Note 14 - Commitments and Contingent Liabilities

12 Months Ended

Dec. 31, 2024

Notes to Financial Statements

Commitments and Contingencies Disclosure [Text Block]

NOTE 14 - COMMITMENTS AND CONTINGENT LIABILITIES

LCNB is a party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers.  These financial instruments include commitments to extend credit.  They involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the balance sheets.  The Company's exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit is represented by the contract amount of those instruments.

The Account Protection product, a customer deposit overdraft program, is offered as a service and does not constitute a contract between the customer and LCNB.

LCNB uses the same credit policies in making commitments and conditional obligations as it does for on-balance-sheet instruments.

Financial instruments whose contract amounts represent off-balance-sheet credit risk at December 31 were as follows (in thousands):

	2024		2023
Commitments to extend credit:
Commercial loans	$	7,881		28,111
Other loans:
Fixed rate		21,613		15,349
Adjustable rate		1,998		1,946
Unused lines of credit:
Fixed rate		10,403		21,532
Adjustable rate		231,046		184,056
Unused overdraft protection amounts on demand accounts		17,566		16,418
Standby letters of credit		5		5
	$	290,512		267,417

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract or agreement.  Unused lines of credit include amounts not drawn on line of credit loans.  Commitments to extend credit and unused lines of credit generally have fixed expiration dates or other termination clauses.

Standby letters of credit are conditional commitments issued to guarantee the performance of a customer to a third party.  These guarantees generally are fully secured and have varying maturities.

The Company evaluates each customer’s credit worthiness on a case-by-case basis.  The amount of collateral obtained, if deemed necessary by the Company, is based on management’s credit evaluation of the borrower.  Collateral held varies, but may include accounts receivable; inventory; property, plant and equipment; residential realty; and income-producing commercial properties.

Activity in the allowance for credit losses on off-balance sheet credit exposures for the years ended December 31, 2024 and 2023 is as follows (in thousands):

	Twelve Months Ended
	2024			2023
Balance, beginning of year	$	281			—
Impact of adopting ASC 326		—			571
Acquisition of Cincinnati Bancorp, Inc.		—			21
Acquisition of Eagle Financial Bancorp, Inc.		48			—
Provision for (recovery of) credit losses		(66	)		(296	)
Losses charged off		—			(15	)
Balance, end of year	$	263		$	281

Capital expenditures include: the construction or acquisition of new office buildings; improvements to LCNB's offices; purchases of furniture and equipment; and additions or improvements to LCNB's information technology system. Commitments outstanding for capital expenditures as of December 31, 2024 totaled approximately $10,000.

The Company and the Bank are parties to various claims and proceedings arising in the normal course of business. Management, after consultation with legal counsel, believes that the liabilities, if any, arising from such proceedings and claims will not be material to LCNB's consolidated financial position or results of operations.