10-K: LCNB Corp. Reports Mixed Results in 2024 Amidst Acquisition Integration

LCNB Corp.'s 2024 net income saw a slight increase, influenced by recent acquisitions and strategic financial maneuvers.

Summary

• LCNB Corp. reported a net income of $13.49 million for 2024, compared to $12.63 million in 2023 and $22.13 million in 2022.
• The results were affected by the mergers with Cincinnati Bancorp, Inc. (CNNB) on November 1, 2023, and Eagle Financial Bancorp, Inc. (EFBI) on April 12, 2024.
• Merger-related expenses totaled $3.44 million in 2024 and $4.66 million in 2023.
• Net interest income was $60.80 million in 2024, compared to $56.35 million in 2023 and $61.04 million in 2022.
• The provision for credit losses totaled $1.96 million in 2024, including $763,000 related to loans acquired through the EFBI acquisition.
• Net gains from sales of loans totaled $3.43 million in 2024, $697,000 in 2023, and $196,000 in 2022, primarily due to the volume of loans sold.
• Other non-interest expense was partially offset by gains on the sale of closed office buildings of $455,000 in 2024 and $425,000 in 2023.
• The Florence Office, located in Boone County, Kentucky, closed at the end of the business day on February 27, 2025.

Sentiment

Score: 5

Explanation: The document presents a mixed picture with some positive growth metrics offset by acquisition costs and a decline in overall profitability compared to previous years. The outlook is uncertain due to various economic and market risks.

Positives

• Net income increased year-over-year.
• Net interest income increased year-over-year.
• Net gains from sales of loans increased significantly year-over-year.
• The company sold approximately $233 million of single-family residential loans in the secondary market during 2024.

Negatives

• Merger-related expenses negatively impacted earnings.
• Net income is still lower than 2022.
• The company closed the Florence, Kentucky office on February 27, 2025.

Risks

• Weakness in the economy and real estate market may negatively affect financial condition and earnings.
• 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 may have results on LCNB's operations materially different from those anticipated.
• Difficulties with technology or data security breaches could negatively affect LCNB's ability to conduct business.
• Climate change, severe weather, natural disasters, acts of war or terrorism, political instability, epidemics and other external events could significantly impact LCNB's business.

Future Outlook

LCNB undertakes no obligation to update any forward-looking statement to reflect events or circumstances that arise after the date such statements are made.

Industry Context

The deregulation of the banking industry and the wide spread enactment of state laws that permit multi-bank holding companies as well as the availability of nationwide interstate banking has created a highly competitive environment for financial services providers.

Related Party Transactions

• LCNB has entered into related party transactions with various directors and executive officers.

Stakeholder Impact

• Shareholders: Dividend payments are subject to regulatory restrictions and depend on the Bank's earnings and capital levels.
• Employees: LCNB is committed to investing in their ongoing growth and development.
• Customers: LCNB is subject to certain consumer laws and regulations that are designed to protect consumers in transactions with banks.

Next Steps

• The 2015 Ownership Incentive Plan will terminate on April 28, 2025.
• The Bank will do the same in 2025 along with some smaller scheduled group meetings at various locations within our market areas to further communicate important initiatives and information.

Key Dates