UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
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. )
Exchange Act of 1934 (Amendment No. )
Filed by the Registranto
Filed by a Party other than the Registrantþ
Filed by a Party other than the Registrantþ
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o | Preliminary Proxy Statement | |
o | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |
o | Definitive Proxy Statement | |
þ | Definitive Additional Materials | |
o | Soliciting Material Pursuant to §240.14a-12 |
LNB Bancorp, Inc.
Shareholders for a Better Bank
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SHAREHOLDERS FOR A BETTER BANK
8500 Station Street, Suite 113
Mentor, Ohio 44060
8500 Station Street, Suite 113
Mentor, Ohio 44060
SPECIAL MEETING OF SHAREHOLDERS
OF LNB BANCORP, INC.
MARCH 18, 2008
OF LNB BANCORP, INC.
MARCH 18, 2008
Richard M. Osborne 216-215-1313 (Cell)
Daniel G. Merkel 216-469-9920 (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.
![](https://capedge.com/proxy/DFAN14A/0000950152-08-002068/l30649al3064902.gif)
LNB Bancorp, Inc.
Comparative Stock Performance![](https://capedge.com/proxy/DFAN14A/0000950152-08-002068/l30649al3064903.gif)
Comparative Stock Performance
![](https://capedge.com/proxy/DFAN14A/0000950152-08-002068/l30649al3064903.gif)
LNB BANCORP, INC.
PERFORMANCE BY YEAR
(in thousands)
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
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