LCNB Corp. (LCNB) (NASDAQ:LCNB) today announced net income of $2,884,000 (total basic and diluted earnings per share of $0.29) and $11,474,000 (total basic and diluted earnings per share of $1.18 and $1.17, respectively) for the three and twelve months ended December 31, 2015, respectively. This compares to net income of $3,217,000 (total basic and diluted earnings per share of $0.34) and $9,869,000 (total basic and diluted earnings per share of $1.06 and $1.05) for the same three and twelve-month periods in 2014. Results for 2015 and 2014 were significantly affected by the acquisitions of BNB Bancorp, Inc. ("BNB") on April 30, 2015 and Eaton National Bank & Trust Co. ("Eaton National") on January 24, 2014. In addition, LCNB sold impaired loans with a carrying value of approximately $4.5 million during the second quarter 2015.

Commenting on the financial results, LCNB Chairman of the Board Steve Wilson said, "We are pleased to report our financial results for the three and twelve months ended December 31, 2015. Despite incurring $643,000 in acquisition related costs during 2015, our return on average assets for the full year was 0.94% and our return on average equity was 8.43%. Organic loan growth during the one-year period was $42,530,000 and we obtained $34,661,000 in seasoned loans from the BNB acquisition, both contributing to increased net interest income.

"On a personal note, it is with great pleasure that I announce the orderly transition of the CEO position from myself to Steve Foster, which was effective January 1, 2016. Mr. Foster has been with LCNB for 39 years and has served as president since 2008. He has a thorough understanding of the banking industry and the communities we serve and is the right person for this position. I will retire as an employee on June 30, 2016, but will continue to serve as a director and Chairman of the Board."

Net interest income for the three and twelve months ended December 31, 2015 increased $383,000 and $3,444,000, respectively, from the comparable periods in 2014, due primarily to an increase in the volume of average interest earning assets, primarily loans.

The provision for loan losses for the three and twelve months ended December 31, 2015 was $187,000 and $436,000 greater than the comparable periods in 2014. Net loan charge-offs for 2015 and 2014 totaled $1,358,000 and $1,397,000, respectively. Non-accrual loans and loans past due 90 days or more and still accruing interest decreased $3,521,000, from $5,802,000 or 0.83% of total loans at December 31, 2014, to $2,281,000 or 0.30% of total loans at December 31, 2015, primarily due to the impaired loan sale mentioned above. Other real estate owned (which includes property acquired through foreclosure or deed-in-lieu of foreclosure) decreased from $1,370,000 at December 31, 2014 to $846,000 at December 31, 2015 due to write-downs recognized on commercial property.

Non-interest income for the three and twelve months ended December 31, 2015 was $151,000 and $981,000 greater than the comparable periods in 2014. The increases were primarily due to trust income, service charges and fees on deposit accounts, gains from sales of investment securities, and gains from sale of loans. Gains from sales of investment securities and loans increased because of a greater volume of sales.

Non-interest expense for the three and twelve months ended December 31, 2015 was $895,000 and $1,548,000 greater than the comparable periods in 2014, primarily due to increases in salaries and employee benefits, other real estate owned expenses, and smaller increases in other accounts. Salaries and employee benefits increased primarily due to salary and wage increases, employees retained from the BNB and Eaton National acquisitions, an increase in the number of employees outside of the acquisitions, and an increase in retirement plan expenses.

LCNB Corp. is a financial holding company headquartered in Lebanon, Ohio. Through its subsidiary, LCNB National Bank (the “Bank”), it serves customers and communities in Southwest and South Central Ohio. A financial institution with a long tradition for building strong relationships with customers and communities, the Bank offers convenient banking locations in Butler, Clermont, Clinton, Fayette, Hamilton, Montgomery, Preble, Ross and Warren Counties, Ohio. The Bank continually strives to exceed customer expectations and provides an array of services for all personal and business banking needs including checking, savings, online banking, personal lending, business lending, agricultural lending, business support, deposit and treasury, investment services, trust and IRAs and stock purchases. LCNB Corp. common shares are traded on the NASDAQ Capital Market Exchange® under the symbol “LCNB.” Learn more about LCNB Corp. at www.lcnb.com.

Certain statements made in this news release regarding LCNB’s financial condition, results of operations, plans, objectives, future performance and business, are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. These forward-looking statements are identified by the fact they are not historical facts and include words such as “anticipate”, “could”, “may”, “feel”, “expect”, “believe”, “plan”, and similar expressions.

These forward-looking statements reflect management's current expectations based on all information available to management and its knowledge of LCNB’s business and operations. Additionally, LCNB’s financial condition, results of operations, plans, objectives, future performance and business are subject to risks and uncertainties that may cause actual results to differ materially. These factors include, but are not limited to:

  1. the success, impact, and timing of the implementation of LCNB’s business strategies, including the successful integration of recently completed acquisitions;
  2. LCNB may incur increased charge-offs in the future;
  3. LCNB may face competitive loss of customers;
  4. changes in the interest rate environment may have results on LCNB’s operations materially different from those anticipated by LCNB’s market risk management functions;
  5. changes in general economic conditions and increased competition could adversely affect LCNB’s operating results;
  6. changes in other regulations and government policies affecting bank holding companies and their subsidiaries, including changes in monetary policies, could negatively impact LCNB’s operating results;
  7. LCNB may experience difficulties growing loan and deposit balances;
  8. the current economic environment poses significant challenges for us and could adversely affect our financial condition and results of operations;
  9. deterioration in the financial condition of the U.S. banking system may impact the valuations of investments LCNB has made in the securities of other financial institutions resulting in either actual losses or other than temporary impairments on such investments; and
  10. the effects of the Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) and the regulations promulgated and to be promulgated thereunder, which may subject LCNB and its subsidiaries to a variety of new and more stringent legal and regulatory requirements which adversely affect their respective businesses.

Forward-looking statements made herein reflect management's expectations as of the date such statements are made. Such information is provided to assist shareholders and potential investors in understanding current and anticipated financial operations of LCNB and is included pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. LCNB undertakes no obligation to update any forward-looking statement to reflect events or circumstances that arise after the date such statements are made.

   
LCNB Corp. and Subsidiaries
Financial Highlights

(Dollars in thousands, except per share amounts)

(Unaudited)

 
Three Months Ended Year Ended
12/31/2015   9/30/2015   6/30/2015   3/31/2015   12/31/2014 12/31/2015   12/31/2014

Condensed Income Statement

Interest income $ 10,812 10,409 11,348 10,090 10,367 42,659 39,477
Interest expense 906   912   748   762   844   3,328   3,590  
Net interest income 9,906 9,497 10,600 9,328 9,523 39,331 35,887
Provision for loan losses 380   240   677   69   193   1,366   930  
Net interest income after provision 9,526 9,257 9,923 9,259 9,330 37,965 34,957
Non-interest income 2,600 2,386 2,831 2,306 2,449 10,123 9,142
Non-interest expense 8,229   8,088   8,426   7,649   7,334   32,392   30,844  
Income before income taxes 3,897 3,555 4,328 3,916 4,445 15,696 13,255
Provision for income taxes 1,013   922   1,205   1,082   1,228   4,222   3,386  
Net income $ 2,884   2,633   3,123   2,834   3,217   11,474   9,869  
 

Per Share Data

Dividends per share $ 0.16 0.16 0.16 0.16 0.16 0.64 0.64
Basic earnings per share $ 0.29 0.26 0.33 0.30 0.34 1.18 1.06
Diluted earnings per share $ 0.29 0.26 0.32 0.30 0.34 1.17 1.05
Book value per share $ 14.12 14.22 13.91 13.80 13.50 14.12 13.50
Tangible book value per share $ 10.58 10.66 10.33 10.40 10.08 10.58 10.08
Average basic shares outstanding 9,905,612 9,898,233 9,694,732 9,312,636 9,306,382 9,704,965 9,297,019
Average diluted shares outstanding 10,014,908 10,005,788 9,804,728 9,410,774 9,403,013 9,811,476 9,406,346
Shares outstanding at period end 9,925,547 9,903,294 9,896,904 9,317,583 9,311,318 9,925,547 9,311,318
 

Selected Financial Ratios

Return on average assets 0.89 % 0.82 % 1.03 % 1.02 % 1.14 % 0.94 % 0.88 %
Return on average equity 8.07 % 7.51 % 9.21 % 9.01 % 10.18 % 8.43 % 8.04 %
Dividend payout ratio 55.17 % 61.54 % 48.48 % 53.33 % 47.06 % 54.24 % 60.38 %
Net interest margin (tax equivalent) 3.46 % 3.37 % 3.95 % 3.83 % 3.82 % 3.64 % 3.66 %
Efficiency ratio (tax equivalent) 63.80 % 65.97 % 61.08 % 63.90 % 59.48 % 63.61 % 66.44 %
 

Selected Balance Sheet Items

Investment securities and stock $ 406,981 391,430 378,651 329,429 314,074
 
Loans:
Commercial and industrial $ 45,275 45,325 47,958 36,447 35,424
Commercial, secured by real estate 419,633 407,264 399,551 381,371 379,141
Residential real estate 273,139 274,054 273,249 255,926 254,087
Consumer 18,510 19,283 19,718 17,296 18,006

Agricultural

13,479 16,016 13,434 9,816 11,472
Other, including deposit overdrafts 665 676 638 678 680
Deferred net origination costs 237   215   188   151   146  
Loans, gross 770,938 762,833 754,736 701,685 698,956
Less allowance for loan losses 3,129   2,958   2,879   2,837   3,121  
Loans, net $ 767,809   759,875   751,857   698,848   695,835  
 
Total assets $ 1,280,531 1,275,171 1,249,363 1,129,497 1,108,066
Total deposits 1,087,160 1,103,513 1,084,033 973,725 946,205
Short-term borrowings 37,387 14,931 12,731 13,454 16,645
Long-term debt 5,947 6,016 6,085 6,153 11,357
Total shareholders’ equity 140,108 140,851 137,698 128,576 125,695
Equity to assets ratio 10.94 % 11.05 % 11.02 % 11.38 % 11.34 %
Loans to deposit ratio 70.91 % 69.13 % 69.62 % 72.06 % 73.87 %
 
 
Three Months Ended Year Ended
12/31/2015 9/30/2015 6/30/2015 3/31/2015 12/31/2014 12/31/2015 12/31/2014

Selected Balance Sheet Items, continued

Tangible common equity (TCE) $ 104,529 105,063 101,694 96,340 93,277
Tangible common assets (TCA) 1,244,952 1,239,383 1,213,359 1,097,261 1,075,648
TCE/TCA 8.40 % 8.48 % 8.38 % 8.78 % 8.67 %
 

Selected Average Balance Sheet Items

Investment securities and stock $ 406,423 385,353 360,750 313,279 311,395 366,758 327,704
 
Loans $ 764,440 760,159 737,021 699,959 694,185 740,626 679,223
Less allowance for loan losses 2,929   2,885   2,865   2,870   3,075   2,888   3,275  
Net loans $ 761,511 757,274 734,156 697,089 691,110 737,738 675,948
 
Total assets $ 1,285,114 1,267,171 1,220,938 1,125,326 1,123,949 1,225,112 1,120,515
Total deposits 1,107,214 1,099,730 1,057,818 969,658 967,505 1,059,095 964,526
Short-term borrowings 20,290 13,450 12,803 13,824 12,217 15,105 14,820
Long-term debt 5,970 6,040 6,108 6,598 11,382 6,177 11,546
Total shareholders’ equity 141,751 139,032 136,003 127,608 125,302 136,145 122,716
 

Asset Quality

Net charge-offs $ 210 160 636 352 370
Other real estate owned 846 1,208 1,364 1,364 1,370
Non-accrual loans 1,722 2,254 1,961 3,972 5,599
Loans past due 90 days or more and still accruing 559   130   128   355   203  
Total nonperforming loans $ 2,281 2,384 2,089 4,327 5,802
Net charge-offs to average loans 0.11 % 0.08 % 0.35 % 0.20 % 0.21 %
Allowance for loan losses to total loans 0.41 % 0.39 % 0.38 % 0.40 % 0.45 %
Nonperforming loans to total loans 0.30 % 0.31 % 0.28 % 0.62 % 0.83 %
Nonperforming assets to total assets 0.24 % 0.28 % 0.28 % 0.50 % 0.65 %
 

Assets Under Management

LCNB Corp. total assets $ 1,280,531 1,275,171 1,249,363 1,129,497 1,108,066
Trust and investments (fair value) 283,193 258,675 272,209 264,122 258,266
Mortgage loans serviced 111,837 113,610 117,204 116,534 120,433
Business cash management 7,271 6,809 6,628 5,839 5,811
Brokerage accounts (fair value) 148,956   142,151   144,186   141,439   132,823  
Total assets managed $ 1,831,788   1,796,416   1,789,590   1,657,431   1,625,399  
 

Non-GAAP Financial Measures

Accreted income on acquired loans $ 219 243 1,348 326 442 2,136 1,553
Amortization of acquired deposit premiums $ 34 46 211 186 191 477 801
 
Net income $ 2,884 2,633 3,123 2,834 3,217 11,474 9,869
Less (add) net gain (loss) on sales of securities, net of tax 108 0 146 73 37 327 98
Add merger-related expenses, net of tax 2   32   363   66   26   463   928  
Core net income $ 2,778 2,665 3,340 2,827 3,206 11,610 10,699
Basic core earnings per share $ 0.28 0.27 0.34 0.30 0.34 1.20 1.15
Diluted core earnings per share $ 0.28 0.27 0.34 0.30 0.34 1.18 1.14
Adjusted return on average assets 0.86 % 0.83 % 1.10 % 1.01 % 1.13 % 0.95 % 0.95 %
Adjusted return on average equity 7.77 % 7.60 % 9.85 % 8.86 % 10.06 % 8.53 % 8.67 %
Core efficiency ratio (tax equivalent) 64.60 % 65.57 % 58.23 % 63.91 % 59.48 % 62.96 % 63.62 %