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 third quarter of 2021 compared to net income of $1.2
million, or $0.21 per diluted share, for the third quarter of 2020.
For the first nine months of 2021, the Company reported unaudited
net income of $4.4 million, or $0.74 per diluted share, as compared
to $3.3 million, or $0.56 per diluted share, for the first nine
months of 2020.
2021 Third Quarter and Year to Date
Financial Highlights:
- Net income of $1.7 million in the
third quarter of 2021 increased by $460,000, or 37.4%, when
compared to the third quarter of 2020. Third quarter 2021 net
income was positively impacted by an increase in net interest
income and a decrease in provision for loan losses, partially
offset by increases in non-interest expense and income tax
expense;
- Net income of $4.4 million for the
nine months ended September 30, 2021 increased by $1.1 million, or
31.9%, when compared to the nine months ended September 30, 2020.
Net income during the first nine months of 2021 was positively
impacted by increased net interest income and non-interest income
and a decrease in provision for loan losses, partially offset by
increases in non-interest expense and income tax expense;
- Total assets at September 30, 2021
increased $23.1 million, or 3.4%, to $709.3 million when compared
to December 31, 2020, primarily due to an increase in cash and cash
equivalents which was driven by deposit growth. This increase was
also due to an increase in securities available for sale;
- Total deposits grew by $31.5
million, or 5.6%, to $591.8 million at September 30, 2021 when
compared to December 31, 2020, primarily due to growth in core
deposits;
- Third quarter 2021 included stock
repurchases and cash dividend payments of $897,000 and $280,000,
respectively; and
- Book value per share grew to $15.17
per share at September 30, 2021 from $14.75 per share at December
31, 2020.
“Our strategic goal to improve financial
performance is reflected in our strong quarterly financial results
and balance sheet growth which is being achieved despite a low
interest rate environment and the lingering impact of the
pandemic,” stated Mr. Daniel P. Reininga, President and Chief
Executive Officer. “Our core banking business has been strengthened
by year-to-date deposit growth and $97.6 million of new loan
originations (excluding PPP loan originations) being added to our
loan portfolio. We successfully converted to a new core banking
system during the quarter, which resulted in non-recurring costs
that impacted our year-to-date financial results. We remain focused
on prudently deploying excess cash to strengthen our financial
performance, along with meeting the needs of new and existing
customers in the markets that we serve, while integrating our new
technology for processing efficiencies.”
COVID 19 Pandemic Update
During the first nine months of 2021, the Bank
originated thirty-three (33) Small Business Administration (“SBA”)
Paycheck Protection Program loans (“PPP loans”) for $11.4 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. The SBA PPP loan program ended on May 31, 2021.
As of September 30, 2021, $10.7 million of the PPP loans originated
during 2021 were still outstanding on the Bank’s balance sheet. All
PPP loans originated during 2020 have been forgiven as of September
30, 2021.
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, the Bank 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 September 30, 2021,
only one loan with a balance of $7.5 million, or 1.4%, of the loan
portfolio remained in the loan deferral program.
Net Interest Income
Third quarter 2021 net interest income increased
$929,000, or 18.9%, to $5.8 million as compared to $4.9 million for
the third quarter 2020. Net interest income for the first nine
months of 2021 increased $1.7 million, or 11.4%, to $16.5 million
as compared to $14.8 million for the first nine months of 2020.
Interest income for the third quarter of 2021
was $6.5 million, an increase of $543,000, or 9.2%, compared to
$5.9 million for the third quarter of 2020. The increase was
primarily due to an increase in total average interest-earning
assets of $33.8 million, or 5.3%, during the third quarter 2021 as
compared to the third quarter 2020. The increase in the average
balance of interest-earning assets was primarily due to growth in
the average balance of commercial and residential real estate
loans. The increase was also due to a 14 basis points increase in
the average yield earned on assets, primarily due to a $363,000
increase in prepayment penalties received on commercial real estate
loans and the recognition of $27,000 in PPP loan fees which was
partially offset by a decrease in market interest rates and to a
lesser extent the origination of PPP loans earning 1.0% since
September 30, 2020.
Interest income for the first nine months of
2021 was $18.7 million, an increase of $334,000, or 1.8%, compared
to $18.4 million for the first nine months of 2020. The increase
was attributable to a $49.4 million, or 8.1%, increase in the
average balance of interest-earning assets and the recognition of
$153,000 in PPP loan fees during the nine months ended September
30, 2021 as compared to the same period in 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. The increase was partially offset by a
23 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 September 30, 2020.
Third quarter 2021 interest expense was
$628,000, a decrease of $386,000, or 38.1%, from $1.0 million for
third quarter 2020 primarily due to a decrease in interest paid on
deposit accounts. During the third quarter of 2021, there was a 31
basis points decrease in the average interest rate paid on deposit
accounts as a result of a decrease in market interest rates since
September 30, 2020. The decrease was partially offset by a $15.0
million, or 3.2%, increase in average interest-bearing deposits
during the 2021 third quarter as compared to the 2020 third
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
continued impact of COVID-19 on consumer and business spending and
savings levels. During the third quarter of 2021, interest expense
on long-term debt decreased by $45,000, or 27.0%, compared to the
third quarter of 2020, primarily due to an $8.2 million decrease in
the average balance of long-term borrowings.
Interest expense for the nine months ended
September 30, 2021 was $2.2 million, a decrease of $1.3 million, or
38.7%, from $3.5 million for the nine months ended September 30,
2020 primarily due to a decrease in interest paid on deposit
accounts. During the first nine months of 2021, there was a 40
basis points decrease in the average interest rate paid on deposit
accounts as a result of a decrease in market interest rates
compared to the same period in 2020. The decrease was partially
offset by a $24.9 million, or 5.6%, increase in average
interest-bearing deposits during the first nine months of 2021 as
compared to the same period in 2020. 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 continued impact of COVID-19 on consumer
and business spending and savings levels. During the nine months
ended September 30, 2021, interest expense on long-term debt
decreased by $112,000, or 21.8%, compared to the nine month period
ended September 30, 2020, primarily due to a $6.7 million decrease
in the average balance on long-term borrowings.
Non-Interest Income
Non-interest income was $707,000 for the third
quarter of 2021, a decrease of $64,000, or 8.3%, as compared to the
same quarter in the prior year. The decrease was primarily due to a
$115,000 decrease in gains on the sale of residential loans and a
$24,000 decrease in earnings on bank owned life insurance,
partially offset by a $64,000 increase in service charges and fees
and an $18,000 increase in debit card interchange income.
Non-interest income was $2.2 million for the
nine months ended September 30, 2021, an increase of $376,000, or
20.5%, as compared to the nine months ended September 30, 2020. The
increase was primarily due to a $277,000 increase in unrealized
gains on interest rate swaps, a $121,000 increase in service
charges and fees and a $94,000 increase in debit card income,
partially offset by a $61,000 decrease in earnings on bank owned
life insurance and a $55,000 decrease in gains on the sale of
residential loans.
Non-Interest Expense
Non-interest expense was $4.5 million for the
third quarter of 2021, an increase of $572,000, or 14.6%, as
compared to $3.9 million for the third quarter of 2020. Salary and
employee benefits expense increased $203,000, or 9.3%, primarily
due to a $108,000 decrease in deferred salaries associated with a
decrease in loan originations during the third quarter of 2021 as
compared to the third quarter of 2020. The increase was also due to
annual salary increases. Professional services increased $209,000,
or 85.3%, primarily due to one-time costs of $221,000 associated
with the Company’s undertaking of a core processing system upgrade
which was completed in the third quarter of 2021. The current year
third quarter also had higher data processing costs, occupancy and
equipment costs and advertising costs.
Non-interest expense was $12.8 million for the
nine months ended September 30, 2021, an increase of $1.2 million,
or 10.2%, as compared to $11.7 million for the first nine months of
2020. Professional services increased $462,000, or 62.3%, primarily
due to one-time costs of $509,000 associated with the Company’s
undertaking of a core processing system upgrade which was completed
in the third quarter of 2021. Salary and employee benefits expense
increased $408,000, or 6.5%, primarily due to an increase in annual
salaries and the creation of an officer position for retail, sales
and marketing which was filled in August 2020. The first nine
months of 2021, also had higher data processing costs, occupancy
and equipment costs, FDIC insurance and other expenses. These
increases were partially offset by lower advertising costs.
Asset Quality
There was no provision for loan losses recorded
during the third quarter 2021 as compared to $300,000 for third
quarter 2020, primarily due to a net decrease in commercial real
estate loan balances, which was offset by an increase in general
reserves associated with the existing loan portfolio. The third
quarter 2020 provision expense was primarily due to general
reserves for loan originations during the period.
The provision for loan losses was $650,000 for
the nine months ended September 30, 2021, a $475,000, or 42.2%,
decrease as compared to $1.1 million for the nine months ended
September 30, 2020. The provision expense for the nine months ended
September 30, 2021 was primarily due to a partial charge-off
related to the downgrade and impairment of one commercial real
estate loan and due to general reserves for loan originations
during the period. The provision expense for the first nine months
of 2020 was primarily due to an adjustment of certain qualitative
factors to take into account the uncertain impact of COVID-19 on
economic conditions and borrowers’ ability to repay loans and
general reserves for loan originations during the period.
Non-performing loans as a percent of total net
loans increased to 1.88% at September 30, 2021 as compared to 0.59%
at December 31, 2020. The increase was primarily due to one
commercial real estate loan with a balance of $7.1 million being
placed into non-accrual status during the first nine months of
2021. The Company’s allowance for loan losses as a percent of total
net loans was 1.17% and 1.12%, at September 30, 2021 and December
31, 2020, respectively.
Balance Sheet Summary
Total assets at September 30, 2021 were $709.3
million, a $23.1 million, or 3.4%, increase as compared to $686.2
million at December 31, 2020. Cash and cash equivalents increased
by $18.0 million, or 41.9%, from $43.0 million at December 31, 2020
to $61.0 million at September 30, 2021. The increase was primarily
due to an increase in deposits, partially offset by the use of
funds to pay off long-term borrowings. Securities available for
sale increased $4.4 million, or 5.6%, to $83.7 million at September
30, 2021 from $79.3 million at December 31, 2020. The increase was
primarily due to securities purchases, which were partially offset
by securities pay-downs during the first nine months of 2021. Loans
receivable, net at September 30, 2021 and December 31, 2020 was
$524.6 million and $524.1 million, respectively. Total deposits at
September 30, 2021 were $591.8 million, an increase of $31.5
million, or 5.6%, 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 September 30, 2021
was $86.5 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 nine months of 2021. During the first nine months
of 2021, the Company repurchased 139,928 shares of common stock at
an average cost of $14.98 per share as compared to 109,600 shares
of common stock repurchased at an average cost of $13.12 per share
during the first nine months of 2020.
Dividends Declared
On October 27, 2021, the Company’s Board of
Directors approved a quarterly cash dividend of $0.14 per share of
common stock. The dividend is payable on November 19, 2021, to
shareholders of record as of November 9, 2021. Lake Shore, MHC (the
“MHC”), which holds 3,636,875 shares, or 63.9%, of the Company’s
total outstanding stock as of October 26, 2021, has elected to
waive receipt of the dividend on its shares. The closing stock
price of Lake Shore Bancorp, Inc. shares was $14.94 on October 26,
2021, which implied a dividend yield for the Company’s common stock
of 3.7%.
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 |
|
|
|
|
|
|
September 30, |
|
December 31, |
|
2021 |
|
2020 |
|
|
(Unaudited) |
|
|
(Dollars in thousands) |
|
|
|
|
|
|
Total assets |
$ |
709,308 |
|
$ |
686,200 |
Cash and cash equivalents |
|
60,980 |
|
|
42,975 |
Securities available for
sale |
|
83,698 |
|
|
79,285 |
Loans receivable, net |
|
524,647 |
|
|
524,143 |
Deposits |
|
591,754 |
|
|
560,259 |
Long-term debt |
|
21,950 |
|
|
29,750 |
Stockholders’ equity |
|
86,491 |
|
|
85,924 |
|
|
|
|
|
|
|
|
|
|
|
|
Statements of
Income |
|
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
|
September 30, |
|
September 30, |
|
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
(Unaudited) |
|
(Dollars in thousands, except per share
amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
$ |
6,465 |
|
$ |
5,922 |
|
$ |
18,691 |
|
$ |
18,357 |
Interest expense |
|
628 |
|
|
1,014 |
|
|
2,153 |
|
|
3,515 |
Net interest income |
|
5,837 |
|
|
4,908 |
|
|
16,538 |
|
|
14,842 |
Provision for loan losses |
|
- |
|
|
300 |
|
|
650 |
|
|
1,125 |
Net interest income after
provision for loan losses |
|
5,837 |
|
|
4,608 |
|
|
15,888 |
|
|
13,717 |
Total non-interest income |
|
707 |
|
|
771 |
|
|
2,210 |
|
|
1,834 |
Total non-interest expense |
|
4,494 |
|
|
3,922 |
|
|
12,842 |
|
|
11,655 |
Income before income taxes |
|
2,050 |
|
|
1,457 |
|
|
5,256 |
|
|
3,896 |
Income tax expense |
|
359 |
|
|
226 |
|
|
884 |
|
|
581 |
Net income |
$ |
1,691 |
|
$ |
1,231 |
|
$ |
4,372 |
|
$ |
3,315 |
Basic and diluted earnings per
share |
$ |
0.29 |
|
$ |
0.21 |
|
$ |
0.74 |
|
$ |
0.56 |
Dividends declared per share |
$ |
0.14 |
|
$ |
0.12 |
|
$ |
0.40 |
|
$ |
0.36 |
Lake Shore Bancorp,
Inc.Selected Financial Information
|
|
|
|
|
|
Selected Financial
Ratios |
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
|
September 30, |
|
September 30, |
|
2021 |
|
2020 |
|
|
2021 |
|
2020 |
|
|
(Unaudited) |
|
|
|
|
Return on average assets |
0.94 |
% |
0.72 |
% |
|
0.83 |
% |
0.68 |
% |
Return on average equity |
7.75 |
% |
0.58 |
% |
|
6.69 |
% |
5.23 |
% |
Average interest-earning assets
to average interest-bearing liabilities |
133.36 |
% |
128.37 |
% |
|
131.43 |
% |
126.13 |
% |
Interest rate spread |
3.36 |
% |
2.90 |
% |
|
3.22 |
% |
3.05 |
% |
Net interest margin |
3.48 |
% |
3.08 |
% |
|
3.35 |
% |
3.25 |
% |
|
|
|
|
September 30, |
December 31, |
|
2021 |
2020 |
|
(Unaudited) |
|
|
|
Asset Quality
Ratios: |
|
|
Non-performing loans as a percent of total net loans |
1.88 |
% |
0.59 |
% |
Non-performing assets as a
percent of total assets |
1.40 |
% |
0.46 |
% |
Allowance for loan losses as a
percent of total net loans |
1.17 |
% |
1.12 |
% |
Allowance for loan losses as a
percent of non-performing loans |
62.14 |
% |
118.75 |
% |
|
|
|
|
|
|
|
September 30, |
|
December 31, |
|
2021 |
|
2020 |
|
|
(Unaudited) |
|
|
|
|
|
|
Share
Information: |
|
|
|
|
|
Common stock, number of shares
outstanding |
|
5,703,024 |
|
|
5,823,786 |
Treasury stock, number of shares
held |
|
1,133,490 |
|
|
1,012,728 |
Book value per share |
$ |
15.17 |
|
$ |
14.75 |
Lake Shore Bancorp (NASDAQ:LSBK)
Gráfica de Acción Histórica
De Abr 2024 a May 2024
Lake Shore Bancorp (NASDAQ:LSBK)
Gráfica de Acción Histórica
De May 2023 a May 2024