Lake Shore Bancorp Reports $4.9 Million Net Income for Fiscal Year 2024

Lake Shore Bancorp, Inc. reported a net income of $4.9 million for the fiscal year ending December 31, 2024, reflecting a 2.3% increase from the previous year's net income of $4.8 million. This translates to earnings of $0.88 per diluted share, up from $0.82 per diluted share in 2023. The company's total assets decreased by 5.5% to $685.5 million, down from $725.1 million in 2023, primarily due to reductions in cash and cash equivalents, net loans, and securities. The decrease in net loans was attributed to a strategic focus on originating shorter-duration, adjustable-rate commercial loans, which helped diversify the asset mix and manage interest rate risk.

In terms of financial performance, net interest income fell by 13.5% to $21.1 million, down from $24.4 million in 2023. This decline was driven by a significant increase in interest expense, which rose by 46.2% to $13.7 million, largely due to rising interest rates and increased competition for deposits. The interest rate spread decreased to 2.62% from 3.23%, while the net interest margin also contracted to 3.21% from 3.62%. Despite these challenges, interest income increased by 3.1% to $34.8 million, supported by a higher average yield on loans.

Operationally, Lake Shore Bancorp has been focusing on enhancing its loan portfolio, particularly in commercial real estate, which represented 58.7% of total gross loans as of December 31, 2024. The company has also been actively managing its credit risk, resulting in a decrease in the allowance for credit losses on loans to $5.1 million from $6.5 million in the previous year. Non-performing assets increased to $3.8 million, or 0.55% of total assets, compared to $3.4 million, or 0.47% of total assets, in 2023. The increase in non-performing loans was primarily due to a single home equity loan that was moved to non-accrual status.

Strategically, Lake Shore Bancorp is undergoing a significant transition, with plans for a second-step conversion from a mutual holding company structure to a fully public stock holding company structure. This conversion is expected to be completed in the third quarter of 2025, subject to regulatory and shareholder approvals. The company has also resumed dividend payments, declaring a cash dividend of $0.18 per share in early 2025, although it suspended future dividend payments pending the completion of the conversion. The management team, led by newly appointed CEO Kim C. Liddell, is focused on optimizing operations and positioning the bank for future growth opportunities in the Western New York market.