Building for the Future with Personal Service, Convenience and Performance
This bench was erected in honor of our
friend and colleague, Ben Jackson.
Letter To Our Shareholders
Dear Shareholders:
Steve Wilson
We are pleased to report to our sharehold-
ers the completion of another successful year in
2011 despite economic and regulatory challenges.
At the end of 2010 we pre-
dicted and hoped for an
improving U.S. economy in
2011. By most measure-
ments the economy gained
some strength in 2011
although unemployment
still remained too high.
Interest rates remained low
throughout 2011 and con-
tinue to remain low as we
enter 2012. Consistent
with general
industry
trends, historic sustained
low interest rates put pressure on the Bank’s
interest margin in 2011. Additionally, the passage
of the Dodd-Frank Bill in 2010 has added and
will add additional regulations that create a com-
pliance burden for financial institutions. That
compliance burden is predicted to be a contribut-
ing factor in the closing, selling, or merging of at
least 25% of financial institutions in the next 3 to
5 years. Compliance is an expensive task and a
larger burden for financial institutions smaller
than LCNB that do not have the staff to dedicate
to compliance. Many small communities have
only one bank and the loss of those banks will
have a negative effect on the success and quality
of life for many citizens. Nevertheless, the drivers
of our success are our strong corporate values
which continue to lead us in this environment.
This Annual Report highlights “Building
for the Future with Personal Service, Conve-
Steve Foster
nience, and Performance”. As you will read
within this report, LCNB realizes the importance
of excellent customer service and the many ways
that customer service is presented. The Board of
Directors, management, and
Directors, management, and
employees strive to provide
employees strive to provide
the best service using the
the best service using the
latest technology available
latest technology available
in the markets we serve.
in the markets we serve.
Although the low
interest rates and resulting
interest rates and resulting
lower
lower interest margin were
a challenge to earnings,
a challenge to earnings,
LCNB successfully earned
LCNB successfully earned
a 1.02% return on average
a 1.02% return on average
assets and a 10.89% return
assets and a 10.89% return
on average equity. As stated
on average equity. As stated
in our end of the year earn-
in our end of the year earn
ings release, we believe that consistency in per-
formance is important. We always strive to take a
long-term versus a short-term view. To that end,
we are pleased that for over 35 years your Bank
has achieved at least a 1% return on average
assets and double digit return on average equity.
Of greatest importance to you, our shareholder, is
the consistent dividend payment that has been
the result of that performance. Net income was
$8.1 million, resulting in total basic earnings per
share of $1.21. LCNB’s total assets grew by 4.1%
or $31.4 million to $791.6 million from Decem-
ber 31, 2010 to December 31, 2011. Total net
loans grew by $6.0 million or 1.3% in 2011 with
commercial loans growing 7.7%. The continued
low interest rate environment allowed consumers
to finance or refinance their mortgages. LCNB
originated or refinanced $26 million in 1-4 family
mortgages for consumers in 2011. Another $9.4
A N N U A L R E P O R T 2 0 1 1
1
B U I L D I N G F O R T H E F U T U R E
Letter To Our Shareholders
million of 1-4 family mortgages were originated
and sold in the secondary market during 2011.
Total shareholders’ equity on December 31, 2011
was $78.0 million which was an increase of 10.3%
from December 31, 2010. Our capital remains in
the “well capitalized” designation.
In the first quarter for 2011 LCNB Corp.
sold the insurance subsidiary Dakin Insurance
Agency. David Beckett, the President of Dakin
Insurance, made the decision to move out of state
and LCNB’s Board of Directors and management
decided to take that opportunity to sell the insur-
ance agency to the Rixey-Berry Insurance Group.
That sale was completed in late March 2011 and
was recognized as a gain on LCNB Corp.’s finan-
cial statements.
Unfortunately, in 2011 the LCNB family
was saddened by the sudden deaths of three
LCNB employees. In early March, Ed Hale, Vice
President of Mortgage Loans, was stricken by a
heart attack and died suddenly. Although Ed had
only been with LCNB for two years, many of us
had known Ed as a local banker for over thirty-six
years. In late July, Ben Jackson lost his battle with
cancer. Ben had worked at LCNB for over thirty-
seven years helping LCNB grow from a $30 mil-
lion asset bank to an almost $800 million asset
bank at his death. Ben’s dedication and hard
work was instrumental in LCNB’s growth and
success. In late December, Linda Palmer also died
suddenly. Linda had worked in our Mason office
as a teller for over ten years. Linda was well-liked
by her fellow employees and her customers. All
three were an important part of the LCNB family
and will be missed.
Several projects that were started in 2010
were completed in 2011. The replacement of
Continued
older ATMs with new touch screen models was
completed in 2011. The construction of a new
full service branch in Monroe, Ohio was started
in November, 2010 and it opened in June, 2011.
The construction of a new Auto Bank at the
Main Office was also completed in 2011. The
new Auto Bank includes a drive-up ATM and a
drive-up night depository. We also closed our
Bridgetown Office during 2011. While that may
sound like a negative, it does demonstrate that
your Board and Management consistently strive
to insure that all our operations are either cur-
rently profitable or have strong potential to
enhance our bottom line. Work on providing
mobile banking using smart phones was also
started in late 2011 to roll out in early 2012.
Additional statistical data and informa-
tion on our financial performance for 2011 is
available in the LCNB Corp. Annual Report on
Form 10-K. This report is filed annually with the
Securities and Exchange Commission. We have
enclosed the Form 10-K with the initial mailing
of this report to shareholders and it is available
upon request or from the shareholder informa-
tion section on our website, www.LCNB.com or
www.lcnbcorp.com.
The Annual Meeting for LCNB Corp. will
be Tuesday, April 24th, 2012 at 10:00 a.m. at our
Main Office located at 2 North Broadway in Leb-
anon, Ohio. Proxy material is included with this
initial mailing. Please review, sign, and return the
proxy in the envelope provided. We would be
pleased to have you attend our annual meeting in
person. Thank you for your continued support.
Stephen P. Wilson
Chairman and CEO
Steve P. Foster
President
A N N U A L R E P O R T 2 0 1 1
2
B U I L D I N G F O R T H E F U T U R E
Board of Directors
Stephen P. Wilson
Chairman of the Board
Chief Executive Officer
Kathleen Porter Stolle
Attorney
William H. Kaufman
Attorney
Spencer S. Cropper
Certified Public Accountant
Stolle Properties, Inc.
Anne E. Krehbiel
Attorney
George L. Leasure
President
Ghent Manufacturing, Inc.
Rick L. Blossom
Managing Partner
Reality Check, LLC
Steve P. Foster
President
Stephen P. Wilson
Chairman of the Board
Chief Executive Officer
Kathleen Porter Stolle
Attorney
George L. Leasure
President,
Ghent Manufacturing, Inc.
William H. Kaufman
Attorney
Spencer S. Cropper
Certified Public Accountant,
Stolle Properties, Inc.
Anne E. Krehbiel
Attorney
Rick L. Blossom
Managing Partner,
Reality Check, LLC
Steve P. Foster
President
A N N U A L R E P O R T 2 0 1 1
3
B U I L D I N G F O R T H E F U T U R E
Building for the Future
with Personal Service, Convenience and Performance
Every era in banking presents new challenges and opportunities to assure our LCNB National Bank customers that their Bank
is a safe and secure place to invest, borrow and grow their money. And, as a community bank, we must also assure our custom-
ers that our financial products, technology and delivery channels are the best and most secure available without sacrificing the
personal service and convenience upon which they depend. Our final challenge is that the Bank must blend these assurances
together to serve our customers and provide the expected results of our shareholders. To some this sounds daunting, but we
have a long history of meeting these challenges and turning them into opportunities.
For example, in 1877 our Founders opened the Bank in very trying times with the promise to their customers that
they would provide the best in security and safety with easy access to their money. They accomplished this by being
open convenient hours, staffing with knowledgeable people and installing a 6,000 lb. safe. Everyone in the Bank was
involved. We like to think of this as state-of-the-art technology in
community banking 135 years ago.
Today, our challenge to meet those same assurances has not changed in scope.
Our people are knowledgeable and dedicated. We concentrate our efforts on
personal service and offering the best in financial products and services. And
although we have a much larger vault today, we also have more secure delivery
channels that serve the same purpose. Some things never change. We continue
to turn challenges into opportunities.
Dedication and Education
The majority of our officers and staff have long careers with the
Bank. They all agree that constant internal and external educa-
tion about products, services and security are a key to their suc-
cess. Their education and knowledge are challenged everyday with
questions from our customers. These questions range from how a product can
help them manage their finances more easily to just solving a problem. What-
ever the situation, when we help them find the answers they are looking for we
all feel a sense of satisfaction in a job well done. That is the essence of com-
munity banking.
Bricks and Mortar – 25 Offices
LCNB is a community bank. We still hold true to the traditions of
local service and personal banking. Despite the explosion of high-
tech offerings, our customers still want the ability to walk into their
LCNB office and visit with our personnel. It gives them a comfort
level of knowing with whom they are investing their money or have their loan.
Our 25 offices continue to be one
of our most important delivery
channels. During this past year,
we opened a new office in Mon-
roe and built a new Auto Bank to
replace our 35-year old structure.
Both of these offices provide a
greater presence for the Bank in
important markets we serve.
Our ATM Network, BankLine, Imaging, and IT Department
When we first installed our ATMs, it became obvious that additional
delivery channels would be carried through phone lines. From that
moment, we began to build for the future. Our Information Technol-
ogy (IT) Department was created and they were given the ongoing
task to find safe and secure solutions to the many new technologies being of-
fered. Around this same time, the Bank introduced BankLine, our automated
telephone banking service. This allowed our customers to perform some of their
banking functions with a touchtone phone. We also invested in imaging scan-
ners for our checking and busi-
ness customers. This provided a
quick search and secure mechanism for someone seeking records. Today, these
services are nothing like their predecessors. The evolution of each through
software upgrades, satellites and the Internet has made them extremely vital
to our customers in managing their finances. Our IT Department grew in its
acquired knowledge and personnel so that we can keep these delivery chan-
nels running securely to serve our customers anywhere in the world.
Online Banking, Online Loan
Applications and Call Center
Providing Internet access for all of our products and services in a
safe, secure and dependable manner has always been a high priority
and a challenge. At the same time, new services were being offered
and developed. We knew our customers wanted the option to use
the new available technology like Online Banking and Online Loan Applica-
tions. However, customers did not want to sacrifice their personal interac-
tion with their Bank. Leading the effort to promote the benefits of both was
the management team, but the day-to-day solution-providers were our Infor-
mation Technology Department and the Call Center. Our Call Center staff
personally answers every phone call, answers questions, solves
problems, transfers customers to correct departments, and pro-
vides the personal touch that helps define our personal banking style.
Mobile Banking
Mobile Banking, our newest delivery channel, allows our custom-
ers to access their accounts on their smart phone and perform
many of the same transactions currently performed on their com-
puters or in-person at one of our offices. This service has grown in
popularity because of the change in our customers’ lifestyles and work sched-
ules. When we combine our mobile banking with personal service – this gives
us an edge in the competitive banking world and one in which we
are most proud.
4
5
LCNB Officers
Name
Years
with
LCNB Title
Years of
Related
Experience
Name
Years
with
LCNB Title
Years of
Related
Experience
Chairman & CEO 40
William E. Childers
13 Assistant VP
Stephen P. Wilson
Steve P. Foster
37
35
President
Bernard H. Wright, Jr. 34
Sr. Executive VP
Robert C. Haines, II
Matthew P. Layer
Leroy F. McKay
Eric J. Meilstrup
Kenneth R. Layer
Timothy J. Sheridan
Ann M. Smith
Stephen P. Anglin
Brian N. Bausmith
Peter G. Berninger
20
29
16
24
29
22
25
11
25
7
Executive VP
Executive VP
Executive VP
Executive VP
Senior VP
Senior VP
Senior VP
Vice President
Vice President
Vice President
Gene G. Bonny
1 Vice President
P. Stanley Castleman
Kelly Haworth
Kimberli R. Layer
Ralph D. Mattingly
Dan H. Nielsen
Rebecca H. Roess
John Rost
Bradley A. Ruppert
Nathan Sachritz
Lonnie D. Schear
Connie A. Sears
Pauletta I. Sears
Deborah G. Stevens
David A. Stitsinger
David R. Theiss
Melanie K. Crane
S. Diane Ingram
6
3
22
33
4
3
5
4
3
14
9
22
10
5
13
26
20
Vice President
Vice President
Vice President
Vice President
Vice President
VP/ Trust Officer
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Vice President
Trust Officer
Trust Officer
Randy Bernhardt
5 Assistant VP
Amy L. Butler
20 Assistant VP
38
37
20
29
26
24
29
35
25
33
25
29
6
23
31
22
40
35
13
29
13
32
38
24
40
35
33
33
26
20
27
20
Karen M. Cramer
24 Assistant VP
Lisa E. Emmel
6 Assistant VP
Patricia S. Hogan
21 Assistant VP
Sherry L. Jackson
17 Assistant VP
Kimberly J. Johnson
31 Assistant VP
Annie S. Joseph
6 Assistant VP
Steven C. Lautenslager 22 Assistant VP
Michael Lavatori
9 Assistant VP
Teresa A. McCurley
23 Assistant VP
Roger P. Mersch
6 Assistant VP
Patricia D. Mitchell
33 Assistant VP
Judith Neiheisel
5 Assistant VP
Beverly K. Taylor
35 Assistant VP
John L. Torbeck
2 Assistant VP
Elizabeth G. Vogele
1 Assistant VP
John E. Wetzig, III
23 Assistant VP
Melissa M. Cordes
11
Branch Officer
16
24
22
21
17
33
14
22
23
23
28
33
29
35
26
30
23
17
Karen A. Day
17 Assistant Cashier 17
Lisa A. Gibson
9 Assistant Cashier 21
Christina L. Harris
Terry J. Howard
16
22
Branch Officer
Branch Officer
16
22
Kimberly B. Isaacs
16 Assistant Cashier 16
Mary Lynn Johnson
25 Assistant Cashier 25
M. Teresa Jenkins
Paula L. Lee
Tammy S. Murray
Patricia Q. Partch
8
8
12
8
Branch Officer
Branch Officer
Branch Officer
Branch Officer
38
10
13
26
Janet M. Preston
16 Assistant Cashier 26
Lenora Schoultheis
14
Branch Officer
Simone Walter
8 Assistant Cashier
Rhonda G. Wetzig
19
Branch Officer
41
8
19
A N N U A L R E P O R T 2 0 1 1
6
B U I L D I N G F O R T H E F U T U R E
Financial Highlights
(Dollars in thousands, except per share data)
For the Years Ended December 31,
Income Statement
Net interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income from continuing operations . . . . . . . . . . . . . . . . . . . . .
Income from discontinued operations, net of tax . . . . . . . . . . . . . .
Net income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income available to common shareholders. . . . . . . . . . . . . . . .
Dividends declared per common share(1). . . . . . . . . . . . . . . . . . . . .
Basic earnings per common share(1):
Continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Discontinued operations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted earnings per common share(1):
Continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Discontinued operations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance Sheet
Loans, net. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Earning assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Short-term borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Per common share:
Book value at year end(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Performance Ratios
Return on average assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Return on average shareholders’ equity. . . . . . . . . . . . . . . . . . . . . .
2011
$ 25,706
7,322
793
8,115
8,115
0.64
1.09
0.12
1.08
0.12
$458,331
736,119
791,570
663,562
21,596
21,373
77,960
2010
25,697
9,133
240
9,373
9,373
0.64
1.37
0.03
1.36
0.03
452,350
706,226
760,134
638,539
21,691
23,120
70,707
2009
24,838
7,687
79
7,766
6,658
0.64
0.99
0.01
0.98
0.01
457,418
678,055
734,409
624,179
14,265
24,960
65,615
2008
20,977
6,427
176
6,603
6,603
0.64
0.96
0.03
0.96
0.03
451,343
599,825
649,731
577,622
2,206
5,000
58,116
2007
18,203
5,737
217
5,954
5,954
0.62
0.90
0.04
0.90
0.04
444,419
550,733
604,058
535,929
1,459
5,000
56,528
11.63
10.57
9.81
8.69
8.45
1.02%
10.89%
1.22%
13.36%
1.07%
10.43%
1.03%
11.35%
1.08%
11.41%
(1)All per share data for 2007 has been adjusted to reflect a 100% stock dividend accounted for as a stock split.
Condensed Consolidated Balance Sheets
At December 31, (Dollars in thousands)
ASSETS:
Cash and due from banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest-bearing demand deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total cash and cash equivalents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investment securities:
Available-for-sale, at fair value. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Held-to-maturity, at cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Federal Reserve Bank stock, at cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Federal Home Loan Bank stock, at cost. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loans, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Premises and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bank owned life insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
LIABILITIES:
Deposits:
Noninterest-bearing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest-bearing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Short-term borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued interest and other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TOTAL LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SHAREHOLDERS’ EQUITY:
Preferred shares - no par value, authorized 1,000,000 shares, none outstanding . . . . . . . . . . . . . . . . . . . . . . .
Common shares - no par value, authorized 12,000,000 shares, issued 7,460,494 and 7,445,514
shares at December 31, 2011 and 2010, respectively . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Treasury shares at cost, 755,771 shares at December 31, 2011 and 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated other comprehensive income, net of taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TOTAL SHAREHOLDERS’ EQUITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2011
$ 12,449
7,086
19,535
254,006
10,734
940
2,091
458,331
17,346
5,915
14,837
7,835
$791,570
$106,793
556,769
663,562
21,596
21,373
7,079
713,610
2010
10,817
182
10,999
235,882
12,141
939
2,091
452,350
16,017
5,915
14,242
9,558
760,134
98,994
539,545
638,539
21,691
23,120
6,077
689,427
–
–
26,753
57,877
(11,698)
5,028
77,960
$791,570
26,515
54,045
(11,698)
1,845
70,707
760,134
A N N U A L R E P O R T 2 0 1 1
7
B U I L D I N G F O R T H E F U T U R E
Condensed Consolidated Statements of Income
For the years ended December 31, (Dollars in thousands, except per share data)
INTEREST INCOME:
Interest and fees on loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest on investment securities:
Taxable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-taxable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TOTAL INTEREST INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
INTEREST EXPENSE:
Interest on deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest on short-term borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest on long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TOTAL INTEREST EXPENSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
NET INTEREST INCOME. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PROVISION FOR LOAN LOSSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES . . . . . . . . . . . . . . . . .
NON-INTEREST INCOME:
Trust income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Service charges and fees on deposit accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net gain on sales of securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bank owned life insurance income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gains from sales of mortgage loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TOTAL NON-INTEREST INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
NON-INTEREST EXPENSE:
Salaries and employee benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equipment expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Occupancy expense, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State franchise tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Marketing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
FDIC premiums. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ATM expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Computer maintenance and supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Telephone expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other real estate owned . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Write-off of pension asset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other non-interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TOTAL NON-INTEREST EXPENSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
INCOME BEFORE INCOME TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PROVISION FOR INCOME TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
NET INCOME FROM CONTINUING OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . .
INCOME FROM DISCONTINUED OPERATIONS, NET OF TAX . . . . . . . . . . . . . . . . . . . . . . . .
NET INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PREFERRED STOCK DIVIDENDS AND DISCOUNT ACCRETION . . . . . . . . . . . . . . . . . . . . . .
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS . . . . . . . . . . . . . . . . . . . .
Basic earnings per common share:
Continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Discontinued operations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted earnings per common share:
Continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Weighted average shares outstanding:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2011
$ 25,502
3,843
2,571
177
32,093
5,702
28
657
6,387
25,706
2,089
23,617
2,099
3,739
948
596
177
205
7,764
11,743
1,038
1,761
764
480
545
553
565
407
350
–
3,643
21,849
9,532
2,210
7,322
793
8,115
–
$ 8,115
$ 1.09
0.12
1.08
0.12
2010
27,020
3,686
3,126
199
34,031
7,613
27
694
8,334
25,697
1,680
24,017
1,897
3,904
948
1,389
496
253
8,887
11,271
889
1,875
703
448
958
513
456
414
506
–
3,244
21,277
11,627
2,494
9,133
240
9,373
–
9,373
1.37
0.03
1.36
0.03
2009
27,538
4,237
2,921
202
34,898
9,434
3
623
10,060
24,838
1,400
23,438
1,916
3,931
110
637
396
190
7,180
10,534
995
1,721
610
408
1,271
513
449
407
17
722
3,039
20,686
9,932
2,245
7,687
79
7,766
1,108
6,658
0.99
0.01
0.98
0.01
6,692,385
6,751,599
6,687,500
6,736,622
6,687,232
6,701,309
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders
LCNB Corp.
We have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consoli-
dated balance sheets of LCNB Corp. and subsidiaries as of December 31, 2011 and 2010, and the related consolidated statements of
income, and consolidated statements of comprehensive income, shareholders’ equity and cash flows (not included herein), for each of
the three years in the period ended December 31, 2011; and in our report dated February 27, 2012, we expressed an unqualified opinion
on those consolidated financial statements.
In our opinion, the information set forth in the accompanying condensed consolidated financial statements is fairly stated, in all material
respects, in relation to the consolidated financial statements from which it has been derived.
Cincinnati, Ohio
February 27, 2012
A N N U A L R E P O R T 2 0 1 1
8
B U I L D I N G F O R T H E F U T U R E
Building for the Future with Personal Service, Convenience and Performance
This bench was erected in honor of our
friend and colleague, Ben Jackson.