<PAGE>4
LNB Bancorp, Inc.
Appendix to Form 10 - K/A
(for the fiscal year ended December 31, 1999)
S - K Reference Number (99.1)
Annual report on Form 11-K of The Lorain National Bank
Employee Stock Ownership Plan (registration number 33-65034)
for the plan year ended December 31, 1999 filed as an
amendment to the annual report on Form 10-K.
<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, 1999
Note: This Form 11-K is being filed as an amending Appendix to the Form
10-K of LNB Bancorp, Inc. for the fiscal year ended December 31,
1999 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)
<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, 1999 and 1998
3) Statements of Changes in Assets Available for Distribution to
Participants - Years ended December 31, 1999 and 1998.
4) Notes to Financial Statements
5) Schedule 1 - Schedule of Assets Held for Investment Purposes -
December 31, 1999
6) Schedule 2 - Schedule of Reportable Transactions - Year ended
December 31, 1999
B) The following Appendix is filed as part of this annual report:
24. Consent of Independent Accountants
<PAGE>7
(COVER EMBOSSED WITH LOGO)
KPMG LLP
The Lorain National Bank
Employee Stock Ownership Plan
Financial Statements and Schedules
December 31, 1999 and 1998
(With Independent Auditors' Report Thereon)
<PAGE>8
The Lorain National Bank
Employee Stock Ownership Plan
Table of Contents
Page
Independent Auditors' Report 1
Statements of Assets Available for Distribution
To Participants, December 31, 1999 and 1998 2
Statements of Changes in Assets Available for
Distribution to Participants, Years ended
December 31, 1999 and 1998 3
Notes to Financial Statements 4
Schedules
1 Schedule of Assets Held for Investment Purposes -
December 31, 1999 8
2 Schedule of Reportable Transactions - Year
ended December 31, 1999 9
<PAGE>9
(LETTERHEAD)
(LOGO)
KPMG LLP
1500 National City Center
1900 East Ninth Street
Cleveland, OH 44114-3495
Independent Auditors' Report
The Plan Administrator
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, 1999 and 1998, 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, 1999 and 1998, 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 as of December 31, 1999 and
reportable transactions for the year ended December 31, 1999 are
presented for the purpose 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.
These supplemental schedules are the responsibility of the Plan's
management. The supplemental schedules have been subjected to the
auditing procedures applied in the audits 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 LLP
April 14, 2000
(LOGO)
Member Firm of
KPMG International
<PAGE>10
THE LORAIN NATIONAL BANK
EMPLOYEE STOCK OWNERSHIP PLAN
Statements of Assets Available for Distribution to Participants
December 31, 1999 and 1998
ASSETS 1999 1998
---------- ----------
Assets available for distribution
to participants:
Short-term cash investments $ 242,984 85,223
Investment, at fair value (notes 3 and 6)
Common stock - LNB Bancorp, Inc. 3,058,664 3,666,161
Receivables:
Employer contributions 100,000 100,000
Dividends and interest 35,775 33,208
---------- ----------
Total receivables 135,775 133,208
---------- ----------
Assets available for
distribution to participants $3,437,423 3,884,592
========== ==========
Assets available for distribution to
participants:
Assets payable to terminated participants $ 117,336 165,800
Assets available for continuing participants 3,320,087 3,718,792
---------- ----------
$3,437,423 3,884,592
========== ==========
See accompanying notes to financial statements.
2
<PAGE>11
THE LORAIN NATIONAL BANK
EMPLOYEE STOCK OWNERSHIP PLAN
Statements of Changes in Assets Available for Distribution to Participants
Years ended December 31, 1999 and 1998
1999 1998
---------- ---------
Additions:
Investment income:
Dividends $ 124,112 112,790
Interest 4,156 6,572
Net depreciation in fair value
of investments (note 3) (788,620) (661)
---------- ---------
Total investment income (loss) (660,352) 118,701
---------- ---------
Employer contribution 400,000 200,000
Other 33 606
Total additions (deletions) (260,319) 319,307
---------- ---------
Deductions - distributions to participants (186,850) (381,823)
---------- ---------
Decrease in assets available for
distribution to participants (447,169) (62,516)
Assets available for distribution to participants
Beginning of year 3,884,592 3,947,108
---------- ---------
End of year $3,437,423 3,884,592
========== =========
See accompanying notes to financial statements.
3
<PAGE>12
THE LORAIN NATIONAL BANK
EMPLOYEE STOCK OWNERSHIP PLAN
Notes to Financial Statements
December 31, 1999 and 1998
(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 Investment and Trust
Services Division 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
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.
4
<PAGE>13
THE LORAIN NATIONAL BANK
EMPLOYEE STOCK OWNERSHIP PLAN
Notes to Financial Statements
December 31, 1999 and 1998
(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.
(c) Use of Estimates in 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, liabilities, and changes therein, and
disclosure of contingent assets and liabilities. Actual
results could differ from those estimates.
<PAGE>14
(d) Payment of Benefits
Benefit payments to participants are recorded when paid.
5
<PAGE>15 THE LORAIN NATIONAL BANK
EMPLOYEE STOCK OWNERSHIP PLAN
Notes to Financial Statements
December 31, 1999 and 1998
(3) Investments
The following table presents the fair values of investments at
December 31, 1999 and 1998:
1999 1998
--------------------- --------------------
Number Number
of Shares Fair of Shares Fair
or Units Value or Units Value
--------- ----------- --------- -----------
Common stock -
LNB Bancorp, Inc. 139,030 $ 3,058,664 132,114 $ 3,666,161
========= =========== ========= ===========
During the years ended December 31, 1999 and 1998, the Plan's
investments (including investments bought, sold, and held during the
year)depreciated in value by $788,620 and $661,respectively, as
follows:
1999 1998
-------- --------
Common Stock - LNB Bancorp, Inc. $ 788,620 661
======== ========
(4) Administrative Expenses
The administrative expenses of the Plan are paid by the Bank.
(5) Federal Income Taxes
The Internal Revenue Service issued its latest determination letter
on May 6, 1996 which stated that the Plan and its underlying Trust,
as designed, qualify under the applicable provisions of the Internal
Revenue Code. The Plan has been amended since receiving the
determination letter. In the opinion of the Plan Administrator, the
Plan and its underlying Trust have operated within the terms of the
Plan and remain qualified under the applicable provisions of the
Internal Revenue Code.
As long as the Plan continues to be qualified under present federal
income tax laws and regulations, participants will not be taxed on
Bank contributions or on investment earning on such contributions at
the time such contributions and investment earnings are received by
the Trustee, but may be subject to tax thereon at such time as they
receive distributions under the Plan.
6
<PAGE>16
THE LORAIN NATIONAL BANK
EMPLOYEE STOCK OWNERSHIP PLAN
Notes to Financial Statements
December 31, 1999 and 1998
(6) Party-in-Interest Transactions
The following is a summary of transactions in common stock of LNB
Bancorp Inc., 100% owner of the Bank, during the year ended
December 31, 1999:
Number Fair
of Shares Value
--------- -----------
Balance at December 31, 1998 132,114 $ 3,666,161
Purchases 7,906 206,482
Distributions (990) (25,359)
Net depreciation - (788,620)
--------- -----------
Balance at December 31, 1999 139,030 $ 3,058,664
========= ===========
7
<PAGE>17
Schedule 1
THE LORAIN NATIONAL BANK
EMPLOYEE STOCK OWNERSHIP PLAN
EIN: 34-0869480
Plan Number: 002
Schedule of Assets Held for Investment Purposes
December 31, 1999
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 maturity value Cost
-------- ------------------ -------------------------- -----------
* LNB Bancorp, Inc. 139,030 shares of common $ 2,538,093
stock
* Lorain National Bank Mutual funds
Treasury Trust Fund 242,984
-----------
$ 2,781,077
===========
Schedule of 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. 139,033 shares of common $ 3,058,664
stock
* Lorain National Bank Mutual funds
Treasury Trust Fund 242,984
-----------
$ 3,301,648
===========
*Party in interest
See accompanying independent auditors' report.
8
<PAGE>18
Schedule 2
THE LORAIN NATIONAL BANK
EMPLOYEE STOCK OWNERSHIP PLAN
EIN: 34-0869480
Plan Number: 002
Schedule of Reportable Transactions
Year ended December 31, 1999
Series transactions, when aggregated, involving an amount in excess of 5%
of the current value of Plan assets:
Column A Column B Column C Column D Column E
-------------------- --------------------- ---------- ---------- ---------
Identity of Description Purchase Selling Lease
party involved of assets price price rental
-------------------- --------------------- ---------- ---------- ---------
* LNB Bancorp, Inc. LNB Bancorp, Inc.
common stock,
7 purchases $ 206,482 - -
* Lorain National Bank Treasury Trust Fund,
16 purchases 395,975 - -
* Lorain National Bank Treasury Trust Fund,
16 sales $ - 238,214 -
========== ========== =========
Schedule of Reportable Transactions Continued
Column A Column B Column F Column G Column H
---------------------- ----------------- ------------- -------- ---------
Current
Expense value of
incurred asset on
Identity of Description with Cost of transaction
party involved of assets transaction asset date
---------------------- ----------------- ------------- --------- ---------
* LNB Bancorp, Inc. LNB Bancorp, Inc.
common stock,
7 purchases - 206,482 206,482
* Lorain National Bank Treasury Trust Fund,
16 purchases - 395,975 395,975
* Lorain National Bank Treasury Trust Fund,
16 sales - 238,214 238,214
============= ========= =========
<PAGE>19
Schedule 2
THE LORAIN NATIONAL BANK
EMPLOYEE STOCK OWNERSHIP PLAN
EIN: 34-0869480
Plan Number: 002
Schedule of Reportable Transactions
Year ended December 31, 1999
Schedule of 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,
7 purchases -
* Lorain National Bank Treasury Trust Fund,
16 purchases -
* Lorain National Bank Treasury Trust Fund,
16 sales -
============
* Party in interest
See accompanying independent auditors' report.
9
<PAGE>20
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 28, 2000 By: /s/ Gregory D. Friedman
------------- -----------------------
Gregory D. Friedman
Executive Vice President and
Chief Financial Officer
/s/ Mitchell J. Fallis
----------------------
Mitchell J. Fallis
Vice President and
Chief Accounting Officer
<PAGE>21
The Lorain National Bank
Employee Stock Ownership Plan
Appendix to Form 11 - K
(for the fiscal year ended December 31, 1999)
S - K Reference Number (24)
Consent of Independent Accountants.
<PAGE>22
(LETTERHEAD)
(LOGO)
KPMG LLP
1500 National City Center
1900 East Ninth Street
Cleveland, OH 44114-3495
Consent of Independent Accountants
----------------------------------
The Plan Administrator
LNB Bancorp, Inc.:
We consent to the incorporation by reference in the Registration Statement
No. 33-65034 of LNB Bancorp, Inc. of our report dated April 14, 2000,
relating to the statements of assets available for distribution to
participants of The Lorain National Bank Employee Stock Ownership Plan as
of December 31, 1999, and 1998, 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 1999 annual report
on Form 10-K of LNB Bancorp, Inc.
/s/ KPMG LLP
Cleveland, Ohio
June 28, 2000
(LOGO)
Member Firm of
KPMG International
