<PAGE>1
Form 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number: 0-13203
LNB Bancorp, Inc.
(Exact name of the registrant as specified on its charter)
Ohio 34-1406303
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
457 Broadway, Lorain, Ohio 44052 - 1769
(Address of principal executive offices) (Zip Code)
(440) 244 - 6000
Registrant's telephone number, including area code
Not Applicable
(Former name, former address and former fiscal year,
if changed since last report)
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,
and (2) has been subject to such requirements for the past 90 days.
YES X NO
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Outstanding at April 27, 1999: 4,122,675 shares
Class of Common Stock: $1.00 par value
<PAGE>2
LNB Bancorp, Inc.
Quarterly Report on From 10-Q
Quarter Ended March 31, 1999
Part I - Financial Information
Item 1 - Financial Statements
Interim financial information required by Regulation 210.10-01 of
Regulation S-X is included in this Form 10-Q as referenced below:
Page
Number(s)
Condensed Consolidated Balance Sheets 3
Condensed Consolidated Statements of Income 5
Condensed Consolidated Statements
of Cash Flows 7
Notes to the Condensed Consolidated Financial
Statements 9
Item 2 - Management's Discussion and Analysis
of Financial Condition and Results of
Operations 13
Item 3 - Quantitative and Qualitative Disclosures
about Market Risk 19
Part II - Other Information
Item 1 - Legal Proceedings 20
Item 2 - Changes in Securities 20
Item 3 - Defaults upon Senior Securities 20
Item 4 - Submission of matters to a Vote of
Security Holders 20
Item 5 - Other Information 21
Item 6 - Exhibits and Reports on Form 8-K 21
Signatures 21
Exhibit Index 22
<PAGE>3
FORM 10-Q LNB BANCORP, INC.
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
MARCH 31, DECEMBER 31,
CONDENSED CONSOLIDATED BALANCE SHEETS 1999 1998
------------- --------------
(Unaudited) (See Note 1)
ASSETS:
Cash and due from banks $ 21,721,000 $ 26,177,000
Federal funds sold and other interest-
bearing instruments 2,793,000 6,624,000
Federal Home Loan Bank and Federal Reserve
Bank stock, at cost 2,222,000 2,189,000
Securities:
Available for sale, at fair value 76,519,000 78,128,000
Held to maturity, at cost (fair value
$42,700,000 and $40,253,000, respectively) 43,523,000 38,202,000
-------------- --------------
Total securities 122,264,000 118,519,000
-------------- --------------
Loans:
Portfolio loans 384,014,000 359,475,000
Loans available for sale 11,223,000 10,391,000
-------------- --------------
Total loans 395,237,000 369,866,000
Reserve for possible loan losses (3,483,000) (3,483,000)
-------------- --------------
Net loans 391,754,000 366,383,000
-------------- --------------
Bank premises and equipment, net 10,150,000 10,989,000
Intangible assets 4,627,000 4,666,000
Accrued interest receivable 3,357,000 3,685,000
Other assets 3,314,000 3,303,000
Other real estate owned 633,000 1,400,000
-------------- --------------
TOTAL ASSETS $560,613,000 $541,746,000
============== ==============
STATEMENT CONTINUED ON NEXT PAGE
<PAGE>4
STATEMENT CONTINUED FROM PREVIOUS PAGE
LIABILITIES AND STOCKHOLDERS' EQUITY:
Noninterest-bearing deposits $ 80,234,000 $ 85,558,000
Interest-bearing deposits 372,612,000 358,290,000
-------------- --------------
Total deposits 452,846,000 443,848,000
-------------- --------------
Securities sold under repurchase agreements
and other short-term borrowings 29,567,000 22,960,000
Federal Home Loan Bank advances 24,345,000 22,045,000
Accrued interest payable 1,540,000 1,487,000
Accrued taxes, expenses, and
other liabilities 3,106,000 2,730,000
-------------- --------------
Total liabilities 511,404,000 493,070,000
-------------- --------------
Shareholders' equity:
Common stock $1.00 par: Shares authorized 5,000,000
Shares issued 4,222,675 and 4,222,575, respectively and
Shares outstanding 4,122,675 and 4,122,575,
respectively 4,223,000 4,223,000
Additional capital 22,603,000 22,602,000
Retained earnings 25,136,000 24,210,000
Accumulated other comprehensive income 147,000 541,000
Treasury stock at cost, 100,000 shares (2,900,000) (2,900,000)
-------------- --------------
Total shareholders' equity 49,209,000 48,676,000
-------------- --------------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $560,613,000 $541,746,000
============== ==============
See notes to unaudited condensed consolidated financial statements.
<PAGE>5
FORM 10-Q LNB BANCORP, INC.
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
THREE MONTHS ENDED
CONDENSED CONSOLIDATED STATEMENTS MARCH 31,
OF INCOME (UNAUDITED) ----------------------------
1999 1998
INTEREST INCOME: ----------------------------
Interest and fees on loans:
Taxable $ 7,972,000 $ 7,229,000
Tax-exempt 8,000 11,000
Interest and dividends on securities:
Taxable 1,711,000 1,720,000
Tax-exempt 54,000 51,000
Interest on Federal funds sold and other
interest-bearing instruments 33,000 60,000
------------- ------------
TOTAL INTEREST INCOME 9,778,000 9,071,000
------------- -------------
INTEREST EXPENSE:
Interest on Certificates of Deposit
of $100,000 and over 611,000 557,000
Interest on other deposits 2,437,000 2,582,000
Interest on securities sold under
repurchase agreements and other
short-term borrowings 237,000 264,000
Interest on Federal Home Loan Bank advances 290,000 32,000
------------- ------------
TOTAL INTEREST EXPENSE 3,575,000 3,435,000
------------- ------------
NET INTEREST INCOME 6,203,000 5,636,000
Provision for possible loan losses 200,000 187,000
NET INTEREST INCOME AFTER PROVISION ------------- ------------
FOR POSSIBLE LOAN LOSSES 6,003,000 5,449,000
------------- ------------
OTHER INCOME:
Trust division income 470,000 437,000
Service charges on deposit accounts 677,000 639,000
Other charges, fees and exchanges 592,000 537,000
Other operating income 11,000 9,000
------------- ------------
TOTAL OTHER INCOME 1,750,000 1,622,000
STATEMENT CONTINUED ON NEXT PAGE
<PAGE>6
STATEMENT CONTINUED FROM PREVIOUS PAGE
OTHER EXPENSES:
Salaries and employee benefits 2,395,000 2,100,000
Net occupancy expense 392,000 352,000
Furniture and equipment expenses 608,000 578,000
Supplies and postage 256,000 255,000
FDIC deposit insurance premium 13,000 13,000
Ohio franchise tax 151,000 135,000
Other operating expenses 1,193,000 1,094,000
------------- ------------
TOTAL OTHER EXPENSES 5,008,000 4,527,000
------------- ------------
INCOME BEFORE FEDERAL INCOME TAXES 2,745,000 2,544,000
FEDERAL INCOME TAXES 912,000 866,000
------------- ------------
NET INCOME $ 1,833,000 $ 1,678,000
============= ============
PER SHARE DATA:
BASIC EARNINGS PER SHARE $ .44 $ .41
======= =======
DILUTED EARNINGS PER SHARE $ .44 $ .41
======= =======
DIVIDENDS DECLARED PER SHARE $ .22 $ .20
======= =======
See notes to unaudited condensed consolidated financial statements.
<PAGE>7
FORM 10-Q LNB BANCORP, INC.
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
THREE MONTHS ENDED
CONDENSED CONSOLIDATED STATEMENTS MARCH 31,
OF CASH FLOWS (UNAUDITED) ----------------------------
1999 1998
CASH FLOWS FROM OPERATING ACTIVITIES: ----------------------------
Interest received $10,361,000 $ 8,972,000
Other income received 1,842,000 1,565,000
Interest paid (3,522,000) (3,373,000)
Cash paid for salaries and
employee benefits (1,842,000) (2,037,000)
Net occupancy expense of premises paid (290,000) (259,000)
Furniture and equipment expenses paid (206,000) (192,000)
Cash paid for supplies and postage (256,000) (255,000)
Cash paid for other operating expenses (463,000) (795,000)
Federal income taxes paid -0- (25,000)
------------- -------------
NET CASH PROVIDED BY OPERATING
ACTIVITIES 5,624,000 3,601,000
------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturities of securities
available for sale 5,000,000 4,175,000
Proceeds from maturities of securities
held to maturity 9,000 8,191,000
Proceeds from sales of securities
available for sale -0- -0-
Purchases of securities held to maturity (5,226,000) -0-
Purchase of securities available
for sale (4,000,000) (15,497,000)
Net decrease in credit card loans 374,000 353,000
Net (increase) decrease in
long-term loans (26,486,000) 904,000
Purchases of bank premises and equipment (98,000) (239,000)
Proceeds from sales of bank premises,
and equipment -0- (2,000)
Proceeds from liquidation of OREO 767,000 -0-
------------- -------------
NET CASH USED IN INVESTING ACTIVITIES (29,660,000) (2,115,000)
------------- -------------
STATEMENT CONTINUED ON NEXT PAGE
<PAGE>8
STATEMENT CONTINUED FROM PREVIOUS PAGE
CASH FLOWS FROM FINANCING ACTIVITIES:
Net (decrease) in demand and other
on interest-bearing deposits (6,450,000) (2,219,000)
Net increase (decrease) in savings and
passbook deposits (3,352,000) 601,000
Net increase in time deposit 17,674,000 3,535,000
Net increase (decrease) in securities sold
under repurchase agreements and other
short-term borrowings 6,607,000 (3,848,000)
Proceeds from Federal Home Loan
Bank advances 2,300,000 -0-
Purchase of Treasury Stock -0- (57,000)
Proceeds from exercise of stock options 1,000 1,000
Dividends paid (1,031,000) (907,000)
------------- -------------
NET CASH PROVIDED (USED) BY FINANCING
ACTIVITIES 15,749,000 (2,894,000)
------------- -------------
NET (DECREASE) IN CASH AND
CASH EQUIVALENTS (8,287,000) (1,408,000)
CASH AND CASH EQUIVALENTS AT BEGINNING
OF YEAR 32,801,000 24,407,000
------------- -------------
CASH AND CASH EQUIVALENTS AT END OF
QUARTER $24,514,000 $22,999,000
============= =============
RECONCILIATION OF NET INCOME TO
NET CASH PROVIDED BY OPERATING ACTIVITIES:
NET INCOME $1,833,000 $1,678,000
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 504,000 479,000
Amortization of deferred loan fees
and costs, net 619,000 76,000
Provision for possible loan losses 200,000 187,000
Amortization of intangible assets 106,000 112,000
(Increase) decrease in accrued interest
receivable 328,000 (160,000)
Decrease in other assets 263,000 277,000
Increase in accrued interest payable 53,000 62,000
Increase in accrued taxes,
expenses and other liabilities 1,626,000 861,000
Others, net 92,000 9,000
-------------- -------------
NET CASH PROVIDED BY OPERATING ACTIVITIES $5,624,000 $3,601,000
============== ==============
See notes to unaudited condensed consolidated financial statements.
<PAGE>9
FORM 10-Q LNB Bancorp, Inc.
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
INTRODUCTION
The following areas of discussion pertain to the unaudited condensed
consolidated financial statements of LNB Bancorp, Inc. (The Parent
Company) and its wholly-owned subsidiary, Lorain National Bank (The Bank)
at March 31, 1999, compared to December 31, 1998 and the results of its
operations and cash flows for the three months ended March 31, 1999
compared to the same period in 1998. The term "the Corporation" refers to
LNB Bancorp, Inc. and its wholly-owned subsidiary. It is the intent of
this discussion to provide the reader with a more thorough understanding
of the unaudited condensed consolidated financial statements and
supporting schedules, and should be read in conjunction with those
unaudited condensed consolidated financial statements and schedules.
LNB Bancorp, Inc. is not aware of any trends, events, or uncertainties
that might have a material effect on the soundness of operations;
neither is LNB Bancorp, Inc. aware of any proposed recommendations by
regulatory authorities which would have a similar effect if implemented.
BASIS OF PRESENTATION
The unaudited condensed consolidated balance sheet as of March 31, 1999,
the unaudited condensed consolidated statements of income and the
unaudited condensed consolidated statement of cash flows for the three
months ended March 31, 1999 and 1998 are prepared in accordance with
generally accepted accounting principles for interim financial
information. The above mentioned statements reflect all normal and
recurring adjustments which are, in the opinion of Management, necessary
for a fair presentation of the financial position and the results of
operation for the interim periods presented.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. The consolidated
balance sheet at December 31, 1998 has been taken from the audited
Financial Statements and condensed. It is suggested that these condensed
consolidated financial statements be read in conjunction with the
financial statements and notes thereto included in the Corporation's
December 31, 1998 Annual Report to Shareholders.
The results of operations for the period ended March 31, 1999 are not
necessarily indicative of the operating results for the full year.
RESERVE FOR POSSIBLE LOAN LOSSES
Because some loans may not be repaid in full, a reserve for possible loan
losses is recorded. This reserve is increased by provisions charged to
earnings and is reduced by loan charge-offs, net of recoveries.
Estimating the risk of loss on any loan is necessarily subjective.
Accordingly, the reserve is maintained by Management at a level considered
<PAGE>10
adequate to cover possible loan losses that are currently anticipated
based on Management's evaluation of several key factors including
information about specific borrower situations, their financial position
and collateral values, current economic conditions, changes in the mix and
levels of the various types of loans, past charge-off experience and other
pertinent information. The reserve for possible loan losses is based on
estimates using currently available information, and ultimate losses may
vary from current estimates due to changes in circumstances. These
estimates are reviewed periodically and, as adjustments become necessary,
they are reported in earnings in the periods in which they become known.
While Management may periodically allocate portions of the reserve for
specific problem situations, the entire reserve is available for any
charge-offs that may occur. Charge-offs are made against the reserve for
possible loan losses when Management concludes that it is probable that
all or a portion of a loan is uncollectible. After a loan is charged-off,
collection efforts continue and future recoveries may occur.
A loan is considered impaired, based on current information and events, if
it is probable that the Bank will be unable to collect the scheduled
payments of principal or interest when due according to the contractual
terms of the loan agreement. The measurement of impaired loans is
generally based on the present value of the expected future cash flows
discounted at the loans initial effective interest rate, except that all
collateral-dependent loans are measured for impairment based on the fair
value of the collateral. If the loan valuation is less than the recorded
value of the loan, an impairment reserve must be established for the
difference. The impairment reserve is established by either an allocation
of the reserve for possible loan losses or by a provision for possible
loan losses, depending upon the adequacy of the reserve for possible loan
losses.
RECLASSIFICATIONS
Certain 1998 amounts have been reclassified to conform to 1999
presentation.
<PAGE>11
2. EARNINGS PER SHARE
Earnings per share is calculated as follows:
For the Quarter ended March 31, 1999
Income Shares Per-Share
(Numerator) (Denominator) Amount
Net Income $1,833,000
Basic EPS
Income available to
common stockholders $1,833,000 4,122,638 $ .44
=====
Effect of Dilutive Securities
Incentive Stock Options -0- 9,298
---------- ---------
Dilutive EPS
Income available to common
stockholders + assumed
conversions $1,833,000 4,131,936 $ .44
========== ========= =====
For the Quarter ended March 31, 1998
Income Shares Per-Share
(Numerator) (Denominator) Amount
Net Income $1,678,000
Basic EPS
Income available to
common stockholders $1,678,000 4,123,820 $ .41
=====
Effect of Dilutive Securities
Incentive Stock Options -0- 10,148
---------- ---------
Dilutive EPS
Income available to common
stockholders + assumed
conversions $1,678,000 4,133,968 $ .41
========== ========= =====
<PAGE>12
3. COMPREHENSIVE INCOME
The Corporation adopted SFAS No. 130 "Reporting Comprehensive Income" on
January 1, 1998. This statement requires companies to report all items
that are recognized as components of comprehensive income under accounting
standards. As required, the Corporation displays the accumulated balance
of other comprehensive income as a separate component of shareholders'
equity. The Corporation's comprehensive income for the quarters ended
March 31, 1999 and 1998 are as follows:
For the quarters ended March 31,
1999 1998
--------------------------------
Net income $1,833,000 $1,678,000
Other comprehensive income:
Unrealized (loss) on securities
available for sale, net of tax
(credit)of $(203,000)
and $-0- (394,000) (1,000)
----------- -----------
Comprehensive Income $1,439,000 $1,677,000
=========== ===========
4. DIVIDEND REINVESTMENT AND CASH STOCK PURCHASE PLAN
The Board of Directors adopted a dividend reinvestment and cash stock
purchase plan on November 18, 1997. Under the plan, the first dividend
reinvestment and cash stock purchase date was April 1, 1998. The plan
allows shareholders to elect to use their quarterly cash dividends to
purchase shares of LNB Bancorp, Inc. common stock. Additionally, cash can
be contributed directly to the plan for the purchase of shares of common
stock with a quarterly limit of $5,000.
The dividend reinvestment plan authorized the sale of 150,000 shares of
the Corporation's authorized but previously unissued common shares to
shareholders who choose to invest all or a portion of their cash dividends
plus additional cash payments. No shares were issued by the Corporation
pursuant to the plan in the first quarter of 1999. In the first quarter
of 1999, stock was purchased in the open market at the then current market
price.
<PAGE>13
PART I - FINANCIAL INFORMATION
ITEM 2 - MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL
CONDITION & RESULTS OF OPERATIONS
FINANCIAL CONDITION
Total assets of the Corporation increased $18,867,000 during the first
quarter, to $560,613,000. Federal funds sold and other interest-bearing
investments decreased by $3,831,000 during the first quarter of 1999.
The total securities portfolio increased $3,745,000 ending the first
quarter at $122,264,000. At March 31, 1999 unrealized gains (losses)in
the held to maturity securities portfolio were approximately $140,000 and
$(963,000), respectively. The decrease in the market value of the
security portfolio is due to market interest rate fluctuations and not due
to the deterioration of the credit worthiness of debt issuers.
Net loans increased $25,371,000 during the first quarter to $391,754,000
at March 31, 1999. This increase was a result of strong loan demand in our
market. Personal and Commercial loan growth was particularly robust,
showing first quarter increases of $11,280,000 and $11,441,000,
respectively. Mortgage loans increased by $2,650,000 during the first
quarter of 1999.
The reserve for possible loan losses ended the quarter at $3,483,000
supported by a provision for loan losses of $200,000, recoveries of
$70,000 and loan charge-offs of $270,000. The reserve for possible loan
losses as a percentage of ending loans was .88% at March 31, 1999 and .94%
at December 31, 1998. Corporate management believes that the reserve for
possible loan losses as a percentage of ending loans at March 31, 1999
remains at an appropriate level because the ratio of the reserve for
possible loan losses to nonperforming assets improved to 235.2% as of
March 31, 1999. Also, Corporate management believes that the current level
of the reserve for possible loan losses is adequate based upon
quantitative analysis of identified risks and analysis of historical
trends.
The level of nonperforming assets decreased $1,006,000 during the first
quarter of 1999. The decrease in nonaccrual loans is due to decreases in
nonaccrual principal balances of $168,000 which have been paid off or
brought current, loans charged-off in the amount of $76,000 and
liquidations of nonaccrual loans of $242,000 and increases in nonaccrual
principal balances of $247,000. The decrease in nonaccrual loans in the
first quarter of 1999 was due primarily to four commercial loan customers
and six personal loan customers. The decrease in Other Real Estate Owned
in the amount of $767,000 resulted from liquidation of assets. The level
of nonperforming assets remains at relatively low levels and Corporate
management believes nonperforming assets are well collateralized.
<PAGE>14
The table below presents the level of nonperforming assets at the end of
the last four calendar quarters.
Amounts in thousands 03/31/99 12/31/98 09/31/98 06/30/98
-------- -------- -------- --------
Nonperforming Assets:
Nonaccrual $ 848 $1,087 $2,707 $1,344
Restructured 0 0 0 0
Other Real Estate Owned 633 1,400 0 0
------ ------ ------ ------
Total Nonperforming Assets $1,481 $2,487 $2,707 $1,344
====== ====== ====== ======
Reserve for possible
loan losses to
nonperforming assets 235.2% 140.1% 172.7% 336.6%
====== ====== ====== ======
Accruing loans past due
90 days $ 479 $ 213 $ 295 $ 421
====== ====== ====== ======
Potential problem loans are those loans identified on management's watch
list in which management has some doubt as to the borrower's ability to
comply with the present repayment terms and loans which management is
actively monitoring due to changes in the borrower's financial condition.
At March 31, 1999, potential problem loans totaled $2,922,000, a decrease
of $19,000 from the December 31, 1998 balance.
The Corporation's credit policies are reviewed and modified on an ongoing
basis in order to remain suitable for the management of credit risk within
the loan portfolio as conditions change. At March 31, 1999 there are no
significant concentrations of credit in the loan portfolio.
The Corporation had outstanding loan and credit commitments to make loans
totaling $87,614,000 and $76,927,000 at March 31, 1999 and 1998,
respectively. The increase in outstanding loan commitments results in part
from an increase in the unused portion of home equity lines of credits
from home equity loan sale programs during 1998 plus increase in loan
demand during the first quarter of 1999. Mortgage and commercial
construction loan demand is expected to increase in the second quarter of
1999 as seasonal weather conditions improve and the construction season
begins. Consumer loan demand is expected to increase in the second
quarter for home improvement and automobile loans as weather conditions
improve.
Total deposits increased $8,998,000 during the first quarter to
$452,846,000. Noninterest-bearing deposits decreased to $80,234,000, at
March 31, 1999 for a decrease of $5,324,000, while interest-bearing
deposits increased to $372,612,000 for an increase of $14,322,000. Federal
funds purchased and securities sold under agreements to repurchase
increased $6,607,000 during the first quarter of 1999. Due to the
volatility of customer repurchase agreements, most funds generated by
repurchase activity enter the Corporation's earning assets as short-term
investments.
<PAGE>15
LIQUIDITY
Liquidity measures a corporation's ability to generate cash or otherwise
obtain funds at reasonable prices to fund commitments to borrowers as well
as the demand of depositors and debt holders. Principal internal sources
of liquidity for the Corporation and the Bank are cash and cash
equivalents, Federal funds sold, and the maturity structures of investment
securities and portfolio loans. Securities and loans available for sale
provide another source of liquidity through the cash flows of these
interest bearing assets as they mature or are sold.
The Corporation continues to maintain a relatively high liquid position in
order to take advantage of interest rate fluctuations. As of March 31,
1999 short-term security investments with maturities of one year or less
totaled $20,692,000 which represented 16.9% of total securities. Adding
cash and due from banks of $21,721,000 and Federal Funds sold and other
interest-bearing instruments of $2,793,000, total liquid assets
represented 8.1% of total assets. The Corporation's subsidiary bank has
established short-term lines of credit at correspondent banks and the
Federal Home Loan Bank in the amount of $37,800,000.
CAPITAL RESOURCES
LNB Bancorp, Inc. continues to maintain a strong capital position.
Total shareholders' equity increased to $49,209,000, at March 31, 1999.
The increase resulted primarily from $1,833,000 of net income generated
from the first quarter of operations less a cash dividend payable to
shareholders of $907,000. The slight increase in interest rates
experienced in the first quarter of 1999 has caused a decrease in the
overall market value of available for sale securities which resulted in a
reduction of shareholders' equity by $394,000 for the quarter ended March
31, 1999. As of March 31, 1999, the LNB Bancorp, Inc. held 100,000
shares of common stock as treasury stock. LNB Bancorp, Inc. purchased
2,004 of these shares in 1998 and 97,996 shares in 1997 for a total cost
of $2,900,000.
The Corporation continues to monitor growth to stay within the constraints
established by the regulatory authorities. Under Federal banking
regulations, an institution is deemed to be well-capitalized if it has a
Risk-based Tier 1 capital ratio of 6.00 percent or greater, a Risk-based
Total capital ratio of 10.00 percent or greater and a Leverage ratio of
5.00 percent or greater. The Corporation's Risk-based capital and
Leverage ratios have exceeded the ratios for a well-capitalized financial
institution for all periods presented. The Corporation's capital and
leverage ratios as of March 31, 1999 and 1998 follow together with those
ratios required for the Corporation to be considered adequately
capitalized.
MARCH 31,
---------------------
1999 1998
------ -------
Tier I capital ratio 11.85% 13.60%
Required Tier I capital ratio 4.00% 4.00%
Total capital ratio 12.79% 14.83%
Required total capital ratio 8.00% 8.00%
Leverage ratio 8.15% 8.32%
Required leverage ratio 3.00% 3.00%
<PAGE>16
On an ongoing basis the Corporation analyzes acquisition opportunities in
markets which are adjacent to or within the Corporation's current
geographical market. Corporate management believes that it's current
capital resources are sufficient to support any foreseeable acquisition
activity.
RESULTS OF OPERATIONS
Interest and fees on loans increased $740,000 when compared to the first
quarter of 1998. This was the result of the impact of increases in the
loan portfolio of $66,402,000 offset by decreases in rates. Interest and
dividends on securities was $1,765,000 for the first quarter of 1999 for
a decrease of $6,000 over the same period in 1998. The first quarter
decrease in interest and dividends on securities results from a net
increase in the securities portfolio of $3,745,000. Interest and
dividends on securities represented 18.1% of total interest income at
March 31, 1999 compared to 18.9% at March 31, 1998. Interest on Federal
funds sold and other interest-bearing instruments was $33,000 at March 31,
1999 compared to $60,000 at March 31, 1998. The decrease resulted from
lower average balances invested in this form of financial instrument along
with lower interest rates.
Total interest expense increased by $140,000 when compared to the first
quarter of 1998. The interest expense increase was fueled by an increase
in interest expense from Federal Home Loan Bank advances in the amount of
$258,000, offset by decreases in deposit account interest of $91,000 and
interest on securities sold under repurchase agreements of $27,000. Also,
total interest expense for the first quarter of 1999 was impacted by
decreases in interest rates paid on savings and certificate of deposit
accounts when compared to the first quarter of 1998.
Total other income increased by $128,000 when compared to the first
quarter of 1998. This increase resulted from increases in trust income of
$33,000, increases in service charges of $38,000 and increases in other
service charges, exchanges and fees of $57,000.
The Corporation continuously monitors noninterest expenses for greater
profitability. The entire staff is geared to improving productivity at
all levels. Noninterest expense for the quarter ended March 31, 1999 was
$5,008,000, 10.6% more than the first quarter of 1998. This increase was
due primarily to increases in salary expenses, increases in equipment and
vehicle expenses plus the operating expenses of one additional branch
office which was placed in service in June of 1998.
The effective tax rate was 33.2% and 34.0% during the first quarter of
1999 and 1998, respectively. Net income was $1,833,000 and $1,678,000 for
the quarters ended March 31, 1999 and 1998, respectively. Net income per
basic and diluted share was $.44 and $.41 for the quarters ended March 31,
1999 and 1998, respectively.
4. YEAR 2000 ISSUE
Several of the Corporation's and Bank's regulators including the
Securities and Exchange Commission, Federal Reserve Board, and the Office
of the Comptroller of Currency have issued guidance relative to the
management and disclosures for year 2000 issues. A discussion of the year
2000 issue as it relates to the Corporation, the Bank and their customers,
suppliers and vendors follows.
<PAGE>17
The Corporation has formed a strategic task force to perform a
comprehensive review of its computer systems to identify the systems that
could be affected by the "Year 2000" issue and has developed an
implementation plan to resolve the issue. The Year 2000 problem is the
result of computer programs being written using two digits rather than
four to define the applicable year. Any of the Corporation's programs
that have time sensitive software may recognize a date using "00" as the
year 1900 rather than the year 2000.
The Corporation expects to incur internal staff costs, consulting, and
other expenses to identify, correct or reprogram, and test the systems
for the year 2000 compliance issue. The Corporation estimates that
compliance costs for the year 2000 issue from 1998 through 1999 will not
exceed $250,000. The Corporation continues to evaluate appropriate
courses of corrective action, including replacement of certain systems
whose associated costs would be recorded as assets and amortized.
Accordingly, the Corporation does not expect that year 2000 compliance
costs to be expensed over the next two years to have a material effect
on the financial position, liquidity or results of operations.
To date, the Corporation is in the process of obtaining formal
notifications from all of its major vendors and suppliers that their
systems are year 2000 compliant. During 1998, the Corporation developed
strategies and plans to test and validate that these systems are year 2000
compliant. The Corporation has completed successful upgrades, testing and
validation of internal mission critical systems and they are Y2K
compliant. The Corporation's customer awareness program includes
providing: seminars to the business and non-profit entities, Year 2000
information on statements and maintaining a telephone number for customer
inquiries. The Corporation provides quarterly updates to the Board of
Directors regarding the status of the year 2000 issue. The project
completion date for the year 2000 issue is slated for June, 1999.
Financial institutions may experience increases in problem loans and
credit losses in the event that borrowers fail to properly respond to the
"Year 2000" issue. Cost of funds may become greater, if customers react
to publicity about this issue by withdrawing deposits. Accordingly, the
Corporation has formed an internal task force to assess potential problems
relating to credit, liquidity, and third party risk, and where
appropriate, develop contingency plans. This task force is conducting a
survey of significant credit and deposit relationships to determine their
"Year 2000" readiness and to evaluate the potential of credit and
liquidity risk to the Corporation. Also, the "Year 2000" issue creates
risk for the Corporation from unforseen problems in its own computer
systems and from third parties' with whom the Corporation deals on
financial transactions. Such failures of the Corporation, and/or third
parties' computer systems could have a material impact on the
Corporation's ability to conduct its business, and especially to process
and account for the transfer of funds electronically.
Based upon testing of mission critical hardware and software, the
Corporation does not anticipate that it will have to rely on a contingency
plan relating to these areas. However, the Corporation is in the process
of developing a contingency plan that would cover the failure of mission
critical hardware and software. The contingency plan is also being
developed to cover Y2K failure(s) that might result from a failure(s)
outside of the control of the Corporation; such as a utility company
failure. The Corporation's contingency plan for Y2K failure of its core
processing systems will be to handle and process customer transactions
<PAGE>18
manually until the system failure is corrected. In the most reasonably
likely worst case scenario where any of the corporation's mission critical
systems, either internal or external, would fail, the Corporation will be
operating in a manual mode. In preparation for the unlikely event of the
most reasonably likely worst case scenario, the Corporation is in the
process of planning and training all of its' employees and will have all
customer records backed up to ensure the accuracy of our customer records.
IMPACTS OF ACCOUNTING AND REGULATORY PRONOUNCEMENTS
Corporate management is not aware of any current recommendations by the
Financial Accounting Standards Board or by regulatory authorities which,
if they were implemented, would have a material effect on the liquidity,
capital resources or operations of the Corporation.
<PAGE>19
PART I - OTHER INFORMATION
ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market Risk
Market risk is the risk of loss in a financial instrument arising from
adverse changes in market indices such as interest rates, foreign exchange
rates and equity prices. The Corporation's principal market risk exposure
is interest rate risk, with no material impact on earnings from changes in
foreign exchange rates or equity prices. There have been no material
changes in the asset and liability mix of the Corporation since December
31, 1998, which would impact the Corporation's level of market risk.
Interest rate risk is the exposure to changes in market interest rates.
Interest rate sensitivity is the relationship between market interest
rates and net interest income due to the repricing characteristics of
assets and liabilities. The Corporation monitors the interest rate
sensitivity of its on - and - off balance sheet positions by examining its
near-term sensitivity and its longer term gap position. Corporate
management has determined no significant changes in the Corporation's
interest rate risk profile since December 31, 1998.
<PAGE>20
PART II - OTHER INFORMATION
ITEM 1 - Legal Proceedings
None
ITEM 2 - Changes in Securities
See item 4, (c), (1)
ITEM 3 - Defaults Upon Senior Securities
None
ITEM 4 - Submission of Matters to a Vote of Security Holders
(a) LNB Bancorp Inc.'s 1999 Annual Meeting of Shareholders
was held on April 20, 1999.
(b) Proxies were solicited by LNB Bancorp Inc.`s management
pursuant to Regulation 14 under the Securities Exchange
Act of 1934, there was no solicitation in opposition to
management's nominees for election to the board of
directors as listed in the proxy statement, and all
such nominees were elected to the classes in the proxy
statement pursuant to the vote of the shareholders.
(c) Other matters voted upon - complete descriptions of the
matters voted upon is contained in Item 6,
(1)Election of directors to serve as Class II Directors
until April 22, 2002 Annual Meeting of Shareholders as
follows:
ABSTAIN/ BROKER
FOR AGAINST WITHHELD NON-VOTES
Terry D. Goode 3,512,406 -0- 8,377 601,892
Wellsley O. Gray 3,513,195 -0- 7,588 601,892
James R. Herrick 3,495,831 -0- 24,952 601,892
Benjamin G. Norton 3,512,960 -0- 7,823 601,892
John W. Schaeffer,MD 3,511,370 -0- 9,413 601,892
The total number of shares of LNB Bancorp, Inc. Common Stock,
$1.00 par value, outstanding as of March 9, 1999, the record
date of the Annual Meeting, was 4,122,675.
<PAGE>21
ITEM 5 - Other Information
(a) The Notice of the Annual Meeting to Shareholders and Proxy
Statement (dated March 22, 1999) was previously filed as
Exhibit 22 to the Bancorp's 1998 Annual Report on Form 10-K.
ITEM 6 - Exhibits and Reports on Form 8-K
(a) Exhibit (11) - Computation of Shares Used for Earnings
Per Share Calculations.
(b) Exhibit (13) - First Quarter Report to Shareholders of
LNB Bancorp, Inc. - March 31, 1999 - EDGAR Version.
(c) Exhibit (27) - Financial Data Schedule
(d) Reports on Form 8-K
There were no reports on Form 8-K filed for the three
months ended March 31, 1999.
Also, see the Exhibit Index which is found on the next page of
this Form.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
LNB BANCORP, INC.
(registrant)
/s/ Gregory D. Friedman
Date: May 13, 1999 --------------------------
Gregory D. Friedman,
Senior Vice President,
Chief Operating Officer and
Chief Financial Officer
/s/ Mitchell J. Fallis
Date: May 13, 1999 --------------------------
Mitchell J. Fallis,
Vice President and
Chief Accounting Officer
<PAGE>22
LNB Bancorp, Inc.
Form 10-Q
Exhibit Index
Pursuant to Item 601 (a) of Regulation S-K
S-K Reference Exhibit
Number
(11) Computation of Shares Used for Earnings Per Share
Calculations. Footnote 2 Earnings Per Share on
Page 11 of this Form 10-Q is incorporated by
Reference.
(12) First Quarter Report to Shareholders of LNB Bancorp, Inc.
- March 31, 1999 - EDGAR Version
(27) Financial Data Schedule
<PAGE>23
LNB Bancorp, Inc.
Exhibit to Form 10 - Q
(For the three months ended March 31, 1999)
S - K Reference Number (13)
First Quarter Report to Shareholders of
LNB Bancorp, Inc. - March 31, 1999
EDGAR Version
DESCRIPTION:
Three sided pamphlet:
Outside cover: green with white stripe
First Quarter Report
LNB Bancorp, Inc. Logo on right hand side
LNB Bancorp, Inc.
March 31, 1999
Inside contains:
Message to shareholders,
Unaudited EDGAR version Consolidated Balance Sheets for period ending
March 31, 1999 and March 31, 1998, respectively,
Unaudited EDGAR version Consolidated Statements of Income for the Three
Months ended March 31, 1999 and March 31, 1998, respectively,
LNB Welcomes ConSun Foods and LNB Bancorp, Inc. Introduces New Market
Maker and the list of Banking Offices & ATMs.
<PAGE>24
Outside cover description:
Green and white background, black and white lettering.
Front Cover:
First Quarter Report
LNB Bancorp, Inc. Logo
LNB BANCORP, INC.
March 31, 1999
<PAGE>25
Inside of front cover:
Message to Shareholders
It's a pleasure, once again, to report on the progress of LNB Bancorp,
Inc., and its wholly owned subsidiary, The Lorain National Bank, after the
first quarter of 1999.
We are pleased to announce that earnings have increased 9% for the first
quarter of the year, compared to the same period one year ago. Earnings
for the first quarter of 1999 reached $1,833,000, up from $1,678,000
during the first quarter of 1998.
Basic earnings per share for the first quarter of 1999, reached $.44
compared to $.41 for the first quarter of 1998. Earnings for the first
quarter ended March 31, 1999 were higher than a year ago because of higher
net interest income and other noninterest income, offset in part by higher
operating expenses. Increases in net interest income were fueled by
robust loan growth.
Total assets rose 14% to $560.6 million, as of March 31, 1999 up $70.7
million from March 31, 1998. Net loans grew by $66.4 million from one
year ago to $391.8 million at March 31, 1999, for a 20% increase.
Consumer loan growth was strong accounting for 67% of total loan growth
while commercial and mortgage loans accounted for 20% and 13% of total
loan growth during the twelve months ended March 31, 1999. Total deposits
climbed over 9% to $452.9 million, up $40.3 million from one year ago.
Increases in demand, savings and certificates of deposit accounted for the
deposit increase. Lorain National Bank operates 21 retail branches and 26
ATMs in nine local communities.
Cash dividends declared per share for the first quarter of 1999
increased by 10% compared to the first quarter of 1998. The first quarter
cash dividends per share increased by $.02 to $.22 per share, up from $.20
per share in 1998. Total shareholders' equity increased by $3.4 million
to $49.2 million during the twelve months ended March 31, 1999.
The relocation of our Second Street Branch Office to Ely Square is on
schedule for opening during the second quarter of this year. Lorain
National Bank is reconfiguring the Ely Square office floor space to
accommodate the delivery of Commercial Lending, Trust & Investment
Management and retail banking services. We look forward to being open six
days a week in the heart of Elyria to deliver superior service to our new
and existing customers.
We thank you for your continued support and look forward to addressing
you after the completion of our second quarter of operations.
/s/ James. F. Kidd /s/ Stanley G. Pijor
------------------------ -------------------------
James F. Kidd Stanley G. Pijor
President and Chairman of the Board
Chief Executive Officer
TOTAL ASSETS millions of dollars
(A Total Assets graph follows in printed version with assets on the y-axis
and years 1995 through 1999 on the x-axis. The graph is a vertical bar
graph. The co-ordinates, by year, which are presented in the table below
are plotted on the previously described grid.)
<PAGE>26
TOTAL SHAREHOLDERS' EQUITY millions of dollars
(A Total Shareholders' Equity graph follows in printed version with
shareholder's equity on the y-axis and years 1995 through 1999 on the
x-axis. The graph is a vertical bar graph. The co-ordinates, by year,
which are presented in the table below are plotted on the previously
described grid.)
BASIC EARNINGS PER SHARE dollars*
(A Basic Earnings Per Share graph follows in printed version with earnings
per share on the y-axis and years 1995 through 1999 on the x-axis. The
graph is a vertical bar graph. The co-ordinates, by year, which are
presented in the table below are plotted on the previously described
grid.)
Total Shareholders' Basic Earnings
Total Assets Equity Per Share
Year millions of dollars millions of dollars dollars*
1999 $560.6 $49.2 $0.44
1998 $489.9 $45.8 $0.41
1997 $445.5 $45.0 $0.36
1996 $420.5 $41.5 $0.31
1995 $408.1 $38.3 $0.26
*Adjusted for stock dividends and splits
<PAGE>27
Consolidated Balance Sheets
March 31
--------------------------
1999 1998
------------ ------------
ASSETS:
Cash and Due from Banks $ 21,721,000 $ 20,117,000
Federal Funds Sold and Other
Interest-Bearing Instruments 2,793,000 2,882,000
Federal Home Loan Bank and Federal
Reserve Bank Stock, at Cost 2,222,000 2,017,000
Securities Held to Maturity, at Cost 43,523,000 85,845,000
Securities Available for Sale, at Fair Value 76,519,000 30,662,000
Loans Held For Sale 11,223,000 12,047,000
Loans 384,014,000 317,665,000
Reserve for Possible Loan Losses (3,483,000) (4,360,000)
- -----------------------------------------------------------------------
NET LOANS 391,754,000 325,352,000
- -----------------------------------------------------------------------
Premises, Equipment and Intangible
Assets (net) 15,159,000 16,683,000
Accrued Interest Receivable and
Other Assets 6,922,000 6,415,000
- -----------------------------------------------------------------------
TOTAL ASSETS $560,613,000 $489,928,000
- -----------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY:
Noninterest-Bearing Deposits $ 80,234,000 $ 66,346,000
Interest-Bearing Deposits 372,612,000 346,226,000
- -----------------------------------------------------------------------
TOTAL DEPOSITS 452,846,000 412,572,000
- -----------------------------------------------------------------------
Securities Sold under Repurchase Agreements
and Other Short-term Borrowings 29,567,000 25,102,000
Federal Home Loan Bank Advances 24,345,000 2,045,000
Accrued Interest, Taxes, Expenses and
Other Liabilities 4,646,000 4,422,000
- -----------------------------------------------------------------------
TOTAL LIABILITIES 511,404,000 444,141,000
- -----------------------------------------------------------------------
Common Stock 4,223,000 4,222,000
Additional Capital 22,603,000 22,600,000
Retained Earnings 25,136,000 21,796,000
Accumulated Other Comprehensive Income 147,000 69,000
Treasury Stock, at Cost (2,900,000) (2,900,000)
- -----------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY 49,209,000 45,787,000
- -----------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $560,613,000 $489,928,000
- -----------------------------------------------------------------------
(LOGO) LNB
Bancorp, Inc.
and its subsidiary Lorain National Bank
<PAGE>28
Consolidated Statements of Income
Three Months Ended
March 31
------------------------
1999 1998
------------ -----------
INTEREST INCOME:
Interest and Fees on Loans $7,980,000 $7,240,000
Interest and Dividends on Securities 1,785,000 1,773,000
Interest on Federal Funds Sold and Other
Interest-Bearing Instruments 13,000 58,000
- ----------------------------------------------------------------------
TOTAL INTEREST INCOME 9,778,000 9,071,000
- ----------------------------------------------------------------------
INTEREST EXPENSE:
Interest on Deposits 3,048,000 3,139,000
Interest on Securities Sold under Repurchase Agreements
and Other Short-term Borrowings 237,000 264,000
Interest on Federal Home Loan Bank Advances 290,000 32,000
- ----------------------------------------------------------------------
TOTAL INTEREST EXPENSE 3,575,000 3,435,000
- ----------------------------------------------------------------------
NET INTEREST INCOME 6,203,000 5,636,000
Provision for Possible Loan Losses 200,000 187,000
- ----------------------------------------------------------------------
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES 6,003,000 5,449,000
- ----------------------------------------------------------------------
OTHER INCOME:
Trust and Investment Management Division Income 470,000 437,000
Fees and Service Charges 1,269,000 1,176,000
Gains From Sales of Loans and Securities -0- -0-
Other Operating Income 11,000 9,000
- ----------------------------------------------------------------------
TOTAL OTHER INCOME 1,750,000 1,622,000
- ----------------------------------------------------------------------
OTHER EXPENSES:
Salaries and Employee Benefits 2,395,000 2,100,000
Net Occupancy Expense of Premises 392,000 352,000
Furniture and Equipment Expenses 608,000 578,000
Supplies and Postage 256,000 255,000
Ohio Franchise Tax 151,000 135,000
Other Operating Expenses 1,206,000 1,107,000
- ----------------------------------------------------------------------
TOTAL OTHER EXPENSES 5,008,000 4,527,000
- ----------------------------------------------------------------------
INCOME BEFORE INCOME TAXES 2,745,000 2,544,000
- ----------------------------------------------------------------------
Income Taxes 912,000 866,000
- ----------------------------------------------------------------------
NET INCOME $1,833,000 $1,678,000
- ----------------------------------------------------------------------
BASIC EARNINGS PER SHARE $.44 $.41
- ----------------------------------------------------------------------
DILUTED EARNINGS PER SHARE $.44 $.41
- ----------------------------------------------------------------------
DIVIDENDS DECLARED PER SHARE $.22 $.20
- ----------------------------------------------------------------------
<PAGE>29
Inside cover
LNB Welcomes ConSun Foods
Color photograph of Convenient Food Mart on left side of page
ConSun Food Industries, Inc., a regional franchiser and owner of several
area Convenient Food Marts and owner of Sunshine Farms Dairy, has chosen
Lorain National Bank as its new provider of financial services.
"We are pleased to be associated with ConSun Foods and its divisions,"
said James F. Kidd, LNB Bancorp, Inc. President and Chief Executive
Officer.
"Like Lorain National Bank, ConSun has a solid history of delivering
quality products to members of our community for years. The Convenient
Food Mart and Sunshine Farms Dairy names are synonymous with value and
customer satisfaction."
Headquartered on Gateway Boulevard in Elyria, ConSun employs more than
400 people overall. Its company owned stores can be found in the counties
of Lorain, Summit, Stark, Portage, Erie, Medina and Wayne in Ohio.
Additionally, its Sunshine Farms dairy division manufactures and
distributes approximately 300 food products.
We welcome Dennis Walter, President, Roger McVetta, Treasurer, Ron
Lattimer, Secretary & Director of Store Operations and the ConSun Food
Industries family to Lorain National.
LNB Bancorp, Inc. Introduces New Market Maker
Thomas P. Ryan, Executive Vice President and Secretary/Treasurer, has
announced the addition of Sweney Cartwright & Company of Columbus to the
list of LNB Bancorp, Inc. Common stock market makers. Sweney Cartwright,
an investment securities firm in business since 1933, specializes in the
marketing of stock of independent banks in Ohio.
Sweney Cartwright joins Akin Investment Services Group, Everen
Securities, McDonald Investments, Mid-Ohio Securities, National
Securities, and the Fifth Third/The Ohio Company as market makers in LNB
Bancorp, Inc. stock.
Shareholders requesting information about their current stock holdings
should call or write to:
Registrar and Transfer Company
Investor Relations Department
10 Commerce Drive
Cranford, New Jersey 07016-9982
(800) 368-5948
<PAGE>30
Back Cover:
White background with green along top of page and black lettering
Four column format
Banking Offices and ATMS
ATM service available wherever you see this symbol **
Lorain Banking Offices Elyria Banking Offices
Main Office **Ely Square Office*
457 Broadway 124 Middle Avenue
Lorain, Ohio 44052 Elyria, Ohio 44035
(440) 244-7185 (440) 323-4621
**Sixth Street Drive-In Office **Cleveland Street Office
200 Sixth Street 801 Cleveland Street
Lorain, Ohio 44052 Elyria, Ohio 44035
(440) 244-7242 (440) 365-8397
**Cooper-Foster Park **Lake Avenue Office
Road Office 42935 North Ridge Road
1920 Cooper-Foster Park Road Elyria Township, Ohio 44035
Lorain, Ohio 44053 (440) 233-7196
(440) 282-1252
**Midway Mall Office
**Kansas Avenue Office 6395 Midway Mall Blvd.
1604 Kansas Avenue Elyria, Ohio 44035
Lorain, Ohio 44052 (440) 324-6530
(440) 288-9151
**Second Street Office*
**Oberlin Avenue Office 221 Second Street
3660 Oberlin Avenue Elyria, Ohio 44035
Lorain, Ohio 44053 (440) 323-4621
(440) 282-9196
Village of LaGrange
**Pearl Avenue Office Banking Office
2850 Pearl Avenue **Village of LaGrange Office
Lorain, Ohio 44055 546 North Center Street
(440) 277-1103 Village of LaGrange,
Ohio 44050
**West Park Drive Office (440) 355-6734
2130 West Park Drive
Lorain, Ohio 44053 Oberlin Banking Offices
(440) 989-3131 Kendal at Oberlin Office
600 Kendal Drive
Amherst Banking Office Oberlin, Ohio 44074
**Amherst Office (440) 774-5400
1175 Cleveland Avenue
Amherst, Ohio 44001 **Oberlin Office
(440) 988-4423 40 East College Street
Oberlin, Ohio 44074
Avon Lake Banking Office (440) 775-1361
**Avon Lake Office
240 Miller Road Olmsted Township
Avon Lake, Ohio 44012 Banking Offices
(440) 933-2186 **Olmsted Township Office
27095 Bagley Road
Olmsted Township, Ohio 44138
(440) 235-4600
<PAGE>31
The Renaissance Office Other Offices
26376 John Road Executive Offices
Olmsted Township, Ohio 44138 457 Broadway
(440) 427-0041 Lorain, Ohio 44052
(440) 244-7123
Vermilion Banking Office
**Vermilion Office Branch Administration
4455 East Liberty Avenue 457 Broadway
Vermilion, Ohio 44089 Lorain, Ohio 44052
(440) 967-3124 (440) 244-7253
Westlake Banking Offices Commercial, Consumer
**Crossings of Westlake Ohio and Mortgage Loans
30210 Detroit Road 457 Broadway
Westlake, Ohio 44145 Lorain, Ohio 44052
(440) 892-9696 (440) 244-7220
(440) 244-7272
Westlake Village Office (440) 244-7216
28550 Westlake Village Drive
Westlake, Ohio 44145 Credit Cards
(440) 808-0229 2130 West Park Drive
Lorain, Ohio 44053
Community-Based (440) 989-3308
Automated Teller
Machine Locations Customer Service
**Captain Larry's Marathon 2130 West Park Drive
1317 State Route 60 Lorain, Ohio 44053
Vermilion, Ohio (440) 989-3348
**Convenient Food Mart Human Resources
5375 West Erie Avenue 2130 West Park Drive
Lorain, Ohio Lorain, Ohio 44053
(440) 989-3139
**Dad's Sunoco
7580 Leavitt Road Operations
State Route 58 2130 West Park Drive
Amherst, Ohio Lorain, Ohio 44053
(440) 989-3315
**Gateway Plaza Convenient
3451 Colorado Avenue Purchasing
Lorain, Ohio 2150 West Park Drive
Lorain, Ohio 44053
**Lakeland Medical Center (440) 989-3260
3700 Kolbe Road
Lorain, Ohio Trust and Investment
Management Services
**Lorain County 457 Broadway
Community College Lorain, Ohio 44052
1005 North Abbe Road (440) 244-7226
Elyria, Ohio
All Other Departments &
**Lowe's Home Information Not Listed
Improvement Warehouse Telebanker (440) 245-4562
620 Midway Boulevard Toll Free (800) 860-1007
Elyria, Ohio Lorain (440) 244-6000
Elyria (440) 236-5047
**Midway Mall Food Court
3343 Midway Mall Blvd. Internet www.4LNB.com
Elyria, Ohio
<PAGE>32
*The Second Street Office will be relocated to Ely Square during the
second quarter of 1999.
Logos for LNB Bancorp, Inc., FDIC Insured, Federal Home Loan Bank System,
and Equal Housing Lender
<PAGE>33
LNB Bancorp, Inc.
Exhibit to Form 10 - Q
(For the three months ended March 31, 1999)
S - K Reference Number (27)
Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 9
<CIK> 0000737210
<NAME> LNB BANCORP, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 21,721
<INT-BEARING-DEPOSITS> 2,793
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 76,519
<INVESTMENTS-CARRYING> 45,745
<INVESTMENTS-MARKET> 44,922
<LOANS> 395,237
<ALLOWANCE> (3,483)
<TOTAL-ASSETS> 560,613
<DEPOSITS> 452,846
<SHORT-TERM> 29,567
<LIABILITIES-OTHER> 4,646
<LONG-TERM> 22,603
0
0
<COMMON> 4,223
<OTHER-SE> 44,986
<TOTAL-LIABILITIES-AND-EQUITY> 560,613
<INTEREST-LOAN> 7,980
<INTEREST-INVEST> 1,785
<INTEREST-OTHER> 13
<INTEREST-TOTAL> 9,778
<INTEREST-DEPOSIT> 3,048
<INTEREST-EXPENSE> 3,575
<INTEREST-INCOME-NET> 6,203
<LOAN-LOSSES> 200
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 5,008
<INCOME-PRETAX> 2,745
<INCOME-PRE-EXTRAORDINARY> 1,833
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,833
<EPS-PRIMARY> .44
<EPS-DILUTED> .44
<YIELD-ACTUAL> 4.89
<LOANS-NON> 848
<LOANS-PAST> 479
<LOANS-TROUBLED> 2,922
<LOANS-PROBLEM> 7,459
<ALLOWANCE-OPEN> 3,483
<CHARGE-OFFS> 270
<RECOVERIES> 70
<ALLOWANCE-CLOSE> 3,483
<ALLOWANCE-DOMESTIC> 2,549
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 934
</TABLE>
