Form 8-K LCNB CORP For: Apr 18

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April 18, 2016 4:32 PM EDT
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________

FORM 8‑K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934


Date of Report (Date of earliest event reported): April 18, 2016
LCNB CORP.
(Exact name of Registrant as specified in its Charter)


Ohio
0-26121
31-1626393
(State or other jurisdiction of incorporation)
(Commission File No.)
(IRS Employer Identification Number)


2 North Broadway, Lebanon, Ohio
45036
(Address of principal executive offices)
(Zip Code)

Registrant’s telephone number, including area code: (513) 932-1414
N/A
(Former name or former address, if changed since last report)



Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

__    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

__    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

__    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

__    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))




Item 2.02 Results of Operations and Financial Condition.

On April 18, 2016, LCNB Corp. issued an earnings release announcing its financial results for the first quarter ended March 31, 2016. A copy of the earnings release (Exhibit 99.1) and unaudited financial highlights (Exhibit 99.2) are attached and are furnished under this Item 2.02.

Item 7.01 Regulation FD Disclosure.

On April 18, 2016, LCNB Corp. issued an earnings release announcing its financial results for the first quarter ended March 31, 2016. A copy of the earnings release (Exhibit 99.1) and unaudited financial highlights (Exhibit 99.2) are attached and are furnished under this Item 7.01.
Item 9.01 Financial Statements and Exhibits.
(d)    Exhibits.

Exhibit No.        Description
99.1
Earnings Press Release Dated April 18, 2016
99.2
Unaudited Financial Highlights
 


SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.

 
 
LCNB CORP.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Date: April 18, 2016
 
By: /s/ Robert C. Haines II              
 
 
 
 
Robert C. Haines II
Chief Financial Officer
 
 
 
 
 




Exhibit 99.1

Press Release
April 18, 2016

LCNB CORP. REPORTS FINANCIAL RESULTS FOR
THE THREE MONTHS ENDED MARCH 31, 2016

LCNB Corp. (LCNB) today announced net income of $2,964,000 (total basic and diluted earnings per share of $0.30) for the three months ended March 31, 2016.  This compares to net income of $2,834,000 (total basic and diluted earnings per share of $0.30) for the same three-month period in 2015.  Results for 2016 were significantly affected by the acquisition of BNB Bancorp, Inc. ("BNB") on April 30, 2015.

Net interest income for the three months ended March 31, 2016 increased $444,000 from the comparable period in 2015, due primarily to a $72.2 million increase in average loans and a $76.4 million increase in average investment securities and stock. The BNB merger added $34.7 million to LCNB's loan portfolio as of the merger date. The remainder of the increase in average loans was due to new loan origination. These increases were partially offset by a decrease in the tax equivalent net interest margin.

Commenting on the financial results, LCNB CEO Steve Foster said, "We are pleased to announce solid financial results for the first quarter of 2016. As the economy continues to improve, LCNB has experienced increased loan demand. In addition to the $34.7 million in loans that BNB added to our portfolio in April 2015, organic growth since March 2015 totaled $37.5 million. We believe that our strong balance sheet and recent actions, including the construction of our new operations center in Lebanon, Ohio, as well as technology and delivery channel investments, favorably position us for future growth. All of our acquisitions are fully integrated and we look forward to making our full line of financial products and services available to our current and future customers."

The provision for loan losses for the three months ended March 31, 2016 was $21,000 greater than the comparable period in 2015. Net loan charge-offs for the first quarter 2016 and 2015 totaled $69,000 and $353,000, respectively.  Non-accrual loans and loans past due 90 days or more and still accruing interest increased $1,145,000, from $2,282,000 or 0.30% of total loans at December 31, 2015 to $3,427,000 or 0.44% of total loans at March 31, 2016, primarily due to two loans to the same borrower totaling $1,307,000 that were newly classified as non-accrual during the first quarter 2016.  Other real estate owned (which includes property acquired through foreclosure) was $846,000 at both March 31, 2016 and December 31, 2015 and consisted of one commercial property.

Non-interest income for the three months ended March 31, 2016 was $336,000 greater than the comparable period in 2015, primarily due to a $260,000 increase in gains from sales of investment securities.

Non-interest expense for the three months ended March 31, 2016 was $643,000 greater than the comparable period in 2015, primarily due to a $273,000 increase in salaries and employee benefits and a $251,000 penalty for early payoff of a $5 million Federal Home Loan Bank ("FHLB") advance (included in other non-interest expense). Salaries and employee benefits increased primarily due to salary and wage increases, employees retained from the BNB acquisition, and an increase in the number of employees outside of the acquisitions. The FHLB advance had an interest rate of 5.25% and was paid off to reduce interest expense on long-term debt.

LCNB Corp. is a financial holding company headquartered in Lebanon, Ohio. Through its subsidiary, LCNB National Bank (the “Bank”), it serves customers and communities in Southwest and South Central Ohio. A financial institution with a long tradition for building strong relationships with customers and communities, the Bank offers convenient banking locations in Butler, Clermont, Clinton, Fayette, Hamilton, Montgomery, Preble, Ross and Warren Counties, Ohio. The Bank continually strives to exceed customer expectations and provides an array of services for all personal and business banking needs including checking, savings, online banking, personal lending, business lending, agricultural lending, business support, deposit and treasury, investment services, trust and IRAs and stock purchases. LCNB Corp. common shares are traded on the NASDAQ Capital Market Exchange® under the symbol “LCNB.” Learn more about LCNB Corp. at www.lcnb.com.





Certain statements made in this news release regarding LCNB’s financial condition, results of operations, plans, objectives, future performance and business, are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. These forward-looking statements are identified by the fact they are not historical facts and include words such as “anticipate”, “could”, “may”, “feel”, “expect”, “believe”, “plan”, and similar expressions.

These forward-looking statements reflect management's current expectations based on all information available to management and its knowledge of LCNB’s business and operations. Additionally, LCNB’s financial condition, results of operations, plans, objectives, future performance and business are subject to risks and uncertainties that may cause actual results to differ materially. These factors include, but are not limited to:
1.
the success, impact, and timing of the implementation of LCNB’s business strategies;
2.
LCNB may incur increased charge-offs in the future;
3.
LCNB may face competitive loss of customers;
4.
changes in the interest rate environment may have results on LCNB’s operations materially different from those anticipated by LCNB’s market risk management functions;
5.
changes in general economic conditions and increased competition could adversely affect LCNB’s operating results;
6.
changes in other regulations and government policies affecting bank holding companies and their subsidiaries, including changes in monetary policies, could negatively impact LCNB’s operating results;
7.
LCNB may experience difficulties growing loan and deposit balances;
8.
the current economic environment poses significant challenges for us and could adversely affect our  financial condition and results of operations;
9.
deterioration in the financial condition of the U.S. banking system may impact the valuations of investments LCNB has made in the securities of other financial institutions resulting in either actual losses or other than temporary impairments on such investments; and
10.
the effects of the Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) and the regulations promulgated and to be promulgated thereunder, which may subject LCNB and its subsidiaries to a variety of new and more stringent legal and regulatory requirements which adversely affect their respective businesses. 

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





Exhibit 99.2

LCNB Corp. and Subsidiaries
Financial Highlights
(Dollars in thousands, except per share amounts)
(Unaudited)
 
Three Months Ended
 
3/31/2016
 
12/31/2015
 
9/30/2015
 
6/30/2015
 
3/31/2015
Condensed Income Statement
 
 
 
 
 
 
 
 
 
Interest income
$
10,621

 
10,812

 
10,409

 
11,348

 
10,090

Interest expense
849

 
906

 
912

 
748

 
762

Net interest income
9,772

 
9,906

 
9,497

 
10,600

 
9,328

Provision for loan losses
90

 
380

 
240

 
677

 
69

Net interest income after provision
9,682

 
9,526

 
9,257

 
9,923

 
9,259

Non-interest income
2,642

 
2,600

 
2,386

 
2,831

 
2,306

Non-interest expense
8,292

 
8,229

 
8,088

 
8,426

 
7,649

Income before income taxes
4,032

 
3,897

 
3,555

 
4,328

 
3,916

Provision for income taxes
1,068

 
1,013

 
922

 
1,205

 
1,082

Net income
$
2,964

 
2,884

 
2,633

 
3,123

 
2,834

 
 
 
 
 
 
 
 
 
 
Per Share Data
 
 
 
 
 
 
 
 
 
Dividends per share
$
0.16

 
0.16

 
0.16

 
0.16

 
0.16

Basic earnings per share
$
0.30

 
0.29

 
0.26

 
0.33

 
0.30

Diluted earnings per share
$
0.30

 
0.29

 
0.26

 
0.32

 
0.30

Book value per share
$
14.39

 
14.12

 
14.22

 
13.91

 
13.80

Tangible book value per share
$
10.88

 
10.58

 
10.66

 
10.33

 
10.40

Average basic shares outstanding
9,916,114

 
9,905,612

 
9,898,233

 
9,694,732

 
9,312,636

Average diluted shares outstanding
9,998,516

 
10,014,908

 
10,005,788

 
9,804,728

 
9,410,774

Shares outstanding at period end
9,931,788

 
9,925,547

 
9,903,294

 
9,896,904

 
9,317,583

 
 
 
 
 
 
 
 
 
 
Selected Financial Ratios
 
 
 
 
 
 
 
 
 
Return on average assets
0.93
%
 
0.89
%
 
0.82
%
 
1.03
%
 
1.02
%
Return on average equity
8.37
%
 
8.07
%
 
7.51
%
 
9.21
%
 
9.01
%
Dividend payout ratio
53.33
%
 
55.17
%
 
61.54
%
 
48.48
%
 
53.33
%
Net interest margin (tax equivalent)
3.49
%
 
3.46
%
 
3.37
%
 
3.95
%
 
3.83
%
Efficiency ratio (tax equivalent)
64.74
%
 
63.80
%
 
65.97
%
 
61.08
%
 
63.90
%
 
 
 
 
 
 
 
 
 
 
Selected Balance Sheet Items
 
 
 
 
 
 
 
 
 
Investment securities and stock
$
393,976

 
406,981

 
391,430

 
378,651

 
329,429

 
 
 
 
 
 
 
 
 
 
Loans:
 
 
 
 
 
 
 
 
 
Commercial and industrial
$
45,324

 
45,275

 
45,325

 
47,958

 
36,447

Commercial, secured by real estate
430,179

 
419,633

 
407,264

 
399,551

 
381,371

Residential real estate
271,812

 
273,139

 
274,054

 
273,249

 
255,926

Consumer
17,925

 
18,510

 
19,283

 
19,718

 
17,296

  Agricultural
12,589

 
13,479

 
16,016

 
13,434

 
9,816

Other, including deposit overdrafts
643

 
665

 
676

 
638

 
678

Deferred net origination costs
242

 
237

 
215

 
188

 
151

  Loans, gross
778,714

 
770,938

 
762,833

 
754,736

 
701,685

Less allowance for loan losses
3,150

 
3,129

 
2,958

 
2,879

 
2,837

  Loans, net
$
775,564

 
767,809

 
759,875

 
751,857

 
698,848

 
 
 
 
 
 
 
 
 
 
Total assets
$
1,285,922

 
1,280,531

 
1,275,171

 
1,249,363

 
1,129,497

Total deposits
1,120,208

 
1,087,160

 
1,103,513

 
1,084,033

 
973,725

Short-term borrowings
11,668

 
37,387

 
14,931

 
12,731

 
13,454

Long-term debt
789

 
5,947

 
6,016

 
6,085

 
6,153

Total shareholders’ equity
142,933

 
140,108

 
140,851

 
137,698

 
128,576

Equity to assets ratio
11.12
%
 
10.94
%
 
11.05
%
 
11.02
%
 
11.38
%
Loans to deposit ratio
69.52
%
 
70.91
%
 
69.13
%
 
69.62
%
 
72.06
%




 
Three Months Ended
 
3/31/2016
 
12/31/2015
 
9/30/2015
 
6/30/2015
 
3/31/2015
Selected Balance Sheet Items, continued
 
 
 
 
 
 
 
 
Tangible common equity (TCE)
$
107,567

 
104,529

 
105,063

 
101,694

 
96,340

Tangible common assets (TCA)
1,250,556

 
1,244,952

 
1,239,383

 
1,213,359

 
1,097,261

TCE/TCA
8.60
%
 
8.40
%
 
8.48
%
 
8.38
%
 
8.78
%
 
 
 
 
 
 
 
 
 
 
Selected Average Balance Sheet Items
 
 
 
 
 
 
 
 
 
Investment securities and stock
$
389,648

 
406,423

 
385,353

 
360,750

 
313,279

 
 
 
 
 
 
 
 
 
 
Loans
$
772,204

 
764,440

 
760,159

 
737,021

 
699,959

Less allowance for loan losses
3,130

 
2,929

 
2,885

 
2,865

 
2,870

Net loans
$
769,074

 
761,511

 
757,274

 
734,156

 
697,089

 
 
 
 
 
 
 
 
 
 
Total assets
$
1,278,014

 
1,285,114

 
1,267,171

 
1,220,938

 
1,125,326

Total deposits
1,104,330

 
1,107,214

 
1,099,730

 
1,057,818

 
969,658

Short-term borrowings
20,710

 
20,290

 
13,450

 
12,803

 
13,824

Long-term debt
1,256

 
5,970

 
6,040

 
6,108

 
6,598

Total shareholders’ equity
142,447

 
141,751

 
139,032

 
136,003

 
127,608

 
 
 
 
 
 
 
 
 
 
Asset Quality
 
 
 
 
 
 
 
 
 
Net charge-offs
$
69

 
209

 
161

 
635

 
353

Other real estate owned
846

 
846

 
1,208

 
1,364

 
1,364

Non-accrual loans
3,328

 
1,723

 
2,254

 
1,961

 
3,972

Loans past due 90 days or more and still accruing
99

 
559

 
130

 
128

 
355

Total nonperforming loans
$
3,427

 
2,282

 
2,384

 
2,089

 
4,327

Net charge-offs to average loans
0.04
%
 
0.11
%
 
0.08
%
 
0.35
%
 
0.20
%
Allowance for loan losses to total loans
0.40
%
 
0.41
%
 
0.39
%
 
0.38
%
 
0.40
%
Nonperforming loans to total loans
0.44
%
 
0.30
%
 
0.31
%
 
0.28
%
 
0.62
%
Nonperforming assets to total assets
0.33
%
 
0.24
%
 
0.28
%
 
0.28
%
 
0.50
%
 
 
 
 
 
 
 
 
 
 
Assets Under Management
 
 
 
 
 
 
 
 
 
LCNB Corp. total assets
$
1,285,922

 
1,280,531

 
1,275,171

 
1,249,363

 
1,129,497

Trust and investments (fair value)
274,297

 
283,193

 
258,675

 
272,209

 
264,122

Mortgage loans serviced
107,992

 
111,837

 
113,610

 
117,204

 
116,534

Business cash management
6,773

 
7,271

 
6,809

 
6,628

 
5,839

Brokerage accounts (fair value)
157,713

 
148,956

 
142,151

 
144,186

 
141,439

Total assets managed
$
1,832,697

 
1,831,788

 
1,796,416

 
1,789,590

 
1,657,431

 
 
 
 
 
 
 
 
 
 
Non-GAAP Financial Measures
 
 
 
 
 
 
 
 
 
Accreted income on acquired loans
$
333

 
219

 
243

 
1,348

 
326

Amortization of acquired deposit premiums
$
27

 
34

 
46

 
211

 
186

 
 
 
 
 
 
 
 
 
 
Net income
$
2,964

 
2,884

 
2,633

 
3,123

 
2,834

Less (add) net gain (loss) on sales of securities, net of tax
245

 
108

 
0

 
146

 
73

Add merger-related expenses, net of tax
0

 
2

 
32

 
363

 
66

Core net income
$
2,719

 
2,778

 
2,665

 
3,340

 
2,827

Basic core earnings per share
$
0.27

 
0.28

 
0.27

 
0.34

 
0.30

Diluted core earnings per share
$
0.27

 
0.28

 
0.27

 
0.34

 
0.30

Adjusted return on average assets
0.85
%
 
0.86
%
 
0.83
%
 
1.10
%
 
1.01
%
Adjusted return on average equity
7.66
%
 
7.77
%
 
7.60
%
 
9.85
%
 
8.86
%
Core efficiency ratio (tax equivalent)
66.67
%
 
64.60
%
 
65.57
%
 
58.23
%
 
63.91
%




LCNB CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)
 
March 31, 2016 (Unaudited)
 
December 31, 2015
ASSETS:
 
 
 
Cash and due from banks
$
13,060

 
14,155

Interest-bearing demand deposits
8,029

 
832

Total cash and cash equivalents
21,089

 
14,987

Investment securities:
 

 
 

Available-for-sale, at fair value
351,101

 
377,978

Held-to-maturity, at cost
36,505

 
22,633

Federal Reserve Bank stock, at cost
2,732

 
2,732

Federal Home Loan Bank stock, at cost
3,638

 
3,638

Loans, net
775,564

 
767,809

Premises and equipment, net
21,985

 
22,100

Goodwill
30,183

 
30,183

Core deposit and other intangibles
5,183

 
5,396

Bank owned life insurance
26,730

 
22,561

Other assets
11,212

 
10,514

TOTAL ASSETS
$
1,285,922

 
1,280,531

 
 
 
 
LIABILITIES:
 

 
 

Deposits:
 

 
 

Noninterest-bearing
$
249,439

 
250,306

Interest-bearing
870,769

 
836,854

Total deposits
1,120,208

 
1,087,160

Short-term borrowings
11,668

 
37,387

Long-term debt
789

 
5,947

Accrued interest and other liabilities
10,324

 
9,929

TOTAL LIABILITIES
1,142,989

 
1,140,423

 
 
 
 
COMMITMENTS AND CONTINGENT 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 10,685,415 and 10,679,174 shares at March 31, 2016 and December 31, 2015, respectively
75,487

 
76,908

Retained earnings
76,005

 
74,629

Treasury shares at cost, 753,627 shares at March 31, 2016 and December 31, 2015
(11,665
)
 
(11,665
)
Accumulated other comprehensive income, net of taxes
3,106

 
236

TOTAL SHAREHOLDERS' EQUITY
142,933

 
140,108

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
$
1,285,922

 
1,280,531









LCNB CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
(Unaudited)
 
Three Months Ended 
 March 31,
 
2016
 
2015
INTEREST INCOME:
 
 
 
Interest and fees on loans
$
8,627

 
8,540

Interest on investment securities –
 
 
 

Taxable
1,189

 
856

Non-taxable
758

 
653

Other short-term investments
47

 
41

TOTAL INTEREST INCOME
10,621

 
10,090

INTEREST EXPENSE:
 

 
 

Interest on deposits
823

 
682

Interest on short-term borrowings
14

 
4

Interest on long-term debt
12

 
76

TOTAL INTEREST EXPENSE
849

 
762

NET INTEREST INCOME
9,772

 
9,328

PROVISION FOR LOAN LOSSES
90

 
69

NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES
9,682

 
9,259

NON-INTEREST INCOME:
 

 
 

Trust income
763

 
800

Service charges and fees on deposit accounts
1,193

 
1,107

Net gain (loss) on sales of securities
371

 
111

Bank owned life insurance income
169

 
159

Gains from sales of mortgage loans
41

 
35

Other operating income
105

 
94

TOTAL NON-INTEREST INCOME
2,642

 
2,306

NON-INTEREST EXPENSE:
 

 
 

Salaries and employee benefits
4,563

 
4,290

Equipment expenses
249

 
288

Occupancy expense, net
569

 
595

State franchise tax
281

 
252

Marketing
167

 
163

Amortization of intangibles
187

 
146

FDIC insurance premiums
165

 
151

Merger-related expenses
—

 
70

Other non-interest expense
2,111

 
1,694

TOTAL NON-INTEREST EXPENSE
8,292

 
7,649

INCOME BEFORE INCOME TAXES
4,032

 
3,916

PROVISION FOR INCOME TAXES
1,068

 
1,082

NET INCOME
$
2,964

 
2,834

 
 
 
 
Dividends declared per common share
$
0.16

 
0.16

Earnings per common share:
 

 
 

Basic
$
0.30

 
0.30

Diluted
0.30

 
0.30

Weighted average common shares outstanding:
 
 
 

Basic
9,916,114

 
9,312,636

Diluted
9,998,516

 
9,410,774





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