LCNB Corp. ("LCNB") (NASDAQ: LCNB) today announced net income of
$4,727,000 (total basic and diluted earnings per share of $0.36)
and $14,082,000 (total basic and diluted earnings per share of
$1.07) for the three and nine months ended September 30, 2019,
respectively. This compares to net income of $4,201,000 (total
basic and diluted earnings per share of $0.32) and $9,652,000
(total basic and diluted earnings per share of $0.84) for the same
three and nine month periods in 2018.
Commenting on the financial results, LCNB Chief Executive
Officer Eric Meilstrup said, "We are pleased to report strong
earnings for the three and nine months ended September 30, 2019.
Net income for the first nine months of 2019 was $4,430,000 greater
than the first nine months of 2018, fueled by a $5,900,000 increase
in net interest income that resulted primarily from a $63.4
million, or 5.5%, increase in our net loan portfolio, from $1.158
billion at September 30, 2018 to $1.222 billion at September 30,
2019. Part of the increase in net interest income was also due to a
full nine months of net earnings on loans, deposits, and borrowings
obtained through our merger with Columbus First Bancorp ("CFB") on
May 31, 2018. Our return on average assets for the first nine
months of 2019 was 1.15% and our return on average equity was
8.42%. Additionally, positive earnings growth allowed for increased
shareholder dividends, from $0.48 per share for the first nine
months of 2018 to $0.51 per share for the same period in 2019. LCNB
remains committed to enhancing shareholder value. In addition to
increased earnings and dividends, LCNB commenced a new share
repurchase program during the second quarter 2019 that authorizes
the repurchase of up to 500,000 shares of our outstanding common
stock. Under this new program, we repurchased 400,000 shares during
the second and third quarters."
Net interest income for the three and nine months ended
September 30, 2019 was, respectively, $475,000 and $5,900,000
greater than the comparable periods in 2018, due to growth in the
average balance of LCNB's loan portfolio and to an increase in the
average rate earned on that portfolio, partially offset by a
decrease in average investment securities and increases in average
deposits and long-term borrowings and increases in the average
rates paid for the deposits and borrowings. Loans, deposits, and
long-term borrowings obtained through the merger with CFB were
considerable components of the growth in the average balance of
LCNB's loan portfolio and the increases in the average balances of
deposits and long-term borrowings.
The provision for loan losses for the three and nine months
ended September 30, 2019 was, respectively, $395,000 and $749,000
less than the comparable periods in 2018. Non-accrual loans and
loans past due 90 days or more and still accruing interest
increased $423,000, from $3,100,000 or 0.26% of total loans at
December 31, 2018 to $3,523,000 or 0.29% of total loans at
September 30, 2019. The increase in non-accrual loans is due to a
loan with a carrying value of approximately $1.0 million that was
newly classified as non-accrual during the third quarter 2019, This
increase was partially offset by a net decrease in other loans
classified as non-accrual or past due 90 days or more and still
accruing interest.
Non-interest income for the three and nine months ended
September 30, 2019 was, respectively, $435,000 and $778,000 greater
than the comparable periods in 2018, primarily due to increases in
fiduciary income, service charges and fees on deposit accounts, and
bank owned life insurance income. Also contributing to the increase
were market-driven increases in the fair value of equity security
investments, which were recorded in other operating income in the
consolidated condensed statements of income.
Non-interest expense for the three and nine months ended
September 30, 2019 was, respectively, $665,000 and $1,938,000
greater than the comparable periods in 2018, primarily due to
increases in salaries and employee benefits, state financial
institutions tax, marketing, and contracted services expenses.
Salaries and employee benefits increased primarily due to salary
and wage increases and newly hired employees, including CFB
employees retained. An increase in health insurance costs also
contributed to the increase in salaries and employee benefits.
State financial institutions tax expense increased due to a larger
capital base (Ohio financial institutions tax is based on capital,
not income), largely caused by stock issued to CFB stockholders as
merger consideration. Marketing expense increased primarily due to
promotion costs for new checking products introduced in 2018,
increased marketing activities in the Columbus area, and expanded
use of broadcast and digital media. A decrease in merger related
expenses and the absence of an impairment charge recognized on one
of LCNB's office buildings during the second quarter 2018 partially
offset these increases.
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, 2018, 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;
- LCNB’s ability to integrate recent and any 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 other 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; and
- government intervention in the U.S. financial system, including
the effects of 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
9/30/2019
6/30/2019
3/31/2019
12/31/2018
9/30/2018
9/30/2019
9/30/2018
Condensed Income
Statement
Interest income
$
16,329
16,328
16,113
15,844
15,070
48,770
38,750
Interest expense
2,751
2,738
2,722
2,334
1,967
8,211
4,091
Net interest income
13,578
13,590
13,391
13,510
13,103
40,559
34,659
Provision (credit) for loan losses
264
54
(105
)
(39
)
659
213
962
Net interest income after provision
13,314
13,536
13,496
13,549
12,444
40,346
33,697
Non-interest income
3,356
2,998
2,772
2,702
2,921
9,126
8,348
Non-interest expense
10,982
10,833
10,700
9,925
10,317
32,515
30,577
Income before income taxes
5,688
5,701
5,568
6,326
5,048
16,957
11,468
Provision for income taxes
961
973
941
1,133
847
2,875
1,816
Net income
$
4,727
4,728
4,627
5,193
4,201
14,082
9,652
Amort/Accret income on acquired loans
$
302
355
224
229
198
881
340
Amort/Accret expenses on acquired
interest-bearing liabilities
$
4
142
144
149
214
290
214
Tax-equivalent net interest income
$
13,679
13,700
13,536
13,680
13,279
40,915
35,203
Per Share
Data
Dividends per share
$
0.17
0.17
0.17
0.17
0.16
0.51
0.48
Basic earnings per common share
$
0.36
0.36
0.35
0.40
0.32
1.07
0.84
Diluted earnings per common share
$
0.36
0.36
0.35
0.40
0.32
1.07
0.84
Book value per share
$
17.44
17.18
16.83
16.47
16.05
17.44
16.05
Tangible book value per share
$
12.57
12.31
12.05
11.67
11.18
12.57
11.18
Weighted average common shares
outstanding:
Basic
12,932,950
13,192,691
13,283,634
13,285,386
13,285,203
13,135,134
11,480,390
Diluted
12,937,145
13,196,665
13,287,338
13,290,499
13,290,665
13,139,100
11,486,051
Shares outstanding at period end
12,927,463
12,978,554
13,314,148
13,295,276
13,304,976
12,927,463
13,304,976
Selected
Financial Ratios
Return on average assets
1.13
%
1.16
%
1.15
%
1.27
%
1.03
%
1.15
%
0.89
%
Return on average equity
8.33
%
8.46
%
8.47
%
9.55
%
7.76
%
8.42
%
7.23
%
Dividend payout ratio
47.22
%
47.22
%
48.57
%
42.50
%
50.00
%
47.66
%
57.14
%
Net interest margin (tax equivalent)
3.67
%
3.72
%
3.71
%
3.69
%
3.59
%
3.70
%
3.61
%
Efficiency ratio (tax equivalent)
64.47
%
64.87
%
65.61
%
60.58
%
63.68
%
64.98
%
70.21
%
Selected Balance
Sheet Items
Cash and cash equivalents
$
22,826
23,185
19,527
20,040
19,812
Debt and equity securities
239,730
246,701
264,559
282,813
299,786
Loans:
Commercial and industrial
$
71,576
79,513
79,725
77,740
78,002
Commercial, secured by real estate
797,842
793,863
764,424
740,647
704,987
Residential real estate
320,703
326,029
334,227
349,127
347,920
Consumer
23,918
19,649
17,409
17,283
17,505
Agricultural
11,525
10,843
10,900
13,297
13,280
Other, including deposit overdrafts
456
373
409
450
498
Deferred net origination costs (fees)
(128
)
(9
)
40
79
133
Loans, gross
1,225,892
1,230,261
1,207,134
1,198,623
1,162,325
Less allowance for loan losses
4,167
4,112
4,126
4,046
4,016
Loans, net
$
1,221,725
1,226,149
1,203,008
1,194,577
1,158,309
Total earning assets
$
1,470,074
1,482,913
1,476,862
1,483,166
1,465,787
Total assets
1,644,447
1,642,012
1,632,387
1,636,927
1,620,299
Total deposits
1,355,383
1,357,959
1,347,857
1,300,919
1,371,023
Three Months Ended
Nine Months Ended
9/30/2019
6/30/2019
3/31/2019
12/31/2018
9/30/2018
9/30/2019
9/30/2018
Selected Balance
Sheet Items, continued
Short-term borrowings
—
—
—
56,230
—
Long-term debt
41,990
41,986
42,982
47,032
23,079
Total shareholders’ equity
225,492
222,972
224,018
218,985
213,515
Equity to assets ratio
13.71
%
13.58
%
13.72
%
13.38
%
13.18
%
Loans to deposits ratio
90.45
%
90.60
%
89.56
%
92.14
%
84.78
%
Tangible common equity (TCE)
$
162,485
159,702
160,488
155,197
149,398
Tangible common assets (TCA)
1,581,440
1,578,742
1,568,857
1,573,139
1,556,182
TCE/TCA
10.27
%
10.12
%
10.23
%
9.87
%
9.60
%
Selected Average
Balance Sheet Items
Cash and cash equivalents
$
28,293
29,523
25,080
20,685
25,920
27,600
25,011
Debt and equity securities
243,553
249,954
266,081
291,433
304,112
253,113
308,020
Loans
$
1,227,806
1,217,726
1,208,809
1,177,061
1,155,846
1,218,183
991,350
Less allowance for loan losses
3,986
4,088
4,074
4,016
3,622
4,049
3,757
Net loans
$
1,223,820
1,213,638
1,204,735
1,173,045
1,152,224
1,214,134
987,593
Total earning assets
$
1,480,096
1,479,225
1,480,634
1,471,650
1,465,510
1,479,983
1,305,211
Total assets
1,654,034
1,637,645
1,635,416
1,626,029
1,623,016
1,642,186
1,442,896
Total deposits
1,365,702
1,352,449
1,333,529
1,333,673
1,367,950
1,350,678
1,232,599
Short-term borrowings
468
243
23,235
36,348
1,833
7,898
6,425
Long-term debt
41,988
42,567
44,676
25,536
25,757
43,067
13,841
Total shareholders’ equity
225,216
224,203
221,470
215,739
214,769
223,644
178,539
Equity to assets ratio
13.62
%
13.69
%
13.54
%
13.27
%
13.23
%
13.62
%
12.37
%
Loans to deposits ratio
89.90
%
90.04
%
90.65
%
88.26
%
84.49
%
90.19
%
80.43
%
Asset
Quality
Net charge-offs (recoveries)
$
209
68
(185
)
(68
)
245
92
348
Other real estate owned
197
197
244
244
35
197
35
Non-accrual loans
3,523
2,962
2,845
2,951
2,603
3,523
2,603
Loans past due 90 days or more and still
accruing
—
24
177
149
1
—
1
Total nonperforming loans
$
3,523
2,986
3,022
3,100
2,604
3,523
2,604
Net charge-offs (recoveries) to average
loans
0.07
%
0.02
%
(0.06
)%
(0.02
)%
0.08
%
0.01
%
0.05
%
Allowance for loan losses to total
loans
0.34
%
0.33
%
0.34
%
0.34
%
0.35
%
0.34
%
0.35
%
Nonperforming loans to total loans
0.29
%
0.24
%
0.25
%
0.26
%
0.22
%
0.29
%
0.22
%
Nonperforming assets to total assets
0.23
%
0.19
%
0.20
%
0.20
%
0.16
%
0.23
%
0.16
%
Assets Under
Management
LCNB Corp. total assets
$
1,644,447
1,642,012
1,632,387
1,636,927
1,620,299
Trust and investments (fair value)
411,724
382,462
367,649
337,549
386,582
Mortgage loans serviced
104,358
88,444
89,049
97,685
115,647
Cash management
117,530
71,973
55,981
48,906
36,502
Brokerage accounts (fair value)
262,038
260,202
245,758
233,751
247,175
Total assets managed
$
2,540,097
2,445,093
2,390,824
2,354,818
2,406,205
Non-GAAP
Financial Measures
Net income
$
4,727
4,728
4,627
5,193
4,201
14,082
9,652
Add: merger-related expenses, net of
tax
21
16
53
148
274
90
1,605
Adjusted net income
$
4,748
4,744
4,680
5,341
4,475
14,172
11,257
Basic adjusted earnings per share
0.37
0.36
0.36
0.41
0.34
1.08
0.98
Diluted adjusted earnings per share
0.37
0.36
0.36
0.41
0.34
1.08
0.98
Adjusted return on average assets
1.14
%
1.16
%
1.16
%
1.30
%
1.09
%
1.15
%
1.04
%
Adjusted return on average equity
8.36
%
8.49
%
8.57
%
9.82
%
8.27
%
8.47
%
8.43
%
LCNB CORP. AND
SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE
SHEETS
(Dollars in thousands)
September 30, 2019
(Unaudited)
December 31, 2018
ASSETS:
Cash and due from banks
$
18,374
18,310
Interest-bearing demand deposits
4,452
1,730
Total cash and cash equivalents
22,826
20,040
Interest-bearing time deposits
249
996
Investment securities:
Equity securities with a readily
determinable fair value, at fair value
2,266
2,078
Equity securities without a readily
determinable fair value, at cost
2,099
2,099
Debt securities, available-for-sale, at
fair value
191,230
238,421
Debt securities, held-to-maturity, at
cost
34,031
29,721
Federal Reserve Bank stock, at cost
4,652
4,653
Federal Home Loan Bank stock, at cost
5,203
4,845
Loans, net
1,221,725
1,194,577
Premises and equipment, net
34,045
32,627
Operating leases right of use asset
5,565
—
Goodwill
59,221
59,221
Core deposit and other intangibles
4,246
5,042
Bank owned life insurance
41,377
28,723
Other assets
15,712
13,884
TOTAL ASSETS
$
1,644,447
1,636,927
LIABILITIES:
Deposits:
Noninterest-bearing
$
335,989
322,571
Interest-bearing
1,019,394
978,348
Total deposits
1,355,383
1,300,919
Short-term borrowings
—
56,230
Long-term debt
41,990
47,032
Operating leases liability
5,531
—
Accrued interest and other liabilities
16,051
13,761
TOTAL LIABILITIES
1,418,955
1,417,942
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 September 30, 2019 and December 31, 2018;
issued 14,102,490 and 14,070,303 shares at September 30, 2019 and
December 31, 2018, respectively
141,618
141,170
Retained earnings
101,929
94,547
Treasury shares at cost, 1,175,027 and
775,027 shares at September 30, 2019 and December 31, 2018
(18,847
)
(12,013
)
Accumulated other comprehensive income
(loss), net of taxes
792
(4,719
)
TOTAL SHAREHOLDERS' EQUITY
225,492
218,985
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY
$
1,644,447
1,636,927
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,
2019
2018
2019
2018
INTEREST INCOME:
Interest and fees on loans
$
14,872
13,363
44,072
33,479
Dividends on equity securities with a
readily determinable fair value
15
17
47
48
Dividends on equity securities without a
readily determinable fair value
16
7
48
22
Interest on debt securities, taxable
918
901
2,720
2,766
Interest on debt securities,
non-taxable
379
661
1,340
2,045
Other short-term investments
129
121
543
390
TOTAL INTEREST INCOME
16,329
15,070
48,770
38,750
INTEREST EXPENSE:
Interest on deposits
2,475
1,810
7,225
3,777
Interest on short-term borrowings
3
12
224
88
Interest on long-term debt
273
145
762
226
TOTAL INTEREST EXPENSE
2,751
1,967
8,211
4,091
NET INTEREST INCOME
13,578
13,103
40,559
34,659
PROVISION FOR LOAN LOSSES
264
659
213
962
NET INTEREST INCOME AFTER PROVISION FOR
LOAN LOSSES
13,314
12,444
40,346
33,697
NON-INTEREST INCOME:
Fiduciary income
1,123
1,081
3,215
2,987
Service charges and fees on deposit
accounts
1,616
1,439
4,421
4,170
Net losses on sales of debt securities
(20
)
(7
)
(37
)
(8
)
Bank owned life insurance income
289
185
654
553
Gains from sales of loans
114
63
207
182
Other operating income
234
160
666
464
TOTAL NON-INTEREST INCOME
3,356
2,921
9,126
8,348
NON-INTEREST EXPENSE:
Salaries and employee benefits
6,403
5,686
18,808
15,791
Equipment expenses
322
276
866
797
Occupancy expense, net
751
734
2,258
2,119
State financial institutions tax
433
299
1,307
898
Marketing
410
382
1,009
798
Amortization of intangibles
263
286
780
659
FDIC insurance premiums (refunds), net
(13
)
91
225
289
Contracted services
455
387
1,394
1,093
Other real estate owned
1
1
52
4
Merger-related expenses
27
346
114
1,959
Other non-interest expense
1,930
1,829
5,702
6,170
TOTAL NON-INTEREST EXPENSE
10,982
10,317
32,515
30,577
INCOME BEFORE INCOME TAXES
5,688
5,048
16,957
11,468
PROVISION FOR INCOME TAXES
961
847
2,875
1,816
NET INCOME
$
4,727
4,201
14,082
9,652
Dividends declared per common share
$
0.17
0.16
0.51
0.48
Earnings per common share:
Basic
0.36
0.32
1.07
0.84
Diluted
0.36
0.32
1.07
0.84
Weighted average common shares
outstanding:
Basic
12,932,950
13,285,203
13,135,134
11,480,390
Diluted
12,937,145
13,290,665
13,139,100
11,486,051
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191021005845/en/
LCNB Corp. Eric J. Meilstrup, CEO and President, 800-344-BANK
Robert C. Haines II, Executive Vice President and CFO,
800-344-BANK
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