LCNB Corp. Reports Financial Results for The Three Months Ended March 31, 2022

Loans, Net Increased 3.4% Year-over-Year to a Quarterly Record of $1.37 Billion Credit Quality Remains Strong with Total Nonperforming Loans Declining to $1.5 Million, or 0.11% of Total Loans LCNB Wealth Assets Up 5.5% Year-over-Year to $1.03 Billion First Quarter Earnings of $0.38 Per Diluted Share

LCNB Corp. ("LCNB") (NASDAQ: LCNB) today announced financial results for the three months ended March 31, 2022.

Commenting on the financial results, LCNB President and Chief Executive Officer Eric Meilstrup said, “I am pleased with LCNB’s first quarter performance, which is a testament to our compelling Ohio markets and our dedicated and seasoned team. During the first quarter, we experienced year-over-year growth in loans and deposits, both of which ended the quarter at record levels. LCNB Wealth Management assets, which comprises trust and investments and brokerage accounts, also experienced robust year-over-year growth of 5.5%, contributing to higher fiduciary and noninterest income. Balance sheet growth, strong asset quality, and the benefits of our share repurchases helped us achieve first quarter earnings of $0.38 per diluted share.”

Mr. Meilstrup continued, “As economic and interest rate uncertainty has increased since the beginning of the year, we remain committed to serving the financial needs of our customers, maintaining strong asset quality, managing expenses, and returning capital to our shareholders. In addition, we believe LCNB is entering this new economic and interest rate cycle from a position of strength, with diversified sources of revenue, record total assets managed, and historically low nonperforming loans. As a result, we will continue to deliver on our strategic objectives to make 2022 another great year for LCNB and its stakeholders,” concluded Mr. Meilstrup.

Income Statement

Net income for the 2022 first quarter decreased 13.7% to $4.5 million compared to $5.2 million for the same period last year. Earnings per basic and diluted share for the 2022 first quarter were $0.38, compared to $0.41 for the same period last year.

Net interest income for the three months ended March 31, 2022, was $14.2 million, compared to $14.4 million for the comparable period in 2021. The 1.0% year-over-year decrease for the three-month period was primarily due to a decline in interest income from loans, partially due to a decrease in fees recognized on PPP loans, partially offset by higher interest income on taxable debt securities and lower interest expense on deposits.

Non-interest income for the three months ended March 31, 2022, was $3.6 million, compared to $3.5 million for the same period last year. The increase in non-interest income was primarily due to higher fiduciary income, service charges and fees on deposit accounts, and gains on sales of loans, partially offset by lower other operating income.

Non-interest expense for the three months ended March 31, 2022, was $758,000 greater than the comparable period in 2021, primarily due to higher salaries and employee benefits, which included increases in salaries and wages, increased bonus expense accruals, increased compensation expense for restricted stock grants, increased FICA matching expense, and to a higher percentage of personnel expenses deferred in 2021 attributable to the high volume of PPP loans originated in that period.

Capital Allocation

During the 2022 first quarter, LCNB invested $21.1 million to repurchase 1,051,688 shares of its outstanding stock at an average price of $20.00 per share. This equates to approximately 8.5% of the Company’s outstanding common stock prior to the repurchase. At March 31, 2022, LCNB had 21,191 shares remaining under its August 2020 share repurchase program.

For the first quarter ended March 31, 2022, LCNB paid $0.20 per share in dividends, a 5.3% increase from $0.19 per share for the first quarter last year.

Balance Sheet

Total assets at March 31, 2022, increased 4.5% to $1.90 billion from $1.82 billion at March 31, 2021. Net loans at March 31, 2022, increased 3.4% to a record $1.37 billion, compared to $1.33 billion at March 31, 2021. Over the past 12 months, LCNB has helped its customers receive $31.8 million of PPP forgiveness payments, including $5.5 million during the first quarter of 2022. The balance of PPP loans outstanding at March 31, 2022, was $1.4 million.

Total deposits at March 31, 2022, increased 6.5% to a record $1.64 billion, compared to $1.54 billion at March 31, 2021 as LCNB continues attracting interest-bearing and non-interest-bearing accounts to the Bank.

Asset Quality

For the 2022 first quarter, LCNB recorded a provision for loan losses of $49,000, compared to a $52,000 credit for the 2021 first quarter.

Net charge-offs for the 2022 first quarter were $25,000, or 0.01% of average loans, annualized, compared to net recoveries of $3,000, or 0.00% of average loans, annualized, for the same period last year.

Total nonperforming loans, which includes non-accrual loans and loans past due 90 days or more and still accruing interest, decreased $1.9 million, from $3.4 million or 0.25% of total loans at March 31, 2021, to $1.5 million, or 0.11% of total loans at March 31, 2022. Nonperforming assets to total assets was 0.08% at March 31, 2022, compared to 0.19% at March 31, 2021.

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.

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, 2021, 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 and the Russia/Ukraine conflict, 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 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 Coronavirus Aid, Relief, and Economic Security ("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																	Three Months Ended
	3/31/2022				12/31/2021			9/30/2021				6/30/2021			3/31/2021			3/31/2022			3/31/2021
Condensed Income Statement
Interest income	$	15,122			15,189				15,024			15,429			15,535			15,122			15,535
Interest expense		899			879				951			1,060			1,163			899			1,163
Net interest income		14,223			14,310				14,073			14,369			14,372			14,223			14,372
Provision (credit) for loan losses		49			(508	)			306			(15	)		(52	)		49			(52	)
Net interest income after provision (credit) for loan losses		14,174			14,818				13,767			14,384			14,424			14,174			14,424
Non-interest income		3,550			4,347				4,106			4,314			3,465			3,550			3,465
Non-interest expense		12,250			12,311				12,029			12,208			11,492			12,250			11,492
Income before income taxes		5,474			6,854				5,844			6,490			6,397			5,474			6,397
Provision for income taxes		951			1,227				1,027			1,200			1,157			951			1,157
Net income	$	4,523			5,627				4,817			5,290			5,240			4,523			5,240
Amort/Accret income on acquired loans	$	66			116				132			216			249			66			249
Tax-equivalent net interest income	$	14,273			14,365				14,129			14,427			14,432			14,273			14,432
Per Share Data
Dividends per share	$	0.20			0.20				0.19			0.19			0.19			0.20			0.19
Basic earnings per common share	$	0.38			0.45				0.39			0.41			0.41			0.38			0.41
Diluted earnings per common share	$	0.38			0.45				0.39			0.41			0.41			0.38			0.41
Book value per share	$	18.14			19.22				19.17			18.99			18.66			18.14			18.66
Tangible book value per share	$	12.84			14.33				14.28			14.15			13.87			12.84			13.87
Weighted average common shares outstanding:
Basic		11,818,614			12,370,702				12,455,276			12,743,726			12,794,824			11,818,614			12,794,824
Diluted		11,818,614			12,370,702				12,455,276			12,743,726			12,794,852			11,818,614			12,794,852
Shares outstanding at period end		11,401,503			12,414,956				12,434,084			12,634,845			12,820,108			11,401,503			12,820,108
Selected Financial Ratios
Return on average assets		0.96	%		1.18	%			1.02	%		1.15	%		1.20	%		0.96	%		1.20	%
Return on average equity		8.13	%		9.33	%			7.93	%		8.78	%		8.80	%		8.13	%		8.80	%
Return on average tangible common equity		11.11	%		12.51	%			10.62	%		11.76	%		11.81	%		11.11	%		11.81	%
Dividend payout ratio		52.63	%		44.44	%			48.72	%		46.34	%		46.34	%		52.63	%		46.34	%
Net interest margin (tax equivalent)		3.35	%		3.34	%			3.32	%		3.51	%		3.68	%		3.35	%		3.68	%
Efficiency ratio (tax equivalent)		68.73	%		65.79	%			65.96	%		65.14	%		64.21	%		68.73	%		64.21	%
Selected Balance Sheet Items
Cash and cash equivalents	$	19,941			18,136				23,852			22,909			41,144
Debt and equity securities		330,715			345,649				352,066			349,199			276,774
Loans:
Commercial and industrial	$	105,805			101,792				91,246			97,240			107,630
Commercial, secured by real estate		906,140			889,108				862,202			836,085			855,894
Residential real estate		328,034			334,547				343,318			341,447			328,265
Consumer		32,445			34,190				35,349			35,257			35,799
Agricultural		7,980			10,647				8,852			8,765			8,698
Other, including deposit overdrafts		45			122				247			369			346
Deferred net origination fees		(928	)		(961	)			(1,055	)		(1,398	)		(1,531	)
Loans, gross		1,379,521			1,369,445				1,340,159			1,317,765			1,335,101
Less allowance for loan losses		5,530			5,506				5,828			5,652			5,679
Loans, net	$	1,373,991			1,363,939				1,334,331			1,312,113			1,329,422
	Three Months Ended																	Three Months Ended
	3/31/2022				12/31/2021			9/30/2021				6/30/2021			3/31/2021			3/31/2022			3/31/2021
Selected Balance Sheet Items, continued
Total earning assets	$	1,712,115			1,716,420				1,695,281			1,671,462			1,634,818
Total assets		1,899,630			1,903,629				1,884,252			1,856,670			1,818,321
Total deposits		1,636,606			1,628,819				1,603,203			1,577,345			1,537,116
Short-term borrowings		24,746			—				—			—			—
Long-term debt		10,000			10,000				15,000			15,000			17,000
Total shareholders’ equity		206,875			238,604				238,419			239,952			239,246
Equity to assets ratio		10.89	%		12.53	%			12.65	%		12.92	%		13.16	%
Loans to deposits ratio		84.29	%		84.08	%			83.59	%		83.54	%		86.86	%
Tangible common equity (TCE)	$	146,360			177,949				177,501			178,771			177,805
Tangible common assets (TCA)		1,839,115			1,842,974				1,823,334			1,795,489			1,756,880
TCE/TCA		7.96	%		9.66	%			9.73	%		9.96	%		10.12	%
Selected Average Balance Sheet Items
Cash and cash equivalents	$	32,826			29,614				34,557			45,414			37,269			32,826			37,269
Debt and equity securities		340,666			348,150				356,214			312,596			260,147			340,666			260,147
Loans	$	1,376,926			1,351,762				1,321,629			1,328,760			1,313,803			1,376,926			1,313,803
Less allowance for loan losses		5,503			5,843				5,567			5,678			5,715			5,503			5,715
Net loans	$	1,371,423			1,345,919				1,316,062			1,323,082			1,308,088			1,371,423			1,308,088
Total earning assets	$	1,727,335			1,708,392				1,688,589			1,666,126			1,589,582			1,727,335			1,589,582
Total assets		1,917,226			1,896,530				1,879,314			1,852,035			1,775,154			1,917,226			1,775,154
Total deposits		1,646,627			1,615,020				1,595,773			1,570,070			1,488,156			1,646,627			1,488,156
Short-term borrowings		12,503			893				1,320			716			342			12,503			342
Long-term debt		10,000			14,402				15,000			15,571			19,689			10,000			19,689
Total shareholders’ equity		225,725			239,174				240,976			241,651			241,517			225,725			241,517
Equity to assets ratio		11.77	%		12.61	%			12.82	%		13.05	%		13.61	%		11.77	%		13.61	%
Loans to deposits ratio		83.62	%		83.70	%			82.82	%		84.63	%		88.28	%		83.62	%		88.28	%
Asset Quality
Net charge-offs (recoveries)	$	25			(186	)		$	130			12			(3	)		25			(3	)
Other real estate owned		—			—				—			—			—			—			—
Non-accrual loans	$	1,455			1,481				2,629			3,338			3,365			1,455			3,365
Loans past due 90 days or more and still accruing		—			56				13			—			—			—			—
Total nonperforming loans	$	1,455			1,537			$	2,642			3,338			3,365			1,455			3,365
Net charge-offs (recoveries) to average loans		0.01	%		(0.05	) %			0.04	%		0.00	%		0.00	%		0.01	%		0.00	%
Allowance for loan losses to total loans		0.40	%		0.40	%			0.43	%		0.43	%		0.43	%		0.40	%		0.43	%
Nonperforming loans to total loans		0.11	%		0.11	%			0.20	%		0.25	%		0.25	%		0.11	%		0.25	%
Nonperforming assets to total assets		0.08	%		0.08	%			0.14	%		0.18	%		0.19	%		0.08	%		0.19	%
Assets Under Management
LCNB Corp. total assets	$	1,899,630			1,903,629				1,884,252			1,856,670			1,818,321
Trust and investments (fair value)		700,353			722,093				713,936			701,838			673,742
Mortgage loans serviced		152,271			149,382				140,147			126,924			127,290
Cash management		75,302			34,009				72,622			80,177			118,494
Brokerage accounts (fair value)		326,290			334,670				319,495			314,491			299,355
Total assets managed	$	3,153,846			3,143,783				3,130,452			3,080,100			3,037,202

LCNB CORP. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in thousands)
	March 31, 2022 (Unaudited)				December 31, 2021
ASSETS:
Cash and due from banks	$	18,062			16,810
Interest-bearing demand deposits		1,879			1,326
Total cash and cash equivalents		19,941			18,136
Investment securities:
Equity securities with a readily determinable fair value, at fair value		2,424			2,546
Equity securities without a readily determinable fair value, at cost		2,099			2,099
Debt securities, available-for-sale, at fair value		293,464			308,177
Debt securities, held-to-maturity, at cost		22,873			22,972
Federal Reserve Bank stock, at cost		4,652			4,652
Federal Home Loan Bank stock, at cost		5,203			5,203
Loans, net		1,373,991			1,363,939
Premises and equipment, net		34,940			35,385
Operating leases right of use asset		6,191			6,357
Goodwill		59,221			59,221
Core deposit and other intangibles		2,328			2,473
Bank owned life insurance		43,488			43,224
Interest receivable		8,364			7,999
Other assets		20,451			21,246
TOTAL ASSETS	$	1,899,630			1,903,629
LIABILITIES:
Deposits:
Noninterest-bearing	$	517,621			501,531
Interest-bearing		1,118,985			1,127,288
Total deposits		1,636,606			1,628,819
Short-term borrowings		24,746			—
Long-term debt		10,000			10,000
Operating lease liabilities		6,337			6,473
Accrued interest and other liabilities		15,066			19,733
TOTAL LIABILITIES		1,692,755			1,665,025
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 14,252,027 and 14,213,792 shares at March 31, 2022 and December 31, 2021, respectively; outstanding 11,401,503 and 12,414,956 shares at March 31, 2022 and December 31, 2021, respectively		143,432			143,130
Retained earnings		128,555			126,312
Treasury shares at cost, 2,850,524 and 1,798,836 shares at March 31, 2022 and December 31, 2021, respectively		(50,115	)		(29,029	)
Accumulated other comprehensive loss, net of taxes		(14,997	)		(1,809	)
TOTAL SHAREHOLDERS' EQUITY		206,875			238,604
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	1,899,630			1,903,629

LCNB CORP. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
(Unaudited)
		Three Months Ended March 31,
		2022		2021
INTEREST INCOME:
Interest and fees on loans		13,786		14,535
Dividends on equity securities with a readily determinable fair value		12		13
Dividends on equity securities without a readily determinable fair value		5		6
Interest on debt securities, taxable		1,095		718
Interest on debt securities, non-taxable		189		224
Other investments		35		39
TOTAL INTEREST INCOME		15,122		15,535
INTEREST EXPENSE:
Interest on deposits		739		1,028
Interest on short-term borrowings		86		1
Interest on long-term debt		74		134
TOTAL INTEREST EXPENSE		899		1,163
NET INTEREST INCOME		14,223		14,372
PROVISION (CREDIT) FOR LOAN LOSSES		49		(52	)
NET INTEREST INCOME AFTER PROVISION (CREDIT) FOR LOAN LOSSES		14,174		14,424
NON-INTEREST INCOME:
Fiduciary income		1,695		1,529
Service charges and fees on deposit accounts		1,406		1,366
Bank owned life insurance income		265		267
Gains from sales of loans		124		43
Other operating income		60		260
TOTAL NON-INTEREST INCOME		3,550		3,465
NON-INTEREST EXPENSE:
Salaries and employee benefits		7,215		6,433
Equipment expenses		408		368
Occupancy expense, net		775		794
State financial institutions tax		436		444
Marketing		262		268
Amortization of intangibles		140		257
FDIC insurance premiums, net		126		113
Contracted services		610		540
Other non-interest expense		2,278		2,275
TOTAL NON-INTEREST EXPENSE		12,250		11,492
INCOME BEFORE INCOME TAXES		5,474		6,397
PROVISION FOR INCOME TAXES		951		1,157
NET INCOME		4,523		5,240
Dividends declared per common share		0.20		0.19
Earnings per common share:
Basic		0.38		0.41
Diluted		0.38		0.41
Weighted average common shares outstanding:
Basic		11,818,614		12,794,824
Diluted		11,818,614		12,794,852

 

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