Note 3 - Investment Securities

3 Months Ended

Mar. 31, 2025

Notes to Financial Statements

Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block]

NOTE 3 - INVESTMENT SECURITIES

The amortized cost and estimated fair value of debt securities at March 31, 2025 and December 31, 2024 are summarized as follows (in thousands):

	Amortized Cost		Unrealized Gains		Unrealized Losses		Fair Value
March 31, 2025
Debt Securities, Available-for-Sale:
U.S. Treasury notes	$	67,674		—		3,750		63,924
U.S. Agency notes		83,384		—		5,000		78,384
Corporate bonds		8,200		15		422		7,793
U.S. Agency mortgage-backed securities		75,467		3		7,620		67,850
Municipal securities:
Non-taxable		4,239		—		243		3,996
Taxable		36,585		—		2,641		33,944
	$	275,549		18		19,676		255,891
Debt Securities, Held-to-Maturity:
Municipal securities:
Non-taxable	$	14,456		—		1,059		13,397
Taxable		3,129		—		324		2,805
	$	17,585		—		1,383		16,202
December 31, 2024
Debt Securities, Available-for-Sale:
U.S. Treasury notes	$	70,934		—		4,754		66,180
U.S. Agency notes		83,770		—		6,253		77,517
Corporate Bonds		8,200		5		449		7,756
U.S. Agency mortgage-backed securities		78,869		3		9,326		69,546
Municipal securities:
Non-taxable		4,248		—		266		3,982
Taxable		36,599		—		3,253		33,346
	$	282,620		8		24,301		258,327
Debt Securities, Held-to-Maturity:
Municipal securities:
Non-taxable	$	13,195		—		922		12,273
Taxable		3,129		—		474		2,655
	$	16,324		—		1,396		14,928

The amortized cost of debt securities in the above table excludes accrued interest of $1.1 million and $993 thousand at March 31, 2025 and December 31, 2024, respectively, that is recorded in other assets on the consolidated condensed balance sheets.

Expected credit losses on debt securities were $5 thousand at March 31, 2025 and December 31, 2024.

Information concerning debt securities with gross unrealized losses at March 31, 2025 and December 31, 2024, aggregated by length of time that individual securities have been in a continuous loss position, is as follows (in thousands):

	Less than Twelve Months				Twelve Months or Greater
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
March 31, 2025
Available-for-Sale:
U.S. Treasury notes	$	—		—		63,924		3,750
U.S. Agency notes		4,110		34		74,274		4,966
Corporate bonds		—		—		6,278		422
U.S. Agency mortgage-backed securities		5,805		18		61,799		7,602
Municipal securities:
Non-taxable		—		—		3,995		243
Taxable		—		—		33,884		2,641
	$	9,915		52		244,154		19,624
Held-to-Maturity:
Municipal securities:
Non-taxable	$	3,619		58		9,370		1,001
Taxable		—		—		2,805		324
	$	3,619		58		12,175		1,325
December 31, 2024
Available-for-Sale:
U.S. Treasury notes	$	3,232		—		62,948		4,754
U.S. Agency notes		3,991		137		73,526		6,116
Corporate Bonds		743		7		6,258		442
U.S. Agency mortgage-backed securities		5,806		180		63,539		9,146
Municipal securities:
Non-taxable		—		—		3,982		266
Taxable		—		—		33,286		3,253
	$	13,772		324		243,539		23,977
Held-to-Maturity:
Municipal securities:
Non-taxable	$	2,283		17		9,578		905
Taxable		—		—		2,655		474
	$	2,283		17		12,233		1,379

At March 31, 2025, LCNB’s securities portfolio consisted of 159 securities, 153 of which were in an unrealized loss position. At December 31, 2024, LCNB's securities portfolio consisted of 161 securities, 157 of which were in an unrealized loss position.

Each quarter, LCNB performs an analysis to determine if any of the unrealized losses on available-for-sale debt securities are comprised of credit losses as compared to unrealized losses due to market interest rate adjustments. The assessment includes a review of the unrealized loss for each security issuance held; the financial condition and near-term prospects of the issuer, including external credit ratings and recent downgrades; and LCNB's ability and intent to hold the security for a period of time sufficient for a recovery in value. LCNB also considers the extent to which the securities are issued by the federal government or its agencies and any guarantee of issued amounts by those agencies. The portfolio continues to consist of a mix of fixed and floating-rate, high quality securities, largely rated AA (or better), displaying an overall effective duration of approximately 3.2 years. No credit losses were determined to be present as of March 31, 2025, as there was no credit quality deterioration noted. Therefore, no provision for credit losses on available-for-sale debt securities was recognized for the first quarter of 2025.

Debt securities with a market value of $135.7 million and $116.2 million at March 31, 2025 and December 31, 2024, respectively, were pledged to secure public deposits and for other purposes required or as permitted by law.

Excluding holdings in U.S. Treasury securities and U.S. Government Agencies, there were no investments in securities of any issuer that exceeded 10% of LCNB's consolidated shareholders' equity at March 31, 2025.

Contractual maturities of debt securities at March 31, 2025 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	$	26,722		26,278		64		63
Due from one to five years		144,868		135,199		991		966
Due from five to ten years		28,493		26,564		9,523		8,828
Due after ten years		—		—		7,007		6,345
		200,083		188,041		17,585		16,202
U.S. Agency mortgage-backed securities		75,466		67,850		—		—
	$	275,549		255,891		17,585		16,202

Certain information concerning the sale of debt securities available-for-sale for the three months ended March 31, 2025 and 2024 was as follows (in thousands):

	Three Months Ended
	March 31,
	2025		2024
Proceeds from sales	$	—		9,615
Gross realized gains		—		—
Gross realized losses		—		214

Realized gains or losses from the sale of securities are computed using the specific identification method.

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 March 31, 2025 on its investments in equity securities without a readily determinable fair value.

The amortized cost and estimated fair value of equity securities with a readily determinable fair value at March 31, 2025 and December 31, 2024 are summarized as follows (in thousands):

	March 31, 2025				December 31, 2024
	Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value
Mutual Funds	$	1,461		1,293		1,451		1,265
Equity Securities		10		94		10		98
Total equity securities with a readily determinable fair value	$	1,471		1,387		1,461		1,363

Certain information concerning changes in the fair value of equity securities with a readily determinable fair value for the three months ended March 31, 2025 and 2024 were as follows (in thousands):

	Three Months Ended
	March 31,
	2025		2024
Net gains (losses) recognized during the period on equity securities	$	14		(10	)
Less net gains (losses) recognized during the period on equity securities sold during the period		—		—
Net unrealized gains (losses) recognized during the reporting period on equity securities still held at period end	$	14		(10	)

LCNB is a member of the FHLB system and its regional FRB. Members are required to own a certain amount of stock based on predetermined formulas. FHLB and FRB stock are carried at cost, which is equal to par value, and periodically evaluated for impairment based on ultimate recovery of par value.