EX-2 3 ex210ka00.txt 26 LNB Bancorp, Inc. Exhibit to Form 10 - K/A (for the fiscal year ended December 31, 2000) S - K Reference Number (99.2) Annual report on Form 11-K of The Lorain National Bank Stock Purchase Plan (registration number 33-65034) for the plan year ended December 31, 2000 filed as an amendment to the annual report on Form 10-K. 27 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, 2000 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, 2000 pursuant to Rule 15d-21, therefore no fee is required. [ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to ---------------- ----------- Commission file number 0-13203 THE LORAIN NATIONAL BANK STOCK PURCHASE PLAN -------------------------------------------- (Full title of the plan) Lorain National Bank 457 Broadway Lorain, Ohio 44052-1769 ------------------------------------------------------------- (Name of issuer of the securities held pursuant to the plan and the address of its principal executive office) 28 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 Net Assets Available for Distribution to Participants - December 31, 2000 and 1999 3) Statements of Changes in Net Assets Available for Distribution to Participants - Years ended December 31, 2000 and 1999 4) Notes to Financial Statements 5) Schedule H, line 4i - Schedule of Assets (Held at End of Year) - December 31, 2000 6) Schedule H, line 4j - Schedule of Reportable Transactions - Year ended December 31, 2000 B) The following Exhibit is filed as part of this annual report: 24. Consent of Independent Accountants 29 (COVER EMBOSSED WITH LOGO) KPMG LLP One Cleveland Center 1375 East Ninth Street, Suite 2600 Cleveland, OH 44114-1796 The Lorain National Bank Stock Purchase Plan Financial Statements and Schedules December 31, 2000 and 1999 (With Independent Auditors' Report Thereon) 30 The Lorain National Bank Stock Purchase Plan Table of Contents Page Independent Auditors' Report 1 Statements of Net Assets Available for Distribution To Participants, December 31, 2000 and 1999 2 Statements of Changes in Net Assets Available for Distribution to Participants, Years ended December 31, 2000 and 1999 3 Notes to Financial Statements 4 Schedules 1 Schedule H, line 41 - Schedule of Assets (Held at End of Year) - December 31, 2000 8 2 Schedule H, line 4j - Schedule of Reportable Transactions - Year ended December 31, 2000 9 31 (LETTERHEAD) (LOGO) KPMG LLP One Cleveland Center 1375 East Ninth Street, Suite 2600 Cleveland, OH 44114-1796 Independent Auditors' Report The Plan Administrator The Lorain National Bank Sponsor of The Lorain National Bank Stock Purchase Plan: We have audited the accompanying statements of net assets available for distribution to participants of The Lorain National Bank Stock Purchase Plan (Plan) as of December 31, 2000 and 1999, and the related statements of changes in net 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 auditing standards generally accepted in the United States of America. 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, 2000 and 1999, and the changes in those assets for the years then ended in conformity with accounting principles generally accepted in the United States of America. Our audits were performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental Schedule H, line 4i- Schedule of Assets (Held at End of Year) as of December 31, 2000 and Schedule H, line 4j - Schedule of Reportable Transactions for the year ended December 31, 2000 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 32 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 16, 2001 (LOGO) Member Firm of KPMG International 33 THE LORAIN NATIONAL BANK STOCK PURCHASE PLAN Statements of Net Assets Available for Distribution to Participants December 31, 2000 and 1999 Assets 2000 1999 --------- --------- Assets: Short-term cash investments $ 28,671 131,298 Investment, at fair value (notes 3 and 6) Common stock - LNB Bancorp, Inc. 2,718,761 2,780,075 Dividends and interest receivable 33,524 31,724 --------- --------- Total assets $ 2,780,956 2,943,097 Liabilities: Due to broker 6,639 -0- --------- --------- Net assets available for distribution to participants $ 2,774,317 2,943,097 ========= ========= See accompanying notes to financial statements. 2 34 THE LORAIN NATIONAL BANK STOCK PURCHASE PLAN Statements of Changes in Net Assets Available for Distribution to Participants Years ended December 31, 2000 and 1999 2000 1999 --------- --------- Additions: Investment income: Dividends $ 119,966 112,163 Interest 5,491 4,758 Net appreciation(depreciation)in fair value of investment (note 3) 108,220 (716,203) --------- --------- Total investment income(loss) 233,677 (599,282) --------- --------- Contributions: Employer 136,624 133,534 Participants 273,227 267,046 --------- --------- Total contributions 409,851 400,580 --------- --------- Total additions(deletions) 643,528 (198,702) Deductions- distributions to participants (812,308) (280,640) --------- --------- Decrease in net assets available for distribution to participants (168,780) (479,342) Net assets available for distribution to participants: Beginning of year 2,943,097 3,422,439 --------- --------- End of year $ 2,774,317 2,943,097 ========= ========= See accompanying notes to financial statements. 3 35 THE LORAIN NATIONAL BANK STOCK PURCHASE PLAN Notes to Financial Statements December 31, 2000 and 1999 (1) Description of the Plan The following description of The Lorain National Bank Stock Purchase Plan (Plan) provides only general information. Participants should refer to the Plan agreement for a more complete description of the Plan's provisions. (a) General The Plan is a defined contribution plan sponsored by The Lorain National Bank (Bank), a wholly owned subsidiary of LNB Bancorp, Inc., covering substantially all employees of the Bank. An employee is eligible to participate in the Plan on the January 1 or July 1 after the attainment of age 21 and completion of one year of service, as defined in the Plan. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA). Under the terms of the Plan, the 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 Plan stipulates that employer and employee contributions will be invested in units of the LNB Bancorp, Inc. stock fund which consists of shares of stock of LNB Bancorp, Inc. and short-term cash investments. (b) Bank Contributions The Bank is required to contribute to the Plan for each month, out of its current or accumulated earnings only, an amount equal to 50% of the participants' contributions for each month. (c) Participants' Contributions A participant can make, through payroll deductions, contributions of one (1) to six (6) percent (in whole percentages) of their compensation. Changes in the amount of compensation paid to a participant will automatically effect a change in the amount of the contribution. 36 (d) Vesting of Contributions Each participant has a fully vested interest in the Bank's and their contributions as of the date payments are made. (e) Withdrawals While Employed At any time, subject to certain restrictions, a participant may elect to withdraw all or a portion of their units. (f) Distributions Upon Termination of Employment A participant whose employment terminates by reason of retirement on their early retirement date or on their normal retirement date, receives all units credited to their account. The participant may elect distribution of the units either in a single distribution or in annual, semiannual, quarterly, or monthly installments. 4 37 THE LORAIN NATIONAL BANK STOCK PURCHASE PLAN Notes to Financial Statements December 31, 2000 and 1999 A participant whose employment is terminated for any reason other than those designated above may receive a single distribution of all units credited to the participant. (g) Plan Termination Although it has not expressed any intention to do so, the Bank has the right to terminate the Plan subject to the provisions set forth in ERISA. In the event of Plan termination, the assets of the Plan will be allocated as prescribed by ERISA and its related regulations. (h) Plan Administrator The Plan Administrator is the President and Chief Executive Officer of the Bank. (2) Summary of Significant Accounting Policies (a) Basis of Presentation The accompanying financial statements of the Plan have been prepared under the accrual method of accounting. (b) Investment The fair value of the investment 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 accounting principles generally accepted in the United States of America 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. 38 (d) Payment of Benefits Benefit payments to participants are recorded when paid. (e) New Accounting Pronouncement In June 1998, the Financial Accounting Standards Board issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS No. 133"). SFAS No. 133 requires that an entity recognize all derivatives and measure those instruments at fair value. 5 39 THE LORAIN NATIONAL BANK STOCK PURCHASE PLAN Notes to Financial Statements December 31, 2000 and 1999 SFAS No. 133, is effective for fiscal years beginning after June 15, 2000. Pursuant to SFAS No. 137, the Plan is required to adopt SFAS No. 133 effective January 1, 2001. Management has determined that the impact of SFAS No. 133 on the Plan financial statements would be immaterial. (3) Investment The following table presents the fair value of the investment at December 31, 2000 and 1999: 2000 1999 -------------------- -------------------- Number Fair Number Fair of shares Value of shares Value Common stock - --------- ---------- --------- ---------- LNB Bancorp, Inc. 124,639 2,718,761 126,368 $2,780,075 ========= ========== ========= ========== During the years ended December 31, 2000 and 1999, the Plan's investment (including investments bought, sold, and held during the year) appreciated (depreciated) in value by $108,220 and $(716,203), respectively. (4) Federal Income Taxes The Internal Revenue Service issued its latest determination letter on June 24, 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 earnings 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. 40 (5) Administrative Expenses The administrative expenses of the Plan are paid by the Bank. 6 41 THE LORAIN NATIONAL BANK STOCK PURCHASE PLAN Notes to Financial Statements December 31, 2000 and 1999 (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, 2000: Number of Shares Fair Value ---------- ------------ Balance at December 31, 1999 126,368 $ 2,780,075 Purchases 20,621 452,534 Distributions (24,586) (622,068) 2% stock dividend 2,236 -0- Net appreciation - 108,220 ---------- ------------ Balance at December 31, 2000 124,639 $ 2,718,761 ========== ============ (7) Subsequent Event The Board of Directors of Lorain National Bank, the Corporation's wholly owned subsidiary, has authorized the Bank as employer and trustee to execute an Adoption Agreement for a 401(k) Profit Sharing Plan and Trust (the Plan), to be effective January 1, 2001. The Plan will amend The Lorain National Bank Stock Purchase Plan. The Plan is a deferred compensation arrangement established in accordance with the requirements under Section 401(a) and Section 401(k) of the Internal Revenue Code. The Plan will be submitted to the IRS for determination by the IRS that the Plan is qualified under Section 401(a) of the Internal Revenue Code and that its trust is qualified under Section 501(a) of the Internal Revenue Code. LNB Bancorp, Inc. intends for the Plan, in operation, to comply with the requirements under Section 401(a) and Section 401(k) of the Internal Revenue Code. The Plan offers the investment choices of Money Market Mutual Funds, U. S. Treasury Index Funds, Equity Mutual Funds and LNB Bancorp, Inc. common stock. 7 42 Schedule 1 THE LORAIN NATIONAL BANK STOCK PURCHASE PLAN EIN: 34-0869480 PLAN NUMBER: 003 Schedule H, line 4i - Schedule of Assets (Held at End of Year) December 31, 2000 Column A Column B Column C Column D Column E -------- ------------------ ------------------------- --------- -------- Description of investment Identity of issue, including maturity date, borrower, lessor rate of interest, collateral, Current or similar party par or maturity value Cost value -------- ----------------- -------------------------- --------- -------- * LNB Bancorp, Inc. 124,639 shares of $1,434,733 2,718,761 LNB Bancorp, Inc. common stock * Lorain National Bank Treasury Trust Fund 22,032 22,032 ========== ========== * Party in interest See accompanying independent auditors' report. 8 43 Schedule 2 THE LORAIN NATIONAL BANK STOCK PURCHASE PLAN EIN: 34-0869480 PLAN NUMBER: 003 Schedule H, line 4j - Schedule of Reportable Transactions Year ended December 31, 2000 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 -------------------- ----------------- ---------- -------- --------- Total Total dollar dollar Identity of Description value of value Lease party involved of assets purchases of sales rental -------------------- ----------------- ---------- --------- --------- * LNB Bancorp, Inc. LNB Bancorp, Inc. common stock; 120 purchases $ 452,534 - - 1 sale - 18 - * Lorain National Bank Treasury Trust Fund; 40 purchases 394,778 - - 108 sales - 499,610 - ========== ========== ========== Schedule of Reportable Transactions Continued Column A Column B Column F Column G Column H -------------------- ----------------- ------------ --------- --------- Current Expenses 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; 120 purchases - 452,534 452,534 1 sale - 22 18 * Lorain National Bank Treasury Trust Fund; 40 purchases - 394,778 394,778 108 sales - 499,610 499,610 ============ ========= ======== 44 Schedule 2 THE LORAIN NATIONAL BANK STOCK PURCHASE PLAN EIN: 34-0869480 PLAN NUMBER: 003 Schedule H, line 4j - Schedule of Reportable Transactions Continued Year ended December 31, 2000 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; 120 purchases - 1 sale (4) * Lorain National Bank Treasury Trust Fund; 40 purchases - 108 sales - ========== * Party in interest See accompanying independent auditors' report. 9 45 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Plan Administrator has duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized. THE LORAIN NATIONAL BANK STOCK PURCHASE PLAN -------------------------------------------- (Name of Plan) Date: June 28, 2001 By: /s/ Gregory D. Friedman ------------- ---------------------------- Gregory D. Friedman, CPA Executive Vice President and Chief Financial Officer /s/ Mitchell J. Fallis ---------------------------- Mitchell J. Fallis, CPA Vice President and Chief Accounting Officer 46 The Lorain National Bank Stock Purchase Plan Exhibit to Form 11 - K (for the fiscal year ended December 31, 2000) S - K Reference Number (24) Consent of Independent Accountants. 47 (LETTERHEAD) (LOGO) KPMG LLP One Cleveland Center 1375 East Ninth Street, Suite 2600 Cleveland, Ohio 44114-1796 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 16, 2001, relating to the statements of net assets available for distribution to participants of The Lorain National Bank Stock Purchase Plan as of December 31, 2000 and 1999, and the related statements of changes in net assets available for distribution to participants for the years then ended, which report appears in Amendment No. 1 to the 2000 annual report on Form 10-K of LNB Bancorp, Inc. /s/ KPMG LLP Cleveland, Ohio June 26, 2001 (LOGO) Member Firm of KPMG International