LCNB Corp. (LCNB) (NASDAQ:LCNB) today announced net income of $3,106,000 (total basic and diluted earnings per share of $0.31) and $9,355,000 (total basic and diluted earnings per share of $0.93) for the three and nine months ended September 30, 2017. This compares to net income of $2,896,000 (total basic and diluted earnings per share of $0.29) and $8,828,000 (total basic and diluted earnings per share of $0.89 and $0.88, respectively) for the same three and nine-month periods in 2016.

Commenting on the financial results, LCNB Chief Executive Officer Steve Foster said, "We are pleased to present our financial results for the three and nine months ended September 30, 2017. Our financial results were solid and we experienced continued growth in our loan and deposit relationships. Comparing September 30, 2017 to December 31, 2016, net loans increased $14.6 million or 1.8% and total deposits increased $10.6 million or 1.0%. Return on average assets for the nine months ended September 30, 2017 was 0.95% compared to 0.91% for the first nine months of 2016. Return on average equity for the nine months ended September 30, 2017 was 8.48% compared to 8.15% for the same period in 2016."

Net interest income for the three months and nine months ended September 30, 2017 was respectively $137,000 and $300,000 greater than the comparable periods in 2016, primarily due to growth in LCNB's loan portfolio, partially offset by a decrease in the average rate earned on the portfolio.

The provision for loan losses for the three and nine months ended September 30, 2017 was respectively $384,000 and $633,000 less than the comparable periods in 2016. Non-accrual loans and loans past due 90 days or more and still accruing interest decreased $1,266,000, from $5,748,000 or 0.70% of total loans at December 31, 2016, to $4,482,000 or 0.54% of total loans at September 30, 2017.

Non-interest income for the three and nine months ended September 30, 2017 was respectively $187,000 and $359,000 less than the comparable periods in 2016, primarily due to decreases in gains from the sale of investment securities. Net gains for the three and nine-month periods were respectively $229,000 and $739,000 less than the comparable 2016 periods primarily due to a decrease in the volume of securities sold.

Non-interest expense for the three months ended September 30, 2017 was $79,000 greater than the comparable period in 2016 primarily due to increases in equipment, occupancy, and marketing expense. These three items increased a total of $337,000, partially offset by a $219,000 decrease in other real estate owned expenses. Equipment and occupancy expenses increased largely due to additional depreciation expense from the new operations center, along with additional utilities and maintenance costs. Marketing expense increased due to the expanded use of television and digital advertising. Other real estate owned expenses decreased because the amount of other real estate owned property held during 2017 was significantly less than the amount of property held during 2016.

Non-interest expense for the nine months ended September 30, 2017 was $102,000 less than the comparable period in 2016, primarily due to a $599,000 decrease in other real estate owned expenses and to the absence of a $251,000 penalty incurred during the first quarter 2016 to pre-pay a Federal Home Loan Bank borrowing bearing an interest rate of 5.25%. The borrowing was paid off to reduce future interest expense on long-term debt. These decreases were partially offset by the increases previously mentioned and by increased salaries and employee benefits on a nine-month basis.

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, Hamilton, Montgomery, Preble, Ross and Warren Counties, Ohio. A commercial loan office is located in Franklin County, 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.

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 may incur increased charge-offs in the future;

3. LCNB may face competitive loss of customers;

4. 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;

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

6. 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;

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

8. the current economic environment poses significant challenges for us and could adversely affect our financial condition and results of operations;

9. 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; and

10. the effects of the Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) and the regulations promulgated and to be promulgated thereunder, which may subject LCNB and its subsidiaries to a variety of new and more stringent legal and regulatory requirements which adversely affect their respective businesses.

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
9/30/2017   6/30/2017   3/31/2017   12/31/2016   9/30/2016 9/30/2017   9/30/2016

Condensed Income Statement

Interest income $ 11,055 10,934 10,864 11,226 10,895 32,853 32,524
Interest expense 908   861   877   887   885   2,646   2,617  
Net interest income 10,147 10,073 9,987 10,339 10,010 30,207 29,907
Provision for loan losses (12 ) 222   15   55   372   225   858  
Net interest income after provision 10,159 9,851 9,972 10,284 9,638 29,982 29,049
Non-interest income 2,659 2,790 2,430 2,615 2,846 7,879 8,238
Non-interest expense 8,672   8,611   7,968   7,908   8,593   25,251   25,353  
Income before income taxes 4,146 4,030 4,434 4,991 3,891 12,610 11,934
Provision for income taxes 1,040   1,027   1,188   1,337   995   3,255   3,106  
Net income $ 3,106   3,003   3,246   3,654   2,896   9,355   8,828  
Accreted income on acquired loans $ 90 180 220 495 223 490 870
Tax-equivalent net interest income $ 10,569 10,494 10,410 10,772 10,432 31,487 31,136
 

Per Share Data

Dividends per share $ 0.16 0.16 0.16 0.16 0.16 0.48 0.48
Basic earnings per common share $ 0.31 0.30 0.32 0.37 0.29 0.93 0.89
Diluted earnings per common share $ 0.31 0.30 0.32 0.37 0.29 0.93 0.88
Book value per share $ 14.94 14.77 14.52 14.30 14.70 14.94 14.70
Tangible book value per share $ 11.57 11.38 11.11 10.86 11.24 11.57 11.24
Average basic common shares outstanding 10,008,807 10,004,422 9,995,054 9,984,344 9,962,571 10,002,812 9,930,182
Average diluted common shares outstanding 10,015,204 10,011,312 10,002,878 9,997,565 9,977,592 10,009,942 9,974,319
Shares outstanding at period end 10,018,507 10,014,004 10,009,642 9,998,025 9,993,695 10,018,507 9,993,695
 

Selected Financial Ratios

Return on average assets 0.94 % 0.91 % 1.01 % 1.10 % 0.87 % 0.95 % 0.91 %
Return on average equity 8.22 % 8.15 % 9.10 % 9.91 % 7.82 % 8.48 % 8.15 %
Dividend payout ratio 51.61 % 53.33 % 50.00 % 43.24 % 55.17 % 51.61 % 53.93 %
Net interest margin (tax equivalent) 3.52 % 3.50 % 3.55 % 3.56 % 3.42 % 3.53 % 3.49 %
Efficiency ratio (tax equivalent) 65.56 % 64.82 % 62.06 % 59.07 % 64.71 % 64.14 % 64.39 %
 

Selected Balance Sheet Items

Cash and cash equivalents $ 21,203 29,967 33,274 18,865 33,213
Investment securities and stock 353,634 373,595 371,501 368,032 394,798
 
Loans:
Commercial and industrial $ 36,049 38,651 40,039 41,878 40,097
Commercial, secured by real estate 510,158 495,255 475,594 477,275 467,512
Residential real estate 253,530 258,710 260,853 265,788 268,574
Consumer 17,956 17,475 17,646 19,173 18,752
Agricultural 15,677 16,014 15,459 14,802 15,872
Other, including deposit overdrafts 570 547 609 633 619
Deferred net origination costs 264   281   281   254   236  
Loans, gross 834,204 826,933 810,481 819,803 811,662
Less allowance for loan losses 3,407   3,382   3,328   3,575   3,798  
Loans, net $ 830,797   823,551   807,153   816,228   807,864  
 
 
Three Months Ended Nine Months Ended
9/30/2017 6/30/2017 3/31/2017 12/31/2016 9/30/2016 9/30/2017 9/30/2016

Selected Balance Sheet Items, continued

Total earning assets $ 1,193,648 1,211,096 1,200,544 1,188,322 1,222,614
Total assets 1,314,319 1,335,571 1,319,074 1,306,799 1,333,536
Total deposits 1,121,523 1,143,920 1,148,198 1,110,905 1,158,921
Short-term borrowings 30,000 31,712 15,957 42,040 16,989
Long-term debt 363 402 480 598 662
Total shareholders’ equity 149,713 147,927 145,318 142,944 146,906
Equity to assets ratio 11.39 % 11.08 % 11.02 % 10.94 % 11.02 %
Loans to deposits ratio 74.38 % 72.29 % 70.59 % 73.80 % 70.04 %
 
Tangible common equity (TCE) $ 115,527 113,542 110,745 108,178 111,946
Tangible common assets (TCA) 1,280,133 1,301,186 1,284,501 1,272,033 1,298,576
TCE/TCA 9.02 % 8.73 % 8.62 % 8.50 % 8.62 %
 

Selected Average Balance Sheet Items

Cash and cash equivalents $ 21,609 33,639 26,672 28,422 32,011 27,289 29,656
Investment securities and stock 363,039 373,295 366,499 380,138 396,620 367,598 394,141
 
Loans $ 824,183 811,186 813,597 812,537 800,729 816,361 785,807
Less allowance for loan losses 3,324   3,334   3,557   3,654   3,382   3,404   3,206  
Net loans $ 820,859 807,852 810,040 808,883 797,347 812,957 782,601
 
Total earning assets $ 1,190,860 1,202,129 1,188,383 1,204,360 1,212,232 1,193,800 1,192,580
Total assets 1,313,476 1,321,442 1,308,591 1,316,037 1,323,532 1,314,476 1,301,620
Total deposits 1,133,072 1,148,206 1,125,457 1,138,740 1,147,981 1,135,605 1,128,642
Short-term borrowings 17,936 15,030 28,500 20,406 16,328 20,450 17,128
Long-term debt 383 441 537 620 684 453 895
Total shareholders’ equity 150,032 147,826 144,672 146,602 147,371 147,530 144,678
Equity to assets ratio 11.42 % 11.19 % 11.06 % 11.14 % 11.13 % 11.22 % 11.12 %
Loans to deposits ratio 72.74 % 70.65 % 72.29 % 71.35 % 69.75 % 71.89 % 69.62 %
 

Asset Quality

Net charge-offs (recoveries) $ (36 ) 168 262 278 (53 ) 394 189
Other real estate owned 0 0 0 0 270 0 270
 
Non-accrual loans 4,387 3,747 3,869 5,725 4,619 4,387 4,619
Loans past due 90 days or more and still accruing 95   141   12   23   20   95   20  
Total nonperforming loans $ 4,482 3,888 3,881 5,748 4,639 4,482 4,639
 
Net charge-offs (recoveries) to average loans (0.02 )% 0.08 % 0.13 % 0.14 % (0.03 )% 0.10 % 0.05 %
Allowance for loan losses to total loans 0.41 % 0.41 % 0.41 % 0.44 % 0.47 % 0.41 % 0.47 %
Nonperforming loans to total loans 0.54 % 0.47 % 0.48 % 0.70 % 0.57 % 0.54 % 0.57 %
Nonperforming assets to total assets 0.34 % 0.29 % 0.29 % 0.44 % 0.37 % 0.34 % 0.37 %
 

Assets Under Management

LCNB Corp. total assets $ 1,314,319 1,335,571 1,319,074 1,306,799 1,333,536
Trust and investments (fair value) 326,642 315,450 316,856 303,534 293,808
Mortgage loans serviced 96,241 98,234 99,324 100,982 105,018
Cash management 77,780 45,519 29,102 30,319 27,453
Brokerage accounts (fair value) 219,960   209,019   199,019   188,663   179,244  
Total assets managed $ 2,034,942   2,003,793   1,963,375   1,930,297   1,939,059  
 

LCNB CORP. AND SUBSIDIARIES

CONSOLIDATED CONDENSED BALANCE SHEETS

(Dollars in thousands)

 

September 30
2017
(Unaudited)

December 31,
2016

ASSETS:
Cash and due from banks $ 15,393 18,378
Interest-bearing demand deposits 5,810   487  
Total cash and cash equivalents 21,203 18,865
Investment securities:
Available-for-sale, at fair value 310,404 320,659
Held-to-maturity, at cost 36,860 41,003
Federal Reserve Bank stock, at cost 2,732 2,732
Federal Home Loan Bank stock, at cost 3,638 3,638
Loans, net 830,797 816,228
Premises and equipment, net 34,897 30,244
Goodwill 30,183 30,183
Core deposit and other intangibles 4,003 4,582
Bank owned life insurance 27,795 27,307
Other assets 11,807   11,358  
TOTAL ASSETS $ 1,314,319   1,306,799  
 
LIABILITIES:

Deposits:

Noninterest-bearing $ 278,773 271,332
Interest-bearing 842,750   839,573  
Total deposits 1,121,523 1,110,905
Short-term borrowings 30,000 42,040
Long-term debt 363 598
Accrued interest and other liabilities 12,720   10,312  
TOTAL LIABILITIES 1,164,606   1,163,855  
 
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, 2017 and December 31, 2016; issued 10,772,134 and
10,751,652 shares at September 30, 2017 and December 31, 2016, respectively

76,877 76,490
Retained earnings 85,287 80,736
Treasury shares at cost, 753,627 shares at September 30, 2017 and December 31, 2016 (11,665 ) (11,665 )
Accumulated other comprehensive income (loss), net of taxes (786 ) (2,617 )
TOTAL SHAREHOLDERS' EQUITY 149,713   142,944  
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,314,319   1,306,799  
 

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,
2017   2016 2017   2016
INTEREST INCOME:
Interest and fees on loans $ 9,095 8,876 26,833 26,395
Interest on investment securities –
Taxable 1,108 1,152 3,350 3,528
Non-taxable 783 813 2,377 2,365
Other short-term investments 69   54   293   236
TOTAL INTEREST INCOME 11,055   10,895   32,853   32,524
INTEREST EXPENSE:
Interest on deposits 850 872 2,539 2,565
Interest on short-term borrowings 55 8 97 30
Interest on long-term debt 3   5   10   22
TOTAL INTEREST EXPENSE 908   885   2,646   2,617
NET INTEREST INCOME 10,147 10,010 30,207 29,907
PROVISION FOR LOAN LOSSES (12 ) 372   225   858
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 10,159   9,638   29,982   29,049
NON-INTEREST INCOME:
Trust income 871 871 2,604 2,471
Service charges and fees on deposit accounts 1,352 1,276 3,886 3,712
Net gain (loss) on sales of securities 78 307 218 957
Bank owned life insurance income 190 193 676 553
Gains from sales of loans 34 73 136 175
Other operating income 134   126   359   370
TOTAL NON-INTEREST INCOME 2,659   2,846   7,879   8,238
NON-INTEREST EXPENSE:
Salaries and employee benefits 4,678 4,642 13,907 13,737
Equipment expenses 361 279 836 767
Occupancy expense, net 685 550 1,889 1,707
State franchise tax 281 279 851 836
Marketing 282 162 641 530
Amortization of intangibles 189 189 562 564
FDIC insurance premiums 108 168 320 495
Contracted services 307 300 930 750
Other real estate owned 3 222 8 607
Other non-interest expense 1,778   1,802   5,307   5,360
TOTAL NON-INTEREST EXPENSE 8,672   8,593   25,251   25,353
INCOME BEFORE INCOME TAXES 4,146 3,891 12,610 11,934
PROVISION FOR INCOME TAXES 1,040   995   3,255   3,106
NET INCOME $ 3,106   2,896   9,355   8,828
 
Dividends declared per common share $ 0.16 0.16 0.48 0.48
Earnings per common share:
Basic 0.31 0.29 0.93 0.89
Diluted 0.31 0.29 0.93 0.88
Weighted average common shares outstanding:
Basic 10,008,807 9,962,571 10,002,812 9,930,182
Diluted 10,015,204 9,977,592 10,009,942 9,974,319