LCNB (LCNB) 8-K Results of Operations and Financial Condition

Exhibit 99.2

LCNB Corp. and Subsidiaries

Financial Highlights

(Dollars in thousands, except per share amounts)

	Three Months Ended											Nine Months Ended
	9/30/2014			6/30/2014		3/31/2014		12/31/2013		9/30/2013		9/30/2014		9/30/2013
Condensed Income Statement
Interest income	$	9,906		9,926		9,278		8,566		8,450		29,110		24,931
Interest expense	911			920		915		927		995		2,746		3,138
Net interest income	8,995			9,006		8,363		7,639		7,455		26,364		21,793
Provision for loan losses	401			255		81		219		178		737		369
Net interest income after provision	8,594			8,751		8,282		7,420		7,277		25,627		21,424
Non-interest income	2,315			2,301		2,077		2,358		2,047		6,693		6,732
Non-interest expense	7,238			7,600		8,672		6,634		6,163		23,510		19,578
Income before income taxes	3,671			3,452		1,687		3,144		3,161		8,810		8,578
Provision for income taxes	953			841		364		797		804		2,158		2,145
Net income	$	2,718		2,611		1,323		2,347		2,357		6,652		6,433
Per Share Data
Dividends per share	$	0.16		0.16		0.16		0.16		0.16		0.48		0.48
Basic earnings per share	$	0.30		0.28		0.14		0.27		0.31		0.72		0.85
Diluted earnings per share	$	0.29		0.28		0.14		0.27		0.30		0.71		0.83
Book value per share	$	13.24		13.18		12.89		12.80		12.07		13.24		12.07
Tangible book value per share	$	9.80		9.71		9.44		11.02		9.93		9.80		9.93
Average basic shares outstanding	9,299,691			9,293,382		9,288,400		8,623,134		7,636,098		9,293,866		7,592,818
Average diluted shares outstanding	9,405,013			9,402,343		9,413,049		8,755,416		7,787,098		9,407,110		7,722,686
Shares outstanding at period end	9,305,208			9,298,270		9,292,226		9,287,536		7,640,163		9,305,208		7,640,163
Selected Financial Ratios
Return on average assets	0.95		%	0.91	%	0.50	%	0.98	%	0.99	%	0.79	%	0.91	%
Return on average equity	8.71		%	8.60	%	4.47	%	8.48	%	10.27	%	7.30	%	9.24	%
Dividend payout ratio	53.33		%	57.14	%	114.29	%	59.26	%	51.61	%	66.67	%	56.47	%
Net interest margin (tax equivalent)	3.57		%	3.59	%	3.66	%	3.63	%	3.57	%	3.60	%	3.55	%
Efficiency ratio	64.00		%	67.21	%	83.07	%	66.36	%	64.86	%	71.12	%	68.63	%
Selected Balance Sheet Items
Investment securities and stock	$	322,341		357,567		331,771		279,021		296,819
Loans	$	685,915		691,719		685,196		574,354		566,109
Less allowance for loan losses	3,298			3,394		3,370		3,588		3,423
Net loans	$	682,617		688,325		681,826		570,766		562,686
Total assets	$	1,123,356		1,151,109		1,133,508		932,338		942,349
Total deposits	956,633			986,824		984,514		785,761		808,335
Short-term borrowings	24,954			23,523		11,215		8,655		22,811
Long-term debt	11,432			11,506		11,580		12,102		12,446
Total shareholders’ equity	123,179			122,584		119,761		118,873		92,215
Tangible common equity (TCE)	$	91,203		89,800		87,017		101,893		75,353
Tangible common assets (TCA)	1,091,380			1,118,325		1,100,764		915,358		925,487
TCE/TA	8.36		%	8.03	%	7.91	%	11.13	%	8.14	%
Loans to deposit ratio	71.70		%	70.10	%	69.60	%	73.10	%	70.03	%
Equity to assets ratio	10.97		%	10.65	%	10.57	%	12.75	%	9.79	%

	Three Months Ended											Nine Months Ended
	9/30/2014			6/30/2014		3/31/2014		12/31/2013		9/30/2013		9/30/2014		9/30/2013
Asset Quality
Net charge-offs	$	496		232		299		54		181
Other real estate owned	1,460			1,906		1,799		1,463		1,561
Non-accrual loans	6,264			6,243		5,374		2,961		2,828
Loans past due 90 days or more and still accruing	111			130		825		250		29
Total nonperforming loans	$	6,375		6,373		6,199		3,211		2,857
Net charge-offs to average loans	0.29		%	0.14	%	0.19	%	0.04	%	0.13	%
Allowance for loan losses to total loans	0.48		%	0.49	%	0.49	%	0.62	%	0.60	%
Nonperforming loans to total loans	0.93		%	0.92	%	0.90	%	0.56	%	0.50	%
Nonperforming assets to total assets	0.70		%	0.72	%	0.71	%	0.50	%	0.47	%
Non-GAAP Financial Measures
Net income	$	2,718		2,611		1,323		2,347		2,357		6,652		6,433
Less (add) net gain (loss) on sales of securities, net of tax	64			0		(3	)	203		38		61		497
Add merger-related expenses, net of tax	3			46		853		101		0		902		913
Core net income	$	2,657		2,657		2,179		2,245		2,319		7,493		6,849
Basic core earnings per share	$	0.29		0.29		0.23		0.26		0.30		0.81		0.90
Diluted core earnings per share	$	0.28		0.28		0.23		0.26		0.30		0.80		0.89
Adjusted return on average assets	0.92		%	0.93	%	0.82	%	0.93	%	0.97	%	0.89	%	0.97	%
Adjusted return on average equity	8.43		%	8.67	%	7.32	%	8.08	%	10.06	%	8.17	%	9.81	%
Core efficiency ratio	64.51		%	66.60	%	70.66	%	67.37	%	65.26	%	67.18	%	65.72	%

LCNB CORP. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

	September 30, 2014			December 31, 2013
	(Unaudited)
ASSETS:
Cash and due from banks	$	13,388		10,410
Interest-bearing demand deposits	19,665			4,278
Total cash and cash equivalents	33,053			14,688
Investment securities:
Available-for-sale, at fair value	292,853			258,241
Held-to-maturity, at cost	23,504			16,323
Federal Reserve Bank stock, at cost	2,346			1,603
Federal Home Loan Bank stock, at cost	3,638			2,854
Loans, net	682,617			570,766
Premises and equipment, net	20,907			19,897
Goodwill	27,638			14,186
Bank owned life insurance	21,773			21,280
Other assets	15,027			12,500
TOTAL ASSETS	$	1,123,356		932,338
LIABILITIES:
Deposits:
Noninterest-bearing	$	190,875		164,912
Interest-bearing	765,758			620,849
Total deposits	956,633			785,761
Short-term borrowings	24,954			8,655
Long-term debt	11,432			12,102
Accrued interest and other liabilities	7,158			6,947
TOTAL LIABILITIES	1,000,177			813,465
SHAREHOLDERS' EQUITY:
Preferred shares – no par value, authorized 1,000,000 shares, none outstanding	—			—
Common shares – no par value, authorized 12,000,000 shares, issued 10,058,835 and 10,041,163 shares at September 30, 2014 and December 31, 2013, respectively	67,086			66,785
Retained earnings	67,667			65,475
Treasury shares at cost, 753,627 shares at September 30, 2014 and December 31, 2013	(11,665		)	(11,665	)
Accumulated other comprehensive loss, net of taxes	91			(1,722	)
TOTAL SHAREHOLDERS' EQUITY	123,179			118,873
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	1,123,356		932,338

LCNB CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Dollars in thousands, except per share data)

(Unaudited)

	Three Months Ended   September 30,			Nine Months Ended   September 30,
	2014		2013	2014	2013
INTEREST INCOME:
Interest and fees on loans	$	8,168	6,902	24,008	20,298
Interest on investment securities –
Taxable	984		862	2,901	2,556
Non-taxable	716		654	2,019	1,932
Other short-term investments	38		32	182	145
TOTAL INTEREST INCOME	9,906		8,450	29,110	24,931
INTEREST EXPENSE:
Interest on deposits	800		875	2,423	2,789
Interest on short-term borrowings	10		11	18	18
Interest on long-term debt	101		109	305	331
TOTAL INTEREST EXPENSE	911		995	2,746	3,138
NET INTEREST INCOME	8,995		7,455	26,364	21,793
PROVISION FOR LOAN LOSSES	401		178	737	369
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES	8,594		7,277	25,627	21,424
NON-INTEREST INCOME:
Trust income	688		626	2,071	1,810
Service charges and fees on deposit accounts	1,245		1,062	3,619	3,114
Net gain (loss) on sales of securities	97		58	93	753
Bank owned life insurance income	165		168	507	512
Gains from sales of mortgage loans	24		57	92	305
Other operating income	96		76	311	238
TOTAL NON-INTEREST INCOME	2,315		2,047	6,693	6,732
NON-INTEREST EXPENSE:
Salaries and employee benefits	4,022		3,247	11,896	9,783
Equipment expenses	337		318	976	908
Occupancy expense, net	541		505	1,706	1,529
State franchise tax	231		208	714	635
Marketing	212		145	541	446
FDIC insurance premiums	183		128	492	375
Merger-related expenses	4		—	1,366	1,326
Other non-interest expense	1,708		1,612	5,819	4,576
TOTAL NON-INTEREST EXPENSE	7,238		6,163	23,510	19,578
INCOME BEFORE INCOME TAXES	3,671		3,161	8,810	8,578
PROVISION FOR INCOME TAXES	953		804	2,158	2,145
NET INCOME	$	2,718	2,357	6,652	6,433
Dividends declared per common share	$	0.16	0.16	0.48	0.48
Earnings per common share:
Basic	$	0.30	0.31	0.72	0.85
Diluted	0.29		0.30	0.71	0.83
Weighted average common shares outstanding:
Basic	9,299,691		7,636,098	9,293,866	7,592,818
Diluted	9,405,013		7,787,098	9,407,110	7,722,686