1
Form 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-13203
LNB Bancorp, Inc.
(Exact name of the registrant as specified in its charter)
Ohio 34-1406303
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
457 Broadway, Lorain, Ohio 44052 - 1769
(Address of principal executive offices) (Zip Code)
(216) 244 - 6000
Registrant's telephone number, including area code
Not Applicable
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months, and (2) has been subject to such
requirements for the past 90 days.
YES X NO
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Outstanding at August 3, 1995: 4,015,327 shares
Class of Common Stock: $1.00 par value
2
LNB Bancorp, Inc.
Quarterly Report on Form 10-Q
Quarter Ended June 30, 1995
Part 1 - Financial Information
Item 1 - Financial Statements
Interim financial information required by Requisition 210.10-01 of
Regulation S-X is included in this Form 10-Q as referenced below:
Page
Number(s)
Consolidated Balance Sheets 3
Consolidated Statements of Income 5
Condensed Consolidated Statements of 9
Cash Flows
Notes to the Consolidated Financial Statements 11
Item 2 - Management's Discussion and Analysis 12
of Financial Condition and Results of
Operations
Part II - Other Information
Item 1 - Legal Proceedings 16
Item 2 - Changes in Securities 16
Item 3 - Defaults upon Senior Securities 16
Item 4 - Submission of matters to a Vote of 16
Security Holders
Item 5 - Other Information 16
Item 6 - Exhibits and Reports on Form 8-K 16
Signatures 16
Exhibit Index 17
3
FORM 10-Q LNB BANCORP, INC.
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
JUNE 30, DECEMBER 31,
CONDENSED CONSOLIDATED BALANCE SHEETS 1995 1994
------------- -------------
(Unaudited) (See Note 1)
ASSETS:
Cash and due from banks $ 20,695,000 $ 21,275,000
Securities:
Securities available for sale 10,841,000 10,137,000
Investment securities 94,497,000 89,387,000
------------ ------------
Total Securities 105,338,000 99,524,000
(Market value $106,167,000 and
$97,080,000, respectively)
Total Loans 273,739,000 261,807,000
Reserve for possible loan losses (3,915,000) (3,832,000)
------------ ------------
Net loans 269,824,000 257,975,000
------------ ------------
Premises and equipment, net 10,925,000 10,682,000
Other assets 6,394,000 5,399,000
------------ ------------
TOTAL ASSETS $413,176,000 $394,855,000
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY:
Noninterest-bearing deposits $ 59,688,000 $ 57,096,000
Interest-bearing deposits 290,470,000 278,123,000
------------ ------------
Total deposits 350,158,000 335,219,000
Federal funds purchased and securities
sold under agreements to repurchase 21,296,000 19,171,000
Other liabilities 2,659,000 2,954,000
------------ ------------
Total Liabilities 374,113,000 357,344,000
STATEMENT CONTINUED ON NEXT PAGE
4
STATEMENT CONTINUED FROM PREVIOUS PAGE
Shareholders' equity:
Common stock $1.00 par:
Authorized 5,000,000
Outstanding 4,014,463 and 4,000,068,
respectively 4,014,000 3,200,000
Additional capital 17,697,000 18,415,000
Retained earnings 17,331,000 16,028,000
Net unrealized security losses 21,000 (132,000)
------------ ------------
Total Shareholders' Equity 39,063,000 37,511,000
------------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $413,176,000 $394,855,000
============ ============
Note 1: The consolidated balance sheet at December 31, 1994 has been
taken from the audited Financial Statements and condensed.
See notes to condensed consolidated financial statements.
5
FORM 10-Q LNB BANCORP, INC. Unaudited
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
SIX MONTHS ENDED
CONDENSED CONSOLIDATED STATEMENTS JUNE 30,
OF INCOME -------------------------
1995 1994
INTEREST INCOME -------------------------
Interest and fees on loans:
Taxable $12,077,000 $10,020,000
Tax-exempt 39,000 34,000
Interest and dividends on securities:
Taxable 2,680,000 2,198,000
Tax-exempt 217,000 285,000
Interest on Federal funds sold and other
interest bearing instruments 122,000 140,000
----------- -----------
TOTAL INTEREST INCOME 15,135,000 12,677,000
----------- -----------
INTEREST EXPENSE:
Interest on certificates of deposit
of $100,000 or more 822,000 285,000
Interest on other deposits 4,261,000 3,352,000
Interest on Federal funds purchased
and securities sold under agreements
to repurchase 624,000 262,000
Other interest 1,000 1,000
----------- -----------
TOTAL INTEREST EXPENSE 5,708,000 3,900,000
----------- -----------
NET INTEREST INCOME 9,427,000 8,777,000
Provision for possible loan losses 200,000 200,000
NET INTEREST INCOME AFTER PROVISION ----------- -----------
FOR POSSIBLE LOAN LOSSES 9,227,000 8,577,000
----------- -----------
OTHER INCOME:
Trust division income 477,000 432,000
Service charges on deposit accounts 758,000 748,000
Other charges, fees and exchanges 840,000 777,000
Other operating income 8,000 5,000
----------- -----------
TOTAL OTHER INCOME 2,083,000 1,962,000
STATEMENT CONTINUED ON NEXT PAGE
6
STATEMENT CONTINUED FROM PREVIOUS PAGE
OTHER EXPENSES:
Salaries and employee benefits 3,764,000 3,669,000
Net occupancy expense 604,000 569,000
Furniture and equipment expense 1,001,000 863,000
FDIC deposit insurance premium 368,000 356,000
Other operating expenses 2,253,000 2,100,000
------------ ------------
TOTAL OTHER EXPENSES 7,990,000 7,557,000
------------ ------------
INCOME BEFORE FEDERAL INCOME TAXES 3,320,000 2,982,000
FEDERAL INCOME TAXES 1,055,000 867,000
------------ ------------
NET INCOME $ 2,265,000 $ 2,115,000
============ ============
PER SHARE DATA:
EARNINGS $ .56 $ .52
====== ======
CASH DIVIDENDS $ .24 $ .22
====== ======
See notes to condensed consolidated financial statements.
7
FORM 10-Q LNB BANCORP, INC. Unaudited
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
THREE MONTHS ENDED
CONDENSED CONSOLIDATED STATEMENTS JUNE 30,
OF INCOME --------------------------
1995 1994
INTEREST INCOME --------------------------
Interest and fees on loans:
Taxable $ 6,200,000 $ 5,105,000
Tax-exempt 19,000 17,000
Interest and dividends on securities:
Taxable 1,375,000 1,124,000
Tax-exempt 118,000 144,000
Interest on Federal funds sold and other
interest bearing instruments 77,000 90,000
----------- -----------
TOTAL INTEREST INCOME 7,789,000 6,480,000
----------- -----------
INTEREST EXPENSE:
Interest on certificates of deposit
of $100,000 or more 429,000 150,000
Interest on other deposits 2,226,000 1,671,000
Interest on Federal funds purchased
and securities sold under agreements
to repurchase 336,000 150,000
Other interest 1,000 1,000
----------- -----------
TOTAL INTEREST EXPENSE 2,992,000 1,972,000
----------- -----------
NET INTEREST INCOME 4,797,000 4,508,000
Provision for possible loan losses 100,000 100,000
NET INTEREST INCOME AFTER PROVISION ----------- -----------
FOR POSSIBLE LOAN LOSSES 4,697,000 4,408,000
----------- -----------
OTHER INCOME:
Trust division income 238,000 223,000
Service charges on deposit accounts 383,000 375,000
Other charges, fees and exchanges 379,000 432,000
Other operating income 5,000 3,000
----------- -----------
TOTAL OTHER INCOME 1,005,000 1,033,000
STATEMENT CONTINUED ON NEXT PAGE
8
STATEMENT CONTINUED FROM PREVIOUS PAGE
OTHER EXPENSES:
Salaries and employee benefits 1,868,000 1,962,000
Net occupancy expense 297,000 283,000
Furniture and equipment expense 494,000 433,000
FDIC deposit insurance premium 182,000 178,000
Other operating expenses 1,129,000 1,060,000
------------ ------------
TOTAL OTHER EXPENSES 3,970,000 3,916,000
------------ ------------
INCOME BEFORE FEDERAL INCOME TAXES 1,732,000 1,525,000
FEDERAL INCOME TAXES 554,000 444,000
------------ ------------
NET INCOME $ 1,178,000 $ 1,081,000
============ ============
PER SHARE DATA:
EARNINGS $ .29 $ .33
====== =====
CASH DIVIDENDS $ .12 $ .14
====== =====
See notes to condensed consolidated financial statements.
9
FORM 10-Q LNB BANCORP, INC. Unaudited
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
SIX MONTHS ENDED
CONDENSED CONSOLIDATED STATEMENTS JUNE 30,
OF CASH FLOWS -------------------------
1995 1994
CASH FLOWS FROM OPERATING ACTIVITIES: -------------------------
Interest received $14,906,000 $12,872,000
Other income received 2,010,000 1,998,000
Interest paid (5,365,000) (3,827,000)
Cash paid for salaries and benefits (3,701,000) (3,703,000)
Net occupancy expense of premises paid (446,000) (433,000)
Furniture and equipment expenses paid (369,000) (332,000)
Cash paid for supplies and postage (459,000) (410,000)
Cash paid for other operating expenses (3,377,000) (2,634,000)
Federal income taxes paid (955,000) (959,000)
----------- ----------
NET CASH PROVIDED BY OPERATING
ACTIVITIES 2,244,000 2,572,000
----------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceed from maturities of
securities available for sale 1,921,000 -0-
Proceeds from maturities of
investment securities 15,088,000 17,846,000
Purchases of securities available for sale (2,468,000) (76,000)
Purchases of investment securities (20,187,000) (23,268,000)
Net decrease in credit card loans 500,000 436,000
Net increase in long-term loans (12,599,000) (6,537,000)
Purchases of bank premises, equipment
and software (1,214,000) (1,921,000)
----------- ----------
NET CASH USED IN INVESTING ACTIVITIES (18,959,000) (13,520,000)
----------- ----------
STATEMENT CONTINUED ON NEXT PAGE
10
STATEMENT CONTINUED FROM PREVIOUS PAGE
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in demand and
other noninterest-bearing deposits 2,592,000 5,994,000
Net increase (decrease) in savings and
passbook deposits (12,207,000) 3,770,000
Net increase (decrease) in time deposits 24,554,000 (1,595,000)
Net increase in Federal funds purchased
and other interest bearing insturments 2,125,000 4,279,000
Proceeds from line of credit -0- 1,200,000
Proceeds from exercise of stock options 96,000 25,000
Dividends paid (1,025,000) (930,000)
----------- -----------
NET CASH PROVIDED BY FINANCING
ACTIVITIES 16,135,000 12,743,000
----------- -----------
NET INCREASE (DECREASE)IN CASH AND
CASH EQUIVALENTS (580,000) 1,795,000
CASH AND CASH EQUIVALENTS AT BEGINNING
OF YEAR 21,275,000 21,276,000
----------- -----------
CASH AND CASH EQUIVALENTS AT END OF
QUARTER $20,695,000 $23,071,000
=========== ===========
See notes to condensed consolidated financial statements.
11
FORM 10-Q LNB Bancorp, Inc. Unaudited
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The unaudited condensed consolidated balance sheet as of June 30, 1995, the
condensed consolidated statements of income and the condensed consolidated
statements of cash flows for the six months ended June 30, 1995 and 1994 are
prepared in accordance with generally accepted accounting principles for
interim financial information. The above mentioned statements reflect all
normal and recurring adjustments which are, in the opinion of management,
necessary for a fair presentation of the financial position and the results
of operations for the interim periods presented.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. It is suggested that these condensed
consolidated financial statements be read in conjunction with the financial
statements and notes thereto included in the Corporation's December 31, 1994
Annual Report to Shareholders.
The results of operations for the period ended June 30, 1995 are not
necessarily indicative of the operating results for the full year.
RECLASSIFICATIONS
Certain 1994 amounts have been reclassified to conform to 1995 presentation.
LOANS
The Corporation adopted SFAS No. 114 "Accounting by Creditors for
Impairment of a Loan" on January 1, 1995. This Statement impacts the
accounting by creditors for impairment of certain loans. It requires that
certain impaired loans be measured based on the present value of expected
future cash flows discounted at the loan's effective interest rate or, as
a practical expedient, at the loan's observable market price or the fair
market value of collateral. Corporate management determined that the
adoption of SFAS No. 114 did not have a significant impact on the carrying
value of the impaired loans or on net income during the first two quarters
of 1995.
2. PER SHARE DATA
Earnings per common and common equivalent shares (stock options) have been
computed using the weighted average number of shares outstanding during each
period after giving consideration to the dilutive effect of incentive stock
options, a five-for-four stock split and a three percent stock dividend which
were approved by shareholders in 1995 and 1994, respectively.
12
PART I - FINANCIAL INFORMATION
ITEM 2 - MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL
CONDITION & RESULTS OF OPERATION
FINANCIAL CONDITION
Total assets of the Corporation increased $18,321,000 during the first half,
increasing to $413,176,000. Some of this growth is attributable to a
successful marketing program for certificates of deposit.
Total investment securities increased $5,814,000 ending the half at
$105,338,000. At June 30, 1995 unrealized gains (losses) in the investment
securities portfolio were approximately $1,463,000 and ($602,000),
respectively.
The level of nonperforming assets decreased $139,000 and $103,000 during
the first and second quarters respectively, in 1995. The decrease in
nonperforming assets is due to improvement in the local economy and the
resolution of a large problem credit during the fourth quarter of 1994.
The table below presents the level of nonperforming assets at the end of
the last four calendar quarters.
Amounts in thousands 06/30/95 03/31/95 12/31/94 09/30/94
-------- -------- -------- --------
Nonperforming Assets:
Nonaccrual $ 368 $ 389 $ 318 $1,161
Past Due Loans 127 209 419 163
Restructured 0 0 0 0
Other Real Estate Owned 0 0 0 0
-------- -------- -------- --------
Total nonperforming Assets $ 495 $ 598 $ 737 $1,324
======== ======== ======== ========
Total loans increased $11,932,000 during the first half to $273,739,000 at
June 30, 1995. The reserve for possible loan losses ended the quarter at
$3,915,000 supported by a provision for loan losses of $200,000, recoveries
of $56,000 and loan charge-offs of $173,000. The reserve for possible loan
losses as a percentage of ending loans was 1.46% and 1.43% at December 31,
1994 and June 30, 1995, respectively. Corporate management believes that
the level of the reserve for possible loan losses is adequate based upon
quantitative analysis of indentified risks and analysis of historical trends.
The Corporation's credit policies are reviewed and modified on an ongoing
basis in order to remain suitable for the management of credit risk within
the loan portfolio as conditions change. At June 30, 1995 there are no
significant concentrations of credit in the loan portfolio.
The Corporation had outstanding loan and credit commitments to make loans
totaling $67,947,000 and $63,002,000 at June 30, 1995 and 1994, respectively.
The increase in outstanding loan commitments results from increased loan
demand due to better economic conditions.
Total deposits increased $14,939,000 during the first half to $350,158,000.
Non-interest bearing deposits increased to $59,688,000, at June 30, 1995 for
an increase of $2,592,000, while interest bearing deposits climbed to
$290,470,000 for an increase of $12,347,000. Federal funds sold and
securities sold under agreements to repurchase increased $2,125,000 during
the first half. Due to the volatility of customer repurchase agreements,
most funds generated by repurchase activity enter the Corporation's earning
assets as short-term investments.
13
LIQUIDITY
The Corporation continues to maintain a relatively high liquid position in
order to take advantage of interest rate fluctuations. As of June 30, 1995,
short-term security investments with maturities of one year or less totalled
$43,121,000, which represented 40.9% of total securities. Adding cash and
due from banks of $20,695,000 total liquid assets represented 15.4% of total
assets.
CAPITAL RESOURCES
Total shareholders' equity increased to $39,063,000, at June 30, 1995. The
increase resulted primarily from $2,265,000 of net income generated from the
first six months of operations less a cash dividend payable to shareholders
of $963,000. The Corporation continues to monitor growth to stay within the
constraints established by the regulatory authorities. Under Federal
banking regulations, an institution is deemed to be well-capitalized if it
has a Risk-based Tier 1 capital ratio of 6.00 percent or greater, a Risk-
based Total capital ratio of 10.00 percent or greater and a Leverage ratio
of 3.00 percent or greater. The Corporation's Risk-based capital and
Leverage ratios have exceeded the ratios for a well-capitalized financial
institution for all periods presented above. The Corporation's capital and
leverage ratios as of June 30, 1995 and 1994 follow.
June 30,
---------------------
1995 1994
------ ------
Tier I capital ratio 16.24% 16.30%
Required Tier I capital ratio 4.00% 4.00%
Total capital ratio 17.41% 17.48%
Required total capital ratio 8.00% 8.00%
Leverage ratio 9.60% 9.44%
Required leverage ratio 3.00% 3.00%
On an ongoing basis the Corporation analyzes acquisition opportunities in
markets which are adjacent to or within the Corporation's current geograph-
ical market. Corporate management believes that it's current capital
resources are sufficient to support any foreseeable acquisition activity.
The Corporation has decided to let the lease lapse on June 30, 1996 for
its Plaza branch which is located at 1147 Meister Road, Lorain. A new branch
facility will be built next to the Corporation's nearby Oberlin Avenue
Auto Bank. The Corporation expects the new faciltiy to be opened in the
spring of 1996 at a cost of approximately $600,000 for the building,
improvements and equipment.
There were no material commitments outstanding at June 30, 1995, other than
the loan commitments and the contractual obligation for the new Plaza office.
14
RESULTS OF OPERATIONS
Interest and fees on loans for the first half of 1995 increased $2,062 when
compared to the first half of 1994. This was the result of the impact of
higher rates combined with increase volume. Interest and dividends on
securities was $2,897,000 for the first half of 1995 for an increase of
$414,000 over the same period in 1994. Interest and dividends on securities
represented 19.1% of total interest income at June 30, 1995 compared to 19.6%
at June 30, 1994. Interest on Federal funds sold and other interest bearing
instruments was $122,000 at June 30, 1995 compared to $140,000 at June 30,
1994. The decrease resulted from slightly higher rates which were more than
offset by the decrease in the average balance invested in these forms of
financial instruments.
Total interest expense increased by $1,808,000 when compared to the first
half of 1994. The impacts of changes in the mix of interest bearing
liabilities combined with increases in both volume and rate were primarily
responsible for this increase in interest expense.
Total other income increased by $121,000 when compared to the first six
months of 1994. This increase resulted from increases in income from
fiduciary fees of $45,000 and increases in other charges of $63,000.
The increase in other charges is the result of pricing increases in credit
card and merchant fees.
The Corporation continuously monitors non-interest expenses for greater
profitability. The entire staff is geared to improving productivity at all
levels. Non-interest expense for the six months ended June 30, 1995 was
$7,990,000, 5.7% above the first six months of 1994. This increase was due
primarily to increases in salaries and benefits, net occupancy, equipment
expense, supplies and postage and the impacts of inflation.
The effective tax rate increased from 29.1% during the first half of 1994 to
31.8% during the first half of 1995. The increase in the effective tax rate
is due primarily to the decrease tax emempt interest. Net income was
$2,265,000 and $2,115,000 for the six months ended June 30, 1995 and 1994,
respectively. Net income per share after adjusting for the five-for-four
stock split in 1995 and the three percent stock dividend in 1994 was $.56
and $.52 for the six months ended June 30, 1995 and 1994, respectively.
IMPACTS OF ACCOUNTING AND REGULATORY PRONOUNCEMENTS
Corporate management is not aware of any current recommendations the
Financial Accounting Standards Board or by regulatory authorities which,
if they were implemented, would have a material effect on the liquidity,
capital resources or operations of the Corporation. However, the
potential impact of certain accounting and regulatory pronouncements
warrant further discussion.
Significant actions by the Federal government and its agencies, affecting
the financial institutions industry in general, are currently having and
will continue to have an impact on the Corporation. A discussion of these
actions follows:
"Omnibus Budget Reconciliation Act of 1993":
Effective date of impact on the Corporation: August 10, 1993
Impact on the Corporation: Although the cost of tax compliance will
increase, Corporate management does not anticipate that this tax act will
have a material impact on net income.
15
During 1993, a risk-related assessment system was developed by the FDIC.
Effective, January 1, 1993, the Bank was assigned to the lowest deposit
insurance assessment rate currently possible. Under the system, the FDIC
will reevaluate the Bank's deposit insurance rate on a semi-annual basis.
The Corporation's subsidiary Bank will have a significantly lower deposit
insurance assessment rate for the second half of 1995. The FDIC has
approved new rate schedule due to the fact that the Bank Insurance Fund (BIF)
has reached its designated reserve ratio. The FDIC is expected to announce
in September the point at which the BIF reached it required reserve level.
If the Bank made overpayments between that point and September 30, the FDIC
refund the overpayment with interest. The lower assessment rate will result
in an after-tax reduction of FDIC premiums by approximately $200,000 during
1995.
16
Part II - OTHER INFORMATION
ITEM 1 - Legal Proceedings
None
ITEM 2 - Changes in Securities
None
ITEM 3 - Defaults Upon Senior Securities
None
ITEM 4 - Submission of Matters to a Vote of Security Holders
None
ITEM 5 - Other Information
None
ITEM 6 - Exhibits and Reports on Form 8-K
(a) Exhibit (11) - Computation of Shares Used for Earnings Per Share
Calculation.
(b) Exhibit (13) - Second Quarter Report to shareholders of LNB Bancorp,
Inc., June 30, 1995.
(c) Reports on Form 8-K
There were no reports on Form 8-K filed for the six months ended
June 30, 1995.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
LNB BANCORP, INC.
(registrant)
Date: August 10, 1995 /s/ Gregory D. Friedman
_________________________
Gregory D. Friedman,
Senior Vice President &
Chief Financial Officer
and acting Chief Accounting
Officer
17
LNB Bancorp, Inc.
Form 10-Q
Exhibit Index
Pursuant to Item 601 (a) of Regualtion S-K
S-K Reference Exhibit
(11) Computation of Shares Used for Earnings Per Share
Calculations
(12) Second Quarter Report to Shareholders of
LNB Bancorp, Inc. - June 30, 1995
(27) Financial Data Schedule
18
LNB Bancorp, Inc.
Exhibit to Form 10-Q
(For the six months ended June 30, 1995)
S - K Reference Number (11)
Computation of Shares Used for Earnings
Per Share Calculation.
Six Months Ended
June 30
----------------------
1995 1994
--------- ---------
Weighted Average Shares Outstanding 4,012,866 3,990,366
Common Stock Equivalents (Stock Options) 33,206 41,108
--------- ---------
4,046,072 4,031,474
========= =========
19
LNB Bancorp, Inc.
Exhibit to Form 10 - Q
(For the six months ended June 30, 1995)
S - K Reference Number (13)
Second Quarter Report to Shareholders of
LNB Bancorp, Inc. (dated June 30, 1995)
Description:
Two sided pamphlet: Outside cover containing the list of Director's of LNB
Bancorp, Inc. Officers of LNB Bancorp, Inc. and green, gray and black cover
page of the pamphlet.
Inside contains: Message to Our Shareholders, unaudited Consolidated
Balance Sheets for period ending June 30, 1995 and June 30, 1994 and
unaudited Consolidated Statements of Income for the Six Months Ended
June 30, 1995 and June 30, 1994.
20
Message to Our Shareholders
It's a pleasure, once again, to report on the progress of LNB Bancorp,
Inc., and its subsidiary, The Lorain National Bank, after the first six
months of 1995.
We are pleased to announce that earnings have increased 7.1 percent for
the first half of the year, compared to the same period one year ago.
Consolidated net income for the first six months of 1995 reached
$2,265,000, up from $2,115,000 for the comparative period in 1994.
Year-to-date cash dividends declared to shareholders has increased 9.3
percent over the comparative period in 1994. Total shareholders' equity
also increased $2.8 million during the 12 months ended June 30, 1995 and
total shareholders' equity, as a percentage of total assets, reached 9.5
percent.
Total assets rose 4.9 percent to $413,175,000 as of June 30, 1995. Net
loans increased to $269,835,000 at June 30, 1995. This represents an
increase of $21.9 million or 8.8 percent over the net loans at June 30,
1994.
The local economy remains strong. Sales of new and existing single-
family homes are up 5.3 percent in Lorain County from 1994. The local
job market continues to strengthen with the influx of jobs from new
employers such as The Geon Company, Manco, Inc. and the A. J. Rose
Corporation.
And finally, on September 30th, we will celebrate 90 years of banking
service to the community. Our doors first opened as The Lorain Banking
Company at the corner of 6th Street and Broadway in 1905. In 1961, a
merger with The National Bank of Lorain gave rise to our current name,
The Lorain National Bank.
We thank you for your loyalty and continued support through the years
and look forward to addressing you after the completion of our 90th year
of successful operations.
Sincerely,
/s/ Stanley G. Pijor /s/ J. F. Kidd
------------------------ -----------------
Stanley G. Pijor James F. Kidd
Chairman & President & Chief
Chief Executive Officer Operating Officer
21
Consolidated Balance Sheets
June 30
--------------------------
1995 1994
------------ ------------
ASSETS:
Cash and Due From Banks $ 20,695,000 $ 21,071,000
Federal Funds Sold -0- 2,000,000
Securities Available for Sale 10,841,000 11,221,000
Investment Securities 94,497,000 97,123,000
Loans 273,739,000 251,717,000
Reserve for Possible Loan Losses (3,915,000) (3,811,000)
- ------------------------------------------------------------------------------
NET LOANS 269,824,000 247,906,000
- ------------------------------------------------------------------------------
Premises and Equipment (net) 10,925,000 9,475,000
Other Assets 6,394,000 5,158,000
- ------------------------------------------------------------------------------
TOTAL ASSETS $413,176,000 $393,954,000
- ------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY:
Non-Interest Bearing Deposits $ 59,688,000 $ 56,235,000
Interest Bearing Deposits 290,470,000 272,946,000
- ------------------------------------------------------------------------------
TOTAL DEPOSITS 350,158,000 329,181,000
Securities Sold under Repurchase
Agreements 21,296,000 23,679,000
Other Liabilities 2,659,000 4,851,000
- ------------------------------------------------------------------------------
TOTAL LIABILITIES 374,113,000 357,711,000
- ------------------------------------------------------------------------------
Common stock 4,014,000 3,194,000
Additional capital 17,697,000 18,389,000
Retained Earnings 17,331,000 14,736,000
Net Unrealized Security Losses 21,000 (76,000)
- ------------------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY 39,063,000 36,243,000
- ------------------------------------------------------------------------------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $413,176,000 $393,954,000
- ------------------------------------------------------------------------------
(LOGO) LNB
Bancorp, Inc.
and its subsidiary Lorain National Bank
22
Consolidated Statements on Income
Six Months Ended
June 30
------------------------
1995 1994
------------------------
INTEREST INCOME:
Interest and Fees on Loans $12,116,000 $10,054,000
Interest and Dividends on Securities: 2,897,000 2,483,000
Interest on Federal Funds Sold 122,000 140,000
- -----------------------------------------------------------------------------
TOTAL INTEREST INCOME 15,135,000 12,677,000
- -----------------------------------------------------------------------------
INTEREST EXPENSE:
Interest Deposits 5,083,000 3,637,000
Interest on Securities Sold under
Repurchase Agreements 624,000 262,000
Other Interest Expense 1,000 1,000
- -----------------------------------------------------------------------------
TOTAL INTEREST EXPENSE 5,708,000 3,900,000
- -----------------------------------------------------------------------------
NET INTEREST INCOME 9,427,000 8,777,000
Provision for Loan Losses 200,000 200,000
- -----------------------------------------------------------------------------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 9,227,000 8,577,000
- -----------------------------------------------------------------------------
OTHER INCOME:
Trust Department Income 477,000 432,000
Fees and Service Charges 1,598,000 1,525,000
Gains From Sales of Loans and Securities -0- -0-
Other Operating Income 8,000 5,000
- -----------------------------------------------------------------------------
TOTAL OTHER INCOME 2,083,000 1,962,000
- -----------------------------------------------------------------------------
OTHER EXPENSES:
Salaries and Employee Benefits 3,764,000 3,669,000
Net Occupancy Expense 604,000 569,000
Furniture and Equipment Expenses 1,001,000 863,000
FDIC Deposit Insurance Premium 368,000 356,000
Other Operating Expenses 2,253,000 2,100,000
- -----------------------------------------------------------------------------
TOTAL OTHER EXPENSES 7,990,000 7,557,000
- -----------------------------------------------------------------------------
INCOME BEFORE FEDERAL INCOME TAXES 3,320,000 2,982,000
Federal Income Taxes 1,055,000 867,000
- -----------------------------------------------------------------------------
NET INCOME $2,265,000 $2,115,000
- -----------------------------------------------------------------------------
PER SHARE DATA:
NET INCOME $ .56 $ .52
- -----------------------------------------------------------------------------
DIVIDENDS DECLARED $ .24 $ .22
=============================================================================
The per share data has been adjusted to reflect the 5-for-4 stock split in
1995 and a 3% stock dividend in 1994. Net income per share is based on
weighted average common and common equivalent shares outstanding.
23
Outside Cover: 2 Column format
Directors and Officers of LNB Bancorp, Inc.
Directors Don A. Sanborn
Retired
James L. Bardoner
Retired, Former President T. L. Smith, M.D.
Dorn Industries, Inc. Physician
Daniel P. Batista Eugene M. Sofranko
Attorney/Partner President and
Cook & Batista Co., L.P.A. Chief Executive Officer
Lorain Glass Company, Inc
Wellsley O. Gray
Sales Consultant Paul T. Stack
Smith Dairy Company Manufacturer's Representative
Coley's Inc. and
James F. Kidd A-1 Welding and Fabricating, Inc.
President and
Chief Operating Officer Leo Weingarten
LNB Bancorp, Inc. and Retired
Lorain National Bank
David M. Koethe Officers
Chairman of the Board
The Lorain Printing Company Stanley G. Pijor
Chairman and
Benjamin G. Norton Chief Executive Officer
Employee and Community
Relations Manager James F. Kidd
Reliance Comm/Tec - Lorain President and
Products Chief Operating Officer
Stanley G. Pijor Thomas P. Ryan
Chairman and Executive Vice President
Chief Executive Officer and Secretary/Treasurer
LNB Bancorp, Inc. and
Lorain National Bank Willard H. DoBrunz
Senior Vice President
James H. Riddell
Chairman of the Board Gregory D. Friedman
Consumers Builders Supply Senior Vice President and
Company Chief Financial Officer
President, Consumeraq, Inc.
Michael D. Ireland
Thomas P. Ryan Senior Vice President
Executive Vice President and
Secretary/Treasurer Emma N. Mason
LNB Bancorp, Inc. Senior Vice President
Executive Vice President
and Secretary James H. Weber
Lorain National Bank Senior Vice President
24
Remainder of Outside cover description:
Gray and green background, black lettering.
(Logo) LNB
Bancorp, Inc.
and its subsidiary Lorain National Bank
(lower middle of outside cover)
LNB BANCORP, INC.
(middle of outside cover)
Quarterly Report
June 30, 1995
(lower right side of outside cover)
24
LNB Bancorp, Inc.
Exhibit to Form 10 - Q
(For the six months ended June 30, 1995)
S - K Reference Number (27)
Financial Data Schedule