DEF: LCNB Corp. Seeks Shareholder Approval for 2025 Ownership Incentive Plan and Director Elections at Upcoming Annual Meeting

LCNB Corp. is holding its annual shareholder meeting on May 19, 2025, to vote on key proposals including the election of directors, executive compensation, ratification of the accounting firm, and adoption of a new ownership incentive plan.

Summary

• LCNB Corp. will hold its annual meeting of shareholders virtually on May 19, 2025.
• Shareholders will vote on electing four Class II directors to serve until the 2028 annual meeting.
• An advisory, non-binding vote on executive compensation (Say-on-Pay) will be conducted.
• Shareholders will vote to ratify the appointment of Plante & Moran, PLLC as the independent registered public accounting firm for the fiscal year ending December 31, 2025.
• The 2025 Ownership Incentive Plan, which allows for the grant of 600,000 Common Shares through ownership incentives to key employees, will be voted on.
• A shareholder proposal recommending the Board take steps to effectuate a sale of the Company will be considered.
• The Board of Directors recommends voting FOR the election of directors, FOR the Say-on-Pay proposal, FOR the ratification of Plante & Moran, FOR the approval of the 2025 Ownership Incentive Plan, and AGAINST the shareholder proposal to sell the company.
• As of April 1, 2025, LCNB had 14,166,915 Common Shares issued and outstanding.

Sentiment

Score: 7

Explanation: The document presents a balanced view, outlining both positive strategic growth and potential risks associated with market conditions and shareholder proposals. The board's confidence in its strategic plan contributes to a moderately positive outlook.

Positives

• The Board has a longstanding commitment to creating value and returning capital to its shareholders, as evidenced by dividends and share repurchases.
• LCNB has a strategic vision of long-term profitable growth.
• LCNB has successfully pursued a strategy aimed at creating long-term shareholder value.
• Total assets managed have increased 160% from $1.6 billion to $4.2 billion, while non-performing loans to total loans have improved from 0.82% at December 31, 2014 to 0.27% at December 31, 2024.
• Wealth and Trust assets have increased 253% from $391.1 million to $1.4 billion, which contributed to consistent growth in noninterest income over the past 10 years.
• The Company has produced almost $160 million of aggregate net income during the last 10 years.
• Over the past 10 years, LCNBs annual dividend has increased 38% from $0.64 per share to $0.88 per share.
• LCNB has made five acquisitions since 2014, which have complemented the Companys organic growth initiatives.

Negatives

• A shareholder proposal recommends that the Board take all necessary steps to promptly effectuate a sale of the Company, which the Board opposes.
• The stock and M&A markets for community banks have been depressed for several years.
• Approval of the shareholder proposal could create the impression that the Company is under pressure to sell, which could adversely affect the value of the Companys stock price and impact potential offers, forcing the Board to accept a lower price as a result.

Risks

• Engaging in a public sale process could damage LCNB's reputation with customers, clients, and associates by creating uncertainty.
• Recent economic, interest rate and capital market volatility could impact the industry, the Company, its competitors and potential strategic partners.
• A sale will not result in maximizing shareholder value at a particularly volatile period in the community banking space and broader economy, especially when the Company is in the midst of absorbing two recent acquisitions.

Future Outlook

The Board believes that shareholders interests are currently best served by the Companys pursuit of its strategy of building franchise value as an independent national bank serving the ever-growing needs of its markets.

Management Comments

• The Board believes that core return on average assets (ROAA) and core return on average tangible common equity (ROATCE) are both indicative measures of a banks performance.
• The Board of Directors strongly believes that its strategic plan focused on balancing growth with credit risk, diversifying revenue streams, focusing on profitability, returning capital to shareholders, prudently pursuing merger and acquisition opportunities and continuously evolving will continue to benefit the future prospects of LCNB and its shareholders.

Industry Context

The document discusses the current depressed state of the stock and M&A markets for community banks, which influences the Board's recommendation against selling the company at this time.

Comparison to Industry Standards

• LCNB's core ROAA and ROATCE have been in line with its peers over the past 10 years.
• Peers include 50 public Midwest banks with assets between $1 billion and $5 billion with disclosed return metrics.

Related Party Transactions

• The Bank retained the law firm of Kaufman & Florence during 2024 for legal services in connection with various matters arising in the course of the Banks business.
• William H. Kaufman, a director of LCNB, is a former Partner (currently Of Counsel) of Kaufman & Florence.
• The approximate amount billed by Kaufman & Florence for legal services during 2024 was $95,044.

Stakeholder Impact

• The document outlines potential impacts on shareholders, employees, customers, and communities served by LCNB National Bank.
• The Board believes that shareholders interests are currently best served by the Companys pursuit of its strategy of building franchise value as an independent national bank serving the ever-growing needs of its markets.

Next Steps

• Shareholders are urged to vote on the proposals outlined in the proxy statement.
• The Board will continue to regularly review the Companys business and prospects and, consistent with the exercise of its fiduciary duties, will consider strategic alternatives that will enhance shareholder value.

Key Dates

Keywords

shareholder meeting, proxy statement, directors, executive compensation, ownership incentive plan, Plante & Moran, sale of company, LCNB Corp, voting, annual meeting