LCNB Reports Strong Revenue Growth in Latest Quarter
Segments of revenue
LCNB Corporation, a financial holding company, reported robust revenue growth in the latest quarter. The company's primary source of earnings is net interest income, which increased significantly compared to the same period last year. LCNB's interest-earning assets generated $17.88 million in interest income for the three months ended September 30, 2023, compared to $15.03 million for the same period in 2022. This represents a growth rate of 18.9%. The average outstanding balance of loans increased to $1.45 billion, contributing to the higher interest income.
LCNB Corporation demonstrated strength in its revenue performance, driven by the growth in net interest income. The increase in interest-earning assets and the higher average yield on loans contributed to the company's strong financial performance. The origination of new loans and the adoption of ASC 326, which led to an increase in the allowance for credit losses, also contributed to the growth in net loans. Additionally, LCNB benefited from an increase in market rates, resulting in a movement from non-interest-bearing deposits to interest-bearing deposits.
While LCNB Corporation reported strong revenue growth, there are some challenges to consider. The company experienced a decrease in other non-interest expense primarily due to the absence of losses recognized on the sale of decommissioned office buildings. This suggests that the decrease in expenses may not be sustainable in the long term. Additionally, the increase in long-term debt, although used to pay down short-term borrowings and support liquidity and loan portfolio growth, may pose a challenge in managing the company's overall debt levels.
It is worth mentioning that LCNB Corporation's effective tax rate for the three months ended September 30, 2023, was 18.9%, slightly higher than the previous year. The difference between the statutory rate and the effective tax rate 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.
LCNB Corporation delivered a strong revenue performance in the latest quarter, driven by the growth in net interest income. The increase in interest-earning assets, higher average yield on loans, and the origination of new loans contributed to the company's robust financial performance. However, challenges such as the absence of losses recognized on the sale of decommissioned office buildings and the increase in long-term debt should be monitored. Overall, LCNB's revenue growth reflects the company's ability to effectively manage its interest-earning assets and adapt to changing market conditions.