LCNB Corp. ("LCNB") (NASDAQ: LCNB) today announced net income of
$4,728,000 (total basic and diluted earnings per share of $0.36)
and $9,355,000 (total basic and diluted earnings per share of
$0.71) for the three and six months ended June 30, 2019,
respectively. This compares to net income of $2,738,000 (total
basic and diluted earnings per share of $0.25) and $5,451,000
(total basic and diluted earnings per share of $0.52) for the same
three and six 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 six months ended June 30, 2019. Net
income for the first half of 2019 was $3,904,000 greater than the
first half of 2018, fueled by a $5,425,000 increase in net interest
income that resulted primarily from a $70.7 million increase in our
net loan portfolio, from $1.155 billion at June 30, 2018 to $1.226
billion at June 30, 2019. Our return on average assets for the
first half of 2019 was 1.15% and our return on average equity was
8.47%. Additionally, positive earnings growth allowed for increased
shareholder dividends, from $0.32 per share for the first half of
2018 to $0.34 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 342,085 shares during the
second quarter."
Net interest income for the three and six months ended June 30,
2019 was, respectively, $2,222,000 and $5,425,000 greater than the
comparable periods in 2018, primarily due to growth in the average
balance of LCNB's loan portfolio, partially offset by a decrease in
average investment securities and increases in average deposits and
long-term borrowings. Also offsetting the positive effect on net
interest income from 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") on May 31, 2018 were a considerable
component 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 six months ended
June 30, 2019 was, respectively, $170,000 and $354,000 less than
the comparable periods in 2018. Non-accrual loans and loans past
due 90 days or more and still accruing interest decreased $114,000,
from $3,100,000 or 0.26% of total loans at December 31, 2018 to
$2,986,000 or 0.24% of total loans at June 30, 2019.
Non-interest income for the three and six months ended June 30,
2019 was, respectively, $207,000 and $343,000 greater than the
comparable periods in 2018, primarily due to increases in fiduciary
income and service charges and fees on deposit accounts.
Market-driven increases in the fair value of equity security
investments contributed to the increase in other operating income
for the six-month period, but the effect on the three-month period
was negligible.
Non-interest expense for the three and six months ended June 30,
2019 was, respectively, $122,000 and $1,273,000 greater than the
comparable periods in 2018, primarily due to increases in salaries
and employee benefits, state financial institutions tax, marketing,
amortization of intangibles, contracted services expenses and other
real estate owned 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 the core deposit intangible
recorded as part of the acquisition of CFB. Other real estate owned
expense increased due to an impairment charge recognized during the
second quarter 2019. 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 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;
- the current economic environment poses significant challenges
for us and could adversely affect LCNB's financial condition and
results of operations;
- 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 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
Six Months Ended
6/30/2019
3/31/2019
12/31/2018
9/30/2018
6/30/2018
6/30/2019
6/30/2018
Condensed Income
Statement
Interest income
$
16,328
16,113
15,844
15,070
12,538
32,441
23,680
Interest expense
2,738
2,722
2,334
1,967
1,170
5,460
2,124
Net interest income
13,590
13,391
13,510
13,103
11,368
26,981
21,556
Provision (credit) for loan losses
54
(105
)
(39
)
659
224
(51
)
303
Net interest income after provision
13,536
13,496
13,549
12,444
11,144
27,032
21,253
Non-interest income
2,998
2,772
2,702
2,921
2,791
5,770
5,427
Non-interest expense
10,833
10,700
9,925
10,317
10,711
21,533
20,260
Income before income taxes
5,701
5,568
6,326
5,048
3,224
11,269
6,420
Provision for income taxes
973
941
1,133
847
486
1,914
969
Net income
$
4,728
4,627
5,193
4,201
2,738
9,355
5,451
Amort/Accret income on acquired loans
$
355
224
229
198
44
579
140
Amort/Accret expenses on acquired
interest-bearing liabilities
$
142
144
149
214
—
286
—
Tax-equivalent net interest income
$
13,700
13,536
13,680
13,279
11,549
27,236
21,924
Per Share
Data
Dividends per share
$
0.17
0.17
0.17
0.16
0.16
0.34
0.32
Basic earnings per common share
$
0.36
0.35
0.40
0.32
0.25
0.71
0.52
Diluted earnings per common share
$
0.36
0.35
0.40
0.32
0.25
0.71
0.52
Book value per share
$
17.18
16.83
16.47
16.05
15.97
17.18
15.97
Tangible book value per share
$
12.31
12.05
11.67
11.23
11.14
12.31
11.14
Weighted average common shares
outstanding:
Basic
13,192,691
13,283,634
13,285,386
13,285,203
11,099,485
13,237,909
10,563,030
Diluted
13,196,665
13,287,338
13,290,499
13,290,665
11,105,014
13,241,752
10,568,792
Shares outstanding at period end
12,978,554
13,314,148
13,295,276
13,304,976
13,299,235
12,978,554
13,299,235
Selected
Financial Ratios
Return on average assets
1.16
%
1.15
%
1.27
%
1.03
%
0.78
%
1.15
%
0.81
%
Return on average equity
8.46
%
8.47
%
9.55
%
7.76
%
6.46
%
8.47
%
6.87
%
Dividend payout ratio
47.22
%
48.57
%
42.50
%
50.00
%
64.00
%
47.89
%
61.54
%
Net interest margin (tax equivalent)
3.72
%
3.71
%
3.69
%
3.59
%
3.63
%
3.71
%
3.61
%
Efficiency ratio (tax equivalent)
64.87
%
65.61
%
60.58
%
63.69
%
74.69
%
65.24
%
74.07
%
Selected Balance
Sheet Items
Cash and cash equivalents
$
23,185
19,527
20,040
19,812
24,901
Debt and equity securities
246,701
264,559
282,813
299,786
311,047
Loans:
Commercial and industrial
$
79,513
79,725
77,740
78,002
81,778
Commercial, secured by real estate
793,863
764,424
740,647
704,987
705,978
Residential real estate
326,029
334,227
349,127
347,920
339,435
Consumer
19,649
17,409
17,283
17,505
17,705
Agricultural
10,843
10,900
13,297
13,280
13,390
Other, including deposit overdrafts
373
409
450
498
583
Deferred net origination costs (fees)
(9
)
40
79
133
229
Loans, gross
1,230,261
1,207,134
1,198,623
1,162,325
1,159,098
Less allowance for loan losses
4,112
4,126
4,046
4,016
3,603
Loans, net
$
1,226,149
1,203,008
1,194,577
1,158,309
1,155,495
Total earning assets
$
1,482,913
1,476,862
1,483,166
1,465,787
1,471,923
Total assets
1,642,012
1,632,387
1,636,927
1,620,299
1,631,442
Total deposits
1,357,959
1,347,857
1,300,919
1,371,023
1,380,884
Three Months Ended
Six Months Ended
6/30/2019
3/31/2019
12/31/2018
9/30/2018
6/30/2018
6/30/2019
6/30/2018
Selected Balance
Sheet Items, continued
Short-term borrowings
0
0
56,230
0
0
Long-term debt
41,986
42,982
47,032
23,079
27,085
Total shareholders’ equity
222,972
224,018
218,985
213,515
212,366
Equity to assets ratio
13.58
%
13.72
%
13.38
%
13.18
%
13.02
%
Loans to deposits ratio
90.60
%
89.56
%
92.14
%
84.78
%
83.94
%
Tangible common equity (TCE)
$
159,702
160,488
155,197
149,398
147,705
Tangible common assets (TCA)
1,578,742
1,568,857
1,573,139
1,556,182
1,566,781
TCE/TCA
10.12
%
10.23
%
9.87
%
9.60
%
9.43
%
Selected Average
Balance Sheet Items
Cash and cash equivalents
$
29,523
25,080
20,685
25,920
27,319
27,332
24,601
Debt and equity securities
249,954
266,081
291,433
304,112
306,366
257,972
310,007
Loans
$
1,217,726
1,208,809
1,177,061
1,155,846
961,726
1,213,292
907,739
Less allowance for loan losses
4,088
4,074
4,016
3,622
4,245
4,081
3,825
Net loans
$
1,213,638
1,204,735
1,173,045
1,152,224
957,481
1,209,211
903,914
Total earning assets
$
1,479,225
1,480,634
1,471,650
1,465,510
1,276,176
1,479,924
1,223,733
Total assets
1,637,645
1,635,416
1,626,029
1,623,016
1,409,698
1,636,370
1,351,355
Total deposits
1,352,449
1,333,529
1,333,673
1,367,950
1,212,104
1,343,042
1,163,810
Short-term borrowings
243
23,235
36,348
1,833
3,491
11,675
8,759
Long-term debt
42,567
44,676
25,536
25,757
13,252
43,616
7,784
Total shareholders’ equity
224,203
221,470
215,739
214,769
170,077
222,844
160,123
Equity to assets ratio
13.69
%
13.54
%
13.27
%
13.23
%
12.06
%
13.62
%
11.85
%
Loans to deposits ratio
90.04
%
90.65
%
88.26
%
84.49
%
79.34
%
90.34
%
78.00
%
Asset
Quality
Net charge-offs (recoveries)
$
68
(185
)
(68
)
245
150
(117
)
103
Other real estate owned
197
244
244
35
35
197
35
Non-accrual loans
2,962
2,845
2,951
2,603
4,065
2,962
4,065
Loans past due 90 days or more and still
accruing
24
177
149
1
5
24
5
Total nonperforming loans
$
2,986
3,022
3,100
2,604
4,070
2,986
4,070
Net charge-offs (recoveries) to average
loans
0.02
%
(0.06
)%
(0.02
)%
0.08
%
0.06
%
(0.02
)%
0.02
%
Allowance for loan losses to total
loans
0.33
%
0.34
%
0.34
%
0.35
%
0.31
%
0.33
%
0.31
%
Nonperforming loans to total loans
0.24
%
0.25
%
0.26
%
0.22
%
0.35
%
0.24
%
0.35
%
Nonperforming assets to total assets
0.19
%
0.20
%
0.20
%
0.16
%
0.25
%
0.19
%
0.25
%
Assets Under
Management
LCNB Corp. total assets
$
1,642,012
1,632,387
1,636,927
1,620,299
1,631,442
Trust and investments (fair value)
382,462
367,649
337,549
386,582
370,587
Mortgage loans serviced
88,444
89,049
97,685
115,647
114,536
Cash management
71,973
55,981
48,906
36,502
48,369
Brokerage accounts (fair value)
260,202
245,758
233,751
247,175
238,651
Total assets managed
$
2,445,093
2,390,824
2,354,818
2,406,205
2,403,585
Non-GAAP
Financial Measures
Net income
$
4,728
4,627
5,193
4,201
2,738
9,355
5,451
Add: merger-related expenses, net of
tax
16
53
148
274
710
69
1,331
Adjusted net income
$
4,744
4,680
5,341
4,475
3,448
9,424
6,782
Basic adjusted earnings per share
0.36
0.36
0.41
0.34
0.31
0.71
0.64
Diluted adjusted earnings per share
0.36
0.36
0.41
0.34
0.31
0.71
0.64
Adjusted return on average assets
1.16
%
1.16
%
1.30
%
1.09
%
0.98
%
1.16
%
1.01
%
Adjusted return on average equity
8.49
%
8.57
%
9.82
%
8.27
%
8.13
%
8.53
%
8.54
%
LCNB CORP. AND
SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE
SHEETS
(Dollars in thousands)
June 30, 2019 (Unaudited)
December 31, 2018
ASSETS:
Cash and due from banks
$
17,234
18,310
Interest-bearing demand deposits
5,951
1,730
Total cash and cash equivalents
23,185
20,040
Interest-bearing time deposits
498
996
Investment securities:
Equity securities with a readily
determinable fair value, at fair value
2,246
2,078
Equity securities without a readily
determinable fair value, at cost
2,099
2,099
Debt securities, available-for-sale, at
fair value
198,660
238,421
Debt securities, held-to-maturity, at
cost
33,343
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
1,226,149
1,194,577
Premises and equipment, net
33,013
32,627
Operating leases right of use asset
5,686
—
Goodwill
59,221
59,221
Core deposit and other intangibles
4,494
5,042
Bank owned life insurance
29,088
28,723
Other assets
14,475
13,884
TOTAL ASSETS
$
1,642,012
1,636,927
LIABILITIES:
Deposits:
Noninterest-bearing
$
335,474
322,571
Interest-bearing
1,022,485
978,348
Total deposits
1,357,959
1,300,919
Short-term borrowings
—
56,230
Long-term debt
41,986
47,032
Operating leases liability
5,615
—
Accrued interest and other liabilities
13,480
13,761
TOTAL LIABILITIES
1,419,040
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 June 30, 2019 and December 31, 2018; issued
14,095,666 and 14,070,303 shares at June 30, 2019 and December 31,
2018, respectively
141,479
141,170
Retained earnings
99,400
94,547
Treasury shares at cost, 1,117,112 and
775,027 shares at June 30, 2019 and December 31, 2018
(17,854
)
(12,013
)
Accumulated other comprehensive loss, net
of taxes
(53
)
(4,719
)
TOTAL SHAREHOLDERS' EQUITY
222,972
218,985
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY
$
1,642,012
1,636,927
LCNB CORP. AND
SUBSIDIARIES
CONSOLIDATED CONDENSED
STATEMENTS OF INCOME
(Dollars in thousands, except per
share data)
(Unaudited)
Three Months Ended June 30,
Six Months Ended June 30,
2019
2018
2019
2018
INTEREST INCOME:
Interest and fees on loans
$
14,662
10,703
29,200
20,116
Dividends on equity securities with a
readily determinable fair value
15
16
32
31
Dividends on equity securities without a
readily determinable fair value
16
8
32
15
Interest on debt securities, taxable
933
934
1,802
1,865
Interest on debt securities,
non-taxable
417
680
961
1,384
Other short-term investments
285
197
414
269
TOTAL INTEREST INCOME
16,328
12,538
32,441
23,680
INTEREST EXPENSE:
Interest on deposits
2,464
1,096
4,750
1,967
Interest on short-term borrowings
2
7
221
76
Interest on long-term debt
272
67
489
81
TOTAL INTEREST EXPENSE
2,738
1,170
5,460
2,124
NET INTEREST INCOME
13,590
11,368
26,981
21,556
PROVISION (CREDIT) FOR LOAN LOSSES
54
224
(51
)
303
NET INTEREST INCOME AFTER PROVISION
(CREDIT) FOR LOAN LOSSES
13,536
11,144
27,032
21,253
NON-INTEREST INCOME:
Fiduciary income
1,058
942
2,092
1,906
Service charges and fees on deposit
accounts
1,497
1,426
2,805
2,731
Net gains (losses) on sales of debt
securities
1
(1
)
(17
)
(1
)
Bank owned life insurance income
183
182
365
368
Gains from sales of loans
64
97
93
119
Other operating income
195
145
432
304
TOTAL NON-INTEREST INCOME
2,998
2,791
5,770
5,427
NON-INTEREST EXPENSE:
Salaries and employee benefits
6,243
5,128
12,405
10,105
Equipment expenses
278
268
544
521
Occupancy expense, net
744
658
1,507
1,385
State financial institutions tax
436
296
874
599
Marketing
297
284
599
416
Amortization of intangibles
260
188
517
373
FDIC insurance premiums
112
99
238
198
Contracted services
475
391
939
706
Other real estate owned
48
1
51
3
Merger-related expenses
20
855
87
1,613
Other non-interest expense
1,920
2,543
3,772
4,341
TOTAL NON-INTEREST EXPENSE
10,833
10,711
21,533
20,260
INCOME BEFORE INCOME TAXES
5,701
3,224
11,269
6,420
PROVISION FOR INCOME TAXES
973
486
1,914
969
NET INCOME
$
4,728
2,738
9,355
5,451
Dividends declared per common share
$
0.17
0.16
0.34
0.32
Earnings per common share:
Basic
0.36
0.25
0.71
0.52
Diluted
0.36
0.25
0.71
0.52
Weighted average common shares
outstanding:
Basic
13,192,691
11,099,485
13,237,909
10,563,030
Diluted
13,196,665
11,105,014
13,241,752
10,568,792
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190722005760/en/
LCNB Corp. Eric J. Meilstrup, CEO, 800-344-BANK Robert C. Haines
II, Executive Vice President and CFO, 800-344-BANK
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