LCNB LCNB Corp.

LCNB Corp. Reports Financial Results for the Three Months Ended March 31, 2017

LEBANON, Ohio--(BUSINESS WIRE)--

LCNB Corp. (LCNB) today announced net income of $3,246,000 (total basic and diluted earnings per share of $0.32) for the three months ended March 31, 2017. This compares to net income of $2,964,000 (total basic and diluted earnings per share of $0.30) for the same three-month period in 2016.

Commenting on the financial results, LCNB Chief Executive Officer Steve Foster said, "We are pleased to present our financial results for the first quarter of 2017. Net income for the 2017 quarter was 9.5% greater than for the first quarter of 2016. Return on average assets (ROAA) was 1.01% and the return on average equity (ROAE) was 9.10%. This compares to an ROAA of 0.93% and an ROAE of 8.37% for the first quarter of 2016. Much of the increase was driven by growth in the loan portfolio, from a net balance of $775.6 million at March 31, 2016 to $807.2 million at March 31, 2017."

Net interest income for the three months ended March 31, 2017 increased $215,000 over the comparable period in 2016, due primarily 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 months ended March 31, 2017 was $75,000 less than the comparable period in 2016. Net loan charge-offs for the three months ended March 31, 2017 totaled $262,000, as compared to net charge-offs of $69,000 for the three months ended March 31, 2016. Non-accrual loans and loans past due 90 days or more and still accruing interest decreased $1,867,000, from $5,748,000 or 0.70% of total loans at December 31, 2016, to $3,881,000 or 0.48% of total loans at March 31, 2017. The decrease is primarily due to two non-accrual commercial real estate loans to the same borrower with a carrying value of $1,236,000 at December 31, 2016 that were transferred into other real estate owned and subsequently sold during the first quarter 2017.

Non-interest income for the three months ended March 31, 2017 was $212,000 less than the comparable period in 2016, primarily due to the absence of $371,000 in gains from sales of securities recognized during the first quarter 2016.

Non-interest expense for the three months ended March 31, 2017 was $324,000 less than the comparable period in 2016, primarily due 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.

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

Condensed Income Statement

Interest income $ 10,864 11,226 10,895 11,008 10,621
Interest expense 877   887   885   883   849  
Net interest income 9,987 10,339 10,010 10,125 9,772
Provision for loan losses 15   55   372   396   90  
Net interest income after provision 9,972 10,284 9,638 9,729 9,682
Non-interest income 2,430 2,615 2,846 2,750 2,642
Non-interest expense 7,968   7,908   8,593   8,468   8,292  
Income before income taxes 4,434 4,991 3,891 4,011 4,032
Provision for income taxes 1,188   1,337   995   1,043   1,068  
Net income $ 3,246   3,654   2,896   2,968   2,964  
Accreted income on acquired loans $ 220 495 223 304 343
Tax-equivalent net interest income $ 10,410 10,772 10,432 10,538 10,166
 

Per Share Data

Dividends per share $ 0.16 0.16 0.16 0.16 0.16
Basic earnings per common share $ 0.32 0.37 0.29 0.30 0.30
Diluted earnings per common share $ 0.32 0.37 0.29 0.29 0.30
Book value per share $ 14.52 14.30 14.70 14.66 14.39
Tangible book value per share $ 11.11 10.86 11.24 11.17 10.88
Average basic common shares outstanding 9,995,054 9,984,344 9,962,571 9,922,024 9,916,114
Average diluted common shares outstanding 10,002,878 9,997,565 9,977,592 9,943,797 9,998,516
Shares outstanding at period end 10,009,642 9,998,025 9,993,695 9,937,262 9,931,788
 

Selected Financial Ratios

Return on average assets 1.01 % 1.10 % 0.87 % 0.92 % 0.93 %
Return on average equity 9.10 % 9.91 % 7.82 % 8.28 % 8.37 %
Dividend payout ratio 50.00 % 43.24 % 55.17 % 53.33 % 53.33 %
Net interest margin (tax equivalent) 3.55 % 3.56 % 3.42 % 3.55 % 3.49 %
Efficiency ratio (tax equivalent) 62.06 % 59.07 % 64.71 % 63.73 % 64.74 %
 

Selected Balance Sheet Items

Cash and cash equivalents $ 33,274 18,865 33,213 19,007 21,089
Investment securities and stock 371,501 368,032 394,798 399,345 393,976
 
Loans:
Commercial and industrial $ 40,039 41,878 40,097 45,153 45,324
Commercial, secured by real estate 475,594 477,275 467,512 455,654 430,179
Residential real estate 260,853 265,788 268,574 266,625 271,812
Consumer 17,646 19,173 18,752 18,545 17,925
Agricultural 15,459 14,802 15,872 13,605 12,589
Other, including deposit overdrafts 609 633 619 635 643
Deferred net origination costs 281   254   236   248   242  
Loans, gross 810,481 819,803 811,662 800,465 778,714
Less allowance for loan losses 3,328   3,575   3,798   3,373   3,150  
Loans, net $ 807,153   816,228   807,864   797,092   775,564  
 
Total earning assets $ 1,200,544 1,188,322 1,222,614 1,201,563 1,180,719
Total assets 1,319,074 1,306,799 1,333,536 1,312,635 1,285,922
Total deposits 1,148,198 1,110,905 1,158,921 1,124,698 1,120,208
Short-term borrowings 15,957 42,040 16,989 30,541 11,668
Long-term debt 480 598 662 726 789
 
 
Three Months Ended
3/31/2017 12/31/2016 9/30/2016 6/30/2016 3/31/2016

Selected Balance Sheet Items, continued

Total shareholders’ equity 145,318 142,944 146,906 145,710 142,933
Equity to assets ratio 11.02 % 10.94 % 11.02 % 11.10 % 11.12 %
Loans to deposits ratio 70.59 % 73.80 % 70.04 % 71.17 % 69.52 %
 
Tangible common equity (TCE) $ 110,745 108,178 111,946 110,541 107,567
Tangible common assets (TCA) 1,284,501 1,272,033 1,298,576 1,277,466 1,250,556
TCE/TCA 8.62 % 8.50 % 8.62 % 8.65 % 8.60 %
 

Selected Average Balance Sheet Items

Cash and cash equivalents $ 26,672 28,422 32,011 29,399 27,533
Investment securities and stock 366,499 380,138 396,620 396,130 389,648
 
Loans $ 813,597 812,537 800,729 784,324 772,204
Less allowance for loan losses 3,557   3,654   3,382   3,103   3,130  
Net loans $ 810,040 808,883 797,347 781,221 769,074
 
Total earning assets $ 1,188,383 1,204,360 1,212,232 1,193,585 1,171,709
Total assets 1,308,591 1,316,037 1,323,532 1,303,073 1,278,014
Total deposits 1,125,457 1,138,740 1,147,981 1,133,403 1,104,330
Short-term borrowings 28,500 20,406 16,328 14,355 20,710
Long-term debt 537 620 684 747 1,256
Total shareholders’ equity 144,672 146,602 147,371 144,185 142,447
Equity to assets ratio 11.06 % 11.14 % 11.13 % 11.06 % 11.15 %
Loans to deposits ratio 72.29 % 71.35 % 69.75 % 69.20 % 69.93 %
 

Asset Quality

Net charge-offs $ 262 278 (53 ) 173 69
Other real estate owned 0 0 270 682 846
 
Non-accrual loans 3,869 5,725 4,619 2,697 3,328
Loans past due 90 days or more and still accruing 12   23   20   369   99  
Total nonperforming loans $ 3,881 5,748 4,639 3,066 3,427
 
Net charge-offs to average loans 0.13 % 0.14 % (0.03 )% 0.09 % 0.04 %
Allowance for loan losses to total loans 0.41 % 0.44 % 0.47

 %

0.42 % 0.40 %
Nonperforming loans to total loans 0.48 % 0.70 % 0.57

 %

0.38 % 0.44 %
Nonperforming assets to total assets 0.29 % 0.44 % 0.37

 %

0.29 % 0.33 %
 

Assets Under Management

LCNB Corp. total assets $ 1,319,074 1,306,799 1,333,536 1,312,635 1,285,922
Trust and investments (fair value) 316,856 303,534 293,808 284,118 274,297
Mortgage loans serviced 99,324 100,982 105,018 107,189 107,992
Business cash management 7,670 9,058 7,647 8,551 6,773
Brokerage accounts (fair value) 199,019   188,663   179,244   163,596   157,713  
Total assets managed $ 1,941,943   1,909,036   1,919,253   1,876,089   1,832,697  
 
   
LCNB CORP. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
 

(Dollars in thousands)

 
March 31,
2017 December 31,
(Unaudited) 2016
ASSETS:
Cash and due from banks $ 14,712 18,378
Interest-bearing demand deposits 18,562   487  
Total cash and cash equivalents 33,274 18,865
Investment securities:

Available-for-sale, at fair value

326,676 320,659
Held-to-maturity, at cost 38,455 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 807,153 816,228
Premises and equipment, net 33,157 30,244
Goodwill 30,183 30,183
Core deposit and other intangibles 4,390 4,582
Bank owned life insurance 27,496 27,307
Other assets 11,920   11,358  
TOTAL ASSETS $ 1,319,074   1,306,799  
 
LIABILITIES:
Deposits:
Noninterest-bearing $ 270,999 271,332
Interest-bearing 877,199   839,573  
Total deposits 1,148,198 1,110,905
Short-term borrowings 15,957 42,040
Long-term debt 480 598
Accrued interest and other liabilities 9,121   10,312  
TOTAL LIABILITIES 1,173,756   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 March 31, 2017 and December 31, 2016; issued 10,763,269 and 10,751,652 shares at March 31, 2017 and December 31, 2016, respectively 76,691 76,490
Retained earnings 82,381 80,736
Treasury shares at cost, 753,627 shares at March 31, 2017 and December 31, 2016 (11,665 ) (11,665 )
Accumulated other comprehensive income, net of taxes (2,089 ) (2,617 )
TOTAL SHAREHOLDERS' EQUITY 145,318   142,944  
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,319,074   1,306,799  
 
 
LCNB CORP. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME

(Dollars in thousands, except per share data)

(Unaudited)

 
Three Months Ended
March 31,
2017   2016
INTEREST INCOME:
Interest and fees on loans $ 8,915 8,627
Interest on investment securities –
Taxable 1,093 1,189
Non-taxable 799 758
Other short-term investments 57   47
TOTAL INTEREST INCOME 10,864   10,621
INTEREST EXPENSE:
Interest on deposits 843 823
Interest on short-term borrowings 30 14
Interest on long-term debt 4   12
TOTAL INTEREST EXPENSE 877   849
NET INTEREST INCOME 9,987 9,772
PROVISION FOR LOAN LOSSES 15   90
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 9,972   9,682
NON-INTEREST INCOME:
Trust income 852 763
Service charges and fees on deposit accounts 1,222 1,193
Net gain (loss) on sales of securities — 371
Bank owned life insurance income 189 169
Gains from sales of loans 39 41
Other operating income 128   105
TOTAL NON-INTEREST INCOME 2,430   2,642
NON-INTEREST EXPENSE:
Salaries and employee benefits 4,526 4,563
Equipment expenses 211 249
Occupancy expense, net 568 569
State franchise tax 284 281
Marketing 143 167
Amortization of intangibles 185 187
FDIC insurance premiums 104 165
Contracted services 248 227
Other real estate owned 5 29
Merger-related expenses — —
Other non-interest expense 1,694   1,855
TOTAL NON-INTEREST EXPENSE 7,968   8,292
INCOME BEFORE INCOME TAXES 4,434 4,032
PROVISION FOR INCOME TAXES 1,188   1,068
NET INCOME $ 3,246   2,964
 
Dividends declared per common share $ 0.16 0.16
Earnings per common share:
Basic 0.32 0.30
Diluted 0.32 0.30
Weighted average common shares outstanding:
Basic 9,995,054 9,916,114
Diluted 10,002,878 9,998,516

EN
19/04/2017

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