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											Twelve Months Ended
	12/31/2016			9/30/2016		6/30/2016		3/31/2016		12/31/2015		12/31/2016		12/31/2015
Condensed Income Statement
Interest income	$	11,226		10,895		11,008		10,621		10,812		43,750		42,659
Interest expense	887			885		883		849		906		3,504		3,328
Net interest income	10,339			10,010		10,125		9,772		9,906		40,246		39,331
Provision for loan losses	55			372		396		90		380		913		1,366
Net interest income after provision	10,284			9,638		9,729		9,682		9,526		39,333		37,965
Non-interest income	2,615			2,846		2,750		2,642		2,600		10,853		10,123
Non-interest expense	7,908			8,593		8,468		8,292		8,229		33,261		32,392
Income before income taxes	4,991			3,891		4,011		4,032		3,897		16,925		15,696
Provision for income taxes	1,337			995		1,043		1,068		1,013		4,443		4,222
Net income	$	3,654		2,896		2,968		2,964		2,884		12,482		11,474
Accreted income on acquired loans	$	495		223		304		343		292		1,365		2,227
Amortization of acquired deposit premiums	$	0		0		0		27		34		27		477
Tax-equivalent net interest income	$	10,772		10,432		10,538		10,166		10,298		41,908		40,798
Per Share Data
Dividends per share	$	0.16		0.16		0.16		0.16		0.16		0.64		0.64
Basic earnings per share	$	0.37		0.29		0.30		0.30		0.29		1.26		1.18
Diluted earnings per share	$	0.37		0.29		0.29		0.30		0.29		1.25		1.17
Book value per share	$	14.30		14.70		14.66		14.39		14.12		14.30		14.12
Tangible book value per share	$	10.86		11.24		11.17		10.88		10.58		10.86		10.58
Average basic shares outstanding	9,984,344			9,962,571		9,922,024		9,916,114		9,905,612		9,943,795		9,704,965
Average diluted shares outstanding	9,997,565			9,977,592		9,943,797		9,998,516		10,014,908		9,981,872		9,811,476
Shares outstanding at period end	9,998,025			9,993,695		9,937,262		9,931,788		9,925,547		9,998,025		9,925,547
Selected Financial Ratios
Return on average assets	1.10		%	0.87	%	0.92	%	0.93	%	0.89	%	0.96	%	0.94	%
Return on average equity	9.91		%	7.82	%	8.28	%	8.37	%	8.07	%	8.60	%	8.43	%
Dividend payout ratio	43.24		%	55.17	%	53.33	%	53.33	%	55.17	%	50.79	%	54.24	%
Net interest margin (tax equivalent)	3.56		%	3.42	%	3.55	%	3.49	%	3.46	%	3.51	%	3.64	%
Efficiency ratio (tax equivalent)	59.07		%	64.71	%	63.73	%	64.74	%	63.80	%	63.04	%	63.61	%
Selected Balance Sheet Items
Investment securities and stock	$	368,032		394,798		399,345		393,976		406,981
Loans:
Commercial and industrial	$	41,878		40,097		45,153		45,324		45,275
Commercial, secured by real estate	477,275			467,512		455,654		430,179		419,633
Residential real estate	265,788			268,574		266,625		271,812		273,139
Consumer	19,173			18,752		18,545		17,925		18,510
Agricultural	14,802			15,872		13,605		12,589		13,479
Other, including deposit overdrafts	633			619		635		643		665
Deferred net origination costs	254			236		248		242		237
Loans, gross	819,803			811,662		800,465		778,714		770,938
Less allowance for loan losses	3,575			3,798		3,373		3,150		3,129
Loans, net	$	816,228		807,864		797,092		775,564		767,809
Total earning assets	$	1,188,322		1,222,614		1,201,563		1,180,719		1,178,750
Total assets	1,306,799			1,333,536		1,312,635		1,285,922		1,280,531
Total deposits	1,110,905			1,158,921		1,124,698		1,120,208		1,087,160
Short-term borrowings	42,040			16,989		30,541		11,668		37,387
Long-term debt	598			662		726		789		5,947

	Three Months Ended											Twelve Months Ended
	12/31/2016			9/30/2016		6/30/2016		3/31/2016		12/31/2015		12/31/2016			12/31/2015
Selected Balance Sheet Items, continued
Total shareholders’ equity	142,944			146,906		145,710		142,933		140,108				��
Equity to assets ratio	10.94		%	11.02	%	11.10	%	11.12	%	10.94	%
Loans to deposits ratio	73.80		%	70.04	%	71.17	%	69.52	%	70.91	%
Tangible common equity (TCE)	$	108,178		111,946		110,541		107,567		104,529
Tangible common assets (TCA)	1,272,033			1,298,576		1,277,466		1,250,556		1,244,952
TCE/TCA	8.50		%	8.62	%	8.65	%	8.60	%	8.40	%
Selected Average Balance Sheet Items
Investment securities and stock	$	380,138		396,620		396,130		389,648		406,423		390,621			366,758
Loans	$	812,537		800,729		784,324		772,204		764,440		792,526			740,626
Less allowance for loan losses	3,654			3,382		3,103		3,130		2,929		3,318			2,888
Net loans	$	808,883		797,347		781,221		769,074		761,511		789,208			737,738
Total earning assets	$	1,204,360		1,212,232		1,193,585		1,171,709		1,181,594		1,195,541			1,120,081
Total assets	1,316,037			1,323,532		1,303,073		1,278,014		1,285,114		1,305,132			1,225,112
Total deposits	1,138,740			1,147,981		1,133,403		1,104,330		1,107,214		1,131,179			1,059,095
Short-term borrowings	20,406			16,328		14,355		20,710		20,290		17,952			15,105
Long-term debt	620			684		747		1,256		5,970		826			6,177
Total shareholders’ equity	146,602			147,371		144,185		142,447		141,751		145,161			136,145
Equity to assets ratio	11.14		%	11.13	%	11.06	%	11.15	%	11.03	%	11.12	%		11.11	%
Loans to deposits ratio	71.35		%	69.75	%	69.20	%	69.93	%	69.04	%	70.06	%		69.93	%
Asset Quality
Net charge-offs	$	278		(53	)	173		69		209
Other real estate owned	0			270		682		846		846
Non-accrual loans	5,725			4,619		2,697		3,328		1,723
Loans past due 90 days or more and still accruing	23			20		369		99		559
Total nonperforming loans	$	5,748		4,639		3,066		3,427		2,282
Net charge-offs to average loans	0.14		%	(0.03	)%	0.09	%	0.04	%	0.11	%
Allowance for loan losses to total loans	0.44		%	0.47	%	0.42	%	0.40	%	0.41	%
Nonperforming loans to total loans	0.70		%	0.57	%	0.38	%	0.44	%	0.30	%
Nonperforming assets to total assets	0.44		%	0.37	%	0.29	%	0.33	%	0.24	%
Assets Under Management
LCNB Corp. total assets	$	1,306,799		1,333,536		1,312,635		1,285,922		1,280,531
Trust and investments (fair value)	303,534			293,808		284,118		274,297		283,193
Mortgage loans serviced	100,982			105,018		107,189		107,992		111,837
Business cash management	9,058			7,647		8,551		6,773		7,271
Brokerage accounts (fair value)	188,663			179,244		163,596		157,713		148,956
Total assets managed	$	1,909,036		1,919,253		1,876,089		1,832,697		1,831,788
Non-GAAP Financial Measures
Net income	$	3,654		2,896		2,968		2,964		2,884		12,482			11,474
Less (add) net gain (loss) on sales of securities, net of tax	82			202		183		245		108		712			327
Add merger-related expenses, net of tax	0			0		0		0		2		0			463
Core net income	$	3,572		2,694		2,785		2,719		2,778		11,770			11,610
Basic core earnings per share	$	0.36		0.27		0.28		0.27		0.28		1.18			1.20
Diluted core earnings per share	$	0.36		0.27		0.28		0.27		0.28		1.18			1.18
Adjusted return on average assets	1.08		%	0.81	%	0.86	%	0.85	%	0.86	%	0.90	%		0.95	%
Adjusted return on average equity	9.69		%	7.27	%	7.77	%	7.66	%	7.77	%	8.11	%		8.53	%
Core efficiency ratio (tax equivalent)	59.57		%	66.24	%	65.09	%	66.67	%	64.60	%	64.34	%		62.96	%

LCNB CORP. AND SUBSIDIARIES

CONSOLIDATED CONDENSED BALANCE SHEETS

(Dollars in thousands)

	December 31, 2016 (Unaudited)			December 31, 2015
ASSETS:
Cash and due from banks	$	18,378		14,155
Interest-bearing demand deposits	487			832
Total cash and cash equivalents	18,865			14,987
Investment securities:
Available-for-sale, at fair value	320,659			377,978
Held-to-maturity, at cost	41,003			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	816,228			767,809
Premises and equipment, net	30,244			22,100
Goodwill	30,183			30,183
Core deposit and other intangibles	4,582			5,396
Bank owned life insurance	27,307			22,561
Other assets	11,358			10,514
TOTAL ASSETS	$	1,306,799		1,280,531
LIABILITIES:
Deposits:
Noninterest-bearing	$	271,332		250,306
Interest-bearing	839,573			836,854
Total deposits	1,110,905			1,087,160
Short-term borrowings	42,040			37,387
Long-term debt	598			5,947
Accrued interest and other liabilities	10,312			9,929
TOTAL LIABILITIES	1,163,855			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 and 12,000,000 shares at December 31, 2016 and December 31, 2015, respectively; issued 10,751,652 and 10,679,174 shares at December 31, 2016 and December 31, 2015, respectively	76,490			76,908
Retained earnings	80,736			74,629
Treasury shares at cost, 753,627 shares at December 31, 2016 and December 31, 2015	(11,665		)	(11,665	)
Accumulated other comprehensive income, net of taxes	(2,617		)	236
TOTAL SHAREHOLDERS' EQUITY	142,944			140,108
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	1,306,799		1,280,531

LCNB CORP. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF INCOME

(Dollars in thousands, except per share data)

(Unaudited)

	Three Months Ended   December 31,			Twelve Months Ended   December 31,
	2016		2015	2016	2015
INTEREST INCOME:
Interest and fees on loans	$	9,205	8,713	35,600	35,285
Interest on investment securities –
Taxable	1,054		1,214	4,582	4,197
Non-taxable	834		761	3,199	2,848
Other short-term investments	133		124	369	329
TOTAL INTEREST INCOME	11,226		10,812	43,750	42,659
INTEREST EXPENSE:
Interest on deposits	875		822	3,440	3,009
Interest on short-term borrowings	8		11	38	24
Interest on long-term debt	4		73	26	295
TOTAL INTEREST EXPENSE	887		906	3,504	3,328
NET INTEREST INCOME	10,339		9,906	40,246	39,331
PROVISION FOR LOAN LOSSES	55		380	913	1,366
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES	10,284		9,526	39,333	37,965
NON-INTEREST INCOME:
Trust income	815		856	3,286	3,262
Service charges and fees on deposit accounts	1,296		1,265	5,008	4,920
Net gain (loss) on sales of securities	125		163	1,082	495
Bank owned life insurance income	193		155	746	625
Gains from sales of loans	69		55	244	343
Other operating income	117		106	487	478
TOTAL NON-INTEREST INCOME	2,615		2,600	10,853	10,123
NON-INTEREST EXPENSE:
Salaries and employee benefits	4,478		4,582	18,215	17,593
Equipment expenses	281		343	1,048	1,257
Occupancy expense, net	564		558	2,271	2,307
State franchise tax	278		248	1,114	1,001
Marketing	166		161	696	720
Amortization of intangibles	189		190	753	700
FDIC insurance premiums	52		166	547	598
Contracted services	283		213	1,033	842
Other real estate owned	17		246	624	489
Merger-related expenses	—		2	—	643
Other non-interest expense	1,600		1,520	6,960	6,242
TOTAL NON-INTEREST EXPENSE	7,908		8,229	33,261	32,392
INCOME BEFORE INCOME TAXES	4,991		3,897	16,925	15,696
PROVISION FOR INCOME TAXES	1,337		1,013	4,443	4,222
NET INCOME	$	3,654	2,884	12,482	11,474
Dividends declared per common share	$	0.16	0.16	0.64	0.64
Earnings per common share:
Basic	0.37		0.29	1.26	1.18
Diluted	0.37		0.29	1.25	1.17
Weighted average common shares outstanding:
Basic	9,984,344		9,905,612	9,943,795	9,704,965
Diluted	9,997,565		10,014,908	9,981,872	9,811,476