10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2014

OR

o 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 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)

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  þ        No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  þ        No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer  o	Accelerated filer  o	Non-accelerated filer  þ	Smaller reporting company   o
	(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨        No  þ

The number of common shares of the registrant outstanding on November 7, 2014 was 9,665,394.

TABLE OF CONTENTS

	Page
PART I - Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets as of September 30, 2014 (unaudited) and December 31, 2013	3
Consolidated Statements of Income and Comprehensive Income (Loss) (unaudited) for the three and nine months ended September 30, 2014 and September 30, 2013	4
Consolidated Statements of Shareholders’ Equity (unaudited) for the nine months ended September 30, 2014 and September 30, 2013	6
Consolidated Statements of Cash Flows (unaudited) for the nine months ended September 30, 2014 and September 30, 2013	7
Notes to the Consolidated Financial Statements (unaudited)	8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	34
Item 3. Quantitative and Qualitative Disclosures about Market Risk	54
Item 4. Controls and Procedures	57
Part II — Other Information	59
Item 1. Legal Proceedings	59
Item 1A. Risk Factors	59
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	59
Item 6. Exhibits	60

PART I - Financial Information

Item 1. Financial Statements

CONSOLIDATED BALANCE SHEETS

	September 30, 2014			December 31, 2013
	(unaudited)
	(Dollars in thousands except share amounts)
ASSETS
Cash and due from banks	$	29,804		$	36,717
Federal funds sold and interest bearing deposits in banks	6,363			15,555
Cash and cash equivalents	36,167			52,272
Securities available for sale, at fair value (Note 4)	218,847			216,122
Restricted stock	5,741			5,741
Loans held for sale	1,497			4,483
Loans:
Portfolio loans (Note 5)	922,514			902,299
Allowance for loan losses (Note 5)	(17,432		)	(17,505		)
Net loans	905,082			884,794
Bank premises and equipment, net	8,831			8,198
Other real estate owned	745			579
Bank owned life insurance	19,876			19,362
Goodwill, net (Note 3)	21,582			21,582
Intangible assets, net (Note 3)	356			457
Accrued interest receivable	3,714			3,621
Other assets	18,661			13,046
Total Assets	$	1,241,099		$	1,230,257
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits: (Note 6)
Demand and other noninterest-bearing	$	153,952		$	148,961
Savings, money market and interest-bearing demand	451,150			393,778
Time deposits	451,682			502,850
Total deposits	1,056,784			1,045,589
Short-term borrowings (Note 7)	2,674			4,576
Federal Home Loan Bank advances (Note 8)	46,867			46,708
Junior subordinated debentures (Note 9)	16,238			16,238
Accrued interest payable	674			789
Accrued expenses and other liabilities	4,797			4,901
Total Liabilities	1,128,034			1,118,801
Shareholders’ Equity
Preferred stock, Series A Voting, no par value, authorized 150,000 shares, none issued at September 30, 2014 and December 31, 2013	—			—
Fixed rate cumulative preferred stock, Series B, no par value, $1,000 liquidation value, no shares were issued at September 30, 2014 and 7,689 shares authorized and issued at December 31, 2013	—			7,689
Discount on Series B preferred stock	—			(19		)
Common stock, par value $1 per share, authorized 15,000,000 shares, issued 10,002,139 shares at September 30, 2014 and 10,001,717 at December 31, 2013	10,002			10,002
Additional paid-in capital	51,336			51,098
Retained earnings	59,356			53,966
Accumulated other comprehensive income (loss)	(1,452		)	(5,188		)
Treasury shares at cost, 336,745 shares at September 30, 2014 and 328,194 shares at December 31, 2013	(6,177		)	(6,092		)
Total Shareholders’ Equity	113,065			111,456
Total Liabilities and Shareholders’ Equity	$	1,241,099		$	1,230,257

See accompanying notes to consolidated financial statements.

3

CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (LOSS) (Unaudited)

	Three Months Ended September 30,					Nine Months Ended September 30,
	2014		2013			2014			2013
	(Dollars in thousands except share and per share amounts)
Interest and Dividend Income
Loans	$	8,960	$	8,973		$	27,076		$	27,291
Securities:
U.S. Government agencies and corporations	1,007		908			3,075			2,616
State and political subdivisions	311		301			924			887
Other debt and equity securities	66		115			250			337
Federal funds sold and short-term investments	6		7			30			23
Total interest income	10,350		10,304			31,355			31,154
Interest Expense
Deposits	1,026		1,200			3,131			3,685
Federal Home Loan Bank advances	158		158			470			469
Short-term borrowings	20		—			73			1
Junior subordinated debentures	170		171			508			511
Total interest expense	1,374		1,529			4,182			4,666
Net Interest Income	8,976		8,775			27,173			26,488
Provision for Loan Losses (Note 5)	720		950			2,513			3,350
Net interest income after provision for loan losses	8,256		7,825			24,660			23,138
Noninterest Income
Investment and trust services	425		363			1,281			1,178
Deposit service charges	850		923			2,469			2,608
Other service charges and fees	771		820			2,262			2,459
Income from bank owned life insurance	172		174			514			512
Other income	71		(218		)	328			335
Total fees and other income	2,289		2,062			6,854			7,092
Securities gains (losses), net (Note 4)	—		—			(5		)	178
Gains on sale of loans	1,056		374			2,649			1,617
Loss on sale of other assets, net	16		30			26			(17		)
Total noninterest income	3,361		2,466			9,524			8,870
Noninterest Expense
Salaries and employee benefits	4,649		4,200			13,754			13,451
Furniture and equipment	1,200		1,076			3,525			3,159
Net occupancy	568		564			1,784			1,701
Professional fees	421		337			1,341			1,413
Marketing and public relations	333		300			1,123			938
Supplies, postage and freight	243		228			675			809
Telecommunications	164		164			477			501
Ohio Financial Institutions Tax	224		304			671			914
Intangible asset amortization	34		35			101			102
FDIC assessments	255		293			788			773
Other real estate owned	5		155			66			280
Loan and collection expense	331		268			1,001			1,030
Other expense	391		377			1,169			1,133
Total noninterest expense	8,818		8,301			26,475			26,204
Income before income tax expense	2,799		1,990			7,709			5,804
Income tax expense	713		471			1,994			1,349
Net Income	2,086		1,519			5,715			4,455
Other comprehensive income (loss), net of taxes:
Changes in unrealized securities' holding gain (loss), net of taxes	481		(2,324		)	3,733			(6,038		)
Less: reclassification adjustments for securities' gains/losses realized in net income, net of taxes	—		—			(3		)	117
Total other comprehensive income (loss), net of taxes	481		(2,324		)	3,736			(6,155		)
Comprehensive Income (Loss)	2,567		(805		)	9,451			(1,700		)

4

Net Income	2,086		1,519		5,715		4,455
Dividends and accretion on preferred stock	—		109		16		483
Net Income Available to Common Shareholders	$	2,086	$	1,410	$	5,699	$	3,972
Net Income Per Common Share (Note 2)
Basic	$	0.22	$	0.15	$	0.59	$	0.44
Diluted	0.22		0.15		0.59		0.44
Dividends declared	0.01		0.01		0.03		0.03
Average Common Shares Outstanding
Basic	9,626,536		9,213,170		9,622,736		8,840,945
Diluted	9,659,254		9,225,462		9,637,355		8,850,129

See accompanying notes to consolidated financial statements

5

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (Unaudited)

	Preferred Stock (net of discount)			Warrant to Purchase Common Stock		Common Stock		Additional Paid-In Capital		Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Treasury Stock			Total
	(Dollars in thousands except share and per share amounts)
Balance, December 31, 2012	$	18,815		$	—	$	8,273	$	39,141	$	48,767		$	1,240		$	(6,092	)	$	110,144
Net Income										4,455									4,455
Other comprehensive loss, net of tax:													(6,155		)				(6,155		)
Share-based compensation								225											225
Issuance of common stock (1,359,348 shares)						1,359		8,374											9,733
Redemption of preferred stock (9,733 shares)	(9,701		)	—						8									(9,693		)
Preferred dividends and accretion of discount	8									(491		)							(483		)
Common dividends declared, $.03 per share										(265		)							(265		)
Balance, September 30, 2013	$	9,122		$	—	$	9,632	$	47,740	$	52,474		$	(4,915	)	$	(6,092	)	$	107,961
Balance, December 31, 2013	$	7,670		$	—	$	10,002	$	51,098	$	53,966		$	(5,188	)	$	(6,092	)	$	111,456
Net Income										5,715									5,715
Other comprehensive income, net of tax													3,736						3,736
Share-based compensation								238											238
Purchase of treasury stock (8,551)																(85		)	(85		)
Redemption of preferred stock (7,689 shares)	(7,689		)																(7,689		)
Preferred dividends and accretion of discount	19									(35		)							(16		)
Common dividends declared, $.03 per share										(290		)							(290		)
Balance, September 30, 2014	$	—		$	—	$	10,002	$	51,336	$	59,356		$	(1,452	)	$	(6,177	)	$	113,065

See accompanying notes to consolidated financial statements

6

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

	Nine Months Ended
	September 30, 2014			September 30, 2013
	(Dollars in thousands)
Operating Activities
Net income	$	5,715		$	4,455
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Provision for loan losses	2,513			3,350
Depreciation and amortization	668			771
Amortization of premiums and discounts	1,328			1,749
Amortization of intangibles	101			102
Amortization of loan servicing rights	284			144
Amortization of deferred loan fees	(197		)	(129		)
Income from cash surrender value of bank-owned life insurance policies	(514		)	(512		)
Federal deferred income tax expense (benefit)	(1,100		)	665
Securities (gains) losses, net	5			(178		)
Share-based compensation expense	238			225
Loans originated for sale	(81,476		)	(85,753		)
Proceeds from sales of loan originations	87,111			92,895
Net gain from loan sales	(2,649		)	(1,617		)
Net (gain) loss on sale of other assets	(26		)	17
Net increase (decrease) in accrued interest receivable and other assets	(6,817		)	741
Net increase (decrease) in accrued interest payable, taxes and other liabilities	(223		)	1,113
Net cash provided by operating activities	4,961			18,038
Investing Activities
Proceeds from sales of available-for-sale securities	2,327			2,272
Proceeds from maturities of available-for-sale securities	36,550			57,553
Purchase of available-for-sale securities	(37,275		)	(82,258		)
Net increase in loans made to customers	(23,609		)	(12,294		)
Proceeds from the sale of other real estate owned	861			868
Purchase of bank premises and equipment	(1,299		)	(382		)
Proceeds from sale of bank premises and equipment	6			15
Net cash used in investing activities	(22,439		)	(34,226		)
Financing Activities
Net increase (decrease) in demand and other noninterest-bearing	4,991			(23		)
Net increase in savings, money market and interest-bearing demand	57,372			14,271
Net increase (decrease) in time deposits	(51,168		)	18,405
Net increase (decrease) in short-term borrowings	(1,902		)	528
Proceeds from Federal Home Loan Bank advances	—			196
Payment of Federal Home Loan Bank advances	—			(10		)
Deferred FHLB prepayment penalty	160			—
Redemption of Fixed-Rate Cumulative Perpetual Preferred stock	(7,670		)	—
Purchase of Treasury Stock	(85		)	—
Dividends paid	(325		)	(748		)
Net cash provided used in financing activities	1,373			32,619
Net increase (decrease) in cash and cash equivalents	(16,105		)	16,431
Cash and cash equivalents, January 1	52,272			30,659
Cash and cash equivalents, September 30	$	36,167		$	47,090
Supplemental cash flow information
Interest paid	$	4,297		$	4,744
Income taxes paid	1,050			1,825
Transfer of loans to other real estate owned	1,029			633

See accompanying notes to consolidated financial statements

7

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in thousands except per share amounts)

(1)    Summary of Significant Accounting Policies

Basis of Presentation

The consolidated financial statements include the accounts of LNB Bancorp, Inc. (the “Corporation”) and its wholly-owned subsidiary, The Lorain National Bank (the “Bank”). The consolidated financial statements also include the accounts of North Coast Community Development Corporation which is a wholly-owned subsidiary of the Bank. All intercompany transactions and balances have been eliminated in consolidation.

The accounting and reporting policies followed in the presentation of the accompanying Unaudited Consolidated Financial Statements are consistent with those described in Note 1 of the Notes to the Consolidated Financial Statements in the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2013, as updated by the information contained in this Form 10-Q. Management has evaluated all significant events and transactions that occurred after September 30, 2014, for potential recognition or disclosure in these consolidated financial statements. In the opinion of management, these consolidated financial statements reflect all adjustments necessary to present fairly such information for the periods and dates indicated. Such adjustments are normal and recurring in nature. The Consolidated Balance Sheet at December 31, 2013, contained herein has been derived from the audited Consolidated Balance Sheet included in Corporation’s Annual Report on Form 10-K.

The preparation of the consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Results of operations for interim periods are not necessarily indicative of the results to be expected for the full year, due in part to seasonal variations and unusual or infrequently occurring items.

Certain reclassifications of prior years' amounts have been made to conform to current year presentation. Such reclassifications had no effect on prior year net income or shareholders' equity.

New Accounting Pronouncements:

In April 2014 the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)”. This ASU supersedes and replaces nearly all existing revenue recognition guidance, including industry-specific guidance, establishes a new control-based revenue recognition model, changes the basis for deciding when revenue is recognized over time or at a point in time, provides new and more detailed guidance on specific topics and expands and improves disclosures about revenue. In addition, this ASU specifies the accounting for some costs to obtain or fulfill a contract with a customer. This amended guidance is effective for the Corporation on January 1, 2017 and is not expected to have a material impact on the Corporation's consolidated operating results or financial condition.

In January 2014, the Financial Accounting Standards Board issued an accounting standards update allowing entities to make an accounting policy election with respect to using the proportional amortization method for investments in qualified affordable housing projects, if certain conditions are met. This standard will be effective for public companies for interim and annual periods beginning after December 15, 2014. The Corporation will adopt this new guidance as required, and it is not expected to have a material impact on the Corporation's Consolidated Financial Statements.

Also, in January 2014, the Financial Accounting Standards Board issued an accounting standards update clarifying guidance for in substance repossessions and foreclosures, and requiring additional disclosures regarding foreclosed residential real estate property and recorded investments in consumer mortgage loans collateralized by residential real estate in the process of foreclosure. This standard will be effective for public companies for interim and annual periods beginning after December 15, 2014. The Corporation will adopt this new guidance as required, and it is not expected to have a material impact on the Corporation's Consolidated Financial Statements.

8

(2)    Earnings Per Common Share

The Corporation calculates earnings per common share (EPS) using the two-class method. The two-class method allocates net income to each class of Common Stock and participating security according to the common dividends declared and participation rights in undistributed earnings. Participating securities consist of unvested stock-based payment awards that contain nonforfeitable rights to dividends. The Corporation also uses the treasury stock method to calculate dilutive EPS. The treasury stock method assumes that the Corporation uses the proceeds from a hypothetical exercise of options to repurchase Common Stock at the average market price during the period. The reconciliation between basic and diluted earnings per share is presented as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2014		2013		2014		2013
Basic EPS	(Dollars in thousands, except per share data)
Net income	$	2,086	$	1,519	$	5,715	$	4,455
Less:
Preferred stock dividend and accretion	—		109		16		483
Income allocated to participating securities	8		13		24		40
Net income allocated to common shareholders	$	2,078	$	1,397	$	5,675	$	3,932
Average common shares outstanding	9,665,088		9,303,702		9,666,107		8,940,213
Less: participating shares included in average common shares outstanding	38,552		90,532		43,371		99,268
Average common shares outstanding used in basic EPS	9,626,536		9,213,170		9,622,736		8,840,945
Basic net income per common share	$	0.22	$	0.15	$	0.59	$	0.44
Diluted EPS:
Income used in diluted earnings per share calculation	$	2,078	$	1,397	$	5,675	$	3,932
Average common shares outstanding	9,626,536		9,213,170		9,622,736		8,840,945
Add: Common Stock equivalents:
Stock Options	32,718		12,292		14,619		9,184
Average common stock shares outstanding	9,659,254		9,225,462		9,637,355		8,850,129
Diluted earnings per common share	$	0.22	$	0.15	$	0.59	$	0.44

Options to purchase 451,530 common shares were considered in computing diluted earnings per common share for the three month and nine month periods ended September 30, 2014. For the three month and nine month periods ended September 30, 2014, approximately 288,834 and 316,668 of options to purchase shares of common stock were not included in the computation of diluted earnings per share because the effect would be antidilutive. Options to purchase 369,363 common shares were considered in computing diluted earnings per common share for the three and nine month periods ended September 30, 2013. For the three month and nine month periods ended September 30, 2013, approximately 331,863 and 224,000 of options to purchase shares of common stock were not included in the computation of diluted earnings per share because the effect would be antidilutive.

9

(3)    Goodwill and Intangible Assets

The Corporation has goodwill of $21,582 primarily from an acquisition completed in 2007. The Corporation assesses goodwill for impairment annually and more frequently in certain circumstances. In September 2011, FASB issued an update on the testing of goodwill for impairment under ASC Topic 350, Intangibles – Goodwill and Other ASC 350 requires a corporation to test goodwill for impairment, on at least an annual basis, by comparing the fair value of a reporting unit with its carrying amount. The overall objective of the update is to simplify how entities, both public and private, test goodwill for impairment. Simplification has resulted in an entity having the option to first assess qualitative factors to determine whether the existence or circumstances lead to a determination that it is more likely than not (that is, a likelihood of more than fifty percent) that the fair value of a reporting unit is less than its carrying amount. For 2013, the Corporation determined the Bank was one reporting unit and assessed the following qualitative factors to determine the likelihood that goodwill is impaired: (a) industry and market considerations such as a deterioration in the environment in which the Corporation operates; (b) overall financial performance such as negative or declining cash flows or a decline in actual or planned revenue or earnings compared with actual and projected results of relevant prior periods; (c) events affecting a reporting unit such as a change in the composition or carrying amount of the Corporation’s assets unit; (d) share price — considered in both absolute terms and relative to peers; (e) non-performing loans and allowance for loans losses; and (f) bank capital analysis. The Corporation evaluates goodwill impairment annually as of November 30th of each year and more frequently if circumstances would warrant an update. Based upon this assessment the Corporation determined that there was no likelihood of goodwill impairment therefore no impairment charge was recognized as of December 31, 2013.

The Corporation cannot predict the occurrences of certain future events that might adversely affect the reported value of goodwill. Such events include, but are not limited to, strategic decisions in response to economic and competitive conditions, the effect of the economic environment on the Corporation’s customer base or a material negative change in the relationship with significant customers. Core deposit intangibles are amortized over their estimated useful life of 10 years. A summary of core deposit intangible assets follows:

	September 30, 2014		December 31, 2013
	(Dollars in thousands)
Core deposit intangibles	$	1,367	$	1,367
Less: accumulated amortization	1,011		910
Carrying value of core deposit intangibles	$	356	$	457

10

(4)    Securities

The amortized cost, gross unrealized gains and losses and fair values of securities at September 30, 2014 and December 31, 2013 follows:

	At September 30, 2014
	Amortized  Cost		Unrealized Gains		Unrealized Losses			Fair Value
	(Dollars in thousands)
Securities available for sale:
U.S. Government agencies and corporations	$	61,427	$	—	$	(2,097	)	$	59,330
Mortgage backed securities: residential	98,061		1,194		(701		)	98,554
Residential collateralized mortgage obligations	25,206		167		(221		)	25,152
State and political subdivisions	34,391		1,569		(149		)	35,811
Total Securities	$	219,085	$	2,930	$	(3,168	)	$	218,847
	At December 31, 2013
	Amortized  Cost		Unrealized Gains		Unrealized Losses			Fair Value
	(Dollars in thousands)
Securities available for sale:
U.S. Government agencies and corporations	$	71,851	$	—	$	(6,463	)	$	65,388
Mortgage backed securities: residential	94,313		1,362		(1,245		)	94,430
Residential collateralized mortgage obligations	18,650		255		(250		)	18,655
State and political subdivisions	32,521		1,137		(693		)	32,965
Preferred securities	4,684		—		—			4,684
Total Securities	$	222,019	$	2,754	$	(8,651	)	$	216,122

U.S. Government agencies and corporations include callable and bullet agency issues and agency-backed mortgage backed securities. Maturities may differ from contractual terms because borrowers may have the right to call or prepay obligations with or without penalties. Periodic payments are received on mortgage-backed securities based upon payment patterns of the underlying collateral.

The amortized cost and fair value of available for sale debt securities by contractual maturity date at September 30, 2014 is provided in the following table. Mortgage backed securities and collateralized mortgage obligations are not due at a single maturity date and are therefore shown separately.

	At September 30, 2014
	Amortized Cost		Fair Value
	(Dollars in thousands)
Securities available for sale:
Due in one year or less	$	21,731	$	20,885
Due from one year to five years	38,415		38,718
Due from five years to ten years	30,078		29,733
Due after ten years	5,594		5,805
Mortgage backed securities and Residential collateralized mortgage obligations	123,267		123,706
	$	219,085	$	218,847

The following table shows the proceeds from sales of available-for-sale securities for the nine month period ended September 30, 2014 and 2013. The gross realized gains and losses on those sales that have been included in earnings. Gains or losses on the sales of available-for-sale securities are recognized upon sale and are determined using the specific identification method.

11

	Nine months ended September 30,
	2014			2013
	(Dollars in thousands)
Gross realized gains	$	—		$	178
Gross realized losses	(5		)	—
Net Securities Gains	$	(5	)	$	178
Proceeds from the sale of available for sale securities	$	2,327		$	2,272

The carrying value of securities pledged to secure trust deposits, public deposits, lines of credit, and for other purposes required by law amounted to $182,185 and $154,479 at September 30, 2014 and December 31, 2013, respectively.

The following is a summary of securities that had unrealized losses at September 30, 2014 and December 31, 2013. The information is presented for securities that have been in an unrealized loss position for less than 12 months and for more than 12 months. At September 30, 2014, the Corporation held 42 securities with unrealized losses totaling $3,168. At December 31, 2013, there were 53 securities with unrealized losses totaling $8,651. Securities may temporarily be valued at less than amortized cost if the current levels of interest rates, as compared to the coupons on the securities held by the Corporation, are higher or if impairment is not due to credit deterioration. The Corporation has the intent and the ability to hold these securities until their value recovers, which may be until maturity.

	At September 30, 2014
	Less than 12 months					12 months or longer					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(Dollars in thousands)
U.S. Government agencies and corporations	$	1,163	$	(2	)	$	58,167	$	(2,095	)	$	59,330	$	(2,097	)
Mortgage backed securities: residential	14,267		(72		)	33,545		(629		)	47,812		(701		)
Residential collateralized mortgage obligations	9,994		(58		)	4,016		(163		)	14,010		(221		)
State and political subdivisions	936		(5		)	4,081		(144		)	5,017		(149		)
Total	$	26,360	$	(137	)	$	99,809	$	(3,031	)	$	126,169	$	(3,168	)
	At December 31, 2013
	Less than 12 months					12 months or longer					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(Dollars in thousands)
U.S. Government agencies and corporations	$	65,388	$	(6,463	)	$	—	$	—		$	65,388	$	(6,463	)
Mortgage backed securities: residential	28,603		(566		)	31,051		(679		)	59,654		(1,245		)
Residential collateralized mortgage obligations	5,079		(59		)	4,411		(191		)	9,490		(250		)
State and political subdivisions	9,188		(602		)	447		(91		)	9,635		(693		)
Total	$	108,258	$	(7,690	)	$	35,909	$	(961	)	$	144,167	$	(8,651	)

On a quarterly basis, the Corporation performs a comprehensive security-level impairment assessment on all securities in an unrealized loss position to determine if other-than-temporary impairment ("OTTI") exists. An unrealized loss exists when the current fair value of an individual security is less than its amortized cost basis. For debt securities, an OTTI loss must be recognized for a debt security in an unrealized loss position if the Corporation intends to sell the security or it is more likely than not that the Corporation will be required to sell the security before recovery of its amortized cost basis. In this situation, the amount of loss recognized in income is equal to the difference between the fair value and the amortized cost basis of the individual security. If the Corporation does not expect to sell the security, the Corporation must evaluate the expected cash flows

12

to be received to determine if a credit loss has occurred. If a credit loss is present, only the amount of impairment associated with the credit loss is recognized in income. The portion of the unrealized loss relating to other factors, such as liquidity conditions in the market or changes in market interest rates, is recorded in other comprehensive income.

The security-level assessment is performed on each security, regardless of the classification of the security as available for sale or held to maturity. The assessments are based on the nature of the securities, the financial condition of the issuer, the extent and duration of the securities, the extent and duration of the loss and the intent and whether management intends to sell or it is more likely than not that it will be required to sell a security before recovery of its amortized cost basis, which may be maturity. For those securities for which the assessment shows the Corporation will recover the entire cost basis, management does not intend to sell these securities and it is not more likely than not that the Corporation will be required to sell them before the anticipated recovery of the amortized cost basis, the gross unrealized losses are recognized in other comprehensive income, net of tax.

Management does not believe that the investment securities that were in an unrealized loss position as of September 30, 2014 represent an other-than-temporary impairment. Total gross unrealized losses were primarily attributable to changes in interest rates, relative to when the investment securities were purchased, and not due to the credit quality of the investment securities. The Corporation does not intend to sell the investment securities that were in an unrealized loss position and it is not more likely than not that the Corporation will be required to sell the investment securities before recovery of their amortized cost basis, which may be at maturity.

(5)    Loans and Allowance for Loan Losses

The allowance for loan losses is maintained by the Corporation at a level considered by management to be adequate to cover probable incurred credit losses in the loan portfolio. The amount of the provision for loan losses charged to operating expenses is the amount necessary, in the estimation of management, to maintain the allowance for loan losses at an adequate level. While management’s periodic analysis of the allowance for loan losses may dictate portions of the allowance be allocated to specific problem loans, the entire amount is available for any loan charge-offs that may occur. Loan losses are charged off against the allowance when management believes that the full collectability of the loan is unlikely. Recoveries of amounts previously charged-off are credited to the allowance.

The allowance is comprised of a general allowance and a specific allowance for identified problem loans. The general allowance is determined by applying estimated loss factors to the credit exposures from outstanding loans. For residential real estate, installment and other loans, loss factors are applied on a portfolio basis. Loss factors are based on the Corporation’s historical loss experience and are reviewed for appropriateness on a quarterly basis, along with other factors affecting the collectability of the loan portfolio. These other factors include but are not limited to: changes in lending policies and procedures, including underwriting standards and collection, charge-off and recovery practices; changes in national and local economic and business conditions, including the condition of various market segments; changes in the nature and volume of the portfolio; changes in the experience, ability, and depth of lending management and staff; changes in the volume and severity of past due and classified loans, the volume of nonaccrual loans, troubled debt restructurings and other loan modifications; the existence and effect of any concentrations of credit, and changes in the level of such concentrations; and the effect of external factors, such as legal and regulatory requirements, on the level of estimated credit losses in the Corporation’s current portfolio. Specific allowances are established for all impaired loans when management has determined that, due to identified significant conditions, it is probable that a loss will be incurred.

The general component covers non‑impaired loans and is based on historical loss experience adjusted for current factors. The historical loss experience is determined by portfolio segment and is based on the actual loss history experienced by the Corporation over the most recent three years. This actual loss experience is supplemented with other economic factors based on the risks present for each portfolio segment. These economic factors include consideration of the following: levels of and trends in delinquencies and impaired loans; levels of and trends in charge-offs and recoveries; trends in volume and terms of loans; effects of any changes in risk selection and underwriting standards; other changes in lending policies, procedures, and practices; experience, ability, and depth of lending management and other relevant staff; national and local economic trends and conditions; industry conditions; and effects of changes in credit concentrations.

13

Activity in the allowance for loan losses by portfolio segment for the three and nine months ended September 30, 2014 and 2013 are summarized as follows:

Nine Months Ended September 30, 2014
	Commercial Real Estate			Commercial			Residential Real Estate			Home Equity Loans			Indirect			Consumer			Total
	(Dollars in thousands)
Allowance for loan losses:
Balance, beginning of period	$	10,122		$	497		$	1,411		$	3,484		$	1,593		$	398		$	17,505
Losses charged off	(1,133		)	(35		)	(213		)	(1,074		)	(283		)	(150		)	(2,888		)
Recoveries	32			32			6			65			143			24			302
Provision charged to expense	94			204			865			644			639			67			2,513
Balance, end of period	$	9,115		$	698		$	2,069		$	3,119		$	2,092		$	339		$	17,432
Three Months Ended September 30, 2014
	Commercial Real Estate			Commercial			Residential Real Estate			Home Equity Loans			Indirect			Consumer			Total
	(Dollars in thousands)
Allowance for loan losses:
Balance, beginning of period	$	9,944		$	476		$	1,446		$	3,789		$	1,533		$	242		$	17,430
Losses charged off	(433		)	(35		)	(63		)	(179		)	(106		)	(41		)	(857		)
Recoveries	11			30			—			46			46			6			139
Provision charged to expense	(407		)	227			686			(537		)	619			132			720
Balance, end of period	$	9,115		$	698		$	2,069		$	3,119		$	2,092		$	339		$	17,432
As of September 30, 2014
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	703		$	5		$	178		$	—		$	—		$	—		$	886
Collectively evaluated for impairment	8,412			693			1,891			3,119			2,092			339			16,546
Total ending allowance balance	$	9,115		$	698		$	2,069		$	3,119		$	2,092		$	339		$	17,432
Loans:
Individually evaluated for impairment	$	15,271		$	184		$	1,356		$	852		$	147		$	64		$	17,874
Collectively evaluated for impairment	398,354			85,359			69,535			124,466			213,303			13,623			904,640
Total ending loans balance	$	413,625		$	85,543		$	70,891		$	125,318		$	213,450		$	13,687		$	922,514

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Nine Months Ended September 30, 2013
	Commercial Real Estate			Commercial			Residential Real Estate			Home Equity Loans			Indirect			Consumer			Total
Allowance for loan losses:
Balance, beginning of period	$	11,386		$	835		$	1,559		$	2,357		$	1,230		$	270		$	17,637
Losses charged off	(1,475		)	(120		)	(679		)	(1,439		)	(555		)	(181		)	(4,449		)
Recoveries	584			7			277			60			276			49			1,253
Provision charged to expense	(33		)	(246		)	281			2,530			660			158			3,350
Balance, end of period	$	10,462		$	476		$	1,438		$	3,508		$	1,611		$	296		$	17,791
Three Months Ended September 30, 2013
	Commercial Real Estate			Commercial			Residential Real Estate			Home Equity Loans			Indirect			Consumer			Total
	(Dollars in thousands)
Allowance for loan losses:
Balance, beginning of period	$	10,424		$	438		$	1,606		$	3,508		$	1,581		$	258		$	17,815
Losses charged off	(630		)	—			(35		)	(410		)	(196		)	(83		)	(1,354		)
Recoveries	83			2			178			5			104			8			380
Provision charged to expense	585			36			(311		)	405			122			113			950
Balance, end of period	$	10,462		$	476		$	1,438		$	3,508		$	1,611		$	296		$	17,791
Year Ended December 31, 2013
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	865		$	73		$	—		$	—		$	—		$	—		$	938
Collectively evaluated for impairment	9,257			$	424		$	1,411		$	3,484		$	1,593		$	398		16,567
Total ending allowance balance	$	10,122		$	497		$	1,411		$	3,484		$	1,593		$	398		$	17,505
Loans:
Individually evaluated for impairment	$	17,842		$	472		$	1,731		$	1,111		$	195		$	160		$	21,511
Collectively evaluated for impairment	383,749			88,174			64,776			121,965			206,128			15,996			880,788
Total ending loans balance	$	401,591		$	88,646		$	66,507		$	123,076		$	206,323		$	16,156		$	902,299

Delinquencies

Management monitors delinquency and potential problem loans on an on going basis. Bank-wide delinquency at September 30, 2014 was 1.27% of total loans. Total 30-59 day delinquency and 60-89 day delinquency was 0.17% and 0.06% of total loans at September 30, 2014, respectively. Bank-wide delinquency at December 31, 2013 was 1.69% of total loans. Total 30-59 day delinquency and 60-89 day delinquency was 0.26% and 0.19% of total loans at December 31, 2013, respectively. Information regarding delinquent loans as of September 30, 2014 and December 31, 2013 is as follows:

15

Age Analysis of Past Due Loans as of September 30, 2014

(Dollars in thousands)	30-59 Days Past Due		60-89 Days Past Due		90 Days and Greater		Total Past Due		Current		Total Loans		Recorded Investment > 90 Days and Accruing
Commercial real estate	$	614	$	233	$	5,684	$	6,531	$	407,094	$	413,625	$	—
Commercial	55		—		172		227		85,316		85,543		—
Residential real estate	267		63		1,668		1,998		68,893		70,891		—
Home equity loans	123		149		1,766		2,038		123,280		125,318		—
Indirect	324		118		28		470		212,980		213,450
Consumer	169		—		308		477		13,210		13,687		—
Total	$	1,552	$	563	$	9,626	$	11,741	$	910,773	$	922,514	$	—

Age Analysis of Past Due Loans as of December 31, 2013

(Dollars in thousands)	30-59 Days Past Due		60-89 Days Past Due		90 Days and Greater		Total Past Due		Current		Total Loans		Recorded Investment > 90 Days and Accruing
Commercial real estate	$	525	$	4	$	7,401	$	7,930	$	393,661	$	401,591	$	—
Commercial	—		18		219		237		88,409		88,646		—
Residential real estate	347		960		2,252		3,559		62,948		66,507		158
Home equity loans	932		707		1,078		2,717		120,359		123,076		43
Indirect	332		30		23		385		205,938		206,323
Consumer	183		25		191		399		15,757		16,156		—
Total	$	2,319	$	1,744	$	11,164	$	15,227	$	887,072	$	902,299	$	201

Impaired Loans

A loan is considered impaired when it is probable that not all principal and interest amounts will be collected according to the loan contract. Consumer residential mortgage, installment and other consumer loans are evaluated collectively for impairment. Individual commercial loans are evaluated for impairment. Impaired loans are written down by the establishment of a specific allowance where necessary. Interest income recognized on impaired loans while the loan was considered impaired was immaterial for all periods.

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Impaired loans for the Period Ended September 30, 2014, December 31, 2013 and September 30, 2013 are as follows:

	At September 30, 2014						Three Months Ended September 30, 2014		Nine Months Ended September 30, 2014
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Balance		Average Recorded Balance
	(Dollars in thousands)
With no related allowance recorded:
Commercial real estate	$	13,235	$	17,060	$	—	$	13,255	$	13,008
Commercial	149		466		—		751		568
Residential real estate	1,178		1,391		—		1,208		1,216
Home equity loans	852		1,535		—		903		928
Indirect	147		231		—		156		168
Consumer	64		103		—		64		64
With allowance recorded:
Commercial real estate	2,036		2,872		703		2,849		3,120
Commercial	35		35		5		146		183
Residential real estate	178		178		178		100		73
Home equity loans	—		—		—		—		—
Indirect	—		—		—		—		—
Consumer	—		—		—		—		—
Total	$	17,874	$	23,871	$	886	$	19,432	$	19,328

Note: The differences between the recorded investment and unpaid principal balance amounts represents partial charge offs.

	At December 31, 2013
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Balance
	(Dollars in thousands)
With no related allowance recorded:
Commercial real estate	$	15,530	$	20,438	$	—	$	16,705
Commercial	214		267		—		186
Residential real estate	1,731		1,940		—		1,832
Home equity loans	1,111		1,623		—		847
Indirect	195		268		—		178
Consumer	160		204		—		111
With allowance recorded:
Commercial real estate	2,312		2,319		865		4,374
Commercial	258		258		73		346
Residential real estate	—		—		—		—
Home equity loans	—		—		—		—
Indirect	—		—		—		—
Consumer	—		—		—		—
Total	$	21,511	$	27,317	$	938	$	24,579

Note: The differences between the recorded investment and unpaid principal balance amounts represents partial charge offs.

17

	At September 30, 2013						Three Months Ended September 30, 2013		Nine Months Ended September 30, 2013
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Balance		Average Recorded Balance
	(Dollars in thousands)
With no related allowance recorded:
Commercial real estate	$	14,625	$	19,617	$	—	$	16,127	$	16,667
Commercial	245		298		—		203		167
Residential real estate	1,613		1,801		—		1,802		1,800
Home equity loans	1,107		1,518		—		897		669
Indirect	191		293		—		208		129
Consumer	152		203		—		113		87
With allowance recorded:
Commercial real estate	5,523		8,842		1,462		5,139		5,781
Commercial	343		343		79		342		396
Residential real estate	57		154		6		29		60
Home equity loans	—		—		—		—		—
Indirect	—		—		—		—		—
Consumer	—		—		—		—		—
Total	$	23,856	$	33,069	$	1,547	$	24,860	$	25,756

*Impaired loans shown in the tables above included loans that were classified as troubled debt restructurings ("TDRs"). The restructuring of a loan is considered a TDR if both (i) the borrower is experiencing financial difficulties and (ii) the creditor has granted a concession.

Troubled Debt Restructuring

A restructuring of debt constitutes a troubled debt restructuring (“TDR”) if the creditor, for economic or legal reasons related to the debtor’s financial difficulties, grants a concession to the debtor that it would not otherwise consider. That concession either stems from an agreement between the creditor and the debtor or is imposed by law or a court. The Corporation adheres to ASC 310-40, Troubled Debt Restructurings by Creditors, to determine whether a troubled debt restructuring applies in a particular instance. Prior to loans being modified and classified as a TDR, specific reserves are generally assessed, as most of these loans have been specifically allocated for as part of the Corporation's normal loan loss provisioning methodology. The Corporation has allocated reserves of $40 for the TDR loans at September 30, 2014.

The following table provides the number of loans modified in a TDR and the recorded investment and unpaid principal balance by loan segment as of September 30, 2014 and September 30, 2013.

	Three Months Ended As of September 30, 2014			Nine Months Ended As of September 30, 2014
	(Dollars in thousands)
	Number of Contracts	Recorded Investment	Unpaid Principal	Number of Contracts	Recorded Investment	Unpaid Principal
Commercial real estate	2	$174	$267	21	$6,694	$9,092
Commercial	—	—	—	1	—	170
Residential real estate	—	—	—	13	854	958
Home equity loans	—	—	—	28	659	1,288
Indirect Loans	—	—	—	39	147	210
Consumer Loans	—	—	—	1	64	64
Total	2	$174	$267	103	$8,418	$11,782

Note: The differences between the recorded investment and unpaid principal balance amounts represents partial charge offs.

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	Three Months Ended As of September 30, 2013			Nine Months Ended As of September 30, 2013
	(Dollars in thousands)
	Number of Contracts	Recorded Investment	Unpaid Principal	Number of Contracts	Recorded Investment	Unpaid Principal
Commercial real estate	—	$—	$—	18	$6,742	$8,724
Commercial	—	—	—	1	—	170
Residential real estate	1	42	46	12	966	1,052
Home equity loans	5	277	320	27	882	1,247
Indirect Loans	3	31	31	38	227	336
Consumer Loans	2	27	27	1	55	55
Total	9	$350	$397	97	$8,872	$11,584

Note 1: The differences between the recorded investment and unpaid principal balance amounts represents partial charge offs.

The pre-modification and post-modification outstanding recorded investments of loans modified as TDRs during the nine months ended September 30, 2014 were not materially different. Loans modified during the nine months ended September 30, 2014 did not involve the forgiveness of principal at the modification date.

There were no loans modified in a TDR that subsequently defaulted during the twelve month periods ended September 30, 2014 and 2013, respectively (i.e., 90 days or more past due following a modification).

A modification of a loan constitutes a TDR when a borrower is experiencing financial difficulty and the modification constitutes a concession by the creditor. The Corporation offers various types of concessions when modifying a loan, however, forgiveness of principal is rarely granted. Commercial loans modified in a TDR often involve temporary interest-only payments, term extensions, and converting revolving credit lines to term loans. Additional collateral, a co-borrower, or a guarantor may be requested. Commercial mortgage and construction loans modified in a TDR often involve reducing the interest rate for the remaining term of the loan, extending the maturity date at an interest rate lower than the current market rate for new debt with similar risk, or substituting or adding a new borrower or guarantor. Construction loans modified in a TDR may also involve extending the interest-only payment period. Land loans are also included in the class of commercial real estate loans. Land loans are typically structured as interest-only monthly payments with a balloon payment due at maturity. Land loans modified in a TDR typically involve extending the balloon payment by one to three years and changing the monthly payments from interest-only to principal and interest, while leaving the interest rate unchanged.

Loans modified in a TDR are typically already on nonaccrual status and partial charge-offs have in some cases already been taken against the outstanding loan balance. As a result, loans modified in a TDR for the Corporation may have the financial effect of increasing the specific allowance associated with the loan. The allowance for impaired loans that have been modified in a TDR is measured based on the estimated fair value of the collateral, less any selling costs, if the loan is collateral dependent or on the present value of expected future cash flows discounted at the loan’s effective interest rate. Management exercises significant judgment in developing these estimates.

The OCC regulatory guidance requires loans to be accounted for as collateral-dependent loans when borrowers have filed Chapter 7 bankruptcy, the debt has been discharged and the borrower has not reaffirmed the debt, regardless of the delinquency status of the loan. The filing of bankruptcy by the borrower is evidence of financial difficulty and the discharge of the obligation by the bankruptcy court is deemed to be a concession granted to the borrower.

The Corporation had approximately $628 of additional commitments to lend additional funds to the related debtors whose terms have been modified in a TDR at September 30, 2014.

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Nonaccrual Loans

Nonaccrual loan balances at September 30, 2014 and December 31, 2013 are as follows:

Loans On Nonaccrual Status	September 30, 2014		December 31, 2013
	(Dollars in thousands)
Commercial real estate	$	8,728	$	11,241
Commercial	172		289
Residential real estate	4,064		5,231
Home equity loans	4,366		4,464
Indirect	446		443
Consumer	417		318
Total Nonaccrual Loans	$	18,193	$	21,986

Credit Risk Grading

Sound credit systems, practices and procedures such as credit risk grading systems; effective credit review and examination processes; effective loan monitoring, problem identification, and resolution processes; and a conservative loss recognition process and charge-off policy are integral to management’s proper assessment of the adequacy of the allowance. Many factors are considered when grades are assigned to individual loans such as current and historic delinquency, financial statements of the borrower, current net realizable value of collateral and the general economic environment and specific economic trends affecting the portfolio. Commercial, commercial real estate and residential construction loans are assigned internal credit risk grades. The loan’s internal credit risk grade is reviewed on at least an annual basis and more frequently if needed based on specific borrower circumstances. Credit quality indicators used in management’s periodic analysis of the adequacy of the allowance include the Corporation’s internal credit risk grades which are described below and are included in the table below for September 30, 2014 and December 31, 2013:

• Grades 1 -5: defined as “Pass” credits — loans which are protected by the borrower’s current net worth and paying capacity or by the value of the underlying collateral. Pass credits are current or have not displayed a significant past due history.

• Grade 6: defined as “Special Mention” credits — loans where a potential weakness or risk exists, which could cause a more serious problem if not monitored. Loans listed for special mention generally demonstrate a history of repeated delinquencies, which may indicate a deterioration of the repayment abilities of the borrower.

• Grade 7: defined as “Substandard” credits — loans that have a well-defined weakness based on objective evidence and are characterized by the distinct possibility that the Corporation will sustain some loss if the deficiencies are not corrected.

• Grade 8: defined as “Doubtful” credits — loans classified as doubtful have all the weaknesses inherent in a substandard asset. In addition, these weaknesses make collection or liquidation in full highly questionable and improbable.

• Grade 9: defined as “Loss” credits — loans classified as a loss are considered uncollectible, or of such value that continuance as an asset is not warranted.

For the residential real estate segment, the Corporation monitors credit quality using a combination of the delinquency status of the loan and/or the Corporation’s internal credit risk grades as indicated above.

20

The following tables present the recorded investment of commercial real estate, commercial and residential real estate loans by internal credit risk grade and the recorded investment of residential real estate, home equity, indirect and consumer loans based on delinquency status as of September 30, 2014 and December 31, 2013:

Commercial Credit Exposure	Commercial Real Estate		Commercial		Residential Real Estate*		Home Equity Loans		Indirect		Consumer		Total
	September 30, 2014
	(Dollars in thousands)
Loans graded by internal credit risk grade:
Grade 1 — Minimal	$	—	$	69	$	—	$	—	$	—	$	—	$	69
Grade 2 — Modest	600		4,203		—		—		—		—		4,803
Grade 3 — Better than average	8,675		47		—		—		—		—		8,722
Grade 4 — Average	284,370		61,069		3,175		—		—		—		348,614
Grade 5 — Acceptable	93,705		19,761		2,366		—		—		—		115,832
Total Pass Credits	387,350		85,149		5,541		—		—		—		478,040
Grade 6 — Special mention	5,520		221		233		—		—		—		5,974
Grade 7 — Substandard	20,755		173		844		—		—		—		21,772
Grade 8 — Doubtful	—		—		—		—		—		—		—
Grade 9 — Loss	—		—		—		—		—		—		—
Total loans internally credit risk graded	413,625		85,543		6,618		—		—		—		505,786
Loans not monitored by internal risk grade:
Current loans not internally risk graded	—		—		62,336		123,280		212,980		13,210		411,806
30-59 days past due loans not internally risk graded	—		—		267		123		324		169		883
60-89 days past due loans not internally risk graded	—		—		2		149		118		—		269
90+ days past due loans not internally risk graded	—		—		1,668		1,766		28		308		3,770
Total loans not internally credit risk graded	—		—		64,273		125,318		213,450		13,687		416,728
Total loans internally and not internally credit risk graded	$	413,625	$	85,543	$	70,891	$	125,318	$	213,450	$	13,687	$	922,514

* Residential loans with an internal commercial credit risk grade include loans that are secured by non owner occupied 1-4 family residential properties and conventional 1-4 family residential properties.

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Commercial Credit Exposure	Commercial Real Estate		Commercial		Residential Real Estate*		Home Equity Loans		Indirect		Consumer		Total
	December 31, 2013
	(Dollars in thousands)
Loans graded by internal credit risk grade:
Grade 1 — Minimal	$	—	$	52	$	—	$	—	$	—	$	—	$	52
Grade 2 — Modest	—		37		—		—		—		—		37
Grade 3 — Better than average	857		—		—		—		—		—		857
Grade 4 — Average	22,580		271		613		—		—		—		23,464
Grade 5 — Acceptable	352,781		84,979		5,589		—		—		—		443,349
Total Pass Credits	376,218		85,339		6,202		—		—		—		467,759
Grade 6 — Special mention	2,146		2,891		35		—		—		—		5,072
Grade 7 — Substandard	23,227		416		625		—		—		—		24,268
Grade 8 — Doubtful	—		—		—		—		—		—		—
Grade 9 — Loss	—		—		—		—		—		—		—
Total loans internally credit risk graded	401,591		88,646		6,862		—		—		—		497,099
Loans not monitored by internal risk grade:
Current loans not internally risk graded	—		—		56,390		120,359		205,938		15,757		398,444
30-59 days past due loans not internally risk graded	—		—		64		932		332		183		1,511
60-89 days past due loans not internally risk graded	—		—		960		707		30		25		1,722
90+ days past due loans not internally risk graded	—		—		2,231		1,078		23		191		3,523
Total loans not internally credit risk graded	—		—		59,645		123,076		206,323		16,156		405,200
Total loans internally and not internally credit risk graded	$	401,591	$	88,646	$	66,507	$	123,076	$	206,323	$	16,156	$	902,299

* Residential loans with an internal commercial credit risk grade include loans that are secured by non owner occupied 1-4 family residential properties and conventional 1-4 family residential properties.

The Corporation adheres to underwriting standards consistent with its Loan Policy for indirect and consumer loans. Final approval of a consumer credit depends on the repayment ability of the borrower. Repayment ability generally requires the determination of the borrower’s capacity to meet current and proposed debt service requirements. A borrower’s repayment ability is monitored based on delinquency, generally for time periods of 30 to 59 days past due, 60 to 89 days past due and 90 days or greater past due. This information is provided in the above past due loans table.

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(6)    Deposits

Deposit balances are summarized as follows:

	September 30, 2014		December 31, 2013
	(Dollars in thousands)
Demand and other noninterest-bearing	$	153,952	$	148,961
Interest checking	179,913		164,662
Savings	127,343		125,582
Money market accounts	143,894		103,534
Consumer time deposits	343,612		382,137
Public time deposits	108,070		120,713
Total deposits	$	1,056,784	$	1,045,589

The aggregate amount of certificates of deposit in denominations of $100,000 or more amounted to $259,154 and $293,330 at September 30, 2014 and December 31, 2013, respectively.

The maturity distribution of certificates of deposit as of September 30, 2014 are as follows:

	September 30, 2014
	(Dollars in thousands)
0-12 months	$	227,865
12-24 months	138,416
24-36 months	66,328
36-48 months	14,936
48-60 months	4,137
Total	$	451,682

(7)    Short-Term Borrowings

The Bank has a line of credit for advances and discounts with the Federal Reserve Bank of Cleveland. The amount of this line of credit varies on a monthly basis. The amount available for borrowing under the line is equal to 50% of the balances of qualified home equity lines of credit that are pledged as collateral. At September 30, 2014, the Bank had pledged approximately $91,995 in qualifying home equity lines of credit, resulting in an available line of credit of approximately $45,998. No amounts were outstanding under the line of credit at September 30, 2014 or December 31, 2013.

The Corporation also has a $6,000 line of credit with an unaffiliated financial institution under which the Corporation had outstanding borrowings of $2,000 at an annualized rate of 3.50% as of September 30, 2014. As part of the Corporation’s repurchase and redemption of its Series B Preferred Stock in December 2013 and January 2014, approximately $3,000 was drawn on the line of credit in December 2013. In the first and second quarter of 2014 the Corporation made payments of $500 of principal in each quarter on the line of credit. Following the two payments of $500 made in the first and second quarter of 2014, $2.0 million remains outstanding at the prime rate of 3.50% annually at September 30, 2014.

Short-term borrowings include securities sold under repurchase agreements and Federal funds purchased from correspondent banks. At September 30, 2014 and December 31, 2013, the outstanding balance of securities sold under repurchase agreements totaled $674 and $1,576, respectively. No Federal funds were purchased as of September 30, 2014 and December 31, 2013.

The following table presents the components of Federal funds purchased and securities sold under agreements to repurchase and short-term borrowings as of September 30, 2014 and December 31, 2013.

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	September 30, 2014			December 31, 2013
Federal funds purchased and securities sold under agreements to repurchase	$	674		$	1,576
Line of credit with an unaffiliated financial institution	2,000			3,000
Total short-term borrowings	$	2,674		$	4,576
Short-term borrowings	September 30, 2014			December 31, 2013
Average balance during the year	$	3,831		$	1,803
Weighted-average annual interest rate during the year	3.61		%	0.10		%
Maximum month-end balance	$	3,353		$	4,576

(8)    Federal Home Loan Bank Advances

Federal Home Loan Bank advances amounted to $46,867 and $46,708 at September 30, 2014 and December 31, 2013 respectively. All advances were bullet maturities with no call features. At September 30, 2014, collateral pledged for FHLB advances consisted of qualified multi-family and residential real estate mortgage loans and investment securities of $80,069 and $11,680, respectively. The maximum borrowing capacity of the Bank at September 30, 2014 was $71,776. The Bank maintains a $40,000 cash management line of credit (CMA) with the FHLB. No amounts were outstanding under the CMA line of credit at September 30, 2014 and December 31, 2013.

Maturities of FHLB advances outstanding at September 30, 2014 and December 31, 2013 are as follows:

	September 30, 2014			December 31, 2013
	(Dollars in thousands)
Maturity January 2014 with fixed rate 3.55%	$	—		$	1
Maturity January 2015 with fixed rate 0.80%	20,000			20,000
Maturity December 2016 with fixed rate 0.79%	10,000			10,000
Maturities June 2017 through December 2017, with fixed rates ranging from 0.89% to 0.99%	15,000			15,000
Maturity June 2018 fixed rate 1.24%	2,500			2,500
Restructuring prepayment penalty	(633		)	(793		)
Total FHLB advances	$	46,867		$	46,708

In 2012, the Corporation prepaid $27,500 of fixed rate FHLB advances with an average contractual interest rate of 2.47% and a remaining maturity of 12 to 31 months. The prepaid FHLB advances were replaced with $27,500 of fixed rate FHLB advances with an average contractual interest rate of 0.88% and terms of 49 to 67 months. In accordance with the restructure, the Corporation was required to pay a prepayment penalty of $1,017 to the FHLB. The present value of the cash flows under the terms of the replacement FHLB advances (including the prepayment penalties) was not more than 10% different from the present value of the cash flows under the terms of the prepaid FHLB advances and therefore the replacement advances were not considered to be substantially different from the original advances in accordance with ASC 470-50, Debt – Modifications and Exchanges. As a result, the prepayment penalties have been treated as a discount on the replacement debt and are being amortized over the life of the new advances as an adjustment to rate. The prepayment penalty effectively increased the interest rate on the new advances over the lives of the new advances at the time of the transaction. The benefit of prepaying these advances was an immediate decrease in interest expense and a decrease in interest rate sensitivity as the maturity of each of the refinanced FHLB advances was extended at a lower rate.

24

At September 30, 2014, the advances were structured to contractually pay down as follows:

	Balance			Weighted Average Rate
2014	$	—		—%
2015	20,000			0.80
2016	10,000			0.79
2017	15,000			0.96
Thereafter	2,500			1.24
Total	$	47,500		0.87%
Restructuring prepayment penalty	(633		)
Total	$	46,867

(9)    Trust Preferred Securities

In May 2007, LNB Trust I (“Trust I”) and LNB Trust II (“Trust II”) each sold $10,000 of preferred securities to outside investors and invested the proceeds in junior subordinated debentures issued by the Corporation. The Corporation’s obligations under the transaction documents, taken together, have the effect of providing a full guarantee by the Corporation, on a subordinated basis, of the payment obligations of the Trusts. The subordinated notes mature in 2037. Trust I bears a floating interest rate (current three-month LIBOR plus 148 basis points). Trust II bears a fixed rate of 6.64% through June 15, 2017, and then becomes a floating interest rate (current three-month LIBOR plus 148 basis points). Interest on the notes is payable quarterly. The interest rates in effect as of the last determination date in 2014 were 1.71% and 6.64% for Trust I and Trust II, respectively. At September 30, 2014 and December 31, 2013, accrued interest payable for Trust I was $6 and $6and for Trust II was $22 and $22, respectively.

The subordinated notes are redeemable in whole or in part, without penalty, at the Corporation’s option and mature on June 15, 2037. The notes are junior in right of payment to the prior payment in full of all senior indebtedness of the Corporation, whether outstanding at the date of the indenture governing the notes or thereafter incurred.

In August 2010, the Corporation entered into an agreement with certain holders of its non-pooled trust preferred securities and those holders exchanged $2,125 in principal amount of the securities issued by Trust I and $2,125 in principal amount of the securities issued by Trust II for 462,234 newly issued shares of the Corporation’s common stock at a volume weighted average price of $4.41 per share.

(10)    Commitments and Contingencies

In the normal course of business, the Corporation enters into commitments with off-balance sheet risk to meet the financing needs of its customers. These instruments are currently limited to commitments to extend credit and standby letters of credit. Commitments to extend credit involve elements of credit risk and interest rate risk in excess of the amount recognized in the consolidated balance sheets. The Corporation's exposure to credit loss in the event of nonperformance by the other party to the commitment is represented by the contractual amount of the commitment. The Corporation uses the same credit policies in making commitments as it does for on-balance sheet instruments. Interest rate risk on commitments to extend credit results from the possibility that interest rates may have moved unfavorably from the position of the Corporation since the time the commitment was made.

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates of 30 to 120 days or other termination clauses and may require payment of a fee. Since some of the commitments may expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements.

The Corporation evaluates each customer’s credit worthiness on a case-by-case basis. The amount of collateral obtained by the Bank upon extension of credit is based on management’s credit evaluation of the applicant. Collateral held is generally single-family residential real estate and commercial real estate. Substantially all of the obligations to extend credit are variable rate. Standby letters of credit are conditional commitments issued to guarantee the performance of a customer to a third party. Standby letters of credit generally are contingent upon the failure of the customer to perform according to the terms of the underlying contract with the third party.

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A summary of the contractual amount of commitments at September 30, 2014 and December 31, 2013 follows:

	September 30, 2014		December 31, 2013
	(Dollars in thousands)
Commitments to extend credit	$	85,072	$	84,283
Home equity lines of credit	91,910		89,331
Standby letters of credit	8,940		8,448
Total	$	185,922	$	182,062

The nature of the Corporation’s business may result in litigation. Management, after reviewing with counsel all actions and proceedings pending against or involving the Corporation and its subsidiaries at September 30, 2014, considers that the aggregate liability or loss, if any, resulting from them will not be material to the Corporation’s financial position, results of operation or liquidity.

(11)    Estimated Fair Value of Financial Instruments

The Corporation discloses estimated fair values for its financial instruments. Fair value estimates, methods and assumptions are set forth below for the Corporation’s financial instruments.

Fair Value Measurements

The fair value of financial assets and liabilities recorded at fair value is categorized in three levels. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. These levels are as follows:

• Level 1 — Valuations based on quoted prices in active markets, such as the New York Stock Exchange. Valuations are obtained from readily available pricing sources for market transactions involving identical assets or liabilities.

• Level 2 — Valuations of assets and liabilities traded in less active dealer or broker markets. Valuations include quoted prices for similar assets and liabilities traded in the same market; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable. Valuations may be obtained from, or corroborated by, third-party pricing services.

• Level 3 — Assets and liabilities with valuations that include methodologies and assumptions that may not be readily observable, including option pricing models, discounted cash flow models, yield curves and similar techniques. Level 3 valuations incorporate certain assumptions and projections in determining the fair value assigned to such assets or liabilities, but in all cases are corroborated by external data, which may include third-party pricing services.

Limitations

Estimates of fair value are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

Estimates of fair value are based on existing on-and-off balance sheet financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments. For example, the Corporation has an Investment and Trust Services Division that contributes net fee income annually. The Investment and Trust Services Division is not considered a financial instrument and its value has not been incorporated into the fair value estimates. Other significant assets and liabilities that are not considered financial instruments include premises and equipment and deferred tax assets. The estimated fair values of the Corporation’s financial instruments at September 30, 2014 and December 31, 2013 are summarized as follows:

26

	September 30, 2014										December 31, 2013
	Carrying Value		Estimated Fair Value		Level 1		Level 2		Level 3		Carrying Value		Estimated Fair Value
	(Dollars in thousands)
Financial assets
Cash and due from banks, Federal funds sold and interest bearing deposits in other banks	$	36,167	$	36,167	$	36,167	$	—	$	—	$	52,272	$	52,272
Securities	218,847		218,847		—		218,847		—		216,122		216,122
Restricted stock	5,741		5,741		N/A		N/A		N/A		5,741		N/A
Portfolio loans, net	905,082		913,057		—		—		913,057		884,794		884,211
Loans held for sale	1,497		1,523		—		1,541		—		4,483		4,487
Accrued interest receivable	3,714		3,714		—		961		2,753		3,621		3,621
Financial liabilities
Deposits:
Demand, savings and money market	605,102		585,468		—		585,468		—		542,739		542,739
Certificates of deposit	451,682		453,489		—		453,489		—		502,850		504,381
Short-term borrowings	2,674		2,674		—		2,674		—		4,576		4,576
Federal Home Loan Bank advances	46,867		47,413		—		47,413		—		46,708		46,923
Junior subordinated debentures	16,238		21,534		—		21,534		—		16,238		16,778
Accrued interest payable	674		674		—		—		674		789		789

Cash and Cash Equivalents

The carrying amounts of cash and short-term instruments approximate fair values and are classified as either Level 1 or Level 2. As of September 30, 2014 and December 31, 2013, Cash and due from banks, Federal funds sold and interest bearing deposits in other banks were classified as Level 1.

Restricted stock

The Corporation has determined that is not practical to determine the fair value of Restricted stock due to restrictions placed on its transferability. Restricted stock is carried at cost and valued based on the ultimate recoverability of par value.

Loans

Fair values of loans, excluding loans held for sale, are estimated as follows: For variable rate loans that re-price frequently and with no significant change in credit risk, fair values are based on carrying values, resulting in a Level 3 classification. Fair values for other loans are estimated using discounted cash flow analyses, using interest rates then being offered for loans with similar terms to borrowers of similar credit quality, resulting in a Level 3 classification. Impaired loans are valued at the lower of cost or fair value. The methods utilized to estimate the fair value of loans do not necessarily represent an exit price. The fair value of loans held for sale is estimated based upon binding contracts and quotes from third party investors, resulting in a Level 2 classification.

Deposits

The fair values disclosed for demand deposits (e.g., interest and non-interest checking, passbook savings, and certain types of money market accounts) are, by definition, equal to the amount payable on demand at the reporting date (i.e., their carrying amount), resulting in a Level 2 classification. The carrying amounts of variable rate, fixed-term money market accounts and certificates of deposit approximate their fair values at the reporting date, resulting in a Level 2 classification. Fair values for fixed rate certificates of deposit are estimated using a discounted cash flows calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on time deposits, resulting in a Level 2 classification.

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Short-term Borrowings

The carrying amounts of federal funds purchased, borrowings under repurchase agreements, and other short-term borrowings, generally maturing within ninety days, approximate their fair values, resulting in a Level 2 classification.

Other Borrowings

The fair values of the Corporation's long-term borrowings are estimated using discounted cash flow analysis based on the then current borrowing rates for similar types of borrowing arrangements, resulting in a Level 2 classification.

The fair values of the Corporation’s Junior Subordinated Debentures are estimated using discounted cash flow analysis based on the then current borrowing rates for similar types of borrowing arrangements, resulting in a Level 2 classification.

Off-balance Sheet Instruments

Fair values for off-balance sheet, credit-related financial instruments are based on fees then charged to enter into similar agreements, taking into account the remaining terms of the agreements and the counterparties’ credit standing. The fair value of commitments is not material.

The following table presents information about the Corporation’s assets and liabilities measured at fair value on a recurring basis as of September 30, 2014 and December 31, 2013, and the valuation techniques used by the Corporation to determine those fair values.

Description	Fair Value as of September 30, 2014		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(Dollars in thousands)
Securities available for sale:
U.S. Government agencies and corporations	$	59,330	$	—	$	59,330	$	—
Mortgage backed securities: residential	98,554		—		98,554		—
Residential collateralized mortgage obligations	25,152		—		25,152		—
State and political subdivisions	35,811		—		35,811		—
Total	$	218,847	$	—	$	218,847	$	—
Description	Fair Value as of December 31, 2013		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(Dollars in thousands)
Securities available for sale:
U.S. Government agencies and corporations	$	65,388	$	—	$	65,388	$	—
Mortgage backed securities: residential	94,430		—		94,430		—
Residential collateralized mortgage obligations	18,655		—		18,655		—
State and political subdivisions	32,965		—		32,965		—
Preferred Securities	4,684		—		—		4,684
Interest rate swaps	222		—		222		—
Total	$	216,344	$	—	$	211,660	$	4,684

Fair value measurements of U.S. Government agencies, collateralized mortgage obligations, and mortgage backed securities use pricing models that vary and may consider various assumptions, including time value, yield curves, volatility factors, prepayment speeds, default rates, loss severity, current market and contractual prices for the underlying financial instruments, as well as other relevant economic measures (level 2). Fair value of debt securities such as obligations of state and political subdivisions may be determined by matrix pricing. Matrix pricing is a mathematical technique that is used to value

28

debt securities without relying exclusively on quoted prices for specific securities, but rather by relying on the securities relationship to other benchmark quoted prices.

In 2013 the Corporation implemented an interest rate program for commercial loan customers. The interest rate program provides the customer with a fixed rate loan while creating a variable rate asset for the Corporation through the customer entering into an interest rate swap with the Corporation on terms that match the loan. The Corporation offsets its risk exposure by entering into an offsetting interest rate swap with an unaffiliated institution. These interest rate swaps do not qualify as designated hedges, therefore, each swap is accounted for as a standalone derivative. Valuations for interest rate swaps are derived from third-party models whose significant inputs are readily observable market parameters, primarily yield curves, with appropriate adjustments for liquidity and credit risk. These fair value measurements are classified as Level 2.

There were no transfers between Levels 1 and 2 of the fair value hierarchy during the quarters ended September 30, 2014 and December 31, 2013. For the available for sale securities, the Corporation obtains fair value measurements from an independent third-party service or independent brokers.

Certain assets and liabilities are measured at fair value on a nonrecurring basis in accordance with GAAP. The adjustments to fair value generally result from the application of accounting guidance that requires assets and liabilities to be recorded at lower of cost or fair value, or assessed for impairment. The Corporation has assets that, under certain conditions, are subject to measurement at fair value on a nonrecurring basis. At September 30, 2014 and December 31, 2013, such assets consist primarily of impaired loans and other property. The Corporation has estimated the fair values of these assets using Level 3 inputs, specifically discounted cash flow projections and market comparable pricing.

The following table presents the balances of assets and liabilities measured at fair value on a nonrecurring basis:

September 30, 2014	Quoted Market Prices in Active Markets (Level 1)	Internal Models with Significant Observable Market Parameters (Level 2)	Internal Models with Significant Unobservable Market Parameters (Level 3)
	(Dollars in thousands)
Impaired Loans:
Commercial real estate			$	1,334
Total			$	1,334

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December 31, 2013	Quoted Market Prices in Active Markets (Level 1)	Internal Models with Significant Observable Market Parameters (Level 2)	Internal Models with Significant Unobservable Market Parameters (Level 3)
	(Dollars in thousands)
Impaired Loans:
Commercial real estate			$	11,241
Commercial			289
Residential real estate			5,231
Home equity loans			4,464
Indirect			443
Consumer			318
Total			$	21,986
Other real estate owned:
Commercial real estate			$	304
Residential real estate			275
Total			$	579

Impaired loans:    Impaired loans that are measured for impairment using the fair value of the collateral for collateral dependent loans, had a principal balance of $2,036, with a valuation allowance of $702 at September 30, 2014, resulting in a reduction to provision for loan losses of $69 and $162 for the three and nine month period ended September 30, 2014. At September 30, 2013, impaired loans measured for impairment using the fair value of the collateral for collateral dependent loans, had a principal balance of $5,924, with a valuation allowance of $1,546, resulting in a reduction to provision for loan losses of $124 and $127 for the three and nine month period ended September 30, 2013.

Appraisals for both collateral-dependent impaired loans and real estate owned are performed by certified general appraisers (for commercial properties) or certified residential appraisers (for residential properties) whose qualifications and licenses have been reviewed and verified by the Corporation. Once received, the Corporation reviews the assumptions and approaches utilized in the appraisal as well as the overall resulting fair value in comparison with independent data sources such as recent market data or industry-wide statistics. On a periodic basis, the Company compares the actual selling price of collateral that has been sold to the most recent appraised value to determine what additional adjustment should be made to the appraisal value to arrive at fair value.

Fair value adjustments for these items typically occur when there is evidence of impairment. Loans are designated as impaired when, in the judgment of management based on current information and events, it is probable that all amounts due according to the contractual terms of the loan agreement will not be collected. The measurement of loss associated with impaired loans can be based on either the observable market price of the loan or the fair market value of the collateral. The Corporation measures fair value based on the value of the collateral securing the loans. Collateral may be in the form of real estate or personal property including equipment and inventory. The vast majority of collateral is real estate. The value of the collateral is determined based on internal estimates as well as third party appraisals or non-binding broker quotes. These measurements were classified as Level 3.

Other Real Estate:    Other real estate includes foreclosed assets and properties securing residential and commercial loans. Assets acquired through or instead of loan foreclosure are initially recorded at fair value less costs to sell when acquired, establishing a new cost basis. These assets are subsequently accounted for at lower of cost or fair value less estimated costs to sell. Fair value is commonly based on recent real estate appraisals which are updated no less frequently than annually. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value.

Foreclosed assets are adjusted to fair value less costs to sell upon transfer of the loans to foreclosed assets. Subsequently, foreclosed assets are carried at lower of carry value or fair value less costs to sell. Fair value is generally based upon internal estimates and third party appraisals or non-binding broker quotes and, accordingly, considered a Level 3 classification.

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The following table presents additional quantitative information about assets measured at fair value on a

nonrecurring basis for which the Corporation has utilized Level 3 inputs to determine fair value (dollars in thousands).

Asset	Fair Value	Valuation Technique	Unobservable Input
Collateral dependent impaired loans	$1,334	Sales comparison approach	Adjustment for differences between the comparable sales with a 15% 20% cost to sell adjustment

Changes in Level 3 Fair Value Measurements

There were no assets measured at fair value on a recurring basis using significant unobservable inputs that were transferred to Level 3 as of or during the nine months ended September 30, 2014.

(12)    Share-Based Compensation

A broad-based stock incentive plan, the 2006 Stock Incentive Plan, was adopted by the Corporation’s shareholders on April 18, 2006 and was amended and restated on May 2, 2012. Awards granted under this Plan as of September 30, 2014 were stock options granted in 2007, 2008, 2009, 2012 and 2013 and long-term restricted shares issued in 2010, 2011, 2012 and 2013. In addition, the Corporation has nonqualified stock option agreements outside of the 2006 Stock Incentive Plan. Grants under the nonqualified stock option agreements were made from 2005 to 2007.

Stock Options

During the nine months ended September 30, 2014, the Corporation granted 117,000 stock options to certain employees. All outstanding stock options were granted at an exercise price equal to the fair value of the common stock on the date of grant. The maximum option term is ten years and the options generally vest over three years as follows: one-third of the underlying shares vest on each the first, second and third anniversaries of the grant date.

The Corporation recognizes compensation expense for awards with a graded vesting schedule on a straight-line basis over the requisite service period for the entire award. The expense recorded for stock options was $71 and $26 for the three months ended September 30, 2014 and 2013, and $131 and $52 for the nine months ended September 30, 2014 and 2013, respectively.

The following table summarizes the Corporation's stock options outstanding at September 30, 2014:

	Outstanding		Exercisable
	Number	Weighted Average Remaining Contractual Life (Years)	Number	Weighted Average Exercise Price
Range of Exercise Prices
$5.34-$5.39	37,500	7.16	25,833	$	5.39
$9.07-$9.56	126,530	8.66	41,066	9.19
$11.03	109,500	9.64	—	—
$12.12	7,500	9.82	—	—
$14.47	78,000	3.35	78,000	14.47
$16.00-$16.50	32,500	2.22	32,500	16.04
$19.10	30,000	1.34	30,000	19.10
$19.17	30,000	0.34	30,000	19.17
Outstanding at end of period	451,530	6.37	237,399	$	13.96

31

A summary of the status of stock options for the nine month periods ended September 30, 2014 and 2013 is presented in the table below:

	September 30,				September 30,
	2014				2013
	Options		Weighted Average Exercise Price per Share		Options	Weighted Average Exercise Price per Share
Outstanding at beginning of period	337,696		$	12.43	232,000	$	14.50
Granted	117,000		11.10		137,363	9.18
Forfeited or expired	(1,500	)	14.47		—	—
Exercised	(1,666	)	9.56		—	—
Stock dividend or split	—		—		—	—
Outstanding at end of period	451,530		$	12.08	369,363	$	12.52
Exercisable at end of period	239,065		$	13.93	208,667	$	15.52

The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying stock options and the quoted price of the Corporation's common stock for those awards that have an exercise price then below the closing price. As of September 30, 2014, the Corporation had outstanding options to purchase an aggregate of 282,696 shares with an exercise price below the closing price of the Corporation's stock, resulting in an aggregate intrinsic value of $1,362.

For the third quarter 2014, the per share weighted-average fair value of stock options granted was $3.57 compared to $2.35 for the third quarter 2013. The per share weighted-average fair value of stock options granted during the first nine months of 2014 and 2013 was $3.24 and $2.15, respectively, on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions:

	Three Months Ended September 30,				Nine Months Ended September 30
	2014		2013		2014		2013
Dividend Yield	2.15	%	3.03	%	2.22	%	3.07	%
Expected volatility	34.47	%	32.54	%	34.49	%	32.60	%
Risk-free interest rate	2.18	%	1.98	%	2.07	%	1.37	%

Restricted Shares

Shares of long-term restricted stock generally vest in two equal installments on the second and third anniversaries of the date of grant, or upon the earlier death or disability of the recipient or a qualified change of control of the Corporation. The expense recorded for long-term restricted stock was $35 and $52 for the three months ended September 30, 2014 and 2013, respectively. For the nine months ended September 30, 2014 and 2013 the expense recorded was $107 and $173, respectively.

The market price of the Corporation’s common shares at the date of grant is used to estimate the fair value of long-term restricted stock. A summary of the status of outstanding restricted shares at September 30, 2014 is presented in the table below:

	Nonvested Shares		Weighted Average Grant Date Fair Value
Nonvested at January 1, 2014	83,355		$	5.86
Granted	—		—
Vested	(44,803	)	5.35
Forfeited or expired	—		—
Nonvested at September 30, 2014	38,552		$	6.45

32

Stock Appreciation Rights (“SARS”)

In 2006, the Corporation issued an aggregate of 30,000 SARS at $19.00 per share, 15,500 of which have expired due to employee terminations. The SARS vest over three years as follows: one-third of the underlying shares on each of the first, second and third anniversaries of the grant date. Any unexercised portion of the SARS shall expire at the end of the stated term which is specified at the date of grant and shall not exceed ten years. The term of the SARS issued in 2006 will expire in January 2016. The expense recorded for SARS for the nine months ended September 30, 2014, was $0 and for 2013 was $10.

(13) Accumulated Other Comprehensive Income (Loss)

The following table details the change in the components of the Corporation’s accumulated other comprehensive income (loss) for the three and nine months ended September 30, 2014 and 2013:

	Three Months Ended September 30, 2014									Nine Months Ended September 30, 2014
	Unrealized securities gains and losses			Pension and post- retirement costs			Total			Unrealized securities gains and losses			Pension and post- retirement costs			Total
Balance at the beginning of the period	$	(637	)	$	(1,296	)	$	(1,933	)	$	(3,892	)	$	(1,296	)	$	(5,188	)
Amounts recognized in other comprehensive income, net of taxes of $246 and $1,926	481			—			481			3,733			—			3,733
Reclassified amounts out of accumulated other comprehensive income, net of tax	—			—			—			(3		)	—			(3		)
Balance at the end of the period	$	(156	)	$	(1,296	)	$	(1,452	)	$	(156	)	$	(1,296	)	$	(1,452	)

	Three Months Ended September 30, 2013									Nine Months Ended September 30, 2013
	Unrealized securities gains and losses			Pension and post- retirement costs			Total			Unrealized securities gains and losses			Pension and post- retirement costs			Total
Balance at the beginning of the period	$	(536	)	$	(2,055	)	$	(2,591	)	$	3,295		$	(2,055	)	$	1,240
Amounts recognized in other comprehensive income, net of taxes of $1,197 and $3,110	(2,324		)	—			(2,324		)	(6,038		)	—			(6,038		)
Reclassified amounts out of accumulated other comprehensive income, net of tax of $60	—			—			—			117			—			117
Balance at the end of the period	$	(2,860	)	$	(2,055	)	$	(4,915	)	$	(2,860	)	$	(2,055	)	$	(4,915	)

33

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following commentary presents a discussion and analysis of the Corporation’s financial condition and results of operations by its management (“Management”). This Management’s Discussion and Analysis (“MD&A”) section discusses the financial condition and results of operations of the Corporation for the three and nine months ended September 30, 2014. This MD&A should be read in conjunction with the financial information contained in the Corporation’s Form 10-K for the fiscal year ended December 31, 2013, and in the accompanying consolidated financial statements and notes contained in this Form 10-Q. The objective of this financial review is to enhance the reader’s understanding of the accompanying tables and charts, the consolidated financial statements, notes to the financial statements and financial statistics appearing elsewhere in the report. Where applicable, this discussion also reflects Management’s insights as to known events and trends that have or may reasonably be expected to have a material effect on the Corporation’s operations and financial condition.

Summary (Dollars in thousands, except per share data)

LNB Bancorp, Inc. (the “Corporation”) is a diversified banking services company headquartered in Lorain, Ohio. It is organized as a bank holding company under the Bank Holding Company Act of 1956, as amended (the “BHC Act”). Its predecessor, The Lorain Banking Company, was a state chartered bank founded in 1905. It merged with the National Bank of Lorain in 1961, and in 1984 became a wholly-owned subsidiary of LNB Bancorp, Inc.

The Corporation engages in lending and depository services, investment services, and other traditional banking services. These services are generally offered through the Corporation's wholly-owned subsidiary, The Lorain National Bank (the “Bank”).

The primary business of the Bank is providing personal, mortgage and commercial banking products, along with investment management and trust services. The Lorain National Bank operates through 20 retail-banking locations and 28 automated teller machines (“ATM's”) in Lorain, Erie, Cuyahoga and Summit counties in the Ohio communities of Lorain, Elyria, Amherst, Avon, Avon Lake, LaGrange, North Ridgeville, Oberlin, Olmsted Township, Vermilion, Westlake and Hudson, as well as a business development office in Cuyahoga County. The Bank also operates an office in Columbus, Ohio that specializes in originating Small Business Administration (SBA) related loans.

Net income for the third quarter 2014 was $2,086 compared to $1,519 for the same period one year ago. Net income available to common shareholders for the third quarter 2014 was $2,086, or $0.22 per diluted common share, compared to $1,410, or $0.15 per diluted common share, for the third quarter 2013. The increase in net income for both the quarter and nine months ended September 30, 2014 was due primarily to higher noninterest income and lower provision for loan losses.

Net interest income on a fully taxable equivalent (FTE) basis for the third quarter 2014 was $9,135, an increase of 2.2%, compared to $8,934 for the third quarter 2013. The net interest margin FTE, determined by dividing tax equivalent net interest income by average assets, for the third quarter 2014 was 3.15% compared to 3.13% for the third quarter 2013.

The provision for loan losses was $720 for the quarter ended September 30, 2014 compared to $950 for the quarter ended September 30, 2013. Credit quality showed a marked improvement in the quarter as provision for loan losses declined 25.0% year over year to $2,513. See Item 1. Financial Statements - Note 5: Loans and Allowance for Loan Losses and Table 9: Analysis of Allowance for Loan Losses of this MD&A for further details.

Noninterest income was $3,361 for the third quarter 2014 compared to $2,466, or a 36.3% increase, when compared to the third quarter 2013. The increase was largely attributed to gain on the sale of SBA loans, which offset a decrease in mortgage banking income. Noninterest income for the nine months ended September 30, 2014 was $9,524 compared to $8,870, or a 7.4% increase, when compared to the nine months ended September 30, 2013.

Noninterest expense for the third quarter 2014 was $8,818, an increase of $517, or 6.2%, when compared to noninterest expense of $8,301 for the same period one year ago. The majority of the increase in noninterest expense was due to an increase in salaries and employee benefits related to an investment made in revenue generating personnel. Noninterest expense for the nine months ended September 30, 2014 was $26,475 compared to $26,204 for the same nine month period in 2013.

During the third quarter 2014, loans increased slightly as total portfolio loans ended at $922,514, a 2.2% increase, compared to $902,299 at December 31, 2013. Total assets for the third quarter 2014 ended at $1,241,099 compared to $1,230,257 at December 31, 2013, an increase of $10,842, or 0.9%. Total deposits grew to $1,056,784 at September 30, 2014, an increase of 1.1%, from $1,045,589 at December 31, 2013.

The Corporation continues to improve credit metrics. The Corporation’s non-performing loans totaled $18,193 at September 30, 2014, or 1.97% of total loans, a decrease from $21,986, or 2.44% of total loans, at December 31, 2013, and a decrease from $24,976, or 2.80% of total loans, in the third quarter 2013.

34

The allowance for possible loan losses was $17,432 at September 30, 2014, compared to $17,505 at December 31, 2013, and constituted 1.89% of total portfolio loans at September 30, 2014, compared to 1.94% of total portfolio loans at December 31, 2013. The ratio of annualized net charge-offs to average loans at September 30, 2014 was 0.38% compared to 0.51% at December 31, 2013, and 0.48% at September 30, 2013.

Table 1: Condensed Consolidated Average Balance Sheets

Interest, Rate, and Rate/ Volume differentials are stated on a Fully-Tax Equivalent (FTE) Basis.

Table 1 presents the condensed consolidated average balance sheets for the three months ended September 30, 2014 and 2013.

	Three Months Ended September 30,
	2014								2013
	Average Balance			Interest			Rate		Average Balance			Interest			Rate
	(Dollars in thousands)
Assets:
U.S. Govt agencies and corporations	$	182,694		$	1,006		2.18	%	$	189,449		$	953		2.00	%
State and political subdivisions	35,097			444			5.02		32,780			432			5.23
Federal funds sold and short-term investments	7,633			6			0.29		14,673			7			0.19
Restricted stock	5,741			66			4.59		5,741			69			4.80
Commercial loans	500,785			5,399			4.28		484,063			5,395			4.42
Residential real estate loans	45,895			602			5.20		49,718			634			5.06
Home equity lines of credit	113,360			1,079			3.78		107,579			1,027			3.79
Installment loans	260,372			1,907			3.13		246,692			1,946			3.13
Total Earning Assets	$	1,151,577		$	10,509		3.62	%	$	1,130,695		$	10,463		3.67	%
Allowance for loan loss	(17,639		)						(18,028		)
Cash and due from banks	28,436								35,772
Bank owned life insurance	19,764								19,018
Other assets	46,631								46,045
Total Assets	$	1,228,769							$	1,213,502
Liabilities and Shareholders’ Equity:
Consumer time deposits	$	383,278		$	791		0.82	%	$	432,751		$	1,001		0.92	%
Public time deposits	71,859			132			0.73		69,847			123			0.70
Savings deposits	128,305			11			0.03		123,328			11			0.03
Money market accounts	136,279			72			0.21		104,443			45			0.17
Interest-bearing demand	163,992			20			0.05		166,568			20			0.05
Short-term borrowings	4,263			20			1.71		1,735			—			0.05
FHLB advances	46,843			158			1.34		46,636			158			1.35
Junior subordinated debentures	16,324			170			4.14		16,328			171			4.15
Total Interest-Bearing Liabilities	$	951,143		$	1,374		0.57	%	$	961,636		$	1,529		0.63	%
Noninterest-bearing deposits	160,308								139,212
Other liabilities	5,924								4,629
Shareholders’ Equity	111,394								108,025
Total Liabilities and Shareholders’ Equity	$	1,228,769							$	1,213,502
Net Yield on Earning Assets (FTE)				$	9,135		3.15	%				$	8,934		3.13	%
Taxable Equivalent Adjustment				(159		)	(0.06	)				(159		)	(0.05	)
Net Interest Income Per Financial Statements				$	8,976							$	8,775
Net Yield on Earning Assets							3.09	%							3.08	%

Note: Interest income on tax-exempt securities and loans has been adjusted to a fully-taxable equivalent basis. Nonaccrual loans have been included in the average balances.

35

Results of Operations (Dollars in thousands except per share data)

Three Months Ended September 30, 2014 versus Three Months Ended September 30, 2013 Net Interest Income Comparison

Net interest income is the difference between interest income earned on interest-earning assets and the interest expense paid on interest-bearing liabilities. Net interest income is the Corporation’s principal source of revenue, accounting for 72.8% of the Corporation’s revenues for the three months ended September 30, 2014. The amount of net interest income is affected by changes in the volume and mix of earning assets and interest-bearing liabilities, the level of rates earned or paid on those assets and liabilities and the amount of loan fees earned. The Corporation reviews net interest income on a fully taxable equivalent (FTE) basis, which presents interest income with an adjustment for tax-exempt interest income on an equivalent pre-tax basis assuming a 34% statutory Federal tax rate. These rates may differ from the Corporation’s actual effective tax rate. The net interest margin is net interest income as a percentage of average earning assets.

Net interest income was $8,976 for the third quarter 2014 compared to $8,775 during the same quarter of 2013, an increase of 2.3%. The increase in net interest income was achieved largely through lower cost of funds, as total interest expense decreased $155, or 10.1%, year over year. Lower total interest expense is due primarily to the extended low interest rate environment that continued in the third quarter. Adjusting for tax-exempt income, net interest income FTE for the third quarter of 2014 and 2013 was $9,135 and $8,934, respectively. The net interest margin FTE, determined by dividing tax equivalent net interest income by average earning assets, was 3.15% for the three months ended September 30, 2014, compared to 3.13% for the three months ended September 30, 2013.

Average earning assets for the third quarter of 2014 were $1,151,577, an increase of $20,882, or 1.8%, compared to $1,130,695 for the third quarter of last year. The yield on average loans during the third quarter of 2014 was 3.87%, which was 15 basis points lower than the 4.02% yield on average loans during the third quarter of 2013. The decrease is primarily the result of newer loans originated at lower market yields. Interest income from securities was $1,450 (FTE) for the three months ended September 30, 2014, compared to $1,385 during the third quarter of 2013. The yield on average securities increased to 2.64% from 2.47%, respectively, for these periods. The increase in interest income from securities is primarily the result of an increase in long-term interest rates year over year which led to a decrease in prepayments within the Corporation's mortgage-backed securities portfolio.

The cost of interest-bearing liabilities was 0.57% during the third quarter of 2014 compared to 0.63% during the same period in 2013. This decrease was primarily due to the sustained low interest rate environment and strong growth on noninterest-bearing accounts. Average noninterest-bearing accounts were $160,308 for the third quarter of 2014, an increase of 15.2%, compared to $139,212 for the same period a year ago. Total average interest-bearing liabilities were $951,143 for the quarter ended September 30, 2014, a decrease of $10,493, or 1.1%, compared to the quarter ended September 30, 2013. The average cost of trust preferred securities was 4.14% for the third quarter of 2014, compared to 4.15% for the third quarter of 2013. One half of the Corporation’s outstanding trust preferred securities accrued dividends at a fixed rate of 6.64%, and the other half accrued dividends at LIBOR plus 1.48%, which was 1.71% as of September 30, 2014.

Net interest income may also be analyzed by comparing the volume and rate components of interest income and interest expense. Table 2 is an analysis of the changes in interest income and expense between the quarters ended September 30, 2014 and September 30, 2013. The table is presented on a fully tax-equivalent basis.

36

Table 2: Rate/Volume Analysis of Net Interest Income (FTE)

	Three Months Ended September 30,
	Increase (Decrease) in Interest Income/Expense  in 2014 over 2013
	Volume			Rate			Total
	(Dollars in thousands)
U.S. Govt agencies and corporations	$	(37	)	$	90		$	53
State and political subdivisions	29			(17		)	12
Federal funds sold and short-term investments	(6		)	5			(1		)
Restricted stock	—			(3		)	(3		)
Commercial loans	180			(176		)	4
Residential real estate loans	(50		)	18			(32		)
Home equity lines of credit	55			(3		)	52
Installment loans	100			(139		)	(39		)
Total Interest Income	271			(225		)	46
Consumer time deposits	(102		)	(108		)	(210		)
Public time deposits	4			5			9
Savings deposits	—			—			—
Money market accounts	17			10			27
Interest-bearing demand	—			—			—
Short-term borrowings	12			8			20
FHLB advances	1			(1		)	—
Junior subordinated debenture	—			(1		)	(1		)
Total Interest Expense	(68		)	(87		)	(155		)
Net Interest Income (FTE)	$	339		$	(138	)	$	201

Net interest income (FTE) for the third quarter2014 was $9,135 compared to $8,934 for the third quarter 2013, an increase of $201, or 2.2%. This increase is primarily attributed to the improvement in the Corporation's investment portfolio. Interest income on securities of U.S. Government agencies and corporations increased $53, of which $90 is attributed to higher rates, while lower volume accounted for a decrease of $37. The extended period of low interest rates has generally resulted in less premium amortization and a decrease in the number of agency securities being called.

Interest income on commercial loans increased $4 in the third quarter of 2014 compared to the same quarter last year. The increase in commercial loan volume of $180 was offset by the rate decrease of $176. The decrease in rate is largely the result of continued competitive pressure among financial services companies. Interest income on residential real estate loans decreased by $32 in the third quarter of 2014 compared to the same quarter last year, of which, $50 increase is attributed to volume offset by $18 attributed to rate. The decrease is reflective of mortgage lending volumes, particularly refinancing activity slowing considerably as mortgage rates have risen year over year. Interest income on installment loans decreased $39 in the third quarter of 2014 compared to the same quarter last year, with a decrease in rate of $139, which was offset by an increase in volume of $100. The decrease was largely the result of the continued lower interest rate environment and the competitive nature of indirect lending.

The $210 decrease in interest expense for consumer time deposits in the third quarter of 2014 compared to the same quarter last year was primarily due to lower market interest rates, as existing accounts continued to renew at lower market interest rates. The decrease in overall interest expense is largely due to the maturity of higher-rate deposit certificates and a more favorable mix of lower cost deposits. Total interest expense decreased $155, with the decrease being attributed to a $87 decrease due to rate and a decrease of $68 due to volume.

37

Table 3: Condensed Consolidated Average Balance Sheets

Interest, Rate, and Rate/ Volume differentials are stated on a Fully-Tax Equivalent (FTE) Basis.

Table 3 presents the condensed consolidated average balance sheets for the nine months ended September 30, 2014 and 2013:

	Nine Months Ended September 30,
	2014								2013
	Average Balance			Interest			Rate		Average Balance			Interest			Rate
	(Dollars in thousands)
Assets:
U.S. Govt agencies and corporations	$	185,287		$	3,125		2.25	%	$	186,145		$	2,745		1.97	%
State and political subdivisions	34,294			1,322			5.15		32,755			1,270			5.17
Federal funds sold and short-term investments	12,529			30			0.32		16,785			23			0.18
Restricted stock	5,570			200			4.81		5,741			208			4.83
Commercial loans	497,133			16,384			4.41		488,225			16,385			4.49
Residential real estate loans	46,566			1,787			5.13		52,015			1,997			5.13
Home equity lines of credit	111,648			3,188			3.82		107,316			3,067			3.82
Installment loans	259,024			5,794			2.99		241,700			5,935			3.28
Total Earning Assets	$	1,152,051		$	31,830		3.69	%	$	1,130,682		$	31,630		3.74	%
Allowance for loan loss	(17,527		)						(17,909		)
Cash and due from banks	32,611								36,180
Bank owned life insurance	19,593								18,850
Other assets	46,368								46,536
Total Assets	$	1,233,096							$	1,214,339
Liabilities and Shareholders' Equity
Consumer time deposits	$	394,963		$	2,448		0.83	%	$	436,761		$	3,079		0.94	%
Public time deposits	81,568			409			0.67		66,596			367			0.74
Savings deposits	128,415			34			0.04		122,541			38			0.04
Money market accounts	126,539			180			0.19		106,234			131			0.16
Interest-bearing demand	168,381			60			0.05		164,865			70			0.06
Short-term borrowings	4,251			73			2.28		1,650			1			0.10
FHLB advances	46,790			470			1.34		46,584			469			1.35
Junior subordinated debentures	16,326			508			4.16		16,323			511			4.18
Total Interest-Bearing Liabilities	$	967,233		$	4,182		0.58	%	$	961,554		$	4,666		0.66	%
Noninterest-bearing deposits	152,138								138,763
Other liabilities	4,808								4,344
Shareholders' Equity	108,917								109,678
Total Liabilities and Shareholders' Equity	$	1,233,096							$	1,214,339
Net Yield on Earning Assets (FTE)				$	27,648		3.21	%				$	26,964		3.19	%
Taxable Equivalent Adjustment				(475		)	(0.06	)				(476		)	(0.06	)
Net Interest Income Per Financial Statements				$	27,173							$	26,488
Net Yield on Earning Assets							3.15	%							3.13	%

Note: Interest income on tax-exempt securities and loans has been adjusted to a fully-taxable equivalent basis. Nonaccrual loans have been included in the average balances.

38

Nine Months Ended September 30, 2014 versus Nine Months Ended September 30, 2013 Net Interest Income Comparison

Net interest income is the difference between interest income earned on interest-earning assets and the interest expense paid on interest-bearing liabilities. Net interest income is the Corporation’s principal source of revenue, accounting for 74.0%

of the Corporation’s revenues for the nine months ended September 30, 2014. The amount of net interest income is affected by

changes in the volume and mix of earning assets and interest-bearing liabilities, the level of rates earned or paid on those assets

and liabilities and the amount of loan fees earned. The Corporation reviews net interest income on a fully taxable equivalent

(FTE) basis, which presents interest income with an adjustment for tax-exempt interest income on an equivalent pre-tax basis

assuming a 34% statutory Federal tax rate. These rates may differ from the Corporation’s actual effective tax rate. The net

interest margin is net interest income as a percentage of average earning assets.

Net interest income, before provision for loan losses, was $27,173 for the nine months ended September 30, 2014 compared to $26,488 during the same period of 2013. Adjusting for tax-exempt income, net interest income FTE, for the third quarter 2014 and 2013 was $27,648 and $26,964, respectively. The net interest margin FTE, determined by dividing tax equivalent net interest income by average earning assets, was 3.21% for the nine months ended September 30, 2014 compared to 3.19% for the nine months ended September 30, 2013. The slight increase is primarily attributed to better returns on the Corporation's investment portfolio year-over-year.

Average earning assets for the first nine months of 2014 were $1,152,051. This represents an increase of $21,369, or 1.9%, compared to the same period last year. Due primarily to the extended period of lower market interest rates that continued through the first nine months of 2014, the yield on average earning assets was 3.69% in the first nine months of 2014 compared to 3.74% for the same period last year. The yield on average loans during the first nine months of 2014 was 3.97%, which is 15 basis points lower than that of the first nine months of 2013 at 4.12%. The decrease in yield on loans is primarily due to the Corporation electing to hold in its portfolio additional high quality low interest rate indirect auto loans. Interest income from securities was $4,447 (FTE) for the first nine months ended September 30, 2014, compared to $4,015 during the same period of 2013. The yield on average securities was 2.71% and 2.45% for these periods, respectively.

The cost of interest-bearing liabilities was 0.58% during the first nine months of 2014 compared to 0.66% during the same period in 2013. The decrease is largely the result of a favorable deposit mix when compared to the same period one year ago. Average consumer time deposits decreased by $41,798, or 9.6%, and average money market accounts increased by $20,305, or 19.1%. Overall total average interest-bearing liabilities as of September 30, 2014 increased $5,679, or 0.6%, compared to Septmeber 30, 2013. The average cost of trust preferred securities was 4.16% for the first nine months of 2014, compared to 4.18% for the first nine months of 2013.

39

Net interest income may also be analyzed by comparing the volume and rate components of interest income and interest expense. Table 4 is an analysis of the changes in interest income and expense between the nine months ended September 30, 2014 and September 30, 2013. The table is presented on a fully tax-equivalent basis:

Table 4: Rate/Volume Analysis of Net Interest Income (FTE)

	Nine Months Ended September 30,
	Increase (Decrease) in Interest Income/Expense in 2014 over 2013
	Volume			Rate			Total
	(Dollars in thousands)
U.S. Govt agencies and corporations	$	(14	)	$	394		$	380
State and political subdivisions	59			(7		)	52
Federal funds sold and short-term investments	(10		)	17			7
Restricted stock	(6		)	(2		)	(8		)
Commercial loans	294			(295		)	(1		)
Residential real estate loans	(209		)	(1		)	(210		)
Home equity lines of credit	124			(3		)	121
Installment loans	390			(531		)	(141		)
Total Interest Income	628			(428		)	200
Consumer time deposits	(258		)	(373		)	(631		)
Public time deposits	75			(33		)	42
Savings deposits	2			(6		)	(4		)
Money market accounts	29			20			49
Interest-bearing demand	1			(11		)	(10		)
Short-term borrowings	45			27			72
FHLB advances	3			(2		)	1
Trust preferred securities	—			(3		)	(3		)
Total Interest Expense	(103		)	(381		)	(484		)
Net Interest Income (FTE)	$	731		$	(47	)	$	684

Net interest income (FTE) for the nine months ended 2014 and 2013 was $27,648 and $26,964, respectively. Interest income (FTE) for the nine months ended September 30, 2014 increased $684 in comparison to the same period in 2013. The increase was primarily attributed to better performance in the Corporation's investment portfolio, specifically U.S. Government agencies and corporation securities, with a total increase of $380 of which $394 was due to rate offset by $14 decrease in volume. The higher long-term rates year-over-year has led to a slowdown in prepayments within the Corporation's mortgage backed securities, which resulted in higher yields.

Total interest expense for the nine months ended 2014 decreased $484 compared to the nine months ended 2013 of which $381 was due to rate and $103 was due to volume. The favorable decrease was due primarily to consumer time deposits decreasing $631 of which $373 was due to rate and $258 was due to volume. Similarly, the decrease is primarily the result of an overall favorable deposit mix when compared to the same period one year ago. Interest expense has benefited from the continued low interest rate environment with higher cost funds being replaced with lower cost deposits.

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Noninterest Income

Table 5: Details of Noninterest Income

	Three Months Ended September 30,					Nine Months Ended September 30,
	2014		2013			2014			2013
	(Dollars in thousands)					(Dollars in thousands)
Investment and trust services	$	425	$	363		$	1,281		$	1,178
Deposit service charges	850		923			2,469			2,608
Other service charges and fees	771		820			2,262			2,459
Income from bank owned life insurance	172		174			514			512
Other income	71		(218		)	328			335
Total fees and other income	2,289		2,062			6,854			7,092
Securities gains & losses, net	—		—			(5		)	178
Gain on sale of loans	1,056		374			2,649			1,617
Gain or loss on sale of other assets, net	16		30			26			(17		)
Total noninterest income	$	3,361	$	2,466		$	9,524		$	8,870

Three Months Ended September 30, 2014 versus Three Months Ended September 30, 2013 Noninterest Income Comparison

Total fees and other income for the three months ended September 30, 2014 was $2,289, a increase of $227, or 11.0%, from $2,062 for the same period in 2013. The Corporation utilizes derivatives as a part of its risk management strategy in conducting its mortgage activities. Consequently, changes in fair value of the instruments, both gains and losses, of the instruments are recorded in the Consolidated Statements of Income in other income. The increase of $289, or 132.6%, in other income from the third quarter of 2014 compared to the third quarter of 2013 is primarily the result of changes in the fair value of mortgage interest rate-locked pipeline loans. Interest rate-locked pipeline loans significantly decreased year-over-year as an increase in mortgage interest rates led to a significant reduction in refinancing activity in the mortgage market.

For the three months ended September 30, 2014, deposit service charges were $850 compared to $923 for the same period one year ago. For the three months ended September 30, 2014, other service charges and fees decreased to $771 from $820 for the same period in 2013. Income earned on investment and trust services for the third quarter of 2014 increased $62 compared to the third quarter of 2013.

Gain on the sale of loans was $1,056 for the third quarter of 2014, compared to $374 for the third quarter of 2013, an increase of $682 or 182.4%. The increase in gain on the sale of loans was due largely to the sale of Small Business Administration (SBA) loans. The Corporation continued to see great momentum in the SBA lending team as reflected by the year over year increase noninterest income. Sales of other assets resulted in a gain of $16 for the three months ended September 30, 2014 compared to a gain of $30 for the same period one year ago. Generally, sales of other assets included bank owned property.

Nine Months Ended September 30, 2014 versus Nine Months Ended September 30, 2013 Noninterest Income Comparison

Total fees and other income for the nine months ended September 30, 2014 was $6,854, a decrease of $238, or 3.4%, over the same period of 2013. Income earned on investment and trust services for the nine months ended September 30, 2014 and 2013 was $1,281 and $1,178, respectively. Deposit service charges decreased $139, from $2,608 for the nine months ended September 30, 2013, to $2,469 for the nine months ended September 30, 2014. Fees from electronic banking were $2,262 for the nine months ended September 30, 2014, compared to $2,459 for the same period last year, a decrease of $197, or 8.0%.

Losses on the sale of securities was $5 for the nine months ended September 30, 2014, compared to a $178 gain for the nine months ended September 30, 2013, a decrease of $183, or 102.8%. Gain on the sale of loans for the nine months ended September 30, 2014 was $2,649, an increase of $1,032, or 63.8%, from the nine months ended September 30, 2013.

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The following table details the gain on the sale of loans recognized for the three and nine months ended September 30, 2014 and 2013:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2014		2013		2014		2013
	(Dollars in thousands)
Gain on sale of mortgage loans	$	159	$	224	$	493	$	1,298
Gain on sale of indirect auto consumer loans	157		107		381		276
Gain on sale of SBA loans	740		43		1,775		43
	$	1,056	$	374	$	2,649	$	1,617

As noted above, the Corporation experienced a decrease in the demand for mortgage lending, primarily in the refinancing market, due to rising interest rates year over year. As a result, the gain on the sale of mortgage loans for the nine months ended September 30, 2014 decreased $805, or 62.0%. For the three months ended September 30, 2014, the mortgage market continued to lag with the Corporation's gain on sale of mortgage loans ending at $159, compared to $224 for the three months ended September 30, 2013. This decrease in the gain on sale of mortgage loans was offset by the SBA lending team generating over $29 million in loans, which resulted in a gain on sale of $1,775 in the nine months ended September 30, 2014. The gain on sale of SBA loans for the three months ended September 30, 2014 was $740. The Corporation retains the unguaranteed portion of these loans and sells the guaranteed portion of these loans. In the third quarter2014, gain on the sale of indirect auto consumer loans was $157 compared to $107 for the third quarter of 2013. The of $50, or 46.7%, from the third quarter 2013 to the third quarter 2014 and $105, or 38.0%, from the first nine months of 2013 to the first nine months of 2014, is due primarily to the continued strength in the auto industry and the Corporation's strategy of electing to sell more indirect auto consumer loans.

Noninterest Expense

Table 6: Details on Noninterest Expense

	Three Months Ended September 30,				Nine Months Ended September 30,
	2014		2013		2014		2013
	(Dollars in thousands)
Salaries and employee benefits	$	4,649	$	4,200	$	13,754	$	13,451
Furniture and equipment	1,200		1,076		3,525		3,159
Net occupancy	568		564		1,784		1,701
Professional fees	421		337		1,341		1,413
Marketing and public relations	333		300		1,123		938
Supplies, postage and freight	243		228		675		809
Telecommunications	164		164		477		501
Ohio franchise tax	224		304		671		914
Intangible asset amortization	34		35		101		102
FDIC assessments	255		293		788		773
Other real estate owned	5		155		66		280
Loan and collection expense	331		268		1,001		1,030
Other expense	391		377		1,169		1,133
Total Noninterest Expense	$	8,818	$	8,301	$	26,475	$	26,204

Three Months Ended September 30, 2014 versus Three Months Ended September 30, 2013 Noninterest Expense Comparison

Noninterest expense for the third quarter of 2014 increased $517, or 6.2%, compared to the same period of 2013. Salaries and employee benefits expense increased $449, or 10.7%, compared to the same period one year ago due to the increase in staffing levels in revenue producing areas, specifically the SBA lending personnel. Furniture and equipment

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expense increased $124, or 11.5%, compared to the same period one year ago primarily due to an increase in data processing expense with the introduction of mobile banking. Marketing and public relations expense in the third quarter 2014 increased $33, or 11.0%, compared to the same period one year ago. The increase was primarily due to the Corporation's communication and advertising for mobile banking, the SBA lending program and the implementation of new checking account products. Professional fees increased $84, or 24.9%, compared to the same period one year ago. The increase in professional fees is attributed to the purchase of a branch that settled in the third quarter of 2014. Taxes due in the state of Ohio decreased $80 in the third quarter 2014, or 26.3%, compared to same period one year ago. This was due to state legislation changes resulting in a favorable change in the calculation for community banks from an equity based method to an asset based method.

Nine Months Ended September 30, 2014 versus Nine Months Ended September 30, 2013 Noninterest Expense Comparison

Salaries and employee benefit costs remained the Corporation's largest noninterest expense, accounting for more than half of total noninterest expense for the nine months ended September 30, 2014. Total noninterest expense for the nine months ended September 30, 2014 increased by $271, or 1.0%, compared to the nine months ended September 30, 2013. Salaries and employee benefits increased $303, or 2.3%. Furniture and equipment cost increased $366, or 11.6%, primarily due to an increase in internet-based banking cost with customers completing a larger percentage of their transactions using debit cards and internet banking services. Marketing and public relations expense increased $185 or 19.7%. The increase was primarily due to the Corporation's communication and advertising for mobile banking, the SBA lending program and the implementation of a relationship checking account product that offers rewards as the customer's relationship with the Bank grows. Loan and collection and other real estate owned expenses improved year over year as management continued to work diligently to control costs incurred on foreclosed assets.

Income taxes

Three Months Ended September 30, 2014 versus Three Months Ended September 30, 2013 Income Taxes Comparison

The Corporation recognized income tax expense of $713 and $471 for the third quarter 2014 and 2013, respectively. The increase in the Corporation’s effective tax rate to 25.5% at September 30, 2014, from 23.7% at September 30, 2013, compared to the Federal statutory tax rate of 34%, was due to higher pre-tax income in the third quarter 2014 compared to the same quarter in 2013. Included in net income for the three months ended September 30, 2014, and September 30, 2013, was $499 and $499 of nontaxable income, respectively, which was comprised of $140 and $142, respectively, related to life insurance policies and $359 and $357, respectively, of tax-exempt investment and loan interest income.

Nine Months Ended September 30, 2014 versus Nine Months Ended September 30, 2013 Income Taxes Comparison

The Corporation recognized income tax expense of $1,994 and $1,349 for the nine months ended 2014 and 2013, respectively. The effective income tax rate for the nine months ended September 30, 2014 was 25.87% compared to 23.24% for the nine months ended September 30, 2013. Included in net income for the nine months ended September 30, 2014 and September 30, 2013 was $1,483 and $1,481, respectively, of nontaxable income, including $417 and $417, respectively, related to life insurance policies, and $1,066 and $1,064, respectively, of tax-exempt investment and loan interest income.

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Financial Condition

Overview

The Corporation’s total assets at September 30, 2014, were $1,241,099 compared to $1,230,257 at December 31, 2013, an increase of $10,842, or 0.9%. This increase is primarily due to the increase in total deposits. Total deposits at September 30, 2014, were $1,056,784 compared to $1,045,589 at December 31, 2013, an increase of $11,195, or 1.1%. The increase in total deposits was primarily due to increases in savings, money market and interest-bearing demand accounts of $57,372 as well as an increase of $4,991 in demand and other non interest-bearing accounts when compared to December 31, 2013. Time deposits decreased $51,168, or 10.2% from December 31, 2013. The decrease in time deposits is largely the result of less emphasis on renewing maturing certificate of deposit accounts and an increased emphasis on growing checking, money market and savings account products. Other increases to note when compared to December 31, 2013 are in portfolio loans of $20,215 and securities available for sale of $2,725.

Securities

The distribution of the Corporation’s securities portfolio at September 30, 2014 and December 31, 2013, is presented in Note 4 to the Consolidated Financial Statements contained within this Form 10-Q. The Corporation continued to employ the securities portfolio to manage the Corporation’s interest rate risk and liquidity needs. Total securities at September 30, 2014 increased $2,725, or 1.3%, compared to December 31, 2013. As of September 30, 2014, the portfolio was comprised of 97.4% available-for-sale securities and 2.6% restricted stock. Available for sale securities were comprised of 27.1% U.S. Government Agencies and corporations, 45.0% U.S. Agency mortgage-backed securities, 11.5% U.S. collateralized mortgage obligations, and 16.4% municipal securities at September 30, 2014. The available-for-sale securities had a net temporary unrealized loss of $238, representing 0.1% of the total amortized cost of the Corporation's available-for-sale securities.

As with any investment, the yield on an available-for-sale security depends on the purchase price in relation to the interest rate and the length of time the investor's principal remains outstanding. Mortgage-backed security yields are often quoted in relation to yields on treasury securities with maturities closest to the mortgage security's estimated average life. The estimated yield on a mortgage security reflects its estimated average life based on the assumed prepayment rates for the underlying mortgage loans. If actual prepayment rates are faster or slower than anticipated, the investor holding the mortgage security until maturity may realize a different yield. Due to the fluctuating interest rate environment and the flattening of the yield curve, the Corporation focused investment opportunities on short-term duration investments.

At September 30, 2014, the available-for-sale securities portfolio had gross unrealized gains of $2,930 and gross unrealized losses of $3,168. The gross unrealized losses represented 1.4% of the total amortized cost of the Corporation’s available-for-sale securities at September 30, 2014. At September 30, 2014, the Corporation held thirty-four available-for-sale securities with an unrealized loss position for greater than twelve months totaling $3,031. Available-for-sale securities with an unrealized loss position for less than twelve months totaled $137 at September 30, 2014. The unrealized gains and losses at December 31, 2013, were $2,754 and $8,651, respectively. See Note 4 to the Consolidated Financial Statements for further detail.

Loans

The detail of loan balances is presented in Note 5 to the Consolidated Financial Statements contained within this Form 10-Q. Table 7 provides detail by loan segment.

Total portfolio loans at September 30, 2014 were $922,514. This was an increase of $20,215 over total portfolio loans of $902,299 at December 31, 2013. The Corporation strives to achieve a well-diversified loan portfolio. As of September 30, 2014, the Corporation's loan portfolio was as follows: Commercial and commercial real estate loans represented 54.1%, indirect loans represented 23.1%, home equity loans represented 13.6%, residential real estate mortgage loans represented 7.7% and consumer loans represented 1.5% of total portfolio loans at September 30, 2014.

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Table 7: Loan Portfolio Distribution

	September 30, 2014			December 31, 2013			September 30, 2013
	(Dollars in thousands)
Commercial real estate	$	413,625		$	401,591		$	404,031
Commercial	85,543			88,646			79,813
Residential real estate	70,891			66,507			65,397
Home equity loans	125,318			123,076			122,285
Indirect	213,450			206,323			206,349
Consumer	13,687			16,156			13,425
Total Loans	922,514			902,299			891,300
Allowance for loan losses	(17,432)			(17,505)			(17,791)
Net Loans	$	905,082		$	884,794		$	873,509
Loan Mix Percent
Commercial real estate	44.8		%	44.5		%	45.3		%
Commercial	9.3		%	9.8		%	9.0		%
Residential real estate	7.7		%	7.4		%	7.3		%
Home equity loans	13.6		%	13.6		%	13.7		%
Indirect	23.1		%	22.9		%	23.2		%
Consumer	1.5		%	1.8		%	1.5		%
Total Loans	100.0		%	100.0		%	100.0		%

Commercial loans and commercial real estate loans totaled $499,168 at September 30, 2014. This was an increase of $8,931 over December 31, 2013, and an increase of $15,324 from September 30, 2013. Commercial real estate loans are loans secured by commercial real estate properties. Commercial loans are primarily lines-of-credit as well as loans secured by assets other than commercial real estate, generally equipment or other business assets.

Real estate mortgages are 1-4 rate family mortgage loans and construction loans made to individuals. The Corporation generally requires a loan-to-value ratio of 80% or private mortgage insurance for loan-to-value ratios in excess of 80% for real estate mortgages. Construction loans comprised $188 of the $70,891 residential real estate mortgage loan portfolio at September 30, 2014. At September 30, 2014 residential real estate mortgage loans increased by $4,384, or 6.6%, in comparison to December 31, 2013 and increased $5,494, or 8.4%, from September 30, 2013.

Indirect auto loans increased by $7,127, or 3.5%, compared to December 31, 2013, and increased $7,101, or 3.4%, compared to September 30, 2013. The increase was primarily attributable to continued strong demand in the auto sales in the third quarter of 2014. The Corporation currently originates high quality indirect auto loans, defined as loans with borrowers that have personal credit scores that are greater than 750, primarily in Ohio, Kentucky, Indiana, Georgia, North Carolina, Pennsylvania, and Tennessee.

Home equity loans increased $2,242, or 1.8%, when compared to December 31, 2013, and increased $3,033, or 2.5%, compared to September 30, 2013. Consumer loans have decreased $2,469, or 15.3%, in comparison to December 31, 2013 and increased $262, or 2.0%, compared to September 30, 2013.

Loans held for sale are not included in portfolio loans and as of September 30, 2014 total loans classified as held for sale were $1,497 compared to $4,483 as of December 31, 2013. Residential real estate mortgage loans held for sale represented $1,188, or 79.4%, and indirect loans represented $309, or 20.6%, of loans held for sale at September 30, 2014. Residential real estate mortgage loans held for sale represented $950, or 45.0%, and indirect loans represented $1,160, or 55.0%, of loans held for sale at September 30, 2013.

Table 8 shows the amount of portfolio loans outstanding as of September 30, 2014 based on the remaining scheduled principal payments or principal amounts re-pricing in the periods indicated. All loans that, by their terms, are due after one year, but which are subject to more frequent re-pricing, have been classified as due in one year or less for purposes of the table.

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Table 8: Cash Flow and Interest Rate Information for Loans:

	September 30, 2014
Due in one year or less	$	214,063
Due after one year but within five years	432,663
Due after five years	275,788
Totals	$	922,514
Due after one year with a predetermined fixed interest rate	$	525,333
Due after one year with a floating interest rate	183,118
Totals	$	708,451

Provision and Allowance for Loan Losses

The allowance for loan losses is maintained by the Corporation at a level considered by management to be adequate to cover probable incurred credit losses in the loan portfolio. The amount of the provision for loan losses charged to operating expenses is the amount necessary, in the estimation of management, to maintain the allowance for loan losses at an adequate level. Management determines the adequacy of the allowance based upon past experience, changes in portfolio size and mix, relative quality of the loan portfolio and the rate of loan growth, assessments of current and future economic conditions and information about specific borrower situations, including their financial position and collateral values, and other factors, which are subject to change over time. While management’s periodic analysis of the allowance for loan losses may dictate portions of the allowance be allocated to specific problem loans, the entire amount is available for any loan charge-offs that may occur.

As the economy faced significant challenges over the past several years, the Corporation responded by adding additional internal resources at the end of 2009, continuing to utilize outside resources and implementing a process to improve asset quality going forward. This process, which includes executive management, finance, credit, lending and legal, is charged with monitoring problem loans on a regular basis to insure proper grading of the loans, identifying loans as “troubled debt restructured,” adequate allowances and timely resolution of problem credits. In addition, the Corporation's bank subsidiary has a Loan and Credit Review Committee which provides board oversight in areas such as underwriting, concentrations, delinquencies, production goals and performance trends.

The Corporation uses a historical loss methodology in determining the level of allowances for various loan segments. The Corporation is in the process of developing data for migration analysis which assists in estimating probable incurred losses, similar to the Basel formula, for commercial loans based on a history of loans migrating through the various loan grades.

The effect of these initiatives has resulted in an improvement in asset quality as measured by the level of nonperforming loans as well as criticized loans. The use of a historical loss methodology tends to have a lag effect when estimating the adequacy of the allowance as specific reserves related to impaired loans are replaced with general reserves related to the various pools of loans.

With the Corporation's exposure to commercial real estate loans, including construction and development loans, and consumer real estate in the form of home equity loans, management continues to monitor loan performance in light of the past and recent volatility in real estate valuations.

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Table 9 presents the Corporation's detailed activity in the allowance for loan losses and related charge-off activity for the three months ended September 30, 2014, and 2013.

Table 9: Analysis of Allowance for Loan Losses

	Three Months Ended						Nine Months Ended
	September 30, 2014			September 30, 2013			September 30, 2014			September 30, 2013
	(Dollars in thousands)
Balance at beginning of year	$	17,430		$	17,815		$	17,505		$	17,637
Charge-offs:
Commercial real estate	(433		)	(630		)	(1,133		)	(1,475		)
Commercial	(35		)	—			(35		)	(120		)
Residential real estate	(63		)	(35		)	(213		)	(679		)
Home equity loans	(179		)	(410		)	(1,074		)	(1,439		)
Indirect	(106		)	(196		)	(283		)	(555		)
Consumer	(41		)	(83		)	(150		)	(181		)
Total Charge-offs	(857		)	(1,354		)	(2,888		)	(4,449		)
Recoveries:
Commercial real estate	11			83			32			584
Commercial	30			2			32			7
Residential real estate	—			178			6			277
Home equity loans	46			5			65			60
Indirect	46			104			143			276
Consumer	6			8			24			49
Total Recoveries	139			380			302			1,253
Net Charge-offs	(718		)	(974		)	(2,586		)	(3,196		)
Provision for loan losses	720			950			2,513			3,350
Balance at end of period	$	17,432		$	17,791		$	17,432		$	17,791
Average Portfolio loans outstanding	$	915,773		$	883,321		$	910,188		$	883,565
Annualized ratio to average loans:
Net Charge-offs	0.31		%	0.44		%	0.38		%	0.48		%
Provision for loan losses	0.31		%	0.43		%	0.37		%	0.51		%
Loans outstanding	$	922,514		$	891,300		$	922,514		$	891,300
As a percent of outstanding loans	1.89		%	2.00		%	1.89		%	2.00		%

* Loans held for sale are excluded in the average portfolio loans outstanding balance.

The allowance for loan losses at September 30, 2014 was $17,432, or 1.89%, of outstanding loans, compared to $17,791, or 2.00%, of outstanding loans at September 30, 2013. The allowance for loan losses was 95.82% and 71.23% of nonperforming loans at September 30, 2014 and 2013, respectively. The lower level of provision reflects continued favorable problem loan migration and improvement in key credit metrics.

Net charge-offs for the three months ended September 30, 2014 were $718, compared to $974 for the three months ended September 30, 2013. Net charge-offs as a percent of average loans was 0.31% for the third quarter of 2014 and 0.44% for the same period in 2013.Net charge-offs on commercial and commercial real estate loans were primarily a result of loans that were collateral dependent and deemed uncollectible. As a result, the loans were written down to their net realizable value, which is determined based upon current appraised value less costs to sell.

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The provision for loan losses was $720 for the three months ended September 30, 2014 compared to $950 for the three months ended September 30, 2013. For the nine months ended September 30, 2014, the provision for loan losses was $2,513, compared to $3,350 for the same period one year ago. Overall, collateral market conditions have improved resulting in higher valuations for underlying collateral. This coupled with overall better asset quality has resulted in lower level of charged-off loans in the Corporation's loan portfolio. Consumer loans, especially home equity loans, while somewhat affected by the real estate market, have been largely influenced by the weak economic recovery. Due to the decrease in charge-offs combined with improving economic conditions the allowance for loan losses have shifted to a lesser allocation of specific reserves and an increase in general reserves which are comprised primarily of qualitative measures.

The allowance for loan losses is, in the opinion of management, sufficient given its analysis of the information available about the portfolio at September 30, 2014. Management continues to work toward prompt resolution of nonperforming loan situations and to adjust underwriting standards as conditions warrant.

The following table sets forth the allocation of the allowance for loan losses by loan category as of September 30, 2014, and December 31, 2013, as well as the percentage of loans in each category to total loans.  This allocation is based on management's assessment, as of a given point in time, of the risk characteristics of each of the component parts of the total loan portfolio and is subject to changes when the risk factors of each component part change.  The allocation is not indicative of either the specific amounts of the loan categories in which future charge-offs may be taken, nor should it be taken as an indicator of future loss trends.  The allocation of the allowance to each category does not restrict the use of the allowance to absorb losses in any other category.

Allocation of the Allowance for Loan Losses by Loan Type

	September 30, 2014				December 31, 2013
	(Dollars in thousands)
	Allowance		Percent of loans in each category to total loans		Allowance		Percent of loans in each category to total loans
Commercial real estate	$	9,115	44.8	%	$	10,122	44.5	%
Commercial	698		9.3	%	497		9.8	%
Residential real estate	2,069		7.7	%	1,411		7.4	%
Home equity loans	3,119		13.6	%	3,484		13.6	%
Indirect	2,092		23.1	%	1,593		22.9	%
Consumer	339		1.5	%	398		1.8	%
Total	$	17,432	100.0	%	$	17,505	100.0	%

The balance in the allowance for loan losses is determined based on management's review and evaluation of the loan portfolio in relation to past loss experience, the size and composition of the portfolio, current economic events and conditions, and other pertinent factors, including management's assumptions as to future delinquencies, recoveries and losses. Increases to the allowance for loan and lease losses are made by charges to the provision for loan losses. Credit exposures deemed to be uncollectible are charged against the allowance for loan losses. Recoveries of previously charged-off amounts are credited to the allowance for loan losses.

The Corporation maintains what Management believes is an adequate allowance for loan loss. The Corporation regularly analyzes the adequacy of the allowance through ongoing review of trends in risk ratings, delinquencies, nonperforming assets, charge-offs, economic conditions, and changes in the composition of the loan portfolio. Management also considers internal and external factors such as economic conditions, loan management practices, portfolio monitoring, and other risks, collectively known as qualitative factors. See Note 5 (Allowance for Loan Losses) in the notes to the consolidated financial statements in this Form 10-Q for further information.

Funding Sources

  The primary source of funds continues to be the generation of deposit accounts within the Corporation's primary markets. In order to achieve deposit account growth, the Corporation offers retail and business customers a full line of deposit products that includes interest and noninterest-bearing checking accounts, savings accounts and time deposits. The Corporation also generates funds through local borrowings generated by a business sweep product. Wholesale funding sources include lines of credit with correspondent banks, advances through the Federal Home Loan Bank of Cincinnati and a secured line of credit

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with the Federal Reserve Bank of Cleveland. The Corporation from time to time will also utilize brokered time deposits to provide term funding at rates comparable to other wholesale funding sources. Table 10 highlights the average balances and the average rates paid on these sources of funds for the three months ended September 30, 2014, and December 31, 2013.

The following table shows the various sources of funding for the Corporation.

Table 10: Funding Sources

	Average Balances Outstanding				Average Rates Paid
	For the three months ended
	September 30, 2014		December 31, 2013		September 30, 2014		December 31, 2013
	(Dollars in thousands)
Noninterest-bearing checking	$	160,308	$	150,174	—	%	—	%
Interest-bearing checking	163,992		168,756		0.05	%	0.05	%
Savings deposits	128,305		125,074		0.03	%	0.03	%
Money market accounts	136,279		100,379		0.21	%	0.18	%
Consumer time deposits	383,278		428,867		0.82	%	0.88	%
Public time deposits	71,859		68,514		0.73	%	0.71	%
Total Deposits	$	1,044,021	$	1,041,764	0.45	%	0.51	%
Short-term borrowings	4,263		2,273		1.71	%	1.09	%
FHLB borrowings	46,843		46,684		1.34	%	1.35	%
Junior subordinated debentures	16,324		16,321		4.14	%	4.19	%
Total borrowings	$	67,430	$	65,278	2.11	%	2.05	%
Total funding	$	1,111,451	$	1,107,042	0.57	%	0.62	%

Deposit accounts and the generation of deposit accounts continued to be the primary source of funds for the Corporation. The Corporation offers various deposit products to both retail and business customers. The Corporation also has available its business sweep accounts to generate funds as well as the brokered CD market to provide funding comparable to other national market borrowings, which include the Federal Home Loan Bank of Cincinnati and the Federal Reserve Bank of Cleveland. At September 30, 2014 and December 31, 2013, the Corporation had no brokered time deposit balances.

Average deposit balances increased from $1,041,764 at December 31, 2013, to $1,044,021 at September 30, 2014. Low-cost deposits, namely checking, savings and money market accounts accounted for 56.4% of total deposits at September 30, 2014. The improved mix and extended lower interest rate environment has contributed to the Corporation's lower funding cost. These low-cost funds had an average yield of 0.45% compared to 0.51% at December 31, 2013. Included in these funds are consumer time deposits which carried an average yield of 0.82% compared to 0.88% at December 31, 2013. Time deposits to total average deposits were $455,137, or 43.6%, of total deposits at September 30, 2014.

Borrowings

The Corporation utilizes both short-term and long-term borrowings to assist in the growth of earning assets. For the Corporation, short-term borrowings include Federal funds purchased and repurchase agreements. Short term borrowings decreased 41.6%, to $2,674 at September 30, 2014 compared to $4,576 at December 31, 2013. As of September 30, 2014, of $2,674 in short borrowings, repurchase agreements represented $674 and $2,000 represented borrowings on a line of credit with an unaffiliated financial institution. As part of the Corporation’s repurchased and redemption of its Series B Preferred Stock December 2013 and January 2014, approximately $3.0 million was drawn on the line of credit with an unaffiliated financial institution in December 2013. The Corporation has maintained a $6.0 million line of credit with this institution since 2009 with interest at the prime rate, which was 3.50% annually at December 31, 2013 and 3.50% at September 30, 2014. In the first and second quarter of 2014 the Corporation made payments in each quarter of $500 of principal on the line of credit. Subsequent to the $500 payment made in the second quarter of 2014, $2,000 of principal remained outstanding at the prime rate of 3.50% annually at September 30, 2014. The Corporation did not purchase Federal funds at September 30, 2014, or December 31, 2013.

Long-term borrowings by the Corporation consist of Federal Home Loan Bank (FHLB) advances and junior subordinated debentures. FHLB advances were $46,867 at September 30, 2014 compared to $46,708 at December 31, 2013, while the junior

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subordinated debentures remained constant at $16,238. In the fourth quarter of 2012, the Corporation prepaid $27,500 of fixed rate FHLB advances with a contractual average interest rate of 2.47% and a weighted average remaining term to maturity of 1.63 years. The transaction was accomplished by extending the maturity date of the advances and rolling the net present value of the advances into the funding cost of the new structure. As a result of the restructure, the Corporation was required to pay a prepayment penalty of $1,017 to the FHLB. In accordance with ASC 470-50, Debt - Modification and Exchanges, the replacement advances were considered a minor modification. The prepayment penalty was deferred and is being recognized in interest expense over the life of the replacement advances. Additional information regarding the FHLB advances is included in Note 9 (Federal Home Loan Bank Advances) in the notes to the consolidated financial statements.

Capital Management

The Bank is subject to various regulatory capital requirements administered by the Office of the Comptroller of the Currency (“OCC”), including a risk-based capital measure. The risk-based capital guidelines include both a definition of capital and a framework for calculating risk-weighted assets by assigning balance sheet assets and off-balance sheet items to broad risk categories. At September 30, 2014 and December 31, 2013, the Bank exceeded all of its regulatory capital requirements and was considered “well-capitalized” under regulatory guidelines.

	Actual				For Capital Adequacy Purposes				To Be Well- Capitalized Under Prompt Corrective Action Provisions
September 30, 2014 (Unaudited)	Amount		Ratio		Amount		Ratio		Amount		Ratio
Total Capital (to Risk-Weighted Assets)	$	121,075	12.34	%	$	78,470	8.0	%	$	98,087	10.0	%
Tier 1 Capital (to Risk-Weighted Assets)	108,751		11.09		39,235		4.0		58,852		6.0
Tier 1 Leverage Capital (to Adjusted Total Assets)	108,751		9.01		48,271		4.0		60,339		5.0
	Actual				For Capital Adequacy Purposes				To Be Well- Capitalized Under Prompt Corrective Action Provisions
December 31, 2013	Amount		Ratio		Amount		Ratio		Amount		Ratio
Total Capital (to Risk-Weighted Assets)	$	122,795	12.89	%	$	76,230	8.0	%	$	95,290	10.0	%
Tier 1 Capital (to Risk-Weighted Assets)	110,815		11.63		38,116		4.0		57,174		6.0
Tier 1 Leverage Capital (to Adjusted Total Assets)	110,815		9.22		48,086		4.0		60,108		5.0

Capital Resources

The Corporation continued to maintain a capital position that exceeded regulatory capital requirements. Total shareholders' equity was $113,065 at September 30, 2014, compared to $111,456 at December 31, 2013, a decrease of $1,609, or 1.4%. The regulatory capital ratios at December 31, 2013 include the proceeds from the Corporation entering into a common shares purchase agreement (the “Purchase Agreement”) with certain investors party thereto (the “Investors”), which included certain third-party investors and certain directors of the Corporation. Pursuant to the Purchase Agreement, the Corporation sold to the Investors an aggregate of 367,321 Common Shares at a purchase price of $9.9087 per share (except that Investors who are directors of the Corporation or are related thereto paid $10.30 per share), for an aggregate purchase price of $3.68 million.

Following the completion of the issuance and sale of Common Shares pursuant to the Purchase Agreement, on December 17, 2013, the Corporation issued a notice of redemption of all 9,147 remaining shares of Series B Preferred Stock, to be funded with the proceeds from the sale of Common Shares along with cash from $3,000 in borrowings under the Corporation’s line of credit with an unaffiliated financial institution and from the Corporation’s accumulated earnings and excess capital. The Purchase Agreement, among other things, provided the Investors with certain registration rights, pursuant to which the Corporation filed a Registration Statement on Form S-3 with the SEC, which was declared effective on January 16, 2014.

On January 17, 2014, the Corporation completed the retirement of the remaining shares of Series B Preferred Stock. The Corporation repurchased 1,458 of such shares in a private transaction in December 2013, and redeemed the remaining 7,689 shares of Series B Preferred Stock on January 17, 2014, the redemption date. As of the redemption date, the Corporation no longer had Series B Preferred Stock issued or outstanding.

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On July 28, 2005, the Corporation announced a share repurchase program of up to 5 percent, or about 332,000, of its common shares outstanding. Repurchased shares can be used for a number of corporate purposes, including the Corporation’s stock option and employee benefit plans. The share repurchase program provides that share repurchases are to be made primarily on the open market from time-to-time until the 5 percent maximum is repurchased or the earlier termination of the repurchase program by the Board of Directors, at the discretion of management based upon market, business, legal and other factors. No repurchases were made under this program during the first half of 2014. At September 30, 2014, the Corporation held 336,745 shares of common stock as treasury stock at a cost of $6,177. In the first three months of 2014, 8,551 shares were surrendered to the Corporation by employees to cover tax withholding in conjunction with vesting of restricted stock, as treasury stock at a cost of $85.

Off-Balance Sheet Arrangements

In the normal course of business, the Corporation enters into commitments with off-balance sheet risk to meet the financing needs of its customers. These arrangements include commitments to extend credit and standby letters of credit. Commitments to extend credit and standby letters of credit involve elements of credit risk and interest rate risk in excess of the amount recognized in the consolidated balance sheets. The Corporation uses the same credit policies in making commitments to extend credit and standby letters of credit as it does for on-balance sheet instruments.

The Corporation’s exposure to credit loss in the event of nonperformance by the other party to the commitment is represented by the contractual amount of the commitment. Interest rate risk on commitments to extend credit results from the possibility that interest rates may have moved unfavorably from the position of the Corporation since the time the commitment was made.

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates of 30 to 120 days or other termination clauses and may require payment of a fee. Since some of the commitments may expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements.

Standby letters of credit are conditional commitments issued to guarantee the performance of a customer to a third party. Most of these arrangements mature within two years and are expected to expire without being drawn upon. Standby letters of credit generally are contingent upon the failure of the customer to perform according to the terms of the underlying contract with the third party.

The Corporation evaluates each customer’s credit worthiness on a case-by-case basis. The amount of collateral obtained by the Corporation upon extension of credit is based on management’s credit evaluation of the applicant. Collateral held is generally single-family residential real estate and commercial real estate. Substantially all of the obligations to extend credit are variable rate.

The Corporation does not believe that off-balance sheet arrangements will have a material impact on its liquidity or capital resources. See Note 10 to the Consolidated Financial Statements for further detail.

Critical Accounting Policies and Estimates

The Corporation’s consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America. The Corporation follows general practices within the banking industry and application of these principles requires management to make assumptions, estimates and judgments that affect the financial statements and accompanying notes. These assumptions, estimates and judgments are based on information available as of the date of the financial statements.

The most significant accounting policies followed by the Corporation are presented in Note 1 to the Consolidated Financial Statements. These policies are fundamental to the understanding of results of operation and financial conditions.

The accounting policies considered to be critical by management are as follows:

• Allowance for loan losses

The allowance for loan losses is an amount that management believes will be adequate to absorb probable incurred credit losses in the loan portfolio taking into consideration such factors as past loss experience, changes in the nature and volume of the portfolio, overall portfolio quality, loan concentrations, specific problem loans and current economic conditions that affect the borrower’s ability to pay. Determination of the allowance is subjective in nature. Loan losses are charged off against the

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allowance when management believes that the full collectability of the loan is unlikely. Recoveries of amounts previously charged-off are credited to the allowance.

A loan is impaired when based on current information and events it is probable the Corporation will be unable to collect the scheduled payment of principal and interest when due under the contractual terms of the loan agreement. Impairment is evaluated in total for smaller-balance loans of similar nature such as real estate mortgages and installment loans, and on an individual loan basis for commercial loans that are graded substandard or below. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis. If a loan is impaired, a portion of the allowance may be allocated so that the loan is reported, net, using either the present value of estimated future cash flows discounted at the loans effective interest rate, the loan's observable market value or at the fair value of collateral if repayment is expected solely from the collateral.

The Corporation maintains the allowance for loan losses at a level adequate to absorb management’s estimate of probable incurred credit losses in the loan portfolio. The allowance is comprised of a general allowance, a specific allowance for identified problem loans and an unallocated allowance representing estimations pursuant to either Statement of Financial Accounting Standards ASC 450,“Accounting for Contingencies,” or ASC 310-10-45, “Accounting by Creditors for Impairment of a Loan.”

The general allowance is determined by applying estimated loss factors to the credit exposures from outstanding loans. For commercial and commercial real estate loans, the Corporation uses historical loss experience along with factors that are considered when loan grades are assigned to individual loans such as current and past delinquency, financial statements of the borrower, current net realizable value of collateral and the general economic environment and specific economic trends affecting the portfolio. For residential real estate, installment and other loans, loss factors are applied on a portfolio basis. Loss factors are based on the Corporation’s historical loss experience and are reviewed for appropriateness on a quarterly basis, along with other factors affecting the collectability of the loan portfolio.

Specific allowances are established for all loans when management has determined that, due to identified significant conditions, it is probable that a loss has been incurred that exceeds the general allowance loss factor from these loans. These conditions are reviewed quarterly by management and include general economic conditions, credit quality trends and internal loan review and regulatory examination findings.

Management believes that it uses the best information available to determine the adequacy of the allowance for loan losses. However, future adjustments to the allowance may be necessary and the results of operations could be significantly and adversely affected if circumstances differ substantially from the assumptions used in making the determinations.

• Income Taxes

The Corporation’s income tax expense and related current and deferred tax assets and liabilities are presented as prescribed in ASC 740, “Accounting for Income Taxes.” The accounting requires the periodic review and adjustment of tax assets and liabilities based on many assumptions. These assumptions include predictions as to the Corporation’s future profitability, as well as potential changes in tax laws that could impact the deductibility of certain income and expense items. Since financial results could be significantly different than these estimates, future adjustments may be necessary to tax expense and related balance sheet accounts.

• Goodwill

During 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2011-08, Intangibles – Goodwill and Other (Topic 350): Testing Goodwill for Impairment. This ASU gives an entity the option to first assess qualitative factors to determine whether it is more likely than not (a likelihood of more than 50%) that the fair value of a reporting unit is less than its carrying amount (impairment). If the entity finds after the qualitative assessment that it is more likely than not (impairment indicators) that the fair value of a reporting unit is less than its carrying amount, the entity is then required to perform a full impairment test. The full impairment test is a two-step process that requires management to make judgments in determining what assumptions to use in the calculation. The first step in impairment testing is to estimate the fair value based on valuation techniques including a discounted cash flow model with revenue and profit forecasts and comparing those estimated fair values with the carrying values, which includes the allocated goodwill. If the carrying value exceeds its fair value, goodwill impairment may be indicated and a second step is performed to compute the amount of the impairment by determining an “implied fair value” of goodwill. The determination of an “implied fair value” of goodwill requires the Corporation to allocate fair value to the assets and liabilities. Any unallocated fair value represents the “implied fair value” of

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goodwill, which is compared to its corresponding carrying value. An impairment loss would be recognized as a charge to earnings to the extent the carrying amount of the goodwill exceeds the implied fair value of the goodwill. Based upon the qualitative assessment the Corporation determined that there is no likelihood of goodwill impairment therefore no impairment charge was recognized as of December 31, 2013. No significant changes since the previous assessment at December 31, 2013 have occurred, thus no additional information to indicate goodwill is impaired has been reviewed.

• New Accounting Pronouncements

Management is not aware of any proposed regulations or 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.

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ITEM 3. Quantitative and Qualitative Disclosures About Market Risk.

RISK ELEMENTS

Risk management is an essential aspect in operating a financial services company successfully and effectively. The most prominent risk exposures for a financial services company are credit, operational, interest rate, market and liquidity risk. Credit risk involves the risk of uncollectible interest and principal balance on a loan when it is due. Fraud, legal and compliance issues, processing errors, technology and the related disaster recovery and breaches in business continuation and internal controls are types of operational risks. Changes in interest rates affecting net interest income are considered interest rate risks. Market risk is the risk that a financial institution’s earnings and capital or its ability to meet its business objectives are adversely affected by movements in market rates or prices. Such movements include fluctuations in interest rates, foreign exchange rates, equity prices that affect the changes in value of available-for-sale securities, credit spreads and commodity prices. The inability to fund obligations due to investors, borrowers or depositors is liquidity risk. For the Corporation, the dominant risks are market, credit and liquidity risk.

Credit Risk Management

Uniform underwriting criteria, ongoing risk monitoring and review processes, and well-defined, centralized credit policies dictate the management of credit risk for the Corporation. As such, credit risk is managed through the Bank’s allowance for loan loss policy which requires the loan officer, lending officers and the loan review committee to manage loan quality. The Corporation’s credit policies are reviewed and modified on an ongoing basis in order to remain suitable for the management of credit risks within the loan portfolio as conditions change. The Corporation uses a loan rating system to properly classify and assess the credit quality of individual commercial loan transactions. The loan rating system is used to determine the adequacy of the allowance for loan losses for financial reporting purposes and to assist in the determination of the frequency of review for credit exposures.

Most of the Corporation’s business activity is with customers located within the Corporation’s defined market area. As of September 30, 2014, the Corporation had concentrations of credit risk in its loan portfolio for the following loan categories: non-farm, non-residential real estate loans, home equity loans and indirect consumer loans. A concentration is defined as greater than 10% of outstanding loans. The Corporation has no exposure to highly leveraged transactions and no foreign credits in its loan portfolio.

Nonperforming Assets

Total nonperforming assets consist of nonperforming loans, loans which have been restructured and other foreclosed assets. As such, a loan is considered nonperforming if it is 90 days past due and/or in management’s estimation the collection of interest on the loan is doubtful. Nonperforming loans no longer accrue interest and are accounted for on a cash basis. The classification of restructured loans involves the deterioration of a borrower’s financial ability leading to original terms being favorably modified or either principal or interest being forgiven.

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Table 11 sets forth nonperforming assets at September 30, 2014, and December 31, 2013.

Table 11: Nonperforming Assets

	September 30, 2014			December 31, 2013
	(Dollars in thousands)
Commercial real estate	$	8,728		$	11,241
Commercial	172			289
Residential real estate	4,064			5,231
Home equity loans	4,366			4,464
Indirect	446			443
Consumer	417			318
Total nonperforming loans	18,193			21,986
Other foreclosed assets	745			579
Total nonperforming assets	$	18,938		$	22,565
Loans 90 days past due accruing interest	$	—		$	158
Total nonperforming loans as a percent of total loans	1.97		%	2.44		%
Total nonperforming assets as a percent of total assets	1.53		%	1.83		%
Allowance for loan losses to nonperforming loans	95.82		%	79.62		%

The Corporation continues to actively manage credit quality and has made great progress in managing problem loans. Nonperforming loans at September 30, 2014 were $18,193 compared to $21,986 at December 31, 2013, a decrease of $3,793 or 17.3%. Nonperforming commercial real estate loans were $8,728 for September 30, 2014, compared to $11,241 at December 31, 2013. These loans are primarily secured by real estate and, in some cases, by SBA guarantees, and have either been charged-down to their realizable value or a specific reserve has been established for any collateral short-fall. All nonperforming loans are being actively managed and monitored.

Management continues to monitor delinquency and potential problem loans. Bank-wide delinquency at September 30, 2014, was 1.27% of total loans, down from 1.69% at December 31, 2013. Additionally, total 30-59 day and 60-89 day delinquencies were 0.17% and 0.06% of total loans at September 30, 2014, compared to 0.26% and 0.19% of total loans at December 31, 2013, respectively.

Other foreclosed assets were $745 as of September 30, 2014, compared to $579 at December 31, 2013. The $745 was comprised of two commercial properties totaling $228 and nine residential properties, totaling $517. This compares to three commercial properties totaling $304 and seven residential properties, totaling $275 as of December 31, 2013.

Liquidity

Management of liquidity is a continual process in the banking industry. The liquidity of the Bank reflects its ability to meet loan demand, the possible outflow of deposits and its ability to take advantage of market opportunities made possible by potential rate environments. Assuring adequate liquidity requires the management of the cash flow characteristics of the assets the Bank originates and the availability of alternative funding sources. The Bank monitors liquidity according to limits established in its liquidity policy. The policy establishes minimums for the ratio of cash and cash equivalents to total assets and the loan to deposit ratio. At September 30, 2014, the Bank’s liquidity was within its policy limits.

The Bank maintains borrowing capacity at the Federal Home Loan Bank of Cincinnati, the Federal Reserve Bank of Cleveland and Federal Fund lines with correspondent banks. The Corporation has a $6,000 line of credit through an unaffiliated financial institution. The term of the line is one year, with principal due at maturity, and is subject to renewal on an annual basis. The interest rate on the line of credit is the unaffiliated financial institution’s prime rate. Liquidity is also provided by unencumbered, or unpledged investment securities that totaled $36,662 at September 30, 2014.

As part of the Corporation’s repurchase and redemption of its Series B Preferred Stock in December 2013 and January 2014, approximately $3,000 was drawn on the line of credit with an unaffiliated financial institution in December 2013. The Corporation has maintained a $6,000 line of credit with this institution since 2009 at the prime rate, which was 3.50% at

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December 31, 2013. In both the first and secondquarters of 2014, the Corporation made payments of $500 of principal in each quarter on the line of credit. Following the two payments, $2.0 million remained outstanding at the prime rate of 3.50% annually at September 30, 2014.

The Corporation is the bank holding company of the Bank and conducts no operations. The Corporation’s primary ongoing needs for liquidity are the payment of the quarterly shareholder dividend, if declared, and miscellaneous expenses related to the regulatory and reporting requirements of a publicly traded corporation. The holding company’s main source of operating liquidity are the dividends that it receives from the Bank. Dividends from the Bank are subject to restrictions by banking regulators. The holding company from time-to-time has access to additional sources of liquidity through correspondent and private lines of credit as of September 30, 2014.

Market Risk Management

The Corporation manages market risk through its Asset/Liability Management Committee (“ALCO”) at the Bank level governed by policies set forth and established by the Board of Directors. This committee assesses interest rate risk exposure through two primary measures: rate sensitive assets divided by rate sensitive liabilities and earnings-at-risk simulation of net interest income over the one year planning cycle and the longer term strategic horizon in order to provide a stable and steadily increasing flow of net interest income.

The difference between a financial institution’s interest rate sensitive assets and interest rate sensitive liabilities is referred to as the interest rate gap. An institution that has more interest rate sensitive assets than interest rate sensitive liabilities in a given period is said to be asset sensitive or has a positive gap. This means that if interest rates rise a corporation’s net interest income may rise and if interest rates fall its net interest income may decline. If interest sensitive liabilities exceed interest sensitive assets then the opposite impact on net interest income may occur. The usefulness of the gap measure is limited. It is important to know the gross dollars of assets and liabilities that may re-price in various time horizons, but without knowing the frequency and basis of the potential rate changes the predictive power of the gap measure is limited.

Two more useful tools in managing market risk are earnings-at-risk simulation and economic value of equity simulation. An earnings-at-risk analysis is a modeling approach that combines the re-pricing information from gap analysis, with forecasts of balance sheet growth and changes in future interest rates. The result of this simulation provides management with a range of possible net interest margin outcomes. Trends that are identified in earnings-at-risk simulation can help identify product and pricing decisions that can be made currently to assure stable net interest income performance in the future. At September 30,

2014, a “shock” treatment of the balance sheet, in which a parallel shift in the yield curve occurs and all rates increase

immediately, indicates that in a +200 basis point shock, net interest income would decrease by $2,486 or 7.06%, and in a -200 basis point shock, net interest income would decrease $4,146, or 11,77%. The reason for the lack of symmetry in these results is the implied floors in many of the Corporation’s core funding which limits their downward adjustment from current offering rates. This analysis is done to describe a best or worst case scenario. Factors such as non-parallel yield curve shifts, management pricing changes, customer preferences and other factors are likely to produce different results. The economic value of equity approach measures the change in the value of the Corporation’s equity as the value of assets and liabilities on the balance sheet change with interest rates.

The economic value of equity approach measures the change in the value of the Corporation’s equity as the value of

assets and liabilities on the balance sheet change with interest rates. At September 30, 2014, this analysis indicated that a +200

basis point change in rates would reduce the value of the Corporation’s equity by 14.20% while a -200 basis point change in rates would decrease the value of the Corporation’s equity by 13.00%.

Forward-Looking Statements

This Form 10-Q contains forward-looking statements within the meaning of the “Safe Harbor” provisions of the Private Securities Litigation Reform Act of 1995. Terms such as “will,” “should,” “plan,” “intend,” “expect,” “continue,” “believe,” “anticipate” and “seek,” as well as similar comments, are forward-looking in nature. Actual results and events may differ materially from those expressed or anticipated as a result of risks and uncertainties which include but are not limited to:

• a worsening of economic conditions or slowing of any economic recovery, which could negatively impact, among other things, business activity and consumer spending and could lead to a lack of liquidity in the credit markets;

• changes in the interest rate environment which could reduce anticipated or actual margins;

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• increases in interest rates or further weakening of economic conditions that could constrain borrowers’ ability to repay outstanding loans or diminish the value of the collateral securing those loans;

• market conditions or other events that could negatively affect the level or cost of funding, affecting the Corporation’s ongoing ability to accommodate liability maturities and deposit withdrawals, meet contractual obligations, and fund asset growth, and new business transactions at a reasonable cost, in a timely manner and without adverse consequences;

• changes in political conditions or the legislative or regulatory environment, including new or heightened legal standards and regulatory requirements, practices or expectations, which may impede profitability or affect the Corporation’s financial condition (such as, for example, the Dodd-Frank Act and rules and regulations that have been or may be promulgated under the Act);

• persisting volatility and limited credit availability in the financial markets, particularly if market conditions limit the Corporation’s ability to raise funding to the extent required by banking regulators or otherwise;

• significant increases in competitive pressure in the banking and financial services industries, particularly in the geographic or business areas in which the Corporation conducts its operations;

• limitations on the Corporation’s ability to return capital to shareholders, including the ability to pay dividends, and the dilution of the Corporation’s common shares that may result from, among other things, any capital-raising or acquisition activities of the Corporation;

• adverse effects on the Corporation’s ability to engage in routine funding transactions as a result of the actions and commercial soundness of other financial institutions;

• general economic conditions becoming less favorable than expected, continued disruption in the housing markets and/or asset price deterioration, which have had and may continue to have a negative effect on the valuation of certain asset categories represented on the Corporation’s balance sheet;

• increases in deposit insurance premiums or assessments imposed on the Corporation by the FDIC;

• a failure of the Corporation’s operating systems or infrastructure, or those of its third-party vendors, that could disrupt its business;

• risks that are not effectively identified or mitigated by the Corporation’s risk management framework; and

• difficulty attracting and/or retaining key executives and/or relationship managers at compensation levels necessary to maintain a competitive market position; as well as the risks and uncertainties described from time to time in the Corporation’s reports as filed with the SEC.

The Corporation undertakes no obligation to update or clarify forward-looking statements, whether as a result of new information, future events or otherwise.

Item 4. Controls and Procedures

The Corporation’s Management carried out an evaluation, under the supervision and with the participation of the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of the Corporation’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934) as of September 30, 2014, pursuant to the evaluation of these controls and procedures required by Rule 13a-15 of the Securities Exchange Act of 1934.

Based upon that evaluation, the Chief Executive Officer along with the Chief Financial Officer concluded that the Corporation’s disclosure controls and procedures as of September 30, 2014, were: (1) designed to ensure that information required to be disclosed by the Corporation in the reports it files or submits under the Exchange Act relating to the Corporation and its subsidiaries is made known to the Chief Executive Officer and Chief Financial Officer by others within the entities as appropriate to allow for timely decisions regarding required disclosure, and (2) effective, in that they provide reasonable assurance that information required to be disclosed by the Corporation in the reports that it files or submits under the Exchange

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Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. No change in the Corporation’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15(d)-15(f) under the Exchange Act) occurred during the fiscal quarter ended September 30, 2014, that has materially affected, or is reasonably likely to materially affect, the Corporation’s internal control over financial reporting.

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Part II Other Information

Item 1. Legal Proceedings

There were no new material legal proceedings or material changes to existing legal proceedings involving the Corporation during the third quarter of 2014.

Item 1A. Risk Factors

In addition to the other information set forth in this report, you should carefully consider the risk factors disclosed in Item 1A of the Corporation’s Annual Report on Form 10-K for the fiscal year ended December 31, 2013.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Issuer Purchases of Equity Securities

The following table summarizes common share repurchase activity for the quarter ended September 30, 2014:

Period	Total Number of Shares  (or Units) Purchased (1)	Average Price Paid Per  Share (or Unit)		Total Number of Shares  (or Units) Purchased as Part of Publicly Announced Plans or Programs	Maximum Number of Shares (or Units) that may yet be Purchased Under the Plans or Programs (2)
July 1, 2014 — July 31, 2014	—	—		—	129,500
August 1, 2014 — August 31, 2014	—	$	—	—	129,500
September 1, 2014 — September 30, 2014	—	—		—	129,500
Total	—	$	—	—	129,500

(1) No shares were purchased by the Corporation or surrendered to the Corporation by employees for tax withholding purposes in conjunction with the vesting of restricted stock awarded to the employees by the Corporation under the 2006 Stock Incentive Plan, as amended.

(2) On July 28, 2005, the Corporation announced a share repurchase program of up to 5 percent, or about 332,000, of its common shares outstanding. Repurchased shares can be used for a number of corporate purposes, including the Corporation’s stock option and employee benefit plans. The share repurchase program provides that share repurchases are to be made primarily on the open market from time-to-time until the 5 percent maximum is repurchased or the earlier termination of the repurchase program by the Board of Directors, at the discretion of management based upon market, business, legal and other factors. As of September 30, 2014, the Corporation had repurchased an aggregate of 202,500 shares under this program. No shares were repurchased under this program during the third quarter of 2014.

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Item 6. Exhibits

(a) The exhibits to this Form 10-Q are referenced in the Exhibit Index attached hereto.

60

SIGNATURES

Pursuant to the requirements of the Securities 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: November 7, 2014	By:	/s/ James H. Nicholson
		James H. Nicholson
		Chief Financial Officer
		(Duly Authorized Officer, and Principal Accounting and Financial Officer)

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Exhibit Index

Exhibit No.	Exhibit
10.1	Change in Control Supplemental Executive Compensation Agreement, dated as of July 28, 2014, by and between LNB Bancorp, Inc. and James H. Nicholson.
31.1	Certification of the Chief Executive Officer Pursuant to Rule 13a-14(a)/15d-14(a).
31.2	Certification of the Chief Financial Officer Pursuant to Rule 13a-14(a)/15d-14(a).
32.1	Certification of the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Enacted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Enacted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	Financial statements from the quarterly report on Form 10-Q of LNB Bancorp, Inc. for the quarter ended September 30, 2014, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets at September 30, 2014 (unaudited) and December 31, 2013; (ii) Consolidated Statements of Income and Comprehensive Income (unaudited) for the three and nine months ended September 30, 2014 and 2013; (iii) Consolidated Statements of Shareholders' Equity (unaudited) for the nine months ended September 30, 2014 and 2013; (iv) Consolidated Statements of Cash Flows (unaudited) for the nine months ended September 30, 2014 and 2013; and (v) Notes to the Unaudited Consolidated Financial Statements.

62

EX-10.1

Exhibit 10.1

CHANGE IN CONTROL

SUPPLEMENTAL EXECUTIVE COMPENSATION AGREEMENT

This Agreement, effective as of the _____, by and between LNB Bancorp, Inc., an Ohio corporation (the "Company"), and ______("Executive"), is to EVIDENCE THAT:

WHEREAS the Company considers the establishment and maintenance of a sound and vital management team for the Company and its Subsidiaries (as defined in Section 1) to be essential to protecting and enhancing the best interests of the Company and its shareholders; and

WHEREAS the Company recognizes that, as is the case with many publicly held corporations, the possibility of a change in control may arise and that such possibility may result in the departure or distraction of management personnel to the detriment of the Company and its shareholders; and

WHEREAS the Board of Directors of the Company (the "Board") has determined that it is in the best interests of the Company and its shareholders to secure Executive's continued services for the Company and/or its Subsidiaries and to ensure Executive's continued and undivided dedication to Executive's duties in the event of any occurrence of a Change in Control (as defined in Section 1) involving the Company; and

WHEREAS Executive and the Company acknowledge that the terms and conditions of this Agreement shall apply only if a Change in Control occurs, except for the covenants contained in Section 11 which shall apply in all circumstances; and

WHEREAS Executive further acknowledges and agrees that this Agreement does not alter Executive's status as an "employee at will" with the Company;

NOW, THEREFORE, for and in consideration of the mutual covenants and agreements herein contained, and intending to be legally bound hereby, the Company and Executive (collectively, the "Parties" and, individually, a "Party") hereby agree as follows:

1.Definitions. As used in this Agreement, the following terms shall have the respective meanings set forth below:

(a) "Bonus Amount" means the highest annual incentive bonus earned by Executive from the Company (or its Subsidiaries) during the last three (3) completed fiscal years of the Company immediately preceding Executive’s Date of Termination.

(b) "Cause" means any one or more of the following: (i) the willful and continued failure of Executive to perform substantially Executive's duties with the Company or its Subsidiaries (other than any such failure resulting from Executive's Disability or any such failure subsequent to Executive being delivered a Notice of Termination without Cause by the Company or its Subsidiaries or after Executive delivering a Notice of Termination for Good Reason to the Company or its Subsidiaries) after a written demand for substantial performance is delivered to Executive by the Board which specifically identifies the manner in which the Board believes that Executive has not substantially performed Executive's duties and provides Executive with ten (10) business days to correct such failure; or (ii) the willful engaging by Executive in illegal conduct or gross misconduct which is injurious to the Company or its Subsidiaries; or (iii) the conviction of Executive of, or a plea by Executive of nolo contendere to, a felony; or (iv) Executive's breach of or failure to perform any of the non-competition and non-disclosure covenants contained in Section 11 of this Agreement or contained in any other document signed by Executive and by the Company (or any Subsidiary). For purposes of this paragraph (b), no act or failure to act by Executive shall be considered "willful" unless done or omitted to be done by Executive in bad faith and without reasonable belief that Executive's action or omission was in the best interests of the Company and its Subsidiaries. Any act or failure to act based upon authority given pursuant to a resolution duly adopted by the Board, based upon the advice of counsel for the Company, or based upon the instructions of the Company's chief executive officer or another senior officer of the Company shall be conclusively presumed to be done, or omitted to be done, by Executive in good faith and in the best interests of the Company and its Subsidiaries.

(c) "Change in Control" means the occurrence of any one of the following events:

(i) if individuals who, on the date of this Agreement, constitute the Board (the "Incumbent Directors") cease for any reason to constitute at least a majority of the Board; provided, however, that: (A) any person becoming a director subsequent to the date of this Agreement, whose election or nomination for election was approved by a vote of at least two-thirds (2/3) of the Incumbent Directors then on the Board (either by a specific vote or by approval of the proxy statement of the Company in which such person is named as a nominee for director, without written objection by such Incumbent Directors to such nomination), shall be deemed to be an Incumbent Director; and (B) no individual elected or nominated as a director of the Company initially as a result of an actual or threatened election contest with respect to directors or any other actual or threatened solicitation of proxies by or on behalf of any person other than the Board shall be deemed to be an Incumbent Director;

(ii) if any "person" (as such term is defined in Section 3(a)(9) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") and as used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act) is or becomes a "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing thirty percent (30%) or more of the combined voting power of the Company's then-outstanding securities eligible to vote for the election of the Board (the "Company Voting Securities"); provided, however, that the events described in this clause (ii) shall not be deemed to be a Change in Control by virtue of any of the following acquisitions: (A) by the Company or any Subsidiary; (B) by any employee benefit plan sponsored or maintained by the Company or any Subsidiary or by any employee stock benefit trust created by the Company or any Subsidiary; (C) by any underwriter temporarily holding securities pursuant to an offering of such securities; (D) pursuant to a Non-Qualifying Transaction (as defined in clause (iii) of this paragraph (c), below); (E) pursuant to any acquisition by Executive or by any group of persons including Executive (or any entity controlled by Executive or any group of persons including Executive); or (F) a transaction (other than one described in clause (iii) of this paragraph (c), below) in which Company Voting Securities are acquired from the Company, if a majority of the Incumbent Directors approves a resolution providing expressly that the acquisition pursuant to this subparagraph (F) does not constitute a Change in Control under this clause (ii);

(iii) upon the consummation of a merger, consolidation, share exchange or similar form of corporate transaction involving the Company or any of its Subsidiaries that requires the approval of the Company's shareholders, whether for such transaction or the issuance of securities in the transaction (a "Business Combination"), unless immediately following such Business Combination: (A) more than fifty percent (50%) of the total voting power of either (1) the corporation resulting from the consummation of such Business Combination (the "Surviving Corporation") or, if applicable, (2) the ultimate parent corporation that directly or indirectly has beneficial ownership of one hundred percent (100%) of the voting securities eligible to elect directors of the Surviving Corporation (the "Parent Corporation") is represented by Company Voting Securities that were outstanding immediately prior to such Business Combination (or, if applicable, represented by shares into which such Company Voting Securities were converted pursuant to such Business Combination), and such voting power among the holders thereof is in substantially the same proportion as the voting power of such Company Voting Securities among the holders thereof immediately prior to the Business Combination; (B) no person (other than any employee benefit plan sponsored or maintained by the Surviving Corporation or the Parent Corporation or any employee stock benefit trust created by the Surviving Corporation or the Parent Corporation) is or becomes the beneficial owner, directly or indirectly, of thirty percent (30%) or more of the total voting power of the outstanding voting securities eligible to elect directors of the Parent Corporation (or, if there is no Parent Corporation, the Surviving Corporation); and (C) at least a majority of the members of the board of directors of the Parent Corporation (or, if there is no Parent Corporation, the Surviving Corporation) were Incumbent Directors at the time of the Board's approval of the execution of the initial agreement providing for such Business Combination (any Business Combination which satisfies all of the criteria specified in (A), (B) and (C) above shall be deemed to be a "Non-Qualifying Transaction"); or

(iv) upon liquidation or dissolution of the Company or consummation of the sale of all or substantially all of the Company's assets but only if, pursuant to such liquidation or sale, the assets of the Company are transferred to an entity not owned (directly or indirectly) by the Company's shareholders.

Notwithstanding the foregoing, a Change in Control shall not be deemed to occur solely because any person acquires beneficial ownership of more than thirty percent (30%) of Company Voting Securities as a result of the acquisition of Company Voting Securities by the Company which reduces the number of Company Voting Securities outstanding; provided, however, that if (after such acquisition by the Company) such person becomes the beneficial owner of additional Company Voting Securities that increases the percentage of outstanding Company Voting Securities beneficially owned by such person, a Change in Control shall then occur. Notwithstanding anything in this Agreement to the contrary, if (A) Executive's employment is terminated prior to a Change in Control for reasons that would have constituted a Qualifying Termination if they had occurred following a Change in Control, (B) Executive reasonably demonstrates that such termination (or event constituting Good Reason) was at the request of a third party who had indicated an intention or taken steps reasonably calculated to effect a Change in Control, and (C) a Change in Control involving such third party (or a party competing with such third party to effectuate a Change in Control) does occur, then (for purposes of this Agreement) the date immediately prior to the date of such termination of employment (or event constituting Good Reason) shall be treated as a Change in Control.

(d) "Date of Termination" means (1) the effective date on which Executive's employment by the Company and its Subsidiaries terminates as specified in a prior written notice by the Company, a Subsidiary or Executive (as the case may be) to the other, delivered pursuant to Section 9, or (2) if Executive's employment by the Company terminates by reason of death, the date of death of Executive, or (3) if the Executive incurs a Disability, the date of such Disability as determined by a physician chosen by the Company. For purposes of determining the timing of payments and benefits to Executive under Section 4, the date of the actual Change in Control shall be treated as Executive's Date of Termination.

(e) "Disability" means Executive's inability to perform Executive's then-existing duties with the Company or its Subsidiaries on a full-time basis for at least one hundred eighty (180) consecutive days as a result of Executive's incapacity due to physical or mental illness.

(f) "Good Reason" means, without Executive's express written consent, the occurrence of any of the following events after a Change in Control:

(i) (A) any change in the duties or responsibilities (including reporting responsibilities) of Executive that is inconsistent in any material and adverse respect with Executive's positions, duties, responsibilities or status with the Company or its Subsidiaries immediately prior to such Change in Control (including any material and adverse diminution of such duties or responsibilities), or (B) a material and adverse change in Executive's titles or offices (including, if applicable, membership on the Board) with the Company or its Subsidiaries as existing immediately prior to such Change in Control;

(ii) (A) a reduction by the Company or its Subsidiaries in Executive's rate of annual base salary as in effect immediately prior to such Change in Control (or as such annual base salary may be increased from time to time thereafter), or (B) the failure by the Company or its Subsidiaries to pay Executive an annual bonus (if any) in respect of the year in which such Change in Control occurs;

(iii) any requirement of the Company or its Subsidiaries that Executive: (A) be based anywhere more than fifty (50) miles from the Executive's residence at the time of the Change in Control, or (B) travel on Company or Subsidiary business to an extent substantially greater than the travel obligations of Executive immediately prior to such Change in Control;

(iv) the failure of the Company or its Subsidiaries to continue in effect any material employee benefit plan, compensation plan, welfare benefit plan or other material fringe benefit plan in which Executive is participating immediately prior to such Change in Control or the taking of any action by the Company or its Subsidiaries which would materially and adversely affect Executive's participation in or reduce Executive's benefits under any such plan, unless

Executive is permitted to participate in other plans providing Executive with substantially equivalent benefits in the aggregate; or

(v) the failure of the Company to obtain the assumption (and, if applicable, guarantee) agreement from any successor (and Parent Corporation) as contemplated in Section 8(b).

Notwithstanding any contrary provision in this Agreement: (A) an isolated, insubstantial and inadvertent action taken in good faith and which is remedied by the Company within ten (10) days after receipt of notice thereof given by Executive shall not constitute Good Reason; and (B) Executive's right to terminate employment for Good Reason shall not be affected by Executive's Disability; and (C) Executive's continued employment shall not constitute a consent to, or a waiver of rights with respect to, any event or condition constituting Good Reason (provided, however, that Executive must provide notice of termination of employment within thirty (30) days following Executive's knowledge of an event constituting Good Reason or such event shall not constitute Good Reason under this Agreement).

(g) “Highest Base Salary” means Executive’s highest annual base salary (excluding any bonuses) paid to Executive by the Company and by any Subsidiary during the Company’s last three (3) fiscal years completed immediately prior to the Date of Termination.

(h) "Qualifying Termination" means a termination of Executive's employment after a Change in Control and during the Termination Period (as defined herein) (i) by the Company or its Subsidiaries other than for Cause, or (ii) by Executive for Good Reason. Termination of Executive's employment on account of death or Disability shall not constitute a Qualifying Termination.

(i) "Retirement" means the termination of Executive's employment with the Company and its Subsidiaries: (A) on or after the first of the month coincident with or next following Executive's attainment of age sixty-five (65), or (B) on such later date as may be provided in a written agreement between the Company or its Subsidiaries and Executive.

(j) "Subsidiary" means any corporation or other entity in which the Company: (A) has a direct or indirect ownership interest of fifty percent (50%) or more of the total combined voting power of the then-outstanding securities or interests of such corporation or other entity entitled to vote generally in the election of directors, or (B) has the right to receive fifty percent (50%) or more of the distribution of profits or fifty percent (50%) of the assets upon liquidation or dissolution.

(k) "Termination Period" means the two (2) year period beginning with a Change in Control and ending two (2) years following such Change in Control.

2.Obligation of Executive. In the event of a tender or exchange offer, proxy contest, or the execution of any agreement which, if consummated, would constitute a Change in Control, Executive agrees (as a condition to receiving any payments and benefits hereunder) not to voluntarily leave the employ of the Company (other than as a result of Disability, Retirement or an event which would constitute Good Reason if a Change in Control had occurred) until the Change in Control occurs or, if earlier, such tender or exchange offer, proxy contest, or agreement is terminated or abandoned.

3.Term of Agreement. The term of this Agreement shall be effective on the date hereof and shall continue in effect until the Company shall have given two (2) years' written notice of cancellation; provided, however, that (notwithstanding the delivery of any such notice) the term of this Agreement shall continue in effect for a period of two (2) years after a Change in Control, if such Change in Control shall have occurred during the term of this Agreement. Notwithstanding anything in this Agreement to the contrary, the term of this Agreement shall terminate if Executive or the Company terminates Executive's employment prior to a Change in Control.

4.Benefits Upon Qualifying Termination of Employment.

(a) Qualifying Termination - Cash Payment. If, during the Termination Period, Executive's employment with the Company and its Subsidiaries terminates pursuant to a Qualifying Termination, then the Company shall pay to Executive, within twenty (20) days following the Date of Termination, a lump sum cash amount equal to the sum of (i) two hundred (200%) of Executive's Highest Base Salary, as defined in Section 1(g), through the Date of Termination and any base salary and bonuses which have been earned and are payable, to the extent not theretofore paid or deferred, plus (ii) one hundred twenty-five percent (200%) of Executive's Bonus Amount.

(b) Qualifying Termination ¯ Continued Coverage. If, during the Termination Period, Executive's employment with the Company and its Subsidiaries terminates pursuant to a Qualifying Termination, the Company shall continue to provide, for a period of twenty-four (24) months following the Date of Termination, Executive (and Executive's dependents, if applicable) with the same level of medical insurance benefits upon substantially the same terms and conditions (including contributions required by Executive for such benefits) as existed immediately prior to Executive's Date of Termination (or, if more favorable to Executive, as such benefits and terms and conditions existed immediately prior to the Change in Control); provided, however, that if Executive is not eligible to continue to participate in the Company plan providing such benefits, the Company shall otherwise provide such benefits on the same after-tax basis as if continued participation had been permitted. Notwithstanding the foregoing, in the event Executive becomes re-employed with another employer and becomes eligible to receive medical insurance benefits from such employer, the medical insurance benefits described herein shall be secondary to such benefits during the period of such eligibility but only if (and to the extent that) the Company reimburses Executive for any increased cost and provides any additional benefits necessary to give Executive the benefits provided hereunder. Executive's accrued benefits as of the Date of Termination under the Company's medical insurance plan shall be payable in accordance with the terms of such plan.

Notwithstanding any contrary provision set forth in this Agreement, Company's payments to Executive shall be reduced to the extent that such payments (together with all other payments by Company to Executive under all other written or verbal agreements between Company and Executive) constitute an "excess parachute payment" under Section 280G of the Internal Revenue Code (as may be periodically amended).

5.Withholding Taxes. The Company shall withhold from all payments due to Executive hereunder all taxes which, by applicable Federal, State, local or other law, the Company is required to withhold therefrom.

6.Reimbursement of Expenses. If any contest or dispute shall arise under this Agreement involving the alleged failure or refusal of the Company or any of its Subsidiaries to perform fully in accordance with the terms hereof, the Company shall reimburse Executive for all reasonable legal fees and expenses, if any, incurred by Executive with respect to such contest or dispute, together with interest in an amount equal to the prime rate of Lorain National Bank from time to time in effect (but in no event higher than the legal rate permissible under applicable law), such interest to accrue from the date the Company becomes obligated to pay such fees and expenses through the date of payment thereof; provided, however, that this Section 6 shall apply only if (and to the extent that) the Company is held to have breached or violated its duties and obligations hereunder to Executive.

7.Scope of Agreement. Executive acknowledges that Executive is employed by the Company as an "employee at will" and that nothing in this Agreement shall be deemed to change Executive's status as an employee at will or to entitle Executive to continued employment with the Company or its Subsidiaries. If Executive's employment with the Company and its Subsidiaries terminates prior to a Change in Control or the term of this Agreement expires, Executive shall have no further rights under this Agreement (except as otherwise expressly provided hereunder).

8.Successors; Binding Agreement.

(a) This Agreement shall not be terminated by any Business Combination. In the event of any Business Combination, the provisions of this Agreement shall be binding upon the Surviving Corporation, and such Surviving Corporation shall be treated as the Company hereunder.

(b) The Company agrees that, in connection with any Business Combination, Company will cause any successor entity to the Company unconditionally to assume (and, for any Parent Corporation in such Business Combination, to guarantee), by written instrument delivered to Executive (or Executive's beneficiaries or estate), all of the obligations of the Company hereunder. Failure of the Company to obtain such assumption or guarantee prior to the effectiveness of any such Business Combination that constitutes a Change in Control shall be a breach of this Agreement and shall constitute Good Reason hereunder and, further, shall entitle Executive to compensation from the Company in the same amount and on the same terms as Executive would be entitled hereunder as if Executive's employment were terminated following a Change in Control by reason of a Qualifying Termination. For purposes of implementing this Section 8(b), the date on which any such Business Combination becomes effective shall be deemed the date Good Reason occurs and shall be the Date of Termination, if so requested by Executive.

(c) This Agreement shall inure to the benefit of and be enforceable by Executive's personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees. If Executive dies while any amounts would be payable to Executive hereunder if Executive had continued to live, all such amounts (unless otherwise provided herein) shall be paid in accordance with the terms of this Agreement to such person or persons appointed in writing by Executive to receive such amounts or, if no person is so appointed, to Executive's estate.

9.Notice.

(a) For purposes of this Agreement, all notices and other communications required or permitted hereunder shall be in writing and shall be deemed to have been properly given when delivered or three (3) days after deposit in the United States mail, certified and return receipt requested, postage prepaid, addressed as follows (or to such other address as either Party may have furnished to the other in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt):

¯ If to the Executive, at the address set forth below in the signatory provision below; and

¯ If to the Company:

LNB Bancorp, Inc.

457 Broadway

Lorain, OH 44052

Attn: President

(b) A written notice of Executive's Date of Termination by the Company or Executive, as the case may be, to the other Party shall (i) indicate the specific termination provision in this Agreement relied upon, (ii) to the extent applicable, set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Executive's employment under the provision so indicated, and (iii) specify the Date of Termination, which date shall be not less than fifteen (15) days (thirty (30) days, if termination is by the Company for Disability) nor more than sixty (60) days after the giving of such notice. The failure by Executive or the Company to set forth in such notice any fact or circumstance which contributes to a showing of Good Reason or Cause shall not waive any right of either Party or preclude either Party from asserting such fact or circumstance in enforcing such Party's rights hereunder.

10.Full Settlement; Resolution of Disputes. The Company's obligation to make payment under this Agreement and otherwise to perform its obligations hereunder shall be in lieu and in full settlement of all other severance payments to Executive (payable because of a Change in Control) under any other severance or employment agreement between Executive and the Company and its Subsidiaries (if any) and under any severance plan of the Company and its Subsidiaries (if any). In no event shall Executive be obligated to seek other employment or take other action by way of mitigation of the amounts payable to Executive under any of the provisions of this Agreement and, except as provided in Section 4, such amounts shall not be reduced whether or not Executive obtains other employment. Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by arbitration in Lorain County, Ohio, by three arbitrators in accordance with the rules of the American Arbitration Association then in effect. Judgment may be entered on the arbitrators' award in any State court having jurisdiction in Lorain County, Ohio. Except as otherwise provided in Section 6, each Party shall pay such Party's costs and expenses incurred in connection with any arbitration proceeding pursuant to this Section and the Parties shall each pay fifty percent (50%) of the costs of the arbitration proceedings.

11.Executive's Non-Disclosure and Non-Solicitation Promises.

11.1    Definitions. For purposes of this Section 11, the Parties agree to and understand the following definitions:

(a) "Competitive Activity" means the performance or rendering of any banking services; trust services and investment services; portfolio management; retirement planning; administration of employee benefit plans; administration of decedents' estates and court-supervised accounts, guardianships, and custodial arrangements; personal tax and estate tax planning; financial consulting services; investment advising services; and any other business activity, service or

product which competes with any existing or future business activity, service or product of the Company.

(b) "Confidential Information" means all of the following (whether written or verbal) pertaining to the Company: (i) trade secrets (as defined by Ohio law); customer lists, records and other information regarding the Company's customers (whether or not evidenced in writing); customer fee or price schedules and fee or price policies; financial books, plans, records, ledgers and information; business development plans; sales and marketing plans; research and development plans; employment and personnel manuals, records, data and policies; business manuals, methods and operations; business forms, correspondence, memoranda and other records; computer records and related data; and any other confidential or proprietary data and information of the Company or its customers which Executive encounters during the Employment Term; and (ii) all products, technology, ideas, inventions, discoveries, developments, devices, processes, business notes, forms and documents, business products, computer programs, and other creations (and improvements of any of the foregoing), whether patentable or copyrightable, which Executive has acquired, developed, conceived or made (whether directly or indirectly, whether solicited or unsolicited, or whether during normal work hours or during off-time) during the Employment Term and which relate to any business activity of the Company or are derived from the Confidential Information designated in Subitem (i) of this Section 11.1(b).

(c) "Customer" means a person, sole proprietorship, partnership, association, organization, corporation, limited liability company, or other entity (governmental or otherwise), wherever located: (i) to or for which the Company sells any products or renders or performs services either during the 180-day period immediately preceding commencement of the Restricted Period or during the Restricted Period, or (ii) which the Company solicits or (as demonstrated by plans, strategies or other tangible preparation) intends to solicit to purchase products or services from the Company either during the 180-day period immediately preceding commencement of the Restricted Period or during the Restricted Period.

(d) "Employment Term" means, for purposes of this Section 11, the period of time starting on the date Executive's employment with the Company commenced and terminating at the close of business on the date Executive's employment with the Company terminates.

(e) "Restricted Period" means a period of two (2) years (or, if shorter, the duration of the Employment Term) commencing on the date the Employment Term is terminated by either Party (for any reason, with or without cause); provided, however, that such period shall be extended to include any period of time during which Executive engages in any activity constituting a breach of this Agreement and any period of time during which litigation transpires wherein Executive is held to have breached this Agreement.

(f) "Company" means, for purposes of this Section 11, LNB Bancorp, Inc. and The Lorain National Bank (a national bank association), all direct and indirect parent and subsidiary entities thereof, and all entities related to LNB Bancorp, Inc., The Lorain National Bank or to such parent and subsidiary entities by common ownership.

11.2    Executive's Promises. Expressly in consideration for the Company's promises made in this Agreement, Executive promises and agrees that:

(a) Confidentiality. The Confidential Information is and, at all times, shall remain the exclusive property of the Company, and Executive (i) shall hold the Confidential Information in strictest confidence and in a position of trust for the Company, and (ii) except as may be necessary to perform Executive's employment duties with the Company, shall not (directly or indirectly) use for any purpose, copy, duplicate, disclose, convey to any third-party or convert any Confidential Information, either during the Employment Term or at any time following termination of the Employment Term (by either Party, for any reason, with or without cause), and (iii) upon the request of the Company at any time during or after the Employment Term, shall immediately deliver to the Company all the Confidential Information in Executive's

possession and shall neither convey to any third-party nor retain any copies or duplicates thereof.

(b) Customers. During the Restricted Period, Executive (or any entity owned or controlled by Executive) shall not directly or indirectly (i) solicit from or perform for any Customer a Competitive Activity, wherever such Customer is located, or (ii) influence (or attempt to influence) any Customer to transfer such Customer's patronage or business from the Company, or (iii) otherwise interfere with any business relationship of the Company with any Customer.

(c) Employees. During the Restricted Period, Executive (or any entity owned or controlled by Executive) shall not directly or indirectly (i) employ, engage, contract for the services of, or solicit or otherwise induce the services of any person who, during the one hundred eighty (180) day period immediately preceding commencement of the Restricted Period or during the Restricted Period, is or was an employee of the Company, or (ii) otherwise interfere with (or attempt to interfere with) any employment relationship of the Company with any employee of the Company.

(d) Other Employment. During the Employment Term, Executive shall not perform services (whether or not for compensation) as an employee, independent contractor, consultant, representative or agent of any person, sole proprietorship, partnership, limited liability company, corporation, association (other than the Company), organization, or other entity (governmental or otherwise) without the prior written consent of the President of the Company (or any person expressly designated by the President).

(e) Costs of Enforcement. Executive shall pay all reasonable legal fees, court costs, expert fees, investigation costs, and other expenses incurred by the Company in the enforcement of this Section 11.

11.3    Importance of Executive's Promises. Executive understands and agrees that:

(a) during the Employment Term, Executive will materially assist the Company in the generation, development or enhancement of certain Confidential Information and certain other business assets and activities for Company; and

(b) Executive's promises in this Section 11: (1) were negotiated at arm's-length and with ample time for Executive to seek the advice of legal counsel, (2) are required for the fair and reasonable protection of the Company and the Confidential Information, and (3) do not constitute an unreasonable hardship to Executive in working for the Company or in subsequently earning a livelihood in Executive's field of expertise; and

(c) if Executive breaches (or threatens to breach) any or all of the promises in this Section 11: the secrecy and thereby the value of the Confidential Information will be significantly jeopardized; the Company will be subject to the immediate risk of material, immeasurable, and irreparable damage and harm; the remedies at law for Executive's breach shall be inadequate; the Company shall therefore be entitled to injunctive relief against Executive in addition to any and all other legal or equitable remedies; and

(d) if Executive had not agreed to the restrictive promises in this Agreement, the Company would not have signed this Agreement.

11.4    Extent and Continuation of Executive's Promises. Executive's promises, duties and obligations made in this Section 11 shall apply to Executive irrespective of whether a Change in Control occurs and shall survive the voluntary or involuntary cessation or termination of the Employment Term by either Party (for any reason, with or without cause). If any of the restrictions contained in this Section 11 are ever judicially held to exceed the limitations permitted by law, then such restrictions shall be deemed to be reformed to comply with the maximum limitations permitted by law. The existence of any claim or cause of action by Executive against the Company (whether or not derived from or based upon Executive's employment with the Company) shall not constitute a defense to the Company's enforcement of any covenant, duty or obligation of Executive in this Section 11.

12.Employment with Subsidiaries. For purposes of this Agreement, any and all references to Executive's employment with the Company shall be deemed to include Executive's employment by any Subsidiary and, with respect to such employment by a Subsidiary, the term "Company" as used in this Agreement shall be deemed to include any Subsidiary which employs Executive.

13.Survival. The respective obligations and benefits afforded to the Company and Executive as provided in Sections 4 (to the extent that payments or benefits are owed as a result of the termination of employment that occurs during the Termination Period), 5, 6, 8, 10 and 11 shall survive the termination of this Agreement and the term of this Agreement.

14.Governing Law; Validity. The interpretation, construction and performance of this Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of Ohio without regard to the principle of conflicts of laws. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement, which other provisions shall remain in full force and effect. The Parties hereby agree that exclusive venue for all litigation arising hereunder lies solely with the State Courts of Lorain County, Ohio and each Party hereby submits and agrees to the personal jurisdiction of such Lorain County State Courts.

15.Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed to be an original and all of which together shall constitute one and the same instrument.

16.Miscellaneous. No provision of this Agreement may be modified or waived unless such modification or waiver is agreed to in writing and signed by Executive and by a duly authorized officer of the Company. No waiver by either Party (at any time) of any breach by the other Party of, or compliance with, any condition or provision of this Agreement to be performed by such other Party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. Except as otherwise expressly set forth in this Agreement, the failure by Executive or the Company to insist upon strict compliance with any provision of this Agreement or to assert any right Executive or the Company may have hereunder shall not be deemed to be a waiver of such provision or right or any other provision or right of this Agreement.

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by a duly authorized officer of the Company and Executive has executed this Agreement as of the day and year first above written.

LNB Bancorp, Inc.
By:	/s/ Daniel E. Klimas
	President and Chief Executive Officer
	~ Company ~
	/s/ James H. Nicholson
	[Name]
	Address
	City, State
	~ Executive ~

EX-31.1

Exhibit 31.1

CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER

PURSUANT TO RULE 13A-14(A)/15D-14(A)

I, Daniel E. Klimas, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q for the quarter ended September 30, 2014 of LNB Bancorp, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:	November 7, 2014	/s/ Daniel E. Klimas
		Daniel E. Klimas
		President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION OF THE CHIEF FINANCIAL OFFICER

PURSUANT TO RULE 13A-14(A)/15D-14(A)

I, James H. Nicholson, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q for the quarter ended September 30, 2014 of LNB Bancorp, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:	November 7, 2014	/s/ James H. Nicholson
		James H. Nicholson
		Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350, AS ENACTED

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of LNB Bancorp, Inc. (the “Corporation”) for the period ending September 30, 2014 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Daniel E. Klimas, President and Chief Executive Officer of the Corporation, certify, pursuant to 18 U.S.C. Section 1350, as enacted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

(i)     The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(ii)     The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation as of, and for, the periods presented in the report.

/s/ Daniel E. Klimas    

Daniel E. Klimas

President and Chief Executive Officer

November 7, 2014

EX-32.2

Exhibit 32.2

CERTIFICATION OF THE CHIEF FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350, AS ENACTED

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of LNB Bancorp, Inc. (the “Corporation”) for the period ending September 30, 2014 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, James H. Nicholson, Chief Financial Officer of the Corporation, certify, pursuant to 18 U.S.C. Section 1350, as enacted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

(i)     The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(ii)     The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation as of, and for, the periods presented in the report.

/s/ James H. Nicholson    

James H. Nicholson

Chief Financial Officer

November 7, 2014

XML

Securities - Additional Information (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended	12 Months Ended
	Sep. 30, 2014 securities	Dec. 31, 2013 securities
Investments, Debt and Equity Securities [Abstract]
Carrying value of securities	$ 182,185	$ 154,479
Number of securities	42	53
Available-for-sale Securities, Continuous Unrealized Loss Position, Aggregate Losses	$ 3,168	$ 8,651

XML

Federal Home Loan Bank Advances - Maturities of FHLB Advances Outstanding (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Maturities of FHLB advances outstanding
Federal Home Loan Bank advances amount	$ 46,867	$ 46,708
Restructuring prepayment penalty	(633)	(793)
Maturities January 2014 with fixed rate 3.55% [Member]
Maturities of FHLB advances outstanding
Interest rates on Federal Home Loan Bank Advances	3.55%
Federal Home Loan Bank advances amount	0	1
Maturities January 2015 with fixed rate 0.80% [Member]
Maturities of FHLB advances outstanding
Interest rates on Federal Home Loan Bank Advances	0.80%
Federal Home Loan Bank advances amount	20,000	20,000
Maturity December 2016 with fixed rate 0.79% [Member]
Maturities of FHLB advances outstanding
Interest rates on Federal Home Loan Bank Advances	0.79%
Federal Home Loan Bank advances amount	10,000	10,000
Maturity June 2017 through December 2017, with fixed rates ranging from 0.89% to 0.99% [Member]
Maturities of FHLB advances outstanding
Federal Home Loan Bank advances amount	15,000	15,000
Maturity June 2017 through December 2017, with fixed rates ranging from 0.89% to 0.99% [Member] | Minimum [Member]
Maturities of FHLB advances outstanding
Interest rates on Federal Home Loan Bank Advances	0.89%
Maturity June 2017 through December 2017, with fixed rates ranging from 0.89% to 0.99% [Member] | Maximum [Member]
Maturities of FHLB advances outstanding
Interest rates on Federal Home Loan Bank Advances	0.99%
Maturity June 2018 fixed rate 1.24% [Member]
Maturities of FHLB advances outstanding
Interest rates on Federal Home Loan Bank Advances	1.24%
Federal Home Loan Bank advances amount	$ 2,500	$ 2,500

XML

Deposits - Deposit Balances (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Deposits
Demand and other noninterest-bearing	$ 153,952	$ 148,961
Interest checking	179,913	164,662
Savings	127,343	125,582
Money market accounts	143,894	103,534
Consumer time deposits	343,612	382,137
Public time deposits	108,070	120,713
Total deposits	$ 1,056,784	$ 1,045,589

XML

Federal Home Loan Bank Advances - Schedule of Maturities (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Balance
2015	$ 20,000
2016	10,000
2017	15,000
Thereafter	2,500
Total	47,500
Restructuring prepayment penalty	(633)	(793)
Federal Home Loan Bank advances (Note 8)	$ 46,867	$ 46,708
Weighted Average Rate
2014	0.00%
2015	0.80%
2016	0.79%
2017	0.96%
Thereafter	1.24%
Total	0.87%

XML

Loans and Allowance for Loan Losses - Summary of Recorded Investment Based on Delinquency Status (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total ending loans balance	$ 922,514	$ 902,299
Commercial real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total ending loans balance	413,625	401,591
Commercial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total ending loans balance	85,543	88,646
Residential Real Estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total ending loans balance	70,891	66,507
Home equity loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total ending loans balance	125,318	123,076
Indirect
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total ending loans balance	213,450	206,323
Consumer
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total ending loans balance	13,687	16,156
Commercial Credit Exposure
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Pass Credits	478,040	467,759
Total loans internally credit risk graded	505,786	497,099
Total loans not internally credit risk graded	416,728	405,200
Total ending loans balance	922,514	902,299
Commercial Credit Exposure | Grade 1-Minimal
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Pass Credits	69	52
Commercial Credit Exposure | Grade 2-Modest
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Pass Credits	4,803	37
Commercial Credit Exposure | Grade 3-Better than average
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Pass Credits	8,722	857
Commercial Credit Exposure | Grade 4-Average
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Pass Credits	348,614	23,464
Commercial Credit Exposure | Grade 5-Acceptable
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Pass Credits	115,832	443,349
Commercial Credit Exposure | Grade 6-Special mention
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans internally credit risk graded	5,974	5,072
Commercial Credit Exposure | Grade 7-Substandard
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans internally credit risk graded	21,772	24,268
Commercial Credit Exposure | Grade 8-Doubtful
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans internally credit risk graded	0	0
Commercial Credit Exposure | Grade 9-Loss
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans internally credit risk graded	0	0
Commercial Credit Exposure | Current loans not internally risk graded
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans not internally credit risk graded	411,806	398,444
Commercial Credit Exposure | 30-59 days past due loans not internally risk graded
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans not internally credit risk graded	883	1,511
Commercial Credit Exposure | 60-89 days past due loans not internally risk graded
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans not internally credit risk graded	269	1,722
Commercial Credit Exposure | 90 days past due loans not internally risk graded
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans not internally credit risk graded	3,770	3,523
Commercial Credit Exposure | Commercial real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Pass Credits	387,350	376,218
Total loans internally credit risk graded	413,625	401,591
Total loans not internally credit risk graded	0	0
Total ending loans balance	413,625	401,591
Commercial Credit Exposure | Commercial real estate | Grade 1-Minimal
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Pass Credits	0	0
Commercial Credit Exposure | Commercial real estate | Grade 2-Modest
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Pass Credits	600	0
Commercial Credit Exposure | Commercial real estate | Grade 3-Better than average
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Pass Credits	8,675	857
Commercial Credit Exposure | Commercial real estate | Grade 4-Average
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Pass Credits	284,370	22,580
Commercial Credit Exposure | Commercial real estate | Grade 5-Acceptable
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Pass Credits	93,705	352,781
Commercial Credit Exposure | Commercial real estate | Grade 6-Special mention
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans internally credit risk graded	5,520	2,146
Commercial Credit Exposure | Commercial real estate | Grade 7-Substandard
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans internally credit risk graded	20,755	23,227
Commercial Credit Exposure | Commercial real estate | Grade 8-Doubtful
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans internally credit risk graded	0	0
Commercial Credit Exposure | Commercial real estate | Grade 9-Loss
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans internally credit risk graded	0	0
Commercial Credit Exposure | Commercial real estate | Current loans not internally risk graded
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans not internally credit risk graded	0	0
Commercial Credit Exposure | Commercial real estate | 30-59 days past due loans not internally risk graded
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans not internally credit risk graded	0	0
Commercial Credit Exposure | Commercial real estate | 60-89 days past due loans not internally risk graded
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans not internally credit risk graded	0	0
Commercial Credit Exposure | Commercial real estate | 90 days past due loans not internally risk graded
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans not internally credit risk graded	0	0
Commercial Credit Exposure | Commercial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Pass Credits	85,149	85,339
Total loans internally credit risk graded	85,543	88,646
Total loans not internally credit risk graded	0	0
Total ending loans balance	85,543	88,646
Commercial Credit Exposure | Commercial | Grade 1-Minimal
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Pass Credits	69	52
Commercial Credit Exposure | Commercial | Grade 2-Modest
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Pass Credits	4,203	37
Commercial Credit Exposure | Commercial | Grade 3-Better than average
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Pass Credits	47	0
Commercial Credit Exposure | Commercial | Grade 4-Average
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Pass Credits	61,069	271
Commercial Credit Exposure | Commercial | Grade 5-Acceptable
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Pass Credits	19,761	84,979
Commercial Credit Exposure | Commercial | Grade 6-Special mention
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans internally credit risk graded	221	2,891
Commercial Credit Exposure | Commercial | Grade 7-Substandard
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans internally credit risk graded	173	416
Commercial Credit Exposure | Commercial | Grade 8-Doubtful
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans internally credit risk graded	0	0
Commercial Credit Exposure | Commercial | Grade 9-Loss
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans internally credit risk graded	0	0
Commercial Credit Exposure | Commercial | Current loans not internally risk graded
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans not internally credit risk graded	0	0
Commercial Credit Exposure | Commercial | 30-59 days past due loans not internally risk graded
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans not internally credit risk graded	0	0
Commercial Credit Exposure | Commercial | 60-89 days past due loans not internally risk graded
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans not internally credit risk graded	0	0
Commercial Credit Exposure | Commercial | 90 days past due loans not internally risk graded
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans not internally credit risk graded	0	0
Commercial Credit Exposure | Residential Real Estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Pass Credits	5,541	6,202
Total loans internally credit risk graded	6,618	6,862
Total loans not internally credit risk graded	64,273	59,645
Total ending loans balance	70,891	66,507
Commercial Credit Exposure | Residential Real Estate | Grade 1-Minimal
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Pass Credits	0	0
Commercial Credit Exposure | Residential Real Estate | Grade 2-Modest
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Pass Credits	0	0
Commercial Credit Exposure | Residential Real Estate | Grade 3-Better than average
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Pass Credits	0	0
Commercial Credit Exposure | Residential Real Estate | Grade 4-Average
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Pass Credits	3,175	613
Commercial Credit Exposure | Residential Real Estate | Grade 5-Acceptable
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Pass Credits	2,366	5,589
Commercial Credit Exposure | Residential Real Estate | Grade 6-Special mention
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans internally credit risk graded	233	35
Commercial Credit Exposure | Residential Real Estate | Grade 7-Substandard
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans internally credit risk graded	844	625
Commercial Credit Exposure | Residential Real Estate | Grade 8-Doubtful
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans internally credit risk graded	0	0
Commercial Credit Exposure | Residential Real Estate | Grade 9-Loss
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans internally credit risk graded	0	0
Commercial Credit Exposure | Residential Real Estate | Current loans not internally risk graded
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans not internally credit risk graded	62,336	56,390
Commercial Credit Exposure | Residential Real Estate | 30-59 days past due loans not internally risk graded
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans not internally credit risk graded	267	64
Commercial Credit Exposure | Residential Real Estate | 60-89 days past due loans not internally risk graded
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans not internally credit risk graded	2	960
Commercial Credit Exposure | Residential Real Estate | 90 days past due loans not internally risk graded
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans not internally credit risk graded	1,668	2,231
Commercial Credit Exposure | Home equity loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Pass Credits	0	0
Total loans internally credit risk graded	0	0
Total loans not internally credit risk graded	125,318	123,076
Total ending loans balance	125,318	123,076
Commercial Credit Exposure | Home equity loans | Grade 1-Minimal
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Pass Credits	0	0
Commercial Credit Exposure | Home equity loans | Grade 2-Modest
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Pass Credits	0	0
Commercial Credit Exposure | Home equity loans | Grade 3-Better than average
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Pass Credits	0	0
Commercial Credit Exposure | Home equity loans | Grade 4-Average
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Pass Credits	0	0
Commercial Credit Exposure | Home equity loans | Grade 5-Acceptable
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Pass Credits	0	0
Commercial Credit Exposure | Home equity loans | Grade 6-Special mention
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans internally credit risk graded	0	0
Commercial Credit Exposure | Home equity loans | Grade 7-Substandard
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans internally credit risk graded	0	0
Commercial Credit Exposure | Home equity loans | Grade 8-Doubtful
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans internally credit risk graded	0	0
Commercial Credit Exposure | Home equity loans | Grade 9-Loss
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans internally credit risk graded	0	0
Commercial Credit Exposure | Home equity loans | Current loans not internally risk graded
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans not internally credit risk graded	123,280	120,359
Commercial Credit Exposure | Home equity loans | 30-59 days past due loans not internally risk graded
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans not internally credit risk graded	123	932
Commercial Credit Exposure | Home equity loans | 60-89 days past due loans not internally risk graded
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans not internally credit risk graded	149	707
Commercial Credit Exposure | Home equity loans | 90 days past due loans not internally risk graded
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans not internally credit risk graded	1,766	1,078
Commercial Credit Exposure | Indirect
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Pass Credits	0	0
Total loans internally credit risk graded	0	0
Total loans not internally credit risk graded	213,450	206,323
Total ending loans balance	213,450	206,323
Commercial Credit Exposure | Indirect | Grade 1-Minimal
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Pass Credits	0	0
Commercial Credit Exposure | Indirect | Grade 2-Modest
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Pass Credits	0	0
Commercial Credit Exposure | Indirect | Grade 3-Better than average
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Pass Credits	0	0
Commercial Credit Exposure | Indirect | Grade 4-Average
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Pass Credits	0	0
Commercial Credit Exposure | Indirect | Grade 5-Acceptable
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Pass Credits	0	0
Commercial Credit Exposure | Indirect | Grade 6-Special mention
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans internally credit risk graded	0	0
Commercial Credit Exposure | Indirect | Grade 7-Substandard
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans internally credit risk graded	0	0
Commercial Credit Exposure | Indirect | Grade 8-Doubtful
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans internally credit risk graded	0	0
Commercial Credit Exposure | Indirect | Grade 9-Loss
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans internally credit risk graded	0	0
Commercial Credit Exposure | Indirect | Current loans not internally risk graded
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans not internally credit risk graded	212,980	205,938
Commercial Credit Exposure | Indirect | 30-59 days past due loans not internally risk graded
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans not internally credit risk graded	324	332
Commercial Credit Exposure | Indirect | 60-89 days past due loans not internally risk graded
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans not internally credit risk graded	118	30
Commercial Credit Exposure | Indirect | 90 days past due loans not internally risk graded
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans not internally credit risk graded	28	23
Commercial Credit Exposure | Consumer
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Pass Credits	0	0
Total loans internally credit risk graded	0	0
Total loans not internally credit risk graded	13,687	16,156
Total ending loans balance	13,687	16,156
Commercial Credit Exposure | Consumer | Grade 1-Minimal
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Pass Credits	0	0
Commercial Credit Exposure | Consumer | Grade 2-Modest
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Pass Credits	0	0
Commercial Credit Exposure | Consumer | Grade 3-Better than average
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Pass Credits	0	0
Commercial Credit Exposure | Consumer | Grade 4-Average
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Pass Credits	0	0
Commercial Credit Exposure | Consumer | Grade 5-Acceptable
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Pass Credits	0	0
Commercial Credit Exposure | Consumer | Grade 6-Special mention
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans internally credit risk graded	0	0
Commercial Credit Exposure | Consumer | Grade 7-Substandard
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans internally credit risk graded	0	0
Commercial Credit Exposure | Consumer | Grade 8-Doubtful
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans internally credit risk graded	0	0
Commercial Credit Exposure | Consumer | Grade 9-Loss
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans internally credit risk graded	0	0
Commercial Credit Exposure | Consumer | Current loans not internally risk graded
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans not internally credit risk graded	13,210	15,757
Commercial Credit Exposure | Consumer | 30-59 days past due loans not internally risk graded
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans not internally credit risk graded	169	183
Commercial Credit Exposure | Consumer | 60-89 days past due loans not internally risk graded
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans not internally credit risk graded	0	25
Commercial Credit Exposure | Consumer | 90 days past due loans not internally risk graded
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total loans not internally credit risk graded	$ 308	$ 191

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Earnings Per Common Share - Basic and Diluted Earnings Per Share (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Basic EPS
Net income	$ 2,086	$ 1,519	$ 5,715	$ 4,455
Preferred stock dividend and accretion	0	109	16	483
Income allocated to participating securities	8	13	24	40
Net income allocated to common shareholders	2,078	1,397	5,675	3,932
Average common shares outstanding	9,665,088	9,303,702	9,666,107	8,940,213
Less: participating shares included in average common shares outstanding	38,552	90,532	43,371	99,268
Average common shares outstanding used in basic EPS	9,626,536	9,213,170	9,622,736	8,840,945
Basic net income per share (in dollars per share)	$ 0.22	$ 0.15	$ 0.59	$ 0.44
Diluted EPS:
Income used in diluted earnings per share calculation	$ 2,078	$ 1,397	$ 5,675	$ 3,932
Average common shares outstanding	9,626,536	9,213,170	9,622,736	8,840,945
Stock Options	32,718	12,292	14,619	9,184
Average common stock shares outstanding	9,659,254	9,225,462	9,637,355	8,850,129
Diluted net income per share (in dollars per share)	$ 0.22	$ 0.15	$ 0.59	$ 0.44

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Commitments and Contingencies - Additional Information (Details)	9 Months Ended
	Sep. 30, 2014
Commitments and Contingencies Disclosure [Abstract]
Commitment expiration date, minimum	30 days
Commitment expiration date, maximum	120 days

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Loans and Allowance for Loan Losses (Tables)

9 Months Ended

Sep. 30, 2014

Receivables [Abstract]

Summary of Activity in the Loan Balances and the Allowance for Loan Losses by Segment

Activity in the allowance for loan losses by portfolio segment for the three and nine months ended September 30, 2014 and 2013 are summarized as follows:

Nine Months Ended September 30, 2014
	Commercial Real Estate			Commercial			Residential Real Estate			Home Equity Loans			Indirect			Consumer			Total
	(Dollars in thousands)
Allowance for loan losses:
Balance, beginning of period	$	10,122		$	497		$	1,411		$	3,484		$	1,593		$	398		$	17,505
Losses charged off	(1,133		)	(35		)	(213		)	(1,074		)	(283		)	(150		)	(2,888		)
Recoveries	32			32			6			65			143			24			302
Provision charged to expense	94			204			865			644			639			67			2,513
Balance, end of period	$	9,115		$	698		$	2,069		$	3,119		$	2,092		$	339		$	17,432
Three Months Ended September 30, 2014
	Commercial Real Estate			Commercial			Residential Real Estate			Home Equity Loans			Indirect			Consumer			Total
	(Dollars in thousands)
Allowance for loan losses:
Balance, beginning of period	$	9,944		$	476		$	1,446		$	3,789		$	1,533		$	242		$	17,430
Losses charged off	(433		)	(35		)	(63		)	(179		)	(106		)	(41		)	(857		)
Recoveries	11			30			—			46			46			6			139
Provision charged to expense	(407		)	227			686			(537		)	619			132			720
Balance, end of period	$	9,115		$	698		$	2,069		$	3,119		$	2,092		$	339		$	17,432
As of September 30, 2014
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	703		$	5		$	178		$	—		$	—		$	—		$	886
Collectively evaluated for impairment	8,412			693			1,891			3,119			2,092			339			16,546
Total ending allowance balance	$	9,115		$	698		$	2,069		$	3,119		$	2,092		$	339		$	17,432
Loans:
Individually evaluated for impairment	$	15,271		$	184		$	1,356		$	852		$	147		$	64		$	17,874
Collectively evaluated for impairment	398,354			85,359			69,535			124,466			213,303			13,623			904,640
Total ending loans balance	$	413,625		$	85,543		$	70,891		$	125,318		$	213,450		$	13,687		$	922,514

Nine Months Ended September 30, 2013
	Commercial Real Estate			Commercial			Residential Real Estate			Home Equity Loans			Indirect			Consumer			Total
Allowance for loan losses:
Balance, beginning of period	$	11,386		$	835		$	1,559		$	2,357		$	1,230		$	270		$	17,637
Losses charged off	(1,475		)	(120		)	(679		)	(1,439		)	(555		)	(181		)	(4,449		)
Recoveries	584			7			277			60			276			49			1,253
Provision charged to expense	(33		)	(246		)	281			2,530			660			158			3,350
Balance, end of period	$	10,462		$	476		$	1,438		$	3,508		$	1,611		$	296		$	17,791
Three Months Ended September 30, 2013
	Commercial Real Estate			Commercial			Residential Real Estate			Home Equity Loans			Indirect			Consumer			Total
	(Dollars in thousands)
Allowance for loan losses:
Balance, beginning of period	$	10,424		$	438		$	1,606		$	3,508		$	1,581		$	258		$	17,815
Losses charged off	(630		)	—			(35		)	(410		)	(196		)	(83		)	(1,354		)
Recoveries	83			2			178			5			104			8			380
Provision charged to expense	585			36			(311		)	405			122			113			950
Balance, end of period	$	10,462		$	476		$	1,438		$	3,508		$	1,611		$	296		$	17,791
Year Ended December 31, 2013
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	865		$	73		$	—		$	—		$	—		$	—		$	938
Collectively evaluated for impairment	9,257			$	424		$	1,411		$	3,484		$	1,593		$	398		16,567
Total ending allowance balance	$	10,122		$	497		$	1,411		$	3,484		$	1,593		$	398		$	17,505
Loans:
Individually evaluated for impairment	$	17,842		$	472		$	1,731		$	1,111		$	195		$	160		$	21,511
Collectively evaluated for impairment	383,749			88,174			64,776			121,965			206,128			15,996			880,788
Total ending loans balance	$	401,591		$	88,646		$	66,507		$	123,076		$	206,323		$	16,156		$	902,299

Age Analysis of Past Due Loans

Information regarding delinquent loans as of September 30, 2014 and December 31, 2013 is as follows:

Age Analysis of Past Due Loans as of September 30, 2014

(Dollars in thousands)	30-59 Days Past Due		60-89 Days Past Due		90 Days and Greater		Total Past Due		Current		Total Loans		Recorded Investment > 90 Days and Accruing
Commercial real estate	$	614	$	233	$	5,684	$	6,531	$	407,094	$	413,625	$	—
Commercial	55		—		172		227		85,316		85,543		—
Residential real estate	267		63		1,668		1,998		68,893		70,891		—
Home equity loans	123		149		1,766		2,038		123,280		125,318		—
Indirect	324		118		28		470		212,980		213,450
Consumer	169		—		308		477		13,210		13,687		—
Total	$	1,552	$	563	$	9,626	$	11,741	$	910,773	$	922,514	$	—

Age Analysis of Past Due Loans as of December 31, 2013

(Dollars in thousands)	30-59 Days Past Due		60-89 Days Past Due		90 Days and Greater		Total Past Due		Current		Total Loans		Recorded Investment > 90 Days and Accruing
Commercial real estate	$	525	$	4	$	7,401	$	7,930	$	393,661	$	401,591	$	—
Commercial	—		18		219		237		88,409		88,646		—
Residential real estate	347		960		2,252		3,559		62,948		66,507		158
Home equity loans	932		707		1,078		2,717		120,359		123,076		43
Indirect	332		30		23		385		205,938		206,323
Consumer	183		25		191		399		15,757		16,156		—
Total	$	2,319	$	1,744	$	11,164	$	15,227	$	887,072	$	902,299	$	201

Impaired Loans

Impaired loans for the Period Ended September 30, 2014, December 31, 2013 and September 30, 2013 are as follows:

	At September 30, 2014						Three Months Ended September 30, 2014		Nine Months Ended September 30, 2014
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Balance		Average Recorded Balance
	(Dollars in thousands)
With no related allowance recorded:
Commercial real estate	$	13,235	$	17,060	$	—	$	13,255	$	13,008
Commercial	149		466		—		751		568
Residential real estate	1,178		1,391		—		1,208		1,216
Home equity loans	852		1,535		—		903		928
Indirect	147		231		—		156		168
Consumer	64		103		—		64		64
With allowance recorded:
Commercial real estate	2,036		2,872		703		2,849		3,120
Commercial	35		35		5		146		183
Residential real estate	178		178		178		100		73
Home equity loans	—		—		—		—		—
Indirect	—		—		—		—		—
Consumer	—		—		—		—		—
Total	$	17,874	$	23,871	$	886	$	19,432	$	19,328

Note: The differences between the recorded investment and unpaid principal balance amounts represents partial charge offs.

	At December 31, 2013
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Balance
	(Dollars in thousands)
With no related allowance recorded:
Commercial real estate	$	15,530	$	20,438	$	—	$	16,705
Commercial	214		267		—		186
Residential real estate	1,731		1,940		—		1,832
Home equity loans	1,111		1,623		—		847
Indirect	195		268		—		178
Consumer	160		204		—		111
With allowance recorded:
Commercial real estate	2,312		2,319		865		4,374
Commercial	258		258		73		346
Residential real estate	—		—		—		—
Home equity loans	—		—		—		—
Indirect	—		—		—		—
Consumer	—		—		—		—
Total	$	21,511	$	27,317	$	938	$	24,579

Note: The differences between the recorded investment and unpaid principal balance amounts represents partial charge offs.

	At September 30, 2013						Three Months Ended September 30, 2013		Nine Months Ended September 30, 2013
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Balance		Average Recorded Balance
	(Dollars in thousands)
With no related allowance recorded:
Commercial real estate	$	14,625	$	19,617	$	—	$	16,127	$	16,667
Commercial	245		298		—		203		167
Residential real estate	1,613		1,801		—		1,802		1,800
Home equity loans	1,107		1,518		—		897		669
Indirect	191		293		—		208		129
Consumer	152		203		—		113		87
With allowance recorded:
Commercial real estate	5,523		8,842		1,462		5,139		5,781
Commercial	343		343		79		342		396
Residential real estate	57		154		6		29		60
Home equity loans	—		—		—		—		—
Indirect	—		—		—		—		—
Consumer	—		—		—		—		—
Total	$	23,856	$	33,069	$	1,547	$	24,860	$	25,756

*Impaired loans shown in the tables above included loans that were classified as troubled debt restructurings ("TDRs"). The restructuring of a loan is considered a TDR if both (i) the borrower is experiencing financial difficulties and (ii) the creditor has granted a concession.

Troubled Debt Restructuring Loan Information

The following table provides the number of loans modified in a TDR and the recorded investment and unpaid principal balance by loan segment as of September 30, 2014 and September 30, 2013.

	Three Months Ended As of September 30, 2014			Nine Months Ended As of September 30, 2014
	(Dollars in thousands)
	Number of Contracts	Recorded Investment	Unpaid Principal	Number of Contracts	Recorded Investment	Unpaid Principal
Commercial real estate	2	$174	$267	21	$6,694	$9,092
Commercial	—	—	—	1	—	170
Residential real estate	—	—	—	13	854	958
Home equity loans	—	—	—	28	659	1,288
Indirect Loans	—	—	—	39	147	210
Consumer Loans	—	—	—	1	64	64
Total	2	$174	$267	103	$8,418	$11,782

Note: The differences between the recorded investment and unpaid principal balance amounts represents partial charge offs.

	Three Months Ended As of September 30, 2013			Nine Months Ended As of September 30, 2013
	(Dollars in thousands)
	Number of Contracts	Recorded Investment	Unpaid Principal	Number of Contracts	Recorded Investment	Unpaid Principal
Commercial real estate	—	$—	$—	18	$6,742	$8,724
Commercial	—	—	—	1	—	170
Residential real estate	1	42	46	12	966	1,052
Home equity loans	5	277	320	27	882	1,247
Indirect Loans	3	31	31	38	227	336
Consumer Loans	2	27	27	1	55	55
Total	9	$350	$397	97	$8,872	$11,584

Note 1: The differences between the recorded investment and unpaid principal balance amounts represents partial charge offs.

Loans on Nonaccrual Status

Nonaccrual loan balances at September 30, 2014 and December 31, 2013 are as follows:

Loans On Nonaccrual Status	September 30, 2014		December 31, 2013
	(Dollars in thousands)
Commercial real estate	$	8,728	$	11,241
Commercial	172		289
Residential real estate	4,064		5,231
Home equity loans	4,366		4,464
Indirect	446		443
Consumer	417		318
Total Nonaccrual Loans	$	18,193	$	21,986

Summary of Recorded Investment Based on Delinquency Status

The following tables present the recorded investment of commercial real estate, commercial and residential real estate loans by internal credit risk grade and the recorded investment of residential real estate, home equity, indirect and consumer loans based on delinquency status as of September 30, 2014 and December 31, 2013:

Commercial Credit Exposure	Commercial Real Estate		Commercial		Residential Real Estate*		Home Equity Loans		Indirect		Consumer		Total
	September 30, 2014
	(Dollars in thousands)
Loans graded by internal credit risk grade:
Grade 1 — Minimal	$	—	$	69	$	—	$	—	$	—	$	—	$	69
Grade 2 — Modest	600		4,203		—		—		—		—		4,803
Grade 3 — Better than average	8,675		47		—		—		—		—		8,722
Grade 4 — Average	284,370		61,069		3,175		—		—		—		348,614
Grade 5 — Acceptable	93,705		19,761		2,366		—		—		—		115,832
Total Pass Credits	387,350		85,149		5,541		—		—		—		478,040
Grade 6 — Special mention	5,520		221		233		—		—		—		5,974
Grade 7 — Substandard	20,755		173		844		—		—		—		21,772
Grade 8 — Doubtful	—		—		—		—		—		—		—
Grade 9 — Loss	—		—		—		—		—		—		—
Total loans internally credit risk graded	413,625		85,543		6,618		—		—		—		505,786
Loans not monitored by internal risk grade:
Current loans not internally risk graded	—		—		62,336		123,280		212,980		13,210		411,806
30-59 days past due loans not internally risk graded	—		—		267		123		324		169		883
60-89 days past due loans not internally risk graded	—		—		2		149		118		—		269
90+ days past due loans not internally risk graded	—		—		1,668		1,766		28		308		3,770
Total loans not internally credit risk graded	—		—		64,273		125,318		213,450		13,687		416,728
Total loans internally and not internally credit risk graded	$	413,625	$	85,543	$	70,891	$	125,318	$	213,450	$	13,687	$	922,514

* Residential loans with an internal commercial credit risk grade include loans that are secured by non owner occupied 1-4 family residential properties and conventional 1-4 family residential properties.

Commercial Credit Exposure	Commercial Real Estate		Commercial		Residential Real Estate*		Home Equity Loans		Indirect		Consumer		Total
	December 31, 2013
	(Dollars in thousands)
Loans graded by internal credit risk grade:
Grade 1 — Minimal	$	—	$	52	$	—	$	—	$	—	$	—	$	52
Grade 2 — Modest	—		37		—		—		—		—		37
Grade 3 — Better than average	857		—		—		—		—		—		857
Grade 4 — Average	22,580		271		613		—		—		—		23,464
Grade 5 — Acceptable	352,781		84,979		5,589		—		—		—		443,349
Total Pass Credits	376,218		85,339		6,202		—		—		—		467,759
Grade 6 — Special mention	2,146		2,891		35		—		—		—		5,072
Grade 7 — Substandard	23,227		416		625		—		—		—		24,268
Grade 8 — Doubtful	—		—		—		—		—		—		—
Grade 9 — Loss	—		—		—		—		—		—		—
Total loans internally credit risk graded	401,591		88,646		6,862		—		—		—		497,099
Loans not monitored by internal risk grade:
Current loans not internally risk graded	—		—		56,390		120,359		205,938		15,757		398,444
30-59 days past due loans not internally risk graded	—		—		64		932		332		183		1,511
60-89 days past due loans not internally risk graded	—		—		960		707		30		25		1,722
90+ days past due loans not internally risk graded	—		—		2,231		1,078		23		191		3,523
Total loans not internally credit risk graded	—		—		59,645		123,076		206,323		16,156		405,200
Total loans internally and not internally credit risk graded	$	401,591	$	88,646	$	66,507	$	123,076	$	206,323	$	16,156	$	902,299

* Residential loans with an internal commercial credit risk grade include loans that are secured by non owner occupied 1-4 family residential properties and conventional 1-4 family residential properties.

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Deposits - Contractual Maturities of Certificates of Deposits (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Time Deposits, Fiscal Year Maturity [Abstract]
0-12 months	$ 227,865
12-24 months	138,416
24-36 months	66,328
36-48 months	14,936
48-60 months	4,137
Total	$ 451,682	$ 502,850

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Loans and Allowance for Loan Losses - Age Analysis of Past Due Loans (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Accounts, Notes, Loans and Financing Receivable [Line Items]
30-59 Days Past Due	$ 1,552	$ 2,319
60-89 Days Past Due	563	1,744
90 Days and Greater	9,626	11,164
Total Past Due	11,741	15,227
Current	910,773	887,072
Total ending loans balance	922,514	902,299
Recorded Investment greater than 90 Days and Accruing	0	201
Commercial real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
30-59 Days Past Due	614	525
60-89 Days Past Due	233	4
90 Days and Greater	5,684	7,401
Total Past Due	6,531	7,930
Current	407,094	393,661
Total ending loans balance	413,625	401,591
Recorded Investment greater than 90 Days and Accruing	0	0
Commercial
Accounts, Notes, Loans and Financing Receivable [Line Items]
30-59 Days Past Due	55	0
60-89 Days Past Due	0	18
90 Days and Greater	172	219
Total Past Due	227	237
Current	85,316	88,409
Total ending loans balance	85,543	88,646
Recorded Investment greater than 90 Days and Accruing	0	0
Residential real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
30-59 Days Past Due	267	347
60-89 Days Past Due	63	960
90 Days and Greater	1,668	2,252
Total Past Due	1,998	3,559
Current	68,893	62,948
Total ending loans balance	70,891	66,507
Recorded Investment greater than 90 Days and Accruing	0	158
Home equity loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
30-59 Days Past Due	123	932
60-89 Days Past Due	149	707
90 Days and Greater	1,766	1,078
Total Past Due	2,038	2,717
Current	123,280	120,359
Total ending loans balance	125,318	123,076
Recorded Investment greater than 90 Days and Accruing	0	43
Indirect
Accounts, Notes, Loans and Financing Receivable [Line Items]
30-59 Days Past Due	324	332
60-89 Days Past Due	118	30
90 Days and Greater	28	23
Total Past Due	470	385
Current	212,980	205,938
Total ending loans balance	213,450	206,323
Recorded Investment greater than 90 Days and Accruing
Consumer
Accounts, Notes, Loans and Financing Receivable [Line Items]
30-59 Days Past Due	169	183
60-89 Days Past Due	0	25
90 Days and Greater	308	191
Total Past Due	477	399
Current	13,210	15,757
Total ending loans balance	13,687	16,156
Recorded Investment greater than 90 Days and Accruing	$ 0	$ 0

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Securities - Amortized Cost and Fair Value of the Debt Securities Portfolio are Shown by Expected Maturity (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Available-for-sale Securities, Debt Maturities [Abstract]
Due in one year or less - Amortized Cost	$ 21,731
Due from one year to five years - Amortized Cost	38,415
Due from five years to ten years - Amortized Cost	30,078
Due after ten years - Amortized Cost	5,594
Mortgage backed securities and residential collateralized mortgage obligations, Amortized cost	123,267
Amortized Cost	219,085	222,019
Due in one year or less - Fair Value	20,885
Due from one year to five years - Fair Value	38,718
Due from five years to ten years - Fair Value	29,733
Due after ten years - Fair Value	5,805
Mortgage backed securities and residential collateralized mortgage obligations, Fair value	123,706
Fair Value	$ 218,847	$ 216,122

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Short-Term Borrowings - Components of short-term borrowings (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended	12 Months Ended
	Sep. 30, 2014	Dec. 31, 2013
Short-term Debt [Line Items]
Total short-term borrowings	$ 2,674	$ 4,576
Average balance during the year	3,831	1,803
Weighted-average annual interest rate during the year	3.61%	0.10%
Maximum month-end balance	3,353	4,576
Securities Sold under Agreements to Repurchase
Short-term Debt [Line Items]
Total short-term borrowings	674	1,576
Line of Credit
Short-term Debt [Line Items]
Total short-term borrowings	$ 2,000	$ 3,000

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Share-Based Compensation - Summary of the Status of Restricted Shares (Details) (Restricted stock [Member], USD $)	9 Months Ended
	Sep. 30, 2014
Restricted stock [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Nonvested Shares, beginning balance (in shares)	83,355
Nonvested Shares, Granted (in shares)	0
Nonvested Shares, Vested (in shares)	(44,803)
Nonvested Shares, Forfeited or expired (in shares)	0
Nonvested Shares, ending balance (in shares)	38,552
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Roll Forward]
Weighted Average Exercise Price per Share, Beginning balance (in dollars per share)	$ 5.86
Weighted Average Exercise Price per Share, Granted (in dollars per share)	$ 0.00
Weighted Average Exercise Price per Share, Vested (in dollars per share)	$ 5.35
Weighted Average Exercise Price per Share, Forfeited or expired (in dollars per share)	$ 0.00
Weighted Average Exercise Price per Share, Ending balance (in dollars per share)	$ 6.45

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Estimated Fair Value of Financial Instruments - Balances of Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total other real estate owned	$ 745	$ 579
Quoted Market Prices in Active Markets (Level 1)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total impaired loans
Internal Models with Significant Observable Market Parameters (Level 2)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total impaired loans
Internal Models with Significant Unobservable Market Parameters (Level 3)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total impaired loans	913,057
Internal Models with Significant Unobservable Market Parameters (Level 3) | Fair Value, Measurements, Nonrecurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total impaired loans	1,334	21,986
Total other real estate owned		579
Internal Models with Significant Unobservable Market Parameters (Level 3) | Commercial real estate | Fair Value, Measurements, Nonrecurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total impaired loans	1,334	11,241
Total other real estate owned		304
Internal Models with Significant Unobservable Market Parameters (Level 3) | Commercial | Fair Value, Measurements, Nonrecurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total impaired loans		289
Internal Models with Significant Unobservable Market Parameters (Level 3) | Residential Real Estate | Fair Value, Measurements, Nonrecurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total impaired loans		5,231
Total other real estate owned		275
Internal Models with Significant Unobservable Market Parameters (Level 3) | Home equity loans | Fair Value, Measurements, Nonrecurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total impaired loans		4,464
Internal Models with Significant Unobservable Market Parameters (Level 3) | Indirect | Fair Value, Measurements, Nonrecurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total impaired loans		443
Internal Models with Significant Unobservable Market Parameters (Level 3) | Consumer | Fair Value, Measurements, Nonrecurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total impaired loans		$ 318

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Loans and Allowance for Loan Losses - Additional Information (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2014	Dec. 31, 2013
Accounts, Notes, Loans and Financing Receivable [Line Items]
Historical loss measurement period	3 years
Bank wide delinquency of loans in percentage	1.27%	1.69%
Bank wide delinquency of loans, 30 to 59 days delinquent, percentage	0.17%	0.26%
Bank wide delinquency of loans, 60 to 89 days delinquent, percentage	0.06%	0.19%
Allocated reserves of nonaccrual TDR loans	$ 40
Additional commitments to lend	$ 628
Minimum [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Time period of repayment based on delinquency period one	30 days
Time period of repayment based on delinquency period two	60 days
Time period of repayment based on delinquency period three	90 days
Maximum [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Time period of repayment based on delinquency period one	59 days
Time period of repayment based on delinquency period two	89 days

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Earnings Per Common Share

9 Months Ended

Sep. 30, 2014

Earnings Per Share [Abstract]

Earnings Per Common Share

Earnings Per Common Share

The Corporation calculates earnings per common share (EPS) using the two-class method. The two-class method allocates net income to each class of Common Stock and participating security according to the common dividends declared and participation rights in undistributed earnings. Participating securities consist of unvested stock-based payment awards that contain nonforfeitable rights to dividends. The Corporation also uses the treasury stock method to calculate dilutive EPS. The treasury stock method assumes that the Corporation uses the proceeds from a hypothetical exercise of options to repurchase Common Stock at the average market price during the period. The reconciliation between basic and diluted earnings per share is presented as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2014		2013		2014		2013
Basic EPS	(Dollars in thousands, except per share data)
Net income	$	2,086	$	1,519	$	5,715	$	4,455
Less:
Preferred stock dividend and accretion	—		109		16		483
Income allocated to participating securities	8		13		24		40
Net income allocated to common shareholders	$	2,078	$	1,397	$	5,675	$	3,932
Average common shares outstanding	9,665,088		9,303,702		9,666,107		8,940,213
Less: participating shares included in average common shares outstanding	38,552		90,532		43,371		99,268
Average common shares outstanding used in basic EPS	9,626,536		9,213,170		9,622,736		8,840,945
Basic net income per common share	$	0.22	$	0.15	$	0.59	$	0.44
Diluted EPS:
Income used in diluted earnings per share calculation	$	2,078	$	1,397	$	5,675	$	3,932
Average common shares outstanding	9,626,536		9,213,170		9,622,736		8,840,945
Add: Common Stock equivalents:
Stock Options	32,718		12,292		14,619		9,184
Average common stock shares outstanding	9,659,254		9,225,462		9,637,355		8,850,129
Diluted earnings per common share	$	0.22	$	0.15	$	0.59	$	0.44

Options to purchase 451,530 common shares were considered in computing diluted earnings per common share for the three month and nine month periods ended September 30, 2014. For the three month and nine month periods ended September 30, 2014, approximately 288,834 and 316,668 of options to purchase shares of common stock were not included in the computation of diluted earnings per share because the effect would be antidilutive. Options to purchase 369,363 common shares were considered in computing diluted earnings per common share for the three and nine month periods ended September 30, 2013. For the three month and nine month periods ended September 30, 2013, approximately 331,863 and 224,000 of options to purchase shares of common stock were not included in the computation of diluted earnings per share because the effect would be antidilutive.

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Estimated Fair Value of Financial Instruments - Level 3 Valuation Inputs and Technique (Details) (USD $) In Thousands, unless otherwise specified					9 Months Ended
	Sep. 30, 2014 Internal Models with Significant Unobservable Market Parameters (Level 3)	Sep. 30, 2014 Fair Value, Measurements, Nonrecurring [Member] Internal Models with Significant Unobservable Market Parameters (Level 3)	Dec. 31, 2013 Fair Value, Measurements, Nonrecurring [Member] Internal Models with Significant Unobservable Market Parameters (Level 3)	Sep. 30, 2014 Fair Value, Measurements, Nonrecurring [Member] Internal Models with Significant Unobservable Market Parameters (Level 3) Collateral dependent impaired loans	Sep. 30, 2014 Minimum [Member]	Sep. 30, 2014 Maximum [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair value of loans	$ 913,057	$ 1,334	$ 21,986	$ 1,334
Comparability adjustments (percent)					15.00%	20.00%

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Loans and Allowance for Loan Losses - Impaired Loans (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013	Dec. 31, 2013
Accounts, Notes, Loans and Financing Receivable [Line Items]
Recorded Investment, Total	$ 17,874	$ 23,856	$ 17,874	$ 23,856	$ 21,511
Unpaid Principal Balance, Total	23,871	33,069	23,871	33,069	27,317
Related Allowance, Total	886	1,547	886	1,547	938
Average Recorded Balance, Total	19,432	24,860	19,328	25,756	24,579
Commercial real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Recorded Investment	13,235	14,625	13,235	14,625	15,530
Unpaid Principal Balance	17,060	19,617	17,060	19,617	20,438
Related Allowance	0	0	0	0	0
Average Recorded Balance	13,255	16,127	13,008	16,667	16,705
Recorded Investment	2,036	5,523	2,036	5,523	2,312
Unpaid Principal Balance	2,872	8,842	2,872	8,842	2,319
Related Allowance	703	1,462	703	1,462	865
Average Recorded Balance	2,849	5,139	3,120	5,781	4,374
Commercial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Recorded Investment	149	245	149	245	214
Unpaid Principal Balance	466	298	466	298	267
Related Allowance	0	0	0	0	0
Average Recorded Balance	751	203	568	167	186
Recorded Investment	35	343	35	343	258
Unpaid Principal Balance	35	343	35	343	258
Related Allowance	5	79	5	79	73
Average Recorded Balance	146	342	183	396	346
Residential real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Recorded Investment	1,178	1,613	1,178	1,613	1,731
Unpaid Principal Balance	1,391	1,801	1,391	1,801	1,940
Related Allowance	0	0	0	0	0
Average Recorded Balance	1,208	1,802	1,216	1,800	1,832
Recorded Investment	178	57	178	57	0
Unpaid Principal Balance	178	154	178	154	0
Related Allowance	178	6	178	6	0
Average Recorded Balance	100	29	73	60	0
Home equity loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Recorded Investment	852	1,107	852	1,107	1,111
Unpaid Principal Balance	1,535	1,518	1,535	1,518	1,623
Related Allowance	0	0	0	0	0
Average Recorded Balance	903	897	928	669	847
Recorded Investment	0	0	0	0	0
Unpaid Principal Balance	0	0	0	0	0
Related Allowance	0	0	0	0	0
Average Recorded Balance	0	0	0	0	0
Indirect
Accounts, Notes, Loans and Financing Receivable [Line Items]
Recorded Investment	147	191	147	191	195
Unpaid Principal Balance	231	293	231	293	268
Related Allowance	0	0	0	0	0
Average Recorded Balance	156	208	168	129	178
Recorded Investment	0	0	0	0	0
Unpaid Principal Balance	0	0	0	0	0
Related Allowance	0	0	0	0	0
Average Recorded Balance	0	0	0	0	0
Consumer
Accounts, Notes, Loans and Financing Receivable [Line Items]
Recorded Investment	64	152	64	152	160
Unpaid Principal Balance	103	203	103	203	204
Related Allowance	0	0	0	0	0
Average Recorded Balance	64	113	64	87	111
Recorded Investment	0	0	0	0	0
Unpaid Principal Balance	0	0	0	0	0
Related Allowance	0	0	0	0	0
Average Recorded Balance	$ 0	$ 0	$ 0	$ 0	$ 0

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Commitments and Contingencies (Tables)

9 Months Ended

Sep. 30, 2014

Commitments and Contingencies Disclosure [Abstract]

Summary of The Contractual Amount of Commitments

A summary of the contractual amount of commitments at September 30, 2014 and December 31, 2013 follows:

	September 30, 2014		December 31, 2013
	(Dollars in thousands)
Commitments to extend credit	$	85,072	$	84,283
Home equity lines of credit	91,910		89,331
Standby letters of credit	8,940		8,448
Total	$	185,922	$	182,062

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Federal Home Loan Bank Advances (Tables)

9 Months Ended

Sep. 30, 2014

Disclosure Federal Home Loan Bank Advances Additional Information [Abstract]

Maturities of FHLB Advances Outstanding

Maturities of FHLB advances outstanding at September 30, 2014 and December 31, 2013 are as follows:

	September 30, 2014			December 31, 2013
	(Dollars in thousands)
Maturity January 2014 with fixed rate 3.55%	$	—		$	1
Maturity January 2015 with fixed rate 0.80%	20,000			20,000
Maturity December 2016 with fixed rate 0.79%	10,000			10,000
Maturities June 2017 through December 2017, with fixed rates ranging from 0.89% to 0.99%	15,000			15,000
Maturity June 2018 fixed rate 1.24%	2,500			2,500
Restructuring prepayment penalty	(633		)	(793		)
Total FHLB advances	$	46,867		$	46,708

Federal Home Loan Bank Advances Future Maturities

At September 30, 2014, the advances were structured to contractually pay down as follows:

	Balance			Weighted Average Rate
2014	$	—		—%
2015	20,000			0.80
2016	10,000			0.79
2017	15,000			0.96
Thereafter	2,500			1.24
Total	$	47,500		0.87%
Restructuring prepayment penalty	(633		)
Total	$	46,867

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Trust Preferred Securities - Additional Information (Details) (USD $)	1 Months Ended		9 Months Ended
	Aug. 31, 2010	May 31, 2007	Sep. 30, 2014	Dec. 31, 2013
Trust Preferred Securities [Line Items]
Accrued interest payable			$ 674,000	$ 789,000
Maturity date of subordinate notes			Jun. 15, 2037
Weighted average price of shares issued from securities conversion (in dollars per share)	$ 4.41
Balance of the subordinated notes payable			16,238,000	16,238,000
Common Stock
Trust Preferred Securities [Line Items]
Shares issued from conversion of preferred securities	462,234
Trust I [Member]
Trust Preferred Securities [Line Items]
Preferred securities sold to outside investors		10,000,000
Floating interest rate period		three-month LIBOR
LIBOR basis points		1.48%
Effective interest rate			1.71%
Accrued interest payable			6,000	6,000
Amount of principal securities exchanged for common stock	2,125,000
Balance of the subordinated notes payable				8,119,000
Trust II [Member]
Trust Preferred Securities [Line Items]
Preferred securities sold to outside investors		10,000,000.0
Floating interest rate period		three-month LIBOR
LIBOR basis points		1.48%
Fixed interest rate of Trust II		6.64%
Effective interest rate			6.64%
Accrued interest payable			22,000	22,000
Amount of principal securities exchanged for common stock	2,125,000
Balance of the subordinated notes payable			$ 8,119,000	$ 8,119,000

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Loans and Allowance for Loan Losses - Troubled Debt Restructuring Loan Information (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014 contracts	Sep. 30, 2013 contracts	Sep. 30, 2014 contracts	Sep. 30, 2013 contracts
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of Contracts	2	9	103	97
Recorded Investment	$ 174	$ 350	$ 8,418	$ 8,872
Unpaid Principal	267	397	11,782	11,584
Commercial real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of Contracts	2	0	21	1
Recorded Investment	174	0	6,694	0
Unpaid Principal	267	0	9,092	170
Commercial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of Contracts	0		1
Recorded Investment	0		0
Unpaid Principal	0		170
Residential real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of Contracts	0	1	13	12
Recorded Investment	0	42	854	966
Unpaid Principal	0	46	958	1,052
Home equity loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of Contracts	0	5	28	27
Recorded Investment	0	277	659	882
Unpaid Principal	0	320	1,288	1,247
Indirect
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of Contracts	0	3	39	38
Recorded Investment	0	31	147	227
Unpaid Principal	0	31	210	336
Consumer Loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Number of Contracts	0	2	1	1
Recorded Investment	0	27	64	55
Unpaid Principal	$ 0	$ 27	$ 64	$ 55

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Estimated Fair Value of Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2014

Fair Value Disclosures [Abstract]

Summary of Financial Instruments

The estimated fair values of the Corporation’s financial instruments at September 30, 2014 and December 31, 2013 are summarized as follows:

	September 30, 2014										December 31, 2013
	Carrying Value		Estimated Fair Value		Level 1		Level 2		Level 3		Carrying Value		Estimated Fair Value
	(Dollars in thousands)
Financial assets
Cash and due from banks, Federal funds sold and interest bearing deposits in other banks	$	36,167	$	36,167	$	36,167	$	—	$	—	$	52,272	$	52,272
Securities	218,847		218,847		—		218,847		—		216,122		216,122
Restricted stock	5,741		5,741		N/A		N/A		N/A		5,741		N/A
Portfolio loans, net	905,082		913,057		—		—		913,057		884,794		884,211
Loans held for sale	1,497		1,523		—		1,541		—		4,483		4,487
Accrued interest receivable	3,714		3,714		—		961		2,753		3,621		3,621
Financial liabilities
Deposits:
Demand, savings and money market	605,102		585,468		—		585,468		—		542,739		542,739
Certificates of deposit	451,682		453,489		—		453,489		—		502,850		504,381
Short-term borrowings	2,674		2,674		—		2,674		—		4,576		4,576
Federal Home Loan Bank advances	46,867		47,413		—		47,413		—		46,708		46,923
Junior subordinated debentures	16,238		21,534		—		21,534		—		16,238		16,778
Accrued interest payable	674		674		—		—		674		789		789

Assets Measured by Fair Value on a Recurring Basis

The following table presents information about the Corporation’s assets and liabilities measured at fair value on a recurring basis as of September 30, 2014 and December 31, 2013, and the valuation techniques used by the Corporation to determine those fair values.

Description	Fair Value as of September 30, 2014		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(Dollars in thousands)
Securities available for sale:
U.S. Government agencies and corporations	$	59,330	$	—	$	59,330	$	—
Mortgage backed securities: residential	98,554		—		98,554		—
Residential collateralized mortgage obligations	25,152		—		25,152		—
State and political subdivisions	35,811		—		35,811		—
Total	$	218,847	$	—	$	218,847	$	—
Description	Fair Value as of December 31, 2013		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(Dollars in thousands)
Securities available for sale:
U.S. Government agencies and corporations	$	65,388	$	—	$	65,388	$	—
Mortgage backed securities: residential	94,430		—		94,430		—
Residential collateralized mortgage obligations	18,655		—		18,655		—
State and political subdivisions	32,965		—		32,965		—
Preferred Securities	4,684		—		—		4,684
Interest rate swaps	222		—		222		—
Total	$	216,344	$	—	$	211,660	$	4,684

Balances of Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

The following table presents the balances of assets and liabilities measured at fair value on a nonrecurring basis:

September 30, 2014	Quoted Market Prices in Active Markets (Level 1)	Internal Models with Significant Observable Market Parameters (Level 2)	Internal Models with Significant Unobservable Market Parameters (Level 3)
	(Dollars in thousands)
Impaired Loans:
Commercial real estate			$	1,334
Total			$	1,334

December 31, 2013	Quoted Market Prices in Active Markets (Level 1)	Internal Models with Significant Observable Market Parameters (Level 2)	Internal Models with Significant Unobservable Market Parameters (Level 3)
	(Dollars in thousands)
Impaired Loans:
Commercial real estate			$	11,241
Commercial			289
Residential real estate			5,231
Home equity loans			4,464
Indirect			443
Consumer			318
Total			$	21,986
Other real estate owned:
Commercial real estate			$	304
Residential real estate			275
Total			$	579

Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques

The following table presents additional quantitative information about assets measured at fair value on a

nonrecurring basis for which the Corporation has utilized Level 3 inputs to determine fair value (dollars in thousands).

Asset	Fair Value	Valuation Technique	Unobservable Input
Collateral dependent impaired loans	$1,334	Sales comparison approach	Adjustment for differences between the comparable sales with a 15% 20% cost to sell adjustment

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Share-Based Compensation (Tables)

9 Months Ended

Sep. 30, 2014

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Summary of Options Outstanding

The following table summarizes the Corporation's stock options outstanding at September 30, 2014:

	Outstanding		Exercisable
	Number	Weighted Average Remaining Contractual Life (Years)	Number	Weighted Average Exercise Price
Range of Exercise Prices
$5.34-$5.39	37,500	7.16	25,833	$	5.39
$9.07-$9.56	126,530	8.66	41,066	9.19
$11.03	109,500	9.64	—	—
$12.12	7,500	9.82	—	—
$14.47	78,000	3.35	78,000	14.47
$16.00-$16.50	32,500	2.22	32,500	16.04
$19.10	30,000	1.34	30,000	19.10
$19.17	30,000	0.34	30,000	19.17
Outstanding at end of period	451,530	6.37	237,399	$	13.96

Summary of Stock Options

A summary of the status of stock options for the nine month periods ended September 30, 2014 and 2013 is presented in the table below:

	September 30,				September 30,
	2014				2013
	Options		Weighted Average Exercise Price per Share		Options	Weighted Average Exercise Price per Share
Outstanding at beginning of period	337,696		$	12.43	232,000	$	14.50
Granted	117,000		11.10		137,363	9.18
Forfeited or expired	(1,500	)	14.47		—	—
Exercised	(1,666	)	9.56		—	—
Stock dividend or split	—		—		—	—
Outstanding at end of period	451,530		$	12.08	369,363	$	12.52
Exercisable at end of period	239,065		$	13.93	208,667	$	15.52

Schedule of Valuation Assumptions

The per share weighted-average fair value of stock options granted during the first nine months of 2014 and 2013 was $3.24 and $2.15, respectively, on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions:

	Three Months Ended September 30,				Nine Months Ended September 30
	2014		2013		2014		2013
Dividend Yield	2.15	%	3.03	%	2.22	%	3.07	%
Expected volatility	34.47	%	32.54	%	34.49	%	32.60	%
Risk-free interest rate	2.18	%	1.98	%	2.07	%	1.37	%

Summary of the Status of Restricted Shares

A summary of the status of outstanding restricted shares at September 30, 2014 is presented in the table below:

	Nonvested Shares		Weighted Average Grant Date Fair Value
Nonvested at January 1, 2014	83,355		$	5.86
Granted	—		—
Vested	(44,803	)	5.35
Forfeited or expired	—		—
Nonvested at September 30, 2014	38,552		$	6.45

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Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2014

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

Basis of Presentation

The consolidated financial statements include the accounts of LNB Bancorp, Inc. (the “Corporation”) and its wholly-owned subsidiary, The Lorain National Bank (the “Bank”). The consolidated financial statements also include the accounts of North Coast Community Development Corporation which is a wholly-owned subsidiary of the Bank. All intercompany transactions and balances have been eliminated in consolidation.

The accounting and reporting policies followed in the presentation of the accompanying Unaudited Consolidated Financial Statements are consistent with those described in Note 1 of the Notes to the Consolidated Financial Statements in the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2013, as updated by the information contained in this Form 10-Q. Management has evaluated all significant events and transactions that occurred after September 30, 2014, for potential recognition or disclosure in these consolidated financial statements. In the opinion of management, these consolidated financial statements reflect all adjustments necessary to present fairly such information for the periods and dates indicated. Such adjustments are normal and recurring in nature. The Consolidated Balance Sheet at December 31, 2013, contained herein has been derived from the audited Consolidated Balance Sheet included in Corporation’s Annual Report on Form 10-K.

The preparation of the consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Results of operations for interim periods are not necessarily indicative of the results to be expected for the full year, due in part to seasonal variations and unusual or infrequently occurring items.

Certain reclassifications of prior years' amounts have been made to conform to current year presentation. Such reclassifications had no effect on prior year net income or shareholders' equity.

New Accounting Pronouncements:

In April 2014 the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)”. This ASU supersedes and replaces nearly all existing revenue recognition guidance, including industry-specific guidance, establishes a new control-based revenue recognition model, changes the basis for deciding when revenue is recognized over time or at a point in time, provides new and more detailed guidance on specific topics and expands and improves disclosures about revenue. In addition, this ASU specifies the accounting for some costs to obtain or fulfill a contract with a customer. This amended guidance is effective for the Corporation on January 1, 2017 and is not expected to have a material impact on the Corporation's consolidated operating results or financial condition.

In January 2014, the Financial Accounting Standards Board issued an accounting standards update allowing entities to make an accounting policy election with respect to using the proportional amortization method for investments in qualified affordable housing projects, if certain conditions are met. This standard will be effective for public companies for interim and annual periods beginning after December 15, 2014. The Corporation will adopt this new guidance as required, and it is not expected to have a material impact on the Corporation's Consolidated Financial Statements.

Also, in January 2014, the Financial Accounting Standards Board issued an accounting standards update clarifying guidance for in substance repossessions and foreclosures, and requiring additional disclosures regarding foreclosed residential real estate property and recorded investments in consumer mortgage loans collateralized by residential real estate in the process of foreclosure. This standard will be effective for public companies for interim and annual periods beginning after December 15, 2014. The Corporation will adopt this new guidance as required, and it is not expected to have a material impact on the Corporation's Consolidated Financial Statements.

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Accumulated Other Comprehensive Income (Loss) (Tables)

9 Months Ended

Sep. 30, 2014

Equity [Abstract]

Schedule of Accumulated Other Comprehensive Income (Loss)

The following table details the change in the components of the Corporation’s accumulated other comprehensive income (loss) for the three and nine months ended September 30, 2014 and 2013:

	Three Months Ended September 30, 2014									Nine Months Ended September 30, 2014
	Unrealized securities gains and losses			Pension and post- retirement costs			Total			Unrealized securities gains and losses			Pension and post- retirement costs			Total
Balance at the beginning of the period	$	(637	)	$	(1,296	)	$	(1,933	)	$	(3,892	)	$	(1,296	)	$	(5,188	)
Amounts recognized in other comprehensive income, net of taxes of $246 and $1,926	481			—			481			3,733			—			3,733
Reclassified amounts out of accumulated other comprehensive income, net of tax	—			—			—			(3		)	—			(3		)
Balance at the end of the period	$	(156	)	$	(1,296	)	$	(1,452	)	$	(156	)	$	(1,296	)	$	(1,452	)

	Three Months Ended September 30, 2013									Nine Months Ended September 30, 2013
	Unrealized securities gains and losses			Pension and post- retirement costs			Total			Unrealized securities gains and losses			Pension and post- retirement costs			Total
Balance at the beginning of the period	$	(536	)	$	(2,055	)	$	(2,591	)	$	3,295		$	(2,055	)	$	1,240
Amounts recognized in other comprehensive income, net of taxes of $1,197 and $3,110	(2,324		)	—			(2,324		)	(6,038		)	—			(6,038		)
Reclassified amounts out of accumulated other comprehensive income, net of tax of $60	—			—			—			117			—			117
Balance at the end of the period	$	(2,860	)	$	(2,055	)	$	(4,915	)	$	(2,860	)	$	(2,055	)	$	(4,915	)

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Securities - Summary of Securities that had Unrealized Losses (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended	12 Months Ended
	Sep. 30, 2014	Dec. 31, 2013
Schedule of Available-for-sale Securities [Line Items]
Less than Twelve Months, Fair Value	$ 26,360	$ 108,258
Less than 12 Months, Aggregate Losses	(137)	(7,690)
Twelve Months or Longer, Fair Value	99,809	35,909
Twelve Months or Longer, Unrealized Losses	(3,031)	(961)
Total, Fair Value	126,169	144,167
Total, Unrealized Losses	(3,168)	(8,651)
U.S. Government agencies and corporations
Schedule of Available-for-sale Securities [Line Items]
Less than Twelve Months, Fair Value	1,163	65,388
Less than 12 Months, Aggregate Losses	(2)	(6,463)
Twelve Months or Longer, Fair Value	58,167	0
Twelve Months or Longer, Unrealized Losses	(2,095)	0
Total, Fair Value	59,330	65,388
Total, Unrealized Losses	(2,097)	(6,463)
Mortgage backed securities: residential
Schedule of Available-for-sale Securities [Line Items]
Less than Twelve Months, Fair Value	14,267	28,603
Less than 12 Months, Aggregate Losses	(72)	(566)
Twelve Months or Longer, Fair Value	33,545	31,051
Twelve Months or Longer, Unrealized Losses	(629)	(679)
Total, Fair Value	47,812	59,654
Total, Unrealized Losses	(701)	(1,245)
Residential collateralized mortgage obligations
Schedule of Available-for-sale Securities [Line Items]
Less than Twelve Months, Fair Value	9,994	5,079
Less than 12 Months, Aggregate Losses	(58)	(59)
Twelve Months or Longer, Fair Value	4,016	4,411
Twelve Months or Longer, Unrealized Losses	(163)	(191)
Total, Fair Value	14,010	9,490
Total, Unrealized Losses	(221)	(250)
State and political subdivisions
Schedule of Available-for-sale Securities [Line Items]
Less than Twelve Months, Fair Value	936	9,188
Less than 12 Months, Aggregate Losses	(5)	(602)
Twelve Months or Longer, Fair Value	4,081	447
Twelve Months or Longer, Unrealized Losses	(144)	(91)
Total, Fair Value	5,017	9,635
Total, Unrealized Losses	$ (149)	$ (693)

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Federal Home Loan Bank Advances - Additional Information (Details) (USD $)	9 Months Ended		12 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Dec. 31, 2013	Dec. 31, 2012
Securities Pledged As Collateral [Line Items]
Long-term Federal Home Loan Bank Advances	$ 46,867,000		$ 46,708,000
Maximum borrowing capacity of the Bank	71,776,000
Cash management line of credit	40,000,000
Cash Management Line Of Credit Outstanding	0		0
Prepayments For Federal Home Loan Bank Advances			27,500,000
Federal Home Loan Bank advances, Activity for Year, average interest rate			2.47%
Federal Home Loan Bank advances, contractual average interest rate			0.88%
Deferred FHLB prepayment penalty	160,000	0		1,017,000
Minimum [Member]
Securities Pledged As Collateral [Line Items]
Federal Home Loan Bank advances, remaining maturity			12 months
Federal Home Loan Bank advances, fixed rate, remaining maturity			49 months
Maximum [Member]
Securities Pledged As Collateral [Line Items]
Federal Home Loan Bank advances, remaining maturity			31 months
Federal Home Loan Bank advances, fixed rate, remaining maturity			67 months
Multi-family mortgage loans [Member]
Securities Pledged As Collateral [Line Items]
Investment securities	80,069,000
Residential real estate mortgage loans [Member]
Securities Pledged As Collateral [Line Items]
Investment securities	$ 11,680,000

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CONSOLIDATED BALANCE SHEETS (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
ASSETS
Cash and due from banks	$ 29,804	$ 36,717
Federal funds sold and interest bearing deposits in banks	6,363	15,555
Cash and cash equivalents	36,167	52,272
Securities available for sale, at fair value (Note 4)	218,847	216,122
Restricted stock	5,741	5,741
Loans held for sale	1,497	4,483
Loans:
Portfolio loans (Note 5)	922,514	902,299
Allowance for loan losses (Note 5)	(17,432)	(17,505)
Net loans	905,082	884,794
Bank premises and equipment, net	8,831	8,198
Other real estate owned	745	579
Bank owned life insurance	19,876	19,362
Goodwill, net (Note 3)	21,582	21,582
Intangible assets, net (Note 3)	356	457
Accrued interest receivable	3,714	3,621
Other assets	18,661	13,046
Total Assets	1,241,099	1,230,257
Deposits: (Note 6)
Demand and other noninterest-bearing	153,952	148,961
Savings, money market and interest-bearing demand	451,150	393,778
Time deposits	451,682	502,850
Total deposits	1,056,784	1,045,589
Short-term borrowings (Note 7)	2,674	4,576
Federal Home Loan Bank advances (Note 8)	46,867	46,708
Junior subordinated debentures (Note 9)	16,238	16,238
Accrued interest payable	674	789
Accrued expenses and other liabilities	4,797	4,901
Total Liabilities	1,128,034	1,118,801
Shareholders’ Equity
Discount on Series B preferred stock	0	(19)
Common stock, par value $1 per share, authorized 15,000,000 shares, issued 10,002,139 shares at September 30, 2014 and 10,001,717 at December 31, 2013	10,002	10,002
Additional paid-in capital	51,336	51,098
Retained earnings	59,356	53,966
Accumulated other comprehensive income (loss)	(1,452)	(5,188)
Treasury shares at cost, 336,745 shares at September 30, 2014 and 328,194 shares at December 31, 2013	(6,177)	(6,092)
Total Shareholders’ Equity	113,065	111,456
Total Liabilities and Shareholders’ Equity	1,241,099	1,230,257
Preferred stock, Series A Voting, no par value, authorized 150,000 shares, none issued at September 30, 2014 and December 31, 2013
Shareholders’ Equity
Preferred stock	0	0
Fixed rate cumulative preferred stock, Series B, no par value, $1,000 liquidation value, no shares were issued at September 30, 2014 and 7,689 shares authorized and issued at December 31, 2013
Shareholders’ Equity
Preferred stock	$ 0	$ 7,689

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Loans and Allowance for Loan Losses - Loans on Nonaccrual Status (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended	12 Months Ended
	Sep. 30, 2014	Dec. 31, 2013
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Nonaccrual Loans	$ 18,193	$ 21,986
Commercial real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Nonaccrual Loans	8,728	11,241
Commercial
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Nonaccrual Loans	172	289
Residential real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Nonaccrual Loans	4,064	5,231
Home equity loans
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Nonaccrual Loans	4,366	4,464
Indirect
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Nonaccrual Loans	446	443
Consumer
Accounts, Notes, Loans and Financing Receivable [Line Items]
Total Nonaccrual Loans	$ 417	$ 318

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CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Parenthetical) (USD $)	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Statement of Stockholders' Equity [Abstract]
Issuance of common stock (in shares)		1,359,348
Redemption of preferred stock (in shares)	7,689	9,733
Dividends declared (in dollars per share)	$ 0.03	$ 0.03
Purchase of treasury stock (shares)	8,551

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Estimated Fair Value of Financial Instruments - Summary of Financial Instruments (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Fair Value Inputs Assets Liabilities Quantitative Information [Line Items]
Securities	$ 218,847	$ 216,122
Accrued interest payable	674	789
Carrying Value [Member]
Fair Value Inputs Assets Liabilities Quantitative Information [Line Items]
Cash and due from banks, Federal funds sold and interest bearing deposits in other banks	36,167	52,272
Securities	218,847	216,122
Restricted stock	5,741	5,741
Portfolio loans, net	905,082	884,794
Loans held for sale	1,497	4,483
Accrued interest receivable	3,714	3,621
Demand, savings and money market	605,102	542,739
Certificates of deposit	451,682	502,850
Short-term borrowings	2,674	4,576
Federal Home Loan Bank advances	46,867	46,708
Junior subordinated debentures	16,238	16,238
Accrued interest payable	674	789
Estimated Fair Value [Member]
Fair Value Inputs Assets Liabilities Quantitative Information [Line Items]
Cash and due from banks, Federal funds sold and interest bearing deposits in other banks	36,167	52,272
Securities	218,847	216,122
Restricted stock	5,741
Portfolio loans, net	913,057	884,211
Loans held for sale	1,523	4,487
Accrued interest receivable	3,714	3,621
Demand, savings and money market	585,468	542,739
Certificates of deposit	453,489	504,381
Short-term borrowings	2,674	4,576
Federal Home Loan Bank advances	47,413	46,923
Junior subordinated debentures	21,534	16,778
Accrued interest payable	674	789
Quoted Market Prices in Active Markets (Level 1)
Fair Value Inputs Assets Liabilities Quantitative Information [Line Items]
Cash and due from banks, Federal funds sold and interest bearing deposits in other banks	36,167
Securities	0
Portfolio loans, net
Loans held for sale
Accrued interest receivable
Demand, savings and money market
Certificates of deposit
Short-term borrowings
Federal Home Loan Bank advances
Junior subordinated debentures
Accrued interest payable
Internal Models with Significant Observable Market Parameters (Level 2)
Fair Value Inputs Assets Liabilities Quantitative Information [Line Items]
Cash and due from banks, Federal funds sold and interest bearing deposits in other banks
Securities	218,847
Portfolio loans, net
Loans held for sale	1,541
Accrued interest receivable	961
Demand, savings and money market	585,468
Certificates of deposit	453,489
Short-term borrowings	2,674
Federal Home Loan Bank advances	47,413
Junior subordinated debentures	21,534
Accrued interest payable	0
Internal Models with Significant Unobservable Market Parameters (Level 3)
Fair Value Inputs Assets Liabilities Quantitative Information [Line Items]
Cash and due from banks, Federal funds sold and interest bearing deposits in other banks
Securities
Portfolio loans, net	913,057
Loans held for sale	0
Accrued interest receivable	2,753
Demand, savings and money market
Certificates of deposit
Short-term borrowings
Federal Home Loan Bank advances
Junior subordinated debentures
Accrued interest payable	$ 674

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Goodwill and Intangible Assets (Details) (USD $)	12 Months Ended		9 Months Ended
	Dec. 31, 2013	Sep. 30, 2014	Sep. 30, 2014 Core Deposit Intangibles	Dec. 31, 2013 Core Deposit Intangibles
Goodwill and Intangible Assets Disclosure [Abstract]
Goodwill	$ 21,582,000	$ 21,582,000
Goodwill impairment charge	0
Acquired Finite-Lived Intangible Assets [Line Items]
Estimated useful life			10 years
Core deposit intangibles			1,367,000	1,367,000
Less: accumulated amortization			1,011,000	910,000
Carrying value of core deposit intangibles	$ 457,000	$ 356,000	$ 356,000	$ 457,000

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Share-Based Compensation - Summary of Options Outstanding (Details) (USD $)	9 Months Ended
	Sep. 30, 2014
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Outstanding, Number (in shares)	451,530
Weighted Average Remaining Contractual Life	6 years 4 months 13 days
Exercisable, Number (in shares)	237,399
Weighted Average Exercise Price (in usd per share)	$ 13.96
$5.34-$5.39 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Range of exercise prices, minimum (in usd per share)	$ 5.34
Range of exercise prices, maximum (in usd per share)	$ 5.39
Outstanding, Number (in shares)	37,500
Weighted Average Remaining Contractual Life	7 years 1 month 28 days
Exercisable, Number (in shares)	25,833
Weighted Average Exercise Price (in usd per share)	$ 5.39
$9.07-$9.56 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Range of exercise prices, minimum (in usd per share)	$ 9.07
Range of exercise prices, maximum (in usd per share)	$ 9.56
Outstanding, Number (in shares)	126,530
Weighted Average Remaining Contractual Life	8 years 7 months 28 days
Exercisable, Number (in shares)	41,066
Weighted Average Exercise Price (in usd per share)	$ 9.19
$11.03 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise price (in usd per share)	$ 11.03
Outstanding, Number (in shares)	109,500
Weighted Average Remaining Contractual Life	9 years 7 months 21 days
Exercisable, Number (in shares)	0
Weighted Average Exercise Price (in usd per share)	$ 0.00
$12.12 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise price (in usd per share)	$ 12.12
Outstanding, Number (in shares)	7,500
Weighted Average Remaining Contractual Life	9 years 9 months 26 days
Exercisable, Number (in shares)	0
Weighted Average Exercise Price (in usd per share)	$ 0.00
$14.47 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise price (in usd per share)	$ 14.47
Outstanding, Number (in shares)	78,000
Weighted Average Remaining Contractual Life	3 years 4 months 6 days
Exercisable, Number (in shares)	78,000
Weighted Average Exercise Price (in usd per share)	$ 14.47
$16.00-$16.50 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Range of exercise prices, minimum (in usd per share)	$ 16.00
Range of exercise prices, maximum (in usd per share)	$ 16.50
Outstanding, Number (in shares)	32,500
Weighted Average Remaining Contractual Life	2 years 2 months 19 days
Exercisable, Number (in shares)	32,500
Weighted Average Exercise Price (in usd per share)	$ 16.04
$19.10 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise price (in usd per share)	$ 19.10
Outstanding, Number (in shares)	30,000
Weighted Average Remaining Contractual Life	1 year 4 months 2 days
Exercisable, Number (in shares)	30,000
Weighted Average Exercise Price (in usd per share)	$ 19.10
$19.17 [Member]
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Exercise price (in usd per share)	$ 19.17
Outstanding, Number (in shares)	30,000
Weighted Average Remaining Contractual Life	4 months 2 days
Exercisable, Number (in shares)	30,000
Weighted Average Exercise Price (in usd per share)	$ 19.17

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Earnings Per Common Share (Tables)

9 Months Ended

Sep. 30, 2014

Earnings Per Share [Abstract]

Basic and Diluted Earnings Per Share

The reconciliation between basic and diluted earnings per share is presented as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2014		2013		2014		2013
Basic EPS	(Dollars in thousands, except per share data)
Net income	$	2,086	$	1,519	$	5,715	$	4,455
Less:
Preferred stock dividend and accretion	—		109		16		483
Income allocated to participating securities	8		13		24		40
Net income allocated to common shareholders	$	2,078	$	1,397	$	5,675	$	3,932
Average common shares outstanding	9,665,088		9,303,702		9,666,107		8,940,213
Less: participating shares included in average common shares outstanding	38,552		90,532		43,371		99,268
Average common shares outstanding used in basic EPS	9,626,536		9,213,170		9,622,736		8,840,945
Basic net income per common share	$	0.22	$	0.15	$	0.59	$	0.44
Diluted EPS:
Income used in diluted earnings per share calculation	$	2,078	$	1,397	$	5,675	$	3,932
Average common shares outstanding	9,626,536		9,213,170		9,622,736		8,840,945
Add: Common Stock equivalents:
Stock Options	32,718		12,292		14,619		9,184
Average common stock shares outstanding	9,659,254		9,225,462		9,637,355		8,850,129
Diluted earnings per common share	$	0.22	$	0.15	$	0.59	$	0.44

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Securities - Amortized Cost, Gross Unrealized Gains and Losses and Fair Values of Securities Available for Sale (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	$ 219,085	$ 222,019
Available-for-sale Securities, Accumulated Gross Unrealized Gain, before Tax	2,930	2,754
Available-for-sale Securities, Accumulated Gross Unrealized Loss, before Tax	(3,168)	(8,651)
Fair Value	218,847	216,122
U.S. Government agencies and corporations
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	61,427	71,851
Available-for-sale Securities, Accumulated Gross Unrealized Gain, before Tax	0	0
Available-for-sale Securities, Accumulated Gross Unrealized Loss, before Tax	(2,097)	(6,463)
Assets, Fair Value Disclosure, Recurring	59,330
Fair Value		65,388
Mortgage backed securities: residential
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	98,061	94,313
Available-for-sale Securities, Accumulated Gross Unrealized Gain, before Tax	1,194	1,362
Available-for-sale Securities, Accumulated Gross Unrealized Loss, before Tax	(701)	(1,245)
Assets, Fair Value Disclosure, Recurring	98,554
Fair Value		94,430
Residential collateralized mortgage obligations
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	25,206	18,650
Available-for-sale Securities, Accumulated Gross Unrealized Gain, before Tax	167	255
Available-for-sale Securities, Accumulated Gross Unrealized Loss, before Tax	(221)	(250)
Assets, Fair Value Disclosure, Recurring	25,152
Fair Value		18,655
State and political subdivisions
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	34,391	32,521
Available-for-sale Securities, Accumulated Gross Unrealized Gain, before Tax	1,569	1,137
Available-for-sale Securities, Accumulated Gross Unrealized Loss, before Tax	(149)	(693)
Assets, Fair Value Disclosure, Recurring	35,811
Fair Value		32,965
Preferred securities
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost		4,684
Available-for-sale Securities, Accumulated Gross Unrealized Gain, before Tax		0
Available-for-sale Securities, Accumulated Gross Unrealized Loss, before Tax		0
Fair Value		$ 4,684

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Securities (Tables)

9 Months Ended

Sep. 30, 2014

Investments, Debt and Equity Securities [Abstract]

Amortized Cost, Gross Unrealized Gains and Losses and Fair Values of Securities Available for Sale

The amortized cost, gross unrealized gains and losses and fair values of securities at September 30, 2014 and December 31, 2013 follows:

	At September 30, 2014
	Amortized  Cost		Unrealized Gains		Unrealized Losses			Fair Value
	(Dollars in thousands)
Securities available for sale:
U.S. Government agencies and corporations	$	61,427	$	—	$	(2,097	)	$	59,330
Mortgage backed securities: residential	98,061		1,194		(701		)	98,554
Residential collateralized mortgage obligations	25,206		167		(221		)	25,152
State and political subdivisions	34,391		1,569		(149		)	35,811
Total Securities	$	219,085	$	2,930	$	(3,168	)	$	218,847
	At December 31, 2013
	Amortized  Cost		Unrealized Gains		Unrealized Losses			Fair Value
	(Dollars in thousands)
Securities available for sale:
U.S. Government agencies and corporations	$	71,851	$	—	$	(6,463	)	$	65,388
Mortgage backed securities: residential	94,313		1,362		(1,245		)	94,430
Residential collateralized mortgage obligations	18,650		255		(250		)	18,655
State and political subdivisions	32,521		1,137		(693		)	32,965
Preferred securities	4,684		—		—			4,684
Total Securities	$	222,019	$	2,754	$	(8,651	)	$	216,122

Amortized Cost and Fair Value of the Debt Securities Portfolio are Shown by Expected Maturity

Mortgage backed securities and collateralized mortgage obligations are not due at a single maturity date and are therefore shown separately.

	At September 30, 2014
	Amortized Cost		Fair Value
	(Dollars in thousands)
Securities available for sale:
Due in one year or less	$	21,731	$	20,885
Due from one year to five years	38,415		38,718
Due from five years to ten years	30,078		29,733
Due after ten years	5,594		5,805
Mortgage backed securities and Residential collateralized mortgage obligations	123,267		123,706
	$	219,085	$	218,847

Realized Gains and Losses Related to Securities Available-for-Sale

Gains or losses on the sales of available-for-sale securities are recognized upon sale and are determined using the specific identification method.

	Nine months ended September 30,
	2014			2013
	(Dollars in thousands)
Gross realized gains	$	—		$	178
Gross realized losses	(5		)	—
Net Securities Gains	$	(5	)	$	178
Proceeds from the sale of available for sale securities	$	2,327		$	2,272

Summary of Securities that had Unrealized Losses

The Corporation has the intent and the ability to hold these securities until their value recovers, which may be until maturity.

	At September 30, 2014
	Less than 12 months					12 months or longer					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(Dollars in thousands)
U.S. Government agencies and corporations	$	1,163	$	(2	)	$	58,167	$	(2,095	)	$	59,330	$	(2,097	)
Mortgage backed securities: residential	14,267		(72		)	33,545		(629		)	47,812		(701		)
Residential collateralized mortgage obligations	9,994		(58		)	4,016		(163		)	14,010		(221		)
State and political subdivisions	936		(5		)	4,081		(144		)	5,017		(149		)
Total	$	26,360	$	(137	)	$	99,809	$	(3,031	)	$	126,169	$	(3,168	)
	At December 31, 2013
	Less than 12 months					12 months or longer					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(Dollars in thousands)
U.S. Government agencies and corporations	$	65,388	$	(6,463	)	$	—	$	—		$	65,388	$	(6,463	)
Mortgage backed securities: residential	28,603		(566		)	31,051		(679		)	59,654		(1,245		)
Residential collateralized mortgage obligations	5,079		(59		)	4,411		(191		)	9,490		(250		)
State and political subdivisions	9,188		(602		)	447		(91		)	9,635		(693		)
Total	$	108,258	$	(7,690	)	$	35,909	$	(961	)	$	144,167	$	(8,651	)

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Share-Based Compensation Valuation Assumptions (Details)	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Dividend Yield (percent)	2.15%	3.03%	2.22%	3.07%
Expected volatility (percent)	34.47%	32.54%	34.49%	32.60%
Risk-free interest rate (percent)	2.18%	1.98%	2.07%	1.37%

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CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Operating Activities
Net income	$ 5,715	$ 4,455
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses	2,513	3,350
Depreciation and amortization	668	771
Amortization (accretion) of premiums and discounts	1,328	1,749
Amortization of intangibles	101	102
Amortization of loan servicing rights	284	144
Amortization of deferred loan fees	(197)	(129)
Income from cash surrender value of bank-owned life insurance policies	(514)	(512)
Federal deferred income tax expense (benefit)	(1,100)	665
Securities gains, net	5	(178)
Share-based compensation expense	238	225
Loans originated for sale	(81,476)	(85,753)
Proceeds from sales of loan originations	87,111	92,895
Net gain from loan sales	(2,649)	(1,617)
Net loss on sale of other assets	(26)	17
Net decrease (increase) in accrued interest receivable and other assets	(6,817)	741
Net increase (decrease) in accrued interest payable, taxes and other liabilities	(223)	1,113
Net cash provided by operating activities	4,961	18,038
Investing Activities
Proceeds from sales of available-for-sale securities	2,327	2,272
Proceeds from maturities of available-for-sale securities	36,550	57,553
Purchase of available-for-sale securities	(37,275)	(82,258)
Net increase in loans made to customers	(23,609)	(12,294)
Proceeds from the sale of other real estate owned	861	868
Purchase of bank premises and equipment	(1,299)	(382)
Proceeds from sale of bank premises and equipment	6	15
Net cash provided by (used in) investing activities	(22,439)	(34,226)
Financing Activities
Net increase (decrease) in demand and other noninterest-bearing	4,991	(23)
Net increase in savings, money market and interest-bearing demand	57,372	14,271
Net decrease in certificates of deposit	(51,168)	18,405
Net increase (decrease) in short-term borrowings	(1,902)	528
Proceeds from Federal Home Loan Bank advances	0	196
Payment of Federal Home Loan Bank advances	0	(10)
Deferred FHLB prepayment penalty	160	0
Redemption of Fixed-Rate Cumulative Perpetual Preferred stock	(7,670)	0
Purchase of Treasury Stock	(85)	0
Dividends paid	(325)	(748)
Net cash provided by financing activities	1,373	32,619
Net increase (decrease) in cash and cash equivalents	(16,105)	16,431
Cash and cash equivalents, January 1	52,272	30,659
Cash and cash equivalents, September 30	36,167	47,090
Supplemental cash flow information
Interest paid	4,297	4,744
Income taxes paid	1,050	1,825
Transfer of loans to other real estate owned	$ 1,029	$ 633

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CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)	Sep. 30, 2014	Dec. 31, 2013
Common stock, par value (in dollars per share)	$ 1	$ 1
Common stock, authorized	15,000,000	15,000,000
Common stock, issued	10,001,717	10,001,717
Treasury stock, shares	336,745	328,194
Preferred stock, Series A Voting, no par value, authorized 150,000 shares, none issued at September 30, 2014 and December 31, 2013
Preferred Stock, No Par Value
Preferred stock, shares authorized	150,000	150,000
Preferred stock, shares issued	0	0
Fixed rate cumulative preferred stock, Series B, no par value, $1,000 liquidation value, no shares were issued at September 30, 2014 and 7,689 shares authorized and issued at December 31, 2013
Preferred stock, shares authorized	7,689	7,689
Preferred stock, shares issued	0	7,689
Preferred stock, Series B, liquidation value (in dollars per share)	$ 1,000	$ 1,000

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2014

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

In the normal course of business, the Corporation enters into commitments with off-balance sheet risk to meet the financing needs of its customers. These instruments are currently limited to commitments to extend credit and standby letters of credit. Commitments to extend credit involve elements of credit risk and interest rate risk in excess of the amount recognized in the consolidated balance sheets. The Corporation's exposure to credit loss in the event of nonperformance by the other party to the commitment is represented by the contractual amount of the commitment. The Corporation uses the same credit policies in making commitments as it does for on-balance sheet instruments. Interest rate risk on commitments to extend credit results from the possibility that interest rates may have moved unfavorably from the position of the Corporation since the time the commitment was made.

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates of 30 to 120 days or other termination clauses and may require payment of a fee. Since some of the commitments may expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements.

The Corporation evaluates each customer’s credit worthiness on a case-by-case basis. The amount of collateral obtained by the Bank upon extension of credit is based on management’s credit evaluation of the applicant. Collateral held is generally single-family residential real estate and commercial real estate. Substantially all of the obligations to extend credit are variable rate. Standby letters of credit are conditional commitments issued to guarantee the performance of a customer to a third party. Standby letters of credit generally are contingent upon the failure of the customer to perform according to the terms of the underlying contract with the third party.

A summary of the contractual amount of commitments at September 30, 2014 and December 31, 2013 follows:

	September 30, 2014		December 31, 2013
	(Dollars in thousands)
Commitments to extend credit	$	85,072	$	84,283
Home equity lines of credit	91,910		89,331
Standby letters of credit	8,940		8,448
Total	$	185,922	$	182,062

The nature of the Corporation’s business may result in litigation. Management, after reviewing with counsel all actions and proceedings pending against or involving the Corporation and its subsidiaries at September 30, 2014, considers that the aggregate liability or loss, if any, resulting from them will not be material to the Corporation’s financial position, results of operation or liquidity.

XML

Document and Entity Information	9 Months Ended
	Sep. 30, 2014	Nov. 07, 2014
Document and Entity Information [Abstract]
Entity Registrant Name	LNB BANCORP INC
Entity Central Index Key	0000737210
Document Type	10-Q
Document Period End Date	Sep. 30, 2014
Amendment Flag	false
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q3
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Entity Common Stock, Shares Outstanding		9,665,394

XML

Estimated Fair Value of Financial Instruments

9 Months Ended

Sep. 30, 2014

Fair Value Disclosures [Abstract]

Estimated Fair Value of Financial Instruments

Estimated Fair Value of Financial Instruments

The Corporation discloses estimated fair values for its financial instruments. Fair value estimates, methods and assumptions are set forth below for the Corporation’s financial instruments.

Fair Value Measurements

The fair value of financial assets and liabilities recorded at fair value is categorized in three levels. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. These levels are as follows:

• Level 1 — Valuations based on quoted prices in active markets, such as the New York Stock Exchange. Valuations are obtained from readily available pricing sources for market transactions involving identical assets or liabilities.

• Level 2 — Valuations of assets and liabilities traded in less active dealer or broker markets. Valuations include quoted prices for similar assets and liabilities traded in the same market; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable. Valuations may be obtained from, or corroborated by, third-party pricing services.

• Level 3 — Assets and liabilities with valuations that include methodologies and assumptions that may not be readily observable, including option pricing models, discounted cash flow models, yield curves and similar techniques. Level 3 valuations incorporate certain assumptions and projections in determining the fair value assigned to such assets or liabilities, but in all cases are corroborated by external data, which may include third-party pricing services.

Limitations

Estimates of fair value are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

Estimates of fair value are based on existing on-and-off balance sheet financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments. For example, the Corporation has an Investment and Trust Services Division that contributes net fee income annually. The Investment and Trust Services Division is not considered a financial instrument and its value has not been incorporated into the fair value estimates. Other significant assets and liabilities that are not considered financial instruments include premises and equipment and deferred tax assets. The estimated fair values of the Corporation’s financial instruments at September 30, 2014 and December 31, 2013 are summarized as follows:

	September 30, 2014										December 31, 2013
	Carrying Value		Estimated Fair Value		Level 1		Level 2		Level 3		Carrying Value		Estimated Fair Value
	(Dollars in thousands)
Financial assets
Cash and due from banks, Federal funds sold and interest bearing deposits in other banks	$	36,167	$	36,167	$	36,167	$	—	$	—	$	52,272	$	52,272
Securities	218,847		218,847		—		218,847		—		216,122		216,122
Restricted stock	5,741		5,741		N/A		N/A		N/A		5,741		N/A
Portfolio loans, net	905,082		913,057		—		—		913,057		884,794		884,211
Loans held for sale	1,497		1,523		—		1,541		—		4,483		4,487
Accrued interest receivable	3,714		3,714		—		961		2,753		3,621		3,621
Financial liabilities
Deposits:
Demand, savings and money market	605,102		585,468		—		585,468		—		542,739		542,739
Certificates of deposit	451,682		453,489		—		453,489		—		502,850		504,381
Short-term borrowings	2,674		2,674		—		2,674		—		4,576		4,576
Federal Home Loan Bank advances	46,867		47,413		—		47,413		—		46,708		46,923
Junior subordinated debentures	16,238		21,534		—		21,534		—		16,238		16,778
Accrued interest payable	674		674		—		—		674		789		789

Cash and Cash Equivalents

The carrying amounts of cash and short-term instruments approximate fair values and are classified as either Level 1 or Level 2. As of September 30, 2014 and December 31, 2013, Cash and due from banks, Federal funds sold and interest bearing deposits in other banks were classified as Level 1.

Restricted stock

The Corporation has determined that is not practical to determine the fair value of Restricted stock due to restrictions placed on its transferability. Restricted stock is carried at cost and valued based on the ultimate recoverability of par value.

Loans

Fair values of loans, excluding loans held for sale, are estimated as follows: For variable rate loans that re-price frequently and with no significant change in credit risk, fair values are based on carrying values, resulting in a Level 3 classification. Fair values for other loans are estimated using discounted cash flow analyses, using interest rates then being offered for loans with similar terms to borrowers of similar credit quality, resulting in a Level 3 classification. Impaired loans are valued at the lower of cost or fair value. The methods utilized to estimate the fair value of loans do not necessarily represent an exit price. The fair value of loans held for sale is estimated based upon binding contracts and quotes from third party investors, resulting in a Level 2 classification.

Deposits

The fair values disclosed for demand deposits (e.g., interest and non-interest checking, passbook savings, and certain types of money market accounts) are, by definition, equal to the amount payable on demand at the reporting date (i.e., their carrying amount), resulting in a Level 2 classification. The carrying amounts of variable rate, fixed-term money market accounts and certificates of deposit approximate their fair values at the reporting date, resulting in a Level 2 classification. Fair values for fixed rate certificates of deposit are estimated using a discounted cash flows calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on time deposits, resulting in a Level 2 classification.

Short-term Borrowings

The carrying amounts of federal funds purchased, borrowings under repurchase agreements, and other short-term borrowings, generally maturing within ninety days, approximate their fair values, resulting in a Level 2 classification.

Other Borrowings

The fair values of the Corporation's long-term borrowings are estimated using discounted cash flow analysis based on the then current borrowing rates for similar types of borrowing arrangements, resulting in a Level 2 classification.

The fair values of the Corporation’s Junior Subordinated Debentures are estimated using discounted cash flow analysis based on the then current borrowing rates for similar types of borrowing arrangements, resulting in a Level 2 classification.

Off-balance Sheet Instruments

Fair values for off-balance sheet, credit-related financial instruments are based on fees then charged to enter into similar agreements, taking into account the remaining terms of the agreements and the counterparties’ credit standing. The fair value of commitments is not material.

The following table presents information about the Corporation’s assets and liabilities measured at fair value on a recurring basis as of September 30, 2014 and December 31, 2013, and the valuation techniques used by the Corporation to determine those fair values.

Description	Fair Value as of September 30, 2014		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(Dollars in thousands)
Securities available for sale:
U.S. Government agencies and corporations	$	59,330	$	—	$	59,330	$	—
Mortgage backed securities: residential	98,554		—		98,554		—
Residential collateralized mortgage obligations	25,152		—		25,152		—
State and political subdivisions	35,811		—		35,811		—
Total	$	218,847	$	—	$	218,847	$	—
Description	Fair Value as of December 31, 2013		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(Dollars in thousands)
Securities available for sale:
U.S. Government agencies and corporations	$	65,388	$	—	$	65,388	$	—
Mortgage backed securities: residential	94,430		—		94,430		—
Residential collateralized mortgage obligations	18,655		—		18,655		—
State and political subdivisions	32,965		—		32,965		—
Preferred Securities	4,684		—		—		4,684
Interest rate swaps	222		—		222		—
Total	$	216,344	$	—	$	211,660	$	4,684

Fair value measurements of U.S. Government agencies, collateralized mortgage obligations, and mortgage backed securities use pricing models that vary and may consider various assumptions, including time value, yield curves, volatility factors, prepayment speeds, default rates, loss severity, current market and contractual prices for the underlying financial instruments, as well as other relevant economic measures (level 2). Fair value of debt securities such as obligations of state and political subdivisions may be determined by matrix pricing. Matrix pricing is a mathematical technique that is used to value debt securities without relying exclusively on quoted prices for specific securities, but rather by relying on the securities relationship to other benchmark quoted prices.

In 2013 the Corporation implemented an interest rate program for commercial loan customers. The interest rate program provides the customer with a fixed rate loan while creating a variable rate asset for the Corporation through the customer entering into an interest rate swap with the Corporation on terms that match the loan. The Corporation offsets its risk exposure by entering into an offsetting interest rate swap with an unaffiliated institution. These interest rate swaps do not qualify as designated hedges, therefore, each swap is accounted for as a standalone derivative. Valuations for interest rate swaps are derived from third-party models whose significant inputs are readily observable market parameters, primarily yield curves, with appropriate adjustments for liquidity and credit risk. These fair value measurements are classified as Level 2.

There were no transfers between Levels 1 and 2 of the fair value hierarchy during the quarters ended September 30, 2014 and December 31, 2013. For the available for sale securities, the Corporation obtains fair value measurements from an independent third-party service or independent brokers.

Certain assets and liabilities are measured at fair value on a nonrecurring basis in accordance with GAAP. The adjustments to fair value generally result from the application of accounting guidance that requires assets and liabilities to be recorded at lower of cost or fair value, or assessed for impairment. The Corporation has assets that, under certain conditions, are subject to measurement at fair value on a nonrecurring basis. At September 30, 2014 and December 31, 2013, such assets consist primarily of impaired loans and other property. The Corporation has estimated the fair values of these assets using Level 3 inputs, specifically discounted cash flow projections and market comparable pricing.

The following table presents the balances of assets and liabilities measured at fair value on a nonrecurring basis:

September 30, 2014	Quoted Market Prices in Active Markets (Level 1)	Internal Models with Significant Observable Market Parameters (Level 2)	Internal Models with Significant Unobservable Market Parameters (Level 3)
	(Dollars in thousands)
Impaired Loans:
Commercial real estate			$	1,334
Total			$	1,334

December 31, 2013	Quoted Market Prices in Active Markets (Level 1)	Internal Models with Significant Observable Market Parameters (Level 2)	Internal Models with Significant Unobservable Market Parameters (Level 3)
	(Dollars in thousands)
Impaired Loans:
Commercial real estate			$	11,241
Commercial			289
Residential real estate			5,231
Home equity loans			4,464
Indirect			443
Consumer			318
Total			$	21,986
Other real estate owned:
Commercial real estate			$	304
Residential real estate			275
Total			$	579

Impaired loans:    Impaired loans that are measured for impairment using the fair value of the collateral for collateral dependent loans, had a principal balance of $2,036, with a valuation allowance of $702 at September 30, 2014, resulting in a reduction to provision for loan losses of $69 and $162 for the three and nine month period ended September 30, 2014. At September 30, 2013, impaired loans measured for impairment using the fair value of the collateral for collateral dependent loans, had a principal balance of $5,924, with a valuation allowance of $1,546, resulting in a reduction to provision for loan losses of $124 and $127 for the three and nine month period ended September 30, 2013.

Appraisals for both collateral-dependent impaired loans and real estate owned are performed by certified general appraisers (for commercial properties) or certified residential appraisers (for residential properties) whose qualifications and licenses have been reviewed and verified by the Corporation. Once received, the Corporation reviews the assumptions and approaches utilized in the appraisal as well as the overall resulting fair value in comparison with independent data sources such as recent market data or industry-wide statistics. On a periodic basis, the Company compares the actual selling price of collateral that has been sold to the most recent appraised value to determine what additional adjustment should be made to the appraisal value to arrive at fair value.

Fair value adjustments for these items typically occur when there is evidence of impairment. Loans are designated as impaired when, in the judgment of management based on current information and events, it is probable that all amounts due according to the contractual terms of the loan agreement will not be collected. The measurement of loss associated with impaired loans can be based on either the observable market price of the loan or the fair market value of the collateral. The Corporation measures fair value based on the value of the collateral securing the loans. Collateral may be in the form of real estate or personal property including equipment and inventory. The vast majority of collateral is real estate. The value of the collateral is determined based on internal estimates as well as third party appraisals or non-binding broker quotes. These measurements were classified as Level 3.

Other Real Estate:    Other real estate includes foreclosed assets and properties securing residential and commercial loans. Assets acquired through or instead of loan foreclosure are initially recorded at fair value less costs to sell when acquired, establishing a new cost basis. These assets are subsequently accounted for at lower of cost or fair value less estimated costs to sell. Fair value is commonly based on recent real estate appraisals which are updated no less frequently than annually. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value.

Foreclosed assets are adjusted to fair value less costs to sell upon transfer of the loans to foreclosed assets. Subsequently, foreclosed assets are carried at lower of carry value or fair value less costs to sell. Fair value is generally based upon internal estimates and third party appraisals or non-binding broker quotes and, accordingly, considered a Level 3 classification.

The following table presents additional quantitative information about assets measured at fair value on a

nonrecurring basis for which the Corporation has utilized Level 3 inputs to determine fair value (dollars in thousands).

Asset	Fair Value	Valuation Technique	Unobservable Input
Collateral dependent impaired loans	$1,334	Sales comparison approach	Adjustment for differences between the comparable sales with a 15% 20% cost to sell adjustment

Changes in Level 3 Fair Value Measurements

There were no assets measured at fair value on a recurring basis using significant unobservable inputs that were transferred to Level 3 as of or during the nine months ended September 30, 2014.

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CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (LOSS) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Interest and Dividend Income
Loans	$ 8,960	$ 8,973	$ 27,076	$ 27,291
Securities:
U.S. Government agencies and corporations	1,007	908	3,075	2,616
State and political subdivisions	311	301	924	887
Other debt and equity securities	66	115	250	337
Federal funds sold and short-term investments	6	7	30	23
Total interest income	10,350	10,304	31,355	31,154
Interest Expense
Deposits	1,026	1,200	3,131	3,685
Federal Home Loan Bank advances	158	158	470	469
Short-term borrowings	20	0	73	1
Junior subordinated debentures	170	171	508	511
Total interest expense	1,374	1,529	4,182	4,666
Net Interest Income	8,976	8,775	27,173	26,488
Provision for Loan Losses (Note 5)	720	950	2,513	3,350
Net interest income after provision for loan losses	8,256	7,825	24,660	23,138
Noninterest Income
Investment and trust services	425	363	1,281	1,178
Deposit service charges	850	923	2,469	2,608
Other service charges and fees	771	820	2,262	2,459
Income from bank owned life insurance	172	174	514	512
Other income	71	(218)	328	335
Total fees and other income	2,289	2,062	6,854	7,092
Securities gains (losses), net (Note 4)	0	0	(5)	178
Gains on sale of loans	1,056	374	2,649	1,617
Loss on sale of other assets, net	16	30	26	(17)
Total noninterest income	3,361	2,466	9,524	8,870
Noninterest Expense
Salaries and employee benefits	4,649	4,200	13,754	13,451
Furniture and equipment	1,200	1,076	3,525	3,159
Net occupancy	568	564	1,784	1,701
Professional fees	421	337	1,341	1,413
Marketing and public relations	333	300	1,123	938
Supplies, postage and freight	243	228	675	809
Telecommunications	164	164	477	501
Ohio Financial Institutions Tax	224	304	671	914
Intangible asset amortization	34	35	101	102
FDIC assessments	255	293	788	773
Other real estate owned	5	155	66	280
Loan and collection expense	331	268	1,001	1,030
Other expense	391	377	1,169	1,133
Total noninterest expense	8,818	8,301	26,475	26,204
Income before income tax expense	2,799	1,990	7,709	5,804
Income tax expense	713	471	1,994	1,349
Net Income	2,086	1,519	5,715	4,455
Other comprehensive income (loss), net of taxes:
Changes in unrealized securities' holding gain (loss), net of taxes	481	(2,324)	3,733	(6,038)
Reclassified amounts out of accumulated other comprehensive income, net of tax	0	0	(3)	117
Total other comprehensive income (loss), net of taxes	481	(2,324)	3,736	(6,155)
Comprehensive Income (Loss)	2,567	(805)	9,451	(1,700)
Net Income	2,086	1,519	5,715	4,455
Dividends and accretion on preferred stock	0	109	16	483
Net Income Available to Common Shareholders	$ 2,086	$ 1,410	$ 5,699	$ 3,972
Net Income Per Common Share (Note 2)
Basic (in dollars per share)	$ 0.22	$ 0.15	$ 0.59	$ 0.44
Diluted (in dollars per share)	$ 0.22	$ 0.15	$ 0.59	$ 0.44
Dividends declared (in dollars per share)	$ 0.01	$ 0.01	$ 0.03	$ 0.03
Average Common Shares Outstanding
Basic (Shares)	9,626,536	9,213,170	9,622,736	8,840,945
Diluted (in shares)	9,659,254	9,225,462	9,637,355	8,850,129

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Loans and Allowance for Loan Losses

9 Months Ended

Sep. 30, 2014

Receivables [Abstract]

Loans and Allowance for Loan Losses

 Loans and Allowance for Loan Losses

The allowance for loan losses is maintained by the Corporation at a level considered by management to be adequate to cover probable incurred credit losses in the loan portfolio. The amount of the provision for loan losses charged to operating expenses is the amount necessary, in the estimation of management, to maintain the allowance for loan losses at an adequate level. While management’s periodic analysis of the allowance for loan losses may dictate portions of the allowance be allocated to specific problem loans, the entire amount is available for any loan charge-offs that may occur. Loan losses are charged off against the allowance when management believes that the full collectability of the loan is unlikely. Recoveries of amounts previously charged-off are credited to the allowance.

The allowance is comprised of a general allowance and a specific allowance for identified problem loans. The general allowance is determined by applying estimated loss factors to the credit exposures from outstanding loans. For residential real estate, installment and other loans, loss factors are applied on a portfolio basis. Loss factors are based on the Corporation’s historical loss experience and are reviewed for appropriateness on a quarterly basis, along with other factors affecting the collectability of the loan portfolio. These other factors include but are not limited to: changes in lending policies and procedures, including underwriting standards and collection, charge-off and recovery practices; changes in national and local economic and business conditions, including the condition of various market segments; changes in the nature and volume of the portfolio; changes in the experience, ability, and depth of lending management and staff; changes in the volume and severity of past due and classified loans, the volume of nonaccrual loans, troubled debt restructurings and other loan modifications; the existence and effect of any concentrations of credit, and changes in the level of such concentrations; and the effect of external factors, such as legal and regulatory requirements, on the level of estimated credit losses in the Corporation’s current portfolio. Specific allowances are established for all impaired loans when management has determined that, due to identified significant conditions, it is probable that a loss will be incurred.

The general component covers non‑impaired loans and is based on historical loss experience adjusted for current factors. The historical loss experience is determined by portfolio segment and is based on the actual loss history experienced by the Corporation over the most recent three years. This actual loss experience is supplemented with other economic factors based on the risks present for each portfolio segment. These economic factors include consideration of the following: levels of and trends in delinquencies and impaired loans; levels of and trends in charge-offs and recoveries; trends in volume and terms of loans; effects of any changes in risk selection and underwriting standards; other changes in lending policies, procedures, and practices; experience, ability, and depth of lending management and other relevant staff; national and local economic trends and conditions; industry conditions; and effects of changes in credit concentrations.

Activity in the allowance for loan losses by portfolio segment for the three and nine months ended September 30, 2014 and 2013 are summarized as follows:

Nine Months Ended September 30, 2014
	Commercial Real Estate			Commercial			Residential Real Estate			Home Equity Loans			Indirect			Consumer			Total
	(Dollars in thousands)
Allowance for loan losses:
Balance, beginning of period	$	10,122		$	497		$	1,411		$	3,484		$	1,593		$	398		$	17,505
Losses charged off	(1,133		)	(35		)	(213		)	(1,074		)	(283		)	(150		)	(2,888		)
Recoveries	32			32			6			65			143			24			302
Provision charged to expense	94			204			865			644			639			67			2,513
Balance, end of period	$	9,115		$	698		$	2,069		$	3,119		$	2,092		$	339		$	17,432
Three Months Ended September 30, 2014
	Commercial Real Estate			Commercial			Residential Real Estate			Home Equity Loans			Indirect			Consumer			Total
	(Dollars in thousands)
Allowance for loan losses:
Balance, beginning of period	$	9,944		$	476		$	1,446		$	3,789		$	1,533		$	242		$	17,430
Losses charged off	(433		)	(35		)	(63		)	(179		)	(106		)	(41		)	(857		)
Recoveries	11			30			—			46			46			6			139
Provision charged to expense	(407		)	227			686			(537		)	619			132			720
Balance, end of period	$	9,115		$	698		$	2,069		$	3,119		$	2,092		$	339		$	17,432
As of September 30, 2014
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	703		$	5		$	178		$	—		$	—		$	—		$	886
Collectively evaluated for impairment	8,412			693			1,891			3,119			2,092			339			16,546
Total ending allowance balance	$	9,115		$	698		$	2,069		$	3,119		$	2,092		$	339		$	17,432
Loans:
Individually evaluated for impairment	$	15,271		$	184		$	1,356		$	852		$	147		$	64		$	17,874
Collectively evaluated for impairment	398,354			85,359			69,535			124,466			213,303			13,623			904,640
Total ending loans balance	$	413,625		$	85,543		$	70,891		$	125,318		$	213,450		$	13,687		$	922,514

Nine Months Ended September 30, 2013
	Commercial Real Estate			Commercial			Residential Real Estate			Home Equity Loans			Indirect			Consumer			Total
Allowance for loan losses:
Balance, beginning of period	$	11,386		$	835		$	1,559		$	2,357		$	1,230		$	270		$	17,637
Losses charged off	(1,475		)	(120		)	(679		)	(1,439		)	(555		)	(181		)	(4,449		)
Recoveries	584			7			277			60			276			49			1,253
Provision charged to expense	(33		)	(246		)	281			2,530			660			158			3,350
Balance, end of period	$	10,462		$	476		$	1,438		$	3,508		$	1,611		$	296		$	17,791
Three Months Ended September 30, 2013
	Commercial Real Estate			Commercial			Residential Real Estate			Home Equity Loans			Indirect			Consumer			Total
	(Dollars in thousands)
Allowance for loan losses:
Balance, beginning of period	$	10,424		$	438		$	1,606		$	3,508		$	1,581		$	258		$	17,815
Losses charged off	(630		)	—			(35		)	(410		)	(196		)	(83		)	(1,354		)
Recoveries	83			2			178			5			104			8			380
Provision charged to expense	585			36			(311		)	405			122			113			950
Balance, end of period	$	10,462		$	476		$	1,438		$	3,508		$	1,611		$	296		$	17,791
Year Ended December 31, 2013
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	865		$	73		$	—		$	—		$	—		$	—		$	938
Collectively evaluated for impairment	9,257			$	424		$	1,411		$	3,484		$	1,593		$	398		16,567
Total ending allowance balance	$	10,122		$	497		$	1,411		$	3,484		$	1,593		$	398		$	17,505
Loans:
Individually evaluated for impairment	$	17,842		$	472		$	1,731		$	1,111		$	195		$	160		$	21,511
Collectively evaluated for impairment	383,749			88,174			64,776			121,965			206,128			15,996			880,788
Total ending loans balance	$	401,591		$	88,646		$	66,507		$	123,076		$	206,323		$	16,156		$	902,299

Delinquencies

Management monitors delinquency and potential problem loans on an on going basis. Bank-wide delinquency at September 30, 2014 was 1.27% of total loans. Total 30-59 day delinquency and 60-89 day delinquency was 0.17% and 0.06% of total loans at September 30, 2014, respectively. Bank-wide delinquency at December 31, 2013 was 1.69% of total loans. Total 30-59 day delinquency and 60-89 day delinquency was 0.26% and 0.19% of total loans at December 31, 2013, respectively. Information regarding delinquent loans as of September 30, 2014 and December 31, 2013 is as follows:

Age Analysis of Past Due Loans as of September 30, 2014

(Dollars in thousands)	30-59 Days Past Due		60-89 Days Past Due		90 Days and Greater		Total Past Due		Current		Total Loans		Recorded Investment > 90 Days and Accruing
Commercial real estate	$	614	$	233	$	5,684	$	6,531	$	407,094	$	413,625	$	—
Commercial	55		—		172		227		85,316		85,543		—
Residential real estate	267		63		1,668		1,998		68,893		70,891		—
Home equity loans	123		149		1,766		2,038		123,280		125,318		—
Indirect	324		118		28		470		212,980		213,450
Consumer	169		—		308		477		13,210		13,687		—
Total	$	1,552	$	563	$	9,626	$	11,741	$	910,773	$	922,514	$	—

Age Analysis of Past Due Loans as of December 31, 2013

(Dollars in thousands)	30-59 Days Past Due		60-89 Days Past Due		90 Days and Greater		Total Past Due		Current		Total Loans		Recorded Investment > 90 Days and Accruing
Commercial real estate	$	525	$	4	$	7,401	$	7,930	$	393,661	$	401,591	$	—
Commercial	—		18		219		237		88,409		88,646		—
Residential real estate	347		960		2,252		3,559		62,948		66,507		158
Home equity loans	932		707		1,078		2,717		120,359		123,076		43
Indirect	332		30		23		385		205,938		206,323
Consumer	183		25		191		399		15,757		16,156		—
Total	$	2,319	$	1,744	$	11,164	$	15,227	$	887,072	$	902,299	$	201

Impaired Loans

A loan is considered impaired when it is probable that not all principal and interest amounts will be collected according to the loan contract. Consumer residential mortgage, installment and other consumer loans are evaluated collectively for impairment. Individual commercial loans are evaluated for impairment. Impaired loans are written down by the establishment of a specific allowance where necessary. Interest income recognized on impaired loans while the loan was considered impaired was immaterial for all periods.

Impaired loans for the Period Ended September 30, 2014, December 31, 2013 and September 30, 2013 are as follows:

	At September 30, 2014						Three Months Ended September 30, 2014		Nine Months Ended September 30, 2014
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Balance		Average Recorded Balance
	(Dollars in thousands)
With no related allowance recorded:
Commercial real estate	$	13,235	$	17,060	$	—	$	13,255	$	13,008
Commercial	149		466		—		751		568
Residential real estate	1,178		1,391		—		1,208		1,216
Home equity loans	852		1,535		—		903		928
Indirect	147		231		—		156		168
Consumer	64		103		—		64		64
With allowance recorded:
Commercial real estate	2,036		2,872		703		2,849		3,120
Commercial	35		35		5		146		183
Residential real estate	178		178		178		100		73
Home equity loans	—		—		—		—		—
Indirect	—		—		—		—		—
Consumer	—		—		—		—		—
Total	$	17,874	$	23,871	$	886	$	19,432	$	19,328

Note: The differences between the recorded investment and unpaid principal balance amounts represents partial charge offs.

	At December 31, 2013
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Balance
	(Dollars in thousands)
With no related allowance recorded:
Commercial real estate	$	15,530	$	20,438	$	—	$	16,705
Commercial	214		267		—		186
Residential real estate	1,731		1,940		—		1,832
Home equity loans	1,111		1,623		—		847
Indirect	195		268		—		178
Consumer	160		204		—		111
With allowance recorded:
Commercial real estate	2,312		2,319		865		4,374
Commercial	258		258		73		346
Residential real estate	—		—		—		—
Home equity loans	—		—		—		—
Indirect	—		—		—		—
Consumer	—		—		—		—
Total	$	21,511	$	27,317	$	938	$	24,579

Note: The differences between the recorded investment and unpaid principal balance amounts represents partial charge offs.

	At September 30, 2013						Three Months Ended September 30, 2013		Nine Months Ended September 30, 2013
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Balance		Average Recorded Balance
	(Dollars in thousands)
With no related allowance recorded:
Commercial real estate	$	14,625	$	19,617	$	—	$	16,127	$	16,667
Commercial	245		298		—		203		167
Residential real estate	1,613		1,801		—		1,802		1,800
Home equity loans	1,107		1,518		—		897		669
Indirect	191		293		—		208		129
Consumer	152		203		—		113		87
With allowance recorded:
Commercial real estate	5,523		8,842		1,462		5,139		5,781
Commercial	343		343		79		342		396
Residential real estate	57		154		6		29		60
Home equity loans	—		—		—		—		—
Indirect	—		—		—		—		—
Consumer	—		—		—		—		—
Total	$	23,856	$	33,069	$	1,547	$	24,860	$	25,756

*Impaired loans shown in the tables above included loans that were classified as troubled debt restructurings ("TDRs"). The restructuring of a loan is considered a TDR if both (i) the borrower is experiencing financial difficulties and (ii) the creditor has granted a concession.

Troubled Debt Restructuring

A restructuring of debt constitutes a troubled debt restructuring (“TDR”) if the creditor, for economic or legal reasons related to the debtor’s financial difficulties, grants a concession to the debtor that it would not otherwise consider. That concession either stems from an agreement between the creditor and the debtor or is imposed by law or a court. The Corporation adheres to ASC 310-40, Troubled Debt Restructurings by Creditors, to determine whether a troubled debt restructuring applies in a particular instance. Prior to loans being modified and classified as a TDR, specific reserves are generally assessed, as most of these loans have been specifically allocated for as part of the Corporation's normal loan loss provisioning methodology. The Corporation has allocated reserves of $40 for the TDR loans at September 30, 2014.

The following table provides the number of loans modified in a TDR and the recorded investment and unpaid principal balance by loan segment as of September 30, 2014 and September 30, 2013.

	Three Months Ended As of September 30, 2014			Nine Months Ended As of September 30, 2014
	(Dollars in thousands)
	Number of Contracts	Recorded Investment	Unpaid Principal	Number of Contracts	Recorded Investment	Unpaid Principal
Commercial real estate	2	$174	$267	21	$6,694	$9,092
Commercial	—	—	—	1	—	170
Residential real estate	—	—	—	13	854	958
Home equity loans	—	—	—	28	659	1,288
Indirect Loans	—	—	—	39	147	210
Consumer Loans	—	—	—	1	64	64
Total	2	$174	$267	103	$8,418	$11,782

Note: The differences between the recorded investment and unpaid principal balance amounts represents partial charge offs.

	Three Months Ended As of September 30, 2013			Nine Months Ended As of September 30, 2013
	(Dollars in thousands)
	Number of Contracts	Recorded Investment	Unpaid Principal	Number of Contracts	Recorded Investment	Unpaid Principal
Commercial real estate	—	$—	$—	18	$6,742	$8,724
Commercial	—	—	—	1	—	170
Residential real estate	1	42	46	12	966	1,052
Home equity loans	5	277	320	27	882	1,247
Indirect Loans	3	31	31	38	227	336
Consumer Loans	2	27	27	1	55	55
Total	9	$350	$397	97	$8,872	$11,584

Note 1: The differences between the recorded investment and unpaid principal balance amounts represents partial charge offs.

The pre-modification and post-modification outstanding recorded investments of loans modified as TDRs during the nine months ended September 30, 2014 were not materially different. Loans modified during the nine months ended September 30, 2014 did not involve the forgiveness of principal at the modification date.

There were no loans modified in a TDR that subsequently defaulted during the twelve month periods ended September 30, 2014 and 2013, respectively (i.e., 90 days or more past due following a modification).

A modification of a loan constitutes a TDR when a borrower is experiencing financial difficulty and the modification constitutes a concession by the creditor. The Corporation offers various types of concessions when modifying a loan, however, forgiveness of principal is rarely granted. Commercial loans modified in a TDR often involve temporary interest-only payments, term extensions, and converting revolving credit lines to term loans. Additional collateral, a co-borrower, or a guarantor may be requested. Commercial mortgage and construction loans modified in a TDR often involve reducing the interest rate for the remaining term of the loan, extending the maturity date at an interest rate lower than the current market rate for new debt with similar risk, or substituting or adding a new borrower or guarantor. Construction loans modified in a TDR may also involve extending the interest-only payment period. Land loans are also included in the class of commercial real estate loans. Land loans are typically structured as interest-only monthly payments with a balloon payment due at maturity. Land loans modified in a TDR typically involve extending the balloon payment by one to three years and changing the monthly payments from interest-only to principal and interest, while leaving the interest rate unchanged.

Loans modified in a TDR are typically already on nonaccrual status and partial charge-offs have in some cases already been taken against the outstanding loan balance. As a result, loans modified in a TDR for the Corporation may have the financial effect of increasing the specific allowance associated with the loan. The allowance for impaired loans that have been modified in a TDR is measured based on the estimated fair value of the collateral, less any selling costs, if the loan is collateral dependent or on the present value of expected future cash flows discounted at the loan’s effective interest rate. Management exercises significant judgment in developing these estimates.

The OCC regulatory guidance requires loans to be accounted for as collateral-dependent loans when borrowers have filed Chapter 7 bankruptcy, the debt has been discharged and the borrower has not reaffirmed the debt, regardless of the delinquency status of the loan. The filing of bankruptcy by the borrower is evidence of financial difficulty and the discharge of the obligation by the bankruptcy court is deemed to be a concession granted to the borrower.

The Corporation had approximately $628 of additional commitments to lend additional funds to the related debtors whose terms have been modified in a TDR at September 30, 2014.

Nonaccrual Loans

Nonaccrual loan balances at September 30, 2014 and December 31, 2013 are as follows:

Loans On Nonaccrual Status	September 30, 2014		December 31, 2013
	(Dollars in thousands)
Commercial real estate	$	8,728	$	11,241
Commercial	172		289
Residential real estate	4,064		5,231
Home equity loans	4,366		4,464
Indirect	446		443
Consumer	417		318
Total Nonaccrual Loans	$	18,193	$	21,986

Credit Risk Grading

Sound credit systems, practices and procedures such as credit risk grading systems; effective credit review and examination processes; effective loan monitoring, problem identification, and resolution processes; and a conservative loss recognition process and charge-off policy are integral to management’s proper assessment of the adequacy of the allowance. Many factors are considered when grades are assigned to individual loans such as current and historic delinquency, financial statements of the borrower, current net realizable value of collateral and the general economic environment and specific economic trends affecting the portfolio. Commercial, commercial real estate and residential construction loans are assigned internal credit risk grades. The loan’s internal credit risk grade is reviewed on at least an annual basis and more frequently if needed based on specific borrower circumstances. Credit quality indicators used in management’s periodic analysis of the adequacy of the allowance include the Corporation’s internal credit risk grades which are described below and are included in the table below for September 30, 2014 and December 31, 2013:

• Grades 1 -5: defined as “Pass” credits — loans which are protected by the borrower’s current net worth and paying capacity or by the value of the underlying collateral. Pass credits are current or have not displayed a significant past due history.

• Grade 6: defined as “Special Mention” credits — loans where a potential weakness or risk exists, which could cause a more serious problem if not monitored. Loans listed for special mention generally demonstrate a history of repeated delinquencies, which may indicate a deterioration of the repayment abilities of the borrower.

• Grade 7: defined as “Substandard” credits — loans that have a well-defined weakness based on objective evidence and are characterized by the distinct possibility that the Corporation will sustain some loss if the deficiencies are not corrected.

• Grade 8: defined as “Doubtful” credits — loans classified as doubtful have all the weaknesses inherent in a substandard asset. In addition, these weaknesses make collection or liquidation in full highly questionable and improbable.

• Grade 9: defined as “Loss” credits — loans classified as a loss are considered uncollectible, or of such value that continuance as an asset is not warranted.

For the residential real estate segment, the Corporation monitors credit quality using a combination of the delinquency status of the loan and/or the Corporation’s internal credit risk grades as indicated above.

The following tables present the recorded investment of commercial real estate, commercial and residential real estate loans by internal credit risk grade and the recorded investment of residential real estate, home equity, indirect and consumer loans based on delinquency status as of September 30, 2014 and December 31, 2013:

Commercial Credit Exposure	Commercial Real Estate		Commercial		Residential Real Estate*		Home Equity Loans		Indirect		Consumer		Total
	September 30, 2014
	(Dollars in thousands)
Loans graded by internal credit risk grade:
Grade 1 — Minimal	$	—	$	69	$	—	$	—	$	—	$	—	$	69
Grade 2 — Modest	600		4,203		—		—		—		—		4,803
Grade 3 — Better than average	8,675		47		—		—		—		—		8,722
Grade 4 — Average	284,370		61,069		3,175		—		—		—		348,614
Grade 5 — Acceptable	93,705		19,761		2,366		—		—		—		115,832
Total Pass Credits	387,350		85,149		5,541		—		—		—		478,040
Grade 6 — Special mention	5,520		221		233		—		—		—		5,974
Grade 7 — Substandard	20,755		173		844		—		—		—		21,772
Grade 8 — Doubtful	—		—		—		—		—		—		—
Grade 9 — Loss	—		—		—		—		—		—		—
Total loans internally credit risk graded	413,625		85,543		6,618		—		—		—		505,786
Loans not monitored by internal risk grade:
Current loans not internally risk graded	—		—		62,336		123,280		212,980		13,210		411,806
30-59 days past due loans not internally risk graded	—		—		267		123		324		169		883
60-89 days past due loans not internally risk graded	—		—		2		149		118		—		269
90+ days past due loans not internally risk graded	—		—		1,668		1,766		28		308		3,770
Total loans not internally credit risk graded	—		—		64,273		125,318		213,450		13,687		416,728
Total loans internally and not internally credit risk graded	$	413,625	$	85,543	$	70,891	$	125,318	$	213,450	$	13,687	$	922,514

* Residential loans with an internal commercial credit risk grade include loans that are secured by non owner occupied 1-4 family residential properties and conventional 1-4 family residential properties.

Commercial Credit Exposure	Commercial Real Estate		Commercial		Residential Real Estate*		Home Equity Loans		Indirect		Consumer		Total
	December 31, 2013
	(Dollars in thousands)
Loans graded by internal credit risk grade:
Grade 1 — Minimal	$	—	$	52	$	—	$	—	$	—	$	—	$	52
Grade 2 — Modest	—		37		—		—		—		—		37
Grade 3 — Better than average	857		—		—		—		—		—		857
Grade 4 — Average	22,580		271		613		—		—		—		23,464
Grade 5 — Acceptable	352,781		84,979		5,589		—		—		—		443,349
Total Pass Credits	376,218		85,339		6,202		—		—		—		467,759
Grade 6 — Special mention	2,146		2,891		35		—		—		—		5,072
Grade 7 — Substandard	23,227		416		625		—		—		—		24,268
Grade 8 — Doubtful	—		—		—		—		—		—		—
Grade 9 — Loss	—		—		—		—		—		—		—
Total loans internally credit risk graded	401,591		88,646		6,862		—		—		—		497,099
Loans not monitored by internal risk grade:
Current loans not internally risk graded	—		—		56,390		120,359		205,938		15,757		398,444
30-59 days past due loans not internally risk graded	—		—		64		932		332		183		1,511
60-89 days past due loans not internally risk graded	—		—		960		707		30		25		1,722
90+ days past due loans not internally risk graded	—		—		2,231		1,078		23		191		3,523
Total loans not internally credit risk graded	—		—		59,645		123,076		206,323		16,156		405,200
Total loans internally and not internally credit risk graded	$	401,591	$	88,646	$	66,507	$	123,076	$	206,323	$	16,156	$	902,299

* Residential loans with an internal commercial credit risk grade include loans that are secured by non owner occupied 1-4 family residential properties and conventional 1-4 family residential properties.

The Corporation adheres to underwriting standards consistent with its Loan Policy for indirect and consumer loans. Final approval of a consumer credit depends on the repayment ability of the borrower. Repayment ability generally requires the determination of the borrower’s capacity to meet current and proposed debt service requirements. A borrower’s repayment ability is monitored based on delinquency, generally for time periods of 30 to 59 days past due, 60 to 89 days past due and 90 days or greater past due. This information is provided in the above past due loans table.

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Securities

9 Months Ended

Sep. 30, 2014

Investments, Debt and Equity Securities [Abstract]

Securities

Securities

The amortized cost, gross unrealized gains and losses and fair values of securities at September 30, 2014 and December 31, 2013 follows:

	At September 30, 2014
	Amortized  Cost		Unrealized Gains		Unrealized Losses			Fair Value
	(Dollars in thousands)
Securities available for sale:
U.S. Government agencies and corporations	$	61,427	$	—	$	(2,097	)	$	59,330
Mortgage backed securities: residential	98,061		1,194		(701		)	98,554
Residential collateralized mortgage obligations	25,206		167		(221		)	25,152
State and political subdivisions	34,391		1,569		(149		)	35,811
Total Securities	$	219,085	$	2,930	$	(3,168	)	$	218,847
	At December 31, 2013
	Amortized  Cost		Unrealized Gains		Unrealized Losses			Fair Value
	(Dollars in thousands)
Securities available for sale:
U.S. Government agencies and corporations	$	71,851	$	—	$	(6,463	)	$	65,388
Mortgage backed securities: residential	94,313		1,362		(1,245		)	94,430
Residential collateralized mortgage obligations	18,650		255		(250		)	18,655
State and political subdivisions	32,521		1,137		(693		)	32,965
Preferred securities	4,684		—		—			4,684
Total Securities	$	222,019	$	2,754	$	(8,651	)	$	216,122

U.S. Government agencies and corporations include callable and bullet agency issues and agency-backed mortgage backed securities. Maturities may differ from contractual terms because borrowers may have the right to call or prepay obligations with or without penalties. Periodic payments are received on mortgage-backed securities based upon payment patterns of the underlying collateral.

The amortized cost and fair value of available for sale debt securities by contractual maturity date at September 30, 2014 is provided in the following table. Mortgage backed securities and collateralized mortgage obligations are not due at a single maturity date and are therefore shown separately.

	At September 30, 2014
	Amortized Cost		Fair Value
	(Dollars in thousands)
Securities available for sale:
Due in one year or less	$	21,731	$	20,885
Due from one year to five years	38,415		38,718
Due from five years to ten years	30,078		29,733
Due after ten years	5,594		5,805
Mortgage backed securities and Residential collateralized mortgage obligations	123,267		123,706
	$	219,085	$	218,847

The following table shows the proceeds from sales of available-for-sale securities for the nine month period ended September 30, 2014 and 2013. The gross realized gains and losses on those sales that have been included in earnings. Gains or losses on the sales of available-for-sale securities are recognized upon sale and are determined using the specific identification method.

	Nine months ended September 30,
	2014			2013
	(Dollars in thousands)
Gross realized gains	$	—		$	178
Gross realized losses	(5		)	—
Net Securities Gains	$	(5	)	$	178
Proceeds from the sale of available for sale securities	$	2,327		$	2,272

The carrying value of securities pledged to secure trust deposits, public deposits, lines of credit, and for other purposes required by law amounted to $182,185 and $154,479 at September 30, 2014 and December 31, 2013, respectively.

The following is a summary of securities that had unrealized losses at September 30, 2014 and December 31, 2013. The information is presented for securities that have been in an unrealized loss position for less than 12 months and for more than 12 months. At September 30, 2014, the Corporation held 42 securities with unrealized losses totaling $3,168. At December 31, 2013, there were 53 securities with unrealized losses totaling $8,651. Securities may temporarily be valued at less than amortized cost if the current levels of interest rates, as compared to the coupons on the securities held by the Corporation, are higher or if impairment is not due to credit deterioration. The Corporation has the intent and the ability to hold these securities until their value recovers, which may be until maturity.

	At September 30, 2014
	Less than 12 months					12 months or longer					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(Dollars in thousands)
U.S. Government agencies and corporations	$	1,163	$	(2	)	$	58,167	$	(2,095	)	$	59,330	$	(2,097	)
Mortgage backed securities: residential	14,267		(72		)	33,545		(629		)	47,812		(701		)
Residential collateralized mortgage obligations	9,994		(58		)	4,016		(163		)	14,010		(221		)
State and political subdivisions	936		(5		)	4,081		(144		)	5,017		(149		)
Total	$	26,360	$	(137	)	$	99,809	$	(3,031	)	$	126,169	$	(3,168	)
	At December 31, 2013
	Less than 12 months					12 months or longer					Total
	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
	(Dollars in thousands)
U.S. Government agencies and corporations	$	65,388	$	(6,463	)	$	—	$	—		$	65,388	$	(6,463	)
Mortgage backed securities: residential	28,603		(566		)	31,051		(679		)	59,654		(1,245		)
Residential collateralized mortgage obligations	5,079		(59		)	4,411		(191		)	9,490		(250		)
State and political subdivisions	9,188		(602		)	447		(91		)	9,635		(693		)
Total	$	108,258	$	(7,690	)	$	35,909	$	(961	)	$	144,167	$	(8,651	)

On a quarterly basis, the Corporation performs a comprehensive security-level impairment assessment on all securities in an unrealized loss position to determine if other-than-temporary impairment ("OTTI") exists. An unrealized loss exists when the current fair value of an individual security is less than its amortized cost basis. For debt securities, an OTTI loss must be recognized for a debt security in an unrealized loss position if the Corporation intends to sell the security or it is more likely than not that the Corporation will be required to sell the security before recovery of its amortized cost basis. In this situation, the amount of loss recognized in income is equal to the difference between the fair value and the amortized cost basis of the individual security. If the Corporation does not expect to sell the security, the Corporation must evaluate the expected cash flows to be received to determine if a credit loss has occurred. If a credit loss is present, only the amount of impairment associated with the credit loss is recognized in income. The portion of the unrealized loss relating to other factors, such as liquidity conditions in the market or changes in market interest rates, is recorded in other comprehensive income.

The security-level assessment is performed on each security, regardless of the classification of the security as available for sale or held to maturity. The assessments are based on the nature of the securities, the financial condition of the issuer, the extent and duration of the securities, the extent and duration of the loss and the intent and whether management intends to sell or it is more likely than not that it will be required to sell a security before recovery of its amortized cost basis, which may be maturity. For those securities for which the assessment shows the Corporation will recover the entire cost basis, management does not intend to sell these securities and it is not more likely than not that the Corporation will be required to sell them before the anticipated recovery of the amortized cost basis, the gross unrealized losses are recognized in other comprehensive income, net of tax.

Management does not believe that the investment securities that were in an unrealized loss position as of September 30, 2014 represent an other-than-temporary impairment. Total gross unrealized losses were primarily attributable to changes in interest rates, relative to when the investment securities were purchased, and not due to the credit quality of the investment securities. The Corporation does not intend to sell the investment securities that were in an unrealized loss position and it is not more likely than not that the Corporation will be required to sell the investment securities before recovery of their amortized cost basis, which may be at maturity.

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Goodwill and Intangible Assets (Tables)

9 Months Ended

Sep. 30, 2014

Goodwill and Intangible Assets Disclosure [Abstract]

Summary of Core Deposit Intangible Assets, Gross and Net

A summary of core deposit intangible assets follows:

	September 30, 2014		December 31, 2013
	(Dollars in thousands)
Core deposit intangibles	$	1,367	$	1,367
Less: accumulated amortization	1,011		910
Carrying value of core deposit intangibles	$	356	$	457

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Share-Based Compensation

9 Months Ended

Sep. 30, 2014

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Share-Based Compensation

 Share-Based Compensation

A broad-based stock incentive plan, the 2006 Stock Incentive Plan, was adopted by the Corporation’s shareholders on April 18, 2006 and was amended and restated on May 2, 2012. Awards granted under this Plan as of September 30, 2014 were stock options granted in 2007, 2008, 2009, 2012 and 2013 and long-term restricted shares issued in 2010, 2011, 2012 and 2013. In addition, the Corporation has nonqualified stock option agreements outside of the 2006 Stock Incentive Plan. Grants under the nonqualified stock option agreements were made from 2005 to 2007.

Stock Options

During the nine months ended September 30, 2014, the Corporation granted 117,000 stock options to certain employees. All outstanding stock options were granted at an exercise price equal to the fair value of the common stock on the date of grant. The maximum option term is ten years and the options generally vest over three years as follows: one-third of the underlying shares vest on each the first, second and third anniversaries of the grant date.

The Corporation recognizes compensation expense for awards with a graded vesting schedule on a straight-line basis over the requisite service period for the entire award. The expense recorded for stock options was $71 and $26 for the three months ended September 30, 2014 and 2013, and $131 and $52 for the nine months ended September 30, 2014 and 2013, respectively.

The following table summarizes the Corporation's stock options outstanding at September 30, 2014:

	Outstanding		Exercisable
	Number	Weighted Average Remaining Contractual Life (Years)	Number	Weighted Average Exercise Price
Range of Exercise Prices
$5.34-$5.39	37,500	7.16	25,833	$	5.39
$9.07-$9.56	126,530	8.66	41,066	9.19
$11.03	109,500	9.64	—	—
$12.12	7,500	9.82	—	—
$14.47	78,000	3.35	78,000	14.47
$16.00-$16.50	32,500	2.22	32,500	16.04
$19.10	30,000	1.34	30,000	19.10
$19.17	30,000	0.34	30,000	19.17
Outstanding at end of period	451,530	6.37	237,399	$	13.96

A summary of the status of stock options for the nine month periods ended September 30, 2014 and 2013 is presented in the table below:

	September 30,				September 30,
	2014				2013
	Options		Weighted Average Exercise Price per Share		Options	Weighted Average Exercise Price per Share
Outstanding at beginning of period	337,696		$	12.43	232,000	$	14.50
Granted	117,000		11.10		137,363	9.18
Forfeited or expired	(1,500	)	14.47		—	—
Exercised	(1,666	)	9.56		—	—
Stock dividend or split	—		—		—	—
Outstanding at end of period	451,530		$	12.08	369,363	$	12.52
Exercisable at end of period	239,065		$	13.93	208,667	$	15.52

The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying stock options and the quoted price of the Corporation's common stock for those awards that have an exercise price then below the closing price. As of September 30, 2014, the Corporation had outstanding options to purchase an aggregate of 282,696 shares with an exercise price below the closing price of the Corporation's stock, resulting in an aggregate intrinsic value of $1,362.

For the third quarter 2014, the per share weighted-average fair value of stock options granted was $3.57 compared to $2.35 for the third quarter 2013. The per share weighted-average fair value of stock options granted during the first nine months of 2014 and 2013 was $3.24 and $2.15, respectively, on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions:

	Three Months Ended September 30,				Nine Months Ended September 30
	2014		2013		2014		2013
Dividend Yield	2.15	%	3.03	%	2.22	%	3.07	%
Expected volatility	34.47	%	32.54	%	34.49	%	32.60	%
Risk-free interest rate	2.18	%	1.98	%	2.07	%	1.37	%

Restricted Shares

Shares of long-term restricted stock generally vest in two equal installments on the second and third anniversaries of the date of grant, or upon the earlier death or disability of the recipient or a qualified change of control of the Corporation. The expense recorded for long-term restricted stock was $35 and $52 for the three months ended September 30, 2014 and 2013, respectively. For the nine months ended September 30, 2014 and 2013 the expense recorded was $107 and $173, respectively.

The market price of the Corporation’s common shares at the date of grant is used to estimate the fair value of long-term restricted stock. A summary of the status of outstanding restricted shares at September 30, 2014 is presented in the table below:

	Nonvested Shares		Weighted Average Grant Date Fair Value
Nonvested at January 1, 2014	83,355		$	5.86
Granted	—		—
Vested	(44,803	)	5.35
Forfeited or expired	—		—
Nonvested at September 30, 2014	38,552		$	6.45

Stock Appreciation Rights (“SARS”)

In 2006, the Corporation issued an aggregate of 30,000 SARS at $19.00 per share, 15,500 of which have expired due to employee terminations. The SARS vest over three years as follows: one-third of the underlying shares on each of the first, second and third anniversaries of the grant date. Any unexercised portion of the SARS shall expire at the end of the stated term which is specified at the date of grant and shall not exceed ten years. The term of the SARS issued in 2006 will expire in January 2016. The expense recorded for SARS for the nine months ended September 30, 2014, was $0 and for 2013 was $10.

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Federal Home Loan Bank Advances

9 Months Ended

Sep. 30, 2014

Disclosure Federal Home Loan Bank Advances Additional Information [Abstract]

Federal Home Loan Bank Advances

 Federal Home Loan Bank Advances

Federal Home Loan Bank advances amounted to $46,867 and $46,708 at September 30, 2014 and December 31, 2013 respectively. All advances were bullet maturities with no call features. At September 30, 2014, collateral pledged for FHLB advances consisted of qualified multi-family and residential real estate mortgage loans and investment securities of $80,069 and $11,680, respectively. The maximum borrowing capacity of the Bank at September 30, 2014 was $71,776. The Bank maintains a $40,000 cash management line of credit (CMA) with the FHLB. No amounts were outstanding under the CMA line of credit at September 30, 2014 and December 31, 2013.

Maturities of FHLB advances outstanding at September 30, 2014 and December 31, 2013 are as follows:

	September 30, 2014			December 31, 2013
	(Dollars in thousands)
Maturity January 2014 with fixed rate 3.55%	$	—		$	1
Maturity January 2015 with fixed rate 0.80%	20,000			20,000
Maturity December 2016 with fixed rate 0.79%	10,000			10,000
Maturities June 2017 through December 2017, with fixed rates ranging from 0.89% to 0.99%	15,000			15,000
Maturity June 2018 fixed rate 1.24%	2,500			2,500
Restructuring prepayment penalty	(633		)	(793		)
Total FHLB advances	$	46,867		$	46,708

In 2012, the Corporation prepaid $27,500 of fixed rate FHLB advances with an average contractual interest rate of 2.47% and a remaining maturity of 12 to 31 months. The prepaid FHLB advances were replaced with $27,500 of fixed rate FHLB advances with an average contractual interest rate of 0.88% and terms of 49 to 67 months. In accordance with the restructure, the Corporation was required to pay a prepayment penalty of $1,017 to the FHLB. The present value of the cash flows under the terms of the replacement FHLB advances (including the prepayment penalties) was not more than 10% different from the present value of the cash flows under the terms of the prepaid FHLB advances and therefore the replacement advances were not considered to be substantially different from the original advances in accordance with ASC 470-50, Debt – Modifications and Exchanges. As a result, the prepayment penalties have been treated as a discount on the replacement debt and are being amortized over the life of the new advances as an adjustment to rate. The prepayment penalty effectively increased the interest rate on the new advances over the lives of the new advances at the time of the transaction. The benefit of prepaying these advances was an immediate decrease in interest expense and a decrease in interest rate sensitivity as the maturity of each of the refinanced FHLB advances was extended at a lower rate.

At September 30, 2014, the advances were structured to contractually pay down as follows:

	Balance			Weighted Average Rate
2014	$	—		—%
2015	20,000			0.80
2016	10,000			0.79
2017	15,000			0.96
Thereafter	2,500			1.24
Total	$	47,500		0.87%
Restructuring prepayment penalty	(633		)
Total	$	46,867

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Estimated Fair Value of Financial Instruments - Assets Measured by Fair Value on a Recurring Basis (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
U.S. Government agencies and corporations
Fair Value Of Other Financial Instrument [Line Items]
Assets, Fair Value Disclosure, Recurring	$ 59,330
Mortgage backed securities: residential
Fair Value Of Other Financial Instrument [Line Items]
Assets, Fair Value Disclosure, Recurring	98,554
Residential collateralized mortgage obligations
Fair Value Of Other Financial Instrument [Line Items]
Assets, Fair Value Disclosure, Recurring	25,152
State and political subdivisions
Fair Value Of Other Financial Instrument [Line Items]
Assets, Fair Value Disclosure, Recurring	35,811
Fair Value [Member]
Fair Value Of Other Financial Instrument [Line Items]
Assets, Fair Value Disclosure, Recurring	218,847	216,344
Fair Value [Member] | U.S. Government agencies and corporations
Fair Value Of Other Financial Instrument [Line Items]
Assets, Fair Value Disclosure, Recurring	59,330	65,388
Fair Value [Member] | Mortgage backed securities: residential
Fair Value Of Other Financial Instrument [Line Items]
Assets, Fair Value Disclosure, Recurring	98,554	94,430
Fair Value [Member] | Residential collateralized mortgage obligations
Fair Value Of Other Financial Instrument [Line Items]
Assets, Fair Value Disclosure, Recurring	25,152	18,655
Fair Value [Member] | State and political subdivisions
Fair Value Of Other Financial Instrument [Line Items]
Assets, Fair Value Disclosure, Recurring	35,811	32,965
Fair Value [Member] | Preferred securities
Fair Value Of Other Financial Instrument [Line Items]
Assets, Fair Value Disclosure, Recurring		4,684
Fair Value [Member] | Interest rate swaps
Fair Value Of Other Financial Instrument [Line Items]
Assets, Fair Value Disclosure, Recurring		222
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member]
Fair Value Of Other Financial Instrument [Line Items]
Assets, Fair Value Disclosure, Recurring	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | U.S. Government agencies and corporations
Fair Value Of Other Financial Instrument [Line Items]
Assets, Fair Value Disclosure, Recurring	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Mortgage backed securities: residential
Fair Value Of Other Financial Instrument [Line Items]
Assets, Fair Value Disclosure, Recurring	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Residential collateralized mortgage obligations
Fair Value Of Other Financial Instrument [Line Items]
Assets, Fair Value Disclosure, Recurring	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | State and political subdivisions
Fair Value Of Other Financial Instrument [Line Items]
Assets, Fair Value Disclosure, Recurring	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Preferred securities
Fair Value Of Other Financial Instrument [Line Items]
Assets, Fair Value Disclosure, Recurring		0
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Interest rate swaps
Fair Value Of Other Financial Instrument [Line Items]
Assets, Fair Value Disclosure, Recurring		0
Significant Other Observable Inputs (Level 2) [Member]
Fair Value Of Other Financial Instrument [Line Items]
Assets, Fair Value Disclosure, Recurring	218,847	211,660
Significant Other Observable Inputs (Level 2) [Member] | U.S. Government agencies and corporations
Fair Value Of Other Financial Instrument [Line Items]
Assets, Fair Value Disclosure, Recurring	59,330	65,388
Significant Other Observable Inputs (Level 2) [Member] | Mortgage backed securities: residential
Fair Value Of Other Financial Instrument [Line Items]
Assets, Fair Value Disclosure, Recurring	98,554	94,430
Significant Other Observable Inputs (Level 2) [Member] | Residential collateralized mortgage obligations
Fair Value Of Other Financial Instrument [Line Items]
Assets, Fair Value Disclosure, Recurring	25,152	18,655
Significant Other Observable Inputs (Level 2) [Member] | State and political subdivisions
Fair Value Of Other Financial Instrument [Line Items]
Assets, Fair Value Disclosure, Recurring	35,811	32,965
Significant Other Observable Inputs (Level 2) [Member] | Preferred securities
Fair Value Of Other Financial Instrument [Line Items]
Assets, Fair Value Disclosure, Recurring		0
Significant Other Observable Inputs (Level 2) [Member] | Interest rate swaps
Fair Value Of Other Financial Instrument [Line Items]
Assets, Fair Value Disclosure, Recurring		222
Significant Unobservable Inputs (Level 3) [Member]
Fair Value Of Other Financial Instrument [Line Items]
Assets, Fair Value Disclosure, Recurring		4,684
Significant Unobservable Inputs (Level 3) [Member] | U.S. Government agencies and corporations
Fair Value Of Other Financial Instrument [Line Items]
Assets, Fair Value Disclosure, Recurring	0	0
Significant Unobservable Inputs (Level 3) [Member] | Mortgage backed securities: residential
Fair Value Of Other Financial Instrument [Line Items]
Assets, Fair Value Disclosure, Recurring	0	0
Significant Unobservable Inputs (Level 3) [Member] | Residential collateralized mortgage obligations
Fair Value Of Other Financial Instrument [Line Items]
Assets, Fair Value Disclosure, Recurring	0	0
Significant Unobservable Inputs (Level 3) [Member] | State and political subdivisions
Fair Value Of Other Financial Instrument [Line Items]
Assets, Fair Value Disclosure, Recurring	0	0
Significant Unobservable Inputs (Level 3) [Member] | Preferred securities
Fair Value Of Other Financial Instrument [Line Items]
Assets, Fair Value Disclosure, Recurring		4,684
Significant Unobservable Inputs (Level 3) [Member] | Interest rate swaps
Fair Value Of Other Financial Instrument [Line Items]
Assets, Fair Value Disclosure, Recurring		$ 0

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Deposits

9 Months Ended

Sep. 30, 2014

Banking and Thrift [Abstract]

Deposits

Deposits

Deposit balances are summarized as follows:

	September 30, 2014		December 31, 2013
	(Dollars in thousands)
Demand and other noninterest-bearing	$	153,952	$	148,961
Interest checking	179,913		164,662
Savings	127,343		125,582
Money market accounts	143,894		103,534
Consumer time deposits	343,612		382,137
Public time deposits	108,070		120,713
Total deposits	$	1,056,784	$	1,045,589

The aggregate amount of certificates of deposit in denominations of $100,000 or more amounted to $259,154 and $293,330 at September 30, 2014 and December 31, 2013, respectively.

The maturity distribution of certificates of deposit as of September 30, 2014 are as follows:

	September 30, 2014
	(Dollars in thousands)
0-12 months	$	227,865
12-24 months	138,416
24-36 months	66,328
36-48 months	14,936
48-60 months	4,137
Total	$	451,682

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Short-Term Borrowings

9 Months Ended

Sep. 30, 2014

Debt Disclosure [Abstract]

Short-Term Borrowings

Short-Term Borrowings

The Bank has a line of credit for advances and discounts with the Federal Reserve Bank of Cleveland. The amount of this line of credit varies on a monthly basis. The amount available for borrowing under the line is equal to 50% of the balances of qualified home equity lines of credit that are pledged as collateral. At September 30, 2014, the Bank had pledged approximately $91,995 in qualifying home equity lines of credit, resulting in an available line of credit of approximately $45,998. No amounts were outstanding under the line of credit at September 30, 2014 or December 31, 2013.

The Corporation also has a $6,000 line of credit with an unaffiliated financial institution under which the Corporation had outstanding borrowings of $2,000 at an annualized rate of 3.50% as of September 30, 2014. As part of the Corporation’s repurchase and redemption of its Series B Preferred Stock in December 2013 and January 2014, approximately $3,000 was drawn on the line of credit in December 2013. In the first and second quarter of 2014 the Corporation made payments of $500 of principal in each quarter on the line of credit. Following the two payments of $500 made in the first and second quarter of 2014, $2.0 million remains outstanding at the prime rate of 3.50% annually at September 30, 2014.

Short-term borrowings include securities sold under repurchase agreements and Federal funds purchased from correspondent banks. At September 30, 2014 and December 31, 2013, the outstanding balance of securities sold under repurchase agreements totaled $674 and $1,576, respectively. No Federal funds were purchased as of September 30, 2014 and December 31, 2013.

The following table presents the components of Federal funds purchased and securities sold under agreements to repurchase and short-term borrowings as of September 30, 2014 and December 31, 2013.

	September 30, 2014			December 31, 2013
Federal funds purchased and securities sold under agreements to repurchase	$	674		$	1,576
Line of credit with an unaffiliated financial institution	2,000			3,000
Total short-term borrowings	$	2,674		$	4,576
Short-term borrowings	September 30, 2014			December 31, 2013
Average balance during the year	$	3,831		$	1,803
Weighted-average annual interest rate during the year	3.61		%	0.10		%
Maximum month-end balance	$	3,353		$	4,576

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Trust Preferred Securities

9 Months Ended

Sep. 30, 2014

Disclosure Trust Preferred Securities Additional Information [Abstract]

Trust Preferred Securities

Trust Preferred Securities

In May 2007, LNB Trust I (“Trust I”) and LNB Trust II (“Trust II”) each sold $10,000 of preferred securities to outside investors and invested the proceeds in junior subordinated debentures issued by the Corporation. The Corporation’s obligations under the transaction documents, taken together, have the effect of providing a full guarantee by the Corporation, on a subordinated basis, of the payment obligations of the Trusts. The subordinated notes mature in 2037. Trust I bears a floating interest rate (current three-month LIBOR plus 148 basis points). Trust II bears a fixed rate of 6.64% through June 15, 2017, and then becomes a floating interest rate (current three-month LIBOR plus 148 basis points). Interest on the notes is payable quarterly. The interest rates in effect as of the last determination date in 2014 were 1.71% and 6.64% for Trust I and Trust II, respectively. At September 30, 2014 and December 31, 2013, accrued interest payable for Trust I was $6 and $6and for Trust II was $22 and $22, respectively.

The subordinated notes are redeemable in whole or in part, without penalty, at the Corporation’s option and mature on June 15, 2037. The notes are junior in right of payment to the prior payment in full of all senior indebtedness of the Corporation, whether outstanding at the date of the indenture governing the notes or thereafter incurred.

In August 2010, the Corporation entered into an agreement with certain holders of its non-pooled trust preferred securities and those holders exchanged $2,125 in principal amount of the securities issued by Trust I and $2,125 in principal amount of the securities issued by Trust II for 462,234 newly issued shares of the Corporation’s common stock at a volume weighted average price of $4.41 per share.

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Share-Based Compensation - Additional Information (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended				12 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014 Stock options [Member]	Sep. 30, 2013 Stock options [Member]	Sep. 30, 2014 Stock options [Member]	Sep. 30, 2013 Stock options [Member]	Sep. 30, 2014 Restricted stock [Member] Installment	Sep. 30, 2013 Restricted stock [Member]	Sep. 30, 2014 Restricted stock [Member] Installment	Sep. 30, 2013 Restricted stock [Member]	Sep. 30, 2014 Stock appreciation rights (SARs) [Member]	Sep. 30, 2013 Stock appreciation rights (SARs) [Member]	Dec. 31, 2006 Stock appreciation rights (SARs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of stock options granted			117,000	137,363
Maximum option term							10 years						10 years
General vesting period							3 years						3 years
Annual vesting percentage							33.33%
Expense recorded for share based compensation					$ 0	$ 0	$ 131	$ 52	$ 35	$ 52	$ 107	$ 173	$ 0	$ 10
Options outstanding with exercise price below quoted price (shares)	282,696		282,696
Total intrinsic value of options outstanding	$ 1,362		$ 1,362
Number of installments									2		2
Stock appreciation rights shares issued															30,000
Stock appreciation rights price of long term restricted share (in dollars per share)															$ 19.00
Shares expired due to employee terminations															15,500
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value	$ 3.57	$ 2.35	$ 3.24	$ 2.15

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Share-Based Compensation - Summary of Stock Options (Details) (USD $)	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Outstanding at beginning of period, shares	337,696	232,000
Granted, shares	117,000	137,363
Forfeited or expired, shares	(1,500)	0
Exercised, shares	(1,666)	0
Stock dividend or split, shares	0	0
Outstanding at end of period, shares	451,530	369,363
Exercisable at end of period, shares	239,065	208,667
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Roll Forward]
Outstanding at beginning of period, Weighted Average Exercise Price Per Share (in dollars per share)	$ 12.43	$ 14.50
Granted, Weighted Average Exercise Price Per Share (in dollars per share)	$ 11.10	$ 9.18
Forfeited or expired, Weighted Average Exercise Price per Share (in dollars per share)	$ 14.47	$ 0.00
Exercised, Weighted Average Exercise Price per Share (in dollars per share)	$ 9.56	$ 0.00
Stock dividend or split, Weighted Average Exercise Price per Share (in dollars per share)	$ 0.00	$ 0.00
Outstanding at end of period, Weighted Average Exercise Price per Share (in dollars per share)	$ 12.08	$ 12.52
Weighted Average Exercise Price per Share, Exercisable (in dollars per share)	$ 13.93	$ 15.52

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Estimated Fair Value of Financial Instruments - Additional Information (Details) (USD $) In Thousands, unless otherwise specified				3 Months Ended		9 Months Ended
	Sep. 30, 2014	Dec. 31, 2013	Sep. 30, 2013	Sep. 30, 2014 Collateral Dependent Loans [Member]	Sep. 30, 2013 Collateral Dependent Loans [Member]	Sep. 30, 2014 Collateral Dependent Loans [Member]	Sep. 30, 2013 Collateral Dependent Loans [Member]
Financing Receivable, Impaired [Line Items]
Impaired loans, principal balance				$ 2,036	$ 5,924	$ 2,036	$ 5,924
Impaired loans, valuation allowance	886	938	1,547	702	1,546	702	1,546
Impaired loans, reduction in loan losses				$ 69	$ 124	$ 162	$ 127

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Earnings Per Common Share - Additional Information (Details)					3 Months Ended		9 Months Ended
	Sep. 30, 2014	Dec. 31, 2013	Sep. 30, 2013	Dec. 31, 2012	Sep. 30, 2014 Stock options [Member]	Sep. 30, 2013 Stock options [Member]	Sep. 30, 2014 Stock options [Member]	Sep. 30, 2013 Stock options [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Options for aggregate common shares	451,530	337,696	369,363	232,000
Securities not included in the computation of diluted earnings per share because the effect would be antidilutive					288,834	331,863	316,668	224,000

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Short-Term Borrowings - Additional Information (Details) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Mar. 31, 2014	Sep. 30, 2014	Dec. 31, 2013
Short-term Debt [Line Items]
Line of credit			50.00%
Home equity lines of credit	$ 91,995,000		$ 91,995,000
Available line of credit	45,998,000		45,998,000
Line of credit outstanding	0		0	0
Line of credit with an unaffiliated financial institution	6,000,000		6,000,000
Total short-term borrowings	2,674,000		2,674,000	4,576,000
Line of credit, capacity drawn	71,776,000		71,776,000
Line of credit payment amount	500,000	500,000
Securities sold under repurchase agreements	674,000		674,000	1,576,000
Line of Credit
Short-term Debt [Line Items]
Total short-term borrowings	2,000,000		2,000,000	3,000,000
Stated interest rate	3.50%		3.50%
Line of credit, capacity drawn				3,000,000
Line of credit, remaining capacity	$ 2,000,000		$ 2,000,000

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Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2014

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

The consolidated financial statements include the accounts of LNB Bancorp, Inc. (the “Corporation”) and its wholly-owned subsidiary, The Lorain National Bank (the “Bank”). The consolidated financial statements also include the accounts of North Coast Community Development Corporation which is a wholly-owned subsidiary of the Bank. All intercompany transactions and balances have been eliminated in consolidation.

The accounting and reporting policies followed in the presentation of the accompanying Unaudited Consolidated Financial Statements are consistent with those described in Note 1 of the Notes to the Consolidated Financial Statements in the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2013, as updated by the information contained in this Form 10-Q. Management has evaluated all significant events and transactions that occurred after September 30, 2014, for potential recognition or disclosure in these consolidated financial statements. In the opinion of management, these consolidated financial statements reflect all adjustments necessary to present fairly such information for the periods and dates indicated. Such adjustments are normal and recurring in nature. The Consolidated Balance Sheet at December 31, 2013, contained herein has been derived from the audited Consolidated Balance Sheet included in Corporation’s Annual Report on Form 10-K.

The preparation of the consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Results of operations for interim periods are not necessarily indicative of the results to be expected for the full year, due in part to seasonal variations and unusual or infrequently occurring items.

Certain reclassifications of prior years' amounts have been made to conform to current year presentation. Such reclassifications had no effect on prior year net income or shareholders' equity.

New Accounting Pronouncements

New Accounting Pronouncements:

In April 2014 the FASB issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606)”. This ASU supersedes and replaces nearly all existing revenue recognition guidance, including industry-specific guidance, establishes a new control-based revenue recognition model, changes the basis for deciding when revenue is recognized over time or at a point in time, provides new and more detailed guidance on specific topics and expands and improves disclosures about revenue. In addition, this ASU specifies the accounting for some costs to obtain or fulfill a contract with a customer. This amended guidance is effective for the Corporation on January 1, 2017 and is not expected to have a material impact on the Corporation's consolidated operating results or financial condition.

In January 2014, the Financial Accounting Standards Board issued an accounting standards update allowing entities to make an accounting policy election with respect to using the proportional amortization method for investments in qualified affordable housing projects, if certain conditions are met. This standard will be effective for public companies for interim and annual periods beginning after December 15, 2014. The Corporation will adopt this new guidance as required, and it is not expected to have a material impact on the Corporation's Consolidated Financial Statements.

Also, in January 2014, the Financial Accounting Standards Board issued an accounting standards update clarifying guidance for in substance repossessions and foreclosures, and requiring additional disclosures regarding foreclosed residential real estate property and recorded investments in consumer mortgage loans collateralized by residential real estate in the process of foreclosure. This standard will be effective for public companies for interim and annual periods beginning after December 15, 2014. The Corporation will adopt this new guidance as required, and it is not expected to have a material impact on the Corporation's Consolidated Financial Statements.

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Deposits (Tables)

9 Months Ended

Sep. 30, 2014

Banking and Thrift [Abstract]

Deposit Balances

Deposit balances are summarized as follows:

	September 30, 2014		December 31, 2013
	(Dollars in thousands)
Demand and other noninterest-bearing	$	153,952	$	148,961
Interest checking	179,913		164,662
Savings	127,343		125,582
Money market accounts	143,894		103,534
Consumer time deposits	343,612		382,137
Public time deposits	108,070		120,713
Total deposits	$	1,056,784	$	1,045,589

Contractual Maturities of Certificates of Deposits

The maturity distribution of certificates of deposit as of September 30, 2014 are as follows:

	September 30, 2014
	(Dollars in thousands)
0-12 months	$	227,865
12-24 months	138,416
24-36 months	66,328
36-48 months	14,936
48-60 months	4,137
Total	$	451,682

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Deposits - Additional Information (Details) (USD $)	Sep. 30, 2014	Dec. 31, 2013
Banking and Thrift [Abstract]
Certificates of deposit denominations	$ 100,000
Aggregate amount of certificates of deposit in denominations of $100,000 or more	$ 259,154,000	$ 293,330,000

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- Summary of Activity in the Loan Balances and the Allowance for Loan Losses by Segment (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013	Mar. 31, 2014	Dec. 31, 2013	Mar. 31, 2013
Allowance for loan losses:
Balance, beginning of period			$ 17,505	$ 17,637	$ 17,430		$ 17,815
Losses charged off	(857)	(1,354)	(2,888)	(4,449)
Recoveries	139	380	302	1,253
Provision charged to expense	720	950	2,513	3,350
Balance, end of period	17,432	17,791	17,432	17,791	17,430		17,815
Ending allowance balance attributable to loans:
Individually evaluated for impairment	886		886			938
Collectively evaluated for impairment	16,546		16,546			16,567
Total ending allowance balance	17,432	17,791	17,432	17,791	17,430		17,815
Loans:
Individually evaluated for impairment	17,874		17,874			21,511
Collectively evaluated for impairment	904,640		904,640			880,788
Total ending loans balance	922,514		922,514			902,299
Commercial real estate
Allowance for loan losses:
Balance, beginning of period			10,122	11,386	9,944		10,424
Losses charged off	(433)	(630)	(1,133)	(1,475)
Recoveries	11	83	32	584
Provision charged to expense	(407)	585	94	(33)
Balance, end of period	9,115	10,462	9,115	10,462	9,944		10,424
Ending allowance balance attributable to loans:
Individually evaluated for impairment	703		703			865
Collectively evaluated for impairment	8,412		8,412			9,257
Total ending allowance balance	9,115	10,462	9,115	10,462	9,944		10,424
Loans:
Individually evaluated for impairment	15,271		15,271			17,842
Collectively evaluated for impairment	398,354		398,354			383,749
Total ending loans balance	413,625		413,625			401,591
Commercial
Allowance for loan losses:
Balance, beginning of period			497	835	476		438
Losses charged off	(35)	0	(35)	(120)
Recoveries	30	2	32	7
Provision charged to expense	227	36	204	(246)
Balance, end of period	698	476	698	476	476		438
Ending allowance balance attributable to loans:
Individually evaluated for impairment	5		5			73
Collectively evaluated for impairment	693		693			424
Total ending allowance balance	698	476	698	476	476		438
Loans:
Individually evaluated for impairment	184		184			472
Collectively evaluated for impairment	85,359		85,359			88,174
Total ending loans balance	85,543		85,543			88,646
Residential Real Estate
Allowance for loan losses:
Balance, beginning of period			1,411	1,559	1,446		1,606
Losses charged off	(63)	(35)	(213)	(679)
Recoveries	0	178	6	277
Provision charged to expense	686	(311)	865	281
Balance, end of period	2,069	1,438	2,069	1,438	1,446		1,606
Ending allowance balance attributable to loans:
Individually evaluated for impairment	178		178			0
Collectively evaluated for impairment	1,891		1,891			1,411
Total ending allowance balance	2,069	1,438	2,069	1,438	1,446		1,606
Loans:
Individually evaluated for impairment	1,356		1,356			1,731
Collectively evaluated for impairment	69,535		69,535			64,776
Total ending loans balance	70,891		70,891			66,507
Home equity loans
Allowance for loan losses:
Balance, beginning of period			3,484	2,357	3,789		3,508
Losses charged off	(179)	(410)	(1,074)	(1,439)
Recoveries	46	5	65	60
Provision charged to expense	(537)	405	644	2,530
Balance, end of period	3,119	3,508	3,119	3,508	3,789		3,508
Ending allowance balance attributable to loans:
Individually evaluated for impairment	0		0			0
Collectively evaluated for impairment	3,119		3,119			3,484
Total ending allowance balance	3,119	3,508	3,119	3,508	3,789		3,508
Loans:
Individually evaluated for impairment	852		852			1,111
Collectively evaluated for impairment	124,466		124,466			121,965
Total ending loans balance	125,318		125,318			123,076
Indirect
Allowance for loan losses:
Balance, beginning of period			1,593	1,230	1,533		1,581
Losses charged off	(106)	(196)	(283)	(555)
Recoveries	46	104	143	276
Provision charged to expense	619	122	639	660
Balance, end of period	2,092	1,611	2,092	1,611	1,533		1,581
Ending allowance balance attributable to loans:
Individually evaluated for impairment	0		0			0
Collectively evaluated for impairment	2,092		2,092			1,593
Total ending allowance balance	2,092	1,611	2,092	1,611	1,533		1,581
Loans:
Individually evaluated for impairment	147		147			195
Collectively evaluated for impairment	213,303		213,303			206,128
Total ending loans balance	213,450		213,450			206,323
Consumer
Allowance for loan losses:
Balance, beginning of period			398	270	242		258
Losses charged off	(41)	(83)	(150)	(181)
Recoveries	6	8	24	49
Provision charged to expense	132	113	67	158
Balance, end of period	339	296	339	296	242		258
Ending allowance balance attributable to loans:
Individually evaluated for impairment	0		0			0
Collectively evaluated for impairment	339		339			398
Total ending allowance balance	339	296	339	296	242		258
Loans:
Individually evaluated for impairment	64		64			160
Collectively evaluated for impairment	13,623		13,623			15,996
Total ending loans balance	$ 13,687		$ 13,687			$ 16,156

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CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (USD $) In Thousands, unless otherwise specified	Total	Preferred Stock (net of discount)	Warrant to Purchase Common Stock	Common Stock	Additional Paid-In Capital	Retained Earnings	Accumulated Other Comprehensive Income (Loss)	Treasury Stock
Beginning balance at Dec. 31, 2012	$ 110,144	$ 18,815	$ 0	$ 8,273	$ 39,141	$ 48,767	$ 1,240	$ (6,092)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	4,455					4,455
Other comprehensive income (loss), net of tax	(6,155)						(6,155)
Share-based compensation	225				225
Issuance of common stock (1,359,348 shares)	9,733			1,359	8,374
Redemption of preferred stock	(9,693)	(9,701)				8
Preferred dividends and accretion of discount	(483)	8				(491)
Common dividends declared	(265)					(265)
Ending balance at Sep. 30, 2013	107,961	9,122	0	9,632	47,740	52,474	(4,915)	(6,092)
Beginning balance at Dec. 31, 2013	111,456	7,670	0	10,002	51,098	53,966	(5,188)	(6,092)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	5,715					5,715
Other comprehensive income (loss), net of tax	3,736						3,736
Share-based compensation	238				238
Purchase of treasury stock (8,551)	(85)							(85)
Redemption of preferred stock	(7,689)	(7,689)
Preferred dividends and accretion of discount	(16)	19				(35)
Common dividends declared	(290)					(290)
Ending balance at Sep. 30, 2014	$ 113,065	$ 0	$ 0	$ 10,002	$ 51,336	$ 59,356	$ (1,452)	$ (6,177)

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Goodwill and Intangible Assets

9 Months Ended

Sep. 30, 2014

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets

 Goodwill and Intangible Assets

The Corporation has goodwill of $21,582 primarily from an acquisition completed in 2007. The Corporation assesses goodwill for impairment annually and more frequently in certain circumstances. In September 2011, FASB issued an update on the testing of goodwill for impairment under ASC Topic 350, Intangibles – Goodwill and Other ASC 350 requires a corporation to test goodwill for impairment, on at least an annual basis, by comparing the fair value of a reporting unit with its carrying amount. The overall objective of the update is to simplify how entities, both public and private, test goodwill for impairment. Simplification has resulted in an entity having the option to first assess qualitative factors to determine whether the existence or circumstances lead to a determination that it is more likely than not (that is, a likelihood of more than fifty percent) that the fair value of a reporting unit is less than its carrying amount. For 2013, the Corporation determined the Bank was one reporting unit and assessed the following qualitative factors to determine the likelihood that goodwill is impaired: (a) industry and market considerations such as a deterioration in the environment in which the Corporation operates; (b) overall financial performance such as negative or declining cash flows or a decline in actual or planned revenue or earnings compared with actual and projected results of relevant prior periods; (c) events affecting a reporting unit such as a change in the composition or carrying amount of the Corporation’s assets unit; (d) share price — considered in both absolute terms and relative to peers; (e) non-performing loans and allowance for loans losses; and (f) bank capital analysis. The Corporation evaluates goodwill impairment annually as of November 30th of each year and more frequently if circumstances would warrant an update. Based upon this assessment the Corporation determined that there was no likelihood of goodwill impairment therefore no impairment charge was recognized as of December 31, 2013.

The Corporation cannot predict the occurrences of certain future events that might adversely affect the reported value of goodwill. Such events include, but are not limited to, strategic decisions in response to economic and competitive conditions, the effect of the economic environment on the Corporation’s customer base or a material negative change in the relationship with significant customers. Core deposit intangibles are amortized over their estimated useful life of 10 years. A summary of core deposit intangible assets follows:

	September 30, 2014		December 31, 2013
	(Dollars in thousands)
Core deposit intangibles	$	1,367	$	1,367
Less: accumulated amortization	1,011		910
Carrying value of core deposit intangibles	$	356	$	457

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Commitments and Contingencies - Summary of The Contractual Amount of Commitments (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2014	Dec. 31, 2013
Loss Contingencies [Line Items]
Contractual amount of commitments, total	$ 185,922	$ 182,062
Commitments to extend credit [Member]
Loss Contingencies [Line Items]
Contractual amount of commitments, total	85,072	84,283
Home equity loans
Loss Contingencies [Line Items]
Contractual amount of commitments, total	91,910	89,331
Standby letters of credit [Member]
Loss Contingencies [Line Items]
Contractual amount of commitments, total	$ 8,940	$ 8,448

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Accumulated Other Comprehensive Income (Loss) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013	Mar. 31, 2014	Mar. 31, 2013
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Balance at the beginning of the period			$ (5,188)	$ 1,240	$ (1,933)	$ (2,591)
Changes in unrealized securities' holding gain (loss), net of taxes	481	(2,324)	3,733	(6,038)
Reclassified amounts out of accumulated other comprehensive income, net of tax	0	0	(3)	117
Balance at the end of the period	(1,452)	(4,915)	(1,452)	(4,915)	(1,933)	(2,591)
Other Comprehensive Income (Loss), before Reclassifications, Tax	246	1,197	1,926	3,110
Reclassification from Accumulated Other Comprehensive Income, Current Period, Tax		60		60
Unrealized securities gains and losses
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Balance at the beginning of the period			(3,892)	3,295	(637)	(536)
Changes in unrealized securities' holding gain (loss), net of taxes	481	(2,324)	3,733	(6,038)
Reclassified amounts out of accumulated other comprehensive income, net of tax	0	0	(3)	117
Balance at the end of the period	(156)	(2,860)	(156)	(2,860)	(637)	(536)
Pension and post- retirement costs
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward]
Balance at the beginning of the period			(1,296)	(2,055)	(1,296)	(2,055)
Changes in unrealized securities' holding gain (loss), net of taxes	0	0	0	0
Reclassified amounts out of accumulated other comprehensive income, net of tax	0	0	0	0
Balance at the end of the period	$ (1,296)	$ (2,055)	$ (1,296)	$ (2,055)	$ (1,296)	$ (2,055)

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Short-Term Borrowings (Tables)

9 Months Ended

Sep. 30, 2014

Debt Disclosure [Abstract]

Schedule of Short-term Debt

The following table presents the components of Federal funds purchased and securities sold under agreements to repurchase and short-term borrowings as of September 30, 2014 and December 31, 2013.

	September 30, 2014			December 31, 2013
Federal funds purchased and securities sold under agreements to repurchase	$	674		$	1,576
Line of credit with an unaffiliated financial institution	2,000			3,000
Total short-term borrowings	$	2,674		$	4,576
Short-term borrowings	September 30, 2014			December 31, 2013
Average balance during the year	$	3,831		$	1,803
Weighted-average annual interest rate during the year	3.61		%	0.10		%
Maximum month-end balance	$	3,353		$	4,576

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Securities - Realized Gains and Losses Related to Securities Available-for-Sale (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Available-for-sale Securities, Gross Realized Gain (Loss), Disclosures [Abstract]
Gross realized gains	$ 0	$ 178
Gross realized losses	(5)	0
Net Securities Gains	(5)	178
Proceeds from the sale of available for sale securities	$ 2,327	$ 2,272

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Accumulated Other Comprehensive Income (Loss) (Notes)

9 Months Ended

Sep. 30, 2014

Equity [Abstract]

Accumulated Other Comprehensive Income (Loss)

Accumulated Other Comprehensive Income (Loss)

The following table details the change in the components of the Corporation’s accumulated other comprehensive income (loss) for the three and nine months ended September 30, 2014 and 2013:

	Three Months Ended September 30, 2014									Nine Months Ended September 30, 2014
	Unrealized securities gains and losses			Pension and post- retirement costs			Total			Unrealized securities gains and losses			Pension and post- retirement costs			Total
Balance at the beginning of the period	$	(637	)	$	(1,296	)	$	(1,933	)	$	(3,892	)	$	(1,296	)	$	(5,188	)
Amounts recognized in other comprehensive income, net of taxes of $246 and $1,926	481			—			481			3,733			—			3,733
Reclassified amounts out of accumulated other comprehensive income, net of tax	—			—			—			(3		)	—			(3		)
Balance at the end of the period	$	(156	)	$	(1,296	)	$	(1,452	)	$	(156	)	$	(1,296	)	$	(1,452	)

	Three Months Ended September 30, 2013									Nine Months Ended September 30, 2013
	Unrealized securities gains and losses			Pension and post- retirement costs			Total			Unrealized securities gains and losses			Pension and post- retirement costs			Total
Balance at the beginning of the period	$	(536	)	$	(2,055	)	$	(2,591	)	$	3,295		$	(2,055	)	$	1,240
Amounts recognized in other comprehensive income, net of taxes of $1,197 and $3,110	(2,324		)	—			(2,324		)	(6,038		)	—			(6,038		)
Reclassified amounts out of accumulated other comprehensive income, net of tax of $60	—			—			—			117			—			117
Balance at the end of the period	$	(2,860	)	$	(2,055	)	$	(4,915	)	$	(2,860	)	$	(2,055	)	$	(4,915	)