Lake Shore Bancorp, Inc. (the “Company”) (NASDAQ: LSBK), the
holding company for Lake Shore Savings Bank (the “Bank”), reported
unaudited net income of $1.7 million, or $0.29 per diluted share,
for the 2023 first quarter compared to net income of $1.1 million,
or $0.18 per diluted share, for the 2022 first quarter.
“We are pleased with Lake Shore’s financial
results during the first quarter of 2023,” stated Kim Liddell,
President and CEO. “We, like most Banks, were susceptible to the
rapidly rising rate environment and increased interest expenses
during the first quarter. Even with those headwinds Lake Shore
performed well, a testament to its core strength of building
relationships one customer at a time for the last 132 years.”
2023 First Quarter Financial
Highlights:
- Net income increased to $1.7
million during the 2023 first quarter, an increase of $623,000, or
58.7%, when compared to the 2022 first quarter. Net income
during the three months ended March
31, 2023 was positively impacted by an increase
in net interest income and a decrease in (credit) provision for
credit losses, partially offset by an increase in non-interest
expenses;
- Net interest income increased
$823,000, or 15.1%, to $6.3 million during the 2023 first quarter
in comparison to the 2022 first quarter, primarily due to an
increase in the average yield earned on interest-earning assets and
an increase in the average balance of interest-earning assets since
March 31, 2022;
- Average loan yield increased 88
basis points when compared to the three months ended March 31,
2022, primarily due to an increase in market interest rates;
- Total deposits increased by $25.1
million, or 4.4% since December 31, 2022, primarily due to an
increase in brokered deposits and time deposits;
- Net interest margin and interest
rate spread was 3.76% and 3.49%, respectively, for the 2023 first
quarter as compared to 3.38% and 3.30%, respectively, for the 2022
first quarter; and
- Non-performing loans as a percent
of total net loans was 0.48% and 0.51% at March 31, 2023 and
December 31, 2022, respectively.
Net Interest Income
2023 first quarter net interest income increased
$823,000, or 15.1%, to $6.3 million as compared to $5.5 million for
the 2022 first quarter.
Interest income for the 2023 first quarter was
$8.0 million, an increase of $2.0 million, or 34.0%, compared to
$5.9 million for the 2022 first quarter. The increase was primarily
due to a 108 basis points increase in the average yield on
interest-earning assets due to an increase in market interest
rates. The increase was also due to a $54.1 million, or 10.4%,
increase in the average balance of loans since March 31, 2022.
2023 first quarter interest expense was $1.7
million, an increase of $1.2 million, or 256.2%, from $466,000 for
the 2022 first quarter. The increase in interest expense was
primarily due to a 90 basis points increase in average interest
paid on interest bearing liabilities and a $23.1 million increase
in average interest-bearing liabilities. During the first quarter
of 2023, there was a $965,000 increase in interest paid on deposit
accounts due to an 80 basis points increase in the average interest
rate paid. The increase in the average rate paid on deposit
accounts was primarily due to the increase in market interest rates
since March 31, 2022. Average deposit balances were $482.6 million,
an 8.1% increase during the 2023 first quarter, resulting from an
increase in certificate of deposits and brokered deposits since
March 31, 2022. During the 2023 first quarter, interest expense on
short-term and long-term debt increased by $229,000, or 221.2%,
compared to the 2022 first quarter, primarily due to a $19.3
million increase in average debt outstanding.
Non-Interest Income
Non-interest income was $554,000 for the 2023
first quarter, a decrease of $178,000, or 24.3%, as compared to the
2022 first quarter. The decrease was primarily due to a $232,000
net increase in unrealized losses on interest rate swap products as
a result of rising interest rates. The decrease was partially
offset by a $36,000 increase in service charges and fees and debit
card income and a $7,000 increase in earnings on bank owned life
insurance.
Non-Interest Expense
Non-interest expense was $5.5 million for the
2023 first quarter, an increase of $985,000, or 21.7%, as compared
to $4.5 million for the 2022 first quarter. Professional services
expense increased by $551,000, or 184.3%, primarily due to an
increase in legal, auditing services, regulatory assessments and
consulting costs during the 2023 first quarter associated with
remediation activities related to regulatory concerns. Salary and
employee benefits expense increased $372,000, or 15.5%, primarily
due to the addition of staffing resources, annual salary increases,
an increase in the cost to attract and retain employees in our
market area and an increase in employee benefits. FDIC Insurance
expense increased by $50,000, or 111.1%, during the quarter
primarily due to an increase in premium assessments. Data
processing costs increased $63,000, or 20.0%, primarily due to an
increase in costs related to core system maintenance and
enhancements to existing IT security protocols. Advertising expense
increased $42,000, or 30.8%, primarily due to an increase in
marketing costs during the first quarter of 2023. Other expenses
decreased $147,000, or 28.3%, primarily due to a one-time,
insurance related expense being recorded during the first quarter
of 2022.
Credit Quality
The Company adopted the Current Expected Credit
Losses (“CECL”) methodology to record expected credit losses on our
loan portfolio effective January 1, 2023. The adoption of CECL
under current accounting guidance resulted in a pre-tax increase to
the allowance for credit losses on loans of $282,000, with an
offset to the Company’s retained earnings. The Company is utilizing
the vintage model to estimate its allowance for credit losses on
loans. During the three months ended March 31, 2023, the Company
recorded a $625,000 credit to the allowance for credit losses on
loans due to a change in the forecasting factor from January 1,
2023.
The provision for credit losses was $400,000 for
the three months ended March 31, 2022.
Non-performing loans as a percent of total net
loans decreased to 0.48% at March 31, 2023 as compared to 0.51% at
December 31, 2022. The Company’s allowance for credit losses as a
percent of total loans was 1.17%, at March 31, 2023 and 1.23% at
December 31, 2022.
Balance Sheet Summary
Total assets at March 31, 2023 were $730.1
million, a $30.2 million increase, or 4.3%, as compared to $699.9
million at December 31, 2022. Cash and cash equivalents increased
by $29.1 million, or 302.2%, from $9.6 million at December 31, 2022
to $38.7 million at March 31, 2023. The increase was primarily due
to an increase in deposit accounts and long-term borrowings.
Securities available for sale was $73.8 million at March 31, 2023
as compared to $73.0 million at December 31, 2022. Loans
receivable, net at March 31, 2023 and December 31, 2022 were $574.4
million and $573.5 million, respectively. Total deposits at March
31, 2023 were $595.2 million, an increase of $25.1 million, or
4.4%, compared to $570.1 million at December 31, 2022 primarily due
to an increase in brokered deposits and time deposits. Total
borrowings increased to $41.3 million, an increase of $3.7 million,
or 9.9% as compared to $37.5 million as of December 31, 2022.
Stockholders’ equity at March 31, 2023 was $83.7
million, a $2.5 million increase, or 3.1%, as compared to $81.2
million at December 31, 2022. The increase in stockholders’ equity
was primarily attributed to a $1.3 million unrealized
mark-to-market gain on the available for sales securities portfolio
recognized in other comprehensive income. The increase in
stockholders’ equity was also attributed to net income earned
during the three months ended March 31, 2023, which was partially
offset by the initial entry recorded to retained earnings upon the
adoption of CECL.
About Lake Shore
Lake Shore Bancorp, Inc. (NASDAQ Global Market:
LSBK) is the mid-tier holding company of Lake Shore Savings Bank, a
federally chartered, community-oriented financial institution
headquartered in Dunkirk, New York. The Bank has eleven
full-service branch locations in Western New York, including five
in Chautauqua County and six in Erie County. The Bank offers a
broad range of retail and commercial lending and deposit services.
The Company’s common stock is traded on the NASDAQ Global Market as
“LSBK”. Additional information about the Company is available at
www.lakeshoresavings.com.
Safe-Harbor
This release contains certain forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995, that are based on current expectations,
estimates and projections about the Company’s and the Bank’s
industry, and management’s beliefs and assumptions. Words such as
anticipates, expects, intends, plans, believes, estimates and
variations of such words and expressions are intended to identify
forward-looking statements. Such statements reflect management's
current views of future events and operations. These
forward-looking statements are based on information currently
available to the Company as of the date of this release. It is
important to note that these forward-looking statements are not
guarantees of future performance and involve and are subject to
significant risks, contingencies, and uncertainties, many of which
are difficult to predict and are generally beyond our control
including, but not limited to, compliance with the Bank’s Consent
Order and an Individual Minimum Capital Requirement both issued by
the Office of the Comptroller of the Currency, data loss or other
security breaches, including a breach of our operational or
security systems, policies or procedures, including cyber-attacks
on us or on our third party vendors or service providers, economic
conditions, the effect of changes in monetary and fiscal policy,
inflation, unanticipated changes in our liquidity position, climate
change, increased unemployment, deterioration in the credit quality
of the loan portfolio and/or the value of the collateral securing
repayment of loans, reduction in the value of investment
securities, the cost and ability to attract and retain key
employees, regulatory or legal developments, tax policy changes,
and our ability to implement and execute our business plan and
strategy and expand our operations. These factors should be
considered in evaluating forward looking statements and undue
reliance should not be placed on such statements, as our financial
performance could differ materially due to various risks or
uncertainties. We do not undertake to publicly update or revise our
forward-looking statements if future changes make it clear that any
projected results expressed or implied therein will not be
realized.
Source: Lake Shore Bancorp, Inc.Category: Financial
Investor Relations/Media ContactRachel A.
FoleyChief Financial Officer and TreasurerLake Shore Bancorp,
Inc.31 East Fourth StreetDunkirk, New York 14048(716) 366-4070 ext.
1020
Lake Shore Bancorp,
Inc.Selected Financial Information
Selected Financial Condition Data |
|
|
|
|
|
|
|
|
March 31, |
|
December 31, |
|
2023 |
|
2022 |
|
(Unaudited) |
|
(Dollars in thousands) |
|
|
|
|
|
|
|
|
Total
assets |
$ |
730,064 |
|
|
$ |
699,914 |
|
Cash and
cash equivalents |
|
38,739 |
|
|
|
9,633 |
|
Securities available for sale |
|
73,751 |
|
|
|
73,047 |
|
Loans
receivable, net |
|
574,408 |
|
|
|
573,537 |
|
Deposits |
|
595,207 |
|
|
|
570,119 |
|
Short-term borrowings |
|
2,030 |
|
|
|
12,596 |
|
Long-term debt |
|
39,250 |
|
|
|
24,950 |
|
Stockholders’ equity |
|
83,697 |
|
|
|
81,184 |
|
|
|
|
|
|
|
|
|
Statements
of Income |
|
|
Three Months Ended |
|
|
March 31, |
|
|
2023 |
|
|
|
2022 |
|
|
(Unaudited) |
|
(Dollars in thousands, except per share
amounts) |
|
|
|
|
|
|
|
Interest income |
$ |
7,951 |
|
|
$ |
5,934 |
|
Interest expense |
|
1,660 |
|
|
|
466 |
|
Net interest income |
|
6,291 |
|
|
|
5,468 |
|
(Credit) Provision for credit
losses |
|
(625 |
) |
|
|
400 |
|
Net interest income after
(credit) provision for credit losses |
|
6,916 |
|
|
|
5,068 |
|
Total non-interest income |
|
554 |
|
|
|
732 |
|
Total non-interest
expense |
|
5,517 |
|
|
|
4,532 |
|
Income before income
taxes |
|
1,953 |
|
|
|
1,268 |
|
Income tax expense |
|
269 |
|
|
|
207 |
|
Net income |
$ |
1,684 |
|
|
$ |
1,061 |
|
Basic and diluted earnings per
share |
$ |
0.29 |
|
|
$ |
0.18 |
|
Dividends declared per
share |
$ |
- |
|
|
$ |
0.16 |
|
|
|
|
|
|
|
|
|
Lake Shore Bancorp,
Inc.Selected Financial Information
Selected Financial
Ratios |
|
|
|
Three Months Ended |
|
March 31, |
|
2023 |
|
2022 |
|
(Unaudited) |
|
|
Return on average assets |
|
0.94 |
% |
|
|
0.98 |
% |
Return
on average equity |
|
8.15 |
% |
|
|
7.78 |
% |
Average
interest-earning assets to average interest-bearing
liabilities |
|
127.65 |
% |
|
|
129.18 |
% |
Interest
rate spread |
|
3.49 |
% |
|
|
3.30 |
% |
Net
interest margin |
|
3.76 |
% |
|
|
3.38 |
% |
|
|
|
|
|
|
|
|
|
March 31, |
|
December 31, |
|
2023 |
|
2022 |
|
(Unaudited) |
|
|
|
|
|
|
|
|
Asset Quality
Ratios: |
|
|
|
|
|
|
|
Non-performing loans as a percent of total net loans |
|
0.48 |
% |
|
|
0.51 |
% |
Non-performing assets as a percent of total assets |
|
0.39 |
% |
|
|
0.43 |
% |
Allowance for credit losses as a percent of total loans |
|
1.17 |
% |
|
|
1.23 |
% |
Allowance for credit losses as a percent of non-performing
loans |
|
242.08 |
% |
|
|
240.96 |
% |
|
|
|
|
|
|
|
|
|
March 31, |
|
December 31, |
|
2023 |
|
2022 |
|
(Unaudited) |
|
|
|
|
|
|
|
|
Share
Information: |
|
|
|
|
|
|
|
Common
stock, number of shares outstanding |
|
5,693,358 |
|
|
|
5,705,225 |
|
Treasury
stock, number of shares held |
|
1,143,156 |
|
|
|
1,131,289 |
|
Book
value per share |
$ |
14.70 |
|
|
$ |
14.23 |
|
|
|
|
|
|
|
|
|
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