Lake Shore Bancorp Announces Net Income Of $1 Million For First Quarter 2012

Lake Shore Bancorp, Inc. (the “Company”) (NASDAQ Global Market: LSBK), the holding company for Lake Shore Savings Bank (the “Bank”), announced first quarter 2012 net income of $1.0 million, or $0.18 per diluted share, compared to net income of $950,000, or $0.17 per diluted share, for the first quarter of 2011. The 6% quarter-over-quarter increase was the result of increased net interest income, reflecting an increase in interest earning assets and decreased interest expense on interest bearing liabilities.

2012 First Quarter Highlights

• Net income of $1.0 million, an increase of $420,000, or 71.6% in comparison to the fourth quarter of 2011;
• Diluted earnings per share increased 6% compared with the prior year quarter;
• Total assets increased $5.5 million from December 31, 2011; and
• Asset quality metrics remain superior to peer and industry averages.

“Our company delivered another quarter of solid performance by successfully controlling overhead, maintaining asset quality, and appropriately managing our yield,” said Daniel P. Reininga, President and Chief Executive Officer. “The business environment remains challenging within our service area and our loan originators are working diligently to secure appropriate loans for conservative growth of our loan portfolio. Our excellent asset quality and strong market position have us well-positioned for sustained earnings performance.”

First quarter 2012 net interest income was $3.8 million, an increase of 5.2%, compared to $3.6 million for the prior year first quarter. The increase in net interest income was reflective of lower interest expense during the first quarter of 2012, which declined 15.8% to $1.3 million in comparison to the first quarter of 2011, while interest income remained flat for both periods at $5.1 million. The decrease in interest expense was primarily due to a 22 basis point decline in the average rate paid on interest-bearing liabilities to 1.31% for the three months ended March 31, 2012 from 1.53% for the three months ended March 31, 2011. The Bank’s average loan balance increased $8.1 million, and the average balance of securities increased $8.3 million during the quarter ended March 31, 2012 compared with the quarter ended March 31, 2011.

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