LCNB CORP (LCNB)

CIK: 0001074902. SIC: 6021 National Commercial Banks. Latest 10-K as of: 2026-03-11.

SIC breadcrumb: Finance, Insurance, And Real Estate > Depository Institutions > SIC 6021 National Commercial Banks

SEC company page: https://www.sec.gov/edgar/browse/?CIK=1074902. Latest filing source: 0001437749-26-007758.

Selected Fundamentals

Financials

Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-03-11. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001074902.json. Derived margins, ratios, and free cash flow are computed from the extracted annual SEC facts.

Flow metrics use full-year FY periods from 10-K/10-K/A filings; balance-sheet metrics use FY-end instants. Free cash flow = operating cash flow - capital expenditures. Missing metrics are omitted rather than fabricated.

Ratios

ROE and ROA use period-end equity/assets. Liabilities / equity uses total liabilities divided by stockholders' equity. Current ratio uses current assets divided by current liabilities when both are reported.

Financial Charts

Quarterly

Quarterly standardized facts from SEC companyfacts as of latest extracted filing date 2026-05-06. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001074902.json.

Flow metrics use discrete quarter-length periods from 10-Q/10-Q/A filings. Q4 revenue and net income are derived only when annual FY and nine-month YTD facts exist for the same fiscal year; derived Q4 values are labeled. EPS Q4 is not derived.

Quarterly Charts

Macro Cross-References

• CPIAUCSL - Consumer Price Index for All Urban Consumers: All Items in U.S. City Average
• UNRATE - Unemployment Rate
• FEDFUNDS - Federal Funds Effective Rate
• CES0500000003 - Average Hourly Earnings of All Employees, Total Private
• DFEDTARU - Federal Funds Target Range - Upper Limit
• DFEDTARL - Federal Funds Target Range - Lower Limit
• DGS3MO - Market Yield on U.S. Treasury Securities at 3-Month Constant Maturity
• DGS2 - Market Yield on U.S. Treasury Securities at 2-Year Constant Maturity
• DGS10 - Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity
• DGS30 - Market Yield on U.S. Treasury Securities at 30-Year Constant Maturity
• T10Y2Y - 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity
• CPILFESL - Consumer Price Index for All Urban Consumers: All Items Less Food and Energy
• CPIUFDSL - Consumer Price Index for All Urban Consumers: Food
• CPIENGSL - Consumer Price Index for All Urban Consumers: Energy
• CUSR0000SAH1 - Consumer Price Index for All Urban Consumers: Shelter
• PCEPI - Personal Consumption Expenditures: Chain-type Price Index
• PCEPILFE - Personal Consumption Expenditures Excluding Food and Energy: Chain-type Price Index
• PPIACO - Producer Price Index by Commodity: All Commodities
• T10YIE - 10-Year Breakeven Inflation Rate
• U6RATE - Total Unemployed, Plus All Marginally Attached Workers Plus Total Employed Part Time for Economic Reasons
• PAYEMS - All Employees, Total Nonfarm
• CIVPART - Labor Force Participation Rate
• EMRATIO - Employment-Population Ratio
• UNEMPLOY - Unemployed
• CE16OV - Employment Level
• ICSA - Initial Claims
• JTSJOL - Job Openings: Total Nonfarm
• JTSQUR - Quits: Total Nonfarm
• GDPC1 - Real Gross Domestic Product
• A191RL1Q225SBEA - Real Gross Domestic Product: Percent Change from Preceding Period
• INDPRO - Industrial Production: Total Index
• TCU - Capacity Utilization: Total Index
• HOUST - New Privately-Owned Housing Units Started: Total Units
• PERMIT - New Privately-Owned Housing Units Authorized in Permit-Issuing Places: Total Units
• RSAFS - Advance Retail Sales: Retail Trade
• PCE - Personal Consumption Expenditures
• DSPIC96 - Real Disposable Personal Income
• PSAVERT - Personal Saving Rate
• M2SL - M2
• BOPGSTB - U.S. International Trade in Goods and Services: Balance
• MSPUS - Median Sales Price of Houses Sold for the United States
• HSN1F - New One Family Houses Sold: United States
• RHORUSQ156N - Homeownership Rate in the United States
• TTLCONS - Total Construction Spending: Total Construction in the United States
• RRVRUSQ156N - Rental Vacancy Rate in the United States
• TOTALSL - Total Consumer Credit Owned and Securitized
• REVOLSL - Revolving Consumer Credit Owned and Securitized
• DRCCLACBS - Delinquency Rate on Credit Card Loans, All Commercial Banks
• GDP - Gross Domestic Product
• GPDI - Gross Private Domestic Investment
• GCE - Government Consumption Expenditures and Gross Investment
• PCEC - Personal Consumption Expenditures
• NETEXP - Net Exports of Goods and Services
• GFDEBTN - Federal Debt: Total Public Debt
• GFDEGDQ188S - Federal Debt: Total Public Debt as Percent of Gross Domestic Product
• FYFSD - Federal Surplus or Deficit
• FGRECPT - Federal Government Current Receipts
• FGEXPND - Federal Government: Current Expenditures
• MANEMP - All Employees, Manufacturing
• USCONS - All Employees, Construction
• USTRADE - All Employees, Retail Trade
• USFIRE - All Employees, Financial Activities
• USGOVT - All Employees, Government
• AWHAETP - Average Weekly Hours of All Employees, Total Private
• DGORDER - Manufacturers' New Orders: Durable Goods
• NEWORDER - Manufacturers' New Orders: Nondefense Capital Goods Excluding Aircraft
• BUSINV - Total Business Inventories
• EXPGS - Exports of Goods and Services
• IMPGS - Imports of Goods and Services
• IR - Import Price Index (End Use): All Commodities
• PPIFIS - Producer Price Index by Commodity: Final Demand

Latest quarter (10-Q)

Latest 10-Q source: 0001437749-26-015192.

Extracted structurally from real Item 2 body heading to real Item 3/4 boundary. Confidence: high. Filing date: 2026-05-06. Report date: 2026-03-31.

Item 2.          Management's Discussion and Analysis of Financial Condition and Results of Operations

Forward Looking Statements

Certain statements made in this document regarding LCNB’s financial condition, results of operations, plans, objectives, future performance and business, are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. These forward-looking statements are identified by the fact they are not historical facts and include words such as “anticipate”, “could”, “may”, “feel”, “expect”, “believe”, “plan”, and similar expressions. Please refer to LCNB’s Annual Report on Form 10-K for the year ended December 31, 2025, as well as its other filings with the SEC, for a more detailed discussion of risks, uncertainties and factors that could cause actual results to differ from those discussed in the forward-looking statements.

These forward-looking statements reflect management's current expectations based on all information available to management and its knowledge of LCNB’s business and operations. Additionally, LCNB’s financial condition, results of operations, plans, objectives, future performance and business are subject to risks and uncertainties that may cause actual results to differ materially. These factors include, but are not limited to:

1.

the success, impact, and timing of the implementation of LCNB’s business strategies;

2.

LCNB’s ability to integrate future acquisitions may be unsuccessful, or may be more difficult, time-consuming, or costly than expected;

3.

LCNB may incur increased loan charge-offs in the future and the allowance for credit losses may be inadequate;

4.

LCNB may face competitive loss of customers to both bank and nonbank financial institutions;

5.

changes in the interest rate environment, either by interest rate increases or decreases, may have results on LCNB’s operations materially different from those anticipated by LCNB’s market risk management functions;

6.

changes in general economic conditions, including increased competition, could adversely affect LCNB’s operating results;

7.

changes in or instability regarding regulations and government policies affecting bank holding companies and their subsidiaries, including changes in monetary policies, could negatively impact LCNB’s operating results;

8.

LCNB may experience difficulties growing loan and deposit balances;

9.

United States trade relations with foreign countries could negatively impact the financial condition of LCNB's customers, which could adversely affect LCNB's operating results and financial condition;

10.

global and/or geopolitical relations and/or conflicts could create financial market uncertainty and have negative impacts on commodities, currency, and stability, which could adversely affect LCNB's operating results and financial condition;

11.

difficulties with technology or data security breaches, including cyberattacks or widespread outages, could negatively affect LCNB's ability to conduct business and its relationships with customers, vendors, and others;

12.

adverse weather events and natural disasters and global and/or national epidemics could negatively affect LCNB's customers given its concentrated geographic scope, which could impact LCNB's operating results; and

13.

government intervention in the U.S. financial system, including the effects of legislative, tax, accounting, and regulatory actions and reforms, including the Jumpstart Our Business Startups Act, the Consumer Financial Protection Bureau, the capital ratios of Basel III as adopted by the federal banking authorities, changes in deposit insurance premium levels, and any such future regulatory actions or reforms.  

Forward-looking statements made herein reflect management's expectations as of the date such statements are made. Such information is provided to assist shareholders and potential investors in understanding current and anticipated financial operations of LCNB and is included pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. LCNB undertakes no obligation to update any forward-looking statement to reflect events or circumstances that arise after the date such statements are made. 

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LCNB CORP. AND SUBSIDIARIES

Item 2.          Management's Discussion and Analysis of Financial Condition and Results of Operations (continued)

Critical Accounting Estimates

The accounting policies of LCNB conform to U.S. generally accepted accounting principles and require management to make estimates and develop assumptions that affect the amounts reported in the financial statements and related footnotes. These estimates and assumptions are based on information available to management as of the date of the financial statements. Actual results could differ significantly from management’s estimates. As this information changes, management’s estimates and assumptions used to prepare LCNB’s financial statements and related disclosures may also change. The most significant accounting policies followed by LCNB are presented in Note 1 of the Notes to Consolidated Financial Statements included in LCNB's 2025 Annual Report on Form 10-K filed with the SEC. Based on the valuation techniques used and the sensitivity of financial statement amounts to the methods, assumptions, and estimates underlying those amounts, management has identified the items described below to be the accounting areas that require the most subjective or complex judgments and, as such, could be most subject to revision as new information becomes available.

Allowance for Credit Losses.  The allowance is maintained at a level LCNB management believes is adequate to absorb estimated credit losses identified and inherent in the loan portfolio. The allowance is established through a provision for credit losses charged to expense.  Loans are charged against the allowance for credit losses when management believes that the collectability of the principal is unlikely.  Subsequent recoveries, if any, are credited to the allowance.  The allowance is an amount that management believes will be adequate to absorb estimated losses over the contractual terms in the loan portfolio based on evaluations of the collectability of loans and prior loan loss experience.  The evaluations take into consideration such factors as changes in the nature and volume of the loan portfolio, overall portfolio quality, review of specific problem loans, and current and forecasted economic conditions that may affect the borrowers' ability to pay.  This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available.

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LCNB CORP. AND SUBSIDIARIES

Item 2.          Management's Discussion and Analysis of Financial Condition and Results of Operations (continued)

See Note 1 - Summary of Significant Accounting Policies - Allowance for Credit Losses on Loans in the 2025 Annual Report on Form 10-K for further detailed descriptions of LCNB's estimation process and methodology related to the allowance. See also Note 4 – Loans in this Quarterly Report on Form 10-Q for further information regarding LCNB's loan portfolio and allowance.

Accounting for Intangibles. LCNB’s intangible assets are composed primarily of goodwill and core deposit intangibles related to acquisitions of other financial institutions.

Accounting rules require LCNB to determine the fair value of all the assets and liabilities of an acquired entity and to record their fair values on the date of acquisition. LCNB employs a variety of means in determining fair values, including the use of discounted cash flow analysis, market comparisons, and projected future revenue streams. For those items for which management concludes that LCNB has the appropriate expertise to determine fair value, management may choose to use its own calculation of fair value. In other cases, where the fair value is not readily determined, consultation with outside parties is used to determine fair value. Once valuations have been determined, the net difference between the price paid for the acquired entity and the fair value of the balance sheet is recorded as goodwill. Goodwill is assessed at least annually for impairment, with any such impairment recognized in the period identified. A more frequent assessment is performed if there are material changes in the marketplace or within the organizational structure.

Core deposit intangibles acquired from business combinations are initially measured at their estimated fair values and are then amortized on a straight-line basis over their estimated useful lives. Management evaluates whether triggering events or circumstances have occurred that indicate the remaining useful life or carrying value of the amortizing intangible should be revised.

Fair Value Accounting for Debt Securities. Debt securities classified as available-for-sale are recorded at fair value with unrealized gains and losses recorded in other comprehensive income (loss), net of tax. Available-for-sale debt securities in unrealized loss positions are evaluated to determine if the decline in fair value should be recorded in income or in other comprehensive income (loss). LCNB first determines if it intends to sell or if it is more likely than not that it will be required to sell the security before recovery of its amortized cost basis. If either criteria is met, the security's amortized cost basis is written down to fair value through income. If neither of these criteria is met, LCNB evaluates whether the decline in fair value resulted from credit factors. In making this determination, management considers, among other factors, the extent to which fair value is less than the amortized cost basis, any changes to the rating of the security by rating agencies, and any adverse conditions specifically related to the security or issuer. If the present value of cash flows expected to be collected is less than the amortized cost basis, a provision is recorded to the allowance for credit losses. Any decline in fair value not recorded through an allowance for credit losses is recognized in accumulated other comprehensive income (loss), net of applicable taxes.

Loans Held-For-Sale. Loans held-for-sale (“LHFS”) represent mortgage loans intended to be sold in the secondary market and other loans that management has an active plan to sell. LHFS are carried at the lower-of-cost-or-fair value as determined on an aggregate basis by type of loan. Any writedowns to fair value upon the transfer of loans to LHFS are reflected in loan charge-offs. Any further decreases are recognized in non-interest income and increases in fair value above the loan cost basis are not recognized until the loans are sold.

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Item 2.          Management's Discussion and Analysis of Financial Condition and Results of Operations (continued)

Results of Operations

Net income for the three months ended March 31, 2026 was $4.4 million (total basic and diluted earnings per share of $0.31). This compares to net income of $4.6 million (total basic and diluted earnings per share of $0.33) for the same three-month periods in 2025. 

Net interest income for the three months ended March 31, 2026 was $18.8 million, compared to net interest income of $16.3 million for the same three-month periods in 2025. The growth in net interest income was primarily due to a decrease on the average rate paid on interest-bearing liabilities and a decrease in the average balances of these liabilities, along with an increase in the average rate earned on LCNB's loan portfolio. LCNB's tax equivalent net interest margin for the first three months of 2026 was 3.83%, compared to 3.25% for t

[Excerpt truncated for page length; source filing is linked above.]

Latest 10-K MD&A

Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary. Confidence: high. Filing date: 2026-03-11. Report date: 2025-12-31.

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued)

Years ended December 31,

2025

2024

2023

Average

Interest

Average

Average

Interest

Average

Average

Interest

Average

Outstanding

Earned/

Yield/

Outstanding

Earned/

Yield/

Outstanding

Earned/

Yield/

Balance

Paid

Rate

Balance

Paid

Rate

Balance

Paid

Rate

(Dollars in thousands)

Loans (1)

$

1,705,520

$

94,313

5.53

%

1,765,672

96,477

5.46

%

1,467,981

71,894

4.90

%

Interest-bearing demand deposits

9,592

577

6.02

%

15,486

880

5.68

%

13,039

734

5.63

%

Interest-bearing time deposits

443

14

3.16

%

401

10

2.49

%

—

—

0.00

%

Federal Reserve Bank stock

6,405

384

6.00

%

6,143

369

6.01

%

4,722

283

5.99

%

Federal Home Loan Bank stock

20,710

1,785

8.62

%

19,460

1,641

8.43

%

8,293

590

7.11

%

Investment securities:

Equity securities

5,064

173

3.42

%

5,012

184

3.67

%

3,879

175

4.51

%

Debt securities, taxable

247,671

4,876

1.97

%

261,856

4,847

1.85

%

277,157

5,235

1.89

%

Debt securities, non-taxable (2)

17,870

791

4.43

%

19,005

768

4.04

%

24,031

871

3.62

%

Total earning assets

2,013,275

102,913

5.11

%

2,093,035

105,176

5.03

%

1,799,102

79,782

4.43

%

Non-earning assets

270,348

267,554

210,509

Allowance for credit losses

(12,107

)

(11,263

)

(8,046

)

Total assets

$

2,271,516

2,349,326

2,001,565

Interest-bearing demand and money market deposits

$

609,615

9,686

1.59

%

607,144

12,877

2.12

%

535,865

7,850

1.46

%

Savings deposits

361,650

805

0.22

%

368,401

1,028

0.28

%

398,299

725

0.18

%

IRA and time certificates

437,913

16,657

3.80

%

481,516

21,933

4.55

%

233,604

7,996

3.42

%

Short-term borrowings

47

3

6.38

%

18,987

1,117

5.88

%

75,383

4,060

5.39

%

Long-term debt

110,324

5,374

4.87

%

156,683

7,265

4.64

%

56,798

2,619

4.61

%

Total interest-bearing liabilities

1,519,549

32,525

2.14

%

1,632,731

44,220

2.71

%

1,299,949

23,250

1.79

%

Noninterest-bearing demand deposits

468,117

450,147

472,232

Other liabilities

19,880

20,880

21,557

Capital

263,970

245,568

207,827

Total liabilities and capital

$

2,271,516

2,349,326

2,001,565

Net interest rate spread (3)

2.97

%

2.32

%

2.64

%

Net interest income and net interest margin on a tax equivalent basis (4)

$

70,388

3.50

%

60,956

2.91

%

56,532

3.14

%

Ratio of interest-earning assets to interest-bearing liabilities

132.49

%

128.19

%

138.40

%

(1)

Includes non-accrual loans if any.

(2)

Income from tax-exempt securities is included in interest income on a taxable-equivalent basis. Interest income has been divided by a factor comprised of the complement of the incremental tax rate of 21%.

(3)

The net interest spread is the difference between the average rate on total interest-earning assets and interest-bearing liabilities.

(4)

The net interest margin is the taxable-equivalent net interest income divided by average interest-earning assets.

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LCNB CORP. AND SUBSIDIARIES

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued)

The following table presents the changes in interest income and expense for each major category of interest-earning assets and interest-bearing liabilities and the amount of change attributable to volume and rate changes for the years indicated.  Changes not solely attributable to rate or volume have been allocated to volume and rate changes in proportion to the relationship of absolute dollar amounts of the changes in each.

For the years ended December 31,

2025 vs. 2024

2024 vs. 2023

Increase (decrease) due to

Increase (decrease) due to

Volume

Rate

Total

Volume

Rate

Total

(In thousands)

Interest income attributable to:

Loans (1)

$

(3,316

)

1,152

(2,164

)

15,653

8,930

24,583

Interest-bearing demand deposits

(352

)

49

(303

)

140

16

156

Interest-bearing time deposits

1

3

4

—

—

—

Federal Reserve Bank stock

16

(1

)

15

85

1

86

Federal Home Loan Bank stock

107

37

144

924

127

1,051

Investment securities:

Equity securities

2

(13

)

(11

)

45

(36

)

9

Debt securities, taxable

(270

)

299

29

(285

)

(103

)

(388

)

Debt securities, non-taxable (2)

(48

)

71

23

(196

)

93

(103

)

Total interest income

(3,860

)

1,597

(2,263

)

16,366

9,028

25,394

Interest expense attributable to:

Interest-bearing demand and money market deposits

52

(3,243

)

(3,191

)

1,151

3,876

5,027

Savings deposits

(19

)

(204

)

(223

)

(58

)

361

303

IRA and time certificates

(1,870

)

(3,406

)

(5,276

)

10,625

3,312

13,937

Short-term borrowings

(1,202

)

88

(1,114

)

(3,287

)

344

(2,943

)

Long-term debt

(2,242

)

351

(1,891

)

4,631

15

4,646

Total interest expense

(5,281

)

(6,414

)

(11,695

)

13,062

7,908

20,970

Net interest income

$

1,421

8,011

9,432

3,304

1,120

4,424

(1)

Non-accrual loans, if any, are included in average loan balances.

(2)

Change in interest income from non-taxable investment securities is computed based on interest income determined on a taxable-equivalent yield basis. Interest income has been divided by a factor comprised of the complement of the incremental tax rate of 21%.

2025 vs. 2024.  Net interest income on a fully tax-equivalent basis for 2025 totaled $70.4 million, an increase of $9.4 million from 2024.  The increase resulted from a decrease in total interest expense of $11.7 million, partially offset by a decrease in total taxable-equivalent interest income of $2.3 million.

The decrease in total interest income was due primarily to a $2.2 million decrease in interest income from loans due to a $60.2 million decrease in average loans, partially offset by a 7 basis point increase in the average rate earned. 

The decrease in total interest expense was primarily due to a $5.3 million decrease in interest paid on IRA and time certificates and to a $3.2 million decrease in interest paid on interest-bearing demand and money market deposit accounts.  Interest on IRA and time certificates decreased due to a $43.6 million decrease in average balances and to a 75 basis point decrease in the average rate paid. Interest paid on interest-bearing demand and money market deposit accounts decreased due to a 53 basis point decrease in the average rate paid, partially offset by $2.5 million increase in average deposit balances. In addition, interest paid on short-term borrowings and long-term debt decreased due to decreases in average balances outstanding.  The decrease in average IRA and time certificate balances and the corresponding decrease in average rates reflects a strategic reduction in higher-cost certificates of deposit and IRA balances as part of LCNB's funding optimization strategy.

2024 vs. 2023.  Net interest income on a fully tax-equivalent basis for 2024 totaled $61.0 million, an increase of $4.4 million from 2023.  The increase resulted from an increase in total taxable-equivalent interest income of $25.4 million, which was partially offset by an increase in total interest expense of $21.0 million.

The increase in total interest income was due primarily to a $24.6 million increase in interest income from loans due to a $297.7 million increase in average loans and to a 56 basis point increase in the average rate earned. Average loans increased due to organic growth in the portfolio in addition to loans acquired through the merger with CNNB in the fourth quarter of 2023 and EFBI in the second quarter of 2024.

The increase in total interest expense was primarily due to a $13.9 million increase in interest paid on IRA and time certificates due to a $247.9 million increase in average balances and to a 113 basis point increase in the average rate paid. Interest paid on interest-bearing demand and money market deposit accounts increased due to a $71.3 million increase in average deposit balances and to a 66 basis point increase in the average rate paid. Interest paid on long-term debt increased due to a $99.9 million increase in average balances and to a 3 basis point increase in the average rate paid.

The increased rates paid on interest-bearing liabilities and the increased yield earned on interest-earning assets is largely the result of fluctuations in market rates.

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LCNB CORP. AND SUBSIDIARIES

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued)

Allowance for Credit Losses

LCNB continuously reviews the loan portfolio for credit risk through the use of its lending and loan review functions.  Independent loan reviews analyze specific loans, providing validation that credit risks are appropriately identified, graded, and reported to the Loan Committee, Board of Directors, and the Audit Committee. New credits meeting specific criteria are analyzed prior to origination and are reviewed by the Loan Committee of the Board of Directors and the Board of Directors.

The total provision for credit losses is determined based upon management's evaluation as to the amount needed to maintain the allowance for credit losses at a level considered appropriate in relation to the risk of losses inherent in the portfolio. For analysis purposes, the loan portfolio is separated into pools of similar loans. These pools include commercial and industrial loans, owner occupied commercial real estate loans, non-owner occupied commercial real estate loans, real estate loans secured by farms, real estate loans secured by multi-family dwellings, residential real estate loans secured by senior liens on 1-4 family dwellings, residential real estate loans secured by junior liens on 1-4 family dwellings, home equity line of credit loans, consumer loans, loans for agricultural purposes not secured by real estate, construction loans secured by 1-4 family dwellings, construction loans secured by other real estate, and several smaller classifications. Within each pool of loans, LCNB examines a variety of factors to determine the adequacy of the allowance for credit losses, including historic charge-off percentages, overall pool quality, a review of specific problem loans, current economic trends and conditions that may affect borrowers' ability to pay, and the nature, volume, and consistency of the loan pool.

LCNB recorded provisions for credit losses and unfunded commitments totaling $1.9 million for 2025, $2.0 million for 2024 and $2.1 million for 2023. The provision for 2025 includes $1.4 million to fully reserve for two commercial and industrial loans to the same borrower within the logistics sector.  Management does not believe there will be any additional reserves associated with this loan and anticipates the loan will be charged off during the first quarter of 2026. Management believes this event does not reflect the overall strength, diversity, or performance of its loan portfolio or the markets that LCNB serves. Included in the provision for credit losses for 2024 and 2023 were $763 thousand and $1.7 million, respectively, related to non-PCD loans acquired through the EFBI and CNNB acquisitions.

Calculating an appropriate level for the allowance and provision for credit losses involves a high degree of management judgment and is, by its nature, imprecise. Revisions may be necessary as more information becomes available.

Net charge-offs for 2025, 2024, and 2023 totaled $273 thousand, $741 thousand, and $185 thousand, respectively. Charge-offs during 2024 were greater because of a $589 thousand charge-off on a commercial & industrial loan.  

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LCNB CORP. AND SUBSIDIARIES

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued)

Non-Interest Income

A comparison of non-interest income for 2025, 2024, and 2023 is as follows:

Increase (Decrease)

2025

2024

2023

2025 vs. 2024

2024 vs. 2023

(In thousands)

Fiduciary income

$

9,531

8,445

7,091

1,086

1,354

Service charges and fees on deposit accounts

7,384

6,759

5,856

625

903

Net losses on sales of debt securities

—

(214

)

—

214

(214

)

Bank owned life insurance income

1,422

1,665

1,136

(243

)

529

Net gains from sales of loans

2,937

3,433

697

(496

)

2,736

Other operating income

501

316

631

185

(315

)

Total non-interest income

$

21,775

20,404

15,411

1,371

4,993

Reasons for changes include:

•

Fiduciary income increased in 2025, 2024, and 2023, primarily due to increases in the fair values of trust and brokerage assets managed, on which fees are based. The increases in fair value were due to the opening of new Wealth Management customer accounts and to an increase in the market values of managed assets. 

•

Service charges and fees on deposit accounts increased during 2025 primarily due to an increased volume in overdraft fees collected and secondarily to an increase in fee income received on the ICS product.  Service charges and fees on deposit accounts increased during 2024 primarily due to increases in check card income and fee income received on the ICS product, partially offset by a decrease in overdraft fees and deposit account fees in general. LCNB reduced overdraft fees from $35 per occurrence to $25 effective November 1, 2023. A higher volume of check cards were outstanding during 2024 due to the mergers with EFBI and CNNB.

•

Net losses from sales of debt securities during 2024 reflect losses recognized on sales of municipal securities with amortized cost bases of approximately $9.8 million.  There were no sales of debt securities during 2025 or 2023.

•

Bank-owned life insurance ("BOLI") income was elevated in 2024 primarily due to mortality proceeds recognized. The 2025 and 2023 periods did not include mortality proceeds. BOLI income also increased to a lesser extent from 2023 to 2024 and 2025 due to insurance policies acquired in the mergers with EFBI and CNNB.

•

Net gains from sales of loans were greater during 2025 and 2024 primarily due to a higher volume of residential real estate loans sold. Included in these gains for the 2024 period were an $843 thousand loss on the sale of approximately $48.9 million of below market rate loans acquired from CNNB and a $359 thousand gain on the sale of approximately $29.8 million of below market rate loans predominately acquired from EFBI. The funds from these acquired loan sales were used to fund new loans and pay down debt.

•

Other operating income decreased in 2024 as compared to 2023 primarily due to amortization of capitalized mortgage servicing rights obtained in the merger with CNNB, which amortization is netted for accounting purposes against fee income recognized from the servicing of sold residential mortgage loans. Other operating income for 2025 increased primarily due to a decrease in amortization of capitalized mortgage servicing rights.

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Table of Contents

LCNB CORP. AND SUBSIDIARIES

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued)

Non-Interest Expense

A comparison of non-interest expense for 2025, 2024, and 2023 is as follows:

Increase (Decrease)

2025

2024

2023

2025 vs. 2024

2024 vs. 2023

(In thousands)

Salaries and employee benefits

$

35,496

35,170

29,108

326

6,062

Equipment expenses

1,517

1,584

1,616

(67

)

(32

)

Occupancy expense, net

3,983

3,725

3,301

258

424

State financial institutions tax

1,716

1,881

1,628

(165

)

253

Marketing

1,223

1,047

1,101

176

(54

)

Amortization of intangibles

1,075

1,142

532

(67

)

610

FDIC premiums

1,487

1,895

932

(408

)

963

Computer maintenance and supplies

1,506

1,425

1,358

81

67

Contracted services

3,520

3,212

2,776

308

436

Merger-related expenses

140

3,442

4,656

(3,302

)

(1,214

)

Other non-interest expense

10,246

8,753

7,415

1,493

1,338

Total non-interest expense

$

61,909

63,276

54,423

(1,367

)

8,853

Reasons for changes include:

•

Salaries and employee benefits were 0.9% greater in 2025 than in 2024 and 20.8% greater in 2024 than in 2023. The increase in 2025 was primarily due to increases in miscellaneous employee related costs, largely offset by a decrease in wages and benefits caused by a reduction in the number of employees. The increase in 2024 was due to overall wage and benefit increases, an increased number of employees due to the acquisitions of EFBI and CNNB, higher sales commissions, and higher health insurance costs. The increase in 2023 was primarily due to overall wage and benefit increases, a higher number of employees during November and December as a result of the CNNB merger, and a higher amount recognized for 401(k) plan matching. These increases were partially offset by decreased pension and health insurance expenses and to a higher amount of personnel expenses deferred during 2023 as a cost of loan originations.

•

Occupancy expense, net increased during 2025 primarily due to increased real estate taxes and depreciation. Occupancy expense, net increased during 2024 primarily due to increased utility and depreciation expenses caused by the additional offices acquired from EFBI and CNNB. Maintenance and repair costs related to LCNB's office facilities also contributed to the increase.  

•

Amortization of intangibles increased during 2024 as compared to 2023 due to the amortization of core deposit intangibles recognized from the acquisitions of EFBI and CNNB.  Amortization decreased during 2025 because the core deposit intangibles related to the BNB Bancorp, Inc. and Columbus First Bancorp, Inc. acquisitions were amortized in full during the year.

•

FDIC insurance premiums increased during 2024 due to a higher assessment base, partially reflecting increased assets resulting from the acquisitions of EFBI and CNNB, and to increases in the assessment rate charged. FDIC insurance premiums decreased in 2025 because of decreased assessment bases, reflecting decreases in total assets, and to reductions in the assessment rate charged.

•

Merger- related expenses reflect costs incurred in connection with the acquisitions of EFBI and CNNB.

•

Other non-interest expense for 2025 includes $265 thousand in impairment charges related to a closed office building that is classified as held-for-sale.  The remaining net increases for 2025 can be attributed to smaller increases in various other accounts. Other non-interest expense increased in 2024 partially due to increased outside accounting and auditing fees and partially due to smaller increases in various other accounts. Partially offsetting the net increase in 2024 was a $455 thousand gain recognized on the sale of an office building that was closed as a result of LCNB's office consolidation strategy, which was netted against other non-interest expense for accounting purposes.  Other non-interest expense for 2023 was partially offset by a $425 thousand gain recognized on the sale of an office building that was closed as a result of LCNB's office consolidation strategy, which was netted against other non-interest expense for accounting purposes.

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Table of Contents

LCNB CORP. AND SUBSIDIARIES

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued)

Income Taxes

LCNB's effective tax rates for the years ended December 31, 2025, 2024, and 2023 were 17.9%, 15.5%, and 17.2%, respectively.  The difference between the statutory rate of 21% and the effective tax rate is primarily due to tax-exempt interest income from municipal securities, tax-exempt earnings from bank owned life insurance, tax-exempt earnings from LCNB Risk Management, Inc., and tax credits and losses related to investments in affordable housing tax credit limited partnerships. The effective tax rate for 2024 was lower due to tax-exempt items not decreasing in proportion to the overall decrease in earnings, partially offset by the tax effect of non-deductible merger-related expenses.

Financial Condition

A comparison of balance sheet line items at December 31 is as follows (in thousands):

2025

2024

Difference $

Difference %

ASSETS:

Total cash and cash equivalents

$

21,614

35,744

(14,130

)

(39.53

)%

Interest-bearing time deposits

2,710

250

2,460

984.00

%

Investment securities:

Equity securities with a readily determinable fair value, at fair value

1,433

1,363

70

5.14

%

Equity securities without a readily determinable fair value, at cost

3,666

3,666

—

0.00

%

Debt securities, available-for-sale, at fair value

232,271

258,327

(26,056

)

(10.09

)%

Debt securities, held-to-maturity, at cost

16,080

16,324

(244

)

(1.49

)%

Federal Reserve Bank stock, at cost

6,405

6,405

—

0.00

%

Federal Home Loan Bank stock, at cost

20,710

20,710

—

0.00

%

Loans, net

1,691,827

1,709,811

(17,984

)

(1.05

)%

Loans held for sale

1,718

5,556

(3,838

)

(69.08

)%

Premises and equipment, net

39,196

41,049

(1,853

)

(4.51

)%

Operating lease right-of-use assets

6,475

5,785

690

11.93

%

Goodwill

90,310

90,310

—

0.00

%

Core deposit and other intangibles, net

9,271

11,104

(1,833

)

(16.51

)%

Bank owned life insurance

55,424

54,002

1,422

2.63

%

Interest receivable

7,968

8,701

(733

)

(8.42

)%

Other assets, net

33,691

38,287

(4,596

)

(12.00

)%

Total assets

$

2,240,769

2,307,394

(66,625

)

(2.89

)%

LIABILITIES:

Deposits:

Non-interest-bearing

$

466,094

459,619

6,475

1.41

%

Interest-bearing

1,374,261

1,418,673

(44,412

)

(3.13

)%

Total deposits

1,840,355

1,878,292

(37,937

)

(2.02

)%

Short-term borrowings

—

—

—

NM

Long-term debt

104,428

155,153

(50,725

)

(32.69

)%

Operating leases liability

6,877

6,115

762

12.46

%

Accrued interest and other liabilities

15,180

14,798

382

2.58

%

Total liabilities

1,966,840

2,054,358

(87,518

)

(4.26

)%

SHAREHOLDERS' EQUITY:

Common shares

188,212

186,937

1,275

0.68

%

Retained earnings

151,938

141,290

10,648

7.54

%

Treasury shares, at cost

(56,071

)

(56,002

)

(69

)

0.12

%

Accumulated other comprehensive loss, net of taxes

(10,150

)

(19,189

)

9,039

(47.11

)%

Total shareholders' equity

273,929

253,036

20,893

8.26

%

Total liabilities and shareholders' equity

$

2,240,769

2,307,394

(66,625

)

(2.89

)%

NM - Not Meaningful

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Table of Contents

LCNB CORP. AND SUBSIDIARIES

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued)

Reasons for changes include:

•

Debt securities, available-for-sale, decreased due to maturities and paydowns, partially offset by a decrease in unrealized losses.  Purchases of new securities during 2025 were minimal.

•

Loans, net decreased due to timing of borrower payoffs and efforts to rebalance the composition of the portfolio.

•

Premises and equipment, net decreased due to depreciation and the transfer of the Florence building to premises held-for-sale, which is included in the other assets classification.

•

Operating lease right-of-use assets and operating lease liabilities increased due the renewal of expiring leases.

•

Core deposit and other intangibles, net decreased due to amortization of core deposit and mortgage servicing rights intangibles.

•

Bank owned life insurance increased due to increases in the cash values of the policies. No new policies were purchased during 2025.

•

Other assets, net decreased primarily due to a reduction in deferred tax assets resulting from utilization of prior-year loss carryforwards and a decline in unrealized losses on available-for-sale debt securities.

•

Total interest-bearing deposits decreased primarily due to decreases in IRA and time certificate deposits and to decreases in interest-bearing demand and money market deposit accounts, partially offset by an increase in deposits obtained through the ICS service. The decline in interest‑bearing balances reflects a strategic decrease of higher‑cost certificates of deposit and IRA balances as part of LCNB’s funding optimization strategy.

•

Long-term debt decreased due to the early payoff of $50 million in advances bearing a weighted average interest rate of 4.23% from the FHLB of Cincinnati. Funds for the payoff were provided by the increase in ICS deposits mentioned above, resulting in an overall decrease in the average interest rate. Prepayment penalties incurred were minimal.

•

Retained earnings increased due to net income retained during 2025.

•

Accumulated other comprehensive loss, net of taxes decreased because of market-driven partial recoveries in the fair value of LCNB's available-for-sale debt securities investments.

LCNB's loan portfolio represents its largest asset category and is its most significant source of interest income. Loan classifications have been identified as Commercial & Industrial, Commercial Real Estate, Residential Real Estate, Consumer, Agricultural, and Other. Commercial real estate is the largest classification in LCNB's loan portfolio, comprising about 64.4% of total loans at December 31, 2025.

Loans secured by commercial real estate consist of owner-occupied, non-owner-occupied, farmland, multi-family, and construction loans. A commercial real estate, owner-occupied loan finances the purchase, construction, or refinance of a building or other property for which the repayment of principal is dependent upon cash flows from ongoing operations conducted by the party, or an affiliate of the party, who owns the property. A commercial real estate, non-owner occupied loan finances the purchase, construction or refinance of a building or other property for which the repayment of principal is dependent upon rental income associated with the property or the subsequent sale of the property. The values of these loans are primarily impacted by the level of interest rates associated with the debt and to local economic conditions, which dictate occupancy rates and the amount of rent charged. The increase in debt service due to higher interest rates may not be able to be passed on to tenants. As part of the origination process, loan interest rates and occupancy rates are stressed to determine the impact on the borrower’s ability to maintain adequate debt service under different economic conditions. Further, LCNB monitors the concentration in any one industry and has established limits relative to the total of the Bank's tier 1 and tier 2 capital for each category of loan. Credit quality trends are monitored by industry to determine if a change in the risk exposure to a certain industry may warrant a change in underwriting standards.

The following table provides a breakdown of amortized cost of commercial real estate loans by property-type classification as of
December 31, 2025
, excluding loans which are junior in lien or covered by collateral secured with varying classes of assets (dollars in thousands):

Amount

% of Total

Multi-family

$

274,742

26

%

Retail

147,030

14

%

Office

126,175

12

%

Mixed Use

94,378

9

%

Hotel/Motel

90,887

9

%

Other

70,187

7

%

Self storage

48,568

5

%

Warehouse (one tenant)

42,113

4

%

Farmland

35,561

3

%

Light Industrial

29,385

3

%

Warehouse (more than one tenant)

28,752

3

%

Manufacturing

24,414

2

%

Healthcare Facilities

19,105

2

%

Dental

11,334

1

%

Total

$

1,042,631

100

%

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Table of Contents

LCNB CORP. AND SUBSIDIARIES

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued)

Most of LCNB's commercial real estate loans are made within its general market area of Southwest and South-Central Ohio and Northern Kentucky. The following table provides a breakdown of amortized cost of commercial real estate loans by real estate collateral location as of December 31, 2025, excluding loans which are junior in lien or covered by collateral secured with varying classes of assets (dollars in thousands):

Amount

% of Total

Franklin County, Ohio

$

296,096

28

%

Hamilton County, Ohio

184,090

17

%

Montgomery County, Ohio

99,729

9

%

Butler County, Ohio

89,310

8

%

Warren County, Ohio

83,338

8

%

Delaware County, Ohio

61,686

6

%

Other counties, Ohio

40,631

4

%

Greene County, Ohio

38,476

4

%

Boone County, Kentucky

36,751

4

%

Clermont County, Ohio

19,313

2

%

Preble County, Ohio

17,986

2

%

Licking County, Ohio

17,662

2

%

Kenton County, Kentucky

15,079

1

%

Fayette County, Ohio

10,942

1

%

Ross County, Ohio

9,265

1

%

Fairfield County, Ohio

9,045

1

%

Other counties, Indiana

6,585

1

%

Other counties, Kentucky

6,647

1

%

Total

$

1,042,631

100

%

Liquidity

LCNB Corp. depends on dividends from the Bank for the majority of its liquid assets, including the cash needed to pay dividends to its shareholders. Federal banking law limits the amount of dividends the Bank may pay to the sum of retained net income for the current year plus retained net income for the previous two years. Prior approval from the OCC, the Bank's primary regulator, is necessary for the Bank to pay dividends in excess of this amount. If dividends exceed net profit for a year, a bank is generally not required to carry forward the negative amount resulting from such excess if the bank can attribute the excess to the preceding two years. If the excess is greater than the bank's previously undistributed net income for the preceding two years, prior OCC approval of the dividend is required and a negative amount would be carried forward in future dividend calculations. In addition, dividend payments may not reduce capital levels below minimum regulatory guidelines.

Effective liquidity management ensures that cash is available to meet the cash flow needs of borrowers and depositors, pay dividends to shareholders, and meet LCNB's operating cash needs. Primary funding sources include customer deposits with the Bank, short-term and long-term borrowings from the FHLB, line of credit arrangements totaling $115.0 million with three correspondent banks, and interest and repayments received from LCNB's loan and investment portfolios.

Total remaining borrowing capacity with the FHLB at December 31, 2025 was approximately $149.1 million. Additional borrowings of approximately $115.0 million were available through the line of credit arrangements at year-end.

Management closely monitors the level of liquid assets available to meet ongoing funding needs. It is management's intent to maintain adequate liquidity so that sufficient funds are readily available at a reasonable cost. LCNB experienced no liquidity or operational problems as a result of current liquidity levels. Management believes LCNB has the ability to generate and obtain adequate amounts of liquidity to meet its requirements in the short and long-term.

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Table of Contents

LCNB CORP. AND SUBSIDIARIES

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued)

Commitments to extend credit at December 31, 2025 totaled $262.2 million and are more fully described in Note 14 - Commitments and Contingent Liabilities to LCNB's consolidated financial statements.  Since many commitments to extend credit may expire without being drawn upon, the total commitment amount does not necessarily represent future cash requirements.

The following table provides information concerning LCNB's commitments at December 31, 2025:

Amount of Commitment Expiration Per Period

Total

Over 1

Over 3

Amounts

1 year

through 3

through 5

More than

Committed

or less

years

years

5 years

(In thousands)

Commitments to extend credit

$

36,427

36,427

—

—

—

Unused lines of credit

225,773

68,573

46,527

26,158

84,515

Standby letters of credit

5

5

—

—

—

Total

$

262,205

105,005

46,527

26,158

84,515

Capital Resources

The Bank is required by banking regulators to meet certain minimum levels of capital adequacy. Failure to meet minimum capital requirements can initiate certain mandatory and possible additional discretionary actions by regulators that, if undertaken, could have a material effect on LCNB's and the Bank's financial statements.  These minimum levels are expressed in the form of certain ratios. Capital is separated into Tier 1 capital (essentially shareholders' equity less goodwill and other intangibles) and Tier 2 capital (essentially the allowance for credit losses limited to 1.25% of risk-weighted assets). Common Equity Tier 1 Capital is the sum of common stock, related surplus, and retained earnings, net of treasury stock, accumulated other comprehensive income, and other adjustments. The first three ratios, which are based on the degree of credit risk in the Bank's assets, provide for weighting assets based on assigned risk factors and include off-balance sheet items such as loan commitments and stand-by letters of credit. Information summarizing the regulatory capital of the Bank at December 31, 2025 and 2024 and corresponding regulatory minimum requirements is included in Note 15 - Regulatory Matters and Impact on Payment of Dividends.

The FDIC, the insurer of deposits in financial institutions, has adopted a risk-based insurance premium system based in part on an institution's capital adequacy. Under this system, a depository institution is required to pay successively higher premiums depending on its capital levels and its supervisory rating by its primary regulator. It is management's intention to maintain sufficient capital to permit the Bank to maintain a "well capitalized" designation, which is the FDIC's highest rating.

On February 27, 2023, LCNB's Board of Directors authorized the Program, which replaced and superseded LCNB's prior share repurchase program, which was adopted on May 27, 2022 and expired on or around December 31, 2022. Under the terms of the Program, LCNB is authorized to repurchase up to 500 thousand of its outstanding common shares.

Under the Program, LCNB may purchase common shares through various means such as open market transactions, including block purchases, and privately negotiated transactions. The number of shares repurchased and the timing, manner, price and amount of any repurchases will be determined at LCNB's discretion. Factors include, but are not limited to, share price, trading volume, and general market conditions, along with LCNB’s general business conditions. The Program may be suspended or discontinued at any time and does not obligate LCNB to acquire any specific number of its common shares.

As part of the Program, LCNB entered into a trading plan adopted in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934, as amended. The 10b5-1 trading plan permits common shares to be repurchased at times that LCNB might otherwise be precluded from doing so under insider trading laws or self-imposed trading restrictions. The 10b5-1 trading plan is administered by an independent broker and is subject to price, market volume and timing restrictions.

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Table of Contents

LCNB CORP. AND SUBSIDIARIES

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued)

The 2025 Plan was approved by LCNB's shareholders at the annual meeting on May 19, 2025 and superseded the 2015 Ownership Incentive Plan, which terminated on April 28, 2025.  Both plans allows for stock-based awards to eligible employees, as determined by the Compensation Committee of the Board of Directors. Awards may be made in the form of stock options, appreciation rights, restricted shares, and/or restricted share units. The 2025 Plan provides for the issuance of up to 600 thousand shares. The 2025 Plan will terminate on May 19, 2035 and is subject to earlier termination by the Compensation Committee.

Critical Accounting Estimates

The accounting policies of LCNB conform to U.S. generally accepted accounting principles and require management to make estimates and develop assumptions that affect the amounts reported in the financial statements and related footnotes. These estimates and assumptions are based on information available to management as of the date of the financial statements. Actual results could differ significantly from management’s estimates. As this information changes, management’s estimates and assumptions used to prepare LCNB’s financial statements and related disclosures may also change. The most significant accounting policies followed by LCNB are presented in Note 1 of the Notes to Consolidated Financial Statements included herein. Based on the valuation techniques used and the sensitivity of financial statement amounts to the methods, assumptions, and estimates underlying those amounts, management has identified the items described below to be the accounting areas that require the most subjective or complex judgments and, as such, could be most subject to revision as new information becomes available.

Allowance for Credit Losses. The allowance is maintained at a level LCNB management believes is adequate to absorb estimated credit losses identified and inherent in the loan portfolio. The allowance is established through a provision for credit losses charged to expense. Loans are charged against the allowance for credit losses when management believes that the collectability of the principal is unlikely. Subsequent recoveries, if any, are credited to the allowance. The allowance is an amount that management believes will be adequate to absorb estimated losses over the contractual terms in the loan portfolio based on evaluations of the collectability of loans and prior loan loss experience. The evaluations take into consideration such factors as changes in the nature and volume of the loan portfolio, overall portfolio quality, review of specific problem loans, and current and forecasted economic conditions that may affect the borrowers' ability to pay. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available.

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Table of Contents

LCNB CORP. AND SUBSIDIARIES

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued)

Accounting for Intangibles.  LCNB’s intangible assets are composed primarily of goodwill and core deposit intangibles related to acquisitions of other financial institutions.

Accounting rules require LCNB to determine the fair value of all the assets and liabilities of an acquired entity, and to record their fair value on the date of acquisition. LCNB employs a variety of means in determining fair value, including the use of discounted cash flow analysis, market comparisons, and projected future revenue streams. For those items for which management concludes that LCNB has the appropriate expertise to determine fair value, management may choose to use its own calculation of fair value. In other cases, where the fair value is not readily determined, consultation with outside parties is used to determine fair value. Once valuations have been determined, the net difference between the price paid for the acquired entity and the fair value of the balance sheet is recorded as goodwill. Goodwill is assessed at least annually for impairment, with any such impairment recognized in the period identified. A more frequent assessment is performed if there are material changes in the market place or within the organizational structure.

Core deposit intangibles acquired from business combinations are initially measured at their estimated fair values and are then amortized on a straight-line basis over their estimated useful lives.  Management evaluates whether triggering events or circumstances have occurred that indicate the remaining useful life or carrying value of the amortizing intangible should be revised.

Fair Value Accounting for Debt Securities.  Debt securities classified as available-for-sale are recorded at fair value with unrealized gains and losses recorded in other comprehensive income (loss), net of tax. Available-for-sale debt securities in unrealized loss positions are evaluated to determine if the decline in fair value should be recorded in income or in other comprehensive income (loss). LCNB first determines if it intends to sell or if it is more likely than not that it will be required to sell the security before recovery of its amortized cost basis. If either criteria is met, the security's amortized cost basis is written down to fair value through income. If neither of these criteria is met, LCNB evaluates whether the decline in fair value resulted from credit factors. In making this determination, management considers, among other factors, the extent to which fair value is less than the amortized cost basis, any changes to the rating of the security by rating agencies, and any adverse conditions specifically related to the security or issuer. If the present value of cash flows expected to be collected is less than the amortized cost basis, a provision is recorded to the allowance for credit losses. Any decline in fair value not recorded through an allowance for credit losses is recognized in accumulated other comprehensive income (loss), net of applicable taxes.

Loans Held-For-Sale. Loans held-for-sale (“LHFS”) represent mortgage loans intended to be sold in the secondary market and other loans that management has an active plan to sell. LHFS are carried at the lower-of-cost-or-fair value as determined on an aggregate basis by type of loan. Any writedowns to fair value upon the transfer of loans to LHFS are reflected in loan charge-offs. Any further decreases are recognized in non-interest income and increases in fair value above the loan cost basis are not recognized until the loans are sold.

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LCNB CORP. AND SUBSIDIARIES