8-K - LCNB - Equibles

UNITED STATES

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): January 29, 2021

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))

Securities Registered Pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, No Par Value	LCNB	NASDAQ

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 January 29, 2021, LCNB Corp. issued an earnings release announcing its financial results for the three and twelve months ended December 31, 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.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

Exhibit No. Description

99.1 Earnings Press Release Dated January 29 , 20 21

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: January 29, 2021	By: /s/ Robert C. Haines II
		Robert C. Haines II<br>Chief Financial Officer

Document

Exhibit 99.1

Press Release

January 29, 2021

2 North Broadway

Lebanon, Ohio 45036

Company Contact: Investor and Media Contact:

Eric J. Meilstrup Andrew M. Berger

President, Chief Executive Officer Managing Director

LCNB Corp, SM Berger & Company, Inc.

(513) 932-1414 (216) 464-6400

emeilstrup@lcnb.com andrew@smberger.com

LCNB CORP. REPORTS FINANCIAL RESULTS FOR

THE THREE AND TWELVE MONTHS ENDED DECEMBER 31, 2020

Annual Diluted Earnings Per Share Increased 7.6% Year-over-Year to a Record of $1.55

Record Fiduciary Income, Driven by a 44.2% Year-over-Year Increase in Trust and Investment Assets

Strong Credit Quality with Annual Net Charge-offs to Average Loans of 3 Basis Points

Fourth Quarter Return on Average Tangible Equity of 12.83%, up 120 Basis Points Year-over-Year

Total Assets Managed Increased 16.3% Year-over-Year to a Record $2.9 Billion

LEBANON, Ohio--LCNB Corp. ("LCNB") (NASDAQ: LCNB) today announced financial results for the three and twelve months ended December 31, 2020.

Net income for the 2020 fourth quarter was $5,742,000, compared to $4,830,000 for the same period last year. Earnings per basic and diluted share for the 2020 fourth quarter were $0.44, compared to $0.37 for the same period last year. Net income for the twelve-month period ended December 31, 2020 was $20,075,000, compared to $18,912,000 for the same period last year. Earnings per basic and diluted share for the twelve-month period ended December 31, 2020 were $1.55, compared to $1.44 for the same period last year. The efficiency ratio improved by 137 basis points, moving from 64.76% for 2019 to 63.39% for 2020.

Earnings, before provisions for loan losses and income taxes, increased 13.4% to $6,874,000 for the 2020 fourth quarter compared to $6,062,000 for the same period last year. For the twelve-month period ended December 31, 2020, earnings, before provisions for loan losses and income taxes, increased 12.7% to $26,174,000, compared to $23,232,000 for the twelve-month period ended December 31, 2019.

Commenting on the financial results, LCNB President and Chief Executive Officer Eric Meilstrup said, “LCNB’s record 2020 earnings reflect the valuable financial services we provide our communities, our conservative approach to risk, and the success of our diversified business model. Most importantly, 2020 demonstrates the dedication of our 361 employees and I am humbled by our team’s resiliency and strong operating performance throughout 2020 and the COVID-19 pandemic.”

Mr. Meilstrup continued, “Despite unprecedented economic challenges related to the COVID-19 crisis, our asset quality remained strong and we experienced stable year-over-year trends in both net charge-offs to average loans and nonperforming assets to total assets. In addition, at December 31, 2020, we only had ten loans in short-term deferral status totaling $20,576,000, which represents a 94.8% decline from the amount of deferrals at June 30, 2020. Strong asset quality performance is a direct result of our conservative lending culture and stable economic trends within our Southwest and Central Ohio markets.”

“We remain focused on building upon 2020’s accomplishments by continuing to offer our communities leading and diversified financial services, maintaining strong asset quality, managing both our cost of funds and non-interest expenses, and increasing non-interest income. We believe we have a proven platform to drive sustainable growth and create long-term value for our shareholders,” concluded Mr. Meilstrup.

Net interest income for the three months ended December 31, 2020 was $14,513,000, compared to $13,847,000 for the comparable period in 2019. Net interest income for the twelve-month period ended December 31, 2020 increased $1,812,000 to $56,218,000, as compared to $54,406,000 in the same period last year. Favorably contributing to the variances for both the three- and twelve- month periods were market driven decreases in the average rates paid on deposits, aided by a shift from higher cost certificates of deposit to lower cost demand and savings products.

Non-interest income for the three and twelve months ended December 31, 2020 was, respectively, $1,083,000 and $3,393,000 greater than the comparable periods in 2019 primarily due to increases in fiduciary income and gains from sales of loans. The increase for the twelve-month period also included gains from the sale of equity securities, which is recorded in other operating income in the consolidated condensed statements of income, gains from the sale of debt securities, and an increase in income from bank owned life insurance. Income from bank owned life insurance increased year-to-date partially due to new policies purchased in the fourth quarter of 2019 and partially due to a mortality benefit received during the first quarter of 2020.

Non-interest expense for the three and twelve months ended December 31, 2020 was respectively, $937,000 and $2,263,000 greater than the comparable periods in 2019, primarily due to increases in salaries and employee benefits. 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.

Asset Quality

For the 2020 fourth quarter, LCNB recorded a $151,000 credit for loan losses, compared to a credit of $6,000 for the 2019 fourth quarter. The provision for loan losses for the year ended December 31, 2020 was $2,014,000, compared to $207,000 for the year ended December 31, 2019. The $1,807,000 year-over-year increase in the provision for loan losses was partially due to adjustments for potential impacts from the economic recession caused by the COVID-19 pandemic.

Net charge-offs for the 2020 fourth quarter were $95,000, or 0.03% of average loans, annualized, compared to $115,000, or 0.04% of average loans, for the same period last year. For the 2020 twelve-month period, net charge-offs were $331,000, or 0.03% of average loans, compared to $207,000, or 0.02% of average loans for the 2019 twelve-month period.

Non-accrual loans and loans past due 90 days or more and still accruing interest increased $508,000, from $3,210,000 or 0.26% of total loans at December 31, 2019 to $3,718,000 or 0.29% of total loans at December 31, 2020. Nonperforming assets to total assets was 0.21% at December 31, 2020 and at December 31, 2019.

About LCNB Corp.

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 Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act"), 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												Year Ended
	12/31/2020			9/30/2020			6/30/2020		3/31/2020		12/31/2019		12/31/2020		12/31/2019
Condensed Income Statement
Interest income	$	15,945		15,322			15,957		16,556		16,424		63,780		65,194
Interest expense	1,432			1,793			1,959		2,378		2,577		7,562		10,788
Net interest income	14,513			13,529			13,998		14,178		13,847		56,218		54,406
Provision (credit) for loan losses	(151)			976			16		1,173		(6)		2,014		207
Net interest income after provision	14,664			12,553			13,982		13,005		13,853		54,204		54,199
Non-interest income	4,305			4,278			3,319		3,839		3,222		15,741		12,348
Non-interest expense	11,944			11,653			11,116		11,072		11,007		45,785		43,522
Income before income taxes	7,025			5,178			6,185		5,772		6,068		24,160		23,025
Provision for income taxes	1,283			928			1,128		746		1,238		4,085		4,113
Net income	$	5,742		4,250			5,057		5,026		4,830		20,075		18,912
Amort/Accret income on acquired loans	$	186					294		667		400		1,328		1,281
Amort/Accret expenses on acquired interest-bearing liabilities	$	1		—			2		3		3		6		293
Tax-equivalent net interest income	$	14,577		13,594			14,066		14,254		13,937		56,491		54,852
Per Share Data
Dividends per share	$	0.19		0.18			0.18		0.18		0.18		0.73		0.69
Basic earnings per common share	$	0.44		0.33			0.39		0.39		0.37		1.55		1.44
Diluted earnings per common share	$	0.44		0.33			0.39		0.39		0.37		1.55		1.44
Book value per share	$	18.73		18.46			18.27		18.00		17.63		18.73		17.63
Tangible book value per share	$	13.93		13.66			13.47		13.18		12.78		13.93		12.78
Weighted average common shares outstanding:
Basic	12,852,614			12,937,865			12,940,975		12,926,077		12,912,106		12,914,277		13,078,920
Diluted	12,852,657			12,937,901			12,941,001		12,927,666		12,916,000		12,914,584		13,082,893
Shares outstanding at period end	12,858,325			12,926,686			12,975,879		12,969,076		12,936,783		12,858,325		12,936,783
Selected Financial Ratios
Return on average assets	1.31		%	0.97		%	1.19	%	1.23	%	1.17	%	1.18	%	1.15	%
Return on average equity	9.52		%	7.08		%	8.63	%	8.75	%	8.42	%	8.49	%	8.42	%
Return on average tangible equity	12.83		%	9.56		%	11.74	%	12.00	%	11.63	%	11.53	%	11.72	%
Dividend payout ratio	43.18		%	54.55		%	46.15	%	46.15	%	48.65	%	47.10	%	47.92	%
Net interest margin (tax equivalent)	3.71		%	3.47		%	3.70	%	3.92	%	3.76	%	3.70	%	3.71	%
Efficiency ratio (tax equivalent)	63.26		%	65.20		%	63.94	%	61.19	%	64.15	%	63.39	%	64.76	%
Selected Balance Sheet Items
Cash and cash equivalents	$	31,730		$	24,485		42,736		24,795		20,765
Debt and equity securities	248,624			199,044			194,883		183,123		219,791
Loans:
Commercial and industrial	$	100,254		$	124,628		125,492		85,356		78,306
Commercial, secured by real estate	843,230			843,943			833,286		829,461		804,953
Residential real estate	309,692			327,689			334,349		318,009		322,533
Consumer	36,917			36,504			32,859		28,955		25,232
Agricultural	10,100			8,920			11,071		10,519		11,509
Other, including deposit overdrafts	363			403			283		436		1,193
Deferred net origination fees	(1,135)			(1,927)			(1,902)		(349)		(275)
Loans, gross	1,299,421			1,340,160			1,335,438		1,272,387		1,243,451
Less allowance for loan losses	5,728			5,974			5,016		5,008		4,045
Loans, net	$	1,293,693		1,334,186			1,330,422		1,267,379		1,239,406
Total earning assets	$	1,562,392		1,547,538			1,554,537		1,462,485		1,466,988
Total assets	1,745,884			1,725,615			1,735,332		1,636,280		1,639,308
Total deposits	1,455,423			1,430,394			1,438,921		1,345,872		1,348,280
	Three Months Ended											Year Ended
---	---	---	---	---	---	---	---	---	---	---	---	---	---	---	---
	12/31/2020			9/30/2020		6/30/2020		3/31/2020		12/31/2019		12/31/2020		12/31/2019
Selected Balance Sheet Items, continued
Long-term debt	22,000			31,999		33,998		35,996		40,994
Total shareholders’ equity	240,825			238,585		237,047		233,478		228,048
Equity to assets ratio	13.79		%	13.83	%	13.66	%	14.27	%	13.91	%
Loans to deposits ratio	89.28		%	93.69	%	92.81	%	94.54	%	92.22	%
Tangible common equity (TCE)	$	179,127		176,624		174,823		170,994		165,304
Tangible common assets (TCA)	1,684,186			1,663,654		1,673,108		1,573,796		1,576,564
TCE/TCA	10.64		%	10.62	%	10.45	%	10.87	%	10.49	%
Selected Average Balance Sheet Items
Cash and cash equivalents	$	49,273		42,661		46,292		25,101		26,501		40,825		27,321
Debt and equity securities	218,816			197,788		182,371		204,912		231,115		201,012		247,569
Loans	$	1,313,892		1,339,608		1,318,753		1,252,554		1,230,845		1,306,314		1,221,375
Less allowance for loan losses	5,920			5,250		4,998		3,938		4,076		5,029		4,056
Net loans	$	1,307,972		1,334,358		1,313,755		1,248,616		1,226,769		1,301,285		1,217,319
Total earning assets	$	1,561,392		1,558,886		1,528,610		1,462,946		1,469,469		1,528,134		1,477,333
Total assets	1,742,947			1,741,998		1,704,303		1,638,486		1,643,793		1,706,924		1,642,591
Total deposits	1,447,217			1,445,573		1,412,082		1,346,770		1,352,101		1,413,093		1,351,036
Short-term borrowings	—			—		82		1,415		622		372		6,064
Long-term debt	30,803			33,020		34,964		38,325		41,742		34,265		42,733
Total shareholders’ equity	239,881			238,990		235,587		231,058		227,595		236,396		224,639
Equity to assets ratio	13.76		%	13.72	%	13.82	%	14.10	%	13.85	%	13.85	%	13.62	%
Loans to deposits ratio	90.79		%	92.67	%	93.39	%	93.00	%	91.03	%	92.44	%	90.19	%
Asset Quality
Net charge-offs	$	95		18		8		210		115		331		207
Other real estate owned	—			—		—		—		197		—		197
Non-accrual loans	3,718			4,110		3,876		2,829		3,210		3,718		3,210
Loans past due 90 days or more and still accruing	—			94		38		39		—		—		—
Total nonperforming loans	$	3,718		4,204		3,914		2,868		3,210		3,718		3,210
Net charge-offs to average loans	0.03		%	0.01	%	0.00	%	0.07	%	0.04	%	0.03	%	0.02	%
Allowance for loan losses to total loans	0.44		%	0.45	%	0.38	%	0.39	%	0.33	%	0.44	%	0.33	%
Nonperforming loans to total loans	0.29		%	0.31	%	0.29	%	0.23	%	0.26	%	0.29	%	0.26	%
Nonperforming assets to total assets	0.21		%	0.24	%	0.23	%	0.18	%	0.21	%	0.21	%	0.21	%
Assets Under Management
LCNB Corp. total assets	$	1,745,884		1,725,615		1,735,332		1,636,280		1,639,308
Trust and investments (fair value)	628,414			524,502		516,076		455,974		435,664
Mortgage loans serviced	137,188			120,546		100,189		94,805		93,596
Cash management	116,792			119,520		116,615		77,471		75,948
Brokerage accounts (fair value)	292,953			267,307		255,276		235,278		268,059
Total assets managed	$	2,921,231		2,757,490		2,723,488		2,499,808		2,512,575

LCNB CORP. AND SUBSIDIARIES

CONSOLIDATED CONDENSED BALANCE SHEETS

(Dollars in thousands)

	December 31, 2020 (Unaudited)		December 31, 2019
ASSETS:
Cash and due from banks	$	17,383	17,019
Interest-bearing demand deposits	14,347		3,746
Total cash and cash equivalents	31,730		20,765
Investment securities:
Equity securities with a readily determinable fair value, at fair value	2,389		2,312
Equity securities without a readily determinable fair value, at cost	2,099		2,099
Debt securities, available-for-sale, at fair value	209,471		178,000
Debt securities, held-to-maturity, at cost	24,810		27,525
Federal Reserve Bank stock, at cost	4,652		4,652
Federal Home Loan Bank stock, at cost	5,203		5,203
Loans, net	1,293,693		1,239,406
Premises and equipment, net	35,376		34,787
Operating leases right of use asset	6,274		5,444
Goodwill	59,221		59,221
Core deposit and other intangibles	3,453		4,006
Bank owned life insurance	42,149		41,667
Interest receivable	8,337		3,926
Other assets	17,027		10,295
TOTAL ASSETS	$	1,745,884	1,639,308
LIABILITIES:
Deposits:
Noninterest-bearing	$	455,073	354,391
Interest-bearing	1,000,350		993,889
Total deposits	1,455,423		1,348,280
Long-term debt	22,000		40,994
Operating lease liabilities	6,371		5,446
Accrued interest and other liabilities	21,265		16,540
TOTAL LIABILITIES	1,505,059		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; issued 14,090,038 and 14,111,810 shares at December 31, 2020 and 2019, respectively; outstanding 12,858,325 and 12,936,783 shares at December 31, 2020 and 2019, respectively	142,443		141,791
Retained earnings	115,058		104,431
Treasury shares at cost, 1,231,713 and 1,175,027 shares at December 31,2020 and 2019, respectively	(20,719)		(18,847)
Accumulated other comprehensive income, net of taxes	4,043		673
TOTAL SHAREHOLDERS' EQUITY	240,825		228,048
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	1,745,884	1,639,308

LCNB CORP. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF INCOME

(Dollars in thousands, except per share data)

(Unaudited)

	Three Months Ended December 31,			Year Ended <br>December 31,
	2020		2019	2020	2019
INTEREST INCOME:
Interest and fees on loans	$	14,839	14,937	59,267	59,009
Dividends on equity securities with a readily determinable fair value	14		15	54	62
Dividends on equity securities without a readily determinable fair value	4		17	37	65
Interest on debt securities, taxable	666		881	2,916	3,601
Interest on debt securities, non-taxable	239		337	1,027	1,677
Interest on interest-bearing time deposits	—		—	—	11
Other investments	183		237	479	769
TOTAL INTEREST INCOME	15,945		16,424	63,780	65,194
INTEREST EXPENSE:
Interest on deposits	1,218		2,301	6,634	9,526
Interest on short-term borrowings	—		3	7	227
Interest on long-term debt	214		273	921	1,035
TOTAL INTEREST EXPENSE	1,432		2,577	7,562	10,788
NET INTEREST INCOME	14,513		13,847	56,218	54,406
PROVISION (CREDIT) FOR LOAN LOSSES	(151)		(6)	2,014	207
NET INTEREST INCOME AFTER PROVISION (CREDIT) FOR LOAN LOSSES	14,664		13,853	54,204	54,199
NON-INTEREST INCOME:
Fiduciary income	1,430		1,139	5,009	4,354
Service charges and fees on deposit accounts	1,444		1,454	5,482	5,875
Net gains (losses) on sales of debt securities	—		(4)	221	(41)
Bank owned life insurance income	278		289	1,441	943
Gains from sales of loans	861		121	2,297	328
Other operating income	292		223	1,291	889
TOTAL NON-INTEREST INCOME	4,305		3,222	15,741	12,348
NON-INTEREST EXPENSE:
Salaries and employee benefits	6,899		6,512	27,178	25,320
Equipment expenses	460		343	1,377	1,209
Occupancy expense, net	730		703	2,875	2,961
State financial institutions tax	428		362	1,708	1,669
Marketing	348		310	1,254	1,319
Amortization of intangibles	263		263	1,046	1,043
FDIC insurance premiums, net	114		—	256	225
Contracted services	509		471	1,821	1,865
Merger-related expenses	—		—	—	114
Other non-interest expense	2,193		2,043	8,270	7,797
TOTAL NON-INTEREST EXPENSE	11,944		11,007	45,785	43,522
INCOME BEFORE INCOME TAXES	7,025		6,068	24,160	23,025
PROVISION FOR INCOME TAXES	1,283		1,238	4,085	4,113
NET INCOME	$	5,742	4,830	20,075	18,912
Dividends declared per common share	$	0.19	0.18	0.73	0.69
Earnings per common share:
Basic	0.44		0.37	1.55	1.44
Diluted	0.44		0.37	1.55	1.44
Weighted average common shares outstanding:
Basic	12,852,614		12,912,106	12,914,277	13,078,920
Diluted	12,852,657		12,916,000	12,914,584	13,082,893