Lake Shore Bancorp, Inc. (the “Company”) (NASDAQ: LSBK), the
holding company for Lake Shore Savings Bank (the “Bank”), reported
unaudited net income of $1.1 million, or $0.18 per diluted share,
for the 2022 first quarter compared to net income of $1.7 million,
or $0.29 per diluted share, for the 2021 first quarter.
2022 First Quarter Financial
Highlights:
- Net interest income increased 3.7%
to $5.5 million during the 2022 first quarter in comparison to $5.3
million during the 2021 first quarter, due to a $6.0 million
increase in the average balance of interest-earning assets and a 26
basis points decrease in the average cost of interest-bearing
liabilities;
- Net interest margin and interest
rate spread was 3.38% and 3.30%, respectively, for the three months
ended March 31, 2022 as compared to 3.29% and 3.15%, respectively,
for the three months ended March 31, 2021;
- Total assets at March 31, 2022
decreased $6.3 million, or 0.9%, to $707.5 million when compared to
December 31, 2021, primarily due to a $36.8 million decrease in
cash and cash equivalents and a $4.3 million decrease in securities
available for sale, which was offset by a $33.1 million increase in
loans receivable, net;
- Loans receivable, net grew by 6.4%,
to $550.3 million at March 31, 2022 when compared to December 31,
2021, primarily due to $30.0 million of net growth in commercial
construction and commercial real estate loans during the 2022 first
quarter;
- 2022 first quarter net income was
impacted by increases in non-interest expense and provision for
loan losses and a decrease in non-interest income; which was
partially offset by an increase in net interest income and a
decrease in income tax expense when compared to 2021 first quarter;
and
- Cash dividend payments increased
$44,000, or 16.4%, to $312,000 for the three months ended March 31,
2022 as compared to the same period in 2021.
“We are extremely pleased to report significant
growth in loan originations during the first quarter of 2022,”
stated Daniel P. Reininga, President and Chief Executive Officer.
“We achieved this loan growth through the establishment of solid
customer relationships with stout credit quality which has helped
strengthened our net interest margin in an uncertain interest rate
environment.”
Net Interest Income
2022 first quarter net interest income increased
$198,000, or 3.8%, to $5.5 million as compared to $5.3 million for
the 2021 first quarter.
Interest income for the 2022 first quarter was
$5.9 million, a decrease of $123,000, or 2.0%, compared to $6.1
million for the 2021 first quarter. The decrease was primarily due
to an 11 basis points decrease in the average yield on
interest-earning assets. The decrease in the average yield was
driven by an $11.9 million decrease in the average balance of loans
receivable, net during the three months ended March 31, 2022,
primarily due to a decrease in higher yield loan balances as a
result of loan paydowns. The decrease in the average yield was also
due to a 17 basis points decrease in the average yield earned on
securities available for sale, as a result of a pay-down in higher
yielding securities since March 31, 2021.
2022 first quarter interest expense was
$466,000, a decrease of $321,000, or 40.8%, from $787,000 for 2021
first quarter interest expense primarily due to a decrease in
interest paid on deposit accounts. During the first quarter of
2022, there was a 25 basis points decrease in the average interest
rate paid on deposit accounts. The decrease was partially offset by
a $11.8 million, or 2.5%, increase in average interest-bearing
deposits during the 2022 first quarter as compared to the 2021
first quarter. The increase in the average balance of
interest-bearing deposits was due to an increase in core deposit
accounts. During the 2022 first quarter, interest expense on
long-term debt decreased by $39,000, or 27.3%, compared to the 2021
first quarter, primarily due to a $7.0 million decrease in the
average balance of long-term borrowings.
Non-Interest Income
Non-interest income was $732,000 for the 2022
first quarter, a decrease of $88,000, or 10.7%, as compared to the
same quarter in the prior year. The decrease was primarily due to a
$169,000 net change in the (loss)/gain on the sale of residential
loans; primarily due to an increase in interest rates. Non-interest
income was also impacted by a $15,000 decrease in recoveries on
previously impaired investment securities. The decreases were
partially offset by a $97,000 increase in unrealized gains on
interest rate swaps and a $12,000 increase in service charges and
fees.
Non-Interest Expense
Non-interest expense was $4.5 million for the
first quarter of 2022, an increase of $579,000, or 14.6%, as
compared to $4.0 million for the first quarter of 2021. Salary and
employee benefits expense increased $306,000, or 14.6%, primarily
due to a $285,000 decrease in deferred salaries associated with a
decrease in the number of loans originated during the first quarter
of 2022 when compared to the first quarter of 2021. The increase
was also due to annual salary increases. Other expenses increased
$217,000, or 71.9%, primarily due to one-time data security, loan
and foreclosure related expenses. Occupancy and equipment increased
$76,000, or 11.2%, primarily due to an increase in maintenance
contracts and equipment expenses related to the core processing
system conversion completed in the third quarter of 2021. The
current year first quarter also had higher professional service
expense, partially offset by lower, data processing costs.
Asset Quality
The provision for loan losses was $400,000 for
the three months ended March 31, 2022, a $250,000, or 166.7%,
increase as compared to $150,000 for the three months ended March
31, 2021. The increase in provision for loan losses was primarily
due to an increase in commercial construction and commercial real
estate loan balances when compared to the same period in 2021.
Non-performing loans as a percent of total net
loans decreased to 1.72% at March 31, 2022 as compared to 1.86% at
December 31, 2021. The decrease was primarily due to a $160,000, or
1.7%, decrease in non-accrual loans during the first three months
of 2022. The Company’s allowance for loan losses as a percent of
total net loans was 1.18%, at March 31, 2022 and December 31,
2021.
Balance Sheet Summary
Total assets at March 31, 2022 were $707.5
million, a $6.3 million, or 0.9%, decrease as compared to $713.7
million at December 31, 2021. Cash and cash equivalents decreased
by $36.8 million, or 54.5%, from $67.6 million at December 31, 2021
to $30.8 million at March 31, 2022. The decrease was primarily due
to the use of cash to fund loan originations. Securities available
for sale decreased $4.3 million, or 4.8%, to $84.6 million at March
31, 2022 from $88.8 million at December 31, 2021. The decrease was
primarily due to unrealized mark to market losses on securities
available for sale due to an increase in market interest rates
during the first three months of 2022. Loans receivable, net was
$550.3 million, an increase of $33.1 million, or 6.4%, compared to
$517.2 million at December 31, 2021. The increase in loans
receivable, net was primarily due to increased commercial
construction and commercial real estate loan originations during
the first three months of 2022. Total deposits at March 31, 2022
were $592.8 million, a decrease of $364,000, or 0.1%, compared to
$593.2 million at December 31, 2021. Stockholders’
equity at March 31, 2022 was $82.7 million as compared to $88.0
million at December 31, 2021. The decrease in stockholders’ equity
was primarily attributed to a decrease in accumulated other
comprehensive income and the payment of dividends, partially offset
by net income during the first three months of 2022. During the
first three months of 2022, the Company did not repurchase any
shares of common stock as compared to 43,834 shares of common stock
repurchased at an average cost of $14.88 per share during the first
three months of 2021.
Dividends Declared
On April 27, 2022, the Company’s Board of
Directors approved a quarterly cash dividend of $0.16 per share of
common stock. The dividend is payable on May 23, 2022, to
shareholders of record as of May 9, 2022. Lake Shore, MHC (the
“MHC”), which holds 3,636,875 shares, or 63.6%, of the Company’s
total outstanding stock as of April 26, 2022, has elected to waive
receipt of the dividend on its shares. The closing stock price of
Lake Shore Bancorp, Inc. shares was $14.53 on April 26, 2022, which
implied a dividend yield for the Company’s common stock of
4.4%.
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 and Bank 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, risks from data loss or other
security breaches, risks from the COVID-19 pandemic, the strength
of the United States economy in general and of the local economies
in which we conduct operations, the effect of changes in monetary
and fiscal policy, including changes in interest rate policies of
the Board of Governors of the Federal Reserve System, inflation,
climate change, increased unemployment, deterioration in credit
quality of our loan portfolio and/or the value of the collateral
securing the repayment of those loans, reduction in the value
of our investment securities, the cost and ability to attract and
retain key employees, a breach of our operational or security
systems, policies or procedures including cyber-attacks on us or
third party vendors or service providers, regulatory or legal
developments, tax policy changes, and our ability to implement and
execute our business plan and strategy and expand our
operations. Therefore, actual results may differ materially
from those expressed or forecast in such forward-looking
statements. The Company and Bank undertake no obligation to update
publicly any forward-looking statements, whether as a result of new
information or otherwise.
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, |
|
2022 |
|
2021 |
|
(Unaudited) |
|
(Dollars in thousands) |
|
|
|
|
|
|
Total assets |
$ |
707,452 |
|
$ |
713,739 |
Cash and cash equivalents |
|
30,766 |
|
|
67,585 |
Securities available for
sale |
|
84,560 |
|
|
88,816 |
Loans receivable, net |
|
550,286 |
|
|
517,206 |
Deposits |
|
592,820 |
|
|
593,184 |
Long-term debt |
|
21,950 |
|
|
21,950 |
Stockholders’ equity |
|
82,663 |
|
|
87,976 |
|
|
|
|
|
|
Statements of
Income |
|
Three Months Ended |
|
March 31, |
|
2022 |
|
2021 |
|
(Unaudited) |
|
(Dollars in thousands, except per share
amounts) |
|
|
|
|
|
|
Interest income |
$ |
5,934 |
|
$ |
6,057 |
Interest expense |
|
466 |
|
|
787 |
Net interest income |
|
5,468 |
|
|
5,270 |
Provision for loan losses |
|
400 |
|
|
150 |
Net interest income after
provision for loan losses |
|
5,068 |
|
|
5,120 |
Total non-interest income |
|
732 |
|
|
820 |
Total non-interest expense |
|
4,532 |
|
|
3,953 |
Income before income taxes |
|
1,268 |
|
|
1,987 |
Income tax expense |
|
207 |
|
|
299 |
Net income |
$ |
1,061 |
|
$ |
1,688 |
Basic and diluted earnings per
share |
$ |
0.18 |
|
$ |
0.29 |
Dividends declared per share |
$ |
0.16 |
|
$ |
0.13 |
Lake Shore Bancorp,
Inc.Selected Financial Information
|
|
|
Selected Financial
Ratios |
|
|
|
Three Months Ended |
|
March 31, |
|
2022 |
2021 |
|
(Unaudited) |
|
|
Return on average assets |
0.60 |
% |
0.98 |
% |
Return on average equity |
4.86 |
% |
7.78 |
% |
Average interest-earning
assets to average interest-bearing liabilities |
129.17 |
% |
129.18 |
% |
Interest rate spread |
3.30 |
% |
3.15 |
% |
Net interest margin |
3.38 |
% |
3.29 |
% |
|
|
|
|
March 31, |
December 31, |
|
2022 |
2021 |
|
(Unaudited) |
|
|
|
Asset Quality
Ratios: |
|
|
Non-performing loans as a percent of total net loans |
1.72 |
% |
1.86 |
% |
Non-performing assets as a
percent of total assets |
1.37 |
% |
1.37 |
% |
Allowance for loan losses as a
percent of total net loans |
1.18 |
% |
1.18 |
% |
Allowance for loan losses as a
percent of non-performing loans |
68.61 |
% |
63.50 |
% |
|
|
|
|
|
|
|
March 31, |
|
December 31, |
|
2022 |
|
2021 |
|
|
(Unaudited) |
|
|
|
|
|
|
Share
Information: |
|
|
|
|
|
Common stock, number of shares
outstanding |
|
5,719,542 |
|
|
5,692,410 |
Treasury stock, number of
shares held |
|
1,116,972 |
|
|
1,144,104 |
Book value per share |
$ |
14.45 |
|
$ |
15.45 |
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