XML 104 R13.htm IDEA: XBRL DOCUMENT
v2.4.1.9

LOANS | 12 Months Ended
--- | ---
Dec. 31, 2014
Receivables [Abstract] |
LOANS | LOANS Major classifications of loans at December 31 were as follows (in thousands):
| 2014 |  | 2013
Commercial and industrial | $ | 35,424 |  |  | 29,337 |
Commercial, secured by real estate | 379,141 |  |  | 314,252 |
Residential real estate | 254,087 |  |  | 215,587 |
Consumer | 18,006 |  |  | 12,643 |
Agricultural | 11,472 |  |  | 2,472 |
Other loans, including deposit overdrafts | 680 |  |  | 91 |
| 698,810 |  |  | 574,382 |
Deferred origination costs (fees), net | 146 |  |  | (28 | )
| 698,956 |  |  | 574,354 |
Less allowance for loan losses | 3,121 |  |  | 3,588 |
Loans-net | $ | 695,835 |  |  | 570,766 |
Loans acquired from the mergers with First Capital and Eaton National are recorded at fair value with no carryover of the acquired entity's previously established allowance for loan losses. The excess of expected cash flows over the estimated fair value of acquired loans is recognized as interest income over the remaining contractual lives of the loans using the level yield method. Subsequent decreases in expected cash flows will require additions to the allowance for loan losses. Subsequent improvements in expected cash flows result in the recognition of additional interest income over the then-remaining contractual lives of the loans. Management estimated the cash flows expected to be collected at acquisition using a third-party risk model, which incorporated the estimate of current key assumptions, such as default rates, severity, and prepayment speeds. Impaired loans acquired are accounted for under FASB ASC 310-30. Factors considered in evaluating whether an acquired loan was impaired include delinquency status and history, updated borrower credit status, collateral information, and updated loan-to-value information. The difference between contractually required payments at the time of acquisition and the cash flows expected to be collected is referred to as the nonaccretable difference. The interest component of the cash flows expected to be collected is referred to as the accretable yield and is recognized as interest income over the remaining contractual life of the loan using the level yield method. Subsequent decreases in expected cash flows will require additions to the allowance for loan losses. Subsequent improvements in expected cash flows will result in a reclassification from the nonaccretable difference to the accretable yield. The following table provides certain information at the acquisition date on loans acquired from Eaton National, not including loans considered to be impaired (in thousands):
Contractually required principal at acquisition | $ | 102,483 |
Less fair value adjustment | 1,347 |
Fair value of acquired loans | $ | 101,136 |
Contractual cash flows not expected to be collected | $ | 1,702 |
The following table provides details on acquired impaired loans obtained through the merger with Eaton National that are accounted for in accordance with FASB ASC 310-30 (in thousands):
Contractually required principal at acquisition | $ | 23,414 |
Contractual cash flows not expected to be collected (nonaccretable difference) | (6,088 | )
Expected cash flows at acquisition | 17,326 |
Interest component of expected cash flows (accretable discount) | (2,163 | )
Fair value of acquired impaired loans | $ | 15,163 |
Non-accrual, past-due, and accruing restructured loans at December 31 were as follows (in thousands):
| 2014 |  | 2013
Non-accrual loans: |  |  |
Commercial and industrial | $ | — |  |  | 144 |
Commercial, secured by real estate | 4,277 |  |  | 1,418 |
Agricultural | 70 |  |  | — |
Residential real estate | 1,252 |  |  | 1,399 |
Total non-accrual loans | 5,599 |  |  | 2,961 |
Past-due 90 days or more and still accruing | 203 |  |  | 250 |
Total non-accrual and past-due 90 days or more and still accruing | 5,802 |  |  | 3,211 |
Accruing restructured loans | 14,269 |  |  | 15,151 |
Total | $ | 20,071 |  |  | 18,362 |
Percentage of total non-accrual and past-due 90 days or more and still accruing to total loans | 0.83 | % |  | 0.56 | %
Percentage of total non-accrual, past-due 90 days or more and still accruing, and accruing restructured loans to total loans | 2.87 | % |  | 3.20 | %
Interest income that would have been recorded during 2014 and 2013 if loans on non-accrual status at December 31, 2014 and 2013 had been current and in accordance with their original terms was approximately $665,000 and $229,000, respectively. The Company is not committed to lend additional funds to debtors whose loans have been modified to provide a reduction or deferral of principal or interest because of deterioration in the financial position of the borrower. The allowance for loan losses and recorded investment in loans for the years ended December 31 were as follows (in thousands):
| Commercial & Industrial |  | Commercial, Secured by Real Estate |  | Residential Real Estate |  | Consumer |  | Agricultural |  | Other |  | Total
December 31, 2014 |  |  |  |  |  |  |  |  |  |  |  |  |
Allowance for loan losses: |  |  |  |  |  |  |  |  |  |  |  |  |
Balance, beginning of year | $ | 175 |  |  | 2,520 |  |  | 826 |  |  | 66 |  |  | — |  |  | 1 |  |  | 3,588 |
Provision charged to expenses | 173 |  |  | (20 | ) |  | 712 |  |  | 18 |  |  | 11 |  |  | 36 |  |  | 930 |
Losses charged off | (261 | ) |  | (573 | ) |  | (652 | ) |  | (129 | ) |  | — |  |  | (79 | ) |  | (1,694 | )
Recoveries | 42 |  |  | 63 |  |  | 40 |  |  | 108 |  |  | — |  |  | 44 |  |  | 297 |
Balance, end of year | $ | 129 |  |  | 1,990 |  |  | 926 |  |  | 63 |  |  | 11 |  |  | 2 |  |  | 3,121 |
Individually evaluated for impairment | $ | 10 |  |  | 415 |  |  | 89 |  |  | — |  |  | — |  |  | — |  |  | 514 |
Collectively evaluated for impairment | 119 |  |  | 1,273 |  |  | 836 |  |  | 63 |  |  | 11 |  |  | 2 |  |  | 2,304 |
Acquired credit impaired loans | — |  |  | 302 |  |  | 1 |  |  | — |  |  | — |  |  | — |  |  | 303 |
Balance, end of year | $ | 129 |  |  | 1,990 |  |  | 926 |  |  | 63 |  |  | 11 |  |  | 2 |  |  | 3,121 |
Loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Individually evaluated for impairment | $ | 401 |  |  | 13,022 |  |  | 1,701 |  |  | 55 |  |  | — |  |  | — |  |  | 15,179 |
Collectively evaluated for impairment | 33,941 |  |  | 352,774 |  |  | 249,374 |  |  | 17,954 |  |  | 11,371 |  |  | 167 |  |  | 665,581 |
Acquired credit impaired loans | 1,092 |  |  | 12,984 |  |  | 3,425 |  |  | 81 |  |  | 101 |  |  | 513 |  |  | 18,196 |
Balance, end of year | $ | 35,434 |  |  | 378,780 |  |  | 254,500 |  |  | 18,090 |  |  | 11,472 |  |  | 680 |  |  | 698,956 |
December 31, 2013 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Allowance for loan losses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Balance, beginning of year | $ | 320 |  |  | 2,296 |  |  | 712 |  |  | 108 |  |  | — |  |  | 1 |  |  | 3,437 |
Provision charged to expenses | (30 | ) |  | 256 |  |  | 327 |  |  | 12 |  |  | — |  |  | 23 |  |  | 588 |
Losses charged off | (119 | ) |  | (58 | ) |  | (244 | ) |  | (181 | ) |  | — |  |  | (67 | ) |  | (669 | )
Recoveries | 4 |  |  | 26 |  |  | 31 |  |  | 127 |  |  | — |  |  | 44 |  |  | 232 |
Balance, end of year | $ | 175 |  |  | 2,520 |  |  | 826 |  |  | 66 |  |  | — |  |  | 1 |  |  | 3,588 |
Individually evaluated for impairment | $ | 2 |  |  | 760 |  |  | 270 |  |  | — |  |  | — |  |  | — |  |  | 1,032 |
Collectively evaluated for impairment | 173 |  |  | 1,760 |  |  | 556 |  |  | 66 |  |  | — |  |  | 1 |  |  | 2,556 |
Acquired credit impaired loans | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Balance, end of year | $ | 175 |  |  | 2,520 |  |  | 826 |  |  | 66 |  |  | — |  |  | 1 |  |  | 3,588 |
Loans: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Individually evaluated for impairment | $ | 165 |  |  | 14,522 |  |  | 2,132 |  |  | 27 |  |  | — |  |  | — |  |  | 16,846 |
Collectively evaluated for impairment | 28,809 |  |  | 295,028 |  |  | 212,378 |  |  | 12,703 |  |  | 2,472 |  |  | 91 |  |  | 551,481 |
Acquired credit impaired loans | 332 |  |  | 4,363 |  |  | 1,332 |  |  | — |  |  | — |  |  | — |  |  | 6,027 |
Balance, end of year | $ | 29,306 |  |  | 313,913 |  |  | 215,842 |  |  | 12,730 |  |  | 2,472 |  |  | 91 |  |  | 574,354 |
| Commercial & Industrial |  | Commercial, Secured by Real Estate |  | Residential Real Estate |  | Consumer |  | Agricultural |  | Other |  | Total
December 31, 2012 |  |  |  |  |  |  |  |  |  |  |  |  |
Allowance for loan losses: |  |  |  |  |  |  |  |  |  |  |  |  |
Balance, beginning of year | $ | 162 |  |  | 1,941 |  |  | 656 |  |  | 166 |  |  | — |  |  | 6 |  |  | 2,931 |
Change in classification | 18 |  |  | (18 | ) |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Provision charged to expenses | 299 |  |  | 536 |  |  | 535 |  |  | (47 | ) |  | — |  |  | 28 |  |  | 1,351 |
Losses charged off | (159 | ) |  | (234 | ) |  | (486 | ) |  | (134 | ) |  | — |  |  | (85 | ) |  | (1,098 | )
Recoveries | — |  |  | 71 |  |  | 7 |  |  | 123 |  |  | — |  |  | 52 |  |  | 253 |
Balance, end of year | $ | 320 |  |  | 2,296 |  |  | 712 |  |  | 108 |  |  | — |  |  | 1 |  |  | 3,437 |
Individually evaluated for impairment | $ | 159 |  |  | 607 |  |  | 138 |  |  | — |  |  | — |  |  | — |  |  | 904 |
Collectively evaluated for impairment | 161 |  |  | 1,689 |  |  | 574 |  |  | 108 |  |  | — |  |  | 1 |  |  | 2,533 |
Balance, end of year | $ | 320 |  |  | 2,296 |  |  | 712 |  |  | 108 |  |  | — |  |  | 1 |  |  | 3,437 |
The risk characteristics of LCNB's material loan portfolio segments are as follows: Commercial and Industrial Loans. LCNB’s commercial and industrial loan portfolio consists of loans for various purposes, including 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. Most commercial and industrial loans have a variable rate, with adjustments occurring monthly, annually, every three years, or every five years. Adjustments are generally based on a publicly available index rate plus a margin. The margin varies based on the terms and collateral securing the loan. Commercial and industrial loans are offered to businesses and professionals for short and medium terms on both a collateralized and uncollateralized basis. Commercial and 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, multifamily (more than two-family) residential properties, construction and land development loans, and other land loans. 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. Many 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 of any guarantors, and other factors. Commercial real estate loans are generally originated with a 75% maximum loan to appraised value ratio. Residential Real Estate Loans. Residential real estate loans include loans secured by first or second mortgage liens on one to two-family residential property. Home equity lines of credit and mortgage loans secured by owner-occupied agricultural property 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 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 ten 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. LCNB does not originate reverse mortgage loans or residential real estate loans generally considered to be “subprime.” 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 requires private mortgage insurance for first mortgage loans that have a loan to appraised value ratio of greater than 80%. 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 collectibility 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 agri-related collateral. The Company 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 the Company will sustain some loss if the deficiencies are not corrected.
• | Doubtful – loans classified in this category have all the weaknesses inherent in loans classified 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.
An analysis of the Company’s loan portfolio by credit quality indicators at December 31 is as follows (in thousands):
| Pass |  | OAEM |  | Substandard |  | Doubtful |  | Total
December 31, 2014 |  |  |  |  |  |  |  |  |
Commercial & industrial | $ | 34,322 |  |  | — |  |  | 1,112 |  |  | — |  |  | 35,434 |
Commercial, secured by real estate | 353,957 |  |  | 6,421 |  |  | 18,402 |  |  | — |  |  | 378,780 |
Residential real estate | 246,335 |  |  | 920 |  |  | 7,245 |  |  | — |  |  | 254,500 |
Consumer | 17,979 |  |  | — |  |  | 111 |  |  | — |  |  | 18,090 |
Agricultural | 11,273 |  |  | — |  |  | 199 |  |  | — |  |  | 11,472 |
Other | 680 |  |  | — |  |  | — |  |  | — |  |  | 680 |
Total | $ | 664,546 |  |  | 7,341 |  |  | 27,069 |  |  | — |  |  | 698,956 |
December 31, 2013 |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial & industrial | $ | 27,563 |  |  | 44 |  |  | 1,699 |  |  | — |  |  | 29,306 |
Commercial, secured by real estate | 295,189 |  |  | 3,967 |  |  | 14,757 |  |  | — |  |  | 313,913 |
Residential real estate | 208,881 |  |  | 1,136 |  |  | 5,825 |  |  | — |  |  | 215,842 |
Consumer | 12,681 |  |  | — |  |  | 49 |  |  | — |  |  | 12,730 |
Agricultural | 2,472 |  |  | — |  |  | — |  |  | — |  |  | 2,472 |
Other | 91 |  |  | — |  |  | — |  |  | — |  |  | 91 |
Total | $ | 546,877 |  |  | 5,147 |  |  | 22,330 |  |  | — |  |  | 574,354 |
The Company 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 at December 31 is as follows (in thousands):
| 30-59 Days Past Due |  | 60-89 Days Past Due |  | Greater Than 90 Days |  | Total Past Due |  | Current |  | Total Loans Receivable |  | Total Loans Greater Than 90 Days and Accruing
December 31, 2014 |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial & industrial | $ | 4 |  |  | — |  |  | — |  |  | 4 |  |  | 35,430 |  |  | 35,434 |  |  | — |
Commercial, secured by real estate | 1,000 |  |  | 83 |  |  | 3,179 |  |  | 4,262 |  |  | 374,518 |  |  | 378,780 |  |  | 9 |
Residential real estate | 648 |  |  | 297 |  |  | 1,289 |  |  | 2,234 |  |  | 252,266 |  |  | 254,500 |  |  | 177 |
Consumer | 59 |  |  | 28 |  |  | 17 |  |  | 104 |  |  | 17,986 |  |  | 18,090 |  |  | 17 |
Agricultural | 73 |  |  | 70 |  |  | — |  |  | 143 |  |  | 11,329 |  |  | 11,472 |  |  | — |
Other | 106 |  |  | — |  |  | — |  |  | 106 |  |  | 574 |  |  | 680 |  |  | — |
Total | $ | 1,890 |  |  | 478 |  |  | 4,485 |  |  | 6,853 |  |  | 692,103 |  |  | 698,956 |  |  | 203 |
December 31, 2013 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial & industrial | $ | 277 |  |  | — |  |  | 144 |  |  | 421 |  |  | 28,885 |  |  | 29,306 |  |  | — |
Commercial, secured by real estate | 951 |  |  | 582 |  |  | 1,174 |  |  | 2,707 |  |  | 311,206 |  |  | 313,913 |  |  | — |
Residential real estate | 1,131 |  |  | 299 |  |  | 1,604 |  |  | 3,034 |  |  | 212,808 |  |  | 215,842 |  |  | 236 |
Consumer | 38 |  |  | 35 |  |  | 13 |  |  | 86 |  |  | 12,644 |  |  | 12,730 |  |  | 14 |
Agricultural | — |  |  | — |  |  | — |  |  | — |  |  | 2,472 |  |  | 2,472 |  |  | — |
Other | 91 |  |  | — |  |  | — |  |  | 91 |  |  | — |  |  | 91 |  |  | — |
Total | $ | 2,488 |  |  | 916 |  |  | 2,935 |  |  | 6,339 |  |  | 568,015 |  |  | 574,354 |  |  | 250 |
Impaired loans for the years ended December 31 were as follows (in thousands):
| Recorded Investment |  | Unpaid Principal Balance |  | Related Allowance |  | Average Recorded Investment |  | Interest Income Recognized
December 31, 2014 |  |  |  |  |  |  |  |  |
With no related allowance recorded: |  |  |  |  |  |  |  |  |
Commercial & industrial | $ | 1,092 |  |  | 2,077 |  |  | — |  |  | 1,823 |  |  | 161 |
Commercial, secured by real estate | 21,987 |  |  | 26,715 |  |  | — |  |  | 23,360 |  |  | 1,373 |
Residential real estate | 4,074 |  |  | 5,549 |  |  | — |  |  | 4,645 |  |  | 379 |
Consumer | 117 |  |  | 178 |  |  | — |  |  | 179 |  |  | 14 |
Agricultural | 101 |  |  | 619 |  |  | — |  |  | 121 |  |  | 20 |
Other | 513 |  |  | 744 |  |  | — |  |  | 550 |  |  | 43 |
Total | $ | 27,884 |  |  | 35,882 |  |  | — |  |  | 30,678 |  |  | 1,990 |
With an allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial & industrial | $ | 401 |  |  | 406 |  |  | 10 |  |  | 319 |  |  | 19 |
Commercial, secured by real estate | 4,019 |  |  | 4,538 |  |  | 717 |  |  | 4,108 |  |  | 117 |
Residential real estate | 1,052 |  |  | 1,265 |  |  | 90 |  |  | 1,026 |  |  | 44 |
Consumer | 19 |  |  | 20 |  |  | — |  |  | 18 |  |  | 2 |
Agricultural | — |  |  | — |  |  | — |  |  | — |  |  | — |
Other | — |  |  | — |  |  | — |  |  | — |  |  | — |
Total | $ | 5,491 |  |  | 6,229 |  |  | 817 |  |  | 5,471 |  |  | 182 |
Total: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial & industrial | $ | 1,493 |  |  | 2,483 |  |  | 10 |  |  | 2,142 |  |  | 180 |
Commercial, secured by real estate | 26,006 |  |  | 31,253 |  |  | 717 |  |  | 27,468 |  |  | 1,490 |
Residential real estate | 5,126 |  |  | 6,814 |  |  | 90 |  |  | 5,671 |  |  | 423 |
Consumer | 136 |  |  | 198 |  |  | — |  |  | 197 |  |  | 16 |
Agricultural | 101 |  |  | 619 |  |  | — |  |  | 121 |  |  | 20 |
Other | 513 |  |  | 744 |  |  | — |  |  | 550 |  |  | 43 |
Total | $ | 33,375 |  |  | 42,111 |  |  | 817 |  |  | 36,149 |  |  | 2,172 |
| Recorded Investment |  | Unpaid Principal Balance |  | Related Allowance |  | Average Recorded Investment |  | Interest Income Recognized
December 31, 2013 |  |  |  |  |  |  |  |  |
With no related allowance recorded: |  |  |  |  |  |  |  |  |
Commercial & industrial | $ | 332 |  |  | 531 |  |  | — |  |  | 700 |  |  | 35 |
Commercial, secured by real estate | 10,883 |  |  | 12,317 |  |  | — |  |  | 11,612 |  |  | 748 |
Residential real estate | 2,096 |  |  | 2,967 |  |  | — |  |  | 2,345 |  |  | 182 |
Consumer | — |  |  | — |  |  | — |  |  | 7 |  |  | — |
Agricultural | — |  |  | — |  |  | — |  |  | 13 |  |  | 6 |
Total | $ | 13,311 |  |  | 15,815 |  |  | — |  |  | 14,677 |  |  | 971 |
With an allowance recorded: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial & industrial | $ | 165 |  |  | 270 |  |  | 2 |  |  | 186 |  |  | 2 |
Commercial, secured by real estate | 7,725 |  |  | 7,725 |  |  | 760 |  |  | 7,368 |  |  | 252 |
Residential real estate | 1,645 |  |  | 1,663 |  |  | 270 |  |  | 1,123 |  |  | 44 |
Consumer | 27 |  |  | 27 |  |  | — |  |  | 17 |  |  | 2 |
Agricultural | — |  |  | — |  |  | — |  |  | — |  |  | — |
Total | $ | 9,562 |  |  | 9,685 |  |  | 1,032 |  |  | 8,694 |  |  | 300 |
Total: |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial & industrial | $ | 497 |  |  | 801 |  |  | 2 |  |  | 886 |  |  | 37 |
Commercial, secured by real estate | 18,608 |  |  | 20,042 |  |  | 760 |  |  | 18,980 |  |  | 1,000 |
Residential real estate | 3,741 |  |  | 4,630 |  |  | 270 |  |  | 3,468 |  |  | 226 |
Consumer | 27 |  |  | 27 |  |  | — |  |  | 24 |  |  | 2 |
Agricultural | — |  |  | — |  |  | — |  |  | 13 |  |  | 6 |
Total | $ | 22,873 |  |  | 25,500 |  |  | 1,032 |  |  | 23,371 |  |  | 1,271 |
| Recorded Investment |  | Unpaid Principal Balance |  | Related Allowance |  | Average Recorded Investment |  | Interest Income Recognized
December 31, 2012 |  |  |  |  |  |  |  |  |
With no related allowance recorded: |  |  |  |  |  |  |  |  |
Commercial & industrial | $ | — |  |  | — |  |  | — |  |  | 975 |  |  | 43 |
Commercial, secured by real estate | 9,541 |  |  | 9,936 |  |  | — |  |  | 9,310 |  |  | 350 |
Residential real estate | 417 |  |  | 417 |  |  | — |  |  | 397 |  |  | 5 |
Consumer | 20 |  |  | 20 |  |  | — |  |  | 23 |  |  | 2 |
Agricultural | — |  |  | — |  |  | — |  |  | — |  |  | — |
Total | $ | 9,978 |  |  | 10,373 |  |  | — |  |  | 10,705 |  |  | 400 |
With an allowance recorded: |  |  |  |  |  |  |  |  |
Commercial & industrial | $ | 264 |  |  | 822 |  |  | 159 |  |  | 374 |  |  | — |
Commercial, secured by real estate | 4,258 |  |  | 4,360 |  |  | 660 |  |  | 4,765 |  |  | 171 |
Residential real estate | 658 |  |  | 853 |  |  | 85 |  |  | 707 |  |  | 2 |
Consumer | — |  |  | — |  |  | — |  |  | 4 |  |  | — |
Agricultural | — |  |  | — |  |  | — |  |  | — |  |  | — |
Total | $ | 5,180 |  |  | 6,035 |  |  | 904 |  |  | 5,850 |  |  | 173 |
Total: |  |  |  |  |  |  |  |  |
Commercial & industrial | $ | 264 |  |  | 822 |  |  | 159 |  |  | 1,349 |  |  | 43 |
Commercial, secured by real estate | 13,799 |  |  | 14,296 |  |  | 660 |  |  | 14,075 |  |  | 521 |
Residential real estate | 1,075 |  |  | 1,270 |  |  | 85 |  |  | 1,104 |  |  | 7 |
Consumer | 20 |  |  | 20 |  |  | — |  |  | 27 |  |  | 2 |
Agricultural | — |  |  | — |  |  | — |  |  | — |  |  | — |
Total | $ | 15,158 |  |  | 16,408 |  |  | 904 |  |  | 16,555 |  |  | 573 |
Of the $2,172,000, $1,271,000, and $573,000 of interest income recognized on impaired loans during 2014, 2013, and 2012, respectively, $8,000 was recognized on a cash basis during 2014 and none was recognized on a cash basis during 2013 and 2012. The Company continued to accrue interest on certain loans classified as impaired during 2014, 2013, and 2012 because they were restructured or considered well secured and in the process of collection. Loan modifications that were classified as troubled debt restructurings during the years ended December 31 were as follows (dollars in thousands):
| 2014 |  | 2013
| Number of Loans |  | Pre-Modification Recorded Balance |  | Post-Modification Recorded Balance |  | Number of Loans |  | Pre-Modification Recorded Balance |  | Post-Modification Recorded Balance
Commercial and industrial | 8 |  |  | $ | 658 |  |  | $ | 340 |  |  | 1 |  |  | $ | 22 |  |  | $ | 22 |
Commercial, secured by real estate | 2 |  |  | 896 |  |  | 1,214 |  |  | 3 |  |  | 1,594 |  |  | 1,594 |
Residential real estate | 2 |  |  | 82 |  |  | 82 |  |  | 6 |  |  | 508 |  |  | 508 |
Consumer | 3 |  |  | 40 |  |  | 40 |  |  | 2 |  |  | 27 |  |  | 27 |
| 15 |  |  | $ | 1,676 |  |  | $ | 1,676 |  |  | 12 |  |  | $ | 2,151 |  |  | $ | 2,151 |
The pre-modification and post-modification recorded balances for the commercial and industrial and commercial, secured by real estate categories in 2014 changed because a borrower had multiple loans classified as commercial and industrial and a loan classified as commercial, secured by real estate, which were all modified into a loan classified as commercial, secured by real estate. Each restructured loan is separately negotiated with the borrower and includes terms and conditions that reflect the borrower’s ability to pay the debt as modified. Modifications may include interest only payments for a period of time, temporary or permanent reduction of the loan’s interest rate, capitalization of delinquent interest, or extensions of the maturity date. LCNB is not committed to lend additional funds to borrowers whose loan terms were modified in a troubled debt restructuring. A restructured automobile loan with a balance of $13,000 was charged off during the first quarter 2013, which was within twelve months of the loan's modification date. There were no other troubled debt restructurings that subsequently defaulted within twelve months of the restructuring date for the years ended December 31, 2014 and 2013. All troubled debt restructurings are considered impaired loans. The allowance for loan loss on such restructured loans is based on the present value of future expected cash flows. Approximately $1,329,000 of impaired loans without a valuation allowance and $299,000 of impaired loans with a valuation allowance at December 31, 2014 consisted of loans that were modified during 2014 and were determined to be troubled debt restructurings. Approximately $327,000 of impaired loans, excluding acquired credit impaired loans, without a valuation allowance and $1,141,000 of impaired loans with a valuation allowance at December 31, 2013 consisted of loans that were modified during 2013 and were determined to be troubled debt restructurings. 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, 2014, 2013 and 2012 were approximately $120,433,000, $90,343,000, and $71,568,000 respectively. Mortgage servicing right assets are included in other assets in the consolidated balance sheets. Amortization of mortgage servicing rights is an adjustment to loan servicing income, which is included with other operating income in the consolidated statements of income. Activity in the mortgage servicing rights portfolio during the years ended December 31 was as follows (in thousands):
| 2014 |  | 2013 |  | 2012
Balance, beginning of year | $ | 498 |  |  | 475 |  |  | 418 |
Amount capitalized to mortgage servicing rights | 292 |  |  | 191 |  |  | 283 |
Amortization of mortgage servicing rights | (199 | ) |  | (168 | ) |  | (226 | )
Balance, end of year | $ | 591 |  |  | 498 |  |  | 475 |

X
- Definition The entire disclosure for claims held for amounts due a entity, excluding financing receivables. Examples include, but are not limited to, trade accounts receivables, notes receivables, loans receivables. Includes disclosure for allowance for credit losses. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.3,4) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 02 -Paragraph 3, 4 -Article 5 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 310 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=35738203&loc=d3e5074-111524 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 310 -SubTopic 10 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=35738203&loc=d3e5066-111524 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 03 -Paragraph 7 -Article 9 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08.(k)) -URI http://asc.fasb.org/extlink&oid=26873400&loc=d3e23780-122690 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph k -Article 4 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 310 -SubTopic 10 -Section 50 -Paragraph 11 -URI http://asc.fasb.org/extlink&oid=35738203&loc=d3e5162-111524 + Details
Name: | us-gaap_LoansNotesTradeAndOtherReceivablesDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- Details
Name: | us-gaap_ReceivablesAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration