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
	6/30/2017			3/31/2017		12/31/2016		9/30/2016		6/30/2016		6/30/2017		6/30/2016
Condensed Income Statement
Interest income	$	10,934		10,864		11,226		10,895		11,008		21,798		21,629
Interest expense	861			877		887		885		883		1,738		1,732
Net interest income	10,073			9,987		10,339		10,010		10,125		20,060		19,897
Provision for loan losses	222			15		55		372		396		237		486
Net interest income after provision	9,851			9,972		10,284		9,638		9,729		19,823		19,411
Non-interest income	2,790			2,430		2,615		2,846		2,750		5,220		5,392
Non-interest expense	8,611			7,968		7,908		8,593		8,468		16,579		16,760
Income before income taxes	4,030			4,434		4,991		3,891		4,011		8,464		8,043
Provision for income taxes	1,027			1,188		1,337		995		1,043		2,215		2,111
Net income	$	3,003		3,246		3,654		2,896		2,968		6,249		5,932
Accreted income on acquired loans	$	180		220		495		223		304		400		647
Tax-equivalent net interest income	$	10,494		10,410		10,772		10,432		10,538		20,904		20,704
Per Share Data
Dividends per share	$	0.16		0.16		0.16		0.16		0.16		0.32		0.32
Basic earnings per common share	$	0.30		0.32		0.37		0.29		0.30		0.62		0.60
Diluted earnings per common share	$	0.30		0.32		0.37		0.29		0.29		0.62		0.59
Book value per share	$	14.77		14.52		14.30		14.70		14.66		14.77		14.66
Tangible book value per share	$	11.38		11.11		10.86		11.24		11.17		11.38		11.17
Average basic common shares outstanding	10,004,422			9,995,054		9,984,344		9,962,571		9,922,024		9,999,765		9,919,070
Average diluted common shares outstanding	10,011,312			10,002,878		9,997,565		9,977,592		9,943,797		10,007,192		9,971,900
Shares outstanding at period end	10,014,004			10,009,642		9,998,025		9,993,695		9,937,262		10,014,004		9,937,262
Selected Financial Ratios
Return on average assets	0.91		%	1.01	%	1.10	%	0.87	%	0.92	%	0.96	%	0.92	%
Return on average equity	8.15		%	9.10	%	9.91	%	7.82	%	8.28	%	8.62	%	8.32	%
Dividend payout ratio	53.33		%	50.00	%	43.24	%	55.17	%	53.33	%	51.61	%	53.33	%
Net interest margin (tax equivalent)	3.50		%	3.55	%	3.56	%	3.42	%	3.55	%	3.53	%	3.52	%
Efficiency ratio (tax equivalent)	64.82		%	62.06	%	59.07	%	64.71	%	63.73	%	63.47	%	64.22	%
Selected Balance Sheet Items
Cash and cash equivalents	$	29,967		33,274		18,865		33,213		19,007
Investment securities and stock	373,595			371,501		368,032		394,798		399,345
Loans:
Commercial and industrial	$	38,651		40,039		41,878		40,097		45,153
Commercial, secured by real estate	495,255			475,594		477,275		467,512		455,654
Residential real estate	258,710			260,853		265,788		268,574		266,625
Consumer	17,475			17,646		19,173		18,752		18,545
Agricultural	16,014			15,459		14,802		15,872		13,605
Other, including deposit overdrafts	547			609		633		619		635
Deferred net origination costs	281			281		254		236		248
Loans, gross	826,933			810,481		819,803		811,662		800,465
Less allowance for loan losses	3,382			3,328		3,575		3,798		3,373
Loans, net	$	823,551		807,153		816,228		807,864		797,092

	Three Months Ended											Six Months Ended
	6/30/2017			3/31/2017		12/31/2016		9/30/2016		6/30/2016		6/30/2017		6/30/2016
Selected Balance Sheet Items, continued
Total earning assets	$	1,211,096		1,200,544		1,188,322		1,222,614		1,201,563
Total assets	1,335,571			1,319,074		1,306,799		1,333,536		1,312,635
Total deposits	1,143,920			1,148,198		1,110,905		1,158,921		1,124,698
Short-term borrowings	31,712			15,957		42,040		16,989		30,541
Long-term debt	402			480		598		662		726
Total shareholders’ equity	147,927			145,318		142,944		146,906		145,710
Equity to assets ratio	11.08		%	11.02	%	10.94	%	11.02	%	11.10	%
Loans to deposits ratio	72.29		%	70.59	%	73.80	%	70.04	%	71.17	%
Tangible common equity (TCE)	$	113,542		110,745		108,178		111,946		110,541
Tangible common assets (TCA)	1,301,186			1,284,501		1,272,033		1,298,576		1,277,466
TCE/TCA	8.73		%	8.62	%	8.50	%	8.62	%	8.65	%
Selected Average Balance Sheet Items
Cash and cash equivalents	$	33,639		26,672		28,422		32,011		29,399		30,173		28,466
Investment securities and stock	373,295			366,499		380,138		396,620		396,130		369,916		392,889
Loans	$	811,186		813,597		812,537		800,729		784,324		812,385		778,264
Less allowance for loan losses	3,334			3,557		3,654		3,382		3,103		3,445		3,116
Net loans	$	807,852		810,040		808,883		797,347		781,221		808,940		775,148
Total earning assets	$	1,202,129		1,188,383		1,204,360		1,212,232		1,193,585		1,195,294		1,182,647
Total assets	1,321,442			1,308,591		1,316,037		1,323,532		1,303,073		1,315,052		1,290,543
Total deposits	1,148,206			1,125,457		1,138,740		1,147,981		1,133,403		1,136,895		1,118,867
Short-term borrowings	15,030			28,500		20,406		16,328		14,355		21,728		17,532
Long-term debt	441			537		620		684		747		489		1,002
Total shareholders’ equity	147,826			144,672		146,602		147,371		144,185		146,258		143,316
Equity to assets ratio	11.19		%	11.06	%	11.14	%	11.13	%	11.06	%	11.12	%	11.11	%
Loans to deposits ratio	70.65		%	72.29	%	71.35	%	69.75	%	69.20	%	71.46	%	69.56	%
Asset Quality
Net charge-offs	$	168		262		278		(53	)	173		430		242
Other real estate owned	0			0		0		270		682		0		682
Non-accrual loans	3,747			3,869		5,725		4,619		2,697		3,747		2,697
Loans past due 90 days or more and still accruing	141			12		23		20		369		141		369
Total nonperforming loans	$	3,888		3,881		5,748		4,639		3,066		3,888		3,066
Net charge-offs to average loans	0.08		%	0.13	%	0.14	%	(0.03	)%	0.09	%	0.11	%	0.06	%
Allowance for loan losses to total loans	0.41		%	0.41	%	0.44	%	0.47	%	0.42	%	0.41	%	0.42	%
Nonperforming loans to total loans	0.47		%	0.48	%	0.70	%	0.57	%	0.38	%	0.47	%	0.38	%
Nonperforming assets to total assets	0.29		%	0.29	%	0.44	%	0.37	%	0.29	%	0.29	%	0.29	%
Assets Under Management
LCNB Corp. total assets	$	1,335,571		1,319,074		1,306,799		1,333,536		1,312,635
Trust and investments (fair value)	315,450			316,856		303,534		293,808		284,118
Mortgage loans serviced	98,234			99,324		100,982		105,018		107,189
Cash management	45,519			29,102		30,319		27,453		28,362
Brokerage accounts (fair value)	209,019			199,019		188,663		179,244		163,596
Total assets managed	$	2,003,793		1,963,375		1,930,297		1,939,059		1,895,900

LCNB CORP. AND SUBSIDIARIES

CONSOLIDATED CONDENSED BALANCE SHEETS

(Dollars in thousands)

	June 30, 2017 (Unaudited)			December 31, 2016
ASSETS:
Cash and due from banks	$	19,399		18,378
Interest-bearing demand deposits	10,568			487
Total cash and cash equivalents	29,967			18,865
Investment securities:
Available-for-sale, at fair value	328,788			320,659
Held-to-maturity, at cost	38,437			41,003
Federal Reserve Bank stock, at cost	2,732			2,732
Federal Home Loan Bank stock, at cost	3,638			3,638
Loans, net	823,551			816,228
Premises and equipment, net	34,980			30,244
Goodwill	30,183			30,183
Core deposit and other intangibles	4,202			4,582
Bank owned life insurance	27,604			27,307
Other assets	11,489			11,358
TOTAL ASSETS	$	1,335,571		1,306,799
LIABILITIES:
Deposits:
Noninterest-bearing	$	275,346		271,332
Interest-bearing	868,574			839,573
Total deposits	1,143,920			1,110,905
Short-term borrowings	31,712			42,040
Long-term debt	402			598
Accrued interest and other liabilities	11,610			10,312
TOTAL LIABILITIES	1,187,644			1,163,855
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 shares at June 30, 2017 and December 31, 2016; issued 10,767,631 and 10,751,652 shares at June 30, 2017 and December 31, 2016, respectively	76,785			76,490
Retained earnings	83,782			80,736
Treasury shares at cost, 753,627 shares at March 31, 2017 and December 31, 2016	(11,665		)	(11,665	)
Accumulated other comprehensive income, net of taxes	(975		)	(2,617	)
TOTAL SHAREHOLDERS' EQUITY	147,927			142,944
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	1,335,571		1,306,799

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,
	2017		2016	2017	2016
INTEREST INCOME:
Interest and fees on loans	$	8,823	8,892	17,738	17,519
Interest on investment securities –
Taxable	1,149		1,187	2,242	2,376
Non-taxable	795		794	1,594	1,552
Other short-term investments	167		135	224	182
TOTAL INTEREST INCOME	10,934		11,008	21,798	21,629
INTEREST EXPENSE:
Interest on deposits	846		870	1,689	1,693
Interest on short-term borrowings	12		8	42	22
Interest on long-term debt	3		5	7	17
TOTAL INTEREST EXPENSE	861		883	1,738	1,732
NET INTEREST INCOME	10,073		10,125	20,060	19,897
PROVISION FOR LOAN LOSSES	222		396	237	486
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES	9,851		9,729	19,823	19,411
NON-INTEREST INCOME:
Trust income	881		837	1,733	1,600
Service charges and fees on deposit accounts	1,312		1,243	2,534	2,436
Net gain (loss) on sales of securities	140		279	140	650
Bank owned life insurance income	297		191	486	360
Gains from sales of loans	63		61	102	102
Other operating income	97		139	225	244
TOTAL NON-INTEREST INCOME	2,790		2,750	5,220	5,392
NON-INTEREST EXPENSE:
Salaries and employee benefits	4,703		4,532	9,229	9,095
Equipment expenses	264		239	475	488
Occupancy expense, net	636		588	1,204	1,157
State franchise tax	286		276	570	557
Marketing	216		201	359	368
Amortization of intangibles	188		188	373	375
FDIC insurance premiums	108		162	212	327
Contracted services	375		223	623	450
Other real estate owned	—		356	5	385
Other non-interest expense	1,835		1,703	3,529	3,558
TOTAL NON-INTEREST EXPENSE	8,611		8,468	16,579	16,760
INCOME BEFORE INCOME TAXES	4,030		4,011	8,464	8,043
PROVISION FOR INCOME TAXES	1,027		1,043	2,215	2,111
NET INCOME	$	3,003	2,968	6,249	5,932
Dividends declared per common share	$	0.16	0.16	0.32	0.32
Earnings per common share:
Basic	0.30		0.30	0.62	0.60
Diluted	0.30		0.29	0.62	0.59
Weighted average common shares outstanding:
Basic	10,004,422		9,922,024	9,999,765	9,919,070
Diluted	10,011,312		9,943,797	10,007,192	9,971,900

Contacts

LCNB Corp.

Steve P. Foster, CEO & President, 800-344-BANK

Robert C. Haines II, Executive Vice President and CFO, 800-344-BANK