Attached files
| file | filename |
|---|---|
| EX-21 - EXHIBIT 21 - LCNB CORP | ex21.htm |
| EX-23 - EXHIBIT 23 - LCNB CORP | ex23.htm |
| EX-32 - EXHIBIT 32 - LCNB CORP | ex32.htm |
| EX-31.1 - EXHIBIT 31.1 - LCNB CORP | ex31_1.htm |
| EX-31.2 - EXHIBIT 31.2 - LCNB CORP | ex31_2.htm |
| 10-K - LCNB CORP 10-K 12-31-2010 - LCNB CORP | form10-k.htm |
EXHIBIT 13
LCNB Corp. 2010 Annual Report
CEO’s and President's Letter to Shareholders (page 1 and 2 of Annual Report):
Dear Shareholders:
A struggling economy, increased banking regulation, and higher FDIC premiums have made it difficult for some U.S. banks to deliver good results in 2010. LCNB is happy to report that, in spite of those challenges, 2010 was another very successful year and we are proud to present these results in this year’s annual report.
The theme of this year’s annual report is, “If LCNB is in your Community... This is a Good Sign.” This refers directly to the importance of a bank to the economic health of any community. A traditional regulated bank, whose success is tied to the success of its customers and its community is so very important for several reasons. A community bank is the economic engine that enables its customers to create jobs and to create wealth and opportunity. It renders advice on how fast to grow and how far to go to ensure that customers are successful in the long-run. The bank’s value to the community itself goes beyond economic value and provides the power of involvement and support. Support is given by investing time and money in many organizations and events which contribute to the quality of life in a community. It also supports those things, both necessary and nice, that differentiates a community and makes it a great place to live.
A successful year is measured in numerous ways. We measure it financially and with the completion of successful projects within the organization.
Financially, LCNB earned a return on average assets of 1.22% and a return on average equity of 13.36% in 2010. Net income available to common shareholders in 2010 exceeded 2009 results by 41% resulting in net income available to common shareholders of $9.4 million. That net income produced total earnings per share of $1.40 which is 40% higher than the $1.00 earnings per share from 2009 results. Although LCNB Corp. total assets grew from $734 million to $760 million in 2010, loan growth was still sluggish in 2010. Net loans declined 1.11% from 2009 to $452 million. But within that total, commercial loans grew by almost 2% and we have originated or refinanced $19 million in 1-4 family mortgages for consumers taking advantage of the low interest rate environment in 2010. Another $24 million of 1-4 family mortgages were originated and sold in the secondary market during 2010. The Trust and Brokerage Departments both had 14% growth in assets they manage for our customers and deposits continued to grow in 2010 to $639 million. Total shareholder’s equity on December 31, 2010 was $70.7 million. Our capital remains in the “well capitalized” designation.
LCNB Management and the Board of Directors believe continuing to pay a dividend to our shareholders is important. During 2010 our shareholders received a dividend of $.64 per share. LCNB returned earnings to its shareholders of 46% in 2010.
In addition to the successful year financially, our employees also were busy improving delivery channels for our customers. We started upgrading our ATM machines to newer models in 2010 and this project will continue in 2011. Because of the constant threat of dishonest people trying to exploit our electronic delivery channels, we have added additional firewalls and other more secure ways that our customers can access their bank information and transact business electronically. We will always strive to maintain the latest security measures to protect our customers’ information. Although we did not build or acquire any new facilities in 2010, we began construction of a new branch in the City of Monroe and the new Auto Bank in Lebanon. Both projects should be complete by late Spring of 2011.
In November, Dave Beckett, a director of LCNB since 1999 and President of Dakin Insurance Agency, a subsidiary of LCNB Corp., announced that he and his family planned to relocate to another state. We are sorry to lose Dave as a director and as president of Dakin Insurance. He has very competently fulfilled both roles. The LCNB Board of Directors decided not to fill the vacant director’s seat at this time. In addition, the LCNB Board of Directors decided to divest of Dakin Insurance by selling the agency.
Additional statistical data and information on our financial performance for 2010 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 shareholders information section on our website, www.LCNB.com.
The Annual Meeting for LCNB Corp. will be Tuesday, April 26th, 2011 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 continued support.
Stephen P. Wilson
Chairman and CEO
Steve P. Foster
President
Please Note: “In the spirit of service to our communities and profession, Steve Wilson continues to demonstrate his dedication to the banking industry. He served as chairman of the Ohio Bankers League (OBL) in 1997 and, beginning in October 2010, Steve is serving as Chairman of the American Bankers Association (ABA).
It is a prestigious honor that Steve has been given to represent our banking industry and his leadership and experience is important to banking at this crucial time.” - Steve P. Foster
FINANCIAL HIGHLIGHTS
(Dollars in thousands, except per share data)
|
For the Years Ended December 31,
|
||||||||||||||||||||
|
2010
|
2009
|
2008
|
2007
|
2006
|
||||||||||||||||
|
Income Statement
|
||||||||||||||||||||
|
Net interest income
|
$ | 25,655 | 24,793 | 20,928 | 18,152 | 18,315 | ||||||||||||||
|
Net income from continuing operations
|
9,133 | 7,687 | 6,427 | 5,737 | 6,182 | |||||||||||||||
|
Income from discontinued operations, net of tax
|
240 | 79 | 176 | 217 | 332 | |||||||||||||||
|
Net income
|
9,373 | 7,766 | 6,603 | 5,954 | 6,514 | |||||||||||||||
|
Net income available to common shareholders
|
9,373 | 6,658 | 6,603 | 5,954 | 6,514 | |||||||||||||||
|
Dividends declared per common share (1)
|
0.64 | 0.64 | 0.64 | 0.62 | 0.60 | |||||||||||||||
|
Basic earnings per common share (1):
|
||||||||||||||||||||
|
Continuing operations
|
1.37 | 0.99 | 0.96 | 0.90 | 0.95 | |||||||||||||||
|
Discontinued operations
|
0.03 | 0.01 | 0.03 | 0.04 | 0.05 | |||||||||||||||
|
Diluted earnings per common share (1):
|
||||||||||||||||||||
|
Continuing operations
|
1.36 | 0.98 | 0.96 | 0.90 | 0.95 | |||||||||||||||
|
Discontinued operations
|
0.03 | 0.01 | 0.03 | 0.04 | 0.05 | |||||||||||||||
|
Balance Sheet
|
||||||||||||||||||||
|
Loans – net
|
$ | 452,350 | 457,418 | 451,343 | 444,419 | 388,320 | ||||||||||||||
|
Earning assets
|
706,226 | 678,055 | 599,825 | 550,733 | 505,485 | |||||||||||||||
|
Total assets
|
760,134 | 734,409 | 649,731 | 604,058 | 548,215 | |||||||||||||||
|
Total deposits
|
638,539 | 624,179 | 577,622 | 535,929 | 478,615 | |||||||||||||||
|
Short-term borrowings
|
21,691 | 14,265 | 2,206 | 1,459 | 15,370 | |||||||||||||||
|
Long-term debt
|
23,120 | 24,960 | 5,000 | 5,000 | - | |||||||||||||||
|
Total shareholders' equity
|
70,707 | 65,615 | 58,116 | 56,528 | 50,999 | |||||||||||||||
|
Per common share:
Book value at year end (1)
|
10.57 | 9.81 | 8.69 | 8.45 | 7.99 | |||||||||||||||
|
Performance Ratios
|
||||||||||||||||||||
|
Return on average assets
|
1.22 | % | 1.07 | % | 1.03 | % | 1.08 | % | 1.19 | % | ||||||||||
|
Return on average shareholders’ equity
|
13.36 | % | 10.43 | % | 11.35 | % | 11.41 | % | 12.48 | % | ||||||||||
|
|
(1) All per share data have been adjusted to reflect a 100% stock dividend accounted for as a stock split in 2007.
|
|
LCNB CORP. AND SUBSIDIARIES
|
||||||||
|
CONDENSED CONSOLIDATED BALANCE SHEETS
|
||||||||
|
At December 31,
|
||||||||
|
(Dollars in thousands)
|
||||||||
|
2010
|
2009
|
|||||||
|
ASSETS:
|
||||||||
|
Cash and due from banks
|
$
|
10,817
|
12,626
|
|||||
|
Interest-bearing demand deposits
|
182
|
-
|
||||||
|
Total cash and cash equivalents
|
10,999
|
12,626
|
||||||
|
Investment securities:
|
||||||||
|
Available-for-sale, at fair value
|
235,882
|
201,578
|
||||||
|
Held-to-maturity, at cost
|
12,141
|
13,030
|
||||||
|
Federal Reserve Bank stock, at cost
|
939
|
940
|
||||||
|
Federal Home Loan Bank stock, at cost
|
2,091
|
2,091
|
||||||
|
Loans, net
|
452,350
|
457,418
|
||||||
|
Premises and equipment, net
|
16,017
|
15,722
|
||||||
|
Goodwill
|
5,915
|
5,915
|
||||||
|
Bank owned life insurance
|
14,242
|
14,122
|
||||||
|
Other assets
|
9,558
|
10,967
|
||||||
|
TOTAL ASSETS
|
$
|
760,134
|
734,409
|
|||||
|
LIABILITIES:
|
||||||||
|
Deposits:
|
||||||||
|
Noninterest-bearing
|
$
|
98,994
|
93,894
|
|||||
|
Interest-bearing
|
539,545
|
530,285
|
||||||
|
Total deposits
|
638,539
|
624,179
|
||||||
|
Short-term borrowings
|
21,691
|
14,265
|
||||||
|
Long-term debt
|
23,120
|
24,960
|
||||||
|
Accrued interest and other liabilities
|
6,077
|
5,390
|
||||||
|
TOTAL LIABILITIES
|
689,427
|
668,794
|
||||||
|
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 7,445,514 at December 31, 2010 and 2009
|
11,068
|
11,068
|
||||||
|
Surplus
|
15,447
|
15,407
|
||||||
|
Retained earnings
|
54,045
|
48,962
|
||||||
|
Treasury shares at cost, 755,771 shares and 758,282 shares at December 31, 2010 and 2009, respectively
|
(11,698)
|
(11,737)
|
||||||
|
Accumulated other comprehensive income, net of taxes
|
1,845
|
1,915
|
||||||
|
TOTAL SHAREHOLDERS' EQUITY
|
70,707
|
65,615
|
||||||
|
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
|
$
|
760,134
|
734,409
|
|||||
|
LCNB CORP. AND SUBSIDIARIES
|
||||||||||||
|
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
|
||||||||||||
|
For the years ended December 31,
|
||||||||||||
|
(Dollars in thousands, except per share data)
|
||||||||||||
|
2010
|
2009
|
2008
|
||||||||||
|
INTEREST INCOME:
|
||||||||||||
|
Interest and fees on loans
|
$ | 26,977 | 27,493 | 29,024 | ||||||||
|
Interest on investment securities:
|
||||||||||||
|
Taxable
|
3,686 | 4,237 | 2,641 | |||||||||
|
Non-taxable
|
3,126 | 2,921 | 1,995 | |||||||||
|
Other investments
|
200 | 202 | 689 | |||||||||
|
TOTAL INTEREST INCOME
|
33,989 | 34,853 | 34,349 | |||||||||
|
INTEREST EXPENSE:
|
||||||||||||
|
Interest on deposits
|
7,613 | 9,434 | 13,145 | |||||||||
|
Interest on short-term borrowings
|
27 | 3 | 13 | |||||||||
|
Interest on long-term debt
|
694 | 623 | 263 | |||||||||
|
TOTAL INTEREST EXPENSE
|
8,334 | 10,060 | 13,421 | |||||||||
|
NET INTEREST INCOME
|
25,655 | 24,793 | 20,928 | |||||||||
|
PROVISION FOR LOAN LOSSES
|
1,680 | 1,400 | 620 | |||||||||
|
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES
|
23,975 | 23,393 | 20,308 | |||||||||
|
NON-INTEREST INCOME:
|
||||||||||||
|
Trust income
|
1,897 | 1,916 | 1,861 | |||||||||
|
Service charges and fees on deposit accounts
|
3,953 | 3,985 | 4,211 | |||||||||
|
Net gain on sales of securities
|
948 | 110 | - | |||||||||
|
Bank owned life insurance income
|
1,389 | 637 | 534 | |||||||||
|
Gains from sales of mortgage loans
|
496 | 396 | 11 | |||||||||
|
Other operating income
|
248 | 204 | 184 | |||||||||
|
TOTAL NON-INTEREST INCOME
|
8,931 | 7,248 | 6,801 | |||||||||
|
NON-INTEREST EXPENSE:
|
||||||||||||
|
Salaries and employee benefits
|
11,271 | 10,534 | 10,183 | |||||||||
|
Equipment expenses
|
889 | 995 | 973 | |||||||||
|
Occupancy expense, net
|
1,875 | 1,721 | 1,652 | |||||||||
|
State franchise tax
|
703 | 610 | 614 | |||||||||
|
Marketing
|
448 | 408 | 433 | |||||||||
|
Intangible amortization
|
57 | 57 | 257 | |||||||||
|
FDIC premiums
|
958 | 1,271 | 75 | |||||||||
|
ATM expense
|
513 | 513 | 456 | |||||||||
|
Computer maintenance and supplies
|
456 | 449 | 454 | |||||||||
|
Telephone expense
|
414 | 407 | 439 | |||||||||
|
Other real estate owned
|
506 | 17 | 9 | |||||||||
|
Write-off of pension asset
|
- | 722 | - | |||||||||
|
Other non-interest expense
|
3,189 | 3,005 | 3,003 | |||||||||
|
TOTAL NON-INTEREST EXPENSE
|
21,279 | 20,709 | 18,548 | |||||||||
|
INCOME BEFORE INCOME TAXES
|
11,627 | 9,932 | 8,561 | |||||||||
|
PROVISION FOR INCOME TAXES
|
2,494 | 2,245 | 2,134 | |||||||||
|
NET INCOME FROM CONTINUING OPERATIONS
|
9,133 | 7,687 | 6,427 | |||||||||
|
INCOME FROM DISCONTINUED OPERATIONS, NET OF TAX
|
240 | 79 | 176 | |||||||||
|
NET INCOME
|
9,373 | 7,766 | 6,603 | |||||||||
|
PREFERRED STOCK DIVIDENDS AND DISCOUNT ACCRETION
|
- | 1,108 | - | |||||||||
|
NET INCOME AVAILABLE TO COMMON SHAREHOLDERS
|
$ | 9,373 | 6,658 | 6,603 | ||||||||
|
Basic earnings per common share:
|
||||||||||||
|
Continuing operations
|
$ | 1.37 | 0.99 | 0.96 | ||||||||
|
Discontinued operations
|
0.03 | 0.01 | 0.03 | |||||||||
|
Diluted earnings per common share:
|
||||||||||||
|
Continuing operations
|
1.36 | 0.98 | 0.96 | |||||||||
|
Discontinued operations
|
0.03 | 0.01 | 0.03 | |||||||||
|
Weighted average shares outstanding:
|
||||||||||||
|
Basic
|
6,687,500 | 6,687,232 | 6,687,232 | |||||||||
|
Diluted
|
6,736,622 | 6,701,309 | 6,687,232 | |||||||||
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders
LCNB Corp. and subsidiaries
We have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of LCNB Corp. and subsidiaries as of December 31, 2010 and 2009, 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, 2010; and in our report dated March 1, 2011 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 material respects, in relation to the consolidated financial statements from which it has been derived.
| /s/ J.D. Cloud & Co. L.L.P. |
Cincinnati, Ohio
March 1, 2011