LCNB Corp. Reports Record Financial Results for the Three and Nine Months Ended September 30, 2022
LCNB Corp. ("LCNB") (NASDAQ: LCNB) today announced financial results for the three and nine months ended September 30, 2022.
Commenting on the financial results, LCNB President and Chief Executive Officer Eric Meilstrup said, “Higher net interest income, excellent asset quality, and net interest margin expansion drove record third-quarter profitability. Earnings per share for the third quarter 2022 increased by 25.6% to a third quarter record of $0.49 per diluted share. Contributing to the increase were the benefits of our share repurchase program, which further contributed to year-over-year growth in our Return On Average Equity and Return On Average Tangible Common Equity.”
Mr. Meilstrup continued, “We are focused on helping our business, consumer, and wealth management clients navigate a more challenging economic and interest rate environment. Net loans and total deposits both increased during the nine months ended September 30, 2022. In addition, LCNB Wealth Management continues to add new assets from new customer accounts, which reflects the success of our comprehensive product offerings, local service and presence, and expertise in our wealth team.”
“As we look to the remainder of 2022 and beyond, we are focused on executing our long-term strategic plan, maintaining excellent asset quality, improving our efficiency ratio by consolidating offices, investing in technology, and returning excess capital to our shareholders through our dividend policy and share buyback program. Year-to-date, we have retired approximately 9.4% of our common stock through our share repurchase program. Despite a more challenging macro environment, our third-quarter and year-to-date results are encouraging and demonstrate the value we provide our communities, our track record of strong asset quality, and our commitment to return excess capital to shareholders. As a result, we continue to believe 2022 will be another strong year of financial and operating performance at LCNB,” concluded Mr. Meilstrup.
Income Statement
Net income for the 2022 third quarter was $5,579,000, an increase of 15.8% as compared to $4,817,000 for the same period last year. Earnings per basic and diluted share for the 2022 third quarter were $0.49, an increase of 25.6% as compared to $0.39 for the same period last year. Net income for the nine-month period ended September 30, 2022, was $15,720,000, an increase of 2.4% as compared to $15,347,000 for the same period last year. Earnings per basic and diluted share for the nine-month period ended September 30, 2022, were $1.36, an increase of 12.4% as compared to $1.21 for the same period last year.
Net interest income for the three months ended September 30, 2022, was $15,444,000, compared to $14,073,000 for the comparable period in 2021. Net interest income for the nine-month period ended September 30, 2022, increased $2,020,000 to $44,834,000, as compared to $42,814,000 in the same period last year. Favorably contributing to the variance for the three-month period was overall growth in the loan portfolio and higher average rates earned on the loan and debt securities portfolios. Favorably contributing to the variance for the nine-month period was overall growth in the taxable debt securities and loan portfolios. In addition, stable cost of funds contributed to the increase in net interest income for both the three- and nine-month periods. Prepayment penalty fees totaling $265,000 and $998,000 were included in loan interest income during the three and nine months ended September 30, 2022, respectively, as compared to $56,000 and $558,000 in such fees during the same periods in 2021.
Non-interest income for the three months ended September 30, 2022, decreased $525,000, or by 12.8% to $3,581,000, compared to $4,106,000 for the same period last year. For the nine months ended September 30, 2022, non-interest income decreased $1,226.000, or by 10.3% to $10,659,000, compared to $11,885,000 for the same period last year. Non-interest income for the nine months ended September 30, 2021, included a one-time $508,000 refund on the Company’s Ohio Financial Institutions Taxes, which was included in other operating income. The primary drivers for the remainder of the decreases for the three- and nine-month periods included decreased fiduciary income, decreased gains from sales of loans, and net unrealized losses recognized on LCNB’s equity securities investment portfolio.
Non-interest expense for the three months ended September 30, 2022, was $321,000 greater than the comparable period in 2021. For the nine months ended September 30, 2022, non-interest expense increased $340,000 from the comparable period in 2021. Other non-interest expense for the three and nine months ended September 30, 2022, included $332,000 and $471,000, respectively, in losses from the sales of two office buildings as a result of our office consolidation strategy. For the 2022 nine-month period, the year-over-year increase in non-interest expense was partially offset by an $889,000 gain from the sale of other real estate owned recognized during the 2022 second quarter.
Capital Allocation
During the 2022 third quarter, LCNB invested $1.4 million to repurchase 87,733 shares of its outstanding stock at an average price of $15.68 per share. Year-to-date, LCNB invested $23.0 million to repurchase 1,172,456 shares of its outstanding stock at an average price of $19.55 per share. This equates to approximately 9.4% of the Company’s outstanding common stock prior to the repurchase. At September 30, 2022, LCNB had 379,232 authorized shares remaining under its May 27, 2022, share repurchase program.
For the third quarter ended September 30, 2022, LCNB paid $0.20 per share in dividends, a 5.3% increase from $0.19 per share for the third quarter last year. Year-to-date, LCNB paid $0.60 per share in dividends, compared to $0.57 per share for the same period last year.
Balance Sheet
Total assets at September 30, 2022, increased 1.1% to $1.90 billion from $1.88 billion at September 30, 2021. Net loans at September 30, 2022, increased 2.8% to $1.37 billion, compared to $1.33 billion at September 30, 2021.
Total deposits at September 30, 2022, increased 3.4% to $1.66 billion, compared to $1.60 billion at September 30, 2021, as LCNB continues to experience year-over-year growth in both interest-bearing and non-interest-bearing accounts.
Asset Quality
For the 2022 third quarter, LCNB recorded a net loan loss recovery of $157,000, compared to a provision for loan losses of $306,000 for the 2021 third quarter. For the nine months ended September 30, 2022, LCNB recorded a provision for loan losses of $269,000, compared to a provision for loan losses of $239,000 for the nine months ended September 30, 2021.
Net charge-offs for the 2022 third quarter were $32,000, compared to $130,000 for the same period last year. For the 2022 nine-month period, net charge-offs were $131,000 or 0.01% of average loans, compared to $139,000 for the 2021 nine-month period.
Total nonperforming loans, which includes non-accrual loans and loans past due 90 days or more and still accruing interest, decreased $2,177,000 from $2,642,000 or 0.20% of total loans at September 30, 2021, to $465,000 or 0.03% of total loans at September 30, 2022. The decrease in nonperforming loans was primarily a result of the completion of the foreclosure process on a commercial real estate loan and the reclassification to other real estate owned and ultimate disposal of that asset. Nonperforming assets to total assets was 0.02% at September 30, 2022, compared to 0.14% at September 30, 2021.
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, 2021, 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 significant risks and uncertainties for LCNB's business, results of operations and financial condition, as well as its regulatory capital and liquidity ratios and other regulatory requirements, caused by the COVID-19 pandemic, which will depend on several factors, including the scope and duration of the pandemic, its influence on financial markets, the effectiveness of LCNB's work from home arrangements and staffing levels in operational facilities, the impact of market participants on which LCNB relies, and actions taken by governmental authorities and other third parties in response to the pandemic; the disruption of global, national, state, and local economies associated with the COVID-19 pandemic and the Russia/Ukraine conflict, which could affect LCNB's liquidity and capital positions, impair the ability of our borrowers to repay outstanding loans, impair collateral values, and further increase the allowance for credit losses; 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 continued 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; 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; adverse weather events and natural disasters and global and/or national epidemics; and government intervention in the U.S. financial system, including the effects of recent 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.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.
Exhibit 99.2
LCNB Corp. and Subsidiaries
Financial Highlights
(Dollars in thousands, except per share amounts)
(Unaudited)
Three Months Ended
Nine Months Ended
9/30/2022
6/30/2022
3/31/2022
12/31/2021
9/30/2021
9/30/2022
9/30/2021
Condensed Income Statement
Interest income
$
16,704
16,208
15,122
15,189
15,024
48,034
45,988
Interest expense
1,260
1,041
899
879
951
3,200
3,174
Net interest income
15,444
15,167
14,223
14,310
14,073
44,834
42,814
Provision for (recovery of) loan losses
(157
)
377
49
(508
)
306
269
239
Net interest income after provision for (recovery of) loan losses
15,601
14,790
14,174
14,818
13,767
44,565
42,575
Non-interest income
3,581
3,528
3,550
4,347
4,106
10,659
11,885
Non-interest expense
12,350
11,469
12,250
12,311
12,029
36,069
35,729
Income before income taxes
6,832
6,849
5,474
6,854
5,844
19,155
18,731
Provision for income taxes
1,253
1,231
951
1,227
1,027
3,435
3,384
Net income
$
5,579
5,618
4,523
5,627
4,817
15,720
15,347
Supplemental Income Statement Information
Amort/Accret income on acquired loans
$
144
61
66
116
132
271
597
Tax-equivalent net interest income
$
15,495
15,217
14,273
14,365
14,129
44,985
42,988
Per Share Data
Dividends per share
$
0.20
0.20
0.20
0.20
0.19
0.60
0.57
Basic earnings per common share
$
0.49
0.49
0.38
0.45
0.39
1.36
1.21
Diluted earnings per common share
$
0.49
0.49
0.38
0.45
0.39
1.36
1.21
Book value per share
$
17.31
17.84
18.14
19.22
19.17
17.31
19.17
Tangible book value per share
$
11.97
12.53
12.84
14.33
14.28
11.97
14.28
Weighted average common shares outstanding:
Basic
11,284,225
11,337,805
11,818,614
12,370,702
12,455,276
11,478,256
12,663,368
Diluted
11,284,225
11,337,805
11,818,614
12,370,702
12,455,276
11,478,256
12,663,378
Shares outstanding at period end
11,293,639
11,374,515
11,401,503
12,414,956
12,433,328
11,293,639
12,433,328
Selected Financial Ratios
Return on average assets
1.15
%
1.18
%
0.96
%
1.18
%
1.02
%
1.09
%
1.12
%
Return on average equity
10.80
%
10.96
%
8.13
%
9.33
%
7.93
%
9.91
%
8.50
%
Return on average tangible common equity
15.30
%
15.52
%
11.11
%
12.51
%
10.62
%
13.86
%
11.39
%
Dividend payout ratio
40.82
%
40.82
%
52.63
%
44.44
%
48.72
%
44.12
%
47.11
%
Net interest margin (tax equivalent)
3.54
%
3.54
%
3.35
%
3.34
%
3.32
%
3.48
%
3.49
%
Efficiency ratio (tax equivalent)
64.74
%
61.18
%
68.73
%
65.79
%
65.96
%
64.82
%
65.11
%
Selected Balance Sheet Items
Cash and cash equivalents
$
29,460
31,815
19,941
18,136
23,852
Debt and equity securities
325,801
337,952
330,715
345,649
352,066
Loans:
Commercial and industrial
$
114,694
114,971
105,805
101,792
91,246
Commercial, secured by real estate
908,130
905,703
906,140
889,108
862,202
Residential real estate
316,669
315,930
328,034
334,547
343,318
Consumer
29,451
30,308
32,445
34,190
35,349
Agricultural
8,630
7,412
7,980
10,647
8,852
Other, including deposit overdrafts
52
81
45
122
247
Deferred net origination fees
(937
)
(928
)
(928
)
(961
)
(1,055
)
Loans, gross
1,376,689
1,373,477
1,379,521
1,369,445
1,340,159
Less allowance for loan losses
5,644
5,833
5,530
5,506
5,828
Loans, net
$
1,371,045
1,367,644
1,373,991
1,363,939
1,334,331
Three Months Ended
Nine Months Ended
9/30/2022
6/30/2022
3/31/2022
12/31/2021
9/30/2021
9/30/2022
9/30/2021
Selected Balance Sheet Items, continued
Total earning assets
$
1,714,196
1,722,853
1,712,115
1,716,420
1,695,281
Total assets
1,904,700
1,912,627
1,899,630
1,903,629
1,884,252
Total deposits
1,657,370
1,658,825
1,636,606
1,628,819
1,603,203
Short-term borrowings
4,000
5,000
24,746
—
—
Long-term debt
24,539
25,000
10,000
10,000
15,000
Total shareholders’ equity
195,439
202,960
206,875
238,604
238,419
Equity to assets ratio
10.26
%
10.61
%
10.89
%
12.53
%
12.65
%
Loans to deposits ratio
83.06
%
82.80
%
84.29
%
84.08
%
83.59
%
Tangible common equity (TCE)
$
135,149
142,557
146,360
177,949
177,501
Tangible common assets (TCA)
1,844,410
1,852,224
1,839,115
1,842,974
1,823,334
TCE/TCA
7.33
%
7.70
%
7.96
%
9.66
%
9.73
%
Selected Average Balance Sheet Items
Cash and cash equivalents
$
35,763
28,787
32,826
29,614
34,557
32,393
39,021
Debt and equity securities
338,299
338,149
340,666
348,150
356,214
339,051
310,004
Loans
$
1,384,520
1,375,710
1,376,926
1,351,762
1,321,629
1,379,080
1,321,426
Less allowance for loan losses
5,830
5,532
5,503
5,843
5,567
5,623
5,653
Net loans
$
1,378,690
1,370,178
1,371,423
1,345,919
1,316,062
1,373,457
1,315,773
Total earning assets
$
1,736,031
1,722,503
1,727,335
1,708,392
1,688,589
1,728,677
1,648,461
Total assets
1,928,868
1,912,574
1,917,226
1,896,530
1,879,314
1,919,804
1,835,887
Total deposits
1,669,932
1,655,389
1,646,627
1,615,020
1,595,773
1,657,401
1,551,727
Short-term borrowings
5,728
18,263
12,503
893
1,320
12,140
796
Long-term debt
24,920
12,637
10,000
14,402
15,000
15,907
16,736
Total shareholders’ equity
205,051
205,645
225,725
239,174
240,976
212,064
241,379
Equity to assets ratio
10.63
%
10.75
%
11.77
%
12.61
%
12.82
%
11.05
%
13.15
%
Loans to deposits ratio
82.91
%
83.10
%
83.62
%
83.70
%
82.82
%
83.21
%
85.16
%
Asset Quality
Net charge-offs (recoveries)
$
32
74
25
(186
)
130
131
139
Non-accrual loans
$
465
599
1,455
1,481
2,629
465
2,629
Loans past due 90 days or more and still accruing
—
—
—
56
13
—
13
Total nonperforming loans
$
465
599
1,455
1,537
2,642
465
2,642
Net charge-offs (recoveries) to average loans
0.01
%
0.02
%
0.01
%
(0.05
) %
0.04
%
0.01
%
0.01
%
Allowance for loan losses to total loans
0.41
%
0.42
%
0.40
%
0.40
%
0.43
%
0.41
%
0.43
%
Nonperforming loans to total loans
0.03
%
0.04
%
0.11
%
0.11
%
0.20
%
0.03
%
0.20
%
Nonperforming assets to total assets
0.02
%
0.03
%
0.08
%
0.08
%
0.14
%
0.02
%
0.14
%
Assets Under Management
LCNB Corp. total assets
$
1,904,700
1,912,627
1,899,630
1,903,629
1,884,252
Trust and investments (fair value)
611,409
625,984
700,353
722,093
713,936
Mortgage loans serviced
145,317
153,557
152,271
149,382
140,147
Cash management
53,199
38,914
75,302
34,009
72,622
Brokerage accounts (fair value)
314,144
303,663
326,290
334,670
319,495
Total assets managed
$
3,028,769
3,034,745
3,153,846
3,143,783
3,130,452
LCNB CORP. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in thousands)
September 30, 2022
(Unaudited)
December 31, 2021
ASSETS:
Cash and due from banks
$
17,754
16,810
Interest-bearing demand deposits
11,706
1,326
Total cash and cash equivalents
29,460
18,136
Investment securities:
Equity securities with a readily determinable fair value, at fair value
2,175
2,546
Equity securities without a readily determinable fair value, at cost
2,099
2,099
Debt securities, available-for-sale, at fair value
290,419
308,177
Debt securities, held-to-maturity, at cost
22,415
22,972
Federal Reserve Bank stock, at cost
4,652
4,652
Federal Home Loan Bank stock, at cost
4,041
5,203
Loans, net
1,371,045
1,363,939
Premises and equipment, net
33,152
35,385
Operating leases right of use asset
6,025
6,357
Goodwill
59,221
59,221
Core deposit and other intangibles
1,996
2,473
Bank owned life insurance
44,027
43,224
Interest receivable
7,622
7,999
Other assets
26,351
21,246
TOTAL ASSETS
$
1,904,700
1,903,629
LIABILITIES:
Deposits:
Noninterest-bearing
$
521,704
501,531
Interest-bearing
1,135,666
1,127,288
Total deposits
1,657,370
1,628,819
Short-term borrowings
4,000
—
Long-term debt
24,539
10,000
Operating lease liabilities
6,116
6,473
Accrued interest and other liabilities
17,236
19,733
TOTAL LIABILITIES
1,709,261
1,665,025
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 14,264,931 and 14,213,792 shares at September 30, 2022 and December 31, 2021, respectively; outstanding 11,293,639 and 12,414,956 shares at September 30, 2022 and December 31, 2021, respectively
143,855
143,130
Retained earnings
135,202
126,312
Treasury shares at cost, 2,971,292 and 1,798,836 shares at September 30, 2022 and December 31, 2021, respectively
(52,009
)
(29,029 )
Accumulated other comprehensive loss, net of taxes
(31,609
)
(1,809 )
TOTAL SHAREHOLDERS' EQUITY
195,439
238,604
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
$
1,904,700
1,903,629
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,
2022
2021
2022
2021
INTEREST INCOME:
Interest and fees on loans
$
15,026
13,729
43,360
42,372
Dividends on equity securities with a readily determinable fair value
14
12
40
38
Dividends on equity securities without a readily determinable fair value
6
5
16
16
Interest on debt securities, taxable
1,323
1,027
3,672
2,650
Interest on debt securities, non-taxable
190
214
567
656
Other investments
145
37
379
256
TOTAL INTEREST INCOME
16,704
15,024
48,034
45,988
INTEREST EXPENSE:
Interest on deposits
979
836
2,493
2,809
Interest on short-term borrowings
71
2
320
4
Interest on long-term debt
210
113
387
361
TOTAL INTEREST EXPENSE
1,260
951
3,200
3,174
NET INTEREST INCOME
15,444
14,073
44,834
42,814
PROVISION (CREDIT) FOR LOAN LOSSES
(157
)
306
269
239
NET INTEREST INCOME AFTER PROVISION (CREDIT) FOR LOAN LOSSES
15,601
13,767
44,565
42,575
NON-INTEREST INCOME:
Fiduciary income
1,513
1,695
4,851
4,959
Service charges and fees on deposit accounts
1,706
1,621
4,658
4,506
Bank owned life insurance income
269
269
803
805
Gains from sales of loans
—
366
188
560
Other operating income
93
155
159
1,055
TOTAL NON-INTEREST INCOME
3,581
4,106
10,659
11,885
NON-INTEREST EXPENSE:
Salaries and employee benefits
7,062
7,096
21,291
20,640
Equipment expenses
398
421
1,234
1,232
Occupancy expense, net
790
713
2,300
2,236
State financial institutions tax
439
437
1,312
1,318
Marketing
215
253
845
878
Amortization of intangibles
113
263
365
780
FDIC insurance premiums, net
137
129
397
365
Contracted services
613
655
1,902
1,818
Other real estate owned, net
5
—
(874
)
2
Other non-interest expense
2,578
2,062
7,297
6,460
TOTAL NON-INTEREST EXPENSE
12,350
12,029
36,069
35,729
INCOME BEFORE INCOME TAXES
6,832
5,844
19,155
18,731
PROVISION FOR INCOME TAXES
1,253
1,027
3,435
3,384
NET INCOME
$
5,579
4,817
15,720
15,347
Dividends declared per common share
$
0.20
0.19
0.60
0.57
Earnings per common share:
Basic
0.49
0.39
1.36
1.21
Diluted
0.49
0.39
1.36
1.21
Weighted average common shares outstanding:
Basic
11,284,225
12,455,276
11,478,256
12,663,368
Diluted
11,284,225
12,455,276
11,478,256
12,663,378
View source version on businesswire.com: https://www.businesswire.com/news/home/20221020006107/en/