26
LNB Bancorp, Inc.
Exhibit to Form 10 - K/A
(for the fiscal year ended December 31, 2000)
S - K Reference Number (99.2)
Annual report on Form 11-K of The Lorain National Bank
Stock Purchase Plan (registration number 33-65034)
for the plan year ended December 31, 2000 filed
as an amendment to the annual report on Form 10-K.
27
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 11-K
FOR ANNUAL REPORTS OF EMPLOYEE STOCK PURCHASE, SAVINGS AND
SIMILAR PLANS PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
[ X ] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2000
Note: This Form 11-K is being filed as an amending Appendix to the Form
10-K of LNB Bancorp, Inc. for the fiscal year ended December 31,
2000 pursuant to Rule 15d-21, therefore no fee is required.
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
---------------- -----------
Commission file number 0-13203
THE LORAIN NATIONAL BANK STOCK PURCHASE PLAN
--------------------------------------------
(Full title of the plan)
Lorain National Bank 457 Broadway Lorain, Ohio 44052-1769
-------------------------------------------------------------
(Name of issuer of the securities held pursuant to the plan and
the address of its principal executive office)
28
REQUIRED INFORMATION
Audited plan financial statements and schedules prepared in accordance
with the financial reporting requirements of the Employee Retirement
Income Securities Act of 1974, as amended, are filed herewith in lieu of
the requirements of an audited statement of financial condition and
statement of income and changes in plan equity.
Financial Statements and Exhibits
A) The following financial statements and schedules are filed as
part of this annual report:
1) Independent Auditors' Report
2) Statements of Net Assets Available for Distribution to
Participants - December 31, 2000 and 1999
3) Statements of Changes in Net Assets Available for Distribution
to Participants - Years ended December 31, 2000 and 1999
4) Notes to Financial Statements
5) Schedule H, line 4i - Schedule of Assets (Held at End of Year) -
December 31, 2000
6) Schedule H, line 4j - Schedule of Reportable Transactions - Year
ended December 31, 2000
B) The following Exhibit is filed as part of this annual
report:
24. Consent of Independent Accountants
29
(COVER EMBOSSED WITH LOGO)
KPMG LLP
One Cleveland Center
1375 East Ninth Street, Suite 2600
Cleveland, OH 44114-1796
The Lorain National Bank
Stock Purchase Plan
Financial Statements and Schedules
December 31, 2000 and 1999
(With Independent Auditors' Report Thereon)
30
The Lorain National Bank
Stock Purchase Plan
Table of Contents
Page
Independent Auditors' Report 1
Statements of Net Assets Available for Distribution
To Participants, December 31, 2000 and 1999 2
Statements of Changes in Net Assets Available for
Distribution to Participants, Years ended
December 31, 2000 and 1999 3
Notes to Financial Statements 4
Schedules
1 Schedule H, line 41 - Schedule of Assets
(Held at End of Year) - December 31, 2000 8
2 Schedule H, line 4j - Schedule of Reportable
Transactions - Year ended December 31, 2000 9
31
(LETTERHEAD)
(LOGO)
KPMG LLP
One Cleveland Center
1375 East Ninth Street, Suite 2600
Cleveland, OH 44114-1796
Independent Auditors' Report
The Plan Administrator
The Lorain National Bank
Sponsor of The Lorain National Bank
Stock Purchase Plan:
We have audited the accompanying statements of net assets available for
distribution to participants of The Lorain National Bank Stock Purchase Plan
(Plan) as of December 31, 2000 and 1999, and the related statements of
changes in net assets available for distribution to participants for the
years then ended. These financial statements are the responsibility of the
Plan's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the assets available for distribution to
participants of the Plan as of December 31, 2000 and 1999, and the changes
in those assets for the years then ended in conformity with accounting
principles generally accepted in the United States of America.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental Schedule H, line 4i-
Schedule of Assets (Held at End of Year) as of December 31, 2000 and
Schedule H, line 4j - Schedule of Reportable Transactions for the year ended
December 31, 2000 are presented for the purpose of additional analysis and
are not a required part of the basic financial statements but are
supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. These supplemental schedules are the responsibility of
the Plan's management. The supplemental schedules have been subjected to the
auditing procedures applied in the audits of the basic financial statements
32
and, in our opinion, are fairly stated in all material respects in relation
to the basic financial statements taken as a whole.
/s/ KPMG LLP
April 16, 2001
(LOGO)
Member Firm of
KPMG International
33
THE LORAIN NATIONAL BANK
STOCK PURCHASE PLAN
Statements of Net Assets Available for Distribution to Participants
December 31, 2000 and 1999
Assets 2000 1999
--------- ---------
Assets:
Short-term cash investments $ 28,671 131,298
Investment, at fair value (notes 3 and 6)
Common stock - LNB Bancorp, Inc. 2,718,761 2,780,075
Dividends and interest receivable 33,524 31,724
--------- ---------
Total assets $ 2,780,956 2,943,097
Liabilities:
Due to broker 6,639 -0-
--------- ---------
Net assets available for distribution
to participants $ 2,774,317 2,943,097
========= =========
See accompanying notes to financial statements.
2
34
THE LORAIN NATIONAL BANK
STOCK PURCHASE PLAN
Statements of Changes in Net Assets Available for
Distribution to Participants
Years ended December 31, 2000 and 1999
2000 1999
--------- ---------
Additions:
Investment income:
Dividends $ 119,966 112,163
Interest 5,491 4,758
Net appreciation(depreciation)in fair
value of investment (note 3) 108,220 (716,203)
--------- ---------
Total investment income(loss) 233,677 (599,282)
--------- ---------
Contributions:
Employer 136,624 133,534
Participants 273,227 267,046
--------- ---------
Total contributions 409,851 400,580
--------- ---------
Total additions(deletions) 643,528 (198,702)
Deductions-
distributions to participants (812,308) (280,640)
--------- ---------
Decrease in net assets available for
distribution to participants (168,780) (479,342)
Net assets available for distribution to participants:
Beginning of year 2,943,097 3,422,439
--------- ---------
End of year $ 2,774,317 2,943,097
========= =========
See accompanying notes to financial statements.
3
35
THE LORAIN NATIONAL BANK
STOCK PURCHASE PLAN
Notes to Financial Statements
December 31, 2000 and 1999
(1) Description of the Plan
The following description of The Lorain National Bank Stock Purchase
Plan (Plan) provides only general information. Participants should
refer to the Plan agreement for a more complete description of the
Plan's provisions.
(a) General
The Plan is a defined contribution plan sponsored by The Lorain
National Bank (Bank), a wholly owned subsidiary of LNB Bancorp,
Inc., covering substantially all employees of the Bank. An
employee is eligible to participate in the Plan on the January
1 or July 1 after the attainment of age 21 and completion of
one year of service, as defined in the Plan. The Plan is
subject to the provisions of the Employee Retirement Income
Security Act of 1974 (ERISA).
Under the terms of the Plan, the Investment and Trust Services
Division of the Bank acts as trustee for the Plan and, as such,
manages a trust fund which includes all of the Plan's assets. The
Plan stipulates that employer and employee contributions will be
invested in units of the LNB Bancorp, Inc. stock fund which
consists of shares of stock of LNB Bancorp, Inc. and short-term
cash investments.
(b) Bank Contributions
The Bank is required to contribute to the Plan for each month, out
of its current or accumulated earnings only, an amount equal to
50% of the participants' contributions for each month.
(c) Participants' Contributions
A participant can make, through payroll deductions, contributions
of one (1) to six (6) percent (in whole percentages) of their
compensation. Changes in the amount of compensation paid to a
participant will automatically effect a change in the amount of
the contribution.
36
(d) Vesting of Contributions
Each participant has a fully vested interest in the Bank's and
their contributions as of the date payments are made.
(e) Withdrawals While Employed
At any time, subject to certain restrictions, a participant may
elect to withdraw all or a portion of their units.
(f) Distributions Upon Termination of Employment
A participant whose employment terminates by reason of retirement
on their early retirement date or on their normal retirement date,
receives all units credited to their account. The participant may
elect distribution of the units either in a single distribution or
in annual, semiannual, quarterly, or monthly installments.
4
37
THE LORAIN NATIONAL BANK
STOCK PURCHASE PLAN
Notes to Financial Statements
December 31, 2000 and 1999
A participant whose employment is terminated for any reason other
than those designated above may receive a single distribution of
all units credited to the participant.
(g) Plan Termination
Although it has not expressed any intention to do so, the Bank has
the right to terminate the Plan subject to the provisions set
forth in ERISA. In the event of Plan termination, the assets of
the Plan will be allocated as prescribed by ERISA and its related
regulations.
(h) Plan Administrator
The Plan Administrator is the President and Chief Executive
Officer of the Bank.
(2) Summary of Significant Accounting Policies
(a) Basis of Presentation
The accompanying financial statements of the Plan have been
prepared under the accrual method of accounting.
(b) Investment
The fair value of the investment and changes therein are
determined through the use of current quoted market values.
Purchases and sales are recorded on a trade-date basis. Interest
income is recorded on the accrual method of accounting.
(c) Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with
accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that
affect the reported amounts of assets, liabilities, and changes
therein, and disclosure of contingent assets and liabilities.
Actual results could differ from those estimates.
38
(d) Payment of Benefits
Benefit payments to participants are recorded when paid.
(e) New Accounting Pronouncement
In June 1998, the Financial Accounting Standards Board issued SFAS
No. 133, "Accounting for Derivative Instruments and Hedging
Activities" ("SFAS No. 133"). SFAS No. 133 requires that an
entity recognize all derivatives and measure those instruments at
fair value.
5
39
THE LORAIN NATIONAL BANK
STOCK PURCHASE PLAN
Notes to Financial Statements
December 31, 2000 and 1999
SFAS No. 133, is effective for fiscal years beginning after June 15,
2000. Pursuant to SFAS No. 137, the Plan is required to adopt SFAS No.
133 effective January 1, 2001. Management has determined that the
impact of SFAS No. 133 on the Plan financial statements would be
immaterial.
(3) Investment
The following table presents the fair value of the investment at
December 31, 2000 and 1999:
2000 1999
-------------------- --------------------
Number Fair Number Fair
of shares Value of shares Value
Common stock - --------- ---------- --------- ----------
LNB Bancorp, Inc. 124,639 2,718,761 126,368 $2,780,075
========= ========== ========= ==========
During the years ended December 31, 2000 and 1999, the Plan's
investment (including investments bought, sold, and held during the
year) appreciated (depreciated) in value by $108,220 and $(716,203),
respectively.
(4) Federal Income Taxes
The Internal Revenue Service issued its latest determination letter on
June 24, 1996 which stated that the Plan and its underlying Trust, as
designed, qualify under the applicable provisions of the Internal
Revenue Code. The Plan has been amended since receiving the
determination letter. In the opinion of the Plan Administrator, the
Plan and its underlying Trust have operated within the terms of the
Plan and remain qualified under the applicable provisions of the
Internal Revenue Code.
As long as the Plan continues to be qualified under present federal
income tax laws and regulations, participants will not be taxed on Bank
contributions or on investment earnings on such contributions at the
time such contributions and investment earnings are received by the
Trustee, but may be subject to tax thereon at such time as they receive
distributions under the Plan.
40
(5) Administrative Expenses
The administrative expenses of the Plan are paid by the Bank.
6
41
THE LORAIN NATIONAL BANK
STOCK PURCHASE PLAN
Notes to Financial Statements
December 31, 2000 and 1999
(6) Party-in-interest Transactions
The following is a summary of transactions in common stock of LNB
Bancorp, Inc., 100% owner of the Bank, during the year ended
December 31, 2000: Number
of Shares Fair Value
---------- ------------
Balance at December 31, 1999 126,368 $ 2,780,075
Purchases 20,621 452,534
Distributions (24,586) (622,068)
2% stock dividend 2,236 -0-
Net appreciation - 108,220
---------- ------------
Balance at December 31, 2000 124,639 $ 2,718,761
========== ============
(7) Subsequent Event
The Board of Directors of Lorain National Bank, the Corporation's
wholly owned subsidiary, has authorized the Bank as employer and
trustee to execute an Adoption Agreement for a 401(k) Profit Sharing
Plan and Trust (the Plan), to be effective January 1, 2001. The Plan
will amend The Lorain National Bank Stock Purchase Plan. The Plan is a
deferred compensation arrangement established in accordance with the
requirements under Section 401(a) and Section 401(k) of the Internal
Revenue Code. The Plan will be submitted to the IRS for determination
by the IRS that the Plan is qualified under Section 401(a) of the
Internal Revenue Code and that its trust is qualified under Section
501(a) of the Internal Revenue Code. LNB Bancorp, Inc. intends for the
Plan, in operation, to comply with the requirements under Section
401(a) and Section 401(k) of the Internal Revenue Code. The Plan
offers the investment choices of Money Market Mutual Funds, U. S.
Treasury Index Funds, Equity Mutual Funds and LNB Bancorp, Inc. common
stock.
7
42
Schedule 1
THE LORAIN NATIONAL BANK
STOCK PURCHASE PLAN
EIN: 34-0869480
PLAN NUMBER: 003
Schedule H, line 4i - Schedule of Assets (Held at End of Year)
December 31, 2000
Column A Column B Column C Column D Column E
- -------- ------------------ ------------------------- --------- --------
Description of investment
Identity of issue, including maturity date,
borrower, lessor rate of interest, collateral, Current
or similar party par or maturity value Cost value
- -------- ----------------- -------------------------- --------- --------
* LNB Bancorp, Inc. 124,639 shares of $1,434,733 2,718,761
LNB Bancorp, Inc.
common stock
* Lorain National Bank Treasury Trust Fund 22,032 22,032
========== ==========
* Party in interest
See accompanying independent auditors' report.
8
43
Schedule 2
THE LORAIN NATIONAL BANK
STOCK PURCHASE PLAN
EIN: 34-0869480
PLAN NUMBER: 003
Schedule H, line 4j - Schedule of Reportable Transactions
Year ended December 31, 2000
Series transactions, when aggregated, involving an amount in excess of 5%
of the current value of Plan assets:
Column A Column B Column C Column D Column E
- -------------------- ----------------- ---------- -------- ---------
Total Total
dollar dollar
Identity of Description value of value Lease
party involved of assets purchases of sales rental
- -------------------- ----------------- ---------- --------- ---------
* LNB Bancorp, Inc. LNB Bancorp, Inc.
common stock;
120 purchases $ 452,534 - -
1 sale - 18 -
* Lorain National Bank Treasury Trust Fund;
40 purchases 394,778 - -
108 sales - 499,610 -
========== ========== ==========
Schedule of Reportable Transactions Continued
Column A Column B Column F Column G Column H
- -------------------- ----------------- ------------ --------- ---------
Current
Expenses value of
incurred asset on
Identity of Description with Cost of transaction
party involved of assets transaction asset date
- -------------------- ----------------- ------------ -------- --------
* LNB Bancorp, Inc. LNB Bancorp, Inc.
common stock;
120 purchases - 452,534 452,534
1 sale - 22 18
* Lorain National Bank Treasury Trust Fund;
40 purchases - 394,778 394,778
108 sales - 499,610 499,610
============ ========= ========
44
Schedule 2
THE LORAIN NATIONAL BANK
STOCK PURCHASE PLAN
EIN: 34-0869480
PLAN NUMBER: 003
Schedule H, line 4j - Schedule of Reportable Transactions Continued
Year ended December 31, 2000
Column A Column B Column I
- -------------------- ----------------- ----------
Identity of Description Net gain
party involved of assets or (loss)
- -------------------- ----------------- ----------
* LNB Bancorp, Inc. LNB Bancorp, Inc.
common stock;
120 purchases -
1 sale (4)
* Lorain National Bank Treasury Trust Fund;
40 purchases -
108 sales -
==========
* Party in interest
See accompanying independent auditors' report.
9
45
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Plan Administrator has duly caused this annual report to be signed
on its behalf by the undersigned hereunto duly authorized.
THE LORAIN NATIONAL BANK STOCK PURCHASE PLAN
--------------------------------------------
(Name of Plan)
Date: June 28, 2001 By: /s/ Gregory D. Friedman
------------- ----------------------------
Gregory D. Friedman, CPA
Executive Vice President and
Chief Financial Officer
/s/ Mitchell J. Fallis
----------------------------
Mitchell J. Fallis, CPA
Vice President and
Chief Accounting Officer
46
The Lorain National Bank
Stock Purchase Plan
Exhibit to Form 11 - K
(for the fiscal year ended December 31, 2000)
S - K Reference Number (24)
Consent of Independent Accountants.
47
(LETTERHEAD)
(LOGO)
KPMG LLP
One Cleveland Center
1375 East Ninth Street, Suite 2600
Cleveland, Ohio 44114-1796
Consent of Independent Accountants
----------------------------------
The Plan Administrator
LNB Bancorp, Inc.:
We consent to the incorporation by reference in the Registration Statement
No. 33-65034 of LNB Bancorp, Inc. of our report dated April 16, 2001,
relating to the statements of net assets available for distribution to
participants of The Lorain National Bank Stock Purchase Plan as of
December 31, 2000 and 1999, and the related statements of changes in net
assets available for distribution to participants for the years then
ended, which report appears in Amendment No. 1 to the 2000 annual report
on Form 10-K of LNB Bancorp, Inc.
/s/ KPMG LLP
Cleveland, Ohio
June 26, 2001
(LOGO)
Member Firm of
KPMG International