ASM 2021

Apr 20, 2021

Hello, and welcome to the 2021 Annual Meeting of Stockholders of LCNB Corp. Please note that today's meeting is being recorded. It is now my pleasure to turn today's meeting over to Spence Cropper, Chairman of the Board of Directors for LC and B Corp. The floor is yours. Thank you. Good morning, ladies and gentlemen. I'm Spence Cropper, and I'm the Chairman of the Board of Directors for LCNB National Bank and LCNB Corp. It's my pleasure to welcome all of you to the LCNB 2021 Annual Meeting of Shareholders. We appreciate your willingness to attend today's virtual Annual Meeting of Shareholders. When we come to the Q and A portion, we will give shareholders the opportunity to ask a question. Questions can be submitted online at any time by clicking the dialog icon in the upper right corner of the meeting center screen. We will save all comments and questions for a Q and A session after the proposals have been presented. Please remember that you may vote your shares at any time before the polls close by clicking on the link provided in the virtual meeting center. If you have already voted and do not want to change your vote, you do not need to take any further action. I'd now like to call to order of the shareholders of the LC and B Corp. For the 2021 annual meeting, the Board of Directors has appointed Kathleen P. Stolle and Bernard H. Wright Jr. To serve as inspectors of election in connection with the matters voted on at this meeting. The inspectors of election will supervise the conduct of the meeting at this meeting. At this time, I would like to introduce you to the members of the Board of Directors and Executive Officers of LCMB. All of them are participating today. First, the directors: Steve Foster, Eric Miestrip, Steve Wilson, Bill Kaufman, Ann Crabill, Brett Huddle, Mike Durant, Mary Bradford and Craig Johnson. And Executive Officers participating today, Eric Maestropp, Rob Haynes, Matt Loehr, Brad Rupert, Mike Miller and Larry Mulligan. Also joining us online today are guests, and they are Ben Howard and Brian Mitchell of BKB, the 2020 independent public accountant for LC and B as well as Mike Daley, Christian Gonzalez and Eric Quinn, all of Dinsmore and Scholl, our legal counsel to LC and B. Eric Maestropp will now read the certificate signed by him as the President and CEO of LCMB concerning the giving of notice of this meeting. Thank you, Spence. I, Eric J. Maestroop, President and Chief Executive Officer of LC and B Corp, do hereby certify that on or about March 15, 2021, LC and B acting on my instructions did mail to each shareholder of record of LC and B as of close of business on March 1, 2021, a notice of annual meeting by regular mail specifying the date, place, time and purpose of the annual meeting of shareholders of LC and B, a proxy statement and a form of proxy with respect thereto. Okay. Thanks, Eric. Well, any shareholders who have not previously submitted a proxy and any shareholders who have submitted a proxy but would like to revoke that proxy and vote online at this meeting, please click on the link provided in the virtual meeting center and do so now. The polls will close in 2 minutes. Our Inspector of Elections reports that shareholders entitled to cast more than 75.90 percent of the votes eligible to be cast at this meeting are present or represented by proxy. Therefore, a quorum is present at the meeting and the meeting may proceed. The meeting will now consider 3 business items as described in our proxy statement. We will present each of the business items 1 at a time. Item 1 is the proposal to elect 3 Class 1 directors to serve for term of 3 years. As indicated in the proxy statement, the Board of Directors recommends that the stockholders elect the director nominees. In light of John Kukensperger's retirement from the Board, effective as of today's meeting, the Board of Directors has acted to reduce the number of directors from 11 to 10. The company's regulations divide the directors into 3 classes as equal in number as possible and set their terms at 3 years. We'd like to thank John for his 8 years of service to the Board. Eric and I will now give a brief background of the nominees and their experience. Each of the nominees are incumbent directors. The first nominee is Steve P. Wilson. Stephen is a former Chairman of LCMB Corp. And LCMB National Bank. He joined the LCMB staff in 1975 and the Board of Directors in 1982. He previously served as Chief Executive Officer of LC and B in the bank from 1992 to 2015. He is the past Chairman of the American Bankers Association and a former Board member of the Federal Reserve Bank of Cleveland. Mr. Wilson has represented the Ohio 7th District and the Ohio State Senate since 20 17. He is a Board member and Treasurer of AAA Cincinnati, Chairman of the Board of Harmon Civic Trust, a trustee of the Ralph J. Sali Countryside YMCA, board member of the Warren County Foundation and a member of the Area Progress Council. He is also a former Vice Chair of Warren County Port Authority and a former trustee at Miami University. He and his wife Jill are active members of the Otterbein United Methodist Church. Through his extensive tenure on the Board and as a former executive with the company, Mr. Wilson has developed unique insights into the business activities of LCB and provides the Board with information as to the operations of each. Identifying near and long term challenges and opportunities for the company. Mr. Wilson serves on the Trust Committee and the Pension Committee. Next, Eric J. Maestropp is the President and Chief Executive Officer of LC and B and LC and B National Bank. He joined the Board in 2018 and serves on the pension committee. Mr. Maestropp has been with LC and B National Bank for 32 years, the last 17 as Executive Vice President and a member of its executive team. He has served in a number of roles over his career, including oversight of deposit operations, branch operations, human resources, training in a number of customer service related departments. He has also served on a number of boards, committees and groups in a variety of capacities throughout his career outside of the bank. He is currently on the Countryside YMCA Board has been a board member there for several years, including 2 years as Board Chair. He also serves as a trustee of the Ralph J. Sally Countryside He is a Board member of the Westside Church of Christ, a former member of the Warren County Career Center District Business Advisory Committee and a current and charter member of the Lebanon Optimist Club. The 3rd nominee is Spencer S. Cropper. Spence is Chairman of LC and B Corp and LC and B National Bank. He joined the Board in 2,006 and was named Chairman in 2019. He is employed by Stauley Properties Incorporated, a subsidiary of Ralph J. Stauley Company and currently serves on the company's Board of Directors. Mr. Cropper is a certified public accountant, a member of the Ohio Society of Certified Public Accountants and a member of the American Institute of Certified Public Accountants. He is an investor and serves on the Board of Advisors of a private equity fund, who primarily focuses on providing mezzanine financing. He serves on the Board of Directors at the Ralph J. Staley Countryside YMCA, as well as the Boards of Trustees for the Ralph J. Stolle Countryside YMCA, the Warren County Foundation and the Bethesda Foundation Incorporated. Mr. Cropper brings to the Board relevant experience in accounting and financial matters. He serves on the Audit Committee, the Pension Committee, compensation committee and the nominating and governance committee. Thank you, Eric. The inspectors of the election certify that with respect to the election of directors, a total of 5,900 and 10,000 403.37 votes were cast in favor of electing Stephen P. Wilson to the Board of Directors, a total of 7,013,077.11 votes were cast in favor of electing Spencer S. Crawford to the Board of Directors, and a total of 6,063,647.11 votes were cast in favor of electing Eric J. Maestro to the Board of Directors. As such, I hereby declare that Stephen P. Wilson, Spencer S. Cropper and Eric J. Maestropp have been duly elected to the Board of Directors of LNG to serve in such positions until the 2024 Annual Meeting of Shareholders. Item number 2 is an advisory proposal to approve the compensation of our named executive officers as disclosed in the proxy statement. As indicated in the proxy statement, the Board of Directors recommends that shareholders vote in favor of this proposal. A total of 6,417,978.57 votes were cast in favor of the approval of the compensation of our named executive officers. A total of 296,838.46 votes were cast against the approval of the compensation of our named executive officers. The compensation committee and the Board will take the outcome of this vote into account when considering future executive compensation arrangements. And lastly, item number 3 is a proposal to ratify the appointment of BKD LLP as LCMB's independent registered accounting firm. As indicated in the proxy statement, the Board of Directors recommends that shareholders vote in favor of this proposal. A total of 9,661,585.54 votes were cast in favor of ratification of the appointment of BKD LLP as the independent registered accounting firm for LC and B. A total of 4630.59 votes were cast against the ratification of the appointment of BKD LLP as the independent registered accounting firm for LCB. As such, I hereby declare that the appointment of BKD LLP as the independent registered accounting firm for LCB has been ratified. That concludes the report of preliminary voting. Details of the final results will be available for all shareholders in our filings with the SEC within 4 business days. Now we will hear from Eric Maestropp, LCB's President and CEO, with a report to shareholders on LC and B's performance in 2020 as well as our plans for 2021. Thank you, Spence. I want to thank all of you who are participating in today's annual meeting and for your continued interest in LCMB. At this time last year, the emerging COVID-nineteen pandemic was causing widespread uncertainty. It was hard to imagine what was going to occur throughout 2020 as a result of the unprecedented nature of the crisis. As a management team and company, not much changed. We remain focused on supporting our associates, customers and communities throughout 2020 and the COVID-nineteen pandemic just like we have for over 140 years. I am proud of LC and B's accomplishments and record financial results over the past year. Our ability to navigate the challenges presented by the COVID-nineteen pandemic while serving our local communities is a direct result of our experienced management team, the dedication of our associates and our successful business model. We entered 2020 with strong capital levels and a legacy of resilient asset quality, which provides LC and B with the flexibility to respond to the challenges associated with the pandemic. Most importantly, this past year demonstrated the dedication of our staff and I want to use this opportunity to say thank you to everyone at LC and B for their continued hard work and commitment. So let me start today's presentation by highlighting some of our record financial results. For 2020, annual diluted earnings per share increased 7.6% year over year to a record of $1.55 Fiduciary income increased to a record as a result of a 44.2% increase in trust and investment assets, while total assets managed increased 16.3% to a record $2,900,000,000 During 2020, we assisted 316 small businesses in keeping their associates employed when we participated in the Paycheck Protection program. While PPP assisted in growing our portfolio to a record $1,300,000,000 in loans, we are simply proud that we were able to assist others when the need was there. Our deposits increased to $107,000,000 also assisted not only by the PPP program, but because trends and savings were boosted during the pandemic. We ended 20 20 at a record $1,500,000,000 in deposits. Importantly, we were able to prudently manage risk throughout 2020, demonstrating that consistent sound portfolio management prior to the pandemic was in place. Charge offs were $331,000 or 0.03 percent of average loans, compared to $207,000 or 0.02 percent of average loans for the same period last year. During the early quarters of the pandemic, we eased customer fears by allowing payment deferrals if customers needed them. Customer deferrals totaled 600 at the high point, but by the end of 2020, only 10 customers with $20,600,000 remain deferred. In addition, despite the impact of COVID-nineteen pandemic, non performing loans to total assets were 0.21% over the past 2 years, reflecting continued consistency in loan performance. From an operational standpoint, it is critical for us to continually invest in our business. Therefore, we are focused on expanding LC and B's digital service and marketing efforts, while optimizing the bank's physical branch presence. Providing an excellent experience for our customers has always been a priority for LC and B. During the past year, we refreshed our entire ATM network, enhanced branch systems and processes, and launched a new online platform that supports enhanced digital account opening and lending applications. All investments were made with the goal of improving the customer service and our customer experience and our operating efficiencies. I also would like to acknowledge the extraordinary efforts of our IT team getting us up and running in a safe and secure digital environment that allowed for at times over 190 employees to work remotely. We remain focused on building upon 2020's accomplishments by continuing to offer our communities leading and diversified financial services, maintaining strong asset quality, managing both our cost of funds and non interest expense and increasing non interest income. We believe we have a proven platform to drive sustainable growth and create long term value for our shareholders. Demonstrating our optimism in the future and our commitment to creating value for shareholders, we increased our cash dividend payment by 5.6% during the 20 24th quarter. LC and B has a long history of paying dividends and returning capital to shareholders, even maintaining our quarterly dividend throughout the 2,007 to 2,009 global financial crisis. Our 4th quarter dividend payment represents the 3rd consecutive annual increase in our dividend payment, and we are focused on supporting shareholders through our growing dividend policy. Yesterday, we filed our Q1 earnings release demonstrating continued improvements in our financial and operating performance. Our wealth team continued to contribute to both growth and non interest income. We hit the $3,000,000,000 mark for assets under management when you combine bank assets and the wealth assets. Also, our asset quality remains strong. Finally, I want to thank John Kockensbarger for his service to LC and B. As a Director, John has provided a significant amount of value to our Board and to the bank over the past 8 years. He is more than just a Board member. He is and always will be a part of the LC and B family. On behalf of everyone at the bank and my fellow Board members, I want to thank John for his contributions to LCNB and wish him well in retirement. To conclude my prepared remarks before we open the meeting to questions, I'm extremely proud of our performance during 2020 and excited by the opportunities we have in 2021 and beyond. I would like once again to thank everyone in LCB for their continued hard work and dedication. We will now address any questions that we have submitted by shareholders. So if you could just give me a second to see if there are any. Spence, it looks like there are no questions at this particular time. So I'll turn it back over to you. Okay. Thank you, Eric. Thank you for the comments as well. That completes the business schedule for today's meeting. We'd like to thank all of you for joining us online. Have a great day and we look forward to seeing you all soon. Our meeting is now officially concluded.