LCNB Corp. Reports Record Financial Results For The Three and Six Months Ended June 30, 2021
07/22/2021 - 06:00 AM
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 t o 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 t o $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:
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;
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;
LCNB’s ability to integrate future acquisitions may be unsuccessful, or may be more difficult, time-consuming, or costly than expected;
LCNB may incur increased loan 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
(Dollars in thousands, except per share amounts)
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
5,678
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
(Dollars in thousands)
June 30, 2021
December
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)
Three Months Ended
Six Months Ended
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/
