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 first quarter of 2021 compared to net income of $731,000,
or $0.12 per diluted share, for the first quarter of 2020.
2021 First Quarter Financial
Highlights:
- Net income of $1.7 million in the
first quarter of 2021 increased by $1.0 million, or 130.9%, when
compared to the first quarter of 2020. First quarter 2021 was
positively impacted by increases in net interest income and
non-interest income and a decrease in provision for loan losses,
partially offset by an increase in income tax expense;
- Loans, net totaled $538.2 million
at March 31, 2021, compared to $524.1 million at December 31, 2020,
an increase of $14.0 million, or 2.7%, primarily due to the
origination of commercial real estate, commercial construction,
Payroll Protection Program (“PPP”) and residential, one- to
four-family loans during the first three months of 2021;
- Non-performing loans as a percent
of total net loans decreased to 0.55% from 0.59% at December 31,
2020, primarily due to a decrease in non-accrual residential, one-
to four- family real estate loans;
- Total assets at March 31, 2021
increased $19.5 million, or 2.8%, to $705.7 million when compared
to December 31, 2020, primarily due to an increase in loans, net
and an increase in cash and cash equivalents which was driven by
deposit growth. This increase was partially offset by a decrease in
securities available for sale; and
- Total deposits grew by $22.3
million, or 4.0%, to $582.6 million at March 31, 2021 when compared
to December 31, 2020, primarily due to growth in core
deposits.
“We experienced a strong first quarter 2021,
despite the ongoing presence of the COVID-19 pandemic. The Company
was able to achieve these results by continuing to produce solid
loan and deposit growth while efficiently controlling operating
expenses,” stated Daniel P. Reininga, President and Chief Executive
Officer. “This growth is possible due to our robust capital
position, increasing asset quality and outstanding customer
service.”
COVID 19 Pandemic Update
During the first quarter of 2021, the Bank
originated 29 Small Business Administration (“SBA”) PPP loans for
$9.7 million to lessen the continued economic impact of the
COVID-19 pandemic on small businesses in our market areas. These
loans were in addition to the 252 PPP loans for $26.9 million which
were originated by the Bank during 2020. As of March 31, 2021,
$23.0 million of the PPP loans originated during 2020 were still
outstanding on the Bank’s balance sheet.
During 2020, the Bank implemented a loan
deferral program, in line with regulatory guidance, to further
assist customers that have been impacted by the pandemic. At its
maximum, we had approved loan payment deferral requests of up to 90
days on 219 loans, representing $103.1 million, or 21.1%, of the
Bank’s loan portfolio. The number of loan payment deferral requests
has decreased significantly and as of March 31, 2021, three
borrowers representing five loans and $15.5 million, or 2.9%, of
the loan portfolio remained in the loan deferral program.
Net Interest Income
First quarter 2021 net interest income increased
$374,000, or 7.6%, to $5.3 million as compared to $4.9 million for
the first quarter 2020.
Interest income for the first quarter of 2021
was $6.1 million, a decrease of $234,000, or 3.7%, compared to $6.3
million for the first quarter 2020. The decrease was attributable
to a 61 basis points decrease in the average yield earned on assets
due to the decrease in market interest rates and to a lesser extent
the origination of PPP loans earning 1.0% since March 31, 2020. The
decrease was partially offset by a $68.8 million, or 1.0%, increase
in the average balance of interest-earning assets and the
recognition of PPP fees during the first quarter 2021 as compared
to the first quarter 2020. The increase in the average balance of
interest-earning assets was primarily due to growth in the average
balance of commercial real estate, commercial construction and PPP
loans.
First quarter 2021 interest expense was
$787,000, a decrease of $608,000, or 43.6%, from $1.4 million for
first quarter 2020 primarily due to a decrease in interest paid on
deposit accounts. During the first quarter of 2021, there was a 58
basis points decrease in the average interest rate paid on deposit
accounts as a result of a decrease in market interest rates since
March 31, 2020. The decrease was partially offset by a $37.4
million, or 8.7%, increase in average interest-bearing deposits
during the 2021 first quarter as compared to the 2020 first
quarter. The increase in the average balance of interest-bearing
deposits was due to an increase in core deposit accounts primarily
through organic growth, the deposit of PPP funds and government
stimulus payments into our customers’ deposit accounts and the
impact of COVID-19 on consumer and business spending and savings
levels.
Non-Interest Income
Non-interest income was $820,000 for the first
quarter of 2021, an increase of $365,000, or 80.2%, as compared to
the same quarter in the prior year. The increase was primarily due
to a $273,000 increase in unrealized gains on interest rate swaps
and equity securities, a $120,000 increase in gains on the sale of
residential loans and a $33,000 increase in debit card income,
partially offset by a $51,000 decrease in service charges and
fees.
Non-Interest Expense
Non-interest expense was $4.0 million for the
first quarter of 2021 and 2020. Salary and employee benefits
expense decreased $115,000, or 5.2%, primarily due to an increase
in deferred salaries related to loan originations during the first
quarter of 2021 when compared to the first quarter of 2020. The
current year first quarter also had lower advertising, postage and
supplies and other expenses. These decreases were offset by higher
occupancy and equipment costs, data processing costs, professional
services and FDIC insurance.
Asset Quality
The provision for loan losses was $150,000 for
first quarter 2021 as compared to $500,000 for the first quarter of
2020. The first quarter 2021 provision expense was primarily due to
general reserves for loan originations during the period. The first
quarter 2020 provision expense was primarily due to an adjustment
of certain qualitative factors to take into account the uncertain
impacts of COVID-19 on economic conditions and borrowers’ ability
to repay loans during the first three months of 2020.
Non-performing loans as a percent of total net
loans decreased to 0.55% at March 31, 2021 as compared to 0.59% at
December 31, 2020. The Company’s allowance for loan losses as a
percent of total net loans was 1.12% at March 31, 2021 and December
31, 2020.
Balance Sheet Summary
Total assets at March 31, 2021 were $705.7
million, a $19.5 million, or 2.8%, increase as compared to $686.2
million at December 31, 2020. Loans receivable, net at March 31,
2021 was $538.2 million, a $14.0 million, or 2.7%, increase as
compared to $524.1 million at December 31, 2020. The increase in
total loans was primarily due to increased commercial real estate,
commercial construction, PPP and residential, one- to four-family
loan originations. Cash and cash equivalents increased by $9.0
million, or 20.9%, from $43.0 million at December 31, 2020 to $52.0
million at March 31, 2021. The increase was primarily due to an
increase in deposits, partially offset by the use of funds for loan
originations. Securities available for sale decreased $3.9 million,
or 4.9%, to $75.4 million at March 31, 2021 from $79.3 million at
December 31, 2020. Total deposits at March 31, 2021 were $582.6
million, an increase of $22.3 million, or 4.0%, compared to $560.3
million at December 31, 2020. The increase in deposits was due to
an increase in core deposit accounts, which was partially driven by
stimulus funds and PPP loan proceeds. Stockholders’
equity at March 31, 2021 was $86.0 million as compared to $85.9
million at December 31, 2020. The increase in stockholders’ equity
was primarily attributed to net income which was nearly offset by a
decrease in accumulated other comprehensive income, dividend
payments and stock repurchases during the first three months of
2021.
Dividends Declared
On April 28, 2021, the Company’s Board of
Directors approved a quarterly cash dividend of $0.13 per share of
common stock. The dividend is payable on May 21, 2021, to
shareholders of record as of May 10, 2021. Lake Shore, MHC (the
“MHC”), which holds 3,636,875 shares, or 62.8%, of the Company’s
total outstanding stock as of April 27, 2021, has elected to waive
receipt of the dividend on its shares. The closing stock price of
Lake Shore Bancorp, Inc. shares was $14.83 on April 27, 2021, which
implied a dividend yield for the Company’s common stock of
3.5%.
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 are not guarantees of
future performance and are subject to certain risks, uncertainties
and assumptions that are difficult to forecast. 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.
As the result of the COVID-19 pandemic and the
related adverse local and national economic consequences, the
Company could be subject to any of the following additional risks,
any of which could have a material, adverse effect on its business,
financial condition, liquidity, and results of operations:
- demand for our products and
services may decline, making it difficult to grow assets and
income;
- if the economy is unable to
substantially reopen, and high levels of unemployment continue for
an extended period of time, loan delinquencies, problem assets, and
foreclosures may increase, resulting in increased charges and
reduced income;
- collateral for
loans, especially real estate, may decline in value, which
could cause loan losses to increase;
- our allowance for loan losses may
have to be increased if borrowers experience financial difficulties
beyond forbearance periods, which will adversely affect our net
income;
- the net worth and liquidity of loan
guarantors may decline, impairing their ability to honor
commitments to us;
- as the result of the decline in the
Federal Reserve Board’s target federal funds rate to near 0%, the
yield on our assets may decline to a greater extent than the
decline in our cost of interest-bearing liabilities, reducing our
net interest margin and spread and reducing net income;
- a material decrease in net income
over several quarters could result in a decrease in the rate of our
quarterly cash dividend;
- our cyber security risks are
increased as the result of an increase in the number of employees
working remotely;
- we rely on third party vendors for
certain services and the unavailability of a critical service due
to the COVID-19 outbreak could have an adverse effect on us;
and
- FDIC premiums may increase if the
agency experiences additional resolution costs.
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, |
|
2021 |
|
2020 |
|
|
(Unaudited) |
|
|
(Dollars in thousands) |
|
|
|
|
|
|
Total
assets |
$ |
705,745 |
|
$ |
686,200 |
Cash and
cash equivalents |
|
51,960 |
|
|
42,975 |
Securities available for sale |
|
75,382 |
|
|
79,285 |
Loans
receivable, net |
|
538,184 |
|
|
524,143 |
Deposits |
|
582,560 |
|
|
560,259 |
Long-term debt |
|
28,250 |
|
|
29,750 |
Stockholders’ equity |
|
85,960 |
|
|
85,924 |
|
|
|
|
|
|
Statements
of Income |
|
Three Months Ended |
|
March 31, |
|
2021 |
|
2020 |
|
(Unaudited) |
|
(Dollars in thousands, except per share
amounts) |
|
|
|
|
|
|
Interest income |
$ |
6,057 |
|
$ |
6,291 |
Interest expense |
|
787 |
|
|
1,395 |
Net interest income |
|
5,270 |
|
|
4,896 |
Provision for loan losses |
|
150 |
|
|
500 |
Net interest income after
provision for loan losses |
|
5,120 |
|
|
4,396 |
Total non-interest income |
|
820 |
|
|
455 |
Total non-interest
expense |
|
3,953 |
|
|
3,998 |
Income before income
taxes |
|
1,987 |
|
|
853 |
Income tax expense |
|
299 |
|
|
122 |
Net income |
$ |
1,688 |
|
$ |
731 |
Basic and diluted earnings per
share |
$ |
0.29 |
|
$ |
0.12 |
Dividends declared per
share |
$ |
0.13 |
|
$ |
0.12 |
|
|
|
|
|
|
Lake Shore Bancorp, Inc.Selected Financial
Information |
|
Selected Financial
Ratios |
|
|
|
Three Months Ended |
|
March 31, |
|
2021 |
|
2020 |
|
(Unaudited) |
|
|
Return on average assets |
0.98 |
% |
|
0.47 |
% |
Return on average equity |
7.78 |
% |
|
3.48 |
% |
Average interest-earning
assets to average interest-bearing liabilities |
129.18 |
% |
|
123.17 |
% |
Interest rate spread |
3.15 |
% |
|
3.19 |
% |
Net interest margin |
3.29 |
% |
|
3.42 |
% |
|
|
|
|
|
|
|
March 31, |
|
December 31, |
|
2021 |
|
2020 |
|
(Unaudited) |
|
|
|
|
|
|
Asset Quality
Ratios: |
|
|
|
|
|
Non-performing loans as a
percent of total net loans |
0.55 |
% |
|
0.59 |
% |
Non-performing assets as a
percent of total assets |
0.42 |
% |
|
0.46 |
% |
Allowance for loan losses as a
percent of total net loans |
1.12 |
% |
|
1.12 |
% |
Allowance for loan losses as a
percent of non-performing loans |
203.94 |
% |
|
118.75 |
% |
|
|
|
|
|
|
|
March 31, |
|
December 31, |
|
2021 |
|
2020 |
|
|
(Unaudited) |
|
|
|
|
|
|
Share
Information: |
|
|
|
|
|
Common
stock, number of shares outstanding |
|
5,799,518 |
|
|
5,823,786 |
Treasury
stock, number of shares held |
|
1,036,996 |
|
|
1,012,728 |
Book
value per share |
$ |
14.82 |
|
$ |
14.75 |
Lake Shore Bancorp (NASDAQ:LSBK)
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