Lake Shore Bancorp Inc., the holding company for Lake Shore Savings Bank, reported unaudited net income of $1.2 million, or 20 cents per diluted share, for the fourth quarter of 2022 compared to net income of $1.8 million, or 31 cents per diluted share, for the fourth quarter of 2021.

For the year ended Dec. 31, the company reported unaudited net income of $5.7 million, or 97 cents per diluted share, as compared to $6.2 million, or $1.05 per diluted share, for 2021.

“We experienced impressive growth in our net interest margin and loan balances during 2022 as a result of the collective determination of our team of talented banking specialists,” stated Daniel P. Reininga, President and Chief Executive Officer. “Our robust capital position and strong asset quality will allow us to react appropriately to the challenges of an uncertain economic environment and increased competition in our marketplace.

“The increase in non-interest expenses during fourth quarter 2022 and the full year 2022 were primarily due to remediation activities associated with the previously disclosed entry of Lake Shore Savings Bank into a formal written agreement with the Office of the Comptroller of the Currency, the Bank’s primary regulator. We expect these higher costs to continue over the near term while we address our regulatory requirements. Additionally, we expect that our employee expenses will increase as we continue to invest in staffing resources to support both our future growth as well as our commitment to address all outstanding regulatory matters. We are very pleased with the additions of our new Chief Operating Officer, Jennifer Zatkos, and Chief Technology Officer, Robert Cortellucci to our senior management team.”

Net interest margin and interest rate spread was 3.77% and 3.65%, respectively, for the year ended Dec. 31 as compared to 3.35% and 3.22%, respectively, for the year ended Dec. 31, 2021;

Loans receivable, net grew by 10.9%, to $573.5 million due to $54.6 million of net growth in commercial and residential real estate loans during the year.

Fourth quarter 2022 net income of $1.2 million decreased by $623,000, or 34.4%, when compared to the fourth quarter of 2021. Fourth quarter 2022 net income was impacted by a $1.2 million increase in non-interest expense primarily due to remediation costs related to requirements from the formal agreement with the Office of the Comptroller of the Currency. A decrease in non-interest income and an increase in provision for loan losses also reduced fourth quarter 2022 net income, which was partially offset by an increase in net interest income and a decrease in income tax expense.

Net income of $5.7 million for the year decreased by $479,000, or 7.7%, when compared to 2021. Net income during the year ended December 31, 2022 was negatively impacted by an increase in non-interest expense, a decrease in non-interest income and an increase in provision for loan losses, which was partially offset by an increase in net interest income and a decrease in income tax expense.