Investors are loving LCNB Corp.’s acquisition this year of a Chillicothe bank, as the stock price has grown about 60 percent over the last year.
LCNB Corp., the parent holding company of Lebanon-based LCNB National Bank, first announced plans in October 2012 to acquire First Capital Bancshares Corp. for $19.6 million. First Capital is the parent company of the former Citizens National Bank.
The deal closed in January this year, expanding LCNB’s footprint to Ross and Fayette counties. LCNB now has 31 branch offices in Butler, Clermont, Clinton, Hamilton, Montgomery and Warren counties.
The deal also grew LCNB’s assets from approximately $788.6 million pre-acquisition to $945.5 million as of the end of June.
The growth of one of the area’s largest community banks is reflected in the company’s stock price.
Share prices have increased in trading to above $20. For example, the stock price increased from a closing price of $13.49 per share on July 20, 2012, to a closing price July 22 of $21.23, a 57 percent increase.
“I think the general feeling is as the bank gets larger it becomes more viable because of the cost with complying with regulations,” said Steve Foster, president of LCNB.
It’s harder for smaller banks that don’t have staff dedicated to making sure the bank adheres to government regulations, Foster said.
“Because of the high cost of regulation, the size of the bank becomes a little more critical. I think that’s part of the reason our growing has helped our stock price,” he said. Also “the acquisition increased our stockholder base because it was a stock/cash deal.”
Moreover, LCNB’s climbing stock price helped the bank qualify to be listed on the Russell 3000 and Russell 2000 stock indexes. The index includes the 3,000 largest U.S. stocks based on market capitalization — the total value of a company’s shares of stock outstanding.
The Russell 2000 Index is composed of the smallest 2,000 stocks in the Russell 3000 index.
LCNB’s market capitalization is currently more than $160 million, fluctuating with the stock price.
Russell Investments, the Seattle, Wash.-based company that owns the index, reshuffles its lineup of listed companies once a year. Russell made the changes to include LCNB on July 1.
Investors commonly used the index to benchmark stock market performance to their portfolios, said Tim Benedict, spokesman for Russell Investments.
“Generally for a company to be listed as part of the Russell Indexes, it means they reached a certain size threshold,” Benedict said. “It’s a sign they’re growing.”
“Also being part of the Russell Index can certainly help the company with visibility to investors,” he said.
That extra visibility could further boost the bank’s stock price.
Since being listed on the Russell Indexes, LCNB’s stock hit a 52-week high of $27.65 per share on July 9.
Another factor that could be contributing to a higher stock price is LCNB’s move in 2011 to the NASDAQ Stock Market and trades under the ticker symbol LCNB. Previously, LCNB stock traded on the smaller exchange Over the Counter Bulletin Board.
LCNB shares are up, but the stock price is still below historic levels. Many bank stocks were hurt by the 2007-2008 financial crisis. LCNB stock traded in the range of $30 to $40 in 2007, dropping to a low of about $8 in 2009.
This newspaper is committed to covering local banks and financial institutions. Count on us to continue to provide in-depth coverage of LCNB and other area banks as they help set the course for the area’s overall economy.