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)

(Unaudited)

	Three Months Ended											Six Months Ended
	6/30/2016			3/31/2016		12/31/2015		9/30/2015		6/30/2015		6/30/2016		6/30/2015
Condensed Income Statement
Interest income	$	11,008		10,621		10,812		10,409		11,348		21,629		21,438
Interest expense	883			849		906		912		748		1,732		1,510
Net interest income	10,125			9,772		9,906		9,497		10,600		19,897		19,928
Provision for loan losses	396			90		380		240		677		486		746
Net interest income after provision	9,729			9,682		9,526		9,257		9,923		19,411		19,182
Non-interest income	2,750			2,642		2,600		2,386		2,831		5,392		5,137
Non-interest expense	8,468			8,292		8,229		8,088		8,426		16,760		16,075
Income before income taxes	4,011			4,032		3,897		3,555		4,328		8,043		8,244
Provision for income taxes	1,043			1,068		1,013		922		1,205		2,111		2,287
Net income	$	2,968		2,964		2,884		2,633		3,123		5,932		5,957
Per Share Data
Dividends per share	$	0.16		0.16		0.16		0.16		0.16		0.32		0.32
Basic earnings per share	$	0.30		0.30		0.29		0.26		0.33		0.60		0.63
Diluted earnings per share	$	0.29		0.30		0.29		0.26		0.32		0.59		0.62
Book value per share	$	14.66		14.39		14.12		14.22		13.91		14.66		13.91
Tangible book value per share	$	11.17		10.88		10.58		10.66		10.33		11.17		10.33
Average basic shares outstanding	9,922,024			9,916,114		9,905,612		9,898,233		9,694,732		9,919,070		9,504,739
Average diluted shares outstanding	9,943,797			9,998,516		10,014,908		10,005,788		9,804,728		9,971,900		9,609,050
Shares outstanding at period end	9,937,262			9,931,788		9,925,547		9,903,294		9,896,904		9,937,262		9,896,904
Selected Financial Ratios
Return on average assets	0.92		%	0.93	%	0.89	%	0.82	%	1.03	%	0.92	%	1.02	%
Return on average equity	8.28		%	8.37	%	8.07	%	7.51	%	9.21	%	8.32	%	9.11	%
Dividend payout ratio	53.33		%	53.33	%	55.17	%	61.54	%	48.48	%	53.33	%	50.79	%
Net interest margin (tax equivalent)	3.55		%	3.49	%	3.46	%	3.37	%	3.95	%	3.52	%	3.89	%
Efficiency ratio (tax equivalent)	63.73		%	64.74	%	63.80	%	65.97	%	61.08	%	64.22	%	62.39	%
Selected Balance Sheet Items
Investment securities and stock	$	399,345		393,976		406,981		391,430		378,651
Loans:
Commercial and industrial	$	45,153		45,324		45,275		45,325		47,958
Commercial, secured by real estate	455,654			430,179		419,633		407,264		399,551
Residential real estate	266,625			271,812		273,139		274,054		273,249
Consumer	18,545			17,925		18,510		19,283		19,718
Agricultural	13,605			12,589		13,479		16,016		13,434
Other, including deposit overdrafts	635			643		665		676		638
Deferred net origination costs	248			242		237		215		188
Loans, gross	800,465			778,714		770,938		762,833		754,736
Less allowance for loan losses	3,373			3,150		3,129		2,958		2,879
Loans, net	$	797,092		775,564		767,809		759,875		751,857
Total assets	$	1,312,635		1,285,922		1,280,531		1,275,171		1,249,363
Total deposits	1,124,698			1,120,208		1,087,160		1,103,513		1,084,033
Short-term borrowings	30,541			11,668		37,387		14,931		12,731
Long-term debt	726			789		5,947		6,016		6,085
Total shareholders’ equity	145,710			142,933		140,108		140,851		137,698
Equity to assets ratio	11.10		%	11.12	%	10.94	%	11.05	%	11.02	%
Loans to deposit ratio	71.17		%	69.52	%	70.91	%	69.13	%	69.62	%

	Three Months Ended											Six Months Ended
	6/30/2016			3/31/2016		12/31/2015		9/30/2015		6/30/2015		6/30/2016		6/30/2015
Selected Balance Sheet Items, continued
Tangible common equity (TCE)	$	110,541		107,567		104,529		105,063		101,694
Tangible common assets (TCA)	1,277,466			1,250,556		1,244,952		1,239,383		1,213,359
TCE/TCA	8.65		%	8.60	%	8.40	%	8.48	%	8.38	%
Selected Average Balance Sheet Items
Investment securities and stock	$	396,130		389,648		406,423		385,353		360,750		392,889		337,146
Loans	$	784,324		772,204		764,440		760,159		737,021		778,264		718,592
Less allowance for loan losses	3,103			3,130		2,929		2,885		2,865		3,116		2,868
Net loans	$	781,221		769,074		761,511		757,274		734,156		775,148		715,724
Total assets	$	1,303,073		1,278,014		1,285,114		1,267,171		1,220,938		1,290,543		1,173,307
Total deposits	1,133,403			1,104,330		1,107,214		1,099,730		1,057,818		1,118,867		1,013,982
Short-term borrowings	14,355			20,710		20,290		13,450		12,803		17,532		13,310
Long-term debt	747			1,256		5,970		6,040		6,108		1,002		6,352
Total shareholders’ equity	144,185			142,447		141,751		139,032		136,003		143,316		131,829
Asset Quality
Net charge-offs	$	173		69		209		161		635
Other real estate owned	682			846		846		1,208		1,364
Non-accrual loans	2,697			3,328		1,723		2,254		1,961
Loans past due 90 days or more and still accruing	369			99		559		130		128
Total nonperforming loans	$	3,066		3,427		2,282		2,384		2,089
Net charge-offs to average loans	0.09		%	0.04	%	0.11	%	0.08	%	0.35	%
Allowance for loan losses to total loans	0.42		%	0.40	%	0.41	%	0.39	%	0.38	%
Nonperforming loans to total loans	0.38		%	0.44	%	0.30	%	0.31	%	0.28	%
Nonperforming assets to total assets	0.29		%	0.33	%	0.24	%	0.28	%	0.28	%
Assets Under Management
LCNB Corp. total assets	$	1,312,635		1,285,922		1,280,531		1,275,171		1,249,363
Trust and investments (fair value)	284,118			274,297		283,193		258,675		272,209
Mortgage loans serviced	107,189			107,992		111,837		113,610		117,204
Business cash management	8,551			6,773		7,271		6,809		6,628
Brokerage accounts (fair value)	163,596			157,713		148,956		142,151		144,186
Total assets managed	$	1,876,089		1,832,697		1,831,788		1,796,416		1,789,590
Non-GAAP Financial Measures
Accreted income on acquired loans	$	294		333		219		243		1,348		627		1,674
Amortization of acquired deposit premiums	$	0		27		34		46		211		27		397
Net income	$	2,968		2,964		2,884		2,633		3,123		5,932		5,957
Less (add) net gain (loss) on sales of securities, net of tax	183			245		108		0		146		428		219
Add merger-related expenses, net of tax	0			0		2		32		363		0		429
Core net income	$	2,785		2,719		2,778		2,665		3,340		5,504		6,167
Basic core earnings per share	$	0.28		0.27		0.28		0.27		0.34		0.55		0.65
Diluted core earnings per share	$	0.28		0.27		0.28		0.27		0.34		0.55		0.64
Adjusted return on average assets	0.86		%	0.85	%	0.86	%	0.83	%	1.10	%	0.86	%	1.06	%
Adjusted return on average equity	7.77		%	7.66	%	7.77	%	7.60	%	9.85	%	7.72	%	9.43	%
Core efficiency ratio (tax equivalent)	65.09		%	66.67	%	64.60	%	65.57	%	58.23	%	65.86	%	60.88	%

LCNB CORP. AND SUBSIDIARIES

CONSOLIDATED CONDENSED BALANCE SHEETS

(Dollars in thousands)

	June 30, 2016 (Unaudited)			December 31, 2015
ASSETS:
Cash and due from banks	$	17,254		14,155
Interest-bearing demand deposits	1,753			832
Total cash and cash equivalents	19,007			14,987
Investment securities:
Available-for-sale, at fair value	353,528			377,978
Held-to-maturity, at cost	39,447			22,633
Federal Reserve Bank stock, at cost	2,732			2,732
Federal Home Loan Bank stock, at cost	3,638			3,638
Loans, net	797,092			767,809
Premises and equipment, net	24,985			22,100
Goodwill	30,183			30,183
Core deposit and other intangibles	4,986			5,396
Bank owned life insurance	26,921			22,561
Other assets	10,116			10,514
TOTAL ASSETS	$	1,312,635		1,280,531
LIABILITIES:
Deposits:
Noninterest-bearing	$	252,498		250,306
Interest-bearing	872,200			836,854
Total deposits	1,124,698			1,087,160
Short-term borrowings	30,541			37,387
Long-term debt	726			5,947
Accrued interest and other liabilities	10,960			9,929
TOTAL LIABILITIES	1,166,925			1,140,423
COMMITMENTS AND CONTINGENT LIABILITIES
SHAREHOLDERS' EQUITY:
Preferred shares – no par value, authorized 1,000,000 shares, none outstanding	—			—
Common shares – no par value, authorized 19,000,000 and12,000,000 shares at June 30, 2016 and December 31, 2015, respectively; issued 10,690,889 and 10,679,174 shares at June 30, 2016 and December 31, 2015, respectively	75,602			76,908
Retained earnings	77,384			74,629
Treasury shares at cost, 753,627 shares at June 30, 2016 and December 31, 2015	(11,665		)	(11,665	)
Accumulated other comprehensive income, net of taxes	4,389			236
TOTAL SHAREHOLDERS' EQUITY	145,710			140,108
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	1,312,635		1,280,531

LCNB CORP. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF INCOME

(Dollars in thousands, except per share data)

(Unaudited)

	Three Months Ended   June 30,			Six Months Ended   June 30,
	2016		2015	2016	2015
INTEREST INCOME:
Interest and fees on loans	$	8,892	9,492	17,519	18,032
Interest on investment securities –
Taxable	1,187		1,033	2,376	1,889
Non-taxable	794		702	1,552	1,355
Other short-term investments	135		121	182	162
TOTAL INTEREST INCOME	11,008		11,348	21,629	21,438
INTEREST EXPENSE:
Interest on deposits	870		671	1,693	1,353
Interest on short-term borrowings	8		4	22	8
Interest on long-term debt	5		73	17	149
TOTAL INTEREST EXPENSE	883		748	1,732	1,510
NET INTEREST INCOME	10,125		10,600	19,897	19,928
PROVISION FOR LOAN LOSSES	396		677	486	746
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES	9,729		9,923	19,411	19,182
NON-INTEREST INCOME:
Trust income	837		852	1,600	1,652
Service charges and fees on deposit accounts	1,243		1,234	2,436	2,341
Net gain (loss) on sales of securities	279		221	650	332
Bank owned life insurance income	191		155	360	314
Gains from sales of loans	61		219	102	254
Other operating income	139		150	244	244
TOTAL NON-INTEREST INCOME	2,750		2,831	5,392	5,137
NON-INTEREST EXPENSE:
Salaries and employee benefits	4,532		4,381	9,095	8,671
Equipment expenses	239		302	488	590
Occupancy expense, net	588		584	1,157	1,179
State franchise tax	276		250	557	502
Marketing	201		220	368	383
Amortization of intangibles	188		175	375	321
FDIC insurance premiums	162		145	327	296
Other real estate owned	356		20	385	55
Merger-related expenses	—		522	—	592
Other non-interest expense	1,926		1,827	4,008	3,486
TOTAL NON-INTEREST EXPENSE	8,468		8,426	16,760	16,075
INCOME BEFORE INCOME TAXES	4,011		4,328	8,043	8,244
PROVISION FOR INCOME TAXES	1,043		1,205	2,111	2,287
NET INCOME	$	2,968	3,123	5,932	5,957
Dividends declared per common share	$	0.16	0.16	0.32	0.32
Earnings per common share:
Basic	0.30		0.33	0.60	0.63
Diluted	0.29		0.32	0.59	0.62
Weighted average common shares outstanding:
Basic	9,922,024		9,694,732	9,919,070	9,504,739
Diluted	9,943,797		9,804,728	9,971,900	9,609,050