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Lake Shore Bancorp sees chance for inroads in Erie County

DUNKIRK ‑ As the Buffalo Niagara’s region’s banking landscape prepares to undergo big changes, a smaller bank like Lake Shore Bancorp sees a chance to pick up more business.

That means going up against rivals with far more extensive resources, so Lake Shore has to take a different tack.

“It’s pure customer service,” said Daniel P. Reininga, president and CEO of Dunkirk-based Lake Shore, in an interview at the bank’s annual meeting on Wednesday. “It’s being able to contact even the president of the bank at any time. It’s feet on the ground to meet our customers’ needs.”

Lake Shore has less than 1 percent of the deposit market share in Erie County, ranking 10th among banks there, according to Federal Deposit Insurance Corp. data. Meanwhile, Cleveland-based KeyCorp is planning to buy First Niagara Financial Group, and Pennsylvania-based Northwest has agreed to buy 13 First Niagara branches in Erie County, increasing its visibility and deposits.

Lake Shore, which is marking its 125th anniversary this year, has a strong presence in Chautauqua County but sees Erie County as a growth opportunity, Reininga said. “I think it’s great for customers to keep their banking relationship in Western New York and deal with a Western New York-based organization.”

Lake Shore may be small ­– it recorded net income of $3.3 million in 2015 – but has added features for commercial customers like remote deposit capture, to scan and deposit checks electronically, without going to a branch.

“If they’re with other banks and we’re trying to bring them over, that’s what they’re looking for,” said Rachel Foley, Lake Shore’s chief financial officer. “‘I had it at my other bank, do you have it?’”

Lake Shore still originates and services residential loans, but sells those loans to Freddie Mac to take the interest rate risk off its own balance sheet, Reininga said. “We’re still the front-line person to service those loans.”

Meanwhile, the bank has made a concerted effort to increase the percentage of commercial loans in its mix. “There’s a lot of commercial activity in Western New York, obviously, with the Buffalo Billion and everything else going on, and we believe that is sustainable,” Reininga said.

Lake Shore targets commercial loan opportunities up to $10 million, but it can go higher when it partners with other community banks on a project, he said.

The bank has also reshaped its balance sheet in order to reduce its interest rate risk, though it’s still unclear when rates might significantly increase.

“The extended low interest rate environment is going to continue to present a challenge for all banks in the near future, along with the slow economic growth,” Foley said.


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