LCNB CORP. Reports Financial Results for the Three and Nine Months Ended September 30, 2020
10/20/2020 - 07:36 PM
LEBANON, Ohio--(BUSINESS WIRE )--LCNB Corp. ("LCNB") (NASDAQ: LCNB) today announced financial results for the three and nine months ended September 30, 2020.
Net income for the third quarter 2020 was $4,250,000 , compared to $4,727,000 for the same period last year. Earnings per basic and diluted share for the third quarter 2020 were $0.33 , compared to $0.36 for the same period last year. Net income for the nine-month period ended September 30, 2020 was $14,333,000 , compared to $14,082,000 for the same period last year. Earnings per basic and diluted share for the nine-month period ended September 30, 2020 were $1.11 compared to $1.07 for the same period last year.
Earnings, before provisions for loan losses and income taxes, increased 3.4% to $6,154,000 for the third quarter 2020 compared to $5,952,000 for the same period last year. For the nine-month period ended September 30, 2020, earnings, before provisions for loan losses and income taxes, increased 12.4% to $19,300,000 , compared to $17,170,000 for the nine-month period ended September 30, 2019.
Commenting on the financial results, LCNB President and Chief Executive Officer Eric Meilstrup said, “LCNB’s third quarter financial results demonstrate the resiliency of our business, employees, customers, and communities, as we navigate the unprecedented impacts of the COVID-19 pandemic. While our asset quality remains relatively stable, we prudently increased our allowance for loan and lease losses to account for uncertainty regarding the long-term economic impacts of the COVID-19 crisis. I am encouraged that our core earnings before provision and tax expenses increased 3.4% during the third quarter and are up 12.4% year-to-date, as we benefit from our diverse non-interest income generating businesses and improvements in our cost of funds. Third quarter non-interest income increased 27.5% over the prior year period, and now represents 21.8% of total revenues, compared to 17.0% of total revenues in the 2019 third quarter primarily due to strong residential mortgage demand and higher fiduciary income.”
Mr. Meilstrup continued, “We are working hard to support our local communities and I am encouraged by the growth we experienced in net loans and total deposits which increased 7.6% and 6.1% , respectively, since December 31, 2019. Since the COVID-19 pandemic began, we have also supported our communities by offering customers impacted by the COVID-19 crisis the ability to defer certain loan payments and over the past three months we have experienced a material decline in the amount of deferrals. Overall, I am pleased with the underlying performance of our loan portfolio as third quarter 2020 net charge-offs were only $18,000 , compared to $209,000 for the same period last year.”
“As we enter the fourth quarter, we remain focused on providing our communities with personalized financial services and we have started assisting our Paycheck Protection Program loan customers through the Small Business Administration forgiveness process. I am extremely proud of the continued dedication and hard work of LCNB’s employees and the positive contributions they provide our customers and communities,” concluded Mr. Meilstrup.
Net interest income for the three months ended September 30, 2020 was $13,529,000 , compared to $13,578,000 for the comparable period in 2019. The slight decline for the three-month period was primarily due to market driven decreases in the average rates earned on loans and investments, partially offset by growth in the average balance of the loan portfolio. Net interest income for the nine-month period ended September 30, 2020 increased $1,146,000 t o $41,705,000 , as compared to the nine month period ended September 30, 2019. The increase for the nine-month period was primarily due to growth in the average balance of LCNB's loan portfolio, partially offset by a decrease in the average rate earned on that portfolio. Favorably contributing to the variances for both the three and nine month periods were market driven decreases in the average rates paid on deposits.
The provision for loan losses for the three and nine months ended September 30, 2020 were, respectively, $712,000 and $1,952,000 greater than the comparable periods in 2019 partially due to adjustments for estimated impacts from the economic downturn caused by the COVID-19 pandemic. Non-accrual loans and loans past due 90 days or more and still accruing interest increased $994,000 , from $3,210,000 , or 0.26% , of total loans at December 31, 2019 to $4,204,000 , or 0.31% , of total loans at September 30, 2020. The increase was primarily due to three loans that were newly classified during 2020.
Non-interest income for the three and nine months ended September 30, 2020 was, respectively, $922,000 and $2,310,000 greater than the comparable periods in 2019 primarily due to increases in fiduciary income and gains from sales of loans, partially offset by a decrease in service charges and fees on deposit accounts. The increase for the nine month period 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 third quarter 2019 and partially due to a mortality benefit received during the first quarter 2020.
Non-interest expense for the three and nine months ended September 30, 2020 was, respectively, $671,000 and $1,326,000 greater than the comparable periods in 2019, primarily due to increases in salaries and employee benefits and other non-interest expenses. 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 employee benefits. Partially offsetting the increase for the nine month period was a decrease in FDIC insurance premiums due to a small bank assessment credit received during both the first and second quarters 2020. LCNB used the credit in full during those two quarters and the premium payment returned to a normal level for the third quarter 2020.
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:
the success, impact, and timing of the implementation of LCNB’s business strategies;
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;
LCNB’s ability to integrate recent and future acquisitions may be unsuccessful, or may be more difficult, time-consuming or costly than expected;
LCNB may incur increased charge-offs in the future;
LCNB may face competitive loss of customers;
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;
changes in general economic conditions and increased competition could adversely affect LCNB’s operating results;
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;
LCNB may experience difficulties growing loan and deposit balances;
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;
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;
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;
adverse weather events and natural disasters and global and/or national epidemics; and
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
Nine Months Ended
9/30/2020
6/30/2020
3/31/2020
12/31/2019
9/30/2019
9/30/2020
9/30/2019
Condensed Income Statement
Interest income
$
15,322
15,957
16,556
16,424
16,329
47,835
48,770
Interest expense
1,793
1,959
2,378
2,577
2,751
6,130
8,211
Net interest income
13,529
13,998
14,178
13,847
13,578
41,705
40,559
Provision (credit) for loan losses
976
16
1,173
(6)
264
2,165
213
Net interest income after provision
12,553
13,982
13,005
13,853
13,314
39,540
40,346
Non-interest income
4,278
3,319
3,839
3,222
3,356
11,436
9,126
Non-interest expense
11,653
11,116
11,072
11,007
10,982
33,841
32,515
Income before income taxes
5,178
6,185
5,772
6,068
5,688
17,135
16,957
Provision for income taxes
928
1,128
746
1,238
961
2,802
2,875
Net income
$
4,250
5,057
5,026
4,830
4,727
14,333
14,082
Amort/Accret income on acquired loans
$
181
294
667
400
302
1,142
881
Amort/Accret expenses on acquired
interest-bearing liabilities
$
—
2
3
3
4
5
290
Tax-equivalent net interest income
$
13,594
14,066
14,254
13,937
13,679
41,914
40,915
Per Share Data
Dividends per share
$
0.18
0.18
0.18
0.18
0.17
0.54
0.51
Basic earnings per common share
$
0.33
0.39
0.39
0.37
0.36
1.11
1.07
Diluted earnings per common share
$
0.33
0.39
0.39
0.37
0.36
1.11
1.07
Book value per share
$
18.46
18.27
18.00
17.63
17.44
18.46
17.44
Tangible book value per share
$
13.66
13.47
13.18
12.78
12.57
13.66
12.57
Weighted average common shares outstanding:
Basic
12,937,865
12,940,975
12,926,077
12,912,106
12,932,950
12,934,987
13,135,134
Diluted
12,937,901
12,941,001
12,927,666
12,916,000
12,937,145
12,935,388
13,139,100
Shares outstanding at period end
12,926,686
12,975,879
12,969,076
12,936,783
12,927,463
12,926,686
12,927,463
Selected Financial Ratios
Return on average assets
0.97
%
1.19
%
1.23
%
1.17
%
1.13
%
1.13
%
1.15
%
Return on average equity
7.08
%
8.63
%
8.75
%
8.42
%
8.33
%
8.14
%
8.42
%
Return on average tangible equity
9.56
%
11.74
%
12.00
%
11.63
%
11.57
%
11.07
%
11.75
%
Dividend payout ratio
54.55
%
46.15
%
46.15
%
48.65
%
47.22
%
48.65
%
47.66
%
Net interest margin (tax equivalent)
3.47
%
3.70
%
3.92
%
3.76
%
3.67
%
3.69
%
3.70
%
Efficiency ratio (tax equivalent)
65.20
%
63.94
%
61.19
%
64.15
%
64.47
%
63.43
%
64.98
%
Selected Balance Sheet Items
Cash and cash equivalents
$
24,485
42,736
24,795
20,765
22,826
Debt and equity securities
199,044
194,883
183,123
219,791
239,730
Loans:
Commercial and industrial
$
124,628
125,492
85,356
78,306
71,576
Commercial, secured by real estate
843,943
833,286
829,461
804,953
797,842
Residential real estate
327,689
334,349
318,009
322,533
320,703
Consumer
36,504
32,859
28,955
25,232
23,918
Agricultural
8,920
11,071
10,519
11,509
11,525
Other, including deposit overdrafts
403
283
436
1,193
456
Deferred net origination fees
(1,927)
(1,902)
(349)
(275)
(128)
Loans, gross
1,340,160
1,335,438
1,272,387
1,243,451
1,225,892
Less allowance for loan losses
5,974
5,016
5,008
4,045
4,167
Loans, net
$
1,334,186
1,330,422
1,267,379
1,239,406
1,221,725
Total earning assets
$
1,547,538
1,554,537
1,462,485
1,466,988
1,470,074
Total assets
1,725,615
1,735,332
1,636,280
1,639,308
1,644,447
Total deposits
1,430,394
1,438,921
1,345,872
1,348,280
1,355,383
Three Months Ended
Nine Months Ended
9/30/2020
6/30/2020
3/31/2020
12/31/2019
9/30/2019
9/30/2020
9/30/2019
Selected Balance Sheet Items, continued
Long-term debt
31,999
33,998
35,996
40,994
41,990
Total shareholders’ equity
238,585
237,047
233,478
228,048
225,492
Equity to assets ratio
13.83
%
13.66
%
14.27
%
13.91
%
13.71
%
Loans to deposits ratio
93.69
%
92.81
%
94.54
%
92.22
%
90.45
%
Tangible common equity (TCE)
$
176,624
174,823
170,994
165,304
162,485
Tangible common assets (TCA)
1,663,654
1,673,108
1,573,796
1,576,564
1,581,440
TCE/TCA
10.62
%
10.45
%
10.87
%
10.49
%
10.27
%
Selected Average Balance Sheet Items
Cash and cash equivalents
$
42,661
46,292
25,101
26,501
28,293
37,988
27,600
Debt and equity securities
197,788
182,371
204,912
231,115
243,553
195,033
253,113
Loans
$
1,339,608
1,318,753
1,252,554
1,230,845
1,227,806
1,303,770
1,218,183
Less allowance for loan losses
5,250
4,998
3,938
4,076
3,986
4,730
4,049
Net loans
$
1,334,358
1,313,755
1,248,616
1,226,769
1,223,820
1,299,040
1,214,134
Total earning assets
$
1,558,886
1,528,610
1,462,946
1,469,469
1,480,096
1,516,967
1,479,983
Total assets
1,741,998
1,704,303
1,638,486
1,643,793
1,654,034
1,695,103
1,642,186
Total deposits
1,445,573
1,412,082
1,346,770
1,352,101
1,365,702
1,401,636
1,350,678
Short-term borrowings
0
82
1,415
622
468
497
7,898
Long-term debt
33,020
34,964
38,325
41,742
41,988
35,427
43,067
Total shareholders’ equity
238,990
235,587
231,058
227,595
225,216
235,225
223,644
Equity to assets ratio
13.72
%
13.82
%
14.10
%
13.85
%
13.62
%
13.88
%
13.62
%
Loans to deposits ratio
92.67
%
93.39
%
93.00
%
91.03
%
89.90
%
93.02
%
90.19
%
Asset Quality
Net charge-offs
$
18
8
210
115
209
236
92
Other real estate owned
—
—
—
197
197
—
197
Non-accrual loans
4,110
3,876
2,829
3,210
3,523
4,110
3,523
Loans past due 90 days or more and
still accruing
94
38
39
—
—
94
—
Total nonperforming loans
$
4,204
3,914
2,868
3,210
3,523
4,204
3,523
Net charge-offs to average loans
0.01
%
0.00
%
0.07
%
0.04
%
0.07
%
0.02
%
0.01
%
Allowance for loan losses to total loans
0.45
%
0.38
%
0.39
%
0.33
%
0.34
%
0.45
%
0.34
%
Nonperforming loans to total loans
0.31
%
0.29
%
0.23
%
0.26
%
0.29
%
0.31
%
0.29
%
Nonperforming assets to total assets
0.24
%
0.23
%
0.18
%
0.21
%
0.23
%
0.24
%
0.23
%
Assets Under Management
LCNB Corp. total assets
$
1,725,615
1,735,332
1,636,280
1,639,308
1,644,447
Trust and investments (fair value)
524,502
516,076
455,974
435,664
411,724
Mortgage loans serviced
120,546
100,189
94,805
93,596
90,784
Cash management
119,520
116,615
77,471
75,948
117,530
Brokerage accounts (fair value)
267,307
255,276
235,278
268,059
262,038
Total assets managed
$
2,757,490
2,723,488
2,499,808
2,512,575
2,526,523
LCNB CORP. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in thousands)
September 30,
2020
(Unaudited)
December 31,
2019
ASSETS:
Cash and due from banks
$
16,151
17,019
Interest-bearing demand deposits
8,334
3,746
Total cash and cash equivalents
24,485
20,765
Investment securities:
Equity securities with a readily determinable fair value, at fair value
2,213
2,312
Equity securities without a readily determinable fair value, at cost
2,099
2,099
Debt securities, available-for-sale, at fair value
157,936
178,000
Debt securities, held-to-maturity, at cost
26,941
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
1,334,186
1,239,406
Premises and equipment, net
35,309
34,787
Operating leases right of use asset
5,729
5,444
Goodwill
59,221
59,221
Core deposit and other intangibles
3,539
4,006
Bank owned life insurance
41,871
41,667
Interest receivable
9,559
3,926
Other assets
12,672
10,295
TOTAL ASSETS
$
1,725,615
1,639,308
LIABILITIES:
Deposits:
Noninterest-bearing
$
426,989
354,391
Interest-bearing
1,003,405
993,889
Total deposits
1,430,394
1,348,280
Long-term debt
31,999
40,994
Operating lease liabilities
5,790
5,446
Accrued interest and other liabilities
18,847
16,540
TOTAL LIABILITIES
1,487,030
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 14,157,303 and
14,111,810 shares at September 30, 2020 and December 31, 2019, respectively; outstanding
12,926,686 and 12,936,783 shares at September 30, 2020 and December 31, 2019, respectively
142,310
141,791
Retained earnings
111,760
104,431
Treasury shares at cost, 1,230,617 and 1,175,027 shares at September 30, 2020 and
December 31, 2019, respectively
(19,639)
(18,847)
Accumulated other comprehensive income, net of taxes
4,154
673
TOTAL SHAREHOLDERS' EQUITY
238,585
228,048
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
$
1,725,615
1,639,308
LCNB CORP. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
(Unaudited)
Three Months Ended
September 30,
Nine Months Ended
September 30,
2020
2019
2020
2019
INTEREST INCOME:
Interest and fees on loans
$
14,379
14,872
44,428
44,072
Dividends on equity securities with a readily determinable fair value
13
15
40
47
Dividends on equity securities without a readily determinable fair value
5
16
33
48
Interest on debt securities, taxable
633
918
2,250
2,720
Interest on debt securities, non-taxable
249
379
788
1,340
Interest on interest-bearing time deposits
—
3
—
11
Other investments
43
126
296
532
TOTAL INTEREST INCOME
15,322
16,329
47,835
48,770
INTEREST EXPENSE:
Interest on deposits
1,567
2,475
5,416
7,225
Interest on short-term borrowings
—
3
7
224
Interest on long-term debt
226
273
707
762
TOTAL INTEREST EXPENSE
1,793
2,751
6,130
8,211
NET INTEREST INCOME
13,529
13,578
41,705
40,559
PROVISION FOR LOAN LOSSES
976
264
2,165
213
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES
12,553
13,314
39,540
40,346
NON-INTEREST INCOME:
Fiduciary income
1,275
1,123
3,579
3,215
Service charges and fees on deposit accounts
1,506
1,616
4,038
4,421
Net gains (losses) on sales of debt securities
—
(20)
221
(37)
Bank owned life insurance income
275
289
1,163
654
Gains from sales of loans
999
114
1,436
207
Other operating income
223
234
999
666
TOTAL NON-INTEREST INCOME
4,278
3,356
11,436
9,126
NON-INTEREST EXPENSE:
Salaries and employee benefits
6,863
6,403
20,279
18,808
Equipment expenses
341
322
917
866
Occupancy expense, net
740
751
2,145
2,258
State financial institutions tax
424
433
1,280
1,307
Marketing
471
410
906
1,009
Amortization of intangibles
263
263
783
780
FDIC insurance premiums, net
112
(13)
142
225
Contracted services
435
455
1,312
1,394
Other real estate owned
2
1
(7)
52
Merger-related expenses
—
27
—
114
Other non-interest expense
2,002
1,930
6,084
5,702
TOTAL NON-INTEREST EXPENSE
11,653
10,982
33,841
32,515
INCOME BEFORE INCOME TAXES
5,178
5,688
17,135
16,957
PROVISION FOR INCOME TAXES
928
961
2,802
2,875
NET INCOME
$
4,250
4,727
14,333
14,082
Dividends declared per common share
$
0.18
0.17
0.54
0.51
Earnings per common share:
Basic
0.33
0.36
1.11
1.07
Diluted
0.33
0.36
1.11
1.07
Weighted average common shares outstanding:
Basic
12,937,865
12,932,950
12,934,987
13,135,134
Diluted
12,937,901
12,937,145
12,935,388
13,139,100