LCNB Corp (LCNB) Reports Mixed Financial Outcomes Amidst Strategic Acquisitions
Net Loss in Q4: LCNB reported a net loss of $293,000 in Q4 2023, impacted by one-time acquisition expenses and higher interest costs.
Adjusted Net Income: Adjusted for one-time items, net income for Q4 stood at $4,241,000, showcasing underlying profitability.
Annual Dividend Increase: Despite a challenging year, LCNB increased its annual dividend by 4.9% to $0.85 per share.
Asset Growth: Total assets grew by 19.4% year-over-year to a record $2.29 billion, driven by organic growth and acquisitions.
Robust Asset Quality: Nonperforming loans represented only 0.01% of total loans as of December 31, 2023.
Acquisition Strategy: The successful acquisition of Cincinnati Bancorp and the pending acquisition of Eagle Financial Bancorp are expected to enhance market presence.
On January 31, 2024, LCNB Corp (NASDAQ:LCNB) released its 8-K filing, detailing the financial results for the fourth quarter and full year ended December 31, 2023. The company, which operates within the financial sector in the United States and is the holding company of LCNB National Bank, faced a challenging quarter with a reported net loss of $293,000. This was primarily due to one-time acquisition-related operating and provision expenses, as well as higher interest expenses. However, when adjusted for these one-time items, the company's core profitability remained solid, with an adjusted net income of $4,241,000 for the fourth quarter.
Income Statement Highlights
LCNB's net interest income for the fourth quarter was $14,659,000, a decrease from the previous year's figure, largely due to increased borrowing costs and a higher Effective Federal Funds Rate. Despite this, the company experienced an increase in interest income from loans, which helped to offset some of the negative impacts. The tax equivalent net interest margin also declined year-over-year to 2.99% for the quarter.
Non-interest income, on the other hand, showed a positive trend, with a 7.9% increase to $15,411,000 for the year, attributed to higher fiduciary income and gains on sales of loans. Non-interest expense for the fourth quarter was significantly higher by $5,511,000 compared to the same period in 2022, due to the integration of Cincinnati Federal and one-time expenses related to acquisitions.
Balance Sheet and Asset Quality
LCNB's balance sheet reflected a strong growth in assets, with total assets increasing to a record $2.29 billion. Net loans also saw a substantial increase of 22.7% to $1.71 billion, bolstered by organic loan growth and the Cincinnati Federal acquisition. Total deposits grew by 13.7% to $1.82 billion. The asset quality remained excellent, with total nonperforming loans to total loans at a mere 0.01% as of December 31, 2023.
LCNB's President and CEO, Eric Meilstrup, commented on the results, emphasizing the company's strategic growth plan and the successful acquisition of Cincinnati Bancorp. He also noted the expected completion of the Eagle Financial Bancorp acquisition in the second quarter of 2024, which is anticipated to further strengthen LCNB's position in the market.
As expected, fourth-quarter profitability was impacted by one-time expenses associated with the Cincinnati Federal and EFBI acquisitions. While we expect one-time merger-related expenses will continue throughout the first half of 2024, we believe we are well positioned for earnings growth to reaccelerate in the fourth quarter of 2024," said Meilstrup.
LCNB's capital allocation strategy included a share repurchase program and an increased dividend payout, reflecting confidence in the company's financial stability and commitment to shareholder value.
Looking Ahead
Despite the short-term challenges reflected in the fourth-quarter results, LCNB Corp (NASDAQ:LCNB) appears to be laying the groundwork for future growth through strategic acquisitions and a focus on asset quality. The company's efforts to expand its market presence and enhance shareholder value, coupled with its solid non-interest income performance, suggest a potential for rebound in profitability as one-time expenses subside. Investors and stakeholders will be watching closely as LCNB navigates the evolving financial landscape in 2024 and beyond.
For a detailed understanding of LCNB Corp's financial performance and strategic initiatives, readers are encouraged to review the full 8-K filing.
Explore the complete 8-K earnings release (here) from LCNB Corp for further details.
This article first appeared on GuruFocus.
