LCNB's Net Income Soars 137% on Strong Net Interest Income Growth

TL;DR

**LCNB is a BUY; their net income is exploding thanks to smart interest expense management and lower credit losses.**

AI Summary

LCNB Corp. reported a significant increase in net income for the three and nine months ended September 30, 2025. Net income for the three months rose to $6.936 million, up 53% from $4.532 million in the prior year, while nine-month net income surged to $17.464 million, a 137% increase from $7.372 million in 2024. This growth was primarily driven by a substantial improvement in net interest income, which increased by 21% to $18.126 million for the quarter and by 18% to $51.966 million for the nine-month period, largely due to a 28% decrease in interest expense on deposits to $6.857 million for the quarter. The provision for credit losses also decreased significantly, falling 68% to $211,000 for the quarter and 67% to $426,000 for the nine months. Total assets decreased by 2.7% to $2.244 billion from $2.307 billion at December 31, 2024, mainly due to a reduction in loans, net, by $42.953 million to $1.666 billion. Total deposits also saw a decline of 1.5% to $1.849 billion from $1.878 billion. Shareholder equity increased by 6.6% to $269.870 million, bolstered by net income and other comprehensive income. The company completed the acquisition of Eagle Financial Bancorp, Inc. on April 12, 2024, which impacted prior year comparisons.

Why It Matters

LCNB's robust net income growth, driven by improved net interest income and reduced credit loss provisions, signals strong operational efficiency and potentially better returns for investors. The significant decrease in interest expense on deposits suggests effective liability management in a dynamic interest rate environment, which could give LCNB a competitive edge against regional banks struggling with deposit costs. While total assets and deposits saw a slight decline, the increase in shareholder equity indicates a strengthening balance sheet. This performance could attract new investors and reassure existing ones about the bank's stability and growth trajectory, potentially leading to increased market valuation and improved employee morale.

Risk Assessment

Risk Level: low — The risk level is low due to a significant reduction in the provision for credit losses, which decreased by 68% to $211,000 for the three months ended September 30, 2025, compared to $660,000 in the prior year. Additionally, the allowance for credit losses on loans remained stable at $12.170 million, indicating controlled credit risk despite a slight decrease in the overall loan portfolio.

Analyst Insight

Investors should consider LCNB as a potential buy, given the substantial increase in net income and effective cost management. The strong growth in earnings per share from $0.53 to $1.23 for the nine-month period suggests a healthy financial trajectory. Monitor future interest rate trends and their impact on deposit costs, but the current performance indicates a well-managed regional bank.

Financial Highlights

debt To Equity

0.39

revenue

$18.126M

operating Margin

N/A

total Assets

$2.244B

total Debt

$104.717M

net Income

$6.936M

eps

$0.49

gross Margin

N/A

cash Position

$35.865M

revenue Growth

+21%

Revenue Breakdown

Key Numbers

• $6.936M — Net Income (Q3 2025) (Increased 53% from $4.532M in Q3 2024)
• $17.464M — Net Income (YTD Q3 2025) (Increased 137% from $7.372M in YTD Q3 2024)
• $18.126M — Net Interest Income (Q3 2025) (Increased 21% from $14.970M in Q3 2024)
• $211K — Provision for Credit Losses (Q3 2025) (Decreased 68% from $660K in Q3 2024)
• $6.857M — Interest on Deposits (Q3 2025) (Decreased 28% from $9.578M in Q3 2024)
• $2.244B — Total Assets (Sept 30, 2025) (Decreased 2.7% from $2.307B at Dec 31, 2024)
• $1.666B — Loans, Net (Sept 30, 2025) (Decreased $42.953M from $1.709B at Dec 31, 2024)
• $1.849B — Total Deposits (Sept 30, 2025) (Decreased 1.5% from $1.878B at Dec 31, 2024)
• $269.870M — Total Shareholders' Equity (Sept 30, 2025) (Increased 6.6% from $253.036M at Dec 31, 2024)
• $0.49 — Basic EPS (Q3 2025) (Increased from $0.31 in Q3 2024)

Key Players & Entities

• LCNB Corp. (company) — registrant
• Eagle Financial Bancorp, Inc. (company) — acquired entity
• EAGLE.bank (company) — subsidiary of acquired entity
• SEC (regulator) — Securities and Exchange Commission
• FASB (regulator) — Financial Accounting Standards Board
• $6.936 million (dollar_amount) — Net income for three months ended September 30, 2025
• $17.464 million (dollar_amount) — Net income for nine months ended September 30, 2025
• $18.126 million (dollar_amount) — Net interest income for three months ended September 30, 2025
• $211,000 (dollar_amount) — Provision for credit losses for three months ended September 30, 2025
• $2.244 billion (dollar_amount) — Total assets as of September 30, 2025

FAQ

Risk Factors

• Credit Risk in Loan Portfolio [medium — financial]: The company maintains an allowance for credit losses on loans, which was $12.170 million as of September 30, 2025. A significant decrease in the provision for credit losses (down 68% for the quarter) suggests improved credit quality or reduced expected losses, but ongoing monitoring is crucial.
• Interest Rate Sensitivity [medium — market]: Fluctuations in interest rates can impact net interest income. The company reported a substantial increase in net interest income (21% for the quarter) driven partly by a decrease in interest expense on deposits, indicating sensitivity to deposit costs.
• Integration of Acquisitions [medium — operational]: The acquisition of Eagle Financial Bancorp, Inc. on April 12, 2024, introduces integration risks. While it may drive growth, successful integration is key to realizing synergies and avoiding operational disruptions.
• Asset and Deposit Contraction [low — financial]: Total assets decreased by 2.7% to $2.244 billion and total deposits by 1.5% to $1.849 billion. This contraction, primarily due to a reduction in net loans, could signal a strategic shift or a response to market conditions.

Industry Context

The banking industry is currently navigating a complex environment characterized by evolving interest rate policies, increasing competition, and a heightened focus on digital transformation. Banks are adapting by optimizing their balance sheets, managing credit risk prudently, and seeking strategic acquisitions to enhance scale and market presence.

Regulatory Implications

As a financial institution, LCNB Corp. is subject to stringent regulatory oversight from bodies like the Federal Reserve and FDIC. Compliance with capital adequacy, liquidity, and consumer protection regulations is paramount. Changes in regulatory requirements or enforcement can impact operational costs and strategic flexibility.

What Investors Should Do

1. Monitor Net Interest Margin Trends
2. Analyze Loan Portfolio Quality
3. Evaluate Acquisition Synergies

Key Dates

• 2025-09-30: Quarter End — Reporting period for the 10-Q, showing significant net income growth and changes in asset/liability structure.
• 2024-12-31: Year End — Prior audited financial position used for comparison in the current 10-Q.
• 2024-04-12: Acquisition of Eagle Financial Bancorp, Inc. — This acquisition impacts year-over-year comparisons and represents a strategic growth initiative for LCNB Corp.

Glossary

Net Interest Income

The difference between the interest income generated by a bank and the interest paid out to its depositors and lenders. (A primary driver of LCNB Corp.'s increased net income, showing improved profitability from core lending and deposit activities.)

Provision for Credit Losses

An expense set aside by a financial institution to cover potential losses from loans that may default. (A significant decrease in this provision indicates improved credit quality or reduced expected loan losses, boosting profitability.)

Goodwill

An intangible asset that arises when a company acquires another company for a price greater than the fair value of its identifiable net assets. (Represents the premium paid for the acquisition of Eagle Financial Bancorp, Inc., impacting the balance sheet.)

Accumulated Other Comprehensive Loss

Unrealized gains or losses on certain investments and foreign currency translations that have not yet been realized. (A component of shareholders' equity that reflects unrealized changes in value, impacting the overall equity position.)

Year-Over-Year Comparison

Compared to the prior year, LCNB Corp. has demonstrated exceptional growth in net income, surging by 53% for the quarter and 137% year-to-date, largely propelled by a substantial increase in net interest income (21% quarterly) and a significant reduction in interest expenses on deposits. The provision for credit losses has also seen a dramatic decrease of 68% quarterly. However, total assets and deposits have contracted slightly, with net loans decreasing by $42.953 million, indicating a potential shift in balance sheet strategy or market conditions.

Filing Documents

• lcnb20250930_10q.htm (10-Q) — 4485KB
• ex_857522.htm (EX-31.1) — 13KB
• ex_857523.htm (EX-31.2) — 13KB
• ex_857524.htm (EX-32) — 6KB
• 0001437749-25-033333.txt ( ) — 20109KB
• lcnb-20250930.xsd (EX-101.SCH) — 94KB
• lcnb-20250930_cal.xml (EX-101.CAL) — 111KB
• lcnb-20250930_def.xml (EX-101.DEF) — 655KB
• lcnb-20250930_lab.xml (EX-101.LAB) — 612KB
• lcnb-20250930_pre.xml (EX-101.PRE) — 713KB
• lcnb20250930_10q_htm.xml (XML) — 5675KB

– FINANCIAL INFORMATION

PART I – FINANCIAL INFORMATION 3

Financial Statements

Item 1. Financial Statements 3 CONSOLIDATED CONDENSED BALANCE SHEETS 3 CONSOLIDATED CONDENSED STATEMENTS OF INCOME 4 CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME 5 CONSOLIDATED CONDENSED STATEMENTS OF SHAREHOLDERS' EQUITY 6 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS 7 NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS 8

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 37

Quantitative and Qualitative Disclosures about Market Risks

Item 3. Quantitative and Qualitative Disclosures about Market Risks 52

Controls and Procedures

Item 4. Controls and Procedures 53

OTHER INFORMATION

PART II. OTHER INFORMATION 54

Legal Proceedings

Item 1. Legal Proceedings 54

Risk Factors

Item 1A. Risk Factors 54

Unregistered Sales of Equity Securities and Use of Proceeds

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 54

Defaults Upon Senior Securities

Item 3. Defaults Upon Senior Securities 54

Mine Safety Disclosures

Item 4. Mine Safety Disclosures 54

Other Information

Item 5. Other Information 54

Exhibits

Item 6. Exhibits 55

SIGNATURES

SIGNATURES 56 1 Table of Contents Glossary of Abbreviations and Acronyms ACL Allowance for Credit Losses ASC Accounting Standards Codification ASU Accounting Standards Update Bank LCNB National Bank CECL Current expected credit losses CNNB Cincinnati Bancorp, Inc. Company LCNB Corp. and its consolidated subsidiaries as a whole DCF Discounted Cash Flow EFBI Eagle Financial Bancorp, Inc. FASB Financial Accounting Standards Board FDIC Federal Deposit Insurance Corporation FFIEC Financial Institutions Examination Council FHLB Federal Home Loan Bank FICO Fair Isaac Corporation FOMC Federal Open Market Committee of the Federal Reserve System FRB Federal Reserve Bank GAAP Generally Accepted Accounting Principles ICS Insured Cash Sweep IRA Individual Retirement Account LCNB LCNB Corp. and its consolidated subsidiaries as a whole LDA Loss Driver Analysis LGD Loss Given Default OAEM Other Assets Especially Mentioned PCD Purchased Credit Deteriorated PD Probability of Default SEC Securities and Exchange Commission 2 Table of Contents

– FINANCIAL INFORMATION

PART I – FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements LCNB CORP. AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS (Dollars in thousands) September 30, 2025 December 31, 2024 Unaudited Audited ASSETS: Cash and due from banks $ 28,167 20,393 Interest-bearing demand deposits 7,698 15,351 Total cash and cash equivalents 35,865 35,744 Interest-bearing time deposits 258 250 Investment securities: Equity securities with a readily determinable fair value, at fair value 1,414 1,363 Equity securities without a readily determinable fair value, at cost 3,666 3,666 Debt securities, available-for-sale, at fair value 243,105 258,327 Debt securities, held-to-maturity, at cost, net of allowance for credit losses of $ 12 and $ 5 at September 30, 2025 and December 31, 2024, respectively 17,304 16,324 Federal Reserve Bank stock, at cost 6,405 6,405 Federal Home Loan Bank stock, at cost 20,710 20,710 Loans held-for-sale 4,018 5,556 Loans, net of allowance for credit losses of $ 12,170 and $ 12,001 at September 30, 2025 and December 31, 2024, respectively 1,666,858 1,709,811 Premises and equipment, net 39,422 41,049 Operating lease right-of-use assets 6,405 5,785 Goodwill 90,310 90,310 Core deposit and other intangibles, net 9,680 11,104 Bank-owned life insurance 55,061 54,002 Interest receivable 8,803 8,701 Other assets, net 35,081 38,287 TOTAL ASSETS $ 2,244,365 2,307,394 LIABILITIES: Deposits: Noninterest-bearing $ 454,192 459,619 Interest-bearing 1,394,890 1,418,673 Total deposits 1,849,082 1,878,292 Long-term debt 104,717 155,153 Operating lease liabilities 6,770 6,115 Accrued interest and other liabilities 13,926 14,798 TOTAL LIABILITIES $ 1,974,495 2,054,358 COMMITMENTS AND CONTINGENT LIABILITIES — — SHAREHOLDERS' EQUITY: Preferred shares – no par value, authorized 1,000,000 shares, none outstanding $ — — Common shares – no par value; authorized 19,000,000 shares; issued 17,401,712 and 17

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