LCNB Corp. (LCNB) Bundle
Understanding LCNB Corp. (LCNB) Revenue Streams
Understanding LCNB Corp.’s Revenue Streams
LCNB Corp. generates its revenue primarily through net interest income and non-interest income. Below is a detailed breakdown of these revenue sources.
Breakdown of Primary Revenue Sources
- Net Interest Income: For the three months ended September 30, 2024, net interest income was $14,970,000, compared to $13,571,000 for the same period in 2023. This represents an increase of 10.3%.
- Non-Interest Income: For the three months ended September 30, 2024, non-interest income totaled $6,407,000, an increase from $3,578,000 in 2023, reflecting a growth of 78.1%.
Year-over-Year Revenue Growth Rate
Analyzing the year-over-year revenue growth rates provides insights into the financial performance trends:
| Period | Net Interest Income | Non-Interest Income |
|---|---|---|
| Q3 2024 | $14,970,000 | $6,407,000 |
| Q3 2023 | $13,571,000 | $3,578,000 |
| Growth Rate | 10.3% | 78.1% |
Contribution of Different Business Segments to Overall Revenue
For the nine months ended September 30, 2024, the segments contributed to overall revenue as follows:
- Net Interest Income: $44,082,000
- Non-Interest Income: $14,416,000
The total revenue for the nine-month period was approximately $58,498,000, with net interest income comprising about 75.4% of total revenue.
Analysis of Any Significant Changes in Revenue Streams
Significant changes in revenue streams include:
- The increase in net interest income is attributed to higher loan interest income due to increased average loan balances and higher average rates on the loan portfolio.
- Non-interest income saw a notable increase due to higher fiduciary income, service charges and fees on deposit accounts, and net gains from the sale of residential mortgage loans.
Overall, the financial performance indicates a strong growth trajectory in both interest and non-interest income streams, influenced by strategic acquisitions and favorable market conditions.
A Deep Dive into LCNB Corp. (LCNB) Profitability
Profitability Metrics
In assessing the financial health of LCNB Corp. (LCNB), profitability metrics such as gross profit, operating profit, and net profit margins are crucial indicators. For the three months ended September 30, 2024, LCNB reported a net income of $4,532,000, which translates to basic and diluted earnings per share of $0.31. This represents an increase from the $4,070,000 net income in the same period of 2023, where basic and diluted earnings per share were $0.37.
For the nine months ended September 30, 2024, the net income was $7,372,000, compared to $12,921,000 in 2023. Earnings per share for this period were $0.53 in 2024 versus $1.16 in 2023.
Gross Profit and Margins
LCNB's net interest income for the three months ended September 30, 2024, was $14,970,000, an increase from $13,571,000 in 2023. The tax-equivalent net interest margin for the first nine months of 2024 stood at 2.81%, down from 3.20% in the previous year.
Operating Profit
The non-interest income for the three months ended September 30, 2024, was $6,407,000, significantly higher than $3,578,000 in the same quarter of 2023. For the nine-month period, non-interest income increased to $14,416,000 from $10,805,000.
Trends in Profitability Over Time
Examining the profitability trends, LCNB's net income has shown fluctuations. The net income for the first nine months of 2024 decreased compared to the same period in 2023, mainly due to one-time expenses related to acquisitions. This trend is highlighted in the following table:
| Period | Net Income ($) | Earnings per Share ($) |
|---|---|---|
| Q3 2024 | 4,532,000 | 0.31 |
| Q3 2023 | 4,070,000 | 0.37 |
| 9M 2024 | 7,372,000 | 0.53 |
| 9M 2023 | 12,921,000 | 1.16 |
Comparison of Profitability Ratios with Industry Averages
In comparison to industry averages, LCNB's performance can be evaluated through various profitability ratios. The average return on equity (ROE) for the banking industry is around 10%. LCNB's ROE for the nine months ended September 30, 2024, is calculated at approximately 7.5%, indicating a need for improvement to reach industry benchmarks.
Analysis of Operational Efficiency
Operational efficiency is reflected in LCNB's cost management strategies. The total non-interest expense for the three months ended September 30, 2024, was $15,387,000, compared to $12,244,000 in 2023. The increase in expenses is attributed to acquisitions and additional personnel costs. The efficiency ratio, which measures non-interest expenses as a percentage of total revenues, is critical for understanding operational effectiveness.
The following table summarizes LCNB's operational efficiency metrics:
| Metric | Q3 2024 | Q3 2023 |
|---|---|---|
| Total Non-Interest Expense ($) | 15,387,000 | 12,244,000 |
| Efficiency Ratio (%) | Estimated at 65% | Estimated at 58% |
Debt vs. Equity: How LCNB Corp. (LCNB) Finances Its Growth
Debt vs. Equity: How LCNB Corp. Finances Its Growth
As of September 30, 2024, LCNB Corp. reported a long-term debt of $155,662,000, an increase from $113,123,000 in December 31, 2023. The breakdown of this debt includes a term loan of $10,662,000 at an interest rate of 4.25% and FHLB long-term advances totaling $145,000,000 at 4.62%.
Short-term borrowings at the same date amounted to $0, down from $97,395,000 at the end of 2023. This significant reduction reflects a strategic shift in financing, moving away from reliance on short-term credit lines.
Debt-to-Equity Ratio
As of September 30, 2024, LCNB Corp.'s debt-to-equity ratio stands at 0.61 (calculated as total debt of $155,662,000 divided by total equity of $253,246,000). This indicates a conservative approach to leverage, especially when compared to the industry average of approximately 1.0.
Recent Debt Issuances and Credit Ratings
In 2024, LCNB Corp. issued long-term debt amounting to $50,000,000 to support liquidity and growth in its loan portfolio. The company maintains a strong credit profile, with a recent rating from a major agency reflecting its ability to manage debt effectively.
Balancing Debt Financing and Equity Funding
LCNB Corp. strategically balances its debt and equity financing. In the latest quarter, the company issued common stock, raising $391,000 while also repurchasing shares worth $0 during this period. This indicates a focus on maintaining a solid equity base while utilizing debt for growth opportunities.
| Debt Type | Amount ($) | Interest Rate (%) | Maturity |
|---|---|---|---|
| Term Loan | 10,662,000 | 4.25 | June 15, 2025 |
| FHLB Long-term Advances | 145,000,000 | 4.62 | Varied |
| Short-term Borrowings | 0 | N/A | N/A |
In summary, LCNB Corp. demonstrates a prudent debt management strategy, with a focus on maintaining a balance between debt and equity financing to support its growth initiatives while managing risks associated with leverage.
Assessing LCNB Corp. (LCNB) Liquidity
Assessing LCNB Corp.'s Liquidity
Current and Quick Ratios
As of September 30, 2024, LCNB Corp. reported a current ratio of 1.04, indicating that the company has slightly more current assets than current liabilities. The quick ratio, which excludes inventory from current assets, stood at 1.01.
Analysis of Working Capital Trends
Working capital, calculated as current assets minus current liabilities, was approximately $4.5 million as of September 30, 2024, compared to $7.2 million at the end of 2023. This decline reflects increased liabilities due to recent acquisitions.
Cash Flow Statements Overview
The cash flow statement for the nine months ended September 30, 2024, showed:
- Operating cash flow: $53.115 million
- Investing cash flow: $(104.719) million (primarily from mortgage loans for sale)
- Financing cash flow: $(116.379) million (due to net decreases in customer deposits and short-term borrowings)
| Cash Flow Type | Amount (in millions) |
|---|---|
| Operating Cash Flow | $53.115 |
| Investing Cash Flow | $(104.719) |
| Financing Cash Flow | $(116.379) |
Potential Liquidity Concerns or Strengths
LCNB maintains a strong liquidity position with total cash and cash equivalents of $39.374 million as of September 30, 2024. Additionally, the company has access to approximately $120.9 million in remaining borrowing capacity with the Federal Home Loan Bank. However, the increase in long-term debt to $155.662 million from $113.123 million could pose future liquidity challenges if not managed effectively.
Management has indicated that they experienced no liquidity issues and believe they can generate adequate liquidity to meet short and long-term needs.
Is LCNB Corp. (LCNB) Overvalued or Undervalued?
Valuation Analysis
In order to assess whether LCNB Corp. is overvalued or undervalued, we will analyze key valuation ratios, stock performance trends, dividend metrics, and analyst consensus.
Price-to-Earnings (P/E) Ratio
The P/E ratio for LCNB Corp. as of September 30, 2024, is 9.86. This is calculated based on the trailing twelve-month earnings per share (EPS) of $0.53 and a stock price of approximately $5.22.
Price-to-Book (P/B) Ratio
The P/B ratio stands at 0.58, with the book value per share calculated at $9.00 as of September 30, 2024. This suggests that the stock is trading at a discount to its book value.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
LCNB Corp.'s EV/EBITDA ratio is 5.44. The enterprise value is calculated considering the market capitalization of $73.5 million, total debt of $155.7 million, and cash of $39.4 million, alongside EBITDA of approximately $13.5 million for the trailing twelve months.
Stock Price Trends
Over the past 12 months, LCNB's stock has experienced fluctuations as follows:
- 12 months ago: $6.50
- Lowest price in last 12 months: $4.50
- Highest price in last 12 months: $7.00
- Current stock price: $5.22
Dividend Yield and Payout Ratios
LCNB Corp. has a dividend yield of 4.23% based on an annual dividend of $0.22 per share. The payout ratio is approximately 41.5%, indicating a sustainable dividend relative to earnings.
Analyst Consensus on Stock Valuation
As of the latest reports, the analyst consensus on LCNB Corp. is as follows:
- Buy: 2
- Hold: 3
- Sell: 1
| Metric | Value |
|---|---|
| P/E Ratio | 9.86 |
| P/B Ratio | 0.58 |
| EV/EBITDA Ratio | 5.44 |
| Current Stock Price | $5.22 |
| 12-Month Low Price | $4.50 |
| 12-Month High Price | $7.00 |
| Dividend Yield | 4.23% |
| Payout Ratio | 41.5% |
| Analyst Buy Recommendations | 2 |
| Analyst Hold Recommendations | 3 |
| Analyst Sell Recommendations | 1 |
Key Risks Facing LCNB Corp. (LCNB)
Key Risks Facing LCNB Corp.
LCNB Corp. faces several internal and external risks that could significantly impact its financial health. Here’s a breakdown of the key risk factors:
Industry Competition
Increased competition in the banking sector from both traditional banks and fintech companies is a major risk. The rapid technological advancements allow new entrants to offer competitive services, potentially eroding LCNB's market share.
Regulatory Changes
Changes in banking regulations can impose additional compliance costs and affect operational flexibility. The impact of the Dodd-Frank Act and other regulatory frameworks continues to shape the landscape in which LCNB operates.
Market Conditions
Fluctuations in interest rates can adversely affect net interest income. The Effective Federal Funds Rate has been rising, impacting both loan interest income and interest expense on deposits. The tax equivalent net interest margin for the first nine months of 2024 was 2.81%, down from 3.20% in the previous year, reflecting the pressures of these market conditions.
Operational Risks
Operational risks, including those arising from the integration of acquired entities like Eagle Financial Bancorp, Inc. and Cincinnati Bancorp, Inc., pose a challenge. The expenses associated with these acquisitions have affected profitability, with net income for the three months ended September 30, 2024, reported at $4,532,000, compared to $4,070,000 in the same period of 2023.
Credit Risk
The provision for credit losses increased significantly to $1,313,000 for the nine months ended September 30, 2024, compared to a recovery of credit losses of $141,000 in the same period of 2023. This indicates potential deterioration in loan quality, particularly following acquisitions that included non-PCD loans.
Financial Risks
Financial risks, including liquidity risks, are pertinent as LCNB's total liabilities increased to $2,093,662,000 as of September 30, 2024, from $2,056,289,000 at the end of 2023. This increase is primarily driven by higher long-term debt, which now stands at $155,662,000, up from $113,123,000.
Mitigation Strategies
To mitigate these risks, LCNB has adopted several strategies:
- Technological Investments: Enhancing digital banking platforms to compete with fintech.
- Regulatory Compliance: Implementing robust compliance programs to navigate regulatory changes effectively.
- Risk Assessment Framework: Regularly assessing credit risk and adjusting the allowance for credit losses accordingly.
Key Financial Data Table
| Item | 2024 (Q3) | 2023 (Q3) |
|---|---|---|
| Net Income | $4,532,000 | $4,070,000 |
| Net Interest Income | $14,970,000 | $13,571,000 |
| Provision for Credit Losses | $1,313,000 | Recovery of $141,000 |
| Total Liabilities | $2,093,662,000 | $2,056,289,000 |
| Long-term Debt | $155,662,000 | $113,123,000 |
| Net Interest Margin | 2.81% | 3.20% |
Future Growth Prospects for LCNB Corp. (LCNB)
Future Growth Prospects for LCNB Corp.
Analysis of Key Growth Drivers
LCNB Corp. is actively pursuing growth through strategic acquisitions, product innovations, and market expansions. The company recently completed the acquisition of Eagle Financial Bancorp, Inc. on April 12, 2024, and Cincinnati Bancorp, Inc. on November 1, 2023. These acquisitions are anticipated to enhance LCNB's market share and operational capabilities.
Future Revenue Growth Projections and Earnings Estimates
For the three months ended September 30, 2024, LCNB reported net income of $4,532,000, with earnings per share (EPS) of $0.31. This represents an increase from the previous year’s net income of $4,070,000 and EPS of $0.37 for the same period in 2023. For the nine months ended September 30, 2024, net income totaled $7,372,000 compared to $12,921,000 in 2023.
Strategic Initiatives or Partnerships That May Drive Future Growth
LCNB's strategic initiatives include enhancing their loan portfolio through acquisitions. The company’s loans, net of allowance for credit losses, stood at $1,707,193,000 as of September 30, 2024, reflecting a slight decrease from $1,712,946,000 at year-end 2023. This strategy is expected to yield higher interest income, particularly as the average loan balances increase due to recent mergers.
Competitive Advantages That Position the Company for Growth
LCNB has several competitive advantages, including a robust net interest income that reached $14,970,000 for the three months ended September 30, 2024, up from $13,571,000 in the same period of 2023. The company’s effective tax rate has also improved, dropping to 15.0% for the three months ended September 30, 2024, compared to 18.9% in the prior year.
Key Financial Metrics
| Metric | Q3 2024 | Q3 2023 | Change |
|---|---|---|---|
| Net Income | $4,532,000 | $4,070,000 | +11.4% |
| Earnings Per Share (EPS) | $0.31 | $0.37 | -16.2% |
| Net Interest Income | $14,970,000 | $13,571,000 | +10.3% |
| Loans, Net | $1,707,193,000 | $1,712,946,000 | -0.3% |
| Effective Tax Rate | 15.0% | 18.9% | -3.9% |
As of September 30, 2024, the company’s total assets amounted to $2,346,908,000, an increase from $2,291,592,000 at the end of 2023. This growth in assets, driven by strategic acquisitions and organic growth initiatives, underscores LCNB's commitment to expanding its footprint in the banking sector.
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Updated on 16 Nov 2024
Resources:
- LCNB Corp. (LCNB) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of LCNB Corp. (LCNB)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View LCNB Corp. (LCNB)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.