<PAGE>1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10K/A
Annual Report Pursuant to Section 13 OR 15(d) of
the Securities Exchange Act of 1934
For the fiscal year ended Commission file
December 31, 1996 number 0-13203
Amendment Number 1
LNB Bancorp, Inc.
(Exact name of the registrant as specified in its Charter)
Ohio 34-1406303
(State of incorporation) (I.R.S. Employer Identification No.)
457 Broadway, Lorain, Ohio 44052-1769
(Address of principal executive offices) (Zip Code)
(216) 244 - 6000
(Registrant's telephone number, including area code)
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE
SECURITIES EXCHANGE ACT OF 1934:
Title of Each Class Name of Each Exchange on Which Registered
Common Stock, Par Value $1.00 NASDAQ - OTC
Per Share
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 is not contained herein, and will not be
contained, to the best of 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 aggregate market value of the voting stock held by non-affiliates
of the Registrant at May 31, 1997 was approximately $87,657,000.
The number of shares of Registrant's Common Stock outstanding on
May 31, 1997 was 4,222,275.
1
<PAGE>2
The undersigned registrant hereby amends the following items of its
Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 on Form 10-K for the fiscal year ended December 31, 1996 for
the purpose of furnishing financial statements for The Lorain National
Bank Employee Stock Ownership Plan and The Lorain National Bank Stock
Purchase Plan:
PART II
ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(3) Exhibits:
(99.1) Annual report on Form 11-K of The Lorain National Bank
Employee Stock Ownership Plan (registration number
33-65036) for the plan year ended December 31, 1996.
(99.2) Annual report on Form 11-K of The Lorain National Bank
Stock Purchase Plan (registration number 33-65036)
for the plan year ended December 31, 1996.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities and
Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
LNB Bancorp, Inc.
(Registrant)
Date: June 25, 1997 By: /s/ Gregory D. Friedman
------------- -----------------------
Gregory D. Friedman
Senior Vice President,
Chief Operating Officer and
Chief Financial Officer
/s/ Mitchell J. Fallis
-----------------------
Mitchell J. Fallis
Vice President and
Chief Accounting Officer
2
<PAGE>3
LNB Bancorp, Inc.
Form 10K/A
Exhibit Index
Pursuant to Item 601 (a) of Regulation S-K
S-K Reference Exhibit
Number
(99.1) Annual report on Form 11-K of The Lorain National Bank
Employee Stock Ownership Plan (registration number
33-65036) for the plan year ended December 31, 1996.
(99.2) Annual report on Form 11-K of The Lorain National Bank
Stock Purchase Plan (registration number 33-65036)
for the plan year ended December 31, 1996.
3
<PAGE>4
LNB Bancorp, Inc.
Exhibit to Form 10 - K/A
(for the fiscal year ended December 31, 1996)
S - K Reference Number (99.1)
Annual report on Form 11-K of The Lorain National Bank
Employee Stock Ownership Plan (registration number 33-65036)
for the plan year ended December 31, 1996 filed as an
amendment to the annual report on Form 10-K.
4
<PAGE>5
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 11-K
FOR ANNUAL REPORTS OF EMPLOYEE STOCK PURCHASE, SAVINGS
AND SIMILAR PLANS PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
[ X ] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996
Note: This Form 11-K is being filed as an amending exhibit to the
Form 10-K of LNB Bancorp, Inc. for the fiscal year ended December
31, 1996 pursuant to Rule 15d-21, therefore no fee is required.
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
---------------- -----------
Commission file number 0-13203
THE LORAIN NATIONAL BANK EMPLOYEE STOCK OWNERSHIP PLAN
------------------------------------------------------
(Full title of the plan)
Lorain National Bank 457 Broadway Lorain, Ohio 44052-1769
-------------------------------------------------------------
(Name of issuer of the securities held pursuant to the plan and
the address of its principal executive office)
5
<PAGE>6
REQUIRED INFORMATION
Audited plan financial statements and schedules prepared in accordance
with the financial reporting requirements of the Employee Retirement
Income Securities Act of 1974, as amended, are filed herewith in lieu of
the requirements of an audited statement of financial condition and
statement of income and changes in plan equity.
Financial Statements and Exhibits
A) The following financial statements and schedules are filed as part of
this annual report.
1) Independent Auditors' Report
2) Statements of Assets Available for Distribution to Participants
- December 31, 1996 and 1995
3) Statements of Changes in Assets Available for Distribution to
Participants - Years ended December 31, 1996 and 1995.
4) Notes to Financial Statements - December 31, 1996 and 1995
5) Schedule 1 - Item 27a - Assets Held for Investment Purposes
(at the end of the Plan year) - December 31, 1996
6) Schedule 2 - Item 27d - Reportable Transactions -
Year ended December 31, 1996
B) The following exhibit is filed as part of this annual report:
24. Consent of Independent Accountants
6
<PAGE>7
(COVER EMBOSSED WITH LOGO)
KPMG Peat Marwick LLP
The Lorain National Bank
Employee Stock Ownership Plan
Financial Statements and Schedules
December 31, 1996 and 1995
(With Independent Auditors' Report Thereon)
7
<PAGE>8
(LETTERHEAD)
(LOGO)
KPMG Peat Marwick LLP
1500 National City Center
1900 East Ninth Street
Cleveland, OH 44114-3495
Independent Auditors' Report
----------------------------
The Board of Directors
The Lorain National Bank
Sponsor of The Lorain National Bank
Employee Stock Ownership Plan:
We have audited the accompanying statements of assets available for
distribution to participants of The Lorain National Bank Employee Stock
Ownership Plan (Plan) as of December 31, 1996 and 1995, and the related
statements of changes in assets available for distribution to participants
for the years then ended. These financial statements are the
responsibility of the Plan'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 assets available for distribution to
participants of the Plan as of December 31, 1996 and 1995, and the changes
in those assets for the years then ended in conformity with generally
accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the
basic financial statements taken as a whole. The supplemental schedules
of assets held for investment purposes at December 31, 1996, and
reportable transactions for the year ended December 31, 1996, are
presented for purposes of additional analysis and are not a required part
of the basic financial statements, but are supplementary information
required by the Department of Labor's Rules and Regulations for Reporting
and Disclosure under the Employee Retirement Income Security Act of 1974.
The supplemental schedules have been subjected to the auditing procedures
applied in the audit of the basic financial statements and, in our
opinion, are fairly stated in all material respects in relation to the
basic financial statements taken as a whole.
/s/ KPMG Peat Marwick LLP
Cleveland, Ohio
April 7, 1997
(LOGO)
Member Firm of
KPMG International 8
<PAGE>9
THE LORAIN NATIONAL BANK
EMPLOYEE STOCK OWNERSHIP PLAN
Statements of Assets Available for Distribution to Participants
December 31, 1996 and 1995
1996 1995
---- ----
Assets available for distribution
to participants
Short-term cash investments $ 408,177 694,122
Investments, at fair value (note 3)
Common stock - LNB Bancorp, Inc. 3,103,290 2,388,348
United States government securities 98,562 251,281
----------- ----------
Total investments 3,201,852 2,639,629
Receivables
Employer contribution 150,000 60,000
Dividends and interest 22,564 22,597
Due from Federal Reserve Bank - 150,000
Due from LNB Trust Department - 6,331
----------- ----------
Total Receivables 172,564 238,928
----------- ----------
Assets available for
distribution to participants $ 3,782,593 3,572,679
=========== ==========
Assets available for distribution to
participants
Assets payable to terminating participants $ 316,157 245,310
Assets available for continuing participants 3,466,436 3,327,369
----------- ----------
$ 3,782,593 3,572,679
=========== ==========
See accompanying notes to financial statements.
9
<PAGE>10
THE LORAIN NATIONAL BANK
EMPLOYEE STOCK OWNERSHIP PLAN
Statements of Changes in Assets Available for Distribution to Participants
Years ended December 31, 1996 and 1995
1996 1995
---- ----
Additions
Investment income - dividends and interest $ 97,502 95,447
Employer contribution 400,000 360,000
Net appreciation in fair value of investments
(note 3) 188,350 287,935
-------- --------
Total additions 685,852 742,382
-------- --------
Distributions to participants (475,938) (190,763)
-------- --------
Increase in assets available for distribution
to participants 209,914 551,619
Assets available for distribution to participants
Beginning of year 3,572,679 3,021,060
--------- ---------
End of year $3,782,593 3,572,679
========== =========
See accompanying notes to financial statements.
10
<PAGE>11
THE LORAIN NATIONAL BANK
EMPLOYEE STOCK OWNERSHIP PLAN
Notes to Financial Statements
December 31, 1996 and 1995
(1) Description of the Plan
-----------------------
The following description of The Lorain National Bank Employee Stock
Ownership Plan (Plan) provides only general information. Participants
should refer to the Plan agreement for a more complete description of
the Plan's provisions.
(a) General
-------
The Plan is a defined contribution plan sponsored by The Lorain
National Bank (Bank), a wholly owned subsidiary of LNB
Bancorp, Inc., covering substantially all employees of the
Bank. An employee is eligible to participate in the Plan after
the attainment of age 21 and completion of one year of service,
as defined in the Plan. The Plan is subject to the provisions
of the Employee Retirement Income Security Act of 1974 (ERISA).
Under the terms of the Plan, the Trust Department of the Bank
acts as trustee for the Plan and, as such, manages a trust fund
which includes all of the Plan's assets. The trustee has been
granted discretionary authority concerning purchases and sales
of investments in the trust fund made from employer
contributions.
(b) Bank Contributions
------------------
The amount of the contribution is determined by the Bank's
Board of Directors in its absolute discretion. The Bank is not
required to make a contribution in any specific year.
Contributions are allocated to participants' accounts in the
proportion each participant's annual compensation bears to the
total annual compensation of all participants for that plan
year.
(c) Voluntary Contributions
-----------------------
The Plan does not permit voluntary contributions.
(d) Vesting
-------
Each participant's vested interest in the Bank's contribution
is determined based on the number of years of service, as
defined by the Plan. Forfeitures of nonvested employer
(Continued)
11
<PAGE>12
THE LORAIN NATIONAL BANK
EMPLOYEE STOCK OWNERSHIP PLAN
Notes to Financial Statements
contributions are made available first to reinstate previously
forfeited account balances of former participants. The
remaining forfeitures, if any, are used to reduce the
contribution of the Bank for the plan year in which such
forfeitures occur.
(e) Distributions Upon Termination of Employment
--------------------------------------------
A participant whose employment terminates by reason of
retirement on their early retirement date or on their normal
retirement date, receives their vested benefits. The
participant may elect distribution of their vested benefits
either in a single distribution or in annual, semiannual,
quarterly, or monthly installments.
A participant whose employment is terminated for any reason
other than those designated above may receive a single
distribution of their vested benefits.
(f) Plan Termination
----------------
Although it has not expressed any intention to do so, the Bank
has the right to terminate the Plan subject to the provisions
set forth in ERISA. In the event of Plan termination, the
assets of the Plan will be allocated as prescribed by ERISA and
its related regulations.
(g) Plan Administrator
------------------
The Plan Administrator is the President and Chief Executive
Officer of the Bank.
(2) Summary of Significant Accounting Policies
------------------------------------------
(a) Basis of Presentation
---------------------
The accompanying financial statements of the Plan have been
prepared under the accrual method of accounting.
(b) Investments
-----------
The fair value of investments and changes therein are
determined through the use of current quoted market values.
Purchases and sales are recorded on a trade date basis.
Interest income is recorded on the accrual method of
accounting.
(Continued)
12
<PAGE>13
THE LORAIN NATIONAL BANK
EMPLOYEE STOCK OWNERSHIP PLAN
Notes to Financial Statements
(c) Use of Estimates in the Preparation of Financial Statements
-----------------------------------------------------------
The preparation of financial statements in conformity with
generally accepted accounting prinicples 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.
(d) Payment of Benefits
-------------------
Benefits are recorded when paid.
(3) Investments
-----------
The following table presents the fair values of investments at
December 31, 1996 and 1995:
1996 1995
-------------------- --------------------
Number Number
of Shares Fair of Shares Fair
or Units Value or Units Value
--------- ----- --------- -----
Common stock
LNB Bancorp, Inc. 107,010 $ 3,103,290 86,849 $2,388,348
United States Treasury Notes
$150,000, 6.875%, due
October 31, 1996 - - - 151,969
$100,000, 4.375%, due
November 15, 1996 - - - 99,312
$100,000, 5.875%, due
November 30, 2001 - 98,562 - -
--------- ---------
Total investments $ 3,201,852 $2,639,629
========= =========
During the years ended December 31, 1996 and 1995, the Plan's
investments (including investments bought, sold, and held during the
year)appreciated (depreciated) in value by $188,350 and $286,935,
respectively, as follows:
1996 1995
---- ----
Common Stock - LNB Bancorp, Inc. $ 190,749 260,628
Mutual funds - 9,992
United States government securities (2,399) 16,315
------- -------
$ 188,350 286,935
======= =======
13
<PAGE>14
(4) Administrative Expenses
-----------------------
The administrative expenses of the Plan are paid by the Bank.
(5) Federal Income Taxes
--------------------
The Plan has obtained a favorable determination letter under the
provisions of Section 401.1(b)(3) of the Internal Revenue Code and
is exempt from federal income taxes.
(6) Party In Interest Transactions
------------------------------
The following is a summary of transactions in common stock of LNB
Bancorp Inc., 100 percent owner of the Bank, during the year ended
December 31, 1996:
Number Fair
of Shares Value
--------- ----------
Balance at December 31, 1995 86,849 $ 2,388,348
2% stock dividend 1,865 -
Purchases 22,542 642,065
Distributions (4,246) (117,872)
Net appreciation - 190,749
------- ----------
Balance at December 31, 1996 107,010 $ 3,103,290
======= ==========
14
<PAGE>15
Schedule 1
----------
THE LORAIN NATIONAL BANK
EMPLOYEE STOCK OWNERSHIP PLAN
EIN: 34-0869480
Plan Number: 002
Item 27a - Assets Held for Investment Purposes
(at the end of the Plan year)
December 31, 1996
Column A Column B Column C Column D
- -------- ------------------ -------------------------- -------------
Description of Investment
Identity of Issue, Including Maturity Date,
Borrower, Lessor, Rate of Interest, Collateral
or Similar Party Par or Marturity Value Cost
------------------ -------------------------- -------------
* LNB Bancorp, Inc. 107,010 shares of common $ 2,094,927
stock -------------
* Lorain National Bank Mututal Funds
Treasury Trust Fund 408,177
-------------
United States Treasury United States Treasury Notes
$100,000 par value, 5.875%
due November 30, 2001 99,680
--------------
Total investments $ 2,602,784
==============
Item 27a - Assets Held for Investment Purposes Continued
Column A Column B Column C Column E
- -------- ------------------ -------------------------- -------------
Description of Investment
Identity of Issue, Including Maturity Date,
Borrower, Lessor, Rate of Interest, Collateral Current
or Similar Party Par or Maturity Value Value
------------------ -------------------------- -------------
* LNB Bancorp, Inc. 107,010 shares of common $ 3,103,290
stock -------------
* Lorain National Bank Mututal Funds
Treasury Trust Fund 408,177
-------------
United States Treasury United States Treasury Notes
$100,000 par value, 5.875%
due November 30, 2001 98,562
--------------
Total investments $ 3,610,029
==============
*Party-in-interest
See accompanying independent auditors' report.
15
<PAGE>16
Schedule 2
----------
THE LORAIN NATIONAL BANK
EMPLOYEE STOCK OWNERSHIP PLAN
EIN: 34-0860480
Plan Number: 002
Item 27d - Reportable Transactions
Year ended December 31, 1996
Series transactions, when aggregated, involving an amount in excess of 5
percent of the current value of Plan assets:
Column A Column B Column C Column D Column E
- -------------------- ---------------------- --------- --------- ---------
Total Dollar
Identity of Description Number of Number Value of
Party Involved of Assets Purchases of Sales Purchases
- ------------------- ---------------------- --------- ---------- ---------
LNB Bancorp, Inc. LNB Bancorp, Inc. 3 - $446,315
Common Stock
LNB Bancorp, Inc. LNB Bancorp, Inc. 1 - $195,750
Common Stock
LNB Bancorp, Inc. LNB Bancorp, Inc. - 1 -
Common Stock
Lorain National Bank Treasury Trust Fund 24 - $799,450
Lorain National Bank Treasury Trust Fund - 29 -
Item 27d - Reportable Transactions Continued
Column A Column B Column F Column G Column H
- ---------------------- ----------------- ------------- -------- ---------
Current
Value of
Total Dollar Asset on
Identity of Description Value of Cost of Transaction
Party Involved of Assets Sales Asset Date
- ---------------------- ----------------- ------------- --------- ---------
LNB Bancorp, Inc. LNB Bancorp, Inc. - $446,315 $446,315
Common Stock
LNB Bancorp, Inc. LNB Bancorp, Inc. - $195,750 $195,750
Common Stock
LNB Bancorp, Inc. LNB Bancorp, Inc. 2 $2 $2
Common Stock
Lorain National Bank Treasury Trust Fund - $799,450 $799,450
Lorain National Bank Treasury Trust Fund 1,085,396 $1,085,396 $1,085,396
<PAGE>17
Schedule 2
----------
THE LORAIN NATIONAL BANK
EMPLOYEE STOCK OWNERSHIP PLAN
EIN: 34-0860480
Plan Number: 002
Item 27d - Reportable Transactions
Year ended December 31, 1996
Item 27d - Reportable Transactions Continued
Column A Column B Column I
- ---------------------- ---------------------- -------------
Identity of Description Net Gain
Party Involved of Assets or (Loss)
- ---------------------- ---------------------- -------------
LNB Bancorp, Inc. LNB Bancorp, Inc. -
Common Stock
LNB Bancorp, Inc. LNB Bancorp, Inc. -
Common Stock
LNB Bancorp, Inc. LNB Bancorp, Inc. -
Common Stock
Lorain National Bank Treasury Trust Fund -
Lorain National Bank Treasury Trust Fund -
See accompanying independent auditors' report.
17
<PAGE>18
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Plan Administrator has duly caused this annual report to be signed
on its behalf by the undersigned hereunto duly authorized.
THE LORAIN NATIONAL BANK EMPLOYEE STOCK OWNERSHIP PLAN
------------------------------------------------------
(Name of Plan)
Date: June 25, 1997 By: /s/ Gregory D. Friedman
------------- -----------------------
Gregory D. Friedman
Senior Vice President,
Chief Operating Officer and
Chief Financial Officer
/s/ Mitchell J. Fallis
----------------------
Mitchell J. Fallis
Vice President and
Chief Accounting Officer
18
<PAGE>19
The Lorain National Bank
Employee Stock Ownership Plan
Exhibit to Form 11 - K
(for the fiscal year ended December 31, 1996)
S - K Reference Number (24)
Consent of Independent Accountants.
19
<PAGE>20
(LETTERHEAD)
(LOGO)
KPMG Peat Marwick LLP
1500 National City Center
1900 East Ninth Street
Cleveland, OH 44114-3495
Consent of Independent Accountants
----------------------------------
The Board of Directors
LNB Bancorp, Inc.:
We consent to the incorporation by reference in the Registration Statement
No. 33-65036 of LNB Bancorp, Inc. of our report dated April 7, 1997,
relating to the statements of assets available for distribution to
participants of The Lorain National Bank Employee Stock Ownership Plan as
of December 31, 1996, and 1995, and the related statements of changes in
assets available for distribution to participants for the years then
ended, which report appears in Amendment No. 1 to the 1996 annual report
on Form 10-K of LNB Bancorp, Inc.
/s/ KPMG Peat Marwick LLP
Cleveland, Ohio
June 25, 1997
(LOGO)
Member Firm of
KPMG International
20
<PAGE>21
LNB Bancorp, Inc.
Exhibit to Form 10 - K/A
(for the fiscal year ended December 31, 1996)
S - K Reference Number (99.2)
Annual report on Form 11-K of The Lorain National Bank
Stock Purchase Plan (registration number 33-65036)
for the plan year ended December 31, 1996 filed
as an amendment to the annual report on Form 10-K.
21
<PAGE>22
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 11-K
FOR ANNUAL REPORTS OF EMPLOYEE STOCK PURCHASE, SAVINGS AND
SIMILAR PLANS PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
[ X ] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996
Note: This Form 11-K is being filed as an amending exhibit to the Form
10-K of LNB Bancorp, Inc. for the fiscal year ended December 31,
1996 pursuant to Rule 15d-21, therefore no fee is required.
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
---------------- -----------
Commission file number 0-13203
THE LORAIN NATIONAL BANK STOCK PURCHASE PLAN
--------------------------------------------
(Full title of the plan)
Lorain National Bank 457 Broadway Lorain, Ohio 44052-1769
-------------------------------------------------------------
(Name of issuer of the securities held pursuant to the plan and
the address of its principal executive office)
22
<PAGE>23
REQUIRED INFORMATION
Audited plan financial statements and schedules prepared in accordance
with the financial reporting requirements of the Employee Retirement
Income Securities Act of 1974, as amended, are filed herewith in lieu of
the requirements of an audited statement of financial condition and
statement of income and changes in plan equity.
Financial Statements and Exhibits
A) The following financial statements and schedules are filed as
part of this annual report:
1) Independent Auditors' Report
2) Statements of Assets Available for Distribution to
Participants - December 31, 1996 and 1995
3) Statements of Changes in Assets Available for Distribution
to Participants - Years ended December 31, 1996 and 1995
4) Notes to Financial Statements - December 31, 1996 and 1995
5) Schedule 1 - Item 27a - Assets Held for Investment Purposes
(at the end of the Plan year) - December 31, 1996
6) Schedule 2 - Item 27d - Reportable Transactions -
Year ended December 31, 1996
B) The following exhibit is filed as part of this annual
report:
24. Consent of Independent Accountants
23
<PAGE>24
(COVER EMBOSSED WITH LOGO)
KPMG Peat Marwick LLP
1500 National City Center
1900 East Ninth Street
Cleveland, OH 44114-3495
The Lorain National Bank
Stock Purchase Plan
Financial Statements and Schedules
December 31, 1996 and 1995
(With Independent Auditors' Report Thereon)
24
<PAGE>25
(LETTERHEAD)
(LOGO)
KPMG Peat Marwick LLP
1500 National City Center
1900 East Ninth Street
Cleveland, OH 44114-3495
Independent Auditors' Report
----------------------------
The Board of Directors
The Lorain National Bank
Sponsor of The Lorain National Bank
Stock Purchase Plan:
We have audited the accompanying statements of assets available for
distribution to participants of The Lorain National Bank Stock Purchase
Plan (Plan) as of December 31, 1996 and 1995, and the related statements
of changes in assets available for distribution to participants for the
years then ended. These financial statements are the responsibility of
the Plan'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 assets available for distribution to
participants of the Plan as of December 31, 1996 and 1995, and the changes
in those assets for the years then ended in conformity with generally
accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the
basic financial statements taken as a whole. The supplemental schedules
of assets held for investment purposes at December 31, 1996 and reportable
transactions for the year ended December 31, 1996, are presented for
purposes of additional analysis and are not a required part of the basic
financial statements, but are supplementary information required by the
Department of Labor's Rules and Regulations for Reporting and Disclosure
under the Employee Retirement Income Security Act of 1974. The
supplemental schedules have been subjected to the auditing procedures
applied in the audit of the basic financial statements and, in our
opinion, are fairly stated in all material respects in relation to the
basic financial statements taken as a whole.
/s/ KPMG Peat Marwick LLP
Cleveland, Ohio
April 7, 1997
(LOGO)
Member Firm of
KPMG International 25
<PAGE>26
THE LORAIN NATIONAL BANK
STOCK PURCHASE PLAN
Statements of Assets Available for
Distribution to Participants
December 31, 1996 and 1995
1996 1995
---- ----
Assets
Short-term cash investments $ 6,273 331,059
Investment, at fair value (note 3)
LNB Bancorp, Inc. common stock 3,704,750 3,279,925
Dividends and interest receivable 23,520 20,332
--------- ---------
Assets available for distribution
to participants $ 3,734,543 3,631,316
========= =========
See accompanying notes to financial statements.
26
<PAGE>27
THE LORAIN NATIONAL BANK
STOCK PURCHASE PLAN
Statements of Changes in Assets Available for
Distribution to Participants
Years ended December 31, 1996 and 1995
1996 1995
---- ----
Additions
Investment income
Dividend and interest income $ 85,703 79,770
Net appreciation in fair value of investment 245,029 417,860
--------- ---------
Total investment income 330,732 497,630
--------- ---------
Contributions
Employer 110,136 105,166
Participants 220,252 210,313
--------- ---------
Total contributions 330,388 315,479
--------- ---------
Total additions 661,120 813,109
Deductions
Distributions to participants (557,893) (602,713)
--------- ---------
Increase in assets available for distribution
to participants 103,227 210,396
Assets available for distribution to participants
Beginning of year 3,631,316 3,420,920
--------- ---------
End of year $ 3,734,543 3,631,316
========= =========
See accompanying notes to financial statements.
27
<PAGE>28
THE LORAIN NATIONAL BANK
STOCK PURCHASE PLAN
Notes to Financial Statements
December 31, 1996 and 1995
(1) Description of the Plan
-----------------------
The following description of The Lorain National Bank Stock Purchase
Plan (Plan) provides only general information. Participants should
refer to the Plan agreement for a more complete description of the
Plan's provisions.
(a) General
-------
The Plan is a defined contribution plan sponsored by The Lorain
National Bank (Bank), a wholly owned subsidiary of LNB Bancorp,
Inc., covering substantially all employees of the Bank. An
employee is eligible to participate in the Plan on the January 1
or July 1 after the attainment of age 21 and completion of one
year of service, as defined in the Plan. The Plan is subject to
the provisions of the Employee Retirement Income Security Act of
1974 (ERISA).
Under the terms of the Plan, the Trust Department of the Bank
acts as trustee for the Plan and, as such, manages a trust fund
which includes all of the Plan's assets. The Plan stipulates
that employer and employee contributions will be invested in
units of the LNB Bancorp, Inc. stock fund which primarily
consists of stock of LNB Bancorp, Inc.
(b) Bank Contributions
------------------
The Bank is required to contribute to the Plan for each month,
out of its current or accumulated earnings only, an amount equal
to 50 percent of the respective participants' contributions for
each month.
(c) Participants' Contributions
---------------------------
A participant can make, through payroll deductions,
contributions of one (1) to six (6) percent (in whole integers)
of their compensation. Changes in the amount of compensation
paid to a participant will automatically effect a change in the
amount of the contribution.
(d) Vesting of Contributions
------------------------
Each participant has a fully vested interest in the Bank's
and their contributions as of the date payments are made.
(Continued)
28
<PAGE>29
THE LORAIN NATIONAL BANK
STOCK PURCHASE PLAN
Notes to Financial Statements
(e) Withdrawals While Employed
--------------------------
At any time, subject to certain restrictions, a participant may
elect to withdraw all or a portion of their units.
(f) Distributions Upon Termination of Employment
--------------------------------------------
A participant whose employment terminates by reason of
retirement on their early retirement date or on their normal
retirement date, receives all units credited to their account.
The participant may elect distribution of the units either in a
single distribution or in annual, semiannual, quarterly, or
monthly installments.
A participant whose employment is terminated for any reason
other than those designated above may receive a single
distribution of all units credited to the participant.
(g) Plan Termination
----------------
Although it has not expressed any intention to do so, the Bank
has the right to terminate the Plan subject to the provisions
set forth in ERISA. In the event of Plan termination, the
assets of the Plan will be allocated as prescribed by ERISA and
its related regulations.
(h) Plan Administrator
------------------
The Plan Administrator is the President and Chief Executive
Officer of the Bank.
(2) Summary of Significant Accounting Policies
------------------------------------------
(a) Basis of Presentation
---------------------
The accompanying financial statements of the Plan have been
prepared under the accrual method of accounting.
(b) Investment
----------
The fair value of investments and changes therein are determined
through the use of current quoted market values. Purchases and
sales are recorded on a trade date basis. Interest income
is recorded on the accrual method of accounting.
(Continued)
29
<PAGE>30
THE LORAIN NATIONAL BANK
STOCK PURCHASE PLAN
Notes to Financial Statements
(c) Use of Estimates on the Preparation of Financial Statements
-----------------------------------------------------------
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 liablilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reported
period. Actual results could differ from those estimates.
(d) Payments of Benefits
--------------------
Benefits are recorded when paid.
(3) Investments
-----------
The following table presents the fair values of investments at
December 31, 1996 and 1995:
1996 1995
---------------- -----------------
Number Fair Number Fair
of shares Value of shares Value
--------- ------ --------- -----
LNB Bancorp, Inc. Common Stock 127,750 $3,704,750 119,270 $3,279,925
========== ==========
During the years ended December 31, 1996 and 1995, the Plan's
investments (including investments bought, sold, and held during the
year) appreciated in value by $245,029 and $417,860, respectively, as
follows:
1996 1995
---- ----
LNB Bancorp, Inc. Common stock $245,029 417,860
======== =======
(4) Federal Income Taxes
--------------------
The Plan has obtained a favorable determination letter under the
provisions of Section 401.1(b)(3) of the Internal Revenue Code and is
exempt from federal income taxes.
(5) Administrative Expenses
-----------------------
The administrative expenses of the Plan are paid by the Bank.
30
<PAGE>31
(6) Plan Units
----------
The Plan assigned a total number of 839,488.4 and 902,497.2 units to
participants at December 31, 1996 and 1995, with a per unit value of
$4.4092 and $4.0236, respectively.
(7) Party-In-Interest Transactions
------------------------------
The following is a summary of transactions in common stock of LNB
Bancorp, Inc., 100 percent owner of the Bank, during the year ended
December 31, 1996:
Number
of Shares Fair Value
--------- ------------
Balance at December 31, 1995 119,270.0 $ 3,279,925
Stock dividend 2,427.3 -
Purchases 19,447.0 556,681
Distributions (13,393.0) (376,885)
Sale of fractional shares (1.3) -
Net appreciation - 245,029
---------- ------------
Balance at December 31, 1996 127,750.0 $ 3,704,750
========== ============
31
<PAGE>32
Schedule 1
----------
THE LORAIN NATIONAL BANK
STOCK PURCHASE PLAN
EIN: 34-0860480
PLAN NUMBER: 003
Item 27a - Assets Held for Investment Purposes
(at the end of the Plan year)
December 31, 1996
Column A Column B Column C Column D Column E
- -------- ------------------ ------------------------ ---------- ----------
Description of Investment
Identity of Issue, Including Maturity Date,
Borrower, Lessor, Rate of Interest, Collateral, Current
or Similar Party Par or Maturity Value Cost Value
------------------ ------------------------- ---------- ---------
* LNB Bancorp, Inc. 127,750 shares of common $1,474,626 $3,704,750
stock
* Lorain National Bank Treasury Trust Fund $ 6,273 $ 6,273
* Party-in-interest
See accompanying independent auditors' report.
32
<PAGE>33
Schedule 2
----------
THE LORAIN NATIONAL BANK
STOCK PURCHASE PLAN
EIN: 34-0869480
PLAN NUMBER: 003
Item 27d - Reportable Transactions
Year ended December 31, 1996
Series transactions, when aggregated, involving an amount in excess of 5
percent of the current value of plan assets:
Column A Column B Column C Column D Column E
- ------------------- ----------------- ---------- -------- -----------
Total Dollar
Identity of Description Number of Number Value of
Party Involved of Assets Purchases of Sales Purchases
- ------------------- ----------------- --------- -------- ------------
LNB Bancorp, Inc. LNB Bancorp, Inc.
Common Stock 7 - $325,501
LNB Bancorp, Inc. LNB Bancorp, Inc.
Common Stock 1 - $231,180
LNB Bancorp, Inc. LNB Bancorp, Inc.
Common Stock - 1 -
Lorain National Bank Treasury Trust Fund 39 - $420,641
Lorain National Bank Treasury Trust Fund - 37 -
Item 27d - Reportable Transactions Continued
Column A Column B Column F Column G Column H
- ----------------- ----------------- ------------ ----------- ----------
Current Value
Total Dollar Of Asset on
Identity of Description Value of Cost of Transaction
Party Involved of Assets Sales Assets Sold Date
- ----------------- ----------------- ------------ ----------- ----------
LNB Bancorp, Inc. LNB Bancorp, Inc.
Common Stock - $325,501 $325,501
LNB Bancorp, Inc. LNB Bancorp, Inc.
Common Stock - $231,180 $231,180
LNB Bancorp, Inc. LNB Bancorp, Inc.
Common Stock $ 14 $ 14 $ 14
Lorain National Bank Treasury Trust Fund - $420,641 $420,641
Lorain National Bank Treasury Trust Fund $745,427 $745,427 $745,427
33
<PAGE>34
Schedule 2
----------
THE LORAIN NATIONAL BANK
STOCK PURCHASE PLAN
EIN: 34-0869480
PLAN NUMBER: 003
Item 27d - Reportable Transactions
Year ended December 31, 1996
Item 27d - Reportable Transactions Continued
Column A Column B Column I
- -------------------- ----------------- ----------
Identity of Description Net Gain
Party Involved of Assets or (Loss)
- -------------------- ----------------- ----------
LNB Bancorp, Inc. LNB Bancorp, Inc.
Common Stock -
LNB Bancorp, Inc. LNB Bancorp, Inc.
Common Stock -
LNB Bancorp, Inc. LNB Bancorp, Inc.
Common Stock 10
Lorain National Bank Treasury Trust Fund -
Lorain National Bank Treasury Trust Fund -
See accompanying independent auditors' report.
34
<PAGE>35
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Plan Administrator has duly caused this annual report to be signed
on its behalf by the undersigned hereunto duly authorized.
THE LORAIN NATIONAL BANK STOCK PURCHASE PLAN
--------------------------------------------
(Name of Plan)
Date: June 25, 1997 By: /s/ Gregory D. Friedman
------------- ----------------------------
Gregory D. Friedman
Senior Vice President,
Chief Operating Officer and
Chief Financial Officer
/s/ Mitchell J. Fallis
----------------------------
Mitchell J. Fallis
Vice President and
Chief Accounting Officer
35
<PAGE>36
The Lorain National Bank
Stock Purchase Plan
Exhibit to Form 11 - K
(for the fiscal year ended December 31, 1996)
S - K Reference Number (24)
Consent of Independent Accountants.
36
<PAGE>37
(LETTERHEAD)
(LOGO)
KPMG Peat Marwick LLP
1500 National City Center
1900 East Ninth Street
Cleveland, Ohio 44114-3495
Consent of Independent Accountants
----------------------------------
The Board of Directors
LNB Bancorp, Inc.:
We consent to the incorporation by reference in the Registration Statement
No. 33-65036 of LNB Bancorp, Inc. of our report dated April 7, 1997,
relating to the statements of assets available for distribution to
participants of The Lorain National Bank Stock Purchase Plan as of
December 31, 1996 and 1995, and the related statements of changes in
assets available for distribution to participants for the years then
ended, which report appears in Amendment No. 1 to the 1996 annual report
on Form 10-K of LNB Bancorp, Inc.
/s/ KPMG Peat Marwick LLP
Cleveland, Ohio
June 25, 1997
(LOGO)
Member Firm of
KPMG International
37
