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
	6/30/2018			3/31/2018		12/31/2017		9/30/2017		6/30/2017		6/30/2018		6/30/2017
Condensed Income Statement
Interest income	$	12,538		11,142		11,610		11,055		10,934		23,680		21,798
Interest expense	1,170			954		953		908		861		2,124		1,738
Net interest income	11,368			10,188		10,657		10,147		10,073		21,556		20,060
Provision for loan losses	224			79		(10	)	(12	)	222		303		237
Net interest income after provision	11,144			10,109		10,667		10,159		9,851		21,253		19,823
Non-interest income	2,791			2,636		2,579		2,659		2,790		5,427		5,220
Non-interest expense	11,494			9,549		8,612		8,672		8,611		21,043		16,579
Income before income taxes	2,441			3,196		4,634		4,146		4,030		5,637		8,464
Provision for income taxes	486			483		1,017		1,040		1,027		969		2,215
Net income	$	1,955		2,713		3,617		3,106		3,003		4,668		6,249
Accreted income on acquired loans	$	44		96		606		90		180		140		400
Tax-equivalent net interest income	$	11,549		10,375		11,062		10,569		10,494		21,924		20,904
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	$	0.17		0.27		0.37		0.31		0.30		0.44		0.62
Diluted earnings per common share	$	0.17		0.27		0.36		0.31		0.30		0.44		0.62
Book value per share	$	15.91		14.80		14.99		14.94		14.77		15.91		14.77
Tangible book value per share	$	11.18		11.47		11.64		11.57		11.38		11.18		11.38
Weighted average common shares outstanding:
Basic	11,099,485			10,020,611		10,013,777		10,008,807		10,004,422		10,563,030		9,999,765
Diluted	11,105,014			10,028,588		10,020,566		10,015,204		10,011,312		10,568,792		10,007,192
Shares outstanding at period end	13,299,235			10,041,152		10,023,059		10,018,507		10,014,004		13,299,235		10,014,004
Selected Financial Ratios
Return on average assets	0.56		%	0.85	%	1.11	%	0.94	%	0.91	%	0.70	%	0.96	%
Return on average equity	4.62		%	7.33	%	9.49	%	8.22	%	8.15	%	5.88	%	8.61	%
Dividend payout ratio	94.12		%	59.26	%	43.24	%	51.61	%	53.33	%	72.73	%	51.61	%
Net interest margin (tax equivalent)	3.63		%	3.59	%	3.73	%	3.52	%	3.50	%	3.61	%	3.53	%
Efficiency ratio (tax equivalent)	80.15		%	73.39	%	63.13	%	65.56	%	64.82	%	76.94	%	63.43	%
Selected Balance Sheet Items
Cash and cash equivalents	$	24,901		17,494		25,386		21,203		29,967
Investment securities and stock	311,047			310,009		317,413		353,634		373,595
Loans:
Commercial and industrial	$	81,814		37,118		36,057		36,049		38,651
Commercial, secured by real estate	705,950			542,890		527,947		510,158		495,255
Residential real estate	339,429			246,487		251,582		253,530		258,710
Consumer	17,705			17,176		17,450		17,956		17,475
Agricultural	13,388			12,217		15,194		15,677		16,014
Other, including deposit overdrafts	583			506		539		570		547
Deferred net origination costs	229			263		291		264		281
Loans, gross	1,159,098			856,657		849,060		834,204		826,933
Less allowance for loan losses	3,603			3,529		3,403		3,407		3,382
Loans, net	$	1,155,495		853,128		845,657		830,797		823,551
Total earning assets	$	1,471,923		1,168,204		1,170,700		1,193,648		1,211,096
Total assets	1,630,739			1,288,791		1,295,638		1,314,319		1,335,571
Total deposits	1,380,884			1,123,463		1,085,821		1,121,523		1,143,920
Short-term borrowings	—			—		47,000		30,000		31,712
Long-term debt	27,165			6,219		303		363		402

	Three Months Ended											Six Months Ended
	6/30/2018			3/31/2018		12/31/2017		9/30/2017		6/30/2017		6/30/2018		6/30/2017
Selected Balance Sheet Items, continued
Total shareholders’ equity	211,583			148,584		150,271		149,713		147,927
Equity to assets ratio	12.97		%	11.53	%	11.60	%	11.39	%	11.08	%
Loans to deposits ratio	83.94		%	76.25	%	78.20	%	74.38	%	72.29	%
Tangible common equity (TCE)	$	148,290		114,801		116,289		115,527		113,542
Tangible common assets (TCA)	1,567,446			1,255,008		1,261,656		1,280,133		1,301,186
TCE/TCA	9.46		%	9.15	%	9.22	%	9.02	%	8.73	%
Selected Average Balance Sheet Items
Cash and cash equivalents	$	27,319		21,820		18,787		21,609		33,639		24,601		30,173
Investment securities and stock	306,366			313,689		332,225		363,039		373,295		308,267		369,916
Loans	$	961,726		853,152		840,526		824,183		811,186		907,739		812,385
Less allowance for loan losses	4,245			3,401		3,407		3,324		3,334		3,825		3,445
Net loans	$	957,481		849,751		837,119		820,859		807,852		903,914		808,940
Total earning assets	$	1,276,176		1,170,708		1,175,180		1,190,860		1,202,129		1,223,733		1,195,294
Total assets	1,409,425			1,292,375		1,295,293		1,313,476		1,321,442		1,351,218		1,315,052
Total deposits	1,212,104			1,114,979		1,096,966		1,133,072		1,148,206		1,163,810		1,136,895
Short-term borrowings	3,491			14,086		34,440		17,936		15,030		8,759		21,728
Long-term debt	13,260			2,255		323		383		441		7,788		489
Total shareholders’ equity	169,845			150,058		151,154		150,032		147,826		160,006		146,258
Equity to assets ratio	12.05		%	11.61	%	11.67	%	11.42	%	11.19	%	11.84	%	11.12	%
Loans to deposits ratio	79.34		%	76.52	%	76.62	%	72.74	%	70.65	%	78.00	%	71.46	%
Asset Quality
Net charge-offs (recoveries)	$	150		(47	)	(7	)	(36	)	168		103		430
Other real estate owned	35			—		—		—		—		35		—
Non-accrual loans	4,133			2,744		2,965		4,387		3,747		4,133		3,747
Loans past due 90 days or more and still accruing	5			146		—		95		141		5		141
Total nonperforming loans	$	4,138		2,890		2,965		4,482		3,888		4,138		3,888
Net charge-offs (recoveries) to average loans	0.06		%	(0.02	)%	0.00	%	(0.02	)%	0.08	%	0.02	%	0.11	%
Allowance for loan losses to total loans	0.31		%	0.41	%	0.40	%	0.41	%	0.41	%	0.31	%	0.41	%
Nonperforming loans to total loans	0.36		%	0.34	%	0.35	%	0.54	%	0.47	%	0.36	%	0.47	%
Nonperforming assets to total assets	0.26		%	0.22	%	0.23	%	0.34	%	0.29	%	0.26	%	0.29	%
Assets Under Management
LCNB Corp. total assets	$	1,630,739		1,288,791		1,295,638		1,314,319		1,335,571
Trust and investments (fair value)	370,587			359,766		362,486		326,642		315,450
Mortgage loans serviced	125,806			90,630		92,818		96,241		98,234
Cash management	48,369			72,372		84,344		77,780		45,519
Brokerage accounts (fair value)	238,651			230,168		229,006		219,960		209,019
Total assets managed	$	2,414,152		2,041,727		2,064,292		2,034,942		2,003,793
Non-GAAP Financial Measures
Net income	$	1,955		2,713		3,617		3,106		3,003		4,668		6,249
Add: merger-related expenses, net of tax	1,493			621		87		—		—		2,114		—
Core net income	$	3,448		3,334		3,704		3,106		3,003		6,782		6,249
Basic core earnings per share	0.31			0.33		0.37		0.31		0.30		0.64		0.62
Diluted core earnings per share	0.31			0.33		0.37		0.31		0.30		0.64		0.62
Adjusted return on average assets	0.98		%	1.05	%	1.16	%	0.94	%	0.91	%	1.01	%	0.96	%
Adjusted return on average equity	8.14		%	9.01	%	9.94	%	8.22	%	8.15	%	8.55	%	8.61	%
Core efficiency ratio (tax equivalent)	68.73		%	66.67	%	62.34	%	65.56	%	64.82	%	68.18	%	63.43	%

LCNB CORP. AND SUBSIDIARIES

CONSOLIDATED CONDENSED BALANCE SHEETS

(Dollars in thousands)

	June 30, 2018 (Unaudited)			December 31, 2017
ASSETS:
Cash and due from banks	$	23,123		21,159
Interest-bearing demand deposits	1,778			4,227
Total cash and cash equivalents	24,901			25,386
Interest-bearing time deposits	9,852			—
Investment securities:
Equity securities with a readily determinable fair value, at fair value	2,188			2,161
Equity securities without a readily determinable fair value, at cost	2,099			1,099
Debt securities, available-for-sale, at fair value	257,721			275,212
Debt securities, held-to-maturity, at cost	31,610			32,571
Federal Reserve Bank stock, at cost	2,732			2,732
Federal Home Loan Bank stock, at cost	4,845			3,638
Loans, net	1,155,495			845,657
Premises and equipment, net	33,769			34,927
Goodwill	57,792			30,183
Core deposit and other intangibles	5,501			3,799
Bank owned life insurance	28,354			27,985
Other assets	13,880			10,288
TOTAL ASSETS	$	1,630,739		1,295,638
LIABILITIES:
Deposits:
Noninterest-bearing	$	343,172		283,212
Interest-bearing	1,037,712			802,609
Total deposits	1,380,884			1,085,821
Short-term borrowings	—			47,000
Long-term debt	27,165			303
Accrued interest and other liabilities	11,107			12,243
TOTAL LIABILITIES	1,419,156			1,145,367
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, 2018 and December 31, 2017; issued 14,052,862 and 10,776,686 shares at June 30, 2018 and December 31, 2017, respectively	140,870			76,977
Retained earnings	88,761			87,301
Treasury shares at cost, 753,627 shares at June 30, 2018 and December 31, 2017	(11,665		)	(11,665	)
Accumulated other comprehensive loss, net of taxes	(6,383		)	(2,342	)
TOTAL SHAREHOLDERS' EQUITY	211,583			150,271
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	1,630,739		1,295,638

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,
	2018			2017	2018		2017
INTEREST INCOME:
Interest and fees on loans	$	10,703		8,823	20,116		17,738
Dividends on equity securities with a readily determinable fair value	16			16	31		31
Dividends on equity securities without a readily determinable fair value	8			5	15		11
Interest on debt securities, taxable	934			1,128	1,865		2,200
Interest on debt securities, non-taxable	680			795	1,384		1,594
Other short-term investments	197			167	269		224
TOTAL INTEREST INCOME	12,538			10,934	23,680		21,798
INTEREST EXPENSE:
Interest on deposits	1,096			846	1,967		1,689
Interest on short-term borrowings	7			12	76		42
Interest on long-term debt	67			3	81		7
TOTAL INTEREST EXPENSE	1,170			861	2,124		1,738
NET INTEREST INCOME	11,368			10,073	21,556		20,060
PROVISION FOR LOAN LOSSES	224			222	303		237
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES	11,144			9,851	21,253		19,823
NON-INTEREST INCOME:
Fiduciary income	942			881	1,906		1,733
Service charges and fees on deposit accounts	1,426			1,312	2,731		2,534
Net gains (losses) on sales of securities	(1		)	140	(1	)	140
Bank owned life insurance income	182			297	368		486
Gains from sales of loans	97			63	119		102
Other operating income	145			97	304		225
TOTAL NON-INTEREST INCOME	2,791			2,790	5,427		5,220
NON-INTEREST EXPENSE:
Salaries and employee benefits	5,128			4,703	10,105		9,229
Equipment expenses	268			264	521		475
Occupancy expense, net	658			636	1,385		1,204
State financial institutions tax	296			286	599		570
Marketing	284			216	416		359
Amortization of intangibles	188			188	373		373
FDIC insurance premiums	99			108	198		212
Contracted services	391			375	706		623
Other real estate owned	1			—	3		5
Merger-related expenses	1,638			—	2,396		—
Other non-interest expense	2,543			1,835	4,341		3,529
TOTAL NON-INTEREST EXPENSE	11,494			8,611	21,043		16,579
INCOME BEFORE INCOME TAXES	2,441			4,030	5,637		8,464
PROVISION FOR INCOME TAXES	486			1,027	969		2,215
NET INCOME	$	1,955		3,003	4,668		6,249
Dividends declared per common share	$	0.16		0.16	0.32		0.32
Earnings per common share:
Basic	0.17			0.30	0.44		0.62
Diluted	0.17			0.30	0.44		0.62
Weighted average common shares outstanding:
Basic	11,099,485			10,004,422	10,563,030		9,999,765
Diluted	11,105,014			10,011,312	10,568,792		10,007,192

Contacts

LCNB Corp.

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

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