LCNB Corp. : Reports Record Financial Results for the Three and Nine Months Ended September 30, 2021

LCNB Wealth Assets Up 30.5% Year-over-Year to a Record $1.03 Billion Total Assets Managed1 13.5% Higher Year-over-Year to a Record $3.13 Billion Third Quarter Diluted Earnings Per Share Increased 18.2% Year-over-Year to $0.39 Per Share

LCNB Corp. ("LCNB") (NASDAQ: LCNB) today announced financial results for the three and nine months ended September 30, 2021.

Commenting on the financial results, LCNB President and Chief Executive Officer Eric Meilstrup said, “LCNB achieved strong third quarter earnings, driven by sustained growth in LCNB Wealth assets, an increase in total earning assets, and sustained strong asset quality. Growing assets under management, actively controlling risk, and diversifying our revenue streams have positioned LCNB to effectively navigate the current low-rate environment. Fee income generated from the Paycheck Protection Program (“PPP”) also contributed $492,000 to our third quarter earnings. PPP loans continue to wind down and our loan portfolio included $12,971,000 of PPP loans at September 30, 2021. We were able to help a significant number of companies get through the pandemic with PPP loans and we believe that we have strengthened and created numerous opportunities for new client relationships in the process. In addition, for the first nine months of 2021, fiduciary income grew 38.6% over the prior year period to $4,959,000.”

Mr. Meilstrup continued, “Net loans at September 30, 2021 are up compared to June 30, 2021, despite an additional $10,849,000 of PPP loans forgiven during the third quarter, which reflects our unceasing commitment to a strong local presence and the value we provide customers within our compelling Ohio markets. Competition for loans remains high in the current environment, however our approach to risk and pricing of loans has been consistent, leading to strong asset quality. At September 30, 2021, non-performing loans totaled $2,642,000, a $1,562,000 or 37.2% decrease from September 30, 2020, and net charge-offs remain limited. Our prudent capital management approach supports our proactive share repurchase program. During the third quarter our board demonstrated its belief that our shares are undervalued as we repurchased 206,768 shares of our common stock. Year-to-date we have repurchased 468,072 shares at an average cost of $16.82 per share.”

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 remain focused on key strategies to diversify revenue, grow customer relationships, manage operating expenses, and prudently control risk. We also continue to develop and retain proven bankers and financial professionals throughout our organization. Our markets offer attractive demographics and we believe that we are well-positioned for prolonged growth and success in the years ahead. I am thankful to our valued associates as we continue to execute on our growth strategies and I am pleased with the progress we are making,” concluded Mr. Meilstrup.

Net income for the 2021 third quarter was $4,817,000, an increase of 13.3% as compared to $4,250,000 for the same period last year. Earnings per basic and diluted share for the 2021 third quarter were $0.39, an increase of 18.2% as compared to $0.33 for the same period last year. Net income for the nine-month period ended September 30, 2021, was $15,347,000, an increase of 7.1% as compared to $14,333,000 for the same period last year. Earnings per basic and diluted share for the nine-month period ended September 30, 2021, were $1.21, an increase of 9.0% as compared to $1.11 for the same period last year.

Net interest income for the three months ended September 30, 2021, was $14,073,000, compared to $13,529,000 for the comparable period in 2020. Net interest income for the nine-month period ended September 30, 2021, increased $1,109,000 to $42,814,000, as compared to $41,705,000 in the same period last year. Favorably contributing to the variances for both the three- and nine-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. LCNB's cost of funds at September 30, 2021 was 0.23%, compared to 0.48% at September 30, 2020.

Non-interest income for the three months ended September 30, 2021, declined $172,000 or by (4.0)% to $4,106,000, compared to $4,278,000 for the same period last year. For the nine months ended September 30, 2021, non-interest income increased $449,000 or by 3.9% to $11,885,000, compared to $11,436,000 for the same period last year. The primary drivers of the third quarter and nine-month year-over-year changes in non-interest income were reductions in gains from loan sales, offset by increased fiduciary income and deposit service charges.

Non-interest expense for the three months ended September 30, 2021, was $376,000 greater than the comparable period in 2020. For the nine months ended September 30, 2021, non-interest expense increased $1,888,000 from the comparable period in 2020. The increases for both the three and nine-month periods were primarily due to increases in salaries and employee benefits, equipment expenses, FDIC insurance, contracted services, and other non-interest expenses.

Asset Quality
For the 2021 third quarter, LCNB recorded a $306,000 provision for loan losses, compared to a provision of $976,000 for the 2020 third quarter. For the nine months ended September 30, 2021, LCNB recorded a provision of $239,000, compared to a provision of $2,165,000 for the nine months ended September 30, 2020. The respective $670,000 and $1,926,000 decreases in the provision for loan losses for the three and nine month periods were partially due to strong asset quality and last year’s proactive build in the Company’s allowance for loan losses associated with the estimated economic impacts caused by the COVID-19 pandemic.

Net charge-offs for the 2021 third quarter were $130,000, compared to $18,000 for the same period last year. For the 2021 nine-month period, net charge-offs were $139,000 or 0.01% of average loans, compared to $236,000 or 0.02% of average loans.

Non-accrual loans and loans past due 90 days or more and still accruing interest decreased $1,562,000, from $4,204,000 or 0.31% of total loans at September 30, 2020, to $2,642,000 or 0.20% of total loans at September 30, 2021. Nonperforming assets to total assets was 0.14% at September 30, 2021, compared to 0.24% at September 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:

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 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																		Nine Months Ended
	9/30/2021				6/30/2021				3/31/2021				12/31/2020			9/30/2020			9/30/2021			9/30/2020
Condensed Income Statement
Interest income	$	15,024			$	15,429			$	15,535			15,945			15,322			45,988			47,835
Interest expense	951				1,060				1,163				1,432			1,793			3,174			6,130
Net interest income	14,073				14,369				14,372				14,513			13,529			42,814			41,705
Provision (credit) for loan losses	306				(15		)		(52		)		(151	)		976			239			2,165
Net interest income after provision (credit)	13,767				14,384				14,424				14,664			12,553			42,575			39,540
Non-interest income	4,106				4,314				3,465				4,305			4,278			11,885			11,436
Non-interest expense	12,029				12,208				11,492				11,944			11,653			35,729			33,841
Income before income taxes	5,844				6,490				6,397				7,025			5,178			18,731			17,135
Provision for income taxes	1,027				1,200				1,157				1,283			928			3,384			2,802
Net income	$	4,817			$	5,290			$	5,240			5,742			4,250			15,347			14,333
Amort/Accret income on acquired loans	$	132			$	216			$	249			186			181			597			1,142
Amort/Accret expenses on acquired interest-bearing liabilities	$	—			$	—			$	—			1			—			—			5
Tax-equivalent net interest income	$	14,129			$	14,427			$	14,432			14,577			13,594			42,988			41,914
Per Share Data
Dividends per share	$	0.19			$	0.19			$	0.19			0.19			0.18			0.57			0.54
Basic earnings per common share	$	0.39			$	0.41			$	0.41			0.44			0.33			1.21			1.11
Diluted earnings per common share	$	0.39			$	0.41			$	0.41			0.44			0.33			1.21			1.11
Book value per share	$	19.17			$	18.99			$	18.66			18.73			18.46			19.17			18.46
Tangible book value per share	$	14.28			$	14.15			$	13.87			13.93			13.66			14.28			13.66
Weighted average common shares outstanding:
Basic	12,455,276				12,743,726				12,794,824				12,852,614			12,937,865			12,663,368			12,934,987
Diluted	12,455,276				12,743,726				12,794,852				12,852,657			12,937,901			12,663,378			12,935,388
Shares outstanding at period end	12,434,084				12,634,845				12,820,108				12,858,325			12,926,686			12,434,084			12,926,686
Selected Financial Ratios
Return on average assets	1.02		%		1.15		%		1.20		%		1.31	%		0.97	%		1.12	%		1.13	%
Return on average equity	7.93		%		8.78		%		8.80		%		9.52	%		7.08	%		8.50	%		8.14	%
Return on average tangible common equity	10.62		%		11.76		%		11.81		%		12.83	%		9.56	%		11.39	%		11.07	%
Dividend payout ratio	48.72		%		46.34		%		46.34		%		43.18	%		54.55	%		47.11	%		48.65	%
Net interest margin (tax equivalent)	3.32		%		3.51		%		3.68		%		3.71	%		3.47	%		3.49	%		3.69	%
Efficiency ratio (tax equivalent)	65.96		%		65.14		%		64.21		%		63.26	%		65.20	%		65.11	%		63.43	%
Selected Balance Sheet Items
Cash and cash equivalents	$	23,852			$	22,909			$	41,144			31,730			24,485
Debt and equity securities	352,066				349,199				276,774				248,624			199,044
Loans:
Commercial and industrial	$	91,246			$	97,240			$	107,630			100,254			124,628
Commercial, secured by real estate	862,202				836,085				855,894				843,230			843,943
Residential real estate	343,318				341,447				328,265				309,692			327,689
Consumer	35,349				35,257				35,799				36,917			36,504
Agricultural	8,852				8,765				8,698				10,100			8,920
Other, including deposit overdrafts	247				369				346				363			403
Deferred net origination fees	(1,055		)		(1,398		)		(1,531		)		(1,135	)		(1,927	)
Loans, gross	1,340,159				1,317,765				1,335,101				1,299,421			1,340,160
Less allowance for loan losses	5,828				5,652				5,679				5,728			5,974
Loans, net	$	1,334,331			$	1,312,113			$	1,329,422			1,293,693			1,334,186

	Three Months Ended																		Nine Months Ended
	9/30/2021				6/30/2021				3/31/2021				12/31/2020			9/30/2020			9/30/2021			9/30/2020
Selected Balance Sheet Items, continued
Total earning assets	$	1,695,281			$	1,671,462			$	1,634,818			1,562,392			1,547,538
Total assets	1,884,252				1,856,670				1,818,321				1,745,884			1,725,615
Total deposits	1,603,203				1,577,345				1,537,116				1,455,423			1,430,394
Short-term borrowings	—				—				—				—			—
Long-term debt	15,000				15,000				17,000				22,000			31,999
Total shareholders’ equity	238,419				239,952				239,246				240,825			238,585
Equity to assets ratio	12.65		%		12.92		%		13.16		%		13.79	%		13.83	%
Loans to deposits ratio	83.59		%		83.54		%		86.86		%		89.28	%		93.69	%
Tangible common equity (TCE)	$	177,501			$	178,771			$	177,805			179,127			176,624
Tangible common assets (TCA)	1,823,334				1,795,489				1,756,880				1,684,186			1,663,654
TCE/TCA	9.73		%		9.96		%		10.12		%		10.64	%		10.62	%
Selected Average Balance Sheet Items
Cash and cash equivalents	$	34,557			$	45,414			$	37,269			49,273			42,661			39,021			37,988
Debt and equity securities	356,214				312,596				260,147				218,816			197,788			310,004			195,033
Loans	$	1,321,629			$	1,328,760			$	1,313,803			1,313,892			1,339,608			1,321,426			1,303,770
Less allowance for loan losses	5,567				5,678				5,715				5,920			5,250			5,653			4,730
Net loans	$	1,316,062			$	1,323,082			$	1,308,088			1,307,972			1,334,358			1,315,773			1,299,040
Total earning assets	$	1,688,589			$	1,666,126			$	1,589,582			1,561,392			1,558,886			1,648,461			1,516,967
Total assets	1,879,314				1,852,035				1,775,154				1,742,947			1,741,998			1,835,887			1,695,103
Total deposits	1,595,773				1,570,070				1,488,156				1,447,217			1,445,573			1,551,727			1,401,636
Short-term borrowings	1,320				716				342				—			—			796			497
Long-term debt	15,000				15,571				19,689				30,803			33,020			16,736			35,427
Total shareholders’ equity	240,976				241,651				241,517				239,881			238,990			241,379			235,225
Equity to assets ratio	12.82		%		13.05		%		13.61		%		13.76	%		13.72	%		13.15	%		13.88	%
Loans to deposits ratio	82.82		%		84.63		%		88.28		%		90.79	%		92.67	%		85.16	%		93.02	%
Asset Quality
Net charge-offs (recoveries)	$	130			$	12			$	(3	)		95			18			139			236
Other real estate owned	—				—				—				—			—			—			—
Non-accrual loans	2,629				3,338				3,365				3,718			4,110			2,629			4,110
Loans past due 90 days or more and still accruing	13				—				—				—			94			13			94
Total nonperforming loans	$	2,642			$	3,338			$	3,365			3,718			4,204			2,642			4,204
Net charge-offs to average loans	0.04		%		0.00		%		0.00		%		0.03	%		0.01	%		0.01	%		0.02	%
Allowance for loan losses to total loans	0.43		%		0.43		%		0.43		%		0.44	%		0.45	%		0.43	%		0.45	%
Nonperforming loans to total loans	0.20		%		0.25		%		0.25		%		0.29	%		0.31	%		0.20	%		0.31	%
Nonperforming assets to total assets	0.14		%		0.18		%		0.19		%		0.21	%		0.24	%		0.14	%		0.24	%
Assets Under Management
LCNB Corp. total assets	$	1,884,252			$	1,856,670			$	1,818,321			1,745,884			1,725,615
Trust and investments (fair value)	713,936				701,838				673,742				628,414			524,502
Mortgage loans serviced	140,147				126,924				127,290				137,188			120,546
Cash management	72,622				80,177				118,494				116,792			119,520
Brokerage accounts (fair value)	319,495				314,491				299,355				292,953			267,307
Total assets managed	$	3,130,452			$	3,080,100			3,037,202				2,921,231			2,757,490

LCNB CORP. AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in thousands)
	September 30, 2021 (Unaudited)				December 31, 2020
ASSETS:
Cash and due from banks	$	20,796			17,383
Interest-bearing demand deposits	3,056				14,347
Total cash and cash equivalents	23,852				31,730
Investment securities:
Equity securities with a readily determinable fair value, at fair value	2,478				2,389
Equity securities without a readily determinable fair value, at cost	2,099				2,099
Debt securities, available-for-sale, at fair value	313,214				209,471
Debt securities, held-to-maturity, at cost	24,420				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	1,334,331				1,293,693
Premises and equipment, net	35,154				35,376
Operating leases right of use asset	6,608				6,274
Goodwill	59,221				59,221
Core deposit and other intangibles	2,671				3,453
Bank owned life insurance	42,954				42,149
Interest receivable	8,624				8,337
Other assets	18,771				17,027
TOTAL ASSETS	$	1,884,252			1,745,884
LIABILITIES:
Deposits:
Noninterest-bearing	$	483,920			455,073
Interest-bearing	1,119,283				1,000,350
Total deposits	1,603,203				1,455,423
Long-term debt	15,000				22,000
Operating lease liabilities	6,693				6,371
Accrued interest and other liabilities	20,937				21,265
TOTAL LIABILITIES	1,645,833				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 14,207,735 and 14,163,904 shares at September 30, 2021 and December 31, 2020, respectively; outstanding 12,434,084 and 12,858,325 shares at September 30, 2021 and December 31, 2020, respectively	142,946				142,443
Retained earnings	123,167				115,058
Treasury shares at cost, 1,773,651 and 1,305,579 shares at September 30, 2021 and December 31, 2020, respectively	(28,590		)		(20,719	)
Accumulated other comprehensive income, net of taxes	896				4,043
TOTAL SHAREHOLDERS' EQUITY	238,419				240,825
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	1,884,252			1,745,884

LCNB CORP. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF INCOME (Dollars in thousands, except per share data) (Unaudited)
	Three Months Ended September 30,							Nine Months Ended  September 30,
	2021				2020			2021			2020
INTEREST INCOME:
Interest and fees on loans	$	13,729			14,379			42,372			44,428
Dividends on equity securities with a readily determinable fair value	12				13			38			40
Dividends on equity securities without a readily determinable fair value	5				5			16			33
Interest on debt securities, taxable	1,027				633			2,650			2,250
Interest on debt securities, non-taxable	214				249			656			788
Other investments	37				43			256			296
TOTAL INTEREST INCOME	15,024				15,322			45,988			47,835
INTEREST EXPENSE:
Interest on deposits	836				1,567			2,809			5,416
Interest on short-term borrowings	2				—			4			7
Interest on long-term debt	113				226			361			707
TOTAL INTEREST EXPENSE	951				1,793			3,174			6,130
NET INTEREST INCOME	14,073				13,529			42,814			41,705
PROVISION FOR LOAN LOSSES	306				976			239			2,165
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES	13,767				12,553			42,575			39,540
NON-INTEREST INCOME:
Fiduciary income	1,695				1,275			4,959			3,579
Service charges and fees on deposit accounts	1,621				1,506			4,506			4,038
Net gains on sales of debt securities, available-for-sale	—				—			—			221
Bank owned life insurance income	269				275			805			1,163
Gains from sales of loans	366				999			560			1,436
Other operating income	155				223			1,055			999
TOTAL NON-INTEREST INCOME	4,106				4,278			11,885			11,436
NON-INTEREST EXPENSE:
Salaries and employee benefits	7,096				6,863			20,640			20,279
Equipment expenses	421				341			1,232			917
Occupancy expense, net	713				740			2,236			2,145
State financial institutions tax	437				424			1,318			1,280
Marketing	253				471			878			906
Amortization of intangibles	263				263			780			783
FDIC insurance premiums, net	129				112			365			142
Contracted services	655				435			1,818			1,312
Other non-interest expense	2,062				2,004			6,462			6,077
TOTAL NON-INTEREST EXPENSE	12,029				11,653			35,729			33,841
INCOME BEFORE INCOME TAXES	5,844				5,178			18,731			17,135
PROVISION FOR INCOME TAXES	1,027				928			3,384			2,802
NET INCOME	$	4,817			4,250			15,347			14,333
Dividends declared per common share	$	0.19			0.18			0.57			0.54
Earnings per common share:
Basic	0.39				0.33			1.21			1.11
Diluted	0.39				0.33			1.21			1.11
Weighted average common shares outstanding:
Basic	12,455,276				12,937,865			12,663,368			12,934,987
Diluted	12,455,276				12,937,901			12,663,378			12,935,388

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20211021005195/en/