LCNB Corp. Reports Financial Results for the Three and Twelve Months Ended December 31, 2020
02/01/2021 - 08:00 AM
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 t o $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:
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 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/