UPDATE: LCNB Corp, Lebanon, OH (LCNB)

In Timyan Bank Alert’s April 2024 post, “Shareholder Shenanigans at LCNB,” I discussed how shortcomings of the shareholder proposal I submitted wound up helping LCNB keep the proposal off their proxy.

This year, I kept it simple and left no wiggle room.

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DISCLAIMER: THIS IS NOT A SOLICITATION OF AUTHORITY TO VOTE YOUR PROXY. DO NOT SEND ME YOUR PROXY CARD. TIMYAN IS NOT ASKING FOR YOUR PROXY CARD AND CANNOT AND WILL NOT ACCEPT PROXY CARDS IF SENT. TIMYAN IS NOT ABLE TO VOTE YOUR PROXY, NOR DOES THIS COMMUNICATION CONTEMPLATE SUCH AN EVENT.

Disclosure: As of this posting, I own shares of LCNB and may subsequently either dispose of them or purchase more.

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Prospective Buyers

There's no shortage of competently managed, acquisitive banks that would happily and skillfully put LCNB's assets to better use for shareholders, customers, and communities. I’d be thrilled to see the bank sold to any of these three, in particular:

• First Financial Bancorp, Cincinnati, OH (FFBC)

• Park National Corp, Newark, OH (PRK)

• Peoples Bancorp, Marietta, OH (PEBO)

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Financial Snapshot

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Scoundrels

• Spencer S. Cropper, Chairman

• Eric J. Meilstrup, President and CEO

• William G. Huddle, Director

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Timyan’s 2025 Shareholder Proposal to LCNB

RESOLVED, that the Shareholders of LCNB Corp. hereby recommend that the Board of Directors take all necessary steps to promptly effectuate a sale of the Company in a manner consistent with the Board of Directors' duties under Ohio Revised Code Section 1701.59.

The Supporting Statement reads:

“Philip J. Timyan believes that the returns on the Company's assets have been subpar for many years and that LCNB shareholders would be best served if the Company and its assets were sold at the earliest opportunity for the highest price available.

Please vote FOR this proposal.”

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The Skinny

Since the April 2024 Timyan Bank Alert review of LCNB, Management has made some progress in operating results, but I still believe shareholders would be better off by selling to a larger bank.

I will be voting for the 2025 Shareholder Proposal to sell LCNB National Bank for the following reasons:

• Although improved, LCNB’s returns of the first quarter — 0.71% ROA and 6.6% ROE — still badly lagged those of the average US bank, which earned over 1% on assets and 11% on equity.

• Since the turn of the century, LCNB stock value has declined by 16%, from $18.08 to the current $15.24, while over the same period, the NASDAQ Bank Index has risen by 154%.

• Last year, Management informed me via an SEC filing that "in December 2023, the Company engaged Hovde to evaluate merger or sale transactions to maximize shareholder value..."

• Instead of selling, LCNB Corp then proceeded to make two acquisitions: Cincinnati Bancorp and Eagle Financial!

• Management touts the fact that LCNB has repurchased 2,036,356 shares since 2020. However, more than half of those shares — 1,051,687 to be exact — were purchased from a dissident shareholder for $20 each, after that shareholder ran the price up, making Management feel threatened. Furthermore, LCNB did not make the same $20 stock purchase offer to any other shareholders.

• LCNB’s tangible book value per share has barely budged in the last ten years — from $10.66 in 2015 to $11.13 today — indicating very little value has been built.

• In 2016, CEO Meilstrup sold 9,825 shares at $17.50, which left him owning only 1,828 shares. Since then, Meilstrup has increased his ownership stake primarily via Board-gifted shares and options.

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Sources

Bank

LCNB Corp website

April 2025 Proxy and Q1 Earnings Report

January 2024 SEC Filing

Other

SEC Rule §14a-8

Denver Law Review of SEC Rule §14a-8

September 2008 Ohio Revised Code re: Cumulative Voting

Confidential interviews with shareholders, analysts, and Ohio bankers