PART I – FINANCIAL INFORMATION [Item 1. Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) Presents LCNB Corp.'s unaudited consolidated condensed financial statements for Q1 2025, including balance sheets, income, equity, and cash flows [Consolidated Condensed Balance Sheets](index=5&type=section&id=CONSOLIDATED%20CONDENSED%20BALANCE%20SHEETS) LCNB Corp.'s balance sheet as of March 31, 2025, shows stable total assets, increased deposits, and reduced long-term debt, with growing equity Consolidated Condensed Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Assets** | **$2,302,745** | **$2,307,394** | | Total cash and cash equivalents | $37,670 | $35,744 | | Total investment securities | $305,644 | $306,794 | | Loans, net | $1,705,506 | $1,709,811 | | Goodwill | $90,310 | $90,310 | | **Total Liabilities** | **$2,044,094** | **$2,054,358** | | Total deposits | $1,921,649 | $1,878,292 | | Long-term debt | $104,637 | $155,153 | | **Total Shareholders' Equity** | **$258,651** | **$253,036** | [Consolidated Condensed Statements of Income](index=7&type=section&id=CONSOLIDATED%20CONDENSED%20STATEMENTS%20OF%20INCOME) LCNB Corp. reported significantly increased net income for Q1 2025, driven by higher net interest income and reduced merger-related expenses Q1 2025 vs Q1 2024 Income Statement (in thousands, except per share data) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Interest Income | $16,299 | $13,895 | | Provision for Credit Losses | $197 | $125 | | Total Non-Interest Income | $5,222 | $3,929 | | Total Non-Interest Expense | $15,809 | $15,472 | | **Net Income** | **$4,609** | **$1,915** | | **Diluted EPS** | **$0.33** | **$0.15** | [Consolidated Condensed Statements of Comprehensive Income](index=9&type=section&id=CONSOLIDATED%20CONDENSED%20STATEMENTS%20OF%20COMPREHENSIVE%20INCOME) Total comprehensive income for Q1 2025 substantially increased, primarily due to higher net income and a positive swing in unrealized gains on securities Q1 2025 vs Q1 2024 Comprehensive Income (in thousands) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Income | $4,609 | $1,915 | | Other comprehensive income (loss), net of tax | $3,662 | $(1,118) | | **Total Comprehensive Income** | **$8,271** | **$797** | [Consolidated Condensed Statements of Shareholders' Equity](index=10&type=section&id=CONSOLIDATED%20CONDENSED%20STATEMENTS%20OF%20SHAREHOLDERS%27%20EQUITY) Shareholders' equity increased in Q1 2025, driven by net income and other comprehensive income, partially offset by common stock dividends - Total shareholders' equity increased by **$5.6 million** during Q1 2025[20](index=20&type=chunk) - Key changes included: **+$4.6M Net Income**, **+$3.7M Other Comprehensive Income**, and **-$3.1M** in dividends paid ($0.22 per share)[20](index=20&type=chunk) [Consolidated Condensed Statements of Cash Flows](index=11&type=section&id=CONSOLIDATED%20CONDENSED%20STATEMENTS%20OF%20CASH%20FLOWS) Cash and cash equivalents increased in Q1 2025, with positive operating cash flow, investing inflows, and financing outflows primarily from debt repayment Q1 2025 vs Q1 2024 Cash Flows (in thousands) | Cash Flow Category | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $2,212 | $(11,941) | | Net Cash from Investing Activities | $9,813 | $11,705 | | Net Cash from Financing Activities | $(10,099) | $(6,536) | | **Net Change in Cash** | **$1,926** | **$(6,772)** | [Notes to Consolidated Condensed Financial Statements](index=13&type=section&id=NOTES%20TO%20CONSOLIDATED%20CONDENSED%20FINANCIAL%20STATEMENTS) The notes provide detailed explanations of the financial statements, covering basis of presentation, acquisition details, portfolio composition, credit losses, and fair value measurements - The acquisition of Eagle Financial Bancorp, Inc (EFBI) on April 12, 2024, increased LCNB's presence in the Cincinnati market. Adjustments to the initial valuation were made in Q1 2025, resulting in a final goodwill amount of **$10.3 million**[34](index=34&type=chunk)[37](index=37&type=chunk) - The loan portfolio's allowance for credit losses (ACL) was **0.71%** of total loans at March 31, 2025, slightly up from **0.70%** at year-end 2024. Non-accrual loans were low at **0.27%** of total loans[58](index=58&type=chunk)[64](index=64&type=chunk) - The company's defined benefit multi-employer retirement plan was hard-frozen on March 1, 2025, meaning no further benefits will accrue to covered employees[109](index=109&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=46&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q1 2025 financial results, highlighting increased net income driven by higher net interest income and reduced merger expenses, covering financial condition and capital [Results of Operations](index=49&type=section&id=Results%20of%20Operations) Q1 2025 net income significantly increased, driven by higher net interest income and non-interest income, with modest non-interest expense growth and no merger costs Key Performance Indicators - Q1 2025 vs Q1 2024 | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Income | $4.6 million | $1.9 million | | Diluted EPS | $0.33 | $0.15 | | Net Interest Income | $16.3 million | $13.9 million | | Tax Equivalent Net Interest Margin | 3.25% | 2.72% | [Net Interest Income](index=50&type=section&id=Net%20Interest%20Income) Net interest income increased in Q1 2025, primarily due to lower interest expense from reduced deposit rates and short-term borrowings, expanding the net interest margin - The increase in net interest income was primarily attributable to changes in rate (**$2.3 million** positive impact), while volume changes had a smaller positive impact (**$0.1 million**)[157](index=157&type=chunk) - Interest expense on deposits and borrowings decreased significantly. Interest expense on interest-bearing demand and money market deposits fell by **$1.6 million**, and on short-term borrowings by **$0.9 million**[159](index=159&type=chunk) [Provision and Allowance For Credit Losses](index=52&type=section&id=Provision%20and%20Allowance%20For%20Credit%20Losses) The company recorded a higher provision for credit losses in Q1 2025, covering loans and off-balance-sheet exposures, with minimal net charge-offs Credit Loss Provision and Charge-offs (in thousands) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Provision for Credit Losses | $197 | $125 | | Net Charge-offs | $39 | $45 | [Financial Condition](index=55&type=section&id=Financial%20Condition) Total assets remained stable in Q1 2025, with increased deposits and reduced long-term debt, while the loan portfolio remains concentrated in commercial real estate - Long-term debt decreased by **32.6%** due to the early payoff of **$50 million** in FHLB advances, funded by an increase in lower-cost ICS deposits[169](index=169&type=chunk)[174](index=174&type=chunk) - The commercial real estate loan portfolio, totaling **$1.05 billion**, is diversified by property type, with Multi-family (**27%**), Retail (**15%**), and Office (**12%**) being the largest segments[173](index=173&type=chunk) - Accumulated other comprehensive loss decreased by **19.1%** due to market-driven recoveries in the fair value of available-for-sale debt securities[169](index=169&type=chunk)[174](index=174&type=chunk) [Regulatory Capital](index=58&type=section&id=Regulatory%20Capital) LCNB and its bank subsidiary remained 'well-capitalized' as of March 31, 2025, with all capital ratios exceeding minimum regulatory requirements Bank Capital Ratios | Ratio | March 31, 2025 | Well-Capitalized Minimum | | :--- | :--- | :--- | | Common Equity Tier 1 Capital | 9.98% | 6.5% | | Tier 1 Capital | 9.98% | 8.0% | | Total Capital | 10.66% | 10.0% | | Leverage Ratio | 8.07% | 5.0% | [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=60&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risks) LCNB manages interest rate risk through asset/liability strategies, with models indicating that rising rates would negatively impact Net Interest Income and Economic Value of Equity within policy limits - A **+200 basis point** rate shock is projected to decrease Net Interest Income (NII) by **1.84%** over one year[186](index=186&type=chunk) - A **+200 basis point** rate shock is projected to decrease the Economic Value of Equity (EVE) by **7.89%**[187](index=187&type=chunk) - The company does not use derivatives like interest rate swaps, caps, or floors to hedge interest rate risk[184](index=184&type=chunk) [Item 4. Controls and Procedures](index=61&type=section&id=Item%204.%20Controls%20and%20Procedures) LCNB's disclosure controls and procedures were effective as of March 31, 2025, with no material changes in internal control over financial reporting during the quarter - The CEO and CFO concluded that as of March 31, 2025, LCNB's disclosure controls and procedures were effective[188](index=188&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, the company's internal controls[189](index=189&type=chunk) PART II. OTHER INFORMATION [Item 1. Legal Proceedings](index=62&type=section&id=Item%201.%20Legal%20Proceedings) LCNB is not a party to any material pending legal proceedings beyond routine business litigation - The company reports no material pending legal proceedings[192](index=192&type=chunk) [Item 1A. Risk Factors](index=62&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors previously disclosed in the 2024 Annual Report on Form 10-K - Readers are referred to the risk factors disclosed in the 2024 Form 10-K[193](index=193&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=62&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) LCNB did not sell unregistered equity securities or repurchase shares under its authorized plan during Q1 2025, with shares remaining available for purchase - No unregistered securities were sold during the reporting period[194](index=194&type=chunk) - No shares were repurchased under the existing stock repurchase plan during the three months ended March 31, 2025. There are **315,047 shares** that may still be purchased under the plan[197](index=197&type=chunk) [Item 3. Defaults Upon Senior Securities](index=62&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) No defaults upon senior securities occurred during the period - There were no defaults upon senior securities[198](index=198&type=chunk) [Item 4. Mine Safety Disclosures](index=62&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company's operations - This item is not applicable to the company[199](index=199&type=chunk) [Item 5. Other Information](index=62&type=section&id=Item%205.%20Other%20Information) No director or officer trading arrangements under Rule 10b5-1 were adopted, modified, or terminated in Q1 2025 - No director or officer trading plans under Rule 10b5-1 were adopted, modified, or terminated in Q1 2025[200](index=200&type=chunk) [Item 6. Exhibits](index=63&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including merger agreements and CEO/CFO certifications - Exhibits include CEO and CFO certifications under Sections 302 and 906 of the Sarbanes-Oxley Act[201](index=201&type=chunk)

Group 1: Earnings Performance - LCNB reported quarterly earnings of $0.33 per share, missing the Zacks Consensus Estimate of $0.39 per share, but showing an increase from $0.20 per share a year ago, representing an earnings surprise of -15.38% [1] - The company posted revenues of $21.52 million for the quarter ended March 2025, missing the Zacks Consensus Estimate by 6.84%, compared to year-ago revenues of $17.82 million [2] - Over the last four quarters, LCNB has surpassed consensus EPS estimates three times and topped consensus revenue estimates three times [2] Group 2: Stock Performance and Outlook - LCNB shares have lost about 7.7% since the beginning of the year, while the S&P 500 has declined by 12.3% [3] - The current consensus EPS estimate for the coming quarter is $0.40 on $23.6 million in revenues, and for the current fiscal year, it is $1.65 on $95.5 million in revenues [7] - The estimate revisions trend for LCNB is mixed, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market in the near future [6] Group 3: Industry Context - The Banks - Northeast industry, to which LCNB belongs, is currently in the top 25% of over 250 Zacks industries, suggesting a favorable outlook for stocks in this sector [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

LCNB Corp. Financial Highlights for the Quarter Ended March 31, 2025 [Financial and Operational Highlights (Q1 2025)](index=1&type=section&id=Financial%20and%20Operational%20Highlights%20(Q1%202025)) LCNB Corp. reported Q1 2025 net income of $4.6 million, a significant year-over-year increase, with improved net interest margin Q1 2025 Key Financial Metrics | Metric | Q1 2025 | Q4 2024 | Q1 2024 | | :--- | :--- | :--- | :--- | | Net Income (in thousands) | $4,609 | $6,120 | $1,915 | | Diluted EPS | $0.33 | $0.44 | $0.15 | | Dividends per Share | $0.22 | $0.22 | $0.22 | | Return on Average Assets | 0.81% | 1.04% | 0.34% | | Return on Average Equity | 7.33% | 9.60% | 3.28% | | Net Interest Margin (tax eq.) | 3.25% | 3.22% | 2.72% | - Book value per share increased to **$18.26** at the end of Q1 2025, compared to **$17.92** at the end of Q4 2024 and **$17.67** at the end of Q1 2024[2](index=2&type=chunk) Gross Loan Portfolio Composition (Q1 2025) | Loan Category | Amount (in thousands) | | :--- | :--- | | Commercial, secured by real estate | $1,110,276 | | Residential real estate | $463,379 | | Commercial and industrial | $112,580 | | Consumer | $19,030 | | Agricultural | $13,161 | | **Total Gross Loans** | **$1,717,630** | [Consolidated Balance Sheets](index=7&type=section&id=Consolidated%20Balance%20Sheets) LCNB Corp.'s Q1 2025 balance sheet shows stable total assets, increased deposits and equity, and a significant reduction in long-term debt Balance Sheet Comparison (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Assets | $2,302,745 | $2,307,394 | | Loans, net | $1,705,506 | $1,709,811 | | Total Deposits | $1,921,649 | $1,878,292 | | Long-term debt | $104,637 | $155,153 | | Total Shareholders' Equity | $258,651 | $253,036 | - The increase in shareholders' equity was supported by retained earnings growth and a reduction in accumulated other comprehensive loss[10](index=10&type=chunk) [Consolidated Statements of Income](index=8&type=section&id=Consolidated%20Statements%20of%20Income) Net income more than doubled year-over-year in Q1 2025, driven by increased net interest and non-interest income, alongside reduced interest expense Income Statement YoY Comparison (in thousands) | Account | Three Months Ended Mar 31, 2025 | Three Months Ended Mar 31, 2024 | | :--- | :--- | :--- | | Net Interest Income | $16,299 | $13,895 | | Provision for Credit Losses | $197 | $125 | | Non-Interest Income | $5,222 | $3,929 | | Non-Interest Expense | $15,809 | $15,472 | | **Net Income** | **$4,609** | **$1,915** | | **Diluted EPS** | **$0.33** | **$0.15** | - Total interest expense decreased to **$9.0 million** in Q1 2025 from **$10.9 million** in Q1 2024, largely due to a sharp drop in interest on short-term borrowings from **$935 thousand** to just **$1 thousand**[12](index=12&type=chunk) - Non-interest expense in Q1 2025 did not include any merger-related expenses, which amounted to **$775 thousand** in Q1 2024[12](index=12&type=chunk) [Asset Quality](index=3&type=section&id=Asset%20Quality) Asset quality remained stable in Q1 2025, with a slight increase in nonperforming loans but minimal net charge-offs and a higher allowance for credit losses Key Asset Quality Metrics | Metric | Q1 2025 | Q4 2024 | Q1 2024 | | :--- | :--- | :--- | :--- | | Nonperforming loans (in thousands) | $4,891 | $4,618 | $3,243 | | Net charge-offs (in thousands) | $39 | $595 | $45 | | Allowance for credit losses on loans (in thousands) | $12,124 | $12,001 | $10,557 | | Nonperforming loans to total loans | 0.28% | 0.27% | 0.20% | | ACL on loans to total loans | 0.71% | 0.70% | 0.64% | - The provision for credit losses on loans for Q1 2025 was **$162 thousand**, down from **$728 thousand** in the prior quarter but up from **$77 thousand** in Q1 2024[4](index=4&type=chunk) [Net Interest Income Analysis](index=6&type=section&id=Net%20Interest%20Income%20Analysis) The company's net interest margin and spread expanded in Q1 2025, driven by higher asset yields and lower interest-bearing liability rates Net Interest Margin and Spread | Metric | Q1 2025 | Q4 2024 | Q1 2024 | | :--- | :--- | :--- | :--- | | Net Interest Rate Spread | 2.71% | 2.63% | 2.11% | | Net Interest Margin (tax eq.) | 3.25% | 3.22% | 2.72% | - The average yield on loans increased to **5.46%** in Q1 2025 from **5.30%** in Q1 2024[7](index=7&type=chunk) - The average rate paid on total interest-bearing liabilities decreased to **2.34%** in Q1 2025 from **2.74%** in Q1 2024, primarily due to lower costs on borrowings[7](index=7&type=chunk) [Assets Under Management](index=5&type=section&id=Assets%20Under%20Management) Total assets under management reached $4.16 billion in Q1 2025, showing year-over-year growth driven by trust and brokerage accounts Assets Under Management (in thousands) | Category | Q1 2025 | Q4 2024 | Q1 2024 | | :--- | :--- | :--- | :--- | | LCNB Corp. total assets | $2,302,745 | $2,307,394 | $2,283,151 | | Trust and investments (fair value) | $957,359 | $942,249 | $890,800 | | Brokerage accounts (fair value) | $441,621 | $438,310 | $411,211 | | **Total assets managed** | **$4,157,148** | **$4,232,235** | **$3,984,966** |

Loan Portfolio and Credit Losses - Total loans outstanding amounted to $1,721.8 million, with commercial and industrial loans at $118.6 million and residential real estate loans at $457.1 million[94]. - The allowance for credit losses on loans was $12.0 million, representing 0.70% of total loans outstanding, an increase from 0.61% in 2023[95]. - The ratio of the allowance for credit losses to total non-accrual loans was 265.04%, indicating a strong coverage of potential losses[95]. - Approximately 89.4% of LCNB's total commercial loans, or about 64.6% of total loans, are related to commercial real estate, indicating a significant concentration in this sector[107]. - LCNB's loan portfolio includes a substantial amount of commercial and industrial loans, which carry higher financial and credit risks compared to residential loans[106]. - The provision for credit losses is determined based on management's evaluation of the loan portfolio, and increases in the allowance for credit losses can negatively impact earnings[136]. Deposits and Liquidity - Uninsured deposits, including related interest accrued and unpaid, were estimated at $245.8 million as of December 31, 2024, up from $203.9 million in 2023[96]. - The estimated contractual maturities of time deposits exceeding the FDIC insurance limit of $250,000 included $15.9 million maturing within 3 months[97]. - LCNB faces liquidity risk, which could impair its ability to fund operations and capitalize on growth opportunities due to potential difficulties in liquidating assets or obtaining financing[109]. Market and Economic Conditions - The company faces risks related to economic conditions, including potential deterioration in credit quality and increased charge-offs due to economic downturns[100]. - Economic conditions in LCNB's market areas, primarily in Southwestern Ohio, could adversely affect its financial condition, increasing the risk of loan defaults and impacting demand for loans and services[134]. - Economic conditions, including inflation and unemployment, could negatively impact LCNB's financial condition and earnings, particularly affecting loan demand and repayment capabilities[100][101]. - LCNB's earnings are significantly affected by market interest rates, with fluctuations potentially impacting net interest income, a primary source of operational income[125]. - LCNB's future success is dependent on effectively adopting new technology-driven products and services to meet customer demands and improve operational efficiencies[148]. Investment and Securities - The company reported a total of $282.6 million in available-for-sale securities with a weighted average yield of 2.37%[92]. - The fair value of LCNB's investment securities portfolio, primarily available-for-sale, may decline due to factors such as interest rate changes and market volatility, impacting shareholders' equity[138]. - LCNB's investments in equity securities are recorded at fair value, meaning declines will immediately decrease net income[140]. - Municipal securities in LCNB's portfolio may experience value declines due to the financial deterioration of issuers, potentially leading to impairment charges[139]. Regulatory and Compliance Risks - The banking industry is highly regulated, with LCNB subject to oversight by multiple regulatory bodies, which could affect its operations[143]. - Changes in tax laws and accounting standards could materially affect LCNB's operations and reported financial condition[141]. - FDIC deposit insurance assessments increased by two basis points starting in 2023, with potential for further rate increases in the future[147]. Competition and Market Position - LCNB's Wealth Management business is subject to intense competition and is directly affected by conditions in the debt and equity securities markets, which are influenced by factors beyond the company's control[118]. - LCNB's ability to attract and retain customers in a competitive market is crucial for its growth and profitability, as it competes with various financial institutions and non-bank entities[133]. - The emergence of non-bank alternatives may lead to customer disintermediation, resulting in loss of fee income and deposits[149]. Operational Risks - LCNB's reliance on electronic communications and information systems poses risks of interruptions or cyberattacks, which could disrupt operations and impact financial results[113]. - Failure to adopt new technologies may result in customer dissatisfaction, impacting LCNB's growth and revenue[148]. - Climate change poses multi-faceted risks, including operational, credit, and reputational risks, which could significantly impact LCNB's business[150]. - Natural disasters and external events could affect LCNB's deposit stability, borrowers' repayment ability, and overall operational capacity[151]. - Outbreaks of communicable diseases may lead to significant market volatility, business disruptions, and adverse effects on LCNB's financial condition and operations[152].

分组1 - LCNB reported quarterly earnings of $0.44 per share, exceeding the Zacks Consensus Estimate of $0.30 per share, and showing an increase from $0.34 per share a year ago, resulting in an earnings surprise of 46.67% [1] - The company achieved revenues of $22.7 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 8.62%, compared to $19.27 million in the same quarter last year [2] - Over the last four quarters, LCNB has surpassed consensus EPS estimates three times and topped consensus revenue estimates three times [2] 分组2 - The stock has gained approximately 1.6% since the beginning of the year, while the S&P 500 has increased by 2.7% [3] - The current consensus EPS estimate for the upcoming quarter is $0.39 on revenues of $22.2 million, and for the current fiscal year, it is $1.75 on revenues of $92.7 million [7] - The Zacks Industry Rank for Banks - Northeast is in the top 6% of over 250 Zacks industries, indicating strong performance potential [8]

Interest Income and Net Interest Income - Interest income for the three months ended December 31, 2024, was $26,894,000, an increase from $23,310,000 for the same period in 2023, representing a growth of 15.8%[2] - Net interest income after provision for credit losses for the twelve months ended December 31, 2024, was $58,833,000, compared to $54,272,000 for the previous year, reflecting an increase of 8.5%[2] - Net interest income for the year ended December 31, 2024, was $60,956 thousand, with a net interest margin of 2.91%[9] - Net interest income for the twelve months ended December 31, 2024, was $60,795 thousand, compared to $56,349 thousand in 2023, reflecting an increase of 7.03%[14] Non-Interest Income - Non-interest income for the three months ended December 31, 2024, was $5,988,000, up from $4,606,000 in the same quarter of 2023, indicating a growth of 30.0%[2] - Non-interest income for the twelve months ended December 31, 2024, reached $20,404 thousand, up from $15,411 thousand in 2023, a growth of 32.51%[14] Credit Losses and Provisions - The provision for credit losses for the three months ended December 31, 2024, was $649,000, compared to $2,218,000 for the same period in 2023, showing a decrease of 70.8%[2] - The provision for credit losses decreased to $1,962 thousand in 2024 from $2,077 thousand in 2023, a reduction of 5.54%[14] - The allowance for credit losses was $11,263 thousand in 2024, up from $8,046 thousand in 2023, reflecting a potential increase in credit risk[9] Net Income and Earnings - The net income for the twelve months ended December 31, 2024, was $13,492,000, an increase from $12,628,000 in 2023, representing a growth of 6.8%[2] - Net income for the twelve months ended December 31, 2024, was $13,492 thousand, compared to $12,628 thousand in 2023, an increase of 6.84%[14] - Basic earnings per share improved to $0.97 in 2024 from $1.10 in 2023, a decrease of 11.82%[14] Efficiency and Ratios - The return on average assets for the three months ended December 31, 2024, was 1.04%, up from 0.15% in the same quarter of 2023[3] - The return on average equity for the three months ended December 31, 2024, was 9.60%, compared to 1.53% for the same period in 2023[3] - The efficiency ratio (tax equivalent) improved to 64.16% for the three months ended December 31, 2024, from 92.19% in the same quarter of 2023[3] - The equity to assets ratio improved to 10.97% from 10.79% in the previous quarter[4] - The adjusted return on average equity for the quarter was 9.68%, compared to 7.60% in the previous quarter[6] Assets and Deposits - Total assets as of December 31, 2024, were $2,307,394 million, a decrease from $2,346,908 million in the previous quarter[6] - Total assets increased to $2,332,087 thousand in 2024 from $2,182,477 thousand in 2023, representing a growth of 6.86%[7] - Total assets increased to $2,307,394 thousand in 2024 from $2,291,592 thousand in 2023, representing a growth of 0.69%[12] - Total deposits decreased to $1,878,292 million from $1,917,005 million in the previous quarter[6] - Total deposits rose to $1,878,292 thousand in 2024, up from $1,824,389 thousand in 2023, an increase of 2.96%[12] Loans and Charge-Offs - The provision for credit losses on loans for the quarter was $728 million, up from $681 million in the prior quarter[4] - Net charge-offs for the quarter were $595 million, compared to $84 million in the previous quarter[5] - Nonperforming loans totaled $4,618 million, up from $3,284 million in the previous quarter[5] - Average loans outstanding rose to $1,765,672 thousand in 2024, with an average yield of 5.46%, compared to $1,467,981 thousand and 4.90% in 2023, indicating a significant increase in both volume and yield[9] - The loans to deposits ratio increased to 91.67% from 89.67% in the previous quarter[4] Expenses and Goodwill - Total non-interest expense for the twelve months ended December 31, 2024, was $63,276 thousand, compared to $54,423 thousand in 2023, an increase of 16.24%[14] - Goodwill increased to $90,310 thousand in 2024 from $79,509 thousand in 2023, reflecting a growth of 13.00%[12]

Financial Performance - Net income for the three and nine months ended September 30, 2024, was $4,532,000 and $7,372,000, respectively, compared to $4,070,000 and $12,921,000 for the same periods in 2023[187]. - Non-interest income for the three and nine months ended September 30, 2024, was $6,407,000 and $14,416,000, respectively, up from $3,578,000 and $10,805,000 in 2023, driven by higher fiduciary income and service charges[190]. - Non-interest expense for the three and nine months ended September 30, 2024, was $15,387,000 and $48,684,000, respectively, compared to $12,244,000 and $36,847,000 in 2023, primarily due to increased personnel and office expenses from acquisitions[191]. - A pretax loss of $843,000 was recorded on the sale of approximately $48.9 million of below market rate loans acquired from Cincinnati Bancorp during the second quarter[190]. Interest Income and Expense - Net interest income for the three and nine months ended September 30, 2024, was $14,970,000 and $44,082,000, respectively, an increase from $13,571,000 and $41,690,000 in 2023, primarily due to higher average loan balances and increased rates[188]. - Total interest income increased by $6,727,000, primarily due to a $6,467,000 increase in loan interest income attributed to a $319.2 million increase in average loan balances[197]. - Total interest expense rose by $5,331,000, driven by a $708,000 increase in interest expense for interest-bearing demand and money market deposits[198]. - Interest expense for IRA and time certificates increased by $4,299,000, due to a $308.0 million increase in average deposit balances and a 121 basis point increase in the average rate paid[198]. - The net interest rate spread decreased to 2.25% from 2.52% in the previous year[194]. Credit Losses - A provision for credit losses of $660,000 and $1,313,000 was recorded for the three and nine months ended September 30, 2024, compared to net recoveries of $114,000 and $141,000 in 2023[189]. - LCNB recorded a provision for credit losses of $660,000 for Q3 2024, compared to a recovery of credit losses of $114,000 for the same period in 2023[211]. - For the nine months ended September 30, 2024, LCNB recorded a provision for credit losses of $1,313,000, compared to a recovery of credit losses of $141,000 for the same period in 2023[211]. - The provision for credit losses on loans during the nine-month 2024 period included $763,000 recognized on non-PCD loans acquired through the EFBI merger[212]. - Net charge-offs for the three and nine months ended September 30, 2024, totaled $84,000 and $147,000, respectively, compared to net charge-offs of $34,000 and $83,000 for the respective periods in 2023[213]. Assets and Deposits - Total assets as of September 30, 2024, were $2,365,676,000, compared to $1,971,269,000 in the previous year[194]. - Total assets increased to $2,346,908,000 as of September 30, 2024, from $2,291,592,000 at December 31, 2023, a difference of $55,316,000, or 2.41%[220]. - Total deposits rose to $1,917,005,000 as of September 30, 2024, from $1,824,389,000 at December 31, 2023, an increase of $92,616,000, or 5.08%[220]. - The increase in average loan and deposit balances during 2024 was attributed to the acquisitions of Eagle Financial Bancorp and Cincinnati Bancorp[188]. Mergers and Acquisitions - LCNB incurred expenses related to the acquisition of Eagle Financial Bancorp on April 12, 2024, and Cincinnati Bancorp on November 1, 2023, impacting net income[187]. - The increase in loan interest income was primarily due to loans acquired in the mergers with EFBI and CNNB[206]. - Goodwill increased primarily due to the merger with EFBI, contributing to a rise in core deposits and intangibles[55]. - Total remaining borrowing capacity with the Federal Home Loan Bank was approximately $120.9 million as of September 30, 2024[236]. Regulatory and Capital Ratios - Regulatory capital ratios as of September 30, 2024: Common Equity Tier 1 Capital to risk-weighted assets at 9.81% and Total Capital at 10.46%[232]. - Management believes that no conditions have occurred that would change LCNB's "well-capitalized" status under regulatory guidelines[231]. Interest Rate Sensitivity - The Bank's interest rate sensitivity analysis indicates that a 100 basis point increase in interest rates would negatively impact net interest income[241]. - The IRSA indicates that a 300 basis point increase in interest rates would result in a decrease of $1,332 thousand in net interest income (NII), representing a decline of 1.75%[242]. - A 200 basis point increase in interest rates would lead to a decrease of $901 thousand in NII, or 1.19%[242]. - The EVE analysis shows that a 300 basis point increase in interest rates would decrease the economic value of equity (EVE) by $36,037 thousand, or 18.50%[243]. Internal Controls and Procedures - LCNB's disclosure controls and procedures were evaluated as effective as of September 30, 2024[245]. - There were no changes in internal control over financial reporting that materially affected LCNB during the reporting period[246]. - LCNB does not use derivatives to hedge interest rate risk and has not entered into market risk instruments for trading purposes[240].

Core Viewpoint - LCNB is positioned as a strong investment opportunity due to its improving earnings outlook and analysts' increasing earnings estimates [1][2][3] Estimate Revisions - The trend of rising earnings estimate revisions reflects growing analyst optimism regarding LCNB's earnings prospects, which is expected to positively influence its stock price [2] - For the current quarter, LCNB is projected to earn $0.30 per share, representing an 11.76% decrease from the previous year, but the Zacks Consensus Estimate has increased by 7.14% over the last 30 days due to one upward revision [4] - For the full year, LCNB is expected to earn $1.09 per share, a 30.13% decline from the prior year, yet the consensus estimate has risen by 9% with one upward revision in the past month [5] Zacks Rank - LCNB currently holds a Zacks Rank 1 (Strong Buy), indicating strong agreement among analysts in raising earnings estimates, which historically correlates with stock performance [3][6] - Stocks with a Zacks Rank 1 and 2 have shown significant outperformance compared to the S&P 500 [6] Stock Performance - LCNB's stock has gained 5.3% over the past four weeks, driven by solid estimate revisions and positive earnings growth prospects [7]

Company Performance - LCNB reported quarterly earnings of $0.31 per share, exceeding the Zacks Consensus Estimate of $0.27 per share, but down from $0.37 per share a year ago, representing an earnings surprise of 14.81% [1] - The company posted revenues of $21.38 million for the quarter ended September 2024, surpassing the Zacks Consensus Estimate by 0.36% and up from $17.15 million year-over-year [1] - Over the last four quarters, LCNB has surpassed consensus EPS estimates two times and topped consensus revenue estimates three times [1] Future Outlook - The sustainability of LCNB's stock price movement will depend on management's commentary during the earnings call and the company's earnings outlook [2][3] - The current consensus EPS estimate for the coming quarter is $0.28 on revenues of $21.5 million, and for the current fiscal year, it is $1 on revenues of $82.4 million [4] - The estimate revisions trend for LCNB is mixed, resulting in a Zacks Rank 3 (Hold), indicating expected performance in line with the market [4] Industry Context - The Banks - Northeast industry, to which LCNB belongs, is currently in the top 23% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [5] - Citizens Financial Services, another bank in the same industry, is expected to report quarterly earnings of $1.38 per share, reflecting a year-over-year decline of 14.3% [5]

Financial Performance - Interest income for the nine months ended September 30, 2024, increased to $78,121,000, up from $56,289,000 for the same period last year, representing a 38.8% growth[1] - Net interest income after provision for credit losses for the three months ended September 30, 2024, was $14,310,000, compared to $13,685,000 for the same period last year, reflecting a 4.6% increase[1] - Non-interest income rose to $6,407,000 for the three months ended September 30, 2024, up from $3,578,000 in the same period last year, marking an increase of 79.5%[1] - Net income for the three months ended September 30, 2024, was $4,532,000, compared to $4,070,000 for the same period last year, showing an increase of 11.4%[1] - Adjusted net income rose to $4,765 million from $4,078 million, reflecting a strong performance[6] - Net income increased to $4,532 million compared to $925 million in the previous quarter, representing a significant increase[6] Asset and Liability Management - Total assets decreased to $2,346,908 million from $2,371,313 million, a decline of approximately 1.03%[5] - Total deposits decreased to $1,917,005 million from $1,943,060 million, a decline of about 1.34%[5] - Total assets increased to $2,365,676 million, up from $1,971,269 million year-over-year[8] - Total assets managed increased to $4,247,253 million from $4,205,498 million, showing growth in asset management[6] - Total liabilities increased to $2,093,662 thousand as of September 30, 2024, from $2,056,289 thousand at December 31, 2023, a rise of about 1.8%[11] Credit Quality - The provision for credit losses was $660,000 for the three months ended September 30, 2024, compared to a recovery of $(114,000) in the same period last year[1] - Nonperforming loans increased to $3,284 million from $3,004 million, indicating a rise in asset quality concerns[5] - The allowance for credit losses was $11,064 million, reflecting an increase from $7,782 million year-over-year[9] Efficiency and Profitability Ratios - Return on average assets for the three months ended September 30, 2024, was 0.76%, up from 0.42% for the same period last year[2] - Return on average equity for the three months ended September 30, 2024, increased to 7.23%, compared to 4.06% for the same period last year[2] - The efficiency ratio (tax equivalent) improved to 71.83% for the three months ended September 30, 2024, down from 83.05% for the same period last year[2] - Adjusted return on average equity improved to 7.60% from 6.72%, reflecting enhanced profitability[6] Capital Position - The equity to assets ratio improved to 10.79% from 10.34%, indicating stronger capital position[5] - Tangible common equity (TCE) increased to $154,728 million from $142,679 million, indicating a stronger equity base[5] Loan and Deposit Metrics - Loans, net as of September 30, 2024, were $1,707,193,000, compared to $1,450,472,000 as of September 30, 2023, indicating a growth of 17.7%[3] - The loans to deposits ratio increased to 89.67% from 89.38%, suggesting a tighter lending environment[5] - Interest earned on loans for the nine months ended September 30, 2024, was $71,860 million, with an average yield of 5.42%[9] - Interest income from loans was $24,342 thousand for the three months ended September 30, 2024, up from $17,875 thousand in the same period last year, indicating a growth of about 36.0%[13] Interest Income and Expenses - The net interest margin on a taxable-equivalent basis was 2.81% for the nine months ended September 30, 2024[9] - Total interest-bearing liabilities amounted to $1,649,368 million, with an interest expense of $11,428 million and an average yield of 2.76%[8] - The ratio of interest-earning assets to interest-bearing liabilities was 127.65%[9] - The company reported a net interest rate spread of 2.22% for the nine months ended September 30, 2024[9] Goodwill and Other Assets - Goodwill increased to $90,209 thousand as of September 30, 2024, from $79,509 thousand at December 31, 2023, reflecting a growth of approximately 13.5%[12] - Cash and cash equivalents increased to $39,374,000 as of September 30, 2024, compared to $32,951,000 as of September 30, 2023, representing a 19.5% increase[2]