Lake Shore Bancorp, Inc., reported net income for the quarter ended Sept. 30 of $602,000 or 10 cents per diluted share compared to net income of $867,000 or14 cents per diluted share for the quarter ended Sept. 30, 2008. Net income during the 2008 period included $179,000 in earnings on an interest rate floor derivative product that was sold in January .

Excluding the 2008 earnings on the interest rate floor derivative product, net income for the quarter ended Sept. 30, 2009 decreased by $86,000, or 12.5 percent, in comparison to the 2008 period. Net income during the 2009 period was impacted by an FDIC assessment of $103,000 compared to an assessment of $10,000 for the quarter ended September 30, 2008. The increase was the result of changes in premiums mandated by the FDIC and the application of one-time assessment credits granted by the FDIC in 2007 against 2008 premiums.

Net income during the 2009 period was also impacted by salary and employee benefit costs which increased by $214,000 for the quarter ended Sept. 30, 2009 compared to the 2008 period partly due to receipt of $71,000 in credits for 401(k) plan forfeitures during the third quarter of 2008. The remaining increase in salary and employee benefit cost was due to annual raises, increased health insurance costs and additional staff needed to open a new branch office in Kenmore, N.Y. on Dec. 1, 2008.

"Even though earnings were lower this quarter compared to the same period last year, our bank operations have continued to show positive results. Our year to date loan originations are at record levels and our deposit share in Erie County continues to increase," said President and Chief Executive Officer David C. Mancuso. "We anticipate our Kenmore branch office will become profitable within the next 18 months and provide a bottom-line impact to our financial performance."

The bank also announced that it has entered into an agreement to lease a building located on Dick Road in Depew, New York which formerly housed a First Niagara Bank branch. It anticipates opening its 10th branch office at this location in April.

Total assets increased by $14.1 million, or 3.4 percent, to $421.9 million at Sept. 30, 2009 compared to $407.8 million at Dec. 31, 2008. The increase in total assets was primarily due to a $17.5 million increase in loans receivable, net and a $7.3 million increase in securities available for sale, partially offset by a $10.0 million decrease in cash and cash equivalents. Asset growth was funded by a $19.0 million increase in deposits. Total liabilities increased $12.4 million from $353.6 million at December 31, 2008 to $366.0 million at September 30, 2009. The increase was primarily due to the increase in deposits, offset in part by a $6.1 million decrease in total borrowings. Total equity was $55.9 million at Sept. 30, 2009 compared to $54.2 million at Dec. 31, 2008. The increase in equity was primarily the result of net income in the first nine months of 2009 and an increase in unrealized gains on available for sale securities, offset by purchases of treasury stock and payment of dividends.

Traded on the NASDAQ Global Market as LSBK, Lake Shore Bancorp can also be found on the Web at www.lakeshoresavings.com.