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LC

LCNB CORP (LCNB)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered strong profitability and margin expansion: diluted EPS of $0.41, ROA 1.04%, and tax‑equivalent NIM of 3.47% versus 2.86% in Q2 2024, aided by lower funding costs and higher loan yields .
  • Significant beat vs Wall Street: EPS $0.41 vs $0.38* and total revenue ~$22.8M vs $16.9M*, driven by higher net interest income and robust non‑interest income (loan sale gains, fiduciary and service charges) .
  • Operating expenses fell year over year due to lapping prior merger‑related costs; efficiency ratio improved to 68.18% (vs 92.19% in Q2 2024) .
  • Watch credit: nonperforming loans rose to $4.8M (0.28% of loans) from $3.0M (0.17%) YoY, primarily a single C&I relationship and three mortgages; management does not foresee additional losses given provisions .

Values marked with * retrieved from S&P Global.

What Went Well and What Went Wrong

What Went Well

  • Margin expansion and profitability: “Second‑quarter net interest margin expanded year‑over‑year by 61 basis points… These factors contributed to strong net income, driving our return on assets above 1% for the quarter.” — CEO Eric Meilstrup .
  • Non‑interest income strength: Q2 non‑interest income rose 28.6% YoY to $5.2M on loan sale gains and higher fiduciary, service charges, and other income .
  • Expense discipline: Non‑interest expense fell $2.2M YoY, reflecting the absence of prior merger‑related costs; efficiency ratio improved significantly .

What Went Wrong

  • Asset quality mixed: NPLs increased to $4.8M (0.28% of loans) from $3.0M (0.17%) YoY; driven by one C&I relationship ($1.4M) and three residential mortgages ($0.537M) .
  • Loans modestly down: Net loans declined 1.4% YoY and 0.5% sequentially amid secondary market sales ($30.0M) and origination pacing ($88.8M) .
  • Deposit base slightly lower YoY: Total deposits decreased 1.2% YoY, though rose 2.2% sequentially; loan‑to‑deposit ratio remains high at 89.25% .

Financial Results

Core P&L, Margins, Profitability (quarterly)

MetricQ2 2024Q4 2024Q1 2025Q2 2025
Net Interest Income ($USD Millions)$15.217 $16.713 $16.299 $17.541
Non-Interest Income ($USD Millions)$4.080 $5.988 $5.222 $5.248
Total Revenue ($USD Millions)$19.297 (NII+NII) $22.701 (NII+NII) $21.521 (NII+NII) $22.789 (NII+NII)
Diluted EPS ($)$0.07 $0.44 $0.33 $0.41
ROA (%)0.15% 1.04% 0.81% 1.04%
NIM (Tax-Equivalent, %)2.86% 3.22% 3.25% 3.47%
Efficiency Ratio (Tax-Equivalent, %)92.19% 64.16% 73.33% 68.18%

Actual vs Wall Street Consensus (Q2 2025)

MetricConsensusActualBeat/Miss
EPS ($)0.38*0.41 Beat
Revenue ($USD Millions)16.85*22.789 Beat
EPS - # of Estimates2*——
Revenue - # of Estimates2*——

Values marked with * retrieved from S&P Global.

Balance Sheet and Mix

MetricQ2 2024Q1 2025Q2 2025
Total Assets ($USD Millions)$2,371.313 $2,302.745 $2,307.800
Total Deposits ($USD Millions)$1,943.060 $1,921.649 $1,919.372
Loans, Net ($USD Millions)$1,725.477 $1,705.506 $1,700.902
Loans-to-Deposits Ratio (%)89.38% 89.38% 89.25%
Equity-to-Assets Ratio (%)10.34% 11.23% 11.42%

Loan Portfolio Composition ($USD Millions)

CategoryQ2 2024Q1 2025Q2 2025
Commercial & Industrial$125.703 $112.580 $110.528
Commercial Real Estate (Secured)$1,117.798 $1,110.276 $1,110.875
Residential Real Estate$458.949 $463.379 $459.473
Consumer$22.912 $19.030 $18.452
Agricultural$11.685 $13.161 $14.413

Asset Quality & Capital KPIs

KPIQ2 2024Q1 2025Q2 2025
NPLs / Total Loans (%)0.17% 0.28% 0.28%
NPLs ($USD Millions)$3.004 $4.891 $4.771
Net Charge-offs to Avg Loans (%)0.00% 0.01% 0.02%
Allowance for Credit Losses / Total Loans (%)0.65% 0.71% 0.71%
TCE ($USD Millions)$142.679 $160.633 $165.756
TCE / TCA (%)6.29% 7.29% 7.50%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Dividend per share ($)Q2 2025$0.22 (Q1 level) $0.22 (declared May 19, 2025) Maintained
Quantitative revenue/EPS guidanceFY/Q3N/AN/ANo formal guidance provided
Margin outlook (qualitative)Near-termPositive momentum from balance sheet actionsManagement reiterates strong positioning and margin expansion drivers (funding cost reductions, loan yields) Maintained positive tone

Earnings Call Themes & Trends

(No earnings call transcript available in our corpus for Q2 2025.)

TopicPrevious Mentions (Q4 2024, Q1 2025)Current Period (Q2 2025)Trend
Balance sheet optimization (funding cost, borrowings)Actions in 2024 (asset sales >$97M) improved liquidity and NIM NIM up to 3.47%; interest-bearing liability costs down Improving
Acquisition integration (Eagle, Cincinnati Federal)Integration largely complete; early TBV earn-back commentary Cross-sell traction; AUM up >300% at acquired branches over 12 months Positive execution
Wealth & trust AUM growthRecord AUM $1.38B; fiduciary income strong Fiduciary income $2.262M; trust/investments fair value up to $990.7M Expanding
Asset qualityNPLs elevated vs 2023, specific CRE/C&I relationships detailed NPLs 0.28%; management expects adequate provisions Mixed, monitored
Non-interest income driversLoan sale gains and service charges rising Gains from $30.0M loan sales; broader fee strength Supportive, some cyclicality

Management Commentary

  • “LCNB delivered a strong second quarter… net interest margin expanded year‑over‑year by 61 bps… asset quality remains strong… return on assets above 1%” — Eric Meilstrup, President & CEO .
  • “We continue to see the benefits from our recent acquisitions, including encouraging traction in cross selling our wealth and trust services… assets under management [investment services] increased by over 300% at newly acquired branches over the past 12 months” .
  • “We believe we are well positioned to continue to drive long‑term growth, supported by our strong asset quality, strengthening levels of profitability…” .

Q&A Highlights

No Q2 2025 earnings call transcript was available; therefore, Q&A themes and guidance clarifications are not accessible for this quarter in our source set.

Estimates Context

  • Q2 2025 results exceeded consensus materially: EPS $0.41 vs $0.38* (+$0.03) and total revenue $22.8M vs $16.9M* (+$5.9M). Beats were driven by lower interest expense, higher loan yields, and fee income contributions (loan sale gains, fiduciary, service charges) .
  • With NIM at 3.47% and efficiency improvements, forward EPS and revenue estimates may need upward revision if margin tailwinds and fee trends persist; watch for sustainability of loan sale gains and normalization of NPLs .

Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • Margin story intact: NIM reached 3.47% (vs 3.25% in Q1), supported by lower funding costs and better asset yields; this underpins earnings power near term .
  • Expense tailwind from lapping merger costs improved efficiency (68.18% vs 73.33% in Q1; 92.19% in Q2 2024), offering operating leverage if revenue holds .
  • Non‑interest income is a differentiator but includes loan sale gains ($615K) tied to $30.0M sales; monitor repeatability versus core fee trajectory (fiduciary, service charges) .
  • Credit watch: NPLs at 0.28% of loans (up YoY); management cites adequate provisioning, but the single C&I exposure bears monitoring for resolution and recoveries .
  • Capital and liquidity improved: Equity‑to‑assets 11.42%, TCE/TCA 7.50%, and long‑term debt down to $105M from $162M YoY, reducing interest burden and risk .
  • Deposit trends stable: Deposits down 1.2% YoY but up 2.2% sequentially; loan‑to‑deposit ~89% provides room for funding stability if growth resumes .
  • Dividend maintained at $0.22 in Q2; combined with earnings momentum, supports shareholder return profile while preserving capital flexibility .