Lake Shore Bancorp's first-quarter profits jumped by 32 percent as the Dunkirk-based banking company benefited from a growing deposit base and a drop in the interest rates it pays on those deposits.
Lake Shore's profits rose for the fifth straight quarter to $950,000, or 17 cents per share, from $721,000, or 12 cents per share, a year earlier.
"Our asset quality remains very strong, and our healthy capital levels ensure that we are positioned to pursue all appropriate growth opportunities," said Daniel P. Reininga, Lake Shore's president and chief executive officer.
Lake Shore's basic banking business boosted its earnings during the quarter. The bank's net interest income -- the difference between the interest it pays on deposits and collects on loans -- grew by 7 percent to $3.6 million.
The increase resulted from a 4 percent rise in the interest it collected, while its interest expense fell by 3 percent.
The bank's deposits have grown by 18 percent over the last year to $377 million. Its asset base increased by 12 percent to $484 million.
Fee income grew by 6 percent to $580,000 as a one-time gain of $57,000 from the recovery of an asset that previously had been written down as impaired offset a $33,000 drop in bank service charges and fees, mainly because of new federal rules on overdraft fees.
The bank's $266 million loan portfolio remained healthy. Lake Shore only wrote off $20,000 in loans during the quarter, and nonperforming loans amounted to 0.86 percent of its total portfolio.