lcnb-20200720
0001074902FALSE00010749022020-01-012020-06-30

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): July 20, 2020
LCNB CORP.
(Exact name of Registrant as specified in its Charter)
Ohio001-3529231-1626393
(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))

Securities Registered Pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, No Par ValueLCNBNASDAQ

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐


If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐




Item 2.02 Results of Operations and Financial Condition.

On July 20, 2020, LCNB Corp. issued an earnings release announcing its financial results for the three and six months ended June 30, 2020. 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 July 20, 2020, LCNB Corp. issued an earnings release announcing its financial results for the three and six months ended June 30, 2020. 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 June 20, 2020
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: July 20, 2020
By: /s/ Robert C. Haines II              
Robert C. Haines II
Chief Financial Officer


 Document

Exhibit 99.1

Press Release
July 20, 2020

LCNB CORP. REPORTS FINANCIAL RESULTS FOR
THE THREE AND SIX MONTHS ENDED JUNE 30, 2020

LEBANON, Ohio--LCNB Corp. ("LCNB") (NASDAQ: LCNB) today announced net income of $5,057,000 (total basic and diluted earnings per share of $0.39) and $10,083,000 (total basic and diluted earnings per share of $0.78) for the three and six months ended June 30, 2020, respectively.  This compares to net income of $4,728,000 (total basic and diluted earnings per share of $0.36) and $9,355,000 (total basic and diluted earnings per share of $0.71) for the same three and six month periods in 2019.

Commenting on the financial results, LCNB President and Chief Executive Officer Eric Meilstrup said, "We are pleased to report strong financial results for the second quarter and first half of 2020, despite the challenging conditions resulting from the COVID-19 pandemic. Gross loans increased $92.0 million or 7.4% since December 31, 2019, including $45.5 million in Paycheck Protection Program ("PPP") loans. Total assets increased $96.0 million or 5.9% during the same period. LCNB's return on average assets was 1.19% and 1.21% for the respective three and six month periods in 2020 and return on average equity for the same periods was 8.63% and 8.69%. "

Net interest income for the three and six months ended June 30, 2020 was, respectively, $408,000 and $1,195,000 greater than the comparable periods in 2019, due to growth in the average balance of LCNB's loan portfolio, partially offset by a decrease in the average rate earned on that portfolio. Also contributing to the increase in net interest income was a decrease in the average rate paid on deposits. These net favorable items were partially offset by a decrease in average investment securities.

The provision for loan losses for the three months ended June 30, 2020 was $38,000 less than the comparable period in 2019 and the six month period was $1,240,000 greater than the comparable period in 2019. Approximately 69% of the increase in the provision for the six month period was due to an adjustment to the allowance for potential impacts from the economic recession caused by the COVID-19 pandemic. Non-accrual loans and loans past due 90 days or more and still accruing interest increased $928,000, from $2,986,000 or 0.24% of total loans at June 30, 2019 to $3,914,000 or 0.29% of total loans at June 30, 2020.

Non-interest income for the three and six months ended June 30, 2020 was, respectively, $321,000 and $1,388,000 greater than the comparable periods in 2019 primarily due to increases in fiduciary income, gains from sales of loans, and increases in income from bank owned life insurance, partially offset by a decrease in service charges and fees on deposit accounts. The increase for the six month period included gains from the sale of equity securities, which is recorded in other operating income in the consolidated condensed statements of income, and gains from the sale of debt securities. Income from bank owned life insurance increased partially due to new policies purchased in the third quarter 2019 and partially due to a mortality benefit received during the first quarter 2020.

Non-interest expense for the three and six months ended June 30, 2020 was, respectively, $283,000 and $655,000 greater than the comparable periods in 2019, primarily due to increases in salaries and employee benefits, partially offset by decreases in marketing expense and FDIC insurance premiums. Salaries and employee benefits increased primarily due to salary and wage increases and newly hired employees, including additional business development positions. An increase in health insurance costs also contributed to the increase in salaries and employee benefits. FDIC insurance premiums decreased due to a small bank assessment credit received during the first and second quarters 2020. LCNB has used the credit in full and anticipates subsequent quarterly premium payments will return to normal levels.



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, Franklin, 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. Please refer to LCNB’s Annual Report on Form 10-K for the year ended December 31, 2019, as well as its other filings with the SEC, for a more detailed discussion of risks, uncertainties and factors that could cause actual results to differ from those discussed in the forward-looking statements.

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.the significant risks and uncertainties for LCNB's business, results of operations and financial condition, as well as its regulatory capital and liquidity ratios and other regulatory requirements, caused by the COVID-19 pandemic, which will depend on several factors, including the scope and duration of the pandemic, its influence on financial markets, the effectiveness of LCNB's work from home arrangements and staffing levels in operational facilities, the impact of market participants on which LCNB relies and actions taken by governmental authorities and other third parties in response to the pandemic;
3.LCNB’s ability to integrate recent and future acquisitions may be unsuccessful, or may be more difficult, time-consuming or costly than expected;
4.LCNB may incur increased charge-offs in the future;
5.LCNB may face competitive loss of customers;
6.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;
7.changes in general economic conditions and increased competition could adversely affect LCNB’s operating results;
8.changes in regulations and government policies affecting bank holding companies and their subsidiaries, including changes in monetary policies, could negatively impact LCNB’s operating results;
9.LCNB may experience difficulties growing loan and deposit balances;
10.United States trade relations with foreign countries could negatively impact the financial condition of LCNB's customers, which could adversely affect LCNB 's operating results and financial condition;
11.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;
12.difficulties with technology or data security breaches, including cyberattacks, that could negatively affect LCNB's ability to conduct business and its relationships with customers, vendors, and others;
13.adverse weather events and natural disasters and global and/or national epidemics; and
14.government intervention in the U.S. financial system, including the effects of recent legislative, tax, accounting and regulatory actions and reforms, including the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Jumpstart Our Business Startups Act, the Consumer Financial Protection Bureau, the capital ratios of Basel III as adopted by the federal banking authorities, and the Tax Cuts and Jobs Act. 

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. 


Document

Exhibit 99.2

LCNB Corp. and Subsidiaries
Financial Highlights
(Dollars in thousands, except per share amounts)
(Unaudited)
Three Months Ended
Six Months Ended
6/30/2020
3/31/2020
12/31/2019
9/30/2019
6/30/2019
6/30/2020
6/30/2019
Condensed Income Statement
Interest income
$15,957  16,556  16,424  16,329  16,328  32,513  32,441  
Interest expense
1,959  2,378  2,577  2,751  2,738  4,337  5,460  
Net interest income
13,998  14,178  13,847  13,578  13,590  28,176  26,981  
Provision (credit) for loan losses
16  1,173  (6) 264  54  1,189  (51) 
Net interest income after provision
13,982  13,005  13,853  13,314  13,536  26,987  27,032  
Non-interest income
3,319  3,839  3,222  3,356  2,998  7,158  5,770  
Non-interest expense
11,116  11,072  11,007  10,982  10,833  22,188  21,533  
Income before income taxes
6,185  5,772  6,068  5,688  5,701  11,957  11,269  
Provision for income taxes
1,128  746  1,238  961  973  1,874  1,914  
Net income
$5,057  5,026  4,830  4,727  4,728  10,083  9,355  
Amort/Accret income on acquired loans
$294  667  400  302  355  961  579  
Amort/Accret expenses on acquired interest-bearing liabilities
$2  3  3  4  142  4  286  
Tax-equivalent net interest income
$14,006  14,254  13,937  13,679  13,700  28,319  27,236  
Per Share Data
Dividends per share
$0.18  0.18  0.18  0.17  0.17  0.36  0.34  
Basic earnings per common share
$0.39  0.39  0.37  0.36  0.36  0.78  0.71  
Diluted earnings per common share
$0.39  0.39  0.37  0.36  0.36  0.78  0.71  
Book value per share
$18.27  18.00  17.63  17.44  17.18  18.27  17.18  
Tangible book value per share
$13.47  13.18  12.78  12.57  12.31  13.47  12.31  
Weighted average common shares outstanding:
Basic
12,940,975  12,926,077  12,912,106  12,932,950  13,192,691  12,933,528  13,237,909  
Diluted
12,941,001  12,927,666  12,916,000  12,937,145  13,196,665  12,934,158  13,241,752  
Shares outstanding at period end
12,975,879  12,969,076  12,936,783  12,927,463  12,978,554  12,975,879  12,978,554  
Selected Financial Ratios
Return on average assets
1.19 %1.23 %1.17 %1.13 %1.16 %1.21 %1.15 %
Return on average equity
8.63 %8.75 %8.42 %8.33 %8.46 %8.69 %8.47 %
Return on average tangible equity11.74 %12.00 %11.63 %11.57 %11.87 %11.92 %11.84 %
Dividend payout ratio
46.15 %46.15 %48.65 %47.22 %47.22 %46.15 %47.89 %
Net interest margin (tax equivalent)
3.70 %3.92 %3.76 %3.67 %3.72 %3.81 %3.71 %
Efficiency ratio (tax equivalent)
63.94 %61.19 %64.15 %64.47 %64.87 %62.54 %65.24 %
Selected Balance Sheet Items
Cash and cash equivalents
$42,736  24,795  20,765  22,826  23,185  
Debt and equity securities
194,883  183,123  219,791  239,730  246,701  
Loans:
Commercial and industrial
$125,492  85,356  78,306  71,576  79,513  
Commercial, secured by real estate
833,286  829,461  804,953  797,842  793,863  
Residential real estate
334,349  318,009  322,533  320,703  326,029  
Consumer
32,859  28,955  25,232  23,918  19,649  
  Agricultural
11,071  10,519  11,509  11,525  10,843  
Other, including deposit overdrafts
283  436  1,193  456  373  
Deferred net origination fees
(1,902) (349) (275) (128) (9) 
  Loans, gross
1,335,438  1,272,387  1,243,451  1,225,892  1,230,261  
Less allowance for loan losses
5,016  5,008  4,045  4,167  4,112  
  Loans, net
$1,330,422  1,267,379  1,239,406  1,221,725  1,226,149  
Total earning assets
$1,554,537  1,462,485  1,466,988  1,470,074  1,482,913  
Total assets
1,735,332  1,636,280  1,639,308  1,644,447  1,642,012  
Total deposits
1,438,921  1,345,872  1,348,280  1,355,383  1,357,959  


Three Months Ended
Six Months Ended
6/30/20203/31/202012/31/20199/30/20196/30/20196/30/20206/30/2019
Selected Balance Sheet Items, continued
Long-term debt
33,998  35,996  40,994  41,990  41,986  
Total shareholders’ equity
237,047  233,478  228,048  225,492  222,972  
Equity to assets ratio
13.66 %14.27 %13.91 %13.71 %13.58 %
Loans to deposits ratio
92.81 %94.54 %92.22 %90.45 %90.60 %
Tangible common equity (TCE)
$174,823  170,994  165,304  162,485  159,702  
Tangible common assets (TCA)
1,673,108  1,573,796  1,576,564  1,581,440  1,578,742  
TCE/TCA
10.45 %10.87 %10.49 %10.27 %10.12 %
Selected Average Balance Sheet Items
Cash and cash equivalents
$46,292  25,101  26,501  28,293  29,523  35,712  27,332  
Debt and equity securities
182,371  204,912  231,115  243,553  249,954  193,642  257,972  
Loans
$1,318,753  1,252,554  1,230,845  1,227,806  1,217,726  1,285,654  1,213,292  
Less allowance for loan losses
4,998  3,938  4,076  3,986  4,088  4,468  4,081  
Net loans
$1,313,755  1,248,616  1,226,769  1,223,820  1,213,638  1,281,186  1,209,211  
Total earning assets
$1,528,610  1,462,946  1,469,469  1,480,096  1,479,225  1,495,779  1,479,924  
Total assets
1,704,303  1,638,486  1,643,793  1,654,034  1,637,645  1,671,394  1,636,370  
Total deposits
1,412,082  1,346,770  1,352,101  1,365,702  1,352,449  1,379,426  1,343,042  
Short-term borrowings
82  1,415  622  468  243  749  11,675  
Long-term debt
34,964  38,325  41,742  41,988  42,567  36,644  43,616  
Total shareholders’ equity
235,587  231,058  227,595  225,216  224,203  233,322  222,844  
Equity to assets ratio
13.82 %14.10 %13.85 %13.62 %13.69 %13.96 %13.62 %
Loans to deposits ratio
93.39 %93.00 %91.03 %89.90 %90.04 %93.20 %90.34 %
Asset Quality
Net charge-offs (recoveries)
$8  210  115  209  68  218  (117) 
Other real estate owned
0  0  197  197  197  0  197  
Non-accrual loans
3,876  2,829  3,210  3,523  2,962  3,876  2,962  
Loans past due 90 days or more and still accruing
38  39  —  —  24  38  24  
Total nonperforming loans
$3,914  2,868  3,210  3,523  2,986  3,914  2,986  
Net charge-offs (recoveries) to average loans
0.00 %0.07 %0.04 %0.07 %0.02 %0.03 %(0.02)%
Allowance for loan losses to total loans
0.38 %0.39 %0.33 %0.34 %0.33 %0.38 %0.33 %
Nonperforming loans to total loans
0.29 %0.23 %0.26 %0.29 %0.24 %0.29 %0.24 %
Nonperforming assets to total assets
0.23 %0.18 %0.21 %0.23 %0.19 %0.23 %0.19 %
Assets Under Management
LCNB Corp. total assets
$1,735,332  1,636,280  1,639,308  1,644,447  1,642,012  
Trust and investments (fair value)
516,076  455,974  435,664  411,724  382,462  
Mortgage loans serviced
100,189  94,805  93,596  90,784  88,444  
Cash management
116,615  77,471  75,948  117,530  71,973  
Brokerage accounts (fair value)
255,276  235,278  268,059  262,038  260,202  
Total assets managed
$2,723,488  2,499,808  2,512,575  2,526,523  2,445,093  


LCNB CORP. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS

(Dollars in thousands)
June 30, 2020 (Unaudited)December 31, 2019
ASSETS:
Cash and due from banks$18,520  17,019  
Interest-bearing demand deposits24,216  3,746  
Total cash and cash equivalents42,736  20,765  
Investment securities:  
Equity securities with a readily determinable fair value, at fair value2,163  2,312  
Equity securities without a readily determinable fair value, at cost2,099  2,099  
Debt securities, available-for-sale, at fair value153,529  178,000  
Debt securities, held-to-maturity, at cost27,237  27,525  
Federal Reserve Bank stock, at cost4,652  4,652  
Federal Home Loan Bank stock, at cost5,203  5,203  
Loans, net1,330,422  1,239,406  
Premises and equipment, net35,383  34,787  
Operating leases right of use asset5,532  5,444  
Goodwill59,221  59,221  
Core deposit and other intangibles3,558  4,006  
Bank owned life insurance41,596  41,667  
Other assets22,001  14,221  
TOTAL ASSETS$1,735,332  1,639,308  
LIABILITIES:  
Deposits:  
Noninterest-bearing$431,697  354,391  
Interest-bearing1,007,224  993,889  
Total deposits1,438,921  1,348,280  
Long-term debt33,998  40,994  
Operating leases liability5,558  5,446  
Accrued interest and other liabilities19,808  16,540  
TOTAL LIABILITIES1,498,285  1,411,260  
COMMITMENTS AND CONTINGENT LIABILITIES—  —  
SHAREHOLDERS' EQUITY:  
Preferred shares – no par value, authorized 1,000,000 shares, none outstanding—  —  
Common shares – no par value, authorized 19,000,000 shares at June 30, 2020 and December 31, 2019; issued 14,150,906 and 14,111,810 shares at June 30, 2020 and December 31, 2019, respectively142,181  141,791  
Retained earnings109,845  104,431  
Treasury shares at cost, 1,175,027 shares at June 30, 2020 and December 31, 2019(18,847) (18,847) 
Accumulated other comprehensive income, net of taxes3,868  673  
TOTAL SHAREHOLDERS' EQUITY237,047  228,048  
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY$1,735,332  1,639,308  




LCNB CORP. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
(Unaudited)
Three Months Ended 
June 30,		Six Months Ended 
June 30,
 2020201920202019
INTEREST INCOME:
Interest and fees on loans$14,822  14,662  30,049  29,200  
Dividends on equity securities with a readily determinable fair value13  15  27  32  
Dividends on equity securities without a readily determinable fair value12  16  28  32  
Interest on debt securities, taxable667  933  1,617  1,802  
Interest on debt securities, non-taxable254  417  539  961  
Interest on interest-bearing time deposits—  3  —  8  
Other investments189  282  253  406  
TOTAL INTEREST INCOME15,957  16,328  32,513  32,441  
INTEREST EXPENSE:    
Interest on deposits1,732  2,464  3,849  4,750  
Interest on short-term borrowings—  2  7  221  
Interest on long-term debt227  272  481  489  
TOTAL INTEREST EXPENSE1,959  2,738  4,337  5,460  
NET INTEREST INCOME13,998  13,590  28,176  26,981  
PROVISION (CREDIT) FOR LOAN LOSSES16  54  1,189  (51) 
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES13,982  13,536  26,987  27,032  
NON-INTEREST INCOME:    
Fiduciary income1,201  1,058  2,304  2,092  
Service charges and fees on deposit accounts1,237  1,497  2,532  2,805  
Net gains (losses) on sales of debt securities—  1  221  (17) 
Bank owned life insurance income287  183  888  365  
Gains from sales of loans317  64  437  93  
Other operating income277  195  776  432  
TOTAL NON-INTEREST INCOME3,319  2,998  7,158  5,770  
NON-INTEREST EXPENSE:    
Salaries and employee benefits6,648  6,243  13,416  12,405  
Equipment expenses289  278  576  544  
Occupancy expense, net723  744  1,405  1,507  
State financial institutions tax420  436  856  874  
Marketing258  297  435  599  
Amortization of intangibles260  260  520  517  
FDIC insurance premiums, net31  112  30  238  
Contracted services475  475  877  939  
Other real estate owned1  48  (9) 51  
Merger-related expenses—  20  —  87  
Other non-interest expense2,011  1,920  4,082  3,772  
TOTAL NON-INTEREST EXPENSE11,116  10,833  22,188  21,533  
INCOME BEFORE INCOME TAXES6,185  5,701  11,957  11,269  
PROVISION FOR INCOME TAXES1,128  973  1,874  1,914  
NET INCOME$5,057  4,728  10,083  9,355  
Dividends declared per common share$0.18  0.17  0.36  0.34  
Earnings per common share:    
Basic0.39  0.36  0.78  0.71  
Diluted0.39  0.36  0.78  0.71  
Weighted average common shares outstanding:
Basic12,940,975  13,192,691  12,933,528  13,237,909  
Diluted12,941,001  13,196,665  12,934,158  13,241,752  



Contacts
LCNB Corp.
Eric J. Meilstrup, CEO and President, 800-344-BANK
Robert C. Haines II, Executive Vice President and CFO, 800-344-BANK


v3.20.2
Cover
 6 Months Ended
Jun. 30, 2020
Document Information [Line Items]  
Document Type 8-K
Document Period End Date Jul. 20, 2020
Entity Registrant Name LCNB CORP.
Entity Tax Identification Number 31-1626393
Entity Incorporation, State or Country Code OH
Entity File Number 001-35292
Entity Address, Address Line One 2 North Broadway
Entity Address, State or Province OH
Entity Address, City or Town Lebanon
Entity Address, Postal Zip Code 45036
City Area Code (513)
Local Phone Number 932-1414
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Title of 12(b) Security Common Stock, No Par Value
Trading Symbol LCNB
Security Exchange Name NASDAQ
Entity Emerging Growth Company false
Amendment Flag false
Entity Central Index Key 0001074902