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LCNB Corp. Reports Financial Results for the Three Months Ended March 31, 2019

LEBANON, Ohio–(BUSINESS WIRE)–LCNB Corp. (“LCNB”) (NASDAQ: LCNB) today announced net income of
$4,627,000 (total basic and diluted earnings per share of $0.35) for the
three months ended March 31, 2019. This compares to net income of
$2,713,000 (total basic and diluted earnings per share of $0.27) for the
same three month period in 2018.

Commenting on the financial results, LCNB Chief Executive Officer Steve
Foster said, “We are pleased to report our financial results for the
three months ended March 31, 2019. The acquisition of Columbus First
Bancorp on May 31, 2018 had a positive effect on our loan balances and,
consequently, on net interest income. Our average loan to deposit ratio
for the first quarter 2018 was 76.25%, compared to 89.56% for the first
quarter 2019. As a result, net interest income increased from
$10,188,000 for the first quarter 2018 to $13,391,000 for the first
quarter 2019.”

Net interest income for the three months ended March 31, 2019 was
$3,203,000 greater than the comparable period in 2018, primarily due to
growth in LCNB’s average loan portfolio, partially offset by a decrease
in average investment securities and increases in average deposits and
long-term borrowings. Also offsetting the growth in the loan portfolio
was a market-driven increase in average rates paid on deposits. Loans,
deposits, and long-term borrowings obtained through the merger with
Columbus First Bancorp (“CFB”) were a considerable component of LCNB’s
loan portfolio growth and the increases in deposits and long-term
borrowings.

The provision for loan losses for the three months ended March 31, 2019
was $184,000 less than the comparable period in 2018. Non-accrual loans
and loans past due 90 days or more and still accruing interest decreased
$78,000, from $3,100,000 or 0.26% of total loans at December 31, 2018 to
$3,022,000 or 0.25% of total loans at March 31, 2019.

Non-interest income for the three months ended March 31, 2019 was
$136,000 greater than the comparable period in 2018 primarily due to
increases in fiduciary income and market-driven increases in the fair
value of equity security investments, slightly offset by a decrease in
net gains from sales of debt security investments.

Non-interest expense for the three months ended March 31, 2019 was
$1,151,000 greater than the comparable period in 2018 primarily due to
increases in salaries and employee benefits, state financial
institutions tax, marketing, amortization of intangibles, and contracted
services expenses. Salaries and employee benefits increased primarily
due to salary and wage increases and newly hired employees, including
CFB employees retained. 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. Amortization of intangibles
increased due to amortization of CFB’s core deposit intangible. A
decrease in merger related expenses 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:

1. the success, impact, and timing of the implementation of
LCNB’s business strategies;

2. LCNB’s ability to
integrate recent and future acquisitions, including the merger with CFB,
may be unsuccessful, or may be more difficult, time-consuming or costly
than expected;

3. LCNB may incur increased
charge-offs in the future;

4. LCNB may face
competitive loss of customers;

5. 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;

6. changes in general economic
conditions and increased competition could adversely affect LCNB’s
operating results;

7. 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;

8. LCNB may
experience difficulties growing loan and deposit balances;

9.
the current economic environment poses significant challenges for us
and could adversely affect LCNB’s
financial condition and results
of operations;

10. 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;

11. 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

12.
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 “Dodd-Frank 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
3/31/2019   12/31/2018   9/30/2018   6/30/2018   3/31/2018

Condensed Income Statement

Interest income $ 16,113 15,844 15,070 12,538 11,142
Interest expense 2,722   2,334   1,967   1,170   954  
Net interest income 13,391 13,510 13,103 11,368 10,188
Provision for loan losses (105 ) (39 ) 659   224   79  
Net interest income after provision 13,496 13,549 12,444 11,144 10,109
Non-interest income 2,772 2,702 2,921 2,791 2,636
Non-interest expense 10,700   9,925   10,317   10,711   9,549  
Income before income taxes 5,568 6,326 5,048 3,224 3,196
Provision for income taxes 941   1,133   847   486   483  
Net income $ 4,627   5,193   4,201   2,738   2,713  
Amort/Accret income on acquired loans $ 224 229 198 44 96
Amort/Accret expenses on acquired interest-bearing liabilities $ 144 149 214
Tax-equivalent net interest income $ 13,536 13,680 13,279 11,549 10,375
 

Per Share Data

Dividends per share $ 0.17 0.17 0.16 0.16 0.16
Basic earnings per common share $ 0.35 0.40 0.32 0.25 0.27
Diluted earnings per common share $ 0.35 0.40 0.32 0.25 0.27
Book value per share $ 16.83 16.47 16.05 15.97 14.80
Tangible book value per share $ 12.05 11.67 11.23 11.14 11.47
Weighted average common shares outstanding:
Basic 13,283,634 13,285,386 13,285,203 11,099,485 10,020,611
Diluted 13,287,338 13,290,499 13,290,665 11,105,014 10,028,588
Shares outstanding at period end 13,314,148 13,295,276 13,304,976 13,299,235 10,041,152
 

Selected Financial Ratios

Return on average assets 1.15 % 1.27 % 1.03 % 0.78 % 0.85 %
Return on average equity 8.47 % 9.55 % 7.76 % 6.46 % 7.33 %
Dividend payout ratio 48.57 % 42.50 % 50.00 % 64.00 % 59.26 %
Net interest margin (tax equivalent) 3.71 % 3.69 % 3.59 % 3.63 % 3.59 %
Efficiency ratio (tax equivalent) 65.61 % 60.58 % 63.69 % 74.69 % 73.39 %
 

Selected Balance Sheet Items

Cash and cash equivalents $ 19,527 20,040 19,812 24,901 17,494
Debt and equity securities 264,559 282,813 299,786 311,047 310,009
 
Loans:
Commercial and industrial $ 79,725 77,740 78,002 81,778 37,118
Commercial, secured by real estate 764,424 740,647 704,987 705,978 542,890
Residential real estate 334,227 349,127 347,920 339,435 246,487
Consumer 17,409 17,283 17,505 17,705 17,176
Agricultural 10,900 13,297 13,280 13,390 12,217
Other, including deposit overdrafts 409 450 498 583 506
Deferred net origination costs 40   79   133   229   263  
Loans, gross 1,207,134 1,198,623 1,162,325 1,159,098 856,657
Less allowance for loan losses 4,126   4,046   4,016   3,603   3,529  
Loans, net $ 1,203,008   1,194,577   1,158,309   1,155,495   853,128  
 
Total earning assets $ 1,476,862 1,483,166 1,465,787 1,471,923 1,171,447
Total assets 1,632,387 1,636,927 1,620,299 1,631,442 1,288,791
Total deposits 1,347,857 1,300,919 1,371,023 1,380,884 1,123,463
 
 
Three Months Ended
3/31/2019 12/31/2018 9/30/2018 6/30/2018 3/31/2018

Selected Balance Sheet Items, continued

Short-term borrowings 0 56,230 0 0 0
Long-term debt 42,982 47,032 23,079 27,085 6,219
Total shareholders’ equity 224,018 218,985 213,515 212,366 148,584
Equity to assets ratio 13.72 % 13.38 % 13.18 % 13.02 % 11.53 %
Loans to deposits ratio 89.56 % 92.14 % 84.78 % 83.94 % 76.25 %
 
Tangible common equity (TCE) $ 160,488 155,197 149,398 147,705 114,801
Tangible common assets (TCA) 1,568,857 1,573,139 1,556,182 1,566,781 1,255,008
TCE/TCA 10.23 % 9.87 % 9.60 % 9.43 % 9.15 %
 

Selected Average Balance Sheet Items

Cash and cash equivalents $ 25,080 20,685 25,920 27,319 21,820
Debt and equity securities 266,081 291,433 304,112 306,366 313,689
 
Loans $ 1,208,809 1,177,061 1,155,846 961,726 853,152
Less allowance for loan losses 4,074   4,016   3,622   4,245   3,401  
Net loans $ 1,204,735 1,173,045 1,152,224 957,481 849,751
 
Total earning assets $ 1,480,634 1,471,650 1,465,510 1,276,176 1,170,708
Total assets 1,635,416 1,626,029 1,623,016 1,409,698 1,292,375
Total deposits 1,333,529 1,333,673 1,367,950 1,212,104 1,114,979
Short-term borrowings 23,235 36,348 1,833 3,491 14,086
Long-term debt 44,676 25,536 25,757 13,252 2,255
Total shareholders’ equity 221,470 215,739 214,769 170,077 150,058
Equity to assets ratio 13.54 % 13.27 % 13.23 % 12.06 % 11.61 %
Loans to deposits ratio 90.65 % 88.26 % 84.49 % 79.34 % 76.52 %
 

Asset Quality

Net charge-offs (recoveries) $ (185 ) (68 ) 245 150 (47 )
Other real estate owned 244 244 35 35
 
Non-accrual loans 2,845 2,951 2,603 4,065 2,744
Loans past due 90 days or more and still accruing 177   149   1   5   146  
Total nonperforming loans $ 3,022 3,100 2,604 4,070 2,890
 
Net charge-offs (recoveries) to average loans (0.06 )% (0.02 )% 0.08 % 0.06 % (0.02 )%
Allowance for loan losses to total loans 0.34 % 0.34 % 0.35 % 0.31 % 0.41 %
Nonperforming loans to total loans 0.25 % 0.26 % 0.22 % 0.35 % 0.34 %
Nonperforming assets to total assets 0.20 % 0.20 % 0.16 % 0.25 % 0.22 %
 

Assets Under Management

LCNB Corp. total assets $ 1,632,387 1,636,927 1,620,299 1,631,442 1,288,791
Trust and investments (fair value) 367,649 337,549 386,582 370,587 359,766
Mortgage loans serviced 89,049 97,685 115,647 114,536 90,630
Cash management 55,981 48,906 36,502 48,369 72,372
Brokerage accounts (fair value) 245,758   233,751   247,175   238,651   230,168  
Total assets managed $ 2,390,824   2,354,818   2,406,205   2,403,585   2,041,727  
 

Non-GAAP Financial Measures

Net income $ 4,627 5,193 4,201 2,738 2,713
Add: merger-related expenses, net of tax 53   148   274   710   621  
Adjusted net income $ 4,680   5,341   4,475   3,448   3,334  
Basic adjusted earnings per share 0.36 0.41 0.34 0.31 0.33
Diluted adjusted earnings per share 0.36 0.41 0.34 0.31 0.33
Adjusted return on average assets 1.16 % 1.30 % 1.09 % 0.98 % 1.05 %
Adjusted return on average equity 8.57 % 9.82 % 8.27 % 8.13 % 9.01 %
 
   
LCNB CORP. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in thousands)
 

March 31,
2019
(Unaudited)

December 31,
2018

ASSETS:
Cash and due from banks $ 14,358 18,310
Interest-bearing demand deposits 5,169   1,730  
Total cash and cash equivalents 19,527 20,040
Interest-bearing time deposits 747 996
Investment securities:
Equity securities with a readily determinable fair value, at fair
value
2,185 2,078
Equity securities without a readily determinable fair value, at cost 2,099 2,099
Debt securities, available-for-sale, at fair value 217,668 238,421
Debt securities, held-to-maturity, at cost 32,363 29,721
Federal Reserve Bank stock, at cost 4,652 4,653
Federal Home Loan Bank stock, at cost 4,845 4,845
Loans, net 1,203,008 1,194,577
Premises and equipment, net 32,548 32,627
Operating leases right of use asset 5,348
Goodwill 59,221 59,221
Core deposit and other intangibles 4,760 5,042
Bank owned life insurance 28,905 28,723
Other assets 14,511   13,884  

TOTAL ASSETS

$ 1,632,387   1,636,927  
 
LIABILITIES:
Deposits:
Noninterest-bearing $ 330,324 322,571
Interest-bearing 1,017,533   978,348  
Total deposits 1,347,857 1,300,919
Short-term borrowings 56,230
Long-term debt 42,982 47,032
Operating leases liability 5,289
Accrued interest and other liabilities 12,241   13,761  
TOTAL LIABILITIES 1,408,369   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 March
31, 2019 and December 31, 2018; issued 14,089,175 and 14,070,303
shares at March 31, 2019 and December 31, 2018, respectively
141,349 141,170
Retained earnings 96,912 94,547
Treasury shares at cost, 775,027 at March 31, 2019 and December 31,
2018
(12,013 ) (12,013 )
Accumulated other comprehensive loss, net of taxes (2,230 ) (4,719 )
TOTAL SHAREHOLDERS’ EQUITY 224,018   218,985  
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 1,632,387   1,636,927  
 
 
LCNB CORP. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
(Unaudited)
 
Three Months Ended
March 31,
2019   2018
INTEREST INCOME:
Interest and fees on loans $ 14,538 9,413
Dividends on equity securities with a readily determinable fair value 17 15
Dividends on equity securities without a readily determinable fair
value
16 7
Interest on debt securities, taxable 869 931
Interest on debt securities, non-taxable 544 704
Other short-term investments 129   72
TOTAL INTEREST INCOME 16,113   11,142
INTEREST EXPENSE:
Interest on deposits 2,286 871
Interest on short-term borrowings 219 69
Interest on long-term debt 217   14
TOTAL INTEREST EXPENSE 2,722   954
NET INTEREST INCOME 13,391 10,188
PROVISION FOR LOAN LOSSES (105 ) 79
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 13,496   10,109
NON-INTEREST INCOME:
Fiduciary income 1,034 964
Service charges and fees on deposit accounts 1,308 1,305
Net gains (losses) on sales of debt securities (18 )
Bank owned life insurance income 182 186
Gains from sales of loans 29 22
Other operating income 237   159
TOTAL NON-INTEREST INCOME 2,772   2,636
NON-INTEREST EXPENSE:
Salaries and employee benefits 6,162 4,977
Equipment expenses 266 253
Occupancy expense, net 763 727
State financial institutions tax 438 303
Marketing 302 132
Amortization of intangibles 257 185
FDIC insurance premiums 126 99
Contracted services 464 315
Other real estate owned 3 2
Merger-related expenses 67 758
Other non-interest expense 1,852   1,798
TOTAL NON-INTEREST EXPENSE 10,700   9,549
INCOME BEFORE INCOME TAXES 5,568 3,196
PROVISION FOR INCOME TAXES 941   483
NET INCOME $ 4,627   2,713
 
Dividends declared per common share $ 0.17 0.16
Earnings per common share:
Basic 0.35 0.27
Diluted 0.35 0.27
Weighted average common shares outstanding:
Basic 13,283,634 10,020,611
Diluted 13,287,338 10,028,588

Contacts

LCNB Corp.
Steve P. Foster, CEO, 800-344-BANK
Robert C. Haines
II, Executive Vice President and CFO, 800-344-BANK

leverton

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