LCNB CORP - 10-Q Quarterly Report

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

( X )

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2005

( )

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the transition period from

Commission File Number 000-26121

LCNB Corp.

(Exact name of registrant as specified in its charter)

Ohio

31-1626393

(State or other jurisdiction of

(I.R.S. Employer

incorporation or organization)

Identification Number)

2 North Broadway, Lebanon, Ohio 45036

(Address of principal executive offices, including Zip Code)

(513) 932-1414

(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes X No

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes X No

The number of shares outstanding of the issuer's common stock, without par value, as of April 25, 2005 was 3,325,249 shares.

LCNB Corp.

INDEX

Page No.

Part I - Financial Information

Item 1. Financial Statements

Consolidated Balance Sheets -

March 31, 2005, and December 31, 2004

Consolidated Statements of Income -

Three Months Ended March 31, 2005 and 2004

Consolidated Statements of Comprehensive Income -

Three Months Ended March 31, 2005 and 2004

Consolidated Statements of Stockholders' Equity -

Three Months Ended March 31, 2005 and 2004

Consolidated Statements of Cash Flows -

Three Months Ended March 31, 2005 and 2004

Notes to Consolidated Financial Statements

6-12

Report of Independent Registered Public Accounting Firm

Item 2. Management's Discussion and Analysis of Financial

Condition and Results of Operations

14-23

Item 3. Quantitative and Qualitative Disclosures about

Market Risks

Item 4 Controls and Procedures

Part II - Other Information

Item 1 Legal Proceedings

Item 2 Changes in Securities and Use of Proceeds

Item 3 Defaults by the Company on its Senior Securities

Item 4 Submission of Matters to a Vote of Security Holders

Item 5 Other Information

Item 6 Exhibits and Reports on Form 8-K

Signatures

LCNB CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)


	March 31,		December 31,
	2005		2004
	(Unaudited)
ASSETS:
Cash and due from banks	$	15,967		10,715
Federal funds sold		8,900		32,400
Total cash and cash equivalents		24,867		43,115

Securities available for sale, at market value		127,417		113,437
Federal Reserve Bank stock and Federal Home Loan Bank stock, at cost		3,085		3,058
Loans, net		338,401		334,440
Premises and equipment, net		12,914		12,233
Intangibles, net		2,018		2,173

Other assets		14,774		13,795
TOTAL ASSETS	$	523,476		522,251

LIABILITIES
Deposits -
Noninterest-bearing	$	73,325		73,417
Interest-bearing		392,436		390,483
Total deposits		465,761		463,900
Long-term debt		2,121		2,137
Accrued interest and other liabilities		3,751		3,918
TOTAL LIABILITIES		471,633		469,955

SHAREHOLDERS' EQUITY
Common stock-no par value, authorized 4,000,000 shares; issued and outstanding 3,551,884 shares		10,560		10,560
Surplus		10,555		10,553
Retained earnings		37,177		36,735
Treasury shares at cost, 226,635 and 223,585 shares at March 31, 2005 and December 31, 2004, respectively		(6,194)		(6,078)
Accumulated other comprehensive income (loss), net of taxes		(255)		526
TOTAL SHAREHOLDERS' EQUITY		51,843		52,296

TOTAL LIABILITES AND SHAREHOLDERS' EQUITY	$	523,476		522,251


The accompanying notes to the consolidated financial statements are an integral part of these statements.

- 1 -

LCNB CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands)
(Unaudited)

		Three Months Ended
		March 31,
		2005	2004
INTEREST INCOME:
Interest and fees on loans	$	5,335	5,060
Dividends on Federal Reserve Bank and Federal Home Loan Bank stock		27	23
Interest on investment securities-
Taxable		613	747
Non-taxable		494	494
Other short-term investments		79	34
TOTAL INTEREST INCOME		6,548	6,358

INTEREST EXPENSE:
Interest on deposits		1,942	1,808
Interest on borrowings		33	54
TOTAL INTEREST EXPENSE		1,975	1,862
NET INTEREST INCOME		4,573	4,496
PROVISION FOR LOAN LOSSES		98	90

NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES		4,475	4,406

NON-INTEREST INCOME:
Trust income		314	365
Service charges and fees		926	899
Net gain on sales of securities		-	127
Insurance agency income		311	326
Earnings from bank owned life insurance		118	-
Gains from sales of mortgage loans		11	21
Gain from sale of credit card portfolio		-	403
Other operating income		35	37
TOTAL NON-INTEREST INCOME		1,715	2,178

NON-INTEREST EXPENSE:
Salaries and wages		1,829	1,772
Pension and other employee benefits		502	532
Equipment expenses		272	248
Occupancy expense – net		350	296
State franchise tax		152	137
Marketing		120	135
Intangible amortization		146	152



Other non-interest expense		954	1,008
TOTAL NON-INTEREST EXPENSE		4,325	4,280

INCOME BEFORE INCOME TAXES		1,865	2,304
PROVISION FOR INCOME TAXES		459	642
NET INCOME	$	1,406	1,662

Dividends declared per common share	$	0.29	0.275

Earnings per common share:
Basic	$	0.42	0.49
Diluted		0.42	0.49

Average shares outstanding:
Basic		3,326,606	3,373,582
Diluted		3,327,982	3,374,534


The accompanying notes to consolidated financial statements are an integral part of these statements.

- 2 -

LCNB CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
(Unaudited)

		Three Months Ended
		March 31,
		2005	2004

Net Income	$	1,406	1,662

Other comprehensive income (loss):
Net unrealized gain (loss) on available for
sale securities (net of taxes of $402
and $264 for the three months ended March 31, 2005

and March 31, 2004, respectively)		(781)	512

Reclassification adjustment for net realized
gain on sale of available for sale securities
included in net income (net of taxes of
$43 for the three months ended March
31, 2004)		-	(85)

Total comprehensive income	$	625	2,089



The accompanying notes to consolidated financial statements are an integral part of these statements.

- 3 -

LCNB CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(In thousands)
(Unaudited)

						Accumulated
						Other			Total
		Common		Retained	Treasury	Comprehensive		Shareholders'
		Shares	Surplus	Earnings	Shares	Income			Equity

Balance January 1, 2004	$	10,560	10,553	33,872	(4,356)		1,819		52,448

Net income				1,662					1,662

Change in estimated fair value of securities available for sale, net of tax and reclassification adjustment							427		427

Treasury shares purchased					(70)				(70)

Cash dividends declared
$0.275 per share				(927)					(927)

Balance March 31, 2004	$	10,560	10,553	34,607	(4,426)		2,246		53,540


Balance January 1, 2005	$	10,560	10,553	36,735	(6,078)		526		52,296

Net income				1,406					1,406

Change in estimated fair value of securities available for sale, net of tax and reclassification adjustment							(781)		(781)

Compensation expense relating to stock options			2						2

Treasury shares purchased					(116)				(116)

Cash dividends declared
$0.29 per share				(964)					(964)

Balance March 31, 2005	$	10,560	10,555	37,177	(6,194)		(255)