8-K - LCNB - Equibles

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): April 21, 2023

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 April 21, 2023, LCNB Corp. issued an earnings release announcing its financial results for the three months ended March 31, 2023. 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 April 2 1 , 202 3

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: April 21, 2023	By: /s/ Robert C. Haines II
		Robert C. Haines II<br>Chief Financial Officer

Document

Exhibit 99.1

Press Release

Two North Broadway

Lebanon, Ohio 45036

Company Contact:<br><br>Eric J. Meilstrup<br><br>President and Chief Executive Officer<br><br>LCNB National Bank<br><br>(513) 932-1414<br><br>shareholderrelations@lcnb.com	Investor and Media Contact:<br><br>Andrew M. Berger<br><br>Managing Director<br><br>SM Berger & Company, Inc.<br><br>(216) 464-6400<br><br>andrew@smberger.com

LCNB Corp. Reports Financial Results for the Three Months Ended March 31, 2023

Ended the First Quarter with a Stable Deposit Base and an 86.97% Loan to Deposit Ratio

Asset Quality Remains Excellent with Total Nonperforming Loans to Total Loans of 0.05% at March 31, 2023

Total Earning Assets Increased 1.4% Year-over-Year to a Record $1.74 Billion

LCNB Wealth Management Assets Up 6.2% Year-over-Year to a Record $1.09 Billion

First Quarter Earnings of $0.37 Per Diluted Share

LEBANON, Ohio--LCNB Corp. ("LCNB") (NASDAQ: LCNB) today announced financial results for the three months ended March 31, 2023.

Commenting on the financial results, LCNB President and Chief Executive Officer Eric Meilstrup said, “We continue to successfully navigate an extremely fluid operating environment as a result of the community banking values we have followed throughout our history, our prudent focus on risk management, and our commitment to our customers and communities. We believe these core operating principles not only position the bank for success in any economic environment, but also resonate with our customers and support our growth. We ended the quarter with record total assets under management driven by growing customer accounts and record assets within our LCNB Wealth Management group. This drove a 2.7% year-over-year increase in fiduciary income and helped grow non-interest income in the first quarter. I am encouraged by the positive momentum underway at LCNB Wealth Management as we leverage our local approach, growing scale, and expanding relationships.”

“LCNB’s long history of serving our communities helps us build longstanding relationships with our customers and builds a stable funding base. At March 31, 2023, we had over 60,000 consumer, public fund, small business and non-profit checking and savings accounts with an average balance of approximately $23,000 per account. With a loan-to-deposit ratio of 86.97% and an equity-to-asset ratio of 10.60% at March 31, 2023, we are well capitalized to support our loan portfolio. LCNB’s strong liquidity levels also continue to support our share repurchase program and during the first quarter we repurchased 107,028 shares of our common stock,” continued Mr. Meilstrup.

“LCNB has a solid foundation of experienced leaders, excellent asset quality, and strong capital levels. We are focused on leveraging this platform to navigate a more challenging and uncertain economic landscape, while continuing to pursue our long-term growth objectives and focus on returning excess capital back to our shareholders,” concluded Mr. Meilstrup.

Income Statement

Net income for the 2023 first quarter decreased 8.1% to $4.2 million, compared to $4.5 million for the same period last year. Earnings per basic and diluted share for the 2023 first quarter were $0.37, compared to $0.38 for the same period last year.

Net interest income for the three months ended March 31, 2023, was $13.9 million, compared to $14.2 million for the comparable period in 2022. The 2.0% year-over-year decrease for the three-month period was primarily due to higher interest expense associated with the rapid year-over-year increase in the Effective Federal Funds Rate. For the 2023 first quarter, LCNB’s tax equivalent net interest margin was 3.28%, compared to 3.35% for the same period last year.

Non-interest income for the three months ended March 31, 2023, increased slightly to $3.58 million, compared to $3.55 million for the same period last year. The increase in non-interest income was primarily due to higher fiduciary income and service charges and fees on deposit accounts, partially offset by lower gains on sales of loans.

Non-interest expense for the three months ended March 31, 2023, was $275,000 greater than the comparable period in 2022, primarily due to higher salaries and employee benefits, occupancy expenses, and FDIC insurance premiums. These increases were partially offset by reduced equipment expenses, state financial institutions tax, and marketing expenses.

Capital Allocation

During the 2023 first quarter, LCNB invested $1.8 million to repurchase 107,028 shares of its outstanding stock at an average price of $17.00 per share. This equates to almost 1.0% of the Company’s outstanding common stock prior to the repurchase. At March 31, 2023, LCNB had 407,932 shares available to be repurchased under its February 2023 share repurchase program.

For the first quarter ended March 31, 2023, LCNB paid $0.21 per share in dividends, a 5.0% increase from $0.20 per share for the first quarter last year.

Balance Sheet

Total assets at March 31, 2023, increased 1.3% to a record $1.92 billion from $1.90 billion at March 31, 2022. Net loans at March 31, 2023 increased 0.9% to $1.39 billion, compared to $1.37 billion at March 31, 2022.

Total deposits at March 31, 2023 decreased 2.0% to $1.60 billion, compared to $1.64 billion at March 31, 2022, as LCNB experienced greater competition for interest-bearing accounts. LCNB’s uninsured deposits to total deposits were approximately 13.4% for the quarter ended March 31, 2023.

Assets Under Management

Total assets managed at March 31, 2023 were a record $3.16 billion, compared to $3.15 billion at March 31, 2022. The year-over-year increase in total assets managed was primarily due to increases in LCNB Corp. total assets, trust and investments, and brokerage accounts. Trust and investments and brokerage accounts increased due to a higher number of new LCNB Wealth Management customer accounts opened over the past twelve months and an increase in the fair value of managed assets associated with an improving capital market environment, partially offset by decreases in cash management accounts and mortgage loans serviced.

Asset Quality

For the 2023 first quarter, LCNB recorded a provision for credit losses on loans of $32,000, compared to a provision of $49,000 for the 2022 first quarter.

On January 1, 2023, LCNB adopted ASC 326, which provides for a current expected credit loss (“CECL”) model in estimating the allowance for credit losses and recorded a one-time decrease of $1.92 million, net of tax, to retained earnings as a result of the initial cumulative entry. The adoption of CECL did not have a material impact on the Bank’s regulatory capital ratios. As an overall percentage of loans, the allowance for credit losses on loans increased to 0.56% at March 31, 2023 compared to 0.40% at March 31, 2022.

Net charge-offs for the 2023 first quarter were $16,000, or 0.00% of average loans, annualized, compared to net charge-offs of $25,000, or 0.01% of average loans, annualized, for the same period last year.

Total nonperforming loans, which includes non-accrual loans and loans past due 90 days or more and still accruing interest, decreased $754,000 from $1.5 million, or 0.11% of total loans, at March 31, 2022, to $701,000, or 0.05% of total loans, at March 31, 2023. The nonperforming assets to total assets ratio was 0.04% at March 31, 2023, compared to 0.08% at March 31, 2022.

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.

Forward-Looking Statements

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, 2022, 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 ongoing uncertainties for LCNB's business, results of operations and financial condition, as well as its regulatory capital and liquidity ratios and other regulatory requirements, resulting from the scope and duration of the COVID-19 pandemic;

3.LCNB’s ability to integrate future acquisitions may be unsuccessful or may be more difficult, time-consuming, or costly than expected;

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

5.LCNB may face competitive loss of customers;

6.changes in the interest rate environment, which may include further interest rate increases, 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.difficulties with technology or data security breaches, including cyberattacks, could negatively affect LCNB's ability to conduct business and its relationships with customers, vendors, and others;

12.adverse weather events and natural disasters and global and/or national epidemics could negatively affect LCNB’s customers given its concentrated geographic scope, which could impact LCNB’s operating results; and

13.government intervention in the U.S. financial system, including the effects of legislative, tax, accounting and regulatory actions and reforms, including the Coronavirus Aid, Relief, and Economic Security ("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, and any such future regulatory actions or reforms.

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
	3/31/2023			12/31/2022		9/30/2022		6/30/2022		3/31/2022
Condensed Income Statement
Interest income	$	17,918		17,719		16,704		16,208		15,122
Interest expense	3,976			1,511		1,260		1,041		899
Net interest income	13,942			16,208		15,444		15,167		14,223
Provision for (recovery of) credit losses	(57)			(19)		(157)		377		49
Net interest income after provision for (recovery of) credit losses	13,999			16,227		15,601		14,790		14,174
Non-interest income	3,581			3,629		3,581		3,528		3,550
Non-interest expense	12,525			12,065		12,350		11,469		12,250
Income before income taxes	5,055			7,791		6,832		6,849		5,474
Provision for income taxes	898			1,383		1,253		1,231		951
Net income	$	4,157		6,408		5,579		5,618		4,523
Supplemental Income Statement Information
Amort/Accret income on acquired loans	$	74		249		144		61		66
Tax-equivalent net interest income	$	13,989		16,257		15,495		15,217		14,273
Per Share Data
Dividends per share	$	0.21		0.21		0.20		0.20		0.20
Basic earnings per common share	$	0.37		0.57		0.49		0.49		0.38
Diluted earnings per common share	$	0.37		0.57		0.49		0.49		0.38
Book value per share	$	18.22		17.82		17.31		17.84		18.14
Tangible book value per share	$	12.86		12.48		11.97		12.53		12.84
Weighted average common shares outstanding:
Basic	11,189,170			11,211,328		11,284,225		11,337,805		11,818,614
Diluted	11,189,170			11,211,328		11,284,225		11,337,805		11,818,614
Shares outstanding at period end	11,202,063			11,259,080		11,293,639		11,374,515		11,401,503
Selected Financial Ratios
Return on average assets	0.88		%	1.34	%	1.15	%	1.18	%	0.96	%
Return on average equity	8.33		%	12.90	%	10.80	%	10.96	%	8.13	%
Return on average tangible common equity	11.85		%	18.59	%	15.30	%	15.52	%	11.11	%
Dividend payout ratio	56.76		%	36.84	%	40.82	%	40.82	%	52.63	%
Net interest margin (tax equivalent)	3.28		%	3.77	%	3.54	%	3.54	%	3.35	%
Efficiency ratio (tax equivalent)	71.29		%	60.67	%	64.74	%	61.18	%	68.73	%
Selected Balance Sheet Items
Cash and cash equivalents	$	31,876		22,701		29,460		31,815		19,941
Debt and equity securities	328,194			323,167		325,801		337,952		330,715
Loans:
Commercial and industrial	$	124,240		120,236		114,694		114,971		105,805
Commercial, secured by real estate	932,208			938,022		908,130		905,703		906,140
Residential real estate	303,051			305,575		316,669		315,930		328,034
Consumer	28,611			28,290		29,451		30,308		32,445
Agricultural	7,523			10,054		8,630		7,412		7,980
Other, including deposit overdrafts	62			81		52		81		45
Deferred net origination fees	(865)			(980)		(937)		(928)		(928)
Loans, gross	1,394,830			1,401,278		1,376,689		1,373,477		1,379,521
Less allowance for credit losses on loans	7,858			5,646		5,644		5,833		5,530
Loans, net	$	1,386,972		1,395,632		1,371,045		1,367,644		1,373,991
	Three Months Ended
---	---	---	---	---	---	---	---	---	---	---	---
	3/31/2023			12/31/2022		9/30/2022		6/30/2022		3/31/2022
Selected Balance Sheet Items, continued
Allowance for Credit Losses on Loans:
Allowance for credit losses, beginning of period	5,646			5,644		5,833		5,530		5,506
Cumulative change in accounting principle; adoption of ASU 2016-13	2,196			—		—		—		—
Provision for (recovery of) credit losses	32			(19)		(157)		377		49
Losses charged off	(36)			(60)		(53)		(116)		(37)
Recoveries	20			81		21		42		12
Allowance for credit losses, end of period	7,858			5,646		5,644		5,833		5,530
Total earning assets	$	1,736,829		1,726,902		1,714,196		1,722,853		1,712,115
Total assets	1,924,531			1,919,121		1,904,700		1,912,627		1,899,630
Total deposits	1,603,881			1,604,970		1,657,370		1,658,825		1,636,606
Short-term borrowings	76,500			71,455		4,000		5,000		24,746
Long-term debt	18,598			19,072		24,539		25,000		10,000
Total shareholders’ equity	204,072			200,675		195,439		202,960		206,875
Equity to assets ratio	10.60		%	10.46	%	10.26	%	10.61	%	10.89	%
Loans to deposits ratio	86.97		%	87.31	%	83.06	%	82.80	%	84.29	%
Tangible common equity (TCE)	$	144,006		140,498		135,149		142,557		146,360
Tangible common assets (TCA)	1,864,465			1,858,944		1,844,410		1,852,224		1,839,115
TCE/TCA	7.72		%	7.56	%	7.33	%	7.70	%	7.96	%
Selected Average Balance Sheet Items
Cash and cash equivalents	$	35,712		24,330		35,763		28,787		32,826
Debt and equity securities	327,123			323,195		338,299		338,149		340,666
Loans	$	1,389,385		1,383,809		1,384,520		1,375,710		1,376,926
Less allowance for credit losses on loans	7,522			5,647		5,830		5,532		5,503
Net loans	$	1,381,863		1,378,162		1,378,690		1,370,178		1,371,423
Total earning assets	$	1,729,008		1,711,524		1,736,031		1,722,503		1,727,335
Total assets	1,921,742			1,903,338		1,928,868		1,912,574		1,917,226
Total deposits	1,583,857			1,637,201		1,669,932		1,655,389		1,646,627
Short-term borrowings	94,591			21,433		5,728		18,263		12,503
Long-term debt	18,983			23,855		24,920		12,637		10,000
Total shareholders’ equity	202,419			197,014		205,051		205,645		225,725
Equity to assets ratio	10.53		%	10.35	%	10.63	%	10.75	%	11.77	%
Loans to deposits ratio	87.72		%	84.52	%	82.91	%	83.10	%	83.62	%
Asset Quality
Net charge-offs (recoveries)	$	16		(21)		32		74		25
Non-accrual loans	$	701		391		465		599		1,455
Loans past due 90 days or more and still accruing	—			39		—		—		—
Total nonperforming loans	$	701		430		465		599		1,455
Net charge-offs (recoveries) to average loans	0.00		%	(0.01)	%	0.01	%	0.02	%	0.01	%
Allowance for credit losses on loans to total loans	0.56		%	0.40	%	0.41	%	0.42	%	0.40	%
Nonperforming loans to total loans	0.05		%	0.03	%	0.03	%	0.04	%	0.11	%
Nonperforming assets to total assets	0.04		%	0.02	%	0.02	%	0.03	%	0.08	%
Assets Under Management
LCNB Corp. total assets	$	1,924,531		1,919,121		1,904,700		1,912,627		1,899,630
Trust and investments (fair value)	716,578			678,366		611,409		625,984		700,353
Mortgage loans serviced	142,167			148,412		145,317		153,557		152,271
Cash management	1,831			1,925		53,199		38,914		75,302
Brokerage accounts (fair value)	374,066			347,737		314,144		303,663		326,290
Total assets managed	$	3,159,173		3,095,561		3,028,769		3,034,745		3,153,846

LCNB CORP. AND SUBSIDIARIES

CONSOLIDATED CONDENSED BALANCE SHEETS

(Dollars in thousands)

	March 31, 2023 (Unaudited)		December 31, 2022
ASSETS:
Cash and due from banks	$	18,071	20,244
Interest-bearing demand deposits	13,805		2,457
Total cash and cash equivalents	31,876		22,701
Investment securities:
Equity securities with a readily determinable fair value, at fair value	1,286		2,273
Equity securities without a readily determinable fair value, at cost	2,099		2,099
Debt securities, available-for-sale, at fair value	293,427		289,850
Debt securities, held-to-maturity, at cost, net of allowance for credit losses	19,763		19,878
Federal Reserve Bank stock, at cost	4,652		4,652
Federal Home Loan Bank stock, at cost	6,967		4,415
Loans, net of allowance for credit losses	1,386,972		1,395,632
Premises and equipment, net	33,186		33,042
Operating leases right of use asset	6,093		6,248
Goodwill	59,221		59,221
Core deposit and other intangibles	1,665		1,827
Bank owned life insurance	44,569		44,298
Interest receivable	8,005		7,482
Other assets	24,750		25,503
TOTAL ASSETS	$	1,924,531	1,919,121
LIABILITIES:
Deposits:
Noninterest-bearing	$	473,345	505,824
Interest-bearing	1,130,536		1,099,146
Total deposits	1,603,881		1,604,970
Short-term borrowings	76,500		71,455
Long-term debt	18,598		19,072
Operating lease liabilities	6,246		6,370
Allowance for credit losses on off-balance sheet credit exposures	482		—
Accrued interest and other liabilities	14,752		16,579
TOTAL LIABILITIES	1,720,459		1,718,446
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 14,320,561 and 14,270,550 shares at March 31, 2023 and December 31, 2022, respectively; outstanding 11,202,063 and 11,259,080 shares at March 31, 2023 and December 31, 2022, respectively	144,488		144,069
Retained earnings	139,115		139,249
Treasury shares at cost, 3,118,498 and 3,011,470 shares at March 31, 2023 and December 31, 2022, respectively	(54,527)		(52,689)
Accumulated other comprehensive loss, net of taxes	(25,004)		(29,954)
TOTAL SHAREHOLDERS' EQUITY	204,072		200,675
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	1,924,531	1,919,121

LCNB CORP. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF INCOME

(Dollars in thousands, except per share data)

(Unaudited)

	Three Months Ended <br>March 31,
		2023	2022
INTEREST INCOME:
Interest and fees on loans		16,143	13,786
Dividends on equity securities with a readily determinable fair value		17	12
Dividends on equity securities without a readily determinable fair value		20	5
Interest on debt securities, taxable		1,343	1,095
Interest on debt securities, non-taxable		176	189
Other investments		219	35
TOTAL INTEREST INCOME		17,918	15,122
INTEREST EXPENSE:
Interest on deposits		2,456	739
Interest on short-term borrowings		1,304	86
Interest on long-term debt		216	74
TOTAL INTEREST EXPENSE		3,976	899
NET INTEREST INCOME		13,942	14,223
Provision for credit losses on loans		32	49
Provision for credit losses on debt securities, held-to-maturity		—	—
Recovery of credit losses on off-balance sheet credit exposures		(89)	—
TOTAL PROVISION FOR (RECOVERY OF) CREDIT LOSSES		(57)	49
NET INTEREST INCOME AFTER PROVISION FOR (RECOVERY OF) CREDIT LOSSES		13,999	14,174
NON-INTEREST INCOME:
Fiduciary income		1,740	1,695
Service charges and fees on deposit accounts		1,482	1,406
Bank owned life insurance income		271	265
Gains from sales of loans		6	124
Other operating income		82	60
TOTAL NON-INTEREST INCOME		3,581	3,550
NON-INTEREST EXPENSE:
Salaries and employee benefits		7,349	7,215
Equipment expenses		361	408
Occupancy expense, net		963	775
State financial institutions tax		397	436
Marketing		192	262
Amortization of intangibles		111	140
FDIC insurance premiums, net		215	126
Contracted services		641	610
Other non-interest expense		2,296	2,278
TOTAL NON-INTEREST EXPENSE		12,525	12,250
INCOME BEFORE INCOME TAXES		5,055	5,474
PROVISION FOR INCOME TAXES		898	951
NET INCOME		4,157	4,523
Dividends declared per common share		0.21	0.20
Earnings per common share:
---	---	---
Basic	0.37	0.38
Diluted	0.37	0.38
Weighted average common shares outstanding:
Basic	11,189,170	11,818,614
Diluted	11,189,170	11,818,614