<PAGE>1
LNB BANCORP, INC.
LORAIN, OHIO
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO THE SHAREHOLDERS OF
LNB BANCORP, INC. March 18, 1996
The Annual Meeting of Shareholders of LNB Bancorp, Inc. will be
held at 521 Broadway, Lorain, Ohio 44052, on Tuesday, April 16, 1996,
at 10:00 a.m., Eastern Daylight Savings Time, for the purpose of
considering and voting upon the following matters as more fully
described in the Proxy Statement.
PROPOSALS:
1. ELECTION OF DIRECTORS - To elect four (4) directors to hold
office until their term expires (April 20, 1999) or until their
successors are elected and qualified.
2. STOCK DIVIDEND - Increase the outstanding common stock of LNB
Bancorp, Inc. by declaration of a stock dividend consisting of
approximately 80,808 shares of common stock of $1.00 par value each,
and the terms and conditions thereof.
3. OTHER BUSINESS - To transact such other business as may properly
come before the meeting.
Shareholders of record at the close of business on March 8, 1996
will be entitled to vote the number of shares held of record in their
names on that date. The transfer books will not be closed.
We urge you to sign and return the enclosed proxy as promptly as
possible, whether or not you plan to attend the meeting in person.
This proxy may be revoked prior to its exercise.
By Order of the Board of Directors
/s/ Thomas P. Ryan
Thomas P. Ryan
Executive Vice President
and Secretary/Treasurer
YOUR VOTE IS IMPORTANT. PLEASE MARK, SIGN, DATE AND MAIL THE ENCLOSED
PROXY FORM(S) WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING. A
RETURN ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE.
-1-
END OF PRINTED PAGE 1
<PAGE>2
LEFT BLANK INTENTIONALLY
-2-
END OF PRINTED PAGE 2
<PAGE>3
LNB BANCORP, INC.
457 BROADWAY
LORAIN, OHIO 44052
PROXY STATEMENT
MARCH 18, 1996
This proxy solicitation is made on behalf of the Board of Directors
of LNB Bancorp, Inc., (hereinafter called the "Corporation") being a
One Bank Holding Company owning all of the stock of The Lorain
National Bank (hereinafter called the "Bank"). As of this date, the
number of shares of Common Stock outstanding and entitled to vote at
the Annual Meeting of Shareholders to be held on April 16, 1996, is
4,040,387. Only those shareholders of record at the close of business
on March 8, 1996 shall be entitled to vote. This proxy may be revoked
prior to its exercise. The cost of this solicitation is being paid by
the Corporation.
VOTING
Each shareholder shall be entitled to one vote for each share of
stock standing in their name on the books of the Corporation. No holder
of shares of any class shall have the right to vote cumulatively in
the election of directors.
Shares held in accounts by the Bank's Trust and Investment
Management Division will be voted by the trustee in accordance with
written instructions from account administrators or account plan
participants, and where no instructions are received, as the trustee
deems proper.
Shares of Common Stock represented by proxies in the accompanying
form which are properly executed and returned to the Corporation will
be voted at the Annual Meeting of Shareholders in accordance with the
shareholders' instruction contained in such proxies. Where no such
instructions are given, the shares will be voted for the election of
directors as described herein; in support of the increase in the
number of authorized shares; and at the discretion of the proxy
holders on such other matters as may come before the meeting. The
Board of Directors has no reason to believe that any of the nominees
will be unable to serve as a director. In the event, however, of the
death or unavailability of any nominee or nominees, the proxy to that
extent will be voted for such other person or persons as the Board of
Directors may recommend.
The results of votes taken at the Annual Meeting will be disclosed
in the Corporation's First Quarterly Report for 1996 on Form 10-Q, as
filed with the Securities and Exchange Commission (SEC). The
disclosure will include for each proposal, the number of votes for,
the number of votes against and the number of abstentions. In
addition, the disclosure will set forth the number of votes received
by each candidate running for a directorship and the percentage of
these votes as to the total shares outstanding.
ELECTION OF DIRECTORS
Article III provides that directors are to be divided into three (3)
classes. Each class serves a term of three (3) years, or until their
respective successors are elected and qualified. In that the term of
office for four (4) members of the present Board of Directors will
expire on April 16, 1996, the management has nominated the hereinafter
named four (4) individuals for election to serve until April 20, 1999,
or until their successors are elected and qualified.
<PAGE>4
The affirmative vote of the holders of at least a majority of a
quorum is required in order to elect each director. Under the Code of
Regulations of the Corporation, a quorum is constituted by the
presence, in person or by proxy, of a majority of the voting power of
the Corporation.
-3-
END OF PRINTED PAGE 3
Other nominations may be made only in accordance with the notice
procedures set forth in Article III of the Code of Regulations of the
Corporation. The procedure states that nominations for election to the
Board of Directors may be made by the Board of Directors or by any
shareholder of any outstanding class of capital stock of the
Corporation entitled to vote for the election of directors.
Nominations, other than those made by or on behalf of the existing
management of the Corporation, shall be made in writing and shall be
delivered or mailed to the President of the Corporation not less than
fourteen (14) days nor more than fifty (50) days prior to any meeting
of shareholders called for the election of directors, provided
however, that if less than twenty-one (21) days notice of the meeting
is given to shareholders, such nomination shall be mailed or delivered
to the President of the Corporation no later than the close of
business on the seventh (7th) day following the day on which the
notice of the meeting was mailed. Such notification shall contain the
following information as to the extent known to the notifying
shareholder: (a) the name and address of each proposed nominee; (b)
the principal occupation of each proposed nominee; (c) the total
number of shares of capital stock of the Corporation that will be
voted for each proposed nominee; (d) the name and resident address of
the notifying shareholder; and (e) the number of shares of capital
stock of the Corporation owned by the notifying shareholder.
Nominations not made in accordance herewith may, at his discretion, be
disregarded by the Chairman of the meeting, and upon his instructions,
the vote teller may disregard all votes cast for each such nominee.
Unless otherwise instructed, it is the intention of the persons
named in the proxy to vote for the election of the following four(4)
nominees:
1) James L. Bardoner
2) Wellsley O. Gray
3) Benjamin G. Norton
4) T. L. Smith, M.D.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF EACH
NOMINEE.
The following individuals are directors whose term of office is
scheduled to expire on April 15, 1997:
1) James F. Kidd
2) Jeffrey Riddell
3) Thomas P. Ryan
4) Paul T. Stack
5) Robert M. Campana
<PAGE>5
The following individuals are directors whose term of office is scheduled to
expire on April 21, 1998:
1) Daniel P. Batista
2) David M. Koethe
3) Stanley G. Pijor
4) Eugene M. Sofranko
5) Leo Weingarten
-4-
END OF PRINTED PAGE 4
DIRECTOR'S COMMITTEES
The Bank has five (5) standing committees upon which members of the
Board of Directors serve. They are:
1) The Audit Committee 4) The Pension/Fringe Benefit Committee
2) The Executive Committee 5) The Incentive Stock Option Committee
3) The Trust Committee
Membership of each of these committees is indicated by footnote on
page 7.
The Audit Committee met three (3) times during the last fiscal year.
It establishes policies for the administration of the Bank's Audit
Division. The Executive Committee met thirteen (13) times during the
last fiscal year. This committee is authorized to approve matters
relating to loans, the purchase of bills, notes, and other evidence of
debt and also serves as the Compensation Committee. The Trust
Committee reviews the various trusts accepted by the Bank's Trust and
Investment Management Division. It held six (6) meetings during the
last fiscal year. The Pension/Fringe Benefit Committee reviews
indirect compensation of officers and employees. It did not meet
during the last fiscal year. The Incentive Stock Option Committee
determines who will receive stock options and the number of shares to
be granted under the terms of the Incentive Stock Option Plan. The
actions of the Incentive Stock Option Committee are subject to the
approval of the Compensation Committee. It did not meet during the
last fiscal year. The Bank has no designated Nominating Committee.
Nominees for the Board of Directors are determined by a vote of the
total Board of Directors.
The Bank held thirteen (13) Board of Directors meetings during the
last fiscal year. Of the directors who served during 1995, Leo
Weingarten attended fewer than 75% of the total number of meetings
of the Board of Directors and all committee meetings of which the
aforementioned director was a member.
The Corporation held eight (8) Board of Directors meetings during the
last fiscal year. Of the directors who served during 1995, no one attended
fewer than 75% of the total of eight (8) meetings held.
All of the directors of the Corporation are also directors of the
Bank. A director's fee of $450.00 is paid to those directors, who are
not officers, for each meeting attended. Directors, who are also
officers, receive a fee of $225.00 for their attendance at the
Corporation's board meetings and receive no director's fees for their
attendance at the meetings of the Bank's board.
-5-
END OF PRINTED PAGE 5
<PAGE>6
LORAIN
NATIONAL
BANK LNB BANCORP,
PRINCIPAL OCCUPATION DIRECTOR INC. DIRECTOR
NAME AND AGE FOR THE PAST FIVE YEARS SINCE SINCE
JAMES L. BARDONER RETIRED, FORMER PRESIDENT 1974 1983
Age 77 Dorn Industries, Inc.
(1-2-4-5) (Manufacturing Company)
DANIEL P. BATISTA ATTORNEY/PARTNER 1976 1983
Age 61 Cook & Batista Co. L.P.A.(A)
(2-3-5)
ROBERT M. CAMPANA MANAGING DIRECTOR 1996 1996
Age 36 P. C. Campana, Inc. (E)
WELLSLEY O. GRAY SALES CONSULTANT 1973 1983
Age 62 Smith Dairy Company
(1-3)
JAMES F. KIDD PRESIDENT AND CHIEF 1989 1989
Age 56 EXECUTIVE OFFICER
(2-3-4) LNB Bancorp, Inc. and
The Lorain National Bank
DAVID M. KOETHE CHAIRMAN OF THE BOARD 1975 1983
Age 60 The Lorain Printing Company(B)
(2-3-4-5)
BENJAMIN G. NORTON EMPLOYEE AND 1983 1983
Age 56 COMMUNITY RELATIONS MANAGER
(3-6) RELTEC Corporation - Lorain Products
STANLEY G. PIJOR CHAIRMAN 1969 1983
Age 65 LNB Bancorp, Inc. and
(2-3-4) The Lorain National Bank
JEFFREY F. RIDDELL PRESIDENT 1995 1995
Age 44 Consumers Builders Supply
Company
PRESIDENT AND
CHIEF EXECUTIVE OFFICER
Consumeracq, Inc.
THOMAS P. RYAN EXECUTIVE VICE PRESIDENT 1989 1989
Age 57 AND SECRETARY/TREASURER
LNB Bancorp, Inc.
EXECUTIVE VICE PRESIDENT
AND SECRETARY
The Lorain National Bank
DON A. SANBORN RETIRED(D) 1971 1983
Age 72
(1-3)
-6-
END OF PRINTED PAGE 6
<PAGE>7
LORAIN
NATIONAL
BANK LNB BANCORP,
PRINCIPAL OCCUPATION DIRECTOR INC. DIRECTOR
NAME AND AGE FOR THE PAST FIVE YEARS SINCE SINCE
T. L. SMITH, M.D RETIRED PHYSICIAN 1968 1983
Age 82
(1-2-4-5)
EUGENE M. SOFRANKO PRESIDENT AND CHIEF 1974 1983
Age 65 EXECUTIVE OFFICER
(1-2-4-5) Lorain Glass Company, Inc.
PAUL T. STACK MANUFACTURER'S 1974 1983
Age 66 REPRESENTATIVE
(1-2-3) Coley's Inc. and
A-1 Welding and Fabricating, Inc.
LEO WEINGARTEN RETIRED 1964 1983
Age 76
(2-4-5)
(1) Member of Audit Committee
(2) Member of Executive Committee
(3) Member of Trust Committee
(4) Member of Pension/Fringe Benefit Committee
(5) Member of Incentive Stock Option Committee
(6) Executive Committee Alternate
(A) The Bank has retained the law firm of Cook & Batista Co.,
L.P.A. as legal counsel for the last several years. During the
last fiscal year, The Lorain National Bank has paid to Cook &
Batista, Co., L.P.A. an amount of $122,616.00. It is anticipated
that this relationship will continue during the current fiscal year.
(B) During the last fiscal year, The Lorain National Bank has paid
to The Lorain Printing Company an amount of $49,079.00 for
stationery, supplies and other printed material. It is anticipated that
such business relationship will continue during the current fiscal year.
(C) The Executive Committee also serves as the Compensation Committee.
(D) Mr. Don A. Sanborn, a director of the Bank for 25 years and a director of
the Corporation since its inception, has elected not to stand for re-
election when his term expires on April 16, 1996. His past service to the
Bank and Corporation has been greatly appreciated. We wish him well.
(E) Mr. Robert M. Campana, Managing Director of P.C. Campana, Inc. was elected
a director of the Bank and Corporation on February 20, 1996. He will join
the class of directors standing for re-election on April 15, 1997. We
welcome Mr. Campana to both boards.
EXECUTIVE COMPENSATION
LNB Bancorp, Inc. did not pay any separate compensation, other than
Corporation director fees, to its executive officers during 1995, 1994, and
1993. All executive compensation was paid by Lorain National Bank. The
information which follows discloses the annual and long term compensation for
services in all capacities to the Corporation and the Bank for the fiscal years
ended December 31, 1995, 1994 and 1993, for all persons who were, during 1995,
(i) the chief executive officer and (ii) the other most highly compensated
officers of the Bank who made in excess of $100,000 during 1995 (the Named
Executive Officers).
-7-
<PAGE>8
END OF PRINTED PAGE 7
SUMMARY COMPENSATION TABLE
The named executive officers disclosure requirements affect the
Chief Executive Officer and those executive officers earning more than
$100,000 in salary and bonuses. In 1995, 1994 and 1993, Mr. Stanley G.
Pijor, Chairman and Chief Executive Officer and Mr. James F. Kidd, President
and Chief Operating Officer, met the criteria for disclosure. In 1995 and
1994, Mr. Thomas P. Ryan, Executive Vice President and Secretary/Treasurer, met
the criteria for disclosure.
The following table discloses the annual salary, bonuses and all
other compensation awards and payouts for services in all capacities
to the Corporation and the Bank for the fiscal years ended December
31, 1995, 1994 and 1993.
Compensation (1)
-----------------------------------------------
Annual
Name and -------------------------------- All
Principal Position Year Salary Bonus Other (2)
- ----------------------------------------------------------------------
Stanley G. Pijor 1995 $241,212 $15,000 $28,288
Chairman and 1994 $186,044 $15,000 $61,483
Chief Executive Officer 1993 $177,334 $10,000 $64,258
James F. Kidd 1995 $124,000 $15,000 $18,427
President and Chief 1994 $104,556 $15,000 $15,646
Operating Officer 1993 $ 94,634 $10,000 $11,903
Thomas P. Ryan 1995 $ 99,375 $15,000 $15,693
Executive Vice President 1994 $ 92,323 $15,000 $14,450
and Secretary/Treasurer
(1) The aggregate of Other Annual Compensation is less than 10% of the
total of annual salary and bonus for all individuals for all years
presented and therefore is not required to be reported under the
SEC rules.
(2) All Other Compensation consisted of the following:
Stanley G. Pijor: 1995 1994 1993
Contribution, in Mr. Pijor's
behalf to:
The Bank's Stock Purchase Plan $ 4,500 $ 5,202 $ 5,390
The Bank's Employee Stock
Ownership Plan $10,959 $10,939 $12,494
Mr. Pijor's Supplemental
Retirement Agreement $ 0 $37,441 $37,441
Mr. Pijor's Supplemental
Life Insurance $ 6,600 $ 6,901 $ 7,758
Retirement and Anniversary
Stock Award $ 4,454 $ 0 $ 0
Corporation director's fees $ 1,775 $ 1,000 $ 1,175
<PAGE>9
James F. Kidd: 1995 1994 1993
Contribution, in Mr. Kidd's
behalf to:
The Bank's Stock Purchase Plan $ 4,176 $ 3,909 $ 2,796
The Bank's Employee Stock
Ownership Plan $10,236 $ 8,860 $ 6,959
Mr. Kidd's Supplemental
Life Insurance $ 2,239 $ 2,077 $ 1,348
Corporation director's fees $ 1,775 $ 800 $ 800
Thomas P. Ryan: 1995 1994
Contribution, in Mr. Ryan's
behalf to:
The Bank's Stock Purchase Plan $ 3,431 $ 3,508
The Bank's Employee Stock
Ownership Plan $ 8,518 $ 7,993
Mr. Ryan's Supplemental
Life Insurance $ 1,969 $ 1,949
Corporation director's fees $ 1,775 $ 1,000
-8-
END OF PRINTED PAGE 8
OPTIONS GRANTS TABLE (last fiscal year)
There were no stock options granted by the Corporation or the Bank
in 1995.
LONG TERM INCENTIVE PLAN AWARD TABLE (last fiscal year)
There were no long term incentive plans or plan awards in 1995.
OPTION EXERCISES AND YEAR END VALUE TABLE (last fiscal year)
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUE(1)
Value of
Number of Unexercised
Unexercised In-the-Money
Option Option
Shares Shares Shares
Acquired Value at FY-End(#) at FY-End ($)
on Realize Exercisable/ Exercisable/
Name Exercise(#) ($)(2) Unexercisable Unexercisable(2)
- --------------------------------------------------------------------------
Stanley G. Pijor 10,481 $184,549 0/0 $ 0/$0
James F. Kidd 0 $0 2,060/0 $14,650/$0
Thomas P. Ryan 0 $0 2,060/0 $14,650/$0
(1) All amounts reflect the five-for-four stock split in April of 1995.
(2) Market value of underlying securities at exercise date or year
end, as the case may be, minus the exercise or price of "in-the-money"
options.
<PAGE>10
COMPENSATION COMMITTEE REPORT
The Executive Committee of the Bank meets annually to review all
officer's salaries. The criteria used in determining salaries and
bonuses of all officers (other than the Chief Executive Officer, Mr.
Stanley G. Pijor) is based upon industry peer group, national surveys
and performance judgements as to the past and expected future
contributions of the individual officers. In addition, the Committee
periodically is advised by independent compensation consultants
concerning salary competitiveness.
The compensation paid to the Chief Executive Officer (Mr. Stanley
G. Pijor) is based upon an "Employment Agreement", a "Supplemental
Retirement Agreement", and a "Consulting Agreement". The terms and
conditions of these three (3) agreements are more fully discussed in
the following paragraphs.
In 1995, Fifteen Thousand Dollar ($15,000.00) bonuses were granted
to Messrs. Pijor, Kidd and Ryan in addition to the compensation called
for under the terms of the aforementioned agreements and criteria. The
Executive Committee granted these bonuses based upon the Committee's
assessment of the individual performance of Messrs. Pijor, Kidd and
Ryan during 1995 and their contributions to the successful management
of the Corporation and the Bank. Messrs. Pijor, Kidd and Ryan were not
present during discussion of this bonus payment.
The members of the Executive Committee are:
James L. Bardoner T. L. Smith, M.D.
Daniel P. Batista Eugene M. Sofranko
David M. Koethe Paul T. Stack
Stanley G. Pijor Leo Weingarten
-9-
END OF PRINTED PAGE 9
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 1995, Mr. Stanley G. Pijor, Chairman and Chief Executive
Officer, served on the Executive Committee of the Bank. The Executive
Committee also serves as the Compensation Committee of the Bank. Mr.
Pijor did not participate in any of the deliberation relative to his
compensation.
EMPLOYMENT AGREEMENTS
On December 31, 1987, an Employment Agreement was entered into
between Mr. Stanley G. Pijor and The Lorain National Bank. The
Agreement became effective January 1, 1988 and remained in effect
through December 31, 1995. The Agreement provided for Mr. Pijor to
maintain the highest executive position in the organization. Mr. Pijor
was compensated at the initial rate of One Hundred Twenty Nine
Thousand Six Hundred Seventy Five Dollars ($129,675.00) with a five
percent (5%) raise effective June 1st of each year thereafter. Mr.
Pijor continued to receive his present fringe benefits and such
additional benefits as are set forth in the Bank's Employee Benefit
Program. In determining the compensation payable under the Agreement,
the Board of Directors reviewed compensation paid to presidents of
financial institutions similar in size to The Lorain National Bank.
<PAGE>11
As of September 1, 1995, Mr. James F. Kidd entered into an Employment
Agreement with LNB Bancorp, Inc. and The Lorain National Bank. The Agreement
provides for Mr. Kidd's employment until he reaches the age of 65 as President.
Mr. Kidd shall be compensated at the initial rate of One Hundred Twenty Four
Thousand Dollars ($124,000.00) with an annual compensation review each year
thereafter. Mr. Kidd will continue to receive his present fringe benefits and
such additional benefits as are set forth in the Bank's Employee Benefit
Program. If the Agreement is terminated earlier other than for just cause, or
by Mr. Kidd, then he will be entitled to the salary and benefits described above
for a period of up to two (2) years.
As of September 1, 1995, Mr. Thomas P. Ryan entered into an Employment
Agreement with LNB Bancorp, Inc. and The Lorain National Bank. The Agreement
provides for Mr. Ryan's employment until he reaches the age of 65 as Executive
Vice President. Mr. Ryan shall be compensated at the initial rate of Ninety
Seven Thousand Five Hundred Dollars ($97,500.00) with an annual compensation
review each year thereafter. Mr. Ryan will continue to receive his present
fringe benefits and such additional benefits as are set forth in the Bank's
Employee Benefit Program. If the Agreement is terminated earlier other than for
just cause, or by Mr. Ryan, then he will be entitled to the salary and benefits
described above for a period of up to two (2) years.
SUPPLEMENTAL RETIREMENT AGREEMENT
On December 31, 1987, the Bank entered into a Supplemental
Retirement Agreement (SRA) with Mr. Stanley G. Pijor. The purpose of
the SRA was to provide supplemental retirement benefits to Mr. Pijor in
addition to the benefits provided by the Bank's qualified retirement
plans. The SRA was adopted to assist the Bank in retaining the
services of Mr. Pijor through his normal retirement date. The SRA was
designed to provide for the monthly payment or annual payment (at Mr.
Pijor's election) in the event of: (a) normal retirement on or after
July 1, 1995; (b) permanent disability; (c) death; or (d) discharge
"without cause". The SRA is fully funded by means of a corporate owned life
insurance policy which was paid for in eight (8) equal annual premium payments
of Thirty Seven Thousand Four Hundred Thirty One Dollars and Twenty Cents
($37,431.20) from 1987 through 1994. Under terms of this agreement, Mr. Pijor
began receiving annual supplemental retirement benefits for ten (10) years of
$50,000 commencing January, 1996.
-10-
END OF PRINTED PAGE 10
<PAGE>12
CONSULTING AGREEMENT
On March 15, 1994, the Bank and the Corporation entered into a
Consulting Agreement (The Agreement) with Mr. Stanley G. Pijor. The
Agreement provides that Mr. Pijor shall receive a consulting fee of
$85,000 each year for a period of five (5) years commencing January 1,
1996. The Agreement also stipulates that Mr. Pijor will be provided
with an automobile and will be reimbursed for reasonable expenses
relative to his duties as a consultant during the term of the
Agreement. Termination of the Agreement (by either party) would not
prejudice Mr. Pijor's right to receive the benefits referred to above
for a period of up to two (2) years.
PENSION PLAN
The Bank sponsors The Lorain National Bank Retirement Pension Plan
(the Plan) covering substantially all employees of the Bank. An
employee is eligible to participate on January 1 or July 1 after the
attainment of age twenty-one (21) and completion of one year of service, as
defined in the Plan. The Bank's 1995 contribution to the Plan was $250,017.
The amount of contributions with respect to a specific person is not and cannot
readily be calculated on an individual basis.
Participants are eligible for normal retirement upon reaching age
sixty-five (65). Annual benefit payments are determined as a percentage for the
five (5) consecutive plan years that yield the highest average salary.
Participants in the Plan prior to January 1, 1989 will have annual benefit
payments reduced if they have less than fifteen (15) years of continuous
employment upon retirement. Participants who join the Plan after January 1, 1989
will have benefit payments reduced if they have less than twenty-five (25) years
of continuous employment upon retirement. The normal form of benefit
payment is a joint and survivor annuity. Benefits become fully vested
after a participant has completed five (5) years of service. The Plan
also provides for the payment of early retirement, death, disability,
and deferred vested benefits in the form of a lump sum distribution, or
monthly annuity.
Annual benefit payments under the provisions of the Plan are computed by a
formula, the factors of which include annual compensation, years of service and
the social security taxable wage base.
Assuming the participant selects the benefit payable in a ten (10) year
Certain and Life Annuity at normal retirement date, the following table reflects
annual benefits payable to the employee based upon average annual compensation
levels and twenty-five (25) years of service.
Employee's Annual Estimated Pension
Final Average Payments Assuming Minimum of
Annual Compensation 25 Years of Service
$250,000* $76,413
200,000* 76,413
150,000 76,413
100,000 49,538
*The current annual compensation limit with respect to determining an employee's
annual pension payment is limited in 1994 by the Internal Revenue Code to
$150,000. The Plan reflects the annual compensation limit and this results in a
maximum annual pension payment of $76,413. Therefore, an employee's annual
estimated pension payment for final average compensation levels of $150,000 and
above remains at the $76,413 level. Pension benefits accrued prior to 1995
-11-
END OF PRINTED PAGE 11
<PAGE>13
are grandfathered, if their calculated benefit is greater than $76,413. These
pension payments do not reflect any additional retirement benefits which the
employee may receive in the form of Social Security and other forms of
supplemental retirement benefits. Messrs. Pijor, Kidd and Ryan have forty,
(40), thirty-one (31) and thirty-four (34) credited years of service
respectively, under the provisions of the Plan.
PERFORMANCE GRAPH
The graph which follows compares the five (5) year cumulative total return
from investing $100 on December 31, 1990 in each of LNB Bancorp, Inc. common
stock, the Standard & Poor's 500 index (S&P 500 Index) of companies and the
National Association of Securities Dealers Association Quotation System Banks
Index (NASDAQ Banks) of companies, with dividends assumed to be reinvested
when received.
Comparison of Five Year Cumulative Total Return*
AMONG LNB BANCORP, INC, THE S&P 500 INDEX AND NASDAQ BANKS INDEX
(PERFORMANCE GRAPH FOLLOWS IN PRINTED VERSION WITH YEARS 1990 THROUGH
1995 ON THE X-AXIS AND CUMULATIVE INVESTMENT ON THE Y-AXIS IN $100
INCREMENTS RANGING FROM $0 TO $500. THE CO-ORDINATES, BY YEAR, WHICH
ARE PRESENTED IN THE TABLE BELOW ARE PLOTTED ON THE PREVIOUSLY DESCRIBED
GRID ALONG WITH AN ACCOMPANYING LEGEND FOR IDENTIFICATION PURPOSES.)
* $100 INVESTED ON 12/31/90 ON STOCK OR INDEX - INCLUDING REINVESTMENT
OF DIVIDENDS.
DECEMBER 31,
---------------------------------------------------------------------------
1990 1991 1992 1993 1994 1995
---------------------------------------------------------------------------
LNB Bancorp, Inc. $100 $113 $129 $158 $191 $223
---------------------------------------------------------------------------
S&P 500 Index $100 $130 $140 $155 $157 $215
---------------------------------------------------------------------------
NASDAQ Banks Index $100 $164 $239 $272 $271 $404
---------------------------------------------------------------------------
-12-
END OF PRINTED PAGE 12
BENEFICIAL OWNERSHIP OF SHARES
The following table reflects as of December 31, 1995, any person known to the
Corporation to be the beneficial owner of more than five percent (5%) of any
class of the Corporation's voting securities, consisting of common stock only,
as well as the total number of shares of common stock beneficially owned by each
director, nominee, and the director and executive officers of the Corporation as
a group.
<PAGE>14
Five Percent Beneficial Ownership
Amount and Nature Percent
Name and Address of of Beneficial of
Beneficial Owner Ownership Class
Standen and Co. as nominee for
The Lorain National Bank 576,920(1) 14.29%
457 Broadway
Lorain, Ohio 44052
(1) The Bank, a wholly owned subsidiary of LNB Bancorp, Inc. (a U. S.
Corporation) disclaims beneficial ownership of all shares. The shares
were held by the Bank in various accounts administered by it, as
fiduciary, for the benefit of beneficiaries, donors, or principals of
such accounts. The Bank, as fiduciary, had (a) sole power to vote
97,495 shares; (b) sole investment power to purchase/sell, but no
power to vote on 223,490 shares; (c) shared investment power with sole
power to vote with respect to 37,767 shares; and (d) no investment
power and no power to vote on 218,168 shares. Shares of the
Corporation held by the Bank in various fiduciary capacities will be
voted only in accordance with directions, approvals or instructions
where called by the governing instruments or by law, and in the
absence of special factors affecting any individual account, will be
voted in accordance with management's recommendations where the Bank
as fiduciary has authority to determine the manner of voting.
BENEFICIAL OWNERSHIP OF MANAGEMENT (As of February 15, 1996)
Sole Shared Total Amount
Investment and Investment and of Beneficial Percent
Name Voting Power Voting Power Ownership of Class
James L. Bardoner 8,163 598 8,761 .22%
Daniel P. Batista 22,435 45,171 67,606 1.67%
Robert M. Campana 2,000 0 2,000 .05%
Wellsley O. Gray 7,957 4,552 12,509 .31%
James F. Kidd 44,561 0 44,561 1.10%
David M. Koethe 53,500 177 53,677 1.33%
Benjamin G. Norton 43,208 44,570 87,778 2.17%
Stanley G. Pijor 72,206 32,007 104,213 2.58%
Jeffrey F. Riddell 9,500 24,476 33,976 .84%
Thomas P. Ryan 36,492 1,220 37,712 .93%
Don A. Sanborn 12,182 0 12,182 .30%
T. L. Smith, M.D. 12,988 8,757 21,745 .54%
Eugene M. Sofranko 6,432 21,004 27,436 .68%
Paul T. Stack 8,629 1,197 9,826 .24%
Leo Weingarten 103,788 8,353 112,141 2.78%
Executive Officers
who are not
Directors 91,286 378 91,664 2.27%
------- -------- ------- ------
All Directors and
Executive Officers
as a Group 535,327 192,460 727,787 18.01%
======= ======== ======= ======
-13-
END OF PRINTED PAGE 13
<PAGE>15
INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS
Some of the directors of the Corporation and the companies with
which they are associated, are customers of and had banking
transactions with the Bank in the ordinary course of the Bank's
business during 1995. Loans and commitments to loans included in such
transactions were made on substantially the same terms, including
interest rates and collateral, as were those prevailing at the time
for comparable transactions with other persons, and in the opinion of
the management of the Bank, do not involve more than a normal risk of
collectability or present other unfavorable features.
STOCK DIVIDEND
A stock dividend of approximately 80,808 shares of common stock (2%)
is recommended by the Board of Directors. SUBJECT TO THE VOTE OF SHARE-
HOLDERS OWNING TWO-THIRDS OR MORE OF THE STOCK OF THE CORPORATION, the stock
dividend will be payable to shareholders of record April 16, 1996. This
stock dividend is recommended as a distribution of earnings of the Corporation
and to conserve the cash assets.
The stock dividend will consist of approximately 80,808 shares which will
increase the total number of shares outstanding to approximately 4,121,195.
As a result of the stock dividend, a transfer of approximately $80,808 will be
made from retained earnings increasing the common stock of the Corporation to
approximately $2,242,000. An additional amount of approximately $2,161,000
will be transferred from retained earnings to surplus. The stock dividend
will not change the common stock par value or the total equity capital of the
Corporation.
The number of shares to be issued and the dollar amounts discussed above are
based upon shares outstanding and stock bid prices as of March 4, 1996. The
actual stock dividend will be calculated based upon shares outstanding and
stock bid prices on the record date.
No fractional shares will be issued. The Corporation will sell full shares
representing all the fractions to the highest bidder after having solicited
sealed bids from at least three (3) licensed stockbrokers. The proceeds of
the sale shall be distributed pro rata to shareholders who otherwise would be
entitled to fractional shares.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE DECLARATION
OF A 2% STOCK DIVIDEND.
COMMON STOCK PRICES
Trading Ranges of Common Stock-Bid Price
1995 1994
HIGH LOW HIGH LOW
First Quarter $24.60 $24.10 $22.20 $21.00
Second Quarter 26.50 24.60 23.40 22.20
Third Quarter 27.00 26.50 24.00 23.40
Fourth Quarter 27.50 27.00 24.10 24.00
Bid prices are taken from those published daily by a newspaper of general
circulation in Lorain County, Ohio.
PRINCIPAL ACCOUNTANTS
The independent accounting firm of KPMG Peat Marwick LLP has served
as the principal accountants for the Bank since 1972. A representative
of the firm will be present at the Annual Meeting and will be available to
respond to questions and issue a statement if so desired.
-14-
END OF PRINTED PAGE 14
<PAGE>16
SHAREHOLDER PROPOSALS FOR NEXT ANNUAL MEETING
Shareholders may submit proposals appropriate for shareholder action
at the Corporation's Annual Meeting consistent with the regulations of
the Securities and Exchange Commission. For proposals to be considered
for inclusion in the Proxy Statement for the 1997 Annual Meeting, they
must be received by the Corporation no later than December 1, 1996.
Such proposals should be directed to LNB Bancorp, Inc., Attention:
Shareholder Relations, 457 Broadway, Lorain, Ohio 44052.
OTHER BUSINESS
Management is not aware of any other matter which may be presented
for action at the meeting other than the matters set forth herein.
Should any matter other than those set forth herein be presented for a
vote of the shareholders, the proxy in the enclosed form directs the
persons voting such proxy to vote in accordance with their judgement.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Securities Exchange Act requires the Corporation's
officers and directors to file reports of ownership and changes of ownership of
the Corporation's registered securities on Forms 3, 4 and 5 with the Securities
and Exchange Commission (SEC).
The Corporation believes that all officers and directors complied with all
filing requirements applicable to them with respect to transactions during
fiscal year 1995.
ANNUAL REPORT
A copy of the Corporation's Annual Report has been mailed to
shareholders prior to the meeting. The Annual Report is not intended
to be part of this Proxy Statement. A report of the operations of the
Corporation and the Bank for the fiscal year ended December 31, 1995
will be presented at the meeting. A copy of the Corporation's Annual
Report on Form 10-K under the Securities Exchange Act of 1934 is
available to shareholders without charge upon request to Thomas P.
Ryan, Executive Vice President and Secretary/Treasurer, LNB Bancorp,
Inc., 457 Broadway, Lorain, Ohio 44052.
By Order of the Board of Directors
/s/ Thomas P. Ryan
Thomas P. Ryan
Executive Vice President
and Secretary/Treasurer
-15-
END OF PRINTED PAGE 15
PAGE 16 LEFT BLANK INTENTIONALLY
END OF PRINTED PAGE 16
<PAGE>17
PROXY ANNUAL MEETING LNB BANCORP, INC., LORAIN, OHIO
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoint JAMES L. BARDONER, DAVID M. KOETHE
and DANIEL P. BATISTA, as Proxies, each with the power to appoint
his substitute, and hereby authorize them to represent and to
vote, as designated below, all the shares of Common Stock of the
LNB Bancorp, Inc. held on record by the undersigned on March 8,
1996, at the Annual Meeting of Shareholders to be held on April
16, 1996 or any adjournment thereof.
1. ELECTION OF DIRECTORS
[ ] FOR all nominees listed below (except as marked to the
contrary below)
[ ] WITHHOLD AUTHORITY to vote for all nominees listed below
James L. Bardoner, Wellsley O. Gray, Benjamin G. Norton,
T.L. Smith, M.D.
(Instruction: To withhold authority to vote for any individual nominee write
that nominee's name on the space provided below.)
- -----------------------------------------------------------------
2. STOCK DIVIDEND - Increase the outstanding common stock of LNB Bancorp, Inc.
by declaration of a stock dividend consisting of approximately 80,808 shares
of common stock of $1.00 par value each, and the terms and conditions
thereof.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
In their discretion, the Proxies are authorized to vote upon such other business
as may properly come before the meeting.
This proxy when properly executed will be voted in the manner directed herein by
the undersigned stockholder. If no direction is made, this proxy will be voted
for proposals 1 and 2.
Dated -----------, 1996 Number of shares in my/our name ---------
-------------------------- (L.S.)
-------------------------- (L.S.)
NOTE: Please sign exactly as name appears above. When signing
as attorney, executor, administrator, trustee or guardian, please
give full title as such. If a corporation, please sign in full
corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized
person.
YOUR VOTE IS IMPORTANT. PLEASE MARK, SIGN, DATE AND MAIL THIS
PROXY FORM WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING.
A RETURN ENVELOPE IS ENCLOSED FOR YOUR CONVENIENCE.
Please read and vote on other side.
