Updated 3/11/25
LCNB Corp. is a small but steady regional bank based in Ohio, primarily serving local businesses and individuals with a range of banking and wealth management services. While it doesn’t get the attention of larger financial institutions, it has built a reputation for consistency, especially when it comes to dividend payouts.
For income investors, LCNB’s high dividend yield is one of its most appealing qualities. The stock has had its ups and downs over the past year, but the company has continued to distribute dividends, which makes it worth a closer look. Below, we’ll break down its dividend performance, financial stability, valuation, and risks to consider.
Key Dividend Metrics
📌 Dividend Yield: 6.01%
📌 Annual Dividend: $0.88 per share
📌 Payout Ratio: 90.72%
📌 5-Year Average Yield: 5.06%
📌 Ex-Dividend Date: March 3, 2025
📌 Next Dividend Payment: March 17, 2025
Dividend Overview
LCNB offers a generous dividend yield of 6.01%, which is significantly above its five-year average. This makes it an attractive option for investors who prioritize income. However, the high payout ratio of over 90% suggests that most of the company’s earnings are going toward dividends rather than reinvestment or business growth.
The bank has a strong track record of maintaining dividend payouts, even during challenging market conditions. For investors who want a steady income stream, this reliability is a plus. That said, with such a high percentage of earnings being distributed, any downturn in profitability could put the current dividend at risk.
Dividend Growth and Safety
Dividend safety is always a top concern, especially when the payout ratio is as high as LCNB’s.
✅ The company has maintained consistent dividend payments over the years, showing a commitment to rewarding shareholders.
⚠️ The potential for future dividend growth appears limited unless earnings increase.
✅ The dividend has not been cut in recent years, which speaks to its stability.
Because LCNB is already paying out nearly all of its earnings in dividends, there isn’t much room for meaningful dividend hikes. If the company’s earnings take a hit, maintaining this high payout could become a challenge. Ideally, a lower payout ratio—somewhere below 75%—would provide a better cushion for maintaining or growing the dividend in the future.
Chart Analysis
Price Action and Moving Averages
The stock has been in a downtrend recently, with the 50-day moving average (orange line) sloping downward after peaking in late December. This suggests that short-term momentum has weakened. The 200-day moving average (blue line) has been relatively flat but has started to curve slightly downward as well, reinforcing the idea that the longer-term trend may be shifting.
A key observation is that the stock price is currently trading below both moving averages, which can indicate weakness. The 50-day MA crossed below the 200-day MA, which is known as a death cross—often a bearish signal that suggests further downside pressure.
However, looking back at the price movement over the past year, the stock had a strong rally from mid-year into late December before losing steam. That kind of momentum followed by a pullback is fairly common after an extended run-up.
Volume and Market Participation
Volume has been relatively low in recent weeks, with no major spikes in buying or selling pressure. This suggests that there hasn’t been any significant institutional accumulation or panic selling.
The green and red volume bars show a few instances of stronger-than-usual activity, particularly during price spikes and pullbacks. These moments typically represent periods of higher investor interest, possibly tied to earnings reports or other major news events.
If volume begins to increase significantly on upward moves, that could indicate renewed buying interest. On the flip side, a surge in volume while the stock continues to decline would suggest increased selling pressure.
Relative Strength Index (RSI)
The RSI indicator at the bottom of the chart shows that the stock was overbought in late December when it was near its highs. Since then, RSI has been in a downward trend, moving closer to oversold levels.
Currently, the RSI appears to be hovering around the middle of its range. This means the stock is neither overbought nor oversold, leaving room for movement in either direction. If RSI drops closer to 30, it could indicate that the stock is oversold and might see a bounce. Conversely, if it starts pushing toward 70 again, it may signal an overbought condition and potential resistance ahead.
Recent Candlestick Action
Looking at the past five candles, there’s a mix of indecision and slight downward bias. The wicks on some of the recent candles suggest that buyers are stepping in at lower prices, but they haven’t been able to sustain a push higher.
The latest candle shows that the stock closed near the lower end of its range, meaning sellers had control for most of the session. This is something to watch in the coming days—if this pattern continues, it could suggest further downside. However, if the stock finds support around current levels and starts forming stronger green candles, it might indicate stabilization.
Analyst Ratings
📈 Upgrades:
🟢 StockNews.com recently upgraded LCNB from a hold rating to a buy rating. This shift in sentiment came after the company delivered a stronger-than-expected earnings report. LCNB posted earnings per share (EPS) of $0.44, which was $0.14 higher than the consensus estimate of $0.30. Analysts viewed this as a sign of financial strength, leading to a more favorable outlook for the stock. Strong earnings performances often indicate that a company is managing its operations well, which can drive long-term investor confidence.
📉 Downgrades:
🔴 Hovde Group initiated coverage on LCNB with a market perform rating and set a price target of $16.25. This neutral stance suggests that while analysts do not see major downside risk, they also do not anticipate significant upside in the near term. Factors such as a challenging regional banking environment, potential interest rate pressures, and slower-than-expected loan growth may have contributed to the cautious approach. While the stock has demonstrated stability, concerns over future earnings growth likely played a role in the firm’s rating decision.
🎯 Consensus Price Target:
The average price target among analysts currently sits at $16.25, with estimates ranging from $15.50 to $17.00. This suggests a modest upside from the current trading price, reflecting a balanced view between the bank’s strengths and potential risks.
Earnings Report Summary
In the fourth quarter of 2024, LCNB Corp. reported net income of $6.1 million, a significant turnaround from a net loss of $293,000 in the same period the previous year. This improvement translated to earnings per share (EPS) of $0.44, compared to a loss of $0.02 per share year-over-year. For the full year, net income reached $13.5 million, up from $12.6 million in 2023, with annual EPS of $0.97, down from $1.10 the prior year.
Net interest income for Q4 2024 was $16.7 million, an increase from $14.7 million in Q4 2023. The annual net interest income rose to $60.8 million from $56.3 million in the previous year. This growth was driven by higher loan volumes and increased interest rates, despite rising costs for deposits and debt. The net interest margin for the quarter improved to 3.22% from 2.99% year-over-year, though the annual margin decreased to 2.91% from 3.14%.
Non-interest income for the quarter was $6.0 million, up from $4.6 million in the same period last year. Annually, non-interest income grew by 32.4% to $20.4 million, primarily due to gains from loan sales and increased fiduciary income, service charges, and bank-owned life insurance income.
Non-interest expenses decreased to $14.6 million in Q4 2024 from $17.6 million in Q4 2023, largely due to one-time merger-related expenses in the prior year. However, for the full year, non-interest expenses increased by $8.9 million, attributed to higher salaries, employee benefits, and other operating costs.
Total assets as of December 31, 2024, were $2.31 billion, slightly up from $2.29 billion the previous year. Net loans slightly decreased by $3.1 million to $1.71 billion. The company originated $399.6 million in loans during the year, selling $138.4 million into the secondary market. Deposits grew by 3.0% to $1.88 billion, with organic growth contributing a 3.6% increase in total deposit relationships.
Shareholders’ equity rose to $253.0 million from $235.3 million year-over-year, with equity per share at $17.92, up from $17.86. Tangible shareholders’ equity also increased by 2.9% to $154.7 million, primarily due to higher retained earnings and improved valuations in the investment portfolio.
LCNB Wealth Management assets reached a record $1.38 billion, a 15.1% increase from the previous year, generating fiduciary income of $2.3 million in Q4 2024. Total assets under management grew to $4.23 billion, up from $3.88 billion, driven by acquisitions and organic growth across various financial services.
The provision for credit losses in Q4 2024 was $649,000, down from $2.2 million in Q4 2023. Net charge-offs for the quarter were $595,000, or 0.14% of average loans, compared to $102,000, or 0.02%, in the same period last year. Nonperforming loans increased to $4.6 million, or 0.27% of total loans, primarily due to one commercial real estate relationship valued at $2.6 million. Despite this, nonperforming assets remained low at 0.20% of total assets.
Overall, LCNB Corp.’s financial performance in Q4 2024 reflects strategic growth initiatives, improved asset quality, and effective expense management, positioning the company for continued profitability.
Financial Health and Stability
The ability to sustain dividends long term depends on financial stability. Here’s a look at LCNB’s key financials:
🔹 Profit Margin: 17.03%
🔹 Operating Margin: 37.55%
🔹 Return on Equity (ROE): 5.53%
🔹 Total Debt: $161.27 million
🔹 Total Cash: $35.99 million
🔹 Book Value Per Share: $17.92
LCNB operates with a healthy profit margin, and its operating margin is strong for a regional bank. However, return on equity is on the lower side, which suggests that while the bank is profitable, it isn’t generating exceptional returns for shareholders.
Debt levels are worth monitoring, as the company carries $161 million in total debt. While this is not excessive for a bank, rising interest rates could impact profitability if borrowing costs increase. On the positive side, the company’s price-to-book ratio of 0.82 suggests that the stock may be undervalued compared to its net assets.
Valuation and Stock Performance
LCNB’s valuation metrics indicate that the stock is trading at a reasonable level, possibly even undervalued.
💰 Price-to-Earnings Ratio: 15.09 (Trailing), 13.05 (Forward)
📉 Price-to-Book Ratio: 0.82
📊 Price-to-Sales Ratio: 2.50
🔄 52-Week High/Low: $17.92 / $12.42
The stock is currently trading at $14.50, which is below both its 50-day and 200-day moving averages. This suggests some recent weakness in the share price. However, with a beta of 0.78, the stock is less volatile than the broader market, making it a relatively stable option for income-focused investors.
One notable factor is the price-to-book ratio being below 1. Historically, this has been a signal that a stock is trading below its intrinsic value. For long-term investors, this could present an opportunity if the company continues to perform steadily.
Risks and Considerations
No dividend stock is without risk, and LCNB is no exception. Investors should keep the following factors in mind:
⚠️ The payout ratio is high, leaving little room for error if earnings decline.
⚠️ As a regional bank, LCNB’s performance is closely tied to local economic conditions. A downturn could impact profitability.
⚠️ Interest rate fluctuations can affect both loan demand and funding costs, impacting overall margins.
⚠️ Growth potential is somewhat limited due to the company’s regional focus.
One of the biggest concerns is the ability to maintain the dividend in the long run. If earnings weaken, LCNB could be forced to adjust its payout to preserve capital. Additionally, regional banks don’t have the same expansion opportunities as larger financial institutions, which can limit long-term growth.
Final Thoughts
LCNB Corp. offers a compelling dividend yield with a history of reliable payouts, making it a strong option for income investors. The 6.01% yield is well above average, but the high payout ratio suggests limited room for future dividend growth.
For those looking for steady income, LCNB provides a solid choice, but it’s important to keep an eye on earnings and financial stability. The stock appears to be undervalued based on book value, but its future growth may be constrained by economic conditions and interest rate changes.
Overall, LCNB remains a steady dividend payer with a strong yield, but investors should weigh the risks of sustainability against its current valuation and stability.
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