XML 55 R29.htm IDEA: XBRL DOCUMENT
v2.4.1.9

FAIR VALUE OF FINANCIAL INSTRUMENTS | 12 Months Ended
--- | ---
Dec. 31, 2014
Fair Value Disclosures [Abstract] |
FAIR VALUE OF FINANCIAL INSTRUMENTS | FAIR VALUE OF FINANCIAL INSTRUMENTS The majority of LCNB’s financial debt securities are classified as available-for-sale. The securities are reported at fair value with unrealized holding gains and losses reported net of income taxes in accumulated other comprehensive income. LCNB utilizes a pricing service for determining the fair values of most of its investment securities. Fair value for U.S. Treasurynotes are determined based on market quotations (level 1). Fair value for most of the other investment securities is calculatedusing the discounted cash flow method for each security. The discount rates for these cash flows are estimated by the pricing service using rates observed in the market (level 2). Cash flow streams are dependent on estimated prepayment speeds and the overall structure of the securities given existing market conditions. In addition, LCNB has invested in trust preferred securities, equity securities, and four mutual funds that are not priced by the pricing service. Market quotations (level 1) are used to determine fair values for the trust preferred securities and equity securities. Investments in mutual funds that are publicly traded in active markets and that publish daily net asset values are considered to have level 1 inputs. An investment in a mutual fund that is not traded in an active market is considered to have level 2 inputs because an investor can have its interest in the fund redeemed for the balance of its capital account at any quarter-end assuming the fund is given a 60 day notice. The investment in this fund is carried at fair value, which approximates cost. Assets that may be recorded at fair value on a nonrecurring basis include impaired loans, other real estate owned, and other repossessed assets. A loan is considered impaired when management believes it is probable that payment of interest and principal will not be made in accordance with the contractual terms of the loan agreement. Impaired loans are carried at the present value of estimated future cash flows using the loan's existing rate or the fair value of collateral if the loan is collateral dependent, if this value is less than the loan balance. The inputs are considered to be level 3. Other real estate owned is adjusted to fair value upon transfer of the loan to foreclosed assets, usually based on an appraisal of the property. Subsequently, foreclosed assets are carried at the lower of carrying value or fair value. These inputs are also considered to be level 3 The following table summarizes the valuation of LCNB’s assets recorded at fair value by input levels as of December 31 (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)
December 31, 2014 |  |  |  |  |  |  |
Recurring fair value measurements: |  |  |  |  |  |  |
Investment securities available-for-sale: |  |  |  |  |  |  |
U.S. Treasury notes | $ | 62,560 |  |  | 62,560 |  |  | — |  |  | — |
U.S. Agency notes | 83,637 |  |  | — |  |  | 83,637 |  |  | — |
U.S. Agency mortgage-backed securities | 38,032 |  |  | — |  |  | 38,032 |  |  | — |
Certificates of deposit | 3,086 |  |  | — |  |  | 3,086 |  |  | — |
Municipal securities: |  |  |  |  |  |  |  |  |  |  |
Non-taxable | 77,395 |  |  | — |  |  | 77,395 |  |  | — |
Taxable | 16,395 |  |  | — |  |  | 16,395 |  |  | — |
Mutual funds | 2,461 |  |  | 1,461 |  |  | 1,000 |  |  | — |
Trust preferred securities | 50 |  |  | 50 |  |  | — |  |  | — |
Equity securities | 1,749 |  |  | 1,749 |  |  | — |  |  | — |
Total recurring fair value measurements | $ | 285,365 |  |  | 65,820 |  |  | 219,545 |  |  | — |
Nonrecurring fair value measurements: |  |  |  |  |  |  |  |  |  |  |
Impaired loans | $ | 4,872 |  |  | — |  |  | — |  |  | 4,872 |
Other real estate owned and repossessed assets | 1,370 |  |  | — |  |  | — |  |  | 1,370 |
Total nonrecurring fair value measurements | $ | 6,242 |  |  | — |  |  | — |  |  | 6,242 |
December 31, 2013 |  |  |  |  |  |  |  |  |  |  |
Recurring fair value measurement: |  |  |  |  |  |  |  |  |  |  |
Investment securities available-for-sale: |  |  |  |  |  |  |  |  |  |  |
U.S. Treasury notes | $ | 12,894 |  |  | 12,894 |  |  | — |  |  | — |
U.S. Agency notes | 106,675 |  |  | — |  |  | 106,675 |  |  | — |
U.S. Agency mortgage-backed securities | 40,309 |  |  | — |  |  | 40,309 |  |  | — |
Certificates of deposit with other banks | 1,501 |  |  | — |  |  | 1,501 |  |  | — |
Municipal securities: |  |  |  |  |  |  |  |  |  |  |
Non-taxable | 75,333 |  |  | — |  |  | 75,333 |  |  | — |
Taxable | 17,309 |  |  | — |  |  | 17,309 |  |  | — |
Mutual funds | 2,380 |  |  | 1,380 |  |  | 1,000 |  |  | — |
Trust preferred securities | 147 |  |  | 147 |  |  | — |  |  | — |
Equity securities | 1,693 |  |  | 1,693 |  |  | — |  |  | — |
Total recurring fair value measurements | $ | 258,241 |  |  | 16,114 |  |  | 242,127 |  |  | — |
Nonrecurring fair value measurements: |  |  |  |  |  |  |  |  |  |  |
Impaired loans | $ | 8,530 |  |  | — |  |  | 773 |  |  | 7,757 |
Other real estate owned and repossessed assets | 1,463 |  |  | — |  |  | 1,463 |  |  | — |
Total nonrecurring fair value measurements | $ | 9,993 |  |  | — |  |  | 2,236 |  |  | 7,757 |
The following table presents quantitative information about unobservable inputs used in nonrecurring Level 3 fair value measurements at December 31, 2014 and 2013 (dollars in thousands):
|  |  |  |  |  |  |  | Range
|  | Fair Value |  | Valuation Technique |  | Unobservable Inputs |  | High |  | Low |  | Weighted Average
2014 |  |  |  |  |  |  |  |  |  |  |  |
Impaired loans |  | $ | 4,872 |  |  | Estimated sales price |  | Adjustments for comparable properties, discounts to reflect current market conditions |  | Not applicable
|  |  |  | Discounted cash flows |  | Discount rate |  | 10.50 | % |  | 4.00 | % |  | 5.36 | %
Other real estate owned |  | 1,370 |  |  | Estimated sales price |  | Adjustments for comparable properties, discounts to reflect current market conditions |  | Not applicable
2013 |  |  |  |  |  |  |  |  |  |  |  |
Impaired loans |  | $ | 7,757 |  |  | Estimated sales price |  | Adjustments for comparable properties, discounts to reflect current market conditions |  | Not applicable
Carrying amounts and estimated fair values of financial instruments as of December 31 were as follows (in thousands):
|  |  |  |  | Fair Value Measurements at the End of the Reporting Period Using
| Carrying Amount |  | Fair Value |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  | Significant Other Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3)
2014 |  |  |  |  |  |  |  |  |
FINANCIAL ASSETS: |  |  |  |  |  |  |  |  |
Cash and cash equivalents | $ | 15,845 |  |  | 15,845 |  |  | 15,845 |  |  |  |  |  |
Investment securities, held-to-maturity | 22,725 |  |  | 22,138 |  |  |  |  |  |  |  |  | 22,138 |
Federal Reserve Bank stock | 2,346 |  |  | 2,346 |  |  | 2,346 |  |  |  |  |  |
Federal Home Loan Bank stock | 3,638 |  |  | 3,638 |  |  | 3,638 |  |  |  |  |  |
Loans, net | 695,835 |  |  | 699,715 |  |  |  |  |  |  |  |  | 699,715 |
FINANCIAL LIABILITIES: |  |  |  |  |  |  |  |  |  |  |
Deposits | 946,205 |  |  | 947,541 |  |  | 731,766 |  |  | 215,775 |  |  |
Short-term borrowings | 16,645 |  |  | 16,645 |  |  | 16,645 |  |  |  |  |  |
Long-term debt | 11,357 |  |  | 11,944 |  |  |  |  |  | 11,944 |  |  |
2013 |  |  |  |  |  |  |  |  |
FINANCIAL ASSETS: |  |  |  |  |  |  |  |  |
Cash and cash equivalents | $ | 14,688 |  |  | 14,688 |  |  | 14,688 |  |  |  |  |
Investment securities, held-to-maturity | 16,323 |  |  | 16,196 |  |  |  |  |  |  | 16,196 |
Federal Reserve Bank stock | 1,603 |  |  | 1,603 |  |  | 1,603 |  |  |  |  |
Federal Home Loan Bank stock | 2,854 |  |  | 2,854 |  |  | 2,854 |  |  |  |  |
Loans, net | 570,766 |  |  | 573,163 |  |  |  |  | 773 |  |  | 572,390 |
FINANCIAL LIABILITIES: |  |  |  |  |  |  |  |  |  |  |
Deposits | 785,761 |  |  | 788,096 |  |  | 599,838 |  |  | 188,258 |  |  |
Short-term borrowings | 8,655 |  |  | 8,655 |  |  | 8,655 |  |  |  |  |
Long-term debt | 12,102 |  |  | 12,842 |  |  |  |  | 12,842 |  |  |
The fair value of off-balance-sheet financial instruments at December 31, 2014 and 2013 was not material. Fair values of financial instruments are based on various assumptions, including the discount rate and estimates of future cash flows. Therefore, the fair values presented may not represent amounts that could be realized in actual transactions. In addition, because the required disclosures exclude certain financial instruments and all nonfinancial instruments, any aggregation of the fair value amounts presented would not represent the underlying value of the Company. The following methods and assumptions were used to estimate the fair value of certain financial instruments: Cash and cash equivalents The carrying amounts presented are deemed to approximate fair value. Investment securities Fair values for securities, excluding Federal Home Loan Bank and Federal Reserve Bank stock, are based on quoted market prices, if available. If a quoted market price is not available, fair value is estimated using quoted market prices for similar securities and/or discounted cash flow analysis. The carrying value of Federal Home Loan Bank and Federal Reserve Bank stock approximates fair value based on the respective redemptive provisions. Loans Fair value is estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities, incorporating assumptions of current and projected prepayment speeds. These current rates approximate market rates. Deposits The fair value of demand deposits, savings accounts, and certain money market deposits is the amount payable on demand at the reporting date. The fair value of fixed-maturity certificates of deposit is estimated using the rates currently offered for deposits of similar remaining maturities, which approximates market rates. Borrowings The carrying amounts of federal funds purchased, repurchase agreements, and U.S. Treasury demand note borrowings are deemed to approximate fair value of short-term borrowings. For long-term debt, fair values are estimated based on the discounted value of expected net cash flows using current interest rates.

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

X
- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=35750535&loc=d3e13537-108611 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 10 -URI http://asc.fasb.org/extlink&oid=35750535&loc=d3e13433-108611 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 28 -URI http://asc.fasb.org/extlink&oid=6957238&loc=d3e14064-108612 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=36462937&loc=d3e19207-110258 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 30 -URI http://asc.fasb.org/extlink&oid=6957238&loc=d3e14172-108612 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 16 -URI http://asc.fasb.org/extlink&oid=35750535&loc=d3e13504-108611 + Details
Name: | us-gaap_FairValueDisclosuresTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration