Lake Shore Bancorp said Tuesday that first-quarter profits rose 5.3 percent on higher revenues from its core lending business, as the company earned more in interest than it paid out.
The Dunkirk-based parent of Lake Shore Savings Bank reported net income of $1 million, or 18 cents per share, up from $950,000, or 17 cents per share.
Total assets rose by $5.5 million from the end of the year to $494.1 million, while credit quality remains strong.
"Our company delivered another quarter of solid performance by successfully controlling overhead, maintaining asset quality, and appropriately managing our yield," said President and CEO Daniel P. Reininga.
The bank's board of directors approved a 7-cent-per-share cash dividend, payable May 22 to shareholders of record on May 7.
Net interest income from taking deposits and making loans rose 5.2 percent to $3.8 million, as interest expense fell 15.8 percent to $1.3 million because the company paid lower rates, while interest income was flat at $5.1 million. Average loans rose by $8.1 million, while average securities rose $8.3 million. Total deposits rose to $388 million. The profit margin widened.
The bank released $35,000 from its loan loss reserves after total loans, and particularly bad debts, fell. A year ago, it set aside $20,000 for losses.
Fee and other income fell 10.2 percent to $521,000, although the 2011 quarter included a $57,000 recovery on an "impairment loss" from 2008 on a single investment security. Without that, fees would have been flat.
Operating expenses rose 2.2 percent to $3.1 million, because of increased advertising, professional service and foreclosure expenses, offset slightly by lower federal deposit insurance premiums and occupancy costs.