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Summary of Significant Accounting Policies
6 Months Ended
Jun. 30, 2015
Accounting Policies [Abstract]  
Summary of Significant Accounting Policies
Summary of Significant Accounting Policies

Agreement and Plan of Merger

On December 15, 2014, LNB Bancorp, Inc. (the “Corporation” or “LNB Bancorp”) entered into an Agreement and Plan of Merger (the “Merger Agreement”) by and between Northwest Bancshares, Inc. (“Northwest Bancshares”) and the Corporation. Pursuant to the Merger Agreement, the Corporation will merge with and into Northwest Bancshares, with Northwest Bancshares as the surviving entity. Immediately thereafter, The Lorain National Bank (the “Bank”), a wholly owned subsidiary of the Corporation, will merge with and into Northwest Bank, a wholly owned subsidiary of Northwest Bancshares, with Northwest Bank as the surviving entity.

Under the terms of the Merger Agreement, 50% of the Corporation’s common shares will be converted into Northwest Bancshares common stock and the remaining 50% will be exchanged for cash. The Corporation’s shareholders have the option to elect to receive either 1.461 shares of Northwest Bancshares’ common stock or $18.70 in cash for each Corporation common share, subject to proration to ensure that, in the aggregate, 50% of the Corporation’s common shares will be converted into Northwest Bancshares stock. The Merger Agreement also provides that all options to purchase the Corporation’s stock which are outstanding and unexercised immediately prior to the closing shall be settled in cash based on a value of $18.70 less the applicable exercise price of the option, to the extent the difference is positive. In connection with the Merger Agreement and the transactions contemplated thereby, the Corporation incurred merger related expenses of $752 or $567 after tax in 2014 and $268 before tax during the six months ended June 30, 2015.

The transaction has been approved by the Boards of Directors of the Corporation and Northwest Bancshares and by the shareholders of the Corporation. Northwest Bancshares has received all required regulatory approvals. The transaction is expected to be completed on August 14, 2015, subject to customary closing conditions.

Basis of Presentation
The consolidated financial statements include the accounts of the Corporation and its wholly-owned subsidiary, 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, 2014, as updated by the information contained in this Form 10-Q. Management has evaluated all significant events and transactions that occurred after June 30, 2015, 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 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.
Accounting Guidance Adopted in 2015
In June 2014, the FASB issued new accounting guidance that applies secured borrowing accounting to repurchase-to-maturity transactions and linked repurchase financings and expands disclosure requirements. This accounting guidance was effective for interim and annual reporting periods beginning after December 15, 2014, effective January 1, 2015, and was implemented using a cumulative-effect approach to transactions outstanding as of the effective date with no adjustment to prior periods. The disclosure for secured borrowings will be presented for annual periods beginning after December 15, 2014, and for interim periods beginning after June 30, 2015. Early adoption was not permitted. The adoption of this accounting guidance did not have a material effect on our financial condition or results of operations. Additional information regarding short-term borrowings is provided in Note 7 ("Short-Term Borrowings").