10-K

U.S. Securities and Exchange Commission

Washington, D.C. 20549

FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

(Mark One)

[ X ] Annual Report Pursuant to Section 13 or 15(d) of the Securities and Exchange Act of 1934

For the fiscal year ended December 31, 1999

or

[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities and Exchange Act of 1934

For the Transition period from ___________________________ to __________________________

Commission file Number 000-26121

LCNB CORP.

(Exact name of registrant as specified in its charter)

Ohio	31-1626393
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)
P.O. Box 59, Lebanon, Ohio	45036
(Address of principal executive offices)	(Zip Code)

Issuer's telephone number, including area code (513) 932-1414

Securities registered under Section 12(b) of the Exchange Act:

	Name of each exchange on
Title of each class	which registered
None	None

Securities registered pursuant to 12(g) of the Exchange Act:

Common stock, No Par Value

(Title of Class)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ( X ) No ( )

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (section 229.405) of this chapter is not contained herein, and will not be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ]

The issuer's common shares are not traded on any securities exchange and are not quoted by a national quotation service. Management is aware of a sale of the issuer's shares for $70.00 per share on January 3, 2000. Based upon such price, the aggregate market value of the issuer's shares held by nonaffiliates was $86,927,400.

As of February 22, 2000, 1,760,000 common shares were issued and outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Proxy Statement included in the Notice of Annual Meeting of Shareholders to be held April 18, 2000, dated March 18, 2000, are incorporated by reference into Part III.

TABLE OF CONTENTS

			Page
PART I	Item 1	Business
	Item 2	Properties
	Item 3	Legal proceedings
	Item 4	Submissions of matters to a vote of security holders
PART II	Item 5	Market for the registrants' securities and related shareholder matters
	Item 6	Selected financial data
	Item 7	Management's discussion and analysis
	Item 7A	Quantitative and qualitative disclosures about market risk
	Item 8	Financial statements and supplementary data
	Item 9	Disagreements on accounting and financial disclosures
PART III	Item 10	Directors and executive officers of the registrant
	Item 11	Executive compensation
	Item 12	Security ownership of certain beneficial owners and management
	Item 13	Certain relationships and related transactions
PART IV	Item 14	Exhibits, financial statement schedules and reports on Form 8-K Signatures

PART I

Item 1. Description of Business and Supplemental Data

FORWARD LOOKING STATEMENTS

Certain matters disclosed herein may be deemed to be forward-looking statements that involve risks and uncertainties, including regulatory policy changes, interest rate fluctuations, loan demand, loan delinquencies and losses, and other risks. Actual strategies and results in future time periods may differ materially from those currently expected. Such forward-looking statements represent management's judgment as of the current date. LCNB Corp. disclaims, however, any intent or obligation to update such forward-looking statements.

ORGANIZATION ACTIVITIES AND PENDING ACQUISTION

On May 18, 1999, Lebanon Citizens National Bank ("Lebanon Citizens") held a special shareholders meeting for the purpose of approving the reorganization of Lebanon Citizens into a one-bank holding company structure. The reorganization was approved and consummated immediately following the special meeting.

The reorganization was effected through the merger of Lebanon Citizens with and into LC Interim National Bank, a wholly-owned subsidiary of the new bank holding company, LCNB Corp. Concurrent with the merger, LC Interim National Bank changed its name to "Lebanon Citizens National Bank" and is now operated as the wholly-owned bank subsidiary of LCNB Corp. The consideration for the merger was ten shares of LCNB Corp. common stock for each share of Lebanon Citizens National Bank common stock held by the shareholders. Following the merger, all shareholders of Lebanon Citizens maintained the same stock ownership percentage in the holding company as they had in Lebanon Citizens. Following the merger, Lebanon Citizens National Bank's business continued unchanged with the same management and employees.

As part of the reorganization of Lebanon Citizens into a bank holding company structure, it was necessary to file a registration statement with the Securities and Exchange Commission. This registration statement also served the purpose of registering LCNB Corp. as a Securities Exchange Act of 1934 ("1934 Act") reporting company. Lebanon Citizens at the end of calendar year 1998, had over 500 shareholders and by law was required to register as a 1934 Act company. By virtue of the reorganization, LCNB Corp. became the registering company and is now a public company obligated to comply with the reporting requirements of the 1934 Act.

The Gramm-Leach-Bliley Act (the "Graham Act"), known commonly as the "Financial Services Modernization Act", was signed into law on November 12, 1999 and is effective March 11, 2000. This new act, among other changes, effectively allows the creation of a new financial services holding company that can offer a full range of financial products and engage in expanded approved activities such as insurance and securities services. Pursuant to the Gramm Act, LCNB Corp. intends to conduct new activities as a financial holding company, as that term is defined in the Gramm Act, through an operating subsidiary that will engage in selling insurance to the public. LCNB Corp. has applied to the Federal Reserve for approval to become a financial holding company pursuant to Interim Rule Section 225.82 promulgated by the Board of Governors of the Federal Reserve System to implement the provisions of the Gramm Act. Upon approval, LCNB Corp., as a financial holding company, will be permitted to engage, through a wholly owned subsidiary, in general insurance agency activities and to act as an agent for the sale of annuities.

LCNB Corp. has entered into an Agreement and Plan of Merger with Dakin Insurance Agency, Inc., the individual shareholders of Dakin Insurance Agency, Inc. and Dakin Acquisition Corporation dated December 30, 1999 (the "Agreement"). In order to facilitate the acquisition of Dakin Insurance Agency, Inc., LCNB Corp. formed Dakin Acquisition Corporation in November 1999, under the laws of the state of Ohio, as a wholly owned subsidiary of LCNB Corp. Pursuant to the Agreement, Dakin Acquisition Corporation will merge with and into Dakin Insurance Agency, Inc. and Dakin Insurance Agency, Inc. being the surviving corporation (hereinafter the surviving company is referred to herein as "Dakin'). The Articles of Incorporation and Regulations of Dakin Acquisition Corporation will become the governing documents of Dakin. At the consummation of the merger, the individual shareholders of Dakin Insurance Agency, Inc. will exchange all of the outstanding shares of Dakin Insurance Agency, Inc. for shares of LCNB Corp. common stock. Following the merger, Dakin will be a wholly owned subsidiary of LCNB Corp. A condition precedent to the closing of the merger is the receipt of all regulatory approvals. Following the satisfaction of all conditions precedent provided in the Agreement, the merger shall be effective upon the later of the date the Certificate of Merger is filed with the Secretary of State of Ohio or such other date as the parties may agree upon.

Dakin Insurance Agency, Inc. is a corporation organized under the laws of Ohio and has been an independent insurance agency in Lebanon, Ohio since 1876. Dakin Insurance Agency, Inc. is currently engaged in selling and servicing personal and commercial insurance products and annuity products and is regulated by the Ohio Department of Insurance. The surviving company in the merger, Dakin, will conduct the same business from the same offices at 20 East Mulberry, Lebanon, Ohio under the same licenses as Dakin Insurance Agency, Inc.

DESCRIPTION OF LCNB CORP'S BUSINESS

General Description

LCNB Corp. is a $439 million locally owned one bank holding company headquartered in Lebanon, Ohio. The predecessor of LCNB Corp., Lebanon Citizens National Bank, was formed as a national banking association in 1877. On May 18, 1999, Lebanon Citizens became the wholly owned subsidiary of LCNB Corp.

Lebanon Citizens has its main banking office located in Warren County, Ohio. Lebanon Citizens has 16 branch offices located in Warren, Butler, Clinton, Clermont, and Hamilton Counties, Ohio. Lebanon Citizens also operates a loan production office in Hamilton, Ohio. In addition, Lebanon Citizens operates twenty-one automated teller machines in its market area. Lebanon Citizens is a full service bank offering a wide range of commercial and personal banking services including commercial loans, real estate loans, construction loans, consumer loans, Small Business Administration loans, Visa and MasterCard credit cards. Other services offered include safe deposit boxes, night depository, U.S. savings bonds, travelers' checks, money orders, cashiers checks, bank-by-mail, automatic teller machine cash and transaction services, debit cards, wire transfers, electronic funds transfer, utility bill collections, notary public service, personal computer based cash management services, 24 hour telephone banking, PC Internet banking and other services tailored for both individuals and businesses.

Lebanon Citizens' residential mortgage lending activities consist primarily of loans for purchasing personal residences, home equity loans, local lender loans, or loans for commercial or consumer purposes secured by residential mortgages. Consumer lending activities consist of traditional forms of financing for automobile and personal loans plus indirect automobile loans.

Lebanon Citizens' range of deposit services include checking accounts, NOW accounts, savings accounts, Christmas and vacation savings, money market accounts, Classic 50 accounts (a Senior Citizen program), individual retirement accounts, certificates of deposit, and overdraft protection. Deposits of Lebanon Citizens are insured by the Bank Insurance Fund administered by the Federal Deposit Insurance Corporation.

The Trust and Investment Management Division of Lebanon Citizens performs complete trust administrative functions and offers agency and trust services and mutual funds investment products to individuals, partnerships, corporations, institutions and municipalities.

Lebanon Citizens is not dependent upon any one significant customer or specific industry. Business is not seasonal to any material degree.

The significant banking market for Lebanon, which encompasses portions of Warren, Butler, Clinton, Clermont and Hamilton Counties, includes approximately 65 other commercial banks, 60 thrift institutions and 67 credit unions. The address of the main office of Lebanon Citizens is 2 North Broadway, Lebanon, Ohio 45036; telephone (513) 932-1414.

Competition

Lebanon Citizens faces strong competition both in making loans and attracting deposits. The deregulation of the banking industry and the wide spread enactment of state laws that permit multi-bank holding companies as well as the availability of nationwide interstate banking has created a highly competitive environment for financial services providers. Lebanon Citizens competes with other national and state banks, savings and loan associations, credit unions, finance companies, mutual funds, insurance companies, brokerage and investment banking companies and other financial intermediaries operating in its market and elsewhere, many of whom have substantially greater financial and managerial resources.

Lebanon Citizens competes with other banks and bank holding companies operating in it's market area which range in size from approximately $50 million to over $260 billion in assets. Other competition comes primarily from savings and loans, credit unions, and other financial intermediaries operating in Lebanon Citizens' market area. Lebanon Citizens seeks to minimize the competitive effect of larger financial institutions through a community banking approach that emphasizes direct customer access to Lebanon Citizens' president and other officers in an environment conducive to friendly, informed and courteous personal services. Management believes that Lebanon Citizens is well positioned to compete successfully in its respective primary market area. Competition among financial institutions is based upon interest rates offered on deposit accounts, interest rates charged on loans and other credit and service charges, the quality and scope of the services rendered, the convenience of the banking facilities and, in the case of loans to commercial borrowers, relative lending limits. Management believes that the commitment of Lebanon Citizens to personal service, innovation and involvement in their respective communities and primary market areas, as well as their commitment to quality community banking service, are factors that contribute to its competitive advantage.

Supervision and Regulation

LCNB Corp, as a bank holding company, is regulated under the Bank Holding Company Act of 1956, as amended (the "Act"), and is subject to the supervision and examination of the Board of Governors of the Federal Reserve System (the "Federal Reserve Board"). The Act requires the prior approval of the Federal Reserve Board for a bank holding company to acquire or hold more than a 5% voting interest in any bank and restricts interstate banking activities. On September 29, 1994, the Act was amended by the Interstate Banking and Branch Efficiency Act of 1994 which authorizes interstate bank acquisitions anywhere in the country, effective one year after the date of enactment and interstate branching by acquisition and consolidation, effective June 1, 1997, in those states that have not opted out by that date.

The Act limits the business of bank holding companies to banking, managing or controlling banks, performing certain servicing activities for subsidiaries and engaging in such other activities as the Federal Reserve Board may determine to be closely related to banking and a proper incident thereto. The Act does not place territorial restrictions on the banking subsidiaries of bank holding companies. LCNB Corp's banking subsidiary is subject to limitations with respect to intercompany loans and investments.

A substantial portion of LCNB Corp.'s cash revenues is derived from dividends paid by Lebanon Citizens. These dividends are subject to various legal and regulatory restrictions.

LCNB Corp. and Lebanon Citizens are subject to an extensive array of banking laws and regulations that are intended primarily for the protection of the customers and depositors of LCNB Corp.'s subsidiaries rather than holders of LCNB Corp.'s securities. These laws and regulations govern such areas as permissible activities, loans and investments, rates of interest that can be charged on loans and reserves. LCNB Corp. and Lebanon Citizens also are subject to general U.S. federal laws and regulations and to the laws and regulations of the State of Ohio. Set forth below are brief descriptions of selected laws and regulations applicable to LCNB Corp. and Lebanon Citizens.

Lebanon Citizens is subject to the provisions of the National Bank Act. Lebanon Citizens is subject to primary supervision, regulation and examination by the Office of the Comptroller of the Currency (OCC). Lebanon Citizens is also subject to the rules and regulations of the Board of Governors of the Federal Reserve System and the Federal Deposit Insurance Corporation (FDIC). Under the Bank Holding Company Act of 1956, as amended, and under Regulations of the Federal Reserve Board pursuant thereto, a bank holding company and its subsidiaries are prohibited from engaging in certain tie-in arrangements in connection with the extension of credit.

LCNB Corp. and Lebanon Citizens are also subject to the state banking laws of Ohio. Ohio adopted nationwide reciprocal interstate banking effective October, 1988. However, banking laws of other states may restrict branching of banks to other counties within the state and acquisitions or mergers involving banks and bank holding companies located in other states.

Federal regulators adopted risk-based capital guidelines and leverage standards for banks and bank holding companies.

The Financial Reform, Recovery and Enforcement Act of 1989 (FIRREA) provides that a holding company and its controlled insured depository institutions are liable for any loss incurred by the Federal Deposit Insurance Corporation in connection with the default of any FDIC assisted transaction involving an affiliated insured bank or savings association.

The Federal Deposit Insurance Corporation Improvement Act of 1991 (FDICIA) covers an expanse of banking regulatory issues. FDICIA deals with the recapitalization of the Bank Insurance Fund, with deposit insurance reform including requiring the FDIC to establish a risk-based premium assessment system with a number of other regulatory and supervisory matters. Lebanon Citizens will be required to make payments for the servicing of obligations of the Financing Corporation ("FICO") issued in connection with the resolution of savings and loan associations, so long as such obligations remain outstanding. Noncompliance to laws and regulations by bank holding companies and banks can lead to monetary penalties and/or an increased level of supervision or a combination of these two items. Management is not aware of any current instances of noncompliance to laws and regulations and does not anticipate any problems maintaining compliance on a prospective basis. Recent regulatory inspections and examinations of the LCNB Corp and Lebanon Citizens have not disclosed any significant instances of noncompliance. The minor instances of noncompliance detected during these inspections and examinations were promptly corrected by Management and no action was taken by the regulators against the LCNB Corp. or Lebanon Citizens.

The earnings and growth of LCNB Corp are affected not only by general economic conditions, but also by the fiscal and monetary policies of the federal government and its agencies, particularly the Federal Reserve Board. Its policies influence the amount of bank loans and deposits and the interest rates charged and paid thereon and thus have an effect on earnings. The nature of future monetary policies and the effect of such policies on the future business and earnings of LCNB Corp. and Lebanon Citizens cannot be predicted.

Employees

As of December 31, 1999, LCNB Corp. and Lebanon Citizens employed 183 full-time equivalent employees. LCNB Corp. is not a party to any collective bargaining agreement. Management considers its relationship with its employees to be very good. Employee benefits programs are considered by Management to be competitive with benefits programs provided by other financial institutions and major employers within Lebanon Citizens' market area.

FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND EXPORT SALES

LCNB Corp. and Lebanon Citizens do not have any offices located in foreign countries and they have no foreign assets, liabilities or related income and expense for the years presented.

STATISTICAL INFORMATION

The following tables present additional statistical information about LCNB Corp. and its operations and financial condition and should be read in conjunction with the consolidated financial statements and related notes and the discussion included in Item 7, Management's Discussion and Analysis and Item 7A, Quantitative and Qualitative Disclosures about Market Risk.

Distribution of Assets, Liabilities and Shareholders' Equity; Interest Rates and Interest Differential

The following table presents, for the years indicated, the distribution of average assets, liabilities and shareholders' equity, as well as the total dollar amounts of interest income from average interest earning assets and the resultant yields, and the dollar amounts of interest expense and average interest-bearing liabilities and the resultant rates paid.

Year ended December 31, (Dollars in thousands)

	1999				1998				1997
	Average	Average		Interest/	Average	Average		Interest/	Average	Average		Interest
	Outstanding	Yield/		Earned	Outstanding	Yield/		Earned	Outstanding	Yield/		Earned/
	Balance	Rate		Paid	Balance	Rate		Paid	Balance	Rate		Paid
Loans (1)	$273,273		8.32%	$ 22,743	$ 272,512		8.46%	$ 23,047	$ 255,241		8.38%	$ 21,385
Federal funds sold	9,251		5.00	463	14,677		5.42	796	16,896		5.43	918
Deposits in banks	5,486		5.12	281	4,347		6.65	289	4,000		5.98	239
Federal Reserve Bank stock	647		6.03	39	647		6.03	39	647		6.03	39
Investment securities:
Taxable	83,592		5.88	4,914	75,374		6.12	4,612	71,469		6.09	4,354
Non-taxable (2)	29,995 ------------		6.32	1,895 -----------	21,628 -----------		5.71	1,236 ----------	18,682 ----------		6.83	1,276
Total earning assets	402,244		7.54	30,335 ----------	389,185		7.71	30,019 -----------	366,935		7.69	28,211 ------------
Non-earning assets	32,528				30,570				19,495
Allowance for loan losses	(2,004) ------------				(2,100) ------------				(2,100) ------------
Total assets	$ 432,768 =======				$ 417,655 =======				$ 384,330 =======
Savings deposits	$ 79,555		2.99	2,382	$ 64,064		2.76	1,769	$ 53,753		3.24	1,741
NOW and money fund	79,548		2.40	1,912	73,727		2.31	1,706	64,367		2.51	1,616
IRA and time certificates	178,541		5.01	8,944	192,873		5.47	10,557	191,892		5.70	10,941
Short-term borrowings (3)	934 ------------		4.60	43 -----------	884 ------------		5.43	48 -----------	847 ------------		5.43	46 ------------
Total interest-bearing liabilities	338,578		3.92	13,281 -----------	331,548		4.25	14,080 ------------	310,859		4.61	14,344 ------------
Demand deposits	49,131				44,484				34,141
Other liabilities	1,718				1,194				2,088
Capital	43,341 ------------				40,429 -----------				37,242 -----------
Total liabilities and capital	$ 432,768 ========				$ 417,655 ========				$ 384,330 ========
Net interest rate spread			3.62				3.46				3.08
Net interest margin
on a taxable equivalent basis			4.24	$ 17,054 =======			4.10	$ 15,939 =======			3.78	$ 13,867 =======
Ratio of interest-earning
assets to interest-bearing
liabilities	118.80%				117.38%				118.04%
(1) Includes nonaccrual loans, if any.
(2) Income from tax-exempt securities is included in interest income on a taxable equivalent basis. Interest
income has been divided by a factor comprised of the complement of the incremental tax rate of 34%.

(3) Short-term borrowings are limited to demand notes issued to the U.S. Treasury in connection with customer tax remittances.

The net interest spread is the difference between the average rate on total interest-earning assets and interest-bearing liabilities.

The net interest margin is the taxable-equivalent net interest income divided by average interest-earning assets.

The following table presents the changes in interest income and expense for each major category of interest-earning assets and interest-bearing liability and the amount of change attributable to volume and rate changes for the years indicated. Changes not solely attributable to rate or volume have been allocated to volume and rate changes in proportion to the relationship of absolute dollar amounts of the changes in each.

(Amounts in thousands)
For the years ended December 31,

1999 vs 1998
Increase (decrease) due to 1998 vs 1997
Increase (decrease) due to

	Volume	Rate	Total	Volume	Rate	Total
Interest income attributable to:
Loans	$ 66	$ (370)	$ (304)	$ 1,457	$ 205	$ 1,662
Federal funds sold	(275)	(58)	(333)	(120)	(2)	(122)
Deposits in banks	67	(75)	(8)	22	28	50
Federal Reserve Bank stock	-	-	-	-	-	-
Investment securities:
Taxable	488	(186)	302	237	21	258
Non-taxable(1)	516 ---------	143 ---------	659 ---------	185 ----------	(225) ----------	(40) ----------
Total Interest Income	862 ----------	(546) ---------	316 ----------	1,781 ----------	27 ----------	1,808 ----------
Interest expense attributable to:
Savings deposits	456	157	613	307	(279)	28
NOW and money fund	138	68	206	225	(135)	90
IRA and time certificates	(757)	(856)	(1,613)	56	(440)	(384)
Short-term borrowings	3 -------	(8) -------	(5) -------	2 --------	- --------	2 --------
Total Interest Expense	(160) -------	(639) -------	(799) -------	590 --------	(854) --------	(264) --------
Net Interest Income	$ 1,022 ======	$ 93 =====	$ 1,115 ======	$ 1,191 ======	$ 881 ======	$ 2,072 ======

(1) The change in interest income from non-taxable investment securities is computed based on interest income determined on a taxable equivalent yield basis. Interest income has been divided by a factor comprised of the complement of the incremental tax rate of 34%.

Investment Portfolio

The following table presents the carrying values of securities for the years indicated:

	(Amounts in thousands) At December 31
		1999	1998	1997
Securities available for sale:
U.S. Treasury notes	$	6,482	28,391	1,020
U.S. Agency notes		29,927	23,190	8,076
U.S. Agency mortgage-back securities		15,069	17,406	8,206
Corporate notes		17,058	24,376	8,080
Municipal securities		36,375 ---------	29,677 ---------	4,710 --------
Total securities available for sale		104,911 ----------	123,040 ---------	30,092 --------
Held to maturity:
U.S. Treasury notes		-	-	56,188
Municipal securities		- --------	- --------	14,261 ---------
Total securities held to maturity		- --------	- --------	70,449 --------
Federal Reserve Bank Stock		647 -----	647 -----	647 -----
Total securities	$	105,558 ======	123,687 ========	101,188 ======

Contractual maturities of debt securities at December 31, 1999, were as follows. Actual maturities may differ from contractual maturities when borrowers have the right to call or prepay obligations.

		(Dollars in thousands)
		Amortized Cost	Market Value	Yield
U.S. Treasury notes:
Within one year	$	3,499	3,505	6.16%
One to five years		3,012	2,977	5.65%
Five to ten years		-	-	- %
After ten years		- ------------	- ---------------	- % ------------
Total U.S Treasury notes	$	6,511 -------------	6,482 ---------------	5.92% -----------
U.S. Agency notes:
Within one year	$	8,005	7,969	5.60%
One to five years		15,329	14,911	5.60%
Five to ten years		7,416	7,047	6.56%
After ten years		- -------------	- --------------	- % ------------
Total U.S. Agency notes	$	30,750 -------------	29,927 --------------	5.83% ------------
Corporate notes:
Within one year	$	8,886	8,905	6.19%
One to five years		8,293	8,153	6.04%
Five to ten years		-	-	- %
After ten years		- ---------	- ---------	- % ----------
Total Corporate notes	$	17,179 ----------	17,058 --------	6.12% ----------
Municipal securities (1):
Within one year	$	6,086	6,111	6.80%
One to five years		12,646	12,490	6.41%
Five to ten years		12,689	12,271	6.12%
After ten years		5,533 -------------	5,503 ---------------	8.06% ------------
Total Municipal securities	$	36,954 -------------	36,375 --------------	6.62% -----------
U.S. Agency mortgage-backed securities	$	15,486 ------------	15,069 -------------	5.90% -----------
	$	106,880 =======	104,911 =======	6.17% ======

(1) Yields on tax-exempt obligations are computed on a tax equivalent basis based upon a 34% statutory Federal income tax rate.

Excluding those holdings of the securities portfolio in the U.S. Treasury securities and U.S. Government Agencies and Corporations, there were no investments in securities of any one issuer which exceeded 10% of the consolidated shareholders' equity of LCNB Corp. at December 31, 1999.

Loan Portfolio

The following table summarizes the distribution of the loan portfolio for the years indicated:

	(Amounts in thousands) At December 31
	1999	1998	1997	1996	1995
Commercial and industrial	$ 26,348	20,640	13,905	9,847	8,263
Commercial, secured by real estate	56,671	53,907	51,088	49,094	43,471
Residential real estate	162,181	154,111	165,908	145,725	123,656
Consumer, excluding credit card	36,472	32,302	35,167	29,855	26,402
Agricultural	2,343	2,370	1,645	1,152	722
Credit card	2,764	2,574	2,461	2,130	1,884
Other	285	966	332	41	39
Lease Financing	183 ------------	- -------------	- -----------	- -----------	- ----------
Total loans	287,247	266,870	270,506	237,844	204,437
Deferred costs (fees), net	361 -----------	187 -------------	(12) -----------	(178) -----------	(677) ----------
	287,608	267,057	270,494	237,666	203,760
Allowance for loan losses	(2,000) -----------	(2,000) -------------	(2,200) ----------	(2,000) -----------	(1,800) -----------
Loans, net	$ 285,608 =======	265,057 ========	268,294 ======	235,666 ======	201,960 ======

The following tables summarize the commercial and agricultural loan maturities and sensitivities to interest rate changes at December 31, 1999:

	(Amounts in thousands)
Maturing in one year or less	$ 28,167
Maturing after one year, but within five years	27,612
Maturing beyond five years	29,583 --------
Total commercial and agricultural loans	$ 85,362 ======
Loans repricing beyond one year:
Fixed rate	$ 29,343
Variable rate	$ 27,852

Risk Elements

The accrual of interest on impaired loans is discontinued when there is a clear indication that the borrower's cash flow may not be sufficient to meet payments as they become due. Subsequent cash receipts on nonaccrual loans are recorded as a reduction of principal, and interest income is recorded once principal recovery is reasonably assured. The current year's accrued interest on loans placed on non-accrual status is charged against earnings. Previous years' accrued interest is charged against the allowance for loan losses.

A summary of accruing loans past due 90 days or more at December 31, follows:

(Amounts in thousands)

Accrued loans past due 90 days

1999	$ 68
1998	374
1997	29
1996	182
1995	87

There were no nonaccrual loans at December 31, for each of the years ended 1995 through 1999. Interest income that would have been recorded in each of the years 1995 through 1999 if loans on nonaccrual status at various times during the respective years had been current and in accordance with their original terms, was not material. For each of the years ended December 31, 1995 through 1999, the recorded investments in loans for which impairment has been recognized in accordance with SFAS Statement No.114 was not material. LCNB Corp. is not committed to lend additional funds to debtors whose loans have been modified to provide a reduction or deferral of principal or interest because of a deterioration in the financial position of the borrower.

Summary of Loan Experience

The table summarizing the activity relating to the allowance for loan losses is included in Item 7, Management's Discussion and Analysis.

The following table presents the allocation of the allowance for loan loss.

(Amount in thousands)
At December 31,
		1999	1998	1997	1996	1995
Commercial	$	304	286	622	162	145
Real Estate		-	-	-	-	-
Consumer		514	345	370	316	190
Credit Card		38	48	26	31	20
Unallocated		1,144 - ---------	1,321 - ----------	1,182 - -----------	1,491 - ---------	1,445 - --------
Total	$	2,000 =======	2,000 ========	2,200 ========	2,000 =======	1,800 ======

This allocation is made for analytical purposes. The total allowance is available to absorb losses from any category of the portfolio. The allowance allocated to the commercial and consumer categories has increased over the five year period due to the increase in outstandings in these loan categories which, by nature, have greater risk elements.

The following table presents the categories of loans as a percent of total loans.

(Amount in thousands)
At December 31,
		1999	1998	1997	1996	1995
Commercial	%	9.17	7.73	5.14	4.14	4.04
Real Estate		76.19	77.96	80.22	81.91	81.76
Consumer		12.70	12.10	13.00	12.55	12.91
Credit Card		0.96	0.96	0.91	0.90	0.92
Other		0.98 ---------	1.25 ---------	0.73 ---------	0.50 ----------	0.37 ----------
Total	%	100.00 =====	100.00 =====	100.00 =====	100.00 ======	100.00 ======

The statistical information regarding average amounts and average rates paid for the deposit categories is included in the "Distribution of Assets, Liabilities and Shareholders' Equity" table included at the beginning of the "Statistical Information" section.

The following table presents the contractual maturity of time deposits of $100,000 or more:

	(Amount in thousands)
	At December 30, 1999
Maturity within 3 months	$ 18,802
After 3 but within 6 months	16,953
After 6 but within 12 months	3,918
After 12 months	5,684 -------------
	$ 45,357 ========

Return of Equity and Assets

The statistical information regarding the return on assets, return on equity, dividend payout ratio and equity to assets ratio is presented in Item 6, Selected Financial Data.

Item 2. Properties

Lebanon Citizens conducts its business from the following offices:

	Name of Office	Address
1.	Main Office	2 North Broadway Lebanon, Ohio 45036	Owned
2.	Auto Bank	26 North Broadway Lebanon, Ohio 45036	Owned
3.	Columbus Avenue Office	730 Columbus Avenue Lebanon, Ohio 45036	Owned
4.	Goshen Office	6723 State Route 132 Goshen, Ohio 45122	Owned
5.	Hamilton Office	1502 Peck Blvd. Hamilton, Ohio 45011	Leased
6.	Hunter Office	3878 State Route 122 Franklin, Ohio 45005	Owned
7.	Loveland Office	615 West Loveland Avenue Loveland, Ohio 45140	Owned
8.	Maineville Office	7795 South State Route 48 Maineville, Ohio 45039	Owned
9.	Mason/West Chester Office	1050 Reading Road Mason, Ohio 45040	Owned
10.	Middletown Office	4441 Marie Drive Middletown, Ohio 45044	Owned
11.	Okeana Office	6225 Cincinnati-Brookville Road Okeana, Ohio 45053	Owned
12.	Otterbein Office	State Route 741 Lebanon, Ohio 45036	Leased
13.	Oxford Office	4 N. College Avenue Oxford, Ohio 45056	Leased
14.	Rochester/Morrow Office	Route 22-3 at 123 Morrow, Ohio 45152	Owned
15.	South Lebanon Office	209 East Forrest Street South Lebanon, Ohio 45065	Leased
16.	Springboro/Franklin Office	525 West Central Avenue Springboro, Ohio 45066	Owned
17.	Waynesville Office	9 North Main Street Waynesville, Ohio 45177	Owned
18.	Wilmington Office	1243 Rombach Avenue Wilmington, Ohio 45177	Owned

Item 3. Legal Proceedings

There are no material legal proceedings, or to the knowledge of management, threatened against LCNB Corp. or Lebanon Citizens National Bank.

Item 4. Submission of Matters to a Vote of Security Holders

None

PART II

Item 5. Market for Registrant's Common Equity and Related Stockholder Matters

The LCNB Corp. had approximately 580 holders of its common stock as of December 31, 1999. The number of shareholders includes banks and brokers who act as nominees, each of whom may represent more than one shareholder. There is currently no established public trading market for LCNB Corp. common stock. Trade prices for shares of LCNB Corp. stock (and Lebanon Citizens' stock preceding the formation of the holding company), reported through registered securities dealers, are set forth below. Trades have occurred during the period without the knowledge of LCNB Corp. The trades of which LCNB Corp. is aware from the market makers in the stock are those outlined. The prices given are interdealer without retail markups, markdown or commissions.

1999	High	Low
First Quarter	$52.00	$47.80
Second Quarter	75.00	51.50
Third Quarter	82.00	70.00
Fourth Quarter	78.00	70.00

1998	High	Low
First Quarter	$43.00	$31.50
Second Quarter	43.00	39.00
Third Quarter	53.00	42.50
Fourth Quarter	53.00	50.50

All the amounts have been restated to reflect the ten-for-one stock exchange in the formation of the holding company on May 18, 1999.

Cash dividends per share declared in 1999 were $.25 in each of March, June and September and $.80 in December. Cash dividends per share declared in 1998 were $.20 in each of March, June and September and $.80 in December. Cash dividends per share have been restated for the ten-for-one stock exchange in the formation of the holding company on May 18, 1999.

It is expected that LCNB Corp. will continue to pay dividends on a similar schedule, to the extent permitted by the business and other factors beyond management's control.

LCNB Corp. may, in its sole discretion, issue unaudited quarterly or other interim reports to its shareholders as it deems appropriate. These reports, while they are required to be filed with the SEC by the LCNB Corp., may not be delivered to shareholders.

Item 6. Selected Financial Data

The following represents selected consolidated financial data of LCNB Corp. for the years ended December 31, 1995 through 1999 and are derived from LCNB Corp's consolidated financial statements and Lebanon Citizens' unaudited financial statements and call reports. This data should be read in conjunction with the consolidated financial statements and the notes thereto included in Item 8 of this Form 10-K and Management's Discussion and Analysis and Quantitative and Qualitative Disclosures about Market Risk included in Items 7 and 7A, respectively, of this Form 10-K, and are qualified in their entirety thereby and by other detailed information elsewhere in this Form 10-K.

		For the Years Ended December 31,
		1999	1998	1997	1996	1995
		(In thousands, except ratios and data per share)
Income Statement
	Interest Income	$ 29,691	$ 29,599	$ 27,777	$ 25,998	$ 24,750
	Interest Expense	13,281	14,080	14,344	13,242	12,996
	Net Interest Income	16,410	15,519	13,433	12,756	11,754
	Loan Loss Provision	208	191	291	288	281
	Net Interest Income after Provision	16,202	15,328	13,142	12,468	11,473
	Other Operating Income	3,419	3,455	2,974	2,573	2,563
	Operating Expenses	11,758	10,910	8,903	7,851	7,443
	Income before Income Taxes	7,863	7,873	7,213	7,190	6,593
	Provision for Income Taxes	2,315	2,426	2,178	2,195	1,997
	Net Income	5,548	5,447	5,035	4,995	4,596
Balance Sheet
	Securities	105,558	123,687	101,188	91,378	109,706
	Loans - net	285,608	265,057	268,294	235,666	201,960
	Total Assets	438,979	432,159	421,027	369,476	351,117
	Total Deposits	391,644	387,041	377,409	330,393	316,577
	Total Shareholder Equity	42,987	42,199	38,656	35,647	32,324
Selected Financial Ratios and Other Data
	Return on average assets	1.28%	1.30%	1.31%	1.41%	1.40%
	Return on average equity	12.98%	13.47%	13.52%	14.55%	15.00%
	Equity-to-assets ratio	0.10	0.10	0.09	0.10	0.09
	Dividend payout ratio	0.51	0.45	0.42	0.33	0.29
	Earnings per share(1)	3.15	3.09	2.86	2.84	2.61
	Dividends declared per share(1)	1.60	1.40	1.20	0.95	0.75

(1) All per share data have been adjusted to reflect the ten-for-one stock exchange in 1999.

Item 7. Management's Discussion and Analysis

Introduction

The following is management's discussion and analysis of the financial condition and results of operations of LCNB Corp. It is intended to amplify certain financial information regarding LCNB Corp. and should be read in conjunction with the Consolidated Financial Statements and related Notes, included in Item 8 of this Form 10-K; and the Statistical Information in Item 1 of this Form 10-K and the Selected Financial Data in Item 6 of this Form 10-K.

Comparative Financial Information

Effective May 18, 1999, Lebanon Citizens was reorganized into a one-bank holding company structure. Prior to that date, the financial information presented represents the assets, liabilities and operations of Lebanon Citizens. Comparative earnings per share information is presented on pro forma basis.

Forward Looking Statements

Certain matters disclosed herein may be deemed to be forward-looking statements that involve risks and uncertainties, including regulatory policy changes, interest rate fluctuations, loan demand, loan delinquencies and losses, and other risks. Actual strategies and results in future time periods may differ materially from those currently expected. Such forward-looking statements represent management's judgment as of the current date. LCNB Corp. disclaims, however, any intent or obligation to update such forward-looking statements.

Net Income

LCNB Corp. earned $5.548 million in 1999 compared to $5.447 in 1998. Earnings per share were $3.15, up 1.9% or $.06 per share from 1998. Performance ratios for 1999 included a return on average assets of 1.28% and a return of average equity of 12.98% compared to ratios of 1.30% and 13.47%, respectively, for 1998.

Net income for 1998 increased $412,000, or by 8.2% in 1998 from 1997 and earnings per share increased $.23 per share.

Net Interest Income

Net interest income increased $891 thousand, or 5.7%, from 1998 to 1999. The net interest margin on a fully taxable equivalent basis (FTE) increased from 4.10% in 1998 to 4.24% in 1999. This 14 basis point increase was due in part to a 32 basis point decline in the cost of average interest-bearing liabilities, partially offset by 17 basis point decline in the yield on average interest-earning assets. The decline in the cost of average interest-bearing funds resulted from the replacement of higher cost time deposits with lower cost savings deposits. The decline in the yield on average interest-earning assets is due to lower yields attributable to commercial loans and mortgage loans. An increase in average interest-earning assets of $13.1 million to $402.2 million in 1999 also contributed to the increase in net interest income. The increase was primarily attributable to increases in average commercial and residential real estate loans and securities.

Net interest income increased $2.1 million, or 15.5% in 1998 from 1997 due to a 22 basis point increase in the FTE net interest margin and a $22.2 million increase in average interest-earning assets. The net interest margin improvement was due to a 36 basis point decrease in the average cost of funds resulting from an initiative to price time deposits and IRA accounts less aggressively in 1998 than 1997. The increase in average interest-earning assets was due in part to the purchase of three Key Bank branches in September 1997.

Provisions and Allowance for Loan Losses

The total provision for loan losses is determined based upon Management's evaluation as to the amount needed to maintain the allowance for credit losses at a level considered appropriate in relation to the risk of losses inherent in the portfolio. In addition to historic charge-off percentages, factors taken into consideration to determine the adequacy of the allowance for credit losses include the nature, volume and consistency of the loan portfolio, overall portfolio quality, review of specific problem loans and current economic conditions that may affect the borrowers ability to pay. The following table presents the total loan provision and the other changes in the allowance for loan losses for the years 1995 through 1999 (in thousands).

		1999	1998	1997	1996	1995
Balance - Beginning of year	$	2,000	2,200	2,000	1,800	1,600
Loans charged off:
Commercial and industrial		-	227	-	3	-
Commercial, secured by real estate		-	-	-	-	-
Residential real estate		-	3	-	-	-
Consumer, excluding credit card		252	153	93	100	131
Agricultural		-	-	-	-	-
Credit Card		20	36	29	17	14
Other		- ---------	- - ----------	- - ---------	- - ---------	- - ---------
Total loans charged off		272 ---------	419 ----------	122 ---------	120 ---------	145 ---------
Recoveries:
Commercial and industrial		-	-	-	-	1
Commercial, secured by real estate		-	-	-	-	-
Residential real estate		-	-	-	-	-
Consumer, excluding credit card		62	26	25	29	61
Agricultural		-	-	-	-	-
Credit Card		2	2	6	-	2
Other		- - ---------	- - ----------	- - ---------	- - ---------	- - ---------
Total recoveries		64 - ---------	28 - ----------	31 - ---------	29 - ---------	64 - ---------
Net charge-offs		208	391	91	88	81
Provision charged to operations		208 ---------	191 - ----------	291 - ---------	288 - ---------	281 - ---------
Balance - End of year	$	2,000 =====	2,000 ======	2,200 =====	2,000 =====	1,800 =====
Ratio of net charge-offs during the period to average loans outstanding		.08% =====	.14% ======	.04% =====	.04% =====	.03% =====

The allowance for loan losses of $2.0 million is .70% of total loans at December 31, 1999, compared to $2.0 million or .75% of total loans at December 31, 1998 and $2.2 million or .81% at December 31, 1997. The $63 thousand increase in consumer loans charged off, net of recoveries, in 1999 over 1998 is attributable, in part, to the adoption of a new uniform charge-off policy in 1999 for consumer, credit card and home mortgage loans as mandated by the Federal Financial Institution's Examination Council for all banks and thrifts. It includes a requirement to charge off open-end credit at 180 days delinquency and closed-end credit at 120 days delinquency. Management believes that no significant difference will occur prospectively in net charge-offs as a result of this policy change. The $419 thousand of charge-offs in 1998 includes one commercial loan of $227 thousand. This loan, which had a $455 thousand balance at December 31, 1997, was charged down and paid off completely in 1998. Management believes the loan represented a unique credit risk based on the nature of the borrower's operations, the inventory that partially collateralized the loan, and the significance of the loan balance outstanding. The loan portfolio at December 31, 1999 does not include a commercial loan with a comparable level of credit risk.

Non-Interest Income

Non-interest income decreased $36 thousand, or 1.0% to $3.419 million in 1999 from $3.455 million in 1998. The decline was partially due to $234 thousand in security gains in 1998 compared to $20 thousand in 1999. Excluding the security gains from the comparison, non-interest income increased $178 thousand, or 5.5%. This increase was attributable to a $78 thousand, or 7.2% increase in trust income and a $130 thousand, or 6.4% increase in service charges and fees.

The trust fee income increased in 1999 due to an increase in estate fee income as well as an increase in the market value of assets under management.

The increase in service charges and fees from 1998 to 1999 was primarily due to a $61 thousand increase in ATM fees attributable to five new ATM machines added in late 1998 and early 1999. Additionally, Lebanon Citizens increased foreign ATM service fees and surcharge fees in mid-1998 and in 1999 and continued to experience an increase in the cardholder base resulting from the Key Bank branch acquisitions in September 1997. Also contributing to the increase in service charges was a $59 thousand increase in check card fee income resulting from continued growth in usage and the base of cardholders. Credit card fee and interchange income increased $72 thousand as a result of an increase in the cardholder base and a change in the processing vendor. These increases in service charges and fees were partially offset by a $72 thousand decrease in credit card merchant processing fees as Lebanon Citizens has opted to exit this business due to declining margins.

Other operating income decreased by $30 thousand as a result of a gain recorded in 1998 on the sale of property in connection with the consolidation of branches in Waynesville, which did not recur in 1999.

Non-interest income increased $481 thousand, or 16.2%, to $3.455 million in 1998. Contributing to the increase was a $334 thousand increase in service charges, in part, due to Lebanon Citizens initiating a new policy to charge ATM fees to users who were not customers of Lebanon Citizens. Also fees increased from customer relationships throughout 1998 that were acquired in the September 1997 acquisition of three branch offices of Key Bank. Additionally, security gains of $234 thousand contributed to the increase in non-interest income in 1998 as no securities were sold in 1997.

Non-Interest Expense

Non-interest expense increased $848 thousand, or 7.8%, in 1999 from 1998. This increase was primarily due to a $584 thousand, or 10.9%, increase in labor costs including pension and other employee benefits. Labor costs increased as a result of salary and related pension costs increases. Equipment and occupancy expenses increased $95 thousand, or 7.1%, primarily as a result of increased depreciation related to equipment purchases in late 1998 and branch improvements. Other non-interest expense increased $167 thousand, or 6.5%. The increase was due in part to an $88 thousand increase in computer maintenance charges due in part to newly purchased imaging equipment becoming operational in 1999. Correspondent bank fees increased $67 thousand in 1999 as Lebanon Citizens has opted to pay for its item processing charges in fees rather than through maintenance of higher non-interest bearing deposits with its upstream correspondent institutions. Other expenses increased as a result of the public filings required by the newly formed LCNB Corp. as well as acquisition efforts in the Dakin Insurance Company transaction. These increases were partially offset by declines in merchant credit card related processing and interchange expenses due to Lebanon Citizen's exiting of the merchant credit card business in mid-1999. Lebanon Citizens outsourced these services in 1999 and now functions as a referral conduit for merchant credit card business.

Non-interest expense increased $2.007 million, or 22.5%, from 1997 to 1998. This increase was primarily due to a $739 thousand, or 16.0%, increase in labor costs including pension and other benefits resulting from a full year of operating the four new branches built and acquired in late 1997. Additionally, amortization of intangibles associated with the acquisition of these three branches located in Oxford, Okeana, and Waynesville increased from $177 thousand in 1997 to $611 thousand in 1998. The intangibles are being amortized on a straight line basis over ten years. Lebanon Citizens periodically reviews the acquired intangibles for impairment.

Income Taxes

LCNB Corp.'s effective tax of 29.4% in 1999 is 104 basis points lower in 1999 than the rate in 1998 due to an increase in tax-exempt interest income as a percent of income before income taxes. The effective tax rate in 1998 of 30.8% increased 60 basis points from 1997.

Assets

Total assets increased $6.8 million, or 1.6% from December 31, 1998 to December 31, 1999. This increase was primarily due to a $20.6 million, or 7.8%, increase in loans, partially offset by a $18.1 million, or 14.7% decrease in securities available for sale.

The loan increase from December 31, 1998 to December 31, 1999 resulted primarily from a $5.7 million increase in commercial and industrial loans, an $8.1 million increase in residential real estate loans and a $4.2 million increase in consumer loans. The growth in commercial loans resulted from competitively priced products and focused officer calling efforts in the Oxford market as well as the Warren County offices. The increase in residential real estate loans is primarily due to Management's decision in 1999 to originate fixed rate loans for portfolio purposes, rather than for sale, due to existing attractive market rates and shifting interest rate trends in 1999. Lebanon Citizens originated $2.4 million in loans for immediate sale to the Federal Home Loan Mortgage Corporation (Freddie Mac). This compares to $11.6 million in loans originated and sold to Freddie Mac in 1998 and $280 thousand in 1997. Consumer loans increased primarily through concentrated efforts to originate indirect auto and other loans through dealers.

Securities decreased as a result of a shifting of assets from the securities portfolio to the higher yielding loan portfolio. $12.8 million of securities were sold in 1999 resulting in a $20 thousand realized gain. Proceeds were primarily used to fund the continued loan growth.

Premises and equipment increased $126 thousand, net of $688 thousand in depreciation expense, from December 31, 1999 to December 31, 1998. Expenditures for 1999 included approximately $350 thousand for costs associated with a new branch site in Goshen, Ohio, $81 thousand related to a new ATM purchase and installation and various branch renovations expenditures.

Lebanon Citizens owns its branches with the exception of four. The Otterbein, Oxford, and South Lebanon branches, as well as the loan production office in Hamilton which opened in December 1999, are leased under multi-year operating leases. The current Otterbein lease expires in July 2005, the Oxford lease expires in May 2000, the South Lebanon lease expires in July 2001 and the Hamilton lease expires in 2004. The Otterbein, South Lebanon and Hamilton leases include renewal options. The Bank is currently building a new branch in Oxford which is expected to open in May 2000. The Goshen branch currently under construction is due to open April 2000.

Total assets increased $11.1 million, or 2.6%, from December 31, 1997 to December 31, 1998. The most significant changes were a $22.5 million, or 22.2%, increase in investment securities from $101.2 million to $123.7 million, a $3.2 million, or 1.3%, decrease in total loans from $270.5 million to $267.1 million, and a 56.6% decrease in combined federal funds sold and interest-bearing deposits in other financial institutions from $21.4 million to $9.3 million.

Securities increased from December 31, 1997 to December 31, 1998 as a result of shifting assets from lower-yielding overnight fed funds to higher-yielding securities and investment of incremental deposit proceeds. Residential real estate loans and consumer loans decreased $11.8 million and $2.9 million, respectively, while commercial loans increased $9.6 million from December 31, 1997 to December 31, 1998. The decrease in residential real estate loans is due to the implementation of a strategy to limit the volume of fixed rate loans added to the portfolio in 1998 as part of Lebanon Citizens' ongoing management of interest rate risk. During 1998, an increasing number of borrowers opted to lock in low rates available through fixed rate products. To meet customer demand, the Bank continued to originate fixed rate real estate loans, however, most were immediately sold in the secondary market to Freddie Mac. Commercial loans increased as result of several significant new credit relationships.

In 1998, Lebanon Citizens sold real estate in Waynesville associated with the consolidation of its branch operations in that community. The $33 thousand gain realized on the sale in 1998 is included in Other Operating Income in the Statements of Income. Expenditures for premises and equipment in 1998 included approximately $600 thousand in renovations to branch offices and $383 thousand for equipment purchases and data processing systems upgrades.

Deposits

Total deposits of $391.6 million at December 31, 1999 increased $4.6 million, or 1.2%, from December 31, 1998. Demand and NOW deposits remained relatively constant from December 31, 1998 to December 31, 1999 and Money fund and savings deposits increased $4.2 million. Other time deposits declined by $8.0 million as Lebanon Citizens continued to allow its higher cost retail deposit products to run-off. Certificates greater than $100 thousand increased by $8.1 million due to an increase in demand for time deposits by public institutions having investable funds.

Deposits increased $9.6 million, or 2.6%, to $387.0 million at December 31, 1998, from $377.4 million at the close of 1997. Of this increase, noninterest-bearing demand deposits were $8.4 million or 20.3% greater than at year end 1997 and interest bearing deposits were up $1.2 million or .4%, net of a decrease in time deposits of $19.9 million. Lebanon Citizens' strategy was to competitively price deposit products in the markets served with an emphasis on growing its lower-priced core deposits products.

Liquidity

Liquidity is the ability to have funds available at all times to meet the commitments of Lebanon Citizens. Asset liquidity is provided by cash and assets which are readily marketable or pledgeable or which will mature in the near future. Liquid assets include cash and deposits in banks, federal funds sold and securities available for sale. Liquidity is also provided by access to core funding sources, primarily core depositors in the bank's trade area. Lebanon Citizens does not solicit brokered deposits as a funding source. The liquidity of Lebanon Citizens is enhanced by the fact that 85% of total deposits at December 31, 1999 were "core" deposits. Core deposits, for this purpose, are defined as total deposits less public funds and certificates of deposit greater than $100,000.

At December 31, 1999, Lebanon Citizens' liquid assets amounted to $134.4 million or 31% of total gross assets, down from $143.7 million or 33% at December 31, 1998. Secondary sources of liquidity include Lebanon Citizens' ability to sell loan participations and purchase federal funds. Management closely monitors the level of liquid assets available to meet ongoing funding needs. It is Management's intent to maintain adequate liquidity so that sufficient funds are readily available at a reasonable cost. Loans to deposits increased to 73% at December 31, 1999, from 69% at December 31, 1998. Lebanon Citizen's experienced no liquidity or operational problems as a result of the current liquidity levels.

Capital Resources

As of December 31, 1999, Lebanon Citizens had no material commitments for capital expenditures. Commitments to extend credit at December 31, 1999, amounted to $52.2 million and standby letters of credit totaled $5.8 million and are more fully described in Note 9 to Lebanon Citizens' Financial Statements. Since many of the commitments to lend may expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. Scheduled repayments of existing loans and maturities of investment securities are expected to provide the necessary funds.

LCNB Corp. and Lebanon Citizens are required by banking regulators to meet certain minimum levels of capital adequacy. These are expressed in the form of certain ratios. Capital is separated into Tier I capital (essentially shareholders' equity less goodwill and other intangibles) and Tier II capital (essentially the allowance for loan losses limited to 1.25% of risk-weighted assets). The first two ratios, which are based on the degree of credit risk in Lebanon Citizens' assets, provide for weighting assets based on assigned risk factors and include off-balance sheet items such as loan commitments and stand-by letters of credit. The ratio of Tier 1 capital to risk-weighted assets must be at least 4.0% and the ratio of Total capital (Tier 1 capital plus Tier 2 capital) to risk-weighted assets must be at least 8.0%.The capital leverage ratio supplements the risk-based capital guidelines. Banks are required to maintain a minimum ratio of Tier 1 capital to adjusted quarterly average total assets of 3.0%. A summary of the regulatory capital of LCNB Corp. and Lebanon Citizens at December 31 follows ($000's):

	1999		1998
	LCNB	Lebanon	Lebanon
	Corp.	Citizens	Citizens
Regulatory Capital:
Shareholders' equity	$ 42,987	37,875	42,199
Goodwill and other intangibles	(4,710)	(4,710)	(5,321)
Net unrealized securities losses (gains)	1,298 ----------	1,298 ---------	(646) --------
	39,575	34,463	36,232
Tier 1 risk-based capital:
Eligible allowance for loan losses	2,000 ----------	2,000 ----------	2,000 -----------
Total risk-based capital	$ 41,575 ======	36,463 ======	38,232 ======
Capital Ratios:
Total risk-based	15.3%	13.6%	15.1%
Tier 1 risk-based	14.6%	12.8%	14.3%
Tier 1 leverage	9.1%	7.9%	8.6%

The FDIC, the insurer of deposits in financial institutions, has adopted a risk-based insurance premium system based in part on an institution's capital adequacy. Under this system, a depository institution is required to pay successively higher premiums depending on its capital levels and its supervisory rating by its primary regulator. It is management's intention to maintain sufficient capital to permit Lebanon Citizens to maintain a "well capitalized" designation (the FDIC's highest rating).

Year 2000 Compliance

LCNB Corp. experienced no difficulties resulting from Y2K in the date transition at year-end 1999. Lebanon Citizens' testing and preparation for Y2K included future dates beyond December 31, 1999. Management anticipates no difficulties from future date changes.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market risk for Lebanon Citizens is primarily interest rate risk. Lebanon Citizens attempts to mitigate this risk through asset/liability management strategies designed to decrease the vulnerability of its earnings to material and prolonged changes in interest rates. Lebanon Citizens does not use derivatives such as interest rate swaps, caps or floors to hedge this risk. Lebanon Citizens has not entered into any market risk instruments for trading purposes. Lebanon Citizens' Asset and Liability Management Committee ("ALCO") primarily uses Interest Rate Sensitivity Gap Analysis, also known as repricing mismatch analysis, for measuring and managing interest rate risk.

Interest Rate Sensitivity Gap Analysis

A traditional gap analysis, provides a point-in-time measurement of the relationship between the amounts of interest rate sensitive assets and liabilities in a given time period. An asset or liability is interest rate sensitive within a specific time period if it will mature or reprice within that time period. If liabilities mature or reprice more quickly or to a greater extent than assets, net interest income would tend to decrease during periods of rising interest rates but increase during periods of falling interest rates. Conversely, if liabilities mature or reprice more slowly or to a lesser extent than assets, net interest income would tend to increase during periods of rising interest rates but decrease during periods of falling interest rates. ALCO strives to maintain a range for the relationship of rate sensitive assets to rate sensitive liabilities for gap analysis purposes of from 75 to 125 percent for the one-year and two- to four-year periods.

Table 1 reflects Lebanon Citizens' gap analysis at December 31, 1999. The amounts reported in the table are the principal cash flows of rate sensitive assets and liabilities by expected maturity or repricing timeframe. Also presented is the related weighted average interest rate. Fixed rate real estate mortgage loans and mortgage-backed securities are allocated to the various maturity / repricing periods based on contractual maturities adjusted for expected prepayments under the current market interest rate environment. Deposit liabilities without contractual maturities such as NOW and savings accounts are allocated to the various repricing periods based on an analysis of forecasted account run-off that takes into consideration the relatively stable nature of these core deposits. The gap analysis indicates that Lebanon Citizens' earnings are sensitive to the repricing of liabilities in the first year, sensitive to repricing of assets in the second through the fourth year, and liability sensitive thereafter. The aggregate ratio of rate sensitive assets to rate sensitive liabilities is 66.26% for the first year and 179.11% for years two through four. With the current relatively low market interest rate environment, management believes the ratios for the one year and four year time frames do not expose Lebanon Citizens' net interest income to significant risk.

			Table 1
		Expected Maturity / Repricing
	2000	2001	2002	2003	2004	Thereafter	Total	Fair Value
- ASSETS -
Loans: (1)
Fixed rate	36,907	26,594	25,233	21,140	15,529	59,724	185,127	176,029
Average interest rate	8.99%	8.62%	8.42%	8.26%	8.18%	8.19%
Variable rate	42,588	16,063	11,210	6,952	18,424	6,883	102,120	102,120
Average interest rate	8.88%	7.69%	7.72%	7.97%	7.22%	7.90%
Securities available for sale (2)	26,988	12,788	11,611	10,792	6,495	38,206	106,880	105,558
Average interest rate (3)	6.14%	6.00%	5.88%	5.89%	6.11%	6.05%
Federal funds sold	5,300	-	-	-	-	-	5,300	5,300
Average interest rate	5.38%
Interest-bearing deposits in banks	5,492	-	-	-	-	-	5,492	5,492
Average interest rate	5.10%
	---------	--------	--------	--------	--------	----------	----------	----------
Total earning assets	117,275	55,445	48,054	38,884	40,448	104,813	404,919 ======	394,499 =========
Average interest rate	7.95%	7.75%	7.64%	7.55%	7.41%	7.39%
- LIABILITIES -
NOW and money fund	16,484	5,023	5,023	5,023	5,023	40,862	77,438	76,738
Average interest rate	2.06%	2.06%	2.85%	2.85%	2.85%	2.39%
Savings	21,734	8,157	8,157	8,157	8,157	26,829	81,191	81,191
Average interest rate	3.37%	3.37%	3.37%	3.37%	3.37%	3.37%
IRA's:
Fixed rate	8,230	3,940	1,834	1,345	1,214	1,584	18,147	18,031
Average interest rate	5.53%	5.35%	5.84%	5.53%	6.12%	6.33%
Variable rate	11,836	-	-	-	-	-	11,836	11,836
Average interest rate	5.17%
CD's over $100,000	39,673	3,670	621	1,194	200	-	45,357	45,085
Average interest rate	5.01%	5.26%	5.63%	5.79%	6.25%	-
CD's under $100,000	79,025	18,956	5,580	2,813	917	832	108,123	107,186
Average interest rate	4.94%	5.26%	5.74%	5.69%	5.58%	5.11%
	---------	--------	--------	--------	--------	---------	----------	----------
Total interest bearing liabilities	177,078	39,746	21,215	18,233	15,511	70,309	342,092 ======	340,067 =========
	4.54%	4.48%	3.96%	3.67%	3.33%	2.89%
Period gap	$ (59,803) =========	$ 15,699 =======	$ 26,839 ========	$ 20,651 =======	$ 24,937 =======	$ 34,504 ========
Cumulative gap	$ (59,803) =========	$ (44,104) ========	$ (17,265) ========	$ 3,386 =======	$ 28,323 =======	$ 62,827 ========
Ratio of rate sensitive
assets to rate sensitive
liabilities:

First twelve months	66.26%
Years two through four	179.11%
Thereafter	149.50%

(1) Excludes adjustments for deferred net origination costs

(2) At amortized cost.

(3) Rates for tax-exempt securities are adjusted to a taxable

Item 8 Financial Statements and Supplementary Data

- I N D E X -

	PAGE
INDEPENDENT AUDITORS' REPORT
FINANCIAL STATEMENTS
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income and Changes in Shareholders' Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements

INDEPENDENT AUDITORS' REPORT

To the Shareholders

LCNB Corp. and Subsidiary

Lebanon, Ohio

We have audited the accompanying consolidated balance sheets of LCNB Corp. and Subsidiary as of December 31, 1999 and 1998, and the related consolidated statements of income, comprehensive income and changes in shareholders' equity, and cash flows for each of the three years in the period ended December 31, 1999. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of LCNB Corp. and Subsidiary as of December 31, 1999 and 1998, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1999, in conformity with generally accepted accounting principles.

/s/J.D. Cloud & Co. LLP

Certified Public Accountants

January 12, 2000

LCNB CORP. and
LEBANON CITIZENS NATIONAL BANK
CONSOLIDATED BALANCE SHEETS
At December 31
($000's)
		1999	1998
ASSETS:
Cash and due from banks	$	18,694	16,907
Federal funds sold		5,300	3,800
Total cash and cash equivalents		23,994	20,707
Interest-bearing deposits in banks		5,492	5,492
Federal Reserve Bank stock		647	647
Securities available for sale, at market value		104,911	123,040
Loans, net		285,608	265,057
Premises and equipment, net		8,228	8,102
Accrued income receivable		3,363	3,017
Intangibles		4,710	5,320
Other assets		2,026 ------------	777 -------------
TOTAL ASSETS	$	438,979 =======	432,159 =======
LIABILITIES:
Deposits -
Demand	$	49,552	49,972
NOW		55,512	54,910
Money fund		21,926	23,942
Savings		81,191	74,982
IRA		29,983	29,888
Certificates - $100,000 and over		45,357	37,252
Other time certificates		108,123 -------------	116,095 -------------
Total deposits		391,644	387,041
Accrued interest and other liabilities		4,348 -------------	2,919 --------------
TOTAL LIABILITIES		395,992 -------------	389,960 --------------
SHAREHOLDERS' EQUITY:
Common stock, no par value, authorized
4,000,000 shares; issued and
outstanding 1,760,000 shares		10,560	10,560
Surplus		11,000	11,000
Retained earnings		22,725	19,993
Accumulated other comprehensive income,
net of taxes		(1,298) ------------	646 -------------
TOTAL SHAREHOLDERS' EQUITY		42,987 ------------	42,199 -------------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY	$	438,979 ========	432,159
The accompanying notes to financial statements are an integral part of these statements.

LCNB CORP.
and
LEBANON CITIZENS NATIONAL BANK
CONSOLIDATED STATEMENTS OF INCOME
For the years ended December 31
($000's, except per share amounts)
		1999	1998	1997
INTEREST INCOME:
Interest and fees on loans	$	22,743	23,047	21,385
Interest on federal funds sold		463	796	918
Interest on deposits in banks		281	289	239
Interest on Federal Reserve Bank stock		39	39	39
Interest on investment securities -
Taxable		4,914	4,612	4,354
Non-taxable		1,251 ----------	816 ---------	842 ----------
TOTAL INTEREST INCOME		29,691 ----------	29,599 ---------	27,777 ----------
INTEREST EXPENSE:
Interest on deposits -
Money fund and NOW accounts		1,912	1,706	1,616
Savings		2,382	1,769	1,741
IRA		1,608	1,737	1,680
Certificates - $100,000 and over		1,916	1,871	2,160
Other time certificates		5,420 -----------	6,949 ----------	7,101 ----------
Total interest on deposits		13,238	14,032	14,298
Interest on short-term borrowings		43 -----------	48 ----------	46 ----------
TOTAL INTEREST EXPENSE		13,281 ----------	14,080 ---------	14,344 ----------
NET INTEREST INCOME		16,410 -----------	15,519 ----------	13,433 ----------
PROVISION FOR LOAN LOSSES		208 ----------	191 ---------	291 ----------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES		16,202 -----------	15,328 ----------	13,142 ----------
NON-INTEREST INCOME:
Trust income		1,160	1,082	1,118
Service charges and fees		2,137	2,007	1,673
Net gain on sales of securities		20	234	-
Other operating income		102 ------------	132 ---------	183 ----------
TOTAL NON-INTEREST INCOME		3,419 ------------	3,455 ----------	2,974 ----------
NON-INTEREST EXPENSE:
Salaries and wages		4,742	4,366	3,690
Pension and other employee benefits		1,215	1,007	944
Equipment expenses		506	475	431
Occupancy expense - net		932	867	690
State franchise tax		581	578	535
Marketing		408	423	317
Intangible amortization		624	611	178
Other non-interest expense		2,750 -----------	2,583 ----------	2,118 ----------
TOTAL NON-INTEREST EXPENSE		11,758 -----------	10,910 ---------	8,903 ---------
INCOME BEFORE INCOME TAXES		7,863	7,873	7,213
PROVISION FOR INCOME TAXES		2,315 -----------	2,426 ----------	2,178 ----------
NET INCOME	$	5,548 =======	5,447 ======	5,035 ======
Basic earnings per common share	$	3.15 =======	3.09 ======	2.86 ======
Weighted average shares outstanding (000's)		1,760 =======	1,760 ======	1,760 ======
The accompanying notes to financial statements are an integral part of these statements.

LCNB CORP.

and

LEBANON CITIZENS NATIONAL BANK

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME AND

CHANGES IN SHAREHOLDERS' EQUITY

For the three years ended December 31, 1999

($000s, except per share amounts)

		Common Shares	Surplus		Retained Earnings	Accumulated Other Comprehensive Income		Total Shareholders' Equity		Comprehensive Income
Balance, January 1, 1997	$	10,560	11,000		14,087	-		35,647
Net income					5,035			5,035		$ 5,035
Net unrealized gain on available-
for-sale securities (net of
taxes of $44)						86		86		86 - --------
Total comprehensive income										5,121 =====
Cash dividends declared -
$1.20 per share					(2,112) - ---------			(2,112) ---------
Balance, December 31, 1997		10,560	11,000		17,010	86		38,656
Net income					5,447			5,447		5,447
Transition adjustment for the effect of a change
effect of a change in
accounting principle						473		473		473
Net unrealized gain on available-
for-sale securities (net of
taxes of $124)						241		241		241
Reclassification adjustment for
net realized gain on sale of
available-for-sale securities
included in net income (net
of taxes of $80)						(154)		(154)		(154) --------
Total comprehensive income										6,007 =====
Cash dividends declared -
$1.40 per share		---------	---------	(2,464) ---------			(2,464) --------
Balance, December 31, 1998		10,560	11,000		19,993	646		42,199
Net income					5,548			5,548		5,548
Net unrealized loss on available-
for-sale securities (net of
taxes of $995)						(1,931)		(1,931)		(1,931)
Reclassification adjustment for
net realized gain on sale of
available-for-sale securities
included in net income (net of
taxes of $7)						(13)		(13)		(13) --------
Total comprehensive income									$	3,604 =====
Cash dividends declared -
$1.60 per share					(2,816) ---------			(2,816) ---------
Balance, December 31, 1999	$	10,560 ======	11,000 =====		22,725 =====	(1,298) =======		42,987 =====
The accompanying notes to financial statements are an integral part of these statements.

LCNB CORP.

and

LEBANON CITIZENS NATIONAL BANK

CONSOLIDATED STATEMENT OF CASH FLOWS

For the years ended December 31

($000's)

		1999	1998	1997
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	5,548	5,447	5,035
Adjustments to reconcile net income to net cash
provided by operating activities -
Depreciation, amortization and accretion		1,834	1,374	1,081
Provision for loan losses		208	191	291
Provision for deferred taxes		(87)	(51)	(62)
Realized gains on securities available for sale		(20)	(234)	-
Origination of mortgage loans for sale		(2,441)	(11,600)	(280)
Proceeds from sales of mortgage loans		2,443	11,707	285
(Increase) in income receivable		(346)	(28)	(503)
Increase (decrease) in interest payable		125	(110)	13
Increase (decrease) in other accrued expenses, net		(454) ----------	112 ----------	89 -----------
TOTAL ADJUSTMENTS		1,262 -----------	1,361 ----------	914 -----------
NET CASH PROVIDED BY OPERATING ACTIVITIES		6,810 ------------	6,808 -----------	5,949 -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net (increase) decrease in interest-bearing deposits in banks		-	(1,492)	-
Proceeds from sales of securities available for sale		12,776	8,315	-
Proceeds from maturities of securities available for sale		45,603	10,201	1,076
Proceeds from maturities of securities held to maturity		-	32,010	32,666
Purchases of securities available for sale		(43,705)	(67,634)	(31,002)
Purchases of securities held to maturity		-	(4,474)	(12,642)
Net decrease (increase) in loans		(20,869)	3,086	(22,390)
Purchases of premises and equipment		(635)	(1,363)	(1,932)
Proceeds from certain asset sales		-	274	-
Net change due to acquisition of branch offices		- ------------	- -----------	32,757 ----------
NET CASH USED IN INVESTING ACTIVITIES		(6,830) ------------	(21,077) ----------	(1,467) ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in deposits		4,603	9,632	(3,331)
Net increase (decrease) in short-term borrowings		1,520	(2,553)	1,470
Cash dividends paid		(2,816) ------------	(2,464) ----------	(2,112) -----------
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES		3,307 ------------	4,615 -----------	(3,973) -----------
NET CHANGE IN CASH AND CASH EQUIVALENTS		3,287	(9,654)	509
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR		20,707 ------------	30,361 -----------	29,852 -----------
CASH AND CASH EQUIVALENTS AT END OF YEAR	$	23,994 =======	20,707 ======	30,361 ======
SUPPLEMENTAL CASH FLOW INFORMATION
CASH PAID DURING THE YEAR FOR:
Interest	$	13,156	14,190	14,331
Income taxes		2,698	2,245	2,261
NON-CASH TRANSFER OF SECURITIES FROM HELD-TO-
MATURITY TO AVAILABLE-FOR-SALE CLASSIFICATION		-	42,768	-
The accompanying notes to financial statements are an integral part of these statements.

LCNB CORP.

And

LEBANON CITIZENS NATIONAL BANK

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Years ended December 31, 1999, 1998 and 1997

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

LCNB Corp. (the Company) was incorporated in December 1998. In the second quarter of 1999, each shareholder of Lebanon Citizens National Bank (the Bank) received ten common shares of the Company in exchange for each share of the Bank. Thereafter, the Company became a one-bank holding company with Lebanon Citizens National Bank its wholly-owned subsidiary. The Bank was founded in 1877 and provides full banking services, including trust services, to customers primarily in the southwestern Ohio area of Warren, Hamilton, Clermont, Clinton and Butler counties.

BASIS OF PRESENTATION-

The consolidated financial statements include the accounts of the Company and its subsidiary. All intercompany accounts and transactions are eliminated in consolidation. All prior period share and per share information has been restated to give effect to the ten-for-one exchange in the formation of the holding company.

USE OF ESTIMATES-

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

INVESTMENT SECURITIES-

Debt securities which the Company has the intent and ability to hold to maturity are reported at amortized cost. Debt securities classified as available for sale and all equity securities are reported at fair value with unrealized holding gains and losses reported net of income taxes as Accumulated Other Comprehensive Income, a separate component of shareholders' equity. Amortization of premiums and accretion of discounts are recognized as adjustments to interest income using the level yield method. Realized gains or losses from the sale of securities are computed using the specific identification method. Federal Reserve Bank stock is restricted in marketability and value. It is reported at cost, which is its par value. Currently, the Bank does not hold any derivatives or conduct hedging activities.

LOANS AND ALLOWANCE FOR LOAN LOSSES-

Loans are stated at the principal amount outstanding, net of unearned income, deferred origination fees and costs, and the allowance for loan losses. Interest on loans is calculated by using the simple interest method on daily balances of the principal amount outstanding. The accrual of interest on impaired loans is discontinued when there is a clear indication that the borrower's cash flow may not be sufficient to meet payments as they become due. Subsequent cash receipts on nonaccrual loans are recorded as a reduction of principal, and interest income is recorded once principal recovery is reasonably assured. The current year's accrued interest on loans placed on nonaccrual status is charged against earnings. Previous years' accrued interest is charged against the allowance for loan losses.

Loan origination fees and certain direct loan origination costs are deferred and the net amount amortized as an adjustment of loan yields. These amounts are being amortized over the lives of the related loans.

The allowance for loan losses is established through a provision for loan losses charged to expense. Loans are charged against the allowance for loan losses when management believes that the collectibility of the principal is unlikely. The allowance is an amount that management believes will be adequate to

absorb possible losses on existing loans that may become uncollectible, based on evaluations of the collectibility of loans and prior loan loss experience. The evaluations take into consideration such factors as changes in the nature and volume of the loan portfolio, overall portfolio quality, review of specific problem loans, and current economic conditions that may affect the borrowers' ability to pay. Loans are considered impaired when management believes, based on current information and events, it is probable that the Bank will be unable to collect all amounts due according to the contractual terms of the loan agreement. Impaired loans are measured by the present value of expected future cash flows using the loan's effective interest rate. Impaired collateral-dependent loans may be measured based on collateral value. Smaller-balance homogenous loans, including residential mortgage and consumer installment loans, are collectively evaluated for impairment.

PREMISES AND EQUIPMENT-

Bank premises and equipment are stated at cost less accumulated depreciation. Depreciation is computed on both the straight-line and accelerated methods over the estimated useful lives of the assets. Costs incurred for maintenance and repairs are expensed currently.

INTANGIBLE ASSETS-

Intangible assets representing the excess of the cost of acquired branch operations over the fair value of net tangible assets acquired is being amortized using the straight-line method over ten years. The Company periodically reviews intangible assets for possible impairment.

MARKETING EXPENSE-

Marketing costs are expensed as incurred.

EMPLOYEE BENEFITS-

The Bank has a noncontributory pension plan covering full-time employees. The retirement plan cost is made up of several components that reflect different aspects of the Bank's financial arrangements as well as the cost of benefits earned by employees. These components are determined using the projected unit credit actuarial cost method and are based on certain actuarial assumptions.

INCOME TAXES-

Certain income and expenses are recognized in different periods for financial reporting than for purposes of computing income taxes currently payable. Deferred taxes are provided on such temporary differences between the financial reporting and tax bases of the related assets and liabilities.

STATEMENTS OF CASH FLOWS-

For purposes of reporting cash flows, cash equivalents include all highly liquid investments with original maturities of three months or less.

EARNINGS PER SHARE-

Basic earnings per share is calculated by dividing net income by the weighted average number of common shares outstanding during the period. The Company's capital structure includes no potential for dilution. There are no warrants, options or other arrangements that would increase the number of shares outstanding.

RECENT PRONOUNCEMENTS AND ACCOUNTING CHANGES-

In June 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standard (SFAS) No. 133, "Accounting for Derivative Instruments and Hedging Activities". In most instances the standard, once adopted, precludes any held-to-maturity security from being designated as a hedged item. The Bank adopted SFAS No. 133 in the fourth quarter of 1998. To provide the flexibility in the future to designate securities as hedged items, the Bank recategorized its held-to-maturity securities as available for sale. The amortized cost and related unrealized net gain of the transferred securities was $42,768,000 and $716,000, respectively, at the date of transfer. This change in accounting principle had no effect on reported net income. Comprehensive income increased $473,000 after income taxes of $243,000.

SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information" became effective in 1998. The nature of the Company's operations and its bank subsidiary are such that there are no additional disclosure requirements under SFAS No. 131.

NOTE 2 - ACQUISITION

On September 15, 1997, the Bank purchased three Ohio branch offices of KeyBank N.A. located in Waynesville, Oxford and Okeana. The transaction was accounted for as a purchase and, accordingly, the results of operations of the acquired branches prior to September 15, 1997 are excluded from the financial statements. All assets acquired and liabilities assumed were recorded at fair value. The Bank received $33 million in cash, $10 million in loans, $1 million in premises and furnishings, and total deposits of $50 million.

NOTE 3 - INVESTMENT SECURITIES

The amortized cost and estimated market value of investment securities at December 31 are summarized as follows ($000's):

				1999
			Amortized Cost	Unrealized Gains	Unrealized Losses	Market Value
U.S. Treasury notes		$	6,511	7	36	6,482
U.S. Agency notes			30,750	-	823	29,927
U.S. Agency mortgage- backed securities			15,486	2	419	15,069
Corporate notes			17,179	41	162	17,058
Municipal securities:
	Non-taxable		32,593	117	518	32,192
	Taxable		4,361 ---------------	- ------------	178 -------------	4,183 ------------
		$	106,880 ========	167 =======	2,136 ========	104,911 =========
				1998
			Amortized	Unrealized	Unrealized	Market
			Cost	Gains	Losses	Value
U.S. Treasury notes		$	28,152	239	-	28,391
U.S. Agency notes			23,134	156	100	23,190
U.S. Agency mortgage- backed securities			17,394	62	50	17,406
Corporate notes			24,318	91	33	24,376
Municipal securities			29,063 ------------	635 --------------	21 ---------------	29,677 ----------------
		$	122,061 =======	1,183 ========	204 ========	123,040 =========

Contractual maturities of debt securities at December 31, 1999, were as follows ($000's). Actual maturities may differ from contractual maturities when borrowers have the right to call or prepay obligations.

		Amortized Cost	Market Value
Due within one year	$	26,476	26,490
Due from one to five years		39,280	38,531
Due from five to ten years		20,105	19,318
Due after ten years		5,533 ----------	5,503 ----------
		91,394	89,842
U.S. Agency mortgage- backed securities		15,486 ----------	15,069 ---------
	$	106,880 ======	104,911 ======

Gross gains realized on sales of securities available for sale were $26,000 and $234,000 for 1999 and 1998, respectively. Realized losses during 1999 amounted to $6,000. There were no realized losses during 1998. There were no sales of investment securities during 1997. Investment securities with a carrying value of $82,897,000 and $45,186,000 at December 31, 1999 and 1998, respectively, were pledged to secure public deposits and for other purposes required or permitted by law.

NOTE 4 - LOANS

Major classifications of loans at December 31 are as follows ($000's):

		1999	1998
Commercial and industrial	$	26,348	20,640
Commercial, secured by real estate		56,671	53,907
Residential real estate		162,181	154,111
Consumer, excluding credit card		36,472	32,302
Agricultural		2,343	2,370
Credit card		2,764	2,574
Other loans		285	966
Lease financing		183	-
		----------	-----------
		287,247	266,870
Deferred net origination costs		361	187
		----------	-----------
		287,608	267,057
Allowance for loan losses		(2,000)	(2,000)
		----------	-----------
Loans-net	$	285,608	265,057
		======	======

Mortgage loans sold to and serviced for the Federal Home Loan Mortgage Corporation are not included in the accompanying balance sheets. The unpaid principal balances of those loans at December 31, 1999 and 1998 were $15,379,000 and $14,747,000, respectively.

Changes in the allowance for loan losses were as follows ($000's):

	1999	1998	1997
BALANCE-BEGINNING OF YEAR	$ 2,000	2,200	2,000
Provision for loan losses	208	191	291
Charge offs	(272)	(418)	(122)
Recoveries	64 ---------	27 -------	31 --------
BALANCE-END OF YEAR	$2,000 =====	2,000 ====	2,200 =====

There were no nonaccrual loans at December 31, 1999 or 1998. Interest income that would have been recorded in 1999, 1998 and 1997 if loans on nonaccrual status at various times during the respective years had been current and in accordance with their original terms, was not material. At December 31, 1999 and 1998, the recorded investment in loans for which impairment has been recognized in accordance with SFAS Statement No. 114 was not material. The Bank is not committed to lend additional funds to debtors whose loans have been modified to provide a reduction or deferral of principal or interest because of a deterioration in the financial position of the borrower.

NOTE 5 - PREMISES AND EQUIPMENT

Premises and equipment at December 31 are summarized as follows ($000's):

	1999	1998
Land	$1,870	1,550
Buildings	7,477	7,254
Equipment	6,723	6,635
	---------	--------
Total	16,070	15,439
Less-Accumulated depreciation	7,842	7,337
	----------	----------
Premises and Equipment-Net	$8,228	8,102
	=====	=====

Depreciation charged to income was $688,000 in 1999, $636,000 in 1998 and $565,000 in 1997.

Some of the Bank's branches and equipment are leased under agreements expiring at various dates through 2049. These leases are accounted for as operating leases. At December 31, 1999, required minimum annual rentals due in the future on noncancelable leases having terms in excess of one year aggregated $1,508,000. Minimum annual rentals for each of the years 2000 through 2004 are approximately $60,000. Rental expense for all leased branches and equipment amounted to $101,000 in 1999, $115,000 in 1998 and $104,000 in 1997.

NOTE 6 - DEPOSIT LIABILITIES

Contractual maturities of certificates of deposit at December 31, 1999 were as follows ($000's):

		Certificates	All other
		over $100,000	Certificates	Total
Year ending December 31
	2000	$ 39,673	79,025	118,698
	2001	3,669	18,956	22,625
	2002	621	5,580	6,201
	2003	1,194	2,813	4,007
	2004	200	917	1,117
	Thereafter	- --------------	832 -----------	832 ----------
		$45,357 =======	108,123 ======	153,480 ======

NOTE 7 - EMPLOYEE BENEFITS

The Bank's noncontributory defined benefit retirement plan covers all regular full-time employees. The benefits are based on years of service and the employee's highest average compensation during five consecutive years. Pension costs are funded based on the Plan's actuarial cost method and are limited to amounts currently deductible for federal income tax purposes.

The components of net periodic pension cost are summarized as follows ($000's):

		1999	1998	1997
Service cost	$	378	279	232
Interest cost		182	157	154
Expected return on Plan assets		(161)	(140)	(134)
Amortization of unrecognized transition obligation		17	17	17
Recognized net actuarial loss (gain)		(13) -------	43 -------	50 -------
Net periodic pension cost	$	403 ====	356 ====	319 ====

A summary of the Plan's funded status and prepaid benefit cost, the latter included in Other Assets on the balance sheets, at December 31 follows ($000's):

	1999	1998
Change in projected benefit obligations
Projected benefit obligation at beginning of year	$3,308	3,040
Service cost	378	279
Interest cost	182	157
Actuarial losses (gains)	(79)	188
Benefits paid	(3) --------	(356) --------
Projected benefit obligation at end of year	3,786 --------	3,308 --------

Change in plan assets
Fair value of plan assets at beginning of year	2,880	2,646
Actual return on plan assets	133	111
Employer contribution	456	479
Benefits paid	(3) ---------	(356) ---------
Fair value of plan assets at end of year	3,466 ---------	2,880 ---------
Funded status	(320)	(428)
Unrecognized net actuarial loss	1,064	1,102
Unrecognized transition obligation	44 ----------	61 ----------
Prepaid benefit cost	$788 ======	735 ======

The Plan's assets are exclusively certificates of deposit with the Bank. In determining the actuarial present value of the projected benefit obligation, the following assumptions were used:

	1999	1998
Assumed discount rate	5.50%	5.50%
Expected long-term rate of return on Plan assets	5.50%	5.50%
Rate of increase in future compensation levels	4.00%	4.00%

The Bank has a benefit plan which permits eligible officers to defer a portion of their compensation. The deferred compensation, with accrued interest, is distributable in cash after retirement or termination of employment. The amount of such deferred compensation at December 31, 1999 and 1998, was $324,000 and $235,000, respectively. The Bank also has a supplemental income plan which provides a covered employee an amount based on a percentage of average compensation, payable annually for ten years upon retirement. The projected benefit obligation included in other liabilities for this supplemental income plan at December 31, 1999 and 1998, is $70,000 and $51,000, respectively. The discount rate used to determine the present value of the obligation was 6.5% in 1999 and 1998. The service cost associated with this plan in each of the three years 1999, 1998 and 1997 was approximately $16,000. Interest costs were not material. Both of these plans are nonqualified and unfunded. Participation in each plan is limited to a select group of management.

NOTE 8 - INCOME TAXES

The provision for federal income taxes consists of ($000's):

				1999	1998	1997
Income taxes currently payable			$	2,402 --------	2,477 ---------	2,290 -----------
Deferred income taxes resulting
from temporary differences-
	Provision for loan losses			-	68	(68)
	Loan origination fees-net			(33)	(73)	(35)
	Pension and deferred compensation			(16)	12	(14)
	Depreciation and amortization			(38) ---------	(58) ---------	5 -----------
		Total deferred income taxes		(87) ---------	(51) --------	(112) -----------
	Provision for income taxes		$	2,315 =====	2,426 =====	2,178 ======

A reconciliation between the statutory income tax rate and the Bank's effective tax rate follows:

		1999	1998	1997
Statutory tax rate		34.0%	34.0	34.0
Increase (decrease) resulting from-
	Tax exempt interest	(4.6)	(2.9)	(3.4)
	Other-net	- ---------	( .3) ------	( .4) --------
	Effective tax rate	29.4% =====	30.8 ===	30.2 =====

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The Bank has not recorded a valuation reserve related to deferred tax assets. Deferred tax assets and liabilities at December 31 consist of the following ($000's):

			1999	1998
Deferred tax assets:
Allowance for loan losses		$	522	522
Unrealized losses on securities available for sale			669	-
Amortization of intangibles			153 ------	83 --------
			1,344 ------	605 -------
Deferred tax liabilities:
Depreciation of premises and equipment			(175)	(144)
Unrealized gains on securities available for sale			-	(333)
Deferred loan fees			(161)	(193)
Pension and deferred compensation			(137) -------	(153) --------
			(473) -------	(823) --------
	Net deferred tax	$	871 ====	(218) ====

NOTE 9 - COMMITMENTS AND CONTINGENT LIABILITIES

The Bank is a party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit. They involve, to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the balance sheets. The Bank's exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit is represented by the contract amount of those instruments.

The Bank uses the same credit policies in making commitments and conditional obligations as it does for on-balance-sheet instruments. Financial instruments whose contract amounts represent off-balance-sheet credit risk at December 31 were as follows (thousands):

		1999	1998
Commitments to extend credit	$	52,198	49,417
Standby letters of credit		5,783	5,357

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses. Standby letters of credit are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party. At December 31, 1999 and 1998, outstanding guarantees of $783,000 and $357,000, respectively, were issued to developers and contractors. These guarantees generally expire within one year and are fully secured. In addition, the Bank is a participant for the amount of $5 million in a letter of credit securing payment of principal and interest on a bond issue. This letter of credit will expire July 15, 2004, and is secured by an assignment of rents and the underlying real property.

The Bank evaluates each customer's credit worthiness on a case-by-case basis. The amount of collateral obtained if deemed necessary by the Bank is based on management's credit evaluation of the borrower. Collateral held varies, but may include accounts receivable; inventory; property, plant and equipment; residential realty; and income-producing commercial properties.

The Company and its subsidiary are parties to various claims and proceedings arising in the normal course of business. Management, after consultation with legal counsel, believes that the liabilities, if any, arising from such proceedings and claims will not be material to the consolidated financial position or results of operations.

NOTE 10 - RELATED PARTY TRANSACTIONS

The Bank has entered into related party transactions with various directors and executive officers. Such transactions originate in the normal course of the Bank's operations as a depository and lending institution. At December 31, 1999 and 1998, certain executive officers, directors and associates of such persons were indebted to the Bank directly or as guarantors in the aggregate amount of $3,576,000 and $3,280,000, respectively. During 1999, $1,208,000 in new loans were made; repayments totaled $912,000.

NOTE 11 - FAIR VALUE OF FINANCIAL INSTRUMENTS

Carrying amounts and estimated fair values of financial instruments as of December 31, were as follows ($000's):

		1999		1998
		Carrying	Fair	Carrying	Fair
		Amount	Value	Amount	Value
FINANCIAL ASSETS:
Cash and cash equivalents	$	23,994	23,994	20,707	20,707
Interest-bearing deposits in banks		5,492	5,492	5,492	5,492
Federal Reserve Bank stock		647	647	647	647
Securities available for sale		104,911	104,911	123,040	123,040
Loans, net		285,608	278,149	265,057	264,439
FINANCIAL LIABILITIES:
Deposits	$	391,644	390,221	387,041	388,176

The fair value of off-balance-sheet financial instruments at December 31, 1999 and 1998, was not material.

Fair values of financial instruments are based on various assumptions, including the discount rate and estimates of future cash flows. Therefore, the fair values presented may not represent amounts that could be realized in actual transactions. In addition, because the required disclosures exclude certain financial instruments and all nonfinancial instruments, any aggregation of the fair value amounts presented would not represent the underlying value of the Bank. The following methods and assumptions were used to estimate the fair value of certain financial instruments:

Cash and cash equivalents:
The carrying amounts presented are deemed to approximate fair value.

Interest-bearing deposits in banks:
Fair value is estimated for these certificates of deposit by discounting the future cash flows at current rates.

Investment Securities:
Fair values are based on quoted market prices, if available. If a quoted market price is not available, fair value is estimated using quoted market prices for similar securities.

Loans:
Fair value is estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities.

Deposits:
The fair value of demand deposits, savings accounts, and certain money market deposits is the amount payable on demand at the reporting date. The fair value of fixed-maturity certificates of deposit is estimated using the rates currently offered for deposits of similar remaining maturities.

NOTE 12 - REGULATORY MATTERS

The Federal Reserve Act requires depository institutions to maintain cash reserves with the Federal Reserve Bank. In 1999 and 1998, the Bank was required to maintain average reserve balances of $8,018,000 and $6,538,000, respectively.

Banks and holding companies must meet certain minimum capital requirements set by federal banking agencies. The minimum regulatory capital ratios are 8% for total risk-based, 4% for Tier 1 risk-based, and 4% for leverage. For various regulatory purposes, institutions are classified into categories based upon capital adequacy. The highest "well capitalized" category requires capital ratios of at least 10% for total risk-based, 6% for Tier 1 risk-based, and 5% for leverage. As of the most recent notification from their regulators, the Holding Company and Bank were categorized as "well-capitalized" under the regulatory framework for prompt corrective action. A summary of the regulatory capital of the Holding Company and Bank at December 31 follows ($000's):

			1999		1998
			Holding
			Company	Bank	Bank
Regulatory Capital:
	Shareholders' equity	$	42,987	37,875	42,199
	Goodwill and other intangibles		(4,710)	(4,710)	(5,321)
	Net unrealized securities losses (gains)		1,298 ------------	1,298 ------------	(646) --------------
	Tier 1 risk-based capital		39,575	34,463	36,232
	Eligible allowance for loan losses		2,000 -----------	2,000 -----------	2,000 -------------
	Total risk-based capital	$	41,575 =======	36,463 ======	38,232 =======
Capital Ratios:
	Total risk-based		15.3%	13.6%	15.1%
	Tier 1 risk-based		14.6%	12.8%	14.3%
	Tier 1 leverage		9.1%	7.9%	8.6%

The principal source of income and funds for LCNB Corp. is dividends paid by the Bank subsidiary. The payment of dividends is subject to restriction by regulatory authorities. For 2000, the restrictions generally limit dividends to the aggregate of net income for the year 2000 plus the retained net earnings for 1999 and 1998. In addition, dividend payments may not reduce capital levels below minimum regulatory guidelines. Accordingly, future dividends may require the prior approval of the Comptroller of the Currency.

NOTE 13 - OTHER DEVELOPMENTS

On December 30, 1999, the Company and the shareholders of Dakin Insurance Agency, Inc. signed an Agreement and Plan of Merger whereby Dakin would become a wholly-owned subsidiary of LCNB Corp. Dakin is an independent insurance agency founded in 1876 and offers a wide range of insurance products for businesses and individuals in the Bank's primary market area. Under the terms of the Agreement, Dakin's shareholders will receive an aggregate of 16,000 shares of LCNB Corp. for all of the outstanding shares of the agency. The merger will qualify as a tax-free reorganization. The Company intends to account for the merger as a pooling of interests. The merger is expected to be completed during the first quarter of 2000.

NOTE 14 - PARENT COMPANY FINANCIAL INFORMATION

Condensed financial information for LCNB Corp. (parent company only) follows ($000's):

Condensed Balance Sheets
	December 31
				1999
	Assets:
	Cash on deposit with subsidiary		$	17
	Corporate and municipal debt securities			4,969
	Investment in subsidiary			37,875
	Other assets			126 ----------
		Total assets	$	42,987 ======
	Liabilities		$	-
	Shareholders' equity			42,987 ----------
	Total liabilities and shareholders' equity		$	42,987 ======
Condensed Statements of Income
	Year ended December 31
				1999
	Income:
	Dividends from subsidiary		$	7,936
	Interest			2 -----------
	Total income			7,938 -----------
	Expenses:
	Amortization of organization costs			13
	Other expense			1 -----------
	Total expense			14 -----------
	Income before income tax benefit and equity
	in undistributed income of subsidiary			7,924
	Income tax benefit			3
	Equity in undistributed income (excess dividends)
	of subsidiary			(2,379) ----------
	Net income		$	5,548 ======
Condensed Statements of Cash Flows
	Year ended December 31
				1999
	Cash flows from operating activities:
	Net income		$	5,548 ======
	Adjustments for non-cash items -
	Equity in undistributed (income) excess
	dividends of subsidiary			2,379
	Amortization			13
	Organization costs			(105)
	Other, net			(5) ----------
	Net cash provided by operating activities			7,830
	Cash flows from investing activities:
	Purchases of securities available for sale			(4,997)
	Cash flows from financing activities:
	Cash dividends paid			(2,816) -----------
	Net change in cash			17
	Cash at beginning of year			- ----------
	Cash at end of year		$	17 ======

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures

None

PART III

Portions of the Proxy Statement included in the Notice of Annual Meeting of Shareholders to be held April 18, 2000, dated March 18, 2000, are incorporated by reference into Part III.

Item 10. Directors and Executive Officers of the Registrant

The information contained in the Notice of Annual Meeting of Shareholders and Proxy Statement (dated March 18, 2000), relating to "Directors and Executive Officers of the Registrant", is incorporated herein by reference.

Item 11. Executive Compensation

The information contained in the Notice of Annual Meeting of Shareholders and Proxy Statement (dated March 18, 2000), relating to "Compensation of Directors and Executive Officers", is incorporated herein by reference.

Item 12. Security Ownership of Certain Beneficial Owners and Management

The information contained in the Notice of Annual Meeting of Shareholders and Proxy Statement (dated March 18, 2000), relating to "Section 16(a) Beneficial Ownership Reporting Compliance" is incorporated herein by reference.

Item 13. Certain Relationships and Related Transactions

The information contained in the Notice of Annual Meeting of Shareholders and Proxy Statement (dated March 18, 2000), relating to "Certain Relationships and Related Transactions", is incorporated herein by reference.

Item 14. Exhibits, Financial Statements and Reports on 8-K

(a) 1. Financial Statements - See Index to Consolidated Financial Statements included in Item 8 of this Form 10-K.

2. Financial Statement Schedules.

None

3. Exhibits required by Item 601 Regulation S-K.

Exhibit No.	Exhibit Description
3.1	Articles of Incorporation
3.2	Regulations(1)
10	Agreement of Merger and Plan of Reorganization by and among Dakin Insurance Agency, Inc., Shareholders of Dakin Insurance Agency, Inc., LCNB Corp. and Dakin Acquisition Corporation, dated December 30, 1999.
21	LCNB Corp. Subsidiaries
27.1 27.2	Financial Data Schedule for the Year Ended December 31, 1999. Restated Financial Data Schedule for the Year Ended December 31, 1998.

(1) Incorporated by reference to Registrant's Registration Statement on Form S-4, Exhibit 3.2, Registration No. 333-70913

(b) Reports on Form 8-K

There were two reports on Form 8-K filed with the SEC in 1999. A Form 8-K was filed on November 4, 1999 regarding the press release reporting the execution of a letter of intent to purchase Dakin Insurance Agency, Inc. Another Form 8-K was filed on January 6, 2000 regarding the press release reporting the Company's earnings for the year 1999.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

LCNB CORP.

(Registrant)

By/s/ Stephen P. Wilson
President and Chairman of the Board of Directors

Pursuant to the requirements of the Securities Act of 1934, this report has been signed below by the following persons in the capacities and on the dates indicated:

	Executive Vice President
/s/ Steve P. Foster	and Chief Financial Officer	February 22, 2000
Steve P. Foster
/s/ Sam Kaufman	Director	February 22, 2000
Sam Kaufman
/s/ William H. Kaufman	Director	February 22, 2000
William H. Kaufman
/s/ George L. Leasure	Director	February 22, 2000
George L. Leasure
/s/ James B. Miller	Director	February 22, 2000
James B. Miller
/s/ Corwin M. Nixon	Director	February 22, 2000
Corwin M. Nixon
/s/ Kathleen Porter Stolle	Director	February 22, 2000
Kathleen Porter Stolle
/s/ Howard E. Wilson	Director	February 22, 2000
Howard E. Wilson
/s/ Marvin E. Young	Director	February 22, 2000
Marvin E. Young

EX-27

 

<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS INCLUDED IN THE ANNUAL REPORT FOR LCNB CORP. FOR THE YEAR
ENDED DECEMBER 31, 1999, FILED WITH FORM 10-K AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.

<MULTIPLIER> 1,000

                             
<PERIOD-TYPE>                   12-MOS
<FISCAL-YEAR-END>                          DEC-31-1999
<PERIOD-START>                             JAN-01-1999
<PERIOD-END>                               DEC-31-1999
<CASH>                                          18,694
<INT-BEARING-DEPOSITS>                           5,492
<FED-FUNDS-SOLD>                                 5,300
<TRADING-ASSETS>                                     0
<INVESTMENTS-HELD-FOR-SALE>                    104,911
<INVESTMENTS-CARRYING>                               0
<INVESTMENTS-MARKET>                                 0
<LOANS>                                        287,608
<ALLOWANCE>                                      2,000
<TOTAL-ASSETS>                                 438,979
<DEPOSITS>                                     391,644
<SHORT-TERM>                                         0
<LIABILITIES-OTHER>                              4,348
<LONG-TERM>                                          0
<PREFERRED-MANDATORY>                                0
<PREFERRED>                                          0
<COMMON>                                        10,560
<OTHER-SE>                                      32,427
<TOTAL-LIABILITIES-AND-EQUITY>                 438,979
<INTEREST-LOAN>                                 22,743
<INTEREST-INVEST>                                6,165
<INTEREST-OTHER>                                   783
<INTEREST-TOTAL>                                29,691
<INTEREST-DEPOSIT>                              13,238
<INTEREST-EXPENSE>                              13,281
<INTEREST-INCOME-NET>                           16,410
<LOAN-LOSSES>                                      208
<SECURITIES-GAINS>                                  20
<EXPENSE-OTHER>                                 11,758
<INCOME-PRETAX>                                  7,863
<INCOME-PRE-EXTRAORDINARY>                       7,863
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
<NET-INCOME>                                     5,548
<EPS-BASIC>                                       3.15
<EPS-DILUTED>                                     3.15
<YIELD-ACTUAL>                                    7.54
<LOANS-NON>                                          0
<LOANS-PAST>                                        68
<LOANS-TROUBLED>                                     0
<LOANS-PROBLEM>                                      0
<ALLOWANCE-OPEN>                                 2,000
<CHARGE-OFFS>                                      272
<RECOVERIES>                                        64
<ALLOWANCE-CLOSE>                                2,000
<ALLOWANCE-DOMESTIC>                                 0
<ALLOWANCE-FOREIGN>                                  0
<ALLOWANCE-UNALLOCATED>                          2,000


 

EX-27

 

<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS INCLUDED IN THE ANNUAL REPORT FOR LCNB CORP. FOR THE YEAR
ENDED DECEMBER 31, 1998, FILED WITH FORM S-4 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.

<MULTIPLIER> 1,000

                             
<PERIOD-TYPE>                   12-MOS
<FISCAL-YEAR-END>                          DEC-31-1998
<PERIOD-START>                             JAN-01-1998
<PERIOD-END>                               DEC-31-1998
<CASH>                                          16,907
<INT-BEARING-DEPOSITS>                           5,492
<FED-FUNDS-SOLD>                                 3,800
<TRADING-ASSETS>                                     0
<INVESTMENTS-HELD-FOR-SALE>                    123,040
<INVESTMENTS-CARRYING>                               0
<INVESTMENTS-MARKET>                                 0
<LOANS>                                        267,057
<ALLOWANCE>                                      2,000
<TOTAL-ASSETS>                                 432,159
<DEPOSITS>                                     387,041
<SHORT-TERM>                                         0
<LIABILITIES-OTHER>                              2,919
<LONG-TERM>                                          0
<PREFERRED-MANDATORY>                                0
<PREFERRED>                                          0
<COMMON>                                        10,560
<OTHER-SE>                                      31,639
<TOTAL-LIABILITIES-AND-EQUITY>                 432,159
<INTEREST-LOAN>                                 23,047
<INTEREST-INVEST>                                5,428
<INTEREST-OTHER>                                 1,124
<INTEREST-TOTAL>                                29,599
<INTEREST-DEPOSIT>                              14,032
<INTEREST-EXPENSE>                              14,080
<INTEREST-INCOME-NET>                           15,519
<LOAN-LOSSES>                                      191
<SECURITIES-GAINS>                                 234
<EXPENSE-OTHER>                                 10,910
<INCOME-PRETAX>                                  7,873
<INCOME-PRE-EXTRAORDINARY>                       7,873
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
<NET-INCOME>                                     5,447
<EPS-BASIC>                                       3.09
<EPS-DILUTED>                                     3.09
<YIELD-ACTUAL>                                    7.71
<LOANS-NON>                                          0
<LOANS-PAST>                                       374
<LOANS-TROUBLED>                                     0
<LOANS-PROBLEM>                                      0
<ALLOWANCE-OPEN>                                 2,200
<CHARGE-OFFS>                                      419
<RECOVERIES>                                        28
<ALLOWANCE-CLOSE>                                2,000
<ALLOWANCE-DOMESTIC>                                 0
<ALLOWANCE-FOREIGN>                                  0
<ALLOWANCE-UNALLOCATED>                          2,000


 

EX-21

Exhibit 21

LCNB CORP. SUBSIDIARIES

Lebanon Citizens National Bank, a national banking association headquartered in Lebanon, Ohio.

EX-10

AGREEMENT

AND PLAN OF MERGER

by and among

DAKIN INSURANCE AGENCY, INC.

SHAREHOLDERS OF DAKIN INSURANCE AGENCY, INC.,

LCNB CORP.,

and

DAKIN ACQUISITION CORPORATION

December 30, 1999

TABLE OF CONTENTS

ARTICLE I DEFINITIONS

ARTICLE II THE MERGER

2.1 Transfer of Property and Liabilities

2.2 Surviving Corporation

2.3 Principal Office

2.4 State Law

ARTICLE III CONVERSION OF SHARES

3.1 Merger Consideration

3.1.1 Initial Purchase Price.

3.1.2 Purchase Price Adjustments.

3.2 Private Placement of Securities

3.3 Exchange of Certificates

ARTICLE IV REPRESENTATIONS AND WARRANTIES OF DAKIN AND THE SHAREHOLDERS

4.1 Organization and Good Standing; Qualification

4.2 Capitalization

4.3 Transactions in Capital Stock

4.4 Continuity of Business Enterprise

4.5Corporate Records

4.6 Authorization and Validity

4.7 No Violation

4.8 Consents

4.9 Financial Statements

4.10 Liabilities and Obligations

4.11 Employee Matters

4.11.1 Cash Compensation

4.11.2 Compensation Plans

4.11.3 Employment Agreements

4.11.4 Employee Policies and Procedures

4.11.5 Unwritten Amendments

4.11.6 Labor Compliance

4.11.7 Unions

4.12 Employee Benefit Plans

4.12.1 Identification

4.12.2 Administration

4.12.3 Examinations

4.12.4 Prohibited Transactions

4.12.5 Claims and Litigation

4.12.6 Qualification

4.12.7 Funding Status

4.12.8 Excise Taxes

4.12.9 Multiemployer Plans

4.12.10 PBGC

4.12.11 Retirees

4.13 Absence of Certain Changes

4.14 Title; Leased Assets

4.14.1 Real Property

4.14.2 Personal Property

4.14.3 Leases

4.15 Commitments

4.15.1 Commitments;

4.15.2 No Cancellation or Termination of Commitment

4.16 Insurance

4.17 Intellectual Property

4.18 Year 2000 Compliance

4.19 Taxes

4.19.1 Filing of Tax Returns

4.19.2 Payment of Taxes

4.19.3 No Pending Deficiencies, Delinquencies, Assessments or Audits

4.19.4 No Extension of Limitation Period

4.19.5 Withholding Requirements Satisfied

4.19.6 Foreign Person

4.19.7 Tax Exempt Entity

4.19.8 Collapsible Corporation

4.19.9 Parachute Payments

4.19.10 S Corporation

4.19.11 Personal Service Corporation

4.19.12 Personal Holding Company

4.20 Compliance with Laws

4.21 Finder's Fee

4.22 Litigation

4.23 Condition of Fixed Assets

4.24 Banking Relations

4.25 Ownership Interests of Interested Persons; Affiliations

4.26 Investments in Competitors

4.27 Environmental Matters

4.28 Certain Payments

4.29 No affiliation with NASD Member

4.30 Full Disclosure

ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS

5.1 Validity; Shareholder Capacity

5.2 No Violation

5.3 Personal Holding Company; Control of Related Businesses

5.4 Transfers of Dakin Capital Stock

5.5 Consents

5.6 Certain Payments

5.7 Ownership of Interested Persons; Affiliations

5.8 Investments in Competitors

5.9 Disposition of LCNB Shares

ARTICLE VI REPRESENTATIONS AND WARRANTIES OF LCNB

6.1 Organization and Good Standing

6.2 Capitalization

6.3 Corporate Power and Authorization

6.4 No Violation

6.5 Shares to be Issued

6.6 SEC Filings

6.7 Current Plans or Intentions

6.8 Governmental Authorities; Consents

6.9 Disclosure

ARTICLE VII COVENANTS OF DAKIN AND THE SHAREHOLDERS

7.1 Consummation of Agreement

7.2 Business Operations

7.3 Access

7.4 Notification of Certain Matters

7.5 Amendment of Schedules

7.6 Approvals of Third Parties

7.7 Employee Matters

7.8 Contracts

7.9 Capital Assets; Payments of Liabilities

7.10 Mortgages, Liens and Guaranties

7.11 Acquisition Proposals

7.12 Distributions and Repurchases

7.13 Requirements to Effect the Merger

7.14 Shareholder Approval

ARTICLE VIII COVENANTS OF LCNB

8.1 Consummation of Agreement

8.2 Requirements to Effect Merger

8.3 Notification of Certain Matters

8.4 Approvals of Third Parties

ARTICLE IX COVENANTS OF ALL PARTIES

9.1 Blue Sky; Securities Filings; Other Action

9.2 Employment Agreements

9.3 Option Agreement

9.4 Tax Treatment

ARTICLE X CONDITIONS PRECEDENT OF LCNB

10.1 Representations and Warranties

10.2 Covenants

10.3 Legal Opinions

10.4 Proceedings

10.5 No Material Adverse Change

10.6 Securities Approvals

10.7 Completion of Due Diligence

10.8 Government Approvals and Required Consents

10.9 Accounting Assurances

10.10 Closing Deliveries

10.11 Key Customer Contracts

ARTICLE XI CONDITIONS PRECEDENT OF DAKIN AND THE SHAREHOLDERS

11.1 Representations and Warranties

11.2 Covenants

11.3 Legal Opinion

11.4 Proceedings

11.5 Government Approvals and Required Consents

11.6 Closing Deliveries

ARTICLE XII CLOSING DELIVERIES

12.1 Time of the Closing

12.2 Deliveries of Dakin and the Shareholders

12.3 Deliveries of LCNB

ARTICLE XIII POST CLOSING MATTERS

13.1 Further Instruments of Transfer

13.2 Merger Tax Covenants

13.3 Employee Matters

13.4 Stock Option Plan

13.5 Surviving Company Board of Directors

13.6 LCNB Board of Directors

13.7 Chief Executive Officer of Surviving Company

ARTICLE XIV EFFECTIVE DATE OF MERGER

14.1

ARTICLE XV INDEMNIFICATION

15.1 Indemnification Obligation of Dakin

15.2 Procedure for Indemnification

15.3 Limitations on Indemnification

15.4 Remedies Not Exclusive

15.5 Tax Benefits; Insurance Proceeds

15.6 Payment of Indemnification Obligation

ARTICLE XVI PUBLICITY

ARTICLE XVII TERMINATION

17.1 Termination

17.2 Effect of Termination

ARTICLE XVIII NONDISCLOSURE OF CONFIDENTIAL INFORMATION

18.1 Nondisclosure

18.2 Damages

18.3 Survival

ARTICLE XIX FEDERAL SECURITIES LAW RESTRICTIONS ON LCNB COMMON STOCK

19.1 Investment Representation

19.2 Compliance with Law

19.3 Economic Risk; Sophistication

19.4 Accredited Investor Status

ARTICLE XX MISCELLANEOUS

20.1 Entire Agreement, Modification and Waiver

20.2 Consents

20.3 Assignment

20.4 Parties In Interest; No Third Party Beneficiaries

20.5 Severability

20.6 Survival of Representations, Warranties and Covenants

20.7 Governing Law

20.8 Captions

20.9 Notice

20.10 Choice of Forum

20.11 No Waiver; Remedies

20.12 Counterparts

20.13 Costs, Expenses and Legal Fees

AGREEMENT

AND PLAN OF MERGER

This Agreement and Plan of Merger (hereinafter referred to as the "Agreement") is made this 30th day of December, 1999 by and among Dakin Insurance Company, Inc., an Ohio corporation, with principal offices located at 24 E. Mulberry Street, P.O. Box 89, Lebanon, Ohio 45036-0089 (hereinafter referred to as "Dakin"); the undersigned shareholders of Dakin (referred to herein as the "Shareholders"); LCNB Corp., an Ohio corporation with principal offices at 2 North Broadway, Lebanon, Ohio 45036 (hereinafter referred to as "LCNB"); and Dakin Acquisition Corporation, an Ohio corporation wholly-owned by Lebanon Citizens National Bank (hereinafter referred to as the "Subsidiary").

WITNESSETH:

WHEREAS, the parties wish to effect a transaction under the authority and provisions of the corporation law of Ohio pursuant to which at the effective date, as defined herein, the Subsidiary will be merged with and into Dakin, which will become the Surviving Corporation (such merger is referred to herein as the "Merger"); and

WHEREAS, for federal income tax purposes, the parties intend the Merger to qualify as a reorganization within the meaning of Sections 368(a)(1)(A) and 368(a)(2)(E) of the Internal Revenue Code of 1986, as amended (the "Code").

NOW THEREFORE, in consideration of the mutual promises and covenants contained herein, the parties agree as follows:

ARTICLE I DEFINITIONS

Certain General Definitions. In addition to all other terms defined elsewhere in this Agreement, the following terms shall have the meanings set forth below:

(a) "actual knowledge", "have no actual knowledge of, "do not actually know of" and similar phrases shall mean (i) in the case of a natural person, the actual conscious awareness, or not, as the context requires, of the particular fact by such person, and (ii) in the case of an entity, the actual conscious awareness, or not, as the context requires, of the particular fact by any shareholder, director or executive officer of such entity.

(b) "Affiliate" with respect to any person shall mean a person that directly or indirectly through one or more intermediaries, controls, or is controlled by or is under common control with, such person.

(c) "best knowledge", "have no knowledge of", "do not know of" or "to the knowledge of" and similar phrases shall mean (i) in the case of a natural person, the particular fact was known, or not known, as the context requires, to such person after diligent investigation and inquiry by such person, and (ii) in the case of an entity, the particular fact was known, or not known, as the context requires, to any shareholder, director or executive officer of such entity after diligent investigation and inquiry.

(d) "Confidential Information" shall mean all trade secrets and other confidential and/or proprietary information of the particular person, including information derived from reports, investigations, research, codes, marketing and sales programs, financial projections, cost summaries, pricing formulae, contract analyses, financial information, projections, confidential filings with any state or federal agency, and all other confidential concepts, methods of doing business, ideas, materials or information prepared or performed for, by or on behalf of such person by its employees, officers, directors, agents, representatives, or consultants.

(e) "Environmental Laws" shall mean any laws or regulations pertaining to health or the environment, as in effect on the date hereof and the Effective Date, including without limitation (i) the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (42 U.S.C. Sections 9601 et seq.), as amended (including without limitation as amended pursuant to the Superfund Amendments and Reauthorization Act of 1986), and regulations promulgated thereunder, (ii) the Resource Conservation and Recovery Act of 1976 (42 U.S.C. Sections 6901 et seq., as amended), and regulations promulgated thereunder, (iii) statutes, rules or regulations, whether federal, state or local, applicable to Dakin's assets or operations that relate to asbestos or polychlorinated biphenyls, and (iv) the provisions contained in any similar state statutes or regulations relating to environmental matters applicable to Dakin's assets or operations.

(f) "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended.

(g) "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.

(h) "Internal Revenue Code" shall mean the Internal Revenue Code of 1986, as amended.

(i) "IRS" shall mean the Internal Revenue Service of the United States Department of the Treasury.

(j) "Material Adverse Effect" shall mean a material adverse effect on the applicable party's business, operations, condition (financial or otherwise) or results of operations, taken as a whole, in consideration of all relevant facts and circumstances.

(k) "ordinary course of business" shall mean the usual and customary way in which the applicable party has conducted its business in the past.

(l) "person" shall mean any natural person, corporation, partnership, joint venture, limited liability company, association, group, organization or other entity.

(m) "LCNB Common Stock" or "LCNB Stock" shall mean the common stock, without par value, of LCNB.

(n) "SEC" shall mean the United States Securities and Exchange Commission.

(o) "Securities Act" shall mean the Securities Act of 1933, as amended.

(p) "Tax Returns" shall include all federal, state, local or foreign income, excise, corporate, franchise, property, sales, use, payroll, withholding, provider, environmental, duties, value added and other tax returns (including information returns).

(q) "Dakin Capital Stock" shall mean the shares of capital stock of Dakin which are authorized, issued and outstanding as of the Effective Date.

(r) "Disclosure Schedules" shall mean the schedules of exceptions and other disclosures attached hereto as of the date hereof or otherwise delivered by Dakin and the Shareholders to LCNB, as such may be amended or supplemented from time to time pursuant to the provisions hereof. The information contained in the LCNB Disclosure Schedules is labeled to correspond with the Section numbers of this Agreement to which the disclosure relates.

ARTICLE II THE MERGER

2.1 Transfer of Property and Liabilities. Upon the Effective Date (as defined below) of the Merger, the separate existence of the Subsidiary shall cease; all of the outstanding shares of Dakin Capital Stock shall be exchanged for and converted into shares of LCNB Common Stock, as hereinafter provided; and upon the filing of the appropriate Certificate of Merger with the Secretary of State of Ohio, Dakin as the Surviving Corporation (the "Surviving Corporation") shall possess all of the rights, privileges, immunities, powers and purposes, and all of the property, real and personal, causes of action and every other asset of the Subsidiary, and shall assume and be liable for all of the liabilities, obligations and penalties of the Subsidiary, in accordance with the Ohio General Corporation Law ("OGCL").

2.2 Surviving Corporation. Following the Merger, the existence of the Surviving Corporation shall continue unaffected and unimpaired by the Merger, with all the rights, privileges, immunities and powers, subject to all of the duties and liabilities of a corporation organized under the laws of the State of Ohio. The officers and directors of the Subsidiary immediately prior to the Effective Date shall be the officers and directors of the Surviving Corporation. The Articles of Incorporation and Regulations of the Subsidiary shall be the Articles of Incorporation and Regulations of the Surviving Corporation from and after the Effective Date.

2.3 Principal Office. Following the Effective Date, the principal office of the Surviving Corporation shall be located in Waynesville, Warren County, Ohio.

2.4 State Law. The Surviving Corporation shall be an Ohio corporation, governed in all respects by the corporate laws of the State of Ohio.

ARTICLE III CONVERSION OF SHARES

3.1 Merger Consideration.

3.1.1 Initial Purchase Price. All of the shares of Dakin Capital Stock issued and outstanding as of the close of business on the business date immediately prior to the Effective Date shall, in the aggregate, without any action on the part of LCNB, the Subsidiary or any holder of such shares, be converted by the Merger into 16,002 shares (the "Shares") of LCNB Common Stock (the "Purchase Price"). The Purchase Price shall be allocated to the Shareholders based upon each such Shareholder's percentage record ownership of Dakin Capital Stock at the Effective Date.

3.1.2 Purchase Price Adjustments. The Purchase Price is based upon Dakin's 1999 year-end shareholders' deficit being no more than $300,000. Such year-end deficit shall be determined by generally accepted accounting principles ("GAAP") by Dakin's independent accounting firm to LCNB's sole satisfaction. In the event the 1999 year-end shareholders' deficit is greater than $300,000, the Purchase Price will be adjusted as follows: for every $1.00 over $300,000, such dollar amount over $300,000 shall be divided by 80 to determine the number of shares of LCNB Common Stock to be deducted from the Purchase Price. The number of shares to be deducted shall be a whole number of shares, and in the event it is not a whole number, such number of shares shall be rounded up to the nearest whole number divisable by three.

3.2 Private Placement of Securities. The Shares have not been registered under the Securities Act of 1933 or any applicable state securities laws, but will be issued pursuant to Regulation D promulgated under the Securities Act of 1933. The Shares are subject to the restrictions on transfer contained in this Agreement and certificates representing the Shares shall bear an appropriate legend to the effect that such shares are subject to the terms of this Agreement.

3.3 Exchange of Certificates. After the Effective Date, each holder of a certificate or certificates for shares of Dakin Capital Stock, upon surrender of the same duly transmitted to LCNB's stock transfer agent (or in lieu of surrendering such certificates in the case of lost, stolen, destroyed or mislaid certificates, upon execution of such documentation as may be reasonably required by LCNB's stock transfer agent), shall be entitled to receive in exchange therefor a certificate or certificates representing the number of whole shares of LCNB Common Stock into which such holder's shares of Dakin Capital Stock shall have been converted by the Merger. Until so surrendered, each outstanding certificate that prior to the time the Merger becomes effective represented shares of Dakin Capital Stock shall be deemed for all corporate purposes to evidence ownership of the number of full shares of LCNB Common Stock into which the same shall have been converted; provided, however, that dividends or distributions otherwise payable with respect to shares of LCNB Common Stock into which Dakin Capital Stock shall have been so converted shall be paid with respect to such shares only when the certificate or certificates evidencing any such shares of Dakin Capital Stock shall have been so surrendered (or in lieu of surrendering such certificates in the case of lost, stolen, destroyed or mislaid certificates, upon execution of such documentation as may be reasonably required by LCNB), and, thereupon, any such dividends and distributions shall be paid, without interest, to the holder entitled thereto, subject however to the operation of any applicable escheat or similar laws relating to unclaimed funds.

ARTICLE IV REPRESENTATIONS AND WARRANTIES OF DAKIN AND THE SHAREHOLDERS

Dakin and the Shareholders, jointly and severally, represent and warrant to LCNB that the representations and warranties set forth in this Article IV are true and correct as of the date hereof. The parties agree that where reference is made to the Disclosure Schedules herein, the information contained therein shall be for disclosure purposes only and shall not in any way modify or limit the representations and warranties set forth in this Article IV, nor affect the obligations of the Shareholders to indemnify LCNB or the Surviving Corporation therefor.

4.1 Organization and Good Standing; Qualification. Dakin is a corporation duly organized, validly existing and in good standing under the laws of its state of organization, with all requisite corporate power and authority to carry on the business in which it is engaged, to own the properties it owns, to execute and deliver this Agreement and to consummate the transactions contemplated hereby. Dakin is not duly qualified and licensed to do business in any other jurisdiction. Dakin does not have any assets, employees or offices in any state other than the state of its organization.

4.2 Capitalization. A full and complete description of the Dakin Capital Stock and a full and complete description of the record and beneficial ownership thereof, is set forth in the Disclosure Schedules. Except as set forth in the Disclosure Schedules, all Dakin Capital Stock is owned free and clear of all security interests, liens, adverse claims, encumbrances, equities, proxies and shareholders' agreements. Each outstanding share of Dakin Capital Stock has been legally and validly issued and is fully paid and nonassessable. Fifty-five (55) shares of Dakin Capital Stock are owned by Dakin in treasury. No shares of Dakin Capital Stock have been issued or disposed of in violation of the preemptive rights, rights of first refusal or similar rights of any of Dakin's shareholders. Dakin has no bonds, debentures, notes or other obligations the holders of which have the right to vote (or are convertible into or exercisable for securities having the right to vote) with the Shareholders on any matter.

4.3 Transactions in Capital Stock. Dakin has not acquired any Dakin Capital Stock since January 1, 1999. Except as described in the Disclosure Schedules, there exist no options, warrants, subscriptions or other rights to purchase, or securities convertible into or exchangeable for, any of the authorized or outstanding securities of Dakin, and no option, warrant, call, conversion right or commitment of any kind exists which obligates Dakin to issue any of its authorized but unissued capital stock. Dakin has no obligation (contingent or otherwise) to purchase, redeem or otherwise acquire any of its equity securities or any interests therein or to pay any dividend or make any distribution in respect thereof. Neither the equity structure of Dakin nor the relative ownership of shares among any of its shareholders has been altered or changed in contemplation of the Merger.

4.4 Continuity of Business Enterprise. There has not been any sale, distribution or spin-off of significant assets of Dakin other than in the ordinary course of business within the two years preceding the date of this Agreement.

4.5 Corporate Records. The copies of the Articles of Incorporation and Regulations, and all amendments thereto, of Dakin that have been delivered or made available to LCNB are true, correct and complete copies thereof, as in effect on the date hereof. The minute books of Dakin, copies of which have been delivered or made available to LCNB, contain accurate minutes of all meetings of, and accurate consents to all actions taken without meetings by, the Board of Directors (and any committees thereof) and the shareholders of Dakin since its formation.

4.6 Authorization and Validity. The execution, delivery and performance by Dakin of this Agreement and the other agreements contemplated hereby, and the consummation of the transactions contemplated hereby and thereby, have been duly authorized by Dakin. This Agreement has been duly executed and delivered by Dakin and constitutes the legal, valid and binding obligation of Dakin enforceable against Dakin in accordance with its terms, except as may be limited by applicable bankruptcy, insolvency or similar laws affecting creditors' rights generally or the availability of equitable remedies. Dakin has obtained, in accordance with applicable law and its Articles of Incorporation and Regulations, the approval of its Board of Directors and will obtain prior to the Closing the approval of such shareholders, necessary to the consummation of the transactions contemplated hereby.

4.7 No Violation. Neither the execution, delivery or performance of this Agreement or the other agreements contemplated hereby nor the consummation of the transactions contemplated hereby or thereby will (a) conflict with, or result in a violation or breach of the terms, conditions or provisions of, or constitute a default under, the Articles of Incorporation or Regulations of Dakin, (b) conflict with, or result in a violation or breach of the terms, conditions or provisions of, or constitute a default under, any agreement, indenture or other instrument under which Dakin is bound or to which any of the assets of Dakin are subject, or result in the creation or imposition of any security interest, lien, charge or encumbrance upon any of the assets of Dakin or (c) violate or conflict with any judgment, decree, order, statute, rule or regulation of any court or any public, governmental or regulatory agency or body.

4.8 Consents. Except for the filing of the Certificate of Merger with the Secretary of State of Ohio, approvals by the appropriate insurance regulators and those consents set forth in the Disclosure Schedules, no consent, authorization, approval, permit or license of, or filing with, any governmental or public body or authority, any lender or lessor or any other person or entity is required to authorize, or is required in connection with, the execution, delivery and performance of this Agreement or the other agreements contemplated under this Agreement on the part of Dakin.

4.9 Financial Statements. Dakin has furnished to LCNB its tax returns for the past five years, unaudited statements of income for the past two years, and an unaudited interim balance sheet dated as of September 30, 1999 (the "Dakin Balance Sheet" and the date thereof shall be referred to as the "Dakin Balance Sheet Date") (such tax returns, unaudited statements of income and the Dakin Balance Sheet, collectively, the "Financial Statements"), copies of which are included in the Disclosure Schedules. The Financial Statements fairly present the financial condition and results of operations of Dakin as of the dates and for the periods indicated and have been prepared using GAAP, applied on a consistent basis with prior periods, except as otherwise indicated in the Financial Statements.

4.10 Liabilities and Obligations. The Financial Statements reflect all liabilities of Dakin, accrued, contingent or otherwise that would be required to be reflected on a balance sheet, or in the notes thereto, using GAAP, applied on a consistent basis with prior periods, except for liabilities and obligations incurred in the ordinary course of business since the Dakin Balance Sheet Date. Except as set forth in the Financial Statements, Dakin is not obligated in any way to provide funds in connection with any guarantee of, or to assume, any debt, obligation or dividend of any other person, corporation, association, partnership, limited liability company, joint venture, trust or other entity. Dakin does not know of any valid basis for the assertion of any other claims against it or any other liabilities of any nature or for any amount.

4.11 Employee Matters.

4.11.1 Cash Compensation. The Disclosure Schedules contain a complete and accurate list of the names, titles and annual cash compensation as of December 31, 1998, including without limitation wages, salaries, bonuses (discretionary and formula) and other cash compensation (the "Cash Compensation") of all employees of Dakin, and the amounts paid to any independent contractor of Dakin, together with a description of the material terms of any such independent contractor's agreement or relationship with Dakin, during the last twelve months. In addition, the Disclosure Schedules contain a complete and accurate description of (i) all increases in Cash Compensation of employees of Dakin during the current fiscal year and the immediately preceding fiscal year and (ii) any promised increases in Cash Compensation of employees and/or independent contractors of Dakin that have not yet been effected.

4.11.2 Compensation Plans. The Disclosure Schedules contain a complete and accurate list of all compensation plans, arrangements or practices (the "Compensation Plans") sponsored by Dakin or to which Dakin contributes on behalf of its employees. The Compensation Plans include, without limitation, all plans, arrangements or practices that provide for severance pay, deferred compensation, incentive, bonus or performance awards, and stock ownership or stock options. Dakin has provided or made available to LCNB a copy of each written Compensation Plan and a written description of each unwritten Compensation Plan. Each of the Compensation Plans can be terminated or amended at will by Dakin.

4.11.3 Employment Agreements. Except as set forth in the Disclosure Schedules, with copies of such agreements included therein, Dakin is not a party to any employment agreement ("Employment Agreements") with respect to any of its employees. Employment Agreements include without limitation employee leasing agreements, employee services agreements and noncompetition agreements.

4.11.4 Employee Policies and Procedures. The Disclosure Schedules contain a complete and accurate list of all employee manuals and all material policies, procedures and work-related rules (the "Employee Policies and Procedures") that apply to employees of Dakin. Dakin has provided or made available to LCNB a copy of all written Employee Policies and Procedures and a written description of all material unwritten Employee Policies and Procedures.

4.11.5 Unwritten Amendments. No material unwritten amendments have been made, whether by oral communication, pattern of conduct or otherwise, with respect to any Compensation Plans or Employee Policies and Procedures.

4.11.6 Labor Compliance. Dakin has been and is in compliance with all applicable laws, rules, regulations and ordinances respecting employment and employment practices, terms and conditions of employment and wages and hours. Dakin is not liable for any arrears of wages or penalties for failure to comply with any of the foregoing. Dakin has not engaged in any unfair labor practice or discriminated on the basis of race, color, religion, sex, national origin, age, disability or handicap in its employment conditions or practices. There are no (i) unfair labor practice charges or complaints or racial, color, religious, sex, national origin, age, disability or handicap discrimination charges or complaints pending or, to the actual knowledge of Dakin, threatened against Dakin before any federal, state or local court, board, department, commission or agency (nor does any valid basis therefor exist) or (ii) existing or threatened labor strikes, disputes, grievances, controversies or other labor troubles affecting Dakin (nor does any valid basis therefor exist).

4.11.7 Unions. Dakin has never been a party to any agreement with any union, labor organization or collective bargaining unit. No employees of Dakin are represented by any union, labor organization or collective bargaining unit. None of the employees of Dakin has threatened to organize or join a union, labor organization or collective bargaining unit.

4.12 Employee Benefit Plans.

4.12.1 Identification. The Disclosure Schedules contain a complete and accurate list of all employee benefit plans (within the meaning of Section 3(3) of ERISA) sponsored by Dakin or to which Dakin contributes on behalf of its employees and all employee benefit plans previously sponsored or contributed to on behalf of its employees within the three years preceding the date hereof (the "Benefit Plans"). Dakin has provided or made available to LCNB copies of all plan documents, determination letters, pending determination letter applications, trust instruments, insurance contracts, administrative services contracts, annual reports, actuarial valuations, summary plan descriptions, summaries of material modifications, administrative forms and other documents that constitute a part of or are incident to the administration of the Benefit Plans. In addition, Dakin has provided or made available to LCNB a written description of all existing practices engaged in by Dakin that constitute Benefit Plans. Subject to the requirements of the Internal Revenue Code and ERISA, each of the Benefit Plans can be terminated or amended at will by Dakin. No unwritten amendment exists with respect to any Benefit Plan.

4.12.2 Administration. Each Benefit Plan has been administered and maintained in compliance with all applicable laws, rules and regulations. Dakin and the Shareholders have made all necessary filings, reports and disclosures pursuant to and have complied with all requirements of the IRS Voluntary Compliance Resolution Program with respect to all applicable Benefit Plans.

4.12.3 Examinations. Dakin has not received any notice that any Benefit Plan is currently the subject of an audit, investigation, enforcement action or other similar proceeding conducted by any state or federal agency.

4.12.4 Prohibited Transactions. No prohibited transactions (within the meaning of Section 4975 of the Internal Revenue Code or Sections 406 and 407 of ERISA) have occurred with respect to any Benefit Plan.

4.12.5 Claims and Litigation. No pending or threatened, claims, suits or other proceedings exist with respect to any Benefit Plan other than normal benefit claims filed by participants or beneficiaries.

4.12.6 Qualification. Dakin has received all required determination letters and rulings from the IRS for each of the Benefit Plans intended to be qualified within the meaning of Section 401(a) of the Internal Revenue Code and/or tax-exempt within the meaning of Section 501 (a) of the Internal Revenue Code. No proceedings exist or have been threatened that could result in the revocation of any such favorable determination letter or ruling.

4.12.7 Funding Status. No accumulated funding deficiency (within the meaning of Section 412 of the Internal Revenue Code), whether or not waived, exists with respect to any Benefit Plan or any plan sponsored by any member of a controlled group (within the meaning of Section 412(n)(6)(B) of the Internal Revenue Code) in which Dakin is a member (a "Controlled Group"). With respect to each Benefit Plan subject to Title IV of ERISA, the assets of each such plan are at least equal in value to the present value of accrued benefits determined on an ongoing basis as of the date hereof. Dakin does not sponsor any Benefit Plan described in Section 501(c)(9) of the Internal Revenue Code. None of the Benefit Plans are subject to actuarial assumptions.

4.12.8 Excise Taxes. Neither Dakin nor any member of a Controlled Group has any liability to pay excise taxes with respect to any Benefit Plan under applicable provisions of the Code or ERISA.

4.12.9 Multiemployer Plans. Neither Dakin nor any member of a Controlled Group is or ever has been obligated to contribute to a multiemployer plan within the meaning of Section 3(37) of ERISA.

4.12.10 PBGC. None of the Benefit Plans is subject to the requirements of Title IV of ERISA.

4.12.11 Retirees. Except as set forth in the Disclosure Schedules, Dakin has no obligation or commitment to provide medical, dental or life insurance benefits to or on behalf of any of its employees who may retire or any of its former employees who have retired except as may be required pursuant to the continuation of coverage provisions of Section 4980B of the Internal Revenue Code and Sections 601 through 608 of ERISA.

4.13 Absence of Certain Changes. Except as set forth on the Disclosure Schedules, since the Dakin Balance Sheet Date, Dakin has not:

(a) suffered a Material Adverse Effect, whether or not caused by any deliberate act or omission of Dakin or a Shareholder;

(b) contracted for the purchase of any capital asset having a cost in excess of $10,000 or made any single capital expenditure in excess of $10,000;

(c) incurred any indebtedness for borrowed money (other than short-term borrowing in the ordinary course of business), or issued or sold any debt securities;

(d) incurred or discharged any material liabilities or obligations except in the ordinary course of business;

(e) paid any amount on any indebtedness prior to the due date, forgiven or canceled any claims or any debt in excess of $10,000, or released or waived any rights or claims except in the ordinary course of business;

(f) mortgaged, pledged or subjected to any security interest, lien, lease or other charge or encumbrance any of its properties or assets (other than statutory liens arising in the ordinary course of business or other liens that do not materially detract from the value or interfere with the use of such properties or assets);

(g) suffered any damage or destruction to or loss of any assets (whether or not covered by insurance) that has, individually or in the aggregate, resulted in a Material Adverse Effect;

(h) acquired or disposed of any assets having an aggregate value in excess of $10,000, except in the ordinary course of business;

(i) written up or written down the carrying value of any of its assets, other than accounts receivable in the ordinary course of business;

(j) changed the costing system or depreciation methods of accounting for its assets in any material respect;

(k) lost or terminated any employee, customer or supplier that has, individually or in the aggregate, resulted in a Material Adverse Effect;

(l) increased the compensation of any director, officer, key employee or consultant;

(m) increased the compensation of any employee (except for increases in the ordinary course of business consistent with past practice) or hired any new employee who is expected to receive annualized compensation of at least $15,000;

(n) made any payments to or loaned any money to any employee, officer, director or shareholder;

(o) formed or acquired or disposed of any interest in any corporation, partnership, joint venture or other entity;

(p) taken any actions or made any changes to change its status of being in trust, as that term is customarily used in the insurance agency business.

(q) redeemed, purchased or otherwise acquired, or sold, granted or otherwise disposed of, directly or indirectly, any of its capital stock or securities or any rights to acquire such capital stock or securities, or agreed to change the terms and conditions of any such capital stock, securities or rights;

(r) entered into any agreement providing for total payments in excess of $10,000 in any 12 month period with any person or group, or modified or amended in any material respect the terms of any such existing agreement, except in the ordinary course of business;

(s) entered into, adopted or amended any Employee Benefit Plan, except as contemplated hereby or the other agreements contemplated hereby; or

(t) entered into any other commitment or transaction or experienced any other event that would materially interfere with its performance under this Agreement or any other agreements or document executed or to be executed pursuant to this Agreement, or otherwise has, individually or in the aggregate, resulted in a Material Adverse Effect.

4.14 Title; Leased Assets.

4.14.1 Real Property. Dakin does not own any interest (other than leasehold interests described in the Disclosure Schedules) in real property. The leased real property described in the Disclosure Schedules constitutes the only real property used for the conduct of Dakin's business.

4.14.2 Personal Property. Except as set forth in the Disclosure Schedules, Dakin has good, valid and marketable title to all the personal property owned by Dakin, all of which is reflected in the Financial Statements (collectively, the "Personal Property"). The Personal Property and any personal property leased by Dakin constitute the only personal property necessary for the conduct of Dakin's business. On the Effective Date, Dakin's interest in the Personal Property shall be free and clear of all security interests, liens, claims and encumbrances, other than statutory liens arising in the ordinary course of business or other liens that do not materially detract from the value or interfere with the use of such properties or assets.

4.14.3 Leases. The Disclosure Schedules set forth a list and brief description of (i) all leases of real property and (ii) leases of personal property involving rental payments within any 12 month period in excess of $5,000, in either case to which Dakin is a party, either as lessor or lessee. All such leases are valid and enforceable in accordance with their respective terms except as may be limited by applicable bankruptcy, insolvency or similar laws affecting creditors' rights generally or the availability of equitable remedies.

4.15 Commitments.

4.15.1 Commitments; Defaults. Any of the following to which Dakin is a party or is bound by, or which any of the shares of Dakin Capital Stock are subject to, or which the assets or the business of Dakin are bound by, whether or not in writing, are listed in the Disclosure Schedules (collectively "Commitments"):

(a) any partnership or joint venture agreement;

(b) any guaranty or suretyship, indemnification or contribution agreement or performance bond;

(c) any debt instrument, loan agreement or other obligation relating to indebtedness for borrowed money or money lent or to be lent to another;

(d) any contract to purchase real property;

(e) any agreement with dealers or sales or commission agents, public relations or advertising agencies, accountants or attorneys (other than in connection with this Agreement and the transactions contemplated hereby) involving total payments within any 12 month period in excess of $5,000 and which is not terminable on 30 days' notice or without penalty;

(f) any agreement relating to any material matter or transaction in which an interest is held by a person or entity that is an Affiliate of Dakin or any Shareholder;

(g) any agreement for the acquisition of services, supplies, equipment, inventory, fixtures or other property involving more than $5,000 in the aggregate;

(h) any powers of attorney;

(i) any contracts containing noncompetition covenants;

(j) any agreement providing for the purchase from a supplier of all or substantially all of the requirements of Dakin of a particular product or service; or

(k) any other agreement or commitment not made in the ordinary course of business or that is material to the business, operations, condition (financial or otherwise) or results of operations of Dakin.

True, correct and complete copies of all written Commitments, and true, correct and complete written descriptions of all oral Commitments, have heretofore been delivered or made available to LCNB. There are no existing or asserted defaults, events of default or events, occurrences, acts or omissions that, with the giving of notice or lapse of time or both, would constitute defaults by Dakin or any other party to a Commitment, and no penalties have been incurred nor are amendments pending with respect to the Commitments. The Commitments are in full force and effect and are valid and enforceable obligations of Dakin and the other parties thereto in accordance with their respective terms, and no defenses, off-sets or counterclaims have been asserted or may be made by any party thereto (other than Dakin), nor has Dakin waived any rights thereunder.

4.15.2 No Cancellation or Termination of Commitment. Neither Dakin nor any Shareholder has received notice of any plan or intention of any other party to any Commitment to exercise any right to cancel or terminate any Commitment, and Dakin does not know of any fact that would justify the exercise of such a right; and neither Dakin nor any Shareholder currently contemplates, or has reason to believe any other person currently contemplates, any amendment or change to any Commitment.

4.16 Insurance. Dakin carries property, liability, workers' compensation and such other types of insurance pursuant to the insurance policies listed and briefly described in the Disclosure Schedules (the "Insurance Policies"). The Insurance Policies are all of the insurance polices relating to the business of Dakin. All of the Insurance Policies are issued by insurers of recognized responsibility, and are valid and enforceable policies, except as may be limited by applicable bankruptcy, insolvency or similar laws affecting creditors' rights generally or the availability of equitable remedies. All Insurance Policies shall be maintained in force without interruption up to and including the Effective Date. True, complete and correct copies of all Insurance Policies have been provided or made available to LCNB. Neither Dakin nor any Shareholder has received any notice or other communication from any issuer of any Insurance Policy canceling such policy, materially increasing any deductibles or retained amounts thereunder, or materially increasing the annual or other premiums payable thereunder and no such cancellation or increase of deductibles, retainages or premiums is threatened. There are no outstanding claims, settlements or premiums owed against any Insurance Policy, or if there are, Dakin has given all notices or has presented all potential or actual claims under any Insurance Policy in due and timely fashion. The Disclosure Schedules set forth a list of all claims under any Insurance Policy in excess of $10,000 per occurrence filed by Dakin during the immediately preceding three-year period.

4.17 Intellectual Property.

(a) The Disclosure Schedules contain a complete and accurate list of all of Dakin's Intellectual Property, as defined herein. Dakin owns all right, title and interest in and to, or holds valid licenses, if any, in and to the Intellectual Property.

(b) Dakin has not, as of and since the date upon which it acquired any of the Intellectual Property, (i) transferred, conveyed, sold, assigned, pledged, mortgaged or granted a security interest in any of the Intellectual Property to any third party, (ii) entered into any license, franchise or other agreement with respect to any of the Intellectual Property with any third person, or (iii) otherwise encumbered any of the Intellectual Property. Dakin has maintained and enforced its rights in the Intellectual Property in accordance with its customary practices in order to safeguard the secrecy of all aspects of the Intellectual Property that are considered to be trade secrets.

(c) The conduct of the business of Dakin as currently conducted does not, to Dakin's knowledge, conflict, misappropriate or infringe in any way with any intellectual property right of any third party that, individually or in the aggregate, is reasonably likely to have a material adverse effect, and there is no claim, suit, action or proceeding pending or, to the knowledge of Dakin, threatened against Dakin (i) alleging that use of the Intellectual Property or any intellectual property licenses conflicts or infringes in any way with any third party's intellectual property rights, or (ii) challenging Dakin's ownership of or right to use or the validity of any Intellectual Property. There are no conflicts, misappropriations, infringements or other violations by any third party of any of the Intellectual Property owned by or licensed by or to Dakin, and to Dakin and the Shareholders' actual knowledge, none are threatened or pending.

(d) Each copyright registration and trademark registration and each application therefor listed in the Disclosure Schedules is valid, subsisting and in proper form, and has been duly maintained, including the submission of all necessary filings in accordance with the legal and administrative requirements of the appropriate jurisdictions. Dakin has taken all of the proper precautions to maintain the secrecy of its Intellectual Property that are considered to be trade secrets, and to protect their trade secrets from disclosure to the full extent required under applicable law. There have been no failures in complying with such requirements and no Copyright or Trademark, each as defined herein, has lapsed and there has been no cancellation or abandonment thereof.

For the purpose of this Agreement, "Intellectual Property" shall be defined as (a) all copyrights, copyright registrations, copyright mask works and copyright applications (the "Copyrights"); and (b) all registered and unregistered trade names, trademarks, service marks, product designations, corporate names, trade dress, logos, slogans, designs and general intangibles of like nature, together with all registrations and recordings and all applications for registration therefor and all translations, adaptations, derivatives and combinations thereof (the "Trademarks").

4.18 Year 2000 Compliance. Dakin has reviewed all computer applications used in the business and operations of Dakin, that could be adversely affected by an inability to recognize and perform properly date sensitive functions involving dates prior to and after December 31, 1999 (the "Year 2000 Issue"). To the best of the Shareholders' and Dakin's knowledge, the Year 2000 Issue will not result in any Material Adverse Effect on Dakin. To Dakin and the Shareholders' actual knowledge, no computer applications used by any of Dakin's material suppliers, customers, or vendors which may materially affect the business operations of Dakin have a Year 2000 Issue that will have a Material Adverse Effect on Dakin, or affect its performance of any product of Dakin in any manner which could reasonably be expected to have a Material Adverse Effect on Dakin.

4.19 Taxes.

4.19.1 Filing of Tax Returns. Dakin has duly and timely filed (in accordance with any extensions duly granted by the appropriate governmental agency, if applicable) with the appropriate governmental agencies all Tax Returns and reports required to be filed by the United States or any state or any political subdivision thereof or any foreign jurisdiction. All such Tax Returns or reports are complete and accurate in all material respects and properly reflect the taxes of Dakin for the periods covered thereby. True and correct copies of such Tax Returns for the past five taxable years have heretofore been delivered to LCNB.

4.19.2 Payment of Taxes. Except for such items as Dakin may be disputing in good faith by proceedings in compliance with applicable law, each of which is described in Disclosure Schedules, (i) Dakin has paid all taxes, penalties, assessments and interest that have become due with respect to any Tax Returns that it has filed and has properly accrued on its books and records for all of the same that have not yet become due and (ii) Dakin is not delinquent in the payment of any tax, assessment or governmental charge.

4.19.3 No Pending Deficiencies, Delinquencies, Assessments or Audits. Dakin has not received any notice that any tax deficiency or delinquency has been asserted against Dakin. There is no unpaid assessment, proposal for additional taxes, deficiency or delinquency in the payment of any of the taxes of Dakin that could be asserted by any taxing authority. There is no taxing authority audit of Dakin pending or threatened, and the results of any completed audits are properly reflected in the Financial Statements. Dakin has not violated any federal, state, local or foreign tax law.

4.19.4 No Extension of Limitation Period. Dakin has not granted an extension to any taxing authority of the limitation period during which any tax liability may be assessed or collected.

4.19.5 Withholding Requirements Satisfied. All monies required to be withheld by Dakin and paid to governmental agencies for all income, social security, unemployment insurance, sales, excise, use, and other taxes have been collected or withheld and paid to the respective governmental agencies.

4.19.6 Foreign Person. Neither Dakin nor any Shareholder is a foreign person, as such term is referred to in Section 1445(f)(3) of the Internal Revenue Code.

4.19.7 Tax Exempt Entity. None of the assets of Dakin and none of the Assets are subject to a lease to a "tax exempt entity" as such term is defined in Section 168(h)(2) of the Internal Revenue Code.

4.19.8 Collapsible Corporation. Dakin has not at any time consented, and the Shareholders will not permit Dakin to elect, to have the provisions of Section 341(f)(2) of the Internal Revenue Code apply to it.

4.19.9 Parachute Payments. No payment required or contemplated to be made by Dakin will be characterized as an "excess parachute payment" within the meaning of Section 280(b)(1) of the Internal Revenue Code.

4.19.10 S Corporation. Dakin is not an "S" corporation under Section 1362(a) of the Internal Revenue Code.

4.19.11 Personal Service Corporation. Dakin is not a personal service corporation subject to the provisions of Section 269A of the Internal Revenue Code.

4.19.12 Personal Holding Company. Dakin is not or has not been a personal holding company within the meaning of Section 542 of the Internal Revenue Code.

4.20 Compliance with Laws. Dakin has complied with all applicable laws and regulations and has filed with the proper authorities all necessary statements and reports except where the failure to so comply or file would not, individually or in the aggregate, result in a Material Adverse Effect. There are no existing violations by Dakin of any federal, state or local law or regulation that could, individually or in the aggregate, result in a Material Adverse Effect. Dakin possesses all necessary licenses, franchises, permits and governmental authorizations for the conduct of Dakin's business as now conducted, all of which are listed (with expiration dates, if applicable) in the Disclosure Schedules. The transactions contemplated by this Agreement will not result in a default under or a breach or violation of, or adversely affect the rights and benefits afforded by any such licenses, franchises, permits or government authorizations, except for any such default, breach or violation that would not, individually or in the aggregate, have a Material Adverse Effect. Since January 1, 1994, Dakin has not received any notice from any federal, state or other governmental authority or agency having jurisdiction over its properties or activities, or any insurance or inspection body, that its operations or any of its properties, facilities, equipment, or business practices fail to comply with any applicable law, ordinance, regulation, building or zoning law, or requirement of any public or quasi-public authority or body, except where failure to so comply would not, individually or in the aggregate, have a Material Adverse Effect.

4.21 Finder's Fee. Dakin has not incurred any obligation for any finder's, broker's or agent's fee in connection with the transactions contemplated hereby.

4.22 Litigation. There are no legal actions or administrative proceedings or investigations instituted or threatened against Dakin, either affecting or that could affect the outstanding shares of Dakin Capital Stock, any of the assets of Dakin, or the operation, business, condition (financial or otherwise), or results of operations of Dakin which (i) if, successful, could, individually or in the aggregate, have a Material Adverse Effect or (ii) could adversely affect the ability of Dakin or any Shareholder to effect the transactions contemplated hereby. Neither Dakin nor any Shareholder is (a) subject to any continuing court or administrative order, judgment, writ, injunction or decree applicable specifically to Dakin or to its business, assets, operations or employees or (b) in default with respect to any such order, judgment, writ, injunction or decree. Dakin has no knowledge of any valid basis for any such action, proceeding or investigation. All claims made or threatened against Dakin in excess of its deductible are covered under its Insurance Policies.

4.23 Condition of Fixed Assets. All of the structures and equipment reflected in the Financial Statements and used by Dakin in its business are in good condition and repair, subject to normal wear and tear, and conform in all material respects with all applicable ordinances, regulations and other laws, and neither Dakin nor the Shareholders have actual knowledge of any latent defects therein.

4.24 Banking Relations. Set forth in the Disclosure Schedules is a complete and accurate list of all borrowing and investing arrangements that Dakin has with any bank or other financial institution, indicating with respect to each relationship the type of arrangement maintained (such as checking account, borrowing arrangements, safe deposit box, etc.) and the person or persons authorized in respect thereof.

4.25 Ownership Interests of Interested Persons; Affiliations. Except as set forth in the Disclosure Schedules, no officer, supervisory employee or director of Dakin, or their respective spouses, children or Affiliates, owns directly or indirectly, on an individual or joint basis, any interest in, has a compensation or other financial arrangement with, or serves as an officer or director of, any customer or supplier of Dakin or any organization that has a material contract or arrangement with Dakin.

4.26 Investments in Competitors. Neither Dakin nor any Shareholder owns directly or indirectly any interests or has any investment in any person that is a competitor of Dakin.

4.27 Environmental Matters. Neither Dakin nor any of its Assets are currently in violation of, or subject to any existing, pending or threatened investigation or inquiry by any governmental authority or to any remedial obligations under, any Environmental Laws.

4.28 Certain Payments. Neither Dakin nor any director, officer or employee of Dakin acting for or on behalf of Dakin, has paid or caused to be paid, directly or indirectly, in connection with the business of Dakin:

(a) to any government or agency thereof or any agent of any supplier or customer any bribe, kick-back or other similar payment; or

(b) any contribution to any political party or candidate (other than from personal funds of directors, officers or employees not reimbursed by their respective employers or as otherwise permitted by applicable law).

4.29 No affiliation with NASD Member. None of the Shareholders or officers or directors of Dakin has any affiliation or association with a member of the National Association of Securities Dealers, Inc.

4.30 Full Disclosure. No representation or warranty made by Dakin or the Shareholders in this Agreement or any Schedule or Exhibit hereto and no statement or certificate or memorandum furnished or to be furnished by Dakin or the Shareholders pursuant hereto or in connection with the transactions covered hereby contains or will contain any untrue statement of a material fact, or omit any material fact, the omission of which would be misleading.

ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS

Each Shareholder, severally and not jointly, as to himself only, (provided that this limitation shall not limit the representations and warranties of Article IV) represents and warrants to LCNB that the following, only insofar as they relate to an individual Shareholder (referred to in this Article V as "the Shareholder") and not to any other Shareholders, are true and correct as of the date hereof and agrees as follows:

5.1 Validity; Shareholder Capacity. This Agreement, the Shareholder Employment Agreement (as defined in Section 9.2), and each other agreement contemplated hereby or thereby have been or will be as of the Effective Date duly executed and delivered by the Shareholder and constitute or will constitute legal, valid and binding obligations of the Shareholder, enforceable against the Shareholder in accordance with their respective terms, except as may be limited by applicable bankruptcy, insolvency or similar laws affecting creditors' rights generally or the availability of equitable remedies. The Shareholder has legal capacity to enter into and perform this Agreement and his Shareholder Employment Agreement.

5.2 No Violation. Neither the execution, delivery or performance of this Agreement, the Shareholder Employment Agreement or the other agreements of the Shareholder contemplated hereby or thereby, nor the consummation of the transactions contemplated hereby or thereby, will (a) conflict with, or result in a violation or breach of the terms, conditions or provisions of, or constitute a default under, any agreement, indenture or other instrument under which the Shareholder is bound or to which any of his shares of Dakin Capital Stock are subject, or result in the creation or imposition of any security interest, lien, charge or encumbrance upon any of his shares of Dakin Capital Stock or (b) violate or conflict with any judgment, decree, order, statute, rule or regulation of any court or any public, governmental or regulatory agency or body.

5.3 Personal Holding Company; Control of Related Businesses. The Shareholder does not own his shares of Dakin Capital Stock, directly or indirectly, beneficially or of record, through a personal holding company. The Shareholder does not control another business that is in the same or similar line of business as Dakin or that has or is engaged in transactions with Dakin except transactions in the ordinary course of business.

5.4 Transfers of Dakin Capital Stock. Set forth in the Disclosure Schedules is a list of all transfers or other transactions involving Dakin Capital Stock since January 1, 1994. All transfers of Dakin Capital Stock by the Shareholder have been made for valid business reasons and not in anticipation or contemplation of the consummation of the transactions contemplated by this Agreement.

5.5 Consents. Except as may be required under the Exchange Act, the Securities Act, the OGBL and state securities laws, or otherwise disclosed pursuant to this Agreement, no consent, authorization, approval, permit or license of, or filing with, any governmental or public body or authority, or any other person is required to authorize, or is required in connection with, the execution, delivery and performance of this Agreement or the agreements contemplated hereby on the part of the Shareholder.

5.6 Certain Payments. The Shareholder has not paid or caused to be paid, directly or indirectly, in connection with the business of Dakin:

(a) to any government or agency thereof or any agent of any supplier or customer any bribe, kick-back or other similar payment; or

(b) any contribution to any political party or candidate (other than from personal funds not reimbursed by Dakin or as otherwise permitted by applicable law).

5.7 Ownership of Interested Persons; Affiliations. Except as set forth in the Disclosure Schedules, neither the Shareholder nor his spouse, children or Affiliates, owns directly or indirectly, on an individual or joint basis, any interest in, has a compensation or other financial arrangement with, or serves as an officer or director of, any customer or supplier of Dakin or any organization that has a material contract or arrangement with Dakin.

5.8 Investments in Competitors. The Shareholder does not own directly or indirectly any interests or have any investment in any person that is a competitor of Dakin.

5.9 Disposition of LCNB Shares. The Shareholder does not presently intend to dispose of any shares of LCNB Common Stock received as Merger Consideration and is not a party to any plan, arrangement or agreement for the disposition of such shares of LCNB Common Stock, except this Agreement.

ARTICLE VI REPRESENTATIONS AND WARRANTIES OF LCNB

LCNB represents and warrants to Dakin and to the Shareholders and their heirs, successors and assigns, that, except as may be set forth in the LCNB Disclosure Schedules, the following are true and correct as of the date hereof:

6.1 Organization and Good Standing. LCNB and the Subsidiary are corporations duly organized, validly existing and in good standing under the laws of the State of Ohio, respectively, and each are duly authorized to carry on the business presently conducted by it.

6.2 Capitalization. LCNB's authorized capital stock consists of 4 million shares of common stock, no par value, of which approximately 1,760,000 shares were issued and outstanding as of the close of business on the last business day prior to the date of this Agreement, all of which were fully paid and nonassessable.

6.3 Corporate Power and Authorization. The Board of Directors of LCNB, by resolution adopted by a vote of the directors at a meeting duly called and held in accordance with applicable law, has duly approved this Agreement, all in accordance with and as required by law and in accordance with the Articles of Incorporation and Regulations of LCNB. LCNB has the corporate power and authority to enter into this Agreement and to carry out its obligations hereunder subject to certain required regulatory approvals. This Agreement, when executed and delivered, will be duly authorized and will constitute a valid and binding obligation of LCNB, enforceable in accordance with its terms, except to the extent that (i) enforceability thereof may be limited by insolvency, reorganization, liquidation, bankruptcy, readjustment of debt or other laws of general application relating to or affecting the enforcement of creditors' rights, and (ii) the availability of certain remedies may be precluded by general principles of equity, subject, however, to the receipt of requisite regulatory approvals. LCNB as the sole shareholder of Subsidiary, shall cause Subsidiary to meet all of its obligations as set forth in this Agreement.

6.4 No Violation. Neither the execution of this Agreement, nor the consummation of the transactions contemplated hereby, (i) conflicts with, results in a breach of, violates or constitutes a material default under LCNB's Articles of Incorporation or Regulations or any federal, state or local law, statute, ordinance, rule, regulation or court or administrative order, or any agreement, arrangement, or commitment, to which LCNB or any of its property is subject or bound; (ii) results in the creation of or gives any person the right to create any lien, charge, encumbrance, security agreement or any other rights of others or other adverse interest upon any material right, property or asset belonging to LCNB; (iii) terminates or gives any person the right to terminate, amend, abandon, or refuse to perform any material agreement, arrangement or commitment to which LCNB is a party or by which LCNB's rights, properties or assets are subject or bound; or (iv) accelerates or modifies, or gives any party thereto the right to accelerate or modify, the time within which, or the terms according to which, LCNB is to perform any duties or obligations or receive any rights or benefits under any material agreements, arrangements or commitments.

6.5 Shares to be Issued. The Shares of LCNB Common Stock to be issued and delivered pursuant to this Agreement will, when so issued, be duly and validly issued, fully paid and nonassessable.

6.6 SEC Filings. LCNB has delivered to Dakin true and complete copies of its (i) Proxy Statement/Prospectus, as filed with the Securities and Exchange Commission ("SEC"), relating to the May 18, 1999 special shareholders meeting whereby LCNB shareholders adopted the reorganization of LCNB into a bank holding company structure and LCNB became an SEC reporting company under the Exchange Act; and (ii) all other reports, statements and registration statements (including Quarterly Reports on Form 10-Q and Current Reports on Form 8-K) filed by LCNB with the SEC since June 30, 1999 (collectively, the "SEC Filings").

6.7 Current Plans or Intentions. To the knowledge of LCNB neither LCNB nor any of its subsidiaries, affiliates or shareholders has taken or agreed to take any action that would prevent the Merger from constituting a transaction qualifying as a reorganization under Sections 368(a)(1)(A) and 368(a)(2)(E) of the Code and LCNB does not have any current plan or intention to take any action that will preclude such qualification.

6.8 Governmental Authorities; Consents. Except for the filing of the Certificate of Merger with the Secretary of State of Ohio and approvals by the appropriate bank and insurance regulators, LCNB is not required to submit any notice, report or other filing with any governmental authority in connection with the execution or delivery by it of this Agreement, the Certificate of Merger or the consummation of the transactions contemplated hereby or thereby. No approval or authorization of any governmental or regulatory authority or any other party or person (except the approval of the Agreement of Merger and Plan of Reorganization by the shareholders of Dakin and Surviving Corporation) is required to be obtained by LCNB or the Surviving Corporation in connection with their execution, delivery and performance of this Agreement, the Certificate of Merger or the transactions contemplated hereby or thereby.

6.9 Disclosure. No representation or warranty made by LCNB in this Agreement or exhibit hereto and no statement or certificate or memorandum furnished or to be furnished by LCNB pursuant hereto or in connection with the transactions covered hereby contains or will contain any untrue statement of a material fact, or omit any material fact, the omission of which would be misleading.

ARTICLE VII COVENANTS OF DAKIN AND THE SHAREHOLDERS

Dakin and the Shareholders, jointly and severally, agree that between the date hereof and the Effective Date (with respect to Dakin's covenants, the Shareholders agree to use their best efforts to cause Dakin to perform):

7.1 Consummation of Agreement. Dakin and the Shareholders shall use their best efforts to cause the consummation of the transactions contemplated hereby in accordance with their terms and conditions; provided, however, that this covenant shall not require Dakin or a Shareholder to make any expenditures that are not expressly set forth in this Agreement or otherwise contemplated herein.

7.2 Business Operations. Dakin shall operate its business in the ordinary course. Dakin and the Shareholders shall use their best efforts to preserve the business of Dakin intact. Neither Dakin nor any Shareholder shall take any action that would, individually or in the aggregate, result in a Material Adverse Effect. Dakin shall use its best efforts to preserve intact its relationships with customers, suppliers, employees and others having significant business relations with it, unless doing so would impair its goodwill or result, individually or in the aggregate, in a Material Adverse Effect. Dakin shall collect its receivables and pay its trade payables in the ordinary course of business consistent with past practice.

7.3 Access. Dakin and the Shareholders shall, at reasonable times during normal business hours and on reasonable notice, permit LCNB and its authorized representatives reasonable access to, and make available for inspection, all of the assets and business of Dakin, including its employees, customers and suppliers, and permit LCNB and its authorized representatives to inspect and, at LCNB's sole cost and expense, make copies of all documents, records and information with respect to the affairs of Dakin as LCNB and its representatives may request, all for the purpose of permitting LCNB to conduct a customary due diligence investigation on, and otherwise become familiar with, the business and assets and liabilities of LCNB.

7.4 Notification of Certain Matters. Dakin and the Shareholders shall promptly inform LCNB in writing of (a) any notice of or other communication relating to, a default or event that, with notice or lapse of time or both, would become a default, received by Dakin or any Shareholder subsequent to the date of this Agreement and prior to the Effective Date under any Commitment material to Dakin's condition (financial or otherwise), operations, assets, liabilities or business and to which it is subject; or (b) any material adverse change in Dakin's condition (financial or otherwise), operations, assets, liabilities or business.

7.5 Amendment of Schedules. Dakin shall have the continuing obligation until the Effective Date to supplement or amend promptly in the Disclosure Schedules with respect to any matter that would have been or would be required to be set forth or described in the Disclosure Schedules in order to not materially breach any representation, warranty or covenant of such party contained herein; provided that, no amendment or supplement to a schedule that constitutes or reflects a material adverse change to Dakin may be made unless LCNB consents to such amendment or supplement. For all purposes of this Agreement, the Disclosure Schedules hereto shall be deemed to be the Disclosure Schedules as amended or supplemented pursuant hereto. In the event that Dakin seeks to amend or supplement a Dakin Disclosure Schedule pursuant hereto and LCNB does not consent to such amendment or supplement, this Agreement shall be deemed terminated by mutual consent as set forth in Section 17.1.1 hereof.

7.6 Approvals of Third Parties. Dakin and the Shareholders shall use their best efforts to secure, as soon as practicable after the date hereof, all necessary approvals and consents of third parties to the consummation of the transactions contemplated hereby, including, without limitation, all necessary approvals and consents required under any real property and personal property leases.

7.7 Employee Matters. Dakin shall not, without the prior written approval of LCNB, except as required by law:

(a) increase the Cash Compensation of any Shareholder or other employee of Dakin (other than in the ordinary course of business and consistent with past practice);

(b) adopt, amend or terminate any Compensation Plan;

(c) adopt, amend or terminate any Employment Agreement;

(d) adopt, amend or terminate any Employee Policies and Procedures;

(e) adopt, amend or terminate any Employee Benefit Plan;

(f) take any action that could deplete the assets of any Employee Benefit Plan, other than payment of benefits in the ordinary course to participants and beneficiaries;

(g) fail to pay any premium or contribution due or with respect to any Employee Benefit Plan;

(h) fail to file any return or report with respect to any Employee Benefit Plan;

(i) institute, settle or dismiss any employment litigation except as could not, individually or in the aggregate, result in a Material Adverse Effect;

(j) enter into, modify, amend or terminate any agreement with any union, labor organization or collective bargaining unit; or

(k) take or fail to take any action with respect to any past or present employee of Dakin that would, individually or in the aggregate, result in a Material Adverse Effect.

7.8 Contracts. Except with LCNB's prior written consent, Dakin shall not assume or enter into any contract, lease, license, obligation, indebtedness, commitment, purchase or sale in excess of $10,000, nor will it waive any material right or cancel any material contract, debt or claim in excess of $10,000.

7.9 Capital Assets; Payments of Liabilities. Dakin shall not, without the prior written approval of LCNB, (a) acquire or dispose of any capital asset having a fair market value of $10,000 or more, or acquire or dispose of any capital asset outside of the ordinary course of business or (b) discharge or satisfy any lien or encumbrance or pay or perform any obligation or liability other than (i) liabilities and obligations reflected in the Financial Statements or (ii) current liabilities and obligations incurred in the usual and ordinary course of business since the Dakin Balance Sheet Date and, in either case (i) or (ii) above, only as required by the express terms of the agreement or other instrument pursuant to which the liability or obligation was incurred.

7.10 Mortgages, Liens and Guaranties. Dakin shall not, without the prior written approval of LCNB, enter into or assume any mortgage, pledge, conditional sale or other title retention agreement, permit any security interest, lien, encumbrance or claim of any kind to attach to any of its assets (other than statutory liens arising in the ordinary course of business and other liens that do not materially detract from the value or interfere with the use of such assets), whether now owned or hereafter acquired, or guarantee or otherwise become contingently liable for any obligation of another, except obligations arising by reason of endorsement for collection and other similar transactions in the ordinary course of business, or make any capital contribution or investment in any person.

7.11 Acquisition Proposals. Dakin and the Shareholders agree that from and after the date of this Agreement until the earliest to occur: (a) the Effective Date or (b) termination of this Agreement as provided in Article XVII herein; no Shareholder nor Dakin, nor any of its officers and directors shall, and the Shareholders and Dakin shall direct and use their best efforts to cause Dakin's employees, agents and representatives not to, initiate, solicit or encourage, directly or indirectly, any inquiries or the making or implementation of any proposal or offer (including, without limitation, any proposal or offer to its shareholders) with respect to a merger, acquisition, consolidation or similar transaction involving, or any purchase of all or any significant portion of the assets or any equity securities of, Dakin (any such proposal or offer being hereinafter referred to as an "Acquisition Proposal") or engage in any negotiations concerning, or provide any confidential information or data to, or have any discussions with, any person relating to an Acquisition Proposal, or otherwise facilitate any effort or attempt to make or implement an Acquisition Proposal; (b) that the Shareholders and Dakin will immediately cease and cause to be terminated any existing activities, discussions or negotiations with any parties conducted heretofore with respect to any of the foregoing; and (c) that the Shareholders and Dakin will notify LCNB immediately if any Acquisition Proposal is received by, any such information is requested from, or any such negotiations or discussions are sought to be initiated or continued with, Dakin or the Shareholders.

7.12 Distributions and Repurchases. No distribution, payment or dividend of any kind will be declared or paid by Dakin on or in connection with Dakin Capital Stock, nor will any repurchase of Dakin Capital Stock be approved or effected.

7.13 Requirements to Effect the Merger. Dakin and the Shareholders shall use their best efforts to take, or cause to be taken, all actions necessary to effect the Merger under applicable law, including without limitation the filing with the appropriate government officials of all necessary documents in form approved by counsel for the parties to this Agreement.

7.14 Shareholder Approval. Dakin shall call a meeting of its shareholders for the purpose of voting upon this Agreement and the Merger.

ARTICLE VIII COVENANTS OF LCNB

LCNB agrees that between the date hereof and the Closing:

8.1 Consummation of Agreement. LCNB shall use its best efforts to cause the consummation of the transactions contemplated hereby in accordance with their terms and conditions and take all corporate and other action necessary to approve the Merger; provided, however, that this covenant shall not require LCNB to make any expenditures that are not expressly set forth in this Agreement or otherwise contemplated herein.

8.2 Requirements to Effect Merger. LCNB will use its best efforts to take, or cause to be taken, all actions necessary to effect the Merger under applicable law, including without limitation the filing with the appropriate government officials all necessary documents in form approved by counsel for the parties to this Agreement.

8.3 Notification of Certain Matters. LCNB shall promptly inform Dakin and the Shareholders in writing of (a) any notice of, or other communication relating to, a default or event that, with notice or lapse of time or both, would become a default, received by LCNB subsequent to the date of this Agreement and prior to the Effective Date under any commitment or agreement of LCNB material to LCNB's condition (financial or otherwise), operations, assets, liabilities or business and to which it is subject; or (b) any material adverse change in LCNB's condition (financial or otherwise), operations, assets, liabilities or business.

8.4 Approvals of Third Parties. LCNB shall use its best efforts to secure, as soon as practicable after the date hereof, all necessary approvals and consents of state and federal bank regulators, state insurance regulators and third parties to the consummation of the transactions contemplated hereby.

ARTICLE IX COVENANTS OF ALL PARTIES

LCNB, Dakin and the Shareholders agree as follows:

9.1 Blue Sky; Securities Filings; Other Action. LCNB shall obtain all necessary state securities law or "Blue Sky" permits and approvals required to carry out the transactions contemplated by this Agreement, and Dakin and the Shareholders shall furnish all information concerning Dakin and the Shareholders as may be reasonably requested in connection with any such action. LCNB and Dakin shall use reasonable efforts to meet the requirements of Regulation D promulgated under the Securities Act of 1933 in order to accomplish the issuance of shares of LCNB Common Stock to the Shareholders in the Merger.

9.2 Employment Agreements. At or immediately prior to Closing, each of the Shareholders shall terminate any existing employment agreement with Dakin by mutual consent without any further liability or obligation on the part of Dakin therefor, and shall enter into an employment agreement in the forms appended hereto as Exhibit 9.2 with LCNB (the "Employment Agreements"). At or immediately prior to Closing, Don Beckett's employment agreement shall be terminated by his retirement from Dakin, and Dakin and Don Beckett shall enter into a consulting agreement, to LCNB's satisfaction, which shall incorporate similar economic provisions, compensation terms and noncompetition terms as were provided in the terminated employment agreement.

9.3 Option Agreement. At the Closing, LCNB and the Shareholders shall execute an Option Agreement in the form appended hereto as Exhibit 9.3 providing for an option to the Shareholders to purchase the Surviving Company in the event LCNB determines to terminate its involvement in the insurance agency business, it will offer the Shareholders the right to repurchase the business pursuant to the terms contained in the Option Agreement

9.4 Tax Treatment. Dakin and LCNB shall use reasonable efforts to cause the merger to qualify, and shall not take any actions which could prevent the Merger from qualifying, (a) as a "reorganization" pursuant to Sections 368(a)(1)(A) and 368(a)(2)(D) of the Code that would be tax free to the shareholders of Dakin and (b) as a pooling of interests for accounting purposes.

ARTICLE X CONDITIONS PRECEDENT OF LCNB

Except as may be waived in writing by LCNB, the obligations of LCNB hereunder are subject to the fulfillment at or prior to the Effective Date of each of the following conditions:

10.1 Representations and Warranties. The representations and warranties of Dakin and the Shareholders contained herein shall have been true and correct in all respects when initially made and shall be true and correct in all respects as of the Effective Date.

10.2 Covenants. Dakin and the Shareholders shall have performed and complied in all material respects with all covenants required by this Agreement to be performed and complied with by Dakin or the Shareholders prior to the Effective Date.

10.3 Legal Opinions. Counsel to Dakin and the Shareholders shall have delivered to LCNB an opinion, dated as of the Effective Date, in form and substance reasonably satisfactory to LCNB, to the effect set forth in Exhibit 10.3. Counsel to LCNB shall have delivered to LCNB a tax opinion dated as of the Effective Date in form and substance reasonably satisfactory to LCNB.

10.4 Proceedings. No action, proceeding or order by any court or governmental body or agency shall have been threatened orally or in writing, asserted, instituted or entered to restrain or prohibit the carrying out of the transactions contemplated hereby.

10.5 No Material Adverse Change. No material adverse change in the condition (financial or otherwise), operations, assets, liabilities or business of Dakin shall have occurred since the Dakin Balance Sheet Date, whether or not such change shall have been caused by the deliberate act or omission of Dakin or the Shareholders.

10.6 Securities Approvals. At or prior to the Effective Date, LCNB shall have received all state securities and "Blue Sky" permits necessary to consummate the transactions contemplated hereby.

10.7 Completion of Due Diligence. LCNB shall have had the opportunity to conduct, and shall have completed, a customary due diligence review of all books, records, properties, and personnel of Dakin and any other information provided pursuant to Section 7.3, and shall have determined that there exist no facts or circumstances as of the Effective Date which would have or result in a Material Adverse Effect.

10.8 Government Approvals and Required Consents. Dakin and the Shareholders shall have obtained all necessary government and other third party approvals and consents.

10.9 Accounting Assurances. LCNB shall have received from its independent accountants a certificate to the effect that the Merger may be accounted for as a pooling of interests.

10.10 Closing Deliveries. LCNB shall have received all documents and agreements, duly executed and delivered in form reasonably satisfactory to LCNB, referred to in Section 12.2.

10.11 Key Customer Contracts. Those contracts identified by LCNB as material to LCNB's intended conduct of Dakin's business after the Effective Date shall remain in full force and effect as of the Effective Date, and LCNB shall be reasonably satisfied that the prospects thereunder after the Effective Date are at least equal to the prospects anticipated by management of Dakin. Dakin shall have received (i) written affirmation from each of Cincinnati Insurance Company, Cincinnati Casualty Company, Cincinnati Indemnity Company, Progressive Insurance, Heritage Mutual Insurance Company, Indiana Insurance and Westfield Companies (the "Insurance Companies") that Dakin's contract with each of the Insurance Companies shall remain in full force and effect upon consummation of the Merger and that each of the Insurance Companies anticipates continuing to perform under such contract consistent with past practice thereafter.

ARTICLE XI CONDITIONS PRECEDENT OF DAKIN AND THE SHAREHOLDERS

Except as may be waived in writing by Dakin and the Shareholders, the obligations of Dakin and the Shareholders hereunder are subject to fulfillment at or prior to the Effective Date of each of the following conditions:

11.1 Representations and Warranties. The representations and warranties of LCNB contained herein shall be true and correct in all respects when initially made and shall be true and correct in all respects as of the Effective Date.

11.2 Covenants. LCNB shall have performed and complied in all material respects with all covenants and conditions required by this Agreement to be performed and complied with by it prior to the Effective Date.

11.3 Legal Opinion. Counsel to LCNB shall have delivered to Dakin and the Shareholders an opinion dated as of the Effective Date, in form and substance reasonably satisfactory to Dakin and the Shareholders, to the effect set forth in Exhibit 11.3

11.4 Proceedings. No action, proceeding or order by any court or governmental body or agency shall have been threatened in writing, asserted, instituted or entered to restrain or prohibit the carrying out of the transactions contemplated hereby.

11.5 Government Approvals and Required Consents. LCNB shall have obtained all necessary government bank regulatory, insurance regulatory and other third party approvals and consents.

11.6 Closing Deliveries. Dakin shall have received all documents and agreements, duly executed and delivered in form reasonably satisfactory to Dakin, referred to in Section 12.3.

ARTICLE XII CLOSING DELIVERIES

12.1 Time of the Closing. The date of the closing for the transactions contemplated hereby (the "Closing") on or before June 30, 2000. The Closing shall take place at the offices of LCNB, 2 North Broadway, Lebanon, Ohio 45036.

12.2 Deliveries of Dakin and the Shareholders. At or prior to the Effective Date, Dakin and the Shareholders shall deliver to LCNB the following, all of which shall be in a form satisfactory to LCNB and its counsel:

(a) a certificate of the President of Dakin, and the Shareholders, dated the Effective Date, as to the truth and correctness of the representations and warranties of Dakin and the Shareholders contained herein on and as of the Effective Date;

(b) a certificate of the President of Dakin, and the Shareholders, dated the Effective Date, (i) as to the performance of and compliance in all material respects by Dakin and the Shareholders with all covenants contained herein on and as of the Effective Date, and (ii) certifying that all conditions precedent of Dakin and the Shareholders to the Closing have been satisfied;

(c) Dakin's minute books, stock transfer records, corporate seal and other materials related to Dakin's corporate administration;

(d) a copy of the Articles of Incorporation of Dakin as amended to date, certified by the Secretary of State of Ohio, and a Certificate of Good Standing of Dakin from the Secretaries of State of Ohio and the Ohio Department of Insurance and, if any, each jurisdiction in which Dakin is qualified evidencing the good standing of Dakin in such jurisdiction;

(e) a copy of each of (i) the text of the resolutions adopted by the board of directors of Dakin authorizing the execution, delivery and performance of this Agreement and the Certificate of Merger, (ii) the text of the resolutions adopted by the shareholders of Dakin authorizing the execution, delivery and performance of this Agreement and the Certificate of Merger and the consummation of all of the transactions contemplated by this Agreement and the Certificate of Merger, and (iii) the Regulations of Dakin; along with certificates executed on behalf of Dakin by its corporate secretary certifying to LCNB that such copies are true, correct and complete copies of such resolutions and Regulations, respectively, and that such resolutions and Regulations were duly adopted and have not been amended or rescinded; and

(f) incumbency certificates executed on behalf of Dakin by its corporate secretary certifying the signature and office of each officer executing this Agreement, closing documents and the Certificate of Merger;

(g) an opinion of counsel to Dakin and the Shareholders, dated as of the Effective Date, pursuant to Section 10.3;

(h) all necessary authorizations, consents, approvals, permits and licenses;

(i) executed Employment Agreements between LCNB and each of the Shareholders in substantially the form attached hereto as Exhibit 9.2, evidence of Don Beckett's retirement and termination of his employment agreement and, in accordance with Section 9.2 hereof, an executed consulting agreement with Don Beckett;

(j) executed Certificate of Merger necessary to effect the Merger;

(k) a nonforeign person affidavit, as such affidavit is referred to in Section 1445(b)(2) of the Internal Revenue Code, of each Shareholder, signed under a penalty of perjury and dated as of the Effective Date, to the effect that each Shareholder is a United States citizen or a resident alien (and thus not a foreign person) and providing each such Shareholder's United States taxpayer identification and/or social security number;

(l) written definitive invoices from any and all third parties providing any professional services, including legal, accounting or advisory services, for any and all fees incurred by Dakin in connection therewith;

(m) Shareholder Certificates; and

(n) such other instrument or instruments of transfer prepared by LCNB as shall be necessary or appropriate, as LCNB or its counsel shall reasonably request, to carry out and effect the purpose and intent of this Agreement.

12.3 Deliveries of LCNB. At or prior to the Effective Date, LCNB shall deliver to Dakin and the Shareholders the following, all of which shall be in a form satisfactory to Dakin and the Shareholders and their counsel;

(a) a certificate of an officer of LCNB dated the Effective Date as to the truth and correctness of the representations and warranties of LCNB contained herein on and as of the Effective Date;

(b) a certificate of an officer of LCNB dated the Effective Date, (i) as to the performance and compliance by LCNB with all covenants contained herein on and as of the Effective Date and (ii) certifying that all conditions precedent of LCNB to the Closing have been satisfied;

(c) a copy of the Articles of Incorporation of LCNB and Subsidiary as amended to date, certified by the Secretary of the State of Ohio, and a Certificate of Good Standing of LCNB and Subsidiary from the Secretary of the State of Ohio, evidencing the good standing of LCNB and Subsidiary;

(d) a copy of each of (i) the text of the resolutions adopted by the boards of directors of LCNB and Subsidiary authorizing the execution, delivery and performance of this Agreement and the Certificate of Merger and the consummation of all of the transactions contemplated by this Agreement and the Certificate of Merger, (ii) the text of the resolutions adopted by the sole shareholder of Subsidiary authorizing the execution, delivery and performance of this Agreement and the Certificate of Merger and the consummation of all of the transactions contemplated by this Agreement and the Certificate of Merger, and (iii) the codes of regulations of LCNB and Subsidiary respectively; along with certificates executed on behalf of LCNB and Subsidiary by their respective corporate secretaries certifying to Dakin that such copies are true, correct and complete copies of such resolutions and codes of regulations of LCNB and Subsidiary respectively were duly adopted and have not been amended or rescinded; and

(e) incumbency certificates executed on behalf of LCNB and Subsidiary by their respective corporate secretaries certifying the signature and office of each officer executing this Agreement, closing documents and/or the Certificate of Merger;

(f) executed Option Agreement among LCNB and the Shareholders substantially in the form attached as Exhibit 9.3;

(g) an opinion of counsel to LCNB dated as of the Effective Date pursuant to Section 11.3;

(h) executed Certificate of Merger necessary to effect the Merger;

(i) all necessary orders evidencing receipt of regulatory approvals and the expiration of all waiting periods;

(j) the Shares of LCNB Common Stock to be issued to each shareholder of Dakin;

(k) such other instrument or instruments of transfer, prepared by Dakin or the Shareholders as shall be necessary or appropriate, as Dakin, the Shareholders or their counsel shall reasonably request, to carry out and effect the purpose and intent of this Agreement.

ARTICLE XIII POST CLOSING MATTERS

13.1 Further Instruments of Transfer. Following the Closing, at the request of LCNB and at LCNB's sole cost and expense, the Shareholders and Dakin shall deliver any further instruments of transfer and take all reasonable action as may be necessary or appropriate to carry out the purpose and intent of this Agreement.

13.2 Merger Tax Covenants.

(a) The parties intend that the Merger will qualify as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code in which Dakin will not recognize gain or loss (a "Reorganization").

(b) Both prior to and after the Effective Date, all books and records shall be maintained, and all Tax Returns and schedules thereto shall be filed in a manner consistent with the Merger being treated as a Reorganization. These obligations are excused as to a party required to maintain the books or file a Tax Return if such party has provided to the other parties a written opinion of competent tax counsel to the effect that there is not substantial authority, within the meaning of Section 6662(d)(2)(B)(i) of the Internal Revenue Code, to report the Merger as a Reorganization and such opinion either is furnished prior to the Effective Date or is based on facts or events not known at the Effective Date. Each party shall provide to each other party such tax information, reports, returns, or schedules as may be reasonably required to assist such party in accounting for and reporting the Merger as a Reorganization.

13.3 Employee Matters

(a) Subject to the following agreements, after the Effective Date LCNB shall have the right to continue, amend or terminate any or all of the Benefit Plans (as defined in Section 4.12.1) in accordance with the terms thereof and subject to any limitation arising under applicable law. Until LCNB shall take such action, however, such Benefit Plans shall continue in force for the benefit of present and former employees of Dakin who have any present or future entitlement to benefits under any of the Benefit Plans (the "Dakin Employees").

(b) LCNB will honor the obligations of Dakin with respect to vested rights under Benefit Plans and agreements of Dakin relating to Dakin Employees in accordance with the terms of such vested rights and subject to the provisions of Section 4.12.1.

(c) In the event LCNB terminates the Benefit Plans, all employees of Dakin shall be treated as new employees for the purposes of eligibility to participate, eligibility for benefits, calculation of benefits and vesting under the Surviving Corporation's or LCNB's existing or future employee benefit plans, programs or arrangements under which the right to or the amount of benefits is based on service of such employees; provided, however, such employees of Dakin will be permitted to join LCNB's benefit plans at the first possible open period after the termination of the Benefit Plans without regard to the expiration of any applicable waiting periods for eligibility set forth in LCNB's benefit plans.

(d) This Section 13.3 is an agreement solely between Dakin and LCNB. Nothing in this Section 13.3, whether express or implied, confers upon any employee of Dakin or LCNB or any other person, any rights or remedies, including, but not limited to: (i) any right to employment or recall, (ii) any right to continued employment for any specified period, or (iii) any right to claim any particular compensation, benefit or aggregate of benefits, of any kind or nature whatsoever, as a result of this Section 13.3.

13.4 Stock Option Plan. Following the Effective Date, should LCNB institute a stock option plan for the benefit of certain employees of LCNB or its affiliates, LCNB shall agree to include the Shareholders in accordance with any such plan.

13.5 Surviving Company Board of Directors. As of the Effective Date, the Board of Directors of the Surviving Company shall consist of nine members. Four of the members of the board shall be chosen by LCNB, four of the members shall be chosen by the Shareholders and one member shall be chosen and agreed upon by the other eight board members.

13.6 LCNB Board of Directors. As soon as legally possible following the Effective Date, LCNB shall take all actions necessary to place one of the Shareholders on the LCNB Board of Directors. Going forward, LCNB shall use its best efforts to maintain one board seat for the Shareholders.

13.7 Chief Executive Officer of Surviving Company. As of the Effective Date, LCNB and the Surviving Company intend for David S. Beckett to hold the position of Chief Executive Officer of the Surviving Company for the period of his employment agreement with the Surviving Company.

ARTICLE XIV EFFECTIVE DATE OF MERGER

14.1 After adoption and approval of this Agreement by the Shareholders in accordance with the requirements of applicable law, and upon satisfaction of each of the conditions set forth in Articles X and XI (unless waived in accordance with this Agreement) and in the absence of any facts that would give any party hereto a right to terminate this Agreement (which right has not been waived), and at such time as shall be agreed upon in writing by Dakin, LCNB and the Subsidiary (if no such agreement has been reached, then on the day of the meeting of Shareholders at which this Agreement is approved), the Certificate of Merger shall be submitted for filing with the Secretary of State of Ohio. The date of the later of such filings, or at such other date as the parties may agree upon in writing pursuant to applicable law, is referred to in this Agreement as the "Effective Date."

ARTICLE XV INDEMNIFICATION

15.1 Indemnification Obligation of Dakin. In the event LCNB and/or the Surviving Corporation incurs any expenses, losses, damages, deficiencies or costs resulting from any misrepresentation or breach by Dakin of any representation, warranty or covenant made by Dakin in this Agreement, the Shareholders shall indemnify and hold LCNB and/or the Surviving Corporation harmless against such expenses, losses, damages, deficiencies, and/or costs, subject to the limitations set forth in Section 15.3.

15.2 Procedure for Indemnification. In connection with any claim for indemnification by LCNB or the Surviving Corporation hereunder, the procedure set forth below shall be followed:

(a) LCNB or the Surviving Corporation shall give to the Representative (as such term is defined below) prompt written notice of any claim, suit, judgment or matter for which indemnity may be sought after LCNB or the Surviving Corporation receives written notice thereof. The indemnification period provided for herein shall be tolled for a particular claim for the period beginning on the date the Representative receives written notice of that claim until the final resolution of such claim. If, in the good faith opinion of LCNB or the Surviving Corporation, a specific occurrence may reasonably give rise to a claim in the future, LCNB or the Surviving Corporation may give notice thereof to the Representative and such notice shall be sufficient and the right to make a claim for indemnification arising thereunder shall, for a period of one year from the date of such notice, survive any prior termination of the indemnification period hereunder until the final resolution of such claim.

(b) The Representative shall have the right to adjust or settle any claim, suit or judgment coming within the scope of this indemnity obligation and shall have the right to control any litigation related thereto. Either party hereto desiring to participate in the handling of any such claim, suit or judgment being handled by the other party shall have the right, at its expense and with its counsel, to join with the other party and participate fully in the defense of any such claim or interest.

(c) LCNB, the Surviving Corporation and the Representative shall cooperate in the defense of any such claim or litigation and each shall make available all books and records which are relevant in connection with such claim or litigation.

(d) LCNB and Dakin hereby mutually appoint David Beckett to act as the representative of the Shareholders for purposes of this Article (the "Representative").

15.3 Limitations on Indemnification. Notwithstanding the provisions of this Article XV, (a) no claim for indemnification may be made by LCNB unless and until the amount to which LCNB is entitled with respect to any individual claim equals or exceeds $10,000, whereupon LCNB shall be entitled to indemnification only to the extent such claim exceeds $10,000, and (b) no holder of Dakin Capital Stock shall be obligated to indemnify LCNB or the Surviving Corporation for any amount in excess of the aggregate value he receives in the Merger.

15.4 Remedies Not Exclusive. The remedies provided in this Agreement shall not be exclusive of any other rights or remedies available to one party against the other, either at law or in equity.

15.5 Tax Benefits; Insurance Proceeds. The total amount of any indemnity payments owed by one party to another party to this Agreement shall be reduced by any correlative tax benefit received by the party to be indemnified or the net proceeds received by the party to be indemnified with respect to recovery from third parties or insurance proceeds, and such correlative insurance benefit shall be net of the insurance premium, if any, that becomes due as a result of such claim.

15.6 Payment of Indemnification Obligation. In the event that the Shareholders have an indemnification obligation to LCNB hereunder, LCNB, in its sole discretion, may satisfy such obligation by redeeming and transferring to LCNB such number of the Shares, valued at a weighted average of the prices of LCNB Common Stock for the 90-day period prior to the day the shares are redeemed, equal to the indemnification obligation.

ARTICLE XVI PUBLICITY

All notices to third parties and all other parties concerning the transactions contemplated by this Agreement shall be as directed by LCNB. Dakin shall not cause or authorize any notice or publicity without prior written approval by LCNB.

ARTICLE XVII TERMINATION

17.1 Termination. This Agreement may be terminated and the Merger may be abandoned:

17.1.1 at any time prior to the Effective Date by mutual agreement of all parties;

17.1.2 at any time prior to the Effective Date by LCNB if any representation or warranty of Dakin or the Shareholders contained in this Agreement or in any certificate or other document executed and delivered by Dakin or the Shareholder pursuant to this Agreement is or becomes untrue or breached in any material respect or if Dakin or the Shareholders fail to comply in any material respect with any covenant or agreement contained herein, and any such misrepresentation, noncompliance or breach is not cured, waived or eliminated within 20 days after receipt of written notice thereof;

17.1.3 at any time prior to the Effective Date by Dakin if any representation or warranty of LCNB contained in this Agreement or in any certificate or other document executed and delivered by LCNB pursuant to this Agreement is or becomes untrue or breached in any material respect or if LCNB fails to comply in any material respect with any covenant or agreement contained herein, and any such misrepresentation, noncompliance or breach is not cured, waived or eliminated within 20 days after receipt of written notice thereof;

17.1.4 by LCNB or Dakin if the Merger shall not have been consummated by June 30, 2000.

17.2 Effect of Termination. In the event this Agreement is terminated pursuant to Sections 17.1.2, 17.1.3 and 17.1.4 above, any party not then in material breach of this Agreement shall be entitled to pursue, exercise and enforce any and all remedies, rights, powers and privileges available at law or in equity. In the event of a termination of this Agreement under Sections 17.1.1 above, the parties hereto shall stand fully released and discharged of any and all obligations under this Agreement.

ARTICLE XVIII NONDISCLOSURE OF CONFIDENTIAL INFORMATION

18.1 Nondisclosure. The parties hereto recognize and acknowledge that they had in the past, currently have, and in the future may possibly have, access to certain Confidential Information of one or more other parties that is valuable, special and unique assets of such other party's or their respective businesses. The Shareholders, Dakin, and LCNB agree that they will not disclose such Confidential Information to any person, firm, corporation, association or other entity for any purpose or reason whatsoever, except to their respective authorized representatives, counsel and other advisers, provided that such advisers (other than counsel) agree to the confidentiality provisions hereof, unless (i) such information becomes available to or known by the public generally through no fault of the party holding such Confidential Information of another party, (ii) disclosure is required by law or the order of any governmental authority under color of law, provided, that prior to disclosing any information pursuant hereto the party holding such Confidential Information shall, if possible, give prior written notice thereof to the other party and provide such other party with the opportunity to contest such disclosure, (iii) the disclosing party reasonably believes that such disclosure is required in connection with the defense of a lawsuit against the disclosing party, (iv) the disclosing party is the sole and exclusive owner of such Confidential Information as a result of the Merger or otherwise, or (v) LCNB determines in its good faith judgment that such disclosure is required by federal securities laws or the rules of the National Association of Securities Dealers. In the event of a breach or threatened breach by any party of the provisions of this Section, the party with respect to which such Confidential Information relates shall be entitled to an injunction restraining such other party from disclosing, in whole or in part, such Confidential Information. Nothing herein shall be construed as prohibiting any party from pursuing any other available remedy for such breach or threatened breach, including the recovery of damages.

18.2 Damages. Because of the difficulty of measuring economic losses as a result of the breach of the foregoing covenants, and because of the immediate and irreparable damage that would be caused for which they would have no other adequate remedy, the parties hereto agree that, in the event of a breach by any of them of the foregoing covenant, the covenant may each be enforced against them by injunctions and restraining orders.

18.3 Survival. The obligations of the parties under this Article XVIII shall survive the termination of this Agreement.

ARTICLE XIX FEDERAL SECURITIES LAW RESTRICTIONS ON LCNB COMMON STOCK

19.1 Investment Representation. Each Shareholder acknowledges that the Shares of LCNB Common Stock to be delivered to such Shareholder pursuant to this Agreement have not been and will not be registered under the Securities Act and may not be resold without compliance with the Securities Act. The LCNB Common Stock to be acquired by such Shareholder pursuant to this Agreement is being acquired solely for his own account, for investment purposes only and with no present intention of distributing, selling or otherwise disposing of it in connection with a distribution.

19.2 Compliance with Law. Each Shareholder covenants, warrants and represents that none of the Shares of LCNB Common Stock issued to such Shareholder will be offered, sold, assigned, pledged, hypothecated, transferred or otherwise disposed of except after full compliance with all of the applicable provisions of the Securities Act and the rules and regulations of the SEC and applicable state securities laws and regulations. All certificates evidencing shares of LCNB Common Stock shall bear a legend having substantially the same effect as the following legend:

The shares represented by this Certificate have not been registered under the Securities Act of 1933 or any other applicable state securities laws (collectively, the "Securities Laws"). Such shares may not be offered, sold, transferred or pledged, with or without consideration, in the absence of registration under the Securities Laws or submission to the Corporation of a favorable opinion of counsel satisfactory to the Corporation or of such other evidence as may be satisfactory to the Corporation to the effect that an exemption from registration under the Securities Laws is available.

In addition, certificates evidencing shares of LCNB Common Stock shall bear any legend required by the securities or blue sky laws of any state where the Shareholder resides.

19.3 Economic Risk; Sophistication. Each Shareholder is able to bear the economic risk of an investment in LCNB Common Stock acquired pursuant to this Agreement and can afford to sustain a total loss of such investment and has such knowledge and experience in financial and business matters that he, she or it is capable of evaluating the merits and risks of the proposed investment and therefore have the capacity to protect his, her or its own interests in connection with the acquisition of the LCNB Common Stock. Each Shareholder or its purchaser representatives have had an adequate opportunity to ask questions and receive answers from the officers of LCNB concerning any and all matters relating to the transactions described in the Exchange Act documents filed by LCNB and the proxy statement/prospectus described in Section 6.6 hereof, including, without limitation, the background and experience of the officers and directors of LCNB, the plans for the operations of the business of LCNB, and any plans for additional acquisitions and the like. Each Shareholder or its purchaser representatives have asked any and all questions in the nature described in the preceding sentence and all questions have been answered to their satisfaction.

19.4 Accredited Investor Status. Each Shareholder has delivered a certificate in substantially the form attached hereto as Exhibit 19.4 indicating whether he qualifies as an "accredited investor" as defined in Rule 501(e)(2) of Regulation D promulgated under the Securities Act.

ARTICLE XX MISCELLANEOUS

20.1 Entire Agreement, Modification and Waiver. This Agreement constitutes the entire agreement between the parties pertaining to its subject matter and supersedes all prior and contemporaneous agreements, representations and understandings of the parties. No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by all the parties. No waiver of any of the provisions of this Agreement shall be deemed, or shall constitute, a waiver of any other provision, whether or not similar, nor shall any waiver constitute a continuing waiver. No waiver shall be binding unless executed in writing by the party making the waiver.

20.2 Consents. Where any consent or waiver of LCNB or the Surviving Corporation is required or requested hereunder, Stephen P. Wilson, President of LCNB, shall be the authorized person to provide any such consent or waiver. Where any consent or waiver of Dakin or the Shareholders is required or requested hereunder, the Representative shall be the authorized person to provide any such consent or waiver. The waiver of any of the terms and conditions of this Agreement shall not be construed as a waiver of any other terms and conditions hereof.

20.3 Assignment. Neither this Agreement nor any right created hereby or in any agreement entered into in connection with the transactions contemplated hereby shall be assignable by any party hereto, except by LCNB or the Subsidiary to a wholly owned subsidiary of LCNB; provided that any such assignment shall not relieve LCNB or the Surviving Corporation of its obligations hereunder.

20.4 Parties In Interest; No Third Party Beneficiaries. Except as otherwise provided herein, the terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective heirs, legal representatives, successors and assigns of the parties hereto. Neither this Agreement nor any other agreement contemplated hereby shall be deemed to confer upon any person not a party hereto or thereto any rights or remedies hereunder or thereunder.

20.5 Severability. If any provision of this Agreement is held to be illegal, invalid or unenforceable under present or future laws effective during the term hereof, such provision shall be fully severable and this Agreement shall be construed and enforced as if such illegal, invalid or unenforceable provision never comprised a part hereof; and the remaining provisions hereof shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance herefrom. Furthermore, in lieu of such illegal, invalid or unenforceable provision, there shall be added automatically as part of this Agreement a provision as similar in its terms to such illegal, invalid or unenforceable provision as may be possible and be legal, valid and enforceable.

20.6 Survival of Representations, Warranties and Covenants. The statements contained in any certificate, exhibit or other instrument delivered by or on behalf of Dakin, the Shareholders or LCNB pursuant to this Agreement shall be deemed to have been representations and warranties by Dakin, the Shareholders, or LCNB, as applicable. The representations, warranties and covenants of Dakin and the Shareholders herein shall survive until the fifth anniversary of the Effective Date except that (a) the representations and warranties set forth in Sections 4.1 through 4.8, Sections 4.14, 4.17, 4.20, 4.22, 4.24, 4.26, 4.27, 4.30, 4.31 and Article V shall survive forever, and (b) the representations and warranties contained in Sections 4.12, 4.19 and 4.28 shall survive until the expiration of any applicable limitations with respect thereto.

20.7 Governing Law. This Agreement and the rights and obligations of the parties hereto shall be governed by and construed and enforced in accordance with the substantive laws of the State of Ohio.

20.8 Captions. The captions in this Agreement are for convenience of reference only and shall not limit or otherwise affect any of the terms or provisions hereof.

20.9 Notice. Whenever this Agreement requires or permits any notice, request, or demand from one party to another, the notice, request, or demand must be in writing to be effective and shall be deemed to be delivered and received (i) if personally delivered or if delivered by telex, telegram, facsimile or courier service, when actually received by the party to whom notice is sent or (ii) if delivered by mail (whether actually received or not), at the close of business on the third business day next following the day when placed in the mail, postage prepaid, certified or registered, addressed to the appropriate party or parties, at the address of such party set forth below (or at such other address as such party may designate by written notice to all other parties in accordance herewith):

If to LCNB or the

Surviving Corporation:

LCNB Corp.

2 North Broadway

Lebanon, Ohio 45036

Fax No.: (513) 933-5262

Attn.: Stephen P. Wilson, President

with a copy to:

Dinsmore & Shohl LLP

1900 Chemed Center

255 East Fifth Street

Cincinnati, Ohio 45202

Fax No.: (513) 977-8141

Attn: Susan B. Zaunbrecher, Esq.

If to Dakin

or the Shareholders:

Dakin Insurance Agency, Inc.

24 East Mulberry Street

Lebanon, Ohio 45036-0089

Fax No.:

Attn: Vincent B. Fullan, President

with a copy to:

Konrad Kircher, Esq.

8805 Governor's Hill Drive, Suite 163

Cincinnati, Ohio 45249

Fax No.: (513) 697-0079

20.10 Choice of Forum. Each of the parties hereto shall be subject to the in personam jurisdiction of any state or federal court located in Warren County, State of Ohio.

20.11 No Waiver; Remedies. No party hereto shall by any act (except by written instrument pursuant to Section 20.1 hereof), delay, indulgence, omission or otherwise be deemed to have waived any right or remedy hereunder or to have acquiesced in any default in or breach of any of the terms and conditions hereof. No failure to exercise, nor any delay in exercising, on the part of any party hereto, any right, power or privilege hereunder shall operate as a waiver thereof. No single or partial exercise of any right, power or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege. No remedy set forth in this Agreement or otherwise conferred upon or reserved to any party shall be considered exclusive of any other remedy available to any party, but the same shall be distinct, separate and cumulative and may be exercised from time to time as often as occasion may arise or as may be deemed expedient.

20.12 Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original, and all of which together shall constitute one and the same instrument.

20.13 Costs, Expenses and Legal Fees. Whether or not the transactions contemplated hereby are consummated, each party hereto shall bear its own costs and expenses (including attorneys' fees) incurred in connection with the transactions contemplated herein.

IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the date first written above.

DAKIN INSURANCE AGENCY, INC.	LCNB CORP.
By:	By:
Its:	Its:
SHAREHOLDERS:	DAKIN ACQUISITION CORPORATION
	By:
Vincent B. Fullan
	Its:
David S. Beckett
Philip R. Hines

Exhibit 9.2

FORM OF DAKIN INSURANCE AGENCY, INC. EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT ("Agreement") is made this _____ day of ___________, 2000, by and between Dakin Insurance Agency, Inc., an Ohio corporation (the "Company") and ________________________, an individual residing at _________[address]_______________, Ohio ("Employee").

W I T N E S S E T H:

WHEREAS, the Company desires to utilize the services of Employee and employ Employee and Employee desires to provide the services to the Company and be employed by the Company upon the terms and conditions set forth herein.

NOW, THEREFORE, for and in consideration of the premises and promises contained herein, the Company and Employee agree as follows:

1. Title and Duties. The Company hereby employs Employee and Employee hereby accepts employment, as ________________ of Company. In such capacity, Employee shall have such duties and responsibilities as defined in Exhibit A and as may be reasonably determined and assigned to Employee from time to time by the Company's President or Board of Directors. Employee will devote Employee's entire work day and his ability and attention to the business of the Company or its affiliates during the term of the Agreement. Employee shall be based at the principal offices of the Company in Waynesville, Ohio.

2. Compensation. While employed under this Employment Agreement, Employee shall receive compensation for Employee's services and employee benefits according to Exhibit B, Compensation and Employee Benefits Schedule, attached hereto and incorporated herein.

3. Licensure. Employee and Company shall each maintain, throughout the term of the Agreement, any and all licenses and permits required by federal, state and local authorities, administrative or regulatory agencies necessary to the proper and lawful exercise of their duties hereunder or incident to conducting the Company's business. Neither party shall take any action or fail to take any action, which would jeopardize Employee's licensure or the licensure of the Company.

4. Term and Termination of Employment

a. Term. The term of this Agreement is five years beginning on the date hereof (the "Original Term"), unless terminated prior to the expiration of such period pursuant to the provisions of Section 4(b). The terms of this Agreement shall automatically renew for additional one year terms unless either party hereto gives notice of termination to the other party at least 90 days prior to the end of the Original Term or any renewal term.

b. Termination. This Employment Agreement shall be terminated in its entirety if:

(1) The Company terminates Employee's employment for cause. Termination for "cause" for purposes of this Agreement, includes without limitation, Company's reasonable determination that Employee has engaged in

(i) insubordination;

(ii) disloyalty;

(iii) dishonesty;

(iv) any activity or conduct that is injurious to the Company or the reputation of the Company;

(v) any activity which leads to the arrest or conviction (including a plea of nolo contendere) of Employee for any felony or for any crime involving an act of moral turpitude, fraud or misrepresentation.

(vi) unacceptable work performance; or

(vii) other misconduct, as defined by the Company, including the failure to perform any and all duties and assignments.

If Employee is terminated for cause pursuant to (i) - (v) above, the Company may do so without prior notice to Employee. If Employee is to be terminated for cause pursuant to (vi) - (vii) above, the Company shall provide Employee with written notice of such reasons for termination, and, in the event such items are not cured to the Company's satisfaction within 120 days of such notice, Employee shall be terminated; or

(2) Employee dies.

c. Disability. Where an Employee does not actively work and perform services for the Company for a period in excess of twenty-six (26) continuous weeks and the Company's long-term disability insurance covering Employee has expired, Employee shall be deemed terminated by the Company. Upon disability, Employee's employment continues only to the extent necessary for coverage under the Company's long-term disability plan.

d. Return of Company Property. Upon the termination of this Agreement, or whenever requested by the Company, Employee shall immediately deliver to the Company all property belonging to the Company, in Employee's possession or under Employee's control.

5. Administrative and Marketing Support of Employee. During the term of this Agreement, Company shall provide Employee with the administrative and marketing support reasonably necessary to service any accounts generated by Employee.

6. Non-Competition, Solicitation, Unfair Competition and Indemnification.

a. Non-Competition. During the greater of the balance of the term of this Agreement or a period of two years following the termination of Employee's employment with the Company, for whatever reason, (the "Termination Date") Employee shall not, directly or indirectly, within thirty miles of the principal office of the Company or LCNB own, manage, operate, control or be employed by, be a shareholder, officer, director, member, partner, consultant or advisor, participate in, consult with or be otherwise affiliated or connected in any manner with the ownership, management, operation or control of, or to sell any products or services on behalf of, any business competitive with any of the businesses or industries in which the Company is engaged as of the Termination Date.

b. Confidentiality. Employee recognizes and acknowledges that certain business and technical information of the Company or LCNB and its affiliates is confidential. Confidential business and technical information includes, without limitation, the identity of the Company's or LCNB's and its affiliates' customers, and the Company's internal procedures and processes, costs, materials, special customer requirements, pricing techniques, business plans, operational procedures and operational policies. Confidential business and technical information is a valuable, special and unique asset of the Company and LCNB and its affiliates. Employee shall not, at any time, whether during the term of this Agreement or after the termination or expiration of this Agreement, use such information, or any part thereof, or disclose such information, or any part thereof, to any person, firm, corporation, association or other entity, for any purpose or reason whatsoever.

c. Non-Solicitation. During the period commencing with the execution hereof and ending two years after the Termination Date, Employee shall not, directly or indirectly, on his own behalf or on behalf of any other person, firm, company or other entity, without the consent of the Company: (i) in any manner whatsoever induce, or assist others to induce, any employee, agent, representative or other person associated with the Company or any of its affiliates or subsidiaries, or any insurance company doing business with the Company or any of its affiliates or subsidiaries, to terminate his association with any such entity, or in any manner interfere with the relationship between the Company or any of its affiliates or subsidiaries and any such person; or (ii) in any manner whatsoever induce, or assist others to induce, any supplier or customer of the Company or any of its affiliates or subsidiaries to terminate its association with the Company or any of its affiliates or subsidiaries, or do anything, directly or indirectly, to interfere with the business relationship between the Company or any of its affiliates or subsidiaries and any of its customers or suppliers or otherwise solicit for business any customer of the Company.

d. Scope of Restrictions. Employee and the Company agree that should any portion of the covenants set forth in this Section 6 be unenforceable because of the scope thereof, or the period covered thereby, or otherwise, the terms of such covenant shall be deemed to be modified in a manner enabling enforcement to the maximum extent permissible under the laws and public policies applicable in the jurisdiction in which enforcement is sought.

7. Remedies.

a. Remedy. Employee and the Company acknowledge and agree that a violation of the covenants and agreements of this Agreement would cause irreparable damage to the Company, and that the Company would not have an adequate remedy at law. Employee therefore agrees that the Company shall be entitled to an injunction, without posting any bond whatsoever, restraining such conduct by Employee in the event of a breach or threatened breach by Employee of this Agreement or any of the terms or conditions hereof.

b. Indemnification. Employee agrees to indemnify and hold the Company harmless against any and all damages and expenses, including reasonable attorneys' fees and disbursements, resulting from any breach or threatened breach by him of this Agreement or any of the terms or conditions hereof, which remedy is in addition to any and all other remedies that the Company may possess at law or in equity.

c. Remedies Cumulative. Employee further agrees that the Company's remedies under this Agreement are cumulative, and that the Company may pursue its remedies in any order that it desires.

8. Notices. Any notice required or permitted by or in connection with this Agreement shall be in writing and shall be made by hand delivery, overnight delivery service, or by certified mail, unrestricted delivery, return receipt requested, postage prepaid, addressed to the parties at the appropriate address set forth below or to such other address as may be hereafter specified by written notice by the parties.

If to Company:

Dakin Insurance Agency, Inc.

Attn:

If to Employee:

9. Jurisdiction and Governing Law. All claims, disputes and any other matters, whether of contention or otherwise, which are in question, arising out of or relating to the Agreement, or claim hereunder, shall be subject to, interpreted and governed by the laws of the State of Ohio. In the event of a claim or lawsuit of any type arising under the terms of the Agreement, the prevailing party shall be entitled to recover attorney's fees and costs.

10. Severability. If any portion of the Agreement is contrary to the laws of the State of Ohio, that portion of the Agreement shall be void. However, the remainder of the Agreement shall remain in full force and effect.

11. Entire Agreement. This Agreement constitutes the complete and exclusive agreement of the Company and Employee with respect to the matters set forth in this Agreement. The terms of this Agreement may not be modified or amended except by an instrument in writing signed by the Company and Employee.

12. Assignment. Employee may not assign or delegate any of his rights or obligations under this Employment Agreement. Company may assign its rights and delegate its duties under this Employment Agreement.

IN WITNESS WHEREOF, Company and Employee have executed the Agreement as of the date first written above.

Employee:

[Name]

Company:

Dakin Insurance Agency, Inc.

By:

Its:

EXHIBIT A

DUTIES AND RESPONSIBILITIES

[To be developed by Dakin with LCNB]

EXHIBIT B

COMPENSATION AND BENEFITS SCHEDULE

(Dave Beckett)

Salary and Commissions -

Salary and an estimated amount or draw for commissions will be paid semi-monthly. The draw will be determined based on 90% of the employee's commissions for the prior year divided by twenty-four (24) unless a more accurate and cost-effective measure is available. Actual commissions earned will be reconciled to the draw amounts on a quarterly basis. If commissions earned by the employee during the quarter exceed the employee's draws for the quarter, the additional amount will be paid to the employee with the first payroll of the following month. If the employee's draws for the quarter exceed the commissions earned by the employee for the quarter, the draw amount for the following quarter may be reduced or eliminated accordingly.

Base annual salary.

The base annual salary will be the sum of the following amounts:

A. $10,000

B. A percent, as set forth below, of the sum of (a) the agency's normal commissions collected and earned for the immediately preceding year, plus (b) an amount equal to the average collected, contingent commissions for the ten year period ending December 31 of the immediately preceding year. Normal commissions do not include contingent commissions. In the event Dakin acquires or merges with any other insurance agency, the acquired or merged agency's normal commissions collected and earned for the immediately preceding year will be included in the calculation of base annual salary. The acquired or merged agency's average collected, contingent commissions for the ten year period ending December 31 of the immediately preceding year will also be included in the calculation of base annual salary. The denominator for purposes of calculating the acquired or merged agency's average collected, contingent commissions will be ten, regardless of the number of years the acquired or merged agency has been in operation.

Sum of (a) and (b) above	Percent included in base salary
The first $2 million	Four percent (4%)
Amount exceeding $2 million	One percent (1%)

Commissions.

Commission-based compensation will be the sum of the following:

A. For property and casualty (P&C) commissions earned and collected by the agency for new business (where the employee performed significant personal service in either obtaining the new business or performing necessary underwriting procedures) the employee will earn a commission computed by multiplying this amount by fifty percent (50%). This commission for the new business as defined, applies to personal and commercial policies.

B. For P&C commissions earned and collected by the agency for renewal business (where the employee performed significant personal service in either obtaining the business or performing necessary underwriting procedures) the employee will earn a commission computed by multiplying this amount by thirty percent (30%). This commission for the renewal business as defined, applies to commercial policies only.

C. The employee will not earn a commission for personal lines P&C revenues earned and collected by the agency for renewal business regardless of whether the employee performed significant personal service in either obtaining the business or performing necessary underwriting procedures.

D. For health and life commissions earned and collected by the agency (where the employee performed significant personal service in either obtaining the business or performing necessary underwriting procedures) the employee will earn a commission computed by multiplying this amount by fifty percent (50%).

Bonus -

Bonuses will be determined and paid as soon after the end of each calendar year as is reasonably possible.

Performance Bonus.

The employee will participate in the bonus program generally available to all full-time employees of Lebanon Citizens National Bank. This bonus percentage is determined by the profitability of the LCNB Corp. consolidated group as reported in the audited annual report. For each year, the base for the employee's bonus will be his base annual salary.

Agency Bonus Pool.

The agency will create or set aside a bonus pool at the end of any such calendar year as both of the following conditions are met: 1) The agency's total normal commission revenues, which exclude contingent commissions, increase from the immediately preceding year by at least 10%. To the extent that any increase in commission revenues is attributable to renewal commissions purchased from another agency, or otherwise having as their origin another agency's business existing at the time such additional agency(ies) is acquired, such renewal commissions are not taken into consideration when determining the increase in revenues for purposes of this Agency Bonus Pool. 2) The agency's total commissions less the expenses listed below as items A through D is a net amount representing at least forty percent (40%) of the agency's total commission revenues.

A. Total agency wages, salaries, commissions, and bonuses (other than the agency growth bonus)

B. Total agency payroll taxes

C. Total agency employee benefits expense including health-related and retirement benefits

D. Amortization, whether or not recorded on the agencies books and records, of the price paid for additional agencies. The amortization amount will be determined using the straight-line method and a life of 180 months.

Assuming the two conditions above are met, the Agency Bonus Pool will equal the percent(s) reflected below of the actual contingent commissions earned during the same year but collected during the following year. Assuming the two conditions above are met, the bonus pool will be determined as soon as practical after the contingent commissions are collected. The employee's share of the pool will be determined by the agency's board of directors.

Contingent Commissions	Percent of Contingent Commissions
$0 to $25,000	Five percent (5%)
$25,001 to $100,000	Ten percent (10%)
$100,001 and over	Fifteen percent (15%)

Vacations -

The employee will be entitled to the same vacation benefits available to officers of Lebanon Citizens National Bank. The employee will be given credit for the years worked for Dakin prior to the Merger for purposes of determining benefits under the bank's vacation policy.

Payment of Expenses -

The agency will reimburse the employee for all reasonable and customary expenses incurred in connection with performing his responsibilities for the agency. Reimbursement will be subject to the employee providing the agency with adequate documentation as to the business nature of the expense as required for federal tax reporting purposes. The employee's semi-monthly payroll will include $200 as a vehicle allowance. This allowance will be additional taxable compensation. There will be no other payments to the employee for the use of his vehicle in the course of performing his responsibilities for the agency.

Other Benefits -

The employee will be entitled to participate in the health-related and retirement plan benefits generally available to all full-time employees of Lebanon Citizens National Bank. Years worked for Dakin prior to the Merger will not be taken into consideration for purposes of determining benefits under the plans.

(Phil Hines and Vincent Fullan)

Salary and Commissions -

Salary and an estimated amount or draw for commissions will be paid semi-monthly. The draw will be determined based on 90% of the employee's commissions for the prior year divided by twenty-four (24) unless a more accurate and cost-effective measure is available. Actual commissions earned will be reconciled to the draw amounts on a quarterly basis. If commissions earned by the employee during the quarter exceed the employee's draws for the quarter, the additional amount will be paid to the employee with the first payroll of the following month. If the employee's draws for the quarter exceed the commissions earned by the employee for the quarter, the draw amount for the following quarter may be reduced or eliminated accordingly.

Base annual salary.

The base annual salary will be the sum of the following amounts:

A. $10,000

B. A percent, as set forth below, of the sum of (a) the agency's normal commissions collected and earned for the immediately preceding year, plus (b) an amount equal to the average collected, contingent commissions for the ten year period ending December 31 of the immediately preceding year. Normal commissions do not include contingent commissions. In the event Dakin acquires or merges with any other insurance agency, the acquired or merged agency's normal commissions collected and earned for the immediately preceding year will be included in the calculation of base annual salary. The acquired or merged agency's average collected, contingent commissions for the ten year period ending December 31 of the immediately preceding year will also be included in the calculation of base annual salary. The denominator for purposes of calculating the acquired or merged agency's average collected, contingent commissions will be ten, regardless of the number of years the acquired or merged agency has been in operation.

Sum of (a) and (b) above	Percent included in base salary
The first $2 million	One-half of one percent (0.5%)
Amount exceeding $2 million	One-tenth of one percent (0.1%)

Commissions.

Commission-based compensation will be the sum of the following:

A. For property and casualty (P&C) commissions earned and collected by the agency for new business (where the employee performed significant personal service in either obtaining the new business or performing necessary underwriting procedures) the employee will earn a commission computed by multiplying this amount by fifty percent (50%). This commission for the new business as defined, applies to personal and commercial policies.

B. For P&C commissions earned and collected by the agency for renewal business (where the employee performed significant personal service in either obtaining the business or performing necessary underwriting procedures) the employee will earn a commission computed by multiplying this amount by thirty percent (30%). This commission for the renewal business as defined, applies to commercial policies only.

C. For P&C commissions earned and collected by the agency for renewal business (where the employee performed significant personal service in either obtaining the business or performing necessary underwriting procedures) the employee will earn a commission computed by multiplying this amount by twenty percent (20%). This commission for the renewal business as defined, applies to personal policies only.

D. For health and life commissions earned and collected by the agency (where the employee performed significant personal service in either obtaining the business or performing necessary underwriting procedures) the employee will earn a commission computed by multiplying this amount by fifty percent (50%).

Bonus -

Bonuses will be determined and paid as soon after the end of each calendar year as is reasonably possible.

New P&C Production Bonus.

On a calendar year basis, if the employee writes new P&C business commissions (where the employee performed significant personal service in either obtaining the new business or performing necessary underwriting procedures) and the collected and earned new P&C commissions in the aggregate (both personal and commercial) exceed the amounts appearing in the schedule that follows, the employee will earn a bonus on such new business commissions. For example, if the employee writes new P&C business commissions during a calendar year (where the employee performed significant personal service in either obtaining the new business or performing necessary underwriting procedures) and the employee's collected and earned new P&C commissions in the aggregate (both personal and commercial) were at least $25,001 to $30,000, the new P&C production bonus would be ten percent (10%) of the employee's collected and earned new P&C commissions.

$20,000 in new commissions earned and collected	Five percent (5%)
$25,000 in new commissions earned and collected	Ten percent (10%)
$30,000 in new commissions earned and collected	Fifteen percent (15%)

P&C Retention Bonus.

On a calendar year basis, if the employee's net renewal P&C commissions collected and earned (where the employee performed significant personal service in either obtaining the business or performing necessary underwriting procedures) increase in the aggregate (both personal and commercial combined) from the prior year by the percentages appearing in the schedule that follows, the employee will earn a bonus on such renewal commissions. For example, if the employee's net renewal P&C commissions collected and earned (where the employee performed significant personal service in either obtaining the business or performing necessary underwriting procedures) increase in the aggregate (both personal and commercial combined) from the prior year by ten percent

(10%) the P&C retention bonus would be two and one-half percent (2.5%) of the employee's collected and earned renewal P&C commissions.

Five percent (5%) net growth	Two and one-half percent (2.5%)
Fourteen percent (14%) net growth	Five percent (5%)

New Health and Life Bonus.

On a calendar year basis, if the employee writes new health and life commissions (where the employee performed significant personal service in either obtaining the business or performing necessary underwriting procedures) and the collected and earned commissions in the aggregate exceed the amounts appearing in the schedule that follows, the employee will earn a bonus on such new business commissions at the rate indicated.

$50,000 in new commissions earned and collected	Two and one-half percent (2.5%)
$75,000 in new commissions earned and collected	Five percent (5%)
$100,000 in new commissions earned and collected	Ten percent (10%)

Agency Bonus Pool.

The agency will create or set aside a bonus pool at the end of any such calendar year as both of the following conditions are met: 1) The agency's total normal commission revenues, which exclude contingent commissions, increase from the immediately preceding year by at least 10%. To the extent that any increase in commission revenues is attributable to renewal commissions purchased from another agency, or otherwise having as their origin another agency's business existing at the time such additional agency(ies) is acquired, such renewal commissions are not taken into consideration when determining the increase in revenues for purposes of this Agency Bonus Pool. 2) The agency's total commissions less the expenses listed below as items A through D is a net amount representing at least forty percent (40%) of the agency's total commission revenues.

A. Total agency wages, salaries, commissions, and bonuses (other than the agency growth bonus)

B. Total agency payroll taxes

C. Total agency employee benefits expense including health-related and retirement benefits

D. Amortization, whether or not recorded on the agencies books and records, of the price paid for additional agencies. The amortization amount will be determined using the straight-line method and a life of 180 months.

Assuming the two conditions above are met, the Agency Bonus Pool will equal the percent(s) reflected below of the actual contingent commissions earned during the same year but collected during the following year. Assuming the two conditions above are met, the bonus pool will be determined as soon as practical after the contingent commissions are collected. The employee's share of the pool will be determined by the agency's board of directors.

Contingent Commissions	Percent of Contingent Commissions
$0 to $25,000	Five percent (5%)
$25,001 to $100,000	Ten percent (10%)
$100,001 and over	Fifteen percent (15%)

Vacations -

The employee will be entitled to the same vacation benefits available to officers of Lebanon Citizens National Bank. The employee will be given credit for the years worked for Dakin prior to the Merger for purposes of determining benefits under the bank's vacation policy.

Payment of Expenses -

The agency will reimburse the employee for all reasonable and customary expenses incurred in connection with performing his responsibilities for the agency. Reimbursement will be subject to the employee providing the agency with adequate documentation as to the business nature of the expense as required for federal tax reporting purposes. The employee's semi-monthly payroll will include $200 as a vehicle allowance. This allowance will be additional taxable compensation. There will be no other payments to the employee for the use of his vehicle in the course of performing his responsibilities for the agency.

Other Benefits -

The employee will be entitled to participate in the health-related and retirement plan benefits generally available to all full-time employees of Lebanon Citizens National Bank. Years worked for Dakin prior to the Merger will not be taken into consideration for purposes of determining benefits under the plans.

Exhibit 9.3

FORM OF OPTION AGREEMENT

THIS OPTION AGREEMENT is made and entered into this _____ day of _______________, 2000, by and among LCNB Corp., an Ohio corporation ("LCNB"), Lebanon Citizens National Bank, a national bank (the "Bank") and Vincent B. Fullan, David S. Beckett and Philip R. Hines (collectively, the "Optionees").

W I T N E S S E T H:

WHEREAS, LCNB and Optionees entered into an Agreement and Plan of Merger whereby LCNB acquired Dakin Insurance Agency, Inc. ("Dakin"); and

WHEREAS, in the event LCNB and the Bank determine that they will no longer conduct an insurance agency business, the Optionees desire to obtain an option to repurchase all of the shares of the common stock of Dakin that are owned by the Bank; and

WHEREAS, LCNB and the Bank desire to grant to the Optionees an option to purchase such shares in the event LCNB and the Bank will no longer conduct an insurance agency business; and

WHEREAS, the parties hereto desire to delineate certain other agreements between them.

NOW, THEREFORE, in consideration of the mutual covenants contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, LCNB and the Bank hereby grant to the Optionees, jointly and severally, the following option:

3. Grant of Option. Subject to the terms and conditions set forth herein, LCNB and the Bank hereby grant to the Optionees the first right and option (the "Option") to repurchase a 100% interest in Dakin (the "Interest"). This Option shall be triggered upon LCNB's written notice to the Optionees to the effect that LCNB and the Bank have determined that they will no longer conduct an insurance agency business. Upon such notice, the Optionees, jointly or severally, shall have the exclusive right to exercise the Option to purchase the Interest for a period of 90 days from the date of notice. Upon the expiration of 90 days after such notice, LCNB and the Bank shall be free in their discretion to offer the Interest to another purchaser. This Option shall arise only at LCNB's and the Bank's sole discretion, and in no event shall the Optionees have the right or authority to trigger the Option.

4. Option Price. In the event the Optionees elect to exercise the Option granted in accordance with the terms contained herein, they may purchase 100% of the capital stock of Dakin for the then fair market value of the Dakin stock. Fair market value shall be determined by the Optionees having prepared by the appraiser of their choice an independent appraisal of the business. If LCNB agrees with such appraisal that shall become the option price. In the event LCNB disagrees with the Dakin appraisal, the fair market value will be determined by taking the average of their independent appraisals. In addition to the Dakin appraisal, the appraisals shall be conducted by one appraiser chosen by LCNB and a third appraiser chosen by the first two appraisers. The cost of such appraisals shall be divided evenly between LCNB and the Optionees, with each of LCNB and the Optionees paying one-half of the total appraisal cost. In no event may the Optionees elect to exercise the Option for less than a 100% interest in Dakin.

5. Exercise of Option. The Optionees may exercise the Option upon receipt of the notice from LCNB described in Section 1 above by a written election delivered to LCNB. Upon such election, the Optionees hereby agree to work in good faith toward a closing of the purchase of the Interest as soon as possible after the election. At or prior to the closing of the purchase of the Interest, LCNB and the Bank shall waive any noncompetition agreements between LCNB, the Bank and the Optionees that might prevent the Optionees from conducting an insurance agency subsequent to the closing.

6. Termination. This Option shall terminate and be of no further force or effect upon the occurrence of any of the following:

(a) With respect only to that Optionee, if an Optionee ceases to be employed for any reason by Dakin or by a bank, corporation, partnership, limited liability company or other entity owned or controlled by LCNB;

(b) With respect only to that Optionee, if an Optionee dies; or

(c) Upon the expiration of 90 days after LCNB's and the Bank's notice of their withdrawal from the insurance agency business and the Optionees have not elected to exercise the Option.

7. Binding Effect; Assignment. This Option shall be binding upon and inure to the benefit of the parties hereto; provided, however, that the Optionees' rights and obligations hereunder may not be assigned without the prior written consent of LCNB. If LCNB or its operating bank subsidiary is merged with or consolidated into or with any other entity or entities, or if substantially all of the stock or operating assets of any of the aforementioned entities is sold or otherwise transferred to another entity, the provisions of this Agreement shall be binding upon and shall inure to the benefit of the continuing entity in or the entity resulting from, such merger, consolidation or asset purchase, or the entity to which such assets are sold or transferred.

8. Notices. All notices provided for herein shall be deemed to have been duly given if and when deposited in the United States mail with proper postage affixed, properly addressed to the party for whom intended and at the party's address as listed below or when personally delivered to such party.

LCNB Corp./Lebanon Citizens National Bank

PO Box 59

Lebanon, Ohio 45036

Attention: Stephen P. Wilson, President

Optionees

Attn: David S. Beckett

9. Entire Agreement. It is expressly agreed by and among the parties hereto as a material consideration for the execution of this Agreement that there are and were no verbal or written representations, understandings, stipulations, agreements or promises pertaining to the subject matter of this Agreement not incorporated in writing herein. This Agreement nor any of the provisions herein contained can be modified, terminated, superseded, waived or extended except by an appropriate written instrument duly executed by the parties hereto.

10. Governing Law. This Agreement shall be governed by, and interpreted in accordance with, the laws of the State of Ohio and the United States of America and the parties hereby agree to the exclusive jurisdiction of any state or federal court located in Warren County, Ohio.

11. Severability. Each section of this Agreement shall be deemed severable and if for any reason any section or subsection hereof is invalid or contrary to any existing or future law such invalidity shall not effect the applicability or validity of any such other provision of this Agreement.

IN WITNESS WHEREOF, the parties hereto have set their hands as of the date first above written.

LCNB Corp.	OPTIONEES:
By:
	Vincent B. Fullan
Its:
Lebanon Citizens National Bank	David S. Beckett
By:
	Philip R. Hines
Its:

Exhibit 10.3

FORM OF OPINION OF COUNSEL TO DAKIN

1. Dakin, an Ohio corporation, is duly incorporated, validly existing and in good standing under the laws of the State of Ohio and has all requisite corporate power and authority to enter into the Agreement and consummate the transactions contemplated therein.

2. Dakin has the requisite corporate power and corporate authority to execute and deliver the Agreement and the Certificate of Merger and to perform its obligations thereunder. The execution, delivery and performance as of the date hereof of the Agreement and the Certificate of Merger by Dakin has been duly authorized by all necessary corporate action of Dakin. The execution, delivery and performance as of the date hereof by Dakin of the Agreement and the execution and filing of the Certificate of Merger do not violate any provision of Dakin's Articles of Incorporation or Regulations.

3. The Agreement and the Certificate of Merger have each been duly executed and delivered on behalf of Dakin and the Shareholders and the Agreement constitutes a valid and binding obligation of Dakin and the Shareholders, each enforceable in accordance with its terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors' rights (such as fraudulent conveyance laws) and except as may be limited by the exercise of judicial discretion in applying general principles of equity (regardless of whether such agreements are considered in a proceeding in equity or at law).

4. To our knowledge, except as disclosed in the Agreement or the Exhibits or Schedules thereto, to our knowledge, there is no action, suit or proceeding, pending or threatened against Dakin or the Shareholders before any court or administrative agency that, if determined adversely to Dakin or the Shareholders, would have a material adverse effect on the ability of Dakin or the Shareholders to consummate the transactions contemplated by this Agreement.

5. The authorized capital stock of Dakin consists of _________ shares of Dakin common stock. All of the _______ issued and outstanding shares of Dakin capital stock are duly authorized and are validly issued, fully paid and non-assessable under Ohio law. Except as described above, to our knowledge, there are no other shares of capital stock of Dakin outstanding. Except as set forth in the Agreement or the Exhibits or schedules thereto, to our knowledge, Dakin has not issued any outstanding securities convertible into or exchangeable for, or outstanding options, warrants or other rights to purchase or subscribe for, any shares of stock or other securities of Dakin.

Exhibit 11.3

FORM OF OPINION OF COUNSEL TO LCNB

1. LCNB, an Ohio corporation, and Surviving Corporation, an Ohio corporation, are duly incorporated, validly existing and in good standing under the laws of the State of Ohio and have all requisite corporate power and authority to enter into the Agreement and consummate the transactions contemplated therein.

2. LCNB and Surviving Corporation have the requisite corporate power and corporate authority to execute and deliver the Agreement, the Employment Agreements, and other ancillary agreements provided for by the Agreement (the "Agreements") and the Certificate of Merger and to perform their obligations thereunder. The execution, delivery and performance as of the date hereof of the Agreements and the Certificate of Merger by LCNB and Surviving Corporation have been duly authorized by all necessary corporate action of LCNB and Surviving Corporation. The execution, delivery and performance as of the date hereof by LCNB and Surviving Corporation of the Agreements and the execution and filing of the Certificate of Merger do not violate any provision of LCNB's or Surviving Corporation's Articles of Incorporation, Regulations or Bylaws, as applicable.

3. The Agreements and the Certificate of Merger have each been duly executed and delivered on behalf of LCNB and Surviving Corporation and the Agreements constitute valid and binding obligations of LCNB and Surviving Corporation, each enforceable in accordance with its terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors' rights (such as fraudulent conveyance laws) and except as may be limited by the exercise of judicial discretion in applying general principles of equity (regardless of whether such agreements are considered in a proceeding in equity or at law).

4. To our knowledge, except as disclosed in the Agreements or the Exhibits or Schedules thereto or in LCNB's filings with the Securities and Exchange Commission, to our knowledge, there is no action, suit or proceeding, pending or threatened against LCNB or Surviving Corporation before any court or administrative agency that, if determined adversely to LCNB or Surviving Corporation, would have a material adverse effect on the ability of LCNB or Surviving Corporation to consummate the transactions contemplated by the Agreements.

5. The authorized capital stock of LCNB consists of 4 million shares of LCNB Common Stock of which 1,760,000 shares were issued and outstanding as of ___________, 2000. All of the issued and outstanding shares of capital stock of LCNB are duly authorized, validly issued and, to our knowledge, fully paid and non-assessable under Ohio law. Except as described above, to our knowledge, there are no other shares of capital stock of LCNB outstanding.

Exhibit 19.4

INVESTMENT AGREEMENT

THIS AGREEMENT made this ____ day of _____________, 2000 by and between LCNB Corp., an Ohio corporation ("Issuer"), and the person(s) set forth on the signature page hereto ("Shareholder").

W I T N E S S E T H:

WHEREAS, Issuer, in connection with the merger of Dakin Acquisition Corp. into Dakin Insurance Agency, Inc. ("Dakin") (the "Merger"), will issue shares of LCNB Common Stock (the "Shares") to the Shareholder in a Regulation D exempt offering in exchange for the Shareholder's shares of Dakin Common Stock; and

WHEREAS, the Shareholder agrees to make certain investment representations and agreements in order to receive the LCNB Common Stock in the Merger.

NOW, THEREFORE, and in consideration of the mutual covenants and promises hereinafter set forth, Issuer and Shareholder hereby agree as follows:

1. Investment Representations. Shareholder represents and warrants to, and agrees with, Issuer as follows:

a. Shareholder is acquiring the Shares for investment and not with a view to a distribution thereof. Shareholder hereby agrees with Issuer that no Shares will be sold or otherwise disposed of by Shareholder unless either (i) the sale or other disposition will be pursuant to a Registration Statement under the Securities Act of 1933, as amended (the "Act") and any applicable securities laws of any state or other jurisdiction; or (ii) Shareholder shall have notified Issuer in writing of any desire on the part of Shareholder to sell or dispose of all or part of the Shares and of the manner and terms of the proposed transaction, and Issuer shall have been advised in writing by counsel acceptable to it that no registration of the Shares under the Act, or the rules and regulations then in effect thereunder, or any applicable state securities laws, is required in connection with the proposed sale or other disposition; or (iii) Issuer has been advised in writing by counsel acceptable to it that based on facts then existing, no registration of the Shares under the Act or the rules and regulations then in effect thereunder, is required for any future sale or disposition thereof by Shareholder.

b. All certificates evidencing ownership of the Shares, or replacement or new certificates evidencing same, in the absence of registration under the Act shall bear an appropriate legend to the effect that the Shares evidenced by such certificate are subject to the terms of this Agreement and that appropriate stop transfer instructions will be issued to Issuer's transfer agent.

c. The representations, terms and provisions of this Agreement shall also be deemed to apply to any shares of the capital stock or any other security issued to the Shareholder as a result of any stock split, reverse stock split and other subdivisions or combinations of the Issuer's outstanding capital stock, stock dividend, recapitalization, merger or consolidation of the Issuer or the sale or conveyance to another person of all or substantially all of the assets of the Issuer.

2. Compliance with Securities Laws. Shareholder and Issuer agree that the sale of the Shares will be effected without registration under the Act or under the applicable state Blue Sky law in reliance upon the exemption from registration afforded by Rule 506 of Regulation D promulgated under the Act. Shareholder hereby represents and warrants that he, she or it is [CHECK AS MANY AS APPLY, SIGN AND RETURN A COPY OF THIS PAGE TO THE ISSUER WITH YOUR SIGNATURE PAGE]:

a. [ ] an accredited investor as such term is defined by the rules of the Securities and Exchange Commission promulgated under the Act by virtue of the fact that he, she or it has individual net worth or joint net worth with spouse which exceeds $1,000,000 as of the date hereof; or

b. [ ] an accredited investor as such term is defined by the rules of the Securities and Exchange Commission promulgated under the act by virtue of the fact that he, she or it has individual income in excess of $200,000 in each of the two most recent years or joint income with a spouse in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year; or

c. [ ] not an accredited investor as such term is defined by the Securities and Exchange Commission promulgated under the Act.

If none of the boxes is checked, the Shareholder represents and warrants that he, she or it is an accredited investor and that both a and b apply to such Shareholder.

Signature

Date:

3. Sophisticated Investor Status. Shareholder represents and warrants that he, she or it has such knowledge and experience in financial and business matters that he, she or it is capable of evaluating the merits and risks of an investment in the Shares.

4. Disclosures. Shareholder represents and warrants that he, she or it has received, read and understands all of the following:

a. A copy of the Proxy Statement relating to Issuer's 1998 Annual Meeting of Shareholders.

b. A copy of Issuer's annual financial report to shareholders for the year ended December 31, 1999.

c. Copies of Issuer's Quarterly Reports on Form 10-Q for the quarters ended June 30, 1999 and September 30, 1999.

d. A copy of the Proxy Statement/Prospectus relating to Issuer's 1999 Special Meeting of Shareholders.

5. Opportunity to Communicate with Management. Shareholder acknowledges that a reasonable time before he, she or it executed this Agreement, he, she or it had the opportunity to ask questions of Issuer's management and receive answers concerning the terms and conditions of this sale of the Shares, and to obtain any reasonably available additional information regarding the Issuer.

6. Investment Risks - Possibility that Entire Investment May Be Lost. Shareholder acknowledges that he, she or it (i) is aware that no federal or state agency has made any recommendation or endorsement of the Shares; (ii) recognizes that an investment in the Shares involves a high degree of risk and that neither the Issuer nor any person purporting to represent the Issuer can give any assurance that the Issuer's business ventures will be successful or generate any returns or profits whatsoever; and (iii) is prepared to accept such risks and represents and warrants that the Shareholder can afford the loss of his, her or its entire investment.

Any investment in Issuer is highly speculative, and Shareholder realizes that his entire investment is at risk and subject to loss. Shareholder represents and warrants that he, she or it is prepared to accept such risk and can afford the loss of his, hers, or its entire investment.

7. No Broker/Dealer. The parties represent and warrant, one to another, that no broker/dealer is involved in any way in this transaction, and that no commission is payable in connection with this transaction.

8. General Provisions.

a. This Agreement constitutes the entire agreement between the parties and supersedes and cancels any other agreement, representation or communication, whether oral or written, between the parties hereto relating to the transactions contemplated herein or the subject matter hereof.

b. This Agreement may be executed simultaneously in two or more counterparts, each of which shall be deemed an original, but all of which together, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

c. All notices and other communications from any party hereto to any other party hereto shall be mailed by first-class, registered or certified mail, postage prepaid, to Issuer at its principal offices at P.O. Box 59, Lebanon, Ohio 45036, Attn: Stephen P. Wilson, President, and to Shareholder at his her, or its address as set forth on the Signature Page or otherwise transmitted to Issuer from time to time.

d. No term hereof may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the party against which enforcement of the change, waiver, discharge or termination is sought.

e. The headings in this Agreement are for the purposes of convenience of reference only and shall not be deemed to constitute a part hereof.

f. This Agreement shall be construed and enforced in accordance with and governed by the laws of the State of Ohio.

g. The benefits of this Agreement shall inure, and the obligations of this Agreement shall be binding upon, the personal representatives, successors and assigns of the parties hereto; provided, however, that neither party shall assign its rights or obligations hereunder without the prior written consent of the other party.

IN WITNESS WHEREOF, the undersigned have hereunto set their hands on the date first above written.

LCNB CORP.	SHAREHOLDER:
By:
Stephen P. Wilson, President	Signature
	Name Typed or Printed
	Street Address
	City/State/Zip Code
	Social Security Number

EX-3

AMENDED AND RESTATED

ARTICLES OF INCORPORATION

OF

LCNB CORP.

The undersigned, desiring to form a corporation for profit, under the General Corporation Law of Ohio, does hereby certify:

FIRST: The name of this Corporation shall be LCNB Corp.

SECOND: The place in Ohio where its principal office is to be located is Lebanon, County of Warren.

THIRD: The purpose for which the Corporation is formed is to engage in any lawful act or activity for which corporations may be formed under Chapter 1701 of the Ohio Revised Code.

FOURTH: The maximum number of shares which the Corporation is authorized to have outstanding is Four Million (4,000,000) shares, all of which shall be designated Common Stock and shall be without par value.

FIFTH: The number of Directors of the Corporation shall be fixed from time to time in accordance with the Corporation's Regulations and may be increased or decreased as therein provided. The Board of Directors shall be divided into three classes, as nearly equal in number as the then total number of Directors constituting the whole Board permits, it not being required that each class have the same number of members if such is mathematically impossible with the term of office of one class expiring each year. At the organizational meeting of shareholders, Directors of the first class shall be elected to hold office for a term expiring at the next succeeding Annual Meeting; Directors of the second class shall be selected to hold office for a term expiring at the second succeeding Annual Meeting and Directors of the third class shall be selected to hold office for a term expiring at the third succeeding Annual Meeting. Thereafter, at each Annual Meeting of shareholders, the successors to the class of Directors whose term shall then expire shall be elected to hold office for a term expiring at the third succeeding Annual Meeting after such election. In the event of any increase in the number of Directors of the Corporation, the additional Directors shall be so classified that all classes of Directors shall be increased equally as nearly as may be possible. In the event of any decrease in the number of Directors of the Corporation, all classes of Directors shall be decreased equally as nearly as possible.

SIXTH: (A) Except as otherwise provided in Clause (B) of this Article SIXTH:

(i) any merger or consolidation of the Corporation with or into any other corporation;

(ii) any sale, lease, exchange or other disposition of all or any substantial part of the assets of the Corporation to or with any other corporation, person or other entity;

(iii) the issuance or transfer of any securities of the Corporation to any other corporation, person or other entity in exchange for assets or securities or a combination thereof (except assets or securities or a combination thereof so acquired in a single transaction or a series of related transactions having an aggregate fair market value of less than $250,000), or

(iv) the issuance or transfer of any securities of the Corporation by the Corporation to any other corporation, person or other entity for cash;

shall require the affirmative vote of the holders of at least eighty percent (80%) of the outstanding shares of capital stock of the Corporation which are not beneficially owned by such other corporation, person or other entity if, as of the record date for the determination of shareholders entitled to notice thereof and to vote thereon, such other corporation, person or entity is the beneficial owner, directly or indirectly, of 10% or more of the outstanding shares of capital stock of the Corporation entitled to vote generally in the election of Directors, considered for the purposes of this Article SIXTH as one class. Such affirmative vote shall be required notwithstanding the fact that no vote may be required, or that some lesser percentage may be specified, by law or in any agreement with any national securities exchange.

(B) The provisions of this Article SIXTH shall not apply to any transaction described in clauses (i), (ii), (iii) or (iv) of Clause (A) of this Article SIXTH, (i) with another corporation if a majority, by vote, of the outstanding shares of all classes of capital stock of such other corporation entitled to vote generally in the election of Directors, considered for this purpose as one class, is owned of record or beneficially by the Corporation and/or its subsidiaries; (ii) with another corporation, person or other entity if the Board of Directors of the Corporation shall by resolution have approved a memorandum of understanding with such other corporation, person or other entity with respect to and substantially consistent with such transaction prior to the time such other corporation, person or other entity became the beneficial owner, directly or indirectly, of 10% or more of the outstanding shares of capital stock of the Corporation entitled to vote generally in the election of Directors; or (iii) approved by resolution adopted by the affirmative vote of at least a majority of the members of the whole Board of Directors of the Corporation at any time prior to the consummation thereof.

(C) For the purposes of this Article SIXTH, a corporation, person or other entity shall be deemed to be the beneficial owner of any shares of capital stock of the corporation (i) which it has the right to acquire pursuant to any agreement, or upon exercise of conversion rights, warrants or options, or otherwise; or (ii) which are beneficially owned, directly or indirectly (including shares deemed owned through application of clause (i) above), by any other corporation, person or other entity with which it or its "affiliate" or "associate" (as defined below) has any agreement, arrangement or understanding for the purpose of acquiring, holding, voting or disposing of capital stock of the Corporation, or which is its "affiliate" or "associate" as those terms were defined in Rule 12b-2 of the general rules and regulations under the Securities Exchange Act of 1934. For the purposes of this Article SIXTH, the outstanding shares of any class of capital stock of the Corporation shall include shares deemed owned through the application of clauses (i) and (ii) of this Clause (C) but shall not include any other shares which may be issuable pursuant to any agreement, or upon exercise of conversion rights, warrants or options, or otherwise.

(D) The Board of Directors of the Corporation shall have the power and duty to determine for the purposes of this Article SIXTH, on the basis of information then known to it, whether (i) any other corporation, person or other entity beneficially owns, directly or indirectly, 10% or more of the outstanding shares of capital stock of the Corporation entitled to vote generally in the election of Directors, or is an "affiliate" or an "associate" (as defined above) of another, (ii) any proposed sale, lease, exchange or other disposition of part of the assets of the Corporation involves a substantial part of the assets of the Corporation, (iii) assets or securities, or a combination thereof, to be acquired in exchange for securities of the Corporation, have an aggregate fair market value of less than $250,000 and whether the same are proposed to be acquired in a single transaction or a series of related transactions, and (iv) the memorandum of understanding referred to above is substantially consistent with the transaction to which it relates. Any such determination by the Board shall be conclusive and binding for all purposes of this Article SIXTH.

SEVENTH: The Board of Directors of the Corporation, when evaluating any offer of another party to (i) purchase or exchange any securities or property for any outstanding equity securities of the Corporation, (ii) merge or consolidate the Corporation with another corporation, or (iii) purchase or otherwise acquire all or substantially all of the properties and assets of the Corporation, shall, in connection with the exercise of its judgment in determining what is in the best interests of the Corporation and its shareholders, give due consideration not only to the price or other consideration being offered but also to all other relevant factors, including without limitation the financial and managerial resources and future prospects of the other party; the possible effects on the business of the Corporation and its subsidiaries and on the depositors, employees, and other constituents of the Corporation and its subsidiaries; and the possible effects on the communities and the public interest which the Corporation and its subsidiaries serve. In evaluating any such offer, the Board of Directors shall be deemed to be performing their duly authorized duties and acting in good faith and in the best interests of the Corporation within the meaning of Section 1701.13 of the Ohio Revised Code, as it may be amended from time to time, and the Corporation's Regulations.

EIGHTH: When authorized by the affirmative vote of a majority of the Board of Directors, without the action or approval of the shareholders of this Corporation, this Corporation may redeem, purchase, or contract to purchase, at any time and from time to time, shares of any class issued by this Corporation for such prices and upon and subject to such terms and conditions as the Board of Directors may determine.

NINTH: The statutes of Ohio require that action on certain specified matters at a shareholders' meeting shall be taken by the affirmative vote of the holders of more than a majority of shares entitled to vote thereon, unless other provision is made in the Articles of Incorporation. On all these specified matters, action may be taken by the affirmative vote of a two-thirds majority of shares entitled to vote thereon or, if the vote is required to be by classes, by the affirmative vote of a two-thirds majority of each class of shares entitled to vote thereon as a class, except that any amendment, alteration, addition to or repeal of Article FIFTH, SIXTH or this Article NINTH and of any of the matters specified above in Article SIXTH as requiring a vote other than the affirmative vote of the holders of a two-thirds majority of the shares entitled to vote thereon, may only be taken by the affirmative vote of the holders of at least eighty percent (80%) of the outstanding shares of capital stock of the Company entitled to vote thereon, considered for the purposes of this Article as one class.

TENTH: No holder of any share or shares of any class issued by the Corporation shall be entitled as such, as a matter of right, at any time, to subscribe for or purchase (i) shares of any class issued by the Corporation, now or hereafter authorized, (ii) securities of the Corporation convertible into or exchangeable for shares of any class issued by the Corporation, now or hereafter authorized, or (iii) securities of the Corporation to which shall be attached or appertain to any rights or options whether by the terms of such securities or in the contracts, warrants, or other instruments (whether transferable or non-transferable or separable or inseparable from such securities) evidencing such rights or options entitling the holders thereof to subscribe for or purchase shares of any class issued by the Corporation, now or hereafter authorized; it being the intent and is the effect of this Article Tenth to fully eliminate any and all pre-emptive rights with respect to the shares of any class issued by the Corporation now or hereafter authorized.