-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RD4VGQhTBFM1Z3TYlNX+5ckek39hL4huP7+nWLHiBmjZn+rUa0IBvoHlVo5Z0fKN MKv4WtBDcO2/LQKUJLhFjQ== 0000737210-01-500005.txt : 20010516 0000737210-01-500005.hdr.sgml : 20010516 ACCESSION NUMBER: 0000737210-01-500005 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010331 FILED AS OF DATE: 20010515 FILER: COMPANY DATA: COMPANY CONFORMED NAME: LNB BANCORP INC CENTRAL INDEX KEY: 0000737210 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 341406303 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-13203 FILM NUMBER: 1635769 BUSINESS ADDRESS: STREET 1: 457 BROADWAY CITY: LORAIN STATE: OH ZIP: 44052-1769 BUSINESS PHONE: 4402446000 10-Q 1 q10110q.txt 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, 2001 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, 2001: 4,213,047 shares Class of Common Stock: $1.00 par value 2 LNB Bancorp, Inc. Quarterly Report on Form 10-Q Quarter Ended March 31, 2001 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 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 22 Exhibit Index 23 3 FORM 10-Q LNB BANCORP, INC. PART I - FINANCIAL INFORMATION ITEM 1 - FINANCIAL STATEMENTS MARCH 31, DECEMBER 31, CONDENSED CONSOLIDATED BALANCE SHEETS 2001 2000 ------------- -------------- (Unaudited) (See Note 1) ASSETS: Cash and due from banks $ 22,130,000 $ 22,011,000 Federal funds sold and short-term investments 3,117,000 3,125,000 Securities: Available for sale, at fair value 89,686,000 79,518,000 Held to maturity, at cost (fair value $37,534,000 and $43,982,000, respectively) 37,363,000 44,431,000 Federal Home Loan Bank, Federal Reserve Bank and other equity stock, at cost 3,263,000 3,152,000 -------------- -------------- Total securities 130,312,000 127,101,000 -------------- -------------- Loans: Portfolio loans 442,515,000 442,132,000 Loans available for sale 8,815,000 9,008,000 -------------- -------------- Total loans 451,330,000 451,140,000 Reserve for loan losses (5,045,000) (5,250,000) -------------- -------------- Net loans 446,285,000 445,890,000 -------------- -------------- Bank premises and equipment, net 11,041,000 11,251,000 Intangible assets 3,753,000 3,847,000 Accrued interest receivable 3,818,000 4,694,000 Other assets 4,728,000 4,093,000 Other foreclosed assets 175,000 98,000 -------------- -------------- TOTAL ASSETS $625,359,000 $622,110,000 ============== ============== STATEMENT CONTINUED ON NEXT PAGE 4 STATEMENT CONTINUED FROM PREVIOUS PAGE LIABILITIES AND STOCKHOLDERS' EQUITY: Deposits: Demand and other noninterest-bearing deposits $ 79,849,000 $ 83,093,000 Savings, Market Access and passbook accounts 223,362,000 219,618,000 Certificates of deposit 205,178,000 193,380,000 -------------- -------------- Total deposits 508,389,000 496,091,000 -------------- -------------- Securities sold under repurchase agreements and other short-term borrowings 27,617,000 39,391,000 Federal Home Loan Bank advances, short-term 18,395,000 16,095,000 Federal Home Loan Bank advances, long-term 5,950,000 8,250,000 Accrued interest payable 1,923,000 1,901,000 Accrued taxes, expenses, and other liabilities 4,847,000 3,857,000 ------------- -------------- Total liabilities 567,121,000 565,585,000 -------------- -------------- Shareholders' equity: Preferred stock, no par value: Shares authorized 1,000,000, and shares outstanding, none Common stock $1.00 par: Shares authorized 15,000,000, Shares issued 4,313,047 and 4,313,047, respectively and Shares outstanding 4,213,047 and 4,211,047, respectively 4,313,000 4,313,000 Additional capital 24,336,000 24,336,000 Retained earnings 31,537,000 30,584,000 Accumulated other comprehensive income 952,000 192,000 Treasury stock at cost, 100,000 shares (2,900,000) (2,900,000) -------------- -------------- Total shareholders' equity 58,238,000 56,525,000 -------------- -------------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $625,359,000 $622,110,000 ============== ============== See notes to unaudited condensed consolidated financial statements. 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) ---------------------------- 2001 2000 INTEREST INCOME: ---------------------------- Interest and fees on loans: Taxable $ 9,833,000 $ 9,022,000 Tax-exempt 3,000 5,000 Interest and dividends on securities: U.S. Treasury securities 30,000 156,000 U.S. Government agencies and corporations 1,673,000 1,559,000 States and political subdivisions 72,000 61,000 Other debt and equity securities 72,000 97,000 Interest on Federal funds sold and other interest-bearing instruments 41,000 39,000 ------------- ------------ TOTAL INTEREST INCOME 11,724,000 10,939,000 ------------- ------------ INTEREST EXPENSE: Interest on Deposits: Time certificates of $100,000 and over 778,000 612,000 Other deposits 3,401,000 2,960,000 Interest on securities sold under repurchase agreements and other short-term borrowings 396,000 436,000 Interest on Federal Home Loan Bank advances 328,000 376,000 ------------- ------------ TOTAL INTEREST EXPENSE 4,903,000 4,384,000 ------------- ------------ NET INTEREST INCOME 6,821,000 6,555,000 Provision for loan losses 450,000 300,000 NET INTEREST INCOME AFTER PROVISION ------------- ------------ FOR LOAN LOSSES 6,371,000 6,255,000 ------------- ------------ OTHER INCOME: Investment and Trust Services Division income 558,000 502,000 Service charges on deposit accounts 799,000 762,000 Other service charges, exchanges and fees 644,000 655,000 Gains from sales of securities 23,000 -0- Other operating income 19,000 14,000 ------------- ------------ TOTAL OTHER INCOME 2,043,000 1,933,000 STATEMENT CONTINUED ON NEXT PAGE 6 STATEMENT CONTINUED FROM PREVIOUS PAGE OTHER EXPENSES: Salaries and employee benefits 2,600,000 2,492,000 Net occupancy expense of premises 386,000 386,000 Furniture and equipment expenses 519,000 573,000 Supplies and postage 275,000 208,000 Ohio franchise tax 162,000 169,000 Credit card and merchant expenses 282,000 250,000 Other operating expenses 1,175,000 1,122,000 ------------- ------------ TOTAL OTHER EXPENSES 5,399,000 5,200,000 ------------- ------------ INCOME BEFORE INCOME TAXES 3,015,000 2,988,000 INCOME TAXES 1,009,000 1,008,000 ------------- ------------ NET INCOME $ 2,006,000 $ 1,980,000 ============= ============ PER SHARE DATA: BASIC EARNINGS PER SHARE $ .48 $ .48 ======= ======= DILUTED EARNINGS PER SHARE $ .48 $ .48 ======= ======= DIVIDENDS DECLARED PER SHARE $ .25 $ .24 ======= ======= See notes to unaudited condensed consolidated financial statements. 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) ---------------------------- 2001 2000 CASH FLOWS FROM OPERATING ACTIVITIES: ---------------------------- Interest received $12,603,000 $11,370,000 Other income received 1,962,000 2,028,000 Interest paid (4,881,000) (4,285,000) Cash paid for salaries and employee benefits (3,211,000) (2,623,000) Net occupancy expense of premises paid (306,000) (306,000) Furniture and equipment expenses paid (181,000) (212,000) Cash paid for supplies and postage (275,000) (208,000) Cash paid for other operating expenses (1,249,000) (667,000) Federal income taxes paid -0- (250,000) ------------- ------------- NET CASH PROVIDED BY OPERATING ACTIVITIES 4,462,000 4,847,000 ------------- ------------- CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from maturities of securities held to maturity 7,000,000 -0- Proceeds from maturities of securities available for sale 13,915,000 4,000,000 Purchases of securities held to maturity (442,000) (78,000) Purchases of securities available for sale (23,140,000) (5,941,000) Net (increase) in loans made to customers (896,000) (8,591,000) Purchases of bank premises and equipment and intangible assets (224,000) (701,000) Proceeds from liquidation of other foreclosed assets 296,000 96,000 Purchases of other foreclosed assets (247,000) -0- ------------- ------------- NET CASH USED IN INVESTING ACTIVITIES (3,738,000) (11,215,000) ------------- ------------- STATEMENT CONTINUED ON NEXT PAGE 8 STATEMENT CONTINUED FROM PREVIOUS PAGE CASH FLOWS FROM FINANCING ACTIVITIES: Net (decrease) increase in demand and other noninterest-bearing deposits (3,244,000) 13,611,000 Net increase in savings and passbook deposits 3,744,000 6,478,000 Net increase in certificates of deposit 11,798,000 25,050,000 Net (decrease) in securities sold under repurchase agreements and other short-term borrowings (2,774,000) (36,802,000) Proceeds from Federal Home Loan Bank advances -0- -0- Payment on Federal Home Loan advances (9,000,000) (10,000,000) Proceeds from exercise of stock options -0- -0- Dividends paid (1,137,000) (1,031,000) ------------- ------------- NET CASH (USED) BY FINANCING ACTIVITIES (613,000) (2,694,000) ------------- ------------- NET INCREASE(DECREASE) IN CASH AND CASH EQUIVALENTS 111,000 (9,062,000) CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 25,136,000 37,343,000 ------------- ------------- CASH AND CASH EQUIVALENTS AT END OF QUARTER $25,247,000 $28,281,000 ============= ============= RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES: NET INCOME $2,006,000 $1,980,000 Adjustments to reconcile net income to net cash provided by operating activities: Gain on sale of investments & loans 29,000 -0- Depreciation and amortization 418,000 441,000 Amortization of intangible assets 94,000 100,000 Amortization of deferred loan fees and costs, net 112,000 163,000 Provision for loan losses 450,000 300,000 Decrease in accrued interest receivable 876,000 456,000 (Increase) in other assets (613,000) (169,000) Increase in accrued interest payable 22,000 99,000 Increase in accrued taxes, expenses and other liabilities 1,104,000 1,364,000 Others, net (36,000) 113,000 -------------- ------------- NET CASH PROVIDED BY OPERATING ACTIVITIES $4,462,000 $4,847,000 ============== ============== See notes to unaudited condensed consolidated financial statements. 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 balance sheets of LNB Bancorp, Inc. (The Parent Company) and its wholly-owned subsidiaries, Lorain National Bank (The Bank) and Charleston Insurance Agency, Inc. and a 49% interest in Charleston Title insurance Agency, LLC., at March 31, 2001, compared to December 31, 2000 and the results of its operations and cash flows for the three months ended March 31, 2001 compared to the same period in 2000. The term "the Corporation" refers to LNB Bancorp, Inc. and its wholly-owned subsidiaries. It is the intent of this discussion to provide the reader with a more thorough understanding of the unaudited condensed consolidated financial statements and should be read in conjunction with those unaudited condensed consolidated financial statements and the Corporation's December 31, 2000 Annual Report. 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. In an effort to take advantage of the recently passed Gramm-Leach-Bliley Act, otherwise known as the financial modernization act, LNB Bancorp, Inc. has applied for, and received, one of the first charters as a financial holding company. The Act enables financial holding companies to engage in business activities previously unavailable to them. The Corporation will also be able to offer new products and services as they are developed and approved by regulators. LNB Bancorp, Inc. is strategically reviewing its new business opportunities under the Gramm-Leach-Bliley Act. BASIS OF PRESENTATION The unaudited condensed consolidated balance sheet as of March 31, 2001, the unaudited condensed consolidated statements of income and cash flows for the three months ended March 31, 2001 and 2000 are prepared in accordance with generally accepted accounting principles. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. 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 operations for the interim periods 10 presented. The consolidated balance sheet at December 31, 2000 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, 2000 Annual Report to Shareholders. The results of operations for the period ended March 31, 2001 are not necessarily indicative of the operating results for the full year. RESERVE FOR LOAN LOSSES Because some loans may not be repaid in full, a reserve for 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 adequate to cover 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 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 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 is established for the difference. The impairment reserve is established by either an allocation of the reserve for loan losses or by a provision for loan losses, depending upon the adequacy of the reserve for loan losses. 11 RECLASSIFICATIONS Certain 2000 amounts have been reclassified to conform to 2001 presentation. 2. EARNINGS PER SHARE Earnings per share is calculated as follows: For the Quarter ended March 31, 2001 Income Shares Per-Share (Numerator) (Denominator) Amount Net Income $2,006,000 Basic EPS Income available to common shareholders $2,006,000 4,211,047 $ .48 ===== Effect of Dilutive Securities Incentive Stock Options -0- 4,674 ---------- --------- Diluted EPS Income available to common shareholders + assumed conversions $2,006,000 4,215,721 $ .48 ========== ========= ===== For the Quarter ended March 31, 2000 Income Shares Per-Share (Numerator) (Denominator) Amount Net Income $1,980,000 Basic EPS Income available to common shareholders $1,980,000 4,127,161 $ .48 ===== Effect of Dilutive Securities Incentive Stock Options -0- 3,581 ---------- --------- Diluted EPS Income available to common shareholders + assumed conversions $1,980,000 4,130,742 $ .48 ========== ========= ===== 12 3. COMPREHENSIVE INCOME The Corporation's comprehensive income for the quarters ended March 31, 2001 and 2000 are as follows: For the quarters ended March 31, 2001 2000 -------------------------------- Net income $2,006,000 $1,980,000 Other comprehensive income: Unrealized gain(loss) on securities available for sale, net of tax (benefit)of $392,000 and $(207,000) 760,000 (137,000) ------------ ------------ Comprehensive Income $2,766,000 $1,843,000 ============ ============ 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 2001. In the first quarter of 2001 stock was purchased in the open market at the then current market price. 13 PART I - FINANCIAL INFORMATION ITEM 2 - MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION & RESULTS OF OPERATIONS FORWARD-LOOKING STATEMENTS Certain statements contained herein are not based on historical facts and are "forward-looking statements" within the meaning of Section 21A of the Securities Exchange Act of 1934. Forward-looking statements which are based on various assumptions (some of which are beyond the Corporation's control), may be identified by reference to a future period or periods, or by the use of forward-looking terminology, such as "may," "will," "believe," "expect," "estimate," "anticipate," "continue," or similar terms or variations on those terms, or the negative of these terms. Actual results could differ materially from those set forth in forward-looking statements, due to a variety of factors, including, but not limited to, those related to the economic environment, particularly in the market areas in which the company operates, competitive products and pricing, fiscal and monetary policies of the U.S. Government, changes in government regulations affecting financial institutions, including regulatory fees and capital requirements, changes in prevailing interest rates, acquisitions and the integration of acquired businesses, credit risk management, asset/liability management, the financial and securities markets and the availability of and costs associated with sources of liquidity. The Corporation does not undertake, and specifically disclaims any obligation, to publicly release the result of any revisions which may be made to any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements. FINANCIAL CONDITION Total assets of the Corporation increased $3,249,000 during the first quarter, to $625,359,000. Federal funds sold and other interest-bearing investments decreased by $8,000 during the first quarter of 2001. The total securities portfolio increased $3,211,000 ending the first quarter at $130,312,000. At March 31, 2001 gross unrealized gains (losses) in the held to maturity securities portfolio were approximately $247,000 and $(76,000), respectively. Net loans increased $395,000 during the first quarter to $446,285,000 at March 31, 2001. This modest increase was a result of weak loan demand in our market. Commercial loan growth was particularly strong, showing first quarter increases of $5,769,000. Consumer and Mortgage loans decreased by $4,362,000 and $1,217,000, respectively, during the first quarter of 2001. The consumer loan portfolio has decreased because the bank has decided to allow some run-off of the indirect automobile credits while mortgages decreased due to the seasonality factors. 14 The reserve for loan losses ended the quarter at $5,045,000 supported by a provision for loan losses of $450,000, recoveries of $36,000 and loan charge- offs of $691,000. The reserve for loan losses as a percentage of ending loans was 1.12% at March 31, 2001 and 1.16% at December 31, 2000. Corporate management believes that the reserve for loan losses as a percentage of ending loans at March 31, 2001 remains at an appropriate level. The ratio of the reserve for loan losses to nonperforming assets increased slightly to 258.9% as of March 31, 2001 from 226.6% at December 31, 2000. Corporate management believes that the current level of the reserve for loan losses is adequate based upon quantitative analysis of identified risks and analysis of historical trends. The level of nonperforming assets decreased by $369,000 during the first quarter of 2001. This decrease is the result of a decrease in nonaccrual loans of $495,000 as well as by an increase in other foreclosed assets owned in the amount of $126,000. The decrease in nonaccrual loans is due to decreases in nonaccrual principal balances of $326,000 which have been paid off or brought current, loans charged-off in the amount of $283,000 and liquidations of nonaccrual loans of $109,000 and increases in nonaccrual principal balances of $403,000 which includes one large commercial loan credit of $147,000 and 26 small consumer loan credits. The decrease in nonaccrual loans in the first quarter of 2001 was due primarily to one commercial loan customer and 21 personal loan customers. The increase in Other Foreclosed Assets resulted from the acquisition of one residential property in the amount of $175,000. The level of nonperforming assets remains at relatively low levels and Corporate management believes nonperforming assets are well collateralized. 15 The table below presents the level of nonperforming assets at the end of the last four calendar quarters. Amounts in thousands 03/31/01 12/31/00 09/31/00 06/30/00 -------- -------- -------- -------- Nonperforming Assets: Nonaccrual $1,724 $2,219 $1,702 $ 626 Restructured 0 0 0 0 Other Foreclosed Assets 224 98 47 247 ------ ------ ------ ------ Total Nonperforming Assets $1,948 $2,317 $1,749 $ 873 ====== ====== ====== ====== Reserve for loan losses to nonperforming assets 258.9% 226.6% 296.4% 557.6% ====== ====== ====== ====== Accruing loans past due 90 days $ 112 $ 306 $ 197 $ 437 ====== ====== ====== ====== 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, 2001, potential problem loans totaled $4,365,000, an increase of $441,000 from the December 31, 2000 balance. The increase in the watch list from June 30, 2000 to September 30, 2000 was due to a weakened steel industry. The Bank has a few commercial loan customers that subcontract to the steel industry. They were placed on the watch list for tracking purposes. 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, 2001 there are no significant concentrations of credit in the loan portfolio. The Corporation had outstanding loan and credit commitments to make loans totaling $114,342,000 and $95,893,000 at March 31, 2001 and 2000, 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 2000 plus increase in loan demand during the first quarter of 2001. Mortgage and commercial construction loan demand is expected to increase in the second quarter of 2001 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 $12,298,000 during the first quarter to $508,389,000. Noninterest-bearing deposits decreased to $79,849,000, at March 31, 2001 for a decrease of $3,244,000, while interest-bearing deposits increased to $428,540,000 for an increase of $15,542,000. Federal funds 16 purchased and securities sold under agreements to repurchase decreased $2,774,000 during the first quarter of 2001. Due to the volatility of customer repurchase agreements, most funds generated by repurchase activity enter the Corporation's earning assets as short-term investments. 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 liquid position in order to take advantage of interest rate fluctuations. As of March 31, 2001 short- term security investments with maturities of one year or less totaled $15,715,000 which represented 12.1% of total securities. Adding cash and due from banks of $22,130,000 and Federal Funds sold and other short-term investments of $3,117,000, total liquid assets represented 6.6% of total assets. The Corporation's subsidiary bank has established short-term lines of credit at correspondent banks, the Federal Home Loan Bank and the Federal Reserve Bank of Cleveland in the amounts of $13,000,000, $30,000,000 and $26,000,000, respectively. CAPITAL RESOURCES LNB Bancorp, Inc. continues to maintain a strong capital position. Total shareholders' equity increased to $58,238,000, at March 31, 2001. The increase resulted primarily from $2,006,000 of net income generated from the first quarter of operations less a cash dividend payable to shareholders of $1,053,000. The decrease in interest rates experienced in the first quarter of 2001 has caused an increase in the overall market value of available for sale securities which resulted in an increase of shareholders' equity by $760,000 for the quarter ended March 31, 2001. As of March 31, 2001, 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 17 of March 31, 2001 and 2000 follow together with those ratios required for the Corporation to be considered well capitalized. MARCH 31, --------------------- 2001 2000 ------- ------- Tier I capital ratio 11.99% 11.87% Required Tier I capital ratio 4.00% 4.00% Total capital ratio 13.12% 13.03% Required total capital ratio 8.00% 8.00% Leverage ratio 8.67% 8.21% Required leverage ratio 3.00% 3.00% 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 $809,000 when compared to the first quarter of 2000. This was the result of the impact of increases in the loan portfolio of $190,000 plus increases in rates. Interest and dividends on securities was $1,847,000 for the first quarter of 2001 for a decrease of $26,000 over the same period in 2000. The first quarter decrease in interest and dividends on securities results from a net increase in the securities portfolio of $3,211,000 which was more than offset by decreases in the average yield of the securities portfolio. Interest and dividends on securities represented 15.7% of total interest income at March 31, 2001 compared to 17.1% at March 31, 2000. Interest on Federal funds sold and other interest-bearing instruments was $-0- at March 31, 2001 compared to $39,000 at March 31, 2000. The decrease resulted from lower average balances invested in this form of financial instrument. Total interest expense increased by $519,000 when compared to the first quarter of 2000. The interest expense increase was fueled by an increase in interest expense from certificates of deposit greater than $100,000 in the amount of $166,000, plus increases in deposit account interest of $441,000 offset in part by decreases in securities sold under repurchase agreements and federal funds purchased of $41,000. Total other income increased by $110,000 when compared to the first quarter of 2000. This increase resulted from increases in Investment and Trust Services Division Income of $56,000, increases in service charges of $37,000 and increases in other service charges, exchanges and fees of $12,000. 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, 2001 was 18 $5,399,000, 3.8% more than the first quarter of 2000. This increase was due primarily to increases in salary expenses, supplies and postage and credit card and merchant expenses. The effective tax rate was 33.5% and 33.7% during the first quarter of 2001 and 2000, respectively. Net income was $2,006,000 and $1,980,000 for the quarters ended March 31, 2001 and 2000, respectively. Net income per basic and diluted share was $.48 and $.48 for the quarters ended March 31, 2001 and 2000, respectively. 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. 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, 2000, 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, 2000. With the Federal Reserve Board's recent announcements to decrease the rates by 150 basis points during the first quarter of 2001, the Corporation anticipates a decrease in the net interest margin during 2001. The amount of the decrease will be determined, in part, by any rate reductions resulting from actions of the Federal Open Market Committee. Also, Corporate management does not anticipate any significant changes in the Corporation's market risk of interest rate risk portfolio. 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 2001 Annual Meeting of Shareholders was held on April 17, 2001. (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 (1)Election of directors to serve as Class II Directors until April 20, 2004 Annual Meeting of Shareholders as follows: ABSTAIN/ BROKER FOR AGAINST WITHHELD NON-VOTES Daniel P. Batista 3,533,822 -0- 33,738 645,487 David M. Koethe 3,540,559 -0- 27,001 645,487 Stanley G. Pijor 3,535,505 -0- 32,055 645,487 Eugene M. Sofranko 3,541,541 -0- 26,019 645,487 Leo Weingarten 3,521,288 -0- 46,273 645,487 The total number of shares of LNB Bancorp, Inc. Common Stock, $1.00 par value, outstanding as of March 5, 2001, the record date of the Annual Meeting, was 4,213,047. 21 (2)Amendment of Articles of Incorporation - To amend the Articles of Incorporation to add provisions requiring a fair price and supermajority vote of shareholders for certain business combinations. (These provisions are already contained in LNB Bancorp's Amended Code of Regulations. This is a technical amendment to address the requirements of Ohio law.) ABSTAIN/ BROKER FOR AGAINST WITHHELD NON-VOTES 2,261,271 879,866 36,125 1,035,785 Proposal (2), Amendment of Articles of Incorporation, did not receive the required sixty-six and two-thirds percentage of affirmative votes needed for ratification, therefore, the amendment was defeated. In the opinion of the Bancorp's legal counsel, the defeat of this proposed amendment has no impact. It was to be a technical revision. ITEM 5 - Other Information (a) The Notice of the Annual Meeting to Shareholders and Proxy Statement (dated March 19, 2001) was previously filed as Exhibit 22 to the Bancorp's 2000 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, 2001 - EDGAR Version. (c) Reports on Form 8-K There were no reports on Form 8-K filed for the three months ended March 31, 2001. Also, see the Exhibit Index which is found on the next page of this Form. 22 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 15, 2001 -------------------------- Gregory D. Friedman, CPA Executive Vice President and Chief Financial Officer /s/ Mitchell J. Fallis Date: May 15, 2001 -------------------------- Mitchell J. Fallis, CPA Vice President and Chief Accounting Officer 23 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, 2001 - EDGAR Version 24 LNB Bancorp, Inc. Exhibit to Form 10 - Q (For the three months ended March 31, 2001) S - K Reference Number (13) First Quarter Report to Shareholders of LNB Bancorp, Inc. - March 31, 2001 EDGAR Version DESCRIPTION: Three sided pamphlet: Outside cover: white with blue stripe across the top with two pictures of LNB Employees and Ohio Read Students First Quarter Report March 31, 2001 (Logo)LNB Bancorp, Inc. Inside contains: Message to shareholders, Unaudited EDGAR version Consolidated Balance Sheets for period ending March 31, 2001 and March 31, 2000, respectively, Unaudited EDGAR version Consolidated Statements of Income for the Three Months ended March 31, 2001 and March 31, 2000, respectively, LNB Investment Center to provide investments and insurance Banking Centers, ATMs and Investment Center 25 Outside cover description: White background with blue stripe across top with two pictures of LNB Employees with Ohio Reads Students Front Cover: First Quarter Report March 31, 2001 (Logo)LNB Bancorp, Inc 26 Inside of front cover: Message to Shareholders It's a pleasure, once again, to report on the progress of LNB Bancorp, Inc., and its subsidiary companies after the first quarter of 2001. As of March 31, 2001, LNB Bancorp, Inc. achieved growth in earnings, dividends, assets, loans, deposits and shareholders' equity. We are pleased to announce that earnings increased 1.3% for the first quarter of 2001, compared to the same quarter one year ago, increasing to $2,006,000, up from last year's $1,980,000. Earnings for 2001 were higher than a year ago because of higher net interest income and noninterest income, offset in part by higher loan loss provision and operating expenses. Increases in net interest income was the net result of commercial loan growth which was partially offset by a higher cost of funds. Basic and diluted earnings per share for the first quarter of 2001 and 2000 remained constant at $.48. Cash dividends declared per share for the first quarter of 2001 increased 4% compared to the same quarter last year. The first quarter cash dividends declared per share in 2001 increased by $.01 to $.25 per share, up from $.24 per share in 2000. Consolidated assets increased 4.2% to $625.4 million at March 31, 2001, up $25.1 million from March 31, 2000. Net loans grew by $23.2 million from one year ago to $446.3 million at March 31, 2001, for a 5.5% increase. Commercial loan growth accounted for almost all of total loan growth during the 12 months ended March 31, 2001. Total deposits increased 1.3% to $508.4 million at March 31, 2001, up $6.4 million from one year ago. Increases in deposits resulted from increases in Market Access accounts offset inpart by decreases in demand and certificates of deposit accounts. Lorain National Bank operates 22 banking centers and 28 ATMs in nine local communities. Total shareholders' equity increased by $6.3 million during the twelve months ended March 31, 2001 for a 12.1% increase. Total shareholders' equity was $58.2 million or $13.83 per share at March 31, 2001, compared to $51.9 million or $12.31 per share at March 31, 2000. The percentage of shareholders' equity to assets reached 9.3% at March 31, 2001. We would like to welcome and congratulate our newly elected member to the Board of Directors, Lee C. Howley, president of Howley and Company. Mr. Howley brings extensive personal experience from the telecommunication industry and health-care-related real estate and service industries, as well as Board of Director experience in the real estate holding industry. We are pleased to report on the recent opening of our 22nd banking center in Elyria, the Elyria United Methodist Village, located at 807 West Avenue, 27 Elyria, Ohio. We look forward to serving the residents and employees at our newest banking center location. We appreciate and thank you for your continued support and look forward to addressing you after the completion of our second quarter of operations. /s/ Stanley G. Pijor /s/ Gary C. Smith --------------------- ------------------ Stanley G. Pijor Gary C. Smith Chairman of the Board President and Chief Executive Officer NET INCOME millions of dollars (A Net Income graph follows in printed version with income on the y-axis and years 1997 through 2001 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.) DIVIDENDS PER SHARE dollars* (A Dividends Per Share graph follows in printed version with dividends on the y-axis and years 1997 through 2001 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 1997 through 2001 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 Net Income Dividends Per Share Per Share Year millions of dollars dollars* dollars* 2001 $2,006 $0.25 $0.48 2000 $1,980 $0.24 $0.48 1999 $1,833 $0.21 $0.43 1998 $1,678 $0.19 $0.40 1997 $1,525 $0.16 $0.36 *Adjusted for stock dividends and splits 28 Consolidated Balance Sheets March 31, 2001 2000 - ---------------------------------------------------------------------- ASSETS: Cash and Due from Banks. . . . . . . . . . .$ 22,130,000 $ 24,547,000 Federal Funds Sold and Short-term Investments 3,117,000 3,734,000 Federal Home Loan Bank and Federal Reserve Bank Stock, at Cost . . . . . . . . 3,203,000 2,996,000 Securities Held to Maturity, at Cost . . . . 43,777,000 44,869,000 Securities Available for Sale, at Fair Value 83,332,000 77,258,000 Loans. . . . . . . . . . . . . . . . . . . . 451,330,000 427,845,000 Reserve for Loan Losses. . . . . . . . . . . (5,045,000) (4,790,000) --------------------------- NET LOANS. . . . . . . . . . . . . . . . . . 446,285,000 423,055,000 --------------------------- Premises, Equipment and Intangible Assets (net). . . . . . . . . . . . . . . . 14,794,000 15,640,000 Accrued Interest Receivable and Other Assets. . . . . . . . . . . . . . . . 8,721,000 8,166,000 --------------------------- TOTAL ASSETS . . . . . . . . . . . . . . . .$625,359,000 $600,265,000 --------------------------- LIABILITIES AND STOCKHOLDERS' EQUITY: Noninterest-Bearing Deposits . . . . . . . .$ 79,849,000 $ 94,265,000 Interest-Bearing Deposits. . . . . . . . . . 428,540,000 407,705,000 --------------------------- TOTAL DEPOSITS . . . . . . . . . . . . . . . 508,389,000 501,970,000 --------------------------- Securities Sold under Repurchase Agreements and Other Short-term Borrowings . . . . . . 27,617,000 15,320,000 Federal Home Loan Bank Advances. . . . . . . 24,345,000 24,345,000 Accrued Interest, Taxes, Expenses and Other Liabilities . . . . . . . . . . . . . 6,764,000 6,726,000 --------------------------- TOTAL LIABILITIES. . . . . . . . . . . . . . 567,115,000 548,361,000 --------------------------- Preferred Stock. . . . . . . . . . . . . . . -0- -0- Common Stock . . . . . . . . . . . . . . . . 4,313,000 4,227,000 Additional Capital . . . . . . . . . . . . . 24,336,000 22,685,000 Retained Earnings. . . . . . . . . . . . . . 31,543,000 29,045,000 Accumulated Other Comprehensive Income(Loss) 952,000 (1,153,000) Treasury Stock, at Cost. . . . . . . . . . . (2,900,000) (2,900,000) --------------------------- TOTAL SHAREHOLDERS' EQUITY . . . . . . . . . 58,244,000 51,904,000 --------------------------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $625,359,000 $600,265,000 --------------------------- 29 TOTAL ASSETS millions of dollars (A Total Assets graph follows in printed version with assets on the y-axis and years 1997 through 2001 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' EQUITY millions of dollars (A Total Shareholders' Equity graph follows in printed version with shareholder's equity on the y-axis and years 1997 through 2001 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' Total Assets Equity Year millions of dollars millions of dollars 2001 $625.4 $58.2 2000 $600.3 $51.9 1999 $560.6 $49.2 1998 $490.0 $45.8 1997 $445.5 $45.0 (LOGO) LNB Bancorp, Inc. 30 Consolidated Statements of Income Three Months Ended March 31, 2001 2000 - ---------------------------------------------------------------------- INTEREST INCOME: Interest and Fees on Loans. . . . . . . . . . $ 9,836,000 $ 9,027,000 Interest and Dividends on Securities. . . . . 1,847,000 1,873,000 Interest on Federal Funds Sold and Short-term Investments . . . . . . . . . . . 41,000 39,000 ------------------------- TOTAL INTEREST INCOME . . . . . . . . . . . . 11,724,000 10 939,000 ------------------------- INTEREST EXPENSE: Interest on Deposits. . . . . . . . . . . . . 4,179,000 3,572,000 Interest on Securities Sold under Repurchase Agreements and Other Short-term Borrowings. . . . . . . 396,000 436,000 Interest on Federal Home Loan Bank Advances . 328,000 376,000 ------------------------- TOTAL INTEREST EXPENSE. . . . . . . . . . . . 4,903,000 4,384,000 ------------------------- NET INTEREST INCOME . . . . . . . . . . . . . 6,821,000 6,555,000 Provision for Loan Losses . . . . . . . . . . 450,000 300,000 ------------------------- NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES. . . . . . . . . . . . . . . 6,371,000 6,255,000 ------------------------- OTHER INCOME: Investment and Trust Services Division Income 558,000 502,000 Fees and Service Charges. . . . . . . . . . . 1,443,000 1,417,000 Gains From Sales of Loans, Securities and Buildings. . . . . . . . . . . . . . . . 23,000 -0- Other Operating Income. . . . . . . . . . . . 19,000 14,000 ------------------------- TOTAL OTHER INCOME. . . . . . . . . . . . . . 2,043,000 1,933,000 ------------------------- OTHER EXPENSES: Salaries and Employee Benefits. . . . . . . . 2,600,000 2,492,000 Net Occupancy Expense of Premises . . . . . . 386,000 386,000 Furniture and Equipment Expenses. . . . . . . 519,000 573,000 Supplies and Postage. . . . . . . . . . . . . 275,000 208,000 Ohio Franchise Tax. . . . . . . . . . . . . . 162,000 169,000 Other Operating Expenses. . . . . . . . . . . 1,457,000 1,372,000 ------------------------- TOTAL OTHER EXPENSES. . . . . . . . . . . . . 5,399,000 5,200,000 ------------------------- INCOME BEFORE INCOME TAXES. . . . . . . . . . 3,015,000 2,988,000 ------------------------- Income Taxes. . . . . . . . . . . . . . . . . 1,009,000 1,008,000 ------------------------- 31 NET INCOME. . . . . . . . . . . . . . . . . . $ 2,006,000 $ 1,980,000 ------------------------- PER SHARE DATA: BASIC EARNINGS PER SHARE. . . . . . . . . . . $.48 $.48 ------------------------- DILUTED EARNINGS PER SHARE. . . . . . . . . . $.48 $.48 ------------------------- DIVIDENDS DECLARED PER SHARE. . . . . . . . . $.25 $.24 ------------------------- Logos for LNBB NASDAQ LISTED, FDIC Insured, Federal Home Loan Bank System, and Equal Housing Lender 32 Inside of back cover LNB Investment Center to provide investments and insurance Color photo in middle top of page of Financial Advisor Robert A. Carino (Logo) LNB Investment Center "Lorain National Bank... now makes available a wide range of investment products and services including stock brokerage and mutual funds." LNB Bancorp, Inc. has announced the availability of alternative investment and insurance products and services through its subsidiaries to be marketed under the brand LNB Investment Center. Lorain National Bank, through an affiliation with Raymond James Financial Services, Inc. Member NASD/SIPC, of St. Petersburg, Florida, now makes available a wide range of investment products and services including stock brokerage and mutual funds. Our Charleston Insurance Agency Inc., subsidiary will provide customers with insurance-related products including life, accident and health, and non- variable annuities. "Customers no longer need to consider any other source to meet all their financial services needs," said Gary C. Smith, president and chief executive officer of LNB Bancorp, Inc. and Lorain National Bank. "Regardless of our customers' financial profiles, LNB Investment Center will market our subsidiaries' products and services that span the entire financial services spectrum." Thomas P. Ryan, president and chief executive officer of Charleston Insurance Agency, Inc., announced the hiring of financial advisor Robert A. Carino to administer the sale of investment and insurance products. Carino is a 17- year veteran of the financial services industry and most recently served as an independent representative of Raymond James Financial Services, Inc. in Norwalk. As an LNB Investment Center financial advisor, Carino will provide customers with a wide variety of Raymond James investment products while all non- variable insurance products are made available through Charleston Insurance. For now, Carino will work out of our downtown Lorain offices, however; he will be providing service to customers of all 22 bank locations. These product offerings were made available as a result of the enactment of the Gramm-Leach-Bliley Financial Modernization Act. Carino was most recently in charge of the Investment Sales Department of 33 Raymond James Financial Services, Inc. at Citizens National Bank of Norwalk. In addition, he has held positions in investment sales and insurance at Pierre Smith & Co., Parker & Hunter Co. and the former Central Trust Bank of Lorain. He received a B.A. degree in Business Administration from Point Park College in Pittsburgh, Pennsylvania and has taken numerous continuing education courses on investments and insurance. He is a resident of Vermilion. 34 Back Cover: White background with black lettering and blue stripe across top of the page Three column format Banking Centers, ATMs and Investment Center **ATM service available wherever you see this symbol Lorain Banking Centers Amherst Banking Center **Main **Amherst 457 Broadway 1175 Cleveland Avenue Lorain, Ohio 44052 Amherst, Ohio 44001 (440) 244-7185 (440) 988-4423 **Sixth Street Drive-In Avon Lake Banking Center 200 Sixth Street **Avon Lake Lorain, Ohio 44052 240 Miller Road (440) 244-7242 Avon Lake, Ohio 44012 (440) 933-2186 **Cooper-Foster Park Road 1920 Cooper-Foster Park Road Elyria Banking Centers Lorain, Ohio 44053 **Ely Square (440) 282-1252 124 Middle Avenue Elyria, Ohio 44035 **Kansas Avenue (440) 323-4621 1604 Kansas Avenue Lorain, Ohio 44052 **Cleveland Street (440) 288-9151 801 Cleveland Street Elyria, Ohio 44035 **Oberlin Avenue (440) 365-8397 3660 Oberlin Avenue Lorain, Ohio 44053 **Lake Avenue (440) 282-9196 42935 North Ridge Road Elyria Township, Ohio 44035 **Pearl Avenue (440) 233-7196 2850 Pearl Avenue Lorain, Ohio 44055 **Midway Mall (440) 277-1103 6395 Midway Mall Blvd Elyria, Ohio 44035 **West Park Drive (440) 324-6530 2130 West Park Drive Lorain, Ohio 44053 **Elyria United Methodist Village (440) 989-3131 807 West Avenue Elyria, Ohio 44035 (440) 323-6488 35 Village of LaGrange Banking Center **Dad's Sunoco **Village of LaGrange 7580 Leavitt Road 546 North Center Street State Route 58 Village of LaGrange, Ohio 44050 Amherst, Ohio 44001 (440) 355-6734 **Fligner's Supermarket Oberlin Banking Centers 1846 Broadway **Kendal at Oberlin* Lorain, Ohio 44052 600 Kendal Drive Oberlin, Ohio 44074 **Gateway Plaza (440) 774-5400 3451 Colorado Avenue Lorain, Ohio 44052 **Oberlin 40 East College Street **Lakeland Medical Center Oberlin, Ohio 44074 3700 Kolbe Road (440) 775-1361 Lorain, Ohio 44053 Olmsted Township Banking Centers **Lorain County Community College **Olmsted Township 1005 North Abbe Road 27095 Bagley Road Elyria, Ohio 44035 Olmsted Township, Ohio 44138 (440) 235-4600 **Lowe's Home Improvement Warehouse The Renaissance 620 Midway Boulevard 26376 John Road Elyria, Ohio 44035 Olmsted Township, Ohio 44138 (440) 427-0041 **Mobile ATM 2130 West Park Drive Vermilion Banking Center Lorain, Ohio 44035 **Vermilion 4455 East Liberty Avenue Other Offices Vermilion, Ohio 44089 Executive (440) 967-3124 457 Broadway Lorain, Ohio 44052 Westlake Banking Centers (440) 244-7123 **Crossings of Westlake 30210 Detroit Road Branch Administration Westlake, Ohio 44145 457 Broadway (440) 892-9696 Lorain, Ohio 44052 (440) 244-7253 Westlake Village 28550 Westlake Village Drive Commercial, Consumer Westlake, Ohio 44145 and Mortgage Loans (440) 808-0229 457 Broadway Lorain, Ohio 44052 ATMs (440) 244-7220 **Captain Larry's Marathon (440) 244-7272 1317 State Route 60 (440) 244-7216 Vermilion, Ohio 44089 36 Credit Cards Charleston Insurance Agency, Inc. 2130 West Park Drive 457 Broadway Lorain, Ohio 44053 Lorain, Ohio 44052 (440) 989-3348 (440) 244-7158 Customer Service Interent: www.4LNB.com 2130 West Park Drive Lorain, Ohio 44053 (Logo) LNB (440) 989-3348 Bancorp, Inc. (800) 860-1007 Human Resources 2130 West Park Drive Lorain, Ohio 44053 (440) 989-3139 Operations 2130 West Park Drive Lorain, Ohio 44053 (440) 989-3315 Purchasing 2150 West Park Drive Lorain, Ohio 44053 (440) 989-3327 Investment and Trust Services 457 Broadway Lorain, Ohio (440) 244-7226 All Other Offices Not Listed Toll Free (800) 860-1007 Lorain (440) 244-6000 Telebanker Telebanker (440) 245-4562 Telebanker (800) 610-9033 Investment Center LNB Investment Center 457 Broadway Lorain, Ohio 44052 (440) 244-7158 (800) 845-2152 -----END PRIVACY-ENHANCED MESSAGE-----