environments, competition, and events such as natural disasters or pandemics;

•

Model risk including statistical risk, reversion risk, timing risk and model limitation risk;

•

Changes in the nature and volume of the portfolio and terms of loans; and

•

The lending policies and procedures, including changes in underwriting standards and practices for collections, write-offs, and recoveries.

The following table presents activity in the allowance for credit losses and a breakdown of the recorded investment in the allowance for credit losses by portfolio segment for the three years ended December 31 and a breakdown of the recorded investment in the loan portfolio by portfolio segment for the two years ended December 31 (in thousands):

				Commercial,
	Commercial			Secured by			Residential
	& Industrial			Real Estate			Real Estate			Consumer			Agricultural			Other			Total
2024
Allowance for credit losses on loans:
Balance, beginning of year	$	1,039			5,414			3,816			238			18			—			10,525
Acquisition of Eagle Financial Bancorp, Inc. - PCD Loans		101			8			79			—			—			—			188
Provision for (recovery of) credit losses		987			869			(736	)		(44	)		62			128			1,266
Acquisition of Eagle Financial Bancorp, Inc. - provision for credit losses on non-PCD loans charged to expense		51			246			466			—			—			—			763
Losses charged off		(610	)		—			—			(43	)		(57	)		(193	)		(903	)
Recoveries		5			—			9			69			1			78			162
Balance, end of year	$	1,573			6,537			3,634			220			24			13			12,001

Individually evaluated for credit loss	$	121			1,204			53			—			—			—			1,378
Collectively evaluated for credit loss		1,452			5,333			3,581			220			24			13			10,623
Balance, end of year	$	1,573			6,537			3,634			220			24			13			12,001

Loans:
Individually evaluated for credit loss	$	1,431			3,205			499			—			—			—			5,135
Collectively evaluated for credit loss		117,180			1,108,927			456,600			20,498			13,293			179			1,716,677
Balance, end of year	$	118,611			1,112,132			457,099			20,498			13,293			179			1,721,812

Percent of loans in each category to total loans		6.9	%		64.6	%		26.5	%		1.2	%		0.8	%		0.0	%		100.0	%
Ratio of net charge-offs to average loans		0.50	%		—	%		—	%		(0.11	)%		0.45	%		54.09	%		0.04	%

2023
Allowance for credit losses on loans:
Balance, beginning of year, prior to adoption of ASC 326	$	1,300			3,609			624			86			22			5			5,646
Impact of adopting ASC 326	$	(512	)		1,440			836			446			(9	)		(5	)		2,196
Acquisition of Cincinnati Bancorp, Inc. - PCD Loans	$	—			90			403			—			—			—			493
Provision for (recovery of) credit losses		266			(176	)		689			(219	)		5			88			653
Acquisition of Cincinnati Bancorp, Inc. - provision for credit losses on non-PCD loans charged to expense		—			451			1,268			3			—			—			1,722
Losses charged off		(15	)		—			(4	)		(83	)		—			(166	)		(268	)
Recoveries		—			—			—			5			—			78			83
Balance, end of year	$	1,039			5,414			3,816			238			18			—			10,525

Individually evaluated for credit loss	$	2			12			5			—			—			—			19
Collectively evaluated for credit loss		1,037			5,402			3,811			238			18			—			10,506
Balance, end of year	$	1,039			5,414			3,816			238			18			—			10,525

Loans:
Individually evaluated for credit loss	$	107			3,293			537			—			—			—			3,937
Collectively evaluated for credit loss		120,434			1,102,351			460,067			25,600			11,000			82			1,719,534
Balance, end of year	$	120,541			1,105,644			460,604			25,600			11,000			82			1,723,471

Percent of loans in each category to total loans		7.0	%		64.2	%		26.7	%		1.5	%		0.6	%		—	%		100.0	%
Ratio of net charge-offs to average loans		0.01	%		—	%		—	%		0.28	%		—	%		117.65	%		0.01	%

				Commercial,
	Commercial			Secured by			Residential
	& Industrial			Real Estate			Real Estate			Consumer			Agricultural			Other			Total
2022
Allowance for credit losses on loans:
Balance, beginning of year	$	1,095			3,607			665			105			30			4			5,506
Provision for (recovery of) loan losses		205			69			(81	)		(12	)		(8	)		77			250
Losses charged off		—			(67	)		(5	)		(37	)		—			(157	)		(266	)
Recoveries		—			—			45			30			—			81			156
Balance, end of year	$	1,300			3,609			624			86			22			5			5,646

Individually evaluated for impairment	$	4			11			6			—			—			—			21
Collectively evaluated for impairment		1,296			3,598			618			86			22			5			5,625
Acquired credit impaired loans		—			—			—			—			—			—			—
Balance, end of year	$	1,300			3,609			624			86			22			5			5,646

Percent of loans in each category to total loans		8.6	%		66.9	%		21.8	%		2.0	%		0.7	%		—	%		100.0	%
Ratio of net charge-offs to average loans		—	%		0.01	%		(0.01	)%		0.02	%		—	%		100.00	%		0.01	%

The ratio of the allowance for credit losses for loans to total loans at December 31, 2024 and 2023 was 0.70% and 0.61%, respectively.

For collateral dependent loans where management has determined that foreclosure of the collateral is probable, or where the borrower is experiencing financial difficulty and repayment of the loan is to be provided substantially through the operation or sale of the collateral, the allowance for credit losses is measured based on the difference between the fair value of the collateral, less costs to sell, and the amortized cost basis of the loan as of the measurement date.

The following table presents the carrying value and related allowance of collateral dependent individually evaluated loans by class segment for the years ended December 31 (in thousands):

	2024				2023
	Amortized		Related		Amortized		Related
	Cost Basis		Allowance		Cost Basis		Allowance
Commercial & industrial	$	—		—		—		—
Commercial, secured by real estate
Owner occupied		48		—		72		—
Non-owner occupied		2,642		1,201		—		—
Farmland		16		—		51		—
Multi-family		—		—		—		—
Construction		—		—		—		—
Residential real estate
Secured by senior liens on 1-4 family dwellings		527		50		—		—
Secured by junior liens on 1-4 family dwellings		—		—		—		—
Home equity line-of-credit loans		75		—		—		—
Consumer		—		—		—		—
Agricultural		—		—		—		—
Other loans, including deposit overdrafts		—		—		—		—
Total	$	3,308		1,251		123		—

The risk characteristics of LCNB's material loan portfolio segments were as follows:

Commercial & Industrial Loans. LCNB’s commercial and industrial loan portfolio consists of loans for various purposes, including, for example, loans to fund working capital requirements (such as inventory and receivables financing) and purchases of machinery and equipment. LCNB offers a variety of commercial and industrial loan arrangements, including term loans, balloon loans, and lines of credit. Commercial & industrial loans can have a fixed or variable rate, with maturities ranging from one to ten years. Commercial & industrial loans are offered to businesses and professionals for short and medium terms on both a collateralized and uncollateralized basis. Commercial & industrial loans typically are underwritten on the basis of the borrower’s ability to make repayment from the cash flow of the business. Collateral, when obtained, may include liens on furniture, fixtures, equipment, inventory, receivables, or other assets. As a result, such loans involve complexities, variables, and risks that require thorough underwriting and more robust servicing than other types of loans.

Commercial, Secured by Real Estate Loans. Commercial real estate loans include loans secured by a variety of commercial, retail and office buildings, religious facilities, hotels, multifamily (more than four-family) residential properties, construction and land development loans, and other land loans. Mortgage loans secured by owner-occupied agricultural property are included in this category. Commercial real estate loan products generally amortize over five to twenty-five years and are payable in monthly principal and interest installments. Some have balloon payments due within one to ten years after the origination date. The majority have adjustable interest rates with adjustment periods ranging from one to ten years, some of which are subject to established “floor” interest rates.

Commercial real estate loans are underwritten based on the ability of the property, in the case of income producing property, or the borrower’s business to generate sufficient cash flow to amortize the debt. Secondary emphasis is placed upon global debt service, collateral value, financial strength and liquidity of any and all guarantors, and other factors. Commercial real estate loans are generally originated with a 75% to 85% maximum loan to appraised value ratio, depending upon borrower occupancy.

Residential Real Estate Loans. Residential real estate loans include loans secured by first or second mortgage liens on one to four-family residential properties. Home equity lines of credit are included in this category. First and second mortgage loans are generally amortized over five to thirty years with monthly principal and interest payments. Home equity lines of credit generally have a five year or less draw period with interest only payments followed by a repayment period with monthly payments based on the amount outstanding. LCNB offers both fixed and adjustable-rate mortgage loans. Adjustable-rate loans are available with adjustment periods ranging between one to fifteen years and adjust according to an established index plus a margin, subject to certain floor and ceiling rates. Home equity lines of credit have a variable rate based on the Wall Street Journal prime rate plus a margin.

Residential real estate loans are underwritten primarily based on the borrower’s ability to repay, prior credit history, and the value of the collateral. LCNB generally requires private mortgage insurance for first mortgage loans that have a loan to appraised value ratio of greater than 80% or may require other credit enhancements for second lien mortgage loans.

Consumer Loans. LCNB’s portfolio of consumer loans generally includes secured and unsecured loans to individuals for household, family and other personal expenditures. Secured loans include loans to fund the purchase of automobiles, recreational vehicles, boats, and similar acquisitions. Consumer loans made by LCNB generally have fixed rates and terms ranging up to 72 months, depending upon the nature of the collateral, size of the loan, and other relevant factors. Consumer loans generally have higher interest rates but pose additional risks of collectability and loss when compared to certain other types of loans. Collateral, if present, is generally subject to damage, wear, and depreciation. The borrower’s ability to repay is of primary importance in the underwriting of consumer loans.

Agricultural Loans. LCNB’s portfolio of agricultural loans includes loans for financing agricultural production or for financing the purchase of equipment used in the production of agricultural products. LCNB’s agricultural loans are generally secured by farm machinery, livestock, crops, vehicles, or other agricultural-related collateral.

Other Loans, Including Deposit Overdrafts. Other loans may include loans that do not fit in any of the other categories, but it is primarily composed of overdrafts from transaction deposit accounts. Overdraft payments are recorded as a recovery and overdrafts are generally written off after 34 days with a negative balance.

LCNB uses a risk-rating system to quantify loan quality. A loan is assigned to a risk category based on relevant information about the ability of the borrower to service the debt including, but not limited to, current financial information, historical payment experience, credit documentation, public information, and current economic trends. The categories used are:

•

Pass – loans categorized in this category are higher quality loans that do not fit any of the other categories described below.

•

Other Assets Especially Mentioned (OAEM) - loans in this category are currently protected but are potentially weak. These loans constitute a risk but not to the point of justifying a classification of substandard. The credit risk may be relatively minor yet constitute an undue risk in light of the circumstances surrounding a specific asset.

•

Substandard – loans in this category are inadequately protected by the current sound net worth and paying capacity of the obligor or of the collateral pledged, if any. Assets so classified must have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the possibility that LCNB will sustain some loss if the deficiencies are not corrected.

•

Doubtful – loans classified in this category have all the weaknesses inherent in loans classified as substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

The following table presents the amortized cost basis of loans by vintage and credit quality indicators at December 31 (in thousands). The December 31, 2023 table is shown for comparison purposes.

	Term Loans by Origination Year
													Revolving Loans		Revolving Loans
	2024		2023		2022		2021		2020		Prior		Amortized Cost Basis		Converted to Term		Total
2024
Commercial & industrial
Pass	$	17,844		11,914		31,287		24,201		6,930		6,507		14,836		—		113,519
OAEM		—		—		—		—		1,416		—		—		—		1,416
Substandard		—		—		1,789		—		81		—		431		—		2,301
Doubtful		1,375		—		—		—		—		—		—		—		1,375
Total		19,219		11,914		33,076		24,201		8,427		6,507		15,267		—		118,611
Gross charge-offs		—		—		588		22		—		—		—		—		610
Commercial, secured by real estate
Pass		43,461		111,706		185,003		160,126		99,709		337,270		155,686		—		1,092,961
OAEM		—		—		3,755		1,496		175		3,640		—		—		9,066
Substandard		—		—		7,399		—		—		2,706		—		—		10,105
Doubtful		—		—		—		—		—		—		—		—		—
Total		43,461		111,706		196,157		161,622		99,884		343,616		155,686		—		1,112,132
Gross charge-offs		—		—		—		—		—		—		—		—		—
Residential real estate
Pass		33,898		60,232		73,984		86,712		52,241		104,254		41,482		—		452,803
OAEM		—		—		—		—		—		207		—		—		207
Substandard		—		394		—		289		480		2,912		14		—		4,089
Doubtful		—		—		—		—		—		—		—		—		—
Total		33,898		60,626		73,984		87,001		52,721		107,373		41,496		—		457,099
Gross charge-offs		—		—		—		—		—		—		—		—		—
Consumer
Pass		6,553		5,053		3,598		2,792		1,900		491		66		—		20,453
OAEM		—		—		—		—		—		—		—		—		—
Substandard		—		—		41		—		—		4		—		—		45
Doubtful		—		—		—		—		—		—		—		—		—
Total		6,553		5,053		3,639		2,792		1,900		495		66		—		20,498
Gross charge-offs		—		1		39		3		—		—		—		—		43
Agricultural
Pass		289		1,458		378		149		309		29		10,681		—		13,293
OAEM		—		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—		—
Total		289		1,458		378		149		309		29		10,681		—		13,293
Gross charge-offs		—		—		—		—		57		—		—		—		57
Other
Pass		—		—		—		—		—		—		179		—		179
OAEM		—		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—		—
Total		—		—		—		—		—		—		179		—		179
Gross charge-offs		—		—		—		—		—		—		193		—		193
Total loans	$	103,420		190,757		307,234		275,765		163,241		458,020		223,375		—		1,721,812

	Term Loans by Origination Year
													Revolving Loans		Revolving Loans
	2023		2022		2021		2020		2019		Prior		Amortized Cost Basis		Converted to Term		Total
2023
Commercial & industrial
Pass	$	17,169		30,518		29,587		11,426		2,732		5,641		16,919		113		114,105
OAEM		—		—		1,474		—		—		—		—		—		1,474
Substandard		—		1,813		—		105		1,592		137		1,315		—		4,962
Doubtful		—		—		—		—		—		—		—		—		—
Total		17,169		32,331		31,061		11,531		4,324		5,778		18,234		113		120,541
Gross charge-offs		—		—		—		—		—		15		—		—		15
Commercial, secured by real estate
Pass		99,055		200,735		156,865		109,810		92,895		283,564		141,354		6,056		1,090,334
OAEM		—		7,671		—		—		—		3,004		—		—		10,675
Substandard		—		—		—		—		1,648		2,987		—		—		4,635
Doubtful		—		—		—		—		—		—		—		—		—
Total		99,055		208,406		156,865		109,810		94,543		289,555		141,354		6,056		1,105,644
Gross charge-offs		—		—		—		—		—		—		—		—		—
Residential real estate
Pass		55,232		83,511		107,120		62,177		19,208		95,643		33,800		—		456,691
OAEM		—		—		—		—		—		18		—		—		18
Substandard		—		446		—		217		—		3,062		170		—		3,895
Doubtful		—		—		—		—		—		—		—		—		—
Total		55,232		83,957		107,120		62,394		19,208		98,723		33,970		—		460,604
Gross charge-offs		—		—		—		—		4		—		—		—		4
Consumer
Pass		8,087		5,820		4,868		4,671		1,382		304		460		—		25,592
OAEM		—		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		8		—		—		—		8
Doubtful		—		—		—		—		—		—		—		—		—
Total		8,087		5,820		4,868		4,671		1,390		304		460		—		25,600
Gross charge-offs		—		—		62		21		—		—		—		—		83
Agricultural
Pass		1,883		464		197		694		46		31		7,685		—		11,000
OAEM		—		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—		—
Total		1,883		464		197		694		46		31		7,685		—		11,000
Gross charge-offs		—		—		—		—		—		—		—		—		—
Other
Pass		—		—		—		—		—		—		82		—		82
OAEM		—		—		—		—		—		—		—		—		—
Substandard		—		—		—		—		—		—		—		—		—
Doubtful		—		—		—		—		—		—		—		—		—
Total		—		—		—		—		—		—		82		—		82
Gross charge-offs		—		—		—		—		—		—		166		—		166
Total loans	$	181,426		330,978		300,111		189,100		119,511		394,391		201,785		6,169		1,723,471

LCNB generally performs a classification of assets review, including the regulatory classification of assets, on an ongoing basis. The results of the classification of assets review are validated annually by an independent third-party loan review firm. In the event of a difference in rating or classification between those assigned by the internal and external resources, the Company will utilize the more critical or conservative rating or classification. Loans with regulatory classifications are presented monthly to the Board of Directors.

LCNB evaluates the loan risk grading system definitions and allowance for loan loss methodology on an ongoing basis. No significant changes were made to either during the past year.

A loan portfolio aging analysis by class segment at December 31 is as follows (in thousands):

													90 Days
													or More
	30-59 Days		60-89 Days		90 Days or More		Total				Total Loans		Past Due
	Past Due		Past Due		Past Due		Past Due		Current		Receivable		and Accruing
2024
Commercial & industrial	$	666		—		—		666		117,945		118,611		—
Commercial, secured by real estate:
Owner occupied		—		—		—		—		210,327		210,327		—
Non-owner occupied		—		—		2,642		2,642		505,889		508,531		—
Farmland		460		—		—		460		37,400		37,860		—
Multi-family		—		—		—		—		264,260		264,260		—
Construction		—		—		—		—		91,154		91,154		—
Residential real estate:
Secured by senior liens on 1-4 family dwellings		1,948		249		237		2,434		390,079		392,513		57
Secured by junior liens on 1-4 family dwellings		—		8		—		8		21,514		21,522		—
Home equity line-of-credit loans		72		—		33		105		42,959		43,064		33
Consumer		10		—		28		38		20,460		20,498		—
Agricultural		—		—		—		—		13,293		13,293		—
Other		179		—		—		179		—		179		—
Total	$	3,335		257		2,940		6,532		1,715,280		1,721,812		90

2023
Commercial & industrial	$	—		—		—		—		120,541		120,541		—
Commercial, secured by real estate:
Owner occupied		—		—		72		72		206,633		206,705		72
Non-owner occupied		2,645		—		—		2,645		498,463		501,108		—
Farmland		—		—		—		—		37,367		37,367		—
Multi-family		—		—		—		—		240,033		240,033		—
Construction		—		—		—		—		120,431		120,431		—
Residential real estate:
Secured by senior liens on 1-4 family dwellings		1,020		414		29		1,463		400,563		402,026		—
Secured by junior liens on 1-4 family dwellings		27		—		—		27		19,972		19,999		—
Home equity line-of-credit loans		174		30		—		204		38,375		38,579		—
Consumer		136		—		—		136		25,464		25,600		—
Agricultural		—		—		—		—		11,000		11,000		—
Other		82		—		—		82		—		82		—
Total	$	4,084		444		101		4,629		1,718,842		1,723,471		72

From time to time, the terms of certain loans are modified when concessions are granted to borrowers experiencing financial difficulties. Each modification is separately negotiated with the borrower and includes terms and conditions that reflect the borrower's ability to pay the debt as modified. The modification of the terms of such loans may have included one, or a combination of, the following: an interest rate reduction, term extension, forgiveness of principal, or an other-than-insignificant payment delay.

Excluding individually evaluated collateral dependent loans that are measured at fair value, the following table presents the amortized cost basis of loans modified during the year for borrowers who were experiencing financial difficulty at the time of modification, disaggregated by class of financing receivable and type of concession granted (in thousands), as of December 31, 2024:

									Combination -		Combination -
	Interest Rate		Extended		Principal		Payment		Extended Maturity and		Interest Rate Reduction and		Total		Percent of
	Reduction		Maturity		Forgiveness		Deferral		Payment Deferral		Payment Deferral		Modifications		Total Class
2024
Commercial & industrial		—		77		—		—		—		—		77		0.06	%
Commercial, secured by real estate, owner occupied		—		175		—		—		—		—		175		0.08	%
Residential real estate, secured by senior liens on 1-4 family dwellings		—		—		—		—		—		20		20		0.01	%
Consumer		—		—		—		—		28		—		28		0.14	%
Total	$	—		252		—		—		28		20		300

The amortized cost basis of loans that were modified for borrowers experiencing financial difficulty during 2023 was zero as of December 31, 2023. As of December 31, 2022, the amortized cost basis of loans that were modified for borrowers experiencing financial difficulty during 2022 was also zero.

LCNB was not committed to lend additional funds to borrowers who were granted loan modifications while experiencing financial difficulty at December 31, 2024 or December 31, 2023.

During the year ended December 31, 2024, one borrower defaulted on two consumer loans which, during the twelve months prior to their default, underwent maturity-extension and payment-deferral modifications while the borrower was known to be experiencing financial difficultly. At December 31, 2024, the amortized cost basis of these two consumer loans totaled $28,000. No other loans defaulted during 2024 which, within twelve months prior to their default, were modified for borrowers experiencing financial difficulty. During the years ended December 31, 2023 and 2022, no loans defaulted which, within the twelve months preceding their default, were modified for borrowers experiencing financial difficulty.

Mortgage loans sold to and serviced for the Federal Home Loan Mortgage Corporation and other investors are not included in the accompanying Consolidated Balance Sheets. The unpaid principal balances of those loans at December 31, 2024 and 2023 were approximately $397.6 million and $391.8 million, respectively.