LNB Bancorp (LNBB) 8-K LNB Bancorp, Inc. Reports Profitable 2008 Fourth Quarter

Exhibit 99.1

LNB Bancorp, Inc. Reports Profitable 2008 Fourth Quarter

LORAIN, Ohio--(BUSINESS WIRE)--February 10, 2009--LNB Bancorp, Inc. (NASDAQ:LNBB):

• Solid increases in loans and deposits amid continued economic crisis
• Net interest margin holds well as interest rates hit historic lows
• Balance sheet, capital levels remain strong

LNB Bancorp, Inc. (NASDAQ:LNBB) today reported financial results for the fourth quarter and full year ended December 31, 2008. Net income for the fourth quarter of 2008 was $1,261,000, or $0.16 per diluted share, compared to $1,668,000, or $0.23 per diluted share, for fourth quarter of 2007.

“Against the backdrop of a dramatic national economic crisis, we are pleased to report that LNB had a profitable fourth quarter with increases in net interest income, loans and deposits over the same quarter in 2007,” said Daniel E. Klimas, president and chief executive officer of LNB Bancorp, Inc. “While many financial institutions across the nation are reporting record losses, we have remained profitable.

“Our balance sheet remains strong and the bank remains well-capitalized at all levels,” said Klimas. “We still face challenges in terms of economic activity, credit quality and real estate values, but we believe we are addressing these issues through vigorous management and appropriate provisions.

“Maintaining profitability in these uncertain times is no small task and reflects the hard work and professionalism of our staff, the support of our board of directors and the continuing loyalty of our customers,” said Klimas. “While the economic prospects for 2009 are unclear, we will continue our focus on growing revenue, effectively managing our expenses and improving our credit quality."

In December 2008, LNB Bancorp closed on a $25.2 million investment by the U.S. Treasury Department under the TARP Capital Purchase Program. The TARP Capital Purchase Program is a voluntary program designed to help healthy institutions build capital to support the U.S. economy by increasing the flow of financing to businesses and consumers. The TARP investment further strengthens LNB’s balance sheet.

“The Treasury’s investment provided us an excellent opportunity to build upon our already strong, well-capitalized position,” said Klimas. “We look forward to using the additional capital to further invest in the growth and economic recovery of our communities.”

Fourth Quarter Review

Fourth quarter net interest income totaled $8.3 million, up nearly 6 percent from $7.8 million for the fourth quarter of 2007 and up slightly from the $8.2 million in the third quarter of 2008. From year-end 2007 to year-end 2008, portfolio loans increased by $50 million to $803.6 million and total deposits increased $64 million to $921 million.

The Company’s net interest margin for the fourth quarter of 2008 was 3.14 percent, compared to 3.24 percent in both the fourth quarter of 2007 and the third quarter of 2008. The maintenance of the net interest margin at this level for the fourth quarter was encouraging in light of the fact that Federal Reserve interest rates reached their lowest levels in more than 70 years.

Noninterest income was $2.8 million for the fourth quarter of 2008, compared to $3.1 million in the fourth quarter of 2007. Service charges and fees from deposit accounts and electronic banking, which were approximately the same as in the fourth quarter last year, continued to do well in the fourth quarter. Trust and brokerage fees were down $229,000 during this same period as a result of the downward trend in the stock market.

Noninterest expense was $8.4 million for the fourth quarter of 2008 compared to $8.0 million for the fourth quarter of 2007. Expenses showed a modest decline from third to fourth quarter in 2008. The Company continues to monitor expenses closely. FDIC insurance premiums increased by more than $460,000 in the fourth quarter of 2008 compared to the fourth quarter of 2007.

Reflective of the continuing pressure on asset quality, the provision for loan losses was $1.2 million, compared to $578,000 for the fourth quarter of 2007. Net charge-offs were $903,000 in the fourth quarter of 2008, down from $990,000 in the third quarter of 2008, but above the fourth quarter of 2007 at $708,000. The company continues to carefully monitor asset quality in this challenging economic environment.

Full year 2008 Review

Net income for 2008 totaled $3.4 million, or $0.45 per diluted share, compared to net income of $5.5 million, or $0.79 per diluted share, for 2007. Net interest income for 2008 was $32.1 million, compared to $29.7 million for the same period the year earlier. The net interest margin for 2008 was 3.19 percent versus 3.35 percent for 2007. Noninterest income for 2008 was $12.5 million, up $1 million from $11.5 million the year earlier.

Total assets at December 31, 2008 were $1.14 billion, a nearly $80 million increase from year-end 2007.

Noninterest expense was $34.3 million at year-end 2008, compared to $31.8 million at year-end 2007. Much of the increase in noninterest expense was reflective of the poor economic environment. Nearly $500,000 of that increase is reflected in expenses related to Other Real Estate Owned as values in those properties continued to decrease. Expenses related to legal services related to loans also increased $200,000 in comparison to 2007.

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 28 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, inflation, government regulations, and economic conditions and competition in the geographic and business areas in which LNB Bancorp, Inc. conducts its operations, 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									Twelve Months Ended
	December 31,			September 30,			December 31,			December 31,			December 31,
	2008			2008			2007			2008			2007
END OF PERIOD BALANCES
Assets	$	1,136,135		$	1,109,501		$	1,056,645		$	1,136,135		$	1,056,645
Deposits		921,175			895,662			856,941			921,175			856,941
Portfolio loans		803,551			793,542			753,598			803,551			753,598
Allowance for loan losses		11,652			11,355			7,820			11,652			7,820
Shareholders' equity		107,059			80,340			82,653			107,059			82,653
AVERAGE BALANCES
Assets:
Total assets	$	1,117,870		$	1,082,869		$	1,032,796		$	1,082,499		$	957,782
Earning assets		1,045,233			1,010,388			956,860			1,008,567			886,832
Securities		245,132			219,642			214,137			228,997			188,430
Portfolio loans		800,101			790,746			742,723			779,569			698,401
Liabilities and shareholders' equity:
Total deposits	$	920,053		$	870,622		$	858,921		$	879,302		$	793,764
Interest bearing deposits		830,051			783,264			772,660			792,000			709,411
Interest bearing liabilities		933,130			907,753			853,309			902,818			786,299
Total shareholders' equity		86,027			79,292			82,775			83,020			78,042
INCOME STATEMENT
Net interest income	$	8,251		$	8,229		$	7,815		$	32,139		$	29,670
Net interest income-FTE (1)		8,376			8,342			7,916			32,578			30,052
Provision for loan losses		1,200			471			578			6,809			2,255
Noninterest income		2,813			3,158			3,073			12,459			11,499
Noninterest expense		8,421			8,498			8,050			34,281			31,751
Taxes		182			595			592			112			1,651
Net income		1,261			1,823			1,668			3,396			5,512
Less Preferred Stock Dividend		91			-			-			91			-
Net income available to common shareholders		1,170			1,823			1,668			3,305			5,512
Total revenue		11,064			11,387			10,888			44,598			41,169
PER SHARE DATA
Basic net income (loss) per common share	$	0.16		$	0.25		$	0.23		$	0.45		$	0.79
Diluted net income (loss) per common share		0.16			0.25			0.23			0.45			0.79
Cash dividends per common share		0.09			0.09			0.18			0.45			0.72
Basic average common shares outstanding		7,295,663			7,295,663			7,295,663			7,295,663			6,992,215
Diluted average common shares outstanding		7,295,663			7,295,663			7,295,663			7,295,663			6,992,215
KEY RATIOS
Return on average assets (2)		0.45	%		0.67	%		0.64	%		0.31	%		0.58	%
Return on average common equity (2)		5.83	%		9.15	%		7.99	%		4.09	%		7.06	%
Efficiency ratio		75.26	%		73.90	%		73.26	%		76.12	%		76.41	%
Noninterest expense to average assets (2)		3.00	%		3.12	%		3.09	%		3.17	%		3.32	%
Average equity to average assets		7.70	%		7.32	%		8.01	%		7.67	%		8.15	%
Net interest margin		3.14	%		3.24	%		3.24	%		3.19	%		3.35	%
Net interest margin (FTE) (1)		3.19	%		3.28	%		3.28	%		3.23	%		3.39	%
ASSET QUALITY
Nonperforming loans	$	19,592		$	17,445		$	10,831		$	19,592		$	10,831
Other real estate owned		1,108			1,799			2,478			1,108			2,478
Total nonperforming assets		20,700			19,244			13,309			20,700			13,309
Net Charge Offs		903			990			708			2,977			2,832
Total nonperforming loans to total loans		2.44	%		2.20	%		1.44	%		2.44	%		1.44	%
Total nonperforming assets to total assets		1.82	%		1.73	%		1.26	%		1.82	%		1.26	%
Net charge-offs to average loans (2)		0.45	%		0.50	%		0.38	%		0.38	%		0.41	%
Allowance for loan losses		1.45	%		1.43	%		1.04	%		1.45	%		1.04	%
Allowance to nonperforming loans		59.47	%		65.09	%		72.20	%		59.47	%		72.20	%
(1) FTE -- fully tax equivalent at 34% tax rate
(2) Annualized

Consolidated Balance Sheets
	December 31, 2008			December 31, 2007
	(unaudited)
	(Dollars in thousands except share amounts)
ASSETS
Cash and due from Banks	$	36,923		$	23,523
Interest-bearing deposits in other banks		352			100
Securities: (Note 5)
Trading securities, at fair value		11,261			33,402
Available for sale, at fair value		223,104			179,324
Federal Home Loan Bank and Federal Reserve Stock		4,839			4,579
Total securities		239,204			217,305
Loans held for sale		3,580			4,724
Loans:
Portfolio loans		803,551			753,598
Allowance for loan losses		(11,652	)		(7,820	)
Net loans		795,479			745,778
Bank premises and equipment, net		11,504			13,328
Other real estate owned		1,108			2,478
Bank owned life insurance		15,742			15,487
Goodwill, net		21,570			21,570
Intangible assets, net		1,154			1,280
Accrued interest receivable		4,290			4,074
Other assets		8,809			6,998
Total Assets	$	1,136,135		$	1,056,645
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
Demand and other noninterest-bearing	$	93,994		$	88,812
Savings, money market and interest-bearing demand		328,861			331,306
Certificates of deposit		498,320			436,823
Total deposits		921,175			856,941
Short-term borrowings		22,928			42,105
Federal Home Loan Bank advances		53,357			44,207
Junior subordinated debentures		20,620			20,620
Accrued interest payable		3,813			4,620
Accrued taxes, expenses and other liabilities		7,183			5,499
Total Liabilities		1,029,076			973,992
Shareholders' Equity
Common stock, par value $1 per share, authorized 15,000,000 shares, issued 7,295,663 shares at December 31, 2008 and 6,931,325 at December 31, 2007		7,624			7,624
Preferred Shares, Series A Voting, no par value, authorized 750,000 shares, none issued at December 31, 2008 and December 31, 2007.		-			-
Preferred Shares, TARP, $1,000 par value, authorized and outstanding 25,223 shares at December 31, 2008, none issued at December 31, 2007.		25,223			-
Additional paid-in capital		37,783			37,712
Retained earnings		41,682			42,951
Accumulated other comprehensive income		839			458
Treasury shares at cost, 328,194 shares at December 31, 2008 and December 31, 2007		(6,092	)		(6,092	)
Total Shareholders' Equity		107,059			82,653
Total Liabilities and Shareholders' Equity	$	1,136,135		$	1,056,645

Consolidated Statements of Income (unaudited)
	Three Months Ended December 31,				Twelve Months Ended December 31,
	2008		2007		2008			2007
	(Dollars in thousands except share and per share amounts)
Interest Income
Loans	$	11,800	$	13,279	$	48,314		$	49,889
Securities:
U.S. Government agencies and corporations		2,143		1,901		7,938			6,771
State and political subdivisions		226		163		777			606
Trading securities		110		377		848			817
Other debt and equity securities		90		81		304			285
Federal funds sold and short-term investments		17		56		147			394
Total interest income		14,386		15,857		58,328			58,762
Interest Expense
Deposits		5,265		7,099		22,306			25,535
Federal Home Loan Bank advances		553		320		2,322			1,555
Short-term borrowings		33		264		387			1,076
Trust preferred securities		284		359		1,174			926
Total interest expense		6,135		8,042		26,189			29,092
Net Interest Income		8,251		7,815		32,139			29,670
Provision for Loan Losses		1,200		578		6,809			2,255
Net interest income after provision for loan losses		7,051		7,237		25,330			27,415
Noninterest Income
Investment and trust services		348		577		1,908			2,170
Deposit service charges		1,201		1,268		4,760			4,725
Other service charges and fees		680		633		2,710			2,339
Income from bank owned life insurance		244		201		979			732
Other income		120		123		856			396
Total fees and other income		2,593		2,802		11,213			10,362
Securities gains (losses), net		32		13		538			274
Gains on sale of loans		155		220		797			766
Gains (losses) on sale of other assets, net		33		38		(89	)		97
Total noninterest income		2,813		3,073		12,459			11,499
Noninterest Expense
Salaries and employee benefits		3,788		3,846		15,255			15,708
Furniture and equipment		870		949		3,950			3,515
Net occupancy		570		573		2,386			2,256
Outside services		494		498		2,490			1,815
Marketing and public relations		158		180		987			1,116
Supplies, postage and freight		376		371		1,468			1,357
Telecommunications		215		226		850			849
Ohio Franchise tax		225		184		895			788
FDIC Insurance		486		24		722			89
Intangible asset amortization		35		34		139			167
Other real estate owned		178		280		1,070			585
Electronic banking expenses		185		210		932			803
Loan and collection expense		192		189		908			576
Other expense		649		486		2,229			2,127
Total noninterest expense		8,421		8,050		34,281			31,751
Income before income tax expense		1,443		2,260		3,508			7,163
Income tax expense		182		592		112			1,651
Net Income		1,261		1,668		3,396			5,512
Less Preferred Stock Dividend		91		-		91			-
Income Available to Common Shareholders	$	1,170	$	1,668	$	3,305		$	5,512
Net Income Per Common Share
Basic	$	0.16	$	0.23	$	0.45		$	0.79
Diluted		0.16		0.23		0.45			0.79
Dividends declared		0.09		0.18		0.54			0.72
Average Common Shares Outstanding
Basic		7,295,663		7,295,663		7,295,663			6,992,215
Diluted		7,295,663		7,295,663		7,295,663			6,992,215

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