##### 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, 2010
 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
(State of Incorporation)
    
    34-1406303
(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 o
    
    Non-accelerated filer þ
    
    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, 2010 (unaudited) and December 31, 2009
    
    
    3Consolidated Statements of Income (unaudited) for the three months ended
March 31, 2010 and March 31, 2009
    
    
    4Consolidated Statements of Shareholders Equity (unaudited) for the three
months ended March 31, 2010 and March 31, 2009
    
    
    5Consolidated Statements of Cash Flows (unaudited) for the three months
ended March 31, 2010 and March 31, 2009
    
    
    6Notes to the Consolidated Financial Statements (unaudited)
    
    
    7Item 2. Managements Discussion and Analysis of Financial Condition and
Results of Operations
    
    
    19Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    32Item 4. Controls and Procedures
    
    
    34Part II  Other Information
    
    
    34Item 1. Legal Proceedings
    
    
    34Item 1A. Risk Factors
    
    
    35Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    35Item 6. Exhibits
    
    
    35EX-31.1EX-31.2EX-32.1EX-32.2
  2




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##### Table of Contents



Part I  FINANCIAL INFORMATION
 
 Item 1. Financial Statements.
 
 Consolidated Balance Sheets
 March 31, 2010
    
    
    December 31, 2009(unaudited)(Dollars in thousands except share amounts)ASSETSCash and due from banks (Note 3)
    
    $
    17,156
    
    
    $
    16,933Federal funds sold and short-term investments
    
    
    37,211
    
    
    
    10,000Cash and cash equivalents
    
    
    54,367
    
    
    
    26,933Interest-bearing deposits in other banks
    
    
    359
    
    
    
    359Securities: (Note 5)Trading securities, at fair value
    
    
    
    
    
    
    8,445Available for sale, at fair value
    
    
    248,112
    
    
    
    247,037Total securities
    
    
    248,112
    
    
    
    255,482Restricted stock
    
    
    4,985
    
    
    
    4,985Loans held for sale
    
    
    3,691
    
    
    
    3,783Loans: (Note 6)Portfolio loans
    
    
    792,585
    
    
    
    803,197Allowance for loan losses (Note 6)
    
    
    (19,183
    )
    
    
    (18,792
    )Net loans
    
    
    773,402
    
    
    
    784,405Bank premises and equipment, net
    
    
    9,782
    
    
    
    10,105Other real estate owned
    
    
    1,467
    
    
    
    1,264Bank owned life insurance
    
    
    16,607
    
    
    
    16,435Goodwill, net (Note 4)
    
    
    21,582
    
    
    
    21,582Intangible assets, net (Note 4)
    
    
    971
    
    
    
    1,005Accrued interest receivable
    
    
    3,882
    
    
    
    4,072Other assets
    
    
    19,556
    
    
    
    19,099Total Assets
    
    $
    1,158,763
    
    
    $
    1,149,509LIABILITIES AND SHAREHOLDERS EQUITYDeposits (Note 7)Demand and other noninterest-bearing
    
    $
    111,896
    
    
    $
    118,505Savings, money market and interest-bearing demand
    
    
    304,711
    
    
    
    305,045Certificates of deposit
    
    
    562,445
    
    
    
    547,883Total deposits
    
    
    979,052
    
    
    
    971,433Short-term borrowings (Note 8)
    
    
    1,589
    
    
    
    1,457Federal Home Loan Bank advances (Note 9)
    
    
    42,504
    
    
    
    42,505Junior subordinated debentures (Note 10)
    
    
    20,620
    
    
    
    20,620Accrued interest payable
    
    
    1,951
    
    
    
    2,074Accrued taxes, expenses and other liabilities
    
    
    7,666
    
    
    
    7,279Total Liabilities
    
    
    1,053,382
    
    
    
    1,045,368Shareholders EquityPreferred stock, Series A Voting, no par value, authorized 750,000
shares, none issued at March 31, 2010 and December 31, 2009.
    
    
    
    
    
    
    Preferred stock, Series B, no par value, 25,223 shares authorized and
issued at March 31, 2010 and December 31, 2009.
    
    
    25,223
    
    
    
    25,223Discount on Series B preferred stock
    
    
    (127
    )
    
    
    (131
    )Warrant to purchase common stock
    
    
    146
    
    
    
    146Common stock, par value $1 per share, authorized 15,000,000 shares,
issued 7,691,355 shares at March 31, 2010 and 7,623,857 at December
31, 2009.
    
    
    7,691
    
    
    
    7,624Additional paid-in capital
    
    
    37,808
    
    
    
    37,862Retained earnings
    
    
    37,821
    
    
    
    36,883Accumulated other comprehensive income
    
    
    2,911
    
    
    
    2,626Treasury shares at cost, 328,194 shares at March 31, 2010
and at December 31, 2009
    
    
    (6,092
    )
    
    
    (6,092
    )Total Shareholders Equity
    
    
    105,381
    
    
    
    104,141Total Liabilities and Shareholders Equity
    
    $
    1,158,763
    
    
    $
    1,149,509
 See accompanying notes to consolidated financial statements.
 3




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##### Table of Contents



Consolidated Statements of Income (unaudited)
 Three Months EndedMarch 31, 2010
    
    
    March 31, 2009(Dollars in thousands except share and per share amounts)Interest and Dividend IncomeLoans
    
    $
    10,792
    
    
    $
    11,611Securities:U.S. Government agencies and corporations
    
    
    2,136
    
    
    
    2,475State and political subdivisions
    
    
    246
    
    
    
    233Trading securities
    
    
    49
    
    
    
    127Other debt and equity securities
    
    
    61
    
    
    
    63Federal funds sold and short-term investments
    
    
    9
    
    
    
    14Total interest and dividend income
    
    
    13,293
    
    
    
    14,523Interest ExpenseDeposits
    
    
    2,980
    
    
    
    4,902Federal Home Loan Bank advances
    
    
    318
    
    
    
    432Short-term borrowings
    
    
    1
    
    
    
    36Junior subordinated debentures
    
    
    215
    
    
    
    255Total interest expense
    
    
    3,514
    
    
    
    5,625Net Interest Income
    
    
    9,779
    
    
    
    8,898Provision for Loan Losses (Note 6)
    
    
    2,109
    
    
    
    1,809Net interest income after provision for
loan losses
    
    
    7,670
    
    
    
    7,089Noninterest IncomeInvestment and trust services
    
    
    445
    
    
    
    350Deposit service charges
    
    
    939
    
    
    
    1,026Other service charges and fees
    
    
    794
    
    
    
    637Income from bank owned life insurance
    
    
    171
    
    
    
    162Other income
    
    
    93
    
    
    
    83Total fees and other income
    
    
    2,442
    
    
    
    2,258Securities gains, net
    
    
    38
    
    
    
    337Gains on sale of loans
    
    
    192
    
    
    
    254Gains (losses) on sale of other assets, net
    
    
    (21
    )
    
    
    8Total noninterest income
    
    
    2,651
    
    
    
    2,857Noninterest ExpenseSalaries and employee benefits
    
    
    3,918
    
    
    
    3,718Furniture and equipment
    
    
    933
    
    
    
    1,142Net occupancy
    
    
    615
    
    
    
    644Outside services
    
    
    553
    
    
    
    555Marketing and public relations
    
    
    246
    
    
    
    244Supplies, postage and freight
    
    
    342
    
    
    
    334Telecommunications
    
    
    212
    
    
    
    203Ohio franchise tax
    
    
    281
    
    
    
    232FDIC assessments
    
    
    528
    
    
    
    313Other real estate owned
    
    
    81
    
    
    
    71Electronic banking expenses
    
    
    184
    
    
    
    189Loan and collection expense
    
    
    323
    
    
    
    210Other expense
    
    
    477
    
    
    
    505Total noninterest expense
    
    
    8,693
    
    
    
    8,360Income before income tax expense
    
    
    1,628
    
    
    
    1,586Income tax expense
    
    
    297
    
    
    
    269Net Income
    
    $
    1,331
    
    
    $
    1,317Dividends and accretion on preferred stock
    
    
    319
    
    
    
    299Net Income Available to Common Shareholders
    
    $
    1,012
    
    
    $
    1,018Net Income Per Common Share (Note 2)Basic
    
    $
    0.14
    
    
    $
    0.14Diluted
    
    
    0.14
    
    
    
    0.14Dividends declared
    
    
    0.01
    
    
    
    0.09Average Common Shares OutstandingBasic
    
    
    7,322,662
    
    
    
    7,295,663Diluted
    
    
    7,322,662
    
    
    
    7,295,663
 See
accompanying notes to consolidated financial statements
 4




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##### Table of Contents



Consolidated Statements of Shareholders Equity (unaudited)
 Preferred Stock
    
    
    Warrant to
    
    
    
    
    
    
    Additional
    
    
    
    
    
    
    Accumulated Other(Net of
    
    
    Purchase Common
    
    
    Common
    
    
    Paid-In
    
    
    
    
    
    
    Comprehensive
    
    
    TreasuryDiscount)
    
    
    Stock
    
    
    Stock
    
    
    Capital
    
    
    Retained Earnings
    
    
    Income (Loss)
    
    
    Stock
    
    
    Total(Dollars in thousands except share and per share amounts)Balance, 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
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    45
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    45Preferred dividends and accretion of discount
    
    
    4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (221
    )
    
    
    
    
    
    
    
    
    
    
    (217
    )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
    )
    
    $
    108,108Balance, January 1, 2010
    
    $
    25,092
    
    
    $
    146
    
    
    $
    7,624
    
    
    $
    37,862
    
    
    $
    36,883
    
    
    $
    2,626
    
    
    $
    (6,092
    )
    
    $
    104,141Comprehensive income:Net Income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,331
    
    
    
    
    
    
    
    
    
    
    
    1,331Other comprehensive income, net of tax:Change in unrealized gains and losses on securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    285
    
    
    
    
    
    
    
    285Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,616Share-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13Nonvested (restricted) shares granted (67,498 shares)
    
    
    
    
    
    
    
    
    
    
    67
    
    
    
    (67
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Preferred dividends and accretion of discount
    
    
    4
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (319
    )
    
    
    
    
    
    
    
    
    
    
    (315
    )Common dividends declared, $.01 per share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (74
    )
    
    
    
    
    
    
    
    
    
    
    (74
    )Balance, March 31, 2010
    
    $
    25,096
    
    
    $
    146
    
    
    $
    7,691
    
    
    $
    37,808
    
    
    $
    37,821
    
    
    $
    2,911
    
    
    $
    (6,092
    )
    
    $
    105,381
 See accompanying notes to consolidated financial statements
 5




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##### Table of Contents



Consolidated Statements of Cash Flows (unaudited)
 Three Months EndedMarch 31, 2010
    
    
    March 31, 2009(Dollars in thousands)Operating ActivitiesNet income
    
    $
    1,331
    
    
    $
    1,317Adjustments to reconcile net income to net cash provided by operating activities:Provision for loan losses
    
    
    2,109
    
    
    
    1,809Depreciation and amortization
    
    
    383
    
    
    
    427Amortization of premiums and discounts
    
    
    407
    
    
    
    241Amortization of intangibles
    
    
    34
    
    
    
    33Amortization of loan servicing rights
    
    
    28
    
    
    
    89Amortization of deferred loan fees
    
    
    (36
    )
    
    
    132Federal deferred income tax expense (benefit)
    
    
    (430
    )
    
    
    120Securities gains, net
    
    
    (38
    )
    
    
    (337
    )Share-based compensation
    
    
    13
    
    
    
    45Loans originated for sale
    
    
    (24,342
    )
    
    
    (25,330
    )Proceeds from sales of loan originations
    
    
    24,434
    
    
    
    26,168Net gain from loan sales
    
    
    (192
    )
    
    
    (254
    )Net (gain) loss on sale of other assets
    
    
    21
    
    
    
    (8
    )Net decrease in accrued interest receivable and other assets
    
    
    (26
    )
    
    
    (1,788
    )Net decrease in accrued interest payable, taxes and other liabilities
    
    
    264
    
    
    
    1,332Net cash provided by operating activities
    
    
    3,960
    
    
    
    3,996Investing ActivitiesProceeds from sales of available-for-sale securities
    
    
    4,170
    
    
    
    17,979Proceeds from maturities of available-for-sale securities
    
    
    20,381
    
    
    
    9,744Purchase of available-for-sale securities
    
    
    (25,010
    )
    
    
    (51,514
    )Change in interest-bearing deposits in other banks
    
    
    (1
    )
    
    
    (2
    )Proceeds from sale of trading securities
    
    
    7,774
    
    
    
    Purchase of Federal Home Loan Bank Stock
    
    
    
    
    
    
    (101
    )Net (increase) decrease in loans made to customers
    
    
    8,812
    
    
    
    (940
    )Proceeds from the sale of other real estate owned
    
    
    47
    
    
    
    82Purchase of bank premises and equipment
    
    
    (60
    )
    
    
    (434
    )Net cash used in investing activities
    
    
    16,113
    
    
    
    (25,186
    )Financing ActivitiesNet decrease in demand and other noninterest-bearing
    
    
    (6,609
    )
    
    
    (163
    )Net increase (decrease) in savings, money market and interest-bearing demand
    
    
    (334
    )
    
    
    13,458Net increase in certificates of deposit
    
    
    14,562
    
    
    
    43,650Net increase in short-term borrowings
    
    
    132
    
    
    
    2,874Proceeds from Federal Home Loan Bank advances
    
    
    30,000
    
    
    
    15,000Payment of Federal Home Loan Bank advances
    
    
    (30,001
    )
    
    
    (25,000
    )Dividends paid
    
    
    (389
    )
    
    
    (878
    )Net cash provided by financing activities
    
    
    7,361
    
    
    
    48,941Net increase in cash and cash equivalents
    
    
    27,434
    
    
    
    27,751Cash and cash equivalents, January 1
    
    
    26,933
    
    
    
    36,923Cash and cash equivalents, March 31
    
    $
    54,367
    
    
    $
    64,674Supplemental cash flow informationInterest paid
    
    $
    3,638
    
    
    $
    5,871Income taxes paid
    
    
    
    
    
    
    627Transfer of loans to other real estate owned
    
    
    310
    
    
    
    460
  6




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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
  New Accounting Pronouncements
 ASC Topic 860, Transfers and Servicing
 ASC Topic 810, Consolidation
 Use of Estimates
  Segment Information
  Statement of Cash Flows
  Securities
  7




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##### Table of Contents



Restricted Stock
  Loans Held For Sale
  Loans
    Allowance for Loan Losses
   Servicing
  8




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##### Table of Contents



Bank Premises and Equipment
  Goodwill and Core Deposit Intangibles
   Other Real Estate Owned
  Split-Dollar Life Insurance
  Investment and Trust Services Assets and Income
  Income Taxes
  Stock-Based Compensation
  9




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##### Table of Contents



Comprehensive Income
   Preferred Stock
  (2) Earnings Per Share
  Three Months Ended March 31,2010
    
    
    2009(Dollars in thousands except per share amounts)Weighted average shares outstanding used in Basic
Earnings per Common Share
    
    
    7,322,662
    
    
    
    7,295,663Dilutive effect of incentive stock options
    
    
    
    
    
    
    Weighted average shares outstanding used in
Diluted Earnings Per Common Share
    
    
    7,322,662
    
    
    
    7,295,663Net Income
    
    $
    1,331
    
    
    $
    1,317Dividends and accretion on preferred stock
    
    
    319
    
    
    
    299Income Available to Common Shareholders
    
    $
    1,012
    
    
    $
    1,018Basic Earnings Per Common Share
    
    $
    0.14
    
    
    $
    0.14Diluted Earnings Per Common Share
    
    $
    0.14
    
    
    $
    0.14
  (3) Cash and Due from Banks
  10




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##### Table of Contents



(4) Goodwill and Intangible Assets
    March 31, 2010
    
    
    December 31, 2009(Dollars in thousands)Core deposit intangibles
    
    $
    1,367
    
    
    $
    1,367Less: accumulated amortization
    
    
    395
    
    
    
    362Carrying value of core deposit intangibles
    
    $
    972
    
    
    $
    1,005
 (5) Securities
  At March 31, 2010Amortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairCost
    
    
    Gains
    
    
    Losses
    
    
    Value(Dollars in thousands)Securities available for sale:U.S. Government agencies and corporations
    
    $
    64,622
    
    
    $
    362
    
    
    $
    (289
    )
    
    $
    64,695Mortgage backed securities
    
    
    153,869
    
    
    
    6,454
    
    
    
    (5
    )
    
    
    160,318State and political subdivisions
    
    
    22,591
    
    
    
    632
    
    
    
    (124
    )
    
    
    23,099Total securities available for sale
    
    $
    241,082
    
    
    $
    7,448
    
    
    $
    (418
    )
    
    $
    248,112
 11




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##### Table of Contents



At December 31, 2009Amortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairCost
    
    
    Gains
    
    
    Losses
    
    
    Value(Dollars in thousands)Securities available for sale:U.S. Government agencies and corporations
    
    $
    45,142
    
    
    $
    354
    
    
    $
    (281
    )
    
    $
    45,215Mortgage backed securities
    
    
    172,708
    
    
    
    6,092
    
    
    
    (21
    )
    
    
    178,779State and political subdivisions
    
    
    22,588
    
    
    
    571
    
    
    
    (116
    )
    
    
    23,043Total securities available for sale
    
    $
    240,438
    
    
    $
    7,017
    
    
    $
    (418
    )
    
    $
    247,037
  Trading Securities held at December 31, 2009Aggregate
    
    
    AggregateUnrealized Gains
    
    
    Unrealized Losses
    
    
    FairCost
    
    
    recorded to income
    
    
    recorded to income
    
    
    Value(Dollars in thousands)Trading Securities
    
    $
    8,327
    
    
    $
    118
    
    
    $
    
    
    
    $
    8,445
 (6) Loans and Allowance for Loan Losses
  March 31, 2010
    
    
    December 31, 2009(Dollars in thousands)Real estate loans (includes loans secured primarily by real estate only):Construction and land development
    
    $
    62,031
    
    
    $
    65,052One to four family residential
    
    
    215,585
    
    
    
    219,508Multi-family residential
    
    
    28,970
    
    
    
    28,988Non-farm non-residential properties
    
    
    283,343
    
    
    
    286,778Commercial and industrial loans
    
    
    59,607
    
    
    
    61,929Personal loans to individuals:Auto, single payment and installment
    
    
    137,170
    
    
    
    135,097All other loans
    
    
    5,879
    
    
    
    5,845Total loans
    
    
    792,585
    
    
    
    803,197Allowance for loan losses
    
    
    (19,183
    )
    
    
    (18,792
    )Net loans
    
    $
    773,402
    
    
    $
    784,405
  March 31, 2010
    
    
    March 31, 2009(Dollars in thousands)Balance at the beginning of period
    
    $
    18,792
    
    
    $
    11,652Provision for loan losses
    
    
    2,109
    
    
    
    1,809Loans charged-off
    
    
    (1,851
    )
    
    
    (1,972
    )Recoveries on loans previously charged-off
    
    
    133
    
    
    
    86Balance at the end of the period
    
    $
    19,183
    
    
    $
    11,575
  12




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##### Table of Contents



(7) Deposits
  March 31, 2010
    
    
    December 31, 2009(Dollars in thousands)Demand and other noninterest-bearing
    
    $
    111,896
    
    
    $
    118,505Interest checking
    
    
    130,978
    
    
    
    137,807Savings
    
    
    84,946
    
    
    
    82,771Money market accounts
    
    
    88,787
    
    
    
    84,467Consumer time deposits
    
    
    468,557
    
    
    
    476,798Public time deposits
    
    
    93,888
    
    
    
    71,085Total deposits
    
    $
    979,052
    
    
    $
    971,433
   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
    
    $
    286,441
    
    
    $
    155,870
    
    
    $
    26,226
    
    
    $
    20
    
    
    $
    468,557Public time deposits
    
    
    90,478
    
    
    
    3,410
    
    
    
    
    
    
    
    
    
    
    
    93,888Total time deposits
    
    $
    376,919
    
    
    $
    159,280
    
    
    $
    26,226
    
    
    $
    20
    
    
    $
    562,445
 (8) Short-Term Borrowings
   (9) Federal Home Loan Bank Advances
  13




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##### Table of Contents



March 31, 2010
    
    
    December 31, 2009(Dollars in thousands)Maturity January 2010, fixed rate 3.58%
    
    $
    
    
    
    $
    10,000Maturities January 2011 through February
2011, with fixed rates ranging from 3.17%
to 3.67%, averaging 3.50% for 2010 and
2009.
    
    
    15,000
    
    
    
    15,000Maturity January 2012, fixed rate 2.37%
    
    
    15,000
    
    
    
    15,000Maturities January 2014, fixed rates
ranging from 2.57% to 3.55%, averaging
2.57% for 2010 and 3.55% for 2009.
    
    
    10,049
    
    
    
    55Maturity July 2015, fixed rate 4.76%
    
    
    2,455
    
    
    
    2,450Total FHLB advances
    
    $
    42,504
    
    
    $
    42,505
 (10) Trust Preferred Securities
    (11) Commitments, Credit Risk, and Contingencies
    14




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##### Table of Contents



Amount(Dollars in thousands)Commitments to extend credit
    
    $
    70,126Home equity lines of credit
    
    
    75,463Standby letters of credit
    
    
    8,728Total
    
    $
    154,317
 (12) 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, 2010 and December 31, 2009.Limitations
   15




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##### Table of Contents



March 31, 2010
    
    
    December 31, 2009Carrying
    
    
    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
    
    $
    54,726
    
    
    $
    54,726
    
    
    $
    27,292
    
    
    $
    27,292Securities
    
    
    248,112
    
    
    
    259,051
    
    
    
    255,482
    
    
    
    255,482Portfolio loans, net
    
    
    773,402
    
    
    
    775,644
    
    
    
    784,405
    
    
    
    786,154Loans held for sale
    
    
    3,691
    
    
    
    3,691
    
    
    
    3,783
    
    
    
    3,783Accrued interest receivable
    
    
    3,882
    
    
    
    3,882
    
    
    
    4,072
    
    
    
    4,072Financial liabilitiesDeposits:Demand, savings and money market
    
    
    416,607
    
    
    
    416,607
    
    
    
    423,550
    
    
    
    423,550Certificates of deposit
    
    
    562,445
    
    
    
    567,962
    
    
    
    547,883
    
    
    
    555,302Total deposits
    
    
    979,052
    
    
    
    984,569
    
    
    
    971,433
    
    
    
    978,852Short-term borrowings
    
    
    1,589
    
    
    
    1,589
    
    
    
    1,457
    
    
    
    1,457Federal Home Loan Bank advances
    
    
    42,504
    
    
    
    43,927
    
    
    
    42,505
    
    
    
    43,708Junior subordinated debentures
    
    
    20,620
    
    
    
    19,214
    
    
    
    20,620
    
    
    
    18,489Accrued interest payable
    
    
    1,951
    
    
    
    1,951
    
    
    
    2,074
    
    
    
    2,074
  
 
 
  16




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##### Table of Contents



Quoted Prices in Active
    
    
    Significant Other
    
    
    SignificantFair Value as of
    
    
    Markets for Identical
    
    
    Observable Inputs
    
    
    Unobservable InputsDescription
    
    March 31, 2010
    
    
    Assets (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)(Dollars in thousands)Available for Sale Securities
    
    $
    248,112
    
    
    $
    
    
    
    $
    248,112
    
    
    $
    Quoted Prices in Active
    
    
    Significant Other
    
    
    SignificantFair Value as of
    
    
    Markets for Identical
    
    
    Observable Inputs
    
    
    Unobservable InputsDecember 31, 2009
    
    
    Assets (Level 1)
    
    
    (Level 2)
    
    
    (Level 3)Description
    
    
    
    
    
    (Dollars in thousands)Trading Securities
    
    $
    8,445
    
    
    $
    
    
    
    $
    8,445
    
    
    $
    Available for Sale Securities
    
    
    247,037
    
    
    
    
    
    
    
    247,037
    
    
    
    Total
    
    $
    255,482
    
    
    $
    
    
    
    $
    255,482
    
    
    $
    
   (13) Stock-Based Compensation
    17




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##### Table of Contents



Outstanding
    
    
    ExercisableWeightedAverageRemaining
    
    
    
    
    
    
    WeightedContractual Life
    
    
    
    
    
    
    Average ExerciseRange of Exercise Prices
    
    Number
    
    
    (Years)
    
    
    Number
    
    
    Price$5.46-$14.46
    
    
    2,500
    
    
    
    9.13
    
    
    
    
    
    
    $
    $14.47-$15.34
    
    
    83,000
    
    
    
    7.85
    
    
    
    55,329
    
    
    
    14.47$15.35-$16.50
    
    
    52,500
    
    
    
    6.96
    
    
    
    45,834
    
    
    
    15.84$16.51-$19.09
    
    
    30,000
    
    
    
    5.84
    
    
    
    30,000
    
    
    
    19.10$19.10-$19.17
    
    
    30,000
    
    
    
    4.84
    
    
    
    30,000
    
    
    
    19.17Outstanding at end of period
    
    
    198,000
    
    
    
    6.87
    
    
    
    161,163
    
    
    $
    16.60
  2010
    

    2009Weighted
    
    
    
    
    
    
    WeightedAverage Exercise
    
    
    
    
    
    
    Average ExerciseOptions
    
    
    Price per Share
    
    
    Options
    
    
    Price per ShareOutstanding at beginning of period
    
    
    198,000
    
    
    $
    16.12
    
    
    
    203,500
    
    
    $
    16.18Granted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Forfeited or expired
    
    
    
    
    
    
    
    
    
    
    (2,500
    )
    
    
    14.47Exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Stock dividend or split
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Outstanding at end of period
    
    
    198,000
    
    
    $
    16.12
    
    
    
    201,000
    
    
    $
    16.20Exercisable at end of period
    
    
    161,163
    
    
    $
    16.60
    
    
    
    118,831
    
    
    $
    17.18
 18




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##### Table of Contents



ITEM 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
  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;
    
    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
limitations on the Corporations ability to raise funding to the extent required by banking
regulators or otherwise; 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);
    
    limitations on the Corporations ability to pay dividends;
    
    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;
    
    asset price deterioration, which has had and may continue to have a negative effect on the
valuation of certain asset categories represented on the Corporations balance sheet;
    
    general economic conditions, either nationally or regionally (especially in northeastern Ohio),
becoming less favorable than expected resulting in, among other things, further 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
 19




---



##### Table of Contents




    
    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
    Allowance for Loan Losses
       20




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##### Table of Contents



Income Taxes
  Goodwill
  New Accounting Pronouncements
  Summary
       21




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##### Table of Contents



22




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##### Table of Contents



Table 1: Condensed Consolidated Average Balance Sheets
 Interest, Rate, and Rate/ Volume differentials are stated on a Fully-Tax Equivalent (FTE) Basis.
  Three Months Ended March 31,March 31, 2010
    
    
    March 31, 2009Average
    
    
    
    
    
    
    
    
    
    
    AverageBalance
    
    
    Interest
    
    
    Rate
    
    
    Balance
    
    
    Interest
    
    
    Rate(Dollars in thousands)Assets:U.S. Govt agencies and corporations
and restricted stock
    
    $
    233,132
    
    
    $
    2,246
    
    
    
    3.91
    %
    
    $
    228,377
    
    
    $
    2,665
    
    
    
    4.73
    %State and political subdivisions
    
    
    23,178
    
    
    
    355
    
    
    
    6.22
    
    
    
    22,595
    
    
    
    337
    
    
    
    6.04Federal funds sold and short-term
investments
    
    
    32,687
    
    
    
    9
    
    
    
    0.11
    
    
    
    40,649
    
    
    
    14
    
    
    
    0.14Commercial loans
    
    
    447,470
    
    
    
    6,041
    
    
    
    5.48
    
    
    
    447,048
    
    
    
    6,425
    
    
    
    5.83Real estate mortgage loans
    
    
    76,764
    
    
    
    1,032
    
    
    
    5.45
    
    
    
    95,044
    
    
    
    1,437
    
    
    
    6.13Home equity lines of credit
    
    
    108,697
    
    
    
    1,069
    
    
    
    3.99
    
    
    
    102,128
    
    
    
    1,010
    
    
    
    4.01Installment loans
    
    
    166,165
    
    
    
    2,666
    
    
    
    6.51
    
    
    
    163,469
    
    
    
    2,757
    
    
    
    6.84Total Earning Assets
    
    $
    1,088,093
    
    
    $
    13,418
    
    
    
    5.00
    %
    
    $
    1,099,310
    
    
    $
    14,645
    
    
    
    5.40
    %Allowance for loan loss
    
    
    (19,150
    )
    
    
    
    
    
    
    
    
    
    
    (11,565
    )Cash and due from banks
    
    
    18,242
    
    
    
    
    
    
    
    
    
    
    
    19,052Bank owned life insurance
    
    
    16,495
    
    
    
    
    
    
    
    
    
    
    
    15,801Other assets
    
    
    56,775
    
    
    
    
    
    
    
    
    
    
    
    47,297Total Assets
    
    $
    1,160,455
    
    
    
    
    
    
    
    
    
    
    $
    1,169,895Liabilities and Shareholders EquityConsumer time deposits
    
    $
    478,344
    
    
    $
    2,624
    
    
    
    2.23
    %
    
    $
    470,027
    
    
    $
    3,840
    
    
    
    3.13
    %Public time deposits
    
    
    84,851
    
    
    
    171
    
    
    
    0.82
    
    
    
    83,911
    
    
    
    613
    
    
    
    2.96Brokered time deposits
    
    
    
    
    
    
    
    
    
    
    0.00
    
    
    
    12,485
    
    
    
    132
    
    
    
    4.28Money market accounts
    
    
    86,946
    
    
    
    78
    
    
    
    0.36
    
    
    
    94,854
    
    
    
    157
    
    
    
    3.31Savings deposits
    
    
    83,142
    
    
    
    40
    
    
    
    0.19
    
    
    
    78,325
    
    
    
    52
    
    
    
    0.27Interest-bearing demand
    
    
    135,110
    
    
    
    67
    
    
    
    0.20
    
    
    
    119,768
    
    
    
    108
    
    
    
    0.37Short-term borrowings
    
    
    1,597
    
    
    
    1
    
    
    
    0.23
    
    
    
    28,096
    
    
    
    36
    
    
    
    0.52FHLB advances
    
    
    44,192
    
    
    
    318
    
    
    
    2.91
    
    
    
    52,800
    
    
    
    432
    
    
    
    3.31Trust preferred securities
    
    
    20,727
    
    
    
    215
    
    
    
    4.21
    
    
    
    20,752
    
    
    
    256
    
    
    
    4.99Total Interest-Bearing Liabilities
    
    $
    934,909
    
    
    $
    3,514
    
    
    
    1.52
    %
    
    $
    961,018
    
    
    $
    5,626
    
    
    
    2.37
    %Noninterest-bearing deposits
    
    
    111,250
    
    
    
    
    
    
    
    
    
    
    
    90,454Other liabilities
    
    
    9,270
    
    
    
    
    
    
    
    
    
    
    
    10,718Shareholders Equity
    
    
    105,026
    
    
    
    
    
    
    
    
    
    
    
    107,705Total Liabilities and
Shareholders Equity
    
    $
    1,160,455
    
    
    
    
    
    
    
    
    
    
    $
    1,169,895Net interest Income (FTE)
    
    
    
    
    
    $
    9,904
    
    
    
    3.69
    %
    
    
    
    
    
    $
    9,019
    
    
    
    3.33
    %Taxable Equivalent Adjustment
    
    
    
    
    
    
    (125
    )
    
    
    (0.05
    )
    
    
    
    
    
    
    (121
    )
    
    
    (0.05
    )Net Interest Income Per
Financial Statements
    
    
    
    
    
    $
    9,779
    
    
    
    
    
    
    
    
    
    
    $
    8,898Net Yield on Earning Assets
    
    
    
    
    
    
    
    
    
    
    3.64
    %
    
    
    
    
    
    
    
    
    
    
    3.28
    %
 23




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##### Table of Contents



Results of Operations
 Three Months Ended March 31, 2010 versus Three Months Ended March 31, 2009 Net Interest Income
Comparison
      24




---



##### Table of Contents



Table 2: Rate/Volume Analysis of Net Interest Income (FTE)
 Three Months Ended March 31,Increase (Decrease) in Interest Income/Expensein 2010 over 2009Volume
    
    
    Rate
    
    
    Total(Dollars in thousands)U.S. Govt agencies and corporations and
restricted stock
    
    $
    46
    
    
    $
    (465
    )
    
    $
    (419
    )State and political subdivisions
    
    
    9
    
    
    
    9
    
    
    
    18Federal funds sold and short-term investments
    
    
    (3
    )
    
    
    (2
    )
    
    
    (5
    )Commercial loans
    
    
    6
    
    
    
    (390
    )
    
    
    (384
    )Real estate mortgage loans
    
    
    (245
    )
    
    
    (160
    )
    
    
    (405
    )Home equity lines of credit
    
    
    65
    
    
    
    (6
    )
    
    
    59Installment loans
    
    
    43
    
    
    
    (134
    )
    
    
    (91
    )Total Interest Income
    
    
    (79
    )
    
    
    (1,148
    )
    
    
    (1,227
    )Consumer time deposits
    
    
    46
    
    
    
    (1,262
    )
    
    
    (1,216
    )Public time deposits
    
    
    2
    
    
    
    (444
    )
    
    
    (442
    )Brokered time deposits
    
    
    (132
    )
    
    
    
    
    
    
    (132
    )Money market accounts
    
    
    (7
    )
    
    
    (72
    )
    
    
    (79
    )Savings deposits
    
    
    2
    
    
    
    (14
    )
    
    
    (12
    )Interest bearing demand
    
    
    8
    
    
    
    (49
    )
    
    
    (41
    )Short-term borrowings
    
    
    (15
    )
    
    
    (20
    )
    
    
    (35
    )FHLB advances
    
    
    (62
    )
    
    
    (52
    )
    
    
    (114
    )Trust preferred securities
    
    
    
    
    
    
    (41
    )
    
    
    (41
    )Total Interest Expense
    
    
    (158
    )
    
    
    (1,954
    )
    
    
    (2,112
    )Net Interest Income (FTE)
    
    $
    79
    
    
    $
    806
    
    
    $
    885
  25




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##### Table of Contents



Noninterest Income
 Table 3: Details on Noninterest Income
 Three Months Ended March 31,2010
    
    
    2009(Dollars in thousands)Investment and trust services
    
    $
    445
    
    
    $
    350Deposit service charges
    
    
    939
    
    
    
    1,026Electronic banking fees
    
    
    794
    
    
    
    637Income from bank owned life insurance
    
    
    171
    
    
    
    162Other income
    
    
    93
    
    
    
    83Total fees and other income
    
    
    2,442
    
    
    
    2,258Gain on sale of securities
    
    
    38
    
    
    
    337Gain on sale of loans
    
    
    192
    
    
    
    254Gains (losses) on sale of other assets
    
    
    (21
    )
    
    
    8Total noninterest income
    
    $
    2,651
    
    
    $
    2,857
 Three Months Ended March 31, 2010 versus Three Months Ended March 31, 2009 Noninterest Income
Comparison
   Noninterest Expense
 Table 4: Details on Noninterest Expense
 Three Months Ended March 31,2010
    
    
    2009(Dollars in thousands)Salaries and employee benefits
    
    $
    3,918
    
    
    $
    3,718Furniture and equipment
    
    
    933
    
    
    
    1,142Net occupancy
    
    
    615
    
    
    
    644Outside services
    
    
    553
    
    
    
    555Marketing and public relations
    
    
    246
    
    
    
    244Supplies, postage and freight
    
    
    342
    
    
    
    334Telecommunications
    
    
    212
    
    
    
    203Ohio Franchise tax
    
    
    281
    
    
    
    232FDIC Assessments
    
    
    528
    
    
    
    313Other real estate owned
    
    
    81
    
    
    
    71Electronic banking expenses
    
    
    184
    
    
    
    189Loan and Collection Expense
    
    
    323
    
    
    
    210Other expense
    
    
    477
    
    
    
    505Total noninterest expense
    
    $
    8,693
    
    
    $
    8,360
 26




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##### Table of Contents



Three Months Ended March 31, 2010 versus Three Months Ended March 31, 2009 Noninterest Expense
Comparison
  Income taxes
 Three Months Ended March 31, 2010 versus Three Months Ended March 31, 2009 Income Taxes Comparison
  Financial Condition
 Overview
  Securities
  Loans
  27




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##### Table of Contents



Table 5: Details on Loan Balances
 March 31, 2010
    
    
    December 31, 2009(Dollars in thousands)Commercial
    
    $
    443,925
    
    
    $
    452,341Real estate mortgage
    
    
    74,128
    
    
    
    77,204Home equity lines of credit
    
    
    108,053
    
    
    
    108,921Installment
    
    
    166,479
    
    
    
    164,731Total Loans
    
    
    792,585
    
    
    
    803,197Allowance for loan losses
    
    
    (19,183
    )
    
    
    (18,792
    )Net Loans
    
    $
    773,402
    
    
    $
    784,405
   Provision and Allowance for Loan Losses
  28




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##### Table of Contents



Table 6: Analysis of Allowance for Loan Losses
 Three Months EndedMarch 31, 2010
    
    
    March 31, 2009(Dollars in thousands)Balance at beginning of period
    
    $
    18,792
    
    
    $
    11,652Charge-offs:Commercial
    
    
    (996
    )
    
    
    (974
    )Real estate mortgage
    
    
    (62
    )
    
    
    (57
    )Home equity lines of credit
    
    
    (429
    )
    
    
    (371
    )Installment
    
    
    (314
    )
    
    
    (521
    )DDA Overdrafts
    
    
    (50
    )
    
    
    (49
    )Total charge-offs
    
    
    (1,851
    )
    
    
    (1,972
    )Recoveries:Commercial
    
    
    3
    
    
    
    33Real estate mortgage
    
    
    
    
    
    
    Home equity lines of credit
    
    
    
    
    
    
    1Installment
    
    
    109
    
    
    
    34DDA Overdrafts
    
    
    21
    
    
    
    18Total Recoveries
    
    
    133
    
    
    
    86Net Charge-offs
    
    
    (1,718
    )
    
    
    (1,886
    )Provision for loan losses
    
    
    2,109
    
    
    
    1,809Balance at end of period
    
    $
    19,183
    
    
    $
    11,575Loans outstanding at end of period
    
    $
    792,585
    
    
    $
    802,267Allowance for loan losses as a
percent of loans outstanding at
the end of the period
    
    
    2.42
    %
    
    
    1.44
    %Average Loans Outstanding
    
    $
    799,096
    
    
    $
    807,689Annualized ratio to average loans:Net Charge-offs
    
    
    0.87
    %
    
    
    0.95
    %Provision for loan losses
    
    
    1.07
    %
    
    
    0.91
    %
    29




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##### Table of Contents



Deposits
 Table 7: Deposits and Borrowings
 Average Balances Outstanding
    
    
    Average Rates PaidFor the three months endedMarch 31, 2010
    
    
    December 31, 2009
    
    
    March 31, 2010
    
    
    December 31, 2009(Dollars in thousands)Demand deposits
    
    $
    111,250
    
    
    $
    105,074
    
    
    
    0.00
    %
    
    
    0.00
    %Interest checking
    
    
    222,056
    
    
    
    227,840
    
    
    
    0.26
    
    
    
    0.28Savings deposits
    
    
    83,142
    
    
    
    80,984
    
    
    
    0.19
    
    
    
    0.19Consumer time deposits
    
    
    478,344
    
    
    
    483,577
    
    
    
    2.23
    
    
    
    2.55Public time deposits
    
    
    84,851
    
    
    
    80,528
    
    
    
    0.82
    
    
    
    1.17Total Deposits
    
    
    979,643
    
    
    
    978,003
    
    
    
    1.23
    
    
    
    1.44Short-term borrowings
    
    
    1,597
    
    
    
    10,961
    
    
    
    0.23
    
    
    
    0.46FHLB borrowings
    
    
    44,192
    
    
    
    42,988
    
    
    
    2.91
    
    
    
    3.23Junior subordinated debentures
    
    
    20,727
    
    
    
    20,727
    
    
    
    4.21
    
    
    
    4.21Total borrowings
    
    
    66,516
    
    
    
    74,676
    
    
    
    3.25
    
    
    
    3.10Total funding
    
    $
    1,046,159
    
    
    $
    1,052,679
    
    
    
    1.36
    %
    
    
    1.56
    %
    Borrowings
  30




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##### Table of Contents



Regulatory Capital
    31




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##### Table of Contents



ITEM 3. Quantitative and Qualitative Disclosures About Market Risk.
 RISK ELEMENTS
  Credit Risk Management
  Nonperforming Assets
    32




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##### Table of Contents



Table 8: Nonperforming Assets
 March 31, 2010
    
    
    December 31, 2009(Dollars in thousands)Commercial loans
    
    $
    29,931
    
    
    $
    26,846Real estate mortgage
    
    
    9,893
    
    
    
    9,139Home equity lines of credit
    
    
    1,379
    
    
    
    1,417Installment loans
    
    
    1,704
    
    
    
    1,435Total nonperforming loans
    
    
    42,907
    
    
    
    38,837Other foreclosed assets
    
    
    1,467
    
    
    
    1,264Total nonperforming assets
    
    $
    44,374
    
    
    $
    40,101Loans 90 days past due accruing interest
    
    $
    
    
    
    $
    Total nonperforming loans to total loans
    
    
    5.41
    %
    
    
    4.84
    %Allowance for loan losses to nonperforming assets
    
    
    43.23
    %
    
    
    46.86
    %
 Market Risk Management
     Liquidity Risk Management
  33




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##### Table of Contents



ITEM 4. Controls and Procedures
   
 PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings
  34




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##### Table of Contents



Item 1A.
    
    Risk Factors
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
 Issuer Purchases of Equity Securities
  
 Item 6.
    
    Exhibits.
  SIGNATURES
  LNB BANCORP, INC.
(Registrant)Date: May 14, 2010
    /s/ Gary J. ElekGary J. ElekChief Financial Officer
(Duly Authorized Officer, and Principal
Financial and Accounting Officer) 35




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##### Table of Contents



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.
 36