LCNB Corp. (“LCNB”) (NASDAQCM: LCNB), the holding company
for LCNB National Bank, and Cincinnati Bancorp, Inc. (“CNNB”)
(OTCQX: CNNB), the holding company for Cincinnati Federal,
announced today that they have signed a definitive merger agreement
whereby LCNB will acquire CNNB in a stock-and-cash transaction.
CNNB operates five full-service branch offices in Cincinnati, Ohio
and Northern Kentucky and has approximately $304.7 million in
assets, $262.9 million in loans, $223.6 million of deposits and
$40.3 million in consolidated stockholders’ equity as of March 31,
2023. When completed, the transaction will significantly increase
LCNB’s existing presence in the Cincinnati market and expand LCNB’s
community banking franchise across the Ohio River into the
compelling Northern Kentucky market.
Subject to the terms of the merger agreement, which has been
approved by the Board of Directors of each company, CNNB
shareholders will have the opportunity to elect to receive either
0.9274 shares of LCNB stock or $17.21 per share in cash for each
share of CNNB common stock owned, subject to 80% of all CNNB shares
being exchanged for LCNB common stock. As of March 31, 2023, CNNB
reported 2,884,171 shares of common stock outstanding, as well as
296,350 options with a weighted average strike price of $10.65 per
share. Any unexercised stock options of CNNB will be canceled in
exchange for a cash payment at the spread value of $17.21 per share
over the exercise price. Based on the LCNB closing share price as
of May 17, 2023, the transaction consideration is valued at $15.05
for each CNNB share or approximately $43.7 million in aggregate
which equates to a 108.9% multiple of tangible book value, a 32.3x
multiple on LTM earnings and a core deposit premium of 2.3% as of
March 31, 2023. The transaction consideration is subject to
dollar-for-dollar downward adjustment if CNNB’s adjusted
shareholders’ equity, as defined in the merger agreement, is less
than $36.8 million as measured three business days immediately
before the closing date.
Eric Meilstrup, President and CEO of LCNB, stated, “We are
excited to announce this transaction. Cincinnati Federal, its Board
of Directors and staff have a great reputation throughout Greater
Cincinnati as a ‘service first’ organization with a focus on being
a leading residential mortgage lender and commercial real estate
lender in the market supported by dedicated and experienced
personnel.” Mr. Meilstrup continued, “We share the same goals and
culture that the executive management team has established at
Cincinnati Federal. LCNB National Bank is a 146-year-old community
bank that was founded in Lebanon, Ohio, and serves 10 southwestern
and south-central Ohio counties with 29 bank offices. The combining
of our two institutions will provide more benefits, financial
products and opportunities for CNNB customers, and create the
premier community banking institution in the Cincinnati / Northern
Kentucky market. We believe that the Cincinnati market is one of
the most attractive markets in the Midwest, and this transaction
should enhance LCNB’s long-term profitability metrics and earnings
growth rate.”
Robert Bedinghaus, Chairman and CEO of CNNB, stated, “We are
very pleased to join forces with LCNB and continue our growth in
the Cincinnati market. We greatly admire the community-focused
approach that LCNB brings to banking, as well as their long history
of success. We believe that our organizations will be very
compatible, and we look forward to expanding our products and
capacity to better serve our customers through this partnership
with LCNB. The Cincinnati Federal team has tremendous customer
relationships in our market. At times, we have been constrained by
our lending limit and our funding base, and we have not been able
to fully meet the needs of some of our customers. This will all
change as we become part of a larger community bank in LCNB. In
addition, LCNB has a broader array of products and services,
including trust and wealth management, which will be helpful to our
customers. We also believe that our employees will continue to grow
and thrive as part of a larger community bank with such an
outstanding reputation. Based on the consideration mix of 80%
stock/20% cash, LCNB’s closing price of $15.65 on May 17, 2023, and
the special dividend declared by CNNB on April 20, 2022, the
transaction represents a 162.3% total return to our original
shareholders and a 60.5% total return for those shareholders that
invested in our second-step offering in January 2020. Our
shareholders will also benefit from having the opportunity to elect
to receive a more liquid stock that offers a very attractive
dividend yield. On a per share equivalent basis, CNNB shareholders
would receive a pro forma annual dividend of $0.78 per share based
on LCNB’s current quarterly dividend.”
Following the merger, Robert Bedinghaus and Gregory Meyers,
Senior Vice President and Chief Lending Officer of CNNB and
Cincinnati Federal, will join LCNB in a consulting capacity to
assist with employee and customer integration. In addition, the
merger agreement also provides that the LCNB board of directors
intends to appoint Robert Bedinghaus to the boards of LCNB and LCNB
National Bank immediately after closing.
Excluding one-time transaction costs, LCNB expects the
transaction to be approximately 18.2% and 26.2% accretive to 2024
and 2025 fully diluted earnings per share, respectively. One-time
transaction costs to be incurred by LCNB are estimated at $7.3
million after-tax. Tangible book value per share dilution is
expected to be approximately 6.6% at closing, with an expected
tangible book value earn-back of approximately 2.3 years using the
crossover method. Excluding any rate-related purchase accounting
adjustments, the expected tangible book value earn-back would be
approximately 1.6 years using the crossover method.
When the transaction is completed, LCNB is estimated to have
consolidated assets of approximately $2.3 billion with 33 banking
offices in Ohio and one branch office in Northern Kentucky. Subject
to regulatory approval, CNNB shareholder approval and other
customary conditions set forth in the definitive merger agreement,
the transaction is anticipated to close in the fourth quarter of
2023. LCNB shareholder approval is not required. At closing,
Cincinnati Federal branches will become branches of LCNB National
Bank.
LCNB is being advised by Janney Montgomery Scott LLC and
Dinsmore & Shohl LLP. CNNB is being advised by Piper Sandler
& Co. and Luse Gorman, PC.
Important Information for Investors and
Shareholders:
This press release does not constitute an offer to sell or the
solicitation of an offer to buy securities of LCNB. LCNB will file
a registration statement on Form S-4 and other documents regarding
the proposed business combination transaction referenced in this
press release with the Securities and Exchange Commission (“SEC”)
to register the shares of LCNB’s common stock to be issued to the
shareholders of CNNB. The registration statement will include a
proxy statement/prospectus which will be sent to the shareholders
of CNNB in advance of a special meeting of shareholders of CNNB
that will be held to consider and vote on the proposed merger.
Investors and CNNB shareholders are urged to read the proxy
statement/prospectus and any other relevant documents to be filed
with the SEC in connection with the proposed transaction because
they will contain important information about LCNB, CNNB and the
proposed transaction. Investors and shareholders may obtain a free
copy of these documents (when available) through the website
maintained by the SEC at www.sec.gov. These documents may also be
obtained, without charge, by directing a request to LCNB Corp., 2
North Broadway, P.O. Box 59, Lebanon, Ohio 45036: Investor
Relations.
CNNB and certain of its directors and executive officers may be
deemed to be participants in the solicitation of proxies from the
shareholders of CNNB in connection with the proposed merger.
Information about the directors and executive officers of CNNB may
be obtained by reading the proxy statement/prospectus regarding the
proposed transaction when it becomes available. Free copies of this
document may be obtained as described in the preceding paragraph,
when it becomes available.
About LCNB Corp.:
LCNB Corp. is a financial holding company headquartered in
Lebanon, Ohio. Through its subsidiary, LCNB National Bank, it
serves customers and communities in Southwest and South-Central
Ohio. A financial institution with a long tradition for building
strong relationships with customers and communities, the bank
offers convenient banking locations in Butler, Clermont, Clinton,
Fayette, Franklin, Hamilton, Montgomery, Preble, Ross, and Warren
Counties, Ohio. The bank continually strives to exceed customer
expectations and provides an array of services for all personal and
business banking needs including checking, savings, online banking,
personal lending, business lending, agricultural lending, business
support, deposit and treasury, investment services, trust and IRAs
and stock purchases. LCNB Corp. common shares are traded on the
NASDAQ Capital Market Exchange® under the symbol “LCNB.” Learn more
about LCNB Corp. at www.lcnb.com.
About Cincinnati Bancorp,
Inc.:
Cincinnati Bancorp, Inc. is the parent company of Cincinnati
Federal. Cincinnati Federal is a community bank that operates
through its main office in Green Township and three full-service
branches in Greater Cincinnati (Anderson, Miami Heights, and Price
Hill), and a full-service branch in Florence, Kentucky. It also
operates a lending center in Milford, Ohio. Learn more about
Cincinnati Bancorp, Inc. at www.cincinnatifederal.com.
Safe Harbor Statement:
Statements made in this news release that are not historical
facts are “forward-looking statements” within the meaning of
Section 27A of the Securities Act of 1933, as amended, Section 21E
of the Securities Exchange Act of 1934, as amended, and the Private
Securities Litigation Reform Act of 1995. These statements are
subject to certain risks and uncertainties including, but not
limited to, failure to successfully complete the proposed
transaction and to successfully integrate CNNB into LCNB, which
includes the failure to retain the acquired customer relationships;
failure to obtain requisite regulatory and shareholder approvals
and satisfy other closing conditions; adverse changes in economic
conditions; the impact of competitive products and pricing; and the
other risks set forth in the LCNB’s filings with the SEC. As a
result, actual results may differ materially from the
forward-looking statements in this news release.
LCNB encourages readers of this news release to understand
forward-looking statements to be strategic objectives rather than
absolute targets of future performance. LCNB undertakes no
obligation to update these forward-looking statements to reflect
events or circumstances after the date of this news release or to
reflect the occurrence of unanticipated events, except as required
by applicable legal requirements. Copies of documents filed by LCNB
with the SEC are available free of charge at the SEC’s website at
www.sec.gov and/or from LCNB’s website.
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version on businesswire.com: https://www.businesswire.com/news/home/20230517005867/en/
LCNB Corp. Contact: Eric J. Meilstrup, President & CEO or
Robert C. Haines II, Executive VP & CFO at 800-344-BANK
Cincinnati Bancorp, Inc. Contact: Robert A. Bedinghaus, Chairman
& CEO at 513-574-3025
Cincinnati Bancorp (NASDAQ:CNNB)
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