LCNB CORP
For the period ended Jun 30, 2024. Filed Aug 7, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 7, 2024
LCNB$19.59+0.3%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-10.
0001074902-24-000079
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-07.
0001074902-24-000106
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 93 previous paragraphs and 106 current paragraphs.
53 unchanged; 33 reworded; 14 added; 7 removed; 0 previous and 6 current paragraphs rearranged.
Tables are not compared: 8 previous and 13 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (14)
Current report
Loans Held-For-Sale. Loans held-for-sale (“LHFS”) represent mortgage loans intended to be sold in the secondary market and other loans that management has an active plan to sell. LHFS are carried at the lower-of-cost-or-fair value as determined on an
Current report
aggregate basis by type of loan. Any writedowns to fair value upon the transfer of loans to LHFS are reflected in loan charge-offs. Any further decreases are recognized in non-interest income and increases in fair value above the loan cost basis are not recognized until the loans are sold.
Current report
Non-interest expense for the three and six months ended June 30, 2024 was $17,825,000 and $33,297,000, respectively, compared to $12,078,000 and $24,603,000 for the same three and six-month periods in 2023. The increases were primarily due to higher expenses associated with the additional personnel and offices resulting from the acquisitions of Eagle Financial Bancorp and Cincinnati Bancorp and to one-time expenses associated with the two acquisitions. In addition, non-interest expense for the 2023 second quarter benefited from a $425,000 gain recognized on the sale of an office building that had been closed as a result of LCNB's office consolidation strategy.
Current report
Three Months Ended June 30, 2024 vs. June 30, 2023
Current report
Six Months Ended June 30, 2024 vs. June 30, 2023
Current report
•Occupancy expense increased primarily due to maintenance and repair costs related to LCNB's office facilities. Also contributing to the increase were increased utility and depreciation expenses caused by the additional offices acquired from EFBI and CNNB.
Current report
•Other non-interest expense for the 2023 second quarter benefited from a $425,000 gain recognized on the sale of an office building that had been closed as a result of LCNB's office consolidation strategy. The remaining net increases for the three and six month periods can be attributed to smaller increases in various other accounts.
Current report
•Net loans increased primarily due to loans acquired through the merger with EFBI and to organic growth in the portfolio, partially offset by a transfer of loans to the held for sale category.
Current report
•Goodwill increased primarily due to additional goodwill recognized as a result of the EFBI acquisition.
Current report
•Common shares increased primarily due to stock issued as part of the acquisition price for EFBI.
Current report
LCNB's loan portfolio represents its largest asset category and is its most significant source of interest income. Loan classifications have been identified as Commercial & Industrial, Commercial Real Estate, Residential Real Estate, Consumer, Agricultural, and Other. Commercial real estate is the largest classification in LCNB's loan portfolio, comprising about 64% of total loans at June 30, 2024.
Current report
Loans secured by commercial real estate consist of owner-occupied, nonowner-occupied, farmland, multi-family, and construction loans. A commercial real estate, owner-occupied loan finances the purchase, construction, or refinance of a building or other property for which the repayment of principal is dependent upon cash flows from ongoing operations conducted by the party, or an affiliate of the party, who owns the property. A commercial real estate, non-owner occupied loan finances the purchase, construction or refinance of a building or other property for which the repayment of principal is dependent upon rental income associated with the property or the subsequent sale of the property. The values of these loans are primarily impacted by the level of interest rates associated with the debt and to local economic conditions, which dictate occupancy rates and the amount of rent charged. The increase in debt service due to higher interest rates may not be able to be passed on to tenants. As part of the origination process, loan interest rates and occupancy rates are stressed to determine the impact on the borrower’s ability to maintain adequate debt service under different economic conditions. Further, LCNB monitors the concentration in any one industry and has established limits relative to the total of the Bank's tier 1 and tier 2 capital for each category of loan. Credit quality trends are monitored by industry to determine if a change in the risk exposure to a certain industry may warrant a change in underwriting standards.
Current report
The following table provides a breakdown of amortized cost of commercial real estate loans by property-type classification as of June 30, 2024, excluding loans which are junior in lien or covered by collateral secured with varying classes of assets (dollars in thousands):
Current report
Most of LCNB's commercial real estate loans are made within its general market area of Southwest and South-Central Ohio and Northern Kentucky. The following table provides a breakdown of amortized cost of commercial real estate loans by real estate collateral location as of June 30, 2024, excluding loans which are junior in lien or covered by collateral secured with varying classes of assets (dollars in thousands):
Removed paragraphs (7)
Previous report
Non-interest expense for the three months ended March 31, 2024 was $15,472,000, compared to $12,525,000 for the same three-month period in 2023. The increase was primarily due to higher expenses associated with the additional personnel and offices resulting from the acquisition of Cincinnati Federal and to one-time expenses totaling $775,000 associated with the Cincinnati Federal and EFBI acquisitions.
Previous report
•Contracted services increased because of higher fees paid for LCNB's loan operations system, outside data services, and recruitment firm services. The increases reflect LCNB's continuing commitment to human and technology resources to meet increasing customer needs.
Previous report
•Other non-interest expense increased due to general increases in a number of miscellaneous accounts.
Previous report
•Net loans decreased primarily due the transfer of loans totaling approximately $64.9 million to the held for sale category.
Previous report
•Accrued interest and other liabilities decreased due to a combination of decreases in accrued bonuses and a decrease in LIHTC liabilities due to funding payments made during the first quarter of 2024, partially offset by an increase in accrued interest payable on deposits and borrowings.
Previous report
•Accumulated other comprehensive loss, net of taxes increased because of continuing declines in the market valuation of LCNB's available-for-sale debt security investments.
Previous report
requirements.
Reworded paragraphs (33)
Previous wording
LCNB’s ability to integrate recent and future acquisitions may be unsuccessful or may be more difficult, time-consuming, or costly than expected;
Current wording
LCNB’s ability to integrate recent and future acquisitions, including CNNB and EFBI, may be unsuccessful or may be more difficult, time-consuming, or costly than expected;
Previous wording
global geopolitical relations and/or conflicts could create financial market uncertainty and have negative impacts on commodities and currency, which could adversely affect LCNB's operating results and financial condition;
Current wording
global or domestic geopolitical relations and/or conflicts could create financial market uncertainty and have negative impacts on commodities and currency, which could adversely affect LCNB's operating results and financial condition;
Previous wording
difficulties with technology or data security breaches, including cyberattacks, could negatively affect LCNB's ability to conduct business and its relationships with customers, vendors, and others;
Current wording
difficulties with technology or data security breaches, including cyberattacks or widespread outages, could negatively affect LCNB's ability to conduct business and its relationships with customers, vendors, and others;
Previous wording
Allowance for Credit Losses. The allowance is maintained at a level LCNB management believes is adequate to absorb estimated credit losses identified and inherent in the loan portfolio. The allowance is established through a provision for credit losses charged to expense. Loans are charged against the allowance for credit losses when management believes that the collectability of the principal is unlikely. Subsequent recoveries, if any, are credited to the allowance. The allowance is an amount that management believes will be adequate to absorb estimated losses over the contractual terms in the loan portfolio based on evaluations of the collectability of loans and prior loan loss experience. The evaluations take into consideration such factors as changes in the nature and volume of the loan portfolio, overall portfolio quality, review of specific problem loans, and current and forecasted economic conditions that may affect the borrowers' ability to pay. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available.
Current wording
Allowance for Credit Losses. The allowance is maintained at a level LCNB management believes is adequate to absorb estimated credit losses identified and inherent in the loan portfolio. The allowance is established through a provision for credit losses charged as an expense. Loans are charged against the allowance for credit losses when management believes that the collectability of the principal is unlikely. Subsequent recoveries, if any, are credited to the allowance. The allowance is an amount that management believes will be adequate to absorb estimated losses over the contractual terms in the loan portfolio based on evaluations of the collectability of loans and prior loan loss experience. The evaluations take into consideration such factors as changes in the nature and volume of the loan portfolio, overall portfolio quality, review of specific problem loans, and current and forecasted economic conditions that may affect the borrowers' ability to pay. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available.
Previous wording
Net income for the three months ended March 31, 2024 was $1,915,000 (total basic and diluted earnings per share of $0.15). This compares to net income of $4,157,000 (total basic and diluted earnings per share of $0.37) for the same three-month period in 2023. Results for the 2024 period were affected by the acquisition of Cincinnati Federal Bancorp on November 1, 2023.
Current wording
Net income for the respective three and six months ended June 30, 2024 was $925,000 (total basic and diluted earnings per share of $0.07) and $2,840,000 (total basic and diluted earnings per share of $0.21). This compares to net income of $4,694,000 (total basic and diluted earnings per share of $0.42) and $8,851,000 (total basic and diluted earnings per share of $0.79) for the same respective three and six-month periods in 2023. Results for the 2024 periods were affected by the expenses incurred in connection with the acquisitions of Eagle Financial Bancorp, Inc. on April 12, 2024 and Cincinnati Bancorp, Inc. on November 1, 2023.
Previous wording
Net interest income for the three months ended March 31, 2024 and 2023 was $13,895,000 and $13,942,000, respectively. The decrease in net interest income was primarily due to interest paid on higher amounts of average interest-bearing demand and money market deposits, IRA and time certificates, and long-term borrowings and to higher interest expense associated with the rapid year-over-year increase in the Effective Federal Funds Rate. These increases in interest expense were partially offset by increased interest income from higher average loan balances and an increase in the average rate earned on the loan portfolio. The higher average loan and deposit balances during 2024 period were partially due to the acquisition of Cincinnati Federal. LCNB's tax equivalent net interest margin for the first three months of 2024 was 2.73%, compared to 3.28% for the same period last year.
Current wording
Net interest income for the three and six months ended June 30, 2024 was $15,217,000 and $29,112,000, respectively. This compares to net interest income of $14,177,000 and $28,119,000 for the same respective three and six-month periods in 2023. The increase in net interest income was primarily due to increased loan interest income caused by higher average loan balances and an increase in the average rate earned on the loan portfolio. This increase was partially offset by increased interest expense recognized on higher amounts of average interest-bearing demand and money market deposits, IRA and time certificates, and long-term borrowings and to higher interest expense paid for these liabilities. The higher average loan and deposit balances during the 2024 periods were partially due to the acquisition of EFBI and CNNB. The increases in average rates earned on loans and paid for deposits and debt is associated with the rapid increase in the Effective Federal Funds Rate. LCNB's tax equivalent net interest margin for the first six months of 2024 was 2.80%, compared to 3.28% for the same period last year.
Previous wording
LCNB recorded a provision for credit losses of $125,000 for the three months ended March 31, 2024. This compares to a net recovery of credit losses of $57,000 for the three months ended March 31, 2023.
Current wording
LCNB recorded a provision for credit losses of $528,000 and $653,000 for the three and six months ended June 30, 2024, respectively. This compares to a provision of $30,000 for the three months ended June 30, 2023 and a net recovery of credit losses of $27,000 for the six months ended June 30, 2023. The provisions for 2024 include $763,000 recognized on non-PCD loans acquired through the Eagle Financial Bancorp merger.
Previous wording
Non-interest income for the three months ended March 31, 2024 and 2023 was $3,929,000 and $3,581,000, respectively. The increase was primarily due to higher amounts of fiduciary income and net gains recognized on the sale of residential mortgage loans.
Current wording
Non-interest income for the three and six months ended June 30, 2024 was $4,080,000 and $8,009,000, respectively. This compares to non-interest income of $3,646,000 and $7,227,000 for the same respective periods in 2023. The increase for both the three and six-month periods was primarily due to higher amounts of fiduciary income and net gains recognized on the sale of residential mortgage loans. Partially offsetting non-interest income during the 2024 quarter was an $843,000 pretax loss on the sale of approximately $48.9 million of below market rate loans acquired from Cincinnati Bancorp.
Previous wording
Net interest income on a fully taxable-equivalent basis for the three months ended March 31, 2024 totaled $13,933,000, a decrease of $56,000 from the comparable period in 2023. Total interest income increased $6,831,000, which was more than offset by an increase in total interest expense of $6,887,000.
Current wording
Net interest income on a fully taxable-equivalent basis for the three months ended June 30, 2024 totaled $15,256,000, an increase of $1,033,000 from the comparable period in 2023. Total interest income increased $8,255,000, which was partially offset by an increase in total interest expense of $7,222,000.
Previous wording
The $6,831,000 increase in total interest income was due primarily to a $6,539,000 increase in loan interest income. The increase in loan interest income was primarily due to a net 59 basis point (a basis point equals 0.01%) increase in the average rate earned on the loan portfolio due to higher market rates and secondarily to a $333.2 million increase in average loan balances. Loan balances increased due to organic growth in the loan portfolio and to loans acquired in the merger with Cincinnati Federal.
Current wording
The $8,255,000 increase in total interest income was primarily due to an $8,073,000 increase in loan interest income. The increase in loan interest income was primarily due to a $412.3 million increase in average loan balances and secondarily to a 71 basis point (a basis point equals 0.01%) increase in the average rate earned on the loan portfolio due to higher market rates. Loan balances increased due to organic growth in the loan portfolio and to loans acquired in the mergers with EFBI and CNNB.
Previous wording
The $6,887,000 increase in total interest expense was primarily due to a $2,672,000 increase in interest expense for interest-bearing demand and money market deposits, a $2,995,000 increase in interest expense for IRA and time certificates, and a $1,522,000 increase in interest expense for long-term debt. Interest expense on interest-bearing demand and money market deposits increased primarily due to a 145 basis point increase in the average rate paid for these deposits and secondarily to a $138.8 million increase in average deposit balances. Interest expense on IRA and time certificates increased due to a $184.8 million increase in average deposit balances and to a 207 basis point increase in the average rate paid. Deposit balances increased due to a combination of organic growth and to balances obtained in the merger with Cincinnati Federal.
Current wording
The $7,222,000 increase in total interest expense was primarily due to a $1,978,000 increase in interest expense for interest-bearing demand and money market deposits, a $4,204,000 increase in interest expense for IRA and time certificates, and a $1,694,000 increase in interest expense for long-term debt. Interest expense on interest-bearing demand and money market deposits increased primarily due to a 99 basis point increase in the average rate paid for these deposits and secondarily to a $127.4 million increase in average deposit balances. Interest expense on IRA and time certificates increased due to a $277.9 million increase in average deposit balances and to a 175 basis point increase in the average rate paid. Deposit balances increased due to a combination of organic growth and to balances obtained in the mergers with EFBI and CNNB.
Previous wording
Interest expense on long-term debt increased primarily due to a $131.2 million increase in the average balance outstanding caused by new FHLB advances, which were used to pay down short-term borrowings, promote loan growth, and increase liquidity.
Current wording
Interest expense on long-term debt increased primarily due to a $144.0 million increase in the average balance outstanding caused by new FHLB advances, which were used to pay down short-term borrowings, promote loan growth, and increase liquidity.
Previous wording
Increases in market rates during 2022 through the first quarter of 2024 were primarily caused by FOMC increases in the Targeted Federal Funds rate. The Targeted Federal Funds rate increased by 425 basis points during 2022 and by an additional 100 basis points during 2023.
Current wording
Increases in market rates were primarily caused by FOMC increases in the targeted federal funds rate, which increased by 425 basis points during 2022 and by an additional 100 basis points during 2023.
Previous wording
LCNB recorded a provision for credit losses of $125,000 for the first quarter of 2024 and a net recovery of credit losses of $57,000 for the comparable in 2023. The provision for the 2024 period included a provision for credit losses on loans of $77,000 and a provision for off-balance-sheet credit exposures of $48,000. The 2023 net recovery was due to a recovery of $89,000 on off-balance sheet credit exposures, partially offset by a provision for credit losses of $32,000 on loans.
Current wording
LCNB recorded a provision for credit losses of $528,000 for the second quarter of 2024, compared to a provision of $30,000 for the comparable period in 2023. The provision for the 2024 period included a provision for credit losses on loans of $542,000 and a net recovery for off-balance-sheet credit exposures of $16,000. The provision for the 2023 period included a provision for credit losses on loans of $132,000 and a net recovery for off-balance-sheet credit exposures of $101,000. For the six months ended June 30, 2024, LCNB recorded a provision for credit losses of $653,000, compared to a net recovery of $27,000 for the comparable period in 2023. The provision for the 2024 six-month period included a provision for credit losses on loans of $619,000 and a provision for off-balance-sheet credit exposures of $32,000. The net recovery for the 2023 six-period included a provision for credit losses on loans of $164,000 and a net recovery for off-balance-sheet credit exposures of $190,000.
Previous wording
The provision for credit losses on loans during the 2024 period includes an increase in the allowance for a loan that was individually evaluated for the first time. This increase was largely offset by a recovery of credit losses in the pooled real estate mortgage loan category. The residential real estate mortgage loan category had a recovery of credit losses primarily due to a decrease in loss rates partially reflecting a change in qualitative factors and to a decrease in loan balances largely due to a transfer to the loans held for sale category.
Current wording
The provisions for credit losses on loans during the three and six-month 2024 periods included $763,000 recognized on non-PCD loans acquired through the EFBI merger and the six-month period included a $1.2 million increase for a commercial real estate, non-owner occupied loan that was individually evaluated for the first time during the first quarter 2024. These increases were largely offset by a recovery of credit losses in the pooled real estate mortgage loan category. The residential real estate mortgage loan category had a recovery of credit losses primarily due to a decrease in loss rates and a decrease in loan balances caused by a transfer to the loans held-for-sale category.
Previous wording
Calculating an appropriate level for the allowance and provision for credit losses involves a high degree of management judgment and is, by its nature, imprecise. Revisions may be necessary as more information becomes available.
Current wording
Calculating an appropriate level for the allowance and provision for credit losses involves a high degree of management judgment and is, by its nature, imprecise. Revisions may be necessary as more information becomes available or if market conditions change.
Previous wording
Net charge-offs for the three months ended March 31, 2024 totaled $45,000, compared to net charge-offs of $16,000 for the same period in 2023.
Current wording
Net charge-offs for the three and six months ended June 30, 2024 totaled $18,000 and $63,000, respectively, compared to net charge-offs of $33,000 and $49,000 for the respective periods in 2023.
Previous wording
A comparison of non-interest income for the three months ended March 31, 2024 and March 31, 2023 is as follows (in thousands):
Current wording
A comparison of non-interest income for the three and six months ended June 30, 2024 and June 30, 2023 is as follows (in thousands):
Previous wording
•Service charges and fees on deposit accounts decreased primarily due to decreases in several fee categories, including overdraft fees, ATM usage fees, and deposit account fees in general. LCNB reduced overdraft fees from $35 per occurrence to $25 effective November 1, 2023.
Current wording
•Service charges and fees on deposit accounts for the three-month period increased primarily due to increases in check card income and fee income received on the ICS product, partially offset by a decreases in overdraft fees, ATM usage fees, and deposit account fees in general. LCNB reduced overdraft fees from $35 per occurrence to $25 effective November 1, 2023.
Previous wording
•Net gains from sales of loans increased due to a higher volume of residential real estate loan sales.
Current wording
•Net gains from sales of loans increased due to a higher volume of residential real estate loan sales. Partially offsetting these gains was an $843,000 pretax loss on the sale of approximately $48.9 million of below market rate loans acquired from CNNB.
Previous wording
A comparison of non-interest expense for the three months ended March 31, 2024 and March 31, 2023 is as follows (in thousands):
Current wording
A comparison of non-interest expense for the three and six months ended June 30, 2024 and June 30, 2023 is as follows (in thousands):
Previous wording
•Salaries and employee benefits increased in 2024 due to overall wage and benefit increases, an increased number of employees due to the acquisition of Cincinnati Federal, higher sales commissions, and higher health insurance costs.
Current wording
•Salaries and employee benefits increased in 2024 due to overall wage and benefit increases, an increased number of employees due to the acquisition of EFBI and CNNB, higher sales commissions, and higher health insurance costs.
Previous wording
•Amortization of intangibles increased due to the amortization of core deposit intangibles recognized from the acquisition of Cincinnati Federal.
Current wording
•Amortization of intangibles increased due to the amortization of core deposit intangibles recognized from the acquisitions of EFBI and CNNB.
Previous wording
•FDIC insurance premiums increased due to a higher assessment base, partially reflecting increased assets resulting from the acquisition of Cincinnati Federal, and to an increase in the assessment rate charged.
Current wording
•FDIC insurance premiums increased due to a higher assessment base, partially reflecting increased assets resulting from the acquisitions of EFBI and CNNB, and to an increase in the assessment rate charged.
Previous wording
•Merger-related expenses reflect costs incurred in connection with the acquisition of Cincinnati Bancorp, Inc., which closed on November 1, 2023, and with the acquisition of Eagle Financial Bancorp, Inc., which closed on April 12, 2024.
Current wording
•Merger-related expenses reflect costs incurred in connection with the acquisitions of EFBI and CNNB.
Previous wording
LCNB's effective tax rate for the three months ended March 31, 2024 was 14.0%, compared to 17.8% for the respective three months ended March 31, 2023. The difference between the statutory rate of 21% and the effective tax rates is primarily due to tax-exempt interest income from municipal securities, tax-exempt earnings from bank-owned life insurance, tax-exempt earnings from LCNB Risk Management, Inc., and tax credits and losses related to investments in affordable housing tax credit limited partnerships. The effective tax rate for 2024 was lower due tax-exempt items not decreasing in proportion to the overall decrease in earnings.
Current wording
LCNB's effective tax rate for the three and six months ended June 30, 2024 was 2.0% and 10.4%, respectively compared to 17.9% and 17.8% for the same respective periods in 2023. The difference between the statutory rate of 21% and the effective tax rates is primarily due to tax-exempt interest income from municipal securities, tax-exempt earnings from bank-owned life insurance, tax-exempt earnings from LCNB Risk Management, Inc., and tax credits and losses related to investments in affordable housing tax credit limited partnerships. The effective tax rates for 2024 were lower due to tax-exempt items not decreasing in proportion to the overall decrease in earnings.
Previous wording
•Loans held for sale represent a portfolio of loans that are scheduled to be sold with servicing rights to an investor during the second quarter 2024.
Current wording
•Loans held-for-sale primarily represents a portfolio of loans that are scheduled to be sold with servicing rights to an investor during the remainder of 2024.
Previous wording
•Total deposits increased slightly during the first three months of 2024. There was, however significant movement from non-interest-bearing deposits to interest-bearing deposits during 2023 and 2024, reflecting the increase in market rates.
Current wording
•Total deposits increased due to a combination of deposits acquired through the merger with EFBI and through organic deposit growth. There was, however, significant movement from non-interest-bearing deposits to interest-bearing deposits during 2023 and 2024, likely due to the increases in market rates.
Previous wording
The Bank must meet certain minimum capital requirements set by federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possible additional discretionary actions by regulators that, if undertaken, could have a material effect on the Company's and Bank's financial statements. LCNB’s and the Bank’s capital amounts and classification are also subject to qualitative judgments by regulators about components, risk weightings, and other factors.
Current wording
The Bank must meet certain minimum capital requirements set by federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possible additional discretionary actions by regulators that, if undertaken, could have a material effect on the Company's and the Bank's financial statements. LCNB’s and the Bank’s capital amounts and classification are also subject to qualitative judgments by regulators about components, risk weightings, and other factors.
Previous wording
LCNB Corp. depends on dividends from the Bank for the majority of its liquid assets, including the cash needed to pay dividends to its shareholders. Federal banking law limits the amount of dividends the Bank may pay to the sum of retained net income for the current year plus retained net income for the previous two years. Prior approval from the OCC, the Bank's primary regulator, is necessary for the Bank to pay dividends in excess of this amount. If dividends exceed net profit for a year, a bank is generally not required to carry forward the negative amount resulting from such excess if the bank can attribute the excess to the preceding two years. If the excess is greater than the bank's previously undistributed net income for the preceding two years, prior OCC approval of the dividend is required and a negative amount would be carried forward in future dividend calculations. In addition, dividend payments may not reduce capital levels below minimum regulatory guidelines.
Current wording
LCNB Corp. depends on dividends from the Bank for the majority of its liquid assets, including the cash needed to pay dividends to its shareholders. Federal banking law limits the amount of dividends the Bank may pay to the sum of retained net income for the current year plus retained net income for the previous two years. Prior approval from the OCC, the Bank's primary regulator, is necessary for the Bank to pay dividends in excess of this amount. If dividends exceed net income for a year, a bank is generally not required to carry forward the negative amount resulting from such excess if the bank can attribute the excess to the preceding two years. If the excess is greater than the bank's previously undistributed net income for the preceding two years, prior OCC approval of the dividend is required and a negative amount would be carried forward in future dividend calculations. In addition, dividend payments may not reduce capital levels below minimum regulatory guidelines.
Previous wording
At December 31, 2023, the bank had paid $650,000 in excess of the previous two years' Bank net income to the holding company due to an $8.75 million dividend for the acquisition of CNNB. In addition, the February 2024 dividend payment was also in excess of the previous two years' Bank net income. The Company does not expect the excess dividend will result in any adverse supervisory action by the OCC.
Current wording
At December 31, 2023, the bank had paid $650,000 in excess of the previous two years' Bank net income to the holding company due to an $8.75 million dividend for the acquisition of CNNB. In addition, dividend payments during 2024 were also in excess of the previous two years' Bank net income. The Company does not expect the excess dividends will result in any adverse supervisory action by the OCC.
Previous wording
Total remaining borrowing capacity with the Federal Home Loan Bank at March 31, 2024 was approximately $118.8 million. Additional borrowings of approximately $85.0 million were available through line of credit arrangements with correspondent banks.
Current wording
Total remaining borrowing capacity with the Federal Home Loan Bank at June 30, 2024 was approximately $170.3 million. Additional borrowings of approximately $115.0 million were available through line of credit arrangements with correspondent banks.
Previous wording
Commitments to extend credit at March 31, 2024 totaled $302.1 million and are more fully described in Note 10 - Commitments and Contingent Liabilities to LCNB's condensed consolidated financial statements. Since many commitments to extend credit may expire without being drawn upon, the total commitment amount does not necessarily represent future cash
Current wording
Commitments to extend credit at June 30, 2024 totaled $360.2 million and are more fully described in Note 11 - Commitments and Contingent Liabilities to LCNB's condensed consolidated financial statements. Since many commitments to extend credit may expire without being drawn upon, the total commitment amount does not necessarily represent future cash required to satisfy the commitment reported prior to its expiration.
Rearranged current paragraphs (6)
Current report — wording carried from elsewhere
The following table presents, for the six months ended June 30, 2024 and June 30, 2023, average balances for interest-earning assets and interest-bearing liabilities, the income or expense related to each item, and the resulting average yields earned or rates paid.
Current report — wording carried from elsewhere
The following table presents the changes in taxable-equivalent basis interest income and expense for each major category of interest-earning assets and interest-bearing liabilities and the amount of change attributable to volume and rate changes for the three months ended June 30, 2024 as compared to the same period in 2023. Changes not solely attributable to rate or volume have been allocated to volume and rate changes in proportion to the relationship of absolute dollar amounts of the changes in each.
Current report — wording carried from elsewhere
Net interest income on a fully taxable-equivalent basis for the six months ended June 30, 2024 totaled $29,189,000, an increase of $977,000 from the comparable period in 2023. Total interest income increased $15,086,000, which was partially offset by an increase in total interest expense of $14,109,000.
Current report — wording carried from elsewhere
The $15,086,000 increase in total interest income was primarily due to an $14,612,000 increase in loan interest income. The increase in loan interest income was primarily due to a $372.7 million increase in average loan balances and secondarily to a 65 basis point increase in the average rate earned on the loan portfolio due to higher market rates. Loan balances increased due to organic growth in the loan portfolio and to loans acquired in the mergers with EFBI and CNNB.
Current report — wording carried from elsewhere
The $14,109,000 increase in total interest expense was primarily due to a $4,650,000 increase in interest expense for interest-bearing demand and money market deposits, a $7,199,000 increase in interest expense for IRA and time certificates, and a $3,216,000 increase in interest expense for long-term debt. Interest expense on interest-bearing demand and money market deposits increased primarily due to a 121 basis point increase in the average rate paid for these deposits and secondarily to a $132.5 million increase in average deposit balances. Interest expense on IRA and time certificates increased due to a $231.3 million increase in average deposit balances and to a 191 basis point increase in the average rate paid. Deposit balances increased due to a combination of organic growth and to balances obtained in the mergers with EFBI and CNNB.
Current report — wording carried from elsewhere
Interest expense on long-term debt increased primarily due to a $137.6 million increase in the average balance outstanding caused by new FHLB advances, which were used to pay down short-term borrowings, promote loan growth, and increase liquidity.