DFAN14A 1 l30649adfan14a.htm SHAREHOLDERS FOR A BETTER BANK/LNB BANCORP, INC. DFAN14A Shareholders for a Better Bank/LNB Bancorp DFAN14A
 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No.  )
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LNB Bancorp, Inc.
 
(Name of Registrant as Specified In Its Charter)
 
Shareholders for a Better Bank
 
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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SHAREHOLDERS FOR A BETTER BANK
8500 Station Street, Suite 113
Mentor, Ohio 44060
 
 
SPECIAL MEETING OF SHAREHOLDERS
OF LNB BANCORP, INC.
MARCH 18, 2008
 
 
Richard M. Osborne 216-215-1313 (Cell)
Daniel G. Merkel 216-469-9920 (Cell)
The following is a handout distributed by Richard M. Osborne, a member of Shareholders for a Better Bank, at the Special Meeting of Shareholders of LNB Bancorp. Inc. on March 18, 2008. Shareholders for a Better Bank is filing this Schedule 14A in the event this handout is deemed to be solicitation material.


 

 


 

LNB Bancorp, Inc.
Comparative Stock Performance

 


 

LNB BANCORP, INC.
PERFORMANCE BY YEAR

(in thousands)
                                                     
    Footnotes   2007     2006     2005     2004     2003     2002  
 
                                                   
Net Interest Income
  1   $ 29,670     $ 28,607     $ 30,030     $ 28,122     $ 28,664     $ 29,232  
 
                                                   
Other Income
  2     10,362       9,514       10,092       10,660       10,105       10,278  
 
                                                   
Operating Expenses
  3     31,751       28,985       30,267       26,290       26,467       24,753  
 
                                                   
Income Before Taxes
        7,163       7,093       8,892       10,526       11,126       13,365  
 
                                                   
Net Income
  4     5,512       5,424       6,413       7,475       7,715       9,165  
 
                                                   
Cash Dividend Declared
        5,034       4,641       4,760       4,777       4,626       4,468  
 
                                                   
Pay-out Ratio
  5     91.3 %     85.6 %     74.2 %     63.9 %     60.0 %     48.8 %
 
                                                   
Per Common Share
  6                                                
Basic Earnings
      $ 0.79 *   $ 0.84     $ 0.97     $ 1.13     $ 1.17     $ 1.39  
 
                                                   
* 851,990 shares issued per Morgan Bank acquisition                                        
 
                                                   
Financial Ratios:
                                                   
Return on Avg Assets
  7     0.58 %     0.66 %     0.81 %     0.98 %     1.05 %     1.33 %
 
                                                   
Return on Equity
  8     7.06 %     7.89 %     9.11 %     10.75 %     11.33 %     14.24 %
 
                                                   
Efficiency Ratio
  9     76.41 %     76.03 %     75.44 %     67.82 %     63.01 %     61.41 %
 
                                                   
Mkt. Price/Book Value
  10     1.27       1.51       1.72       1.89       2.09       2.55  
 
                                                   
Market Capitalization (millions)
  11   $ 94.50     $ 103.00     $ 114.60     $ 136.20     $ 141.00     $ 79.80  
 
                                                   
Shareholders Equity (000s)
  12   $ 82,653     $ 68,697     $ 68,406     $ 70,574     $ 68,135     $ 66,613  
Footnotes:
     
1
  Net interest income flat for six years.
2
  Other income flat for six years
3
  Operating expenses increased 28% since 2002.
4
  Net income decreased 40% since 2002, and 14% since 2005.
5
  Pay-out ratio increased 87% since 2002 to sustain dividend and is at an all time high of 91.3%.
6
  Earnings per common share declined 43% since 2002.
7
  Return on average assets decreased 57% since 2002, and 28% since 2005.
8
  Return on equity decreased 50% since 2002, and 23% since 2005.
9
  Efficiency ratio is at all time high of 76.11%; meaning it takes LNB $0.76 to generate $1.00 of revenue, where in 2002 it was $0.61.
10
  Year end market price of stock to book value. This is noteworthy, because it suggests the markets’ perception of franchise declining value.
11
  Illustration of the annual loss of shareholder value.
12
  In 2007, LNB acquired Morgan Bank.


 

LNB BANCORP, INC.
LOANS TO OFFICERS AND DIRECTORS
Definition of non-recourse loan:
    Principal not personally liable for the debt nor the debt payments
 
    Security for the loan limited to the collateral, not the person who owns collateral
 
    If the borrower defaults on the loan, the bank can seize the collateral, but cannot proceed against the borrower even if the value of the collateral does not cover the full amount of the loan
Recourse loans in Ohio typically contain a cognovit provision
    In the event of a default, a lender with a personal guarantee and a cognivit provision within the guarantee can obtain a judicial judgment against the guarantor in the amount of the guarantee
 
    Enhances the lender’s negotiating position and expedites lender’s ability to bring action and judgment against borrower
In the banking industry, it is normal course of business to require a personal guarantee from the principal