Lake Shore Bancorp said first-quarter profits fell 9.4 percent, as revenues from lending fell and the bank set aside more for loan losses.
The Dunkirk-based parent of Lake Shore Savings Bank reported net income of $906,000, or 16 cents per share, down from $1 million, or 18 cents per share, a year ago.
The savings bank’s board also declared a 7-cent cash dividend, payable May 21 to shareholders of record on May 7.
The bank also opened its newest office April 11, in Snyder, marking its 11th location. “We look forward to bringing a superior level of personal service to the families and businesses in yet another Western New York community,” said Lake Shore President and CEO Daniel P. Reininga.
Net interest income from taking deposits and making loans dropped 1.7 percent to $3.7 million, as interest income fell faster than interest expense because of lower average rates on investments and a lower volume of interest-earning assets during the quarter. Even so, the profit margin widened a notch.
Average interest-earning assets fell $13.9 million because of a drop in investments, while average borrowings fell by $8.4 million, and average deposits fell $6 million. Total assets rose 4.8 percent annualized from year’s end to $488.2 million, while total deposits rose 6.1 percent annualized to $384.3 million. Annualized means one quarter’s rate multiplied by four.
The bank set aside $45,000 for loan losses, compared with a $35,000 release from its reserves a year ago. That’s a result of growth in commercial mortgages and an uptick in bad mortgages, although problem loans still remain low.
Fee and other income fell 1.2 percent to $515,000, as deposit service charges and fees fell, only partially offset by higher earnings on bank-owned life insurance.
Expenses rose 1.2 percent from higher occupancy and equipment costs, higher professional services and higher salary and benefits, offset by a drop in advertising costs.
“We continue to deliver solid and stable earnings in a challenging low-growth economic environment by remaining focused on strong asset quality, carefully managing non-interest expense and prudently investing in opportunities to expand our customer service footprint,” Reininga said. “We remain committed to building scale in our commercial lending portfolio.”