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											Nine Months Ended
	9/30/2018			6/30/2018		3/31/2018		12/31/2017		9/30/2017		9/30/2018		9/30/2017
Condensed Income Statement
Interest income	$	15,070		12,538		11,142		11,610		11,055		38,750		32,853
Interest expense	1,967			1,170		954		953		908		4,091		2,646
Net interest income	13,103			11,368		10,188		10,657		10,147		34,659		30,207
Provision for loan losses	659			224		79		(10	)	(12	)	962		225
Net interest income after provision	12,444			11,144		10,109		10,667		10,159		33,697		29,982
Non-interest income	2,921			2,791		2,636		2,579		2,659		8,348		7,879
Non-interest expense	10,317			10,711		9,549		8,612		8,672		30,577		25,251
Income before income taxes	5,048			3,224		3,196		4,634		4,146		11,468		12,610
Provision for income taxes	847			486		483		1,017		1,040		1,816		3,255
Net income	$	4,201		2,738		2,713		3,617		3,106		9,652		9,355
Amort/Accret income on acquired loans	$	198		44		96		606		90		340		490
Amort/Accret expenses on acquired interest-bearing liabilities	$	214		—		—		—		—		214		—
Tax-equivalent net interest income	$	13,281		11,549		10,375		11,062		10,569		35,203		31,487
Per Share Data
Dividends per share	$	0.16		0.16		0.16		0.16		0.16		0.48		0.48
Basic earnings per common share	$	0.32		0.25		0.27		0.37		0.31		0.84		0.93
Diluted earnings per common share	$	0.32		0.25		0.27		0.36		0.31		0.84		0.93
Book value per share	$	16.05		15.97		14.80		14.99		14.94		16.05		14.94
Tangible book value per share	$	11.18		11.14		11.47		11.64		11.57		11.18		11.57
Weighted average common shares outstanding:
Basic	13,285,203			11,099,485		10,020,611		10,013,777		10,008,807		11,480,390		10,002,812
Diluted	13,290,665			11,105,014		10,028,588		10,020,566		10,015,204		11,486,051		10,009,942
Shares outstanding at period end	13,304,976			13,299,235		10,041,152		10,023,059		10,018,507		13,304,976		10,018,507
Selected Financial Ratios
Return on average assets	1.03		%	0.78	%	0.85	%	1.11	%	0.94	%	0.89	%	0.95	%
Return on average equity	7.76		%	6.46	%	7.33	%	9.49	%	8.22	%	7.23	%	8.48	%
Dividend payout ratio	50.00		%	64.00	%	59.26	%	43.24	%	51.61	%	57.14	%	51.61	%
Net interest margin (tax equivalent)	3.60		%	3.63	%	3.59	%	3.73	%	3.52	%	3.61	%	3.53	%
Efficiency ratio (tax equivalent)	63.68		%	74.69	%	73.39	%	63.13	%	65.56	%	70.21	%	64.14	%
Selected Balance Sheet Items
Cash and cash equivalents	$	19,812		24,901		17,494		25,386		21,203
Investment securities and stock	299,786			311,047		310,009		317,413		353,634
Loans:
Commercial and industrial	$	78,002		81,778		37,118		36,057		36,049
Commercial, secured by real estate	704,987			705,978		542,890		527,947		510,158
Residential real estate	347,920			339,435		246,487		251,582		253,530
Consumer	17,505			17,705		17,176		17,450		17,956
Agricultural	13,280			13,390		12,217		15,194		15,677
Other, including deposit overdrafts	498			583		506		539		570
Deferred net origination costs	133			229		263		291		264
Loans, gross	1,162,325			1,159,098		856,657		849,060		834,204
Less allowance for loan losses	4,016			3,603		3,529		3,403		3,407
Loans, net	$	1,158,309		1,155,495		853,128		845,657		830,797
Total earning assets	$	1,465,787		1,471,923		1,168,204		1,170,700		1,193,648
Total assets	1,620,134			1,631,442		1,288,791		1,295,638		1,314,319
Total deposits	1,371,023			1,380,884		1,123,463		1,085,821		1,121,523

	Three Months Ended											Nine Months Ended
	9/30/2018			6/30/2018		3/31/2018		12/31/2017		9/30/2017		9/30/2018		9/30/2017
Selected Balance Sheet Items, continued
Short-term borrowings	0			0		0		47,000		30,000
Long-term debt	23,079			27,085		6,219		303		363
Total shareholders’ equity	213,515			212,366		148,584		150,271		149,713
Equity to assets ratio	13.18		%	13.02	%	11.53	%	11.60	%	11.39	%
Loans to deposits ratio	84.78		%	83.94	%	76.25	%	78.20	%	74.38	%
Tangible common equity (TCE)	$	148,733		147,705		114,801		116,289		115,527
Tangible common assets (TCA)	1,555,352			1,566,781		1,255,008		1,261,656		1,280,133
TCE/TCA	9.56		%	9.43	%	9.15	%	9.22	%	9.02	%
Selected Average Balance Sheet Items
Cash and cash equivalents	$	25,920		27,319		21,820		18,787		21,609		25,011		27,289
Investment securities and stock	304,112			306,366		313,689		332,225		363,039		308,020		367,598
Loans	$	1,155,846		961,726		853,152		840,526		824,183		991,350		816,361
Less allowance for loan losses	3,622			4,245		3,401		3,407		3,324		3,757		3,404
Net loans	$	1,152,224		957,481		849,751		837,119		820,859		987,593		812,957
Total earning assets	$	1,465,510		1,276,176		1,170,708		1,175,180		1,190,860		1,305,211		1,193,800
Total assets	1,623,016			1,409,698		1,292,375		1,295,293		1,313,476		1,442,896		1,314,476
Total deposits	1,367,950			1,212,104		1,114,979		1,096,966		1,133,072		1,232,599		1,135,605
Short-term borrowings	1,833			3,491		14,086		34,440		17,936		6,425		20,450
Long-term debt	25,757			13,252		2,255		323		383		13,841		453
Total shareholders’ equity	214,769			170,077		150,058		151,154		150,032		178,539		147,530
Equity to assets ratio	13.23		%	12.06	%	11.61	%	11.67	%	11.42	%	12.37	%	11.22	%
Loans to deposits ratio	84.49		%	79.34	%	76.52	%	76.62	%	72.74	%	80.43	%	71.89	%
Asset Quality
Net charge-offs (recoveries)	$	245		150		(47	)	(7	)	(36	)	348		394
Other real estate owned	35			35		—		—		—		35		—
Non-accrual loans	2,603			4,065		2,744		2,965		4,387		2,603		4,387
Loans past due 90 days or more and still accruing	1			5		146		—		95		1		95
Total nonperforming loans	$	2,604		4,070		2,890		2,965		4,482		2,604		4,482
Net charge-offs (recoveries) to average loans	0.08		%	0.06	%	(0.02	)%	0.00	%	(0.02	)%	0.05	%	0.06	%
Allowance for loan losses to total loans	0.35		%	0.31	%	0.41	%	0.40	%	0.41	%	0.35	%	0.41	%
Nonperforming loans to total loans	0.22		%	0.35	%	0.34	%	0.35	%	0.54	%	0.22	%	0.54	%
Nonperforming assets to total assets	0.16		%	0.25	%	0.22	%	0.23	%	0.34	%	0.16	%	0.34	%
Assets Under Management
LCNB Corp. total assets	$	1,620,134		1,631,442		1,288,791		1,295,638		1,314,319
Trust and investments (fair value)	386,582			370,587		359,766		362,486		326,642
Mortgage loans serviced	115,647			114,536		90,630		92,818		96,241
Cash management	36,502			48,369		72,372		84,344		77,780
Brokerage accounts (fair value)	247,175			238,651		230,168		229,006		219,960
Total assets managed	$	2,406,040		2,403,585		2,041,727		2,064,292		2,034,942
Non-GAAP Financial Measures
Net income	$	4,201		2,738		2,713		3,617		3,106		9,652		9,355
Add: merger-related expenses, net of tax	274			710		621		87		—		1,605		—
Adjusted net income	$	4,475		3,448		3,334		3,704		3,106		11,257		9,355
Basic adjusted earnings per share	0.34			0.31		0.33		0.37		0.31		0.98		0.94
Diluted adjusted earnings per share	0.34			0.31		0.33		0.37		0.31		0.98		0.93
Adjusted return on average assets	1.09		%	0.98	%	1.05	%	1.16	%	0.94	%	1.04	%	0.95	%
Adjusted return on average equity	8.27		%	8.13	%	9.01	%	9.94	%	8.22	%	8.43	%	8.48	%

LCNB CORP. AND SUBSIDIARIES

CONSOLIDATED CONDENSED BALANCE SHEETS

(Dollars in thousands)

	September 30, 2018 (Unaudited)			December 31, 2017
ASSETS:
Cash and due from banks	$	16,136		21,159
Interest-bearing demand deposits	3,676			4,227
Total cash and cash equivalents	19,812			25,386
Interest-bearing time deposits	6,873			—
Investment securities:
Equity securities with a readily determinable fair value, at fair value	2,200			2,160
Equity securities without a readily determinable fair value, at cost	2,099			1,099
Debt securities, available-for-sale, at fair value	247,437			275,213
Debt securities, held-to-maturity, at cost	31,679			32,571
Federal Reserve Bank stock, at cost	4,653			2,732
Federal Home Loan Bank stock, at cost	4,845			3,638
Loans, net	1,158,309			845,657
Premises and equipment, net	33,533			34,927
Premises held for sale, net	—			—
Goodwill	59,952			30,183
Core deposit and other intangibles	5,306			3,799
Bank owned life insurance	28,539			27,985
Other assets	14,897			10,288
TOTAL ASSETS	$	1,620,134		1,295,638
LIABILITIES:
Deposits:
Noninterest-bearing	$	333,440		283,212
Interest-bearing	1,037,583			802,609
Total deposits	1,371,023			1,085,821
Short-term borrowings	—			47,000
Long-term debt	23,079			303
Accrued interest and other liabilities	12,517			12,243
TOTAL LIABILITIES	1,406,619			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 Septembeer 30, 2018 and December 31, 2017; issued 14,058,603 and 10,776,686 shares at September 30, 2018 and December 31, 2017, respectively	140,996			76,977
Retained earnings	91,617			87,301
Treasury shares at cost, 753,627 shares at September 30, 2018 and December 31, 2017	(11,665		)	(11,665	)
Accumulated other comprehensive loss, net of taxes	(7,433		)	(2,342	)
TOTAL SHAREHOLDERS' EQUITY	213,515			150,271
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$	1,620,134		1,295,638

LCNB CORP. AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF INCOME

(Dollars in thousands, except per share data)

(Unaudited)

	Three Months Ended  September 30,					Nine Months Ended  September 30,
	2018			2017		2018		2017
INTEREST INCOME:
Interest and fees on loans	$	13,363		9,095		33,479		26,833
Dividends on equity securities with a readily determinable fair value	17			13		48		44
Dividends on equity securities without a readily determinable fair value	7			6		22		17
Interest on debt securities, taxable	901			1,089		2,766		3,289
Interest on debt securities, non-taxable	661			783		2,045		2,377
Other short-term investments	121			69		390		293
TOTAL INTEREST INCOME	15,070			11,055		38,750		32,853
INTEREST EXPENSE:
Interest on deposits	1,810			850		3,777		2,539
Interest on short-term borrowings	12			55		88		97
Interest on long-term debt	145			3		226		10
TOTAL INTEREST EXPENSE	1,967			908		4,091		2,646
NET INTEREST INCOME	13,103			10,147		34,659		30,207
PROVISION FOR LOAN LOSSES	659			(12	)	962		225
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES	12,444			10,159		33,697		29,982
NON-INTEREST INCOME:
Fiduciary income	1,081			871		2,987		2,604
Service charges and fees on deposit accounts	1,439			1,352		4,170		3,886
Net gains (losses) on sales of securities	(7		)	78		(8	)	218
Bank owned life insurance income	185			190		553		676
Gains from sales of loans	63			34		182		136
Other operating income	160			134		464		359
TOTAL NON-INTEREST INCOME	2,921			2,659		8,348		7,879
NON-INTEREST EXPENSE:
Salaries and employee benefits	5,686			4,678		15,791		13,907
Equipment expenses	276			361		797		836
Occupancy expense, net	734			685		2,119		1,889
State financial institutions tax	299			281		898		851
Marketing	382			282		798		641
Amortization of intangibles	286			189		659		562
FDIC insurance premiums	91			108		289		320
Contracted services	387			307		1,093		930
Other real estate owned	1			3		4		8
Merger-related expenses	346			—		1,959		—
Other non-interest expense	1,829			1,778		6,170		5,307
TOTAL NON-INTEREST EXPENSE	10,317			8,672		30,577		25,251
INCOME BEFORE INCOME TAXES	5,048			4,146		11,468		12,610
PROVISION FOR INCOME TAXES	847			1,040		1,816		3,255
NET INCOME	$	4,201		3,106		9,652		9,355
Dividends declared per common share	$	0.16		0.16		0.48		0.48
Earnings per common share:
Basic	0.32			0.31		0.84		0.93
Diluted	0.32			0.31		0.84		0.93
Weighted average common shares outstanding:
Basic	13,285,203			10,008,807		11,480,390		10,002,812
Diluted	13,290,665			10,015,204		11,486,051		10,009,942

Contacts

LCNB Corp.

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

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