LCNB Corp. Reports Financial Results For The Three Months Ended March 31, 2021

LCNB Corp. ("LCNB") (NASDAQ: LCNB) today announced financial results for the three months ended March 31, 2021.

Net income for the 2021 first quarter increased 4.3% to $5,240,000 compared to $5,026,000 for the same period last year. Earnings per basic and diluted share for the 2021 first quarter were $0.41, compared to $0.39 for the same period last year. Earnings, before provisions for loan losses and income taxes, were $6,345,000 for the 2021 first quarter compared to $6,945,000 for the same period last year.

Commenting on the financial results, LCNB President and Chief Executive Officer Eric Meilstrup said, “Total assets managed increased to a record of over $3.0 billion, an important milestone for LCNB, as we benefited from strong year-over-year growth across all aspects of our business. Growth in trust and investment assets was particularly strong, which drove a 38.6% increase in fiduciary income. Our trust and investment businesses are important growth drivers, and we are benefiting from over 50 years of providing local, sophisticated, and diverse wealth solutions to our customers.”

Mr. Meilstrup continued, “Our asset quality is encouraging and we had limited net charge-offs in the quarter. At March 31, 2021, we only had six loans in deferral status for $19.6 million, which is a 94.9% decline from the amount of deferrals at June 30, 2020. We also continue to support small businesses within our local communities and during the first quarter we originated 345 new PPP loans for $23.6 million while processing $11.0 million of loan forgiveness under the program.”

¹ Total Assets Managed includes LCNB Corp. Consolidated Assets, Wealth Management & Brokerage Assets, Loans Serviced for Others, and Cash Management Services.

“We believe we are emerging from the COVID-19 crisis with a dynamic platform to drive sustainable growth and I am pleased with the solid start to 2021. We remain focused on 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,” concluded Mr. Meilstrup.

Net interest income for the three months ended March 31, 2021, was $14,372,000, compared to $14,178,000 for the comparable period in 2020. The 1.4% increase for the three-month period was primarily due to a decline in the average rates paid on interest bearing liabilities.

Non-interest income for the three months ended March 31, 2021, was $3,465,000, compared to $3,839,000 for the same period last year. The decline in non-interest income was primarily due to lower gains on sales of debt securities, bank owned life insurance income, gains from sales of loans, and other operating income, partially offset by fiduciary income and service charges and fees on deposit accounts.

Non-interest expense for the three months ended March 31, 2021, was $420,000 greater than the comparable period in 2020, primarily due to increases in equipment, occupancy, marketing, FDIC insurance, contracted services and other non-interest expenses, partially offset by a decrease in salaries and employee benefits.

Asset Quality

For the 2021 first quarter, LCNB recorded a $52,000 credit for loan losses, compared to a provision of $1,173,000 for the 2020 first quarter. The $1,225,000 year-over-year decrease 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 recoveries for the 2021 first quarter were $3,000 compared to net charge-offs of $210,000, or an annualized ratio of 0.07% of average loans, for the same period last year.

Non-accrual loans and loans past due 90 days or more and still accruing interest increased $497,000, from $2,868,000 or 0.23% of total loans at March 31, 2020, to $3,365,000 or 0.25% of total loans at March 31, 2021. Nonperforming assets to total assets was 0.19% at March 31, 2021, compared to 0.18% at March 31, 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:

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. 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;
4. LCNB’s ability to integrate recent and future acquisitions may be unsuccessful, or may be more difficult, time-consuming, or costly than expected;
5. LCNB may incur increased loan charge-offs in the future;
6. LCNB may face competitive loss of customers;
7. 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;
8. changes in general economic conditions and increased competition could adversely affect LCNB’s operating results;
9. 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;
10. LCNB may experience difficulties growing loan and deposit balances;
11. 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;
12. 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;
13. 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;
14. adverse weather events and natural disasters and global and/or national epidemics; and
15. 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
	3/31/2021				12/31/2020			9/30/2020			6/30/2020			3/31/2020
Condensed Income Statement
Interest income	$	15,535			15,945			15,322			15,957			16,556
Interest expense	1,163				1,432			1,793			1,959			2,378
Net interest income	14,372				14,513			13,529			13,998			14,178
Provision (credit) for loan losses	(52		)		(151	)		976			16			1,173
Net interest income after provision	14,424				14,664			12,553			13,982			13,005
Non-interest income	3,465				4,305			4,278			3,319			3,839
Non-interest expense	11,492				11,944			11,653			11,116			11,072
Income before income taxes	6,397				7,025			5,178			6,185			5,772
Provision for income taxes	1,157				1,283			928			1,128			746
Net income	$	5,240			5,742			4,250			5,057			5,026
Amort/Accret income on acquired loans	$	249			186			181			294			667
Amort/Accret expenses on acquired interest-bearing liabilities	$	—			1			—			2			3
Tax-equivalent net interest income	$	14,432			14,577			13,594			14,066			14,254
Per Share Data
Dividends per share	$	0.19			0.19			0.18			0.18			0.18
Basic earnings per common share	$	0.41			0.44			0.33			0.39			0.39
Diluted earnings per common share	$	0.41			0.44			0.33			0.39			0.39
Book value per share	$	18.66			18.73			18.46			18.27			18.00
Tangible book value per share	$	13.87			13.93			13.66			13.47			13.18
Weighted average common shares outstanding:
Basic	12,794,824				12,852,614			12,937,865			12,940,975			12,926,077
Diluted	12,794,852				12,852,657			12,937,901			12,941,001			12,927,666
Shares outstanding at period end	12,820,108				12,858,325			12,926,686			12,975,879			12,969,076
Selected Financial Ratios
Return on average assets	1.20		%		1.31	%		0.97	%		1.19	%		1.23	%
Return on average equity	8.80		%		9.52	%		7.08	%		8.63	%		8.75	%
Return on average tangible equity	11.81		%		12.83	%		9.56	%		11.74	%		12.00	%
Dividend payout ratio	46.34		%		43.18	%		54.55	%		46.15	%		46.15	%
Net interest margin (tax equivalent)	3.68		%		3.71	%		3.47	%		3.70	%		3.92	%
Efficiency ratio (tax equivalent)	64.21		%		63.26	%		65.20	%		63.94	%		61.19	%
Selected Balance Sheet Items
Cash and cash equivalents	$	41,144			31,730			24,485			42,736			24,795
Debt and equity securities	276,774				248,624			199,044			194,883			183,123
Loans:
Commercial and industrial	$	107,630			100,254			124,628			125,492			85,356
Commercial, secured by real estate	855,894				843,230			843,943			833,286			829,461
Residential real estate	328,265				309,692			327,689			334,349			318,009
Consumer	35,799				36,917			36,504			32,859			28,955
Agricultural	8,698				10,100			8,920			11,071			10,519
Other, including deposit overdrafts	346				363			403			283			436
Deferred net origination fees	(1,531		)		(1,135	)		(1,927	)		(1,902	)		(349	)
Loans, gross	1,335,101				1,299,421			1,340,160			1,335,438			1,272,387
Less allowance for loan losses	5,679				5,728			5,974			5,016			5,008
Loans, net	$	1,329,422			1,293,693			1,334,186			1,330,422			1,267,379
Total earning assets	$	1,634,818			1,562,392			1,547,538			1,554,537			1,462,485
Total assets	1,818,321				1,745,884			1,725,615			1,735,332			1,636,280
Total deposits	1,537,116				1,455,423			1,430,394			1,438,921			1,345,872

	Three Months Ended
	3/31/2021				12/31/2020			9/30/2020			6/30/2020			3/31/2020
Selected Balance Sheet Items, continued
Long-term debt	17,000				22,000			31,999			33,998			35,996
Total shareholders’ equity	239,246				240,825			238,585			237,047			233,478
Equity to assets ratio	13.16		%		13.79	%		13.83	%		13.66	%		14.27	%
Loans to deposits ratio	86.86		%		89.28	%		93.69	%		92.81	%		94.54	%
Tangible common equity (TCE)	$	177,805			179,127			176,624			174,823			170,994
Tangible common assets (TCA)	1,756,880				1,684,186			1,663,654			1,673,108			1,573,796
TCE/TCA	10.12		%		10.64	%		10.62	%		10.45	%		10.87	%
Selected Average Balance Sheet Items
Cash and cash equivalents	$	37,269			49,273			42,661			46,292			25,101
Debt and equity securities	260,147				218,816			197,788			182,371			204,912
Loans	$	1,313,803			1,313,892			1,339,608			1,318,753			1,252,554
Less allowance for loan losses	5,715				5,920			5,250			4,998			3,938
Net loans	$	1,308,088			1,307,972			1,334,358			1,313,755			1,248,616
Total earning assets	$	1,589,582			1,561,392			1,558,886			1,528,610			1,462,946
Total assets	1,775,154				1,742,947			1,741,998			1,704,303			1,638,486
Total deposits	1,488,156				1,447,217			1,445,573			1,412,082			1,346,770
Short-term borrowings	342				—			—			82			1,415
Long-term debt	19,689				30,803			33,020			34,964			38,325
Total shareholders’ equity	241,517				239,881			238,990			235,587			231,058
Equity to assets ratio	13.61		%		13.76	%		13.72	%		13.82	%		14.10	%
Loans to deposits ratio	88.28		%		90.79	%		92.67	%		93.39	%		93.00	%
Asset Quality
Net charge-offs (recoveries)	$	(3	)		95			18			8			210
Other real estate owned	—				—			—			—			—
Non-accrual loans	3,365				3,718			4,110			3,876			2,829
Loans past due 90 days or more and still accruing	—				—			94			38			39
Total nonperforming loans	$	3,365			3,718			4,204			3,914			2,868
Net charge-offs to average loans	0.00		%		0.03	%		0.01	%		0.00	%		0.07	%
Allowance for loan losses to total loans	0.43		%		0.44	%		0.45	%		0.38	%		0.39	%
Nonperforming loans to total loans	0.25		%		0.29	%		0.31	%		0.29	%		0.23	%
Nonperforming assets to total assets	0.19		%		0.21	%		0.24	%		0.23	%		0.18	%
Assets Under Management
LCNB Corp. total assets	$	1,818,321			1,745,884			1,725,615			1,735,332			1,636,280
Trust and investments (fair value)	673,742				628,414			524,502			516,076			455,974
Mortgage loans serviced	127,290				137,188			120,546			100,189			94,805
Cash management	118,494				116,792			119,520			116,615			77,471
Brokerage accounts (fair value)	299,355				292,953			267,307			255,276			235,278
Total assets managed	$	3,037,202			2,921,231			2,757,490			2,723,488			2,499,808

LCNB CORP. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in thousands)
	March 31, 2021 (Unaudited)				December 31, 2020
ASSETS:
Cash and due from banks	$	18,201			17,383
Interest-bearing demand deposits	22,943				14,347
Total cash and cash equivalents	41,144				31,730
Investment securities:
Equity securities with a readily determinable fair value, at fair value	2,506				2,389
Equity securities without a readily determinable fair value, at cost	2,099				2,099
Debt securities, available-for-sale, at fair value	237,619				209,471
Debt securities, held-to-maturity, at cost	24,695				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	1,329,422				1,293,693
Premises and equipment, net	35,243				35,376
Operating leases right of use asset	6,865				6,274
Goodwill	59,221				59,221
Core deposit and other intangibles	3,108				3,453
Bank owned life insurance	42,416				42,149
Interest receivable	8,665				8,337
Other assets	15,463				17,027
TOTAL ASSETS	$	1,818,321			1,745,884
LIABILITIES:
Deposits:
Noninterest-bearing	$	475,127			455,073
Interest-bearing	1,061,989				1,000,350
Total deposits	1,537,116				1,455,423
Long-term debt	17,000				22,000
Operating lease liabilities	6,998				6,371
Accrued interest and other liabilities	17,961				21,265
TOTAL LIABILITIES	1,579,075				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 14,196,008 and 14,163,904 shares at March 31, 2021 and December 31, 2020, respectively; outstanding 12,820,108 and 12,858,325 shares at March 31, 2021 and December 31, 2020, respectively	142,639				142,443
Retained earnings	117,863				115,058
Treasury shares at cost, 1,375,900 and 1,305,579 shares at March 31, 2021 and December 31, 2020, respectively	(21,859		)		(20,719	)
Accumulated other comprehensive income, net of taxes	603				4,043
TOTAL SHAREHOLDERS' EQUITY	239,246				240,825
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	1,818,321			1,745,884

LCNB CORP. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
(Unaudited)
	Three Months Ended March 31,
	2021				2020
INTEREST INCOME:
Interest and fees on loans	$	14,535			15,227
Dividends on equity securities with a readily determinable fair value	13				14
Dividends on equity securities without a readily determinable fair value	6				16
Interest on debt securities, taxable	718				950
Interest on debt securities, non-taxable	224				285
Other investments	39				64
TOTAL INTEREST INCOME	15,535				16,556
INTEREST EXPENSE:
Interest on deposits	1,028				2,117
Interest on short-term borrowings	1				7
Interest on long-term debt	134				254
TOTAL INTEREST EXPENSE	1,163				2,378
NET INTEREST INCOME	14,372				14,178
PROVISION (CREDIT) FOR LOAN LOSSES	(52		)		1,173
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES	14,424				13,005
NON-INTEREST INCOME:
Fiduciary income	1,529				1,103
Service charges and fees on deposit accounts	1,366				1,295
Net gains on sales of debt securities	—				221
Bank owned life insurance income	267				601
Gains from sales of loans	43				120
Other operating income	260				499
TOTAL NON-INTEREST INCOME	3,465				3,839
NON-INTEREST EXPENSE:
Salaries and employee benefits	6,433				6,768
Equipment expenses	368				287
Occupancy expense, net	794				682
State financial institutions tax	444				436
Marketing	268				177
Amortization of intangibles	257				260
FDIC insurance premiums (credit), net	113				(1	)
Contracted services	540				402
Other non-interest expense	2,275				2,061
TOTAL NON-INTEREST EXPENSE	11,492				11,072
INCOME BEFORE INCOME TAXES	6,397				5,772
PROVISION FOR INCOME TAXES	1,157				746
NET INCOME	$	5,240			5,026
Dividends declared per common share	$	0.19			0.18
Earnings per common share:
Basic	0.41				0.39
Diluted	0.41				0.39
Weighted average common shares outstanding:
Basic	12,794,824				12,926,077
Diluted	12,794,852				12,927,666

 

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