Lorain National Bank Deposit Operations Center

LNB Bancorp, Inc. Reports Earnings for the Third Quarter 2012.

* Net income of $1.5 million

* Loan balances grew by $48 million over prior year, or 5.7%

* Nonperforming assets continue to decline, down $2.3 million from
the previous quarter

*
Lorain National Bank

 opened a mortgage loan production office in

Solon, Ohio

, extending the bank’s reach into additional high-growth
markets.

LORAIN, Ohio

 —
LNB

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LNB Lubbock National Bank  
 Bancorp, Inc. (
NASDAQ

: LNBB) (“LNB” or
the “Company”) today reported financial results for the
quarter ended
September
 see month.
 30, 2012. Net income was $1.53 million compared
to $1.67 million for the third quarter of 2011, a decline of $147,000 or
8.79%. Net income available to common shareholders was $1.21 million, or
$0.15 per common share, compared to $1.35 million, or $0.17 per common
share, for the 2011 third quarter. For the first nine months of 2012,
net income was $4.46 million, up $954,000 or 27%, from the first nine
months of the prior year. Net income available to common shareholders
for the first nine months of 2012 was $3.51 million, or $0.44 per common
share; this compares to $2.56 million for the 2011 nine-month period, or
$0.32 per common share, an increase of $0.12 per share, or 37.5%.

“We are particularly pleased with the continued progress that
we are making in credit quality,” noted
Daniel
 book of the Bible. It combines “court” tales, perhaps originating from the 6th cent. B.C., and a series of apocalyptic visions arising from the time of the Maccabean emergency (167–164 B.C.
 E. Klimas, president
and chief executive officer of LNB Bancorp, Inc. “Non-performing
assets have declined $2.3 million in the quarter and nearly $5 million
year over year. The ratio of non-performing assets to total assets is
2.84% in the quarter, down from 3.35% a year ago.

“Loans have grown by $42.6 million since year-end 2011. This
month, the U.S. Small Business Administration recognized Lorain National
Bank for ranking 4th in the
Cleveland
 former county, NE England, created under the Local Government Act of 1972 (effective 1974). It was composed of the county boroughs of Hartlepool and Teeside and parts of the former counties of Durham and
 
metro area

 in small business
SBA

abbr.
Small Business Administration

Noun 1. SBA – an independent agency of the United States government that protects the interests of small businesses and ensures that they receive a fair share of government
 loan production over the last twelve months.

“We have participated in the
resurgence
  
n.
1. A continuing after interruption; a renewal.

2. A restoration to use, acceptance, activity, or vigor; a revival.
 in the
automobile
industry

 the business of producing and selling self-powered vehicles, including passenger cars, trucks, farm equipment, and other commercial vehicles.
 through our indirect lending activities, originating auto loans
through dealers in Ohio,
Indiana
 midwestern state in the N central United States. It is bordered by Lake Michigan and the state of Michigan (N), Ohio (E), Kentucky, across the Ohio R. (S), and Illinois (W).
,
Georgia
 , Georgian Sakartvelo, Rus. Gruziya, officially Republic of Georgia, republic (2005 est. pop. 4,677,000), c.26,900 sq mi (69,700 sq km), in W Transcaucasia.
,
North Carolina
 state in the SE United States. It is bordered by the Atlantic Ocean (E), South Carolina and Georgia (S), Tennessee (W), and Virginia (N).
Facts and Figures

Area, 52,586 sq mi (136,198 sq km). Pop.
,
Kentucky
 , one of the so-called border states of the S central United States. It is bordered by West Virginia and Virginia (E); Tennessee (S); the Mississippi R.
 and

Tennessee
 , state in the south-central United States.
. The auto loan portfolio has increased $21 million during the
first nine months of 2012.”

Third Quarter Review

Net income for the 2012 third quarter declined by $147,000 from the
year-ago quarter but increased $88,000 from the preceding quarter.
Improvement in asset quality has more than offset the impact of
declining interest rates, resulting in a 27% improvement in net income
for the first nine months of 2012 compared to the year-earlier nine
months.

Operating revenue

Revenue from any regular source. Revenue from sales is adjusted for discounts and returns when calculating operating revenue. Compare other revenue.
, including net interest income on a fully
tax-equivalent basis (”
FTE

FTE Fund for Theological Education
“) plus noninterest income from
operations, was $12.5 million for the third quarter of 2012, a decline
of $100,000 compared to the third quarter of 2011. Stronger loan sales
this quarter offset declining net interest income; and while loan sales
were stronger, the Company still achieved $47 million of growth in
average
earning assets

 year over year. Net interest income on a
tax-equivalent basis (FTE) in the quarter was $9.6 million, down
$600,000, or 6.0%, from the 2011 third quarter. The net interest margin
(FTE) for the full nine months of 2012 was 3.53%, a decline of fifteen
basis points from the 2011 nine-month period.

Excluding gains of $46,000 and $7,000 from securities sales in the
third quarter of 2012 and 2011 respectively, noninterest income from

recurring
  
intr.v. re·curred, re·cur·ring, re·curs
1. To happen, come up, or show up again or repeatedly.

2. To return to one’s attention or memory.

3. To return in thought or discourse.
 operations was $3.0 million for the third quarter of 2012
compared to $2.5 million for the year-ago third quarter, an increase of
17.8%. Strong mortgage and auto loan originations and sales accounted
for the majority of fee income growth, up $183,000, or double the level
of gains in the 2011 third quarter.

For the third quarter of 2012, noninterest expense was $8.5 million
compared to $8.3 million for the year-ago quarter. On a
pretax
  
adj.
Existing before tax deductions:

 adj [profit] →  
, taxa
equivalent basis, pre-provision core earnings* for the third quarter
were $3.94 million, down 7.8%, from the third quarter of 2011.

Total assets were $1.2 billion as of September 30, 2012, up 3.1%
since September 30, 2011. Portfolio loans increased 5.7% during the same
12-month period, to $885.7 million. Of the $48.2 million in total loan
growth over the past twelve months, $42.6 million was booked since
year-end 2011. Commercial lending was the primary contributor to recent
loan growth, up $28.3 million since the beginning of the year.

Asset quality continues to improve. Nonperforming assets declined by
$5 million, or 12.7%, over the past twelve months, to $34.2 million. LNB
added $1.9 million to the loan loss reserve during the quarter. At
quarter-end, the loan loss reserve was 1.99% of total portfolio loans
compared to 2.13% for the year-ago third quarter and 1.99% for the
second quarter of 2012.

All
regulatory
  
tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates
1. To control or direct according to rule, principle, or law.

2.
 ratios continue to exceed the
threshold

 for
“well-capitalized.”
Tangible

 common equity ratio improved by
13 basis points to 5.79% as a result of $3.5 million growth in common
equity since September 30, 2011.

* Pre-provision core earnings is a non-GAAP financial measure that
the Company’s management believes is useful in analyzing the
Company’s underlying performance trends, particularly in periods of
economic stress. Pre-provision core earnings is defined as income before
income tax expense, adjusted to exclude the impact of provision for loan
losses. Pre-provision core earnings is
reconciled
  
v. rec·on·ciled, rec·on·cil·ing, rec·on·ciles

v.tr.
1. To reestablish a close relationship between.

2. To settle or resolve.

3.
 to the related
GAAP

See generally accepted accounting principles (GAAP).
 financial measure in the “Reconciliation” table included after
the
consolidated financial statements

 and supplemental financial
information included in this press release.

About LNB Bancorp, Inc.

LNB Bancorp, Inc. is a $1.2 billion bank holding company. Its major
subsidiary, The Lorain National Bank, is a full-service commercial bank,
specializing in commercial, personal banking services, residential
mortgage lending and investment and trust services. The Lorain National
Bank and its
Morgan
 American family of financiers and philanthropists.

Junius Spencer Morgan, 1813–90, b. West Springfield, Mass., prospered at investment banking.
 Bank division serve customers through 20
retail-banking locations and 28 ATMs in
Lorain
 , city (1990 pop. 71,245), Lorain co., N Ohio, on Lake Erie at the mouth of the Black River; inc. 1834. Once an important ore-shipping point, Lorain has shipyards, steelworks, automobile-assembly plants, and commercial
,
Erie
 , indigenous people of North America of the Iroquoian branch of the Hokan-Siouan linguistic stock (see Native American languages).
,
Cuyahoga
 , river, c.80 mi (130 km) long, flowing SW through Cuyahoga Falls, then N to Lake Erie, NE Ohio, forming part of Cleveland harbor.
 and
Summit counties, as well as a loan production office in Solon, Ohio.
North Coast Community Development Corporation is a
wholly owned
subsidiary

 of The Lorain National Bank. For more information about LNB
Bancorp, Inc., and its related products and services or to view its
filings with the Securities and Exchange Commission, visit us at
http://www.4lnb.com.

Forward-Looking Statements

This press release contains forward-looking statements within the
meaning of the ”
Safe Harbor

” provisions of the
Private
Securities Litigation Reform Act

 of 1995. Terms such as
“will,” “should,” “plan,”
“intend,” “expect,” “continue,”
“believe,” “anticipate” and “seek,” as
well as similar comments, are forward-looking in nature. Actual results
and events may differ materially from those expressed or anticipated as
a result of risks and uncertainties which include but are not limited
to:

* a
worsening
  
tr. & intr.v. wors·ened, wors·en·ing, wors·ens
To make or become worse.

Noun 1. worsening – process of changing to an inferior state
decline in quality, deterioration, declension
 of economic conditions or slowing of any economic
recovery, which could negatively impact, among other things, business
activity and
consumer spending

 and could lead to a lack of liquidity in
the credit markets;

* changes in the interest rate environment which could reduce
anticipated or actual margins;

* increases in interest rates or further weakening of economic
conditions that could
constrain
  
tr.v. con·strained, con·strain·ing, con·strains
1. To compel by physical, moral, or circumstantial force; oblige:  See Synonyms at force.

2.
 borrowers’ ability to repay
outstanding loans or diminish the value of the
collateral
 , something of value given or pledged as security for payment of a loan. Collateral consists usually of financial instruments, such as stocks, bonds, and negotiable paper, rather than physical goods, although
 securing those
loans;

* market conditions or other events that could negatively affect the
level or cost of funding, affecting the Company’s ongoing ability
to accommodate liability maturities and deposit withdrawals, meet
contractual obligations, and fund asset growth, and new business
transactions at a reasonable cost, in a timely manner and without
adverse consequences;

* 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
  
tr.v. im·ped·ed, im·ped·ing, im·pedes
To retard or obstruct the progress of. See Synonyms at hinder1.


[Latin imped
 profitability
or affect the Company’s financial condition (such as, for example,
the Dodd-Frank Act and rules and regulations that have been or may be

promulgated
  
tr.v. prom·ul·gat·ed, prom·ul·gat·ing, prom·ul·gates
1. To make known (a decree, for example) by public declaration; announce officially. See Synonyms at announce.

2.
 under the Act);

*
persisting
  
intr.v. per·sist·ed, per·sist·ing, per·sists
1. To be obstinately repetitious, insistent, or tenacious.

2.
 
volatility

 and limited credit availability in the
financial markets, particularly if market conditions limit the
Company’s ability to raise funding to the extent required by
banking regulators or otherwise;

* significant increases in competitive pressure in the banking and

financial services

 industries, particularly in the
geographic
 /geo·graph·ic/ () in pathology, of or referring to a pattern that is well demarcated, resembling outlines on a map.


geographic

pertaining to geography.
 or
business areas in which the Company conducts its operations;

* limitations on the Company’s ability to return capital to
shareholders, including the ability to pay dividends, and the
dilution

 of the Company’s common shares that may result from, among other
things, funding any
repurchase
  
tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es
To buy (something) again.

n.
The act of buying something that one previously sold or owned.

Noun 1.
 or
redemption

 of the Company’s
outstanding
preferred stock

;

* adverse effects on the Company’s ability to engage in routine
funding transactions as a result of the actions and commercial soundness
of other financial institutions;

* general economic conditions becoming less
favorable
  
adj.
1. Advantageous; helpful:

2. Encouraging; propitious:

3.
 than expected,
continued
disruption
 /dis·rup·tion/ () a morphologic defect resulting from the extrinsic breakdown of, or interference with, a developmental process.
 in the housing markets and/or asset price

deterioration

n.
The process or condition of becoming worse.
, which have had and may continue to have a negative effect
on the valuation of certain asset categories represented on the
Company’s balance sheet;

* increases in deposit insurance premiums or assessments imposed on
the Company by the
FDIC

See Federal Deposit Insurance Corporation (FDIC).
;

* a failure of the Company’s
operating systems

 or
infrastructure, or those of its third-party vendors, that could disrupt
its business;

* risks that are not effectively identified or
mitigated
  
v. mit·i·gat·ed, mit·i·gat·ing, mit·i·gates

v.tr.
To moderate (a quality or condition) in force or intensity; alleviate. See Synonyms at relieve.

v.intr.
To become milder.
 by the
Company’s risk management framework; and

* difficulty attracting and/or retaining key executives and/or
relationship managers at compensation levels necessary to maintain a
competitive market position; as well as the risks and uncertainties
described from time to time in the Company’s reports as filed with
the SEC.

The Company undertakes no obligation to update or
clarify

 forward-looking statements, whether as a result of new information,
future events or otherwise.

* Pre-provision core earnings is a non-GAAP financial measure that
the Company’s management believes is useful in analyzing the
Company’s underlying performance trends, particularly in periods of
economic stress. Pre-provision core earnings is defined as income before
income tax expense, adjusted to exclude the impact of provision for loan
losses.