LCNB Corporation | research notes

Introducing LCNB Corporation: A Leading Financial Institution in Ohio

LCNB Corporation, headquartered in Lebanon, Ohio, is a publicly traded financial holding company with a strong presence in the Cincinnati metropolitan area. The company has a long history of providing financial services to individuals and businesses in the region.

History

LCNB Corporation was founded in 1893 as the Lebanon National Bank. Over the years, the bank has expanded its operations through acquisitions and organic growth. In 2002, LCNB Corporation became a public company and has since continued to grow its footprint and services.

Business Lines

LCNB Corporation's primary business line is banking. Through its subsidiary, LCNB National Bank, the company offers a full range of banking products and services to individuals, businesses, and municipalities. These include:

• Checking and savings accounts
• Loans and mortgages
• Investment services
• Insurance
• Wealth management

Financial Performance

LCNB Corporation has consistently reported strong financial performance. In 2021, the company had net income of $64 million and total assets of $5.5 billion. Its return on equity (ROE) was 12.3%, indicating a high level of profitability.

Corporate Culture

LCNB Corporation is known for its commitment to its customers and employees. The company places a strong emphasis on providing excellent customer service and supporting its employees' growth and development. LCNB Corporation has been recognized multiple times for its workplace culture, including being named a "Best Bank to Work For" by American Banker.

Community Involvement

LCNB Corporation is deeply involved in the communities it serves. The company supports local charities, sponsors community events, and invests in economic development initiatives. LCNB Corporation believes that its success is tied to the well-being of the communities where it operates.

Expansion and Future Plans

LCNB Corporation continues to expand its operations in the Cincinnati metropolitan area. In 2022, the company announced plans to acquire two new banks, which will significantly increase its market share. LCNB Corporation also plans to continue investing in technology and innovation to enhance its customer experience and drive growth.

Conclusion

LCNB Corporation is a leading financial institution in Ohio with a strong track record of success. The company's commitment to customer service, employee engagement, and community involvement has made it a respected and trusted name in the Cincinnati area. As LCNB Corporation continues to grow and expand, it remains well-positioned to serve the financial needs of its customers for years to come.

LCNB Corp. Business Model

LCNB Corp. is a regional bank holding company with a focus on commercial and retail banking in the Midwest. Its business model revolves around three primary segments:

• Commercial Banking: Provides a range of financial services to businesses, including loans, deposits, and other personalized banking solutions.
• Retail Banking: Offers personal banking services such as checking and savings accounts, mortgages, and consumer loans.
• Wealth Management: Provides investment management, financial planning, and trust services to individuals and families.

LCNB Corp. generates revenue through various sources, including:

• Interest income from loans and investments
• Service charges and fees for banking services
• Wealth management advisory fees
• Mortgage origination fees

Advantages to Competitors

LCNB Corp. enjoys several advantages over its competitors:

• Local Market Expertise: As a regional bank, LCNB Corp. has deep roots and a strong understanding of the local markets it serves. This allows it to tailor its products and services to meet the specific needs of its customers.
• Personalized Service: LCNB Corp. emphasizes personalized service and relationship-building with its clients. By focusing on understanding their unique financial situations, it can provide customized solutions and build long-term relationships.
• Financial Stability: LCNB Corp. maintains a strong financial position with solid capital ratios and a low level of non-performing loans. This financial stability provides confidence to customers and investors.
• Digital Banking: While maintaining a focus on traditional banking, LCNB Corp. has embraced digital banking and mobile technology. This allows customers to access their accounts and complete transactions conveniently.
• Community Involvement: LCNB Corp. actively supports the communities it serves through charitable giving and volunteerism. This involvement builds goodwill and strengthens its brand reputation.

These advantages enable LCNB Corp. to differentiate itself from competitors, attract and retain customers, and drive revenue growth in the highly competitive financial services industry.

LCNB Corporation Overview

Ticker Symbol: LCNB

Industry: Banking

Headquarters: Lebanon, Ohio

Website: https://www.lcnb.com/

Business Description:

LCNB Corporation is a publicly traded financial services holding company that operates LCNB National Bank, a community bank with 49 banking locations in Ohio, Indiana, and Kentucky. The company offers a range of banking products and services to individuals, businesses, and municipalities, including:

• Deposit accounts (checking, savings, money market)
• Loans (personal, mortgage, commercial)
• Wealth management
• Insurance
• Trust services

Outlook and Key Metrics:

Financial Performance:

• Revenue: $380.8 million (2022)
• Net Income: $67.8 million (2022)
• Return on Equity (ROE): 10.5% (2022)
• Net Interest Margin: 3.23% (2022)

Loan Portfolio:

• Total Loans: $4.2 billion (2022)
• Commercial Loans: 46% of total
• Real Estate Loans: 27% of total
• Consumer Loans: 27% of total

Deposit Base:

• Total Deposits: $5.4 billion (2022)
• Non-Interest Bearing Deposits: 46% of total
• Interest Bearing Deposits: 54% of total

Expansion and Growth:

• LCNB has a history of acquiring other banks to expand its market reach.
• The company recently acquired First National Bank of Germantown and Gem Savings Bank, expanding its presence in Ohio and Kentucky.
• LCNB is focused on organic growth through new branch openings and customer acquisition campaigns.

Market Position:

• Strong market share in its core markets in Ohio, Indiana, and Kentucky.
• Ranked as one of the top community banks in the country by various industry publications.
• Known for its customer-centric approach and financial stability.

Challenges and Opportunities:

Challenges:

• Rising interest rates, which can put pressure on net interest margins.
• Competition from larger banks and non-bank financial institutions.
• Economic uncertainty and potential recession.

Opportunities:

• Continued growth through acquisitions and organic expansion.
• Cross-selling of additional products and services to existing customers.
• Leveraging technology to enhance customer convenience and efficiency.

Analyst Ratings:

• JPMorgan: Overweight
• UBS: Buy
• Jefferies: Hold

Valuation:

• Price-to-Book Ratio: 2.1x (2023)
• Price-to-Earnings Ratio: 15x (2023)

Overall Outlook:

LCNB Corporation is a well-established community bank with a strong financial track record and a commitment to customer service. The company is well-positioned to continue growing its business through acquisitions and organic expansion. However, it faces challenges from rising interest rates and competition. Analysts have a generally positive outlook on LCNB, citing its strong fundamentals and growth potential.

Similar Companies to LCNB Corporation:

1. First Financial Corporation (https://www.firstfinancial.com/)

• Customer Appeal: First Financial offers a wide range of financial products and services, including loans, deposits, and wealth management. It has a strong branch network across the Midwest and a commitment to community banking.

2. Fifth Third Bancorp (https://www.53.com/)

• Customer Appeal: Fifth Third is a regional bank with a strong presence in the Midwest and Southeast. It offers a full suite of banking products, including mortgages, auto loans, and investment services.

3. Huntington Bancshares Incorporated (https://www.huntington.com/)

• Customer Appeal: Huntington is a versatile financial institution with a focus on retail and commercial banking. It offers competitive interest rates on deposits, mobile banking services, and a wide range of loan options.

4. KeyCorp (https://www.key.com/)

• Customer Appeal: KeyCorp is a leading commercial bank with a strong presence in the Great Lakes region and East Coast. It provides comprehensive financial solutions, including business banking, wealth management, and investment advisory services.

5. PNC Financial Services Group (https://www.pnc.com/)

• Customer Appeal: PNC is a nationally recognized banking and financial services provider. It offers a variety of products and services, including mortgages, personal loans, and business banking solutions.

LCNB Corporation (NASDAQ: LCNB)

Inception:

• Founded in 1877 as the Lebanon County National Bank in Lebanon, Pennsylvania.

Early Growth:

• Expanded through mergers and acquisitions, establishing branches throughout Lebanon County.
• Focused on providing traditional banking services such as loans, deposits, and cash management.

20th Century:

• Continued to expand geographically within Pennsylvania.
• Introduced automated banking systems and expanded its product offerings.
• Renamed LCNB Corporation in 1995 to reflect its broader operations.

21st Century:

• Accelerated its growth through further acquisitions, including Susquehanna Bank in 2015.
• Expanded into new markets, including Delaware and Maryland.
• Enhanced its digital banking capabilities and invested in technology.

Recent Developments:

• In 2020, LCNB announced plans to acquire First Priority Financial Bank.
• Continued to focus on customer experience, investing in branch renovations and introducing new products and services.

Key Milestones:

• 1877: Founded as Lebanon County National Bank.
• 1995: Renamed LCNB Corporation.
• 2000: Acquired National Penn Bancshares.
• 2015: Acquired Susquehanna Bank.
• 2020: Announced acquisition of First Priority Financial Bank.

Current Profile:

• LCNB Corporation is a regional bank holding company headquartered in Lebanon, Pennsylvania.
• As of 2022, operates 103 branches in Pennsylvania, Delaware, and Maryland.
• Offers a range of banking and financial services to individuals, businesses, and municipalities.
• Traded on the NASDAQ under the ticker symbol LCNB.

Recent Timelines of LCNB Corporation

2023

• January 25: Announced the acquisition of TriState Capital Bank.
• March 31: Completed the acquisition of TriState Capital Bank and reported strong financial results.

2022

• January 13: Announced a 12% increase in its quarterly dividend.
• March 15: Reported strong first-quarter earnings and increased its loan portfolio.
• July 29: Announced the launch of a new digital banking platform.
• October 25: Announced plans to open a new branch in Greenville, South Carolina.

2021

• February 23: Reported record earnings for the fourth quarter and full year.
• April 15: Increased its quarterly dividend by 15%.
• June 10: Acquired First National Bank of Southern Maryland.
• September 20: Announced a partnership with Truist Financial to offer expanded banking services.

LCNB Corporation: A Shining Star in the Financial Industry

As a valued customer of LCNB Corporation, I am delighted to share my exceptional experience with this esteemed company. From the moment I established my account, I have been consistently impressed by their professionalism, customer-centric approach, and innovative financial solutions.

Exceptional Customer Service

LCNB's customer service team is truly outstanding. They are always responsive, friendly, and go above and beyond to address any inquiries or concerns. Whether I visit the branch, call their hotline, or send an email, I receive prompt and courteous assistance.

Innovative Financial Products

LCNB offers a comprehensive suite of financial products tailored to meet the diverse needs of its customers. From checking and savings accounts to mortgages, loans, and investment services, they provide a one-stop shop for all my financial requirements. The digital banking platform is user-friendly and allows me to manage my finances conveniently from anywhere.

Competitive Interest Rates

LCNB consistently offers highly competitive interest rates on its deposit accounts. I appreciate their commitment to providing fair returns to their customers, which allows me to grow my savings and reach my financial goals.

Convenient Branch Network

LCNB has an extensive network of branches conveniently located throughout the region. This makes it easy for me to access banking services and receive personalized advice from experienced bankers. The branches are always clean, well-maintained, and provide a welcoming atmosphere.

Community Involvement

I am particularly impressed by LCNB's strong involvement in the community. They actively support local organizations and initiatives, demonstrating their commitment to giving back to the communities they serve. This sense of social responsibility aligns perfectly with my values.

Conclusion

Overall, my experience with LCNB Corporation has been nothing short of exceptional. Their customer-centric approach, innovative financial products, competitive interest rates, convenient branch network, and community involvement make them a standout financial institution. I highly recommend LCNB to anyone seeking a trusted and reliable banking partner.

Unlock Financial Success with LCNB Corporation: Visit Our Website Today!

Are you seeking a reliable and innovative partner to guide you on your financial journey? Look no further than LCNB Corporation! Our comprehensive website is now live, offering a wealth of resources and services designed to meet your unique financial needs.

About LCNB Corporation

LCNB Corporation is a leading financial services provider with over 70 years of experience. As a trusted community partner, we pride ourselves on providing personalized banking solutions to businesses and individuals alike. Our mission is to empower you with the financial tools and expert guidance to achieve your goals.

What Our Website Offers

Our newly launched website serves as a comprehensive hub for all your financial needs. Here, you will find:

• Banking Services: Explore our wide range of banking products, including checking accounts, savings accounts, loans, and mortgages. Compare rates, apply online, and manage your accounts conveniently.
• Wealth Management: Get personalized advice and investment solutions to help you grow your wealth and secure your financial future.
• Business Services: Discover our tailored financial services for small businesses, including commercial lending, treasury management, and business advisory.
• Online Banking: Access your accounts securely 24/7 from any device. Transfer funds, pay bills, and view account statements with ease.
• Financial Resources: Stay up-to-date with industry trends, market analysis, and practical financial tips through our insightful blog and resource center.

Why Choose LCNB Corporation?

• Customer-Centric Approach: We believe in building lasting relationships based on trust and understanding. Our team is dedicated to providing exceptional service tailored to your specific needs.
• Financial Expertise: Our team of seasoned professionals has a deep understanding of the financial industry. We draw on extensive experience to guide you towards informed financial decisions.
• Innovative Solutions: We embrace technology to provide seamless and cutting-edge banking experiences. Our online and mobile platforms empower you to manage your finances effortlessly.
• Community Involvement: As a proud member of our local communities, we actively support organizations and initiatives that make a positive difference.

Visit Our Website Today!

Embark on your financial success journey with LCNB Corporation. Visit our website at [website link] to explore our comprehensive suite of services, connect with our experienced team, and gain valuable financial insights.

At LCNB Corporation, we believe that together, we can unlock your financial potential and create a brighter financial future for you and your loved ones. Visit our website today and let us guide you towards financial success!

Main Suppliers of LCNB Corporation

| Supplier Name | Website | | ----------- | ----------- | | Fiserv | https://www.fiserv.com/ | | Fiserv provides LCNB Corporation with a range of financial services, including core banking, payment processing, and wealth management. | Jack Henry & Associates, Inc. | https://www.jackhenry.com/ | | Jack Henry & Associates, Inc. provides LCNB Corporation with a variety of banking software and services, including core banking, lending, and compliance. | Fiserv | https://www.fiserv.com/ | | Fiserv provides LCNB Corporation with a range of technology solutions, including mobile banking, online banking, and fraud detection. | CoreLogic | https://www.corelogic.com/ | | CoreLogic provides LCNB Corporation with a variety of data and analytics services, including property data, risk assessment, and fraud detection. | Equifax | https://www.equifax.com/ | | Equifax provides LCNB Corporation with a variety of credit reporting and risk management services. | Experian | https://www.experian.com/ | | Experian provides LCNB Corporation with a variety of credit reporting and risk management services. | TransUnion | https://www.transunion.com/ | | TransUnion provides LCNB Corporation with a variety of credit reporting and risk management services.

LCNB Corporation is a financial holding company headquartered in Lebanon, Ohio. The company's primary business is banking, and it operates through its wholly-owned subsidiary, LCNB National Bank.

LCNB National Bank is a community bank that provides a range of financial services to individuals and businesses in Ohio, Kentucky, and Indiana. The bank's main customer base consists of:

• Individuals: LCNB National Bank offers a variety of banking products and services to individuals, including checking accounts, savings accounts, loans, and mortgages.
• Businesses: LCNB National Bank provides a range of banking products and services to businesses, including business loans, lines of credit, and merchant services.
• Government entities: LCNB National Bank provides a range of banking products and services to government entities, including tax collection services and investment services.

LCNB Corporation's main customers are typically located in the following areas:

• Ohio: LCNB National Bank has a strong presence in Ohio, with branches located in Cincinnati, Dayton, and Columbus.
• Kentucky: LCNB National Bank has a branch located in Covington, Kentucky.
• Indiana: LCNB National Bank has a branch located in Lawrenceburg, Indiana.

Website:

LCNB Corporation's website is https://www.lcnbbank.com.

Key Revenue Streams of LCNB Corporation

LCNB Corporation (NASDAQ: LCNB) is a financial holding company headquartered in Lebanon, Ohio. The company's primary revenue stream is from its banking operations, which include:

1. Net Interest Income: This is the difference between the interest income earned on loans and investments and the interest expense paid on deposits and borrowings. It is the largest source of revenue for LCNB Corporation, accounting for approximately 80% of its total revenue. In 2022, the company reported net interest income of $252.2 million.

2. Non-Interest Income: This includes revenue from various sources, such as service charges, wealth management fees, and mortgage banking fees. Non-interest income typically accounts for around 20% of LCNB Corporation's total revenue. In 2022, the company reported non-interest income of $53.3 million.

Estimated Annual Revenue

The estimated annual revenue of LCNB Corporation is approximately $300 million, based on its recent financial performance. The company's revenue has grown steadily over the past several years, primarily driven by increases in net interest income.

Factors Affecting Revenue

LCNB Corporation's revenue is influenced by various factors, including:

• Interest rate environment
• Loan demand
• Deposit growth
• Competition in the financial services industry
• Economic conditions

Financial Performance

LCNB Corporation has consistently reported strong financial results. In 2022, the company had:

• Total assets: $2.8 billion
• Net income: $68.1 million
• Return on equity: 10.9%

Conclusion

LCNB Corporation generates its revenue primarily from its banking operations, with net interest income being the largest contributor. The company's revenue has grown steadily over the past several years, driven by a combination of factors. LCNB Corporation's strong financial performance and well-diversified revenue streams position it well for continued growth in the future.

Key Partners of LCNB Corporation

1. PNC Bank

• Website: https://www.pnc.com/
• PNC Bank is a large regional bank that provides a wide range of financial services, including lending, deposit accounts, and investment services. LCNB Corporation has a strategic partnership with PNC Bank to provide its customers with access to a wider range of financial products and services.

2. Fiserv

• Website: https://www.fiserv.com/
• Fiserv is a provider of technology solutions for the financial services industry. LCNB Corporation uses Fiserv's technology to power its online and mobile banking platforms, as well as its core banking system.

3. Jack Henry & Associates

• Website: https://www.jackhenry.com/
• Jack Henry & Associates is a provider of technology solutions for the financial services industry. LCNB Corporation uses Jack Henry & Associates' technology to power its loan origination and servicing systems.

4. The Clearing House

• Website: https://www.theclearinghouse.org/
• The Clearing House is a payments network that connects banks and other financial institutions. LCNB Corporation is a member of The Clearing House, which allows it to process payments more quickly and efficiently.

5. Federal Home Loan Bank of Atlanta

• Website: https://www.fhlbatl.com/
• The Federal Home Loan Bank of Atlanta is a cooperative bank that provides funding and other services to its member financial institutions. LCNB Corporation is a member of the Federal Home Loan Bank of Atlanta, which provides it with access to low-cost funding and other resources.

LCNB Corporation Key Cost Structure

Estimated Annual Cost

Cost Category | Estimated Annual Cost ---|---| Cost of Goods Sold | $100 million Selling, General and Administrative (SG&A) Expenses | $50 million Research and Development (R&D) Expenses | $20 million Depreciation and Amortization | $10 million Interest Expense | $5 million

Total | $185 million

Cost of Goods Sold

Cost of goods sold represents the direct costs associated with the production of goods or services. For LCNB Corporation, this includes:

• Raw materials
• Direct labor
• Manufacturing overhead

Selling, General and Administrative (SG&A) Expenses

SG&A expenses are indirect costs associated with the sale and administration of the business. This includes:

• Sales and marketing
• Customer service
• General and administrative

Research and Development (R&D) Expenses

R&D expenses are incurred to develop new products or services or improve existing ones.

Depreciation and Amortization

Depreciation and amortization expenses represent the allocation of the cost of fixed assets (e.g., property, plant, and equipment) over their useful lives.

Interest Expense

Interest expense represents the cost of borrowing money. This includes interest on:

• Loans
• Bonds
• Other debt instruments

Key Cost Drivers

The key cost drivers that impact LCNB Corporation's cost structure include:

• Volume of goods or services produced
• Cost of raw materials
• Labor costs
• Sales and marketing expenses
• R&D expenses
• Depreciation and amortization expenses
• Interest rates

LCNB Corporation Sales Channels

LCNB Corporation, headquartered in Lebanon, Ohio, is a financial services company with a focus on banking and lending. The company offers a range of financial products and services to individuals, businesses, and municipalities. LCNB Corporation's primary sales channels include:

1. Branch Network: LCNB Corporation has a network of over 50 branches located throughout Ohio and Kentucky. These branches provide a physical presence for the company and allow customers to access banking services in person.

2. Online Banking: LCNB Corporation offers a secure online banking platform that allows customers to manage their accounts, make transactions, and view account statements. This channel provides convenience and flexibility for customers who prefer to bank remotely.

3. Mobile Banking: LCNB Corporation also offers a mobile banking app that allows customers to access their accounts, make transactions, and deposit checks using their smartphones or tablets. This channel provides even greater convenience and accessibility for customers on the go.

4. Telephone Banking: LCNB Corporation offers telephone banking services that allow customers to access their accounts, make transactions, and speak with customer service representatives over the phone. This channel is particularly useful for customers who do not have internet access or who prefer to speak to a live person.

5. Mortgage Origination: LCNB Corporation offers mortgage origination services through its mortgage division, LCNB Mortgage Company. This channel provides customers with access to a range of mortgage products and services, including home loans, refinancing, and construction loans.

6. Wealth Management: LCNB Corporation offers wealth management services through its wealth management division, LCNB Wealth Management. This channel provides customers with personalized investment advice, portfolio management, and financial planning services.

7. Commercial Lending: LCNB Corporation offers commercial lending services to businesses of all sizes. This channel provides businesses with access to a range of loan products, including term loans, lines of credit, and equipment financing.

8. Municipal Lending: LCNB Corporation offers municipal lending services to municipalities and government entities. This channel provides municipalities with access to a range of loan products, including tax-exempt bonds, revenue bonds, and general obligation bonds.

Estimated Annual Sales

LCNB Corporation's estimated annual sales are not publicly available. However, the company reported total assets of $3.9 billion and total deposits of $3.4 billion as of December 31, 2021. These figures suggest that LCNB Corporation is a significant player in the financial services industry with a large customer base and a substantial volume of business.

LCNB Corporation Customer Segments and Estimated Annual Sales

LCNB Corporation, a financial holding company headquartered in Ohio, primarily serves retail, commercial, and small business customers in Ohio and Pennsylvania. The company operates through its various subsidiaries, including LCNB National Bank, LCNB Investments, and LCNB Insurance Agency.

LCNB Corporation's customer segments and estimated annual sales are as follows:

1. Retail Banking

• Target audience: Individuals and families
• Products and services: Checking accounts, savings accounts, mortgages, personal loans, credit cards, and wealth management services
• Estimated annual sales: $250 million

2. Commercial Banking

• Target audience: Small to mid-sized businesses
• Products and services: Business loans, lines of credit, cash management services, and equipment financing
• Estimated annual sales: $150 million

3. Wealth Management

• Target audience: High-net-worth individuals and families
• Products and services: Investment management, financial planning, trust services, and estate planning
• Estimated annual sales: $50 million

4. Insurance

• Target audience: Individuals, families, and businesses
• Products and services: Property and casualty insurance, life insurance, and health insurance
• Estimated annual sales: $25 million

Total Estimated Annual Sales: $475 million

It's important to note that these are only estimates and the actual sales may vary depending on market conditions, competition, and other factors.

LCNB Corporation Value Proposition

Headline: Empowering Financial Success Through Personalized Banking Solutions

Problem: Individuals, families, and businesses face complex financial challenges in a rapidly evolving economy. They need tailored solutions and expert guidance to navigate their financial journeys effectively.

Solution: LCNB Corporation offers a comprehensive suite of tailored banking services designed to meet the unique needs of each customer.

Key Value Propositions:

1. Personalized Banking Experience:

• Dedicated Relationship Managers who work closely with customers to understand their financial goals
• Customized financial plans that align with individual circumstances
• Proactive advice and proactive support to anticipate and address financial needs proactively

2. Comprehensive Product Offerings:

• Checking and savings accounts with competitive rates and flexible features
• Personal and business loans for a wide range of needs, from homeownership to business expansion
• Investment solutions tailored to risk tolerance and investment objectives
• Treasury management services for businesses to optimize cash flow and manage risk

3. Digital Banking Convenience:

• Mobile banking app with intuitive navigation and seamless account management
• Online banking portal for secure and convenient transactions
• Contactless payment options for increased convenience and security

4. Local Presence and Community Involvement:

• Branch locations throughout the community for personalized service and accessibility
• Active participation in community events and initiatives
• Support for local businesses and non-profit organizations

5. Financial Education and Empowerment:

• Educational resources and workshops on personal finance, investing, and business management
• Financial literacy initiatives to promote financial well-being in the community

Target Audience:

• Individuals and families seeking financial guidance and tailored banking solutions
• Small businesses and corporations in need of banking, lending, and treasury management services
• Non-profit organizations looking for financial support and banking partnerships
• Community members seeking financial education and local involvement

Benefits:

• Optimized financial performance through personalized advice and solutions
• Reduced financial stress and increased confidence in navigating financial challenges
• Increased convenience and efficiency through digital banking capabilities
• Strong connection to the local community and support for its economic growth
• Enhanced financial knowledge and empowerment for individuals and organizations

LCNB Corporation Risk Analysis

LCNB Corporation (LCNB) is a financial holding company headquartered in Lebanon, Ohio. The company operates a network of banking offices in Ohio, Indiana, and Kentucky. LCNB provides a range of financial services, including commercial and consumer lending, deposit accounts, and wealth management.

Credit Risk

Credit risk is the risk that borrowers will default on their loans. LCNB's credit risk is primarily concentrated in its commercial lending portfolio. The company's commercial loans are typically made to small and medium-sized businesses in its local markets. These businesses are more likely to default on their loans than larger, more established companies.

LCNB's credit risk is also affected by the economic conditions in its operating markets. If the economy enters a recession, businesses are more likely to default on their loans. This could lead to significant losses for LCNB.

Interest Rate Risk

Interest rate risk is the risk that changes in interest rates will affect the value of LCNB's assets and liabilities. LCNB's assets are primarily composed of loans and securities. The value of these assets will decline if interest rates rise. LCNB's liabilities are primarily composed of deposits. The cost of these deposits will increase if interest rates rise.

If interest rates rise, LCNB's net interest margin will decline. This could lead to a decrease in profitability.

Liquidity Risk

Liquidity risk is the risk that LCNB will not be able to meet its financial obligations as they come due. LCNB's liquidity risk is primarily managed through its deposit base. The company has a large and stable deposit base, which provides it with a source of funding.

LCNB also has access to wholesale funding markets. However, if market conditions deteriorate, LCNB may have difficulty accessing these markets. This could lead to a liquidity crisis.

Operational Risk

Operational risk is the risk of losses resulting from inadequate or failed internal processes, people, and systems or from external events. LCNB's operational risk is managed through a variety of policies and procedures. These policies and procedures are designed to prevent and mitigate losses from operational failures.

LCNB's operational risk is also affected by the regulatory environment in which it operates. LCNB is subject to a variety of regulations, which can increase its operational costs and complexity.

Overall Risk Profile

LCNB's overall risk profile is moderate. The company's credit risk is primarily concentrated in its commercial lending portfolio, but the company has a strong track record of managing this risk. LCNB's interest rate risk and liquidity risk are also moderate. The company's operational risk is managed through a variety of policies and procedures.

Mitigating Factors

LCNB has a number of mitigating factors that reduce its overall risk profile. These factors include:

• Strong capital position
• Experienced management team
• Stable deposit base
• Diversified revenue streams

These mitigating factors help to protect LCNB from the risks it faces.

Conclusion

LCNB Corporation is a financial holding company with a moderate risk profile. The company's primary risks are credit risk, interest rate risk, liquidity risk, and operational risk. LCNB has a number of mitigating factors that reduce its overall risk profile.