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Lake Shore Bancorp announces second quarter results

Lake Shore Bancorp Inc., the holding company for Lake Shore Savings Bank, reported unaudited net income of $1.4 million, or 23 cents per diluted share, for the second quarter of 2020 compared to net income of $805,000, or 13 cents per diluted share, for second quarter of 2019.

For the first six months of 2020, the company reported unaudited net income of $2.1 million, or $0.35 per diluted share, compared to $1.7 million, or $0.28 per diluted share, for the first six months of 2019.

During the second quarter of 2020, the company continued to be actively engaged in its response to the COVID-19 pandemic. The bank originated 245 Small Business Administration Paycheck Protection Program loans for customers, which totaled $26.2 million and represented the retention of more than 3,300 jobs. The bank funded $17.9 million of PPP loans directly and the remaining $8.3 million was funded indirectly Lake Shore Bancorp’s partnership with Pursuit, a SBA lender that operates in the northeast.

The company implemented a loan modification program for customers impacted by the pandemic, in line with regulatory guidance, allowing customers to defer loan payments. During the second quarter of 2020, the bank 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 June 30, 2020. The majority of these customers have not yet requested a second 90-day deferral period, with the exception of 17 loans, or $18.9 million, which have received an additional 90 day deferral to end on September 30, 2020.

While many industries have and will continue to experience adverse impacts as a result of the COVID-19 pandemic, the company’s management team has considered the categories below to be “at risk” of significant impact.

Lake Shore Bancorp encourages its customers to use the branch drive-thru lanes, mobile banking and online banking services or one of its more than 1,900 surcharge-free ATM locations to promote appropriate social distancing protocols.

“As we continue to manage through the ongoing pandemic, we have been successful in delivering uninterrupted service and support, both in-branch and online, to all of our customers,” said Daniel P. Reininga, president and chief executive officer. “We continue to take every precaution necessary to ensure the safety of our customers, employees, and vendor partners. Our ability to assist customers with the origination of PPP loans during this challenging economic environment reflects the bank’s continued focus on “Putting People First” and we are proud of the efforts put forth by our loan officers to meet the needs of our community members.”

2020 SECOND QUARTER AND YEAR TO DATE FINANCIAL HIGHLIGHTS:

Net interest income increased $355,000, or 7.6%, for the three months ended June 30, 2020 when compared to the three months ended June 30, 2019 and $713,000, or 7.7%, for the first six months of 2020 when compared to the first six months of 2019 primarily due to an increase in average commercial real estate and commercial construction loans;

Provision for loan losses for the six months ended June 30, 2020 was $825,000, a $400,000 increase in comparison to the prior year period, primarily reflecting the economic uncertainty relating to COVID-19. The resulting allowance was 1.09% of the total loan portfolio (excluding the $23.1 million of PPP loans which were outstanding as of June 30, 2020 and are 100% guaranteed by the SBA);

Loans, net totaled $487.9 million at June 30, 2020, compared to $470.8 million at December 31, 2019, an increase of $17.1 million, or 3.6%, primarily due to the origination of PPP loans during the second quarter of 2020;

Total assets at June 30, 2020 increased $66.9 million, or 11.0%, to $677.8 million when compared to December 31, 2019 primarily due to the origination of PPP loans and an increase in deposits; and

Total deposits grew by $67.0 million, or 13.9%, to $550.5 million at June 30, 2020 when compared to December 31, 2019, primarily due to the PPP loan proceeds being placed in customers’ deposit accounts and growth in core deposits.

“Although our year to date results have been impacted by the marked decline in interest rates and an increased provision for loan losses, our strong capital levels will allow us to appropriately manage the risks presented by the current economic environment,” Reininga said. “We remain focused on meeting the needs of our community members with a high quality, multi-channel service model that provides an opportunity for existing and new customers to obtain loans or to place deposits by means of our multiple and diversified, high quality banking products and services.”

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