LNB Bancorp (LNBB) 8-K Financial statements and exhibits

Exhibit 20

MESSAGE TO OUR SHAREHOLDERS

It’s a pleasure, once again, to report on the progress of LNB Bancorp, Inc., and its subsidiary companies after the first quarter of 2004. We are pleased to announce that earnings increased 3% for the first quarter of 2004, compared to the same quarter one year ago, increasing to $2,256,000, up from last year’s $2,191,000. Basic and diluted earnings per share for the first quarter of 2004 reached $.34, a 3% increase from the $.33 amount reported for the first quarter of 2003.

Earnings for 2004 were higher than a year ago because of higher operating income and lower operating expenses partially offset by lower net interest income. Decreases in net interest income resulted primarily from reduced yields on loans and securities that were greater than the reduction of interest rates paid on interest bearing liabilities. Earnings in 2004 were also impacted by continued slow earning asset growth, attributable to the weak local economy.

The increase in operating income results primarily from increases in service charges on deposit accounts, Investment and Trust Services Division income and increases in gain on sale of securities offset in part by decreases in income from investment in life insurance, other services charges and decreases in gain on sale of loans.

Operating expenses decreased by 3% led by decreases in salaries and employee benefits, net occupancy, supplies and postage and marketing expenses partially offset by increases in furniture and equipment, card related and professional services expenses.

The first quarter cash dividend declared per share in 2004 was $.18 per share, an increase from the $.17 amount reported for the first quarter of 2003.

Consolidated assets climbed 4% to $752.4 million at March 31, 2004, up $30.4 million from March 31, 2003. Net loans grew by $24.4 million from one year ago to $529.2 million at March 31, 2004, for a 5% increase. Loan growth was attributable to commercial loans, home equity lines of credit and purchased loans offset in part by declines in mortgages during the 12 months ended March 31, 2004. The security portfolio decreased to $152.3 million at March 31, 2004, from $155.1 million from one year ago.

Total deposits decreased to $563.8 million at March 31, 2004 from $578.9 million from one year ago. The decrease in deposits was offset by a $44.0 million increase in other borrowings to $113.3 million at March 31, 2004. Lorain National Bank’s deposits are insured by the Federal Deposit Insurance Corporation (FDIC). Lorain National Bank operates 20 banking centers and 23 ATMs in nine local communities.

Total shareholders’ equity increased by $2.1 million or 3% during the twelve months ended March 31, 2004. Total shareholders’ equity was $69.5 million or $10.51 per share at March 31, 2004, compared to $67.4 million or $10.21 per share at March 31, 2003. The percentage of shareholders’ equity to assets reached 9.2% at March 31, 2004.

We appreciate and thank you for your continuing support and look forward to addressing you after the completion of our second quarter of operations.

Stanley G. Pijor	James F. Kidd
Chairman of the Board	President and Chief Executive Officer

LNB BANCORP, INC.  •  2004 FIRST QUARTER REPORT

CONSOLIDATED BALANCE SHEETS

	March 31,
(Dollars in thousands)	2004			2003
Assets:
Cash and due from banks	$	27,363		$	25,527
Federal funds sold and short-term investments		7,913			3,235
Federal Home Loan Bank and Federal Reserve Bank stock, at cost		3,915			3,772
Securities held to maturity, at cost		21,157			5,312
Securities available for sale, at fair value		127,208			146,005
Portfolio loans		530,449			500,385
Loans available for sale		6,559			11,094
Reserve for loan losses		(7,819	)		(6,703	)
Net loans		529,189			504,776
Premises, equipment and intangible assets (net)		14,524			13,902
Accrued interest receivable and other assets		21,123			19,519
Total Assets	$	752,392		$	722,048
Liabilities and Shareholders’ Equity:
Noninterest-bearing deposits	$	84,250		$	87,054
Interest-bearing deposits		479,563			491,801
Total Deposits		563,813			578,855
Securities sold under repurchase agreements and other short-term borrowings		22,963			16,839
Federal Home Loan Bank advances		90,303			52,425
Accrued interest, taxes, expenses and other liabilities		5,770			6,557
Total Liabilities		682,849			654,676
Preferred stock		-0-			-0-
Common stock		6,766			6,753
Additional capital		26,243			26,086
Retained earnings		39,779			36,701
Accumulated other comprehensive income		(364	)		726
Treasury stock, at cost		(2,881	)		(2,894	)
Total Shareholders’ Equity		69,543			67,372
Total Liabilities and Shareholders’ Equity	$	752,392		$	722,048

CONSOLIDATED STATEMENTS OF INCOME

	Three Months Ended March 31,
(Dollars in thousands)	2004		2003
Interest Income:
Interest and fees on loans	$	7,793	$	8,202
Interest and dividends on securities		1,169		1,472
Interest on Federal funds sold and short-term investments		14		12
Total Interest Income		8,976		9,686
Interest Expense:
Interest on deposits		1,614		2,051
Interest on Federal Home Loan Bank advances		451		407
Interest on securities sold under repurchase agreements and Other Short-term Borrowings		41		68
Total Interest Expense		2,106		2,526
Net Interest Income		6,870		7,160
Provision for Loan Losses		525		564
Net Interest Income after Provision for Loan Losses		6,345		6,596
Operating Income:
Service charges on deposit accounts		984		946
Electronic banking fees		631		627
Investment and Trust Services Division income		586		454
Gain on sale of securities		223		203
Income from investments in life insurance		159		193
Other service charges, exchanges and fees		111		160
Gain on sale of loans		37		62
Other operating income		125		54
Total Operating Income		2,856		2,699
Operating Expenses:
Salaries and employee benefits		3,038		3,157
Net occupancy expense of Premises		374		412
Furniture and equipment expenses		670		549
Card-related expenses		332		292
Supplies and postage		252		282
Professional services		234		218
Marketing and advertising		179		240
Ohio Franchise Tax		188		181
Other operating expenses		709		808
Total Operating Expenses		5,976		6,139
Income Before Income Taxes		3,225		3,156
Income Taxes		969		965
Net Income	$	2,256	$	2,191
Per Share Data:
Basic Earnings Per Share	$	.34	$	.33
Diluted Earnings Per Share	$	.34	$	.33
Dividends Declared Per Share	$	.18	$	.17

LNB BANCORP, INC.  •  2004 FIRST QUARTER REPORT

NEW LNB AVON OFFICE OPENS; NEW AVON LAKE OFFICE TO FOLLOW IN MAY

James F. Kidd, President & CEO, officially opened LNB’s new Avon office with a ceremonial ribbon-cutting on March 1, 2004 as city and bank officials look on.

Lorain National Bank’s newest banking office in the city of Avon opened Monday, March 1, 2004 with a ribbon-cutting ceremony led by Lorain National Bank president James F. Kidd, Avon Mayor Jim Smith and Avon office manager, Carrie Hartman.

“We are truly excited about joining the Avon business community and bringing our brand of quality banking service to our Avon neighbors,” Kidd said. “Carrie and her enthusiastic staff are the perfect fit for this growing community’s banking needs,” Kidd added.

The grand opening of the new branch office at 2100 Center Road, near the Avon Commons shopping complex, featured a “lucky key” treasure chest promotion worth $2,500 in cash, home electronics and gift certificates from several Avon-area merchants. Keys were mailed to Avon area residents accompanied by information about our new branch office and special new account offers.

The two-week-long grand opening celebration was attended by more than 1,000 guests from Avon, Westlake, Avon Lake, North Ridgeville and surrounding communities. LNB executives also hosted an after-hours business reception and an employee open house during the celebration period.

Construction of the bank’s new 3,200-square-foot Avon Lake banking facility at 32960 Walker Road, in the Towne Center shopping complex is also well underway and will open for business on May 17, 2004.

Upon opening, customer accounts and safe deposit boxes will be relocated from LNB’s existing Avon Lake branch at the intersection of Miller and Walker roads. The older facility, which has been in service since the 1960s, will be closed when the transfer to Towne Center is complete.

“We’re pleased to announce that Lorain National Bank is committed to growth and development right here in our neighborhood. Our new Avon Lake Towne Center site will provide a more convenient, centrally-located banking facility for residential and business customers alike,” Kidd said.

LNB’s Towne Center office will feature multiple-lane drive-in service, a drive-up ATM, an after hours depository, a contemporary banking lobby with five teller stations, an attractive new accounts center, a customer waiting area featuring a coffee bar, television and a children’s play area, two private offices and a conference room. Customers of the new Avon Lake branch will be served by LNB’s current Avon Lake office management and staff.

“Our new banking office construction and other facilities improvements in Lorain County will allow us to provide even higher quality service to our customers while increasing efficiencies bank wide,” Kidd added. “We are excited about our opportunities to expand our banking business in our primary market.”

Exterior finishing of LNB’s Avon Lake office is progressing as the bank prepares for a May 17, 2004 grand opening.

LNB BANCORP, INC.  •  2004 FIRST QUARTER REPORT

LNB BANCORP, INC. AND SUBSIDIARY LOCATIONS

Lorain National Bank	Charleston Insurance	Charleston Title	North Coast Community
457 Broadway	Agency, Inc.	Agency, LLC	Development Corporation
Lorain, Ohio 44052	457 Broadway	424 Middle Avenue	457 Broadway
(440) 244-6000	Lorain, Ohio 44052	Elyria, Ohio 44035	Lorain, Ohio 44052
(800) 860-1007	(440) 244-7158	(440) 244-5212	(440) 244-7145
	(800) 845-2152	(440) 284-5165	(440) 244-7212

LNB BANKING CENTERS, ATMS, LNB INVESTMENT AND TRUST SERVICES AND LNB INVESTMENT CENTER

Lorain Banking Centers
	Main
	457 Broadway
	Lorain, Ohio 44052
	(440) 244-7185
	Sixth Street Drive-In**
	200 Sixth Street
	Lorain, Ohio 44052
	(440) 244-7242
	Kansas Avenue
	1604 Kansas Avenue
	Lorain, Ohio 44052
	(440) 288-9151
	Oberlin Avenue
	3660 Oberlin Avenue
	Lorain, Ohio 44053
	(440) 282-9196
	Pearl Avenue
	2850 Pearl Avenue
	Lorain, Ohio 44055
	(440) 277-1103
	West Park Drive-In**
	2130 West Park Drive
	Lorain, Ohio 44053
	(440) 989-3131
Amherst Banking Center
	Amherst
	1175 Cleveland Avenue
	Amherst, Ohio 44001
	(440) 988-4423
Avon Banking Center
	Avon
	2100 Center Road
	Avon, Ohio 44011
	(440) 934-7922
Avon Lake Banking Center
	Avon Lake
	240 Miller Road
	Avon Lake, Ohio 44012
	(440) 933-2186
	ATM service available wherever you see this symbol
	* Restricted to residents, their visitors and employees
	** Drive-In service only

Elyria Banking Centers
	Ely Square
	124 Middle Avenue
	Elyria, Ohio 44035
	(440) 323-4621
	Cleveland Street
	801 Cleveland Street
	Elyria, Ohio 44035
	(440) 365-8397
	Lake Avenue
	42935 North Ridge Road
	Elyria Township,
	Ohio 44035
	(440) 233-7196
	Elyria United
	Methodist Village*
	807 West Avenue
	Elyria, Ohio 44035
	(440) 323-6488
Village of LaGrange Banking Center
	Village of LaGrange
	546 North Center Street
	Village of LaGrange,
	Ohio 44050
	(440) 355-6734
Oberlin Banking Centers
	Kendal at Oberlin*
	600 Kendal Drive
	Oberlin, Ohio 44074
	(440) 774-5400
	Oberlin
	40 East College Street
	Oberlin, Ohio 44074
	(440) 775-1361
Olmsted Township Banking Centers
	Olmsted Township
	27095 Bagley Road
	Olmsted Township,
	Ohio 44138
	(440) 235-4600
	The Renaissance*
	26376 John Road
	Olmsted Township,
	Ohio 44138
	(440) 427-0041

Vermilion Banking Center
	Vermilion
	4455 East Liberty Avenue
	Vermilion, Ohio 44089
	(440) 967-3124
Westlake Banking Centers
	Westlake Village*
	28550 Westlake
	Village Drive
	Westlake, Ohio 44145
	(440) 808-0229
ATMs
	Captain Larry’s Shell
	1317 State Route 60
	Vermilion, Ohio 44089
	Dad’s Sunoco
	7580 Leavitt Road
	State Route 58
	Amherst, Ohio 44001
	Gateway Plaza
	3451 Colorado Avenue
	Lorain, Ohio 44052
	Grafton Station
	537 Main Street
	Grafton, Ohio 44044
	Lakeland Medical Center 3700 Kolbe Road Lorain, Ohio 44053
	Lorain County
	Community College
	1005 North Abbe Road
	Elyria, Ohio 44035
	Lowe’s Home
	Improvement Warehouse
	620 Midway Boulevard
	Elyria, Ohio 44035
Other Offices
	Executive
	457 Broadway
	Lorain, Ohio 44052
	(440) 244-7123
	Accounting
	457 Broadway
	Lorain, Ohio 44052
	(440) 244-7145
	Retail Administration
	457 Broadway
	Lorain, Ohio 44052
	(440) 244-7253

	Commercial, Consumer and Mortgage Loans
	457 Broadway
	Lorain, Ohio 44052
	(440) 244-7219
	(440) 989-3348
	(440) 244-7216
	Customer Service
	2130 West Park Drive
	Lorain, Ohio 44053
	(440) 989-3348
	(800) 860-1007
	Human Resources
	2130 West Park Drive
	Lorain, Ohio 44053
	(440) 989-3139
	Purchasing
	2150 West Park Drive
	Lorain, Ohio 44053
	(440) 989-3327
	Technology Center
	2130 West Park Drive
	Lorain, Ohio 44053
	(440) 989-3301
	Electronic Banking
	2130 West Park Drive
	Lorain, Ohio 44053
	(440) 989-3348
LNB Investment and Trust Services
	457 Broadway
	Lorain, Ohio 44052
	(440) 244-7148
LNB Investment Center
	457 Broadway
	Lorain, Ohio 44052
	(440) 244-7241
	(800) 845-2152
All Other Offices Not Listed
	Toll Free (800) 860-1007
	Lorain (440) 244-6000
TeleBanker
	TeleBanker
	(440) 245-4562
	TeleBanker
	(800) 610-9033
Internet: www.4LNB.com
	(440) 989-3348