Lake Shore Bancorp, Inc. (LSBK) 10-Q Quarterly Report November 2023

DUNKIRK, N.Y. — October 26, 2023 — Lake Shore Bancorp, Inc. (the “Company”) (NASDAQ: LSBK), the holding company for Lake Shore Savings Bank (the “Bank”), reported unaudited net income of $1.6 million, or $0.27 per diluted share, for the 2023 third quarter compared to net income of $1.8 million, or $0.30 per diluted share, for the 2022 third quarter. For the first nine months of 2023, the Company reported unaudited net income of $4.1 million, or $0.69 per diluted share, as compared to $4.5 million, or $0.77 per diluted share, for the first nine months of 2022.

“Lake Shore delivered solid results for the third quarter despite significant expenses related to our efforts to remediate previously disclosed regulatory matters,” stated Kim Liddell, President, CEO, and Director. “We continue to look for opportunities to effectively manage expense and improve results for our shareholders. Deposit competition remains fierce and continues to be at the forefront of our focus.”

2023 Third Quarter and Year-to-Date Financial Highlights:

•

Net income decreased to $1.6 million during the 2023 third quarter, a decrease of $200,000, or 11.3%, when compared to the 2022 third quarter. Net income during the three months ended September 30, 2023 was negatively impacted by an increase in non-interest expenses from an increase in salaries and benefits and FDIC insurance, partially offset by an increase in net interest income after (credit) provision for credit losses;

•

Net income decreased to $4.1 million during the first nine months of 2023, a decrease of $0.4 million, or 9.9%, when compared to the first nine months of 2022. Net income during the nine months ended September 30, 2023 was negatively impacted by an increase in non-interest expenses associated with remediation activities related to regulatory matters, an increase in salaries and benefits, and a decrease in non-interest income, partially offset by an increase in net interest income after (credit) provision for credit losses;

•

Net interest income decreased $50,000, or 0.8%, to $6.3 million during the 2023 third quarter as compared to the 2022 third quarter, primarily due to an increase in the average interest rate paid on interest-bearing liabilities when compared to the prior year period, partially offset by an increase in the average yield earned on interest-earning assets;

•

Net interest income increased $1.0 million, or 5.7%, to $18.8 million during the first nine months of 2023 as compared to $17.8 million during the first nine months of 2022, 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 September 30, 2022, partially offset by an increase in the average rate paid on interest-bearing liabilities;

•

Average loan yield increased 88 basis points for the three months ended September 30, 2023 when compared to the three months ended September 30, 2022, due to an increase in market rates;

The following information was filed by Lake Shore Bancorp, Inc. (LSBK) on Thursday, October 26, 2023 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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Inside Lake Shore Bancorp, Inc.'s 10-Q Quarterly Report:

Financial - Shares Highlight
The increase in stockholders equity was primarily attributed to $4.1 million in net income earned during the first nine months of 2023, partially offset by a $2.7 million unrealized mark-to-market loss on the available for sales securities portfolio recognized in other comprehensive loss, and the initial entry of $0.7 million recorded to retained earnings upon the adoption of CECL.

Financial - Expense Highlight
The increase in interest expense on deposits was primarily due to a 138 basis points increase in the average interest rate paid on deposit accounts as the deposit mix shifted towards higher cost time deposits.
Financial - Expense Highlight
The increase in interest expense on deposits was primarily due to a 115 basis points increase in the average interest rate paid on deposit accounts as the deposit mix shifted towards higher cost time deposits.
Financial - Expense Highlight
The Company adopted ASU 2016-13 - Financial Instruments Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, as amended, ("CECL") for all financial assets measured at amortized cost using the modified retrospective method on January 1, 2023 and replaced the allowance for loan losses incurred loss model discussed in the Form 10-K for the year ended December 31, 2022 with the allowance for credit losses model.
Financial - Earnings Highlight
The increase in the average yield of interest-earning assets was primarily driven by an 89 basis points increase in the average yield of average loans and a $32.2 million increase in the average balance of loans.
Financial - Income
Income tax expense was $332,000...Read more
Financial - Income
Income tax expense was $838,000...Read more
Other - Other
Cash and cash equivalents increased...Read more
Revenue - Product
The increase was primarily due...Read more
Financial - Earnings
Net interest margin increased to...Read more
Financial - Expense
Advertising expense increased $58,000, or...Read more
Financial - Earnings
Net interest margin decreased to...Read more
Other - Other
The increase in the average...Read more
Legal - Other
Professional services increased by $891,000,...Read more
Financial - Earnings
Net income was $4.1 million...Read more
Financial - Earnings
Net income was $1.6 million...Read more
Other - Other
The allowance for credit losses...Read more
Other - Other
Total non-performing assets increased by...Read more
Financial - Income
As shown in the above...Read more
Other - Other
The Bank elected to be...Read more
Financial - Expense
We expect that our non-interest...Read more
Financial - Expense
We expect that our non-interest...Read more
Other - Other
Management considers past events, current...Read more
Financial - Earnings
The average yield of interest-earning...Read more
Other - Other
Based on our deposit retention...Read more
Other - Other
Comparison of Financial Condition at...Read more
Financial - Expense
Interest expense increased $1.9 million,...Read more
Financial - Expense
Interest expense increased $4.9 million,...Read more
Other - Other
At September 30, 2023, we...Read more
Other - Other
The effective tax rate was...Read more
Other - Other
The effective tax rate for...Read more
Financial - Debt
During the nine months ended...Read more
Revenue - Product
The Company?s strategic focus is...Read more
Revenue - Product
Securities decreased by $15.0 million,...Read more
Financial - Earnings
The provision for credit losses...Read more
Financial - Income
The decrease in income tax...Read more

Financial Statements, Disclosures and Schedules

Inside this 10-Q Quarterly Report

Material Contracts, Statements, Certifications & more

Lake Shore Bancorp, Inc. provided additional information to their SEC Filing as exhibits

Exhibit 31.1: Rule 13A-14(A)/15D-14(A) Certification

Exhibit 31.2: Rule 13A-14(A)/15D-14(A) Certification

Exhibit 32.1: Section 1350 Certification

Exhibit 32.2: Section 1350 Certification

Ticker: LSBK
CIK: 1341318
Form Type: 10-Q Quarterly Report
Accession Number: 0000950170-23-063087
Submitted to the SEC: Mon Nov 13 2023 4:54:35 PM EST
Accepted by the SEC: Mon Nov 13 2023
Period: Saturday, September 30, 2023
Industry: Savings Institution Federally Chartered

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Lake Shore Bancorp, Inc. (LSBK) SEC Filing 10-Q Quarterly Report for the period ending Saturday, September 30, 2023

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