Ended the First Quarter with a Stable Deposit
Base and an 86.97% Loan to Deposit Ratio
Asset Quality Remains Excellent with Total
Nonperforming Loans to Total Loans of 0.05% at March 31, 2023
Total Earning Assets Increased 1.4%
Year-over-Year to a Record $1.74 Billion
LCNB Wealth Management Assets Up 6.2%
Year-over-Year to a Record $1.09 Billion
First Quarter Earnings of $0.37 Per Diluted
Share
LCNB Corp. ("LCNB") (NASDAQ: LCNB) today announced financial
results for the three months ended March 31, 2023.
Commenting on the financial results, LCNB President and Chief
Executive Officer Eric Meilstrup said, “We continue to successfully
navigate an extremely fluid operating environment as a result of
the community banking values we have followed throughout our
history, our prudent focus on risk management, and our commitment
to our customers and communities. We believe these core operating
principles not only position the bank for success in any economic
environment, but also resonate with our customers and support our
growth. We ended the quarter with record total assets under
management driven by growing customer accounts and record assets
within our LCNB Wealth Management group. This drove a 2.7%
year-over-year increase in fiduciary income and helped grow
non-interest income in the first quarter. I am encouraged by the
positive momentum underway at LCNB Wealth Management as we leverage
our local approach, growing scale, and expanding
relationships.”
“LCNB’s long history of serving our communities helps us build
longstanding relationships with our customers and builds a stable
funding base. At March 31, 2023, we had over 60,000 consumer,
public fund, small business and non-profit checking and savings
accounts with an average balance of approximately $23,000 per
account. With a loan-to-deposit ratio of 86.97% and an
equity-to-asset ratio of 10.60% at March 31, 2023, we are well
capitalized to support our loan portfolio. LCNB’s strong liquidity
levels also continue to support our share repurchase program and
during the first quarter we repurchased 107,028 shares of our
common stock,” continued Mr. Meilstrup.
“LCNB has a solid foundation of experienced leaders, excellent
asset quality, and strong capital levels. We are focused on
leveraging this platform to navigate a more challenging and
uncertain economic landscape, while continuing to pursue our
long-term growth objectives and focus on returning excess capital
back to our shareholders,” concluded Mr. Meilstrup.
Income Statement
Net income for the 2023 first quarter decreased 8.1% to $4.2
million, compared to $4.5 million for the same period last year.
Earnings per basic and diluted share for the 2023 first quarter
were $0.37, compared to $0.38 for the same period last year.
Net interest income for the three months ended March 31, 2023,
was $13.9 million, compared to $14.2 million for the comparable
period in 2022. The 2.0% year-over-year decrease for the
three-month period was primarily due to higher interest expense
associated with the rapid year-over-year increase in the Effective
Federal Funds Rate. For the 2023 first quarter, LCNB’s tax
equivalent net interest margin was 3.28%, compared to 3.35% for the
same period last year.
Non-interest income for the three months ended March 31, 2023,
increased slightly to $3.58 million, compared to $3.55 million for
the same period last year. The increase in non-interest income was
primarily due to higher fiduciary income and service charges and
fees on deposit accounts, partially offset by lower gains on sales
of loans.
Non-interest expense for the three months ended March 31, 2023,
was $275,000 greater than the comparable period in 2022, primarily
due to higher salaries and employee benefits, occupancy expenses,
and FDIC insurance premiums. These increases were partially offset
by reduced equipment expenses, state financial institutions tax,
and marketing expenses.
Capital Allocation
During the 2023 first quarter, LCNB invested $1.8 million to
repurchase 107,028 shares of its outstanding stock at an average
price of $17.00 per share. This equates to almost 1.0% of the
Company’s outstanding common stock prior to the repurchase. At
March 31, 2023, LCNB had 407,932 shares available to be repurchased
under its February 2023 share repurchase program.
For the first quarter ended March 31, 2023, LCNB paid $0.21 per
share in dividends, a 5.0% increase from $0.20 per share for the
first quarter last year.
Balance Sheet
Total assets at March 31, 2023, increased 1.3% to a record $1.92
billion from $1.90 billion at March 31, 2022. Net loans at March
31, 2023 increased 0.9% to $1.39 billion, compared to $1.37 billion
at March 31, 2022.
Total deposits at March 31, 2023 decreased 2.0% to $1.60
billion, compared to $1.64 billion at March 31, 2022, as LCNB
experienced greater competition for interest-bearing accounts.
LCNB’s uninsured deposits to total deposits were approximately
13.4% for the quarter ended March 31, 2023.
Assets Under Management
Total assets managed at March 31, 2023 were a record $3.16
billion, compared to $3.15 billion at March 31, 2022. The
year-over-year increase in total assets managed was primarily due
to increases in LCNB Corp. total assets, trust and investments, and
brokerage accounts. Trust and investments and brokerage accounts
increased due to a higher number of new LCNB Wealth Management
customer accounts opened over the past twelve months and an
increase in the fair value of managed assets associated with an
improving capital market environment, partially offset by decreases
in cash management accounts and mortgage loans serviced.
Asset Quality
For the 2023 first quarter, LCNB recorded a provision for credit
losses on loans of $32,000, compared to a provision of $49,000 for
the 2022 first quarter.
On January 1, 2023, LCNB adopted ASC 326, which provides for a
current expected credit loss (“CECL”) model in estimating the
allowance for credit losses and recorded a one-time decrease of
$1.92 million, net of tax, to retained earnings as a result of the
initial cumulative entry. The adoption of CECL did not have a
material impact on the Bank’s regulatory capital ratios. As an
overall percentage of loans, the allowance for credit losses on
loans increased to 0.56% at March 31, 2023 compared to 0.40% at
March 31, 2022.
Net charge-offs for the 2023 first quarter were $16,000, or
0.00% of average loans, annualized, compared to net charge-offs of
$25,000, or 0.01% 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 $754,000 from $1.5 million, or 0.11% of total loans, at
March 31, 2022, to $701,000, or 0.05% of total loans, at March 31,
2023. The nonperforming assets to total assets ratio was 0.04% at
March 31, 2023, compared to 0.08% at March 31, 2022.
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, 2022, 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;
- the ongoing uncertainties for LCNB's business, results of
operations and financial condition, as well as its regulatory
capital and liquidity ratios and other regulatory requirements,
resulting from the scope and duration of the COVID-19
pandemic;
- LCNB’s ability to integrate future acquisitions may be
unsuccessful or may be more difficult, time-consuming, or costly
than expected;
- LCNB may incur increased loan charge-offs in the future;
- LCNB may face competitive loss of customers;
- changes in the interest rate environment, which may include
further interest rate increases, 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 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;
- difficulties with technology or data security breaches,
including cyberattacks, could negatively affect LCNB's ability to
conduct business and its relationships with customers, vendors, and
others;
- adverse weather events and natural disasters and global and/or
national epidemics could negatively affect LCNB’s customers given
its concentrated geographic scope, which could impact LCNB’s
operating results; and
- government intervention in the U.S. financial system, including
the effects of 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, and any such future regulatory actions or
reforms.
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
3/31/2023
12/31/2022
9/30/2022
6/30/2022
3/31/2022
Condensed Income
Statement
Interest income
$
17,918
17,719
16,704
16,208
15,122
Interest expense
3,976
1,511
1,260
1,041
899
Net interest income
13,942
16,208
15,444
15,167
14,223
Provision for (recovery of) credit
losses
(57
)
(19
)
(157
)
377
49
Net interest income after provision for
(recovery of) credit losses
13,999
16,227
15,601
14,790
14,174
Non-interest income
3,581
3,629
3,581
3,528
3,550
Non-interest expense
12,525
12,065
12,350
11,469
12,250
Income before income taxes
5,055
7,791
6,832
6,849
5,474
Provision for income taxes
898
1,383
1,253
1,231
951
Net income
$
4,157
6,408
5,579
5,618
4,523
Supplemental
Income Statement Information
Amort/Accret income on acquired loans
$
74
249
144
61
66
Tax-equivalent net interest income
$
13,989
16,257
15,495
15,217
14,273
Per Share
Data
Dividends per share
$
0.21
0.21
0.20
0.20
0.20
Basic earnings per common share
$
0.37
0.57
0.49
0.49
0.38
Diluted earnings per common share
$
0.37
0.57
0.49
0.49
0.38
Book value per share
$
18.22
17.82
17.31
17.84
18.14
Tangible book value per share
$
12.86
12.48
11.97
12.53
12.84
Weighted average common shares
outstanding:
Basic
11,189,170
11,211,328
11,284,225
11,337,805
11,818,614
Diluted
11,189,170
11,211,328
11,284,225
11,337,805
11,818,614
Shares outstanding at period end
11,202,063
11,259,080
11,293,639
11,374,515
11,401,503
Selected
Financial Ratios
Return on average assets
0.88
%
1.34
%
1.15
%
1.18
%
0.96
%
Return on average equity
8.33
%
12.90
%
10.80
%
10.96
%
8.13
%
Return on average tangible common
equity
11.85
%
18.59
%
15.30
%
15.52
%
11.11
%
Dividend payout ratio
56.76
%
36.84
%
40.82
%
40.82
%
52.63
%
Net interest margin (tax equivalent)
3.28
%
3.77
%
3.54
%
3.54
%
3.35
%
Efficiency ratio (tax equivalent)
71.29
%
60.67
%
64.74
%
61.18
%
68.73
%
Selected Balance
Sheet Items
Cash and cash equivalents
$
31,876
22,701
29,460
31,815
19,941
Debt and equity securities
328,194
323,167
325,801
337,952
330,715
Loans:
Commercial and industrial
$
124,240
120,236
114,694
114,971
105,805
Commercial, secured by real estate
932,208
938,022
908,130
905,703
906,140
Residential real estate
303,051
305,575
316,669
315,930
328,034
Consumer
28,611
28,290
29,451
30,308
32,445
Agricultural
7,523
10,054
8,630
7,412
7,980
Other, including deposit overdrafts
62
81
52
81
45
Deferred net origination fees
(865
)
(980
)
(937
)
(928
)
(928
)
Loans, gross
1,394,830
1,401,278
1,376,689
1,373,477
1,379,521
Less allowance for credit losses on
loans
7,858
5,646
5,644
5,833
5,530
Loans, net
$
1,386,972
1,395,632
1,371,045
1,367,644
1,373,991
Three Months Ended
3/31/2023
12/31/2022
9/30/2022
6/30/2022
3/31/2022
Selected Balance
Sheet Items, continued
Allowance for Credit Losses on
Loans:
Allowance for credit losses, beginning of
period
5,646
5,644
5,833
5,530
5,506
Cumulative change in accounting principle;
adoption of ASU 2016-13
2,196
—
—
—
—
Provision for (recovery of) credit
losses
32
(19
)
(157
)
377
49
Losses charged off
(36
)
(60
)
(53
)
(116
)
(37
)
Recoveries
20
81
21
42
12
Allowance for credit losses, end of
period
7,858
5,646
5,644
5,833
5,530
Total earning assets
$
1,736,829
1,726,902
1,714,196
1,722,853
1,712,115
Total assets
1,924,531
1,919,121
1,904,700
1,912,627
1,899,630
Total deposits
1,603,881
1,604,970
1,657,370
1,658,825
1,636,606
Short-term borrowings
76,500
71,455
4,000
5,000
24,746
Long-term debt
18,598
19,072
24,539
25,000
10,000
Total shareholders’ equity
204,072
200,675
195,439
202,960
206,875
Equity to assets ratio
10.60
%
10.46
%
10.26
%
10.61
%
10.89
%
Loans to deposits ratio
86.97
%
87.31
%
83.06
%
82.80
%
84.29
%
Tangible common equity (TCE)
$
144,006
140,498
135,149
142,557
146,360
Tangible common assets (TCA)
1,864,465
1,858,944
1,844,410
1,852,224
1,839,115
TCE/TCA
7.72
%
7.56
%
7.33
%
7.70
%
7.96
%
Selected Average
Balance Sheet Items
Cash and cash equivalents
$
35,712
24,330
35,763
28,787
32,826
Debt and equity securities
327,123
323,195
338,299
338,149
340,666
Loans
$
1,389,385
1,383,809
1,384,520
1,375,710
1,376,926
Less allowance for credit losses on
loans
7,522
5,647
5,830
5,532
5,503
Net loans
$
1,381,863
1,378,162
1,378,690
1,370,178
1,371,423
Total earning assets
$
1,729,008
1,711,524
1,736,031
1,722,503
1,727,335
Total assets
1,921,742
1,903,338
1,928,868
1,912,574
1,917,226
Total deposits
1,583,857
1,637,201
1,669,932
1,655,389
1,646,627
Short-term borrowings
94,591
21,433
5,728
18,263
12,503
Long-term debt
18,983
23,855
24,920
12,637
10,000
Total shareholders’ equity
202,419
197,014
205,051
205,645
225,725
Equity to assets ratio
10.53
%
10.35
%
10.63
%
10.75
%
11.77
%
Loans to deposits ratio
87.72
%
84.52
%
82.91
%
83.10
%
83.62
%
Asset
Quality
Net charge-offs (recoveries)
$
16
(21
)
32
74
25
Non-accrual loans
$
701
391
465
599
1,455
Loans past due 90 days or more and still
accruing
—
39
—
—
—
Total nonperforming loans
$
701
430
465
599
1,455
Net charge-offs (recoveries) to average
loans
0.00
%
(0.01
) %
0.01
%
0.02
%
0.01
%
Allowance for credit losses on loans to
total loans
0.56
%
0.40
%
0.41
%
0.42
%
0.40
%
Nonperforming loans to total loans
0.05
%
0.03
%
0.03
%
0.04
%
0.11
%
Nonperforming assets to total assets
0.04
%
0.02
%
0.02
%
0.03
%
0.08
%
Assets Under
Management
LCNB Corp. total assets
$
1,924,531
1,919,121
1,904,700
1,912,627
1,899,630
Trust and investments (fair value)
716,578
678,366
611,409
625,984
700,353
Mortgage loans serviced
142,167
148,412
145,317
153,557
152,271
Cash management
1,831
1,925
53,199
38,914
75,302
Brokerage accounts (fair value)
374,066
347,737
314,144
303,663
326,290
Total assets managed
$
3,159,173
3,095,561
3,028,769
3,034,745
3,153,846
LCNB CORP. AND
SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE
SHEETS
(Dollars in thousands)
March 31, 2023
December 31,
(Unaudited)
2022
ASSETS:
Cash and due from banks
$
18,071
20,244
Interest-bearing demand deposits
13,805
2,457
Total cash and cash equivalents
31,876
22,701
Investment securities:
Equity securities with a readily
determinable fair value, at fair value
1,286
2,273
Equity securities without a readily
determinable fair value, at cost
2,099
2,099
Debt securities, available-for-sale, at
fair value
293,427
289,850
Debt securities, held-to-maturity, at
cost, net of allowance for credit losses
19,763
19,878
Federal Reserve Bank stock, at cost
4,652
4,652
Federal Home Loan Bank stock, at cost
6,967
4,415
Loans, net of allowance for credit
losses
1,386,972
1,395,632
Premises and equipment, net
33,186
33,042
Operating leases right of use asset
6,093
6,248
Goodwill
59,221
59,221
Core deposit and other intangibles
1,665
1,827
Bank owned life insurance
44,569
44,298
Interest receivable
8,005
7,482
Other assets
24,750
25,503
TOTAL ASSETS
$
1,924,531
1,919,121
LIABILITIES:
Deposits:
Noninterest-bearing
$
473,345
505,824
Interest-bearing
1,130,536
1,099,146
Total deposits
1,603,881
1,604,970
Short-term borrowings
76,500
71,455
Long-term debt
18,598
19,072
Operating lease liabilities
6,246
6,370
Allowance for credit losses on off-balance
sheet credit exposures
482
—
Accrued interest and other liabilities
14,752
16,579
TOTAL LIABILITIES
1,720,459
1,718,446
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 14,320,561 and 14,270,550 shares at March
31, 2023 and December 31, 2022, respectively; outstanding
11,202,063 and 11,259,080 shares at March 31, 2023 and December 31,
2022, respectively
144,488
144,069
Retained earnings
139,115
139,249
Treasury shares at cost, 3,118,498 and
3,011,470 shares at March 31, 2023 and December 31, 2022,
respectively
(54,527
)
(52,689
)
Accumulated other comprehensive loss, net
of taxes
(25,004
)
(29,954
)
TOTAL SHAREHOLDERS' EQUITY
204,072
200,675
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY
$
1,924,531
1,919,121
LCNB CORP. AND
SUBSIDIARIES
CONSOLIDATED CONDENSED
STATEMENTS OF INCOME
(Dollars in thousands, except per
share data)
(Unaudited)
Three Months Ended
March 31,
2023
2022
INTEREST INCOME:
Interest and fees on loans
16,143
13,786
Dividends on equity securities with a
readily determinable fair value
17
12
Dividends on equity securities without a
readily determinable fair value
20
5
Interest on debt securities, taxable
1,343
1,095
Interest on debt securities,
non-taxable
176
189
Other investments
219
35
TOTAL INTEREST INCOME
17,918
15,122
INTEREST EXPENSE:
Interest on deposits
2,456
739
Interest on short-term borrowings
1,304
86
Interest on long-term debt
216
74
TOTAL INTEREST EXPENSE
3,976
899
NET INTEREST INCOME
13,942
14,223
Provision for credit losses on loans
32
49
Provision for credit losses on debt
securities, held-to-maturity
—
—
Recovery of credit losses on off-balance
sheet credit exposures
(89
)
—
TOTAL PROVISION FOR (RECOVERY OF) CREDIT
LOSSES
(57
)
49
NET INTEREST INCOME AFTER PROVISION FOR
(RECOVERY OF) CREDIT LOSSES
13,999
14,174
NON-INTEREST INCOME:
Fiduciary income
1,740
1,695
Service charges and fees on deposit
accounts
1,482
1,406
Bank owned life insurance income
271
265
Gains from sales of loans
6
124
Other operating income
82
60
TOTAL NON-INTEREST INCOME
3,581
3,550
NON-INTEREST EXPENSE:
Salaries and employee benefits
7,349
7,215
Equipment expenses
361
408
Occupancy expense, net
963
775
State financial institutions tax
397
436
Marketing
192
262
Amortization of intangibles
111
140
FDIC insurance premiums, net
215
126
Contracted services
641
610
Other non-interest expense
2,296
2,278
TOTAL NON-INTEREST EXPENSE
12,525
12,250
INCOME BEFORE INCOME TAXES
5,055
5,474
PROVISION FOR INCOME TAXES
898
951
NET INCOME
4,157
4,523
Dividends declared per common share
0.21
0.20
Earnings per common share:
Basic
0.37
0.38
Diluted
0.37
0.38
Weighted average common shares
outstanding:
Basic
11,189,170
11,818,614
Diluted
11,189,170
11,818,614
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230421005425/en/
Company Contact: Eric J. Meilstrup President and Chief
Executive Officer LCNB National Bank (513) 932-1414
shareholderrelations@lcnb.com
Investor and Media Contact: Andrew M. Berger Managing
Director SM Berger & Company, Inc. (216) 464-6400
andrew@smberger.com
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