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