Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil Hydroworld Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries LCNB Corp. Reports Record Financial Results for the Three and Six Months Ended June 30, 2023 By: LCNB Corp. via Business Wire July 21, 2023 at 08:00 AM EDT Ended the Second Quarter with a Stable Deposit Base and a 90.14% Loan to Deposit Ratio Net Loans Increased 4.7% Year-over-Year to a Record of $1.43 Billion Asset Quality Remains Excellent with Total Nonperforming Loans to Total Loans of 0.05% at June 30, 2023 LCNB Wealth Management Assets Up 21.4% Year-over-Year to a Record $1.13 Billion Cincinnati Bancorp, Inc. Acquisition Expected to Close in the 2023 Fourth Quarter LCNB Corp. ("LCNB") (NASDAQ: LCNB) today announced financial results for the three and six months ended June 30, 2023. Commenting on the financial results, LCNB President and Chief Executive Officer Eric Meilstrup said, “I am pleased with our favorable second quarter performance and the progress we are making despite a difficult operating environment. During the second quarter, we increased net income and earnings per share from first quarter levels, maintained excellent asset quality, and achieved record net loans, LCNB Wealth Management assets, and total assets. In addition, our flexible balance sheet and solid capital levels allowed us to support our organic growth strategies and return capital back to our shareholders.” “While we expect the challenging banking landscape to persist throughout the second half of 2023, we remain focused on managing the factors under our control. This includes controlling operating expenses, managing our balance sheet, maintaining excellent asset quality, and supporting our local communities. In addition, we continue to make progress completing the acquisition of Cincinnati Bancorp, which is expected to close during the 2023 fourth quarter. Once finalized, we expect LCNB will have total assets of approximately $2.3 billion with 33 banking offices in Ohio and one branch office in Northern Kentucky. With an expanded position within the greater Cincinnati and Northern Kentucky markets, we believe this transaction should enhance LCNB’s long-term profitability metrics and earnings growth rate in the future. We are excited to complete the acquisition and welcome Cincinnati Bancorp’s customers, employees, and shareholders to LCNB,” concluded Mr. Meilstrup. Income Statement Net income for the 2023 second quarter was $4,694,000, compared to $5,618,000 for the same period last year. Earnings per basic and diluted share for the 2023 second quarter were $0.42, compared to $0.49 for the same period last year. Net income for the six-month period ended June 30, 2023 was $8,851,000, compared to $10,141,000 for the same period last year. Earnings per basic and diluted share for the six-month period ended June 30, 2023 were $0.79, compared to $0.87 for the same period last year. Adjusted net income for the 2023 second quarter was $5.0 million, or $0.45 per diluted share, compared to $5.6 million, or $0.49 per diluted share, in the prior year quarter. Adjusted net income accounts for the impact of one-time merger-related expenses, net of tax, associated with the Cincinnati Bancorp, Inc. acquisition. Adjusted net income for the first half ended June 30, 2023 was $9.2 million, or $0.82 per diluted share, compared to $10.1 million, or $0.87 per diluted share, in the prior year period. Net interest income for the three months ended June 30, 2023 was $14,177,000, compared to $15,167,000 for the comparable period in 2022. Net interest income for the six-month period ended June 30, 2023 was $28,119,000, as compared to $29,390,000 in the same period last year. Contributing to the variances for both the three and six-month periods were increases in the amount of short-term borrowings combined with higher interest expense associated with the rapid year-over-year increase in the Effective Federal Funds Rate. For the 2023 second quarter, LCNB’s tax equivalent net interest margin was 3.28%, compared to 3.54% for the same period last year. Non-interest income for the three months ended June 30, 2023 increased $118,000, or by 3.3%, to $3,646,000, compared to $3,528,000 for the same period last year. For the six months ended June 30, 2023, non-interest income increased $149,000, or by 2.1%, to $7,227,000, compared to $7,078,000 for the same period last year. The increase in non-interest income for both the three and six-month periods were primarily due to higher fiduciary income and a decrease in net unrealized losses recognized on equity securities, partially offset by lower gains on sales of loans. Also contributing to the increase during the six-month period were gains recognized on the sale of equity securities during the 2023 first quarter. Non-interest expense for the three months ended June 30, 2023 was $609,000 greater than the comparable period in 2022, primarily due to $415,000 in one-time merger-related expenses. For the first half ended June 30, 2023, non-interest expense was $884,000 higher than the comparable period in 2022, partially due to $440,000 in merger-related expenses. In addition, non-interest expense for the 2022 second quarter benefited from an $889,000 gain from the sale of other real estate owned. Capital Allocation During the 2023 second quarter, LCNB invested $1.5 million to repurchase 92,885 shares of its outstanding stock at an average price of $15.86 per share. Year-to-date, LCNB invested $3.3 million to repurchase 199,913 shares of its outstanding stock at an average price of $16.47 per share. This equates to approximately 1.78% of the Company’s outstanding common stock prior to the repurchase. At June 30, 2023, LCNB had 315,047 shares remaining under its February 2023 share repurchase program. For the second quarter ended June 30, 2023, LCNB paid $0.21 per share in dividends, a 5.0% increase from $0.20 per share for the second quarter last year. Year-to-date, LCNB paid $0.42 per share in dividends, compared to $0.40 per share for the first half last year. Balance Sheet Total assets at June 30, 2023 increased 1.9% to a record $1.95 billion from $1.91 billion at June 30, 2022. Net loans at June 30, 2023 increased 4.7% to a record $1.43 billion, compared to $1.37 billion at June 30, 2022. Total deposits at June 30, 2023 decreased 3.7% to $1.60 billion, compared to $1.66 billion at June 30, 2022, as LCNB experienced greater competition for deposit accounts. LCNB’s uninsured deposits to total deposits was approximately 11.7% for the quarter ended June 30, 2023. Assets Under Management Total assets managed at June 30, 2023 were a record $3.23 billion, compared to $3.04 billion at June 30, 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 second quarter, the total provision for credit losses was $30,000, compared to a total provision for credit losses of $377,000 for the 2022 second quarter. For the six months ended June 30, 2023, LCNB recorded a total recovery of credit losses of $27,000, compared to a total provision for credit losses of $426,000 for the six months ended June 30, 2022. Net charge-offs for the 2023 second quarter were $33,000, or 0.01% of average loans, compared to net charge-offs of $74,000, or 0.02% of average loans, for the same period last year. For the 2023 six-month period, net charge-offs were $49,000, or 0.01% of average loans, compared to net charge-offs of $99,000, or 0.03% of average loans, for the 2022 six-month period. Total nonperforming loans, which includes non-accrual loans and loans past due 90 days or more and still accruing interest, increased $111,000 from $599,000 or 0.04% of total loans at June 30, 2022, to $710,000 or 0.05% of total loans at June 30, 2023. Nonperforming assets to total assets was 0.04% at June 30, 2023, compared to 0.03% at June 30, 2022. Merger Agreement With Cincinnati Bancorp, Inc. LCNB and Cincinnati Bancorp, Inc. (“CNNB”), the holding company for Cincinnati Federal, a federally chartered stock savings and loan association, signed a definitive merger agreement on May 18, 2023 whereby LCNB will acquire CNNB in a stock-and-cash transaction. CNNB operates five full-service branch offices in Cincinnati, Ohio and Northern Kentucky. When completed, the transaction will significantly increase LCNB’s existing presence in the Cincinnati market and expand LCNB’s community banking franchise across the Ohio River into the Northern Kentucky market. Subject to the terms of the merger agreement, which has been approved by the Board of Directors of each company, CNNB shareholders will have the opportunity to elect to receive either 0.9274 shares of LCNB stock or $17.21 per share in cash for each share of CNNB common stock owned, subject to 80% of all CNNB shares being exchanged for LCNB common stock. Subject to regulatory approval, CNNB shareholder approval, and other customary conditions set forth in the definitive merger agreement, the transaction is anticipated to close in the fourth quarter of 2023. 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: the success, impact, and timing of the implementation of LCNB’s business strategies; the uncertainties for LCNB's business, results of operations and financial condition resulting from the recovery from the COVID-19 pandemic; 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 and the allowance for credit losses may be inadequate; LCNB may face competitive loss of customers; 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; 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; 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; 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 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 Six Months Ended 06-30-2023 03-31-2023 12-31-2022 09-30-2022 06-30-2022 06-30-2023 06-30-2022 Condensed Income Statement Interest income $ 18,703 17,918 17,719 16,704 16,208 36,621 31,330 Interest expense 4,526 3,976 1,511 1,260 1,041 8,502 1,940 Net interest income 14,177 13,942 16,208 15,444 15,167 28,119 29,390 Provision for (recovery of) credit losses 30 (57 ) (19 ) (157 ) 377 (27 ) 426 Net interest income after provision for (recovery of) credit losses 14,147 13,999 16,227 15,601 14,790 28,146 28,964 Non-interest income 3,646 3,581 3,629 3,581 3,528 7,227 7,078 Non-interest expense 12,078 12,525 12,065 12,350 11,469 24,603 23,719 Income before income taxes 5,715 5,055 7,791 6,832 6,849 10,770 12,323 Provision for income taxes 1,021 898 1,383 1,253 1,231 1,919 2,182 Net income $ 4,694 4,157 6,408 5,579 5,618 8,851 10,141 Supplemental Income Statement Information Amort/Accret income on acquired loans $ — 74 249 144 61 74 127 Tax-equivalent net interest income $ 14,223 13,989 16,257 15,495 15,217 28,212 29,490 Per Share Data Dividends per share $ 0.21 0.21 0.21 0.20 0.20 0.42 0.40 Basic earnings per common share $ 0.42 0.37 0.57 0.49 0.49 0.79 0.87 Diluted earnings per common share $ 0.42 0.37 0.57 0.49 0.49 0.79 0.87 Book value per share $ 18.20 18.22 17.82 17.31 17.84 18.20 17.84 Tangible book value per share $ 12.81 12.86 12.48 11.97 12.53 12.81 12.53 Weighted average common shares outstanding: Basic 11,056,308 11,189,170 11,211,328 11,284,225 11,337,805 11,122,371 11,576,873 Diluted 11,056,308 11,189,170 11,211,328 11,284,225 11,337,805 11,122,371 11,576,873 Shares outstanding at period end 11,116,080 11,202,063 11,259,080 11,293,639 11,374,515 11,116,080 11,374,515 Selected Financial Ratios Return on average assets 0.98 % 0.88 % 1.34 % 1.15 % 1.18 % 0.93 % 1.07 % Return on average equity 9.22 % 8.33 % 12.90 % 10.80 % 10.96 % 8.78 % 9.48 % Return on average tangible common equity 13.07 % 11.85 % 18.59 % 15.30 % 15.52 % 12.46 % 13.18 % Dividend payout ratio 50.00 % 56.76 % 36.84 % 40.82 % 40.82 % 53.16 % 45.98 % Net interest margin (tax equivalent) 3.28 % 3.28 % 3.77 % 3.54 % 3.54 % 3.28 % 3.45 % Efficiency ratio (tax equivalent) 67.59 % 71.29 % 60.67 % 64.74 % 61.18 % 69.42 % 64.86 % Selected Balance Sheet Items Cash and cash equivalents $ 26,020 31,876 22,701 29,460 31.815 Debt and equity securities 314,763 328,194 323,167 325,801 337,952 Loans: Commercial and industrial $ 127,553 124,240 120,236 114,694 114,971 Commercial, secured by real estate 961,173 932,208 938,022 908,130 905,703 Residential real estate 312,338 303,051 305,575 316,669 315,930 Consumer 29,007 28,611 28,290 29,451 30,308 Agricultural 9,955 7,523 10,054 8,630 7,412 Other, including deposit overdrafts 69 62 81 52 81 Deferred net origination fees (844 ) (865 ) (980 ) (937 ) (928 ) Loans, gross 1,439,251 1,394,830 1,401,278 1,376,689 1,373,477 Less allowance for credit losses on loans 7,956 7,858 5,646 5,644 5,833 Loans, net $ 1,431,295 1,386,972 1,395,632 1,371,045 1,367,644 Three Months Ended Six Months Ended 06-30-2023 03-31-2023 12-31-2022 09-30-2022 06-30-2022 06-30-2023 06-30-2022 Selected Balance Sheet Items, continued Allowance for Credit Losses on Loans: Allowance for credit losses, beginning of period $ 7,858 5,646 5,644 5,833 5,530 Cumulative change in accounting principle; adoption of ASU 2016-13 — 2,196 — — — Provision for (recovery of) credit losses 131 32 (19 ) (157 ) 377 Losses charged off (49 ) (36 ) (60 ) (53 ) (116 ) Recoveries 16 20 81 21 42 Allowance for credit losses, end of period $ 7,956 7,858 5,646 5,644 5,833 Total earning assets $ 1,756,157 1,736,829 1,726,902 1,714,196 $ 1,722,853 Total assets 1,950,763 1,924,531 1,919,121 1,904,700 1,912,901 Total deposits 1,596,709 1,603,881 1,604,970 1,657,370 1,658,825 Short-term borrowings 112,289 76,500 71,455 4,000 5,000 Long-term debt 18,122 18,598 19,072 24,539 25,000 Total shareholders’ equity 202,316 204,072 200,675 195,439 202,960 Equity to assets ratio 10.37 % 10.60 % 10.46 % 10.26 % 10.61 % Loans to deposits ratio 90.14 % 86.97 % 87.31 % 83.06 % 82.80 % Tangible common equity (TCE) $ 142,362 144,006 140,498 135,149 142,557 Tangible common assets (TCA) 1,890,809 1,864,465 1,858,944 1,844,410 1,852,224 TCE/TCA 7.53 % 7.72 % 7.56 % 7.33 % 7.70 % Selected Average Balance Sheet Items Cash and cash equivalents $ 30,742 35,712 24,330 35,763 $ 28,787 $ 33,205 $ 30,788 Debt and equity securities 321,537 327,123 323,195 338,299 338,149 324,320 339,432 Loans $ 1,405,939 1,389,385 1,383,809 1,384,520 $ 1,375,710 $ 1,397,708 $ 1,376,315 Less allowance for credit losses on loans 7,860 7,522 5,647 5,830 5,532 7,692 5,517 Net loans $ 1,398,079 1,381,863 1,378,162 1,378,690 $ 1,370,178 $ 1,390,016 $ 1,370,798 Total earning assets $ 1,737,256 1,729,008 1,711,524 1,736,031 1,722,503 1,733,160 1,724,938 Total assets 1,927,957 1,921,742 1,903,338 1,928,868 1,912,574 1,925,004 1,915,051 Total deposits 1,604,346 1,583,857 1,637,201 1,669,932 1,655,389 1,594,159 1,651,032 Short-term borrowings 79,485 94,591 21,433 5,728 18,263 86,996 15,399 Long-term debt 18,514 18,983 23,855 24,920 12,637 18,747 11,326 Total shareholders’ equity 204,085 202,419 197,014 205,051 205,645 203,257 215,629 Equity to assets ratio 10.59 % 10.53 % 10.35 % 10.63 % 10.75 % 10.56 % 11.26 % Loans to deposits ratio 87.63 % 87.72 % 84.52 % 82.91 % 83.10 % 87.68 % 83.36 % Asset Quality Net charge-offs (recoveries) $ 33 16 (21 ) 32 74 49 99 Other real estate owned — — — — — — — Non-accrual loans $ 454 701 391 465 599 454 599 Loans past due 90 days or more and still accruing 256 — 39 — 0 256 — Total nonperforming loans $ 710 701 430 465 599 710 599 Net charge-offs (recoveries) to average loans 0.01 % 0.00 % (0.01 )% 0.01 % 0.02 % 0.01 % 0.03 % Allowance for credit losses on loans to total loans 0.55 % 0.56 % 0.40 % 0.41 % 0.42 % Nonperforming loans to total loans 0.05 % 0.05 % 0.03 % 0.03 % 0.04 % Nonperforming assets to total assets 0.04 % 0.04 % 0.02 % 0.02 % 0.03 % Three Months Ended Six Months Ended 06-30-2023 03-31-2023 12-31-2022 09-30-2022 06-30-2022 06-30-2023 06-30-2022 Assets Under Management LCNB Corp. total assets $ 1,950,763 1,924,531 1,919,121 1,904,700 1,912,901 Trust and investments (fair value) 744,149 716,578 678,366 611,409 625,984 Mortgage loans serviced 143,093 142,167 148,412 145,317 153,557 Cash management 2,668 1,831 1,925 53,199 38,914 Brokerage accounts (fair value) 384,889 374,066 347,737 314,144 303,663 Total assets managed 3,225,562 3,159,173 3,095,561 3,028,769 3,035,019 Reconciliation of Net Income Less Tax-Effected Merger-Related Costs Net income $ 4,694 4,157 6,408 5,579 5,618 8,851 10,141 Merger-related costs 415 25 — — — 440 — Tax effect (63 ) (4 ) — — — (67 ) — Adjusted net income $ 5,046 4,178 6,408 5,579 5,618 9,224 10,141 Adjusted basic and diluted earnings per share $ 0.45 0.37 0.57 0.49 0.49 0.82 0.87 Adjusted return on average assets 1.05 % 0.88 % 1.34 % 1.15 % 1.18 % 0.97 % 1.07 % Adjusted return on average equity 9.92 % 8.37 % 12.90 % 10.80 % 10.96 % 9.15 % 9.48 % LCNB CORP. AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS (Dollars in thousands) June 30, 2023 (Unaudited) December 31, 2022 ASSETS: Cash and due from banks $ 23,877 20,244 Interest-bearing demand deposits 2,143 2,457 Total cash and cash equivalents 26,020 22,701 Investment securities: Equity securities with a readily determinable fair value, at fair value 1,279 2,273 Equity securities without a readily determinable fair value, at cost 2,099 2,099 Debt securities, available-for-sale, at fair value 281,156 289,850 Debt securities, held-to-maturity, at cost, net of allowance for credit losses 19,117 19,878 Federal Reserve Bank stock, at cost 4,652 4,652 Federal Home Loan Bank stock, at cost 6,460 4,415 Loans, net of allowance for credit losses 1,431,295 1,395,632 Premises and equipment, net 33,145 33,042 Operating leases right of use asset 6,260 6,525 Goodwill 59,221 59,221 Core deposit and other intangibles 1,497 1,827 Bank owned life insurance 44,846 44,298 Interest receivable 7,811 7,482 Other assets 25,905 25,503 TOTAL ASSETS $ 1,950,763 1,919,398 LIABILITIES: Deposits: Noninterest-bearing $ 480,288 505,824 Interest-bearing 1,116,421 1,099,146 Total deposits 1,596,709 1,604,970 Short-term borrowings 112,289 71,455 Long-term debt 18,122 19,072 Operating lease liabilities 6,434 6,647 Allowance for credit losses on off-balance sheet credit exposures 381 — Accrued interest and other liabilities 14,512 16,579 TOTAL LIABILITIES 1,748,447 1,718,723 COMMITMENTS AND CONTINGENT LIABILITIES SHAREHOLDERS' EQUITY: Preferred shares – no par value, authorized 1,000,000 shares, none outstanding 123,422 122,839 Common shares –no par value, authorized 19,000,000; issued 14,327,463 and 14,270,550 shares at June 30, 2023 and December 31, 2022, respectively; outstanding 11,116,080 and 11,259,080 shares at March 31, 2023 and December 31, 2022, respectively 21,249 21,230 Retained earnings 141,431 139,249 Treasury shares at cost, 3,211,383 and 3,011,470 shares at June 30, 2023 and December 31, 2022, respectively (56,015 ) (52,689 ) Accumulated other comprehensive loss, net of taxes (27,771 ) (29,954 ) TOTAL SHAREHOLDERS' EQUITY 202,316 200,675 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,950,763 1,919,398 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, 2023 2022 2023 2022 INTEREST INCOME: Interest and fees on loans $ 16,763 14,548 32,906 28,334 Dividends on equity securities with a readily determinable fair value 8 14 25 26 Dividends on equity securities without a readily determinable fair value 30 5 50 10 Interest on debt securities, taxable 1,323 1,254 2,666 2,349 Interest on debt securities, non-taxable 174 188 350 377 Other investments 405 199 624 234 TOTAL INTEREST INCOME 18,703 16,208 36,621 31,330 INTEREST EXPENSE: Interest on deposits 3,335 775 5,791 1,514 Interest on short-term borrowings 1,008 163 2,312 249 Interest on long-term debt 183 103 399 177 TOTAL INTEREST EXPENSE 4,526 1,041 8,502 1,940 NET INTEREST INCOME 14,177 15,167 28,119 29,390 Provision for credit losses on loans 132 377 164 426 Provision for (recovery of) credit losses on debt securities, held-to-maturity (1 ) — (1 ) — Recovery of credit losses on off-balance sheet credit exposures (101 ) — (190 ) — TOTAL PROVISION FOR (RECOVERY OF) CREDIT LOSSES 30 377 (27 ) 426 NET INTEREST INCOME AFTER PROVISION FOR (RECOVERY OF) CREDIT LOSSES 14,147 14,790 28,146 28,964 NON-INTEREST INCOME: Fiduciary income 1,787 1,643 3,527 3,338 Service charges and fees on deposit accounts 1,445 1,546 2,927 2,952 Bank owned life insurance income 277 269 548 534 Gains from sales of loans 3 64 9 188 Other operating income 134 6 216 66 TOTAL NON-INTEREST INCOME 3,646 3,528 7,227 7,078 NON-INTEREST EXPENSE: Salaries and employee benefits 7,061 7,014 14,410 14,229 Equipment expenses 417 428 778 836 Occupancy expense, net 599 735 1,562 1,510 State financial institutions tax 396 437 793 873 Marketing 320 368 512 630 Amortization of intangibles 112 112 223 252 FDIC insurance premiums, net 224 134 439 260 Contracted services 666 679 1,307 1,289 Other real estate owned, net 1 (879 ) 2 (879 ) Merger-related expenses 415 — 440 — Other non-interest expense 1,867 2,441 4,137 4,719 TOTAL NON-INTEREST EXPENSE 12,078 11,469 24,603 23,719 INCOME BEFORE INCOME TAXES 5,715 6,849 10,770 12,323 PROVISION FOR INCOME TAXES 1,021 1,231 1,919 2,182 NET INCOME $ 4,694 5,618 8,851 10,141 2023 2022 2023 2022 Earnings per common share: Basic 0.42 0.49 0.79 0.87 Diluted 0.42 0.49 0.79 0.87 Weighted average common shares outstanding: Basic 11,056,308 11,337,805 11,122,371 11,576,873 Diluted 11,056,308 11,337,805 11,122,371 11,576,873 View source version on businesswire.com: https://www.businesswire.com/news/home/20230720470049/en/Contacts 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 Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. By accessing this page, you agree to the following Privacy Policy and Terms and Conditions.
LCNB Corp. Reports Record Financial Results for the Three and Six Months Ended June 30, 2023 By: LCNB Corp. via Business Wire July 21, 2023 at 08:00 AM EDT Ended the Second Quarter with a Stable Deposit Base and a 90.14% Loan to Deposit Ratio Net Loans Increased 4.7% Year-over-Year to a Record of $1.43 Billion Asset Quality Remains Excellent with Total Nonperforming Loans to Total Loans of 0.05% at June 30, 2023 LCNB Wealth Management Assets Up 21.4% Year-over-Year to a Record $1.13 Billion Cincinnati Bancorp, Inc. Acquisition Expected to Close in the 2023 Fourth Quarter LCNB Corp. ("LCNB") (NASDAQ: LCNB) today announced financial results for the three and six months ended June 30, 2023. Commenting on the financial results, LCNB President and Chief Executive Officer Eric Meilstrup said, “I am pleased with our favorable second quarter performance and the progress we are making despite a difficult operating environment. During the second quarter, we increased net income and earnings per share from first quarter levels, maintained excellent asset quality, and achieved record net loans, LCNB Wealth Management assets, and total assets. In addition, our flexible balance sheet and solid capital levels allowed us to support our organic growth strategies and return capital back to our shareholders.” “While we expect the challenging banking landscape to persist throughout the second half of 2023, we remain focused on managing the factors under our control. This includes controlling operating expenses, managing our balance sheet, maintaining excellent asset quality, and supporting our local communities. In addition, we continue to make progress completing the acquisition of Cincinnati Bancorp, which is expected to close during the 2023 fourth quarter. Once finalized, we expect LCNB will have total assets of approximately $2.3 billion with 33 banking offices in Ohio and one branch office in Northern Kentucky. With an expanded position within the greater Cincinnati and Northern Kentucky markets, we believe this transaction should enhance LCNB’s long-term profitability metrics and earnings growth rate in the future. We are excited to complete the acquisition and welcome Cincinnati Bancorp’s customers, employees, and shareholders to LCNB,” concluded Mr. Meilstrup. Income Statement Net income for the 2023 second quarter was $4,694,000, compared to $5,618,000 for the same period last year. Earnings per basic and diluted share for the 2023 second quarter were $0.42, compared to $0.49 for the same period last year. Net income for the six-month period ended June 30, 2023 was $8,851,000, compared to $10,141,000 for the same period last year. Earnings per basic and diluted share for the six-month period ended June 30, 2023 were $0.79, compared to $0.87 for the same period last year. Adjusted net income for the 2023 second quarter was $5.0 million, or $0.45 per diluted share, compared to $5.6 million, or $0.49 per diluted share, in the prior year quarter. Adjusted net income accounts for the impact of one-time merger-related expenses, net of tax, associated with the Cincinnati Bancorp, Inc. acquisition. Adjusted net income for the first half ended June 30, 2023 was $9.2 million, or $0.82 per diluted share, compared to $10.1 million, or $0.87 per diluted share, in the prior year period. Net interest income for the three months ended June 30, 2023 was $14,177,000, compared to $15,167,000 for the comparable period in 2022. Net interest income for the six-month period ended June 30, 2023 was $28,119,000, as compared to $29,390,000 in the same period last year. Contributing to the variances for both the three and six-month periods were increases in the amount of short-term borrowings combined with higher interest expense associated with the rapid year-over-year increase in the Effective Federal Funds Rate. For the 2023 second quarter, LCNB’s tax equivalent net interest margin was 3.28%, compared to 3.54% for the same period last year. Non-interest income for the three months ended June 30, 2023 increased $118,000, or by 3.3%, to $3,646,000, compared to $3,528,000 for the same period last year. For the six months ended June 30, 2023, non-interest income increased $149,000, or by 2.1%, to $7,227,000, compared to $7,078,000 for the same period last year. The increase in non-interest income for both the three and six-month periods were primarily due to higher fiduciary income and a decrease in net unrealized losses recognized on equity securities, partially offset by lower gains on sales of loans. Also contributing to the increase during the six-month period were gains recognized on the sale of equity securities during the 2023 first quarter. Non-interest expense for the three months ended June 30, 2023 was $609,000 greater than the comparable period in 2022, primarily due to $415,000 in one-time merger-related expenses. For the first half ended June 30, 2023, non-interest expense was $884,000 higher than the comparable period in 2022, partially due to $440,000 in merger-related expenses. In addition, non-interest expense for the 2022 second quarter benefited from an $889,000 gain from the sale of other real estate owned. Capital Allocation During the 2023 second quarter, LCNB invested $1.5 million to repurchase 92,885 shares of its outstanding stock at an average price of $15.86 per share. Year-to-date, LCNB invested $3.3 million to repurchase 199,913 shares of its outstanding stock at an average price of $16.47 per share. This equates to approximately 1.78% of the Company’s outstanding common stock prior to the repurchase. At June 30, 2023, LCNB had 315,047 shares remaining under its February 2023 share repurchase program. For the second quarter ended June 30, 2023, LCNB paid $0.21 per share in dividends, a 5.0% increase from $0.20 per share for the second quarter last year. Year-to-date, LCNB paid $0.42 per share in dividends, compared to $0.40 per share for the first half last year. Balance Sheet Total assets at June 30, 2023 increased 1.9% to a record $1.95 billion from $1.91 billion at June 30, 2022. Net loans at June 30, 2023 increased 4.7% to a record $1.43 billion, compared to $1.37 billion at June 30, 2022. Total deposits at June 30, 2023 decreased 3.7% to $1.60 billion, compared to $1.66 billion at June 30, 2022, as LCNB experienced greater competition for deposit accounts. LCNB’s uninsured deposits to total deposits was approximately 11.7% for the quarter ended June 30, 2023. Assets Under Management Total assets managed at June 30, 2023 were a record $3.23 billion, compared to $3.04 billion at June 30, 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 second quarter, the total provision for credit losses was $30,000, compared to a total provision for credit losses of $377,000 for the 2022 second quarter. For the six months ended June 30, 2023, LCNB recorded a total recovery of credit losses of $27,000, compared to a total provision for credit losses of $426,000 for the six months ended June 30, 2022. Net charge-offs for the 2023 second quarter were $33,000, or 0.01% of average loans, compared to net charge-offs of $74,000, or 0.02% of average loans, for the same period last year. For the 2023 six-month period, net charge-offs were $49,000, or 0.01% of average loans, compared to net charge-offs of $99,000, or 0.03% of average loans, for the 2022 six-month period. Total nonperforming loans, which includes non-accrual loans and loans past due 90 days or more and still accruing interest, increased $111,000 from $599,000 or 0.04% of total loans at June 30, 2022, to $710,000 or 0.05% of total loans at June 30, 2023. Nonperforming assets to total assets was 0.04% at June 30, 2023, compared to 0.03% at June 30, 2022. Merger Agreement With Cincinnati Bancorp, Inc. LCNB and Cincinnati Bancorp, Inc. (“CNNB”), the holding company for Cincinnati Federal, a federally chartered stock savings and loan association, signed a definitive merger agreement on May 18, 2023 whereby LCNB will acquire CNNB in a stock-and-cash transaction. CNNB operates five full-service branch offices in Cincinnati, Ohio and Northern Kentucky. When completed, the transaction will significantly increase LCNB’s existing presence in the Cincinnati market and expand LCNB’s community banking franchise across the Ohio River into the Northern Kentucky market. Subject to the terms of the merger agreement, which has been approved by the Board of Directors of each company, CNNB shareholders will have the opportunity to elect to receive either 0.9274 shares of LCNB stock or $17.21 per share in cash for each share of CNNB common stock owned, subject to 80% of all CNNB shares being exchanged for LCNB common stock. Subject to regulatory approval, CNNB shareholder approval, and other customary conditions set forth in the definitive merger agreement, the transaction is anticipated to close in the fourth quarter of 2023. 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: the success, impact, and timing of the implementation of LCNB’s business strategies; the uncertainties for LCNB's business, results of operations and financial condition resulting from the recovery from the COVID-19 pandemic; 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 and the allowance for credit losses may be inadequate; LCNB may face competitive loss of customers; 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; 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; 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; 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 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 Six Months Ended 06-30-2023 03-31-2023 12-31-2022 09-30-2022 06-30-2022 06-30-2023 06-30-2022 Condensed Income Statement Interest income $ 18,703 17,918 17,719 16,704 16,208 36,621 31,330 Interest expense 4,526 3,976 1,511 1,260 1,041 8,502 1,940 Net interest income 14,177 13,942 16,208 15,444 15,167 28,119 29,390 Provision for (recovery of) credit losses 30 (57 ) (19 ) (157 ) 377 (27 ) 426 Net interest income after provision for (recovery of) credit losses 14,147 13,999 16,227 15,601 14,790 28,146 28,964 Non-interest income 3,646 3,581 3,629 3,581 3,528 7,227 7,078 Non-interest expense 12,078 12,525 12,065 12,350 11,469 24,603 23,719 Income before income taxes 5,715 5,055 7,791 6,832 6,849 10,770 12,323 Provision for income taxes 1,021 898 1,383 1,253 1,231 1,919 2,182 Net income $ 4,694 4,157 6,408 5,579 5,618 8,851 10,141 Supplemental Income Statement Information Amort/Accret income on acquired loans $ — 74 249 144 61 74 127 Tax-equivalent net interest income $ 14,223 13,989 16,257 15,495 15,217 28,212 29,490 Per Share Data Dividends per share $ 0.21 0.21 0.21 0.20 0.20 0.42 0.40 Basic earnings per common share $ 0.42 0.37 0.57 0.49 0.49 0.79 0.87 Diluted earnings per common share $ 0.42 0.37 0.57 0.49 0.49 0.79 0.87 Book value per share $ 18.20 18.22 17.82 17.31 17.84 18.20 17.84 Tangible book value per share $ 12.81 12.86 12.48 11.97 12.53 12.81 12.53 Weighted average common shares outstanding: Basic 11,056,308 11,189,170 11,211,328 11,284,225 11,337,805 11,122,371 11,576,873 Diluted 11,056,308 11,189,170 11,211,328 11,284,225 11,337,805 11,122,371 11,576,873 Shares outstanding at period end 11,116,080 11,202,063 11,259,080 11,293,639 11,374,515 11,116,080 11,374,515 Selected Financial Ratios Return on average assets 0.98 % 0.88 % 1.34 % 1.15 % 1.18 % 0.93 % 1.07 % Return on average equity 9.22 % 8.33 % 12.90 % 10.80 % 10.96 % 8.78 % 9.48 % Return on average tangible common equity 13.07 % 11.85 % 18.59 % 15.30 % 15.52 % 12.46 % 13.18 % Dividend payout ratio 50.00 % 56.76 % 36.84 % 40.82 % 40.82 % 53.16 % 45.98 % Net interest margin (tax equivalent) 3.28 % 3.28 % 3.77 % 3.54 % 3.54 % 3.28 % 3.45 % Efficiency ratio (tax equivalent) 67.59 % 71.29 % 60.67 % 64.74 % 61.18 % 69.42 % 64.86 % Selected Balance Sheet Items Cash and cash equivalents $ 26,020 31,876 22,701 29,460 31.815 Debt and equity securities 314,763 328,194 323,167 325,801 337,952 Loans: Commercial and industrial $ 127,553 124,240 120,236 114,694 114,971 Commercial, secured by real estate 961,173 932,208 938,022 908,130 905,703 Residential real estate 312,338 303,051 305,575 316,669 315,930 Consumer 29,007 28,611 28,290 29,451 30,308 Agricultural 9,955 7,523 10,054 8,630 7,412 Other, including deposit overdrafts 69 62 81 52 81 Deferred net origination fees (844 ) (865 ) (980 ) (937 ) (928 ) Loans, gross 1,439,251 1,394,830 1,401,278 1,376,689 1,373,477 Less allowance for credit losses on loans 7,956 7,858 5,646 5,644 5,833 Loans, net $ 1,431,295 1,386,972 1,395,632 1,371,045 1,367,644 Three Months Ended Six Months Ended 06-30-2023 03-31-2023 12-31-2022 09-30-2022 06-30-2022 06-30-2023 06-30-2022 Selected Balance Sheet Items, continued Allowance for Credit Losses on Loans: Allowance for credit losses, beginning of period $ 7,858 5,646 5,644 5,833 5,530 Cumulative change in accounting principle; adoption of ASU 2016-13 — 2,196 — — — Provision for (recovery of) credit losses 131 32 (19 ) (157 ) 377 Losses charged off (49 ) (36 ) (60 ) (53 ) (116 ) Recoveries 16 20 81 21 42 Allowance for credit losses, end of period $ 7,956 7,858 5,646 5,644 5,833 Total earning assets $ 1,756,157 1,736,829 1,726,902 1,714,196 $ 1,722,853 Total assets 1,950,763 1,924,531 1,919,121 1,904,700 1,912,901 Total deposits 1,596,709 1,603,881 1,604,970 1,657,370 1,658,825 Short-term borrowings 112,289 76,500 71,455 4,000 5,000 Long-term debt 18,122 18,598 19,072 24,539 25,000 Total shareholders’ equity 202,316 204,072 200,675 195,439 202,960 Equity to assets ratio 10.37 % 10.60 % 10.46 % 10.26 % 10.61 % Loans to deposits ratio 90.14 % 86.97 % 87.31 % 83.06 % 82.80 % Tangible common equity (TCE) $ 142,362 144,006 140,498 135,149 142,557 Tangible common assets (TCA) 1,890,809 1,864,465 1,858,944 1,844,410 1,852,224 TCE/TCA 7.53 % 7.72 % 7.56 % 7.33 % 7.70 % Selected Average Balance Sheet Items Cash and cash equivalents $ 30,742 35,712 24,330 35,763 $ 28,787 $ 33,205 $ 30,788 Debt and equity securities 321,537 327,123 323,195 338,299 338,149 324,320 339,432 Loans $ 1,405,939 1,389,385 1,383,809 1,384,520 $ 1,375,710 $ 1,397,708 $ 1,376,315 Less allowance for credit losses on loans 7,860 7,522 5,647 5,830 5,532 7,692 5,517 Net loans $ 1,398,079 1,381,863 1,378,162 1,378,690 $ 1,370,178 $ 1,390,016 $ 1,370,798 Total earning assets $ 1,737,256 1,729,008 1,711,524 1,736,031 1,722,503 1,733,160 1,724,938 Total assets 1,927,957 1,921,742 1,903,338 1,928,868 1,912,574 1,925,004 1,915,051 Total deposits 1,604,346 1,583,857 1,637,201 1,669,932 1,655,389 1,594,159 1,651,032 Short-term borrowings 79,485 94,591 21,433 5,728 18,263 86,996 15,399 Long-term debt 18,514 18,983 23,855 24,920 12,637 18,747 11,326 Total shareholders’ equity 204,085 202,419 197,014 205,051 205,645 203,257 215,629 Equity to assets ratio 10.59 % 10.53 % 10.35 % 10.63 % 10.75 % 10.56 % 11.26 % Loans to deposits ratio 87.63 % 87.72 % 84.52 % 82.91 % 83.10 % 87.68 % 83.36 % Asset Quality Net charge-offs (recoveries) $ 33 16 (21 ) 32 74 49 99 Other real estate owned — — — — — — — Non-accrual loans $ 454 701 391 465 599 454 599 Loans past due 90 days or more and still accruing 256 — 39 — 0 256 — Total nonperforming loans $ 710 701 430 465 599 710 599 Net charge-offs (recoveries) to average loans 0.01 % 0.00 % (0.01 )% 0.01 % 0.02 % 0.01 % 0.03 % Allowance for credit losses on loans to total loans 0.55 % 0.56 % 0.40 % 0.41 % 0.42 % Nonperforming loans to total loans 0.05 % 0.05 % 0.03 % 0.03 % 0.04 % Nonperforming assets to total assets 0.04 % 0.04 % 0.02 % 0.02 % 0.03 % Three Months Ended Six Months Ended 06-30-2023 03-31-2023 12-31-2022 09-30-2022 06-30-2022 06-30-2023 06-30-2022 Assets Under Management LCNB Corp. total assets $ 1,950,763 1,924,531 1,919,121 1,904,700 1,912,901 Trust and investments (fair value) 744,149 716,578 678,366 611,409 625,984 Mortgage loans serviced 143,093 142,167 148,412 145,317 153,557 Cash management 2,668 1,831 1,925 53,199 38,914 Brokerage accounts (fair value) 384,889 374,066 347,737 314,144 303,663 Total assets managed 3,225,562 3,159,173 3,095,561 3,028,769 3,035,019 Reconciliation of Net Income Less Tax-Effected Merger-Related Costs Net income $ 4,694 4,157 6,408 5,579 5,618 8,851 10,141 Merger-related costs 415 25 — — — 440 — Tax effect (63 ) (4 ) — — — (67 ) — Adjusted net income $ 5,046 4,178 6,408 5,579 5,618 9,224 10,141 Adjusted basic and diluted earnings per share $ 0.45 0.37 0.57 0.49 0.49 0.82 0.87 Adjusted return on average assets 1.05 % 0.88 % 1.34 % 1.15 % 1.18 % 0.97 % 1.07 % Adjusted return on average equity 9.92 % 8.37 % 12.90 % 10.80 % 10.96 % 9.15 % 9.48 % LCNB CORP. AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS (Dollars in thousands) June 30, 2023 (Unaudited) December 31, 2022 ASSETS: Cash and due from banks $ 23,877 20,244 Interest-bearing demand deposits 2,143 2,457 Total cash and cash equivalents 26,020 22,701 Investment securities: Equity securities with a readily determinable fair value, at fair value 1,279 2,273 Equity securities without a readily determinable fair value, at cost 2,099 2,099 Debt securities, available-for-sale, at fair value 281,156 289,850 Debt securities, held-to-maturity, at cost, net of allowance for credit losses 19,117 19,878 Federal Reserve Bank stock, at cost 4,652 4,652 Federal Home Loan Bank stock, at cost 6,460 4,415 Loans, net of allowance for credit losses 1,431,295 1,395,632 Premises and equipment, net 33,145 33,042 Operating leases right of use asset 6,260 6,525 Goodwill 59,221 59,221 Core deposit and other intangibles 1,497 1,827 Bank owned life insurance 44,846 44,298 Interest receivable 7,811 7,482 Other assets 25,905 25,503 TOTAL ASSETS $ 1,950,763 1,919,398 LIABILITIES: Deposits: Noninterest-bearing $ 480,288 505,824 Interest-bearing 1,116,421 1,099,146 Total deposits 1,596,709 1,604,970 Short-term borrowings 112,289 71,455 Long-term debt 18,122 19,072 Operating lease liabilities 6,434 6,647 Allowance for credit losses on off-balance sheet credit exposures 381 — Accrued interest and other liabilities 14,512 16,579 TOTAL LIABILITIES 1,748,447 1,718,723 COMMITMENTS AND CONTINGENT LIABILITIES SHAREHOLDERS' EQUITY: Preferred shares – no par value, authorized 1,000,000 shares, none outstanding 123,422 122,839 Common shares –no par value, authorized 19,000,000; issued 14,327,463 and 14,270,550 shares at June 30, 2023 and December 31, 2022, respectively; outstanding 11,116,080 and 11,259,080 shares at March 31, 2023 and December 31, 2022, respectively 21,249 21,230 Retained earnings 141,431 139,249 Treasury shares at cost, 3,211,383 and 3,011,470 shares at June 30, 2023 and December 31, 2022, respectively (56,015 ) (52,689 ) Accumulated other comprehensive loss, net of taxes (27,771 ) (29,954 ) TOTAL SHAREHOLDERS' EQUITY 202,316 200,675 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,950,763 1,919,398 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, 2023 2022 2023 2022 INTEREST INCOME: Interest and fees on loans $ 16,763 14,548 32,906 28,334 Dividends on equity securities with a readily determinable fair value 8 14 25 26 Dividends on equity securities without a readily determinable fair value 30 5 50 10 Interest on debt securities, taxable 1,323 1,254 2,666 2,349 Interest on debt securities, non-taxable 174 188 350 377 Other investments 405 199 624 234 TOTAL INTEREST INCOME 18,703 16,208 36,621 31,330 INTEREST EXPENSE: Interest on deposits 3,335 775 5,791 1,514 Interest on short-term borrowings 1,008 163 2,312 249 Interest on long-term debt 183 103 399 177 TOTAL INTEREST EXPENSE 4,526 1,041 8,502 1,940 NET INTEREST INCOME 14,177 15,167 28,119 29,390 Provision for credit losses on loans 132 377 164 426 Provision for (recovery of) credit losses on debt securities, held-to-maturity (1 ) — (1 ) — Recovery of credit losses on off-balance sheet credit exposures (101 ) — (190 ) — TOTAL PROVISION FOR (RECOVERY OF) CREDIT LOSSES 30 377 (27 ) 426 NET INTEREST INCOME AFTER PROVISION FOR (RECOVERY OF) CREDIT LOSSES 14,147 14,790 28,146 28,964 NON-INTEREST INCOME: Fiduciary income 1,787 1,643 3,527 3,338 Service charges and fees on deposit accounts 1,445 1,546 2,927 2,952 Bank owned life insurance income 277 269 548 534 Gains from sales of loans 3 64 9 188 Other operating income 134 6 216 66 TOTAL NON-INTEREST INCOME 3,646 3,528 7,227 7,078 NON-INTEREST EXPENSE: Salaries and employee benefits 7,061 7,014 14,410 14,229 Equipment expenses 417 428 778 836 Occupancy expense, net 599 735 1,562 1,510 State financial institutions tax 396 437 793 873 Marketing 320 368 512 630 Amortization of intangibles 112 112 223 252 FDIC insurance premiums, net 224 134 439 260 Contracted services 666 679 1,307 1,289 Other real estate owned, net 1 (879 ) 2 (879 ) Merger-related expenses 415 — 440 — Other non-interest expense 1,867 2,441 4,137 4,719 TOTAL NON-INTEREST EXPENSE 12,078 11,469 24,603 23,719 INCOME BEFORE INCOME TAXES 5,715 6,849 10,770 12,323 PROVISION FOR INCOME TAXES 1,021 1,231 1,919 2,182 NET INCOME $ 4,694 5,618 8,851 10,141 2023 2022 2023 2022 Earnings per common share: Basic 0.42 0.49 0.79 0.87 Diluted 0.42 0.49 0.79 0.87 Weighted average common shares outstanding: Basic 11,056,308 11,337,805 11,122,371 11,576,873 Diluted 11,056,308 11,337,805 11,122,371 11,576,873 View source version on businesswire.com: https://www.businesswire.com/news/home/20230720470049/en/Contacts 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
Ended the Second Quarter with a Stable Deposit Base and a 90.14% Loan to Deposit Ratio Net Loans Increased 4.7% Year-over-Year to a Record of $1.43 Billion Asset Quality Remains Excellent with Total Nonperforming Loans to Total Loans of 0.05% at June 30, 2023 LCNB Wealth Management Assets Up 21.4% Year-over-Year to a Record $1.13 Billion Cincinnati Bancorp, Inc. Acquisition Expected to Close in the 2023 Fourth Quarter
LCNB Corp. ("LCNB") (NASDAQ: LCNB) today announced financial results for the three and six months ended June 30, 2023. Commenting on the financial results, LCNB President and Chief Executive Officer Eric Meilstrup said, “I am pleased with our favorable second quarter performance and the progress we are making despite a difficult operating environment. During the second quarter, we increased net income and earnings per share from first quarter levels, maintained excellent asset quality, and achieved record net loans, LCNB Wealth Management assets, and total assets. In addition, our flexible balance sheet and solid capital levels allowed us to support our organic growth strategies and return capital back to our shareholders.” “While we expect the challenging banking landscape to persist throughout the second half of 2023, we remain focused on managing the factors under our control. This includes controlling operating expenses, managing our balance sheet, maintaining excellent asset quality, and supporting our local communities. In addition, we continue to make progress completing the acquisition of Cincinnati Bancorp, which is expected to close during the 2023 fourth quarter. Once finalized, we expect LCNB will have total assets of approximately $2.3 billion with 33 banking offices in Ohio and one branch office in Northern Kentucky. With an expanded position within the greater Cincinnati and Northern Kentucky markets, we believe this transaction should enhance LCNB’s long-term profitability metrics and earnings growth rate in the future. We are excited to complete the acquisition and welcome Cincinnati Bancorp’s customers, employees, and shareholders to LCNB,” concluded Mr. Meilstrup. Income Statement Net income for the 2023 second quarter was $4,694,000, compared to $5,618,000 for the same period last year. Earnings per basic and diluted share for the 2023 second quarter were $0.42, compared to $0.49 for the same period last year. Net income for the six-month period ended June 30, 2023 was $8,851,000, compared to $10,141,000 for the same period last year. Earnings per basic and diluted share for the six-month period ended June 30, 2023 were $0.79, compared to $0.87 for the same period last year. Adjusted net income for the 2023 second quarter was $5.0 million, or $0.45 per diluted share, compared to $5.6 million, or $0.49 per diluted share, in the prior year quarter. Adjusted net income accounts for the impact of one-time merger-related expenses, net of tax, associated with the Cincinnati Bancorp, Inc. acquisition. Adjusted net income for the first half ended June 30, 2023 was $9.2 million, or $0.82 per diluted share, compared to $10.1 million, or $0.87 per diluted share, in the prior year period. Net interest income for the three months ended June 30, 2023 was $14,177,000, compared to $15,167,000 for the comparable period in 2022. Net interest income for the six-month period ended June 30, 2023 was $28,119,000, as compared to $29,390,000 in the same period last year. Contributing to the variances for both the three and six-month periods were increases in the amount of short-term borrowings combined with higher interest expense associated with the rapid year-over-year increase in the Effective Federal Funds Rate. For the 2023 second quarter, LCNB’s tax equivalent net interest margin was 3.28%, compared to 3.54% for the same period last year. Non-interest income for the three months ended June 30, 2023 increased $118,000, or by 3.3%, to $3,646,000, compared to $3,528,000 for the same period last year. For the six months ended June 30, 2023, non-interest income increased $149,000, or by 2.1%, to $7,227,000, compared to $7,078,000 for the same period last year. The increase in non-interest income for both the three and six-month periods were primarily due to higher fiduciary income and a decrease in net unrealized losses recognized on equity securities, partially offset by lower gains on sales of loans. Also contributing to the increase during the six-month period were gains recognized on the sale of equity securities during the 2023 first quarter. Non-interest expense for the three months ended June 30, 2023 was $609,000 greater than the comparable period in 2022, primarily due to $415,000 in one-time merger-related expenses. For the first half ended June 30, 2023, non-interest expense was $884,000 higher than the comparable period in 2022, partially due to $440,000 in merger-related expenses. In addition, non-interest expense for the 2022 second quarter benefited from an $889,000 gain from the sale of other real estate owned. Capital Allocation During the 2023 second quarter, LCNB invested $1.5 million to repurchase 92,885 shares of its outstanding stock at an average price of $15.86 per share. Year-to-date, LCNB invested $3.3 million to repurchase 199,913 shares of its outstanding stock at an average price of $16.47 per share. This equates to approximately 1.78% of the Company’s outstanding common stock prior to the repurchase. At June 30, 2023, LCNB had 315,047 shares remaining under its February 2023 share repurchase program. For the second quarter ended June 30, 2023, LCNB paid $0.21 per share in dividends, a 5.0% increase from $0.20 per share for the second quarter last year. Year-to-date, LCNB paid $0.42 per share in dividends, compared to $0.40 per share for the first half last year. Balance Sheet Total assets at June 30, 2023 increased 1.9% to a record $1.95 billion from $1.91 billion at June 30, 2022. Net loans at June 30, 2023 increased 4.7% to a record $1.43 billion, compared to $1.37 billion at June 30, 2022. Total deposits at June 30, 2023 decreased 3.7% to $1.60 billion, compared to $1.66 billion at June 30, 2022, as LCNB experienced greater competition for deposit accounts. LCNB’s uninsured deposits to total deposits was approximately 11.7% for the quarter ended June 30, 2023. Assets Under Management Total assets managed at June 30, 2023 were a record $3.23 billion, compared to $3.04 billion at June 30, 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 second quarter, the total provision for credit losses was $30,000, compared to a total provision for credit losses of $377,000 for the 2022 second quarter. For the six months ended June 30, 2023, LCNB recorded a total recovery of credit losses of $27,000, compared to a total provision for credit losses of $426,000 for the six months ended June 30, 2022. Net charge-offs for the 2023 second quarter were $33,000, or 0.01% of average loans, compared to net charge-offs of $74,000, or 0.02% of average loans, for the same period last year. For the 2023 six-month period, net charge-offs were $49,000, or 0.01% of average loans, compared to net charge-offs of $99,000, or 0.03% of average loans, for the 2022 six-month period. Total nonperforming loans, which includes non-accrual loans and loans past due 90 days or more and still accruing interest, increased $111,000 from $599,000 or 0.04% of total loans at June 30, 2022, to $710,000 or 0.05% of total loans at June 30, 2023. Nonperforming assets to total assets was 0.04% at June 30, 2023, compared to 0.03% at June 30, 2022. Merger Agreement With Cincinnati Bancorp, Inc. LCNB and Cincinnati Bancorp, Inc. (“CNNB”), the holding company for Cincinnati Federal, a federally chartered stock savings and loan association, signed a definitive merger agreement on May 18, 2023 whereby LCNB will acquire CNNB in a stock-and-cash transaction. CNNB operates five full-service branch offices in Cincinnati, Ohio and Northern Kentucky. When completed, the transaction will significantly increase LCNB’s existing presence in the Cincinnati market and expand LCNB’s community banking franchise across the Ohio River into the Northern Kentucky market. Subject to the terms of the merger agreement, which has been approved by the Board of Directors of each company, CNNB shareholders will have the opportunity to elect to receive either 0.9274 shares of LCNB stock or $17.21 per share in cash for each share of CNNB common stock owned, subject to 80% of all CNNB shares being exchanged for LCNB common stock. Subject to regulatory approval, CNNB shareholder approval, and other customary conditions set forth in the definitive merger agreement, the transaction is anticipated to close in the fourth quarter of 2023. 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: the success, impact, and timing of the implementation of LCNB’s business strategies; the uncertainties for LCNB's business, results of operations and financial condition resulting from the recovery from the COVID-19 pandemic; 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 and the allowance for credit losses may be inadequate; LCNB may face competitive loss of customers; 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; 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; 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; 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 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 Six Months Ended 06-30-2023 03-31-2023 12-31-2022 09-30-2022 06-30-2022 06-30-2023 06-30-2022 Condensed Income Statement Interest income $ 18,703 17,918 17,719 16,704 16,208 36,621 31,330 Interest expense 4,526 3,976 1,511 1,260 1,041 8,502 1,940 Net interest income 14,177 13,942 16,208 15,444 15,167 28,119 29,390 Provision for (recovery of) credit losses 30 (57 ) (19 ) (157 ) 377 (27 ) 426 Net interest income after provision for (recovery of) credit losses 14,147 13,999 16,227 15,601 14,790 28,146 28,964 Non-interest income 3,646 3,581 3,629 3,581 3,528 7,227 7,078 Non-interest expense 12,078 12,525 12,065 12,350 11,469 24,603 23,719 Income before income taxes 5,715 5,055 7,791 6,832 6,849 10,770 12,323 Provision for income taxes 1,021 898 1,383 1,253 1,231 1,919 2,182 Net income $ 4,694 4,157 6,408 5,579 5,618 8,851 10,141 Supplemental Income Statement Information Amort/Accret income on acquired loans $ — 74 249 144 61 74 127 Tax-equivalent net interest income $ 14,223 13,989 16,257 15,495 15,217 28,212 29,490 Per Share Data Dividends per share $ 0.21 0.21 0.21 0.20 0.20 0.42 0.40 Basic earnings per common share $ 0.42 0.37 0.57 0.49 0.49 0.79 0.87 Diluted earnings per common share $ 0.42 0.37 0.57 0.49 0.49 0.79 0.87 Book value per share $ 18.20 18.22 17.82 17.31 17.84 18.20 17.84 Tangible book value per share $ 12.81 12.86 12.48 11.97 12.53 12.81 12.53 Weighted average common shares outstanding: Basic 11,056,308 11,189,170 11,211,328 11,284,225 11,337,805 11,122,371 11,576,873 Diluted 11,056,308 11,189,170 11,211,328 11,284,225 11,337,805 11,122,371 11,576,873 Shares outstanding at period end 11,116,080 11,202,063 11,259,080 11,293,639 11,374,515 11,116,080 11,374,515 Selected Financial Ratios Return on average assets 0.98 % 0.88 % 1.34 % 1.15 % 1.18 % 0.93 % 1.07 % Return on average equity 9.22 % 8.33 % 12.90 % 10.80 % 10.96 % 8.78 % 9.48 % Return on average tangible common equity 13.07 % 11.85 % 18.59 % 15.30 % 15.52 % 12.46 % 13.18 % Dividend payout ratio 50.00 % 56.76 % 36.84 % 40.82 % 40.82 % 53.16 % 45.98 % Net interest margin (tax equivalent) 3.28 % 3.28 % 3.77 % 3.54 % 3.54 % 3.28 % 3.45 % Efficiency ratio (tax equivalent) 67.59 % 71.29 % 60.67 % 64.74 % 61.18 % 69.42 % 64.86 % Selected Balance Sheet Items Cash and cash equivalents $ 26,020 31,876 22,701 29,460 31.815 Debt and equity securities 314,763 328,194 323,167 325,801 337,952 Loans: Commercial and industrial $ 127,553 124,240 120,236 114,694 114,971 Commercial, secured by real estate 961,173 932,208 938,022 908,130 905,703 Residential real estate 312,338 303,051 305,575 316,669 315,930 Consumer 29,007 28,611 28,290 29,451 30,308 Agricultural 9,955 7,523 10,054 8,630 7,412 Other, including deposit overdrafts 69 62 81 52 81 Deferred net origination fees (844 ) (865 ) (980 ) (937 ) (928 ) Loans, gross 1,439,251 1,394,830 1,401,278 1,376,689 1,373,477 Less allowance for credit losses on loans 7,956 7,858 5,646 5,644 5,833 Loans, net $ 1,431,295 1,386,972 1,395,632 1,371,045 1,367,644 Three Months Ended Six Months Ended 06-30-2023 03-31-2023 12-31-2022 09-30-2022 06-30-2022 06-30-2023 06-30-2022 Selected Balance Sheet Items, continued Allowance for Credit Losses on Loans: Allowance for credit losses, beginning of period $ 7,858 5,646 5,644 5,833 5,530 Cumulative change in accounting principle; adoption of ASU 2016-13 — 2,196 — — — Provision for (recovery of) credit losses 131 32 (19 ) (157 ) 377 Losses charged off (49 ) (36 ) (60 ) (53 ) (116 ) Recoveries 16 20 81 21 42 Allowance for credit losses, end of period $ 7,956 7,858 5,646 5,644 5,833 Total earning assets $ 1,756,157 1,736,829 1,726,902 1,714,196 $ 1,722,853 Total assets 1,950,763 1,924,531 1,919,121 1,904,700 1,912,901 Total deposits 1,596,709 1,603,881 1,604,970 1,657,370 1,658,825 Short-term borrowings 112,289 76,500 71,455 4,000 5,000 Long-term debt 18,122 18,598 19,072 24,539 25,000 Total shareholders’ equity 202,316 204,072 200,675 195,439 202,960 Equity to assets ratio 10.37 % 10.60 % 10.46 % 10.26 % 10.61 % Loans to deposits ratio 90.14 % 86.97 % 87.31 % 83.06 % 82.80 % Tangible common equity (TCE) $ 142,362 144,006 140,498 135,149 142,557 Tangible common assets (TCA) 1,890,809 1,864,465 1,858,944 1,844,410 1,852,224 TCE/TCA 7.53 % 7.72 % 7.56 % 7.33 % 7.70 % Selected Average Balance Sheet Items Cash and cash equivalents $ 30,742 35,712 24,330 35,763 $ 28,787 $ 33,205 $ 30,788 Debt and equity securities 321,537 327,123 323,195 338,299 338,149 324,320 339,432 Loans $ 1,405,939 1,389,385 1,383,809 1,384,520 $ 1,375,710 $ 1,397,708 $ 1,376,315 Less allowance for credit losses on loans 7,860 7,522 5,647 5,830 5,532 7,692 5,517 Net loans $ 1,398,079 1,381,863 1,378,162 1,378,690 $ 1,370,178 $ 1,390,016 $ 1,370,798 Total earning assets $ 1,737,256 1,729,008 1,711,524 1,736,031 1,722,503 1,733,160 1,724,938 Total assets 1,927,957 1,921,742 1,903,338 1,928,868 1,912,574 1,925,004 1,915,051 Total deposits 1,604,346 1,583,857 1,637,201 1,669,932 1,655,389 1,594,159 1,651,032 Short-term borrowings 79,485 94,591 21,433 5,728 18,263 86,996 15,399 Long-term debt 18,514 18,983 23,855 24,920 12,637 18,747 11,326 Total shareholders’ equity 204,085 202,419 197,014 205,051 205,645 203,257 215,629 Equity to assets ratio 10.59 % 10.53 % 10.35 % 10.63 % 10.75 % 10.56 % 11.26 % Loans to deposits ratio 87.63 % 87.72 % 84.52 % 82.91 % 83.10 % 87.68 % 83.36 % Asset Quality Net charge-offs (recoveries) $ 33 16 (21 ) 32 74 49 99 Other real estate owned — — — — — — — Non-accrual loans $ 454 701 391 465 599 454 599 Loans past due 90 days or more and still accruing 256 — 39 — 0 256 — Total nonperforming loans $ 710 701 430 465 599 710 599 Net charge-offs (recoveries) to average loans 0.01 % 0.00 % (0.01 )% 0.01 % 0.02 % 0.01 % 0.03 % Allowance for credit losses on loans to total loans 0.55 % 0.56 % 0.40 % 0.41 % 0.42 % Nonperforming loans to total loans 0.05 % 0.05 % 0.03 % 0.03 % 0.04 % Nonperforming assets to total assets 0.04 % 0.04 % 0.02 % 0.02 % 0.03 % Three Months Ended Six Months Ended 06-30-2023 03-31-2023 12-31-2022 09-30-2022 06-30-2022 06-30-2023 06-30-2022 Assets Under Management LCNB Corp. total assets $ 1,950,763 1,924,531 1,919,121 1,904,700 1,912,901 Trust and investments (fair value) 744,149 716,578 678,366 611,409 625,984 Mortgage loans serviced 143,093 142,167 148,412 145,317 153,557 Cash management 2,668 1,831 1,925 53,199 38,914 Brokerage accounts (fair value) 384,889 374,066 347,737 314,144 303,663 Total assets managed 3,225,562 3,159,173 3,095,561 3,028,769 3,035,019 Reconciliation of Net Income Less Tax-Effected Merger-Related Costs Net income $ 4,694 4,157 6,408 5,579 5,618 8,851 10,141 Merger-related costs 415 25 — — — 440 — Tax effect (63 ) (4 ) — — — (67 ) — Adjusted net income $ 5,046 4,178 6,408 5,579 5,618 9,224 10,141 Adjusted basic and diluted earnings per share $ 0.45 0.37 0.57 0.49 0.49 0.82 0.87 Adjusted return on average assets 1.05 % 0.88 % 1.34 % 1.15 % 1.18 % 0.97 % 1.07 % Adjusted return on average equity 9.92 % 8.37 % 12.90 % 10.80 % 10.96 % 9.15 % 9.48 % LCNB CORP. AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS (Dollars in thousands) June 30, 2023 (Unaudited) December 31, 2022 ASSETS: Cash and due from banks $ 23,877 20,244 Interest-bearing demand deposits 2,143 2,457 Total cash and cash equivalents 26,020 22,701 Investment securities: Equity securities with a readily determinable fair value, at fair value 1,279 2,273 Equity securities without a readily determinable fair value, at cost 2,099 2,099 Debt securities, available-for-sale, at fair value 281,156 289,850 Debt securities, held-to-maturity, at cost, net of allowance for credit losses 19,117 19,878 Federal Reserve Bank stock, at cost 4,652 4,652 Federal Home Loan Bank stock, at cost 6,460 4,415 Loans, net of allowance for credit losses 1,431,295 1,395,632 Premises and equipment, net 33,145 33,042 Operating leases right of use asset 6,260 6,525 Goodwill 59,221 59,221 Core deposit and other intangibles 1,497 1,827 Bank owned life insurance 44,846 44,298 Interest receivable 7,811 7,482 Other assets 25,905 25,503 TOTAL ASSETS $ 1,950,763 1,919,398 LIABILITIES: Deposits: Noninterest-bearing $ 480,288 505,824 Interest-bearing 1,116,421 1,099,146 Total deposits 1,596,709 1,604,970 Short-term borrowings 112,289 71,455 Long-term debt 18,122 19,072 Operating lease liabilities 6,434 6,647 Allowance for credit losses on off-balance sheet credit exposures 381 — Accrued interest and other liabilities 14,512 16,579 TOTAL LIABILITIES 1,748,447 1,718,723 COMMITMENTS AND CONTINGENT LIABILITIES SHAREHOLDERS' EQUITY: Preferred shares – no par value, authorized 1,000,000 shares, none outstanding 123,422 122,839 Common shares –no par value, authorized 19,000,000; issued 14,327,463 and 14,270,550 shares at June 30, 2023 and December 31, 2022, respectively; outstanding 11,116,080 and 11,259,080 shares at March 31, 2023 and December 31, 2022, respectively 21,249 21,230 Retained earnings 141,431 139,249 Treasury shares at cost, 3,211,383 and 3,011,470 shares at June 30, 2023 and December 31, 2022, respectively (56,015 ) (52,689 ) Accumulated other comprehensive loss, net of taxes (27,771 ) (29,954 ) TOTAL SHAREHOLDERS' EQUITY 202,316 200,675 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,950,763 1,919,398 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, 2023 2022 2023 2022 INTEREST INCOME: Interest and fees on loans $ 16,763 14,548 32,906 28,334 Dividends on equity securities with a readily determinable fair value 8 14 25 26 Dividends on equity securities without a readily determinable fair value 30 5 50 10 Interest on debt securities, taxable 1,323 1,254 2,666 2,349 Interest on debt securities, non-taxable 174 188 350 377 Other investments 405 199 624 234 TOTAL INTEREST INCOME 18,703 16,208 36,621 31,330 INTEREST EXPENSE: Interest on deposits 3,335 775 5,791 1,514 Interest on short-term borrowings 1,008 163 2,312 249 Interest on long-term debt 183 103 399 177 TOTAL INTEREST EXPENSE 4,526 1,041 8,502 1,940 NET INTEREST INCOME 14,177 15,167 28,119 29,390 Provision for credit losses on loans 132 377 164 426 Provision for (recovery of) credit losses on debt securities, held-to-maturity (1 ) — (1 ) — Recovery of credit losses on off-balance sheet credit exposures (101 ) — (190 ) — TOTAL PROVISION FOR (RECOVERY OF) CREDIT LOSSES 30 377 (27 ) 426 NET INTEREST INCOME AFTER PROVISION FOR (RECOVERY OF) CREDIT LOSSES 14,147 14,790 28,146 28,964 NON-INTEREST INCOME: Fiduciary income 1,787 1,643 3,527 3,338 Service charges and fees on deposit accounts 1,445 1,546 2,927 2,952 Bank owned life insurance income 277 269 548 534 Gains from sales of loans 3 64 9 188 Other operating income 134 6 216 66 TOTAL NON-INTEREST INCOME 3,646 3,528 7,227 7,078 NON-INTEREST EXPENSE: Salaries and employee benefits 7,061 7,014 14,410 14,229 Equipment expenses 417 428 778 836 Occupancy expense, net 599 735 1,562 1,510 State financial institutions tax 396 437 793 873 Marketing 320 368 512 630 Amortization of intangibles 112 112 223 252 FDIC insurance premiums, net 224 134 439 260 Contracted services 666 679 1,307 1,289 Other real estate owned, net 1 (879 ) 2 (879 ) Merger-related expenses 415 — 440 — Other non-interest expense 1,867 2,441 4,137 4,719 TOTAL NON-INTEREST EXPENSE 12,078 11,469 24,603 23,719 INCOME BEFORE INCOME TAXES 5,715 6,849 10,770 12,323 PROVISION FOR INCOME TAXES 1,021 1,231 1,919 2,182 NET INCOME $ 4,694 5,618 8,851 10,141 2023 2022 2023 2022 Earnings per common share: Basic 0.42 0.49 0.79 0.87 Diluted 0.42 0.49 0.79 0.87 Weighted average common shares outstanding: Basic 11,056,308 11,337,805 11,122,371 11,576,873 Diluted 11,056,308 11,337,805 11,122,371 11,576,873 View source version on businesswire.com: https://www.businesswire.com/news/home/20230720470049/en/
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