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LCNB Corp. Reports Financial Results for the Three and Twelve Months Ended December 31, 2012
[January 28, 2013]

LCNB Corp. Reports Financial Results for the Three and Twelve Months Ended December 31, 2012

LEBANON, Ohio --(Business Wire)--

LCNB Corp. (LCNB) (NASDAQ: LCNB) today announced net income of $2,159,000 (total basic and diluted earnings per common share of $0.32) and $8,270,000 (total basic and diluted earnings per common share of $1.23 and $1.22, respectively) for the three and twelve months ended December 31, 2012, respectively. This compares to net income from continuing operations of $1,954,000 (total basic and diluted earnings per common share of $0.29 and $0.28) and $7,322,000 (total basic and diluted earnings per common share of $1.09 and $1.08) for the same three and twelve-month periods in 2011.

Net income for the year ended December 31, 2011 included income from discontinued operations of $793,000, which consisted of a gain recognized on the sale of LCNB's insurance agency subsidiary, Dakin Insurance Agency, Inc., less certain related closing costs, taxes, and a curtailment expense recognized in LCNB's nonqualified defined benefit retirement plan due to the sale.

Commenting on the financial results, LCNB CEO Steve Wilson said, "We are pleased to report solid earnings for 2012. Even though the current low interest rate environment lowered our interest rate margin and consequently decreased net interest income, we were able to maintain a return on average assets ratio of greater than 1% and a return on average equity of greater than 10%. This success allowed us to continue our dividend rate at $0.64 for the year, which equates to a 52.0% payout ratio."

The provision for loan losses for the three and twelve months ended December 31, 2012 was $609,000 and $1,351,000, respectively, down from $613,000 and $2,089,000 for the same periods in 2011. Credit quality continued to stabilize during 2012, resulting in a decline in the provision. Net loan charge-offs for 2012 and 2011 totaled $845,000 and $1,799,000, respectively. Non-accrual loans and loans past due 90 days or more and still accruing interest totaled $2,411,000 or 0.53% of total loans at December 31, 2012, compared to $3,707,000 or 0.80% of total loans at December 31, 2011. The decrease was primarily due to the transfer of a non-accrual commercial real estate loan to other real estate owned during the first quarter 2012 and to partial charge-offs recognized on various loans. Other real estate owned (which includes property acquired through foreclosure or deed-in-lieu of foreclosure and also includes property deemed to be in-substance foreclosed) and other repossessed assets increased from $1,642,000 at December 31, 2011 to $2,189,000 at December 31, 2012.

Net interest income for the three and twelve months ended December 31, 2012 decreased $350,000 and $657,000, respectively, from the comparative periods in 2011. The decreases for both periods were primarily due to decreases in the net interest margin, partially offset by increases in average interest-earning assets and decreases in average interest-bearing liabilities.

Non-interest income for the three and twelve-month periods in 2012 was $772,000 and $1,285,000 greater than the comparative periods in 2011 primarily due to increases in gains from sales of investment securities and mortgage loans. One-time fees recognized by the trust department during the first quarter 2012 also contributed to the twelve-month comparable period increase. These increases were partially offset by a decrease in service charges and fees on deposit accounts.

Non-interest expense for the three months ended December 31, 2012 was $19,000 greater than the comparative period in 2011 due to impairment charges recognized on several other real estate owned properties and increases in various other expenses, offset by a decrease in retirement plan expense. Non-interest expense for the year ended December 31, 2012 was $167,000 less than the comparative period in 2011 primarily due to decreases in FDIC insurance premiums, retirement plan expense, and other expenses. The decrease in other expenses in 2012 reflects the absences of losses recognized during 2011 on a standby letter of credit and certain environmental remediation costs. These decreases were partially offset by the other real estate owned impairment charges in 2012.

LCNB Corp. is a financial holding company headquartered in Lebanon, Ohio. LCNB Corp.'s only business is ownership of LCNB National Bank. At December 31, 2012, LCNB had 25 offices located in Warren, Butler, Montgomery, Clinton, Clermont, and Hamilton Counties, Ohio. A merger with First Capital Bancshares, Inc. was finalized on January 11, 2013, which added six additional offices in Fayette and Ross Counties, Ohio. Additional information about LCNB Corp. and information about products and services offered by LCNB National Bank can be found on the internet at

Certain matters disclosed herein may be deemed to be forward-looking statements that involve risks and uncertainties, including regulatory policy changes, interest rate fluctuations, loan demand, loan delinquencies and losses, and other risks. Actual strategies and results in future time periods may differ materially from those currently expected. Such forward-looking statements represent management's judgment as of the current date. LCNB disclaims any intent or obligation to update such forward-looking statements. LCNB intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

LCNB Corp. and Subsidiaries
Financial Highlights
(Dollars in thousands, except per share amounts)
  Three Months Ended     Year Ended
Condensed Income Statement December 31, December 31,
2012   2011 2012   2011
Interest income $ 7,232 7,888 29,938 32,093
Interest expense 1,105 1,411 4,889 6,387
Net interest income 6,127 6,477 25,049 25,706
Provision for loan losses 609 613 1,351 2,089
Net interest income after provision 5,518 5,864 23,698 23,617
Non-interest income 2,753 1,981 9,049 7,764
Non-interest expense 5,340 5,321 21,682 21,849
Income before income taxes 2,931 2,524 11,065 9,532
Provision for income taxes 772 570 2,795 2,210
Net income from continuing operations 2,159 1,954 8,270 7,322

Income from discontinued operations, net of taxes





Net income $ 2,159 1,954 8,270 8,115
Dividends per common share $ 0.16 0.16 0.64 0.64
Basic earnings per common share:
Continuing operations $ 0.32 0.29 1.23 1.09
Discontinued operations - - - 0.12
Diluted earnings per common share:
Continuing operations $ 0.32 0.28 1.22 1.08
Discontinued operations - - - 0.12
Average basic shares outstanding 6,727,502 6,699,005 6,717,357 6,692,385
Average diluted shares outstanding 6,819,117 6,767,406 6,802,475 6,751,599
Selected Financial Ratios
Return on average assets 1.06% 0.97% 1.02% 1.02%
Return on average equity 10.33% 9.94% 10.22% 10.89%
Dividend payout ratio 50.00% 55.17% 52.03% 52.89%
Net interest margin (tax equivalent) 3.41% 3.63% 3.52% 3.70%

December 31, December 31,
Selected Balance Sheet Items 2012 2011
Investment securities $ 276,970 267,771
Loans 453,783 461,262
Less allowance for loan losses 3,437 2,931
Net loans 450,346 458,331
Total assets 788,637 791,570
Total deposits 671,471 663,562
Short-term borrowings 13,756 21,596
Long-term debt 13,705 21,373
Total shareholders' equity 82,006 77,960
Shares outstanding at period end 6,731,900 6,704,723
Book value per share $ 12.18 11.63
Tangible book value per share 11.29 10.73
Equity to assets ratio 10.40% 9.85%
Assets Under Management
LCNB Corp. total assets $ 788,637 791,570
Trust and investments (fair value) 221,558 221,950
Mortgage loans serviced 71,568 67,410
Business cash management 6,673 8,583
Brokerage accounts (fair value) 96,424 78,863
Total assets managed $ 1,184,860 1,168,376

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