LCNB Corp. Reports Financial Results for the Three Months Ended March 31, 2023

Rhea-AI Summary

LCNB Corp. (NASDAQ: LCNB) reported a stable first quarter for 2023, ending March 31 with a loan to deposit ratio of 86.97% and total nonperforming loans at a low 0.05% of total loans. Total earning assets reached a record $1.74 billion, a 1.4% increase year-over-year. The company’s first quarter earnings per share were $0.37, slightly down from $0.38 the previous year, with net income decreasing 8.1% to $4.2 million. Despite a 2.0% drop in net interest income to $13.9 million, LCNB’s non-interest income rose to $3.58 million. The bank's asset management saw growth, achieving $3.16 billion in total assets, reflecting a stable consumer base and increased fiduciary income.

Positive

• Total earning assets increased 1.4% year-over-year to a record $1.74 billion
• Wealth management assets grew 6.2% year-over-year to $1.09 billion
• Non-interest income increased slightly to $3.58 million
• Record total assets under management of $3.16 billion
• Share repurchase program with 107,028 shares repurchased

Negative

• Net income decreased 8.1% to $4.2 million year-over-year
• Earnings per share down from $0.38 to $0.37
• Net interest income decreased by 2.0% to $13.9 million
• Total deposits fell 2.0% to $1.60 billion
• Higher interest expenses due to increased Effective Federal Funds Rate

Ended the First Quarter with a Stable Deposit Base and an 86.97% Loan to Deposit Ratio

Asset Quality Remains Excellent with Total Nonperforming Loans to Total Loans of 0.05% at March 31, 2023

Total Earning Assets Increased 1.4% Year-over-Year to a Record $1.74 Billion

LCNB Wealth Management Assets Up 6.2% Year-over-Year to a Record $1.09 Billion

First Quarter Earnings of $0.37 Per Diluted Share

LEBANON, Ohio--(BUSINESS WIRE)-- LCNB Corp. ("LCNB") (NASDAQ: LCNB) today announced financial results for the three months ended March 31, 2023.

Commenting on the financial results, LCNB President and Chief Executive Officer Eric Meilstrup said, “We continue to successfully navigate an extremely fluid operating environment as a result of the community banking values we have followed throughout our history, our prudent focus on risk management, and our commitment to our customers and communities. We believe these core operating principles not only position the bank for success in any economic environment, but also resonate with our customers and support our growth. We ended the quarter with record total assets under management driven by growing customer accounts and record assets within our LCNB Wealth Management group. This drove a 2.7% year-over-year increase in fiduciary income and helped grow non-interest income in the first quarter. I am encouraged by the positive momentum underway at LCNB Wealth Management as we leverage our local approach, growing scale, and expanding relationships.”

“LCNB’s long history of serving our communities helps us build longstanding relationships with our customers and builds a stable funding base. At March 31, 2023, we had over 60,000 consumer, public fund, small business and non-profit checking and savings accounts with an average balance of approximately $23,000 per account. With a loan-to-deposit ratio of 86.97% and an equity-to-asset ratio of 10.60% at March 31, 2023, we are well capitalized to support our loan portfolio. LCNB’s strong liquidity levels also continue to support our share repurchase program and during the first quarter we repurchased 107,028 shares of our common stock,” continued Mr. Meilstrup.

“LCNB has a solid foundation of experienced leaders, excellent asset quality, and strong capital levels. We are focused on leveraging this platform to navigate a more challenging and uncertain economic landscape, while continuing to pursue our long-term growth objectives and focus on returning excess capital back to our shareholders,” concluded Mr. Meilstrup.

Income Statement

Net income for the 2023 first quarter decreased 8.1% to $4.2 million, compared to $4.5 million for the same period last year. Earnings per basic and diluted share for the 2023 first quarter were $0.37, compared to $0.38 for the same period last year.

Net interest income for the three months ended March 31, 2023, was $13.9 million, compared to $14.2 million for the comparable period in 2022. The 2.0% year-over-year decrease for the three-month period was primarily due to higher interest expense associated with the rapid year-over-year increase in the Effective Federal Funds Rate. For the 2023 first quarter, LCNB’s tax equivalent net interest margin was 3.28%, compared to 3.35% for the same period last year.

Non-interest income for the three months ended March 31, 2023, increased slightly to $3.58 million, compared to $3.55 million for the same period last year. The increase in non-interest income was primarily due to higher fiduciary income and service charges and fees on deposit accounts, partially offset by lower gains on sales of loans.

Non-interest expense for the three months ended March 31, 2023, was $275,000 greater than the comparable period in 2022, primarily due to higher salaries and employee benefits, occupancy expenses, and FDIC insurance premiums. These increases were partially offset by reduced equipment expenses, state financial institutions tax, and marketing expenses.

Capital Allocation

During the 2023 first quarter, LCNB invested $1.8 million to repurchase 107,028 shares of its outstanding stock at an average price of $17.00 per share. This equates to almost 1.0% of the Company’s outstanding common stock prior to the repurchase. At March 31, 2023, LCNB had 407,932 shares available to be repurchased under its February 2023 share repurchase program.

For the first quarter ended March 31, 2023, LCNB paid $0.21 per share in dividends, a 5.0% increase from $0.20 per share for the first quarter last year.

Balance Sheet

Total assets at March 31, 2023, increased 1.3% to a record $1.92 billion from $1.90 billion at March 31, 2022. Net loans at March 31, 2023 increased 0.9% to $1.39 billion, compared to $1.37 billion at March 31, 2022.

Total deposits at March 31, 2023 decreased 2.0% to $1.60 billion, compared to $1.64 billion at March 31, 2022, as LCNB experienced greater competition for interest-bearing accounts. LCNB’s uninsured deposits to total deposits were approximately 13.4% for the quarter ended March 31, 2023.

Assets Under Management

Total assets managed at March 31, 2023 were a record $3.16 billion, compared to $3.15 billion at March 31, 2022. The year-over-year increase in total assets managed was primarily due to increases in LCNB Corp. total assets, trust and investments, and brokerage accounts. Trust and investments and brokerage accounts increased due to a higher number of new LCNB Wealth Management customer accounts opened over the past twelve months and an increase in the fair value of managed assets associated with an improving capital market environment, partially offset by decreases in cash management accounts and mortgage loans serviced.

Asset Quality

For the 2023 first quarter, LCNB recorded a provision for credit losses on loans of $32,000, compared to a provision of $49,000 for the 2022 first quarter.

On January 1, 2023, LCNB adopted ASC 326, which provides for a current expected credit loss (“CECL”) model in estimating the allowance for credit losses and recorded a one-time decrease of $1.92 million, net of tax, to retained earnings as a result of the initial cumulative entry. The adoption of CECL did not have a material impact on the Bank’s regulatory capital ratios. As an overall percentage of loans, the allowance for credit losses on loans increased to 0.56% at March 31, 2023 compared to 0.40% at March 31, 2022.

Net charge-offs for the 2023 first quarter were $16,000, or 0.00% of average loans, annualized, compared to net charge-offs of $25,000, or 0.01% of average loans, annualized, for the same period last year.

Total nonperforming loans, which includes non-accrual loans and loans past due 90 days or more and still accruing interest, decreased $754,000 from $1.5 million, or 0.11% of total loans, at March 31, 2022, to $701,000, or 0.05% of total loans, at March 31, 2023. The nonperforming assets to total assets ratio was 0.04% at March 31, 2023, compared to 0.08% at March 31, 2022.

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, 2022, 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. the ongoing uncertainties for LCNB's business, results of operations and financial condition, as well as its regulatory capital and liquidity ratios and other regulatory requirements, resulting from the scope and duration of the COVID-19 pandemic;
3. LCNB’s ability to integrate future acquisitions may be unsuccessful or may be more difficult, time-consuming, or costly than expected;
4. LCNB may incur increased loan charge-offs in the future;
5. LCNB may face competitive loss of customers;
6. changes in the interest rate environment, which may include further interest rate increases, may have results on LCNB’s operations materially different from those anticipated by LCNB’s market risk management functions;
7. changes in general economic conditions and increased competition could adversely affect LCNB’s operating results;
8. 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;
9. LCNB may experience difficulties growing loan and deposit balances;
10. 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;
11. difficulties with technology or data security breaches, including cyberattacks, could negatively affect LCNB's ability to conduct business and its relationships with customers, vendors, and others;
12. adverse weather events and natural disasters and global and/or national epidemics could negatively affect LCNB’s customers given its concentrated geographic scope, which could impact LCNB’s operating results; and
13. government intervention in the U.S. financial system, including the effects of 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, and any such future regulatory actions or reforms.

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
		3/31/2023				12/31/2022			9/30/2022			6/30/2022			3/31/2022
Condensed Income Statement
Interest income		$	17,918			17,719			16,704			16,208			15,122
Interest expense			3,976			1,511			1,260			1,041			899
Net interest income			13,942			16,208			15,444			15,167			14,223
Provision for (recovery of) credit losses			(57	)		(19	)		(157	)		377			49
Net interest income after provision for (recovery of) credit losses			13,999			16,227			15,601			14,790			14,174
Non-interest income			3,581			3,629			3,581			3,528			3,550
Non-interest expense			12,525			12,065			12,350			11,469			12,250
Income before income taxes			5,055			7,791			6,832			6,849			5,474
Provision for income taxes			898			1,383			1,253			1,231			951
Net income		$	4,157			6,408			5,579			5,618			4,523
Supplemental Income Statement Information
Amort/Accret income on acquired loans		$	74			249			144			61			66
Tax-equivalent net interest income		$	13,989			16,257			15,495			15,217			14,273
Per Share Data
Dividends per share		$	0.21			0.21			0.20			0.20			0.20
Basic earnings per common share		$	0.37			0.57			0.49			0.49			0.38
Diluted earnings per common share		$	0.37			0.57			0.49			0.49			0.38
Book value per share		$	18.22			17.82			17.31			17.84			18.14
Tangible book value per share		$	12.86			12.48			11.97			12.53			12.84
Weighted average common shares outstanding:
Basic			11,189,170			11,211,328			11,284,225			11,337,805			11,818,614
Diluted			11,189,170			11,211,328			11,284,225			11,337,805			11,818,614
Shares outstanding at period end			11,202,063			11,259,080			11,293,639			11,374,515			11,401,503
Selected Financial Ratios
Return on average assets			0.88	%		1.34	%		1.15	%		1.18	%		0.96	%
Return on average equity			8.33	%		12.90	%		10.80	%		10.96	%		8.13	%
Return on average tangible common equity			11.85	%		18.59	%		15.30	%		15.52	%		11.11	%
Dividend payout ratio			56.76	%		36.84	%		40.82	%		40.82	%		52.63	%
Net interest margin (tax equivalent)			3.28	%		3.77	%		3.54	%		3.54	%		3.35	%
Efficiency ratio (tax equivalent)			71.29	%		60.67	%		64.74	%		61.18	%		68.73	%
Selected Balance Sheet Items
Cash and cash equivalents		$	31,876			22,701			29,460			31,815			19,941
Debt and equity securities			328,194			323,167			325,801			337,952			330,715
Loans:
Commercial and industrial		$	124,240			120,236			114,694			114,971			105,805
Commercial, secured by real estate			932,208			938,022			908,130			905,703			906,140
Residential real estate			303,051			305,575			316,669			315,930			328,034
Consumer			28,611			28,290			29,451			30,308			32,445
Agricultural			7,523			10,054			8,630			7,412			7,980
Other, including deposit overdrafts			62			81			52			81			45
Deferred net origination fees			(865	)		(980	)		(937	)		(928	)		(928	)
Loans, gross			1,394,830			1,401,278			1,376,689			1,373,477			1,379,521
Less allowance for credit losses on loans			7,858			5,646			5,644			5,833			5,530
Loans, net		$	1,386,972			1,395,632			1,371,045			1,367,644			1,373,991
		Three Months Ended
		3/31/2023				12/31/2022			9/30/2022			6/30/2022			3/31/2022
Selected Balance Sheet Items, continued
Allowance for Credit Losses on Loans:
Allowance for credit losses, beginning of period			5,646			5,644			5,833			5,530			5,506
Cumulative change in accounting principle; adoption of ASU 2016-13			2,196			—			—			—			—
Provision for (recovery of) credit losses			32			(19	)		(157	)		377			49
Losses charged off			(36	)		(60	)		(53	)		(116	)		(37	)
Recoveries			20			81			21			42			12
Allowance for credit losses, end of period			7,858			5,646			5,644			5,833			5,530
Total earning assets		$	1,736,829			1,726,902			1,714,196			1,722,853			1,712,115
Total assets			1,924,531			1,919,121			1,904,700			1,912,627			1,899,630
Total deposits			1,603,881			1,604,970			1,657,370			1,658,825			1,636,606
Short-term borrowings			76,500			71,455			4,000			5,000			24,746
Long-term debt			18,598			19,072			24,539			25,000			10,000
Total shareholders’ equity			204,072			200,675			195,439			202,960			206,875
Equity to assets ratio			10.60	%		10.46	%		10.26	%		10.61	%		10.89	%
Loans to deposits ratio			86.97	%		87.31	%		83.06	%		82.80	%		84.29	%
Tangible common equity (TCE)		$	144,006			140,498			135,149			142,557			146,360
Tangible common assets (TCA)			1,864,465			1,858,944			1,844,410			1,852,224			1,839,115
TCE/TCA			7.72	%		7.56	%		7.33	%		7.70	%		7.96	%
Selected Average Balance Sheet Items
Cash and cash equivalents		$	35,712			24,330			35,763			28,787			32,826
Debt and equity securities			327,123			323,195			338,299			338,149			340,666
Loans		$	1,389,385			1,383,809			1,384,520			1,375,710			1,376,926
Less allowance for credit losses on loans			7,522			5,647			5,830			5,532			5,503
Net loans		$	1,381,863			1,378,162			1,378,690			1,370,178			1,371,423
Total earning assets		$	1,729,008			1,711,524			1,736,031			1,722,503			1,727,335
Total assets			1,921,742			1,903,338			1,928,868			1,912,574			1,917,226
Total deposits			1,583,857			1,637,201			1,669,932			1,655,389			1,646,627
Short-term borrowings			94,591			21,433			5,728			18,263			12,503
Long-term debt			18,983			23,855			24,920			12,637			10,000
Total shareholders’ equity			202,419			197,014			205,051			205,645			225,725
Equity to assets ratio			10.53	%		10.35	%		10.63	%		10.75	%		11.77	%
Loans to deposits ratio			87.72	%		84.52	%		82.91	%		83.10	%		83.62	%
Asset Quality
Net charge-offs (recoveries)		$	16			(21	)		32			74			25
Non-accrual loans		$	701			391			465			599			1,455
Loans past due 90 days or more and still accruing			—			39			—			—			—
Total nonperforming loans		$	701			430			465			599			1,455
Net charge-offs (recoveries) to average loans			0.00	%		(0.01	) %		0.01	%		0.02	%		0.01	%
Allowance for credit losses on loans to total loans			0.56	%		0.40	%		0.41	%		0.42	%		0.40	%
Nonperforming loans to total loans			0.05	%		0.03	%		0.03	%		0.04	%		0.11	%
Nonperforming assets to total assets			0.04	%		0.02	%		0.02	%		0.03	%		0.08	%
Assets Under Management
LCNB Corp. total assets		$	1,924,531			1,919,121			1,904,700			1,912,627			1,899,630
Trust and investments (fair value)			716,578			678,366			611,409			625,984			700,353
Mortgage loans serviced			142,167			148,412			145,317			153,557			152,271
Cash management			1,831			1,925			53,199			38,914			75,302
Brokerage accounts (fair value)			374,066			347,737			314,144			303,663			326,290
Total assets managed		$	3,159,173			3,095,561			3,028,769			3,034,745			3,153,846

LCNB CORP. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in thousands)
		March 31, 2023				December 31,
		(Unaudited)				2022
ASSETS:
Cash and due from banks		$	18,071			20,244
Interest-bearing demand deposits			13,805			2,457
Total cash and cash equivalents			31,876			22,701
Investment securities:
Equity securities with a readily determinable fair value, at fair value			1,286			2,273
Equity securities without a readily determinable fair value, at cost			2,099			2,099
Debt securities, available-for-sale, at fair value			293,427			289,850
Debt securities, held-to-maturity, at cost, net of allowance for credit losses			19,763			19,878
Federal Reserve Bank stock, at cost			4,652			4,652
Federal Home Loan Bank stock, at cost			6,967			4,415
Loans, net of allowance for credit losses			1,386,972			1,395,632
Premises and equipment, net			33,186			33,042
Operating leases right of use asset			6,093			6,248
Goodwill			59,221			59,221
Core deposit and other intangibles			1,665			1,827
Bank owned life insurance			44,569			44,298
Interest receivable			8,005			7,482
Other assets			24,750			25,503
TOTAL ASSETS		$	1,924,531			1,919,121
LIABILITIES:
Deposits:
Noninterest-bearing		$	473,345			505,824
Interest-bearing			1,130,536			1,099,146
Total deposits			1,603,881			1,604,970
Short-term borrowings			76,500			71,455
Long-term debt			18,598			19,072
Operating lease liabilities			6,246			6,370
Allowance for credit losses on off-balance sheet credit exposures			482			—
Accrued interest and other liabilities			14,752			16,579
TOTAL LIABILITIES			1,720,459			1,718,446
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 14,320,561 and 14,270,550 shares at March 31, 2023 and December 31, 2022, respectively; outstanding 11,202,063 and 11,259,080 shares at March 31, 2023 and December 31, 2022, respectively			144,488			144,069
Retained earnings			139,115			139,249
Treasury shares at cost, 3,118,498 and 3,011,470 shares at March 31, 2023 and December 31, 2022, respectively			(54,527	)		(52,689	)
Accumulated other comprehensive loss, net of taxes			(25,004	)		(29,954	)
TOTAL SHAREHOLDERS' EQUITY			204,072			200,675
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY		$	1,924,531			1,919,121

LCNB CORP. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Dollars in thousands, except per share data)
(Unaudited)
		Three Months Ended
		March 31,
		2023			2022
INTEREST INCOME:
Interest and fees on loans		16,143			13,786
Dividends on equity securities with a readily determinable fair value		17			12
Dividends on equity securities without a readily determinable fair value		20			5
Interest on debt securities, taxable		1,343			1,095
Interest on debt securities, non-taxable		176			189
Other investments		219			35
TOTAL INTEREST INCOME		17,918			15,122
INTEREST EXPENSE:
Interest on deposits		2,456			739
Interest on short-term borrowings		1,304			86
Interest on long-term debt		216			74
TOTAL INTEREST EXPENSE		3,976			899
NET INTEREST INCOME		13,942			14,223
Provision for credit losses on loans		32			49
Provision for credit losses on debt securities, held-to-maturity		—			—
Recovery of credit losses on off-balance sheet credit exposures		(89	)		—
TOTAL PROVISION FOR (RECOVERY OF) CREDIT LOSSES		(57	)		49
NET INTEREST INCOME AFTER PROVISION FOR (RECOVERY OF) CREDIT LOSSES		13,999			14,174
NON-INTEREST INCOME:
Fiduciary income		1,740			1,695
Service charges and fees on deposit accounts		1,482			1,406
Bank owned life insurance income		271			265
Gains from sales of loans		6			124
Other operating income		82			60
TOTAL NON-INTEREST INCOME		3,581			3,550
NON-INTEREST EXPENSE:
Salaries and employee benefits		7,349			7,215
Equipment expenses		361			408
Occupancy expense, net		963			775
State financial institutions tax		397			436
Marketing		192			262
Amortization of intangibles		111			140
FDIC insurance premiums, net		215			126
Contracted services		641			610
Other non-interest expense		2,296			2,278
TOTAL NON-INTEREST EXPENSE		12,525			12,250
INCOME BEFORE INCOME TAXES		5,055			5,474
PROVISION FOR INCOME TAXES		898			951
NET INCOME		4,157			4,523
Dividends declared per common share		0.21			0.20
Earnings per common share:
Basic		0.37			0.38
Diluted		0.37			0.38
Weighted average common shares outstanding:
Basic		11,189,170			11,818,614
Diluted		11,189,170			11,818,614

 

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Company Contact:

Eric J. Meilstrup

President and Chief Executive Officer

LCNB National Bank

(513) 932-1414

shareholderrelations@lcnb.com

Investor and Media Contact:

Andrew M. Berger

Managing Director

SM Berger & Company, Inc.

(216) 464-6400

andrew@smberger.com

Source: LCNB Corp.

FAQ

What were LCNB's earnings per share for the first quarter of 2023?

Earnings per share for LCNB in the first quarter of 2023 were $0.37.

How did LCNB's total deposits change in the first quarter of 2023?

Total deposits at LCNB decreased by 2.0% to $1.60 billion compared to the previous year.

What is LCNB's loan to deposit ratio as of March 31, 2023?

As of March 31, 2023, LCNB's loan to deposit ratio was 86.97%.

How much did LCNB repurchase of its shares in the first quarter of 2023?

LCNB repurchased 107,028 shares of its common stock during the first quarter of 2023.

What is the total asset management value for LCNB as of March 31, 2023?

Total assets under management for LCNB reached a record $3.16 billion as of March 31, 2023.