-----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, UuKuz1SRKgcg5gvSY19eUOeI07L1JfsP+FqKaMh8TDEMCIZ2eh+TAUEN9PaJmrUN tOeMlnRwtFVoJIK97MFVpg== 0000737210-02-000015.txt : 20020701 0000737210-02-000015.hdr.sgml : 20020701 20020701160234 ACCESSION NUMBER: 0000737210-02-000015 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20011231 FILED AS OF DATE: 20020701 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-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-13203 FILM NUMBER: 02693707 BUSINESS ADDRESS: STREET 1: 457 BROADWAY CITY: LORAIN STATE: OH ZIP: 44052-1769 BUSINESS PHONE: 800-860-1007 10-K/A 1 lnb10ka01a1.txt LNB BANCORP, INC. 10 K/A 12-31-2001 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10K/A Annual Report Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934 For the fiscal year ended Commission file December 31, 2001 Number 0-13203 Amendment Number 1 LNB Bancorp, Inc. (Exact name of the registrant as specified in its Charter) Ohio 34-1406303 (State of incorporation) (I.R.S. Employer Identification No.) 457 Broadway, Lorain, Ohio 44052-1769 (Address of principal executive offices) (Zip Code) (440) 244 - 6000 (Registrant's telephone number, including area code) SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934: Title of Each Class Name of Each Exchange on Which Registered Common Stock, Par Value $1.00 NASDAQ - National Market Per Share Preferred Share Purchase Rights Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES [X] NO [ ] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X] The aggregate market value of the voting stock held by non-affiliates of the Registrant at May 31, 2002 was approximately $84,594,000. The number of shares of Registrant's Common Stock outstanding on May 31, 2002 was 4,317,558. 2 The undersigned registrant hereby amends the following items of its Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 on Form 10-K for the fiscal year ended December 31, 2001 for the purpose of furnishing financial statements for The Lorain National Bank Employee Stock Ownership Plan and The Lorain National Bank 401 (k) Plan PART II ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (3) Exhibits: (23.1) Consent of KPMG LLP (23.2) Consent of KPMG LLP (99.1) Annual report on Form 11-K of The Lorain National Bank Employee Stock Ownership Plan for the plan year ended December 31, 2001. (99.2) Annual report on Form 11-K of The Lorain National Bank 401(k) Plan for the plan year ended December 31, 2001. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. LNB Bancorp, Inc. (Registrant) Date: June 28, 2002 By: /s/ Gregory D. Friedman ------------- ----------------------- Gregory D. Friedman, CPA Executive Vice President, Chief Financial Officer and Corporate Secretary /s/ Mitchell J. Fallis ----------------------- Mitchell J. Fallis, CPA Vice President and Chief Accounting Officer 3 LNB Bancorp, Inc. Form 10K/A Exhibit Index Pursuant to Item 601 (a) of Regulation S-K S-K Reference Exhibit Number (23.1) Consent of KPMG LLP (23.2) Consent of KPMG LLP (99.1) Annual report on Form 11-K of The Lorain National Bank Employee Stock Ownership Plan for the plan year ended December 31, 2001. (99.2) Annual report on Form 11-K of The Lorain National Bank 401(k) Plan for the plan year ended December 31, 2001. EX-1 3 lnb10ka01ex1a1.txt LNB BANCORP, INC. EXHIBIT 1 4 LNB Bancorp, Inc. Exhibit to Form 10 - K/A (for the fiscal year ended December 31, 2001) S - K Reference Number (99.1) Annual report on Form 11-K of The Lorain National Bank Employee Stock Ownership Plan for the plan year ended December 31, 2001 filed as an amendment to the annual report on Form 10-K. 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, 2001 Note: This Form 11-K is being filed as an amending Exhibit to the Form 10-K of LNB Bancorp, Inc. for the fiscal year ended December 31, 2001 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) 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, 2001 and 2000 3) Statements of Changes in Assets Available for Distribution to Participants - Years ended December 31, 2001 and 2000. 4) Notes to Financial Statements 5) Schedule H, line 4i - Schedule of Assets (Held at End of Year) - December 31, 2001 6) Schedule H, line 4j - Schedule of Reportable Transactions - Year ended December 31, 2001 B) The following Exhibit is filed as part of this annual report: 24. Consent of Independent Accountants 7 (COVER EMBOSSED WITH LOGO) KPMG LLP The Lorain National Bank Employee Stock Ownership Plan Financial Statements and Schedules December 31, 2001 and 2000 (With Independent Auditors' Report Thereon) 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, 2001 and 2000 2 Statements of Changes in Assets Available for Distribution to Participants, Years ended December 31, 2001 and 2000 3 Notes to Financial Statements 4 Schedules 1 Schedule H, line 4i -Schedule of Assets (Held at End of Year) - December 31, 2001 8 2 Schedule H, line 4j - Schedule of Reportable Transactions - Year ended December 31, 2001 9 All other schedules required to be filed in accordance with the Employee Retirement Income Security Act of 1974 are not applicable and accordingly have been omitted 9 (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 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, 2001 and 2000, 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 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, 2001 and 2000, 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, 2001 and Schedule H, line 4j - Schedule of Reportable Transactions for the year ended December 31, 2001 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 10 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 June 21, 2002 (LOGO) Member Firm of KPMG International 11 THE LORAIN NATIONAL BANK EMPLOYEE STOCK OWNERSHIP PLAN Statements of Assets Available for Distribution to Participants December 31, 2001 and 2000 ASSETS 2001 2000 ---------- ---------- Assets available for distribution to participants: Short-term cash investments $ 52,464 302,385 Investment, at fair value (notes 3 and 6): Common stock - LNB Bancorp, Inc. 3,816,478 3,335,957 ---------- ---------- 3,868,942 3,638,342 ---------- ---------- Receivables: Employer contributions -0- 150,000 Dividends and interest 47,735 42,723 ---------- ---------- Total receivables 47,735 192,723 ---------- ---------- Assets available for distribution to participants $3,916,677 3,831,065 ========== ========== See accompanying notes to financial statements. 2 12 THE LORAIN NATIONAL BANK EMPLOYEE STOCK OWNERSHIP PLAN Statements of Changes in Assets Available for Distribution to Participants Years ended December 31, 2001 and 2000 2001 2000 ---------- --------- Additions: Investment income: Dividends $ 165,657 148,089 Interest 14,566 8,236 Net appreciation in fair value of investments (note 3) 48,708 49,512 ---------- --------- Total investment income 228,931 205,837 ---------- --------- Employer contribution -0- 450,000 Total additions 228,931 655,837 ---------- --------- Deductions - distributions to participants (143,319) (262,195) ---------- --------- Increase in assets available for distribution to participants 85,612 393,642 Assets available for distribution to participants: Beginning of year 3,831,065 3,437,423 ---------- --------- End of year $3,916,677 3,831,065 ========== ========= See accompanying notes to financial statements. 3 13 THE LORAIN NATIONAL BANK EMPLOYEE STOCK OWNERSHIP PLAN Notes to Financial Statements December 31, 2001 and 2000 (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 and related LNB Bancorp, Inc. affiliates for which the Bank acts as common paymaster. 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) Participant Contributions The Plan does not permit participant contributions. 14 (d) Vesting Each participant vests in the bank contribution after 5 years of service. Forfeitures of nonvested employer contributions are made available first to reinstate previously forfeited account balances of former participants who are reemployed by the Plan sponsor. The remaining forfeitures, if any, shall be allocated among the participants' accounts in the proportion each participant's annual compensation bears to the total annual compensation of all participants for that plan year. At December 31, 2001, forfeited nonvested accounts totaled $28,795. (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. 4 15 THE LORAIN NATIONAL BANK EMPLOYEE STOCK OWNERSHIP PLAN Notes to Financial Statements December 31, 2001 and 2000 (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 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. (d) Payment of Benefits Benefit payments to participants are recorded when paid. 16 (e) New Accounting Procedures In June 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards (SFAS) No. 133, Accounting for Derivative Instruments and Hedging Activities, which was amended in June 2000 by SFAS No. 138. SFAS No. 133, as amended, requires that an entity recognize all derivatives and measure those instruments at fair value The Plan adopted SFAS No. 133, as amended, effective January 1, 2001, with no impact to the Plan's financial statements. 5 17 THE LORAIN NATIONAL BANK EMPLOYEE STOCK OWNERSHIP PLAN Notes to Financial Statements December 31, 2001 and 2000 (3) Investment The following table presents the fair values of investments at December 31, 2001 and 2000: 2001 2000 --------------------- -------------------- Number Number of Shares Fair of Shares Fair or Units Value or Units Value --------- ----------- --------- ----------- Common stock - LNB Bancorp, Inc. 176,469 $ 3,816,478 152,919 $ 3,335,957 ========= =========== ========= =========== During the years ended December 31, 2001 and 2000, the Plan's investments (including investments bought, sold, and held during the year) appreciated in value by $48,708 and $49,512, respectively (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. A new tax determination letter was applied for during the Current year to comply with the GUST Amendments, however, due to a Backlog with the IRS, the determination letter has not yet been Received. 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. 18 (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, 2001: Number Fair of Shares Value ----------- ----------- Balance at December 31, 2000 152,919 $ 3,335,957 Stock Dividend, 2% 3,287 - Purchases 22,953 492,898 Distributions (2,690) (50,879) Net appreciation - 38,502 ----------- ----------- Balance at December 31, 2001 176,469 $ 3,816,478 =========== =========== 6 19 THE LORAIN NATIONAL BANK EMPLOYEE STOCK OWNERSHIP PLAN Notes to Financial Statements December 31, 2001 and 2000 (7) Assets Available for Distribution to Participants 2001 2000 ----------- ----------- Assets payable to terminated participants $ 25,187 $ 132,963 Assets available for continuing participants 3,891,490 3,698,102 ----------- ----------- $3,916,677 $3,831,065 =========== =========== 7 20 Schedule 1 THE LORAIN NATIONAL BANK EMPLOYEE STOCK OWNERSHIP PLAN EIN: 34-0869480 Plan Number: 002 Schedule H, line 4i - Schedule of Assets (Held at End of Year) December 31, 2001 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. 176,469 shares of common $ 3,615,982 stock * Lorain National Bank Treasury Trust Fund 52,464 ----------- $ 3,668,446 =========== Schedule H, line 4i - Schedule of Assets (Held at End of Year) 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. 176,485 shares of common $ 3,816,478 stock * Lorain National Bank Treasury Trust Fund 52,464 ----------- $ 3,868,942 =========== *Party in interest See accompanying independent auditors' report. 8 21 Schedule 2 THE LORAIN NATIONAL BANK EMPLOYEE STOCK OWNERSHIP PLAN EIN: 34-0869480 Plan Number: 002 Schedule H, line 4j - Schedule of Reportable Transactions Year ended December 31, 2001 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, 143 purchases $ 492,898 - - 1 sale - 2 - (fractional share) * Lorain National Bank Treasury Trust Fund, 14 purchases 183,547 - - 137 sales $ - 433,468 - ========== ========== ========= Schedule H, line 4j - 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, 143 purchases - 492,898 492,898 1 sale - 2 2 * Lorain National Bank Treasury Trust Fund, 14 purchases - 183,547 183,547 137 sales - 433,468 433,468 ============= ========= ========= 22 Schedule 2 THE LORAIN NATIONAL BANK EMPLOYEE STOCK OWNERSHIP PLAN EIN: 34-0869480 Plan Number: 002 Schedule H, line 4j - 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, 143 purchases - 1 sale - (fractional share) * Lorain National Bank Treasury Trust Fund, 14 purchases - 137 sale - ============ * Party in interest See accompanying independent auditors' report. 9 23 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, 2002 By: /s/ Gregory D. Friedman ------------- ----------------------- Gregory D. Friedman, CPA Executive Vice President, Chief Financial Officer and Corporate Secretary /s/ Mitchell J. Fallis ---------------------- Mitchell J. Fallis, CPA Vice President and Chief Accounting Officer 24 (LETTERHEAD) Exhibit 23.1 (LOGO) KPMG LLP One Cleveland Center 1375 East Ninth Street, Suite 2600 Cleveland, OH 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 June 21, 2002, relating to the statements of assets available for distribution to participants of The Lorain National Bank Employee Stock Ownership Plan as of December 31, 2001 and 2000, and the related statements of changes in assets available for distribution to participants for the years then ended, and the related supplemental schedules, which report appears in Amendment No. 1 to the 2001 annual report on Form 10-K of LNB Bancorp, Inc. /s/ KPMG LLP Cleveland, Ohio June 28, 2002 (LOGO) Member Firm of KPMG International EX-2 4 lnb10ka01ex2a1.txt LNB BANCORP, INC. EXHIBIT 2 25 LNB Bancorp, Inc. Exhibit to Form 10 - K/A (for the fiscal year ended December 31, 2001) S - K Reference Number (99.2) Annual report on Form 11-K of The Lorain National Bank 401(k) Plan (registration number 333-53210) for the plan year ended December 31, 2001 filed as an amendment to the annual report on Form 10-K. 26 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, 2001 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, 2001 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 401(K) 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) 27 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 Plan Benefits - December 31, 2001 and 2000 3) Statements of Changes in Net Assets Available for Plan Benefits - Years ended December 31, 2001 and 2000 4) Notes to Financial Statements 5) Schedule H, line 4i - Schedule of Assets (Held at End of Year) - December 31, 2001 6) Schedule H, line 4j - Schedule of Reportable Transactions - Year ended December 31, 2001 B) The following Exhibit is filed as part of this annual report: 24. Consent of Independent Accountants 28 (COVER EMBOSSED WITH LOGO) KPMG LLP One Cleveland Center 1375 East Ninth Street, Suite 2600 Cleveland, OH 44114-1796 The Lorain National Bank 401(k) Plan Financial Statements and Schedules December 31, 2001 and 2000 (With Independent Auditors' Report Thereon) 29 The Lorain National Bank 401(k) Plan Table of Contents Page Independent Auditors' Report 1 Statements of Net Assets Available for Plan Benefits, December 31, 2001 and 2000 2 Statements of Changes in Net Assets Available for Plan Benefits, Years ended December 31, 2001 and 2000 3 Notes to Financial Statements 4 Schedules 1 Schedule H, line 41 - Schedule of Assets (Held at End of Year) - December 31, 2001 8 2 Schedule H, line 4j - Schedule of Reportable Transactions - Year ended December 31, 2001 9 All other schedules required to be filed in accordance with the Employee Retirement Income Security Act of 1974 are not applicable and accordingly have been omitted. 30 (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 401(k) Plan: We have audited the accompanying statements of net assets available for plan benefits of The Lorain National Bank 401(k) Plan (Plan) as of December 31, 2001 and 2000, and the related statement of changes in net assets available for plan benefits 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 plan benefits of the Plan as of December 31, 2001 and 2000, 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, 2001 and Schedule H, line 4j - Schedule of Reportable Transactions for the year ended December 31, 2001 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 31 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 June 21, 2002 (LOGO) Member Firm of KPMG International 32 THE LORAIN NATIONAL BANK 401(K) PLAN Statements of Net Assets Available for Plan Benefits December 31, 2001 and 2000 Assets 2001 2000 --------- --------- Assets: Short-term cash investments $ 189,900 28,671 Investments, at fair value (notes 3 and 6) Common stock - LNB Bancorp, Inc. 2,804,280 2,718,761 Mutual Funds 272,311 - Dividends and interest receivable 36,293 33,524 --------- --------- Total assets $ 3,302,784 2,780,956 Liabilities: Due to broker - 6,639 --------- --------- Net assets available for plan benefits $ 3,302,784 2,774,317 ========= ========= See accompanying notes to financial statements. 2 33 THE LORAIN NATIONAL BANK 401(K) PLAN Statements of Changes in Net Assets Available for Plan Benefits Years ended December 31, 2001 and 2000 2001 2000 --------- --------- Additions: Investment income: Dividends $ 130,006 119,966 Interest 6,803 5,491 Net appreciation in fair value of investment (note 3) 24,130 108,220 --------- --------- Total investment income 160,939 233,677 --------- --------- Contributions: Employer 200,889 136,624 Participants 400,123 273,227 Participant rollovers 10,486 - --------- --------- Total contributions 611,498 409,851 --------- --------- Total additions 772,437 643,528 Deductions- Distributions to participants (243,970) (812,308) --------- --------- Increase (decrease) in net assets available for plan benefits 528,467 (168,780) Net assets available for plan benefits: Beginning of year 2,774,317 2,943,097 --------- --------- End of year $ 3,302,784 2,774,317 ========= ========= See accompanying notes to financial statements. 3 34 THE LORAIN NATIONAL BANK 401(k) PLAN Notes to Financial Statements December 31, 2001 and 2000 (1) Description of the Plan The following is a general description of The Lorain National Bank 401(k) Plan (Plan). 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 and related LNB Bancorp, Inc. affiliates for which the Bank acts as common paymaster. An employee is eligible to participate in the Plan after the attainment of age 19 and completion of 90 days 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 matching contributions will be invested in LNB Bancorp, Inc. common stock and short-term cash investments. The Board of Directors of Lorain National Bank, the Corporation's wholly owned subsidiary, authorized the Bank as employer and trustee to execute an Adoption Agreement for a 401(k) Plan and Trust (the Plan), effective January 1, 2001. The Plan amended and restated 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 was 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. believes that the Plan complies 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, International Mutual Fund and LNB Bancorp, Inc. common stock. 35 THE LORAIN NATIONAL BANK 401(k) PLAN Notes to Financial Statements December 31, 2001 and 2000 (b) Contributions The Plan allows participants to make pretax contributions up to 6% of eligible compensation, subject to certain limitations. Based on number of hours worked or paid, certain participants in the 401(k) plan are eligible to receive Company contributions. The amount of Company contributions were $200,889 and $136,624 for 2001 and 2000, respectively. The Company makes a contribution to the employee's plan account bi-weekly. Employee contributions are invested according to participant Investment elections for pretax contributions. If an employee has not made investment elections, the Employee contributions will be invested in Federated Money Market fund. To receive a Company contribution, a participant must be employed on the last day of the Plan year. A participant's account also receives the Company contribution for the year in which they retire, become disabled, or die. (c) Participant Accounts Each participant's account is credited with the participant's Contribution, the Company's contribution, and an allocation of Plan earnings. The benefits to which a participant is entitled is the benefit that can be provided from the participant's vested account. (d) Forfeitures At December 31, 2001, forfeited nonvested accounts totaled $6,465. This amount will be used to reduce future employer contributions. 4 36 THE LORAIN NATIONAL BANK 401(k) PLAN Notes to Financial Statements December 31, 2001 and 2000 (e) Investments During 2000, Plan assets were invested in shares of stock of LNB Bancorp, Inc., and short-term cash investments. During 2001, with the Plan being amended and restated (see Note 1a), Plan assets were invested in shares of stock of LNB Bancorp, Inc., mutual funds and short-term cash investments. (f) Vesting Participants are immediately vested in their voluntary contribution plus any earnings accrued thereon. The Company's contribution is 100% vested after an employee completes five years of service, with vesting accruing 20% for each year of service. (g) Payment of Benefits Upon termination of service, the vested amount of the Company's Contributions and earnings thereon is paid at the election of the participant in cash. Participants can elect to receive their voluntary contributions and earnings thereon in a single lump-sum cash payment or in substantially equal installments over a period of not more than the assumed life expectancy of the participant and the participant's beneficiary. (h) Withdrawals Aside from normal retirement distributions, pretax savings may be withdrawn only upon attainment of age 65. In accordance with plan provisions, pretax savings may also be withdrawn for reasons of extreme financial hardship as defined under federal law. An employee can make only one withdrawal in any twelve-month period relative to the Stock Purchase Plan provision of pre 2000 after tax dollars and Company match. 37 THE LORAIN NATIONAL BANK 401(k) PLAN Notes to Financial Statements December 31, 2001 and 2000 (i) Participant Loans Participants may borrow from their fund accounts a minimum of $1,000 up to a maximum equal to the lesser of $50,000 or 50% of their account balance, whichever is less. The loans are secured by the balance in the participant's account and are charged a rate of interest commensurate with local prevailing rates as determined by the Plan Administrator. Principal and interest is paid ratably through monthly payroll deductions. There were no participant loans outstanding at December 31, 2001 and 2000. (j) Plan Expenses The administrative expenses of the Plan are paid by the Bank. (2) Significant Accounting Policies (a) Basis of Presentation The financial statements of the Plan are prepared using the accrual basis of accounting. 5 38 THE LORAIN NATIONAL BANK 401(k) PLAN Notes to Financial Statements December 31, 2001 and 2000 (b) Investment Valuation and Income Recognition The Plan's investments are stated at fair value. Quoted market prices are used to value investments. Purchases and sales of securities are recorded on a trade-date basis. Dividends are recorded on the ex-dividend date. Interest income is recorded on the accrual method of accounting. (c) New Accounting Pronouncement In June 1998, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards, 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. SFAS No. 133 was effective for fiscal years beginning after June 15, 2000. The Plan has adopted SFAS No. 133 effective January 1, 2001. Management has determined the impact of SFAS No. 133 on the Plan financial statements to be immaterial. (d) Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires Plan 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. (3) Investments The following table presents the fair value of the investments at December 31, 2001 and 2000. Items that represented 5% or more of the Plan's assets are separately identified. 2001 2000 -------------- --------------- Common stock - LNB Bancorp, Inc.: 129,678 and 124,639 common shares in 2001 and 2000, respectively $ 2,804,280 2,718,761 Mutual funds 272,311 - ============== ================ 39 THE LORAIN NATIONAL BANK 401(K) PLAN Notes to Financial Statements December 31, 2001 and 2000 During the years ended December 31, 2001 and 2000, the Plan's investments (including investments bought, sold, and held during the year) appreciated in value as follows: 2001 2000 -------------- ----------- Common stock - LNB Bancorp, Inc. $ 26,082 108,220 Mutual funds (1,952) - ---------------------------- $ 24,130 108,220 ============== =========== 6 40 THE LORAIN NATIONAL BANK 401(k) PLAN Notes to Financial Statements December 31, 2001 and 2000 (4) Plan Termination The Company has voluntarily agreed to make contributions to the Plan. Although the Company has not expressed any intent to terminate the Plan agreement. It may do so at any time. In the event of such termination, each participant will receive 100% of the amounts contributed to the Plan and earnings thereon, and the vested amount of the Company's matching contribution. (5) Federal Income Taxes The Internal Revenue Service (IRS) has determined and informed the Company by a letter dated June 24, 1996, that the Plan and related trust are designed in accordance with applicable sections of the Internal Revenue Code (Code). The Plan has been amended since receiving the letter. The plan has applied for an updated determination letter since the amendment; however, a response has not yet been received from the IRS. The plan administrator believes that the Plan is designed and currently being operated in compliance with the applicable requirements of the Code. (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, 2001: Number of Shares Fair Value ---------- ------------ Balance at December 31, 2000 124,639 $ 2,718,761 ---------- ------------ Purchases 15,566 281,165 Distributions (10,527) (221,728) Net appreciation - 26,082 ---------- ------------ Balance at December 31, 2001 129,678 $ 2,804,280 ========== ============ 7 41 Schedule 1 THE LORAIN NATIONAL BANK 401(k) PLAN EIN: 34-0869480 PLAN NUMBER: 003 Schedule H, line 4i - Schedule of Assets (Held at End of Year) December 31, 2001 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. 129,677.685 shares of $1,532,787 2,804,280 LNB Bancorp, Inc. ========== ========== common stock * Lorain National Bank Treasury Trust Fund $ 189,900 189,900 ========== ========== Mutual funds Janus Fund Janus Advisor International Fund $ 20,424 Northern Northern Institutional Institutional Funds Funds Balanced Fund ** 20,194 Northern Northern Institutional Institutional Funds Focused Growth Portfolio ** 34,342 Northern Northern Institutional Institutional Funds Funds US Treasury Index A ** 39,699 Vanguard Fund Vanguard Quantitative Portfolios Growth and Income Fund ** 23,173 Vanguard Fund Vanguard Explorer Fund ** 53,787 Vanguard Fund Vanguard 500 Index Fund ** 80,692 ---------- --------- Total mutual funds $ - 272,311 * Party in interest ** Historical cost information is no longer required on the Schedule of Assets Held for Investments at End of Year for participant-directed Investments. See accompanying independent auditors' report. 8 42 Schedule 2 THE LORAIN NATIONAL BANK 401(k) PLAN EIN: 34-0869480 PLAN NUMBER: 003 Schedule H, line 4j - Schedule of Reportable Transactions Year ended December 31, 2001 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; 57 purchases $ 269,867 - - 6 sales - 31,622 - * Lorain National Bank Treasury Trust Fund; 9 purchases $ 968,707 - - 9 sales $ - 798,635 - ========== ========== ========== 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; 57 purchases - 269,867 269,867 6 sales - 32,937 31,622 * Lorain National Bank Treasury Trust Fund; 9 purchases - 968,707 968,707 9 sales - 798,635 798,635 ============ ========= ======== 43 Schedule 2 THE LORAIN NATIONAL BANK 401(k) PLAN EIN: 34-0869480 PLAN NUMBER: 003 Schedule H, line 4j - Schedule of Reportable Transactions Continued Year ended December 31, 2001 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; 57 purchases - 6 sales (1,315) * Lorain National Bank Treasury Trust Fund; 9 purchases - 9 sales - ========== * Party in interest See accompanying independent auditors' report. 9 44 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, 2002 By: /s/ Gregory D. Friedman ------------- ---------------------------- Gregory D. Friedman, CPA Executive Vice President, Chief Financial Officer and Corporate Secretary /s/ Mitchell J. Fallis ---------------------------- Mitchell J. Fallis, CPA Vice President and Chief Accounting Officer 45 (LETTERHEAD) Exhibit 23.2 (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. 333-53210 of LNB Bancorp, Inc. of our report dated June 21, 2002, relating to the statements of net assets available for plan benefits of The Lorain National Bank 401(k) Plan as of December 31, 2001 and 2000, and the related statements of changes in net assets available for plan benefits for the years then ended and the related supplemental schedules, which report appears in Amendment No. 1 to the 2001 annual report on Form 10-K of LNB Bancorp, Inc. /s/ KPMG LLP Cleveland, Ohio June 28, 2002 (LOGO) Member Firm of KPMG International -----END PRIVACY-ENHANCED MESSAGE-----