##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2009
 OR
 o
    
    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.
  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)
   
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ




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##### 



Part I  Financial InformationItem 1. Financial StatementsConsolidated Balance Sheets March 31, 2009 (unaudited) and December 31, 2008Consolidated Statements of Income (unaudited) for the three months ended March
31, 2009 and March 31, 2008Consolidated Statements of Changes in Shareholders Equity (unaudited) for the
three months ended March 31, 2009 and March 31, 2008Consolidated Statements of Cash Flows (unaudited) for the three months ended
March 31, 2009 and March 31, 2008Notes to the Consolidated Financial Statements (unaudited)Item 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 1A. Risk FactorsItem 2. Unregistered Sales of Equity Securities and Use of ProceedsItem 6. ExhibitsEX-31.1EX-31.2EX-32.1EX-32.2




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##### Table of Contents



Part I  FINANCIAL INFORMATION
 
 Item 1. Financial Statements.
 
 Consolidated Balance Sheets
 March 31, 2009
    
    
    December 31, 2008(unaudited)(Dollars in thousands except share amounts)ASSETSCash and due from banks (Note 3)
    
    $
    19,274
    
    
    $
    21,723Federal funds sold and short-term investments
    
    
    45,400
    
    
    
    15,200Cash and cash equivalents
    
    
    64,674
    
    
    
    36,923Interest-bearing deposits in other banks
    
    
    354
    
    
    
    352Securities: (Note 5)Trading securities, at fair value
    
    
    11,004
    
    
    
    11,261Available for sale, at fair value
    
    
    248,047
    
    
    
    223,052Total securities
    
    
    259,051
    
    
    
    234,313Restricted stock
    
    
    4,985
    
    
    
    4,884Loans held for sale
    
    
    2,742
    
    
    
    3,580Loans: (Note 6)Portfolio loans
    
    
    802,267
    
    
    
    803,551Allowance for loan losses (Note 6)
    
    
    (11,575
    )
    
    
    (11,652
    )Net loans
    
    
    790,692
    
    
    
    791,899Bank premises and equipment, net
    
    
    10,864
    
    
    
    11,504Other real estate owned
    
    
    1,468
    
    
    
    1,108Bank owned life insurance
    
    
    15,905
    
    
    
    15,742Goodwill, net (Note 4)
    
    
    21,582
    
    
    
    21,582Intangible assets, net (Note 4)
    
    
    1,109
    
    
    
    1,142Accrued interest receivable
    
    
    4,319
    
    
    
    4,290Other assets
    
    
    10,590
    
    
    
    8,816Total Assets
    
    $
    1,188,335
    
    
    $
    1,136,135LIABILITIES AND SHAREHOLDERS EQUITYDeposits (Note 8)Demand and other noninterest-bearing
    
    $
    93,831
    
    
    $
    93,994Savings, money market and interest-bearing demand
    
    
    304,535
    
    
    
    292,679Certificates of deposit
    
    
    579,754
    
    
    
    534,502Total deposits
    
    
    978,120
    
    
    
    921,175Short-term borrowings (Note 9)
    
    
    25,802
    
    
    
    22,928Federal Home Loan Bank advances (Note 10)
    
    
    43,357
    
    
    
    53,357Junior subordinated debentures (Note 11)
    
    
    20,620
    
    
    
    20,620Accrued interest payable
    
    
    3,559
    
    
    
    3,813Accrued taxes, expenses and other liabilities
    
    
    8,769
    
    
    
    7,183Total Liabilities
    
    
    1,080,227
    
    
    
    1,029,076Shareholders EquityPreferred stock, Series A Voting, no par value, authorized 750,000
shares, none issued at March 31, 2009 and December 31, 2008.
    
    
    
    
    
    
    Preferred stock, Series B, no par value, 25,223 shares authorized and
issued at March 31, 2009 and December 31, 2008.
    
    
    25,223
    
    
    
    25,223Discount on Series B preferred stock
    
    
    (142
    )
    
    
    (146
    )Warrant to purchase common stock
    
    
    146
    
    
    
    146Common stock, par value $1 per share, authorized 15,000,000 shares,
issued 7,623,857 shares at March 31, 2009 and December 31,
2008.
    
    
    7,624
    
    
    
    7,624Additional paid-in capital
    
    
    37,828
    
    
    
    37,783Retained earnings
    
    
    42,121
    
    
    
    41,682Accumulated other comprehensive income
    
    
    1,400
    
    
    
    839Treasury shares at cost, 328,194 shares at March 31, 2009
and at December 31, 2008
    
    
    (6,092
    )
    
    
    (6,092
    )Total Shareholders Equity
    
    
    108,108
    
    
    
    107,059Total Liabilities and Shareholders Equity
    
    $
    1,188,335
    
    
    $
    1,136,135
 See accompanying notes to consolidated financial statements.




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##### Table of Contents



Consolidated Statements of Income (unaudited)
 Three Months Ended March 31,2009
    
    
    2008(Dollars in thousands except share and per share amounts)Interest and Dividend IncomeLoans
    
    $
    11,611
    
    
    $
    12,576Securities:U.S. Government agencies and corporations
    
    
    2,475
    
    
    
    1,970State and political subdivisions
    
    
    233
    
    
    
    162Trading securities
    
    
    127
    
    
    
    293Other debt and equity securities
    
    
    63
    
    
    
    65Federal funds sold and short-term investments
    
    
    14
    
    
    
    48Total interest and dividend income
    
    
    14,523
    
    
    
    15,114Interest ExpenseDeposits
    
    
    4,902
    
    
    
    6,509Federal Home Loan Bank advances
    
    
    432
    
    
    
    570Short-term borrowings
    
    
    36
    
    
    
    175Junior subordinated debentures
    
    
    255
    
    
    
    340Total interest expense
    
    
    5,625
    
    
    
    7,594Net Interest Income
    
    
    8,898
    
    
    
    7,520Provision for Loan Losses (Note 6)
    
    
    1,809
    
    
    
    474Net interest income after provision for
loan losses
    
    
    7,089
    
    
    
    7,046Noninterest IncomeInvestment and trust services
    
    
    350
    
    
    
    532Deposit service charges
    
    
    1,026
    
    
    
    1,111Other service charges and fees
    
    
    637
    
    
    
    644Income from bank owned life insurance
    
    
    162
    
    
    
    183Other income
    
    
    83
    
    
    
    599Total fees and other income
    
    
    2,258
    
    
    
    3,069Securities gains, net
    
    
    337
    
    
    
    214Gains on sale of loans
    
    
    254
    
    
    
    187Gains (losses) on sale of other assets, net
    
    
    8
    
    
    
    (136
    )Total noninterest income
    
    
    2,857
    
    
    
    3,334Noninterest ExpenseSalaries and employee benefits
    
    
    3,718
    
    
    
    3,778Furniture and equipment
    
    
    1,142
    
    
    
    996Net occupancy
    
    
    644
    
    
    
    657Outside services
    
    
    555
    
    
    
    883Marketing and public relations
    
    
    244
    
    
    
    308Supplies, postage and freight
    
    
    334
    
    
    
    349Telecommunications
    
    
    203
    
    
    
    244Ohio franchise tax
    
    
    232
    
    
    
    220FDIC assessments
    
    
    313
    
    
    
    24Other real estate owned
    
    
    71
    
    
    
    98Electronic banking expenses
    
    
    189
    
    
    
    257Loan and collection expense
    
    
    210
    
    
    
    228Other expense
    
    
    505
    
    
    
    480Total noninterest expense
    
    
    8,360
    
    
    
    8,522Income before income tax expense
    
    
    1,586
    
    
    
    1,858Income tax expense
    
    
    269
    
    
    
    411Net Income
    
    $
    1,317
    
    
    $
    1,447Dividends and amortization on preferred stock
    
    
    299
    
    
    
    Net Income Available to Common Shareholders
    
    $
    1,018
    
    
    $
    1,447Net Income Per Common Share (Note 2)Basic
    
    $
    0.14
    
    
    $
    0.20Diluted
    
    
    0.14
    
    
    
    0.20Dividends declared
    
    
    0.09
    
    
    
    0.18Average Common Shares OutstandingBasic
    
    
    7,295,663
    
    
    
    7,295,663Diluted
    
    
    7,295,663
    
    
    
    7,295,663
 See accompanying notes to consolidated financial statements




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Consolidated
Statements of Shareholders Equity (unaudited)
 AccumulatedPreferred
    
    
    Warrant to
    
    
    
    
    
    
    Additional
    
    
    
    
    
    
    OtherStock
    
    
    Purchase
    
    
    Common
    
    
    Paid-In
    
    
    Retained
    
    
    Comprehensive
    
    
    Treasury(net
of discount)
    
    
    Common Stock
    
    
    Stock
    
    
    Capital
    
    
    Earnings
    
    
    Income (Loss)
    
    
    Stock
    
    
    Total(Dollars in thousands except share and per share amounts)Balance, January 1, 2008
    
    $
    
    
    
    $
    
    
    
    $
    7,624
    
    
    $
    37,712
    
    
    $
    42,951
    
    
    $
    458
    
    
    $
    (6,092
    )
    
    $
    82,653Cumulative affect of adoption
of EITF 06-4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (725
    )
    
    
    
    
    
    
    
    
    
    
    (725
    )Comprehensive income:Net Income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,447
    
    
    
    
    
    
    
    
    
    
    
    1,447Other comprehensive income,
net of tax:Change in unrealized gains
and losses on securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,293
    
    
    
    
    
    
    
    1,293Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,740Share-based compensation income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8Issuance of 851,990 shares of
common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Common dividends declared,
$.18 per share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,313
    )
    
    
    
    
    
    
    
    
    
    
    (1,313
    )Balance, March 31, 2008
    
    $
    
    
    
    $
    
    
    
    $
    7,624
    
    
    $
    37,720
    
    
    $
    42,360
    
    
    $
    1,751
    
    
    $
    (6,092
    )
    
    $
    83,363Balance, January 1, 2009
    
    $
    25,077
    
    
    $
    146
    
    
    $
    7,624
    
    
    $
    37,783
    
    
    $
    41,682
    
    
    $
    839
    
    
    $
    (6,092
    )
    
    $
    107,059Comprehensive income:Net Income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,317
    
    
    
    
    
    
    
    
    
    
    
    1,317Other comprehensive income,
net of tax:Change in unrealized gains
and losses on securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    561
    
    
    
    
    
    
    
    561Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,878Share-based compensation income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    45
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    45Amortization
of discount on
preferred stock
    
    
    4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4Preferred dividends declared,
$8.75 per share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (221
    )
    
    
    
    
    
    
    
    
    
    
    (221
    )Common dividends declared,
$.09 per share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (657
    )
    
    
    
    
    
    
    
    
    
    
    (657
    )Balance, March 31, 2009
    
    $
    25,081
    
    
    $
    146
    
    
    $
    7,624
    
    
    $
    37,828
    
    
    $
    42,121
    
    
    $
    1,400
    
    
    $
    (6,092
    )
    
    $
    108,108
 See accompanying notes to consolidated financial statements




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Consolidated Statements of Cash Flows (unaudited)
 Three Months Ended March 31,2009
    
    
    2008(Dollars in thousands)Operating ActivitiesNet income
    
    $
    1,317
    
    
    $
    1,447Adjustments to reconcile net income to net cash provided by
operating activities:Provision for loan losses
    
    
    1,809
    
    
    
    474Depreciation and amortization
    
    
    427
    
    
    
    468Amortization (accretion) of premiums and discounts
    
    
    241
    
    
    
    (277
    )Amortization of intangibles
    
    
    33
    
    
    
    33Amortization of loan servicing rights
    
    
    89
    
    
    
    58Amortization of deferred loan fees
    
    
    132
    
    
    
    (119
    )Federal deferred income tax expense
    
    
    120
    
    
    
    Securities gains, net
    
    
    (337
    )
    
    
    (214
    )Share-based compensation expense, net of tax
    
    
    45
    
    
    
    8Loans originated for sale
    
    
    (25,330
    )
    
    
    (24,659
    )Proceeds from sales of loan originations
    
    
    26,168
    
    
    
    21,635Net gain from loan sales
    
    
    (254
    )
    
    
    (188
    )Net (gain) loss on sale of other assets
    
    
    (8
    )
    
    
    138Net decrease in accrued interest receivable and other assets
    
    
    (1,792
    )
    
    
    (1,437
    )Net decrease in accrued interest payable, taxes and other liabilities
    
    
    1,332
    
    
    
    27Net cash provided by operating activities
    
    
    3,992
    
    
    
    (2,606
    )Investing ActivitiesProceeds from sales of available-for-sale securities
    
    
    17,979
    
    
    
    14,657Proceeds from maturities of available-for-sale securities
    
    
    9,744
    
    
    
    22,772Purchase of available-for-sale securities
    
    
    (51,514
    )
    
    
    (36,607
    )Purchase of trading securities
    
    
    
    
    
    
    (36,979
    )Change in interest-bearing deposits in other banks
    
    
    2
    
    
    
    Proceeds from sale of trading securities
    
    
    
    
    
    
    33,500Purchase of Federal Home Loan Bank Stock
    
    
    (101
    )
    
    
    (117
    )Net
(increase) decrease in loans made to customers
    
    
    (940
    )
    
    
    437Proceeds from the sale of other real estate owned
    
    
    82
    
    
    
    391Purchase of bank premises and equipment
    
    
    (434
    )
    
    
    (76
    )Net cash used in investing activities
    
    
    (25,182
    )
    
    
    (2,022
    )Financing ActivitiesNet decrease in demand and other noninterest-bearing
    
    
    (163
    )
    
    
    (388
    )Net increase (decrease) in savings, money market and
interest-bearing demand
    
    
    13,458
    
    
    
    (5,574
    )Net increase in certificates of deposit
    
    
    43,650
    
    
    
    14,087Net increase (decrease) in short-term borrowings
    
    
    2,874
    
    
    
    (14,229
    )Proceeds from Federal Home Loan Bank advances
    
    
    15,000
    
    
    
    50,000Payment of Federal Home Loan Bank advances
    
    
    (25,000
    )
    
    
    (35,000
    )Dividends paid
    
    
    (878
    )
    
    
    (1,313
    )Net cash provided by financing activities
    
    
    48,941
    
    
    
    7,583Net increase in cash and cash equivalents
    
    
    27,751
    
    
    
    2,955Cash and cash equivalents, January 1
    
    
    36,923
    
    
    
    23,523Cash and cash equivalents, March 31
    
    $
    64,674
    
    
    $
    26,478Supplemental cash flow informationInterest paid
    
    $
    5,871
    
    
    $
    7,806Income taxes paid
    
    
    627
    
    
    
    1,205Transfer of loans to other real estate owned
    
    
    460
    
    
    
    731




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##### Table of Contents



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (Dollars in thousands except per share amounts)
 (1) Summary of Significant Accounting Policies
 Basis of Presentation
  Use of Estimates
  Segment Information
  Statement of Cash Flows
  Securities




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##### Table of Contents



Restricted Stock
  Loans Held For Sale
  Loans
    Allowance for Loan Losses




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Servicing
  Bank Premises and Equipment
  Goodwill and Core Deposit Intangibles
   Other Real Estate Owned
  Split-Dollar Life Insurance
 Accounting for Deferred Compensation and Postretirement Benefit
Aspects of Endorsement Split-Dollar Life Insurance Arrangements,




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Investment and Trust Services Assets and Income
  Income Taxes
  Comprehensive Income
  Preferred Stock
  New Accounting Pronouncements
  (2) Earnings Per Share




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##### Table of Contents



Three Months Ended March 31,2009
    
    
    2008(Dollars in thousands except per share amounts)Weighted average shares outstanding used in Basic
Earnings per Common Share
    
    
    7,295,663
    
    
    
    7,295,663Dilutive effect of incentive stock options
    
    
    
    
    
    
    Weighted average shares outstanding used in
Diluted Earnings Per Common Share
    
    
    7,295,663
    
    
    
    7,295,663Net Income
    
    $
    1,317
    
    
    $
    1,447Preferred stock dividend and amortization
    
    
    299
    
    
    
    Income Available to Common Shareholders
    
    $
    1,018
    
    
    $
    1,447Basic Earnings Per Common Share
    
    $
    0.14
    
    
    $
    0.20Diluted Earnings Per Common Share
    
    $
    0.14
    
    
    $
    0.20
  (3) Cash and Due from Banks
  (4) Goodwill and Intangible Assets
    March 31, 2009
    
    
    December 31, 2008(Dollars in thousands)Core deposit intangibles
    
    $
    2,643
    
    
    $
    2,643Less: accumulated amortization
    
    
    1,534
    
    
    
    1,501Carrying value of core deposit intangibles
    
    $
    1,109
    
    
    $
    1,142




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##### Table of Contents



(5) Securities
  At March 31, 2009Amortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairCost
    
    
    Gains
    
    
    Losses
    
    
    Value(Dollars in thousands)Securities available for sale:U.S. Government agencies and corporations
    
    $
    48,316
    
    
    $
    646
    
    
    $
    (94
    )
    
    $
    48,868Mortgage backed securities
    
    
    172,011
    
    
    
    4,251
    
    
    
    (157
    )
    
    
    176,105State and political subdivisions
    
    
    22,921
    
    
    
    372
    
    
    
    (219
    )
    
    
    23,074Total securities available for sale
    
    $
    243,248
    
    
    $
    5,269
    
    
    $
    (470
    )
    
    $
    248,047
 At December 31, 2008Amortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairCost
    
    
    Gains
    
    
    Losses
    
    
    Value(Dollars in thousands)Securities available for sale:U.S. Government agencies and corporations
    
    $
    46,418
    
    
    $
    1,134
    
    
    $
    
    
    
    $
    47,552Mortgage backed securities
    
    
    150,718
    
    
    
    2,886
    
    
    
    (196
    )
    
    
    153,408State and political subdivisions
    
    
    21,969
    
    
    
    438
    
    
    
    (315
    )
    
    
    22,092Total securities available for sale
    
    $
    219,105
    
    
    $
    4,458
    
    
    $
    (511
    )
    
    $
    223,052
  Trading Securities held at March 31, 2009Aggregate Unrealized
    
    
    Aggregate Unrealized
    
    
    FairCost
    
    
    Gains recorded to income
    
    
    Losses recorded to income
    
    
    Value(Dollars in thousands)Trading Securities
    
    $
    10,898
    
    
    $
    106
    
    
    $
    
    
    
    $
    11,004
 Trading Securities held at December 31, 2008Aggregate Unrealized
    
    
    Aggregate Unrealized
    
    
    FairCost
    
    
    Gains recorded to income
    
    
    Losses recorded to income
    
    
    Value(Dollars in thousands)Trading Securities
    
    $
    11,245
    
    
    $
    16
    
    
    $
    
    
    
    $
    11,261
 (6) Loans and Allowance for Loan Losses




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##### Table of Contents



March 31, 2009
    
    
    December 31, 2008(Dollars in thousands)Commercial
    
    $
    444,581
    
    
    $
    450,081Real estate mortgage
    
    
    91,690
    
    
    
    96,241Home equity lines of credit
    
    
    104,110
    
    
    
    100,873Installment
    
    
    161,886
    
    
    
    156,356Total Loans
    
    
    802,267
    
    
    
    803,551Allowance for loan losses
    
    
    (11,575
    )
    
    
    (11,652
    )Net Loans
    
    $
    790,692
    
    
    $
    791,899
  March 31, 2009
    
    March 31, 2008(Dollars in thousands)Balance at the beginning of period
    
    $
    11,652
    
    
    $
    7,820Provision for loan losses
    
    
    1,809
    
    
    
    474Loans charged-off
    
    
    (1,972
    )
    
    
    (372
    )Recoveries on loans previously charged-off
    
    
    86
    
    
    
    78Balance at the end of the year
    
    $
    11,575
    
    
    $
    8,000
  (7) Stock Options and Stock Appreciation Rights
   Year Issued2005
    
    2005
    
    2006
    
    2007
    
    2007
    
    2008
    
    2008
    
    2006Option
    
    Option
    
    Option
    
    Option
    
    Option
    
    Option
    
    Option
    
    SARsTypeNumber of Options
    
    
    2,500
    
    
    
    30,000
    
    
    
    30,000
    
    
    
    30,000
    
    
    
    20,000
    
    
    
    50,000
    
    
    
    38,500
    
    
    
    14,500Strike Price
    
    $
    16.50
    
    
    $
    19.17
    
    
    $
    19.10
    
    
    $
    16.00
    
    
    $
    15.35
    
    
    $
    14.47
    
    
    $
    14.47
    
    
    $
    19.00Number of Options Vested
    
    
    2,500
    
    
    
    30,000
    
    
    
    30,000
    
    
    
    20,000
    
    
    
    6,667
    
    
    
    16,666
    
    
    
    12,998
    
    
    
    14,500Assumptions:Risk free interest rate
    
    
    4.50
    %
    
    
    3.92
    %
    
    
    3.66
    %
    
    
    4.73
    %
    
    
    4.72
    %
    
    
    2.94
    %
    
    
    2.94
    %
    
    
    1.42
    %Dividend yield
    
    
    4.36
    %
    
    
    3.76
    %
    
    
    3.77
    %
    
    
    4.50
    %
    
    
    4.69
    %
    
    
    4.98
    %
    
    
    4.98
    %
    
    
    6.86
    %Volatility
    
    
    18.48
    %
    
    
    17.30
    %
    
    
    17.66
    %
    
    
    16.52
    %
    
    
    15.33
    %
    
    
    15.68
    %
    
    
    15.68
    %
    
    
    25.19
    %Expected Life  years
    
    
    5
    
    
    
    6
    
    
    
    6
    
    
    
    7
    
    
    
    6
    
    
    
    6
    
    
    
    6
    
    
    
    5




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##### Table of Contents



2009WeightedAverage ExerciseOptions
    
    
    Price per ShareOptions outstanding, December 31, 2008
    
    
    203,500
    
    
    $
    16.18Granted
    
    
    
    
    
    
    Forfeited
    
    
    (2,500
    )
    
    
    14.47Exercised, expired or cancelled
    
    
    
    
    
    
    Options outstanding, March 31, 2009
    
    
    201,000
    
    
    $
    16.20Options vested and exercisable, March 31, 2009
    
    
    118,831
    
    
    $
    17.18
 (8) Deposits
  March 31, 2009
    
    
    December 31, 2008(Dollars in thousands)Demand and other noninterest-bearing
    
    $
    93,831
    
    
    $
    93,994Interest checking
    
    
    122,748
    
    
    
    115,102Savings
    
    
    80,189
    
    
    
    78,526Money market accounts
    
    
    101,598
    
    
    
    99,051Consumer time deposits
    
    
    473,481
    
    
    
    449,772Public time deposits
    
    
    93,782
    
    
    
    72,247Brokered time deposits
    
    
    12,491
    
    
    
    12,483Total deposits
    
    $
    978,120
    
    
    $
    921,175
   After 12 months
    
    
    After 36 monthsWithin
    
    
    but within 36
    
    
    but within 6012 months
    
    
    months
    
    
    months
    
    
    After 5 years
    
    
    Total(Dollars in thousands)Consumer time deposits
    
    $
    401,419
    
    
    $
    63,011
    
    
    $
    9,034
    
    
    $
    17
    
    
    $
    473,481Public time deposits
    
    
    91,712
    
    
    
    1,858
    
    
    
    212
    
    
    
    
    
    
    
    93,782Brokered time deposits
    
    
    12,491
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,491Total time deposits
    
    $
    505,622
    
    
    $
    64,869
    
    
    $
    9,246
    
    
    $
    17
    
    
    $
    579,754




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##### Table of Contents



(9) Short-Term Borrowings
   March 31, 2009
    
    

December 31, 2008(Dollars in thousands)Securities sold under repurchase agreementsPeriod End:Outstanding
    
    $
    25,802
    
    
    $
    22,928Interest rate
    
    
    0.50
    %
    
    
    0.50
    %Average:Outstanding
    
    $
    28,096
    
    
    $
    25,875Interest rate
    
    
    0.52
    %
    
    
    1.19
    %Maximum month-end balance
    
    $
    32,351
    
    
    $
    30,781Federal funds purchasedPeriod End:Outstanding
    
    $
    
    
    
    $
    Interest rate
    
    
    n/a
    
    
    
    n/aAverage:Outstanding
    
    $
    
    
    
    $
    1,989Interest rate
    
    
    n/a
    
    
    
    3.87
    %Maximum month-end balance
    
    $
    
    
    
    $
    12,900
 (10) Federal Home Loan Bank Advances
  March 31, 2009
    
    
    December 31, 2008(Dollars in thousands)Maturities January 2009 through
December 2009, with fixed rates
ranging from 3.36% to 5.00%, averaging
4.86% in 2009 and 3.60% in 2008.
    
    
    796
    
    
    
    25,794Maturity January 2010, fixed rate 3.58%
    
    
    10,000
    
    
    
    10,000Maturities January 2011 through
February 2011, with fixed rates
ranging from 3.17% to 3.67%, averaging
3.50% for 2009 and 2008.
    
    
    15,000
    
    
    
    15,000Maturity
January 2012, fixed rate 2.37%
    
    
    15,000Maturity January 2014, fixed rate 3.55%
    
    
    61
    
    
    
    63Maturity July 2015, fixed rate 4.76%
    
    
    2,500
    
    
    
    2,500Total FHLB advances
    
    $
    43,357
    
    
    $
    53,357




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##### Table of Contents



(11) Trust Preferred Securities
    (12) Commitments, Credit Risk, and Contingencies
     Amount(Dollars in thousands)Commitments to extend credit
    
    $
    87,591Home equity lines of credit
    
    
    79,617Standby letters of credit
    
    
    9,027Total
    
    $
    176,235




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##### Table of Contents



(13) Estimated Fair Value of Financial Instruments
   
    
    The carrying value of Cash and due from banks, Federal funds sold,
short-term investments, interest-bearing deposits in other banks and accrued
interest receivable and other financial assets is a reasonable estimate of
fair value due to the short-term nature of the asset.
    
    The fair value of investment securities is based on quoted market prices,
where available. If quoted market prices are not available, fair value is
estimated using the quoted market prices of comparable instruments.
    
    For variable rate loans with interest rates that may be adjusted on a
quarterly, or more frequent basis, the carrying amount is a reasonable
estimate of fair value. The fair value of other types of loans is estimated
by discounting future cash flows using the current rates at which similar
loans would be made to borrowers with similar credit ratings and for the
same remaining maturities.
    
    The carrying value approximates the fair value for bank owned life insurance.
    
    The fair value of deposits with no stated maturity, such as
noninterest-bearing demand deposits, savings, money market, checking and
interest-bearing checking, is equal to the amount payable on demand as of
the balance sheet date, for each year presented. The fair value of
fixed-maturity certificates of deposit is estimated using the rates
currently offered for deposits of similar remaining maturities. For variable
rate certificates of deposit, the carrying amount is a reasonable estimate
of fair value.
    
    Securities sold under repurchase agreements, other short-term borrowings,
accrued interest payable and other financial liabilities approximate fair
value due to the short-term nature of the liability.
    
    The fair value of Federal Home Loan Bank advances is estimated by
discounting future cash flows using current FHLB rates for the remaining
term to maturity.
    
    The fair value of junior subordinated debentures is based on the discounted
value of contractual cash flows using rates currently offered for similar
maturities.
    
    The fair value of commitments to extend credit approximates the fees charged
to make these commitments; since rates and fees of the commitment contracts
approximates those currently charged to originate similar commitments. The
carrying amount and fair value of off-balance sheet instruments is not
significant as of March 31, 2009 and December 31, 2008.
 Limitations




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##### Table of Contents



March 31, 2009
    
    
    December 31, 2008Carrying
    
    
    Estimated Fair
    
    
    Carrying
    
    
    Estimated FairValue
    
    
    Value
    
    
    Value
    
    
    Value(Dollars in thousands)Financial assetsCash and due from banks, Federal
funds sold, short-term investments
and interest-bearing deposits in
other banks
    
    $
    65,028
    
    
    $
    65,028
    
    
    $
    37,275
    
    
    $
    37,275Securities
    
    
    259,051
    
    
    
    259,051
    
    
    
    234,313
    
    
    
    234,313Restricted stock
    
    
    4,985
    
    
    
    4,985
    
    
    
    4,884
    
    
    
    4,884Portfolio loans, net
    
    
    790,692
    
    
    
    823,938
    
    
    
    791,899
    
    
    
    836,432Loans held for sale
    
    
    2,742
    
    
    
    2,742
    
    
    
    3,580
    
    
    
    3,580Accrued interest receivable
    
    
    4,319
    
    
    
    4,319
    
    
    
    4,290
    
    
    
    4,290Financial liabilitiesDeposits:Demand, savings and money market
    
    
    398,366
    
    
    
    423,871
    
    
    
    422,855
    
    
    
    422,855Certificates of deposit
    
    
    579,754
    
    
    
    590,300
    
    
    
    498,320
    
    
    
    546,497Total deposits
    
    
    978,120
    
    
    
    1,014,171
    
    
    
    921,175
    
    
    
    969,352Short-term borrowings
    
    
    25,802
    
    
    
    25,802
    
    
    
    22,928
    
    
    
    22,928Federal Home Loan Bank advances
    
    
    43,357
    
    
    
    44,347
    
    
    
    53,357
    
    
    
    54,647Junior subordinated debentures
    
    
    20,620
    
    
    
    22,256
    
    
    
    20,620
    
    
    
    21,492Accrued interest payable
    
    
    3,559
    
    
    
    3,559
    
    
    
    3,813
    
    
    
    3,813
  ITEM 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
 Introduction
   Forward-Looking Statements
  
    
    significant increases in competitive pressure in the banking and financial services industries;
    
    changes in the interest rate environment which could reduce anticipated or actual margins;




---



##### Table of Contents




    
    changes in political conditions or the legislative or regulatory environment, including new or
heightened legal standards and regulatory requirements, practices or expectations, which may
impede profitability or affect the Corporations financial condition;
    
    persisting volatility and limited credit availability in the financial markets, particularly if
The Emergency Economic Stabilization Act of 2008 (EESA), the American Recovery and
Reinvestment Act of 2009, the Financial Stability Plan announced on February 10, 2009, by the
Secretary of the U.S. Treasury, in coordination with other financial institution regulators,
and other initiatives undertaken by the U.S. government do not have the intended effect on the
financial markets;
    
    limitations on the Corporations ability to return capital to shareholders and dilution of the
Corporations common shares that may result from the terms of the Capital Purchase Program
(CPP), pursuant to which the Corporation issued securities to the United States Department of
the Treasury (the U.S. Treasury);
    
    increases in interest rates or further weakening economic conditions that could constrain
borrowers ability to repay outstanding loans or diminish the value of the collateral securing
those loans;
    
    adverse effects on the Corporations ability to engage in routine funding transactions as a
result of the actions and commercial soundness of other financial institutions;
    
    general economic conditions, either nationally or regionally (especially in northeastern Ohio),
becoming less favorable than expected resulting in, among other things, a deterioration in
credit quality of assets;
    
    increases in deposit insurance premiums or assessments imposed on the Corporation by the FDIC;
    
    difficulty attracting and/or retaining key executives and/or relationship managers at
compensation levels necessary to maintain a competitive market position;
    
    changes occurring in business conditions and inflation;
    
    changes in technology;
    
    changes in trade, monetary, fiscal and tax policies;
    
    changes in the securities markets, in particular, continued disruption in the fixed income
markets and adverse capital market conditions;
    
    continued disruption in the housing markets and related conditions in the financial markets; and
    
    changes in general economic conditions and competition in the geographic and business areas in
which the Corporation conducts its operations, particularly in light of the recent
consolidation of competing financial institutions; as well as the risks and uncertainties
described from time to time in the Corporations reports as filed with the Securities and
Exchange Commission.
 Critical Accounting Policies and Estimates




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##### Table of Contents



Allowance for Loan Losses
       Income Taxes




---



##### Table of Contents



New Accounting Pronouncements
 Form
10-Q.
 Summary of Earnings (Dollars in thousands except per share data)




---



##### Table of Contents



Results of Operations
 Net Interest Income
  Three Months Ended March 31, 2009 versus Three Months Ended March 31, 2008
    Table 1: Condensed Consolidated Average Balance Sheets
 Interest, Rate, and Rate/ Volume differentials are stated on a Fully-Tax Equivalent
(FTE) Basis.




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##### Table of Contents



Three Months Ended March 31,2009
    
    
    2008Average
Balance
    
    
    Interest
    
    
    Rate
    
    
    Average
Balance
    
    
    Interest
    
    
    Rate(Dollars in thousands)Assets:U.S. Govt agencies and corporations
and restricted stock
    
    $
    228,377
    
    
    $
    2,665
    
    
    
    4.73
    %
    
    $
    203,393
    
    
    $
    2,327
    
    
    
    4.60
    %State and political subdivisions
    
    
    22,595
    
    
    
    337
    
    
    
    6.04
    
    
    
    15,435
    
    
    
    234
    
    
    
    6.08Federal funds sold and short-term
investments
    
    
    40,649
    
    
    
    14
    
    
    
    0.14
    
    
    
    7,212
    
    
    
    48
    
    
    
    2.51Commercial loans
    
    
    447,048
    
    
    
    6,425
    
    
    
    5.83
    
    
    
    436,421
    
    
    
    7,319
    
    
    
    6.73Real estate mortgage loans
    
    
    95,044
    
    
    
    1,437
    
    
    
    6.13
    
    
    
    100,564
    
    
    
    1,485
    
    
    
    5.92Home equity lines of credit
    
    
    102,128
    
    
    
    1,010
    
    
    
    4.01
    
    
    
    81,567
    
    
    
    1,178
    
    
    
    5.79Installment loans
    
    
    163,469
    
    
    
    2,757
    
    
    
    6.84
    
    
    
    143,784
    
    
    
    2,617
    
    
    
    7.30Total Earning Assets
    
    $
    1,099,310
    
    
    $
    14,645
    
    
    
    5.40
    %
    
    $
    988,376
    
    
    $
    15,208
    
    
    
    6.17
    %Allowance for loan loss
    
    
    (11,565
    )
    
    
    
    
    
    
    
    
    
    
    (7,913
    )Cash and due from banks
    
    
    19,052
    
    
    
    
    
    
    
    
    
    
    
    24,473Bank owned life insurance
    
    
    15,801
    
    
    
    
    
    
    
    
    
    
    
    15,564Other assets
    
    
    47,297
    
    
    
    
    
    
    
    
    
    
    
    42,704Total Assets
    
    $
    1,169,895
    
    
    
    
    
    
    
    
    
    
    $
    1,063,204Liabilities and Shareholders EquityConsumer time deposits
    
    $
    470,027
    
    
    $
    3,840
    
    
    
    3.13
    %
    
    $
    364,150
    
    
    $
    4,157
    
    
    
    4.58
    %Public time deposits
    
    
    83,911
    
    
    
    613
    
    
    
    2.96
    
    
    
    65,429
    
    
    
    738
    
    
    
    4.52Brokered time deposits
    
    
    12,485
    
    
    
    132
    
    
    
    4.28
    
    
    
    23,637
    
    
    
    317
    
    
    
    5.38Money market accounts
    
    
    94,854
    
    
    
    157
    
    
    
    3.31
    
    
    
    123,593
    
    
    
    827
    
    
    
    2.68Savings deposits
    
    
    78,325
    
    
    
    52
    
    
    
    0.27
    
    
    
    82,032
    
    
    
    144
    
    
    
    0.70Interest-bearing demand
    
    
    119,768
    
    
    
    108
    
    
    
    0.37
    
    
    
    118,100
    
    
    
    326
    
    
    
    1.11Short-term borrowings
    
    
    28,096
    
    
    
    36
    
    
    
    0.52
    
    
    
    26,080
    
    
    
    174
    
    
    
    2.65FHLB advances
    
    
    52,800
    
    
    
    432
    
    
    
    3.32
    
    
    
    60,250
    
    
    
    570
    
    
    
    3.79Trust preferred securities
    
    
    20,752
    
    
    
    256
    
    
    
    4.99
    
    
    
    20,798
    
    
    
    340
    
    
    
    6.56Total Interest-Bearing Liabilities
    
    $
    961,018
    
    
    $
    5,626
    
    
    
    2.37
    %
    
    $
    884,069
    
    
    $
    7,593
    
    
    
    3.44
    %Noninterest-bearing deposits
    
    
    90,454
    
    
    
    
    
    
    
    
    
    
    
    84,914Other liabilities
    
    
    10,718
    
    
    
    
    
    
    
    
    
    
    
    10,296Shareholders Equity
    
    
    107,705
    
    
    
    
    
    
    
    
    
    
    
    83,925Total Liabilities and
Shareholders Equity
    
    $
    1,169,895
    
    
    
    
    
    
    
    
    
    
    $
    1,063,204Net interest Income (FTE)
    
    
    
    
    
    $
    9,019
    
    
    
    3.33
    %
    
    
    
    
    
    $
    7,615
    
    
    
    3.09
    %Taxable Equivalent Adjustment
    
    
    
    
    
    
    (121
    )
    
    
    (0.05
    )
    
    
    
    
    
    
    (95
    )
    
    
    (0.04
    )Net Interest Income Per
Financial Statements
    
    
    
    
    
    $
    8,898
    
    
    
    
    
    
    
    
    
    
    $
    7,520Net Yield on Earning Assets
    
    
    
    
    
    
    
    
    
    
    3.28
    %
    
    
    
    
    
    
    
    
    
    
    3.05
    %
 Rate/Volume




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##### Table of Contents



Table 2: Rate/Volume Analysis of Net Interest Income (FTE)
 Three Months Ended March 31,Increase (Decrease) in Interest Income/Expensein 2009 over 2008Volume
    
    
    Rate
    
    
    Total(Dollars in thousands)U.S. Govt agencies and corporations and
restricted stock
    
    $
    270
    
    
    $
    68
    
    
    $
    338State and political subdivisions
    
    
    106
    
    
    
    (3
    )
    
    
    103Federal funds sold and short-term investments
    
    
    2
    
    
    
    (36
    )
    
    
    (34
    )Commercial loans
    
    
    159
    
    
    
    (1,053
    )
    
    
    (894
    )Real estate mortgage loans
    
    
    (105
    )
    
    
    57
    
    
    
    (48
    )Home equity lines of credit
    
    
    137
    
    
    
    (305
    )
    
    
    (168
    )Installment loans
    
    
    336
    
    
    
    (196
    )
    
    
    140Total Interest Income
    
    
    905
    
    
    
    (1,468
    )
    
    
    (563
    )Consumer time deposits
    
    
    445
    
    
    
    (762
    )
    
    
    (317
    )Public time deposits
    
    
    89
    
    
    
    (214
    )
    
    
    (125
    )Brokered time deposits
    
    
    (146
    )
    
    
    (39
    )
    
    
    (185
    )Money market accounts
    
    
    (61
    )
    
    
    (609
    )
    
    
    (670
    )Savings deposits
    
    
    (3
    )
    
    
    (89
    )
    
    
    (92
    )Interest bearing demand
    
    
    2
    
    
    
    (220
    )
    
    
    (218
    )Short-term borrowings
    
    
    2
    
    
    
    (140
    )
    
    
    (138
    )FHLB advances
    
    
    (68
    )
    
    
    (70
    )
    
    
    (138
    )Trust preferred securities
    
    
    
    
    
    
    (84
    )
    
    
    (84
    )Total Interest Expense
    
    
    260
    
    
    
    (2,227
    )
    
    
    (1,967
    )Net Interest Income (FTE)
    
    $
    645
    
    
    $
    759
    
    
    $
    1,404




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##### Table of Contents



Noninterest Income
 Table 3: Details on Noninterest Income
 Three Months Ended March 31,2009
    
    
    2008(Dollars in thousands)Investment and trust services
    
    $
    350
    
    
    $
    532Deposit service charges
    
    
    1,026
    
    
    
    1,111Electronic banking fees
    
    
    637
    
    
    
    644Income from bank owned life insurance
    
    
    162
    
    
    
    183Other income
    
    
    83
    
    
    
    599Total fees and other income
    
    
    2,258
    
    
    
    3,069Gain on sale of securities
    
    
    337
    
    
    
    214Gain on sale of loans
    
    
    254
    
    
    
    187Gains (losses) on sale of other assets
    
    
    8
    
    
    
    (136
    )Total noninterest income
    
    $
    2,857
    
    
    $
    3,334
 Three Months Ended March 31, 2009 as compared to the Three Months Ended March 31, 2008




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##### Table of Contents



Noninterest Expense
 Table 4: Details on Noninterest Expense
 Three Months Ended March 31,2009
    
    
    2008(Dollars in thousands)Salaries and employee benefits
    
    
    3,718
    
    
    
    3,778Furniture and equipment
    
    
    1,142
    
    
    
    996Net occupancy
    
    
    644
    
    
    
    657Outside services
    
    
    555
    
    
    
    883Marketing and public relations
    
    
    244
    
    
    
    308Supplies, postage and freight
    
    
    334
    
    
    
    349Telecommunications
    
    
    203
    
    
    
    244Ohio Franchise tax
    
    
    232
    
    
    
    220FDIC Assessments
    
    
    313
    
    
    
    24Other real estate owned
    
    
    71
    
    
    
    98Electronic banking expenses
    
    
    189
    
    
    
    257Loan and Collection Expense
    
    
    210
    
    
    
    228Other expense
    
    
    505
    
    
    
    480Total noninterest expense
    
    
    8,360
    
    
    
    8,522
 Three Months Ended March 31, 2009 as compared to the Three Months Ended March 31, 2008
  Income taxes




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##### Table of Contents



Balance Sheet Analysis
 Overview
  Securities
  Loans
  Table 5: Details on Loan Balances
 March 31, 2009
    
    
    December 31, 2008(Dollars in thousands)Real estate loans (includes loans secured primarily by real estate only):Construction and land development
    
    $
    62,648
    
    
    $
    60,725One to four family residential
    
    
    228,969
    
    
    
    231,757Multi-family residential
    
    
    27,222
    
    
    
    26,284Non-farm non-residential properties
    
    
    292,094
    
    
    
    296,393Commercial and industrial loans
    
    
    55,967
    
    
    
    60,846Personal loans to individuals:Auto, single payment and installment
    
    
    131,152
    
    
    
    123,807All other loans
    
    
    4,215
    
    
    
    3,739Total loans
    
    
    802,267
    
    
    
    803,551Allowance for loan losses
    
    
    (11,575
    )
    
    
    (11,652
    )Net loans
    
    $
    790,692
    
    
    $
    791,899




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##### Table of Contents



Deposits
 Table 6: Deposits and Borrowings
 Average Balances Outstanding
    
    Average Rates PaidFor the three months endedMarch 31, 2009
    
    December 31, 2008
    
    March 31, 2009
    
    December 31, 2008(Dollars in thousands)Demand deposits
    
    $
    90,454
    
    
    $
    90,002
    
    
    
    0.00
    %
    
    
    0.00
    %Interest checking
    
    
    119,768
    
    
    
    121,596
    
    
    
    0.37
    
    
    
    0.70Savings deposits
    
    
    78,325
    
    
    
    79,686
    
    
    
    0.27
    
    
    
    0.49Money market accounts
    
    
    94,854
    
    
    
    106,059
    
    
    
    0.67
    
    
    
    1.24Consumer time deposits
    
    
    470,027
    
    
    
    435,846
    
    
    
    3.31
    
    
    
    3.46Public time deposits
    
    
    83,911
    
    
    
    74,386
    
    
    
    2.96
    
    
    
    4.27Brokered time deposits
    
    
    12,485
    
    
    
    12,479
    
    
    
    4.28
    
    
    
    3.72Total Deposits
    
    
    949,824
    
    
    
    920,054
    
    
    
    2.31
    
    
    
    2.28Short-term borrowings
    
    
    28,096
    
    
    
    22,974
    
    
    
    0.52
    
    
    
    0.52FHLB borrowings
    
    
    52,800
    
    
    
    59,345
    
    
    
    3.32
    
    
    
    3.71Junior subordinated debentures
    
    
    20,752
    
    
    
    20,759
    
    
    
    4.99
    
    
    
    5.43Total borrowings
    
    
    101,648
    
    
    
    103,078
    
    
    
    2.89
    
    
    
    3.34Total funding
    
    $
    1,051,472
    
    
    $
    1,023,132
    
    
    
    2.37
    %
    
    
    2.61
    %
  Borrowings




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##### Table of Contents



Regulatory Capital
    
 ITEM 3. Quantitative and Qualitative Disclosures About Market Risk.
 RISK ELEMENTS




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##### Table of Contents



Credit Risk Management
  Nonperforming Assets, Delinquency and Potential Problem Loans
     Table 8: Nonperforming Assets
 March 31, 2009
    
    December 31, 2008(Dollars in thousands)Commercial loans
    
    $
    15,450
    
    
    $
    14,209Real estate mortgage
    
    
    3,858
    
    
    
    3,465Home equity lines of credit
    
    
    886
    
    
    
    989Installment loans
    
    
    1,107
    
    
    
    929Total nonperforming loans
    
    
    21,301
    
    
    
    19,592Other foreclosed assets
    
    
    1,468
    
    
    
    1,108Total nonperforming assets
    
    $
    22,769
    
    
    $
    20,700Loans 90 days past due accruing interest
    
    $
    
    
    
    $
    Allowance for loan losses to nonperforming assets
    
    
    50.84
    %
    
    
    56.29
    %




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##### Table of Contents



Provision and Allowance for Loan Losses
  Table 9: Analysis of Allowance for Loan Losses
 Three Months Ended March 31,2009
    
    
    2008(Dollars in thousands)Balance at beginning of year
    
    $
    11,652
    
    
    $
    7,820Charge-offs:Commercial
    
    
    (974
    )
    
    
    (18
    )Real estate mortgage
    
    
    (57
    )
    
    
    (106
    )Home equity lines of credit
    
    
    (371
    )
    
    
    (10
    )Installment
    
    
    (521
    )
    
    
    (186
    )DDA Overdrafts
    
    
    (49
    )
    
    
    (52
    )Total charge-offs
    
    
    (1,972
    )
    
    
    (372
    )Recoveries:Commercial
    
    
    33
    
    
    
    27Real estate mortgage
    
    
    
    
    
    
    Home equity lines of credit
    
    
    1
    
    
    
    Installment
    
    
    34
    
    
    
    33DDA Overdrafts
    
    
    18
    
    
    
    18Total Recoveries
    
    
    86
    
    
    
    78Net Charge-offs
    
    
    (1,886
    )
    
    
    (294
    )Provision for loan losses
    
    
    1,809
    
    
    
    474Balance at end of year
    
    $
    11,575
    
    
    $
    8,000




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##### Table of Contents



Market Risk Management
     
 ITEM 4. Controls and Procedures




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##### Table of Contents



PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
 Issuer Purchases of Equity Securities
  
 Item 6. Exhibits.




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##### Table of Contents



SIGNATURES
  LNB BANCORP, INC.(Registrant)Date: May 8, 2009
    
    /s/ Gary J. ElekGary J. ElekChief Financial Officer(Duly Authorized Officer, and Principal
Financial Officer)
 
 Exhibit31.1
    
    Chief Executive Officer Rule 13a -14(a)/15d -14(a) Certification.31.2
    
    Chief Financial Officer Rule 13a -14(a)/15d -14(a) Certification.32.1
    
    Certification pursuant to 18 U.S.C. section 1350, as enacted pursuant
to section 906 of the Sarbanes-Oxley Act of 2002.32.2
    
    Certification pursuant to 18 U.S.C. section 1350, as enacted pursuant
to section 906 of the Sarbanes-Oxley Act of 2002.