Lake Shore Bancorp, Inc. (the “Company”) (NASDAQ: LSBK), the
holding company for Lake Shore Savings Bank (the “Bank”), reported
unaudited net income of $1.8 million, or $0.31 per diluted share,
for the fourth quarter of 2021 compared to net income of $1.2
million, or $0.21 per diluted share, for the fourth quarter of
2020. For the year ended December 31, 2021, the Company reported
unaudited net income of $6.2 million, or $1.05 per diluted share,
as compared to $4.6 million, or $0.77 per diluted share, for the
year ended December 31, 2020.
2021 Full Year and Fourth Quarter
Financial Highlights:
- Fourth quarter net income of $1.8
million increased by $572,000, or 46.0%, when compared to the
fourth quarter of 2020. Fourth 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 a
decrease in non-interest income and an increase in income tax
expense;
- Net income of $6.2 million for the
year ended December 31, 2021 increased by $1.6 million, or 35.8%,
when compared to the year ended December 31, 2020. Net income
during the year ended December 31, 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 December 31, 2021
increased $27.9 million, or 4.1%, to $714.1 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, partially
offset by a decrease in loans receivable, net;
- Total deposits grew by $33.5
million, or 6.0%, to $593.7 million at December 31, 2021 when
compared to December 31, 2020, primarily due to growth in core
deposits;
- Stock repurchases of $2.3 million,
representing the repurchase of 150,542 shares at an average cost
per share of $14.98, were completed during the year ended December
31, 2021;
- Cash dividend payments of $1.0
million were paid to shareholders during the year ended December
31, 2021, resulting in an annual dividend per share of $0.54, a
10.2% increase over last year; and
- Book value per share increased 4.7%
to $15.45 per share at December 31, 2021 as compared to $14.75 per
share at December 31, 2020.
“We are extremely pleased to report significant
growth in both total assets and net income during 2021,” stated
Daniel P. Reininga, President and Chief Executive Officer. “We
exceeded the $700 million threshold for total assets in 2021
through our continued commitment to understanding the individual
needs of our customers and integrating new technology for
processing efficiencies, while also withstanding the challenges of
the current interest rate environment and intense competition
throughout our market area.”
COVID-19 Pandemic Update
During 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
December 31, 2021, $4.6 million of the PPP loans originated during
2021 were still outstanding on the Bank’s balance sheet. All PPP
loans originated during 2020 had been forgiven as of December 31,
2021.
During 2020, the Bank implemented a loan
deferral program, in line with regulatory guidance, to further
assist customers that had 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. As of December 31, 2021, all loan
deferrals under this program have ended and there are no loans that
remained in the loan deferral program.
Net Interest Income
Fourth quarter 2021 net interest income
increased $366,000, or 7.2%, to $5.5 million as compared to $5.1
million for the fourth quarter 2020. Net interest income for the
year ended December 31, 2021 increased $2.1 million, or 10.3%, to
$22.0 million as compared to $19.9 million for the year ended
December 31, 2020.
Interest income was $6.0 million for the fourth
quarter of 2021 and 2020. Interest income for the fourth quarter of
2021 was positively impacted by an increase in total average
interest-earning assets of $12.7 million, or 2.0%, during the
fourth quarter 2021 as compared to the fourth 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. Interest income was negatively
impacted by an eight basis points decrease in the average yield on
interest-earning assets due to the decrease in market interest
rates since December 31, 2020.
Interest income for the year ended December 31,
2021 was $24.7 million, an increase of $323,000, or 1.3%, compared
to $24.3 million for the year ended December 31, 2020. The increase
was primarily due to a $40.2 million, or 4.5%, increase in the
average balance of interest-earning assets and a $338,000 increase
in prepayment penalties received on commercial real estate loans.
The increase was also due to a $119,000 increase in PPP loan fees
recognized during the year ended December 31, 2021 as compared to
2020. The increase in the average balance of interest-earning
assets was primarily due to growth in the average balance of
commercial real estate and residential real estate loans. The
increase in interest income was partially offset by a 20 basis
points decrease in the average yield on interest-earning assets due
to the decrease in market interest rates and to a lesser extent the
origination of PPP loans earning 1.0% since December 31, 2020.
Fourth quarter 2021 interest expense was
$512,000, a decrease of $377,000, or 42.4%, from $889,000 for
fourth quarter 2020 primarily due to a decrease in interest paid on
deposit accounts. During the fourth quarter of 2021, there was a 28
basis points decrease in the average interest rate paid on deposit
accounts as a result of a decrease in market interest rates on
deposits since December 31, 2020. The decrease was partially offset
by a $5.7 million, or 1.2%, increase in average interest-bearing
deposits during the 2021 fourth quarter as compared to the 2020
fourth quarter. During the fourth quarter of 2021, interest expense
on long-term debt decreased by $48,000, or 31.0%, compared to the
fourth quarter of 2020, primarily due to an $8.6 million decrease
in the average balance of long-term borrowings.
Interest expense for the year ended December 31,
2021 was $2.7 million, a decrease of $1.7 million, or 39.5%, from
$4.4 million for the year ended December 31, 2020 primarily due to
a decrease in interest paid on deposit accounts. During the year
ended December 31, 2021, there was a 37 basis points decrease in
the average interest rate paid on deposit accounts as a result of a
decrease in market interest rates on deposits compared to 2020. The
decrease was partially offset by a $20.0 million, or 4.4%, increase
in average interest-bearing deposits during the year ended December
31, 2021 as compared to 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 the COVID-19 pandemic on
consumer and business spending and savings levels. During the year
ended December 31, 2021, interest expense on long-term debt
decreased by $160,000, or 24.0%, compared to the year ended
December 31, 2020, primarily due to a $7.2 million decrease in the
average balance on long-term borrowings.
Non-Interest Income
Non-interest income was $1.0 million for the
fourth quarter of 2021, a decrease of $180,000, or 15.5%, as
compared to the same quarter in the prior year. The decrease was
primarily due to a $242,000 decrease in gains on the sale of
residential loans, partially offset by a $51,000 increase in
service charges and fees and a $38,000 increase in other income.
The increase in other income was primarily due to a $54,000
increase in unrealized gains on interest rate swaps.
Non-interest income was $3.2 million for the
year ended December 31, 2021, an increase of $196,000, or 6.6%, as
compared to the year ended December 31, 2020. The increase was
primarily due to a $321,000 increase in other income due to a
$331,000 increase in unrealized gains on interest rate swaps, a
$281,000 increase in service charges and fees which included a
$110,000 increase in debit card income. These increases were
partially offset by a $297,000 decrease in gains on the sale of
residential loans and a $76,000 decrease in earnings on bank owned
life insurance.
Non-Interest Expense
Non-interest expense was $4.2 million for the
fourth quarter of 2021, a decrease of $47,000, or 1.1%, as compared
to $4.3 million for the fourth quarter of 2020. Data processing
expenses decreased $272,000, or 58.4%, primarily due to lower
processing costs associated with the Company’s undertaking of a
core processing system conversion which was completed in the third
quarter of 2021. Salary and employee benefits expense decreased
$44,000, or 1.9%, primarily due to a $138,000 decrease in incentive
expenses, partially offset by a $105,000 decrease in deferred
salaries that are amortized over the life of a loan, due to a
decrease in loan origination volume. The decrease in salary and
employee benefits was partially offset by annual salary increases.
The decrease in non-interest expense was partially offset by an
increase in occupancy and equipment costs of $141,000, or 21.8%,
primarily due to an increase in maintenance contract expense and
costs to purchase equipment and hardware in relation to the core
processing system conversion. Professional services increased
$130,000, or 57.3%, primarily due to an $86,000 increase in legal
expenses during the fourth quarter of 2021.
Non-interest expense was $17.1 million for the
year ended December 31, 2021, an increase of $1.1 million, or 7.2%,
as compared to $15.9 million for the year ended December 31, 2020.
Professional services increased $592,000, or 61.2%, primarily due
to one-time costs of $509,000 associated with the Company’s
undertaking of a core processing system conversion which was
completed in the third quarter of 2021. Salary and employee
benefits expense increased $364,000, or 4.2%, 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.
Occupancy and equipment costs increased $268,000, or 10.4%,
primarily due to an increase in equipment and hardware purchases,
as well as increased maintenance costs as a result of the core
processing system conversion. The year ended December 31, 2021,
also had increases in expenses for FDIC insurance, postage and
supplies and other expenses that were partially offset by a
decrease in data processing and advertising expense. The $126,000,
or 8.5%, decrease in data processing expense was due to lower
processing costs related to the core processing system
conversion.
Asset Quality
There was no provision for loan losses recorded
during the fourth quarter 2021 as compared to $500,000 for fourth
quarter 2020, primarily due to a net decrease in commercial real
estate loan balances. The fourth 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 year ended December 31, 2021, a $1.0 million, or 60.0%,
decrease as compared to $1.6 million for the year ended December
31, 2020. The provision for the year ended December 31, 2021 was
primarily due to a partial charge-off related to the downgrade and
impairment of one commercial real estate loan as well as general
reserves for loan originations during the year. The provision for
the year ended December 31, 2020 was primarily due to an adjustment
of certain qualitative factors to take into account the uncertain
impact of the COVID-19 pandemic on economic conditions and
borrowers’ ability to repay loans and general reserves for loan
originations during the year.
Non-performing loans as a percent of total net
loans increased to 1.86% at December 31, 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 $7.0 million being
placed into non-accrual status during the year ended December 31,
2021. The Company’s allowance for loan losses as a percent of total
net loans was 1.18% and 1.12%, at December 31, 2021 and December
31, 2020, respectively.
Balance Sheet Summary
Total assets at December 31, 2021 were $714.1
million, a $27.9 million, or 4.1%, increase as compared to $686.2
million at December 31, 2020. Cash and cash equivalents increased
by $25.0 million, or 58.2%, from $43.0 million at December 31, 2020
to $68.0 million at December 31, 2021. The increase was primarily
due to an increase in deposits and cash received from loan payoffs,
partially offset by the use of funds to originate loans, pay off
long-term borrowings and purchase securities available for sale.
Securities available for sale increased $9.5 million, or 12.0%, to
$88.8 million at December 31, 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 year
ended December 31, 2021. Loans receivable, net decreased $6.9
million, or 1.3%, from $524.1 million at December 31, 2020 to
$517.2 million at December 31, 2021. The decrease was primarily due
to an increase in commercial real estate and commercial business
loan pay-downs, which included PPP loan forgiveness, that was
partially offset by new loan originations during the year ended
December 31, 2021. Total deposits at December 31, 2021 were $593.7
million, an increase of $33.5 million, or 6.0%, compared to $560.3
million at December 31, 2020. The increase in deposits was due to
an increase in checking accounts, which was partially driven by
stimulus funds and PPP loan proceeds.
Stockholders’ equity at December 31, 2021 was
$88.0 million as compared to $85.9 million at December 31, 2020.
The $2.1 million increase in stockholders’ equity was primarily
attributed to net income which was partially offset by a decrease
in accumulated other comprehensive income, along with dividend
payments and stock repurchases during the year ended December 31,
2021. During the year ended December 31, 2021, the Company
repurchased 150,542 shares of common stock at an average cost of
$14.98 per share as compared to 121,051 shares of common stock
repurchased at an average cost of $13.16 per share during the year
ended December 31, 2020. 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, 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 |
|
|
|
|
|
|
December 31, |
|
December 31, |
|
2021 |
|
2020 |
|
|
(Unaudited) |
|
|
(Dollars in thousands) |
|
|
|
|
|
|
Total assets |
$ |
714,085 |
|
$ |
686,200 |
Cash and cash equivalents |
|
67,965 |
|
|
42,975 |
Securities available for
sale |
|
88,816 |
|
|
79,285 |
Loans receivable, net |
|
517,206 |
|
|
524,143 |
Deposits |
|
593,722 |
|
|
560,259 |
Long-term debt |
|
21,950 |
|
|
29,750 |
Stockholders’ equity |
|
87,976 |
|
|
85,924 |
|
|
|
|
|
|
|
|
|
|
|
|
Statements of
Income |
|
|
|
|
|
|
|
|
Three Months Ended |
|
Years Ended |
|
|
December 31, |
|
December 31, |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
|
(Unaudited) |
|
(Dollars in thousands, except per share
amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
$ |
5,968 |
|
$ |
5,979 |
|
$ |
24,659 |
|
$ |
24,336 |
Interest expense |
|
512 |
|
|
889 |
|
|
2,665 |
|
|
4,404 |
Net interest income |
|
5,456 |
|
|
5,090 |
|
|
21,994 |
|
|
19,932 |
Provision for loan losses |
|
- |
|
|
500 |
|
|
650 |
|
|
1,625 |
Net interest income after
provision for loan losses |
|
5,456 |
|
|
4,590 |
|
|
21,344 |
|
|
18,307 |
Total non-interest income |
|
978 |
|
|
1,158 |
|
|
3,188 |
|
|
2,992 |
Total non-interest
expense |
|
4,215 |
|
|
4,262 |
|
|
17,057 |
|
|
15,917 |
Income before income
taxes |
|
2,219 |
|
|
1,486 |
|
|
7,475 |
|
|
5,382 |
Income tax expense |
|
404 |
|
|
243 |
|
|
1,288 |
|
|
824 |
Net income |
$ |
1,815 |
|
$ |
1,243 |
|
$ |
6,187 |
|
$ |
4,558 |
Basic and diluted earnings per
share |
$ |
0.31 |
|
$ |
0.21 |
|
$ |
1.05 |
|
$ |
0.77 |
Dividends declared per
share |
$ |
0.14 |
|
$ |
0.13 |
|
$ |
0.54 |
|
$ |
0.49 |
|
Lake Shore Bancorp, Inc.Selected Financial
Information |
|
Selected Financial
Ratios |
|
|
|
|
|
|
Three Months Ended |
|
Years Ended |
|
December 31, |
|
December 31, |
|
2021 |
2020 |
|
2021 |
2020 |
|
(Unaudited) |
|
|
|
|
Return on average assets |
1.03 |
% |
0.73 |
% |
|
0.88 |
% |
0.69 |
% |
Return on average equity |
8.32 |
% |
5.79 |
% |
|
7.10 |
% |
5.37 |
% |
Average interest-earning
assets to average interest-bearing liabilities |
131.51 |
% |
128.17 |
% |
|
131.45 |
% |
126.65 |
% |
Interest rate spread |
3.25 |
% |
3.03 |
% |
|
3.22 |
% |
3.05 |
% |
Net interest margin |
3.35 |
% |
3.18 |
% |
|
3.35 |
% |
3.23 |
% |
|
|
|
|
December 31, |
|
2021 |
2020 |
|
(Unaudited) |
|
|
|
Asset Quality
Ratios: |
|
|
Non-performing loans as a percent of total net loans |
1.86 |
% |
|
0.59 |
% |
Non-performing assets as a
percent of total assets |
1.37 |
% |
|
0.46 |
% |
Allowance for loan losses as a
percent of total net loans |
1.18 |
% |
|
1.12 |
% |
Allowance for loan losses as a
percent of non-performing loans |
63.50 |
% |
|
118.75 |
% |
|
|
|
|
|
|
|
|
December 31, |
|
2021 |
|
2020 |
|
|
(Unaudited) |
|
|
|
|
|
|
|
Share
Information: |
|
|
|
|
|
|
Common stock, number of shares
outstanding |
|
5,692,410 |
|
|
5,823,786 |
|
Treasury stock, number of
shares held |
|
1,144,104 |
|
|
1,012,728 |
|
Book value per share |
$ |
15.45 |
|
$ |
14.75 |
|
Lake Shore Bancorp (NASDAQ:LSBK)
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