LCNB Corp. Reports Financial Results for the Three and Six Months Ended June 30, 2014

LEBANON, Ohio--()--LCNB Corp. (LCNB) today announced net income of $2,611,000 (total basic and diluted earnings per share of $0.28) and $3,934,000 (total basic and diluted earnings per common share of $0.42) for the three and six months ended June 30, 2014, respectively. This compares to net income of $2,348,000 (total basic and diluted earnings per common share of $0.31 and $0.30, respectively) and $4,076,000 (total basic and diluted earnings per common share of $0.54 and $0.53, respectively) for the same three and six-month periods in 2013. Results for 2013 and 2014 were significantly affected by the completion of mergers with First Capital Bancshares, Inc. and its subsidiary, Citizens National Bank of Chillicothe, on January 11, 2013 and Eaton National Bank & Trust Co. ("Eaton National") on January 24, 2014. In addition, 1,642,857 shares of new voting common stock were issued during the fourth quarter 2013.

Commenting on the financial results, LCNB CEO Steve Wilson said, "We are pleased to announce solid financial results for the second quarter and first half of 2014. Our financial results were negatively impacted by expenses related to the Eaton National merger, but, with the successful integration of our recent acquisitions, we look forward to the synergies that will benefit all our stakeholders."

Net interest income for the three and six months ended June 30, 2014 increased $1,646,000 and $3,031,000, respectively, from the comparative periods in 2013 due primarily to the increased volume of average interest earning assets provided from the merger with Eaton National and by an increase in the net interest margin.

The provision for loan losses for the three and six months ended June 30, 2014 was $213,000 and $145,000 greater than the comparable periods in 2013. Net loan charge-offs for the first six months of 2014 and 2013 totaled $531,000 and $202,000, respectively. Non-accrual loans and loans past due 90 days or more and still accruing interest totaled $6,373,000 or 0.92% of total loans at June 30, 2014, compared to $3,211,000 or 0.56% of total loans at December 31, 2013. The increase was predominately due to acquired impaired loans that were classified as non-accrual during the second quarter 2014. Other real estate owned (which includes property acquired through foreclosure or deed-in-lieu of foreclosure and also includes property deemed to be in-substance foreclosed) and other repossessed assets increased from $1,463,000 at December 31, 2013 to $1,906,000 at June 30, 2014 primarily due to foreclosures and property obtained through the merger with Eaton National, partially offset by property sales.

Non-interest income for the three-month period in 2014 was $123,000 greater than the comparable period in 2013 and $307,000 less for the six-month period. The three-month period was greater primarily due to increases in trust income and service charges and fees on deposit accounts, partially offset by a decrease in gains from sales of investment securities and mortgage loans. For the six-month period, increases in trust income and service charges and fees on deposit accounts were more than offset by decreased gains from sales of investment securities and mortgage loans. The increases in service charges and fees were primarily due to a greater number of deposit accounts resulting from the merger. The increase in trust income was due to growth in the fair value of trust assets serviced and to fee adjustments. The decreases in gains from sales of investment securities and mortgage loans were due to lower sales volumes during the 2014 period.

Non-interest expense for the three and six months ended June 30, 2014 was $1,276,000 and $2,857,000 greater than the comparable periods in 2013. Salaries and employee benefits, as well as a variety of other expense items, increased significantly due to the increased number of employees and offices resulting from the merger with Eaton National. Also contributing to the increase in non-interest expense was an increase in other real estate owned expenses.

LCNB Corp. is a financial holding company headquartered in Lebanon, Ohio. LCNB Corp.’s only business is ownership of LCNB National Bank, which has 35 offices located in Warren, Butler, Montgomery, Clinton, Clermont, Hamilton, Fayette, Ross, and Preble Counties, Ohio. Additional information about LCNB Corp. and information about products and services offered by LCNB National Bank can be found on the internet at www.lcnb.com.

Certain matters disclosed herein may be deemed to be forward-looking statements that involve risks and uncertainties, including regulatory policy changes, interest rate fluctuations, loan demand, loan delinquencies and losses, and other risks. Actual strategies and results in future time periods may differ materially from those currently expected. Such forward-looking statements represent management’s judgment as of the current date. LCNB disclaims any intent or obligation to update such forward-looking statements. LCNB intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

LCNB Corp. and Subsidiaries
Financial Highlights
 (Dollars in thousands, except per share amounts)

   
Three Months Ended Six Months Ended
6/30/2014   3/31/2014   12/31/2013   9/30/2013   6/30/2013 6/30/2014   6/30/2013

Condensed Income Statement

Interest income $ 9,926 9,278 8,566 8,450 8,405 19,204 16,481
Interest expense 920   915   927   995   1,045   1,835   2,143  
Net interest income 9,006 8,363 7,639 7,455 7,360 17,369 14,338
Provision for loan losses 255   81   219   178   42   336   191  
Net interest income after provision 8,751 8,282 7,420 7,277 7,318 17,033 14,147
Non-interest income 2,301 2,077 2,358 2,047 2,178 4,378 4,685
Non-interest expense 7,600   8,672   6,634   6,163   6,324   16,272   13,415  
Income before income taxes 3,452 1,687 3,144 3,161 3,172 5,139 5,417
Provision for income taxes 841   364   797   804   824   1,205   1,341  
Net income $ 2,611   1,323   2,347   2,357   2,348   3,934   4,076  
 

Per Share Data

Dividends per share $ 0.16 0.16 0.16 0.16 0.16 0.32 0.32
Basic earnings per share $ 0.28 0.14 0.27 0.31 0.31 0.42 0.54
Diluted earnings per share $ 0.28 0.14 0.27 0.30 0.30 0.42 0.53
Book value per share $ 13.18 12.89 12.80 12.07 11.82 13.18 11.82
Tangible book value per share $ 9.71 9.44 11.02 9.93 9.64 9.71 9.64
Average basic shares outstanding 9,293,382 9,288,400 8,623,134 7,636,098 7,627,900 9,290,905 7,570,817
Average diluted shares outstanding 9,402,343 9,413,049 8,755,416 7,787,098 7,759,438 9,407,964 7,686,890
Shares outstanding at period end 9,298,270 9,292,226 9,287,536 7,640,163 7,633,679 9,298,270 7,633,679
 

Selected Financial Ratios

Return on average assets 0.91 % 0.50 % 0.98 % 0.99 % 0.99 % 0.72 % 0.88 %
Return on average equity 8.60 % 4.47 % 8.48 % 10.27 % 9.91 % 6.57 % 8.75 %
Dividend payout ratio 57.14 % 114.29 % 59.26 % 51.61 % 51.61 % 76.19 % 59.26 %
Net interest margin (tax equivalent) 3.59 % 3.66 % 3.63 % 3.57 % 3.54 % 3.62 % 3.54 %
Efficiency ratio 67.21 % 83.07 % 66.36 % 64.86 % 66.30 % 74.82 % 70.52 %
 

Selected Balance Sheet Items

Investment securities and stock $ 357,567 331,771 279,021 296,819 304,934
 
Loans 691,719 685,196 574,354 566,109 556,314
Less allowance for loan losses 3,394   3,370   3,588   3,423   3,426  
Net loans 688,325 681,826 570,766 562,686 552,888
 
Total assets 1,151,109 1,133,508 932,338 942,349 945,510
Total deposits 986,824 984,514 785,761 808,335 800,813
Short-term borrowings 23,523 11,215 8,655 22,811 36,272
Long-term debt 11,506 11,580 12,102 12,446 12,788
Total shareholders’ equity 122,584 119,761 118,873 92,215 90,229
 
Tangible common equity (TCE) 89,800 87,017 101,893 75,353 73,065
Tangible common assets (TCA) 1,118,325 1,100,764 915,358 925,487 928,346
TCE/TA 8.03 % 7.91 % 11.13 % 8.14 % 7.87 %
Loans to deposit ratio 70.10 % 69.60 % 73.10 % 70.03 % 69.47 %
Equity to assets ratio 10.65 % 10.57 % 12.75 % 9.79 % 9.54 %
 
 
 
 
Three Months Ended Six Months Ended
6/30/2014 3/31/2014 12/31/2013 9/30/2013 6/30/2013 6/30/2014 6/30/2013

Asset Quality

Net charge-offs 232 299 54 181 20
Other real estate owned 1,906 1,799 1,463 1,561 1,530
Non-accrual loans 6,243 5,374 2,961 2,828 3,026
Loans past due 90 days or more and still accruing 130   825   250   29   113  
Total nonperforming loans 6,373 6,199 3,211 2,857 3,139
Net charge-offs to average loans 0.14 % 0.19 % 0.04 % 0.13 % 0.01 %
Allowance for loan losses to total loans 0.49 % 0.49 % 0.62 % 0.60 % 0.62 %
Nonperforming loans to total loans 0.92 % 0.90 % 0.56 % 0.50 % 0.56 %
Nonperforming assets to total assets 0.72 % 0.71 % 0.50 % 0.47 % 0.49 %
 

Non-GAAP Financial Measures

Net income $ 2,611 1,323 2,347 2,357 2,348 3,934 4,076
Less (add) net gain (loss) on sales of securities, net of tax 0 (3 ) 203 38 71 (3 ) 459
Add merger-related expenses, net of tax 46   853   71   0   180   899   909  
Core net income $ 2,657 2,179 2,215 2,319 2,457 4,836 4,526
Basic core earnings per share $ 0.29 0.23 0.26 0.30 0.32 0.52 0.60
Diluted core earnings per share $ 0.28 0.23 0.25 0.30 0.32 0.51 0.59
Adjusted return on average assets 0.93 % 0.82 % 0.92 % 0.97 % 1.03 % 0.88 % 0.97 %
Adjusted return on average equity 8.67 % 7.32 % 7.97 % 10.06 % 10.33 % 8.02 % 9.67 %
Core efficiency ratio 66.60 % 70.66 % 67.36 % 65.26 % 64.18 % 68.55 % 65.96 %
 

LCNB CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)

   
June 30, 2014 December 31,
2013
(Unaudited)
ASSETS:
Cash and due from banks $ 18,771 10,410
Interest-bearing demand deposits 110   4,278  
Total cash and cash equivalents 18,881 14,688
Investment securities:
Available-for-sale, at fair value 327,740 258,241
Held-to-maturity, at cost 23,843 16,323
Federal Reserve Bank stock, at cost 2,346 1,603
Federal Home Loan Bank stock, at cost 3,638 2,854
Loans, net 688,325 570,766
Premises and equipment, net 21,230 19,897
Goodwill 27,638 14,186
Bank owned life insurance 21,607 21,280
Other assets 15,861   12,500  
TOTAL ASSETS $ 1,151,109   932,338  
LIABILITIES:
Deposits:
Noninterest-bearing $ 201,928 164,912
Interest-bearing 784,896   620,849  
Total deposits 986,824 785,761
Short-term borrowings 23,523 8,655
Long-term debt 11,506 12,102
Accrued interest and other liabilities 6,672   6,947  
TOTAL LIABILITIES 1,028,525   813,465  
SHAREHOLDERS' EQUITY:
Preferred shares – no par value, authorized 1,000,000 shares, none outstanding
Common shares – no par value, authorized 12,000,000 shares, issued 10,051,897 and 10,041,163 shares at June 30, 2014 and December 31, 2013, respectively 66,974 66,785
Retained earnings 66,437 65,475
Treasury shares at cost, 753,627 shares at June 30, 2014 and December 31, 2013 (11,665 ) (11,665 )
Accumulated other comprehensive loss, net of taxes 838   (1,722 )
TOTAL SHAREHOLDERS' EQUITY 122,584   118,873  

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$ 1,151,109   932,338  
 

LCNB CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
 (Dollars in thousands, except per share data)
 (Unaudited)

   
Three Months Ended
June 30,
Six Months Ended
June 30,
2014   2013 2014   2013
INTEREST INCOME:
Interest and fees on loans $ 8,144 6,816 15,840 13,396
Interest on investment securities –
Taxable 1,026 860 1,917 1,694
Non-taxable 657 655 1,303 1,278
Other short-term investments 99   74   144   113
TOTAL INTEREST INCOME 9,926   8,405   19,204   16,481
INTEREST EXPENSE:
Interest on deposits 814 931 1,623 1,914
Interest on short-term borrowings 5 4 8 7
Interest on long-term debt 101   110   204   222
TOTAL INTEREST EXPENSE 920   1,045   1,835   2,143
NET INTEREST INCOME 9,006 7,360 17,369 14,338
PROVISION FOR LOAN LOSSES 255   42   336   191
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 8,751   7,318   17,033   14,147
NON-INTEREST INCOME:
Trust income 728 609 1,383 1,184
Service charges and fees on deposit accounts 1,252 1,073 2,374 2,052
Net gain (loss) on sales of securities 108 (4 ) 695
Bank owned life insurance income 170 172 342 344
Gains from sales of mortgage loans 53 119 68 248
Other operating income 98   97   215   162
TOTAL NON-INTEREST INCOME 2,301   2,178   4,378   4,685
NON-INTEREST EXPENSE:
Salaries and employee benefits 3,956 3,242 7,874 6,536
Equipment expenses 345 298 639 590
Occupancy expense, net 514 518 1,165 1,024
State franchise tax 239 211 483 427
Marketing 197 157 329 301
FDIC insurance premiums 160 119 309 247
Merger-related expenses 70 271 1,362 1,326
Other non-interest expense 2,119   1,508   4,111   2,964
TOTAL NON-INTEREST EXPENSE 7,600   6,324   16,272   13,415
INCOME BEFORE INCOME TAXES 3,452 3,172 5,139 5,417
PROVISION FOR INCOME TAXES 841   824   1,205   1,341
NET INCOME $ 2,611   2,348   3,934   4,076
Dividends declared per common share $ 0.16 0.16 0.32 0.32
Earnings per common share:
Basic $ 0.28 0.31 0.42 0.54
Diluted 0.28 0.30 0.42 0.53
Weighted average common shares outstanding:
Basic 9,293,382 7,627,900 9,290,905 7,570,817
Diluted 9,402,343 7,759,438 9,407,964 7,686,890
 

Contacts

LCNB Corp.
Stephen P. Wilson, Chairman and CEO, 800-344-BANK
or
Steve P. Foster, President, 800-344-BANK

Sharing

Contacts

LCNB Corp.
Stephen P. Wilson, Chairman and CEO, 800-344-BANK
or
Steve P. Foster, President, 800-344-BANK