LNB Bancorp (LNBB) 8-K LNB Bancorp, Inc. Reports Improved Third Quarter Results

Exhibit 99.1

LNB Bancorp, Inc. Reports Improved Third Quarter Results

• Third quarter 2008 net income up 9.0 percent from a year ago
• Net interest income increases continue amid national economic crisis
• Solid foundation provides sound financial footing

LORAIN, Ohio--(BUSINESS WIRE)--October 30, 2008--LNB Bancorp, Inc. (NASDAQ: LNBB) today reported net income of $1,823,000 or $.25 per diluted share for the three months ended September 30, 2008, compared with net income of $1,673,000 or $.23 per diluted share reported for the same period a year ago.

“While we struggle as a nation through the worst financial crisis since the Great Depression, LNB is able to report an earnings increase with strong core operating results in the third quarter,” said Daniel E. Klimas, president and chief executive officer of LNB Bancorp, Inc. Net interest income and noninterest income increased from the second quarter of 2008 as well as the third quarter a year ago.

“Our company continues to be bolstered by the significant strategic investments made over the past three years as well as the important and prudent steps we took last quarter to help cover potential loan losses. The loan loss provision taken in the second quarter has proven to be the right step in light of continued economic pressures,” said Klimas.

“Our third quarter performance demonstrates the strength of our company. Our balance sheet remains strong and the bank continues to remain well-capitalized on all levels,” said Klimas.

“It is difficult to predict when this current economic environment will improve, but we are confident that we have taken appropriate steps to build a solid foundation on which to face these tough times,” said Klimas. “On the national level, we believe that strong measures had to be taken by the government to strengthen the financial services industry. Management and the Board of Directors will continue to carefully consider all of the programs being offered to assist financial institutions in an effort to ensure sound financial footings in the future.”

Third Quarter Performance

Net interest income for the third quarter of 2008 was $8,229,000, a 5.12 percent increase compared to net interest income of $7,828,000 for the third quarter a year ago and higher than the $8,139,000 of net interest income posted in the second quarter of 2008. This strong net interest income performance was accomplished through the bank providing competitive interest rates on both loan and deposit products to customers, while maintaining a healthy balance sheet.

Net interest margin was 3.24 percent in the third quarter this year, compared to 3.31 percent in the third quarter a year ago as well as the second quarter 2008.

Noninterest income was $3,158,000 for the third quarter of 2008, up 5.13 percent from $3,004,000 in the same quarter a year ago and $3,154,000 in the second quarter of 2008. The second quarter of 2008 included $217,000 from the redemption of bank owned life insurance. Income from deposit service charges and other fees continue to be strong.

Noninterest expense was $8,498,000 in the third quarter of 2008, compared to $8,334,000 for the same period in 2007, but down from $8,840,000 in the second quarter of 2008. Other real estate owned expense was $285,000 in the third quarter of 2008 representing a substantial increase over the third quarter of 2007. Salaries and employee benefits expense declined 6.72 percent in the third quarter of 2008 compared to the third quarter a year ago. Expense management continues to be a major emphasis of the company.

In terms of asset quality, the allowance for loan losses at September 30, 2008 was $11,355,000 or 1.43 percent of outstanding loans, due in part to the increased loan loss provision taken in the second quarter of 2008. Net charge-offs for the third quarter of 2008 were $990,000, down from $1,094,000 in the third quarter a year ago, but up from $790,000 during the second quarter of 2008. The allowance to nonperforming loans declined from 72.66 percent in the third quarter of 2007 to 65.09 percent in the third quarter of 2008. The allowance to nonperforming loans in the second quarter of 2008 was 76.96 percent.

Total assets at the end of the third quarter 2008 were $1.1 billion, compared to $1.0 billion at the end of the third quarter of 2007. Total portfolio loans at September 30, 2008 were $793,542,000, up from $728,624,000 at September 30, 2007. Total deposits at the end of the third quarter this year were $895,662,000, up from $834,323,000 at the end of last year’s third quarter.

Nine-month Results

For the first nine months of 2008, net income was $2,135,000, or $.29 per diluted share, compared with $3,844 or $.56 per diluted share for the same period a year ago. Net interest income was $23,888,000 for the first nine months of 2008, compared to $21,855,000 in the first nine months of 2007.

Noninterest income was $9,646,000 for the nine months ended September 30, 2008, a 14.48 percent increase from the $8,426,000 for the first nine months of 2007.

For the first nine months of 2008, noninterest expense was $25,860,000, compared with $23,701,000 for the first nine months of 2007. During the first quarter of this year, a special shareholders meeting was held at the request of a shareholder of the Corporation which added additional expense, net of tax, of approximately $572,000.

About LNB Bancorp, Inc.

LNB Bancorp, Inc. is a $1.1 billion financial holding company. Its major subsidiary, The Lorain National Bank, is a full-service commercial bank, specializing in commercial, personal banking services, residential mortgage lending and investment and trust services. The Lorain National Bank and Morgan Bank serve customers through 21 retail-banking locations and 29 ATMs in Lorain, eastern Erie, western Cuyahoga and Summit counties. North Coast Community Development Corporation is a wholly owned subsidiary of The Lorain National Bank. Brokerage services are provided by the bank through an agreement with Investment Centers of America. For more information about LNB Bancorp, Inc., and its related products and services or to view its filings with the Securities and Exchange Commission, visit us at http://www.4lnb.com.

This press release contains forward-looking statements within the meaning of the “Safe Harbor” provisions of the Private Securities Litigation Reform Act of 1995. Terms such as “will,” “should,” “plan,” “intend,” “expect,” “continue,” “believe,” “anticipate” and “seek,” as well as similar expressions, are forward-looking in nature. Actual results and events may differ materially from those expressed or anticipated as a result of risks and uncertainties which include fluctuations in interest rates, changes in trade, monetary or fiscal policy, continued disruption in the fixed income markets, adverse capital markets conditions, continued disruption in the housing markets and related conditions in the financial markets, inflation, changes in government, regulatory practices, requirements or expectations and changes in general economic conditions and competition in the geographic and business areas in which LNB Bancorp, Inc. conducts its operations, particularly in light of the recent consolidation of competing financial institutions, as well as the risks and uncertainties described from time to time in LNB Bancorp’s reports as filed with the Securities and Exchange Commission. We undertake no obligation to review or update any forward-looking statements, whether as a result of new information, future events or otherwise.

LNB Bancorp, Inc.
Supplemental Financial Information
(Unaudited - Dollars in thousands except Share and Per Share Data)
	Three Months Ended									Nine Months Ended
	September 30,			June 30,			September 30,			September 30,			September 30,
	2008			2008			2007			2008			2007
END OF PERIOD BALANCES
Assets	$	1,109,501		$	1,072,974		$	1,019,197		$	1,109,501		$	1,019,197
Deposits		895,662			861,202			834,323			895,662			834,323
Portfolio loans		793,542			769,785			728,624			793,542			728,624
Allowance for loan losses		11,355			11,874			7,951			11,355			7,951
Shareholders' equity		80,340			78,747			81,340			80,340			81,340
AVERAGE BALANCES
Assets:
Total assets	$	1,082,869		$	1,065,623		$	1,019,758		$	1,064,967		$	932,543
Earning assets		1,010,388			987,829			937,937			989,045			862,483
Securities		219,642			223,139			200,084			218,246			179,786
Portfolio loans		790,746			764,690			737,853			763,577			682,697
Liabilities and shareholders' equity:
Total deposits	$	870,622		$	864,217		$	820,578		$	863,643		$	771,806
Interest bearing deposits		783,264			777,357			734,185			777,790			688,089
Interest bearing liabilities		907,753			885,878			841,952			885,453			763,745
Total shareholders' equity		79,292			82,898			81,964			83,532			76,455
INCOME STATEMENT
Net interest income	$	8,229		$	8,139		$	7,828		$	23,888		$	21,855
Net interest income-FTE (1)		8,342			8,244			7,927			24,202			22,137
Provision for loan losses		471			4,664			441			5,609			1,677
Noninterest income		3,158			3,154			3,004			9,646			8,426
Noninterest expense		8,498			8,840			8,334			25,860			23,701
Taxes		595			(1,076	)		384			(70	)		1,059
Net income (loss)		1,823			(1,135	)		1,673			2,135			3,844
Total revenue		11,387			11,293			10,832			33,534			30,281
PER SHARE DATA
Basic net income (loss) per common share	$	0.25		$	(0.16	)	$	0.23		$	0.29		$	0.56
Diluted net income (loss) per common share		0.25			(0.16	)		0.23			0.29			0.56
Cash dividends per common share		0.09			0.18			0.18			0.45			0.54
Basic average common shares outstanding		7,295,663			7,295,663			7,295,663			7,295,663			6,889,953
Diluted average common shares outstanding		7,295,663			7,295,663			7,295,663			7,295,663			6,889,953
KEY RATIOS
Return on average assets (2)		0.67	%		-0.43	%		0.65	%		0.27	%		0.55	%
Return on average common equity (2)		9.15	%		-5.51	%		8.10	%		3.41	%		6.72	%
Efficiency ratio		73.90	%		77.56	%		76.24	%		76.40	%		77.55	%
Noninterest expense to average assets (2)		3.12	%		3.34	%		3.24	%		3.24	%		3.40	%
Average equity to average assets		7.32	%		7.78	%		8.04	%		7.84	%		8.20	%
Net interest margin		3.24	%		3.31	%		3.31	%		3.23	%		3.39	%
Net interest margin (FTE) (1)		3.28	%		3.36	%		3.35	%		3.27	%		3.43	%
ASSET QUALITY
Nonperforming loans	$	17,445		$	15,428		$	10,942		$	17,445		$	10,942
Other real estate owned		1,799			2,351			3,053			1,799			3,053
Total nonperforming assets		19,244			17,779			13,995			19,244			13,995
Net Charge Offs		990			790			1,094			1,084			1,530
Total nonperforming loans to total loans		2.20	%		2.00	%		1.50	%		2.20	%		1.50	%
Total nonperforming assets to total assets		1.73	%		1.66	%		1.37	%		1.73	%		1.37	%
Net charge-offs to average loans (2)		0.50	%		0.42	%		0.59	%		0.19	%		0.30	%
Allowance for loan losses		1.43	%		1.54	%		1.09	%		1.43	%		1.09	%
Allowance to nonperforming loans		65.09	%		76.96	%		72.66	%		65.09	%		72.66	%
(1) FTE -- fully tax equivalent at 34% tax rate
(2) Annualized

Consolidated Balance Sheets
	September 30, 2008			December 31, 2007
	(unaudited)
	(Dollars in thousands except share amounts)
ASSETS
Cash and due from Banks	$	45,665		$	23,523
Interest-bearing deposits in other banks		350			100
Securities: (Note 5)
Trading securities, at fair value		33,559			33,402
Available for sale, at fair value		172,087			179,324
Federal Home Loan Bank and Federal Reserve Stock		4,839			4,579
Total securities		210,485			217,305
Loans held for sale		5,677			4,724
Loans:
Portfolio loans		793,542			753,598
Allowance for loan losses		(11,355	)		(7,820	)
Net loans		782,187			745,778
Bank premises and equipment, net		12,408			13,328
Other real estate owned		1,799			2,478
Bank owned life insurance		15,499			15,487
Goodwill, net		21,570			21,570
Intangible assets, net		1,176			1,280
Accrued interest receivable		4,186			4,074
Other assets		8,499			6,998
Total Assets	$	1,109,501		$	1,056,645
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
Demand and other noninterest-bearing	$	90,912		$	88,812
Savings, money market and interest-bearing demand		308,221			331,306
Certificates of deposit		496,529			436,823
Total deposits		895,662			856,941
Short-term borrowings		29,876			42,105
Federal Home Loan Bank advances		73,857			44,207
Junior subordinated debentures		20,620			20,620
Accrued interest payable		3,560			4,620
Accrued taxes, expenses and other liabilities		5,586			5,499
Total Liabilities		1,029,161			973,992
Shareholders' Equity
Common stock, par value $1 per share, authorized 15,000,000 shares, issued 7,623,857 shares at September 30, 2008 and December 31, 2007		7,624			7,624
Preferred Shares, Series A Voting, no par value, authorized 750,000 shares, none issued at September 30, 2008 and December 31, 2007.					-
Additional paid-in capital		37,745			37,712
Retained earnings		41,079			42,951
Accumulated other comprehensive income (loss)		(16	)		458
Treasury shares at cost, 328,194 shares at September 30, 2008 and December 31, 2007		(6,092	)		(6,092	)
Total Shareholders' Equity		80,340			82,653
Total Liabilities and Shareholders' Equity	$	1,109,501		$	1,056,645

Consolidated Statements of Income (unaudited)
	Three Months Ended September 30,				Nine Months Ended September 30,
	2008		2007		2008			2007
	(Dollars in thousands except share and per share amounts)
Interest Income
Loans	$	11,976	$	13,437	$	36,514		$	36,610
Securities:
U.S. Government agencies and corporations		1,861		2,148		5,795			5,310
State and political subdivisions		203		157		551			443
Trading securities		209		-		738			-
Other debt and equity securities		82		78		214			204
Federal funds sold and short-term investments		54		51		130			338
Total interest income		14,385		15,871		43,942			42,905
Interest Expense
Deposits		5,135		6,705		17,041			18,436
Federal Home Loan Bank advances		646		635		1,769			1,235
Short-term borrowings		93		347		354			812
Trust preferred securities		282		356		890			567
Total interest expense		6,156		8,043		20,054			21,050
Net Interest Income		8,229		7,828		23,888			21,855
Provision for Loan Losses		471		441		5,609			1,677
Net interest income after provision for loan losses		7,758		7,387		18,279			20,178
Noninterest Income
Investment and trust services		441		547		1,560			1,593
Deposit service charges		1,258		1,239		3,559			3,457
Other service charges and fees		704		605		2,030			1,706
Income from bank owned life insurance		154		182		735			531
Other income		67		128		736			273
Total fees and other income		2,624		2,701		8,620			7,560
Securities gains (losses), net		223		2		506			261
Gains on sale of loans		298		277		642			546
Gains (losses) on sale of other assets, net		13		24		(122	)		59
Total noninterest income		3,158		3,004		9,646			8,426
Noninterest Expense
Salaries and employee benefits		3,828		4,104		11,467			11,862
Furniture and equipment		1,049		952		3,080			2,566
Net occupancy		556		593		1,816			1,683
Outside services		522		488		1,996			1,317
Marketing and public relations		247		321		829			936
Supplies, postage and freight		408		353		1,092			986
Telecommunications		189		232		635			623
Ohio Franchise tax		225		188		670			604
Intangible asset amortization		36		57		104			133
Other real estate owned		285		58		892			305
Electronic banking expenses		237		150		747			593
Loan and collection expense		256		236		716			644
Other expense		660		602		1,816			1,449
Total noninterest expense		8,498		8,334		25,860			23,701
Income before income tax expense		2,418		2,057		2,065			4,903
Income tax expense (benefit)		595		384		(70	)		1,059
Net Income (Loss)	$	1,823	$	1,673	$	2,135		$	3,844
Net Income (Loss) Per Common Share
Basic	$	0.25	$	0.23	$	0.29		$	0.56
Diluted		0.25		0.23		0.29			0.56
Dividends declared		0.09		0.18		0.45			0.54
Average Common Shares Outstanding
Basic		7,295,663		7,295,663		7,295,663			6,889,953
Diluted		7,295,663		7,295,663		7,295,663			6,889,953

CONTACT:
For LNB Bancorp, Inc.
W. John Fuller, 216-978-7643