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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  OR [     ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934  Commission file number: 0-13203 LNB Bancorp, Inc.  Ohio
    
    34-1406303(State of Incorporation)
    
    (I.R.S. Employer Identification No.)
 457 Broadway, Lorain, Ohio
    
    44052 - 1769(Address of principal executive offices)
    
    (Zip Code)
 (440) 244-6000
Registrants telephone number, including area code Not Applicable
(Former: name, address and 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 by check mark whether the registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2)       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 April 30, 2004: 6,617,892 shares
Class of Common Stock: $1.00 par value




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LNB Bancorp, Inc.
Index Part I. Financial InformationItem 1. Financial StatementsCondensed Consolidated Balance Sheets 
March 31, 2004  and December 31, 2003Condensed Consolidated Statements of Income 
Three months ended March 31, 2004 and 2003Condensed Consolidated Statements of Cash Flows 
Three months ended March 31, 2004 and 2003Notes to Condensed Consolidated Financial StatementsItem 2. Managements Discussion and Analysis of Financial Condition
and Results of OperationsItem 3. Quantitative and Qualitative Disclosures About Market RiskItem 4. Controls and ProceduresPart II. Other InformationItem 1. Legal ProceedingsItem 2. Changes in Securities and Use of ProceedsItem 3. Defaults Upon Senior SecuritiesItem 4. Submission of Matters to a Vote of Security HoldersItem 5. Other InformationItem 6. Exhibits and Reports on Form 8-KSignaturesCertificationsEX-31A  302 CEOEX-31B  302 CFOEX-32A  906 CEOEX-32B  906 CFO




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LNB Bancorp, Inc. 
   March 31,
    
    December 31,(Dollars in thousands)
    
    2004
    
    2003Assets:Cash and due from banks
    
    $
    27,363
    
    
    $
    24,646Federal funds sold and short-term investments
    
    
    7,913
    
    
    
    3,103Securities:Available for sale, at fair value
    
    
    127,208
    
    
    
    143,459Held to maturity, at cost (fair value $21,402 and $4,952 respectively
    
    
    21,157
    
    
    
    4,789Other investments and equity stock, at cost
    
    
    3,915
    
    
    
    3,879Total securities
    
    
    152,280
    
    
    
    152,127Loans: (Note 8)Portfolio loans
    
    
    530,449
    
    
    
    528,096Loans held for sale
    
    
    6,559
    
    
    
    6,215Total loans
    
    
    537,008
    
    
    
    534,311Reserve for loan losses
    
    
    (7,819
    )
    
    
    (7,730
    )Net loans
    
    
    529,189
    
    
    
    526,581Bank owned life insurance
    
    
    12,861
    
    
    
    12,702Bank premises and equipment, net
    
    
    11,307
    
    
    
    11,009Intangible assets
    
    
    3,217
    
    
    
    3,245Accrued interest receivable
    
    
    2,728
    
    
    
    2,818Other assets
    
    
    4,872
    
    
    
    4,401Foreclosed assets
    
    
    662
    
    
    
    589Total Assets
    
    $
    752,392
    
    
    $
    741,221Liabilities and Shareholders Equity:Deposits:Demand and other noninterest-bearing deposits
    
    $
    84,250
    
    
    $
    86,693Savings, Market Access and passbook accounts
    
    
    270,100
    
    
    
    277,197Certificates of deposit
    
    
    209,463
    
    
    
    217,454Total deposits
    
    
    563,813
    
    
    
    581,344Securities sold under repurchase agreements
and other short-term borrowings
    
    
    22,963
    
    
    
    15,023Federal Home Loan Bank advances
    
    
    90,303
    
    
    
    71,540Accrued interest payable
    
    
    940
    
    
    
    875Accrued taxes, expenses and other liabilities (Note 6)
    
    
    4,830
    
    
    
    4,304Total liabilities
    
    
    682,849
    
    
    
    673,086Shareholders Equity: (Note 3)Preferred stock, no par value, Shares authorized 1,000,000, and Shares
outstanding noneCommon stock, $1.00 par: Shares authorized 15,000,000, Shares issued
6,766,867 and 6,766,867, respectively, Shares outstanding 6,617,838
and 6,617,618 respectively
    
    
    6,766
    
    
    
    6,766Additional capital
    
    
    26,243
    
    
    
    26,243Retained earnings
    
    
    39,779
    
    
    
    38,715Accumulated other comprehensive (loss)
    
    
    (364
    )
    
    
    (704
    )Treasury stock at cost, 149,029 and 149,249 shares, respectively
    
    
    (2,881
    )
    
    
    (2,885
    )Total Shareholders Equity
    
    
    69,543
    
    
    
    68,135Commitments and contingenciesTotal Liabilities and Shareholders Equity
    
    $
    752,392
    
    
    $
    741,221
 See accompanying notes to the
condensed consolidated financial statements.




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LNB Bancorp, Inc. 
   March 31,
    
    March 31,(Dollars in thousands, except per share amounts)
    
    2004
    
    2003Interest Income:Interest and fees on loans
    
    $
    7,793
    
    
    $
    8,202Interest and dividends on securities:U.S. Government agencies and corporations
    
    
    952
    
    
    
    1,238States and political subdivisions
    
    
    145
    
    
    
    155Other debt and equity securities
    
    
    72
    
    
    
    79Interest on Federal funds sold and other
interest-bearing instruments
    
    
    14
    
    
    
    12Total interest income
    
    
    8,976
    
    
    
    9,686Interest Expense:Interest on depositsTime certificates of $100,000 and over
    
    
    334
    
    
    
    375Other deposits
    
    
    1,280
    
    
    
    1,676Interest on securities sold under agreements
to repurchase and other short-term borrowings
    
    
    41
    
    
    
    68Interest on Federal Home Loan Bank advances
    
    
    451
    
    
    
    407Total interest expense
    
    
    2,106
    
    
    
    2,526Net Interest Income
    
    
    6,870
    
    
    
    7,160Provision for Loan Losses
    
    
    525
    
    
    
    564Net Interest Income after Provision for Loan Losses
    
    
    6,345
    
    
    
    6,596Operating Income:Service charges on deposits accounts
    
    
    984
    
    
    
    946Electronic banking fees
    
    
    631
    
    
    
    627Investment and Trust Services Income
    
    
    586
    
    
    
    454Gain on sale of securities
    
    
    223
    
    
    
    203Income from investment in life insurance
    
    
    159
    
    
    
    193Other service charges, exchanges and fees
    
    
    111
    
    
    
    160Gains on sale of loans
    
    
    37
    
    
    
    62Other operating income
    
    
    125
    
    
    
    54Total Operating Income
    
    
    2,856
    
    
    
    2,699Operating Expenses:Salaries and employee benefits (Notes 5 and 6)
    
    
    3,038
    
    
    
    3,157Net occupancy expenses
    
    
    374
    
    
    
    412Furniture and equipment expenses
    
    
    670
    
    
    
    549Card-related expenses
    
    
    332
    
    
    
    292Supplies and postage
    
    
    252
    
    
    
    282Professional services
    
    
    234
    
    
    
    218Marketing and advertising
    
    
    179
    
    
    
    240Ohio franchise tax
    
    
    188
    
    
    
    181Other operating expenses
    
    
    709
    
    
    
    808Total Operating Expenses
    
    
    5,976
    
    
    
    6,139Income Before Income Taxes
    
    
    3,225
    
    
    
    3,156Income Taxes
    
    
    969
    
    
    
    965Net Income
    
    $
    2,256
    
    
    $
    2,191Net Income Available to Common Shareholders:Basic
Earnings Per Share (Note 2 *)
    
    $
    .34
    
    
    $
    .33Diluted
Earnings Per Share (Note 2 *)
    
    $
    34
    
    
    $
    .33
 See accompanying notes to the
condensed consolidated financial statements.
* All shares and or share amounts have been adjusted to reflect the
three-for-two stock split in 2003.




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LNB Bancorp, Inc. 
   (Dollars in thousands)
    
    March 31, 2004
    
    March 31, 2003Cash Flows from Operating Activities:Interest received
    
    $
    9,230
    
    
    $
    9,827Other income received
    
    
    2,131
    
    
    
    2,161Interest paid
    
    
    (2,041
    )
    
    
    (2,526
    )Originations of loans held for sale
    
    
    (1,207
    )
    
    
    (4,314
    )Proceeds from sale of loans held for sale
    
    
    1,596
    
    
    
    5,295Gain on sale of loans held for sale
    
    
    (37
    )
    
    
    (62
    )Cash paid for salaries and employee benefits
    
    
    (3,366
    )
    
    
    (3,620
    )Net occupancy expense of premises paid
    
    
    (302
    )
    
    
    (333
    )Furniture and equipment expenses paid
    
    
    (309
    )
    
    
    (235
    )Cash paid for supplies and postage
    
    
    (252
    )
    
    
    (282
    )Cash paid for other operating expenses
    
    
    (1,993
    )
    
    
    (2,402
    )Net Cash Provided by Operating Activities
    
    
    3,450
    
    
    
    3,509Cash Flows from Investing Activities:Proceeds from maturities of securities held to maturity
    
    
    338
    
    
    
    5,325Proceeds from sales and maturities of securities available for sale
    
    
    33,155
    
    
    
    30,190Purchases of securities held to maturity
    
    
    (16,442
    )
    
    
    0Purchases of securities available for sale
    
    
    (16,675
    )
    
    
    (38,352
    )Increase in loans available for sale
    
    
    389
    
    
    
    1,269Net (increase) in loans made to customers
    
    
    (3,960
    )
    
    
    (4,839
    )Purchases of bank premises and equipment
    
    
    (741
    )
    
    
    (228
    )Proceeds from sales of bank premises and equipment
    
    
    10
    
    
    
    9Proceeds from liquidation of other foreclosed assets
    
    
    (242
    )
    
    
    22Purchases of other foreclosed assets
    
    
    192
    
    
    
    0Net Cash Used in Investing Activities
    
    
    (3,976
    )
    
    
    (6,604
    )Cash Flows from Financing Activities:Net increase (decrease) in demand and other noninterest-
bearing deposits
    
    
    (2,443
    )
    
    
    6,175Net (decrease) in savings, Market Access and passbook deposits
    
    
    (7,097
    )
    
    
    (4,076
    )Net increase (decrease) in certificates of deposit
    
    
    (7,991
    )
    
    
    10,629Net increase (decrease) in securities sold under
repurchase agreements and other short-term borrowings
    
    
    7,940
    
    
    
    (10,027
    )Proceeds from Federal Home Loan Bank Advances
    
    
    106,500
    
    
    
    75,500Cash paid on Federal Home Loan Bank Advances
    
    
    (87,737
    )
    
    
    (72,000
    )Cash paid in lieu of fractional shares related to three-for-two stock split
    
    
    0
    
    
    
    (13
    )Proceeds from exercise of stock options
    
    
    0
    
    
    
    19Issuance of Treasury stock
    
    
    4
    
    
    
    6Dividends paid
    
    
    (1,123
    )
    
    
    (1,188
    )Net Cash Provided by Financing Activities
    
    
    8,053
    
    
    
    5,025Net Increase in Cash and Cash Equivalents
    
    
    7,527
    
    
    
    1,930Cash and Cash Equivalents at Beginning of Year
    
    
    27,749
    
    
    
    6,832Cash and Cash Equivalents at End of Quarter
    
    $
    35,276
    
    
    $
    28,762
 See accompanying notes to the
condensed consolidated financial statements.




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(Dollars in thousands)
    
    March 31, 2004
    
    March 31, 2003Reconciliation of Net Income to Net cash Provided by Operating Activities:Net Income
    
    $
    2,256
    
    
    $
    2,191Adjustments to reconcile net income to net cash provided by
operating activities:Originations of loans held for sale
    
    
    (1,207
    )
    
    
    (4,314
    )Proceeds from sale of loans held for sale
    
    
    1,596
    
    
    
    5,295Gain on sale of investments and loans
    
    
    (260
    )
    
    
    (265
    )Depreciation and amortization
    
    
    433
    
    
    
    393Amortization of intangible assets
    
    
    28
    
    
    
    29Amortization of premiums on investment securities
    
    
    249
    
    
    
    280Amortization of deferred loan fees and costs, net
    
    
    (44
    )
    
    
    (80
    )Provision for loan losses
    
    
    525
    
    
    
    564Increase in cash surrender value of BOLI
    
    
    (159
    )
    
    
    (185
    )(Increase) decrease in accrued interest receivable
    
    
    90
    
    
    
    (61
    )(Increase) in other assets
    
    
    (471
    )
    
    
    (26
    )Increase in accrued interest payable
    
    
    65
    
    
    
    0Increase (Decrease) in accrued taxes, expenses and other liabilities
    
    
    458
    
    
    
    (239
    )Other, net
    
    
    (109
    )
    
    
    (73
    )Net Cash Provided by Operating Activities
    
    $
    3,450
    
    
    $
    3,509
 See accompanying notes to the
condensed consolidated financial statements.




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LNB Bancorp, Inc. 
 Notes to Condensed Consolidated Financial Statements (Unaudited) 1. Basis of Presentation These consolidated financial statements include the accounts of LNB Bancorp,
Inc. (the Parent Company) and its wholly-owned subsidiaries, Lorain National
Bank (the Bank) and Charleston Insurance Agency, Inc. Charleston Title
Agency, LLC, a 49%-owned subsidiary, is accounted for under the equity method.
The term the Corporation refers to LNB Bancorp, Inc. and its wholly-owned
subsidiaries, The Lorain National Bank and Charleston Insurance Agency, Inc.,
and a 49% interest in Charleston Title Agency, LLC. All significant
inter-company balances and transactions have been eliminated in consolidation.
Also included is the Banks wholly-owned subsidiary, North Coast Community
Development Corporation (NCCDC). All dollar amounts in this report are
reported in thousands of dollars, except per share amounts. The unaudited condensed consolidated financial statements have been prepared in
accordance with accounting principles generally accepted in the United States
of America for interim financial information and with instructions for Form
10-Q. Accordingly, they do not include all of the information and footnotes
required by accounting principles generally accepted in the United States of
America for complete financial statements. In the opinion of management, all
adjustments (all of which are normal and recurring in nature) considered
necessary for a fair presentation have been included. Operating results for the
three-month period ending March 31, 2004 are not necessarily indicative of the
results that may be expected for the year ending December 31, 2004. The 2003
LNB Bancorp, Inc. Annual Report on Form 10-K should be read in conjunction with
these statements. 2. Critical Accounting Policies and New Accounting and Regulatory
Pronouncements Critical Accounting Policies The Corporation maintains critical accounting policies for reserve for loan
losses, classification and evaluation of securities valuation and a deferred
tax asset valuation reserve. Refer to notes 1,5,7 and 12 of the Notes to
Consolidated Financial Statements for additional information incorporated by
reference to the 2003 Annual Report to Shareholders on Form 10-K. Impacts of Accounting and Regulatory Pronouncements: Corporate management is not aware of any proposed regulations or current
recommendations by 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. Financial Accounting Standards Board: The Financial Accounting Standards Board (FASB) has issued:




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SFAS No. 132(Revised 2003), Employers Disclosures about Pensions and Other
Postretirement Benefits. In December 2003, the FASB issued SFAS No. 132 (Revised 2003), Employers
Disclosures about Pensions and Other Postretirement Benefits. This Statement
expands upon the existing disclosure requirements as prescribed under the
original SFAS No. 132 by requiring more details about pension plan assets,
benefit obligations, cash flows, benefit costs and related information. SFAS
No. 132(R) also requires companies to disclose various elements of pension and
postretirement benefit costs in interim-period financial statements beginning
after December 15, 2003. This Statement is effective for financial statements
with fiscal years ending after December 15, 2003. The Corporation adopted the
additional year-end disclosure requirements under SFAS No. 132(R) during the
fourth quarter of 2003 and the interim-period financial statement disclosure
requirements in the first quarter of 2004 and its adoption did not have a
material impact on our financial position, results of operation, or liquidity.
SFAS No. 132(R) disclosures are included in Note 6. FASB Interpretation No. 46 (FIN No. 46), Consolidation of Variable Interest
Entities. and FASB Interpretation No. 46R (FIN No. 46R), Consolidation of
Variable Interest Entities an interpretation of ARB 51 (revised December
2003), In January 2003, the FASB issued Interpretation No. 46 (FIN No. 46),
Consolidation of Variable Interest Entities. This Interpretation clarifies
the application of ARB No. 51, Consolidated Financial Statements, for certain
entities in which equity investors do not have the characteristics of a
controlling financial interest or do not have sufficient equity at risk for the
entity to finance its activities without additional subordinated support from
other parties. This Interpretation requires variable interest entities (VIEs)
to be consolidated by the primary beneficiary which represents the enterprise
that will absorb the majority of the VIEs expected losses if they occur,
receive a majority of the VIEs residual returns if they occur, or both.
Qualifying Special Purpose Entities (QSPE) are exempt from the consolidation
requirements of FIN No. 46. This Interpretation was effective for VIEs created
after January 31, 2003 and for VIEs in which an enterprise obtains an
interest after that date. In December 2003, the FASB issued Interpretation No.
46R (FIN 46R), Consolidation of Variable Interest Entities  an interpretation
of ARB 51 (revised December 2003), which replaces FIN No. 46. FIN No. 46(R)
was primarily issued to clarify the required accounting for interests in VIEs.
Additionally, this Interpretation exempts certain entities from its
requirements and provides for special effective dates for enterprises that have
fully or partially applied FIN No. 46 as of December 24, 2003. Application of
FIN No. 46(R) is required in financial statements of public enterprises that have
interests in structures that are commonly referred to as special-purpose
entities, or SPEs, for periods ending after December 15, 2003. Application by
public enterprises, other than small business issuers, for all other types of
VIEs (i.e., non-SPEs) is required in financial statements for periods ending
after March 15, 2004. As of December 31, 2003 and March 31, 2004, the
Corporation had no variable interest entities and therefore, the interpretation
of FIN No. 46(R) had no impact on the financial position, results of operations
or liquidity. Other Statements of Financial Accounting Standards All other applicable Statements of Financial Accounting Standards that have
been issued and have effective dates impacting 2004 and prior years financial
statements were adopted by the Corporation. Corporate management believes there
are no Statements of Financial Accounting




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Standards, which have been issued and have implementation dates in the future
that will materially impact the financial statements of future years.
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: SEC Staff Accounting Bulletin: No. 105 Application of Accounting Principles
to Loan Commitments In March 2004, the SEC issued Staff Accounting Bulletin No. 105 Application of
Accounting Principles to Loan Commitments. This Staff Account Bulletin
summarizes the views of the SEC staff regarding the application of generally
accepted accounting principles to loan commitments accounted for as derivative
instruments, a loan committed at a specified rate, but funded later.
Presently, the Corporation does not make loan commitments that will be funded
at a later date, and therefore, the SEC Staff Accounting Bulletin had no impact
on the financial position, results of operations or liquidity. Sarbanes-Oxley Act of 2002 On July 30, 2002, President Bush signed into law the Sarbanes-Oxley Act of
2002, which contains important new requirements for public companies in the
area of financial disclosure and corporate governance. Although portions of the
act are still being fully implemented, we do not anticipate any significant
changes in the operations of and reporting by the Corporation as a result of
the act. In accordance with the requirements of the Sarbanes-Oxley Act, written
certifications for this quarterly report on Form 10-Q by the chief executive
officer and the chief financial officer of the Corporation are filed in this
report under Exhibit index (31(a)), (31(b)), (32(a)), and (32(b)). See
Controls and Procedures for the Corporations evaluation of disclosure
controls and procedures. 3. Common Stock On February 25, 2003, the Board of Directors of LNB Bancorp, Inc. declared a
three-for-two split of common stock. Shareholders received one additional
common share for every two shares owned on the stock-split record date of March
10, 2003. Shareholders participating in the Bancorps dividend reinvestment
plan, LNBB Direct (the Plan), were issued fractional shares. Shareholders not
participating in the Plan were issued cash in lieu of fractional shares. For
additional information see Form 8-K filed on February 25, 2003. On February 17, 2004, the Board of Directors of LNB Bancorp, Inc. declared a
first quarter cash dividend of $.18 per share payable April 1, 2004, to
shareholders of record on March 15, 2004. This represents a 5.9 percent
increase from last years first quarter cash dividend of $.17 per share. 4. Earnings per Share Basic earnings per common share is based upon weighted-average common shares
outstanding. The reconcilement of basic earnings per share to earnings per
diluted share follows:




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For the Three Months EndedMarch 31, 2004
    
    March 31, 2003Earnings per Share
    
    Net
    
    Average
    
    Per Share
    
    Net
    
    Average
    
    Per Share(Dollars in thousands, except per share)
    
    Income
    
    Shares
    
    Amounts
    
    Income
    
    Shares
    
    AmountsNet Income
    
    $
    2,256
    
    
    
    
    
    
    
    
    
    
    $
    2,191Basic Earnings Per Share
    
    $
    2,256
    
    
    
    6,617,715
    
    
    $
    .34
    
    
    $
    2,191
    
    
    
    6,602,127
    
    
    $
    .33Effect of Dilutive Securities
    
    
    
    
    
    
    10,176
    
    
    
    
    
    
    
    
    
    
    
    14,839Diluted Earnings Per Share
    
    $
    2,256
    
    
    
    6,627,891
    
    
    $
    .34
    
    
    $
    2,191
    
    
    
    6,616,966
    
    
    $
    .33
 5. Stock Option Plans The FASB issued SFAS No. 148, Accounting for Stock-Based Compensation -
Transition and Disclosure. SFAS No. 148 provides guidance on how to transition
from the intrinsic value method of accounting for stock-based employee
compensation under APB No. 25 to SFAS No. 123s fair value method for
accounting, if a company so elects. In accordance with the transitional
guidance of SFAS No. 148, the fair value method of accounting for stock options
should be applied prospectively to awards granted subsequent to January 1,
2003. As permitted, options granted prior to January 1, 2003, will continue to
be accounted for under APB Opinion 25, and the pro forma impact of accounting
for these options at fair value will continue to be disclosed in the notes to
the consolidated financial statements. The Corporation did not issue any stock
options during the first quarter of 2004 or during any quarter in 2003. All
stock options issued were 100% vested at March 31, 2004 and 2003, and therefore
had compensation cost for the Corporations stock- based compensation plans
been determined consistent with SFAS No. 123, net income and net income per
share would not have been impacted. 6. Retirement Pension Plan The Banks non-contributory defined benefit pension plan (the Plan) covers
substantially all of its employees. Effective December 31, 2002, the benefits
under the Plan were frozen and no additional benefits will be accrued under the
Plan after December 31, 2002. The 2003 loss
recognized due to settlement in the amount of $5 results from significant lump
sum distributions paid in 2003, but not actuarially projected for 2003. The net periodic pension cost charged to salaries and benefits expense in the
Income Statement amounted to $19 for the first quarter of 2004 and $29 for the
first quarter of 2003. Components of Net Periodic Pension Cost
    
    For the Three Months Ended(Dollars in thousands)
    
    March 31, 2004
    
    March 31, 2003Service cost
    
    $
    113
    
    
    $
    119Interest cost
    
    
    (94
    )
    
    
    (95
    )Loss recognized due to settlement
    
    
    0
    
    
    
    5Net Periodic Pension Cost
    
    
    19
    
    
    
    29




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Employer Contributions The Corporation previously disclosed in its 2003 Annual Report to Shareholders
on Form 10-K, that it expected to contribute $500 to the Lorain National Bank
Retirement Pension Plan in 2004. As of March 31, 2004, a $500 cash
contribution was made to the Plan. 7. Comprehensive Income The Corporations comprehensive income for the three months ended March 31,
2004 and 2003 are as follows: Comprehensive Income(Dollars in thousands)
    
    For the Three Months EndedMarch 31, 2004
    
    March 31, 2003Net Income
    
    $
    2,256
    
    
    $
    2,191Other comprehensive income:Change in unrealized gain on securities available
for sale, net of tax (credit) of $175 and $(169)
    
    
    340
    
    
    
    (328
    )Comprehensive Income
    
    $
    2,956
    
    
    $
    1,863Disclosure of Reclassification Amount:Unrealized holding gains (losses) arising
during the period, net of tax (credit) of $251 and $(238)
    
    $
    487
    
    
    $
    (462
    )Less reclassification adjustment for gains included
in net income, net of tax of $76 and $69
    
    
    147
    
    
    
    134Change in unrealized gain (loss) on
securities available for sale, net of tax (credit) of $175 and $(169)
    
    $
    340
    
    
    $
    (328
    )
 8. Components of the Loan Portfolio The following table presents the components of total loans at March
31, 2004 and December 31, 2003. Loan Portfolio(Dollars in thousands)
    
    For the Period EndedMarch 31,
    
    December 31,2004
    
    2003Commercial
    
    $
    299,323
    
    
    $
    297,468Mortgage
    
    
    108,725
    
    
    
    113,649Installment
    
    
    62,844
    
    
    
    59,217Home Equity
    
    
    59,557
    
    
    
    57,762Loans held for sale
    
    
    6,559
    
    
    
    6,215Total portfolio loans
    
    $
    537,008
    
    
    $
    534,311
 9. Reclassifications Certain amounts appearing in the financial statements and notes thereto, for
prior periods, have been reclassified to conform to the current presentation.
The reclassification had no effect on net income or shareholders equity as
previously reported.




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##### Table of Contents



Part I 
 Item 2  Managements Discussion and Analysis of Financial Condition and
Results of Operations The following is managements discussion and analysis of certain significant
factors that affected the Corporations financial condition and results of
operations during the periods included in the Condensed Consolidated Financial
Statements which are part of this filing. Certain statements contained herein are not based on historical facts and are
forward-looking statements within the meaning of Section 21A of the
Securities Exchange Act of 1934. Forward-looking statements which are based on
various assumptions (some of which are beyond the Corporations control), may
be identified by reference to a future period or periods, or by the use of
forward-looking terminology, such as may, will, believe, expect,
estimate, anticipate, continue, or similar terms or variations of those
terms, or the negative of these terms. Actual results could differ materially
from those set forth in forward-looking statements, due to a variety of
factors, including, but not limited to, those related to the economic
environment, particularly in the market areas in which the Corporation
operates, competitive products and pricing, fiscal and monetary policies of the
U.S. Government, changes in government regulations affecting financial
institutions, including regulatory fees and capital requirements, changes in
prevailing interest rates, acquisitions and the integration of acquired
businesses, credit risk management, asset/liability management, the financial
and securities markets and the availability of and costs associated with
sources of liquidity. The Corporation does not undertake, and specifically disclaims any obligation,
to publicly release the result of any revisions which may be made to any
forward-looking statements to reflect the occurrence of anticipated or
unanticipated events or circumstances after the date of such statements. Introduction LNB Bancorp, Inc. is the financial holding company for Lorain National Bank.
The Corporation is headquartered in Lorain, Ohio and operates 20 offices in
three counties in northern Ohio. As disclosed in the Corporations 2003 Annual
Report on Form 10-K, two new offices were scheduled to open during 2004. The
first new office, located in Avon, Ohio opened for business in March 2004. The
second new office, located in Avon Lake, Ohio is on schedule to open in May
2004. The most material current trend is the very slow recovery of the local
economy. Since the Corporations revenues are primarily driven by net interest
income, the lack of economic activity continues to have a material impact on
the Corporations revenue and earnings. However, the Corporations first
quarter results reflect the impact of the operating expense
reduction initiatives that were completed in 2003. Results of Operations (Dollars in Thousands) Net income for the first quarter of 2004 was $2,256, an increase of $65 over
the first quarter of 2003 net income of $2,191. Basic and diluted earnings per
common share for the first quarter of 2004 were $.34, as compared to $.33 for
the same period in 2003. Return on average equity (ROE) and return on average
assets (ROA) were 1.21% and 13.18%, respectively, for the first quarter of
2004, compared to 1.24% and 13.22%, respectively, in 2003. Selected operating
data is as follows:




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##### Table of Contents



Table 1  Operating Data(Dollars in thousands, except per share data)
    
    Three Months EndedMarch 31, 2004
    
    March 31, 2003Net interest income
    
    $
    6,870
    
    
    $
    7,160Net Income
    
    $
    2,256
    
    
    $
    2,191Basic earnings per share
    
    $
    .34
    
    
    $
    .33Diluted earnings per share
    
    $
    .34
    
    
    $
    .33Cash dividends per Common share
    
    $
    .18
    
    
    $
    .17Dividend Payout Ratio
    
    
    52.7
    %
    
    
    52.0
    %ROAA
    
    
    1.21
    %
    
    
    1.24
    %ROAE
    
    
    13.18
    %
    
    
    13.22
    %Net interest margin
    
    
    4.02
    %
    
    
    4.39
    %Efficiency ratio
    
    
    61.50
    %
    
    
    62.30
    %
 Net Interest Income Net interest income for the first quarter of 2004 was $6,870, a decrease of
$290 or 4.0% from $7,160 in the first quarter of 2003. Net interest income, the
difference between interest income earned on interest-earning assets and
interest expense incurred on interest-bearing liabilities, is the most
significant component of the Corporations earnings. Net interest income is
affected by changes in the volumes, rates and composition of interest-earning
assets and interest-bearing liabilities. Average earning assets were $696.9
million during the first quarter of 2004, an increase of 4% from the first
quarter last year. Commercial and home equity loans were primarily responsible
for this increase. Offsetting some of this growth was continued runoff in the
mortgage loan portfolio. Average deposits were $579.3 million for the first
three months of 2004, up 1.3% from the same quarter last year, which included
average transaction account growth of 1.0%. Average other borrowings were $93.7
million for the first three months of 2004, up 29.3% from the same quarter last
year, which included average Federal Home Loan Bank advances borrowing growth
of 37.1%. Increases in Federal Home Loan Bank advances supported earning asset
growth. The Corporations net interest margin for the three months ended March
31, 2004 was 4.02%, a decrease of 37 basis points from the first quarter of
2003. In general the lower net interest margin reflects the impact of the
continued low interest rate environment. This can be seen in the overall yield
on earning assets of 5.15%, which is a decline of 63 basis points for the first
three months of 2004 versus the same period in 2003. Earning asset yields
continue to be impacted by competitive market pressures and the prepayment of
assets resulting in shorter durations and considerable cashflow. The low
interest rate environment, in addition to compressing asset yields has also
impacted the cost of funding. This can be seen in the average rate on deposits
and purchased funds, which was 1.45% for the first quarter of 2004. Although
this is a 38 basis point decrease from the




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##### Table of Contents



rate paid on deposits and purchased funds in the first quarter of 2003, it
represents more than half the yield decline that was experienced by the
earnings assets being funded by these sources. In many instances, market rates
on deposit accounts have reached practical limits or levels that are
unattractive to customers. The Corporation believes that the improving economy
and the associated asset growth, combined with increasing interest rates and
slower prepayment rates, will begin to improve net interest income in future
periods. Provision for loan losses The Provision for loan losses represents the charge to income necessary to
adjust the Reserve for loan losses to an amount that represents managements
assessment of the estimated probable credit losses inherent in the
Corporations loan portfolio which have been incurred at each balance sheet
date. The Provision for loan losses decreased $39 or 6.9% to $525 in the first
quarter of 2004 compared to $564 in the first quarter of 2003. The slightly
lower Provision for loan losses in the first quarter of 2004 was attributable
to minimal loan portfolio growth, lower net charge-offs and improvement in
market conditions as compared to the first quarter of 2003. Net charge-offs
were $436 or 0.33% (annualized) of average loans during the three months ended
March 31, 2004, compared to $514 or 0.40% (annualized) for the same period in
2003. Table 2 presents a summary of The Corporations loan loss experience for
the three months ended March 31, 2004 and 2003. Table 2  Reserve for loan losses(Dollars in thousands)
    
    For the Three Months EndedMarch 31, 2004
    
    March 31, 2003Balance at beginning of period
    
    $
    7,730
    
    
    $
    6,653Chargeoffs:Commercial
    
    
    377
    
    
    
    325Real estate
    
    
    9
    
    
    
    12Consumer
    
    
    132
    
    
    
    262Total chargeoffs
    
    
    518
    
    
    
    599Recoveries:Commercial
    
    
    28
    
    
    
    8Real estate
    
    
    0
    
    
    
    0Consumer
    
    
    54
    
    
    
    77Total recoveries
    
    
    82
    
    
    
    85Net chargeoffs
    
    
    436
    
    
    
    514Reserve for loan losses
    
    
    525
    
    
    
    564Balance at end of period
    
    $
    7,819
    
    
    $
    6,703




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##### Table of Contents



The Reserve for loan losses as a percentage of non-performing loans at March
31, 2004 has improved slightly since the end of 2003 due to an overall
stabilization in non-performing loans. For more information see sections titled
Non-performing Assets and Reserve for Loan Losses. Operating Income The change in Operating Income reflects the emphasis of the Corporation on
expanding its fee-based products. Operating Income for the first quarter of
2004 was $2,856, an increase of $157 or 5.8% from the $2,699 for the same
quarter of 2003. Operating Income growth was most significant in Investment and
Trust Services Income and Services charges on deposits accounts which were up
$132 and $38 respectively. Also increasing was Net securities gains totaling
$223, which is up $20 as compared to the first quarter of 2003. These gains
were primarily the result of the sale of non-rated, non-Ohio municipal bonds
and the repositioning of the agency portfolio for rising rates. Operating
income also includes earnings on the Corporations Bank owned life insurance
(BOLI). BOLI is a long-term investment, with its earnings rate tied to
long-term interest rates. As such, the income from this source was down $34 to
$159 in the first quarter as compared to the first quarter of 2003. Gain on the
sale of loans are primarily from gain on the sale of mortgages. For the first
quarter of 2004, such gains were down $25, or 40.3% as compared to the first
quarter of 2003. This reflects a dramatic slowing of mortgage activity in the
market. Operating Expense Operating Expense for the first quarter of 2004 was $5,976, a decrease of $163
or 2.7%, from $6,139 reported for the same quarter of 2003. This was due
primarily to a decrease in salary and employee benefits as a result of the cost
cutting measures taken in 2002 and 2003. Salaries and benefits were $3,038,
down $119 or 3.8% from the same quarter last year. Net occupancy costs,
supplies and postage, loan and collection expense and marketing expenses were
all lower in the first quarter of 2004 as compared to the first quarter of
2003. As disclosed in the 2003 Annual Report to shareholders on Form 10-K,
outside services and equipment costs continue to trend upward due to expenses
related to Sarbanes-Oxley compliance and the ongoing upgrade of many
Corporation technology systems. The efficiency ratio was 61.5% for the first
quarter of 2004, down from 62.3% for the same quarter last year. Income Taxes The provision for income taxes for the first quarter of 2004 was $969, up
slightly from $965 in the same period in 2003. The effective tax rate for the
three months ended March 31, 2004 was 30.0% as compared to 30.6% for the same
period in 2003. This reduction is partially attributable to the impact of NCCDC
activities that generated $56 in tax credits in the first quarter of 2004. Balance Sheet At March 31, 2004, total assets were $752,392, an increase of $11,171 from
December 31, 2003. The increase was primarily attributable to increases in
loans of $2,697, cash and interest bearing deposits of $2,717, and short-term
investments of $4,810. The net growth in assets was funded by growth in
short-term purchased funds and Federal Home Loan Bank advances. Total deposits
declined 3.0% or $17,531, to $563,813 at March 31, 2004 when compared to
December 31, 2003. This decline in deposits was primarily the result of a shift
from public funds deposits to alternative borrowing sources and from general
economic weakness in the local market. Shareholders equity totaled $69,543 at
March 31, 2004, increasing $1,408 from December 31, 2003. Net retained earnings
(net income less cash dividends) for the three months ended March 31, 2004
totaled




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##### Table of Contents



$1,064. Other comprehensive income decreased by $340, primarily due to an
increase in the market value of securities available for sale. Nonperforming Assets The level of nonperforming assets at March 31, 2004 remains at approximately
the same level as December 31, 2003, and management believes nonperforming
assets are well collateralized. Table 3 presents the level of nonperforming
assets and respective ratios at the end of the last five calendar quarters. Table 3  Nonperforming Assets
    
    March 31,
    
    December 31,
    
    September 30,
    
    June 30,
    
    March 31,(Dollars in thousands)
    
    2004
    
    2003
    
    2003
    
    2003
    
    2003Nonperforming Assets:Nonaccrual loans
    
    $
    5,234
    
    
    $
    5,154
    
    
    $
    3,481
    
    
    $
    2,609
    
    
    $
    2,319Restructured loans
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0Other foreclosed assets
    
    
    662
    
    
    
    589
    
    
    
    589
    
    
    
    589
    
    
    
    0Total Nonperforming Assets
    
    $
    5,896
    
    
    $
    5,743
    
    
    $
    4,070
    
    
    $
    3,198
    
    
    $
    2,319Reserve for loan losses to total
nonperforming assets
    
    
    160.0
    %
    
    
    150.0
    %
    
    
    187.8
    %
    
    
    222.1
    %
    
    
    289.0
    %Nonperforming assets to total
loans
    
    
    1.08
    %
    
    
    1.06
    %
    
    
    .75
    %
    
    
    .61
    %
    
    
    .45
    %Nonperforming loans to total loans
    
    
    .96
    %
    
    
    .95
    %
    
    
    .64
    %
    
    
    .49
    %
    
    
    .45
    %Accruing loans past due 90 days
    
    $
    0
    
    
    $
    46
    
    
    $
    25
    
    
    $
    14
    
    
    $
    62
 Performing loans where some concerns exist as to the ability of the borrower to
comply with present loan repayment terms, excluding nonperforming loans,
approximated $23,242 and $21,747 at March 31, 2004 and December 31, 2003,
respectively, and are being closely monitored by management and the Board of
Directors. The amounts include results from a loan-by-loan evaluation of loans
classified as special mention, substandard and doubtful, but are not
included in the nonperforming loan category. The classification of these loans,
however, does not imply that management expects losses on each of these loans,
but believes that a higher level of scrutiny is prudent under the
circumstances. These loans require close monitoring despite the fact that they
are currently performing. Such classifications relate to specific concerns
relating to each individual borrower and do not relate to any concentrated risk
elements common to all loans in this group. Non-accrual loans increased slightly from $5,154 at December 31, 2003 to $5,234
at March 31, 2004. Nearly all non-accrual loans are secured by real estate or
commercial real estate. As of March 31, 2004, the Corporation did not have any
loan concentrations which exceeded 10% of total loans.




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##### Table of Contents



The Corporation maintains a reserve for loan losses at a level adequate to
absorb managements estimate of probable losses inherent in the loan portfolio.
The reserve is comprised of a general reserve, a specific reserve for
identified problem loans and an unallocated reserve. The general reserve is
determined by applying estimated loss factors to the credit exposures from
outstanding loans. For construction, commercial and commercial real estate
loans, loss factors are applied based on internal risk grades of these loans.
For residential real estate, installment and other loans, loss factors are
applied on a portfolio basis. Loss factors are based on the Corporations
historical loss experience, and are reviewed for revision on a quarterly basis,
along with other factors affecting the collectibility of the loan portfolio.
Specific reserves are established for all classified loans, where management
has determined that, due to identified significant conditions, the probability
that a loss has been incurred exceeds the general reserve loss factor
determination for those loans. The unallocated reserve recognizes the
estimation risk associated with the allocated general and specific reserves and
incorporates managements evaluation of existing conditions that are not
included in the allocated reserve determinations. These conditions are reviewed
quarterly by management and include general economic conditions, credit quality
trends, and internal loan review and regulatory examination findings. Table 4
presents information concerning the allocation of the Reserve for Loan Losses
at March 31, 2004 and December 31, 2003. Table 4  Allocation of the Reserve for Loan Losses(Dollars in thousands)
    
    AtMarch 31,
    
    December 31,2004
    
    2003Commercial
    
    $
    5,618
    
    
    $
    5,495Real Estate
    
    
    319
    
    
    
    405Consumer
    
    
    1,344
    
    
    
    1,237Off-balance sheet risk
    
    
    150
    
    
    
    113Unallocated
    
    
    388
    
    
    
    480Total Reserve for Loan Losses
    
    $
    7,819
    
    
    $
    7,730
 Liquidity Management of liquidity is of growing importance to the banking industry. The
liquidity of a financial institution reflects its ability to meet loan
requests, to accommodate possible outflows in deposits and to take advantage of
interest rate market opportunities. The ability of a financial institution to
meet its current financial obligations is a function of balance sheet
structure, the ability to liquidate assets, and the availability of alternative
sources of funds. In addition to maintaining a stable core deposit base, the Corporations
banking subsidiary maintains adequate liquidity primarily through the use of
investment securities and unused borrowing capacity. At March 31, 2004,
securities and other short-term investments with maturities of one year or less
totaled $41,888. In addition, the mortgage-backed securities provide an
estimated cash flow of $14,603 over a twelve-month time horizon.
The Bank is a




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##### Table of Contents



member of the Federal Home Loan Bank of Cincinnati (FHLB). The FHLB provides a
reliable source of funds to support asset growth in excess of retail deposit
growth. As of March 31, 2004, the Bank had total credit availability with the
FHLB of $127,196, of which $90,303 was outstanding. The Bank also maintains
borrowing capacity at the Federal Reserve Bank of Cleveland. At March 31, 2004,
there were no borrowings on this borrowing base of $47,342. The Bank also
maintains Federal funds lines of credit with correspondents totaling $24,000.
There were $5,500 outstanding balances on these lines as of March 31, 2004. Since the Corporation is a financial holding company and does not conduct
operations, its only sources of operating liquidity are borrowings from outside
sources and dividends paid to it by the Bank. For the Bank, regulatory approval
is required in order to pay dividends in excess of the subsidiarys earnings
retained for the current year plus retained net profits for the prior two
years. As a result of these restrictions, dividends that could be paid to the
Corporation by its bank subsidiary, without prior regulatory approval, were
limited to $12,257 at March 31, 2004. Asset/Liability Management Closely related to liquidity management is the management of interest-earning
assets and interest-bearing liabilities. LNB Bancorp manages its rate
sensitivity position to avoid wide swings in net interest margins and to
minimize risk due to changes in interest rates. At March 31, 2004, The
Corporations gap position, the difference between the dollar value of interest
rate sensitive assets and interest rate sensitive liabilities, was positive for
three, six and twelve month periods. Earnings-at-risk simulation indicates that
the Corporation will experience net interest income improvement as rates rise.
See also Item. 3, Quantitative and Qualitative Disclosures About Market Risk. Capital The Corporation continues to maintain a strong capital position. Total
shareholders equity reached a record high of $69,543, at March 31, 2004, an
increase of $1,408, or 2.1% from December 31, 2003. The increase resulted
primarily from $2,256 of net income generated for the three months ended March
31, 2004 less cash dividends payable to shareholders of $1,192. The change in
intermediate term interest rates experienced in the first three months of 2004
has caused an increase in the fair value of available for sale securities which
resulted in a increase in shareholders equity within accumulated other
comprehensive income of $340 for the three months ended March 31, 2004. As of
March 31, 2004, the Corporation held 149,029 shares of common stock as treasury
stock at a cost of $2,881. The Corporation and the Bank continue to monitor growth to stay within the
constraints established by the regulatory authorities. Under Federal banking
regulations, at March 31, 2004 and December 31, 2003, the Corporation and Bank
maintained capital ratios consistent with guidelines to be deemed
well-capitalized. These capital positions for the Corporation are presented in
Table 5. MinimumMarch 31,
    
    December 31,
    
    Well-capitalizedTable 5  Capital Ratios
    
    2004
    
    2003
    
    RatioLeverage Ratio
    
    
    8.92
    %
    
    
    8.92
    %
    
    
    5.00
    %Tier I Risk based Ratio
    
    
    11.34
    %
    
    
    11.32
    %
    
    
    8.00
    %Total Capital Ratio
    
    
    12.59
    %
    
    
    12.57
    %
    
    
    10.00
    %




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##### Table of Contents



The Corporation regularly evaluates acquisition opportunities and conducts due
diligence activities in connection with possible acquisitions in markets near
or within the Corporations current geographic market. As a result,
acquisition discussions and, in some cases negotiations, take place and future
acquisitions could occur. Corporate management believes that the Corporations
current capital resources are sufficient to support any foreseeable acquisition
activity. 
 Item 3. Quantitative and Qualitative Disclosures About Market Risk Market risk is the risk that a financial institutions earnings and capital, or
its ability to meet its business objectives, will be adversely affected by
movements in market rates or prices such as interest rates, foreign exchange
rates, equity prices, credit spreads and/or commodity prices. Within the
Corporation, the dominant market risk exposure is changes in interest rates.
The negative effects of this exposure are felt through the net interest margin,
mortgage banking revenues and the market value of various assets and
liabilities. The Corporation manages market risk through its Asset/Liability Committee
(ALCO) at the consolidated level. This committee monitors interest rate risk
through sensitivity analysis, whereby it measures potential changes in future
earnings that may result from one or more hypothetical changes in interest
rates. This analysis is performed by estimating the expected cash flows of the
Corporations financial instruments using interest rates in effect at March 31,
2004. For the net interest income estimates, the hypothetical rates are applied
to the financial instruments based on the assumed cash flows. The Corporation
applied these interest rate shocks to its financial instruments in 300, 200 and
100 basis point increasing rate scenarios. Scenarios testing 300, 200 and 100
basis points decreases in rates were not measured due to the low probability of
such declines. Table 6 presents the potential ratio of the Corporations interest rate
sensitive assets (i.e. assets that will mature or reprice within a specific
time period) divided by its interest rate sensitive liabilities (i.e.
liabilities that will mature or reprice within a specific time period),
commonly referred to as the interest rate sensitivity gap or gap, for the
current period and the cumulative position at three, six and twelve month time
periods. Table 6  Interest Rate Sensitivity (Cumulative)(Dollars in thousands)
    
    Current
    
    3 months
    
    6 months
    
    12 monthsRate Sensitive Assets (RSA)
    
    $
    371,888
    
    
    $
    388,344
    
    
    $
    401,329
    
    
    $
    418,195Rate Sensitive Liabilities (RSL)
    
    
    350,000
    
    
    
    319,650
    
    
    
    323,112
    
    
    
    329,135Net GAP Position (RSA/RSL)
    
    
    21,387
    
    
    
    68,694
    
    
    
    78,216
    
    
    
    89,059Cumulative GAP
    
    
    106
    %
    
    
    116
    %
    
    
    118
    %
    
    
    122
    %




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##### Table of Contents



Table 7 presents an analysis of the potential sensitivity of the Corporations
net interest income to sudden and sustained 300, 200 and 100 basis point
changes in market rates. The net interest income presented in each interest
rate scenario represents the potential net interest income result for the next
twelve months. Table 7  Earnings at Risk(Dollars in thousands)
    
    Base Case
    
    +100 basis points
    
    +200 basis points
    
    +300 basis pointsNet Interest Income
    
    $
    31,702
    
    
    $
    32,045
    
    
    $
    32,389
    
    
    $
    32,737
 ALCO is aggressively managing the Corporations risk to net interest income in
response to continued declines in the interest rate environment. The preceding
analysis is based on numerous assumptions, including relative levels of market
interest rates, loan prepayments and reactions of depositors to changes in
interest rates, and should not be relied upon as being indicative of actual
results. Further, the analysis does not necessarily contemplate all actions the
Corporation may undertake in response to changes in interest rates. 
 Item 4. Controls and Procedures The Corporation carried out an evaluation under the supervision and with the
participation of the Corporations management, including the Corporations
President and Chief Executive Officer and Executive Vice President, Chief
Financial Officer and Corporate Secretary, of the effectiveness of the design
and operation of the Corporations disclosure controls and procedures as of
March 31, 2003, pursuant to SEC rule 13a-15. Based upon that evaluation, the
President and Chief Executive Officer and Executive Vice President, Chief
Financial Officer and Corporate Secretary concluded that as of March 31, 2004,
the Corporations disclosure controls and procedures are effective in timely
alerting them to material information relating to the Corporation (including
its consolidated subsidiaries) required to be included in the Corporations
periodic SEC filings. There was no significant change made in the Corporations internal control over
financial reporting that occurred during the Corporations first quarter ended
March 31, 2004, that was materially affecting, or is reasonably likely to
materially affect, the Corporations internal control over financial reporting.




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##### Table of Contents



PART II. OTHER INFORMATION 
 Item 1. Legal Proceedings Not Applicable 
 Item 2. Changes in Securities and Use of Proceeds Issuer Purchases of Equity Securities (c) Total Number of Shares (or
    
    (d) Maximum Number (or Approximate(a) Total Number of
    
    (b)
    
    Units) Purchased as Part of
    
    Dollar Value) of Shares (or Units)Shares (or Units)
    
    Average Price Paid
    
    Publicly Announced Plans or
    
    that May Yet Be Purchased Under thePeriod
    
    Purchased
    
    per Share (or Unit)
    
    Programs
    
    Plans or ProgramsJanuary 1, 2004 -
January 31, 2004
    
    
    0
    
    
    
    N/A
    
    
    
    0
    
    
    
    N/AFebruary 1, 2004 -
February 29, 2004
    
    
    0
    
    
    
    N/A
    
    
    
    0
    
    
    
    N/AMarch 31, 2004 -
March 31, 2004
    
    
    0
    
    
    
    N/A
    
    
    
    0
    
    
    
    N/ATotal
    
    
    0
    
    
    
    N/A
    
    
    
    0
    
    
    
    N/A
 LNB Bancorp, Inc does not have any common stock repurchase plans, either
publicly announced or
non-publicly announced. 
 Item 3. Defaults Upon Senior Securities Not applicable. 
 Item 4. Submission of Matters to a Vote of Security Holders a) LNB Bancorp Inc.s 2004 Annual Meeting of Shareholders was held on April 20,
2004. b) Proxies were solicited by LNB Bancorp Inc.s management pursuant to
Regulation 14 under the Securities Exchange Act of 1934, there was no
solicitation in opposition to managements four (4) nominees for election to
the board of directors as listed in the proxy statement, and all such nominees
were elected to the classes in the proxy statement pursuant to the vote of the
shareholders. The following presents Directors, elected for terms expiring in 2007, at the
2004 Annual Meeting.




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##### Table of Contents



TermClass III Directors
    
    ExpiresDaniel P. Batista
    
    
    2007David M. Koethe
    
    
    2007Stanley G. Pijor
    
    
    2007Eugene M. Sofranko
    
    
    2007
 The following table presents Directors who continue for terms expiring in 2005
and 2006. TermDirector
    
    ExpiresTerry D. Goode
    
    
    2005James R. Herrick
    
    
    2005Benjamin G. Norton
    
    
    2005John W. Schaeffer
    
    
    2005Robert M. Campana
    
    
    2006Lee C. Howley, Jr.
    
    
    2006James F. Kidd
    
    
    2006Jeffrey F. Riddell
    
    
    2006
 c) Other matters voted upon  (1)
    
    Election of four (4) Class III Directors to serve a three-year term
until the Annual Meeting of Shareholders on April 17, 2007 were as
follows: Percent of AffirmativeClass III Directors
    
    For
    
    Against
    
    VoteDaniel P. Batista
    
    
    5,466,469
    
    
    
    148,753
    
    
    
    83David M. Koethe
    
    
    5,536,597
    
    
    
    78,625
    
    
    
    84Stanley G. Pijor
    
    
    5,251,138
    
    
    
    364,084
    
    
    
    79Eugene M. Sofranko
    
    
    5,525,309
    
    
    
    89,913
    
    
    
    83




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##### Table of Contents



The total number of shares of LNB Bancorp, Inc. Common Stock, $1.00 par value,
outstanding as of March 1, 2004, the record date of the Annual Meeting was
6,617,726. Total shares voted were 5,615,222 or 84.9% of the outstanding
shares. 
 Item 5. Other Information Not applicable. 
 Item 6. Exhibits and Reports on Form 8-K (a) Exhibits  The following exhibits are filed as part of this report: LNB Bancorp, Inc.
Exhibit Index
Pursuant to Item 601 (a) of Regulation S-K S-KReference
    
    
    
    PageNumber
    
    Exhibit
    
    Number(3.1)
    
    LNB Bancorp, Inc. Second Amended Articles of
Incorporation. Previously filed under Item 6,
Exhibit (3)(i) to Quarterly Report on Form 10-Q
(Commission File No. 0-13202) for the quarter ended
September 30, 2000, filed November 14, 2000 and
incorporated herein by reference.
    
    N/A(3.2)
    
    LNB Bancorp, Inc. Amended Code of Regulations.
Previously filed under Item 7, Exhibit 3 to Form 8-K
(Commission File No. 0-13203) filed January 4, 2001
and incorporated herein by reference.
    
    N/A(4.)
    
    Instruments Defining the Rights of Security Holders.
(See Exhibits 3.1 and 3.2)
    
    N/A(31(a))
    
    Chief Executive Officer Sarbanes-Oxley Act 302
Certification dated April 30, 2004 for LNB Bancorp,
Inc.s Quarterly Report on Form 10-Q for the quarter
ended March 31, 2004.(31(b))
    
    Chief Financial Officer Sarbanes-Oxley Act 302
Certification dated April 30, 2004 for LNB Bancorp,
Inc.s Quarterly Report on Form 10-Q for the quarter
ended March 31, 2004.(32(a))
    
    Certification pursuant to 18 U.S.C. section 1350, as
enacted pursuant to section 906 of the
Sarbanes-Oxley Act of 2002.(32(b))
    
    Certification pursuant to 18 U.S.C. section 1350, as
enacted pursuant to section 906 of the
Sarbanes-Oxley Act of 2002.




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##### Table of Contents



(b) Reports on Form 8-K February 3, 2004  LNB Bancorp, Inc. published and issued a press release
announcing financial results for the three and twelve months ended December 31,
2003 dated January 28, 2004. April 20, 2004  LNB Bancorp, Inc. published and released its 1st Quarter 2004
Report to Shareholders and issued a press release announcing 1st Quarter 2004
Earnings dated April 20, 2004. April 20, 2004  LNB Bancorp, Inc. published and issued a press release
announcing Lorain National Bank to Acquire Mortgage One Banc to Expand Market
Presence in Consumer Mortgage Lending. Also, see the Exhibit Index which is found on the next page of this Form. 
 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: April 30, 2004
    /s/ Terry M. WhiteTerry M. WhiteExecutive Vice President,
Chief Financial Officer and
Corporate Secretary Date: April 30, 2004
    /s/ Mitchell J. Fallis, CPAVice President andChief Accounting Officer




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##### Table of Contents



LNB Bancorp, Inc.
Exhibit Index
Pursuant to Item 601 (a) of Regulation S-K S-KReference
    
    
    
    PageNumber
    
    Exhibit
    
    Number(3.1)
    
    LNB Bancorp, Inc. Second Amended Articles of
Incorporation. Previously filed under Item 6,
Exhibit (3)(i) to Quarterly Report on Form 10-Q
(Commission File No. 0-13202) for the quarter ended
September 30, 2000, filed November 14, 2000 and
incorporated herein by reference.
    
    N/A(3.2)
    
    LNB Bancorp, Inc. Amended Code of Regulations.
Previously filed under Item 7, Exhibit 3 to Form 8-K
(Commission File No. 0-13203) filed January 4, 2001
and incorporated herein by reference.
    
    N/A(4.)
    
    Instruments Defining the Rights of Security Holders.
(See Exhibits 3.1 and 3.2)
    
    N/A(31(a))
    
    Chief Executive Officer Sarbanes-Oxley Act 302
Certification dated April 30, 2004 for LNB Bancorp,
Inc.s Quarterly Report on Form 10-Q for the quarter
ended March 31, 2004.(31(b))
    
    Chief Financial Officer Sarbanes-Oxley Act 302
Certification dated April 30, 2004 for LNB Bancorp,
Inc.s Quarterly Report on Form 10-Q for the quarter
ended March 31, 2004.(32(a))
    
    Certification pursuant to 18 U.S.C. section 1350, as
enacted pursuant to section 906 of the
Sarbanes-Oxley Act of 2002.(32(b))
    
    Certification pursuant to 18 U.S.C. section 1350, as
enacted pursuant to section 906 of the
Sarbanes-Oxley Act of 2002.