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LCNB Corp. Reports Financial Results for the Three and Twelve Months Ended December 31, 2020

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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

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.

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
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

View source version on businesswire.com: https://www.businesswire.com/news/home/20210201005170/en/

Contacts

Company Contact:
Eric J. Meilstrup
President, Chief Executive Officer
LCNB Corp
(513) 932-1414
emeilstrup@lcnb.com

Investor and Media Contact:
Andrew M. Berger
Managing Director
SM Berger & Company, Inc.
(216) 464-6400
andrew@smberger.com