LCNB Corp. Reports Financial Results for the Three and Twelve Months Ended December 31, 2020

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 to $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:

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. LCNB’s ability to integrate recent and future acquisitions may be unsuccessful, or may be more difficult, time-consuming, or costly than expected;
4. LCNB may incur increased charge-offs in the future;
5. LCNB may face competitive loss of customers;
6. 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;
7. changes in general economic conditions and increased competition could adversely affect LCNB’s operating results;
8. 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;
9. LCNB may experience difficulties growing loan and deposit balances;
10. 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;
11. 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;
12. 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;
13. adverse weather events and natural disasters and global and/or national epidemics; and
14. 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

 

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