LCNB Corp. ("LCNB") (NASDAQ: LCNB) today announced net income of $5,026,000 (total basic and diluted earnings per share of $0.39) for the three months ended March 31, 2020. This compares to net income of $4,627,000 (total basic and diluted earnings per share of $0.35) for the same three month period in 2019.
Commenting on the financial results, LCNB President and Chief Executive Officer Eric Meilstrup said, "The first quarter of 2020 has brought unique and unprecedented circumstances and challenges to everyone. Despite these challenges, LCNB performed well during the quarter. Even with a $1,173,000 provision for loan losses, LCNB achieved a 1.23% return on average assets and an 8.75% return on average equity."
Net interest income for the three months ended March 31, 2020 was $787,000 greater than the comparable period in 2019, due primarily to growth in the average balance of LCNB's loan portfolio and to an increase in the average rate earned on that portfolio. Also contributing to the increase in net interest income were a decrease in the average rate paid on deposits and decreases in the average amount of and average rate paid on short-term borrowings. These favorable items were partially offset by a decrease in average investment securities.
The provision for loan losses for the three months ended March 31, 2020 was $1,278,000 greater than the comparable period in 2019. The provision included an adjustment to the allowance for loan losses for losses that may result from a potential economic recession caused by the Covid-19 pandemic. Non-accrual loans and loans past due 90 days or more and still accruing interest decreased $154,000, from $3,022,000 or 0.25% of total loans at March 31, 2019 to $2,868,000 or 0.23% of total loans at March 31, 2020.
Non-interest income for the three months ended March 31, 2020 was $1,067,000 greater than the comparable period in 2019 primarily due to increases in fiduciary income, gains from sales of securities and loans, increases in income from bank owned life insurance, and market-driven increases in the fair value of equity security investments, which were recorded in other operating income in the consolidated statements of income. Income from bank owned life insurance increased partially due to new policies purchased in the third quarter 2019 and partially due to a benefit received during the first quarter 2020.
Non-interest expense for the three months ended March 31, 2020 was $372,000 greater than the comparable period in 2019, primarily due to increases in salaries and employee benefits, partially offset by decreases in marketing expense and FDIC insurance premiums. 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. FDIC insurance premiums decreased due to a small bank assessment credit received during the first quarter 2020. LCNB has used the substantial portion of the credit and anticipates quarterly premium payments will resume in the second quarter 2020.
The provision for income taxes for the first quarter 2020 is $195,000 less than the comparable quarter in 2019 primarily due to a one-time tax benefit recognized as a result of certain provisions in the Coronavirus Aid, Relief, & Economic Security ("CARES") Act passed by Congress and signed by the President during the first 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 | |||||||||||||||
3/31/2020 | 12/31/2019 | 9/30/2019 | 6/30/2019 | 3/31/2019 | |||||||||||
Condensed Income Statement | |||||||||||||||
Interest income | $ | 16,556 | 16,424 | 16,329 | 16,328 | 16,113 | |||||||||
Interest expense | 2,378 | 2,577 | 2,751 | 2,738 | 2,722 | ||||||||||
Net interest income | 14,178 | 13,847 | 13,578 | 13,590 | 13,391 | ||||||||||
Provision (credit) for loan losses | 1,173 | (6 | ) | 264 | 54 | (105 | ) | ||||||||
Net interest income after provision | 13,005 | 13,853 | 13,314 | 13,536 | 13,496 | ||||||||||
Non-interest income | 3,839 | 3,222 | 3,356 | 2,998 | 2,772 | ||||||||||
Non-interest expense | 11,072 | 11,007 | 10,982 | 10,833 | 10,700 | ||||||||||
Income before income taxes | 5,772 | 6,068 | 5,688 | 5,701 | 5,568 | ||||||||||
Provision for income taxes | 746 | 1,238 | 961 | 973 | 941 | ||||||||||
Net income | $ | 5,026 | 4,830 | 4,727 | 4,728 | 4,627 | |||||||||
Amort/Accret income on acquired loans | $ | 667 | 400 | 302 | 355 | 224 | |||||||||
Amort/Accret expenses on acquired interest-bearing liabilities | $ | 3 | 3 | 4 | 142 | 144 | |||||||||
Tax-equivalent net interest income | $ | 14,254 | 13,937 | 13,679 | 13,700 | 13,536 | |||||||||
Per Share Data | |||||||||||||||
Dividends per share | $ | 0.18 | 0.18 | 0.17 | 0.17 | 0.17 | |||||||||
Basic earnings per common share | $ | 0.39 | 0.37 | 0.36 | 0.36 | 0.35 | |||||||||
Diluted earnings per common share | $ | 0.39 | 0.37 | 0.36 | 0.36 | 0.35 | |||||||||
Book value per share | $ | 18.00 | 17.63 | 17.44 | 17.18 | 16.83 | |||||||||
Tangible book value per share | $ | 13.18 | 12.78 | 12.57 | 12.31 | 12.05 | |||||||||
Weighted average common shares outstanding: | |||||||||||||||
Basic | 12,926,077 | 12,912,106 | 12,932,950 | 13,192,691 | 13,283,634 | ||||||||||
Diluted | 12,927,666 | 12,916,000 | 12,937,145 | 13,196,665 | 13,287,338 | ||||||||||
Shares outstanding at period end | 12,969,076 | 12,936,783 | 12,927,463 | 12,978,554 | 13,314,148 | ||||||||||
Selected Financial Ratios | |||||||||||||||
Return on average assets | 1.23 | % | 1.17 | % | 1.13 | % | 1.16 | % | 1.15 | % | |||||
Return on average equity | 8.75 | % | 8.42 | % | 8.33 | % | 8.46 | % | 8.47 | % | |||||
Dividend payout ratio | 46.15 | % | 48.65 | % | 47.22 | % | 47.22 | % | 48.57 | % | |||||
Net interest margin (tax equivalent) | 3.92 | % | 3.76 | % | 3.67 | % | 3.72 | % | 3.71 | % | |||||
Efficiency ratio (tax equivalent) | 61.19 | % | 64.15 | % | 64.47 | % | 64.87 | % | 65.61 | % | |||||
Selected Balance Sheet Items | |||||||||||||||
Cash and cash equivalents | $ | 24,795 | 20,765 | 22,826 | 23,185 | 19,527 | |||||||||
Debt and equity securities | 183,123 | 219,791 | 239,730 | 246,701 | 264,559 | ||||||||||
Loans: | |||||||||||||||
Commercial and industrial | $ | 85,356 | 78,306 | 71,576 | 79,513 | 79,725 | |||||||||
Commercial, secured by real estate | 829,461 | 804,953 | 797,842 | 793,863 | 764,424 | ||||||||||
Residential real estate | 318,009 | 322,533 | 320,703 | 326,029 | 334,227 | ||||||||||
Consumer | 28,955 | 25,232 | 23,918 | 19,649 | 17,409 | ||||||||||
Agricultural | 10,519 | 11,509 | 11,525 | 10,843 | 10,900 | ||||||||||
Other, including deposit overdrafts | 436 | 1,193 | 456 | 373 | 409 | ||||||||||
Deferred net origination costs (fees) | (349 | ) | (275 | ) | (128 | ) | (9 | ) | 40 | ||||||
Loans, gross | 1,272,387 | 1,243,451 | 1,225,892 | 1,230,261 | 1,207,134 | ||||||||||
Less allowance for loan losses | 5,008 | 4,045 | 4,167 | 4,112 | 4,126 | ||||||||||
Loans, net | $ | 1,267,379 | 1,239,406 | 1,221,725 | 1,226,149 | 1,203,008 | |||||||||
Total earning assets | $ | 1,462,485 | 1,466,988 | 1,470,074 | 1,482,913 | 1,476,862 | |||||||||
Total assets | 1,636,280 | 1,639,308 | 1,644,447 | 1,642,012 | 1,632,387 | ||||||||||
Total deposits | 1,345,872 | 1,348,280 | 1,355,383 | 1,357,959 | 1,347,857 | ||||||||||
Three Months Ended | |||||||||||||||
3/31/2020 | 12/31/2019 | 9/30/2019 | 6/30/2019 | 3/31/2019 | |||||||||||
Selected Balance Sheet Items, continued | |||||||||||||||
Long-term debt | 35,996 | 40,994 | 41,990 | 41,986 | 42,982 | ||||||||||
Total shareholders’ equity | 233,478 | 228,048 | 225,492 | 222,972 | 224,018 | ||||||||||
Equity to assets ratio | 14.27 | % | 13.91 | % | 13.71 | % | 13.58 | % | 13.72 | % | |||||
Loans to deposits ratio | 94.54 | % | 92.22 | % | 90.45 | % | 90.60 | % | 89.56 | % | |||||
Tangible common equity (TCE) | $ | 170,994 | 165,304 | 162,485 | 159,702 | 160,488 | |||||||||
Tangible common assets (TCA) | 1,573,796 | 1,576,564 | 1,581,440 | 1,578,742 | 1,568,857 | ||||||||||
TCE/TCA | 10.87 | % | 10.49 | % | 10.27 | % | 10.12 | % | 10.23 | % | |||||
Selected Average Balance Sheet Items | |||||||||||||||
Cash and cash equivalents | $ | 25,101 | 26,501 | 28,293 | 29,523 | 25,080 | |||||||||
Debt and equity securities | 204,912 | 231,115 | 243,553 | 249,954 | 266,081 | ||||||||||
Loans | $ | 1,252,554 | 1,230,845 | 1,227,806 | 1,217,726 | 1,208,809 | |||||||||
Less allowance for loan losses | 3,938 | 4,076 | 3,986 | 4,088 | 4,074 | ||||||||||
Net loans | $ | 1,248,616 | 1,226,769 | 1,223,820 | 1,213,638 | 1,204,735 | |||||||||
Total earning assets | $ | 1,462,946 | 1,469,469 | 1,480,096 | 1,479,225 | 1,480,634 | |||||||||
Total assets | 1,638,486 | 1,643,793 | 1,654,034 | 1,637,645 | 1,635,416 | ||||||||||
Total deposits | 1,346,770 | 1,352,101 | 1,365,702 | 1,352,449 | 1,333,529 | ||||||||||
Short-term borrowings | 1,415 | 622 | 468 | 243 | 23,235 | ||||||||||
Long-term debt | 38,325 | 41,742 | 41,988 | 42,567 | 44,676 | ||||||||||
Total shareholders’ equity | 231,058 | 227,595 | 225,216 | 224,203 | 221,470 | ||||||||||
Equity to assets ratio | 14.10 | % | 13.85 | % | 13.62 | % | 13.69 | % | 13.54 | % | |||||
Loans to deposits ratio | 93.00 | % | 91.03 | % | 89.90 | % | 90.04 | % | 90.65 | % | |||||
Asset Quality | |||||||||||||||
Net charge-offs (recoveries) | $ | 210 | 115 | 209 | 68 | (185 | ) | ||||||||
Other real estate owned | 0 | 197 | 197 | 197 | 244 | ||||||||||
Non-accrual loans | 2,829 | 3,210 | 3,523 | 2,962 | 2,845 | ||||||||||
Loans past due 90 days or more and still accruing | 39 | — | — | 24 | 177 | ||||||||||
Total nonperforming loans | $ | 2,868 | 3,210 | 3,523 | 2,986 | 3,022 | |||||||||
Net charge-offs (recoveries) to average loans | 0.07 | % | 0.04 | % | 0.07 | % | 0.02 | % | (0.06 | )% | |||||
Allowance for loan losses to total loans | 0.39 | % | 0.33 | % | 0.34 | % | 0.33 | % | 0.34 | % | |||||
Nonperforming loans to total loans | 0.23 | % | 0.26 | % | 0.29 | % | 0.24 | % | 0.25 | % | |||||
Nonperforming assets to total assets | 0.18 | % | 0.21 | % | 0.23 | % | 0.19 | % | 0.20 | % | |||||
Assets Under Management | |||||||||||||||
LCNB Corp. total assets | $ | 1,636,280 | 1,639,308 | 1,644,447 | 1,642,012 | 1,632,387 | |||||||||
Trust and investments (fair value) | 455,974 | 435,664 | 411,724 | 382,462 | 367,649 | ||||||||||
Mortgage loans serviced | 94,805 | 93,596 | 90,784 | 88,444 | 89,049 | ||||||||||
Cash management | 77,471 | 75,948 | 117,530 | 71,973 | 55,981 | ||||||||||
Brokerage accounts (fair value) | 235,278 | 268,059 | 262,038 | 260,202 | 245,758 | ||||||||||
Total assets managed | $ | 2,499,808 | 2,512,575 | 2,526,523 | 2,445,093 | 2,390,824 | |||||||||
Non-GAAP Financial Measures | |||||||||||||||
Net income | $ | 5,026 | 4,830 | 4,727 | 4,728 | 4,627 | |||||||||
Add: merger-related expenses, net of tax | 0 | 0 | 21 | 16 | 53 | ||||||||||
Adjusted net income | $ | 5,026 | 4,830 | 4,748 | 4,744 | 4,680 | |||||||||
Basic adjusted earnings per share | 0.39 | 0.37 | 0.37 | 0.36 | 0.36 | ||||||||||
Diluted adjusted earnings per share | 0.39 | 0.37 | 0.37 | 0.36 | 0.36 | ||||||||||
Adjusted return on average assets | 1.23 | % | 1.17 | % | 1.14 | % | 1.16 | % | 1.16 | % | |||||
Adjusted return on average equity | 8.75 | % | 8.42 | % | 8.36 | % | 8.49 | % | 8.57 | % | |||||
LCNB CORP. AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS | ||||||
(Dollars in thousands) | ||||||
March 31,
|
December 31,
| |||||
ASSETS: | ||||||
Cash and due from banks | $ | 17,820 | 17,019 | |||
Interest-bearing demand deposits | 6,975 | 3,746 | ||||
Total cash and cash equivalents | 24,795 | 20,765 | ||||
Investment securities: | ||||||
Equity securities with a readily determinable fair value, at fair value | 2,036 | 2,312 | ||||
Equity securities without a readily determinable fair value, at cost | 2,099 | 2,099 | ||||
Debt securities, available-for-sale, at fair value | 141,439 | 178,000 | ||||
Debt securities, held-to-maturity, at cost | 27,694 | 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 | 1,267,379 | 1,239,406 | ||||
Premises and equipment, net | 35,017 | 34,787 | ||||
Operating leases right of use asset | 5,621 | 5,444 | ||||
Goodwill | 59,221 | 59,221 | ||||
Core deposit and other intangibles | 3,751 | 4,006 | ||||
Bank owned life insurance | 41,309 | 41,667 | ||||
Other assets | 16,064 | 14,221 | ||||
TOTAL ASSETS | $ | 1,636,280 | 1,639,308 | |||
LIABILITIES: | ||||||
Deposits: | ||||||
Noninterest-bearing | $ | 342,442 | 354,391 | |||
Interest-bearing | 1,003,430 | 993,889 | ||||
Total deposits | 1,345,872 | 1,348,280 | ||||
Long-term debt | 35,996 | 40,994 | ||||
Operating leases liability | 5,659 | 5,446 | ||||
Accrued interest and other liabilities | 15,275 | 16,540 | ||||
TOTAL LIABILITIES | 1,402,802 | 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 at March 31, 2020 and December 31, 2019; issued 14,144,103 and 14,111,810 shares at March 31, 2020 and December 31, 2019, respectively | 142,046 | 141,791 | ||||
Retained earnings | 107,123 | 104,431 | ||||
Treasury shares at cost, 1,175,027 shares at March 31, 2020 and December 31, 2019 | (18,847 | ) | (18,847 | ) | ||
Accumulated other comprehensive income, net of taxes | 3,156 | 673 | ||||
TOTAL SHAREHOLDERS' EQUITY | 233,478 | 228,048 | ||||
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ | 1,636,280 | 1,639,308 | |||
LCNB CORP. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF INCOME (Dollars in thousands, except per share data) (Unaudited) | ||||||
Three Months Ended
| ||||||
2020 | 2019 | |||||
INTEREST INCOME: | ||||||
Interest and fees on loans | $ | 15,227 | 14,538 | |||
Dividends on equity securities with a readily determinable fair value | 14 | 17 | ||||
Dividends on equity securities without a readily determinable fair value | 16 | 16 | ||||
Interest on debt securities, taxable | 950 | 869 | ||||
Interest on debt securities, non-taxable | 285 | 544 | ||||
Interest on interest-bearing time deposits | — | 5 | ||||
Other investments | 64 | 124 | ||||
TOTAL INTEREST INCOME | 16,556 | 16,113 | ||||
INTEREST EXPENSE: | ||||||
Interest on deposits | 2,117 | 2,286 | ||||
Interest on short-term borrowings | 7 | 219 | ||||
Interest on long-term debt | 254 | 217 | ||||
TOTAL INTEREST EXPENSE | 2,378 | 2,722 | ||||
NET INTEREST INCOME | 14,178 | 13,391 | ||||
PROVISION (CREDIT) FOR LOAN LOSSES | 1,173 | (105 | ) | |||
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES | 13,005 | 13,496 | ||||
NON-INTEREST INCOME: | ||||||
Fiduciary income | 1,103 | 1,034 | ||||
Service charges and fees on deposit accounts | 1,295 | 1,308 | ||||
Net gains (losses) on sales of debt securities | 221 | (18 | ) | |||
Bank owned life insurance income | 601 | 182 | ||||
Gains from sales of loans | 120 | 29 | ||||
Other operating income | 499 | 237 | ||||
TOTAL NON-INTEREST INCOME | 3,839 | 2,772 | ||||
NON-INTEREST EXPENSE: | ||||||
Salaries and employee benefits | 6,768 | 6,162 | ||||
Equipment expenses | 287 | 266 | ||||
Occupancy expense, net | 682 | 763 | ||||
State financial institutions tax | 436 | 438 | ||||
Marketing | 177 | 302 | ||||
Amortization of intangibles | 260 | 257 | ||||
FDIC insurance premiums (credit), net | (1 | ) | 126 | |||
Contracted services | 402 | 464 | ||||
Other real estate owned | (10 | ) | 3 | |||
Merger-related expenses | — | 67 | ||||
Other non-interest expense | 2,071 | 1,852 | ||||
TOTAL NON-INTEREST EXPENSE | 11,072 | 10,700 | ||||
INCOME BEFORE INCOME TAXES | 5,772 | 5,568 | ||||
PROVISION FOR INCOME TAXES | 746 | 941 | ||||
NET INCOME | $ | 5,026 | 4,627 | |||
Dividends declared per common share | $ | 0.18 | 0.17 | |||
Earnings per common share: | ||||||
Basic | 0.39 | 0.35 | ||||
Diluted | 0.39 | 0.35 | ||||
Weighted average common shares outstanding: | ||||||
Basic | 12,926,077 | 13,283,634 | ||||
Diluted | 12,927,666 | 13,287,338 | ||||
View source version on businesswire.com: https://www.businesswire.com/news/home/20200420005940/en/
Contacts:
Eric J. Meilstrup, CEO and President, 800-344-BANK
Robert C. Haines II, Executive Vice President and CFO, 800-344-BANK
