-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, WvxhznWvUNeL058ZB/ee4TVO7Ev1cy6tF8RW7a90dUeE8nsGR6PgPLB9IJOzMiwC F5mRAK/olhjd6MqgN7QC7w== 0000737210-99-000007.txt : 19990701 0000737210-99-000007.hdr.sgml : 19990701 ACCESSION NUMBER: 0000737210-99-000007 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19981231 FILED AS OF DATE: 19990630 FILER: COMPANY DATA: COMPANY CONFORMED NAME: LNB BANCORP INC CENTRAL INDEX KEY: 0000737210 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 341406303 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K/A SEC ACT: SEC FILE NUMBER: 000-13203 FILM NUMBER: 99656044 BUSINESS ADDRESS: STREET 1: 457 BROADWAY CITY: LORAIN STATE: OH ZIP: 44052-1769 BUSINESS PHONE: 2162446000 10-K/A 1 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10K/A Annual Report Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934 For the fiscal year ended Commission file December 31, 1998 Number 0-13203 Amendment Number 1 LNB Bancorp, Inc. (Exact name of the registrant as specified in its Charter) Ohio 34-1406303 (State of incorporation) (I.R.S. Employer Identification No.) 457 Broadway, Lorain, Ohio 44052-1769 (Address of principal executive offices) (Zip Code) (440) 244 - 6000 (Registrant's telephone number, including area code) SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934: Title of Each Class Name of Each Exchange on Which Registered Common Stock, Par Value $1.00 NASDAQ - OTC Per Share Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES [X] NO [ ] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] The aggregate market value of the voting stock held by non-affiliates of the Registrant at May 31, 1999 was approximately $69,046,000. The number of shares of Registrant's Common Stock outstanding on May 31, 1999 was 4,122,775. 2 The undersigned registrant hereby amends the following items of its Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 on Form 10-K for the fiscal year ended December 31, 1998 for the purpose of furnishing financial statements for The Lorain National Bank Employee Stock Ownership Plan and The Lorain National Bank Stock Purchase Plan: PART II ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (3) Exhibits: (99.1) Annual report on Form 11-K of The Lorain National Bank Employee Stock Ownership Plan (registration number 33-65036) for the plan year ended December 31, 1998. (99.2) Annual report on Form 11-K of The Lorain National Bank Stock Purchase Plan (registration number 33-65036) for the plan year ended December 31, 1998. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. LNB Bancorp, Inc. (Registrant) Date: June 28, 1999 By: /s/ Gregory D. Friedman ------------- ----------------------- Gregory D. Friedman Senior Vice President, Chief Operating Officer and Chief Financial Officer /s/ Mitchell J. Fallis ----------------------- Mitchell J. Fallis Vice President and Chief Accounting Officer 3 LNB Bancorp, Inc. Form 10K/A Exhibit Index Pursuant to Item 601 (a) of Regulation S-K S-K Reference Exhibit Number (99.1) Annual report on Form 11-K of The Lorain National Bank Employee Stock Ownership Plan (registration number 33-65036) for the plan year ended December 31, 1998. (99.2) Annual report on Form 11-K of The Lorain National Bank Stock Purchase Plan (registration number 33-65036) for the plan year ended December 31, 1998. EX-1 2 4 LNB Bancorp, Inc. Exhibit to Form 10 - K/A (for the fiscal year ended December 31, 1998) S - K Reference Number (99.1) Annual report on Form 11-K of The Lorain National Bank Employee Stock Ownership Plan (registration number 33-65036) for the plan year ended December 31, 1998 filed as an amendment to the annual report on Form 10-K. 5 SECURITIES AND EXCHANGE COMMISSION WASHINGTON D.C. 20549 FORM 11-K FOR ANNUAL REPORTS OF EMPLOYEE STOCK PURCHASE, SAVINGS AND SIMILAR PLANS PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [ X ] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1998 Note: This Form 11-K is being filed as an amending exhibit to the Form 10-K of LNB Bancorp, Inc. for the fiscal year ended December 31, 1998 pursuant to Rule 15d-21, therefore no fee is required. [ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to ---------------- ----------- Commission file number 0-13203 THE LORAIN NATIONAL BANK EMPLOYEE STOCK OWNERSHIP PLAN ------------------------------------------------------ (Full title of the plan) Lorain National Bank 457 Broadway Lorain, Ohio 44052-1769 --------------------------------------------------------------- (Name of issuer of the securities held pursuant to the plan and the address of its principal executive office) 6 REQUIRED INFORMATION Audited plan financial statements and schedules prepared in accordance with the financial reporting requirements of the Employee Retirement Income Securities Act of 1974, as amended, are filed herewith in lieu of the requirements of an audited statement of financial condition and statement of income and changes in plan equity. Financial Statements and Exhibits A) The following financial statements and schedules are filed as part of this annual report. 1) Independent Auditors' Report 2) Statements of Assets Available for Distribution to Participants - December 31, 1998 and 1997 3) Statements of Changes in Assets Available for Distribution to Participants - Years ended December 31, 1998 and 1997. 4) Notes to Financial Statements 5) Schedule 1 - Line 27(a) - Schedule of Assets Held for Investment Purposes - December 31, 1998 6) Schedule 2 - Line 27(d) - Schedule of Reportable Transactions - Year ended December 31, 1998 B) The following exhibit is filed as part of this annual report: 24. Consent of Independent Accountants 7 (COVER EMBOSSED WITH LOGO) KPMG LLP The Lorain National Bank Employee Stock Ownership Plan Financial Statements and Schedules December 31, 1998 and 1997 (With Independent Auditors' Report Thereon) 8 The Lorain National Bank Employee Stock Ownership Plan Table of Contents Page Independent Auditors' Report 1 Statements of Assets Available for Distribution To Participants as of December 31, 1998 and 1997 2 Statements of Changes in Assets Available for Distribution to Participants for the years ended December 31, 1998 and 1997 3 Notes to Financial Statements 4 Schedules 1 Line 27(a) - Schedule of Assets Held for Investment Purposes (at end of Plan year) - December 31, 1998 8 2 Line 27(d) - Schedule of Reportable Transactions - Year ended December 31, 1998 9 9 (LETTERHEAD) (LOGO) KPMG LLP 1500 National City Center 1900 East Ninth Street Cleveland, OH 44114-3495 Independent Auditors' Report ---------------------------- The Plan Administrator The Lorain National Bank Sponsor of The Lorain National Bank Employee Stock Ownership Plan: We have audited the accompanying statements of assets available for distribution to participants of The Lorain National Bank Employee Stock Ownership Plan (Plan) as of December 31, 1998 and 1997, and the related statements of changes in assets available for distribution to participants for the years then ended. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by Management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the assets available for distribution to participants of the Plan as of December 31, 1998 and 1997, and the changes in those assets for the years then ended in conformity with generally accepted accounting principles. Our audits were performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedules of assets held for investment purposes as of December 31, 1998, and reportable transactions for the year ended December 31, 1998, are presented for the purpose of additional analysis and are not a required part of the basic financial statements but are supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. These supplemental schedules are the responsibility of the Plan's management. The supplemental schedules have been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. /s/ KPMG LLP April 29, 1999 (LOGO) Member Firm of KPMG International 10 THE LORAIN NATIONAL BANK EMPLOYEE STOCK OWNERSHIP PLAN Statements of Assets Available for Distribution to Participants December 31, 1998 and 1997 1998 1997 ---- ---- Assets available for distribution to participants Short-term cash investments $ 85,223 378,065 Investments, at fair value (notes 3 and 6) Common stock - LNB Bancorp, Inc. 3,666,161 3,539,707 Receivables Employer contributions 100,000 - Dividends and interest 33,208 29,336 ----------- ---------- Total Receivables 133,208 29,336 ----------- ---------- Assets available for distribution to participants $ 3,884,592 3,947,108 =========== ========== Assets available for distribution to participants Assets payable to terminated participants $ 165,800 325,177 Assets available for continuing participants 3,718,792 3,621,931 ----------- ---------- $ 3,884,592 3,947,108 =========== ========== See accompanying notes to financial statements. 2 11 THE LORAIN NATIONAL BANK EMPLOYEE STOCK OWNERSHIP PLAN Statements of Changes in Assets Available for Distribution to Participants Years ended December 31, 1998 and 1997 1998 1997 ---- ---- Additions Investment income - dividends and interest $ 119,362 102,993 Employer contribution 200,000 400,000 Net depreciation in fair value of investments (note 3) (661) (105,664) Other 606 - ---------- --------- Total additions 319,307 397,329 ---------- --------- Distributions to participants (381,823) (232,814) ---------- --------- Increase (decrease) in assets available for distribution to participants (62,516) 164,515 Assets available for distribution to participants Beginning of year 3,947,108 3,782,593 ---------- --------- End of year $3,884,592 3,947,108 ========== ========= See accompanying notes to financial statements. 3 12 THE LORAIN NATIONAL BANK EMPLOYEE STOCK OWNERSHIP PLAN Notes to Financial Statements December 31, 1998 and 1997 (1) Description of the Plan The following description of The Lorain National Bank Employee Stock Ownership Plan (Plan) provides only general information. Participants should refer to the Plan agreement for a more complete description of the Plan's provisions. (a) General The Plan is a defined contribution plan sponsored by The Lorain National Bank (Bank), a wholly owned subsidiary of LNB Bancorp, Inc., covering substantially all employees of the Bank. An employee is eligible to participate in the Plan after the attainment of age 21 and completion of one year of service, as defined in the Plan. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA). Under the terms of the Plan, the Trust Department of the Bank acts as trustee for the Plan and, as such, manages a trust fund which includes all of the Plan's assets. The trustee has been granted discretionary authority concerning purchases and sales of investments in the trust fund made from employer contributions. (b) Bank Contributions The amount of the contribution is determined by the Bank's Board of Directors in its absolute discretion. The Bank is not required to make a contribution in any specific year. Contributions are allocated to participants' accounts in the proportion each participant's annual compensation bears to the total annual compensation of all participants for that plan year. (c) Voluntary Contributions The Plan does not permit voluntary contributions. (d) Vesting Each participant's vested interest in the Bank's contribution is determined based on the number of years of service, as defined by the Plan. Forfeitures of nonvested employer contributions are made available first to reinstate previously forfeited account balances of former participants. The remaining forfeitures, if any, are used to reduce the contribution of the Bank for the plan year in which such forfeitures occur. 4 13 THE LORAIN NATIONAL BANK EMPLOYEE STOCK OWNERSHIP PLAN Notes to Financial Statements December 31, 1998 and 1997 (e) Distributions Upon Termination of Employment A participant whose employment terminates by reason of retirement on their early retirement date or on their normal retirement date, receives their vested benefits. The participant may elect distribution of their vested benefits either in a single distribution or in annual, semiannual, quarterly, or monthly installments. A participant whose employment is terminated for any reason other than those designated above may receive a single distribution of their vested benefits. (f) Plan Termination Although it has not expressed any intention to do so, the Bank has the right to terminate the Plan subject to the provisions set forth in ERISA. In the event of Plan termination, the assets of the Plan will be allocated as prescribed by ERISA and its related regulations. (g) Plan Administrator The Plan Administrator is the President and Chief Executive Officer of the Bank. (2) Summary of Significant Accounting Policies (a) Basis of Presentation The accompanying financial statements of the Plan have been prepared under the accrual method of accounting. (b) Investments The fair value of investments and changes therein are determined through the use of current quoted market values. Purchases and sales are recorded on a trade date basis. Interest income is recorded on the accrual method of accounting. (c) Use of Estimates in the Preparation of Financial Statements The preparation of financial statements in conformity with generally accepted accounting principles requires Management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of changes in assets available for distribution during the reporting period. Actual results could differ from those estimates. 14 (d) Payment of Benefits Benefit payments to participants are recorded when paid. 5 15 THE LORAIN NATIONAL BANK EMPLOYEE STOCK OWNERSHIP PLAN Notes to Financial Statements December 31, 1998 and 1997 (3) Investments The following table presents the fair values of investments at December 31, 1998 and 1997: 1998 1997 -------------------- -------------------- Number Number of Shares Fair of Shares Fair or Units Value or Units Value --------- ----------- --------- ----------- Common stock LNB Bancorp, Inc. 132,114 $ 3,666,161 127,557 $3,539,707 ========= =========== ========== ========== During the years ended December 31, 1998 and 1997, the Plan's investments (including investments bought, sold, and held during the year)depreciated in value by $(661) and $(105,644),respectively, as follows: 1998 1997 ---- ---- Common Stock - LNB Bancorp, Inc. $ (661) (105,945) United States government securities - 281 ------- ------- $ (661) (105,664) ======= ======= (4) Administrative Expenses The administrative expenses of the Plan are paid by the Bank. (5) Federal Income Taxes The Internal Revenue Service issued its latest determination letter on May 6, 1996 which stated that the Plan and its underlying Trust, as designed, qualify under the applicable provisions of the Internal Revenue Code. The Plan has been amended since receiving the determination letter. In the opinion of the Plan Administrator, the Plan and its underlying Trust have operated within the terms of the Plan and remain qualified under the applicable provisions of the Internal Revenue Code. As long as the Plan continues to be qualified under present federal income tax laws and regulations, participants will not be taxed on Bank contributions or on investment earnings on such contributions at the time such contributions and investment earnings are received by the Trustee, but may be subject to tax thereon at such time as the receive distributions under the Plan. 6 16 THE LORAIN NATIONAL BANK EMPLOYEE STOCK OWNERSHIP PLAN Notes to Financial Statements December 31, 1998 and 1997 (6) Party-in-Interest Transactions ------------------------------ The following is a summary of transactions in common stock of LNB Bancorp Inc., 100 percent owner of the Bank, during the year ended December 31, 1998: Number Fair of Shares Value --------- ---------- Balance at December 31, 1997 127,557 $ 3,539,707 Purchases 8,807 244,705 Distributions (2,266) (62,882) Net (depreciation) - (661) Sale of shares (1,984) (54,708) -------- ---------- Balance at December 31, 1998 132,114 $ 3,666,161 ======= =========== 7 17 Schedule 1 ---------- THE LORAIN NATIONAL BANK EMPLOYEE STOCK OWNERSHIP PLAN EIN: 34-0869480 Plan Number: 002 Line 27(a) - Schedule of Assets Held for Investment Purposes December 31, 1998 Column A Column B Column C Column D - -------- ------------------ -------------------------- ----------- Description of Investment Identity of Issue, Including Maturity Date, Borrower, Lessor Rate of Interest, Collateral, or Similar Party Par or Maturity Value Cost - -------- ------------------ -------------------------- ----------- * LNB Bancorp, Inc. 132,114 shares of common $ 2,358,718 stock * Lorain National Bank Mutual funds Treasury Trust Fund 85,223 ----------- $ 2,443,941 =========== Line 27(a) - Schedule of Assets Held for Investment Purposes Continued Column A Column B Column C Column E - -------- ------------------ -------------------------- ----------- Description of Investment Identity of Issue, Including Maturity Date, Borrower, Lessor Rate of Interest, Collateral, Current or Similar Party Par or Maturity Value Value - -------- ------------------ -------------------------- ----------- * LNB Bancorp, Inc. 132,114 shares of common $ 3,666,161 stock * Lorain National Bank Mutual funds Treasury Trust Fund 85,223 ----------- $ 3,751,384 =========== *Party-in-interest See accompanying independent auditors' report. 8 18 Schedule 2 ---------- THE LORAIN NATIONAL BANK EMPLOYEE STOCK OWNERSHIP PLAN EIN: 34-0869480 Plan Number: 002 Line 27(d) - Schedule of Reportable Transactions Year ended December 31, 1998 Series transactions, when aggregated, involving an amount in excess of 5 percent of the current value of Plan assets: Column A Column B Column C Column D Column E - -------------------- --------------------- ---------- ---------- --------- Total Total Dollar Dollar Identity of Description Value of Value Lease Party Involved of Assets Purchases of Sales Rental - -------------------- --------------------- ---------- ---------- --------- * LNB Bancorp, Inc. LNB Bancorp, Inc. Common Stock, 7 purchases $ 244,705 - - * LNB Bancorp, Inc. LNB Bancorp, Inc. Common Stock, 4 sales - 54,708 - * Lorain National Bank Treasury Trust Fund, 19 purchases 565,416 - - * Lorain National Bank Treasury Trust Fund, 24 sales - 862,028 - Line 27(d) - Schedule of Reportable Transactions Continued Column A Column B Column F Column G Column H - ---------------------- ----------------- ------------- -------- --------- Current Expense Value of Incurred Asset on Identity of Description With Cost of Transaction Party Involved of Assets Transaction Asset Date - ---------------------- ----------------- ------------- --------- --------- * LNB Bancorp, Inc. LNB Bancorp, Inc. Common Stock, 7 purchases - 244,705 244,705 * LNB Bancorp, Inc. LNB Bancorp, Inc. Common Stock, 4 sales - 56,481 54,708 * Lorain National Bank Treasury Trust Fund, 19 purchases - 565,416 565,416 * Lorain National Bank Treasury Trust Fund, 24 sales - 862,028 862,028 19 Schedule 2 ---------- THE LORAIN NATIONAL BANK EMPLOYEE STOCK OWNERSHIP PLAN EIN: 34-0869480 Plan Number: 002 Item 27(d) - Schedule of Reportable Transactions Year ended December 31, 1998 Line 27(d) - Schedule of Reportable Transactions Continued Column A Column B Column I - ---------------------- ---------------------- ------------- Identity of Description Net Gain Party Involved of Assets or (Loss) - ---------------------- ---------------------- ------------- * LNB Bancorp, Inc. LNB Bancorp, Inc. Common Stock, 7 purchases - * LNB Bancorp, Inc. LNB Bancorp, Inc. Common Stock, 4 sales (1,773) * Lorain National Bank Treasury Trust Fund, 19 purchases - * Lorain National Bank Treasury Trust Fund, 24 sales - * Party-in-interest See accompanying independent auditors' report. 9 20 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Plan Administrator has duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized. THE LORAIN NATIONAL BANK EMPLOYEE STOCK OWNERSHIP PLAN ------------------------------------------------------ (Name of Plan) Date: June 28, 1999 By: /s/ Gregory D. Friedman ------------- ----------------------- Gregory D. Friedman Senior Vice President, Chief Operating Officer and Chief Financial Officer /s/ Mitchell J. Fallis ---------------------- Mitchell J. Fallis Vice President and Chief Accounting Officer 21 The Lorain National Bank Employee Stock Ownership Plan Exhibit to Form 11 - K (for the fiscal year ended December 31, 1998) S - K Reference Number (24) Consent of Independent Accountants. 22 (LETTERHEAD) (LOGO) KPMG LLP 1500 National City Center 1900 East Ninth Street Cleveland, OH 44114-3495 Consent of Independent Accountants ---------------------------------- The Plan Administrator LNB Bancorp, Inc.: We consent to the incorporation by reference in the Registration Statement No. 33-65036 of LNB Bancorp, Inc. of our report dated April 29, 1999, relating to the statements of assets available for distribution to participants of The Lorain National Bank Employee Stock Ownership Plan as of December 31, 1998, and 1997, and the related statements of changes in assets available for distribution to participants for the years then ended, which report appears in Amendment No. 1 to the 1998 annual report on Form 10-K of LNB Bancorp, Inc. /s/ KPMG LLP Cleveland, Ohio June 28, 1999 (LOGO) Member Firm of KPMG International EX-2 3 23 LNB Bancorp, Inc. Exhibit to Form 10 - K/A (for the fiscal year ended December 31, 1998) S - K Reference Number (99.2) Annual report on Form 11-K of The Lorain National Bank Stock Purchase Plan (registration number 33-65036) for the plan year ended December 31, 1998 filed as an amendment to the annual report on Form 10-K. 24 SECURITIES AND EXCHANGE COMMISSION WASHINGTON D.C. 20549 FORM 11-K FOR ANNUAL REPORTS OF EMPLOYEE STOCK PURCHASE, SAVINGS AND SIMILAR PLANS PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [ X ] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1998 Note: This Form 11-K is being filed as an amending exhibit to the Form 10-K of LNB Bancorp, Inc. for the fiscal year ended December 31, 1998 pursuant to Rule 15d-21, therefore no fee is required. [ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to ---------------- ----------- Commission file number 0-13203 THE LORAIN NATIONAL BANK STOCK PURCHASE PLAN -------------------------------------------- (Full title of the plan) Lorain National Bank 457 Broadway Lorain, Ohio 44052-1769 ------------------------------------------------------------- (Name of issuer of the securities held pursuant to the plan and the address of its principal executive office) 25 REQUIRED INFORMATION Audited plan financial statements and schedules prepared in accordance with the financial reporting requirements of the Employee Retirement Income Securities Act of 1974, as amended, are filed herewith in lieu of the requirements of an audited statement of financial condition and statement of income and changes in plan equity. Financial Statements and Exhibits A) The following financial statements and schedules are filed as part of this annual report: 1) Independent Auditors' Report 2) Statements of Assets Available for Distribution to Participants - December 31, 1998 and 1997 3) Statements of Changes in Assets Available for Distribution to Participants - Years ended December 31, 1998 and 1997 4) Notes to Financial Statements 5) Schedule 1 - Line 27(a) - Schedule of Assets Held for Investment Purposes - December 31, 1998 6) Schedule 2 - Line 27(d) - Schedule of Reportable Transactions - Year ended December 31, 1998 B) The following exhibit is filed as part of this annual report: 24. Consent of Independent Accountants 26 (COVER EMBOSSED WITH LOGO) KPMG LLP 1500 National City Center 1900 East Ninth Street Cleveland, OH 44114-3495 The Lorain National Bank Stock Purchase Plan Financial Statements and Schedules December 31, 1998 and 1997 (With Independent Auditors' Report Thereon) 27 The Lorain National Bank Stock Purchase Plan Table of Contents Page Independent Auditors' Report 1 Statements of Assets Available for Distribution To Participants as of December 31, 1998 and 1997 2 Statements of Changes in Assets Available for Distribution to Participants for the years ended December 31, 1998 and 1997 3 Notes to Financial Statements 4 Schedules 1 Line 27(a) - Schedule of Assets Held for Investment Purposes (at end of Plan year) - December 31, 1998 7 2 Line 27(d) - Schedule of Reportable Transactions - Year ended December 31, 1998 8 28 (LETTERHEAD) (LOGO) KPMG LLP 1500 National City Center 1900 East Ninth Street Cleveland, OH 44114-3495 Independent Auditors' Report ---------------------------- The Plan Administrator The Lorain National Bank Sponsor of The Lorain National Bank Stock Purchase Plan: We have audited the accompanying statements of assets available for distribution to participants of The Lorain National Bank Stock Purchase Plan (Plan) as of December 31, 1998 and 1997, and the related statements of changes in assets available for distribution to participants for the years then ended. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by Management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the assets available for distribution to participants of the Plan as of December 31, 1998 and 1997, and the changes in those assets for the years then ended in conformity with generally accepted accounting principles. Our audits were performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedules of assets held for investment purposes as of December 31, 1998, and reportable transactions for the year ended December 31, 1998, are presented for the purpose of additional analysis and are not a required part of the basic financial statements but are supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. These supplemental schedules are the responsibility of the Plan's management. The supplemental schedules have been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. /s/ KPMG LLP April 29, 1999 (LOGO) Member Firm of KPMG International 29 THE LORAIN NATIONAL BANK STOCK PURCHASE PLAN Statements of Assets Available for Distribution to Participants December 31, 1998 and 1997 1998 1997 ---- ---- Assets available for distribution to participants: Short-term cash investments $ 137,784 33,158 Investment, at fair value (notes 3 and 6) LNB Bancorp, Inc. common stock 3,254,868 3,463,811 Dividends and interest receivable 29,787 27,687 --------- --------- Assets available for distribution to participants $ 3,422,439 3,524,656 ========= ========= See accompanying notes to financial statements. 2 30 THE LORAIN NATIONAL BANK STOCK PURCHASE PLAN Statements of Changes in Assets Available for Distribution to Participants Years ended December 31, 1998 and 1997 1998 1997 ---- ---- Additions: Investment income: Dividend and interest income $ 105,498 90,549 Net appreciation(depreciation)in fair value of investment 18,916 (81,238) --------- --------- Total investment income 124,414 9,311 --------- --------- Contributions: Employer 126,781 121,017 Participants 253,540 242,016 --------- --------- Total contributions 380,321 363,033 --------- --------- Total additions 504,735 372,344 Deductions: Distributions to participants (606,952) (582,231) --------- --------- (Decrease)in assets available for distribution to participants (102,217) (209,887) Assets available for distribution to participants: Beginning of year 3,524,656 3,734,543 --------- --------- End of year $ 3,422,439 3,524,656 ========= ========= See accompanying notes to financial statements. 3 31 THE LORAIN NATIONAL BANK STOCK PURCHASE PLAN Notes to Financial Statements December 31, 1998 and 1997 (1) Description of the Plan The following description of The Lorain National Bank Stock Purchase Plan (Plan) provides only general information. Participants should refer to the Plan agreement for a more complete description of the Plan's provisions. (a) General The Plan is a defined contribution plan sponsored by The Lorain National Bank (Bank), a wholly owned subsidiary of LNB Bancorp, Inc., covering substantially all employees of the Bank. An employee is eligible to participate in the Plan on the January 1 or July 1 after the attainment of age 21 and completion of one year of service, as defined in the Plan. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA). Under the terms of the Plan, the Trust Department of the Bank acts as trustee for the Plan and, as such, manages a trust fund which includes all of the Plan's assets. The Plan stipulates that employer and employee contributions will be invested in units of the LNB Bancorp, Inc. stock fund which primarily consists of stock of LNB Bancorp, Inc. (b) Bank Contributions The Bank is required to contribute to the Plan for each month, out of its current or accumulated earnings only, an amount equal to 50 percent of the participants' contributions for each month. (c) Participants' Contributions A participant can make, through payroll deductions, contributions of one (1) to six (6) percent (in whole integers) of their compensation. Changes in the amount of compensation paid to a participant will automatically effect a change in the amount of the contribution. (d) Vesting of Contributions Each participant has a fully vested interest in the Bank's and their contributions as of the date payments are made. (e) Withdrawals While Employed At any time, subject to certain restrictions, a participant may elect to withdraw all or a portion of their units. 4 32 THE LORAIN NATIONAL BANK STOCK PURCHASE PLAN Notes to Financial Statements December 31, 1998 and 1997 (f) Distributions Upon Termination of Employment A participant whose employment terminates by reason of retirement on their early retirement date or on their normal retirement date, receives all units credited to their account. The participant may elect distribution of the units either in a single distribution or in annual, semiannual, quarterly, or monthly installments. A participant whose employment is terminated for any reason other than those designated above may receive a single distribution of all units credited to the participant. (g) Plan Termination Although it has not expressed any intention to do so, the Bank has the right to terminate the Plan subject to the provisions set forth in ERISA. In the event of Plan termination, the assets of the Plan will be allocated as prescribed by ERISA and its related regulations. (h) Plan Administrator The Plan Administrator is the President and Chief Executive Officer of the Bank. (2) Summary of Significant Accounting Policies (a) Basis of Presentation The accompanying financial statements of the Plan have been prepared under the accrual method of accounting. (b) Investment The fair value of the investment and changes therein are determined through the use of current quoted market values. Purchases and sales are recorded on a trade-date basis. Interest income is recorded on the accrual method of accounting. (c) Use of Estimates in the Preparation of Financial Statements The preparation of financial statements in conformity with generally accepted accounting principles requires Management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of changes in assets available for distribution during the reported period. Actual results could differ from those estimates. 33 (d) Payments of Benefits Benefit payments to participants are recorded when paid. 5 34 THE LORAIN NATIONAL BANK STOCK PURCHASE PLAN Notes to Financial Statements December 31, 1998 and 1997 (3) Investment The following table presents the fair value of the investment at December 31, 1998 and 1997: 1998 1997 -------------------- -------------------- Number Fair Number Fair of shares Value of shares Value --------- ---------- --------- ---------- LNB Bancorp, Inc. 117,293 $3,254,868 124,822 $3,463,811 Common Stock ========== ========== During the years ended December 31, 1998 and 1997, the Plan's investment (including investments bought, sold, and held during the year) appreciated (depreciated) in value by $18,916 and $(81,238), respectively. (4) Federal Income Taxes The Internal Revenue Service issued its latest determination letter on June 24, 1996 which stated that the Plan and its underlying Trust, as designed, qualify under the applicable provisions of the Internal Revenue Code. The Plan has been amended since receiving the determination letter. In the opinion of the Plan Administrator, the Plan and its underlying Trust have operated within the terms of the Plan and remain qualified under the applicable provisions of the Internal Revenue Code. As long as the Plan continues to be qualified under present federal income tax laws and regulations, participants will not be taxed on Bank contributions or on investment earnings on such contributions at the time such contributions and investment earnings are received by the Trustee, but may be subject to tax thereon at such time as they receive distributions under the Plan. (5) Administrative Expenses The administrative expenses of the Plan are paid by the Bank. (6) Party-In-Interest Transactions The following is a summary of transactions in common stock of LNB Bancorp, Inc., 100 percent owner of the Bank, during the year ended December 31, 1998: Number of Shares Fair Value --------- ------------ Balance at December 31, 1997 124,822 $ 3,463,811 Purchases 8,028 224,529 Distributions (10,710) (317,041) Sale of fractional shares (4,847) (135,347) Net appreciation - 18,916 ---------- ------------ Balance at December 31, 1998 117,293 $3,254,868 ========== ============ 6 35 Schedule 1 ---------- THE LORAIN NATIONAL BANK STOCK PURCHASE PLAN EIN: 34-0869480 PLAN NUMBER: 003 Line 27(a) - Schedule of Assets Held for Investment Purposes December 31, 1998 Column A Column B Column C Column D Column E - -------- ------------------ ------------------------- --------- -------- Description of Investment Identity of Issue, Including Maturity Date, Borrower, Lessor Rate of Interest, Collateral, Current or Similar Party Par or Maturity Value Cost Value - -------- ----------------- ------------------------- --------- -------- * LNB Bancorp, Inc. 117,293 shares of $1,419,159 $3,254,868 LNB Bancorp Inc. Common stock * Lorain National Bank Treasury Trust Fund $ 137,784 $ 137,784 * Party-in-interest See accompanying independent auditors' report. 7 36 Schedule 2 ---------- THE LORAIN NATIONAL BANK STOCK PURCHASE PLAN EIN: 34-0869480 PLAN NUMBER: 003 Line 27(d) - Schedule of Reportable Transactions Year ended December 31, 1998 Series transactions, when aggregated, involving an amount in excess of 5 percent of the current value of plan assets: Column A Column B Column C Column D Column E - -------------------- ----------------- ---------- -------- --------- Total Total Dollar Dollar Identity of Description Value of Value Lease Party Involved of Assets Purchases of Sales Rental - -------------------- ----------------- ---------- --------- --------- * LNB Bancorp, Inc. LNB Bancorp, Inc. Common Stock; 8 purchases $ 224,529 - - * LNB Bancorp, Inc. LNB Bancorp, Inc. Common Stock; 5 sales - 135,347 - * Lorain National Bank Treasury Trust Fund; 35 purchases 471,474 - - * Lorain National Bank Treasury Trust Fund; 20 sales - 366,848 - Line 27(d) - Schedule of Reportable Transactions Continued Column A Column B Column F Column G Column H - -------------------- ----------------- ------------ --------- --------- Current Expenses Value Of Incurred Asset On Identity of Description With Cost of Transaction Party Involved of Assets Transaction Asset Date - -------------------- ----------------- ------------ -------- -------- * LNB Bancorp, Inc. LNB Bancorp, Inc. Common Stock; 8 purchases - 224,529 224,529 * LNB Bancorp, Inc. LNB Bancorp, Inc. Common Stock; 5 sales - 139,517 135,347 * Lorain National Bank Treasury Trust Fund; 35 purchases - 471,474 471,474 * Lorain National Bank Treasury Trust Fund; 20 sales - 366,848 366,848 37 Schedule 2 ---------- THE LORAIN NATIONAL BANK STOCK PURCHASE PLAN EIN: 34-0869480 PLAN NUMBER: 003 Line 27(d) - Schedule of Reportable Transactions Year ended December 31, 1998 Line 27(d) - Schedule of Reportable Transactions Continued Column A Column B Column I - -------------------- ----------------- ---------- Identity of Description Net Gain Party Involved of Assets or (Loss) - -------------------- ----------------- ---------- * LNB Bancorp, Inc. LNB Bancorp, Inc. Common Stock; 8 purchases - * LNB Bancorp, Inc. LNB Bancorp, Inc. Common Stock; 5 sales (4,170) * Lorain National Bank Treasury Trust Fund; 35 purchases - * Lorain National Bank Treasury Trust Fund; 20 sales - * Party-in-interest See accompanying independent auditors' report. 8 38 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Plan Administrator has duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized. THE LORAIN NATIONAL BANK STOCK PURCHASE PLAN -------------------------------------------- (Name of Plan) Date: June 28, 1999 By: /s/ Gregory D. Friedman ------------- ---------------------------- Gregory D. Friedman Senior Vice President, Chief Operating Officer and Chief Financial Officer /s/ Mitchell J. Fallis ---------------------------- Mitchell J. Fallis Vice President and Chief Accounting Officer 39 The Lorain National Bank Stock Purchase Plan Exhibit to Form 11 - K (for the fiscal year ended December 31, 1998) S - K Reference Number (24) Consent of Independent Accountants. 40 (LETTERHEAD) (LOGO) KPMG LLP 1500 National City Center 1900 East Ninth Street Cleveland, Ohio 44114-3495 Consent of Independent Accountants ---------------------------------- The Plan Administrator LNB Bancorp, Inc.: We consent to the incorporation by reference in the Registration Statement No. 33-65036 of LNB Bancorp, Inc. of our report dated April 29, 1999, relating to the statements of assets available for distribution to participants of The Lorain National Bank Stock Purchase Plan as of December 31, 1998 and 1997, and the related statements of changes in assets available for distribution to participants for the years then ended, which report appears in Amendment No. 1 to the 1998 annual report on Form 10-K of LNB Bancorp, Inc. /s/ KPMG LLP Cleveland, Ohio June 28, 1999 (LOGO) Member Firm of KPMG International -----END PRIVACY-ENHANCED MESSAGE-----