LCNB (LCNB 0.84%), a regional bank serving Southwest Ohio and Northern Kentucky, reported results for Q2 2025 on July 22, 2025. The most significant news was a notable GAAP earnings beat and a major improvement in profitability. Reported earnings per share (GAAP) reached $0.41, surpassing the analyst consensus GAAP estimate of $0.38. Total revenue, defined here as net interest income plus non-interest income, totaled $22.7 million. The quarter’s results showed broad-based improvement, particularly in net interest margins and returns.
Overall, the quarter underscored profitability gains and disciplined expense management, even as loan growth remained muted.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS | $0.41 | $0.38 | $0.07 | 486% |
| Revenue | $22.7 million | $22.6 million | $19.3 million | 17.6% |
| Net interest margin | 3.47% | 2.86% | 0.61 pp | |
| Non-interest expense | $15.6 million | $17.8 million | (12.4%) |
Source: LCNB. Note: Analysts' consensus estimates for the quarter provided by FactSet.
Business Overview and Success Factors
LCNB is a community-focused bank headquartered in Ohio and a strategy emphasizing direct, local service. Its core business includes providing a full range of financial products, such as personal and commercial loans, deposit accounts, trust and investment services, to individuals and small businesses.
The company’s recent focus has centered on disciplined pricing, growing net interest margins, and expanding its wealth and trust services. Success depends on maintaining strong credit quality, effective risk management, and nurturing local customer relationships -- all set against the backdrop of solid expense control and adapting to competitive and regulatory changes.
Notable Developments This Quarter
This quarter’s standout feature was a substantial earnings surprise on a reported (GAAP) basis. Earnings per share (GAAP) vaulted to $0.41, a 486% increase compared to Q2 2024, and above the consensus expectation (GAAP). Net interest income for the three months ended June 30, 2025, rose 15.1% year over year. The non-interest income line, which captures revenue from fees, fiduciary and trust services, and gains on loan sales, advanced 28.6% from the prior year. Management noted that performance in non-interest income reflected stronger results from trust and wealth services and increased gains from loans sold into the secondary market.
Net interest margin, a key community bank profitability metric measuring returns on assets minus funding costs, increased from 2.86% in Q2 2024 to 3.47%. This was described by management as a result of “prior actions to strengthen our balance sheet, recent loan originations, and a stable interest rate environment.” Return on average assets, another benchmark of returns, finished the quarter at 1.04%. Both trend lines suggest improved core profitability despite sluggish loan growth in recent quarters.
Non-interest expense for the three months ended June 30, 2025, totaled $15.6 million, a 12.4% reduction from the $17.8 million (GAAP) reported in Q2 2024. Management attributed much of this expense drop to the absence of merger-related costs that affected last year’s results following the Eagle acquisition. Lower Federal Deposit Insurance Corporation (FDIC) insurance expenses also contributed to results for the six months ended June 30, 2025.
The bank recorded a credit loss provision of $18,000, down sharply from $528,000 a year prior. Nonperforming loans, representing loans with overdue payments or at risk of default, stood at $4.8 million, or 0.28% of total loans—up from $3.0 million (0.17%) the previous year. Management cited isolated relationships as causes and stated, “LCNB does not foresee any additional losses on these loans, as they are currently deemed to have adequate provision.” Net charge-offs, which measure loan losses, remained minimal at 0.02% of average loans.
Growth Trends and Capital Management
Trends in lending and deposits were subdued. Net loans at the end of Q2 2025 were $1.71 billion, offset in part by loan sales. Loan origination activity reached $88.8 million, while $30.0 million in loans were sold on the secondary market for a reported gain. Bank deposits were $1.92 billion as of June 30, 2025, while total assets under management slipped modestly to $4.18 billion. Management reported “encouraging traction” in cross-selling its wealth and trust services, especially in recently acquired branches, where assets under management rose over 300% year over year.
On the capital front, shareholders’ equity closed the quarter at $263.5 million, and both book value and tangible book value per share rose significantly compared to June 30, 2024—up 7.3% and 16%, respectively, as of June 30, 2025. These increases in tangible shareholders' equity were driven by higher retained earnings and improved unrealized portfolio losses. The company paid a quarterly dividend of $0.22 per share.
Look Ahead: Guidance and Areas to Watch
Management described the economic environment as “fluid,” but stated confidence that its strong asset quality and enhanced profitability position the company to continue delivering growth.
Investors may wish to track several trends in future quarters. These include the pace of loan and asset growth, potential changes in nonperforming loans, and progress in cross-selling wealth and trust services. Deposit stability and the effect of interest rate movements on margins will continue to influence results.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
