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LCNB Corp. Reports Record Financial Results For The Three and Six Months Ended June 30, 2021

·11 min read

LCNB Wealth Assets Up 31.8% Year-over-Year to a Record $1.02 Billion
Total Assets Managed1 13.1% Higher Year-over-Year to a Record $3.08 Billion
Second Quarter Diluted Earnings Per Share Increased 5.1% Year-over-Year to a Second Quarter Record of $0.41

LEBANON, Ohio, July 22, 2021--(BUSINESS WIRE)--LCNB Corp. ("LCNB") (NASDAQ: LCNB) today announced financial results for the three and six months ended June 30, 2021.

Commenting on the financial results, LCNB President and Chief Executive Officer Eric Meilstrup said, "LCNB achieved record second quarter earnings, driven by continued growth in total assets managed and strong asset quality. Growing assets, controlling risk, and diversifying revenue has helped LCNB successfully navigate the current low interest rate environment. Fee income generated from the Paycheck Protection Program ("PPP") also contributed $402,000 to our record second quarter earnings as we processed $10.4 million of loan forgiveness under the program during the quarter. PPP loans continue to wind down and our loan portfolio included $23.8 million of PPP loans at June 30, 2021. In addition, we continue to benefit from robust fiduciary income associated with our rapidly growing wealth management business and, for the second quarter 2021, fiduciary income increased 44.5% over the prior year period to a quarterly record of $1.7 million."

Mr. Meilstrup continued, "Average net loans are up both sequentially and year-over-year, despite the $46 million of PPP loans forgiven over the past 12 months, which is a testament to our local presence and the value we provide customers within our compelling Ohio markets. In addition, while the competition for loans is high, we remain disciplined with our approach to risk and pricing of loans. As a result, our asset quality is robust as total non-performing loans are in line with pre-pandemic levels and net charge-offs continue to be limited. At June 30, 2021, we only had one $10.4 million relationship still in a COVID-19 deferral status, which is a 97.3% decline from the balance of COVID-19 deferrals at June 30, 2020.

1 Total Assets Managed includes LCNB Corp. Consolidated Assets, LCNB Wealth Management Assets (Trust and Investments and Brokerage accounts), Loans Serviced for Others, and Cash Management Services.

"We continue to focus on strategies that support our growth opportunities, increase operating efficiencies, improve our customer engagement, and enhance our digital resources. We continue to develop and retain proven bankers and financial professionals throughout our organization. Additionally, we continue to attract new talent and we recently enhanced our commercial lending presence to pursue additional loan opportunities within Northern Kentucky. We also recently rebranded our investment and trust services to LCNB Wealth, which is an important component of our enhanced go to market and cross-selling strategies. Overall, I am extremely pleased with the progress we are making and excited by the direction we are headed," concluded Mr. Meilstrup.

Net income for the 2021 second quarter was $5,290,000, compared to $5,057,000 for the same period last year. Earnings per basic and diluted share for the 2021 second quarter were $0.41, compared to $0.39 for the same period last year. Net income for the six-month period ended June 30, 2021, was $10,530,000, compared to $10,083,000 for the same period last year. Earnings per basic and diluted share for the six-month period ended June 30, 2021, were $0.82, compared to $0.78 for the same period last year.

Net interest income for the three months ended June 30, 2021, was $14,369,000, compared to $13,998,000 for the comparable period in 2020. Net interest income for the six-month period ended June 30, 2021, increased $565,000 to $28,741,000, as compared to $28,176,000 in the same period last year. Favorably contributing to the variances for both the three- and six- month periods were fees recognized from PPP loans and 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 months ended June 30, 2021, increased $995,000 or by 30.0% to $4,314,000, compared to $3,319,000 for the same period last year. For the six months ended June 30, 2021, non-interest income increased $621,000 or by 8.7% to $7,779,000, compared to $7,158,000 for the same period last year. The primary drivers of the second quarter and first half year-over-year increases in non-interest income were increased fiduciary income, deposit service charges, and a one-time refund for the Company’s Ohio Financial Institution taxes, which was included in other operating income.

Non-interest expense for the three months ended June 30, 2021, was $1,092,000 greater than the comparable period in 2020 primarily due to increases in salaries and employee benefits, equipment, marketing, FDIC insurance, contracted services, and other non-interest expenses. For the first half ended June 30, 2021, non-interest expense increased $1,512,000 from the comparable period in 2020.

Asset Quality

For the 2021 second quarter, LCNB recorded a $15,000 credit for loan losses, compared to a provision of $16,000 for the 2020 second quarter. For the six months ended June 30, 2021, LCNB recognized a credit for loan losses of $67,000, compared to a provision of $1,189,000 for the six months ended June 30, 2020. The $1,256,000 year-over-year improvement in the provision for loan losses was partially due to strong asset quality and last year’s proactive build in the Company’s allowance for loan losses associated with the potential economic impacts caused by the COVID-19 pandemic.

Net charge-offs for the 2021 second quarter were $12,000, compared to $8,000 for the same period last year. For the 2021 six-month period, net charge-offs were $9,000, compared to $218,000 or 0.03% of average loans for the 2020 six-month period.

Non-accrual loans and loans past due 90 days or more and still accruing interest decreased $576,000, from $3,914,000 or 0.29% of total loans at June 30, 2020, to $3,338,000 or 0.25% of total loans at June 30, 2021. Nonperforming assets to total assets was 0.18% at June 30, 2021, compared to 0.23% at June 30, 2020.

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, digital 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, 2020, 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. the disruption of global, national, state, and local economies associated with the COVID-19 pandemic, which could affect LCNB's liquidity and capital positions, impair the ability of our borrowers to repay outstanding loans, impair collateral values, and further increase the allowance for credit losses;

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

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

  6. LCNB may face competitive loss of customers;

  7. 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;

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

  9. 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;

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

  11. 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;

  12. 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;

  13. 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;

  14. adverse weather events and natural disasters and global and/or national epidemics; and

  15. 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 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

Six Months Ended

6/30/2021

3/31/2021

12/31/2020

9/30/2020

6/30/2020

6/30/2021

6/30/2020

Condensed Income Statement

Interest income

$

15,429

$

15,535

15,945

15,322

15,957

30,964

32,513

Interest expense

1,060

1,163

1,432

1,793

1,959

2,223

4,337

Net interest income

14,369

14,372

14,513

13,529

13,998

28,741

28,176

Provision (credit) for loan losses

(15

)

(52

)

(151

)

976

16

(67

)

1,189

Net interest income after provision (credit)

14,384

14,424

14,664

12,553

13,982

28,808

26,987

Non-interest income

4,314

3,465

4,305

4,278

3,319

7,779

7,158

Non-interest expense

12,208

11,492

11,944

11,653

11,116

23,700

22,188

Income before income taxes

6,490

6,397

7,025

5,178

6,185

12,887

11,957

Provision for income taxes

1,200

1,157

1,283

928

1,128

2,357

1,874

Net income

$

5,290

$

5,240

5,742

4,250

5,057

10,530

10,083

Amort/Accret income on acquired loans

$

216

$

249

186

181

294

465

961

Amort/Accret expenses on acquired interest-bearing liabilities

$

$

1

2

4

Tax-equivalent net interest income

$

14,427

$

14,432

14,577

13,594

14,066

28,858

28,319

Per Share Data

Dividends per share

$

0.19

$

0.19

0.19

0.18

0.18

0.38

0.36

Basic earnings per common share

$

0.41

$

0.41

0.44

0.33

0.39

0.82

0.78

Diluted earnings per common share

$

0.41

$

0.41

0.44

0.33

0.39

0.82

0.78

Book value per share

$

18.99

$

18.66

18.73

18.46

18.27

18.99

18.27

Tangible book value per share

$

14.15

$

13.87

13.93

13.66

13.47

14.15

13.47

Weighted average common shares outstanding:

Basic

12,743,726

12,794,824

12,852,614

12,937,865

12,940,975

12,769,131

12,933,528

Diluted

12,743,726

12,794,852

12,852,657

12,937,901

12,941,001

12,769,146

12,934,158

Shares outstanding at period end

12,634,845

12,820,108

12,858,325

12,926,686

12,975,879

12,634,845

12,975,879

Selected Financial Ratios

Return on average assets

1.15

%

1.20

%

1.31

%

0.97

%

1.19

%

1.17

%

1.21

%

Return on average equity

8.78

%

8.80

%

9.52

%

7.08

%

8.63

%

8.79

%

8.69

%

Return on average tangible equity

11.76

%

11.81

%

12.83

%

9.56

%

11.74

%

11.79

%

11.92

%

Dividend payout ratio

46.34

%

46.34

%

43.18

%

54.55

%

46.15

%

46.34

%

46.15

%

Net interest margin (tax equivalent)

3.51

%

3.68

%

3.71

%

3.47

%

3.70

%

3.57

%

3.81

%

Efficiency ratio (tax equivalent)

65.14

%

64.21

%

63.26

%

65.20

%

63.94

%

64.69

%

62.54

%

Selected Balance Sheet Items

Cash and cash equivalents

$

22,909

$

41,144

31,730

24,485

42,736

Debt and equity securities

349,199

276,774

248,624

199,044

194,883

Loans:

Commercial and industrial

$

97,240

$

107,630

100,254

124,628

125,492

Commercial, secured by real estate

836,085

855,894

843,230

843,943

833,286

Residential real estate

341,447

328,265

309,692

327,689

334,349

Consumer

35,257

35,799

36,917

36,504

32,859

Agricultural

8,765

8,698

10,100

8,920

11,071

Other, including deposit overdrafts

369

346

363

403

283

Deferred net origination fees

(1,398

)

(1,531

)

(1,135

)

(1,927

)

(1,902

)

Loans, gross

1,317,765

1,335,101

1,299,421

1,340,160

1,335,438

Less allowance for loan losses

5,652

5,679

5,728

5,974

5,016

Loans, net

$

1,312,113

$

1,329,422

1,293,693

1,334,186

1,330,422

Total earning assets

$

1,671,462

$

1,634,818

1,562,392

1,547,538

1,554,537

Total assets

1,856,670

1,818,321

1,745,884

1,725,615

1,735,332

Three Months Ended

Six Months Ended

6/30/2021

3/31/2021

12/31/2020

9/30/2020

6/30/2020

6/30/2021

6/30/2020

Selected Balance Sheet Items, continued

Total deposits

1,577,345

1,537,116

1,455,423

1,430,394

1,438,921

Short-term borrowings

Long-term debt

15,000

17,000

22,000

31,999

33,998

Total shareholders’ equity

239,952

239,246

240,825

238,585

237,047

Equity to assets ratio

12.92

%

13.16

%

13.79

%

13.83

%

13.66

%

Loans to deposits ratio

83.54

%

86.86

%

89.28

%

93.69

%

92.81

%

Tangible common equity (TCE)

$

178,771

$

177,805

179,127

176,624

174,823

Tangible common assets (TCA)

1,795,489

1,756,880

1,684,186

1,663,654

1,673,108

TCE/TCA

9.96

%

10.12

%

10.64

%

10.62

%

10.45

%

Selected Average Balance Sheet Items

Cash and cash equivalents

$

45,414

$

37,269

49,273

42,661

46,292

41,385

35,712

Debt and equity securities

312,596

260,147

218,816

197,788

182,371

286,517

193,642

Loans

$

1,328,760

$

1,313,803

1,313,892

1,339,608

1,318,753

1,321,323

1,285,654

Less allowance for loan losses

...

5,715

5,920

5,250

4,998

5,696

4,468

Net loans

$

1,323,082

$

1,308,088

1,307,972

1,334,358

1,313,755

1,315,627

1,281,186

Total earning assets

$

1,666,126

$

1,589,582

1,561,392

1,558,886

1,528,610

1,628,066

1,495,779

Total assets

1,852,035

1,775,154

1,742,947

1,741,998

1,704,303

1,813,888

1,671,394

Total deposits

1,570,070

1,488,156

1,447,217

1,445,573

1,412,082

1,529,339

1,379,426

Short-term borrowings

716

342

82

530

749

Long-term debt

15,571

19,689

30,803

33,020

34,964

17,619

36,644

Total shareholders’ equity

241,651

241,517

239,881

238,990

235,587

241,585

233,322

Equity to assets ratio

13.05

%

13.61

%

13.76

%

13.72

%

13.82

%

13.32

%

13.96

%

Loans to deposits ratio

84.63

%

88.28

%

90.79

%

92.67

%

93.39

%

86.40

%

93.20

%

Asset Quality

Net charge-offs (recoveries)

$

12

$

(3

)

95

18

8

9

218

Other real estate owned

Non-accrual loans

3,338

3,365

3,718

4,110

3,876

3,338

3,876

Loans past due 90 days or more and still accruing

94

38

38

Total nonperforming loans

$

3,338

$

3,365

3,718

4,204

3,914

3,338

3,914

Net charge-offs to average loans

0.00

%

0.00

%

0.03

%

0.01

%

0.00

%

0.00

%

0.03

%

Allowance for loan losses to total loans

0.43

%

0.43

%

0.44

%

0.45

%

0.38

%

0.43

%

0.38

%

Nonperforming loans to total loans

0.25

%

0.25

%

0.29

%

0.31

%

0.29

%

0.25

%

0.29

%

Nonperforming assets to total assets

0.18

%

0.19

%

0.21

%

0.24

%

0.23

%

0.18

%

0.23

%

Assets Under Management

LCNB Corp. total assets

$

1,856,670

$

1,818,321

1,745,884

1,725,615

1,735,332

Trust and investments (fair value)

701,838

673,742

628,414

524,502

516,076

Mortgage loans serviced

126,924

127,290

137,188

120,546

100,189

Cash management

80,177

118,494

116,792

119,520

116,615

Brokerage accounts (fair value)

314,491

299,355

292,953

267,307

255,276

Total assets managed

$

3,080,100

$

3,037,202

2,921,231

2,757,490

2,723,488

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

June 30, 2021
(Unaudited)

December
31, 2020

ASSETS:

Cash and due from banks

$

18,411

17,383

Interest-bearing demand deposits

4,498

14,347

Total cash and cash equivalents

22,909

31,730

Investment securities:

Equity securities with a readily determinable fair value, at fair value

2,488

2,389

Equity securities without a readily determinable fair value, at cost

2,099

2,099

Debt securities, available-for-sale, at fair value

310,515

209,471

Debt securities, held-to-maturity, at cost

24,242

24,810

Federal Reserve Bank stock, at cost

4,652

4,652

Federal Home Loan Bank stock, at cost

5,203

5,203

Loans, net

1,312,113

1,293,693

Premises and equipment, net

35,356

35,376

Operating leases right of use asset

6,730

6,274

Goodwill

59,221

59,221

Core deposit and other intangibles

2,853

3,453

Bank owned life insurance

42,685

42,149

Interest receivable

8,395

8,337

Other assets

17,209

17,027

TOTAL ASSETS

$

1,856,670

1,745,884

LIABILITIES:

Deposits:

Noninterest-bearing

$

472,830

455,073

Interest-bearing

1,104,515

1,000,350

Total deposits

1,577,345

1,455,423

Long-term debt

15,000

22,000

Operating lease liabilities

6,846

6,371

Accrued interest and other liabilities

17,527

21,265

TOTAL LIABILITIES

1,616,718

1,505,059

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 14,201,728 and 14,163,904 shares at June 30, 2021 and December 31, 2020, respectively; outstanding 12,634,845 and 12,858,325 shares at June 30, 2021 and December 31, 2020, respectively

142,791

142,443

Retained earnings

120,720

115,058

Treasury shares at cost, 1,566,883 and 1,305,579 shares at June 30, 2021 and December 31, 2020, respectively

(25,122

)

(20,719

)

Accumulated other comprehensive income, net of taxes

1,563

4,043

TOTAL SHAREHOLDERS' EQUITY

239,952

240,825

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

1,856,670

1,745,884

LCNB CORP. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
(Unaudited)

Three Months Ended
June 30,

Six Months Ended
June 30,

2021

2020

2021

2020

INTEREST INCOME:

Interest and fees on loans

$

14,108

14,822

28,643

30,049

Dividends on equity securities with a readily determinable fair value

13

13

26

27

Dividends on equity securities without a readily determinable fair value

5

12

11

28

Interest on debt securities, taxable

905

667

1,623

1,617

Interest on debt securities, non-taxable

218

254

442

539

Other investments

180

189

219

253

TOTAL INTEREST INCOME

15,429

15,957

30,964

32,513

INTEREST EXPENSE:

Interest on deposits

945

1,732

1,973

3,849

Interest on short-term borrowings

1

2

7

Interest on long-term debt

114

227

248

481

TOTAL INTEREST EXPENSE

1,060

1,959

2,223

4,337

NET INTEREST INCOME

14,369

13,998

28,741

28,176

PROVISION (CREDIT) FOR LOAN LOSSES

(15

)

16

(6

)

1,189

NET INTEREST INCOME AFTER PROVISION (CREDIT) FOR LOAN LOSSES

14,384

13,982

28,808

26,987

NON-INTEREST INCOME:

Fiduciary income

1,735

1,201

3,264

2,304

Service charges and fees on deposit accounts

1,519

1,237

2,885

2,532

Net gains on sales of debt securities, available-for-sale

221

Bank owned life insurance income

269

287

536

888

Gains from sales of loans

151

317

194

437

Other operating income

640

277

900

776

TOTAL NON-INTEREST INCOME

4,314

3,319

7,779

7,158

NON-INTEREST EXPENSE:

Salaries and employee benefits

7,111

6,648

13,544

13,416

Equipment expenses

443

289

811

576

Occupancy expense, net

729

723

1,523

1,405

State financial institutions tax

437

420

881

856

Marketing

357

258

625

435

Amortization of intangibles

260

260

517

520

FDIC insurance premiums, net

123

31

236

30

Contracted services

623

475

1,163

877

Other non-interest expense

2,125

2,012

4,400

4,073

TOTAL NON-INTEREST EXPENSE

12,208

11,116

23,700

22,188

INCOME BEFORE INCOME TAXES

6,490

6,185

12,887

11,957

PROVISION FOR INCOME TAXES

1,200

1,128

2,357

1,874

NET INCOME

$

5,290

5,057

10,530

10,083

Dividends declared per common share

$

0.19

0.18

0.38

0.36

Earnings per common share:

Basic

0.41

0.39

0.82

0.78

Diluted

0.41

0.39

0.82

0.78

Weighted average common shares outstanding:

Basic

12,743,726

12,940,975

12,769,131

12,933,528

Diluted

12,743,726

12,941,001

12,769,146

12,934,158

View source version on businesswire.com: https://www.businesswire.com/news/home/20210722005254/en/

Contacts

Company Contact:
Eric J. Meilstrup
President Chief Executive Officer
LCNB National Bank
(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