8-K

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): October 19, 2018

LCNB CORP.

(Exact name of Registrant as specified in its Charter)

Ohio	001-35292	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))

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. ☐

Explanatory Note

Item 2.02 Results of Operations and Financial Condition.

On October 19, 2018, LCNB Corp. issued an earnings release announcing its financial results for the three and nine months ended September 30, 2018. 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 October 19, 2018, LCNB Corp. issued an earnings release announcing its financial results for the three and nine months ended September 30, 2018. 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 October 19, 2018

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: October 19, 2018	By: /s/ Robert C. Haines II
		Robert C. Haines II Chief Financial Officer

EX-99.1

Exhibit 99.1

Press Release

October 19, 2018

LCNB CORP. REPORTS FINANCIAL RESULTS FOR

THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2018

LEBANON, Ohio--LCNB Corp. ("LCNB") (NASDAQ: LCNB) today announced net income of $4,201,000 (total basic and diluted earnings per share of $0.32) and $9,652,000 (total basic and diluted earnings per share of $0.84) for the three and nine months ended September 30, 2018, respectively.  This compares to net income of $3,106,000 (total basic and diluted earnings per share of $0.31) and $9,355,000 (total basic and diluted earnings per share of $0.93) for the same three and nine month periods in 2017. Items significantly affecting net income during the 2018 periods were:

• expenses relating to the merger with Columbus First Bancorp, Inc. ("Columbus First") totaled $346,000 and $1,959,000 for the three and nine month periods, respectively,

• a $645,000 premises impairment charge recognized during the second quarter 2018, and

• a reduction in LCNB's federal tax rate from 34% to 21% as a result of the Tax Cuts and Jobs Act that was signed into law on December 22, 2017.

Commenting on the financial results, LCNB Chief Executive Officer Steve Foster said, "We are pleased to report our financial results for the three and nine months ended September 30, 2018. Net income for the three and nine months ended September 30, 2018 was greater than the comparable periods in 2017, despite merger-related expenses recognized for the acquisition of Columbus First. Return of average assets equaled 1.03% and 0.89% for the three and nine month periods in 2018. Eliminating merger-related expenses from the income statement produces pro-forma net income of $4,475,000 and $11,257,000 for the three and nine month periods in 2018, respectively. Pro-forma return on average asset ratios for the three and nine month periods were 1.09% and 1.04%, respectively. The pro-forma results equate to respective increases of $1,369,000 and $1,902,000 in net income over the same three and nine month periods in 2017."

Mr. Foster continued, "As previously announced, Eric J. Meilstrup was promoted from Executive Vice President to President of LCNB National Bank and LCNB Corp., effective October 1, 2018. Eric and I have worked closely over the years and he has been a strong contributer to LCNB. I look forward to continuing to work with him in his new position."

Net interest income for the three and nine months ended September 30, 2018 was, respectively, $2,956,000 and $4,452,000 greater than the comparable periods in 2017, primarily due to growth in LCNB's loan portfolio, partially offset by a decrease in average investment securities and increases in deposits and long-term borrowings. Also offsetting the growth in the loan portfolio was a market-driven increase in average rates paid on deposits. Loans, deposits, and long-term borrowings obtained through the merger with Columbus First were a significant component of LCNB's loan portfolio growth and the increases in deposits and long-term borrowings.

The provision for loan losses for the three and nine months ended September 30, 2018 was, respectively, $671,000 and $737,000 greater than the comparable periods in 2017. Non-accrual loans and loans past due 90 days or more and still accruing interest decreased $361,000, from $2,965,000 or 0.35% of total loans at December 31, 2017, to $2,604,000 or 0.22% of total loans at September 30, 2018.

Non-interest income for the three and nine months ended September 30, 2018 was, respectively, $262,000 and $469,000 greater than the comparable periods in 2017 primarily due to increases in fiduciary income and service charges and fees on deposit accounts, partially offset by a decrease in net gains (losses) from sales of securities.

Non-interest expense for the three and nine months ended September 30, 2018 was, respectively, $1,645,000 and $5,326,000 greater than the comparable periods in 2017 primarily due to increases in salaries and employee benefits and merger-related expenses. Also contributing to the increase during the nine month period was an impairment charge recognized on one of LCNB's office buildings. Merger-related expenses increased due to costs connected to the acquisition of Columbus First.

The merger with Columbus First was accounted for using the acquisition method of accounting and, accordingly, assets acquired, liabilities assumed, and consideration paid were recorded at their estimated fair values as of the merger date. Any changes in the estimated fair values based on new information about facts that existed at the merger date will be recognized in the period the adjustment is identified.

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, 2017, 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. LCNB’s ability to integrate recent and future acquisitions, including the recent merger with Columbus First, may be unsuccessful, or may be more difficult, time-consuming or costly than expected;

3. LCNB may incur increased charge-offs in the future;

4. LCNB may face competitive loss of customers;

5. 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;

6. changes in general economic conditions and increased competition could adversely affect LCNB’s operating results;

7. 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;

8. LCNB may experience difficulties growing loan and deposit balances;

9. the current economic environment poses significant challenges for us and could adversely affect our  financial condition and results of operations;

10. 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;

11. 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; and

12. 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 “Dodd-Frank 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. 

EX-99.2

Exhibit 99.2

LCNB Corp. and Subsidiaries

Financial Highlights

(Dollars in thousands, except per share amounts)

(Unaudited)

	Three Months Ended											Nine Months Ended
	9/30/2018			6/30/2018		3/31/2018		12/31/2017		9/30/2017		9/30/2018		9/30/2017
Condensed Income Statement
Interest income	$	15,070		12,538		11,142		11,610		11,055		38,750		32,853
Interest expense	1,967			1,170		954		953		908		4,091		2,646
Net interest income	13,103			11,368		10,188		10,657		10,147		34,659		30,207
Provision for loan losses	659			224		79		(10	)	(12	)	962		225
Net interest income after provision	12,444			11,144		10,109		10,667		10,159		33,697		29,982
Non-interest income	2,921			2,791		2,636		2,579		2,659		8,348		7,879
Non-interest expense	10,317			10,711		9,549		8,612		8,672		30,577		25,251
Income before income taxes	5,048			3,224		3,196		4,634		4,146		11,468		12,610
Provision for income taxes	847			486		483		1,017		1,040		1,816		3,255
Net income	$	4,201		2,738		2,713		3,617		3,106		9,652		9,355
Amort/Accret income on acquired loans	$	198		44		96		606		90		340		490
Amort/Accret expenses on acquired interest-bearing liabilities	$	214		—		—		—		—		214		—
Tax-equivalent net interest income	$	13,281		11,549		10,375		11,062		10,569		35,203		31,487
Per Share Data
Dividends per share	$	0.16		0.16		0.16		0.16		0.16		0.48		0.48
Basic earnings per common share	$	0.32		0.25		0.27		0.37		0.31		0.84		0.93
Diluted earnings per common share	$	0.32		0.25		0.27		0.36		0.31		0.84		0.93
Book value per share	$	16.05		15.97		14.80		14.99		14.94		16.05		14.94
Tangible book value per share	$	11.18		11.14		11.47		11.64		11.57		11.18		11.57
Weighted average common shares outstanding:
Basic	13,285,203			11,099,485		10,020,611		10,013,777		10,008,807		11,480,390		10,002,812
Diluted	13,290,665			11,105,014		10,028,588		10,020,566		10,015,204		11,486,051		10,009,942
Shares outstanding at period end	13,304,976			13,299,235		10,041,152		10,023,059		10,018,507		13,304,976		10,018,507
Selected Financial Ratios
Return on average assets	1.03		%	0.78	%	0.85	%	1.11	%	0.94	%	0.89	%	0.95	%
Return on average equity	7.76		%	6.46	%	7.33	%	9.49	%	8.22	%	7.23	%	8.48	%
Dividend payout ratio	50.00		%	64.00	%	59.26	%	43.24	%	51.61	%	57.14	%	51.61	%
Net interest margin (tax equivalent)	3.60		%	3.63	%	3.59	%	3.73	%	3.52	%	3.61	%	3.53	%
Efficiency ratio (tax equivalent)	63.68		%	74.69	%	73.39	%	63.13	%	65.56	%	70.21	%	64.14	%
Selected Balance Sheet Items
Cash and cash equivalents	$	19,812		24,901		17,494		25,386		21,203
Investment securities and stock	299,786			311,047		310,009		317,413		353,634
Loans:
Commercial and industrial	$	78,002		81,778		37,118		36,057		36,049
Commercial, secured by real estate	704,987			705,978		542,890		527,947		510,158
Residential real estate	347,920			339,435		246,487		251,582		253,530
Consumer	17,505			17,705		17,176		17,450		17,956
Agricultural	13,280			13,390		12,217		15,194		15,677
Other, including deposit overdrafts	498			583		506		539		570
Deferred net origination costs	133			229		263		291		264
Loans, gross	1,162,325			1,159,098		856,657		849,060		834,204
Less allowance for loan losses	4,016			3,603		3,529		3,403		3,407
Loans, net	$	1,158,309		1,155,495		853,128		845,657		830,797
Total earning assets	$	1,465,787		1,471,923		1,168,204		1,170,700		1,193,648
Total assets	1,620,134			1,631,442		1,288,791		1,295,638		1,314,319
Total deposits	1,371,023			1,380,884		1,123,463		1,085,821		1,121,523

	Three Months Ended											Nine Months Ended
	9/30/2018			6/30/2018		3/31/2018		12/31/2017		9/30/2017		9/30/2018		9/30/2017
Selected Balance Sheet Items, continued
Short-term borrowings	0			0		0		47,000		30,000
Long-term debt	23,079			27,085		6,219		303		363
Total shareholders’ equity	213,515			212,366		148,584		150,271		149,713
Equity to assets ratio	13.18		%	13.02	%	11.53	%	11.60	%	11.39	%
Loans to deposits ratio	84.78		%	83.94	%	76.25	%	78.20	%	74.38	%
Tangible common equity (TCE)	$	148,733		147,705		114,801		116,289		115,527
Tangible common assets (TCA)	1,555,352			1,566,781		1,255,008		1,261,656		1,280,133
TCE/TCA	9.56		%	9.43	%	9.15	%	9.22	%	9.02	%
Selected Average Balance Sheet Items
Cash and cash equivalents	$	25,920		27,319		21,820		18,787		21,609		25,011		27,289
Investment securities and stock	304,112			306,366		313,689		332,225		363,039		308,020		367,598
Loans	$	1,155,846		961,726		853,152		840,526		824,183		991,350		816,361
Less allowance for loan losses	3,622			4,245		3,401		3,407		3,324		3,757		3,404
Net loans	$	1,152,224		957,481		849,751		837,119		820,859		987,593		812,957
Total earning assets	$	1,465,510		1,276,176		1,170,708		1,175,180		1,190,860		1,305,211		1,193,800
Total assets	1,623,016			1,409,698		1,292,375		1,295,293		1,313,476		1,442,896		1,314,476
Total deposits	1,367,950			1,212,104		1,114,979		1,096,966		1,133,072		1,232,599		1,135,605
Short-term borrowings	1,833			3,491		14,086		34,440		17,936		6,425		20,450
Long-term debt	25,757			13,252		2,255		323		383		13,841		453
Total shareholders’ equity	214,769			170,077		150,058		151,154		150,032		178,539		147,530
Equity to assets ratio	13.23		%	12.06	%	11.61	%	11.67	%	11.42	%	12.37	%	11.22	%
Loans to deposits ratio	84.49		%	79.34	%	76.52	%	76.62	%	72.74	%	80.43	%	71.89	%
Asset Quality
Net charge-offs (recoveries)	$	245		150		(47	)	(7	)	(36	)	348		394
Other real estate owned	35			35		—		—		—		35		—
Non-accrual loans	2,603			4,065		2,744		2,965		4,387		2,603		4,387
Loans past due 90 days or more and still accruing	1			5		146		—		95		1		95
Total nonperforming loans	$	2,604		4,070		2,890		2,965		4,482		2,604		4,482
Net charge-offs (recoveries) to average loans	0.08		%	0.06	%	(0.02	)%	0.00	%	(0.02	)%	0.05	%	0.06	%
Allowance for loan losses to total loans	0.35		%	0.31	%	0.41	%	0.40	%	0.41	%	0.35	%	0.41	%
Nonperforming loans to total loans	0.22		%	0.35	%	0.34	%	0.35	%	0.54	%	0.22	%	0.54	%
Nonperforming assets to total assets	0.16		%	0.25	%	0.22	%	0.23	%	0.34	%	0.16	%	0.34	%
Assets Under Management
LCNB Corp. total assets	$	1,620,134		1,631,442		1,288,791		1,295,638		1,314,319
Trust and investments (fair value)	386,582			370,587		359,766		362,486		326,642
Mortgage loans serviced	115,647			114,536		90,630		92,818		96,241
Cash management	36,502			48,369		72,372		84,344		77,780
Brokerage accounts (fair value)	247,175			238,651		230,168		229,006		219,960
Total assets managed	$	2,406,040		2,403,585		2,041,727		2,064,292		2,034,942
Non-GAAP Financial Measures
Net income	$	4,201		2,738		2,713		3,617		3,106		9,652		9,355
Add: merger-related expenses, net of tax	274			710		621		87		—		1,605		—
Adjusted net income	$	4,475		3,448		3,334		3,704		3,106		11,257		9,355
Basic adjusted earnings per share	0.34			0.31		0.33		0.37		0.31		0.98		0.94
Diluted adjusted earnings per share	0.34			0.31		0.33		0.37		0.31		0.98		0.93
Adjusted return on average assets	1.09		%	0.98	%	1.05	%	1.16	%	0.94	%	1.04	%	0.95	%
Adjusted return on average equity	8.27		%	8.13	%	9.01	%	9.94	%	8.22	%	8.43	%	8.48	%

LCNB CORP. AND SUBSIDIARIES

CONSOLIDATED CONDENSED BALANCE SHEETS

(Dollars in thousands)

	September 30, 2018 (Unaudited)			December 31, 2017
ASSETS:
Cash and due from banks	$	16,136		21,159
Interest-bearing demand deposits	3,676			4,227
Total cash and cash equivalents	19,812			25,386
Interest-bearing time deposits	6,873			—
Investment securities:
Equity securities with a readily determinable fair value, at fair value	2,200			2,160
Equity securities without a readily determinable fair value, at cost	2,099			1,099
Debt securities, available-for-sale, at fair value	247,437			275,213
Debt securities, held-to-maturity, at cost	31,679			32,571
Federal Reserve Bank stock, at cost	4,653			2,732
Federal Home Loan Bank stock, at cost	4,845			3,638
Loans, net	1,158,309			845,657
Premises and equipment, net	33,533			34,927
Premises held for sale, net	—			—
Goodwill	59,952			30,183
Core deposit and other intangibles	5,306			3,799
Bank owned life insurance	28,539			27,985
Other assets	14,897			10,288
TOTAL ASSETS	$	1,620,134		1,295,638
LIABILITIES:
Deposits:
Noninterest-bearing	$	333,440		283,212
Interest-bearing	1,037,583			802,609
Total deposits	1,371,023			1,085,821
Short-term borrowings	—			47,000
Long-term debt	23,079			303
Accrued interest and other liabilities	12,517			12,243
TOTAL LIABILITIES	1,406,619			1,145,367
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 Septembeer 30, 2018 and December 31, 2017; issued 14,058,603 and 10,776,686 shares at September 30, 2018 and December 31, 2017, respectively	140,996			76,977
Retained earnings	91,617			87,301
Treasury shares at cost, 753,627 shares at September 30, 2018 and December 31, 2017	(11,665		)	(11,665	)
Accumulated other comprehensive loss, net of taxes	(7,433		)	(2,342	)
TOTAL SHAREHOLDERS' EQUITY	213,515			150,271
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	1,620,134		1,295,638

LCNB CORP. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF INCOME

(Dollars in thousands, except per share data)

(Unaudited)

	Three Months Ended  September 30,					Nine Months Ended  September 30,
	2018			2017		2018		2017
INTEREST INCOME:
Interest and fees on loans	$	13,363		9,095		33,479		26,833
Dividends on equity securities with a readily determinable fair value	17			13		48		44
Dividends on equity securities without a readily determinable fair value	7			6		22		17
Interest on debt securities, taxable	901			1,089		2,766		3,289
Interest on debt securities, non-taxable	661			783		2,045		2,377
Other short-term investments	121			69		390		293
TOTAL INTEREST INCOME	15,070			11,055		38,750		32,853
INTEREST EXPENSE:
Interest on deposits	1,810			850		3,777		2,539
Interest on short-term borrowings	12			55		88		97
Interest on long-term debt	145			3		226		10
TOTAL INTEREST EXPENSE	1,967			908		4,091		2,646
NET INTEREST INCOME	13,103			10,147		34,659		30,207
PROVISION FOR LOAN LOSSES	659			(12	)	962		225
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES	12,444			10,159		33,697		29,982
NON-INTEREST INCOME:
Fiduciary income	1,081			871		2,987		2,604
Service charges and fees on deposit accounts	1,439			1,352		4,170		3,886
Net gains (losses) on sales of securities	(7		)	78		(8	)	218
Bank owned life insurance income	185			190		553		676
Gains from sales of loans	63			34		182		136
Other operating income	160			134		464		359
TOTAL NON-INTEREST INCOME	2,921			2,659		8,348		7,879
NON-INTEREST EXPENSE:
Salaries and employee benefits	5,686			4,678		15,791		13,907
Equipment expenses	276			361		797		836
Occupancy expense, net	734			685		2,119		1,889
State financial institutions tax	299			281		898		851
Marketing	382			282		798		641
Amortization of intangibles	286			189		659		562
FDIC insurance premiums	91			108		289		320
Contracted services	387			307		1,093		930
Other real estate owned	1			3		4		8
Merger-related expenses	346			—		1,959		—
Other non-interest expense	1,829			1,778		6,170		5,307
TOTAL NON-INTEREST EXPENSE	10,317			8,672		30,577		25,251
INCOME BEFORE INCOME TAXES	5,048			4,146		11,468		12,610
PROVISION FOR INCOME TAXES	847			1,040		1,816		3,255
NET INCOME	$	4,201		3,106		9,652		9,355
Dividends declared per common share	$	0.16		0.16		0.48		0.48
Earnings per common share:
Basic	0.32			0.31		0.84		0.93
Diluted	0.32			0.31		0.84		0.93
Weighted average common shares outstanding:
Basic	13,285,203			10,008,807		11,480,390		10,002,812
Diluted	13,290,665			10,015,204		11,486,051		10,009,942

Contacts

LCNB Corp.

Steve P. Foster, CEO, 800-344-BANK

Robert C. Haines II, Executive Vice President and CFO, 800-344-BANK