LCNB Corp
Annual Report 2012

Plain-text annual report

Letter To Our Shareholders Dear Shareholders: We are proud to present to you the 2012 Annual Report for LCNB Corp. and our subsid- iary LCNB National Bank. Your Bank concluded another successful year in its 135-year history. This year’s report is titled, “Community Banks – The Economic Engine of Local Communities”. We believe that a strong community bank is vital to the health of its community. Within this report you will find a summary of histori- cal financial information, as well as, more detailed financials for those who like a more in-depth pre- sentation. Steve Wilson Our bank was founded in 1877 to be the economic engine for Lebanon and surrounding Warren County. Like today, our founders and their community faced great uncertainty and needed a strong, stable financial institution to provide security and stimulus to the local econ- omy. Throughout our history we cautiously and purposefully expanded into other communi- ties to provide that same security and economic stimulus. Presently, we serve that role in eight counties with 31 offices. We strongly support the success of the communities we serve and strive to meet, not only economic needs, but quality of life needs, as well. Since 2012 was a presidential election year, there was a lot of uncertainty about what direc- tion the country and our economy might take in 2013. Although the election is over there is still a lot of uncertainty about how the tax changes and the rising fiscal debt will affect the U.S. economy. The Federal Reserve’s policy of maintaining low interest rates to stimulate eco- nomic growth has put pressure on banks’ inter- est margins. Community banks still rely on that margin to generate a large percentage of total in- come. LCNB management has recognized the impor- tance of generating non- interest income to sup- plement interest margin income. One area generat- ing non-interest income, is the trust department and investment services, which contributed over $2.3 million during 2012, a 10% increase over 2011. The continued success of these departments is an important part of the future growth of LCNB. Steve Foster The financial results for 2012 include a return on average assets of 1.02% and a return on aver- age equity of 10.22%. Net income was $8.3 mil- lion, resulting in total basic earnings per share of $1.23. Total shareholders’ equity increased $4 million from December 31, 2011 to Decem- ber 31, 2012, an increase of 5.2%. Our capital remains in the “well capitalized” designation. Although total net loans decreased by $8 mil- lion, commercial real estate loans increased by just over $11 million. Low interest rates in 2012 were reflected in robust mortgage activ- ity. LCNB originated or refinanced $24 million of 1-4 family mortgages for consumers in 2012. Another $28 million of 1-4 family mortgages were originated and sold in the secondary mar- ket in 2012. Credit quality continued to im- prove in 2012. Net loan charge-offs were lower, A N N U A L R E P O R T 2 0 1 2 1 E C O N O M I C E N G I N E O F L O C A L C O M M U N I T I E S Letter To Our Shareholders totaling $.8 million compared to $1.8 million in 2011. Non-accrual loans and loans past due 90- days or more and still accruing interest totaled $2.4 million or 0.53% of total loans at Decem- ber 31, 2012 compared to $3.7 million or 0.80% of total loans at December 31, 2011. Despite low interest rates, deposits increased $8 million during 2012 to $671 million. The winning formula for our bank continues to be maintaining a strong capital base, paying a regular dividend, strong underwriting of loans, and pursuing robust earnings. One major event in 2012 was the negotiation of the purchase of Citizens National Bank of Chillicothe. The negotiations resulted in a suc- cessful merger agreement signed on October 9, 2012 and closed on January 11, 2013. LCNB National Bank now has approximately $950 million in total assets and serves customers in eight counties with 31 offices. The LCNB Board and Management felt that the culture of both banks was very similar and the two banks would be stronger as one. As part of the merger agree- ment, John Kochensparger, Chairman of the Citizens National Bank Board, was offered a board seat with LCNB. John joined the LCNB Board on January 14, 2013. The remaining Citizens National Bank board members agreed to serve on an Advisory Board for 2013. The LCNB Board of Directors and management feel that measured growth is just one part of a strategy for the future success of LCNB. In 2012 several projects were completed. The bank’s phone system was upgraded with new equipment and enhanced connections between offices. As we expand, the importance of com- munication between our offices and with our customers become more critical in provid- ing the best customer service. We continue to Continued believe that answering each call to the bank with a highly trained employee, not a machine, is one key to excellent customer service. The ability for customers to apply for consumer loans online was added to our website as a complement to our online mortgage application. We have also redesigned our website for 2013. All of our offices participated in the St. Jude Home Giveaway in the first half of 2012 by selling tickets and staff- ing a telethon for a chance to win a brand new home in the Maineville area. This charitable event raised almost $650,000 to support the St. Jude Research Hospital’s continued research for medical treatment and the care of severely ill children. The caring and generosity for others by our employees is a strength of LCNB. Additional statistical data and information on our financial performance for 2012 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 information section on our website, www.LCNB.com or www.LCNBCorp.com. The Annual Meeting for LCNB Corp. will be Tuesday, April 23, 2013 at 10:00 a.m. at our Main Office located at 2 North Broadway in Lebanon, 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 contin- ued 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 2 2 E C O N O M I C E N G I N E O F L O C A L C O M M U N I T I E S 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 Chairman GMi Companies 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 Chairman, GMi Companies 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 2 3 E C O N O M I C E N G I N E O F L O C A L C O M M U N I T I E S As our world and technology continues to accelerate forward, LCNB works hard to stay out in front in its evolutionary quest to provide financial services and access whenever or wherever our customers need us. At LCNB, this quest for access is built upon a foundation of personal service, safety and security. Our staff answers each incoming phone call in person. Our bank officers make personal visits and calls on our customers. And, by reaching out and investing our time, we proactively make the effort to understand what our customers need before they ask. Personal service stokes our creativity. It enables us to search for solutions to our customers’ problems and to help them embrace new opportunities. Like the coal car's purpose on the train, our consistent and attentive service provides the fuel to keep the local economy running. The growth of LCNB as a successful community bank is tied directly to knowing our capabilities and understand- ing who we serve. This knowledge is powerful. It adds to the foundation built upon personal service, safety and security which enables the Bank to efficiently move forward to assist our customers, shareholders and employees reach their desired goals. As we enter 2013, LCNB will harness the strength of our 31 offices to make the markets we serve better places to live and operate businesses. We will offer our knowledge, experience, financial products and personal service, just as we always have. And, we will bring our tradition of rolling up our sleeves and working closely with volunteer organizations that provide vital support services. We make this pledge based on 135 years of experience in serving generations of customers. As the “Economic Engine of a Community”, we are expected to lead. All of us at LCNB National Bank wholeheartedly embrace this leadership responsibility. As a Community Bank, we help stoke the local economic engine by reinvesting the deposits of our customers back into their communities as loans. LCNB Mobile Facebook Mail Our Call Center and Electronic Services Department answers each incoming call in person. Their goal is to help customers find answers to their questions or direct them to people who can. They are the front line of our promise to deliver unmatched personal service every time a customer calls. THE ECONOMIC ENGINE OF OUR LOCAL COMMUNITIESLCNB National Bank's reputation as the “Economic Engine of our Local Communities" is one we earn every day. With this comes a certain expectation from our personal and business customers that we have the financial products and services they need, when they need them. LCNB builds its base of knowledge of its customers’ financial needs while working to earn their trust, thereby making our communities stronger. The Bank, like the engine of the train, must put forth the extra power and effort to help customers move forward and succeed.As a Community Bank, we help stoke the local eco-nomic engine by reinvesting the deposits of our customers back into their communities as loans. This is one of several original principles we still employ at LCNB. When our founders opened our doors 135 years ago, that was how business was conducted in the small farming community of Leba-non, Ohio. The practice of reinvesting deposits in our communities is as relevant today as it was in 1877. Founded in 1877, LCNB National Bank in Lebanon, Ohio has grown to 31 offices in 8 counties.LCNB Officers Name Years with LCNB Title Years of Related Experience Name Years with LCNB Title Years of Related Experience Chairman & CEO 41 S. Diane Ingram Stephen P. Wilson Steve P. Foster 38 36 President Bernard H. Wright, Jr. 35 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 Gene G. Bonny P. Stanley Castleman Kelly Haworth Mark Kennard 21 30 17 25 30 23 26 12 26 8 2 7 4 1 Executive VP Executive VP Executive VP Executive VP Senior VP Senior VP Senior VP Vice President Vice President Vice President Vice President Vice President Vice President Vice President Steven C. Lautenslager 23 Vice President Kimberli R. Layer Ralph D. Mattingly Roger P. Mersch Patricia D. Mitchell 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 Beverly K. Taylor David R. Theiss John E. Wetzig, III Melanie K. Crane 23 34 7 34 4 6 5 4 15 10 23 11 6 36 14 24 27 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 Vice President Vice President Trust Officer 39 38 21 30 27 25 30 36 26 34 26 30 7 24 32 9 23 23 41 29 34 14 30 14 33 39 25 41 36 34 36 34 24 27 21 28 21 17 25 23 22 18 34 15 24 24 30 27 31 20 18 Randy Bernhardt Amy L. Butler William E. Childers Karen M. Cramer Lisa E. Emmel Patricia S. Hogan Sherry L. Jackson 21 6 21 14 25 7 22 18 Trust Officer Assistant VP Assistant VP Assistant VP Assistant VP Assistant VP Assistant VP Assistant VP Kimberly J. Johnson-Hall 32 Assistant VP Annie S. Joseph Michael Lavatori Teresa A. McCurley Judith Neiheisel John L. Torbeck Elizabeth G. Vogele Rhonda G. Wetzig Melissa M. Cordes Karen A. Day Lisa A. Gibson Christina L. Harris Terry J. Howard Kimberly B. Isaacs Mary Lynn Johnson M. Teresa Jenkins Ursula Keith Amy Kobes Paula L. Lee Michele McIntosh Angela Otis Patricia Q. Partch Julie Peters Janet M. Preston Betty Seibert Lenora Schoultheis Simone Walter 7 10 24 6 3 2 20 12 18 10 17 23 17 26 9 11 11 9 23 12 9 10 17 15 15 9 Assistant VP Assistant VP Assistant VP Assistant VP Assistant VP Assistant VP Assistant VP Branch Officer Assistant Cashier 18 Assistant Cashier 22 Branch Officer Branch Officer 17 23 Assistant Cashier 17 Assistant Cashier 26 Branch Officer Branch Officer 39 15 Asst. Trust Officer 11 Branch Officer Branch Officer 11 23 Assistant Cashier 12 Branch Officer Branch Officer 27 10 Assistant Cashier 27 Branch Officer Branch Officer Assistant Cashier 23 42 9 A N N U A L R E P O R T 2 0 1 2 6 E C O N O M I C E N G I N E O F L O C A L C O M M U N I T I E S Financial Highlights 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 . . . . . . . . . . . . . . . . . . . . . . . Basic earnings per common share: Continuing operations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Diluted earnings per common share: 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Performance Ratios Return on average assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Return on average shareholders’ equity. . . . . . . . . . . . . . . . . . . . . . . 2012 $ 25,049 8,270 – 8,270 8,270 0.64 1.23 – 1.22 – $450,346 732,968 788,637 671,471 13,756 13,705 82,006 (Dollars in thousands, except per share data) 2009 2011 2010 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 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 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 12.18 11.63 10.57 9.81 8.69 1.02% 10.22% 1.02% 10.89% 1.22% 13.36% 1.07% 10.43% 1.03% 11.35% 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 7,485,527 and 7,460,494 shares at December 31, 2012 and 2011, respectively . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Retained earnings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Treasury shares at cost, 753,627 and 755,771 shares at December 31, 2012 and 2011, respectively. . . . . . . Accumulated other comprehensive income, net of taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . TOTAL SHAREHOLDERS’ EQUITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2012 $11,260 2,215 13,475 258,506 15,424 949 2,091 450,346 16,564 5,915 16,915 8,452 $788,637 $133,848 537,623 671,471 13,756 13,705 7,699 706,631 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 – – 27,107 61,843 (11,665) 4,721 82,006 $788,637 26,753 57,877 (11,698) 5,028 77,960 791,570 A N N U A L R E P O R T 2 0 1 2 7 E C O N O M I C E N G I N E O F L O C A L C O M M U N I T I E S 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Contracted services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other real estate owned. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Basic earnings per common share: Continuing operations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Diluted earnings per common share: Continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Discontinued operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Weighted average shares outstanding: Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2012 $ 23,585 3,737 2,441 175 29,938 4,317 16 556 4,889 25,049 1,351 23,698 2,317 3,605 1,853 578 506 190 9,049 11,614 1,100 1,671 790 526 405 620 524 465 441 490 3,036 21,682 11,065 2,795 8,270 – $ 8,270 $ 1.23 – 1.22 – 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 1,761 764 480 545 553 565 407 420 350 3,223 21,849 9,532 2,210 7,322 793 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 1,875 703 448 958 513 456 414 370 506 2,874 21,277 11,627 2,494 9,133 240 9,373 1.37 0.03 1.36 0.03 6,717,357 6,802,475 6,692,385 6,751,599 6,687,500 6,736,622 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, 2012 and 2011, 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, 2012; and in our report dated February 25, 2013, 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 ma- terial respects, in relation to the consolidated financial statements from which it has been derived. Cincinnati, Ohio February 25, 2013 A N N U A L R E P O R T 2 0 1 2 8 E C O N O M I C E N G I N E O F L O C A L C O M M U N I T I E S P.O. Box 59 • 2 North Broadway • Lebanon, Ohio 45036 (513) 932-1414 • www.LCNB.com • (800) 344-BANK (2265) = F 

Continue reading text version or see original annual report in PDF format above